UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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CITIZENS FINANCIAL GROUP, INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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LETTER FROM THE CHAIRMAN AND CHIEF EXECUTIVE OFFICER |
LETTER FROM THE CHAIRMAN AND CHIEF EXECUTIVE OFFICER
March 9, 202011, 2022
Dear Stockholder,
On behalf of the Board of Directors, I am pleased to invite you to attend our annual meeting of stockholders to be held on Thursday, April 23, 2020,28, 2022, at 9:00 a.m. Eastern Time at our headquarters located at One Citizens Plaza, Providence, Rhode Island 02903.
Citizens entersdelivered strong performance in 2021 against the backdrop of a shifting economic and public health environment, demonstrating adaptability and resilience as we maintained our focus on serving our customers. We have entered 2022 with good momentum, and the strong foundation we have built through the transformation of the bank since our IPO positions us for future success.
Our efforts to build a stronger, more diversified business have served us well over the course of the coronavirus pandemic. Our financial strength has allowed us to build out a broad set of capabilities and to invest in new decade intechnologies, digital solutions and data analytics to better serve our customers. We have a position of strength.clear strategy, strong leadership team and outstanding culture that have enabled us to deliver good operational and financial results. We are delivering value forpositioned to play offense and further accelerate the execution of our shareholders, enhancing customer experience, investing in our colleagues and giving back tostrategic growth plans.
While the communities where we live and work. And while we remain closely focused on excellent execution inagenda ahead of us is highly ambitious, the near-term, we are also moving decisively to develop the foundational capabilities needed to succeed into the future during a time of rapid change in the financial services industry.
Looking to this year and beyond, weCitizens Credo will continue to “aim for excellence” across key dimensions, including capabilities, talent, technology, culture, innovationserve as our North Star, helping ensure we continue to perform our best and risk management. We still have work to do beforehelp our customers, colleagues, communities, shareholders and all of those we can realize our vision of being a top-performing bank. However, we believe that our strategy—fueled by our customer centric culture, our mindset of continuous improvement,serve reach their potential – today and over the excellence of our capabilities—enables us to face the future with confidence.
Our vision also guides our corporate responsibility framework which we continually seek to enhance. Earlier this year, the Nominating and Corporate Governance Committee was given formal responsibility for the oversight of our commitment to environmental, social and governance (ESG) matters and reporting. We have commenced a formal ESG materiality assessment to identify the issues that represent the most significant opportunities and risks for the Company to help further guide our efforts in continuing to drive strong corporate governance and responsible, sustainable growth. Further information on these efforts is provided in this proxy statement.
Since becoming a public company in 2014, we have sought to enhance shareholder rights and improve shareholder communication through this proxy statement and other communications and a more robust shareholder outreach program. We have worked to enhance the depth of disclosures in our proxy statement and make it more reader-friendly through better use of charts and graphics. Over the past several years, we have instituted a majority voting standard for director elections and proxy access. In furtherance of these efforts, at the meeting you will be asked to approve a management proposal providing shareholders with the right to call a special meeting. You’ll find this, and other matters scheduled to be voted on at the meeting described in detail in the following 2020 Notice of Annual Meeting of Stockholders and Proxy Statement. If you owned shares of our stock as of February 25, 2020, we encourage you to vote on these matters.
Our slate of director nominees includes a new nominee this year, Mr. Robert G. Leary. We believe that Mr. Leary’s background and experience will make him a valuable addition to our board.longer-term.
Your vote is important and, whether or not you plan to attend the meeting, we encourage you to access electronic voting via the Internet or utilize the automated telephone voting feature as described on your enclosedNotice of Internet Availability of Proxy Materials or proxy card. Alternatively, you may sign, date and return the proxy card in the envelope provided. You may also vote in personat the meeting if you plan to attend the annual meeting.attend.
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Finally, I would like to thank Mark CasadyLee Higdon and Bud Koch for histheir service on our Board. Both Mr. CasadyHigdon and Mr. Koch will not be standing forre-election in order to focus on his other business commitments and we wish him every success in his endeavors.retire from the Board after their current terms expire at the Annual Meeting. We appreciate the insight that he has shared given his extensive business expertise since joiningthey have provided and their considerable contributions to the Board in 2014 and we will miss his contributions.the Company.
We thank you for your support of Citizens Financial Group, Inc.
Sincerely, |
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Bruce Van Saun Chairman of the Board and Chief Executive Officer |
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LETTER FROM THE LEAD INDEPENDENT DIRECTOR |
March 11, 2022
Dear Stockholder,
Thank you for your investment in Citizens Financial Group, Inc. and confidence in the Board. I am pleased to be serving as Lead Independent Director and working closely with my fellow Directors as we move into 2022 focused on delivering strong results and executing well against our strategy.
Environmental, Social, and Governance (“ESG”) practices remain a priority for the Board and for our investors, as was evident from the conversations we had with stockholders throughout the year. During 2021, we continued to deliver on our corporate responsibility efforts to serve our customers well, provide a great place to work and build a career, strengthen our communities, and operate responsibly and sustainably, backed by strong governance. We published the results of our ESG materiality assessment to identify our priority ESG topics, we aligned our corporate responsibility reporting to internationally recognized reporting frameworks and plan to further enhance this in 2022 with reporting aligned with the Task-Force on Climate-related Financial Disclosures (“TCFD”), and we adopted and published greenhouse gas emissions reduction targets. We also continuously review our governance practices and seek the highest standards of corporate governance in alignment with market practice. At our 2022 Annual Meeting, we are requesting stockholder approval to amend our Certificate of Incorporation to eliminate supermajority voting requirements.
Diversity, Equity, and Inclusion also continue to be a priority for the company, both internally and in the communities we serve. During 2021, we sharpened our focus on diverse hiring, continued to expand development programs that are curated to build a strong pipeline of diverse emerging talent, and also launched required inclusion training for all colleagues. Additionally, we continued to execute on the various initiatives funded through our $10 million social equity commitment and our $500 million commitment to provide incremental financing and capital for small businesses, housing, and other developments in predominantly minority communities.
Our colleagues are central to our commitment to our communities and in 2021 volunteered more than 154,000 hours, and participated in our first Skills-Based Volunteer Day of Service. Our community giving program, Citizens Helping Citizens, is focused on three areas which we believe are core elements of fortifying our communities: Fighting Hunger, Financial Empowerment and Strengthening Communities through Economic and Workforce Development.
Serving our customers well is always top of mind. This past year we continued to deliver for our customers with several product features aimed at further enhancing customer experience. In addition, expanded capabilities and geographic coverage have allowed us to deepen existing customer relationships and broaden our customer base.
In the accompanying proxy statement, we share essential information about your Board’s role in shaping Citizens’ Credo, values, governance, and strategy. Whether or not you can attend the annual meeting, we welcome your participation with Citizens and thank you for your continued support.
Sincerely, |
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Shivan Subramaniam Lead Independent Director and Chair, |
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 23, 2020
To the Stockholders of Citizens Financial Group, Inc.:
NOTICE IS HEREBY GIVENthat the annual meeting of stockholders (the “Annual Meeting”) of Citizens Financial Group Inc., a Delaware corporation (the “Company”), will be held on April 23, 2020,
Date and Time Thursday, April 28, 2022, at 9:00 a.m. Eastern Time
Record Date February 28, 2022. Stockholders of record as of this date are entitled to notice of, and to vote
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OUR MISSION To help our
Our full-year 2021 financial results demonstrate the strength and diversity of our business model. For the full year, our net income was $2.3 billion, EPS was $5.16 and ROTCE was 15%. On an Underlying basis, net income was $2.4 billion, EPS was $5.34 and ROTCE was 16%. These strong earnings and returns were enhanced by the release of credit reserves we took in 2020, but operating performance was broadly in line with our expectations for the year.
2021 Highlights $188.4B Assets $128.2B Loans & Leases $154.4B Deposits 83% Loans-to-Deposit Ratio 71% Record Capital Markets Fees 18% Record Wealth Fees 9.9% CET1 Ratio 6% Tangible Book Value Per Share Net income available to common stockholders and EPS ROTCE (Return on average tangible common equity) Efficiency Ratio Reported results Underlying results Reported EPS Underlying EPS $2,284 $2,206 $5.34 $5.16 2021 $1,033 $950 $2.41 $2.22 2020 8% 7% 16% 15% 2020 2021 58% 56% 61% 60% 2020 20212021 Highlights $188.4B Assets $128.2B Loans & Leases $154.4B Deposits 83% Loans-to-Deposit Ratio 71% Record Capital Markets Fees 18% Record Wealth Fees 9.9% CET1 Ratio 6% Tangible Book Value Per Share Net income available to common stockholders and EPS ROTCE (Return on average tangible common equity) Efficiency Ratio Reported results Underlying results Reported EPS Underlying EPS $2,284 $2,206 $5.34 $5.16 2021 $1,033 $950 $2.41 $2.22 2020 8% 7% 16% 15% 2020 2021 58% 56% 61% 60% 2020 2021 Reported results Underlying results Reported results Underlying results * Results are presented on an Underlying basis, as applicable. See Appendix
Board Nominees
election for the first time, with their election subject to the completion of our acquisition of Investors Bancorp, Inc. Additional information about the director nominees can be found beginning on page
Board Skills and Demographics We believe that
Van Saun Alexander Cumming Cummings Hankowsky * Committee Chair
Gender Diversity Racial Diversity 4 31% Women 9 2 15% Racially Diverse 11 Tenure Age Years of Service 0-5 5-10 11-15 15+ 65 Age Range: Average Age of Directors 54-73
Corporate Governance Highlights
Our Restated Certificate of Incorporation, or Charter, and Amended and Restated Bylaws provide that the Board shall consist of between five and twenty-five directors, excluding any directors elected by holders of preferred stock pursuant to provisions applicable only in the case of The Board has nominated Our Bylaws provide for the election of directors by a majority of the votes cast in an uncontested election. This means that the Our Bylaws also provide that directors may be removed, with or without cause, by an affirmative vote of shares representing a majority of the outstanding shares then entitled to vote at an election of directors. Any vacancy occurring on our Board and any newly created directorship may be filled only by a vote of a majority of the remaining directors in office. Biographical information about the nominees for director, including information about their qualifications to serve as a director, is set forth below.
The following sections provide an overview of our board governance structure and processes including how we select directors and consider their independence as well as key aspects of our Board operations and oversight, Corporate Governance Guidelines Our Board has adopted Corporate Governance Guidelines which outline the Board’s expectations as to how the Board, its various committees, individual directors and management should perform their functions. The Corporate Governance Guidelines are reviewed annually and address:
Our Corporate Governance Guidelines are available on the corporate governance section of our website at
Our Board has also adopted a Code of Business Conduct and Ethics (the “Code”), which sets forth key guiding principles concerning ethical conduct and is applicable to all of our directors, officers and employees. The Code addresses, among other things, conflicts of interest, protection of confidential information and compliance with laws, rules, and regulations, and describes the process by which any concerns about violations should be reported. The Code is available on the corporate governance section of our website at Meetings of the Board Our Board
an unavoidable scheduling conflict. Our Board utilizes the Securities and Exchange Commission (“SEC”) and New York Stock Exchange (“NYSE”) criteria to determine our director independence. Under the NYSE rules, the Board also broadly considers all other relevant facts and circumstances that bear on the materiality of each director’s relationship with the Company, including the potential for conflicts of To assist the Board in its determination of director independence, the Nominating and Corporate Governance Committee annually evaluates each prospective and incumbent director using the foregoing standards and We
Our Chief Executive Officer, Mr. Van Saun, serves as Chairman of the Board, while an independent director, Mr. Subramaniam, serves as Lead Director. The Lead Director is designated by the Board, based on the recommendation of the Nominating and Corporate Governance Committee. The Board has determined that a combined Chairman and Chief Executive Officer position, with an independent Lead Director, is the most appropriate Board leadership structure for the Company. Having a combined Chairman and Chief Executive Officer: Ø provides efficient and effective governance and leadership to the Company; ➣ ensures the Board is apprised of current risks and issues that may impact the Company in a timely manner; and ➣ presents a single point of leadership to all Company stakeholders. The Board reviews its leadership structure periodically and in doing so considers the composition of the Board, the needs of the Company and its stockholders, peer company practices, and other factors, retaining the flexibility to allocate the responsibilities of the offices of the Chairman and Chief Executive Officer in any manner that serves the best interests of the Company. Executive Sessions of ourNon-Employee Directors The Company’snon-employee directors, who are all independent, participate in regularly scheduled executive sessions in which management does not participate. In addition, each of the Board committees, which are comprised solely of independent directors, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2022 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT - CORPORATE GOVERNANCE MATTERS | |||
Board Selection, Nomination and Refreshment
Our Board has delegated responsibility for the selection and recommendation of director nominees to the Nominating and Corporate Governance Committee. Upon the Nominating and Corporate Governance Committee’s recommendation, a slate of directors is nominated by the Board and submitted to a stockholder vote annually. The Nominating and Corporate Governance Committee also evaluates and recommends candidates for the Board as vacancies or newly created positions occur. New candidates may be identified to serve on the Board through recommendations from independent directors or members of management, search firms or other sources, and stockholders. Evaluations of prospective candidates typically include a review of the candidate’s background and qualifications, interviews with the Committee as a whole, one or more members of the Committee, or one or more other Board members, and discussions within the Committee and the full Board.
The most qualified candidates are sought for all open board positions based on required criteria. The Board values diverse perspectives and qualities and the Committee considers self-identified diverse characteristics of directors and nominees in addition to each person’s background and experience when recommending candidates for election to the Board, re-nominating current directors and reviewing Board and committee composition. In order to support the Board’s desire for diverse representation, any firms engaged in the director search process are requested to include diverse individuals in its list of potential candidates.
Director Nominee Selection Process Assess Composition Committee assesses compostion considering director skills and experience, and diversity of prespectives and chararcteristics such as age, gender and race to determine a prospective director candidate profile. Source Candidates Committee works with a third-party search firm, directors and other stakeholders to identify candidates with the desired profile and who meet the required criteria for Board membership. Evaluate Candidates Slate of candidates is presented to the Committee for evaluation. Evaluations are based on the required criteria, each candidate's background qualifications, independence, performance and the overall composition and diversity of the Board. Recommend Committee members meet with the shortlisted candidates before making a recommendation to the Board that it nominate the candidate(s) it determines meet the required criteria and who will enhance the expertise, experience, composition and overall strength of the Board. Review The Committee evaluates each director annually. In doing so, it considers their individual performance, skills, expertise, experience, diverse characteristics, as well as the composition of the Board as a whole. Required Criteria Demonstrated leadership Relevant background, experience and key skills Financially literate Risk management experience and other business experience and acumen Exhibit independent thought and judgement Time availability and commitment
Any stockholder who wishes to recommend a prospective candidate for the board of directors for consideration by the Nominating and Corporate Governance Committee may do so by submitting the name and qualifications of the prospective candidate in writing to the following address: Corporate Secretary, 600 Washington Boulevard, Stamford, Connecticut 06901. Stockholders must propose nominees for consideration by the Nominating and Corporate Governance Committee in accordance with the procedures and other requirements set forth in our Bylaws. See “Information for Stockholders—2023 Annual Meeting and Stockholder Proposals.”
2022 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT - CORPORATE GOVERNANCE MATTERS | |||
When reviewing the Board and committee composition during succession planning and in the recruitment and evaluation of directors, the Nominating and Corporate Governance Committee considers the skills and experience represented by the Board as a whole. The key skills and number of the nominees are outlined below.
Executive Leadership Experience operating in an executive leadership position demonstrates the abilities required to understand and direct business operations, analyze risk, manage human capital, oversee implementation of organizational change and deliver strategic plans. 13/13 Financial Services Industry Understanding the products and services we offer, our competitive environment and the regulatory framework in which we operate gives directors the ability to challenge and guide management, effectively overseeing the operation of our business and implementation of our strategic plan. 13/13 Financial Reporting/Audit/Capital Planning An understanding of financial reporting structures and internal controls to ensure accuracy and transparency in reporting, coupled with the ability to understand capital market transactions and strategic capital plans allows for robust challenge and oversight. 13/13 Risk Management Risk is inherent in the operation of our business. Having directors with experience and expertise in risk management allows the Board to provide challenge and guidance in its independent oversight of the design and implementation of the Company's risk management framework. 13/13 Compliance/Regulatory Operating in a heavily regulated industry, we value directors with legal and/or regulatory expertise as it assists the Board's understanding of the applicable requirements and how they pertain to the Company. 13/13 Technology/Information Security/Cybersecurity Technology is critical to all aspects of our business operations from delivery of our products and services to our customers, to making investments, to maximizing our human capital, and to delivering key strategic initiatives. As a financial services company with reliance on technology, we are exposed to information and cybersecurity risk on an ongoing basis. We value directors with technology, information security and/or cybersecurity expertise. 11/13 Mergers and Acquisitions Experience of mergers and acquisitions is valuable in making strategic decisions and executing them effectively. Having directors with this experience assists in the strong execution of mergers and acquisitions. 10/13 Human Capital Management Directors with an understanding of the impact of a company's employees and culture on productivity as well as experience in talent management and mobilizing strategic organizational change provide valuable insight to the Board and management. 13/13 Environmental, Social, and Governance We demonstrate our commitment to the communities in which we do business by serving our customers well, managing our operations responsibly, building a diverse culture and providing a great place for colleagues to work. Experience in ESG matters helps us deliver on the different dimensions of our corporate responsibility strategy.12/13
Mr. Cummings and Ms. Siekerka were identified as Board candidates in connection with the acquisition of Investors Bancorp, Inc. and will be appointed to the Board in accordance with the Merger Agreement. Before making its recommendation to the Board that it nominate Mr. Cummings and Ms. Siekerka for election to the Board by stockholders at the Annual Meeting, the Nominating and Corporate Governance Committee considered Mr. Cummings’ and Ms. Siekerka’s skills, experience, independence and diverse characteristics as well as that of the Board as a whole.
2022 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT - CORPORATE GOVERNANCE MATTERS | |||
Board, Committee and Director Evaluations
The Board, led by the Nominating and Corporate Governance Committee, conducts an annual self-evaluation to determine whether it and its committees are functioning effectively. Under each committee’s charter, the committee evaluates and assesses its performance, skills and resources required to meet its obligations under its charter at least annually. In addition, all directors complete a self-evaluation. At least every three years, an independent third party is used to conduct the Board and committee evaluations.
Results of the evaluations are then presented to the Board and its committees and used to determine actions designed to enhance the operations of the Board and its committees going forward. Periodically, the Board will also complete peer evaluations. At least every three years, an independent third-party is used to conduct the Board, committee, director and peer evaluations.
1 REVIEW OF PROCESS The resultsNominating and Corporate Governance Committee reviews the self-assessment process annually and approves the form of all peer evaluationsevaluation. 2 SELF-ASSESSMENT QUESTIONNAIRE The questionnaire is distributed by an external facilitator to the Board, each of the committees and individual directors for their feedback. 3 INDIVIDUAL DISCUSSIONS External facilitator holds interview with each director to expand on the questionnaires. 4 RESULTS Results are anonymously compiled by the external facilitator and reviewed by the Chairman, Lead Director and Chair of the Nominating and Corporate Governance Committee Chair before being presented to the Board and each director receivesof its committees. 5 ACTIONS Action plans are prepared and used to inform agenda planning and are used to enhance current governance practices and Board operations. 6 MONITORING The Nominating and Corporate Governance Committee monitors the execution of the action plans throughout the year. BOARD AND COMMITTEES EVALUATIONS (ANNUAL) Subjects covered in the evaluation: Strategy Culture Roles and responsibilities Relationship with Management Membership and structure DIRECTOR SELF EVALUATIONS (ANNUAL) Subjects covered in the evaluation: Performance Contributions Skills PEER EVALUATIONS (PERIODICALLY) Subjects covered in the evaluation: Director participation and engagement Director judgement Board dynamics Overall performance ACTIONS TAKEN Results of the evaluations are used to determine actions designed to augment the operations of the Board and its committees. Examples of actions taken as a copyresult of their individual report.conducting the evaluations include enhancing board materials, streamlining agendas to allow for longer discussion time, and updating the board's education and training program.
| CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT - CORPORATE GOVERNANCE MATTERS | |||
Annual Evaluation Process
Each of our Board members participates in an annual training and continuing education program which includes both full board training and board committee training. AnManagement incorporates director input to develop an annual schedule is developed by management, with input from the directors, whichthat covers a broad range of topics to enhance and strengthen the skills, knowledge and competencies of directors, both individually and collectively. Topics covered during 20192021 included cybersecurity, regulatory developments, industry trends, consumerdiversity, equity and inclusion, ESG, technology, compliance and anti-money laundering. The program encompasses presentations from internal and external speakers as well as site visits to key locations and regular meetings with management. In addition, directors are encouraged to avail themselves of educational programs offered through recognized independent providers.
Board’s Role Another key element of Board education is the mentoring program in Strategy
Theplace where Board is responsible for guiding and ultimately approving the strategic directionmembers serve as mentors to certain members of the Companyexecutive team, and overseeing executionalso meet in small group sessions with members of senior management below the executive level which assists in deepening the Board’s understanding of the Company’s strategic plan. Every year the Board holds an offsite meeting dedicated to reviewing the Company’s long-term strategy which includes detailed discussions with management, investors, securities analysts and industry experts. In addition, the Board assesses the Company’s strategic, competitive and financial performance at each of its meetings to ensure continued alignment with the long-term strategy.
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Board’s Role in Risk Oversight
The Board is responsible for oversight of the Company’s internal controls and risk management framework. This oversight generally requires evaluating management’s systems of internal control, financial reporting and public disclosure, reviewing the accuracy and completeness of financial results, reviewing and approving the Company’s enterprise-wide risk management governance framework and ensuring that risks to the Company are properly managed.
While the Board has delegated certain risk oversight duties to the Risk Committee, and with respect to financial controls, the Audit Committee, each of the Board’s committees have risk oversight responsibilities. The Board receives independent reports from each committee at its meetings.
Under the oversight of the Risk Committee, the Company operates an enterprise-wide risk management governance framework which sets standards and provides guidance for the identification, assessment, monitoring and control of material risks that affect or have the potential to affect the value for our stockholders, customers and colleagues and the safety and soundness of the Company. The framework sets forth the risk governance model that operates within the Company and outlines the responsibilities of the Board and its committees, executive officers, colleagues and oversight committees with respect to risk governance, supervision and internal control systems.
BOARD OF DIRECTORS RISK COMMITTEE AUDIT COMMITTEE COMPENSATION & HR COMMITTEE Oversees design, implementation and operation of the enterprise-wide risk management governance framework, which sets standards for the identification, assessment, monitoring and control of material risks and related governance. Reviews and, as it deems appropriate, recommends to the Board the design and implementation of the Companys risk strategy and policy, risk appetite framework and specific risk appetites and limits. Serves as primary point of contact between the Board and management committees that have responsibility for risk management. Oversees evaluation of systems of internal control, financial reporting and public disclosure. Reviews the accuracy and completeness of financial results. Oversees our Conduct Office, which monitors colleague behavior in relation to our Code of Business Conduct and Ethics, Sales Practices and other key policy considerations. Oversees the Companys compensation policies and practices as well as talent management and succession planning for executives and the organization overall. Oversees governance practices, independence and effectiveness of the Board. Oversees the Companys commitment to environmental, social and governance matters. Both the Risk and Audit Committees have oversight of the management of our cybersecurity risk and receive regular reporting on cybersecurity and as cyber threats continue to evolve.
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Both the Risk and Audit Committees have oversight of the management of our cybersecurity risk. The Audit Committee is responsible for overseeing our cybersecurity program under its risk oversight responsibilities as it relates to financial controls. The Risk Committee is responsible for oversight of the management of cybersecurity risk consistent with the Company’s enterprise-wide risk management governance framework.
We remain committed to building and maintaining a strong risk management culture throughout the Company and that culture is foundational to delivering the best possible banking experience for our customers and providing a great workplace for our colleagues.business.
Our Board has six standing committees. Four of these committees (Audit, Compensation and HR, Nominating and Corporate Governance and Risk) meet on a regular basis. The Executive Committee meets as needed and is composed of our Chairman and Chief Executive Officer, Mr. Van Saun, our Lead Director and Chair of our Nominating and Corporate Governance Committee, Mr. Subramaniam, and Audit and Compensation and HR Committee member, Mr. Hankowsky. The Executive Committee may act on behalf of the Board and reports its actions to the full Board. The Equity Committee is composed of our Chairman and Chief Executive Officer and acts as needed to make equity grants (subject to certain limitations determined by the Compensation and HR Committee) between annual grant cycles and reports its actions to the Compensation and HR Committee. See “Compensation Matters—Compensation Discussion and Analysis—Section 5.4. Governance Policies and Practices—Process for Approval of Equity Grants.” In carrying out their duties, each committee of the Board is authorized to select, retain, terminate and approve fees and other retention terms of independent legal or other advisors as it deems appropriate without seeking approval of management or the full Board. The following table shows the current members of each of the four primary standing committees and the number of meetings held during fiscal 2019.2021.
DIRECTOR
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Mark Casady |
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Lee Alexander | Member |
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Christine M. Cumming |
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William P. Hankowsky |  | |
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Howard W. Hanna III | |
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Leo I. Higdon | |  |
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Edward J. Kelly III |
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Charles J. Koch | |
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Robert G. Leary |
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Terrance J. Lillis | |
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Shivan Subramaniam |
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Christopher J. Swift |
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Wendy A. Watson |  | |
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Marita Zuraitis |
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Number of meetings | 12 | 7 | 4 | 6 | 12 | 9 | 4 | 6 | |||||||||||||||||
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| CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT - CORPORATE GOVERNANCE MATTERS | |||
| Audit Committee | ||||||
Members: Wendy A. Watson (Chair) Lee Alexander William P. Hankowsky
Leo I. Higdon Charles J. Koch Terrance J. Lillis
Meetings held in | The Audit Committee reviews and, as it deems appropriate, recommends to the Board our internal accounting and financial controls and the accounting principles and auditing practices and procedures to be employed in preparation and review of our financial statements. The Audit Committee is also directly responsible for the appointment, compensation, retention and evaluation of the qualifications, independence and performance of our independent public auditors.
Each member of the Audit Committee meets the independence requirements of the NYSE and is financially literate, and each member of the Audit Committee is an independent director under Rule10A-3 under the Exchange Act. In addition,
The Audit Committee charter is available on the corporate governance section of our website at
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Compensation & HR Committee Members: Leo I. Higdon (Chair) William P. Hankowsky Edward J. Kelly III Shivan Subramaniam Wendy A. Watson Meetings held in 2021: 9 | ||||||
| The Compensation and HR Committee establishes, implements and monitors our executive compensation plans and programs and determines compensation for our CEO and other executives. The Compensation and HR Committee also oversees our material compensation and benefit plans, makes recommendations to the Board onnon-employee director compensation, and reviews talent management and succession plans as well as diversity, equity and inclusion
Each member of the Compensation and HR Committee meets the independence requirements of the NYSE and Rule10C-1 of the Exchange Act and is a“non-employee director” under Exchange Act Rule16b-3.
The Compensation and HR Committee charter is available on the corporate governance section of our website at
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Nominating &
Members: Shivan Subramaniam (Chair)
Edward J. Kelly III Marita Zuraitis
Meetings held in
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| The Nominating and Corporate Governance Committee reviews and, as it deems appropriate, recommends to the Board policies and procedures relating to director and board committee nominations and corporate
Each member of the Nominating and Corporate Governance Committee meets the independence requirements of the NYSE.
The Nominating and Corporate Governance Committee charter is available on the corporate governance section of our website at about-us/investor-relations/corporate-governance.aspx.
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| Risk Committee | ||||||
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Members: Charles J. Koch (Chair)
Christine M. Cumming
Christopher J. Swift Wendy A. Watson Marita Zuraitis
Meetings held in | The Risk Committee reviews and, as it deems appropriate, recommends to the Board the design and implementation of our risk strategy and policy, risk appetite framework and specific risk appetites and limits. The Risk Committee also oversees our enterprise risk management governance framework and reviews the due diligence of any proposed strategic transaction. In addition, the Risk Committee oversees the Chief Risk Officer and the internal risk management function of the Company.
Each member of the Risk Committee meets the independence requirements of the NYSE. Mr. Koch qualifies as an expert, as required by federal banking regulations, having the experience in identifying, assessing and managing large, complex financial firms’ risk exposures relevant to the Company’s particular risks and commensurate with the Company’s structure, risk profile, complexity, activities and size. As required by the Risk Committee charter, the chair of the committee, Mr. Koch, is also anon-executive director who meets the criteria for independence specified by the Federal Reserve Board’s Enhanced Prudential Standards (12 CFR 252.33(a)(4)(ii)).
The Risk Committee charter is available on the corporate governance section of our website at
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Compensation and HR Committee Interlocks and Insider ParticipationBoard’s Role in Risk Oversight
NoneThe Board is responsible for oversight of the membersCompany’s internal controls and risk management framework. This oversight includes evaluation of management’s systems of internal control, financial reporting and public disclosure, confirming the Compensationaccuracy and HR Committee who served during 2019 are current or former officers or employeescompleteness of financial results, reviewing and approving the Company’s Enterprise-wide Risk Management Governance Framework (the “ERMG Framework”), and ensuring that risks to the Company or anyare properly managed. A key element of our subsidiaries. No Company executive officer served onCitizens’ ERMG Framework is building and maintaining a strong risk management culture throughout the compensation committee of another entity that employed an executive officer who also served on our Board. No Company executive officer served as a director of an entity that employed an executive officer who also served on our CompensationCompany.
The Board has delegated certain risk oversight duties to the Risk Committee, and HR Committee.
Talent Management and Succession Planning
At least annually, the Compensation and HR Committee reviews the Company’s talent management and succession plans, including with respect to financial controls, the Chief Executive OfficerAudit Committee, but each of the Board’s committees has risk oversight responsibilities and other executive positions. This includes the reviewBoard receives independent reports from each of its key committees at its meetings.
The ERMG Framework, overseen by the Risk Committee, encompasses the policies, programs, and evaluationprocedures which set the standards for the identification, assessment, monitoring, and control of development plans for potential successorsmaterial risks that could affect stockholder value, customers, colleagues or the safety and soundness of the Company. Foundational to the Chief Executive Officer roleERMG Framework is the Risk Appetite Framework which governs the Company’s approach to risk and other key positions.serves to better inform the Company’s risk-taking strategy in its pursuit of strategic and financial goals. The Company’s Risk Appetite is embedded into key-decision making processes.
Developing talent at all levelsThe ERMG Framework is implemented through a priorityThree Lines of Defense model which incorporates (1) front line units responsible for the Company. We have two programs focused on providing the Board with additional opportunities to interact with senioridentifying, assessing, controlling, monitoring and reporting risk; (2) independent risk management which gives management unique access toprovides independent challenge and oversight of our overall risk profile; and (3) internal audit and credit review functions which evaluate the Boarddesign and also facilitates a deeper understandingeffectiveness of the organization by the Board. This includes a mentoring program that pairs executives with Board membersCompany’s risk framework. The model is designed to ensure effective management, control and informal feedback sessions where directors meet with groupsoversight of senior management below the executive level. The Company also offers various talent development programs throughout the organization focused on building leadershipall risks including Credit Risk, Interest Rate Risk, Liquidity Risk, Market Risk, Operational Risk, Security, Fraud, and management skills, career development,Financial Crimes Risk, Technology Risk, Compliance Risk, Strategic Risk, and other areas.Reputation Risk.
| CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT - CORPORATE GOVERNANCE MATTERS | |||
OurBOARD OF DIRECTORS Risk Committee Audit Committee Compensation and HR Committee Nominating and Corporate Governance Committee Oversees design, implementation and operation of the ERMG Framework, which sets standards for the identification, assessment, monitoring and control of material risks and related governance. Reviews and, as it deems appropriate, recommends to the Board the design and implementation of the Companys risk strategy and policy, risk appetite framework and specific risk appetites and limits. Oversees evaluation of systems of internal control, financial reporting, and public disclosure. Reviews the accuracy and completeness of financial results. Oversees our Conduct Office, which monitors colleague behavior in relation to our Code of Business Conduct and Ethics, sales practices, and other key policy considerations. Evaluates executive officers are designated by,performance, including risk performance, and serveapproves compensation Establishes and Monitors compensation programs and performs an annual risk review of compensation plans. Reviews director compensation, with input from its independent consultant. Oversees talent management and succession planning at the discretionexecutive level and for the organization overall, as well as diversity, equity and inclusion initiatives. Oversees governancepractices, independence and effectiveness of the Board. Oversees the Companys commitment to environmental, social, and governance matters. Oversees the development and implementation of the board annual training and continuing education program. Both the Risk and Audit Committees oversee the management of our cybersecurity risk. Regular reporting on cybersecurity and cyber threats as they continue to evolve is provided to both committees and the BoardBOARD OF DIRECTORS Risk Committee Audit Committee Compensation and HR Committee Nominating and Corporate Governance Committee Oversees design, implementation and operation of the ERMG Framework, which sets standards for the identification, assessment, monitoring and control of material risks and related governance. Reviews and, as it deems appropriate, recommends to the Board the design and implementation of the Companys risk strategy and policy, risk appetite framework and specific risk appetites and limits. Oversees evaluation of systems of internal control, financial reporting, and public disclosure. Reviews the accuracy and completeness of financial results. Oversees our Conduct Office, which monitors colleague behavior in relation to our Code of Business Conduct and Ethics, sales practices, and other key policy considerations. Evaluates executive performance, including risk performance, and approves compensation Establishes and Monitors compensation programs and performs an annual risk review of compensation plans. Reviews director compensation, with input from its independent consultant. Oversees talent management and succession planning at the executive level and for the organization overall, as well as diversity, equity and inclusion initiatives. Oversees governance practices, independence and effectiveness of the Board. Oversees the Companys commitment to environmental, social, and governance matters. Oversees the development and implementation of the board of directors. There are no family relationships among anyannual training and continuing education program. Both the Risk and Audit Committees oversee the management of our directors or executive officers. Our executive officerscybersecurity risk. Regular reporting on cybersecurity and cyber threats as they continue to evolve is provided to both committees and the Board
Cybersecurity Risk Oversight
As a financial institution our operations rely on the secure processing, transmission and storage of confidential information in our network. In addition, our customers use personal computers, smartphones, tablets, and other mobile devices to access our products and services. As such, we are as follows:
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* Executive officer appointment effective until January 27, 2020
** Executive officer appointment effective assubject to a variety of January 27, 2020cybersecurity risks.
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CORPORATE RESPONSIBILITYSTOCKHOLDER ENGAGEMENT
In 2019, we published our second Corporate Responsibility Report which provides an overview of how we are putting our commitments to work across six dimensions:
Throughout the year we interact and communicate with our stockholders in a number of forums, including quarterly earnings presentations, investor conferences, press releases and SEC filings, stockholder dialogue, our proxy statement and the annual meeting of stockholders. On an annual basis, we proactively reach out to our largest stockholders to solicit feedback which we use to enhance our current practices. We also hold discussions with additional stockholders at their request. Feedback received is shared with the Board which discusses As we continue to navigate through these exceptional times it was important to us to maintain an open dialogue with investors and listen to their perspectives. During 2021, we conducted two outreach programs. In the Spring we reached out to 28 of our largest stockholders holding over 62 percent of our outstanding stock, and in the Fall we reached out to 25 of our largest stockholders holding over 65 percent of our outstanding stock. During the course of our engagements we ultimately met with multiple stockholders representing approximately 38 percent of our outstanding stock. These discussions focused on our progress on ESG matters, climate actions and reporting, human capital management, executive compensation, corporate governance, and board composition. Stockholder feedback, together with ongoing reviews of market and peer practice have resulted in several enhancements to our governance and compensation practices and related disclosure in recent years. Stockholders we have spoken to have expressed their support for the enhancements we have made to board diversity and disclosures, our executive compensation program, and stockholder rights, and have recognized the significant progress we have made in oversight and management of ESG matters and related reporting. |
STOCKHOLDER OUTREACH WHAT WE DISCUSSED & WHAT WE DID Stockholder rights Requesting stockholder approval to eliminate super majority voting requirementsDiversity disclosures Enhanced proxy disclosers to identify diversity characteristics of individual director and | |
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The Board is committed to overseeing our corporate responsibility efforts. While environmental, social and governance matters fall under the purview of each of the Board committees as it relates to their individual oversight responsibilities, in 2020, the Nominating and Corporate Governance Committee undertook formal responsibility for providing oversight of the Company’s commitment to environmental, social and governance (“ESG”) matters, including providing overall strategic direction on corporate responsibility and reporting.
During 2020, we are further enhancing our corporate responsibility efforts and have commenced a formal ESG materiality assessment to identify the issues that represent the most significant opportunities and risks for the Company. In conjunction with the materiality assessment, under the oversight of the Nominating and Corporate Governance Committee we expect to strengthen our ESG policies and tracking systems to ensure effective reporting on an ongoing basis and, in 2021, plan to provide standard-aligned reporting on our progress against priority ESG issues in our Corporate Responsibility Report.
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Our mission is to help our customers, colleagues and communities reach their potential. A strong culture is key to our long-term success and central to our strategy and we are focused on building a culture where colleagues live our values every day.
An engaged diverse workforce and inclusive culture are essential for growth and innovation and to most effectively meet the needs of our customers.
We are committed to diversity and inclusion (“D&I”) at all levels of our organization and have built a strong D&I program which is overseen by the Compensation and HR Committee. The program includes six business resource groups (“BRGs”) with approximately 2,800 members that are active and influential in shaping Citizens’ culture and D&I programming. In 2018, we launched a diverse slate commitment to interview at least two diverse candidates for senior management roles and have developed strategic partnerships with various community-based and diversity-focused organizations aiming to serve those communities as well as to promote our jobs to diverse candidates.
We want Citizens to be a great place to work and build a career and offer a strong career development program featuring various programs and tools to assist colleagues in building critical skills and growing their careers within our organization. These tools include a centralized career development resource, a recently launched virtual career coach which helps colleagues build personalized recommendations about career development and learning, as well as a myriad of leadership and skills training programs.
Our environmental policy governs how we measure and track our environmental performance. We report annually through our CDP response and make it publicly available. We work with various climate change leaders to develop innovative ways to mitigate our environmental impact. In 2018, we opened our new corporate campus in Johnston, Rhode Island which is the central hub for more than 3,000 colleagues and includes many environmentally sustainable features. Additionally, by focusing on the reduction of our operational footprint through smaller redesigned branch concepts, our business operations continue to align with customer trends such as increased mobile banking and a desire for companies to have a smaller physical environmental footprint. Environmental risk is managed through our enterprise risk management governance framework which is overseen by the Risk Committee.
We believe that good citizens help each other and that when communities prosper, we all thrive. Citizens Helping Citizens is our community engagement platform through which we focus our corporate giving on specific areas such as fighting hunger, teaching money management and strengthening communities by partnering with organizations that are working to revitalize neighborhoods, foster economic development and create a well-trained and sustainable workforce.
Throughout the year we interact and communicate with ourinvite any stockholders in a number of forums, including quarterly earnings presentations, investor conferences, press releases and SEC filings, stockholder dialogue, our annual report, proxy statement and the annual meeting of stockholders.
On an annual basis, we proactively reach out to our largest stockholders to solicit feedback on corporate governance and executive compensation which we use to enhance our current practices. We also hold discussions with additional stockholders at their request. Feedback received is shared with the Board which discussesfollow-up actions as appropriate. As a result of stockholder feedback as well as our ongoing reviews of
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market and peer practice, we have made several changes to our governance and compensation practices and related disclosure, as illustrated below.
What We Discussed Implementation of Proxy Access Provision of stockholder rights to call a special meeting Director skills disclosures Oversight of environmental, social and governance matters Environmental sustainability practices and reporting Executive compensation design Compensation disclosures Pay equity Management of human capital What We Did Implemented Proxy Access Proposed to provide stockholders the right to call a special meeting Enhanced disclosures to include an individual director skills matrix Established formal Board oversight of environmental, social and governance matters Introduced a relative metric for our PSU awards Enchanced disclosure of PSU awards and the process for making executive compensation decisions Made a formal commitment to pay equity
Stockholders who wish to contact our Board mayto send written correspondence, in care of the Corporate Secretary, to Citizens Financial Group, Inc., 600 Washington Boulevard, Stamford, Connecticut 06901. Communications may be addressed to the Lead Director or any alternate director, marked as confidential or otherwise. Communications which are addressed to the Board, an individual director or group of directors will be processed by the Office of the Corporate Secretary. Communications received that discuss business or other matters relevant to the activities of our Board, as determined by the Corporate Secretary, will be distributed to the addressees either in summary form or by delivering a copy of the communication. With respect to other correspondence received by the Company on behalf of one or more directors, the Board has requested that certain items, including the following, not be distributed to directors, because they generally fall into the purview of management, rather than the Board: junk mail and mass mailings, product and services complaints, product and services inquiries, resumes and other forms of job inquiries, solicitations for charitable donations, surveys, business solicitations and advertisements.
2022 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT - CORPORATE GOVERNANCE MATTERS | |||
Our executive officers are designated by, and serve at the discretion of, our Board. There are no family relationships among any of our directors or executive officers. Our executive officers are as follows:
 | Bruce Van Saun, Chairman and Chief Executive Officer Bruce Van Saun’s biography and related information may be found above under “Corporate Governance Matters—Proposal One - Election of Directors” |
 | Mary Ellen Baker, Executive Vice President and Head of Business Services Mary Ellen Baker, age 64, has responsibility for Information & Corporate Security, Process Reengineering Technology and Cybersecurity Risk as well as the Integration Management Office overseeing Citizens’ acquisition integrations. Ms. Baker joined the Company in August 2016 from PNC Financial Services Group, Inc. where she most recently held the title of Executive Vice President of Enterprise Services. She previously worked for Bank of America Corporation as Head of Enterprise Resiliency and Corporate Services and Head of Technology and Operations for the Consumer and Small Business Bank. Throughout her career, Ms. Baker |
has led numerous strategic projects in the areas of technology and operations, including supply chain, risk management, new technology implementation, and crisis response initiatives. Ms. Baker is a graduate of Western Michigan University. | ||||
 | Brendan Coughlin, Executive Vice President and Head of Consumer Banking Brendan Coughlin, age 42, was appointed to the role of Head of Consumer Banking at Citizens Bank with responsibility for both national and regional banking in January 2020. This includes the branch and call center distribution, business banking, mortgage banking, wealth management, product lines including checking, savings, debit and credit cards, auto finance, home equity, student and personal unsecured lending. Mr. Coughlin has been with Citizens for more than 15 years and has held numerous positions in Consumer Banking product management and consumer finance. He was named president of Consumer |
Lending in June 2015. Previously, he was the head of marketing for Consumer Finance. Prior to joining Citizens, Mr. Coughlin worked at Bank of America and FleetBoston Financial in a variety of business areas, including corporate strategy, mortgage product management and retail distribution /M&A. Mr. Coughlin serves on the board of directors of uAspire, a national nonprofit aimed at increasing access to higher education among inner-city youth and actively represents the bank on the CBA Education Funding Committee, the nation’s most influential financial services trade organization for student lending. Mr. Coughlin received his bachelor’s degree from Boston College in finance and marketing and an M.B.A. from Babson College. | ||||
2022 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT - CORPORATE GOVERNANCE MATTERS | |||
 | Malcolm Griggs, Executive Vice President, Chief Risk Officer and General Counsel* Malcolm Griggs, age 61,has been Executive Vice President and Chief Risk Officer since April 2016. Mr. Griggs joined the Company in December 2014 as Executive Vice President and Chief Credit Officer. He is responsible for all credit, market, regulatory, compliance and operational risk management for the Company. In March 2021, Mr. Griggs assumed the additional duties of General Counsel and Chief Legal Officer of the Company. Prior to joining Citizens, Mr. Griggs was head of business risk and controls for the U.S. Consumer and Commercial Banking business at Citigroup. Mr. Griggs has had a wide range of risk |
management responsibility over his banking career, including senior risk positions at Morgan Stanley Private Bank, Bank of America, Wachovia, and as the first Chief Risk Officer at Fifth Third Bank. He also served on the national Board of Directors of the Risk Management Association, including serving as Chairman. He currently serves as President of the Board of the Rhode Island Philharmonic Orchestra and Music School. Mr. Griggs received his undergraduate and law degrees from the University of North Carolina at Chapel Hill. | ||||
 | Beth Johnson, Executive Vice President and Chief Experience Officer Beth Johnson, age 50,was appointed to the role of Chief Experience Officer in January 2020. In this role, Ms. Johnson leads an organization focused on improving the customer experience by advancing the bank’s overall capabilities in analytics, digital, marketing and payments. She previously served as chief marketing officer and head of virtual channels, and was responsible for corporate-wide marketing activities and for advancing Consumer Banking growth and profitability by leading and aligning the business’ strategy, brand, customer experience and data analytics efforts. Prior to joining Citizens in |
2013 as head of Corporate Strategy, Ms. Johnson was a senior leader at Bain and Company. She served as a partner and leader of its customer strategy and marketing practice, specializing in financial services and regularly co- authored Bain’s annual Customer Loyalty in Banking study. Prior to that, Ms. Johnson also held roles at J.P. Morgan and Goldman Sachs, where she focused on fixed income and derivatives products for commercial banking clients as well as risk management. She earned a bachelor’s degree in economics and MMSS from Northwestern University and a M.B.A. from Stanford. | ||||
 | Susan LaMonica,Executive Vice President and Chief Human Resources Officer Susan LaMonica, age 60,has been Chief Human Resources Officer since 2011 and is responsible for developing and driving people strategies to support Citizens’ business plans. She has responsibility for organizational development and culture, leadership and talent development, learning, DE&I, compensation and benefits, and human resource operations. Ms. LaMonica is also responsible for corporate affairs including the Company’s corporate social responsibility and ESG activities. Prior to joining Citizens in 2011, Ms. LaMonica held senior leadership roles at J.P. Morgan Chase. She served as |
the head of human resources for the investment banking and markets division globally, and before that served as the head of human resources for the consumer and commercial banking division. She also served as global head of development for the bank, leading the firm’s efforts around talent, leadership, learning, diversity, culture and organizational change. During her tenure she played a key role for human resources in a number of bank mergers. Before moving into human resources, Ms. LaMonica began her career with Chase Manhattan Bank, holding a number of roles in operations, risk and retail banking. Ms. LaMonica earned a B.S. in finance from Boston College and an M.B.A. in finance from New York University. | ||||
* The Company announced on February 28, 2022, that Polly N. Klane will become our General Counsel and Chief Legal Officer effective April 4, 2022, with Malcolm Griggs continuing in his capacity as Chief Risk Officer and member of the Citizens Executive Committee.
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 | Donald H. McCree III, Vice Chairman and Head of Commercial Banking Donald H. McCree III, age 60,has been Vice Chairman of our Commercial Banking Division since August 2015. Prior to joining the Company, Mr. McCree served in a number of senior leadership positions over the course of 31 years at J.P. Morgan Chase & Co. and its predecessor companies. Most recently, Mr. McCree was Head of Corporate Banking and Chief Executive Officer of Global Treasury Services at J.P. Morgan, where he was responsible for providing relationship banking services to commercial clients as well as treasury and trade finance solutions to small businesses, multinational corporations, financial |
services firms and government entities worldwide. Prior to becoming Head of Corporate Banking, Mr. McCree’s roles at J.P. Morgan included Head of Global Credit Markets, North American Co-Head of Fixed Income and Head of Wholesale Risk Management. He also served as Head of Treasury and Corporate Development and was based in London for several years, where he served as European Co-Head of Investment Banking and Head of European and Asian Syndicated Finance. Mr. McCree received his B.A. from the University of Vermont. | ||||
 | C. Jack Read, Executive Vice President and Controller C. Jack Read, age 53,joined the Company in July 2018 as Executive Vice President and Controller, and assumed the position of Chief Accounting Officer in August 2018. Mr. Read’s responsibilities include oversight of SEC and Regulatory reporting, Corporate Tax, Finance Risk and Sarbanes Oxley. Mr. Read joined the Company from Mitsubishi UFJ Financial Group, Inc. (MUFG), where he served as Managing Director, Head of Operational Risk for the Americas from 2016 to 2018, Head of Financial Operations for the Americas from 2013 to 2015 and Corporate Tax Director from 2010 to 2012. Prior to joining MUFG, |
Mr. Read was a Managing Director in the Corporate Tax Department at J.P. Morgan Chase and at Washington Mutual, a predecessor entity. Mr. Read began his career in 1993 with KPMG becoming partner in the Tax Advisory division. Mr. Read holds a J.D. from Temple University Law School and a B.B.A. from the Isenberg School of Management at University of Massachusetts Amherst. | ||||
 | Michael Ruttledge, Executive Vice President and Chief Information Officer Michael Ruttledge, age 58, is Chief Information Officer and Head of Technology Services for Citizens Financial Group. He oversees all aspects of the bank’s technology environment, from customer- and client-facing applications to the people, processes and infrastructure supporting Citizens’ day-to-day business operations. Mr. Ruttledge spearheaded our Next Generation Technology transformation to modernize the bank and deliver personalized, digital solutions for customers. He has delivered a major up-skilling initiative and strong culture of learning through immersive Engineering and Architecture |
Academies, digital credentialing and building of critical skills for the future such as AI, Blockchain, Modern API’s and Cloud. Before joining Citizens in 2019, he previously held the position of Chief Information Officer of American Express Co. He has more than 20 years of experience in infrastructure and engineering roles within the financial services industry including payments, merchant services, customer service, risk, fraud, banking and finance. During his career he has maintained a focus on developing the vision, strategy and innovative culture to execute new digital capabilities, big data, payments, and next generation analytics platforms that advance business strategies. He received a graduate degree in Information Systems from the University of Brighton in the United Kingdom. | ||||
2022 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT - CORPORATE GOVERNANCE MATTERS | |||
 | John F. Woods, Vice Chairman and Chief Financial Officer John F. Woods, age 57, joined the Company in February 2017. He assumed the position of Chief Financial Officer in March 2017 and was appointed Vice Chairman in February 2019. Mr. Woods has responsibility for our Financial Planning, Controller, Investor Relations, Strategy and Corporate Development, Treasury, business line finance and Property and Procurement groups. Mr. Woods joined the Company from Mitsubishi UFJ Financial Group, Inc. (MUFG), where he served as Chief Financial Officer of MUFG Americas, which operates MUFG Union Bank, since 2013. He previously served as Vice Chairman and Chief Financial Officer for Union Bank since 2009. Prior to that, Mr. Woods held business unit Chief Financial |
Officer positions at J.P. Morgan Chase and other large financial institutions. Mr. Woods began his financial career in 1986 with Arthur Andersen in Washington, D.C., ending as a partner in the financial and risk consulting group. Mr. Woods serves on the board of Prove Identity Inc. (since December 2021). He holds a Bachelor of Science degree in Commerce from the University of Virginia at Charlottesville. | ||||
Policies and Procedures for Related Person Transactions
We have in placeThe Board has adopted a written policy governing transactions with related person transaction policy pursuant to whichpersons. Under the Related Person Transaction Policy, our executive officers, directors, and significant stockholders, including their immediate family members, and significant stockholders (each a “Related Person”), are not permitted to enter into a related person transaction with the Company without the consent ofapproval from our Nominating and Corporate Governance Committee. Subject to certain transactionspre-approved by the Nominating and Corporate Governance Committee inIn accordance with the policy, any request for us to enter into a transaction with an executive officer, director, significant stockholder or any of such persons’ immediate family members, in which the amount involved exceeds $120,000, and in which the related person has a direct or indirect material interest is required to be presented to our Nominating and Corporate Governance Committee for review, consideration and approval. All of our directors, director nominees, executive officers and significant stockholders are required to report to our
Under the policy, the Nominating and Corporate Governance Committee has pre-approved transactions which do not pose a risk of creating conflicts of interest because they arise in the ordinary course of business, and the interests of the Related Person are not material even if the amount involved exceeds $120,000. Pre-approved transactions include those that do not require disclosure under Item 404(a) of Regulation S-K; transactions that are subject to other approval processes such as employment and compensation arrangements of, or lending to, executive officers and directors; and ordinary course banking, brokerage, investment, and financial services relationships, as well as other ordinary course of business relationships and transactions with any such transaction. beneficial owner of between 5 percent and 20 percent of the Company’s voting securities that is not a natural person, and is a Related Person solely as a result of stock ownership, provided they are on non-preferential terms and the value does not exceed 1 percent of the consolidated gross revenues in a fiscal year of either the Company or the beneficial owner.
In reviewing theapproving or rejecting a proposed transaction, our Nominating and Corporate Governance Committee will take into account, among other factors it deems appropriate, (i) the commercial reasonableness of the terms,
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(ii) the benefit or perceived benefit, or lack thereof, to the Company, (iii) opportunity costs of alternate transactions, (iv) the materiality and character of the related person’s direct or indirect interest, and (v) the actual or perceived conflict of interest of the related person.
Transactions with Executive Officers and DirectorsRelated Persons
We providemaintain ordinary course banking relationships with some of our directors and officers. This includes providing credit facilities from time to time to certain directors and executive officers and their immediate family members, as well as their affiliated companies. These credit facilities (i) complied with our Regulation O policies and procedures, (ii) were made in the ordinary course of business, (iii) were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable loans with persons not related to the lender, and (iv) did not involve more than a normal risk of collectability or did not present other features unfavorable to the Company.
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Under supplemental retirement arrangements relating to their prior service to Charter One, which we acquired in 2004, Mr. Charles Koch, a director, as well as his brother, Mr. John Koch, are entitled to receive monthly payments. Mr. Charles Koch and Mr. John Koch received approximately $877,500 and $744,900, respectively, under this arrangement during 2019.2021.
For transactions with BlackRock, Inc., The Vanguard Group, Inc., Capital International Investors or State Street Corporation, each beneficial owners of more than 5% of our outstanding common stock as of December 31, 2021, and therefore considered “Related Persons” under the policy, see “Security Ownership of Certain Beneficial Owners and Management—Beneficial Owners of more than Five Percent”.
Indemnification of Directors and Officers
We indemnify our directors and officers to the fullest extent permitted by Delaware law against liabilities that may arise by reason of their service to us, and to advance expenses incurred as a result of any proceeding against them as to which they could be indemnified. Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended, may be permitted to directors or executive officers, we have been informed that in the opinion of the SEC such indemnification is against public policy and is therefore unenforceable.
There is currently no pending material litigation or proceeding involving any of our directors and executive officers for which indemnification is sought or which is adverse to the Company.
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In 2021 we continued to make progress on our responsibility as a bank to serve our customers well, provide a great place to work and build a career, strengthen our communities, and operate responsibly and sustainably, backed by strong governance. While good corporate citizenship has always been core to our values and central to our Credo, we have implemented enhancements in all areas of ESG over the past five years to build upon our longstanding commitment to corporate responsibility.
2018 Published first corporate responsibility report First made CDP Climate Change Questionnaire response public 2019 Made public commitment to pay equity Implemented proxy access 2020 Established formal board and executive oversight of ESG Conducted ESG materiality assessment Committed $10 million in grants and charitable support for initiatives aimed at promoting social equity and $500 million in incremental financing and capital for small businesses, housing, and other development in predominantly minority communities Provided stockholders with the right to call a special meeting 2021 Published results of ESG materiality assessment Aligned reporting to GRI and SASB reporting frameworks Adopted and published GHG Scope 1 & 2 emissions reduction targets Launched Green Deposits Product Launched checking product feature Citizens Peace of MindTM 2022 During 2022 we expect to publish TCFD-aligned reporting Requested stockholder approval to amend our Certificate of Incorporation to eliminate supermajority voting
Our ESG Priorities and Strategy
During 2020, Citizens conducted its first materiality assessment to understand and prioritize the ESG topics that matter most to our stakeholders and our business. The objective of this assessment was to establish a strong foundation for our corporate responsibility strategy and disclosure efforts moving forward.
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Our materiality assessment reviewed a comprehensive set of ESG topics that intersect with our business. We interviewed our external stakeholders and completed a landscape review of industry trends and research to understand the importance of each ESG issue to our stakeholders. We also interviewed our executive team and surveyed internal subject matter experts to assess which topics have or may have the most significant impact on our business success. To ensure objectivity and a best practice approach, we engaged an independent firm to complete the assessment.
Through this process, we confirmed our priority issues—those deemed most critical to our business success and to the interests and expectations of our key stakeholder groups. We also confirmed five important issues which are increasing in visibility among stakeholders and which we aim to focus on in our corporate responsibility strategy.
Priority Issues | ||||
· Climate Change · Data Privacy and Protection · Diversity, Equity and Inclusion · Ethics and Compliance · Innovation and Technology · Talent Attraction, Development and Engagement | ||||
Important Issues | ||||
· Community Development · Corporate Citizenship · Fair and Responsible Banking · Financial Access and Inclusion · Responsible Investment | ||||
Data Privacy and Protection Diversity, Equity and Inclusion Ethics and Compliance Talent Attraction, Development, and Engagement Climate Change Responsible Investment Corporate Governance Community Development Innovation and Technology Financial Access and Inclusion Corporate Citizenship Colleague Wellness and Safety Fair and Responsible Banking Systematic Risk Management Environment Footprint ESG-Linked Products Public Policy Supply Chain LOW Stakeholder concern HIGH Priority issues Important issues LOW Impact on the company HIGH
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The Board is committed to overseeing our corporate responsibility efforts. Overall responsibility for providing oversight of the Company’s commitment to ESG matters, including providing overall strategic direction on corporate responsibility and reporting, sits with the Nominating and Corporate Governance Committee; however, each of the Board committees have oversight responsibilities for ESG matters which fall under their purview. Board oversight is supported by a management governance structure which includes an executive steering committee to guide our strategies, help integrate our efforts across lines of business, and monitor our progress, and an ESG working group which helps shape strategies and oversees measurement, monitoring and reporting.
CEO and ExCo Approves CR strategies and reporting. ESG Executive Steering Committee Guides CR strategies; champions business line integration of key initiatives (KPIs) and long-term goals. ESG Working Group Helps shape strategies; oversees CR measurement, monitoring and reporting. CEO and ExCo Approves corporate responsibility strategies and reporting. ESG Executive Steering Committee Guides corporate responsibility strategies; champions business line integration of key initiatives (KPIs) and long-term goals. ESG Working Group Helps shape strategies; oversees corporate responsibility measurement, monitoring and reporting.
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| ENVIRONMENTAL | ||
◾ Targets adopted to reduce our Scope 1 and 2 GHG emissions 30% by 2025 and 50% by 2035, based on our 2016 baseline. | ◾ Received a score of “B” on our 2021 CDP Climate Change Questionnaire response. | |
◾ Green Deposits product gives clients the opportunity to direct deposits to investments in sectors such as energy efficiency; renewable energy; green transport; sustainable food, agriculture, and forestry; waste management; and greenhouse gas reduction. | ◾ More than $429 million invested in renewable energy projects as of December 31, 2021 with ongoing exploration of opportunities to increase lending and investments in renewable energy and energy efficiency projects. | |
◾ Utilizing recommendations from the TCFD to inform and guide climate efforts and future disclosures. | ◾ Created new “Head of Sustainability” role within our Corporate Strategy division to advance our environmental sustainability efforts. | |
| SOCIAL | ||
Health and Well-being ◾ Competitive and comprehensive benefits and wellness package, which is continuously evaluated. ◾ Recent introduction of additional mental health resources as well as backup adult/childcare. ◾ Return to office strategy driven by colleague well-being. ◾ Continuation of heightened protocols in all locations. | Customers ◾ Office of Fair Banking integrated into product governance processes to ensure products are fair and inclusive ◾ Commercial Credit Policy includes an Environmental, Social, and Ethical (ESE) Screening. ◾ Clients provided with ESG-aligned investment solutions that include mutual funds and exchange-traded funds comprised of companies regarded to have strong ESG characteristics. ◾ Transparency and accessibility of banking increased with new checking product feature Citizens Peace of MindTM which helps customers avoid unexpected overdraft fees by providing automatic rebate if cured within 24-hours as well as real-time digital monitoring and low-balance alerts. ◾ Artificial Intelligence Governance Forum reviews key ethical considerations around the use of artificial intelligence/machine learning technologies including bias management, transparency, explainability, fairness, quality, privacy and overall soundness. | |
Diversity, Equity and Inclusion (“DE&I”) ◾ Continued execution of initiatives funded through our $10 million social equity commitment and our $500 million commitment to providing access to capital in minority communities. ◾ Diverse hire commitment, through which at least 50% of candidates interviewed for senior roles must be diverse. ◾ Executive DE&I scorecards reviewed quarterly to enhance transparency and accountability. ◾ Commitment to public disclosure on DE&I issues, including disclosure of pay equity analysis results and disclosure of colleague demographics to further align with EEOC reporting. ◾ Six active business resource groups, whose members play an important role in advancing business strategy and the DE&I strategy. | ||
Growth and Career Development ◾ Culture of continuous learning, which we believe is necessary for colleagues to thrive and feel a sense of accomplishment and purpose. ◾ Comprehensive development and training programs, including technical and skills-based programs and resources aligned with leadership competencies. ◾ Programs are designed to equip colleagues with the skills necessary to excel in their current roles and to enable them to be highly valuable contributors in the future. | Community ◾ Collegues volunteered more than 154,000 hours in our communities and participated in our first Skills-Based Volunteer Day of Service ◾ Community giving program focused on Fighting Hunger, Financial Empowerment and Strengthening Communities through Economic and Workforce Development ◾ Achieved a Community Reinvestment Act Rating of “Outstanding” from the Office of the Comptroller of the Currency for its most recent examination period. | |
| GOVERNANCE | ||
Board Independence ◾ 12 of 13 directors are independent ◾ Independent Lead Director with formally defined role and responsibilities | Stockholder Rights ◾ Annual election of directors with majority voting ◾ Non-classified board structure ◾ Proxy Access ◾ Shareholder right to call a special meeting ◾ Requesting stockholders approve the amendment to the Certificate of Incorporation to eliminate supermajority vote requirements | |
Board Composition ◾ 6 of 13 nominees are gender or racially diverse ◾ Board skills and experience aligned to strategy | ||
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We are committed to reducing our operational impact on the environment, understanding and managing the risks and opportunities for our business presented by climate change and resulting regulatory and market changes, and helping our customers plan for and manage climate change impact.
To better meet internationally recognized goals to foster climate resilience and limit global temperature increase, we have set targets to reduce our Scope 1 and 2 GHG emissions 30% by 2025 and 50% by 2035, based on our 2016 baseline. These reductions align with the recommendations of the Paris Agreement, which aims to limit average global temperature increase to well-below 2° Celsius compared to pre-industrial levels. Our environmental policy requires that we measure and track our environmental performance on our journey of continuous improvement. We have a data-gathering program that includes energy, water, paper, waste, recycling, greenhouse gas emissions, and business travel. We report our performance each year through the CDP (formerly Carbon Disclosure Project). Our most recent CDP Climate Change Questionnaire Response, which received a score of “B”, can be viewed on our website.
To meet the unique needs of the renewable energy industry, we provide equity investments to support a greener and more independent energy future through Citizens Asset Finance. We have participated in the funding of nine U.S. wind farm projects since mid-2015, with our investments totaling approximately $429 million at the end of 2021.
In 2021, we launched Green Deposits, a program that allows corporate clients to direct their cash reserves toward companies and projects that are expected to create a positive environmental impact. The Green Deposits solution gives clients the opportunity to direct deposits to investments in sectors such as energy efficiency; renewable energy; green transport; sustainable food, agriculture, and forestry; waste management; and greenhouse gas reduction. Citizens developed its Green Deposits Framework to identify eligible activities within the bank’s portfolio and ensure alignment with best practices and standards. The framework was created in line with eligibility criteria developed with the support of Sustainalytics, a Morningstar company, and leading provider of ESG research and data.
As one of our ESG priority topics, we know that focus on climate change is important to our business strategy and many of our stakeholders. We seek to understand the potential risks of climate change to our business and are working to identify, address and disclose the risks in our value chain including potential extreme weather impacts of climate change, or the risks associated with regulatory or market changes that emerge as part of the transition to a lower-carbon economy. We have added staff focused on climate work, including a Head of Sustainability role to our Corporate Strategy team to advance our efforts to mitigate climate risks and capitalize on opportunities presented by resulting market changes. We have assembled working groups in our Commercial and Risk divisions to drive this work and are using the recommendations from the TCFD to guide our efforts.
Philanthropy
Through our Citizens Helping Citizens program, we invest our time, resources, and energy to support the communities where we live and work. We focus our philanthropic giving on three specific areas that we believe fortify the overall well-being of our communities: Fighting Hunger, Financial Empowerment and Strengthening Communities through Economic and Workforce Development. Highlights of our 2021 community efforts include:
| · | Extended our partnership with Local Initiatives Support Corporation to support a digital inclusion program in Boston, Philadelphia, Providence, Atlanta and Richmond. The program provides instruction and 1:1 coaching on how to access technology resources and build/apply digital skills to drive successful job searches and career advancement. |
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| · | Worked with national and local partners including Bankwork$, EVERFI, Girls Who Code and Year Up to support programming focused on upskilling, re-skilling, job training, career advancement and digital inclusion aimed at building wealth and preparing tomorrow’s workforce. |
| · | Through our signature Champions in Action program, we awarded $350,000 to 10 organizations in 2021 focused on the topics of COVID-19 relief and Social Equity & Inclusion. This unrestricted funding and additional support from our media partners helps these organizations build capacity and raise awareness. |
| · | Joined Goalsetter, an innovative new app that encourages youth to save and invest, as one of its first ten corporate partners kicking off their One Stock, One Future campaign—a movement to get Black and Latinx teenagers involved in learning and investing early. The goal is to gift one million shares of stock to one million Black and Latinx youth across the United States. |
Volunteerism
Our colleagues are central to—and take great pride in—our commitment to our communities. Colleagues volunteered more than 154,000 hours in 2021 with more than 2,000 organizations. Additionally, nearly 60 colleagues lent their skills to ten nonprofits during our first Skills-Based Volunteer Day of Service.
To continue to help our colleagues safely volunteer during a time when our communities needed it most, we worked with our partners to provide meaningful virtual opportunities for all our colleagues. During September’s Hunger Action Month, we supported our national partner Feeding America by engaging colleagues in a wellness challenge called Step Up to Fight Hunger that allowed them to translate wellness activities into meals donated to those facing hunger. Through the challenge our colleagues logged more than 648 million steps which generated a donation equivalent to 300,000 meals.
Community Development
We also work to strengthen communities by providing financial resources that foster development in our local communities. Our capital allows our community partners to advance their plans to expand affordable housing and community services, revitalize communities, and fuel economic development. We provide support in the form of loans and equity investments. We fund development opportunities sponsored by Community Development Corporations, Community Development Enterprises, Community Development Financial Institutions and other public welfare investments leveraging tax-advantaged tools like Low-Income Housing and New Markets Tax Credits.
We continued to execute on our 2020 commitment to fund up to $50 million to Community Development Financial Institutions to provide working capital lines of credit, small business loans, microloans, and reconstruction loans to non-bankable Black- and Brown–owned businesses. We also continued to deliver on our 2020 commitment of $300 million in Low-Income Housing Tax Credit developments in predominantly minority census tracts at premium pricing. The premium we pay is used to help address the digital divide at no cost to residents, by providing features such as technology centers with computer workstations and internet connectivity.
Homeownership is a goal for many individuals and families, and we work with our customers to determine if home ownership is right for them, obtain a loan to fit their budget, and make an informed decision. Our Portfolio Loan Program provides first-time homeowners with lower rates and more flexible underwriting requirements. Low- to moderate-income individuals, and/or those purchasing a home in low- to moderate-income neighborhoods can qualify for the program, which allows a low down payment with no mortgage insurance. It can also be combined with approved community seconds, which are grants and subsidies provided by local organizations. In addition to offering innovative loan programs, we also help address a key element of the home purchase affordability gap by providing closing cost assistance grants to eligible low- and moderate-income homebuyers or those buying homes in low- to moderate-income tracts. To expand borrowing options for low- to moderate-income homeowners, we have created the Citizens GoalBuilder™ Home Equity Line of Credit. With lower credit limits and FICO requirements, GoalBuilder™ provides an affordable borrowing option to a wider range of customers using equity in their homes.
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Citizens has achieved a Community Reinvestment Act Rating of “Outstanding” from the Office of the Comptroller of the Currency for its most recent examination period.
We believe that our long-term success depends on our ability to attract, develop, and retain a high-performing workforce. Our ultimate goal is to create an environment where colleagues can thrive and maximize their potential. Our Board and the Compensation and HR Committee provide oversight of our human capital strategy and programs, with senior management providing regular updates on human capital matters to the Board and the Compensation and HR Committee directly, to facilitate that oversight.
Health and Well-being
Citizens is committed to supporting the health and well-being of our colleagues and their loved ones. We offer a competitive and comprehensive benefits program, which was complemented with several additional elements during 2020 to support colleagues’ physical, financial, and mental wellness during the pandemic. Those programs included additional paid time off to address personal circumstances and for COVID-19 quarantine and recovery, mental health and parental resources, and modifications to select compensation programs to take into consideration decreased production at the onset of the crisis. We continuously evaluate our programs and, in 2021, implemented additional mental and emotional health resources as well as emergency back-up child and adult care in order to help alleviate the stress associated with unexpected circumstances. In addition, in early 2022 we paid our branch colleagues a $500 bonus to recognize their continued dedication to serving our customers.
Our commitment to colleague health and well-being has also driven our return to office strategy. While our branch staff have been serving customers in-person throughout the pandemic, we have implemented a gradual return to office strategy for non-branch colleagues which incorporates flexibility for colleagues based on their unique needs. We also continue to implement heightened protocols in our branches and other work locations.
Talent Management and Succession Planning
The Company has a robust talent strategy, which includes the assessment of talent at various levels across the organization on a regular basis. As part of this strategy, the Board reviews the Company’s talent management and succession plans regularly. Talent management and succession plans for the CEO, including evaluations of successors and related development plans, are provided to the Compensation and HR Committee and to the Board at least annually. A similarly detailed review of talent management and succession plans for the CEO’s management team also occurs annually by the Compensation and HR Committee. The Board’s focus on talent management also extends below the executive level. To that end, the Compensation and HR Committee reviews talent management and succession plans for our primary businesses and functions on a regular basis. In addition to focusing on potential successors and team strength, these deep dives also focus on the identification of emerging talent deeper in the organization. Board members also serve as formal mentors to certain members of our executive team and meet in small group sessions with high-potential leaders across the Company throughout the year.
Diversity, Equity, and Inclusion
We are committed to building deep partnerships with our customers, colleagues, and communities while fostering a culture where all stakeholders feel respected, valued, and heard. Our DE&I strategy is focused on increasing diverse representation in our workforce (particularly in leadership roles), developing a diverse talent pipeline, embedding DE&I capabilities and inclusive behaviors in our culture, and facilitating access to capital. Some key elements of our DE&I strategy include the following:
| · | Continued execution of various initiatives funded through our $10 million social equity commitment and our $500 million commitment to incremental financing and capital for small businesses, housing, and other developments in predominantly minority communities, as well as pivoting our community efforts to support our social equity goals. |
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| · | Introduction of diversity scorecards for senior leaders to increase transparency and accountability, which are reviewed quarterly to track progress, identify any roadblocks, and ensure development plans are fully executed for diverse groups. |
| · | Recent expansion of our diverse hire commitment, through which at least 50% of candidates interviewed for senior roles must be diverse, and the development of strong partnerships with community organizations to help identify qualified diverse candidates. |
| · | Development programs that are specifically curated to build a strong pipeline of diverse emerging talent internally and the recent launch of required inclusion training for all colleagues. |
| · | Empowerment of our six business resource groups (“BRGs”), the members of which serve as cultural and community ambassadors and play an important role in advancing our business strategy and informing the DE&I agenda. Eighteen percent of our colleague population participates in at least one BRG, which include Citizens WIN (Women’s Impact Network), Citizens Elev8 (Rising Professionals), Prism (Multi-Cultural), Citizens Pride (LGBTQ), Citizens Veterans, and Citizens Awake (Disability Awareness). |
Commitment to Pay Equity
We continuously evaluate our practices and are committed to identifying opportunities to help ensure that all colleagues have equal opportunity to maximize their potential. Compensation decisions are based on a “pay-for-performance” philosophy. This means compensation decisions are based on a blend of individual performance, business unit performance, and Citizens’ overall performance across a number of dimensions, including customer, risk and control, financial, and people. Managers also receive annual training that includes tools and resources to help them make appropriate compensation decisions during our annual review process. Rating and compensation recommendations submitted by managers are reviewed to ensure they are fair and equitable.
We engage an independent third-party expert to conduct an annual pay equity analysis to assess whether equal pay is received for equal work throughout our organization. This review covers all of our operations and colleagues and considers factors such as performance, experience, and time in role in analyzing base salary, cash bonuses, and equity awards of colleagues serving in similar roles. In the case that job-related factors do not explain a disparity, a pay adjustment is made. The results of our most recent analysis indicate that women are paid 99% of what men are paid and there is no pay disparity for people of color. Although these are strong results, we understand that the opportunity gap for women and people of color continues to exist and the programs described above in “—Diversity, Equity, and Inclusion” have been designed to help facilitate, among other things, increasing the representation of women and people of color in senior and leadership roles over time.
Growth and Development
Citizens supports a culture of continuous learning, which we believe is crucial for colleagues to build the skills necessary to thrive as part of our organization and to feel a sense of accomplishment and purpose. Our comprehensive development and training programs include technical and skills-based programs as well as resources aligned with our leadership competencies and have been designed to be easily accessible and utilized by colleagues through the use of technology, social networking, and immersive new career experiences. Our skills-based programs include learning academies with badging and curated learning experiences that deepen the critical capabilities needed to drive our transformation, embed innovative mindsets, and exceed customer expectations. During 2021, we launched the Citizens Learning Hub which offers personalized learning suited to colleagues’ roles and interests, with nearly 90% of our colleague base logging on during 2021 to explore resources and engage in self-directed learning. Through our programs we aim to equip colleagues with the skills necessary to not only excel in their current roles, but to build competencies that will enable them to be highly valuable contributors in the future as their careers evolve.
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Colleague Engagement
As part of our continuous efforts to make Citizens a great place to build a career, we use McKinsey & Company’s Organizational Health Index (“OHI”) survey to understand colleagues’ viewpoints about the Company on a wide range of factors. In 2021, we maintained our strong overall OHI score despite the competitive talent market and had 80% of our colleagues respond to the survey, our highest response rate to date. We use the results of this survey to refine our focus, address any gaps, and strengthen our efforts to improve our organizational effectiveness and colleague experience. The OHI survey includes several questions focused on DE&I and the responses to these questions by various diverse colleague segments are reviewed in order to understand where action may be necessary to further inclusion efforts.
2022
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The Company provides this vote under the federal securities laws (SectionSection 14A of the Securities Exchange Act of 1934) and in recognition of our stockholders’ vote in 20152021 recommending that we hold anon-binding, advisory vote on executive compensation each year. Following that vote, the Board affirmed that recommendation and electeddecided to hold futurecontinue holding “say-on-pay” advisory votes on an annual basis, until the next stockholder vote onsay-on-pay frequency. basis.
With this item, stockholders may submit an advisory vote on the compensation of our CEO and other named executive officers listed in the 2021 Summary Compensation Table.Table. We encourage stockholders to review the complete description of our executive compensation programsprogram provided in this proxy statement, including the Compensation Discussion and Analysis and, the compensation tables, and accompanying narrative, which describe the ways we seek to align the interests of our executives with those of our stockholders.
We ask our stockholders to vote on the following resolution at the Annual Meeting.
RESOLVED, that the Company’s stockholders approve, on anon-binding, advisory basis, the compensation of the Company’s named executive officers named in the20192021 Summary Compensation Table, as disclosed pursuant to Item 402 of RegulationS-K (which disclosure includes the Compensation Discussion and Analysis, the compensation tables, and accompanying narrative).
Although the vote on this proposal is advisory and thereforenon-binding, the Compensation and HR Committee will carefully consider the results of this vote when making future compensation decisions.
This Compensation Discussion and Analysis (“CD&A”) describes our executive compensation program and how we paid our named executive officers (“NEOs”) for 2019.2021. The Company’s NEOs for the 20192021 year are as follows:
Name of Executive | Position | |
Bruce Van Saun | Chairman and Chief Executive Officer | |
John F. Woods | Vice Chairman and Chief Financial Officer | |
Donald H. McCree III | Vice Chairman and Head of Commercial | |
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Malcolm Griggs | Executive Vice President, | |
Brendan Coughlin | Executive Vice President and Head of Consumer Banking |
The CD&A is divided into fivefour sections:
Section 1: Executive Compensation Overview
Section 2: Determining ExecutiveNEO Compensation
Section 3: NEO Compensation for the 2019 Performance Year
Section 4: Other Compensation and Benefits
Section 5:4: Governance Policies and Practices
| CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT - COMPENSATION MATTERS | |||
SECTION 1. EXECUTIVE COMPENSATION OVERVIEW
Alignment of Pay and Performance
Over the past five years, we have addressed many of the challenges we faced at our IPO and have consistently demonstrated the ability to set a course, develop a plan, and execute well. We continue to deliver well for all stakeholders, with consistent progress for customers, colleagues and communities, while retaining a solid regulatory position. We have met or exceeded analyst expectations for 22 consecutive quarters. We have focused on growing the bank, uptiering talent, and building capabilities and we remain committed to a mindset of continuous improvement as highlighted by our Tapping Our Potential programs and Balance Sheet Optimization strategies, which are helping to drive improvement in earnings per share and underlying momentum despite the challenging interest rate and yield curve backdrop in 2019. Our performance journey is described in further detail in the earlier section titled “Proxy Statement Summary—Performance Highlights.”
We believe we have turned the corner on performance and are now aiming for excellence, on our way towards becoming atop-performing regional bank. To realize these results, it has been essential for us to effectively attract, retain, and motivate highly capable and experienced executive management and we feel our compensation program has been integral in achieving this goal.
Executive Compensation Philosophy
The fundamental principles that guide the design and implementation of compensation programs for our NEOs include:
 | Attract, retain, motivate and reward high-caliber executives to deliver long-term business performance. | |
| Provide alignment between annual and long-term compensation for executives and the Company’s strategic plan. | |
| Support a culture where colleagues recognize the importance of serving customers well and are rewarded for superior performance. | |
| Encourage the creation of value over the long-term and align the rewards received by executives with returns to stockholders. | |
| Design compensation in a manner that promotes a culture of risk management and accountability. | |
Review of Compensation Program & Recent Changes
Over 94% of the votes cast on the advisorysay-on-pay vote conducted at our 2019 annual meeting approved the compensation of our NEOs. Notwithstanding oursay-on-pay results, throughout each year the Compensation and HR Committee’s independent consultant provides updates regarding executive compensation trends, best practices, and regulatory developments in order to assist the Compensation and HR Committee in determining whether any changes to our executive compensation program should be considered.
In addition, the Compensation and HR Committee considers feedback from stockholders and other interested parties regarding our executive compensation program and governance practices. Based on feedback received from stockholders as well as our review of market practice, we have taken the following actions:
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Further strengthened governance practices. We have further strengthened our compensation governance practices by making changes such as increasing our CEO’s stock ownership guideline to 6x base salary and ournon-employee director stock ownership guideline to 5x annual cash retainer, and amending our equity plan to prohibit liberal share recycling and to generally impose a minimum vesting period of 12 months for awards.
Highlights of our Pay Practices
We believe our pay practices demonstrate our commitment to alignment with stockholders’ interests and our dedication to maintaining a compensation program supported by strong corporate governance, as exemplified by the following practices:
What We Do | ||||||||||
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Pay for performance. A significant portion of our executives’ compensation is awarded in the form of awards that are earned based on a combination of Company, division, and individual performance. |
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  | Variable compensation funding and executive compensation awards dependent on risk performance indicators. Our overall variable compensation funding as well as individual executive compensation awards are determined based on a number of factors, including but not limited to, risk performance and |  |
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| Robust compensation plan governance.Our compensation plans are subject to a robust governance process that involves review by control partners, including risk, legal, human resources, and finance. The plans are subject to a risk review by the Compensation and HR Committee on an annual basis and | |||||||||
| Stock ownership and retention guidelines. Our executives and directors are subject to stock ownership and retention guidelines (CEO - 6x base salary; Executive Committee members (including NEOs) - 3x base salary; Directors - 5x annual cash retainer). | |||||||||
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| | Stockholder engagement. We proactively engage with key stockholders in order to elicit their feedback on various topics, including executive compensation. | |||||||||
| | Independent compensation consultant. The Compensation and HR Committee engages an independent compensation consultant, who is not | |||||||||
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| What We Don’t Do | ||||||
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 | No tax gross-ups | |||||
| Prohibition against hedging and pledging. We prohibit executive officers, colleagues, and directors
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| Dividend equivalents not paid on unearned or unvested units. Dividend equivalents are accrued but not paid until restricted stock units and performance stock units are earned and become vested. | |||||
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Our equity plan | |||||
Changes Following Ongoing Review of our Program
Throughout each year, the Compensation and HR Committee continuously monitors our executive compensation program in light of trends, best practice, market conditions, and regulatory developments in order to determine whether any changes should be considered. This review is done in consultation with the Compensation and HR Committee’s independent consultant as well as Company management.
The Compensation and HR Committee also considers the results of the Company’s advisory say-on-pay vote. In 2021, we received support of over 92 percent on our say-on-pay vote. In addition, feedback from our stockholders is considered. On an annual basis, we proactively reach out to our largest stockholders to solicit feedback on various topics, including executive compensation, and also hold discussions with additional stockholders at their request. As we continued to navigate through these exceptional times it was more important than ever to hear from our investors. During 2021, we conducted two outreach programs, during the course of which we met with multiple stockholders representing approximately 38 percent of our outstanding stock. Stockholders we have spoken to have been supportive of our executive compensation program and related disclosures.
As a result of the ongoing review of compensation program and related disclosure, over the past few years we have taken the following actions:
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| • | Expanded disclosure regarding how DE&I progress is considered in determining executive compensation. This proxy statement expands on how performance with regard to DE&I initiatives is considered in determining NEO compensation, including both how it generally fits within our methodology and the identification of specific 2021 DE&I accomplishments for each NEO. See “—Section 2. Determining NEO Compensation.” |
| • | Enhancements to executive performance and compensation disclosure. This proxy statement features simplified disclosure of each NEO’s key accomplishments and performance year compensation. See “—Section 2. Determining NEO Compensation.” |
| • | Disclosure of pay equity analysis results. We engage an independent third-party to regularly perform a pay equity analysis to assess whether equal pay is received for equal work throughout our organization, accounting for factors that appropriately explain differences in pay such as performance, time in role, and experience. In 2021, we began disclosing results of our most recent pay equity analysis, a practice we intend to continue. See “Corporate Responsibility—Human Capital Management—Commitment to Pay Equity.” |
Elements of our Executive Compensation Program
Our executive compensation program is composed of base salary, variable compensation (including short-term and long-term awards), and other benefits. The below chart reflects the proportion of NEOs’ 20192021 direct total compensation (excluding performance-based retention awards granted in May 2021) that isat-risk and not guaranteed (85%(87% for the CEO and 80% on average for other NEOs), with. In addition, the below table summarizingsummarizes the key characteristics of each element of compensation.
Chief Executive Officer Salary, 13% PSUs, 39% Cash, 26% RSUs, 22% 87% At-Risk Other NEO Average(1)Average PSUs, 32% Salary, 20% Cash, 26% RSUs, 22% 80% At-Risk
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| Element of Pay | Objective | Key Characteristics | ||
| Base Salary | To attract and retain talented executives who can effectively lead the organization to achieve our strategic objectives. | Base salaries are intended to fairly compensate executives for the positions held. Salaries are reviewed annually and are subject to change at the Compensation and HR Committee’s discretion if, among other reasons, the executives’ responsibilities change materially or there are changes in the competitive market environment. | ||
| Variable Compensation | To support a culture where colleagues recognize the importance of serving customers well and are rewarded for their individual contributions and our collective success and to align compensation with stockholders’ interests. | Variable compensation is designed to reward achievement of long-term objectives and annual progress toward those objectives. The determination of overall funding for variable compensation is informed by a process that includes a comprehensive review of Company performance through multiple dimensions including the following: key financial performance measures, risk performance, delivery to stakeholders (customers, colleagues, stockholders, regulators, and
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| Long-Term Awards | Granted in the form of performance stock units (“PSUs”) and restricted stock units (“RSUs” | |||
| Short-Term Awards | The remaining portion of variable pay is delivered in | |||
Other Benefits | To give executives an opportunity to provide for their retirement and address other specific needs. | Our NEOs are eligible to participate in our Company-sponsored benefit programs, including our broad-based 401(k) plan and employee stock purchase plan, on the same terms and conditions that apply to all of our colleagues. In addition, we provide certain limited perquisites to our NEOs, which are described in | ||
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Variable Compensation Mix
The Compensation and HR Committee reviews the variable compensation mix applicable to our executives annually prior toyear-end, and believes that our currentvariable compensation mix delivers a meaningful portion of NEOs’ variable compensation in the form of long-term equity awards(60-70%), in line with regulatory expectations. Further, our CEO, CFO and Heads of Consumer and Commercial Banking have nearly two-thirds (64%) of their long-term awards granted in the form of PSUs. The Compensation and HR Committee reviews the variable compensation mix applicable to our executives on an annual basis prior to year-end.
The below chart reflects the elements of our variable compensation program (PSUs, RSUs, and annual cash bonuses), with the key design features of each described further below.
CEO, CFO, HeadHeads of Businesses Other NEOsBusiness Cash 30% PSUs 45% RSUs 25% 70% Long-Term Incentive Chief Risk Officer & General Counsel PSUs 25% Cash 40% RSUs 35% 60% Long-Term Incentive
Element
| Key Design Features
| |
Performance Stock Units |
Performance
Core Performance
• Cumulative Diluted Earnings Per Share (50%) • Average Return on Average Tangible Common Equity (50%)
•
Payout
• Generally 0-150% of target, • Ultimate payouts based on achievement againstpre-established targets and performance relative to peers in connection with our TSR modifier.
Vesting
| |
Restricted Stock Units |
| |
Cash Bonus |
Paid annually, with executives having the option to defer up to 80% under the Company’s nonqualified deferred compensation
| |
| CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT - COMPENSATION MATTERS | |||
Performance Stock Units Design & Target Setting
2019 Grants
The Compensation and HR Committee reviews and determines PSU design annually in consultation with its compensation consultant. For the 20192021 grants, the Compensation and HR Committee determined that Cumulative Diluted Earnings Per Share (“Diluted EPS”) and Average Return on Average Tangible Common Equity (“ROTCE”) continued to be appropriate core metrics for the Company’s PSU awards because these metrics remain an integral element of the Company’s strategic plan. Growth in each of these metrics is essential for us to continue on our trajectory of becoming a top-performing regional bank and, as a result, each is very important to stockholders:
| • | Diluted EPS: Diluted earnings per share is a common metric used by investors to evaluate the profitability of a company and shows the earnings (net income) we make on each outstanding share of common stock. |
We define “Diluted EPS” as net income divided by weighted average diluted common shares outstanding, as reported on an Underlying basis consistent with our external earnings reporting.Seereporting. See Appendix BA for more information on our use of Forward-Looking Statements, Key Performance Metrics andNon-GAAP Financial Measures and Reconciliations.their calculation or reconciliation to GAAP financial measures.
| • | ROTCE: Return on average tangible common equity measures profitability by showing how much profit we generate (net income) with the money our stockholders have invested. |
We define “ROTCE” as net income available to common stockholders divided by average common equity excluding average goodwill (net of related deferred tax liabilities) and average other intangible assets, as reported on an Underlying basis consistent with our external earnings reporting. See Appendix BA for more information on our use of Forward-Looking Statements, Key Performance Metrics andNon-GAAP Financial Measures and Reconciliations.
Targets for Diluted EPS and ROTCE for 2019 PSU awards were set by the Compensation and HR Committee, together with management, following the consideration of historic performance, market conditions, analyst expectations, the competitive landscape, and plan at the time the targets were established in February 2019. Achievement of target level of performance requires achievement of an 8% cumulative average growth rate (“CAGR”) on 2018 EPS and achievement of maximum level of performance requires achievement of a 15% CAGR on 2018 EPS.
|
| |||
2020 Grantstheir calculation or reconciliation to GAAP financial measures.
As a complement to our absolute metrics and following conversations with stockholders, the Compensation and HR Committee has modified our PSU design for awards to be granted in 2020 to include relative TSR as a metric.metric commencing with 2020 grants. Diluted EPS and ROTCE remain our core metrics for the reasons described above, with the payout percentage multiplied by 110% if our TSR during the performance period is in the top quartile of our peer group or by 90% if our TSR is in the bottom quartile of our peer group as illustrated below, subject to a maximum payout of 150% of target.target (including application of the TSR modifier). Information regarding our peer group is discussed below in “—Section 5.4. Governance Policies and Practices—Compensation Peer Group.”
Step 1: Calculate Core Metrics Payouts Step 2: Apply Relative Modifier (if applicable) Step 3: Compensation & HR Committee Approves Final Awards Payout % 50% 3-Year Cumulative Diluted EPS + 50% 3-Year Averaged ROTCE * Top Quartile 3-Year TSR: 110% of Payout OR Bottom Quartile 3-Year TSR: 90% of Payout = 2021 PSU Award Payout %
2022 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT - COMPENSATION MATTERS | |||
Targets for Diluted EPS and ROTCE for 2021 PSU awards were set by the Compensation and HR Committee, together with management in February 2021, following the consideration of historic performance, market conditions, analyst expectations, the competitive landscape, and internal goals at the time.
SECTION 2: DETERMINING EXECUTIVENEO COMPENSATION
The Compensation and HR Committee continues to believe that it is important to retain its discretion to determine executive compensation in order to ensure that we continue to build stockholder value while promoting the stability and growth of the Company. More specifically, the Compensation and HR Committee exercises structured discretion in making these decisions, which areis informed by a number of qualitative and quantitative performance metrics across various dimensions.
The This process for determining compensation provides the Compensation and HR Committee believesflexibility to make appropriate compensation decisions in years that present exigent macroeconomic conditions, as was the case during 2020, without having to override our methodology. In addition, we believe that reviewing multiple dimensions of performance in determining payand allowing the Compensation and HR Committee to exercise discretion facilitates management’s focus on Company performance overall, and mitigatesthereby mitigating the risk of disproportionate focus on certain elements of performance. Further, because long-term equity awards represent60-70% of annual variable compensation for our NEOs, we believe this helps to ensure long-term alignment with stockholders’ interests.
The below diagram reflects the inputs considered by the Compensation and HR Committee in determining compensation for our NEOs. These inputs represent both objective and subjective considerations, and the Compensation and HR Committee does not favor one measure over another or apply a particular formula or weighting.
|
| |||
In addition, Under “Performance Considerations” in the graphic below we have listed the various lenses through which performance is evaluated in determining executive pay, which go beyond financial and business delivery goals to include various other facets of performance that we feel are integral to the Company’s long-term success. Among the Human Capital performance considerations is progress on and commitment to DE&I initiatives. For each NEO, the Compensation and HR Committee specifically reviews performance relative to DE&I initiatives. Some key achievements of our NEOs that were considered by the Compensation and HR Committee in making 2021 compensation decisions, including DE&I-related accomplishments, are disclosed below in “Section 2.—Determining NEO Compensation—NEO 2021 Performance Year Compensation.” It should also be noted that the Risk Committee and Audit Committee review performance and approve compensation for the Chief Risk Officer and Chief Audit Officer,Executive, respectively.
After executive compensation decisions are made, the total variable compensation amount for each executive is awarded in accordance with the predetermined pay mix applicable to each executive, as further described earlier in“—Section 1. Executive Compensation Overview—Variable Compensation Mix”,Mix.”with half of variable compensation awarded in the form of PSUs for our CEO, CFO and the heads of our businesses.
Assessment of 2017 PSUs
On February 12, 2020, the Compensation and HR Committee assessed the performance level of PSUs granted in 2017 relating to the 2016 performance year (“2017 PSU Award”). Half of each 2017 PSU Award has been earned based on achievement ofpre-established Diluted EPS goals and half has been earned based on achievement ofpre-established ROTCE goals, with an overall maximum payout of 150% of target.
| CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT - COMPENSATION MATTERS | |||
Determining NEO Compensation Step 1: Performance Considerations Step 2: Market Practice & Other Considerations Step 3: Final Decision The Compensation and HR Committee approved a final payout percentageconsiders various aspects of 150% of target based onCompany and individual performance that collectively indicate our Company's success, including: The Compensation and HR Committee also considers the results reflectedfollowing information in the below table. Average ROTCE results represent 56% improvement over the period as compared to our ROTCE as of December 31, 2016 and cumulative Diluted EPS results represent a CAGR of 26% over the period, which both delivered maximum payout.
The below table also reflects the ROTCE and Diluted EPS thresholds, targets and maximums for the 2017 PSU Award. In addition, performance results for the period of 2014-2016 reflected belowmaking executive compensation decisions: Once all inputs are intended to illustrate the rigor of the targets in light of the Company’s ongoing execution of its turnaround plan at the time the targets were established.
| Metric |
2014-2016 Results
| 2017 PSU Award Targets
|
2017-2019 Underlying*
| ||||||||||||||||||||||
Threshold
| Target
| Maximum
| |||||||||||||||||||||||
3-Year Average ROTCE
|
6.81%
|
7.60%
|
8.67%
|
9.41%
|
11.87%
| ||||||||||||||||||||
3-Year Cumulative Diluted EPS
|
$4.96
|
$5.79
|
$7.03
|
$7.70
|
$9.98
| ||||||||||||||||||||
*See Appendix B for more information on Forward-Looking Statements, Key Performance Metrics andNon-GAAP Financial Measures and their calculation or reconciliation to GAAP financial measures.
During its assessment of 2017 PSU Award results,reviewed, the Compensation and HR Committee also reviewed Company results for 2018 and 2019 on an adjusted basis to exclude the benefit of 2017 tax reform. 2017 PSU Awards would have also been earned at the maximum level of performanceexercises its structured discretion based on members' judgment to determine variable compensation and salary for each NEO that is consistent with Company performance. Financial & Business Delivery Financial performance compared to our budget/strategic plan, consensus, and peers (including growth rate), quality of earnings Customer Outcomes Customer satisfaction, deepening of existing customer relationships, new customer acquisition Strategic Initiatives M&A execution and integration, digitization, technology initiatives, cost savings initiatives Human Capital Diversity, equity, and inclusion and ESG initiatives, colleague attraction and retention, colleague survey results Risk & Control Delivery against regulatory expectations, control environment, risk culture Peer Data & Compensation History Compensation paid to executive in similar roles by our peer group as well as additional organizations with which we compete for talent, although we do not benchmark compensation at a specified level. Each NEO's compensation history and year-over-year position are also considerations for variable pay decisions. CEO & CHRO Recommendations The CEO's perspective on executive performance and pay as well as additional context from the Chief Human Resources Officer, regarding executives other than themselves. Risk Ratings by Chief Risk Officer Risk ratings assigned to executives by the Chief Risk Officer as part of the annual risk review process, based on feedback from second line of defense Risk partners. Independent Compensation Consultant Input The perspective of Compensation Advisory Partners, the independent compensation consultant to the Compensation and HR Committee, with regard to Company performance and market pay practices. Target Compensation (for CEO) For the CFO his target compensation amount is considered, which $9.94MM However, this adjusted calculation.target is intended to serve only as a reference point.Determining NEO Compensation Step 1: Performance Considerations Step 2: Market Practice & Other Considerations Step 3: Final Decision The Compensation and HR Committee considers various aspects of Company and individual performance that collectively indicate our Companys success, including: The Compensation and HR Committee also considers the following information in making executive compensation decisions: Once all inputs are reviewed, the Compensation and HR Committee exercises its structured discretion based on members judgment to determine variable compensation and salary for each NEO that is consistent with Company performance. Financial & Business Delivery Financial performance compared to our budget/ strategic plan, consensus, and peers (including growth rate), quality of earnings Customer Outcomes Customer satisfaction, deepening of existing customer relationships, new customer acquisition Strategic Initiatives M&A execution and integration, digitization, technology initiatives, cost savings initiatives Human Capital Diversity, equity, and inclusion and ESG initiatives, colleague attraction and retention, colleague survey results Risk & Control Delivery against regulatory expectations, control environment, risk culture Peer Data & Compensation History Compensation paid to executives in similar roles by our peer group as well as additional organizations with which we compete for talent, although we do not benchmark compensation at a specified level. Each NEOs compensation history and year-over-year position are also considerations for variable pay decisions. CEO & CHRO Recommendations The CEOs perspective on executive performance and pay as well as additional context from the Chief Human Resources Officer, regarding executives other than themselves. Risk Ratings by Chief Risk Officer Risk ratings assigned to executives by the Chief Risk Officer as part of the annual risk review process, based on feedback from second line of defense Risk partners. Independent Compensation Consultant Input The perspective of Compensation Advisory Partners, the independent compensation consultant to the Compensation and HR Committee, with regard to Company performance and market pay practices. Target Compensation (for CEO) For the CEO his target compensation amount is considered, which is $9.94MM. However, this target is intended to serve only as a reference point.Determining NEO Compensation Step 1: Performance Considerations Step 2: Market Practice & Other Considerations Step 3: Final Decision The Compensation and HR Committee considers various aspects of Company and individual performance that collectively indicate our Company's success, including: The Compensation and HR Committee also considers the following information in making executive compensation decisions: Once all inputs are reviewed, the Compensation and HR Committee exercises its structured discretion based on members' judgment to determine variable compensation and salary for each NEO that is consistent with Company performance. Financial & Business Delivery Financial performance compared to our budget/strategic plan, consensus, and peers (including growth rate), quality of earnings Customer Outcomes Customer satisfaction, deepening of existing customer relationships, new customer acquisition Strategic Initiatives M&A execution and integration, digitization, technology initiatives, cost savings initiatives Human Capital Diversity, equity, and inclusion and ESG initiatives, colleague attraction and retention, colleague survey results Risk & Control Delivery against regulatory expectations, control environment, risk culture Peer Data & Compensation History Compensation paid to executive in similar roles by our peer group as well as additional organizations with which we compete for talent, although we do not benchmark compensation at a specified level. Each NEO's compensation history and year-over-year position are also considerations for variable pay decisions. CEO & CHRO Recommendations The CEO's perspective on executive performance and pay as well as additional context from the Chief Human Resources Officer, regarding executives other than themselves. Risk Ratings by Chief Risk Officer Risk ratings assigned to executives by the Chief Risk Officer as part of the annual risk review process, based on feedback from second line of defense Risk partners. Independent Compensation Consultant Input The perspective of Compensation Advisory Partners, the independent compensation consultant to the Compensation and HR Committee, with regard to Company performance and market pay practices. Target Compensation (for CEO) For the CFO his target compensation amount is considered, which $9.94MM. However, this target is intended to serve only as a reference point.
SECTION 3.
2022 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT - COMPENSATION MATTERS | |||
NEO COMPENSATION FOR THE 2019 PERFORMANCE YEAR2021 Performance Year Compensation
The followingbelow table reflects how the Compensation and HR Committee views the direct compensation earned by each of our NEOs for the 2019 performance year.during 2021. The amounts reported in this table differ from those reported in the20192021 Summary Compensation Table because thisprimarily due to the depiction of equity awards. First, the table below includes equity awards earned for performance during 2019, as opposed to equity awards granted in 2019. After assessing Company and each individual NEO’sMarch 2022 relating to 2021 performance, during 2019,whereas, due to SEC rules, the 2021 Summary Compensation and HR Committee approvedTable includes equity grants made in 2021 for 2020 performance. Secondly, the followingtable below excludes the PSU retention awards granted to management in May 2021 because those grants were made for purposes of retention as opposed to compensation for our NEOs.the 2021 performance year.
Variable Compensation | Total 2019 Direct Compensation |
Variable Compensation | Total Compensation | |||||||||||||||||||||||||||||||||||||||||||||||||
Name | Base Salary | Cash(1) | Restricted Stock Units(2) | Performance Stock Units(2) | Base Salary | Cash(1) | Restricted Stock Units(2) | Performance Stock Units(2) | Total Variable | % Chg vs. | Total Direct | % Chg vs. | ||||||||||||||||||||||||||||||||||||||||
Bruce Van Saun | $ | 1,487,000 |
| $ | 2,553,900 |
| $ | 1,702,600 |
| $ | 4,256,500 |
| $ | 10,000,000 |
| $ | 1,487,000 |
| $ | 2,928,900 |
| $ | 2,440,750 |
| $ | 4,393,350 |
| $ | 9,763,000 |
|
| 29.1 | % | $ | 11,250,000 |
|
| 24.3 | % | |||||||||||||
John F. Woods | $ | 700,000 |
| $ | 937,500 |
| $ | 625,000 |
| $ | 1,562,500 |
| $ | 3,825,000 |
| $ | 700,000 |
| $ | 1,105,000 |
| $ | 837,500 |
| $ | 1,507,500 |
| $ | 3,450,000 |
|
| 21.5 | % | $ | 4,150,000 |
|
| 17.2 | % | |||||||||||||
Donald H. McCree III | $ | 700,000 |
| $ | 990,000 |
| $ | 660,000 |
| $ | 1,650,000 |
| $ | 4,000,000 |
| $ | 700,000 |
| $ | 1,065,000 |
| $ | 887,500 |
| $ | 1,597,500 |
| $ | 3,550,000 |
|
| 23.3 | % | $ | 4,250,000 |
|
| 18.7 | % | |||||||||||||
Brad L. Conner(3) | $ | 700,000 |
| $ | 735,000 |
| $ | 1,715,000 |
|
| - |
| $ | 3,150,000 |
| |||||||||||||||||||||||||||||||||||||
Brendan Coughlin | $ | 625,000 |
| $ | 637,500 |
| $ | 531,250 |
| $ | 956,250 |
| $ | 2,125,000 |
|
| 49.1 | % | $ | 2,750,000 |
|
| 34.1 | % | ||||||||||||||||||||||||||||
Malcolm Griggs | $ | 525,000 |
| $ | 670,000 |
| $ | 502,500 |
| $ | 502,500 |
| $ | 2,200,000 |
| $ | 535,000 |
| $ | 746,000 |
| $ | 652,750 |
| $ | 466,250 |
| $ | 1,865,000 |
|
| 25.2 | % | $ | 2,400,000 |
|
| 18.5 | % | |||||||||||||
| (1) | The cash portion of |
| (2) | The number of Company shares subject to these awards was determined based on the Company’s closing share price on the grant date. |
| (3) |
|
|
| |||
As discussed above in “—Section 2. Determining Executive CompensationCompensation””, the Compensation and HR Committee’s determination of executive compensation is based on various inputs, including Company and individual performance across various dimensions. The Compensation and HR Committee determined that the compensation amounts reflected in the preceding table were appropriate in large part, due to 20192021 Company performance described earlier in the “Proxy Statement Summary—Performance Highlights”Our Strategy and Performance”section and the following key achievements.
Bruce Van Saun, Chairman and Chief Executive Officer:
Continued to make good financial progress, despite the challenging and unexpected rate environment. Although work continues in order to reach peer levels of performance on certain key metrics, the Company’s turnaround phase has been completed and we are now entering the next phase of our journey “aiming for excellence.”
Launched a major cost and operating model transformation program which will improve both efficiency and effectiveness, generate significant savings, and increase our speed to market with better customer outcomes.
Implemented several initiatives designed to further customer growth and experience and be responsive to the needs of clients, including Consumer Banking’sroll-out of a refreshed value proposition for various segments and the execution of several innovative products and customer service solutions, and Commercial Banking’s further expansion of product offerings, industry and geographic coverage, and improvements in customer-facing applications.
Fully embedded a strong risk culture into the businesses, further strengthened our control environment, and embarked on significant changes to the Risk organization to ensure that it remains aligned with our risk priorities.
Continued to successfully attract and retain top talent across the organization, including a new Head of Technology, Commercial Banking CFO, and several other leaders in Technology and the Commercial business. Made further talent investments in data analytics, digital, cybersecurity, and customer experience.
Achieved strong culture survey results and continued to demonstrate commitment to our colleagues and community by accelerating development opportunities to ensure our colleagues remain highly engaged and well-equipped for the future, further maturing our diversity and inclusion efforts, and partnering with several community organizations and universities to accelerate internal and external workforce development.
John F. Woods, Vice Chairman and Chief Financial Officer:
Supported good financial progress despite a challenging environment and the continued success of our Tapping our Potential (“TOP”) efficiency initiatives, which were broadened in 2019 to include a transformation program that will serve as the foundation for a refreshed operating model, serving as Chair of this program to set direction and maximize benefits to be derived.
Continued to improve the maturity and capabilities of our M&A function while managing an active pipeline.
Balanced the Board’s management agenda on near-term and long-term initiatives, ensuring increased focus on strategic choices to develop new revenue pools that will improve the sustainability of our competitive position.
Developed an innovation funding and resource model, including governance and related tools and enablers, to ensure that management advances high potential innovative ideas throughout the bank.
Effectively managed the balance sheet of the Company addressing liquidity and interest rate risks. Over the course of the year, a series of funding and hedging-related transactions improved key performance indicators associated with each of these risks.
| CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT - COMPENSATION MATTERS | |||
Continued to advance the maturity of the capital stress testing program through advanced analytic capabilities and diversified Tier 1 Capital sources through preferred stock issuances.
Donald H. McCree III, Vice Chairman, Head of Commercial Banking:
Continued to develop products and capabilities needed to provide a differentiated client experience, including expansion of M&A advisory capabilities through the acquisition of Bowstring Partners, corporate finance expertise in healthcare, technology, and business services, and the launch of a high yield sales and distribution desk.
Strengthened our coverage model nationally and selectively expanded our Corporate Banking business’ reach into the Southeast and West Coast.
Maintained strong client satisfaction as we continue to deliver against our strategy to enhance client experience by deploying new customer-facing applications, reengineering processes, and deploying automation and systems upgrades including the implementation of Access Optima in Treasury Solutions.
Executed strong performance in Global Markets and Capital Markets, navigating a volatile rate environment and delivering results consistent with overall market.
Brad L. Conner, Former Vice Chairman, Head of Consumer Banking:
Continued focus on customer growth and experience initiatives, including the Company’s retail transformation which is designed to streamline and strategically develop the organization in order to provide a unified and simplified customer experience.
|
Bruce Van Saun
Chairman and Chief Executive Officer
| Year | Base Salary |
Variable Compensation
|
Total Compensation
| |||||||||||||||
Cash Bonus
| RSUs | PSUs | Total |
YoY % Change
| Total |
YoY % Change
| ||||||||||||||
2021 | $1,487,000 | $2,928,900 | $2,440,750 | $4,393,350 | $9,763,000 | +29.1% | $11,250,000 | +24.3% | ||||||||||||
2020 | $1,487,000 | $2,268,900 | $1,890,750 | $3,403,350 | $7,563,000 | -11.2% | $9,050,000 | -9.5% | ||||||||||||
| Key Achievements | ||||||||
| Financial | Customer | Strategic | People | Risk | ||||
• Achieved solid financial results that exceeded analyst expectations in a challenging environment. ROTCE, EPS and Net Income are ahead of budget, driven by improved credit outlook. Operating performance was broadly in line with budget as fee income growth in capital markets, wealth, and card fees largely offset mortgage fee normalization from record levels, and expenses were well-controlled. • Executed a strong • Signed or completed several noteworthy acquisitions to build scale, expand geographic reach, and accelerate our strategic agenda, including the acquisition of HSBC East Coast Branches and Investors Bancorp in the NY Metro area. • Continued progress on strengthening our risk function with risk programs that are successfully embedded into the business, an effective control environment and mature conduct risk culture, and satisfactory regulatory ratings. • Successfully evolved several senior leaders’ positions within the bank and continued • Continued focus on DE&l with the execution of various initiatives funded by our $10 million social equity commitment and our $500 million commitment to help advance access to capital in predominantly minority communities, establishment of internal 2022 demographics targets and launch of | ||||||||
Built a competitive and innovative Mortgage business following the 2018 integration of Franklin American Mortgage Company with significant year-over-year growth in originations, and successfully integrated Clarfeld Financial Advisors to offer a highly competitive banking and investment Wealth Management offering across all segments.
Continued to evolve marketing and analytics capabilities, most notably with the highly successful launch of Company-wide brand platform ‘Made Ready’, sponsorships designed to deliver experiences to our target segments, and development and launch of a new personalization platform.
Malcolm Griggs, Executive Vice President and Chief Risk Officer:
Fully embedded a strong risk management culture in all three lines of defense and continued to further strengthen the control environment, most notably to include stronger oversight of technology and cybersecurity.
Continued to strengthen the Risk organization’s business capabilities with a customer-driven culture and mindset, working closely with the businesses to focus on customer impact when supporting initiatives such as the launch of the high yield desk and merchant finance initiatives.
Gained traction across the Company for our migration from a “rules-based” to a “principles-based” risk and control philosophy, with material simplification of Company policies and risk decisions driven by our foundational risk principles.
Evaluated the structure and operation of the Risk organization given the evolution of the Company and current and long-term priorities, with several transformation initiatives executed during 2019 and continuing for 2020.
| CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT - COMPENSATION MATTERS | |||
|
John F. Woods
Vice Chairman and Chief Financial Officer
| Year | Base Salary |
Variable Compensation
|
Total Compensation
| |||||||||||||||
Cash Bonus
| RSUs | PSUs | Total |
YoY % Change
| Total |
YoY % Change
| ||||||||||||||
2021 | $700,000 | $1,105,000 | $837,500 | $1,507,500 | $3,450,000 | +21.5% | $4,150,000 | +17.2% | ||||||||||||
2020 | $700,000 | $852,000 | $710,000 | $1,278,000 | $2,840,000 | -9.1% | $3,540,000 | -7.5% | ||||||||||||
| Key Achievements | ||||||||
| Financial | Customer | Strategic | People | Risk | ||||
• Supported solid financial performance and continued the success of our TOP efficiency initiatives in order to self-fund investments in our business and offset revenue headwinds, with the TOP program exceeding 2021 investor commitments of $425 million pre-tax run rate improvement. • Executed several initiatives to further improve our capital and balance sheet position, including several debt capital market transactions, managing the deposit cost down over the past 18 months to close the cost gap to peers, and development of retail loans securitization capabilities to reduce capital consumption and increase returns. • Elevated the M&A agenda with the successful execution of multiple concurrent bank and fee-based transactions and provided leadership in the integration phase as the chair of the M&A Integration Steering Committee. • Effectively managing several top financial risks at the Company including liquidity, interest rate/ALM, Capital/CCAR, and controls over financial reporting. • Stepped up to co-sponsor the corporate DE&I agenda, providing oversight on formulation and execution of DE&I strategy and initiatives. | ||||||||
|
Donald H. McCree Ill
Vice Chairman and Head of Commercial Banking
| Year | Base Salary |
Variable Compensation
|
Total Compensation
| |||||||||||||||
Cash Bonus
| RSUs | PSUs | Total |
YoY % Change
| Total |
YoY % Change
| ||||||||||||||
2021 | $700,000 | $1,065,000 | $887,500 | $1,597,500 | $3,550,000 | +23.3% | $4,250,000 | +18.7% | ||||||||||||
2020 | $700,000 | $864,000 | $720,000 | $1,296,000 | $2,880,000 | -12.7% | $3,580,000 | -10.5% | ||||||||||||
| Key Achievements | ||||||||
| Financial | Customer | Strategic | People | Risk | ||||
• Delivered record financial performance in Commercial driven by strong fee generation and robust deposit growth. • Successfully positioned Commercial Banking for future growth through the successful acquisitions of JMP Group LLC, Willamette Management Associates, and the signed deal for DH Capital, each of which broaden capabilities and talent. • Deepened our coverage model and client advisory agenda, including the continued build out of industry verticals, the launch of a new lower middle market strategy, expansion of talent in M&A, Corporate Finance and the South and West Coast, which has resulted in strong new client acquisition, uptiering of client relationships, and above budget Corporate Finance revenues. • Continued as executive sponsor of PRISM, the bank’s multi-cultural business resource group, and improved representation of women and people of color in senior level roles since the start of the year and achieved strong diverse representation in the Commercial junior programs, with participants in this program typically becoming a feeder into senior leader roles over time. | ||||||||
2022 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT - COMPENSATION MATTERS | |||
|
Brendan Coughlin
Executive Vice President and Head of Consumer Banking
| Year | Base Salary |
Variable Compensation
|
Total Compensation
| |||||||||||||||
Cash Bonus
| RSUs | PSUs | Total |
YoY % Change
| Total |
YoY % Change
| ||||||||||||||
2021
|
$625,000
|
$637,500
|
$531,250
|
$956,250
|
$2,125,000
|
+49.1%
|
$2,750,000
|
+34.1%
| ||||||||||||
| Key Achievements | ||||||||
| Financial | Customer | Strategic | People | Risk | ||||
• Mr. Coughlin continues to execute the change agenda that he introduced upon assuming the role of Head of Consumer Banking in 2020, including acceleration of digital adoption with enhanced digital capabilities for customers and the achievement of major technology milestones to modernize the bank and position it for sustained growth, including a new Student Lending originations platform, HELOC FastlineTM, and expansion of Citizens Pay, each contributing to the achievement of our highest Consumer NPS score to date. • Strong execution of growth agenda with the entrance into agreements to acquire HSBC East Coast branches and their digital bank as well as Investors Bancorp, which will collectively expand the Company’s consumer bank across four important markets (Metro NYC, NJ, Washington DC, and South Florida). • Material progress repositioning our deposit franchise resulting in industry-leading low-cost deposit growth and strong primary household growth and the successful launch of a new Wealth business strategy resulting in record performance in 2021 and scaling at a rate faster than market. • Continued focus on DE&I with the addition of several diverse colleagues to the Consumer senior management team in strategic, mission-critical roles. | ||||||||
|
Malcolm Griggs
Executive Vice President, Chief Risk Officer & General Counsel
| Year | Base Salary |
Variable Compensation
|
Total Compensation
| |||||||||||||||
Cash Bonus
| RSUs | PSUs | Total |
YoY % Change
| Total |
YoY % Change
| ||||||||||||||
2021 | $535,000 | $746,000 | $652,750 | $466,250 | $1,865,000 | +25.2% | $2,400,000 | +18.5% | ||||||||||||
2020 | $535,000 | $596,000 | $521,500 | $372,500 | $1,490,000 | -11.0% | $2,025,000 | -8.0% | ||||||||||||
| Key Achievements | ||||||||
| Financial | Customer | Strategic | People | Risk | ||||
• Took on the role of Chief Legal Officer/General Counsel in addition to Chief Risk Officer duties, providing strong leadership to both organizations. • Continued to deliver on the Company’s risk agenda, balancing risk and return. Further streamlined and improved risk governance, continued to develop and enhance stress scenarios for capital planning and reserve models, maintained excellent credit quality while meeting customers needs through the pandemic, and maintained strong risk oversight in second line of defense and effective regulatory relationships. • Provided legal support for acquisitions, including contracts, compliance analysis, and integration planning. Improved the efficiency of legal processes and provided legal team members with additional development opportunities. • Strong execution of the diverse hire commitment in the fulfillment of open Legal and Risk roles, with diverse candidates ultimately hired for at least half of open roles in each function. | ||||||||
2022 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT - COMPENSATION MATTERS | |||
Performance Assessment of 2019 PSUs
On February 25, 2022, the Compensation and HR Committee approved the performance assessment of PSUs granted in 2019 relating to the 2018 performance year (“2019 PSU Award”). Half of each 2019 PSU Award was earned based on achievement of pre-established Diluted EPS goals and half was earned based on achievement of pre-established ROTCE goals, with an overall maximum payout of 150% of target.
The Compensation and HR Committee approved a final payout percentage of 70.3% of target based on the results reflected in the below table. The pandemic was not foreseen when these awards were made, and had a dramatic impact on performance, which impacted this payout. The below table also reflects the ROTCE and Diluted EPS thresholds, targets, and maximums for the 2019 PSU Award.
| Metric |
2016-2018 Results
| 2019 PSU Award Targets
| 2019-2021 Normalized*
| 2019 PSU Award Final Payout (% of Target)
| ||||||||||
Threshold
| Target
| Maximum
| ||||||||||||
3-Year Average ROTCE
|
10.15%
|
12.41%
|
13.45%
|
14.71%
|
12.41%
|
50.0%
| 70.3% | |||||||
3-Year Cumulative Diluted EPS
|
$8.07
|
$10.14
|
$12.67
|
$14.06
|
$11.96
|
90.6%
| ||||||||
*Normalized results for 2020 and 2021 have been calculated using the incurred loss methodology for credit provisioning for consistency with earlier years. In normalizing results, the average tangible common equity and average common shares outstanding were adjusted to reflect planned common stock repurchases that were contemplated when goals were set, but which were forgone due to Federal Reserve prohibitions in response to the COVID-19 pandemic. See Appendix A for more information on Non-GAAP Financial Measures.
SECTION 4:3: OTHER COMPENSATION AND BENEFITS
Severance
Each of our active NEOs is party to an employment agreement that sets forth his compensation and benefits, including severance benefits available in certain circumstances. For details, see “Termination of Employment and Change of Control”below.
Nonqualified Deferred Compensation Plan
The CFG Voluntary Executive Nonqualified Deferred Compensation Plan was adopted effective as of January 1, 2009 and does not offer any matching contributions or provide for above-market earnings. During 2019, Mr.2021, Messrs. Van Saun wasand Coughlin were the only NEONEOs who participated in the CFG Voluntary Executive Nonqualified Deferred Compensation Plan. For a description of the material terms of this deferred compensation plan, see the narrative following the20192021 Nonqualified Deferred CompensationTablebelow.table below.
Pension Plan
The CFG Pension Plan, atax-qualified,non-contributory defined benefit pension plan was closed to new participants effective January 1, 2009 and frozen to all participants and benefit accruals effective December 31, 2012. Mr. ConnerCoughlin has a benefit under this plan because he was hired prior to 2009. For a description of the material terms of the CFG Pension Plan, see the narrative following the20192021 Pension BenefitsTabletable below.
401(k) Plan
We maintain a qualified defined contribution 401(k) plan for all of our colleagues. Colleagues may defer up to 50% of their eligible pay to the plan up to Internal Revenue Code limits. After colleagues have completed one full year of service, colleaguethey are eligible to receive Company contributions are matched at 100% up to an overall limit of 4% and colleagues receive an additional Company contribution equal to 2% of eligible earnings,the plan subject to limits set by the Internal Revenue Service. During 2021, colleagues with 401(k) eligible pay of at least $500,000 did not receive the matching or non-elective Company contributions and non-elective Company contributions were reduced to 1% for other
2022 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT - COMPENSATION MATTERS | |||
colleagues. Our NEOs are entitled to participate in our 401(k) plan on the same basis as colleagues generally.generally and, as a result, were not be eligible to receive Company 401(k) contributions in 2021. For 2022, we have reinstated Company matching contributions for high earners and have also implemented a 1.5% core contribution for all colleagues.
Health and Welfare Benefit Plans
NEOs are eligible to participate in Company-sponsored benefit programs, offered on the same terms and conditions as those made generally available to all of our colleagues, including medical, dental, vision, and short-term and long-term disability plans.
Perquisites and Other Benefits
We provide our executives, including our NEOs, with independent advisors to assist them with financial planning services if desired by the executives. Our executives, including our NEOs, are also covered by relocation and matching charitable contribution programs that generally cover our colleagues. During 2019,colleagues generally. Mr. Van Saun useduses the Company car for limited personal use for travel between his home and Mr. Conner was reimbursedhis primary office location so that he can most efficiently use that time for certain travel expenses. In addition,business purposes. During 2021, the Compensation and HR Committee approved an annual allowance of $100,000 relating to Mr. Van Saun’s spouse and Mr. Conner’s spouse each attended one work-related event andpersonal use of the Company aircraft, consistent with peer banks with similar policies. The full incremental cost to the Company of Mr. Van Saun’s spousepersonal use has been reflected in the “All Other Compensation” column of the 2021 Summary Compensation Table. In addition, on a few occasions during 2021 family members of each of Mr. Van Saun and Mr. Woods accompanied himthem on business trips aboard the Company aircraftaircraft; however, these trips resulted in connection with her attendance at that event, but there was no incremental cost associated with her travel onto the aircraft. For additional details, see footnote 7 to the2019 Summary Compensation Tablebelow.Company.
SECTION 5.4. GOVERNANCE POLICIES AND PRACTICES
Compensation and HR Committee Interlocks and Insider Participation
None of the members of the Compensation and HR Committee who served during 2021 are current or former officers or employees of the Company or any of our subsidiaries. No Company executive officer served on the compensation committee of another entity that employed an executive officer who also served on our Board. No Company executive officer served as a director of an entity that employed an executive officer who also served on our Compensation and HR Committee.
Compensation Consultants
The Compensation and HR Committee retained Compensation Advisory Partners, LLC (“CAP”) to provide guidance and advice on compensation-related matters during 2019.2021. CAP has been directly selected and retained by the Compensation and HR Committee to provide a broad set of services pertaining to the compensation of our
|
| |||
executives and our directors. The Compensation and HR Committee does not engage CAP for any additional services outside of executive and director compensation consulting, and they are not separately engaged by management for any services. In connection with CAP’s retention and on an annual basis, the Compensation and HR Committee conducts an assessment of potential conflicts of interest, considering various factors including the six factors mandated by the New York Stock Exchange rules, and no conflicts of interest relating to its services have been identified.
In addition, management retains McLagan to provide market compensation data, which is referenced by the Compensation and HR Committee when making executive compensation decisions as discussed earlier in “—Section 2. Determining ExecutiveNEO Compensation.”
Compensation Peer Group
As mentioned earlier in “—Section 2. Determining ExecutiveNEO Compensation”, the Compensation and HR Committee refers to peer data as a reference point in making compensation decisions and to better understand whether our pay practices remain competitive, although we do not target or benchmark a specific percentile for executive compensation. In determining the appropriate positioning of our compensation relative to that of peers, the Compensation and HR Committee focuses on how well the Company has performed relative to internal targets and peers, including the rate of growth in various metrics relative to peers.
2022 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT - COMPENSATION MATTERS | |||
The Compensation and HR Committee reviews the compensation peer group annually in consultation with its compensation consultant, with the Compensation and HR Committee making any adjustments to the peer group based on the advice of management and its compensation consultant. The peer group consists of companies with which the Company competes for talent and stockholder investments, and which are generally similar in size and business mix.
During the 2019Compensation and HR Committee’s 2021 review of our peer group, it was determined that the Compensation and HR Committee considered whether any additional companies shouldbelow peer group continues to be added as peers and also considered whether Truist Financial would be an appropriate peer for the Company followingand will continue in effect until the combination of BB&T and SunTrust. In connection with that review, the Compensation and HR Committee determined that Huntington Bancshares and Truist Financial should be included in the compensation peer group starting in 2020. This peer group change corresponds with identical changes that have been made to our financial peer group for 2020.next annual review.
Comerica Corporation | KeyCorp |
Regions Financial
| ||
Fifth Third Bancorp | M&T Bank Corporation |
Truist Financial
| ||
Huntington Bancshares
| PNC Financial Services | U.S. Bancorp |
Clawback and Forfeiture Process
The Company maintains a firm-wide process through which events (referred to as “Trigger Events”) are reviewed to determine whether they should have an impact on a colleague’s compensation from previous years or for the current year. This process applies to all our colleagues, including our NEOs. The Accountability Review Panel (“ARP”) consists of the direct reports to our CEO with our Chief Risk Officer serving as chair and meets on a regular basis to consider whether specific Trigger Events should result in compensation adjustments for involved colleagues. Trigger Events include not only any financial restatement,restatements, but also events having a material impact on the Company that have arisen as a result of certain colleague behavior, including failure to adequately consider risk. Potential actions by the ARP include current-year compensation adjustment,adjustments, forfeiture of unvested awards, or clawback. This process is in addition to any clawback or recovery rights under applicable law.
|
| |||
The Compensation and HR Committee monitors regulatory developments relating to clawback and forfeiture and will continue to evaluate our practices in order to ensure they drive appropriate behavior and discourage inappropriate risk taking, as well as comply with applicable law.
Stock Ownership and Retention Guidelines
The Company maintains stock ownership and retention guidelines in order to further align the long-term interests of our executives with those of our stockholders. Our stock ownership guidelines require that our executives hold shares having an aggregate value equal to a multiple of executives’ annual base salary, as reflected below. During 2019, the stock ownership guideline for our CEO was increased from 5x to 6x base salary.
Position | Multiple of Salary | |
Chief Executive Officer |
6x salary | |
| Executive Committee members (including NEOs) | 3x salary | |
| Other Executive Officers | 1x salary |
Shares that count for purposes of ownership under the guidelines include (i) shares or units for which receipt has been deferred (including shares held through our 401(k) plan, shares purchased under ourtax-qualified employee stock purchase program, unvested RSUs, and shares or units held through a deferred compensation plan maintained by the Company), (ii) shares held in a trust for an immediate family member, provided the executive or director retains investment control, and (ii)(iii) restricted stock and unvested RSUs (that may only be settled in shares) that are subject to time-based vesting conditions only. Unexercised options (whether vested or
2022 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT - COMPENSATION MATTERS | |||
unvested), performance awards (including performance-based restricted stock and performance-based units), and unvested RSUs that may only be settled in cash would not count towards the satisfaction of these guidelines.
Each executive has five years from the date he or she becomes subject to these guidelines to achieve compliance. In addition, executives are required to hold 50% of the net shares acquired as a result of settlement of compensatory awards until he is in compliance with his applicable ownership guidelines have been met.requirement. As of December 31, 2019,2021, each of our NEOs was in compliance with his applicable ownership requirement.
Prohibition on Hedging and Pledging
We prohibit our colleagues and directors, including our NEOs and other executive officers, from engaging in any hedging transactions (including transactions involving options, puts, calls, prepaid variable forward contracts, equity swaps, collars and exchange funds or other derivatives) that are designed to hedge or offset a decrease in the market value of the Company’s equity securities or pledging their ownership in our securities (including equity-based awards), which would undermine the risk alignment embedded in our executive compensation program.
Process for Approval of Equity Grants
We do not grant equity awards in anticipation of the release of material,non-public information, nor do we time the release of material,non-public information based on equity grant dates. The Compensation and HR Committee has delegated the authority to makeoff-cycle equity grants under the Citizens Financial Group, Inc. 2014 Omnibus Plan (“Omnibus Plan”) to participants other than our executives to the Equity Committee of the Board, which is comprised of our Chairman and CEO, subject to limits designated by the Compensation and HR Committee, as described above in “Corporate Governance Matters—Board Governance and Oversight—Committees of the Board.”
Tax Deductibility of Compensation
Under Section 162(m) of the Internal Revenue Code, (“Section 162(m)”), a public company generally may not deduct compensation in excess of $1 million paid to its CEO and other covered officers. The Tax Cuts and Jobs Act (“TCJA”) made certain changes to Section 162(m), most notably repealing the exemption for qualified performance-based compensation for taxable years beginning after December 31, 2017 and expanding the scope of persons covered by its limitations on deductibility. Accordingly, compensation paid after 2017 to our covered executive officers in excess of $1 million will not be deductible unless it qualifies for transition relief applicable
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| |||
to certain arrangements in place as of November 2, 2017. We have historically sought to structure our variable equity-based and cash-based awards to be deductible under Section 162(m), to the extent possible. However, to maintain flexibility we do not have a policy requiring compensation to be fully deductible under Section 162(m). The Company believes that tax deductibility of compensation should not be the sole or primary factor inIn setting executive compensation, policy orthe Compensation and HR Committee considers the factors identified in rewarding executive performance. While the Company plans to rely on the transition relief includedmore detail in the TCJA to the extent practicable, as a result of the elimination of the exemption for qualified performance-based compensation more of our covered executive officers’ compensation is expected to benon-deductible under “—Section 162(m) in the future. 2. Determining NEO Compensation.”
The Compensation and HR Committee has reviewed and discussed the CD&A included in this proxy statement with members of management, and based on such review and discussions, the Compensation and HR Committee recommended to the Board that the CD&A be included in this proxy statement.
The Compensation and Human Resources |
Leo I. Higdon (Chair) |
William P. Hankowsky |
Edward J. Kelly III |
Shivan Subramaniam |
Wendy A. Watson |
| CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT - COMPENSATION MATTERS | |||
20192021 Summary Compensation Table
This20192021 Summary Compensation Tablereflects the compensation of our NEOs in accordance with SEC reporting rules, which require that cash awards be disclosed in the year in which they are earned and that equity grants be disclosed in the year of grant (regardless of whether they were earned for performance during that year or the prior year).
Name and Principal Position | Year | Salary ($)(2) | Bonus ($)(3) | Stock Awards ($)(4) | Non-Equity Incentive Plan Compensation ($)(5) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(6) | All Other Compensation ($)(7) | Total ($) | Year | Salary ($)(1) | Bonus ($)(2) | Stock Awards ($)(3) | Change in ($)(4) | All Other Compensation ($)(5) | Total ($) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Bruce Van Saun, | 2019 | 1,487,000 | 2,553,900 | 5,749,060 | - | - | 108,482 | 9,898,442 | 2021 | 1,487,000 | 2,928,900 | 7,840,912 | - | 173,264 | 12,430,076 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Chairman & Chief | 2018 | 1,487,000 | 2,463,900 | 5,259,033 | - | - | 196,000 | 9,405,933 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Executive Officer | 2017 | 1,487,000 | - | 4,699,056 | 2,253,900 | - | 110,033 | 8,549,989 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Chairman & | 2020 | 1,487,000 | 2,268,900 | 10,422,527 | - | 156,896 | 14,335,323 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Chief Executive Officer | 2019 | 1,487,000 | 2,553,900 | 5,749,060 | - | 108,482 | 9,898,442 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
John F. Woods, | 2019 | 700,000 | 937,500 | 2,099,972 | - | - | 33,621 | 3,771,093 | 2021 | 700,000 | 1,105,000 | 3,005,551 | - | 26,015 | 4,836,566 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Vice Chairman & | 2018 | 700,000 | 900,000 | 1,889,986 | - | - | 64,859 | 3,554,845 | 2020 | 700,000 | 852,000 | 3,825,899 | - | 35,001 | 5,412,900 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Chief Financial Officer | 2017 | 619,231 | 3,000,000 | 4,659,743 | 810,000 | - | 12,825 | 9,101,799 | 2019 | 700,000 | 937,500 | 2,099,972 | - | 33,621 | 3,771,093 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Donald H. McCree III, | 2019 | 700,000 | 990,000 | 2,327,448 | - | - | 5,600 | 4,023,048 | 2021 | 700,000 | 1,065,000 | 3,033,796 | - | 20,000 | 4,818,796 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Vice Chairman, | 2018 | 700,000 | 997,500 | 2,222,468 | - | - | 12,602 | 3,932,570 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Vice Chairman & | 2020 | 700,000 | 864,000 | 4,040,136 | - | 30,700 | 5,634,836 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Head of Commercial Banking | 2017 | 700,000 | - | 1,977,481 | 952,500 | - | 119,907 | 3,749,888 | 2019 | 700,000 | 990,000 | 2,327,448 | - | 5,600 | 4,023,048 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Brad L. Conner, | 2019 | 700,000 | 735,000 | 1,714,987 | - | 20,299 | 96,445 | 3,266,731 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Former Vice Chairman, | 2018 | 700,000 | 735,000 | 1,627,456 | - | 0 | 69,929 | 3,132,385 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Head of Consumer Banking(1) | 2017 | 700,000 | - | 1,487,475 | 697,500 | 13,875 | 54,983 | 2,953,833 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Malcolm Griggs, | 2021 | 535,000 | 746,000 | 1,199,100 | - | 25,000 | 2,505,100 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Executive Vice President, | 2020 | 532,692 | 596,000 | 1,531,928 | - | 44,100 | 2,704,720 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Chief Risk Officer & General Counsel | 2019 | 525,000 | 670,000 | 983,978 | - | 41,800 | 2,220,778 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Malcolm Griggs, | 2019 | 525,000 | 670,000 | 983,978 | - | - | 41,800 | 2,220,778 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Brendan Coughlin, | 2021 | 625,000 | 637,500 | 1,181,250 | 0 | - | 2,443,750 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Executive Vice President & | 2018 | 519,231 | 710,368 | 878,958 | - | - | 71,194 | 2,179,751 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Chief Risk Officer | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Head of Consumer Banking | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (1) | Mr. |
|
Amounts in this column reflect the cash portion of annual variable compensation awards for the |
Mr. Van Saun elected to defer 80% of the cash portion of his 2019 variable compensation ($2,043,120 out of $2,553,900) pursuant to the CFG Voluntary Executive Deferred Compensation Plan, which is discussed in the narrative following the2019 Nonqualified Deferred CompensationTable.
Amounts in this column for |
| CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT - COMPENSATION MATTERS | |||
|
For PSUs granted in 2021, the amounts above were calculated based on the probable outcome of the performance conditions as of the service inception date, and represent the value of the target number of units granted consistent with the estimate of aggregate compensation cost to be recognized over the service period determined as of the service inception date under FASB ASC 718. AsMaximum payout level for our annual 2021 PSUs is 150% of the service inception date, the valuestarget; maximum payout of theour retention PSUs grantedis limited to the NEOs assuming the highest level125% of performance (150% of the grant date value), were as follows: Mr. Van Saun ($6,159,723); Mr. Woods ($2,249,970); Mr. McCree ($2,493,726); Mr. Conner ($1,837,494); and Mr. Griggs ($737,965).target. For a breakdown of all awards granted during 2019,2021, see the20192021 Grants of Plan-Based AwardsTable.table.
The |
|
The below table reflects |
401(k) Company Contribution ($) | Charitable Matching Contribution ($) | Travel ($) | Financial Planning ($) | Other ($) | Total ($) | |||||||||||||||||||||||||||||||||
| Name | Charitable Matching Contribution ($) | Personal Use ($) | Other ($) | Total ($) | ||||||||||||||||||||||||||||||||||
Bruce Van Saun | 16,800 | 50,000 | - | 27,945 | 13,737 | 108,482 | 50,000 | 78,959 | 44,305 | 173,264 | ||||||||||||||||||||||||||||
John F. Woods | 16,800 | - | - | 16,821 | - | 33,621 | 9,000 | - | 17,015 | 26,015 | ||||||||||||||||||||||||||||
Donald H. McCree III | 5,600 | - | - | - | - | 5,600 | 20,000 | - | - | 20,000 | ||||||||||||||||||||||||||||
Brad L. Conner | 16,800 | 10,500 | 51,806 | 16,312 | 1,027 | 96,445 | ||||||||||||||||||||||||||||||||
Malcolm Griggs | 16,800 | 25,000 | - | - | - | 41,800 | 25,000 | - | - | 25,000 | ||||||||||||||||||||||||||||
Brendan Coughlin | - | - | - | - | ||||||||||||||||||||||||||||||||||
| CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT - COMPENSATION MATTERS | |||
20192021 Grants of Plan-Based Awards
Estimated Future Payouts Under Equity Incentive | All Other Stock Awards: Number of Shares of Stock or Units (#) | Grant Date Fair Value of Stock Awards ($)(1) | Estimated Future Payouts Under Equity Incentive | All Other Stock Awards: Number of Shares of Stock or Units (#) | Grant Date Fair Value of Stock Awards ($)(1) | |||||||||||||||||||||||
| Plan Awards | Plan Awards
| |||||||||||||||||||||||||||
| Name | Grant Date | Threshold (#) | Target (#) | Maximum (#) | Grant Date | Threshold (#) | Target (#) | Maximum (#) | ||||||||||||||||||||
| Bruce Van Saun | 3/1/2021 | (2) | - | - | - | 42,680 | 1,890,724 | |||||||||||||||||||||
| 3/1/2019 | (2) | 55,493 | 110,986 | 166,479 | - | 4,106,482 | 3/1/2021 | (3) | 38,412 | 76,825 | 115,236 | - | 3,450,211 | |||||||||||||||
| 3/1/2019 | (3) | - | - | - | 44,394 | 1,642,578 | 5/13/2021 | (4) | 37,892 | 50,525 | 63,156 | - | 2,499,977 | |||||||||||||||
| John F. Woods | 3/1/2021 | (2) | - | - | - | 16,027 | 709,996 | |||||||||||||||||||||
| 3/1/2019 | (2) | 20,270 | 40,540 | 60,810 | - | 1,499,980 | 3/1/2021 | (3) | 14,424 | 28,848 | 43,272 | - | 1,295,564 | |||||||||||||||
| 3/1/2019 | (3) | - | - | - | 16,216 | 599,992 | 5/13/2021 | (4) | 15,156 | 20,210 | 25,262 | - | 999,991 | |||||||||||||||
| Donald H. McCree III | 3/1/2021 | (2) | - | - | - | 16,252 | 719,964 | |||||||||||||||||||||
| 3/1/2019 | (2) | 22,466 | 44,932 | 67,398 | - | 1,662,484 | 3/1/2021 | (3) | 14,626 | 29,255 | 43,882 | - | 1,313,842 | |||||||||||||||
| 3/1/2019 | (3) | - | - | - | 17,972 | 664,964 | 5/13/2021 | (4) | 15,156 | 20,210 | 25,262 | - | 999,991 | |||||||||||||||
| Brad L. Conner | ||||||||||||||||||||||||||||
| Malcolm Griggs | 3/1/2021 | (2) | - | - | - | 11,772 | 521,500 | |||||||||||||||||||||
| 3/1/2019 | (2) | 16,554 | 33,108 | 49,662 | - | 1,224,996 | 3/1/2021 | (3) | 4,204 | 8,408 | 12,612 | - | 377,603 | |||||||||||||||
| 3/1/2019 | (3) | - | - | - | 13,243 | 489,991 | 5/13/2021 | (4) | 4,546 | 6,063 | 7,578 | - | 299,997 | |||||||||||||||
| Malcolm Griggs | ||||||||||||||||||||||||||||
| Brendan Coughlin | 3/1/2021 | (2) | - | - | - | 8,041 | 356,216 | |||||||||||||||||||||
| 3/1/2019 | (2) | 6,648 | 13,297 | 19,945 | - | 491,989 | 3/1/2021 | (3) | 7,236 | 14,475 | 21,712 | - | 650,072 | |||||||||||||||
| 3/1/2019 | (3) | - | - | - | 13,297 | 491,989 | 5/13/2021 | (4) | 2,652 | 3,536 | 4,420 | - | 174,961 | |||||||||||||||
| (1) | Amounts in this column reflect the grant date fair value of awards calculated in accordance with FASB ASC 718, using the valuation methodology and assumptions set forth in Note |
| (2) | Represents |
|
| (3) | Represents PSUs granted under the Omnibus Plan for performance year 2020, with ultimate payouts to be based half on ROTCE and half on Diluted EPS in addition to a +/-10% relative TSR modifier, in each case during the performance period of 2021-2023 with an overall maximum payout of 150% of target. For more detail, see “Compensation Discussion and Analysis—Section 1. Executive Compensation Overview—Variable Compensation Mix.” |
| (4) | Represents the PSU retention awards granted in May 2021. Ultimate payout level will be determined based on performance relative to several quantitative and qualitative metrics across the four quadrants of performance (financial, customer, risk, and human capital) during the performance period of 2021-2022, with an overall maximum payout of 125% of target. For more detail, see “Compensation Discussion and Analysis—Section 1. Executive Compensation Overview—Changes Following Ongoing Review of our Program.” |
| CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT - COMPENSATION MATTERS | |||
Outstanding Equity Awards at 20192021 FiscalYear-End
The following table shows, for each NEO, the outstanding equity awards held as of December 31, 2019.2021. These awards include RSUs and PSUs granted in years 2017, 20182019, 2020, and 2019.2021.
Stock Awards | ||||||||||||||||
| Name | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(1) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market Value or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(1) | ||||||||||||
Bruce Van Saun | ||||||||||||||||
2017 RSUs (2) | 11,303 | 459,015 | - | - | ||||||||||||
2017 PSUs(3) | 127,170 | 5,164,374 | - | - | ||||||||||||
2018 RSUs (4) | 23,011 | 934,477 | - | - | ||||||||||||
2018 PSUs (5) | - | - | 86,296 | 3,504,481 | ||||||||||||
2019 RSUs (6) | 44,394 | 1,802,840 | - | - | ||||||||||||
2019 PSUs(7) | - | - | 83,239 | 3,380,336 | ||||||||||||
John F. Woods | ||||||||||||||||
RSUBuy-out(8) | 32,956 | 1,338,343 | - | - | ||||||||||||
2018 RSUs (4) | 8,269 | 335,804 | - | - | ||||||||||||
2018 PSUs(5) | - | - | 31,013 | 1,259,438 | ||||||||||||
2019 RSUs (6) | 16,216 | 658,532 | - | - | ||||||||||||
2019 PSUs(7) | - | - | 30,405 | 1,234,747 | ||||||||||||
Donald H. McCree III | ||||||||||||||||
2017 RSUs (2) | 4,756 | 193,141 | - | - | ||||||||||||
2017 PSUs(3) | 53,516 | 2,173,285 | - | - | ||||||||||||
2018 RSUs (4) | 9,724 | 394,892 | - | - | ||||||||||||
2018 PSUs (5) | - | - | 36,469 | 1,481,006 | ||||||||||||
2019 RSUs (6) | 17,972 | 729,843 | - | - | ||||||||||||
2019 PSUs(7) | - | - | 33,699 | 1,368,516 | ||||||||||||
Brad L. Conner | ||||||||||||||||
2017 RSUs (2) | 3,578 | 145,303 | - | - | ||||||||||||
2017 PSUs(3) | 40,254 | 1,634,715 | - | - | ||||||||||||
2018 RSUs (4) | 7,121 | 289,184 | - | - | ||||||||||||
2018 PSUs(5) | - | - | 26,705 | 1,084,490 | ||||||||||||
2019 RSUs (6) | 13,243 | 537,798 | - | - | ||||||||||||
2019 PSUs(7) | - | - | 24,831 | 1,008,387 | ||||||||||||
Malcolm Griggs | ||||||||||||||||
2017 RSUs (2) | 3,283 | 133,323 | - | - | ||||||||||||
2017 PSUs(3) | 14,774 | 599,972 | - | - | ||||||||||||
2018 RSUs (4) | 6,730 | 273,305 | - | - | ||||||||||||
2018 PSUs (5) | - | - | 10,096 | 409,999 | ||||||||||||
2019 RSUs (6) | 13,297 | 539,991 | - | - | ||||||||||||
2019 PSUs(7) | - | - | 9,972 | 404,963 | ||||||||||||
|
|
|
Stock Awards | ||||||||||||||||
| Name | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(1) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market Value or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(1) | ||||||||||||
| Bruce Van Saun | ||||||||||||||||
| 2019 RSUs (2) | 14,797 | 699,158 | - | - | ||||||||||||
| 2019 PSUs (3) | 78,022 | 3,686,540 | - | - | ||||||||||||
| 2020 RSUs (4) | 34,065 | 1,609,571 | - | - | ||||||||||||
| 2020 PSUs (5) | - | - | 127,746 | 6,035,999 | ||||||||||||
| 2021 RSUs (6) | 42,680 | 2,016,630 | - | - | ||||||||||||
| 2021 PSUs (7) | - | - | 76,825 | 3,629,981 | ||||||||||||
| 2021 PSUs (8) | - | - | 50,525 | 2,387,306 | ||||||||||||
| John F. Woods | ||||||||||||||||
| 2019 RSUs (2) | 5,405 | 255,386 | - | - | ||||||||||||
| 2019 PSUs (3) | 28,499 | 1,346,578 | - | - | ||||||||||||
| 2020 RSUs (4) | 12,504 | 590,814 | - | - | ||||||||||||
| 2020 PSUs (5) | - | - | 46,893 | 2,215,694 | ||||||||||||
| 2021 RSUs (6) | 16,027 | 757,276 | - | - | ||||||||||||
| 2021 PSUs (7) | - | - | 28,848 | 1,363,068 | ||||||||||||
| 2021 PSUs (8) | - | - | 20,210 | 954,923 | ||||||||||||
| Donald H. McCree III | ||||||||||||||||
| 2019 RSUs (2) | 5,990 | 283,028 | - | - | ||||||||||||
| 2019 PSUs (3) | 31,587 | 1,492,486 | - | - | ||||||||||||
| 2020 RSUs (4) | 13,204 | 623,889 | - | - | ||||||||||||
| 2020 PSUs (5) | - | - | 49,519 | 2,339,773 | ||||||||||||
| 2021 RSUs (6) | 16,252 | 767,907 | - | - | ||||||||||||
| 2021 PSUs (7) | - | - | 29,255 | 1,382,299 | ||||||||||||
| 2021 PSUs (8) | - | - | 20,210 | 954,923 | ||||||||||||
| Malcolm Griggs | ||||||||||||||||
| 2019 RSUs (2) | 4,432 | 209,412 | - | - | ||||||||||||
| 2019 PSUs (3) | 9,347 | 441,646 | - | - | ||||||||||||
| 2020 RSUs (4) | 10,053 | 475,004 | - | - | ||||||||||||
| 2020 PSUs (5) | - | - | 15,081 | 712,577 | ||||||||||||
| 2021 RSUs (6) | 11,772 | 556,227 | - | - | ||||||||||||
| 2021 PSUs (7) | - | - | 8,408 | 397,278 | ||||||||||||
| 2021 PSUs (8) | - | - | 6,063 | 286,477 | ||||||||||||
| Brendan Coughlin | ||||||||||||||||
| 2019 RSUs (2) | 2,296 | 108,486 | - | - | ||||||||||||
| 2019 PSUs (3) | 4,843 | 228,832 | - | - | ||||||||||||
| 2019 RSUs (9) | 14,168 | 669,438 | - | - | ||||||||||||
| 2020 RSUs (4) | 5,401 | 255,197 | - | - | ||||||||||||
| 2020 PSUs (5) | - | - | 8,103 | 382,867 | ||||||||||||
| 2021 RSUs (6) | 8,041 | 379,937 | - | - | ||||||||||||
| 2021 PSUs (7) | - | - | 14,475 | 683,944 | ||||||||||||
| 2021 PSUs (8) | - | - | 3,536 | 167,076 | ||||||||||||
| CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT - COMPENSATION MATTERS | |||
|
|
These amounts reflect RSUs granted in March 2019 for the 2018 performance year under the Omnibus Plan, which had |
These amounts reflect PSUs granted in March 2019 for the 2018 performance year under the Omnibus Plan, which were |
| (4) | These amounts reflect RSUs granted in March 2020 for the 2019 performance year under the Omnibus Plan, which had two remaining equal installments scheduled to vest on March 2, 2022 and 2023. |
| (5) | These amounts reflect PSUs granted in March 2020 for the 2019 performance year under the Omnibus Plan, and then subsequently modified in December 2020, which are scheduled to vest on March 2, 2023 following the end of the three-year performance period of January 1, 2020 through December 31, 2022, based half on ROTCE and half on Diluted EPS in addition to a +/-10% TSR relative modifier. For more detail, see “Compensation Discussion and Analysis—Section1. Executive Compensation |
| (6) | These amounts reflect RSUs granted in March 2021 for the 2020 performance year under the Omnibus Plan, which had three remaining equal installments scheduled to vest on March 1, 2022, 2023, and 2024. |
| (7) | These amounts reflect PSUs granted in March 2021 for the 2020 performance year under the Omnibus Plan, which are scheduled to vest on March 1, 2024 following the end of the three-year performance period of January 1, 2021 through December 31, 2023, based half on ROTCE and half on Diluted EPS in addition to a +/-10% TSR relative modifier. For more detail, see “Compensation Discussion and Analysis—Section 1. Executive Compensation Overview—Variable Compensation Mix.” Based on performance through December 31, 2021, amounts in this row reflect overall 100% of target level of performance, with maximum performance level reflected for ROTCE and threshold performance level reflected for Diluted |
| (8) | These amounts reflect PSU retention awards granted in May 2021, which are scheduled to vest on May 13, 2023, following the end of the two-year performance period of January 1, 2021 through December 31, 2022, based on performance relative to several quantitative and qualitative metrics across the four quadrants of performance (financial, customer, risk, and human capital).Based on performance through December 31, 2021, amounts in this column reflect target level of performance. |
| (9) | This amount reflects an RSU |
2022 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT - COMPENSATION MATTERS | |||
Stock Vested in 20192021
Stock Awards | Stock Awards | |||||||||||||||
Name | Number of Shares Acquired on Vesting(#)(1) | Value Realized on Vesting($)(2) | Number of Shares Acquired on Vesting(#)(1) | Value Realized on Vesting($)(2) | ||||||||||||
Bruce Van Saun |
| 317,976 |
|
| 11,734,417 |
|
| 145,984 |
|
| 6,469,816 |
| ||||
John F. Woods |
| 44,154 |
|
| 1,633,698 |
|
| 52,681 |
|
| 2,334,769 |
| ||||
Donald H. McCree III |
| 46,533 |
|
| 1,721,721 |
|
| 60,835 |
|
| 2,696,047 |
| ||||
Brad L. Conner |
| 50,454 |
|
| 1,866,798 |
| ||||||||||
Malcolm Griggs |
| 31,608 |
|
| 1,169,496 |
|
| 24,833 |
|
| 1,100,906 |
| ||||
Brendan Coughlin |
| 12,867 |
|
| 570,440 |
| ||||||||||
| (1) | Amounts reflect Company shares issued under the Omnibus Plan in connection with the vesting of equity-based awards in |
| (2) | The values reflected in this column were calculated by multiplying the number of shares that vested by the closing price of a Company share on the NYSE on each applicable vesting date during |
|
20192021 Pension Benefits
Name | Plan Name | Number of Years Credited Service(2) | Present Value of Accumulated Benefits($)(3) | Plan Name | Number of Years Credited Service (2) | Present Value of Accumulated Benefits($) (3) | ||||||||||||||||||
Bruce Van Saun | - | - | - |
| - |
|
| - |
|
| - |
| ||||||||||||
John F. Woods | - | - | - |
| - |
|
| - |
|
| - |
| ||||||||||||
Donald H. McCree III | - | - | - |
| - |
|
| - |
|
| - |
| ||||||||||||
Brad L. Conner(1) | CFG Pension Plan | 4.5411 | 125,431 | |||||||||||||||||||||
Malcolm Griggs | - | - | - |
| - |
|
| - |
|
| - |
| ||||||||||||
Brendan Coughlin(1) |
| CFG Pension Plan |
|
| 8.3553 |
|
| 162,120 |
| |||||||||||||||
| (1) | Mr. |
|
| |||
| (2) | After December 31, 2012, there were no further benefit accruals under the CFG Pension Plan. Therefore, an eligible colleague’s actual years of service may be more than such colleague’s years of credited service under the CFG Pension Plan. |
| (3) | For Mr. |
2019 Pension Benefits
We sponsor the CFG Pension Plan (formerly RBS Americas Pension Plan) (“Pension Plan”), which is anon-contributory defined benefit pension plan that is qualified under Section 401(a) of the Internal Revenue Code. The Pension Plan was closed to new hires andre-hires effective January 1, 2009 and frozen to all participants and benefit accruals effective December 31, 2012. Regular full-time and part-time colleagues of the Company who were hired before January 1, 2009 and completed one year of service were eligible for benefits under the Pension Plan.
The benefit under the Pension Plan for colleagues is currently calculated using a formula based on a colleague’s “average gross compensation” (defined under the Pension Plan as a participant’s average eligible compensation during five years of employment (whether or not consecutive) prior to December 31, 2012 yielding the highest average), subject to limitations imposed by the Internal Revenue Service. Eligible compensation generally includes all taxable compensation, other than certain equity-based andnon-recurring amounts. The formula generally provides for a benefit of 1% of average gross compensation multiplied by each year of the participant’s credited service, with such benefit percentage varying depending on the colleague’s hire date and retirement date, as specified under the Pension Plan. Benefits under the Pension Plan are generally payable in the form of a monthly annuity, though benefits under the Pension Plan may be received as a lump sum payment.
2022 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT - COMPENSATION MATTERS | |||
A participant’s pension benefit under the Pension Plan vests in full upon the earlier of completion of five years of service or the attainment of normal retirement date. Normal retirement date is the later of attainment of age 65 or the fifth anniversary of the date the participant commenced participation in the Pension Plan. Participants may begin receiving full retirement benefits on the first day of the month coincident with or immediately following the normal retirement date and may be eligible for reduced benefits if retiring after attainment of age 55 with a minimum of five years of vesting service. Participants who retire after attainment of age 62 with a minimum of twenty years of vesting service are eligible to receive unreduced retirement benefits. Mr. ConnerCoughlin became a participant in the Pension Plan on JulySeptember 1, 2009.2005. Mr. Conner isCoughlin will be eligible to receive unreduced early retirement benefits under the Pension Plan following his retirement on March 3, 2020; however, based on hiscommencing at age 62 provided that he remains actively employed at date of hire he will never be eligible for unreduced retirement benefits.Citizens through age 55.
20192021 Nonqualified Deferred Compensation
Name | Executive Contributions in Last FY ($) | Aggregate Earnings in Last FY ($)(2) | Aggregate Balance at Last FY ($) | Executive Contributions in Last FY ($) | Aggregate Earnings in Last FY ($)(2) | Aggregate Balance at Last FYE ($) | ||||||||||||||||||
Bruce Van Saun(1) |
| 2,191,820 |
|
| 219,975 |
|
| 9,439,355 |
|
| 2,196,675 |
|
| 1,849,748 |
|
| 17,278,428 |
| ||||||
John F. Woods |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
| ||||||
Donald H. McCree III |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
| ||||||
Brad L. Conner |
| - |
|
| - |
|
| - |
| |||||||||||||||
Malcolm Griggs |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
| ||||||
Brendan Coughlin(1) |
| 12,500 |
|
| 17,994 |
|
| 138,786 |
| |||||||||||||||
| (1) | The material terms of the CFG Voluntary Executive Nonqualified Deferred Compensation Plan are described in the narrative below. Executive contributions for Mr. Van Saun in the last fiscal year include the deferred portion of his |
|
| |||
|
| (2) | For |
We sponsor the CFG Voluntary Executive Nonqualified Deferred Compensation Plan, which does not offer any matching contributions or provide for above-market earnings. During 2019, Mr.2021, Messrs. Van Saun and Coughlin were the only NEOs who participated in the CFG Voluntary Executive Nonqualified Deferred Compensation Plan andPlan. Mr. Van Saun elected to defer 10% of his base salary and 80%75% of the cash portion of his variable compensation award for the 20192021 performance year. Mr. Coughlin elected to defer 2% of his base salary in 2021.
Under the CFG Voluntary Executive Nonqualified Deferred Compensation Plan, eligibility is limited to colleagues who have total compensation in the immediately preceding year equal to or exceeding the Internal Revenue Code Section 401(a)(17) limit for the relevant plan year. Participants are permitted to defer between 1% and 80% of their base salary and annual cash bonus. Participants select the allocation of their accounts among investment indices available under the plan. Our Board has the power to amend the plan at any time, as long as the amount accrued to the date of amendment in any account under the plan is not decreased or otherwise restricted. In addition, following a termination of employment, participants in the CFG Voluntary Executive Nonqualified Deferred Compensation Plan are entitled to receive amounts that have been deferred under that plan.
2022 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT - COMPENSATION MATTERS | |||
We have entered into an employment agreement with each of our NEOs, the material terms of which are summarized below, including severance provisions. In addition, the treatment of equity-based awards held by our NEOs upon a termination of employment and change of control are summarized below. Please see thePotential Payments Tabletablebelow for quantification of estimated payments and benefits to which our NEOs would be entitled under various termination scenarios and upon a change of control, in each case, assuming such event occurred on December 31, 2019.2021.
Equity Awards
Equity awards under the Omnibus Plan granted to our NEOs have the following treatment upon termination of employment. Provisions relating to the treatment of Bruce Van Saun’s equity-based awards upon termination of employment (including following a change of control of the Company) are included below in the description of his employment agreement.
| • | Termination |
RSU Awards -If a participant’s employment with the Company is terminated by the Company without “cause” (as defined in award agreements), or by reason of “disability” or “retirement” (as defined in award agreements), vesting and settlement of awards will continue as originally scheduled subject to the participant not engaging in “detrimental activity” (as defined in award agreements), or “competitive activity” (as defined in award agreements) in the case of disability or retirement, during the remaining vesting period. If a participant voluntarily resigns or is terminated by the Company for cause, unvested awards will be forfeited. All unvested awards will become vested on the date of a participant’s death.
PSU Awards -In the event of a termination by reason of disability or retirement, awards will continue to vest in accordance with the original schedule subject to actual performance and will not bepro-rated based on service, provided the participant does not engage in detrimental activity or competitive activity. In the event of an involuntary termination by the Company of the grantee without cause, awards will continue to vest in accordance with the original schedule subject to actual performance and will not bepro-rated based on service, provided that the termination does not occur prior to the first anniversary of the performance period start date and the participant does not engage in detrimental activity; if the termination occurs prior to the first anniversary of the performance period start date, awards will be
|
| |||
forfeited. If a participant voluntarily resigns or is terminated for cause, unvested awards will be forfeited. Awards will become vested at target on the date of a participant’s death and will not be subject topro-ration based on service. PSU retention awards granted to our NEOs in May 2021 have the same termination treatment as annual PSU awards except that any unvested awards would be immediately forfeited in the event of a voluntary resignation, including for reason of retirement.
| • | Change of Control |
Omnibus Plan Provisions
In the event of a “change of control” (as defined in the Omnibus Plan and summarized below), except as otherwise provided in the applicable award agreement, the Compensation and HR Committee may provide for:
continuation or assumption of outstanding awards under the Omnibus Plan by the Company (if we are the surviving corporation) or by the surviving corporation or its parent;
substitution by the surviving corporation or its parent of awards with substantially the same terms and value as such outstanding awards under the Omnibus Plan;
acceleration of the vesting (including the lapse of any restrictions, with any performance criteria or conditions deemed met at target) or the right to exercise outstanding awards immediately prior to the date of the change of control and the expiration of awards not timely exercised by the date determined by the Compensation and HR Committee; or
in the case of outstanding stock options and SARs, cancelation in consideration of a payment in cash or other consideration equal to the intrinsic value of the award. The Compensation and HR Committee may, in its sole discretion, terminate without the payment of any consideration, any stock options or SARs for which the exercise or hurdle price is equal to or exceeds the per share value of the consideration to be paid in the change of control transaction.
2022 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT - COMPENSATION MATTERS | |||
Committee may, in its sole discretion, terminate without the payment of any consideration, any stock options or SARs for which the exercise or hurdle price is equal to or exceeds the per share value of the consideration to be paid in the change of control transaction. |
Under the Omnibus Plan, except as otherwise provided in a participant’sthe applicable award agreement, change of control generally means the occurrence of one or more of the following events:
the acquisition of more than 50% of the combined voting power of our outstanding securities (other than by an employee benefit plan or trust maintained by the Company);
the replacement of the majority of our directors during any12-month period;
the consummation of our merger or consolidation with another entity (unless our voting securities outstanding immediately before such transaction continue to represent at least 50% of the combined voting power and total fair market value of the securities of the surviving entity, or if applicable, the ultimate parent thereof, outstanding immediately after such transaction); or
the transfer of our assets having an aggregate fair market value of more than 50% of the fair market value of the Company and our subsidiaries immediately before such transfer, but only to the extent that in connection with such transfer or within a reasonable period thereafter, our stockholders receive distributions of cash and/or assets having a fair market value that is greater than 50% of the fair market value of the Company and our subsidiaries immediately before such transfer.
RSU and PSU Award Agreements
Upon a change of control, PSUs will be assessed to determine the actual number earned as of the date of the change of control and the earned portion will remain subject to time-based vesting conditions until the end of the original vesting period. If within 12 months following a change of control, the participant’s employment is terminated by the Company without cause or the participant resigns for “good reason” (as defined in award agreements), RSUs and PSUs will fully vest and be settled immediately following the termination, with the level of performance for PSUs measured as of the change of control.
|
| |||
Severance
The severance to which our NEOs are entitled in various circumstances is governed by their employment agreements, which are described below in “—Employment Agreements with Our NEOs.” None of our NEOs’ employment agreements providesprovide for excise taxgross-ups in connection with a change of control.
In addition to severance pay, under our severance practice our NEOs would also be entitled to receive benefits under our then-existing health and welfare plans for one month at active colleague rates, prior to the start of the COBRA continuation period. Outplacement services would also be offered for 12 months. We may amend or terminate this practice at any time.
Employment Agreements with Our NEOs
The material terms of the agreements entered into with our NEOs are summarized below.
Employment Agreement with Mr. Van Saun
In light of UK and European remuneration regulations ceasing to apply to the Company in late 2015, we entered into an amended employment agreement with Mr. Van Saun on May 5, 2016. The Compensation and HR Committee’s objective was to put into place an arrangement that balanced its former obligations under Mr. Van Saun’s prior agreement and achieved the following positive results for the Company: (i) motivates and rewards Mr. Van Saun for the achievement of our strategic objectives; (ii) provides additional retentive value; and (iii) aligns terms and conditions more closely with US market practice.
TheThis agreement hashad an initial five-year term that will bewas extended automatically for a subsequenttwo-year term, unlesswhich was scheduled to expire on May 5, 2023. In June 2021, a simple addendum to the agreement was entered into between the Company and Mr. Van Saun which will extend the term of the contract beyond its expiration in
2022 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT - COMPENSATION MATTERS | |||
May 2023 until terminated by either party provides at least 12 monthsparty. In addition to extending the term of the contract, the addendum also puts an obligation on the Company to provide Mr. Van Saun six-months’ notice in the event the Company chooses to terminate. Thereterminate his employment without cause, which is no further opportunity for automatic renewal beyond the additionalreciprocal to Mr. Van Saun’s obligation to provide two-yearsix-month term. Innotice in the event of Mr. Van Saun’s voluntary resignation, he would be required to providea resignation. Otherwise, the Company at least six months noticeterms of the agreement continued in order to effectuate an orderly handover of duties.effect with no changes.
Pursuant to the agreement, Mr. Van Saun is entitled to receive an annual base salary of $1,487,000 and has a target total compensation opportunity of $9.94 million, which was most recently increased from $9.0 millionamended in June 20192019. No changes were made to Mr. Van Saun’s target total compensation opportunity in light of the subsequent increases to median CEO compensation in our peer group.2020 or 2021. The form and terms of Mr. Van Saun’s variable compensation are to be determined annually by the Compensation and HR Committee. In addition, Mr. Van Saun is eligible to participate in employee benefits available to the Company’s senior executives generally.
The agreement also provided Mr. Van Saun with aone-time equity award with a target value of $3 million, as consideration for the elimination of the annual fixed cash pension benefit allowance of approximately $550,000 provided under his prior contract. This award vested in May 2019. The assessment of this award was discussed in our proxy statement filed on March 8, 2019.
Under the terms of his agreement, Mr. Van Saun is also entitled to the following payments and benefits upon termination of employment in various scenarios, in each case, subject to execution andnon-revocation of a release in our favor:
| Termination without cause or resignation for good reason absent a change of control | Mr. Van Saun would receive a lump sum cash severance payment equal to two times his base salary and would also receive apro-rata portion of his target cash bonus for the year of termination to be paid when cash bonuses are paid to other executives, in each case, subject to an orderly handover of duties. In addition, his outstanding unvested equity awards would continue to vest on their original schedule, with PSUs subject to actual performance and, in each case, subject to Mr. Van Saun not engaging in detrimental activity for 12 months post-termination. |
|
| ||||
| Termination without cause or resignation for good reason following a change of control | In the event of a qualifying termination of employment occurring within 24 months following a change of control, Mr. Van Saun would receive a lump sum cash severance payment equal to three times the sum of his base salary and his target cash bonus for the year of termination, plus apro-rata portion of his target cash bonus for the year of termination. Upon the change of control, Mr. Van Saun’s PSUs would be frozen at target performance level, but not accelerated. Following the subsequent qualifying termination, all of Mr. Van Saun’s outstanding equity awards would immediately vest and be paid. The agreement also provides that if any payments or benefits to Mr. Van Saun (whether or not under the employment agreement) would be considered parachute payments pursuant to Internal Revenue Code Section 280G, these payments and benefits would be reduced to the extent necessary to avoid triggering the excise tax under Internal Revenue Code Section 4999 unless he would be better off (on anafter-tax basis) if he received all payments and benefits due and paid all excise and income taxes. The employment agreement does not provide anygross-up for excise taxes. | |
| Resignation without Good Reason | Mr. Van Saun Because Mr. Van Saun currently meets the Company’s retirement rule (age plus years of service equals or exceeds 65, with a minimum of five years of service), his outstanding unvested equity awards would continue to vest on their original schedule, with PSUs subject to actual performance and, in each case, subject to Mr. Van Saun not engaging in competitive activity during the remaining vesting period or specified detrimental activity for 12 months post-termination. However, the PSU retention award granted to Mr. Van Saun in May 2021 would be forfeited. In the event that Mr. Van Saun did not truly retire and became employed by a financial services company specified in his non-compete provision, his outstanding equity awards would be forfeited. | |
2022 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT - COMPENSATION MATTERS | |||
| Death | Mr. Van Saun’s estate would receive his base salary through the end of the month in which his death occurs as well as apro-rata portion of his target cash bonus. In addition, his outstanding equity awards would immediately vest and be paid, with PSUs vesting at target level. | |
| Disability | Mr. Van Saun would continue to receive his base salary up to the date he becomes eligible for long-term disability benefits under the Company’s plan (currently, six months from the date of disability) and, in addition, his outstanding unvested equity awards would continue to vest on their original schedule, with PSUs subject to actual performance and, in each case, subject to Mr. Van Saun not engaging in competitive activity during the remaining vesting period or specified detrimental activity for 12 months post-termination. | |
Mr. Van Saun is subject to a perpetual confidentiality covenant. In addition, Mr. Van Saun is subject tocovenant and also non-competition andnon-solicitation covenants. Thenon-competition covenant applies for six months post-termination, concurrent with any notice period, in the event of a termination without cause or resignation for good reason. For this purpose, competitors are defined to include the following companies: J.P. Morgan Chase, Bank of America Corporation, Citigroup Inc., Wells Fargo & Company, U.S. Bancorp, Regions Financial Corporation, M&T Bank Corporation, PNC Financial Services Group, Fifth Third Bancorp, SunTrust Banks, Inc., Comerica Corporation, KeyCorp, BB&T Corporation, Capital One Financial Corp. and TD Bank Financial Group. Thenon-solicitation covenant prohibits solicitation of colleagues as well as customers and prospective clients for 12 months post-termination, concurrent with any notice period, in the event of a termination without cause or resignation for good reason.
|
| |||
The agreement includes the following definitions of cause and good reason:
“Cause” includes: (i) any indictment for, conviction of, plea of guilty or nolo contendere to by Mr. Van Saun for the commission of: (a) any felony, (b) any criminal offense within the scope of Section 19 of the Federal Deposit Insurance Act, 12 U.S. C. § 1829; or (c) a misdemeanor involving dishonesty; (ii) if Mr. Van Saun willfully commits a material breach of his obligations under his employment agreement or repeats or continues after written warning any material breach of his obligations under his employment agreement, or is, in the opinion of the Board, guilty of gross misconduct which brings him or the Company or any of its affiliates into disrepute; (iii) if Mr. Van Saun is guilty of dishonesty in the conduct of his duties under his employment agreement, gross incompetence, willful neglect of duty, or of mismanagement of his financial affairs through failure to observe the Company’s rules and procedures for the operation of bank accounts and/or borrowing; (iv) if Mr. Van Saun commits any act of bankruptcy or takes advantage of any statute for the time being in force offering relief to insolvent debtors; or (v) if, as a result of any default on the part of Mr. Van Saun, he is prohibited by law from acting as an officer of the Company or any of its affiliates.
“Good Reason” includes a material breach of the employment agreement by the Company, or a substantial diminution or other substantial adverse change, not consented to by Mr. Van Saun, in the nature or scope of his responsibilities, authorities, powers, functions or duties or in his base salary, except that removal of the role of Chairman of the Company from his duties shall not amount to good reason.
Employment Agreements with Other NEOs
Each of Messrs. Woods, McCree, ConnerGriggs, and GriggsCoughlin has entered into an employment agreement with the Company. These agreements generally provide for the terms of each executive’s compensation arrangement, including salary and variable compensation, vacation and eligibility for other health and welfare benefits. Under each executive’s agreement, the executive is subject to a notice period with regard to his intent to resign (120 days for Messrs. Woods, McCree, and ConnerCoughlin and 90 days for Mr. Griggs). In addition, each of the agreements contains covenants regarding thenon-solicitation of customers and colleagues that apply for 12 months following a termination of employment for any reason.
The agreements provide that the executive is entitled to a minimum payment of 26 weeks of base salary in the event he is made redundant or is terminated by the Company without “cause” (as defined in the agreements), subject to the execution andnon-revocation of a release in favor of the Company. This level of severance is
2022 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT - COMPENSATION MATTERS | |||
consistent with severance available to all executives. In addition, the agreements each provide for double trigger severance in the event of a qualifying termination following a change of control. The decision to provide this severance was made in 2017 following a review of peer practice and to achieve parity among members of senior management. In the event of a termination by the Company without “cause” (as defined in the agreements)cause or resignation by the executive with “good reason” (as defined in the agreements) within 24 months following a change of control, each of Messrs. Woods, McCree, ConnerGriggs and GriggsCoughlin will receive severance consisting of: (i) two times the sum of his current base salary and average cash bonus received during the prior three years, plus (ii) apro-rata cash bonus for the year in which termination occurs, also based on the average cash bonus during the prior three years.
The agreements in place for Messrs. Woods and McCree also provide that, for purposes of calculating retirement eligibility under the Company’s various plans, each executive will be credited with an additional five years of service. PursuantAlso, pursuant to Mr. Woods’ agreement, his target variable compensation is $2.7 million and when he joined the Company he was granted a $7 millionbuy-out award in order to compensate him for the bonus which would have otherwise been paid to him by his former employer for the 2016 year and the value of awards he forfeited in connection with his resignation. Of that amount, $3 million was paid in cash on March 31, 2017 and $4.66 million was granted in the form of RSUs with a three year vesting schedule (as of December 31, 2019 there was one remaining installment scheduled to vest on March 1, 2020 (32,956 units)), with the increase in award value from $4 million to $4.66 million due to the difference between the initial valuation and the grant date values.
|
| |||
million.
The agreements include the following definitions of cause and good reason:
“Cause” includes (i) any conviction (including a plea of guilty or of nolo contendere or entry into apre-trial diversion program) for the commission of a felony or any conviction of any criminal offense within the scope of Section 19 of the Federal Deposit Insurance Act, 12 U.S.C. § 1829; (ii) an act of gross misconduct, fraud, embezzlement, theft or material dishonesty with the executive’s duties or in the course of employment with the Company or an affiliate; (iii) failure on the part of executive to perform his employment duties in any material respect, which is not cured to the reasonable satisfaction of the Company within thirty (30)30 days after the executive receives written notice of such failure; (iv) the executive’s violation of the provisions of his employment agreement relating tonon-solicitation, confidentiality, ownership of materials, duty to return Company property or intellectual property rights; and/or (v) the executive makes any material false or disparaging comments about the Company or any Company affiliate, or any Company or Company affiliate employee, officer, or director, or engages in any such activity which in the opinion of the Company is not consistent with providing an orderly handover of the executive’s responsibilities.
“Good Reason” includes a material diminution in the executive’s authority, duties, or responsibilities, a material diminution in the executive’s base salary other than a general reduction in base salary that affects all similarly situated colleagues, or a relocation of the executive’s principal place of employment by more than fifty (50)50 miles from his current principal place of employment, unless the new principal place of employment is closer to the executive’s home address.
| CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT - COMPENSATION MATTERS | |||
Potential Payments Table
The following table summarizes estimated payments and benefits that would be provided to our NEOs pursuant to their employment agreements, our severance practice and the terms of outstanding awards, in connection with a termination of employment under various scenarios or a change of control, assuming such event occurred on December 31, 2019.2021.
For a summary of the material terms of the outstanding equity awards, the severance to which NEOs’NEOs would be entitled, and the terms and conditions of our NEOs’ employment agreements, see “—Equity Awards”, “—Severance” and “—Employment Agreements with ourOur NEOs” above.
| Name | Voluntary | Voluntary ($) | Not for Cause | For Cause Termination ($) | Change in | Change in | Change in Control Only (No Related Termination) ($) | Death ($) | Disability ($) | Retirement ($) | Voluntary Termination ($)(13) | Voluntary Termination with Good Reason ($) | Not for Cause Termination ($) | For Cause Termination ($) | Change in Control Not for Cause Termination ($) | Change in Control Good Reason Resignation ($) | Change in Control Only (No Related Termination) ($) | Death ($) | Disability ($) | Retirement ($) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Bruce Van Saun | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash Payment |
| 4,256,500 | (6) |
| 5,509,900 | (7) |
| 5,509,900 | (7) |
| - |
|
| 14,604,600 | (8) |
| 14,604,600 | (8) |
| - |
|
| 2,535,900 | (9) |
| 743,500 | (10) |
| 4,256,500 | (6) |
| 5,369,650 | (6) |
| 5,509,900 | (7) |
| 5,509,900 | (7) |
| - |
|
| 14,604,600 | (8) |
| 14,604,600 | (8) |
| - |
|
| 2,535,900 | (9) |
| 743,500 | (10) |
| 5,369,650 | (6) | ||||||||||||||||||||
Equity Awards(1)(2) |
| 16,372,328 |
|
| 16,372,328 |
|
| 16,372,328 |
|
| - |
|
| 16,372,328 |
|
| 16,372,328 |
|
| - |
|
| 16,372,328 |
|
| 16,372,328 |
|
| 16,372,328 |
|
| - |
|
| 17,677,879 |
|
| 20,065,185 |
|
| - |
|
| 20,065,185 |
|
| 20,065,185 |
|
| - |
|
| 20,065,185 |
|
| 20,065,185 |
|
| 17,677,879 |
| ||||||||||||||||||||
Health Benefits(3) |
| - |
|
| 1,308 |
|
| 1,308 |
|
| - |
|
| 1,308 |
|
| 1,308 |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| 944 |
|
| 944 |
|
| - |
|
| 944 |
|
| 944 |
|
| - |
|
| - |
|
| - |
|
| - |
| ||||||||||||||||||||
Outplacement Services(4) |
| - |
|
| 7,225 |
|
| 7,225 |
|
| - |
|
| 7,225 |
|
| 7,225 |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| 7,284 |
|
| 7,284 |
|
| - |
|
| 7,284 |
|
| 7,284 |
|
| - |
|
| - |
|
| - |
|
| - |
| ||||||||||||||||||||
Total |
| 20,628,828 |
|
| 21,890,761 |
|
| 21,890,761 |
|
| - |
|
| 30,985,461 |
|
| 30,985,461 |
|
| - |
|
| 18,908,228 |
|
| 17,115,828 |
|
| 20,628,828 |
|
| 5,369,650 |
|
| 23,196,007 |
|
| 25,583,313 |
|
| - |
|
| 34,678,013 |
|
| 34,678,013 |
|
| - |
|
| 22,601,085 |
|
| 20,808,685 |
|
| 23,047,529 |
| ||||||||||||||||||||
John F. Woods | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash Payment |
| - |
|
| - |
|
| 350,000 | (11) |
| - |
|
| 4,047,500 | (12) |
| 4,047,500 | (12) |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| 350,000 | (11) |
| - |
|
| 4,294,500 | (12) |
| 4,294,500 | (12) |
| - |
|
| - |
|
| - |
|
| - |
| ||||||||||||||||||||
Equity Awards(1)(5) |
| - |
|
| - |
|
| 3,592,117 |
|
| - |
|
| 5,238,446 |
|
| 5,238,446 |
|
| - |
|
| 5,238,446 |
|
| 5,238,446 |
|
| 5,238,446 |
|
| - |
|
| - |
|
| 6,120,671 |
|
| - |
|
| 7,483,739 |
|
| 7,483,739 |
|
| - |
|
| 7,483,739 |
|
| 7,483,739 |
|
| 6,528,816 |
| ||||||||||||||||||||
Health Benefits(3) |
| - |
|
| - |
|
| 1,198 |
|
| - |
|
| 1,198 |
|
| 1,198 |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| 1,256 |
|
| - |
|
| 1,256 |
|
| 1,256 |
|
| - |
|
| - |
|
| - |
|
| - |
| ||||||||||||||||||||
Outplacement Services(4) |
| - |
|
| - |
|
| 7,225 |
|
| - |
|
| 7,225 |
|
| 7,225 |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| 7,284 |
|
| - |
|
| 7,284 |
|
| 7,284 |
|
| - |
|
| - |
|
| - |
|
| - |
| ||||||||||||||||||||
Total |
| - |
|
| - |
|
| 3,950,540 |
|
| - |
|
| 9,294,369 |
|
| 9,294,369 |
|
| - |
|
| 5,238,446 |
|
| 5,238,446 |
|
| 5,238,446 |
|
| - |
|
| - |
|
| 6,479,211 |
|
| - |
|
| 11,786,779 |
|
| 11,786,779 |
|
| - |
|
| 7,483,739 |
|
| 7,483,739 |
|
| 6,528,816 |
| ||||||||||||||||||||
Donald H. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
McCree III | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash Payment |
| - |
|
| - |
|
| 350,000 | (11) |
| - |
|
| 4,340,000 | (12) |
| 4,340,000 | (12) |
| - |
|
| - |
|
| - |
|
| - |
| ||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Awards(1)(5) |
| - |
|
| - |
|
| 4,972,167 |
|
| - |
|
| 6,796,855 |
|
| 6,796,855 |
|
| - |
|
| 6,796,855 |
|
| 6,796,855 |
|
| 6,796,855 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||
Health Benefits(3) |
| - |
|
| - |
|
| 1,265 |
|
| - |
|
| 1,265 |
|
| 1,265 |
|
| - |
|
| - |
|
| - |
|
| - |
| ||||||||||||||||||||||||||||||||||||||||||||||||||
Outplacement Services(4) |
| - |
|
| - |
|
| 7,225 |
|
| - |
|
| 7,225 |
|
| 7,225 |
|
| - |
|
| - |
|
| - |
|
| - |
| ||||||||||||||||||||||||||||||||||||||||||||||||||
Total |
| - |
|
| - |
|
| 5,330,657 |
|
| - |
|
| 11,145,345 |
|
| 11,145,345 |
|
| - |
|
| 6,796,855 |
|
| 6,796,855 |
|
| 6,796,855 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||
Brad L. Conner | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Donald H. McCree III | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash Payment |
| - |
|
| - |
|
| 350,000 | (11) |
| - |
|
| 3,567,500 | (12) |
| 3,567,500 | (12) |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| 350,000 | (11) |
| - |
|
| 4,319,000 | (12) |
| 4,319,000 | (12) |
| - |
|
| - |
|
| - |
|
| - |
| ||||||||||||||||||||
Equity Awards(1)(5) |
| - |
|
| - |
|
| 3,691,490 |
|
| - |
|
| 5,036,005 |
|
| 5,036,005 |
|
| - |
|
| 5,036,005 |
|
| 5,036,005 |
|
| 5,036,005 |
|
| - |
|
| - |
|
| 6,462,005 |
|
| - |
|
| 7,844,303 |
|
| 7,844,303 |
|
| - |
|
| 7,844,303 |
|
| 7,844,303 |
|
| 6,889,381 |
| ||||||||||||||||||||
Health Benefits(3) |
| - |
|
| - |
|
| 1,198 |
|
| - |
|
| 1,198 |
|
| 1,198 |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| 1,339 |
|
| - |
|
| 1,339 |
|
| 1,339 |
|
| - |
|
| - |
|
| - |
|
| - |
| ||||||||||||||||||||
Outplacement Services(4) | - |
| - |
|
| 7,225 |
|
| - |
|
| 7,225 |
|
| 7,225 |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| 7,284 |
|
| - |
|
| 7,284 |
|
| 7,284 |
|
| - |
|
| - |
|
| - |
|
| - |
| ||||||||||||||||||||||
Total |
| - |
|
| - |
|
| 4,049,913 |
|
| - |
|
| 8,611,928 |
|
| 8,611,928 |
|
| - |
|
| 5,036,005 |
|
| 5,036,005 |
|
| 5,036,005 |
|
| - |
|
| - |
|
| 6,820,628 |
|
| - |
|
| 12,171,926 |
|
| 12,171,926 |
|
| - |
|
| 7,844,303 |
|
| 7,844,303 |
|
| 6,889,381 |
| ||||||||||||||||||||
Malcolm Griggs | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash Payment |
| - |
|
| - |
|
| 262,500 | (11) |
| - |
|
| 2,962,000 | (12) |
| 2,962,000 | (12) |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| 267,500 | (11) |
| - |
|
| 3,082,000 | (12) |
| 3,082,000 | (12) |
| - |
|
| - |
|
| - |
|
| - |
| ||||||||||||||||||||
Equity Awards(1)(5) |
| - |
|
| - |
|
| 1,956,590 |
|
| - |
|
| 2,496,581 |
|
| 2,496,581 |
|
| - |
|
| 2,496,581 |
|
| 2,496,581 |
|
| 2,496,581 |
|
| - |
|
| - |
|
| 2,681,343 |
|
| - |
|
| 3,078,621 |
|
| 3,078,621 |
|
| - |
|
| 3,078,621 |
|
| 3,078,621 |
|
| 2,792,144 |
| ||||||||||||||||||||
Health Benefits(3) |
| - |
|
| - |
|
| 859 |
|
| - |
|
| 859 |
|
| 859 |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| 906 |
|
| - |
|
| 906 |
|
| 906 |
|
| - |
|
| - |
|
| - |
|
| - |
| ||||||||||||||||||||
Outplacement Services(4) |
| - |
|
| - |
|
| 7,225 |
|
| - |
|
| 7,225 |
|
| 7,225 |
|
| - |
|
| - |
|
| - |
|
| - |
| - |
| - |
|
| 7,284 |
|
| - |
|
| 7,284 |
|
| 7,284 |
|
| - |
|
| - |
|
| - |
|
| - |
| ||||||||||||||||||||||
Total |
| - |
|
| - |
|
| 2,227,174 |
|
| - |
|
| 5,466,665 |
|
| 5,466,665 |
|
| - |
|
| 2,496,581 |
|
| 2,496,581 |
|
| 2,496,581 |
|
| - |
|
| - |
|
| 2,957,033 |
|
| - |
|
| 6,168,811 |
|
| 6,168,811 |
|
| - |
|
| 3,078,621 |
|
| 3,078,621 |
|
| 2,792,144 |
| ||||||||||||||||||||
Brendan Coughlin | Brendan Coughlin |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash Payment |
| - |
|
| - |
|
| 312,500 | (11) |
| - |
|
| 2,675,000 | (12) |
| 2,675,000 | (12) |
| - |
|
| - |
|
| - |
|
| - |
| ||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Awards(1)(5) |
| - |
|
| - |
|
| 2,191,833 |
|
| - |
|
| 2,875,777 |
|
| 2,875,777 |
|
| - |
|
| 2,875,777 |
|
| 2,875,777 |
|
| 2,039,263 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||
Health Benefits(3) |
| - |
|
| - |
|
| 1,377 |
|
| - |
|
| 1,377 |
|
| 1,377 |
|
| - |
|
| - |
|
| - |
|
| - |
| ||||||||||||||||||||||||||||||||||||||||||||||||||
Outplacement Services(4) |
| - |
|
| - |
|
| 7,284 |
|
| - |
|
| 7,284 |
|
| 7,284 |
|
| - |
|
| - |
|
| - |
|
| - |
| ||||||||||||||||||||||||||||||||||||||||||||||||||
Total |
| - |
|
| - |
|
| 2,512,994 |
|
| - |
|
| 5,559,438 |
|
| 5,559,438 |
|
| - |
|
| 2,875,777 |
|
| 2,875,777 |
|
| 2,039,263 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||
| (1) | These amounts reflect the value of equity-based awards expected to vest, with values determined by multiplying the number of shares subject to outstanding awards by |
| (2) | For a description of the treatment of Mr. Van Saun’s outstanding equity awards, please see |
| (3) | These amounts reflect the cost of COBRA benefit continuation coverage for one month under the plan in which the particular executive is enrolled, less the monthly active colleague rate for those benefits. This represents the benefit received by the NEOs as a result of receiving coverage at active colleague rates for one month, when they would have otherwise been required to elect COBRA to receive continued coverage. |
2022 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT - COMPENSATION MATTERS | |||
| (4) | These amounts reflect the cost for us to provide outplacement services for executive level colleagues for 12 months under our outplacement policy. |
| (5) | For a description of the treatment of outstanding equity awards held by NEOs other than Mr. Van Saun, please see |
|
| |||
| (6) | This amount includes apro-rata portion of Mr. Van Saun’s |
| (7) | This amount reflects the sum of (i) two times Mr. Van Saun’s base salary and (ii) apro-rata portion of his target cash bonus for |
| (8) | This amount reflects (i) three times the sum of Mr. Van Saun’s (a) base salary and (b) |
| (9) | This amount reflects apro-rata portion of Mr. Van Saun’s target cash bonus for |
| (10) | This amount reflects six months of base salary, which would be paid to Mr. Van Saun prior to his receipt of long-term disability benefits. |
| (11) | This amount reflects 26 weeks of base salary. |
| (12) | This amount reflects (i) two times the sum of (a) base salary and (b) the average cash bonus paid for |
Mr. Conner ceased to serve as Head of Consumer Banking effective as of January 27, 2020 and retired from the Company on March 3, 2020. The Compensation and HR Committee decided that Mr. Conner’s 2019 variable compensation should be awarded in the form of restricted stock units and cash, as described earlier in“Section 3: NEO Compensation for the 2019 Performance Year.” Consistent with the termination table, Mr. Conner will not be receiving any cash payment from the Company in connection with his retirement.
| (13) | Voluntary termination for purposes of this table differs from “Retirement” in that it assumes our NEOs terminate voluntarily and engage in competitive activity by becoming employed by another financial services company, as opposed to truly retiring. |
2022 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT - COMPENSATION MATTERS | |||
The Company acknowledges that there are inherent risks associated with executive compensation and has taken a multi-faceted approach to manage those risks, including the following:
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Based on the Compensation and HR Committee’s most recent review of our compensation policies and practices for all of our colleagues, it has concluded that our compensation policies and practices are not reasonably likely to have a material adverse impact on the Company.
2022 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT - COMPENSATION MATTERS | |||
As required by Section 953(b) ofSEC rules require us to disclose the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(u) of RegulationS-K, we are providing this disclosure regarding the relationshipratio of the annual total compensation of our colleagues and the annual total compensation ofCEO, Bruce Van Saun, to our Chief Executive Officer.
In accordance with the rule, we are using the same median employee identified in the proxy statement for last year’s annual meeting of stockholders because there has been no change in our employee population or our employee compensation arrangements that we believe would significantly impact the pay ratio disclosure.
For 2019, our last completed fiscal year:
the median of theemployee’s annual total compensation of all colleagues of our Company (other than our CEO) was $66,497; andcompensation. For the year ended December 31, 2021:
| • |
|
|
These amounts have beenThe annual total compensation of our median employee was $82,418 (see below for additional detail).
The resulting ratio of Mr. Van Saun’s annual total compensation to that of our median employee is 151 to 1.
The pay ratio rules allow issuers to use the same median employee for comparison purposes for up to three years. Since we last identified our median employee as of November 30, 2018, a new median employee was selected as of November 30, 2021. To identify our median employee we reviewed our employee population as of November 30, 2021 and the amount of their compensation for the period of January 1, 2021 through November 30, 2021 as would be reported to the Internal Revenue Service in Box 1, which we determined reasonably reflects the compensation of our employees. This calculation included all of our part-time and full time-employees as of such date, and we did not annualize the compensation for any of our employees who were only employed for part of the year. In addition, because all our colleagues are located in the United States, as is our CEO, we did not make any cost-of-living adjustments in identifying the median employee. Once we identified our median employee, we calculated and combined all of the elements of this employee’s compensation for the full 2021 year in accordance with the requirements of Item 402(u)402 of RegulationS-KS-K. and, for our CEO, is consistent with the amount reported in the “Total” column of our2019 Summary Compensation Table included in this proxy statement.
The Citizens Financial Group, Inc.Non-Employee Director Compensation Policy (“Director Compensation Policy”) governs the compensation of ournon-employee directors. The Director Compensation Policy is reviewed on an annual basis by the Compensation and HR Committee, together with its independent compensation consultant, CAP, who reviews our program to ensure consistency with sound governance practices and makes recommendations, as appropriate. The Compensation and HR Committee reviews market data and recommendations provided by CAP and considers their advice on industry best practice when making decisions regarding director compensation. Any changes to director compensation are approved by the Compensation and HR Committee in addition to the Nominating and Corporate Governance Committee and the full Board.
|
| |||
FollowingAs a result of the review of director compensation in April 2019, the following modest increases were made to our director compensation policy:2021, directors’ annual cash retainer increased $5,000 (to $90,000); equity retainer increased $5,000 (to $130,000); lead director retainer increasedby $10,000 (to $40,000); and Compensation and HR Committee chair retainer increased $5,000 (to $25,000). These changes wereto $100,000. This change was approved by the Compensation and HR Committee, the Nominating and Corporate Governance Committee, and the full Board and werewas effective as of our annual meeting of stockholders held on, April 25, 2019.22, 2021. The director compensation program provides additional compensation for leadership positions on the Board, including lead director and committee chair roles. Below is a summary of the elements of our director compensation program, as amended:
| Element of Compensation | Amount | |
Annual Retainer (cash) | $ | |
Annual Restricted Stock Unit Award (equity) | $130,000 | |
Lead Director Retainer (cash) | $40,000 | |
Audit Committee Member Retainer (cash) | $10,000 | |
Audit Committee Chair Retainer (cash) | $35,000 | |
Risk Committee Chair Retainer (cash) | $30,000 | |
Compensation and HR Committee Chair Retainer (cash) | $25,000 | |
Nominating & Corporate Governance Committee Chair Retainer (cash) | $20,000 | |
2022
| CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT - COMPENSATION MATTERS
| |||
On the date of each annual meeting of our stockholders, eachnon-employee director receives a grant of RSUs under the Citizens Financial Group, Inc. 2014Non-Employee Directors Compensation Plan (“Directors Plan”), having a fair market value of $130,000, as compensation for their service until the next annual meeting. RSUs vest immediately as of the grant date, subject to the terms and conditions of the Directors Plan and the applicable award agreement. Director RSUs are not settled until a director’s cessation of service. To the extent dividends are declared between the grant and ultimate settlement date, dividend equivalents are reinvested into additional RSUs with the same terms and conditions as the related award.
Non-employee directors are subject to stock ownership guidelines requiring that they hold shares with a value at least equal to five times their annual cash retainer (which was increased from 4x during 2019) within five years following their service start date. As mentioned above, director RSUs are subject to mandatory deferral and are not settled until a director’s cessation of service. The types of awards that count toward meeting this requirement are consistent with those applicable to executives, as discussed above in“Compensation Discussion and Analysis—Section 5.4. Governance Policies and Practices—Stock Ownership and Retention Guidelines.”
Directors may defer up to 100% of their cash compensation under our Directors Deferred Compensation Plan. Contributions to this plan are credited with interest on a monthly basis, based on the applicable interest crediting rate. The interest crediting rate is the annualized average yield on the United States Treasury bond10-year constant maturity for the immediately preceding calendar quarter plus two percent (2%), which is then divided by 12 to determine the monthly interest crediting rate. There are no Company contributions to this plan and no above-market or preferential earnings on compensation deferred pursuant to this plan.
Directors are also eligible to receive matching charitable contributions as part of our general matching charitable contribution program. Under this program, to the extent directors choose to make charitable contributions to qualifying charitable organizations the Company matches those contributionsdollar-for-dollar up to an annual limit of $5,000. Ournon-employee directors do not participate in our employee benefit programs. In addition, directors receive reimbursement of business expenses incurred in connection with their attendance at meetings.
2021 Director Compensation Table
The following table shows compensation for our non-employee directors during 2021. As described above, the Director Compensation Policy was amended effective April 22, 2021. Prior to that date, directors were compensated in accordance with the prior version of our Director Compensation Policy.
Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(4) | Other Compensation($)(5) | Total Compensation($) | ||||||||||||
Lee Alexander(1) | 98,333 | 162,622 | 5,000 | 265,955 | ||||||||||||
Christine M. Cumming | 96,667 | 148,085 | - | 244,752 | ||||||||||||
William P. Hankowsky | 106,667 | 148,085 | - | 254,752 | ||||||||||||
Howard W. Hanna III(2)(3) | 33,333 | 4,057 | 5,000 | 42,390 | ||||||||||||
Leo I. Higdon | 131,667 | 148,085 | 5,000 | 284,752 | ||||||||||||
Edward J. Kelly III | 96,667 | 143,767 | 5,000 | 245,434 | ||||||||||||
Charles J. Koch | 136,667 | 148,085 | 5,000 | 289,752 | ||||||||||||
Robert Leary | 96,667 | 137,848 | 5,000 | 239,515 | ||||||||||||
Terrance J. Lillis | 106,667 | 143,767 | 5,000 | 255,434 | ||||||||||||
Shivan Subramaniam(3) | 156,667 | 148,085 | 5,000 | 309,752 | ||||||||||||
Christopher J. Swift(1) | 89,167 | 162,622 | 5,000 | 256,789 | ||||||||||||
Wendy A. Watson(3) | 141,667 | 148,085 | 5,000 | 294,752 | ||||||||||||
Marita Zuraitis | 96,667 | 148,085 | - | 244,752 | ||||||||||||
| CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT - COMPENSATION MATTERS | |||
2019 Director Compensation Table
The following table shows compensation for ournon-employee directors during 2019. As described above, the Director Compensation Policy was amended effective April 25, 2019. Prior to that date, directors were compensated in accordance with the prior version of our Director Compensation Policy.
Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(4) | Other Compensation($)(5) | Total Compensation($) | ||||||||||||
Mark Casady
|
|
88,333
|
|
|
139,612
|
|
|
-
|
|
|
227,945
|
| ||||
Christine M. Cumming
|
|
88,333
|
|
|
139,612
|
|
|
-
|
|
|
227,945
|
| ||||
Anthony Di Iorio(1)
|
|
31,667
|
|
|
1,272
|
|
|
-
|
|
|
32,939
|
| ||||
William P. Hankowsky
|
|
98,333
|
|
|
139,612
|
|
|
-
|
|
|
237,945
|
| ||||
Howard W. Hanna III(2)
|
|
98,333
|
|
|
139,612
|
|
|
5,000
|
|
|
242,945
|
| ||||
Leo I. Higdon
|
|
115,000
|
|
|
139,612
|
|
|
5,000
|
|
|
259,612
|
| ||||
Edward J. Kelly III(3)
|
|
81,250
|
|
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163,194
|
|
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-
|
|
|
244,444
|
| ||||
Charles J. Koch
|
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128,333
|
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139,612
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-
|
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267,945
|
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Terrance J. Lillis(3)
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90,417
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163,194
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5,000
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258,611
|
| ||||
Arthur F. Ryan(1)
|
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45,000
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1,272
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-
|
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46,272
|
| ||||
Shivan Subramaniam(2)
|
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135,000
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139,612
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5,000
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|
279,612
|
| ||||
Wendy A. Watson(2)
|
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133,333
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139,612
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5,000
|
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277,945
|
| ||||
Marita Zuraitis
|
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88,333
|
|
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139,612
|
|
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-
|
|
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227,945
|
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| (1) | Mr. |
| (2) | Mr. Hanna left the Board at the conclusion of our April |
During |
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|
| (5) | Amounts in this column reflect matching charitable contributions made by the Company on behalf of directors during |
| CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT - AUDIT MATTERS | |||
Ratify the Appointment of Deloitte & Touche LLP
| ||||
The Audit Committee has appointed Deloitte, & Touche LLP (“Deloitte”), an independent registered public accounting firm, as the independent auditor to perform an integrated audit of the Company for the fiscal year ending December 31, 2020.2022. Deloitte served as our independent auditor for the fiscal year ended December 31, 20192021 and has served as our independent auditor since becoming a public company in 2014 and prior to that as a privately held company since 2000.
The Audit Committee periodically considers the rotation of the external auditor to ensure independence. In determining whether to retain Deloitte, the Audit Committee considers,considered, among other things, the firm’s independence, objectivity, professional skepticism, qualifications, expertise and performance on the Company’s audit which is evaluated annually. In addition,The Audit Committee has oversight of the Audit Committeeaudit firm fee negotiation process and is responsible for approving audit fees. It also oversees the rotation of the lead audit partner as mandated by SEC requirements and is directly involved in the selection of a new lead audit partner. The currentA new lead audit partner was appointedidentified in 20162020. The transition process was overseen by the Audit Committee during the course of 2021 in preparation for the 2017 audit. The next rotation is scheduled for 2021new lead audit partner’s formal appointment in February 2022, and the new appointment will begin in conjunction with thefiscal year 2022 audit. The Audit Committee also has oversight of the audit firm fee negotiation process and is responsible for approving audit fees.
The Board believes that the reappointment of Deloitte as the independent registered public accounting firm for fiscal year 20202022 is in the best interests of the Company and its stockholders. Neither our Bylaws nor other governing documents or law require stockholder ratification of the selection of Deloitte as our independent registered public accounting firm. However,firm, however, the Board believes that obtaining stockholder ratification of the appointment is a sound corporate governance practice. If the stockholders do not vote in favor of Deloitte, the Audit Committee will reconsider the appointment and in doing so, assess the impact of changing the auditor and the appropriate timing for doing so. The Audit Committee may retain Deloitte or hire another firm without resubmitting the matter for stockholders to approve. The Audit Committee retains the discretion at any time to appoint a different independent auditor.
Representatives of Deloitte are expected to be present at the Annual Meeting, available to respond to appropriate questions and will have the opportunity to make a statement if they desire.
The purpose of the Audit Committee is to assist Citizens Financial Group, Inc.’s (the “Company”) Board of Directors (the “Board”) in its oversight of (i) the integrity of the financial statements of the Company, (ii) the appointment, compensation, retention and evaluation of the qualifications, independence and performance of the Company’s independent external auditor, (iii) the performance of the Company’s internal audit function, and (iv) compliance by the Company with legal and regulatory requirements.
The Audit Committee operates pursuant to a Charter that was last amended and restated by the Board on February 14, 2019. As set forth in the Charter, management of the Company is primarily responsible for the adequacy and effectiveness of the Company’s financial reporting process, systems of internal accounting and financial controls. Deloitte, & Touche LLP (“Deloitte”), the Company’s independent auditor for 2019,2021, is responsible for expressing opinions on the conformity of the Company’s audited financial statements with generally accepted accounting principles and on the effectiveness of the Company’s internal control over financial reporting.
| CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT - AUDIT MATTERS | |||
In this context, the Audit Committee has reviewed and discussed with management and Deloitte the audited financial statements for the year ended December 31, 2019.2021.
The Audit Committee has discussed with Deloitte the matters that are required to be discussed under the applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”) standards, including critical audit matters that arose during the year, and SEC and NYSE requirements. Deloitte has provided to the Audit Committee the written disclosures and the PCAOB-required letter regarding the independent accountant’s communications with the Audit Committee concerning independence, and the Audit Committee has discussed with Deloitte their independence giving consideration to the provision of audit andnon-audit services and fees paid to the firm.
Based on the review and discussions referred to above, the Audit Committee recommended to the Board that the audited financial statements for the year ended December 31, 20192021 be included in the Company’s 20192021 Annual Report on Form10-K, for filing with the Securities and Exchange Commission.SEC. This report is provided by the following independent directors, who comprise the Audit Committee:
Wendy A. Watson (Chair) Lee Alexander William P. Hankowsky
| Leo I. Higdon Charles J. Koch Terrance J. Lillis | |
February | ||
PRE-APPROVAL OF INDEPENDENT AUDITOR SERVICES
The Audit Committee approves in advance all audit, audit-related, tax, and other services performed by the independent auditors. The Audit Committeepre-approves specific categories of services up topre-established fee thresholds. Unless the type of service has previously beenpre-approved, the Audit Committee must approve that specific service before the independent auditors may perform it. In addition, separate approval is required if the amount of fees for anypre-approved category of service exceeds the fee thresholds established by the Audit Committee. The Audit Committee may delegate to the chairChair or any independent member of the Audit Committeepre-approval authority with respect to permitted services, provided that the member must report anypre-approval decisions to the Audit Committee at its next scheduled meeting. All fees described below werepre-approved by the Audit Committee.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FEES
The following table presents fees paid by the Company for services performed by its independent registered public accounting firm, Deloitte, and its affiliates for the years ended December 31, 20192021 and 2018.2020.
| 2019 | 2018 | |||||||
Audit fees | $ | 5,743,000 |
| $ | 5,597,000 |
| ||
Audit-related fees(1) |
| 960,391 |
|
| 983,665 |
| ||
Tax fees(2) |
| 487,513 |
|
| 417,496 |
| ||
All other fees(3) |
| 132,000 |
|
| - |
| ||
|
|
|
| |||||
Total | $ | 7,322,904 |
| $ | 6,998,161 |
| ||
|
|
|
| |||||
| 2021 | 2020 | |||||||
|
| |||||||
Audit fees | $ | 5,169,000 |
| $ | 5,384,000 |
| ||
Audit-related fees(1) |
| 890,000 |
|
| 882,000 |
| ||
Tax fees(2) |
| 721,528 |
|
| 362,255 |
| ||
All other fees |
| - |
|
| - |
| ||
|
|
|
| |||||
Total | $ | 6,780,528 |
| $ | 6,628,255 |
| ||
|
|
|
| |||||
| (1) | Includes required compliance services associated with several of the Company’s lending programs (e.g., Ginnie Mae, Housing and Urban Development (HUD), Uniform Single Attestation Program (USAP) and the Family Education Loan Program) and Statement on Standards for Attestation Engagements (SSAE) No. |
| (2) | Includes aggregate fees billed for tax services, including tax compliance, planning and consulting. |
|
| CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT - MANAGEMENT | |||
Management Proposal to Amend the Company’s Certificate of Incorporation to
| ||||
The Board is seeking stockholder approval to amend certain provisionsArticle 11 of our Amended and Restated Certificate of Incorporation (the “Charter”). The amendments to Article 11 will provide stockholders holding 25 percentreduce the vote required to repeal or amend in any respect Section 4.02 of Article 4 (Voting Rights), and Articles 6 (Board of Directors), 7 (Meetings of Stockholders), 8 (Indemnification) and 11 (Amendments) from not less than 75% of the total voting power of all outstanding shares the ability to directsecurities of the Company entitled to callvote, to a special meetingmajority of stockholders pursuantthe voting power of the Company.
If adopted, the amendment will become effective upon the filing of the amended Charter with the Secretary of State of the State of Delaware.
In conjunction with the proposed amendments to the amendedCharter, the Board has approved amendments to the Company’s Bylaws which have been adopted bywill reduce the vote required to repeal or amend in any respect Articles 2 (Meetings of Stockholders), 3 (Directors), 4 (Officers) and Section 6.06 of Article 6 (Amendments) of the Bylaws from 75% of the total voting power of all outstanding securities of the Company entitled to vote or a majority of the Board of Directors, to a majority of the voting power of the Company or a majority of the Board of Directors.
The changes to the Bylaws are subject to and will become effective upon stockholder approval of the proposed changes to the Charter and the filing of the amended and restated Charter with the Secretary of State of the State of Delaware.
Special Meeting Charter ProvisionProposed Changes
The amendment toproposed amended provisions of the Charter will provide thatare outlined as follows:
ARTICLE 11 - AMENDMENTS
Section 11.01. Amendments. The Corporation reserves the right to amend this Certificate of Incorporation in any manner permitted by the Delaware Law and all rights and powers conferred upon stockholders, directors and officers herein are granted subject to this reservation.Notwithstanding the foregoing, the provisions set forth in in Section 4.02 and Articles 6, 7, 8, and this Article 11 may not be repealed or amended in any respect, and no other provision may be adopted, amended or repealed which would have the effect of modifying or permitting the circumvention of the provisions set forth in any of Section 4.02 and Articles 6, 7, 8, and this Article 11, unless such action is approved by the affirmative vote of the holders of at least 25 percentnot less than 75% of the total voting power of all outstanding shares of common stocksecurities of the Company may requireCorporation generally entitled to vote in the Company to callelection of directors, voting together as a special meeting of stockholders, subject to applicable provisions of the Bylaws (which are described below).The right of stockholders to call a special meeting will be in addition to the existing right for such a meeting to be called by the Chairman of the Board, the Chief Executive Officer of the Company or a majority of the Board. The proposed amended special meeting provisions set forth in Article 7, Section 7.01 of the Charter are attached to this Proxy Statement as Appendix A and shown in blue text. No changes are being made to the Certificates of Designation for Series A through E of our preferred stock, which provide for the terms of each series and as such these Certificates of Designation have been omitted from Appendix A. The Certificates of Designation will be attached to the amended and restated Charter and filed with the Secretary of State of the State of Delaware, subject to approval of this proposal by the stockholders. The Certificates of Designation can be viewed on the corporate governance section of our website at www.citizensbank.com/investor-relations.single class.
Special Meeting Bylaw
The amended special meeting bylaw which has been adopted by the Board and will become effective upon stockholder approval of the amended Charter and the filing of the amended Charter with the Secretary of State of the State of Delaware, is set forth in Article 2, Section 2.03 of the Company’s Bylaws and may be summarized as follows:
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| CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT - MANAGEMENT | |||
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The amended special meeting bylaw does not require stockholder action. If stockholders do not approve the amendment to the Charter, the amended special meeting bylaw will not take effect. The special meeting bylaw may be further amended by the Board or stockholders as provided in the Bylaws.
Board Consideration of Stockholder Special Meeting RightsSupermajority Vote Requirements
While serving as a takeover defense, supermajority vote requirements also ensure that a large majority of shareholders are aligned with the corporate action in question, however, the Board recognizes that such a condition can result in minority stockholders blocking actions that are in the best interests of the Company’s stockholders and supported by the majority of them.
The Board believes that providingeliminating supermajority vote requirements in favor of a simple majority vote standard will reduce the risk of minority stockholders withblocking proposed corporate actions requiring stockholder approval while maintaining the right to request a special meetingprotections afforded by ensuring alignment of actions with a thresholdmajority of 25stockholders. The proposed amendment also makes it easier for stockholders to approve future amendments to the Charter.
Over 70 percent ownership, alongof the S&P 500 do not have supermajority vote requirements, consistent with specified procedural requirements and limitations, strikes a reasonable balance between enhancingcorporate governance best practices. Eliminating supermajority voting provisions in our Charter further enhances existing stockholder rights and protecting against the risk that a small minority of stockholders, including stockholders with special interests, could call one or more special meetings that could result in unnecessary financial expense and disruption to our business. The Board believes that special meetings should only be called to consider extraordinary events that are of interest to a broad base of stockholders and that cannot be delayed until the next annual meeting. Additionally, preparing for a stockholder meeting requires significant attention of our directors, officers and employees, diverting their attention away from performing their primary function of operating the Company’s business in the best interests of our stockholders. Likewise, the Board believes that only stockholders with a true economic andnon-transitory interest in the Company should be entitled to utilize the special meeting mechanism.
The Board believes that providing stockholders with the right to call a special meeting further enhances the Company’s strong corporate governance policies and practices which are highlighted beginning on page 67 of this proxy statementProxy Statement, and the Board strongly recommends that stockholders approve the proposed changes to the Charter to facilitate the right of stockholders to call a special meeting as described above.
| CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT - | |||
|
As a matter of good governance, the Board is also seeking stockholder approval to amend and restate the Charter to remove certainnon-operative provisions relating to our former parent, The Royal Bank of Scotland Group plc. The proposed amended provisions set forth in Article 4, Section 4.01, Article 7, Sections 7.01 and 7.02, Article 9 and Article 11, Section 11.01 of the Charter are attached to this Proxy Statement as Appendix A and shown in green text. No changes are being made to the Certificates of Designation for Series A through E of our preferred stock, which provide for the terms of each series and as such these Certificates of Designation have been omitted from Appendix A. The Certificates of Designation will be attached to the amended and restated Charter and filed with the Secretary of State of the State of Delaware, subject to approval of this proposal by the stockholders. The Certificates of Designation can be viewed on the corporate governance section of our website at www.citizensbank.com/investor-relations. The Board recommends that stockholders approve the proposed changes to the Charter to removenon-operative provisions.
|
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Under Section 16(a) of the Exchange Act, the Company’s directors and executive officers and persons who beneficially own more than 10% of the outstanding shares of common stock are required to report their beneficial ownership of the common stock and any changes in that beneficial ownership to the SEC and the NYSE. Based solely on its review of the copies of such forms received by it, or written representations from certain reporting persons, the Company believes that these filing requirements were satisfied by all of its directors and officers and 10% or more beneficial owners of Company stock during 2021 with the exception of a gift of the pecuniary interest in shares to family members made by Mr. Hankowsky which was not reported timely on a Form 5.
The following table indicatestables indicate information regarding the beneficial ownership of our common stock by:
· each person whom we know to own beneficially own more than 5 percent5% of our common stock;
· each of the directors, nominees and named executive officers individually; and
· all directors, nominees and executive officers as a group.
In accordance with SEC rules, beneficial ownership includes sole or shared voting or investment power with respect to securities and includes the shares issuable pursuant to restricted stock units and performance stock units that will become vested within 60 days of the date of determination. Under these rules, one or more persons may be a deemed beneficial owner of the same securities and a person may be deemed a beneficial owner of securities to which such person has no economic interest. Unless otherwise indicated, the persons or entities identified in this table have sole voting and investment power with respect to all shares shown as beneficially owned by them, subject to applicable community property laws.
The number of shares and percentage of beneficial ownership of each person in the table below whom we know to beneficially own more than 5 percent5% of our common stock are as of December 31, 2019.2021. The number of shares and percentage of beneficial ownership for each of the directors and named executive officers individually and all directors and executive officers as a group in the table below are as of February 25, 2020.28, 2022. As of February 25, 2020,28, 2022, there were 427,434,404422,142,765 shares of our common stock outstanding.
Information with respect to beneficial ownership has been furnished by each director, officer, or beneficial owner of more than 5 percent5% of the shares of our common stock. Except as otherwise noted below, the address for each person listed on the table is c/o Citizens Financial Group, Inc., 600 Washington Boulevard, Stamford, Connecticut 06901.
| CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT - SECTION 16(A) REPORTS AND BENEFICIAL STOCK OWNERSHIP | |||
| NAME OF BENEFICIAL OWNER | NUMBER OF SHARES | % | ||
5% Stockholders | ||||
The Vanguard Group, Inc.**
|
52,312,853
|
12.03
| ||
BlackRock, Inc.***
|
40,291,550
|
9.3
| ||
State Street Corporation****
|
21,726,348
|
5.0
| ||
Directors and Named Executive Officers
| ||||
Bruce Van Saun
|
784,015
|
*
| ||
Brad L. Conner
|
194,089
|
*
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Malcolm Griggs
|
65,474
|
*
| ||
Donald H. McCree III
|
179,393
|
*
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John F. Woods
|
89,027
|
*
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Mark Casady
|
24,124
|
*
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Christine M. Cumming
|
16,795
|
*
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William P. Hankowsky
|
34,924
|
*
| ||
Howard W. Hanna III
|
28,924
|
*
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Leo I. Higdon
|
21,967
|
*
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Terrance J. Lillis
|
4,652
|
*
| ||
Charles J. Koch
|
68,924
|
*
| ||
Edward J. Kelly III
|
4,652
|
*
| ||
Shivan Subramaniam
|
42,924
|
*
| ||
Wendy A. Watson
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19,924
|
*
| ||
Marita Zuraitis
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21,924
|
*
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All directors and executive officers as a group (22 persons)
|
1,875,565
|
*
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Beneficial Ownership of Directors, Nominees and Named Executive Officers
| NAME | SHARES OF COMMON STOCK(1) | RESTRICTED STOCK UNTS(2) (3) | TOTAL | % | ||||||||||||||||
Bruce Van Saun | 773,126 | 124,079 | 897,205 | * | ||||||||||||||||
Brendan Coughlin | 29,485 | 12,521 | 42,006 | * | ||||||||||||||||
Malcolm Griggs | 63,832 | 22,731 | 86,563 | * | ||||||||||||||||
Donald H. McCree III | 177,099 | 49,597 | 226,696 | * | ||||||||||||||||
John F. Woods | 97,415 | 45,499 | 142,914 | * | ||||||||||||||||
Lee Alexander | 0 | 3,903 | 3,903 | * | ||||||||||||||||
Christine M. Cumming | 2,416 | 25,179 | 27,595 | * | ||||||||||||||||
Kevin Cummings | 0 | 0 | 0 | * | ||||||||||||||||
William P. Hankowsky | 30,710 | 25,179 | 55,889 | * | ||||||||||||||||
Leo I. Higdon | 8,588 | 25,179 | 33,767 | * | ||||||||||||||||
Edward J. Kelly III | 0 | 15,196 | 15,196 | * | ||||||||||||||||
Charles J. Koch | 79,545 | 25,179 | 104,724 | * | ||||||||||||||||
Robert G. Leary | 0 | 10,116 | 10,116 | * | ||||||||||||||||
Terrance J. Lillis | 1,000 | 15,196 | 16,196 | * | ||||||||||||||||
Michele N. Siekerka | 0 | 0 | 0 | * | ||||||||||||||||
Shivan Subramaniam | 37,545 | 25,179 | 62,724 | * | ||||||||||||||||
Christopher J. Swift | 0 | 3,903 | 3,903 | * | ||||||||||||||||
Wendy A. Watson | 5,545 | 25,179 | 30,724 | * | ||||||||||||||||
Marita Zuraitis | 7,545 | 25,179 | 32,724 | * | ||||||||||||||||
All directors, nominees and executive officers as a group (24 persons) | 1,507,517 | 539,191 | 2,046,708 | * | ||||||||||||||||
| * | Less than 1% |
Includes the following shares beneficially owned for the indicated director or officer: |
| - | For Mr. McCree, amount includes 145,588 shares held by trusts for his children |
| - | For Mr. Hankowsky, amount includes 83 shares held for the benefit of his children and to which he disclaims beneficial ownership |
| - | For Mr. Subramaniam, amount includes 4,000 shares held by his children. |
| (2) | Amounts in this column for executive officers reflect restricted stock units, including performance-based restricted stock units, which will vest and be distributed in an equivalent number of shares of our common stock within 60 days of February 28, 2022. |
| (3) | Amounts in this column for directors reflect restricted stock units granted to directors under the Director Compensation Policy. These restricted stock units are vested. However, settlement in an equivalent number of shares of our common stock is deferred until the director ceases to serve on the Board. |
2022 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT - SECTION 16(A) REPORTS AND BENEFICIAL STOCK OWNERSHIP | |||
Beneficial Ownership of Stockholders Holding More Than Five Percent
| NAME | NUMBER OF SHARES | % | ||
The Vanguard Group, Inc(1)
|
49,015,558
|
11.5
| ||
BlackRock, Inc.(2)
|
40,372,501
|
9.5
| ||
Capital International Investors(3)
|
30,845,906
|
7.2
| ||
State Street Corporation(4)
|
24,290,700
|
5.7
|
| (1) | Represents shares beneficially owned by The Vanguard Group, Inc., 100 Vanguard Blvd., Malvern, PA 19355. The Vanguard Group, Inc. has no sole voting power with respect to |
Represents shares beneficially owned by BlackRock, Inc., 55 East 52nd St, New York, NY 10055. BlackRock, Inc. has sole voting power with respect to |
Represents shares beneficially owned by Capital International Investors, 333 South Hope Street, 55th Fl, Los Angeles, CA 90071. Capital International Investors has sole voting power with respect to 30,832,734 shares and sole dispositive power with respect to 30,845,906 shares. The foregoing information is based solely on a Schedule 13G filed by Capital International Investors with the SEC on February 11, 2022 regarding its holdings as of December 31, 2021. |
| (4) | Represents shares beneficially owned by State Street Corporation, State Street Financial Center, One Lincoln Street, Boston, MA 02111. State Street Corporation has shared voting power with respect to |
| CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT - INFORMATION FOR STOCKHOLDERS | |||
QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND THE ANNUAL MEETING
|
This proxy statement and proxy card are furnished in connection with the solicitation of proxies to be voted at our Annual Meeting, which will be held on April 23, 2020,28, 2022, at 9:00 a.m. Eastern Time at the Company’s headquarters located at One Citizens Plaza, Providence, Rhode Island 02903.
We continue to monitor the effects of the COVID-19 pandemic and are committed to the safety and security of our colleagues, stockholders and board members and should circumstances change, the Company may update the format of the Annual Meeting to be held solely by remote communication, in a virtual-only format. In this event, updates to the format of the Annual Meeting will be notified by means of a press release, public filings and updates to our website at https://investor.citizensbank.com/about-us/investor-relations/annual-meeting.aspx. Any changes will be announced not less than 10 days before the Annual Meeting and we strongly recommend you monitor our website to confirm the format of the meeting in advance of your attendance.
Why am I receiving this proxy statement and proxy card?
You have received these proxy materials because our Board of Directors is soliciting your proxy to vote your shares at the Annual Meeting. This proxy statement describes issues on which we would like you to vote at our Annual Meeting. It also gives you information on these issues so that you can make an informed decision.
Because you own shares of our common stock, our Board of Directors has made this proxy statement and proxy card available to you on the Internet, in addition to delivering printed versions of this proxy statement and proxy card to certain stockholders by mail.
When you vote by using the Internet or (if you received your proxy card by mail) by signing and returning the proxy card, you appoint each of Bruce Van Saun, Stephen T. GannonMalcolm Griggs and Robin S. Elkowitz (withor any of them (each with full power of substitution) as your representatives at the Annual Meeting. They will vote your shares at the Annual Meeting as you have instructed them or, if an issue that is not on the proxy card comes up for vote, in accordance with their best judgment. This way, your shares will be voted whether or not you attend the Annual Meeting. Even if you plan to attend the Annual Meeting, we encourage you to vote in advance by using the Internet or (if you received your proxy card by mail) by signing and returning your proxy card. If you vote by using the Internet, you do not need to return your proxy card.
Why did I receive a Notice of Internet Availability of Proxy Materials in the mail instead of a printed set of proxy materials?
Pursuant to rules adopted by the SEC, we are permitted to furnish our proxy materials over the Internet to our stockholders by delivering a Notice in the mail. If you received a Notice by mail, you will not receive a printed copy of the proxy materials in the mail. Instead, the Notice instructs you on how to access and review the proxy statement and annual report over the Internet. The Notice also instructs you on how to electronically access and review all of the important information contained in this proxy statement and the annual report and how you may submit your proxy over the Internet. If you received a Notice by mail and would like to receive a printed copy of our proxy materials, you should follow the instructions for requesting these materials contained in the Notice.
Stockholders who receive a printed set of proxy materials will not receive the Notice but may still access our proxy materials and submit their proxies over the Internet by following the instructions provided on their proxy card.
2022 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT - INFORMATION FOR STOCKHOLDERS | |||
Who is entitled to vote?
Holders of our common stock at the close of business on February 25, 202028, 2022 (the record date) are entitled to vote. In accordance with Delaware law, a list of stockholders entitled to vote at the meeting will be available in electronic form at the Annual Meeting site on April 23, 2020 and will be accessible in electronic form for ten days before the meeting at our principal place of business located at One Citizens Plaza, Providence, Rhode Island 02903, between the hours of 9:00 a.m. and 5:00 p.m. Eastern Time.
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How many votes is each share of common stock entitled to?
Holders of common stock are entitled to one vote per share. As of February 25, 2020,28, 2022, there were 427,434,404422,142,765 shares of our common stock outstanding.
What is the difference between a stockholder of record and a “street name” holder?
Many of our stockholders hold their shares through a broker, bank or other nomineeintermediary rather than directly in their own name. As summarized below, there are some differences between shares held of record and those owned beneficially.
Stockholder of Record. If your shares are registered directly in your name with the Company’s transfer agent, Computershare, you are considered, with respect to those shares, the stockholder of record, and these proxy materials are being sent directly to you by the Company. As the stockholder of record, you have the right to grant your voting proxy directly to certain officers of Citizens Financial Group, Inc. or to vote in person at the Annual Meeting. The Company has enclosed or sent a proxy card for you to use. You may also vote onby using the Internet or by telephone, as described below under the heading “How“How do I vote?” below..
Beneficial Owner or “Street Name” Holder. If your shares are held in an account at a broker, bank or other nominee,intermediary, like many of our stockholders, you are considered the beneficial owner of shares held in street name, and these proxy materials were forwarded to you by that organization. As the beneficial owner, you have the right to direct your broker, bank or other nomineeintermediary how to vote your shares, and you are also invited to attend the Annual Meeting.
Since a beneficial owner is not the stockholder of record, to vote your shares in person at the Annual Meeting you must obtain a “legal proxy” from the broker, bank, or other nominee that is the stockholder of record of your shares giving you the right to vote the shares at the Annual Meeting. If you do not wish to vote in personat the Annual Meeting, or you will not be attending, the Annual Meeting, you may vote by proxy. You may vote by proxy by completing, signing and returning the voting instruction form or by using the Internet or by telephone, as described below under the heading “How“How do I vote?” below.. The method you use to vote will not limit your right to vote at the Annual Meeting if you decide to attend the meeting.
How do I vote?
StockholdersAs described below, stockholders of record may vote by using the Internet, by telephone, or (if you received a proxy card by mail) by mail as described below.mail. Stockholders also may attend the meeting and vote in person.vote. If you hold shares in street name through a bank or broker or other intermediary, please refer to your proxy card, Notice or other information forwarded by your bank or broker to see which voting options are available to you.
| • | You may vote by using the Internet. The address of the website for Internet voting can be found on your proxy card or Notice. Internet voting is available 24 hours a day and will be accessible until 11:59 p.m. Eastern Time on April |
| • | You may vote by telephone. Dial the number listed on your proxy card, Notice or other information forwarded by your |
| • | You may vote by mail. If you received a proxy card by mail and choose to vote by mail, simply mark your proxy card, date and sign it, and return it in the postage-paid |
The method you use to vote will not limit your right to vote at the Annual Meeting if you decide to attend in person. Written ballots will be passed out to anyone who wants to vote at the Annual Meeting. If you hold your shares in “street name,” you must obtain a proxy, executed in your favor, from the holder of record to be able to vote in person at the Annual Meeting.
| • | You may vote at the meeting. Stockholders may also attend the meeting and vote. |
| CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT - INFORMATION FOR STOCKHOLDERS | |||
What if I change my mind after I return my proxy?
You may revoke your proxy and change your vote at any time before the polls close at the Annual Meeting. You may do this by:
submitting a subsequent proxy by using the Internet, telephone or by mail with a later date;
sending written notice of revocation to our Corporate Secretary, Citizens Financial Group, Inc., 600 Washington Boulevard, Stamford, Connecticut 06901; or
voting in person at the Annual Meeting.
If you hold shares through a bank, broker or broker,other intermediary, please refer to your proxy card, Notice or other information forwarded by your bank, broker or brokerother intermediary to see how you can revoke your proxy and change your vote.
Attendance at the meeting will not by itself revoke a proxy.
How many votes do you need to hold the Annual Meeting?
The presence, in person or by proxy, of the holders of a majority of the total voting power of all outstanding securities entitled to vote at the Annual Meeting will constitute a quorum. If a quorum is present, we can hold the Annual Meeting and conduct business.
On what items am I voting?
You are being asked to vote on fivefour items:
| 1. | the election of each of the |
| 2. | advisory vote to approve the Company’s executive compensation, commonly referred to as a |
| 3. | ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for fiscal year |
| 4. | a management proposal to amend the Company’s Certificate of Incorporation to |
|
No cumulative voting rights are authorized, and dissenters’ rights are not applicable to these matters.
How does the board of directors recommend that I vote?
The Board recommends that you vote as follows:
| 1. | FOR the |
| 2. | FOR the approval, on an advisory basis, of the Company’s executive compensation; |
| 3. | FOR the ratification of the appointment of our independent registered public accounting firm; and |
| 4. | FOR the management proposal to amend the Company’s Certificate of Incorporation to |
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How may I vote in the election of directors, and how many votes must the nominees receive to be elected?
With respect to the election of directors, you may:
vote FOR the twelvethirteen nominees for director;
vote FOR any of the nominees for director and vote AGAINST or ABSTAIN from voting on the other nominees for director;
2022 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT - INFORMATION FOR STOCKHOLDERS | |||
vote AGAINST the twelvethirteen nominees for director; or
ABSTAIN from voting on all of the nominees for director.
Our Bylaws provide for the election of directors by an affirmative vote of a majority of the votes cast in an uncontested election. This means each of the twelvethirteen individuals nominated for election to the Board of Directors must receive more votes cast “FOR” than “AGAINST” (among votes properly cast, in person, electronically or by proxy) to be elected. Abstentions and brokernon-votes are not considered votes cast for the foregoing purpose and will have no effect on the election of nominees. If the election of directors is a contested election, then the directors are elected by a plurality of the votes cast.
What happens if a nominee does not receive a majority of “FOR” votes?
If a nominee does not receive a majority of “FOR” votes, he or she shall tender to the Board, via the Chair of the Nominating and Corporate Governance Committee, his or her resignation. The Nominating and Corporate Governance Committee will consider the resignation and make a recommendation to the Board whether to accept or reject the tendered resignation no later than 60 days following the date of the Annual Meeting in accordance with the specific requirements outlined in our Corporate Governance Guidelines.
What happens if a nominee is unable to stand for election?
If a nominee is unable to stand for election, the Board may either:
reduce the number of directors that serve on the Board; or
designate a substitute nominee.
If the Board designates a substitute nominee, shares represented by proxies voted for the nominee who is unable to stand for election will be voted for the substitute nominee.
How may I cast my advisory vote for the proposal to approve the Company’s executive compensation?
With respect to this proposal, you may:
vote FOR the approval, on an advisory basis, of the Company’s executive compensation;
vote AGAINST the approval, on an advisory basis, of the Company’s executive compensation; or
ABSTAIN from voting on the proposal.
In accordance with applicable law, this vote is “advisory,” meaning it will serve as a recommendation to the Board but will not be binding. The Compensation and HR Committee will carefully consider the outcome of this vote when determining future executive compensation arrangements. Abstentions and brokernon-votes will not count as votes cast.
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How may I vote for the proposal to ratify the appointment of our independent registered public accounting firm, and how many votes must this proposal receive to pass?
With respect to this proposal, you may:
vote FOR the ratification of the accounting firm;
vote AGAINST the ratification of the accounting firm; or
ABSTAIN from voting on the proposal.
In order to pass, the proposal must receive the affirmative vote of a majority of the votes cast at the Annual Meeting by the stockholders who are present in person or by proxy. Abstentions will not countbe counted as votes cast.
2022 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT - INFORMATION FOR STOCKHOLDERS | |||
How may I vote for the proposal to amend the Company’s Certificate of Incorporation to provide stockholders with the right to call a special meeting,eliminate supermajority vote requirements, and how many votes must this proposal receive to pass?
With respect to this proposal, you may:
vote FOR the amendment of the Company’s Certificate of Incorporation to provide stockholders with the right to call a special meeting;eliminate supermajority vote requirements;
vote AGAINST the amendment of the Company’s Certificate of Incorporation to provide stockholders with the right to call a special meeting;eliminate supermajority vote requirements; or
ABSTAIN from voting on the proposal.
In order to pass, the proposal must receive the affirmative vote of holders of not less than seventy-five percent of our outstanding common stock as of the record date for the Annual Meeting. As a result, abstentions and brokernon-votes, if any, will have the same effect as votes against the proposal.
How may I vote for the proposal to amend the Company’s Certificate of Incorporation to removenon-operative provisions relating to our former parent, and how many votes must this proposal receive to pass?
With respect to this proposal, you may:
vote FOR the amendment of the Company’s Certificate of Incorporation to removenon-operative provisions relating to our former parent;
vote AGAINST the amendment of the Company’s Certificate of Incorporation to removenon-operative provisions relating to our former parent; or
ABSTAIN from voting on the proposal.
In order to pass, the proposal must receive the affirmative vote of holders of not less than seventy-five percent of our outstanding common stock as of the record date for the Annual Meeting. As a result, abstentions and brokernon-votes, if any, will have the same effect as votes against the proposal.
What happens if I sign and return my proxy card but do not provide voting instructions?
If you return a signed card but do not provide voting instructions, your shares will be voted as follows:
| 1. | FOR the |
| 2. | FOR the approval, on an advisory basis, of the Company’s executive compensation; |
| 3. | FOR the ratification of the appointment of our independent registered public accounting firm; and |
| 4. | FOR the |
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Will my shares be voted if I do not vote by using the Internet, telephone or by signing and returning my proxy card?
If you do not vote by using the Internet, telephone or (if you received a proxy card by mail) by signing and returning your proxy card, then your shares will not be voted and will not count in deciding the matters presented for stockholder consideration at the Annual Meeting.
If your shares are held in street name through a bank or broker or other intermediary and you do not provide voting instructions before the Annual Meeting, your bank or broker may vote your shares under certain limited circumstances if you do not provide voting instructions before the Annual Meeting, in accordance with the NYSE rules that govern banks and brokers. These circumstances include voting your shares on “routine matters,” such as the ratification of the appointment of our independent registered public accountants described in this proxy statement. With respect to the proposal to ratify the appointment of our independent registered public accounting firm, therefore, if you do not vote your shares, your bank or broker may vote your shares on your behalf or leave your shares unvoted.
The election of directors, approval, on anthe advisory basis, ofvote to approve the Company’s executive compensation, and amendmentsthe approval of the amendment to the Company’s Certificate of Incorporation to eliminate supermajority vote requirements are not considered routine matters under the NYSE rules relating to voting by banks and brokers. When a proposal is not a routine matter and the brokerage firm has not received voting instructions from the beneficial owner of the shares with respect to that proposal, the brokerage firm cannot vote the shares on that proposal. This is called a “brokernon-vote.” Brokernon-votes that are represented at the Annual Meeting will be counted for purposes of establishing a quorum, but not for determining the number of shares voted for or against thenon-routine matter.
We encourage you to provide instructions to your bank or brokerage firm by voting your proxy. This action ensures your shares will be voted at the meeting in accordance with your wishes.
What do I need to show to attend the Annual Meeting in person?
You will need proof of your share ownership (such as a recent brokerage statement or letter from your broker showing that you owned shares of the Company’s common stock as of February 25, 2020 if you hold your shares through a broker) and a form of government-issued photo identification. If you do not have proof of ownership and valid photo identification, you may not be admitted to the Annual Meeting.
2022 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT - INFORMATION FOR STOCKHOLDERS | |||
If you are the legal representative of a stockholder, you must also bring a letter from the stockholder certifying (a) the beneficial ownership you represent and (b) your status as a legal representative. We will determine in our sole discretion whether the letter presented for admission meets the above requirements.
No cameras, laptops, tablets, recording equipment, large bags, backpacks, briefcases, and similar items are permitted in the meeting room. Cell phones may not be used during the meeting and we reserve the right to remove individuals who do not adhere to these requirements.
Who bears the cost of the proxy materials?
The Company pays for preparing, printing and mailing this proxy statement and the annual report. Officers and employees of the Company may solicit the return of proxies but will not receive additional compensation for those efforts. The Company will request that brokers, banks, custodians, nominees and other fiduciaries send proxy materials to all beneficial owners and upon request will reimburse them for their expenses. Solicitation may be made by mail, telephone or other means.
Can I receive future proxy materials and annual reports electronically?
Yes. Instead of receiving future paper copies in the mail, you can elect to receive our future annual reports and proxy materials electronically. Opting to receive your proxy materials electronically will save us the cost of producing and mailing documents to your home or business and will reduce the environmental impact of our
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annual meetings. If you are a stockholder of record and wish to enroll in the electronic proxy delivery service for future meetings, you may do so by going to the website provided on your proxy card and following the prompts.
Can I ask questions or make comments at the Annual Meeting?
Questions and comments can be made at the meeting, no more than one of which may be on a single topic. Only questions and comments appropriate to the business of the meeting will be considered.
What questions would be considered not to be appropriate to the business of the meeting?
The views and comments of all stockholders are welcome. However, the purpose of the meeting will be observed and questions that fall into the following categories will not be addressed at the meeting:
Irrelevant to the business of the Company or the conduct of its operations;
Related to pending or threatened litigation;
Derogatory references that are not in good taste;
Unduly prolonged;
Substantially repetitious of those made by other stockholders; or
Related to personal grievances.
The Board is not aware of any other matters to be presented at the Annual Meeting. If any other matter proper for action at the meeting should be presented, the holders of the accompanying proxy will vote the shares represented by the proxy on such matter in accordance with their best judgment. If any matter not proper for action at the meeting should be presented, the holders of the proxy will vote against consideration of the matter or the proposed action.
20212023 ANNUAL MEETING AND STOCKHOLDER PROPOSALS
In order for a stockholder proposal or director nomination submitted pursuant to SEC Rule 14a-8 to be considered for inclusion in our proxy materials for our annual meeting of stockholders, expected to be held in April 2021,2023, the proposal or director nomination must be received by our Corporate Secretary, Citizens Financial Group, Inc., 600 Washington Boulevard, Stamford, Connecticut 06901, on or before the close of business on November 9, 2020,11, 2022, and must comply with the rules and regulations promulgated by the SEC. These stockholder notices must also comply with the requirements of our Bylaws and will not be effective otherwise.
Our Bylaws impose procedural requirements on stockholders who wish to nominate directors, generally or under the proxy access provisions, propose that a director be removed, propose any repeal or change in our Bylaws or propose any other business to be brought before an annual or special meeting of stockholders. Under these procedural requirements, in order to bring a proposal before a meeting of stockholders, a stockholder must deliver timely notice of a proposal pertaining to a proper subject for presentation at the annual meeting to our Corporate Secretary.
2022 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT - INFORMATION FOR STOCKHOLDERS | |||
For proposals outside of SEC Rule14a-8, to be timely, a stockholder’s notice must be delivered to the Corporate Secretary at 600 Washington Boulevard, Stamford, Connecticut, 06901 not less than 120 days or more than 150 days prior to the first anniversary of the preceding year’s annual meeting. Therefore, to be presented at our annual meeting of stockholders to be held in 2021,2023, such a proposal must be received on or after November 24, 2020,29, 2022, but not later than December 24, 2020.29, 2022. In the event that the date of the annual meeting of stockholders to be held in 20212023 is advanced by more than 30 days or delayed by more than 70 days from the anniversary date of this year’s annual meeting of stockholders, such notice by the stockholder must be so received no earlier than 120 days prior to the annual meeting of stockholders to be held in 20212023 and not later than 70 days prior to such annual meeting of stockholders to be held in 20212023 or 10 days following the day on which public announcement of the date of such annual meeting is first made.
Director nominations submitted for inclusion in our proxy materials under the proxy access provisions of our Bylaws must comply with the notice, ownership and other requirements of Article 2, Section 2.10(c).
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For director nominations and proposals of other business, pursuant to Article 2, Section 2.10(a), a stockholder’s notice to the Corporate Secretary shall set forth (i) as to each person whom the stockholder proposes to nominate for election or reelection as a director all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934 (as amended, together with the rules and regulations promulgated thereunder, the “Exchange Act”) including such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected, (ii) as to any other business that the stockholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the text of the proposal or business (including the text of any resolutions proposed for consideration and in the event that such business includes a proposal to amend the Bylaws, the text of the proposed amendment), the reasons for conducting such business and any material interest in such business of such stockholder and the beneficial owner, if any, on whose behalf the proposal is made, and (iii) as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the proposal is made:
the name and address of such stockholder (as they appear on the Company’s books) and any such beneficial owner;
the number of shares of capital stock of the Company that are held of record or are beneficially owned by such stockholder and by any such beneficial owner;
a description of any agreement, arrangement or understanding between or among such stockholder and any such beneficial owner, any of their respective affiliates or associates, and any other person or persons (including their names) in connection with the proposal of such nomination or other business;
a description of any agreement, arrangement or understanding (including, regardless of the form of settlement, any derivative, long or short positions, profit interests, forwards, futures, swaps, options, warrants, convertible securities, stock appreciation or similar rights, hedging transactions and borrowed or loaned shares) that has been entered into by or on behalf of, or any other agreement, arrangement or understanding that has been made, the effect or intent of which is to create or mitigate loss to, manage risk or benefit of share price changes for, or increase or decrease the voting power of, such stockholder or any such beneficial owner or any such nominee with respect to the Company’s securities;
a representation that the stockholder is a holder of record of stock of the Company entitled to vote at such meeting and intends to appearattend in person or by proxy at the meeting to bring such nomination or other business before the meeting;
a representation as to whether such stockholder or any such beneficial owner intends or is part of a group that intends to (i) deliver a proxy statement and/or form of proxy to holders of at least the percentage of the voting power of the Company’s outstanding capital stock required to approve or adopt the proposal or to elect each such nominee, and/or (ii) otherwise to solicit proxies from stockholders in support of such proposal or nomination;
2022 | CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT - INFORMATION FOR STOCKHOLDERS | |||
any other information relating to such stockholder, beneficial owner, if any, or director nominee or proposed business that would be required to be disclosed in a proxy statement or other filing required to be made in connection with the solicitation of proxies in support of such nominee or proposal pursuant to Section 14 of the Exchange Act; and
such other information relating to any proposed item of business as the Company may reasonably require to determine whether such proposed item of business is a proper matter for stockholder action.
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The fiscal 20192021 Annual Report on Form10-K is being mailed with this proxy statement to those stockholders receiving a copy of the proxy materials in the mail. Stockholders receiving the Notice of Internet Availability of Proxy Materials can access this proxy statement, and our fiscal 20192021 Annual Report on Form 10-K and our 2021 Annual Review at www.edocumentview.com/CFG. Requests for copies of our Annual Report on Form 10-K may also be directed to Investor Relations, Citizens Financial Group, Inc., 600 Washington Boulevard, Stamford, Connecticut 06901.
HOUSEHOLDING OF ANNUAL DISCLOSURE DOCUMENTS
In some cases, stockholders holding their shares in a brokerage or bank account who share the same surname and address and have not given contrary instructions are receivingreceive only one copy of our annual report and this proxy statement. This reduces the volume of duplicate information received at your household and helps to reduce costs and environmental impact. If you would like to have additional copies of these documents mailed to you, please call or write to Investor Relations at (203)900-6854 or 600 Washington Boulevard, Stamford, Connecticut 06901. If you want to receive separate copies of the proxy statement, annual report to stockholders or Notice of Internet Availability of Proxy Materials in the future, or if you are receiving multiple copies and would like to receive only one copy per household, you should contact your bank, broker or other nominee record holder.
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Stamford, ConnecticutCAUTIONARY STATEMENT ABOUT FORWARD LOOKING STATEMENTS
March 9, 2020
“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: This Proxy Statement contains “forward looking statements” — that is, statements related to future, not past, events. In this context, forward-looking statements often address our expected future business and financial performance and financial condition, and often contain words such as “expect,” “anticipate,” “intend,” “plan,” “pending,” “believe,” “seek,” “see,” “will,” “would,” or “target.” Forward-looking statements by their nature address matters that are, to different degrees, uncertain. Uncertainties that could cause our actual results to be materially different than those expressed in our forward-looking statements include the failure to consummate the Investors Bancorp transaction or to make or take any filing or other action required to consummate any such transaction on a timely matter or at all. These or other uncertainties may cause our actual future results to be materially different from those expressed in our forward-looking statements. We caution you, therefore, against relying on any of these forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance. More information about factors that could cause actual results to differ materially from those described in the forward-looking statements can be found under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021 as filed with the United States Securities and Exchange Commission.
| CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT - INFORMATION FOR STOCKHOLDERS | |||
INFORMATION NOT INCORPORATED BY REFERENCE
Information contained on or accessible through our website at citizensbank.com is not and shall not be deemed to be a part of this proxy statement by reference or otherwise incorporated into any other filings we make with the SEC, except to the extent we specifically incorporate such information by reference.
| BY ORDER OF THE BOARD OF DIRECTORS |
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| Robin S. Elkowitz |
| Executive Vice President, Deputy General Counsel and Secretary |
Stamford, Connecticut
March 11, 2022
2022
| CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT - APPENDIX A | |||
APPENDIX A - |
AMENDED AND RESTATEDThis document contains non-GAAP financial measures denoted as “Underlying” or “Normalized” results. Underlying or Normalized results for any given reporting period exclude certain items that may occur in that period which Management does not consider indicative of the Company’s on-going financial performance. Where there is a reference to these metrics in that paragraph, all measures that follow are on the same basis, when applicable. We believe these non-GAAP financial measures provide useful information to investors because they are used by management to evaluate our operating performance and make day-to-day operating decisions. In addition, we believe our Underlying results or results excluding the impact of certain items in any given reporting period reflect our on-going financial performance and increase comparability of period-to-period results, accordingly, are useful to consider in addition to our GAAP financial results.
CERTIFICATE OF INCORPORATION
OF
CITIZENS FINANCIAL GROUP, INC.
PursuantThe following reconciliation tables provide computations and more information on the computation of our non-GAAP financial measures and reconciliations to the provisions of §242 and §245 ofmost directly comparable GAAP financial measures.
Other companies may use similarly titled non-GAAP financial measures that are calculated differently from the
General Corporation Law of the State of Delaware
FIRST: The present name of the corporation is Citizens Financial Group, Inc. (the “Corporation”). The date of filing of the original Certificate of Incorporation of the Corporation way we calculate such measures. Accordingly, our non-GAAP financial measures may not be comparable to similar measures used by such companies. We caution investors not to place undue reliance on such non-GAAP financial measures, but to consider them with the Secretary of State of the State of Delaware was November 21, 1984.
SECOND: The Amendedmost directly comparable GAAP measures. Non-GAAP financial measures have limitations as analytical tools and Restated Certificate of Incorporation of the Corporation is hereby amendedshould not be considered in its entirety as set forth in the Amended and Restated Certificate of Incorporation hereinafter provided for (the “Certificate of Incorporation”).
THIRD: The Certificate of Incorporation herein certified has been duly adopted by the stockholders in accordance with the provisions of §228, 242 and 245 of the General Corporation Law of the State of Delaware.
FOURTH: This Certificate shall become effective as ofApril 23, 2020.August 22, 2014(the “Effective Time”).
ARTICLE 1
NAME
Section 1.01. Name. The name of the corporation is Citizens Financial Group, Inc. (the “Corporation”).
ARTICLE 2
REGISTERED OFFICEAND AGENT
Section 2.01. Address and Name. The address of its registered office in the State of Delaware is 2711 Centerville Road, Ste. 400, City of Wilmington, County of New Castle, Delaware 19808. The name of its registered agent at such address is The Corporation Service Company.
ARTICLE 3
PURPOSEAND POWERS
Section 3.01. Purpose and Powers. The purpose for which the Corporation is organized is to actisolation or as a bank holding company, to act as a savings and loan holding company, and to engage in any lawful act or activitysubstitute for which corporations may be organizedour results reported under the General Corporation Law of the State of Delaware as the same exists or may hereafter be amended (“Delaware Law”).
ARTICLE 4
CAPITAL STOCK
Section 4.01. Authorized Shares.
(a) Classes of Stock. The total number of shares of stock that the Corporation shall have authority to issue is 1,100,000,000, consisting of 1,000,000,000 shares of Common Stock, par value $0.01 per share (theGAAP.
| CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT - APPENDIX A | |||
“Common Stock”),Non-GAAP financial measures and 100,000,000 shares of Preferred Stock, par value $25.00 perreconciliations
(in millions, except share, (the “Preferred Stock”).per-share and ratio data)
Upon this Certificate of Incorporation becoming effective pursuant to Delaware Law at the Effective Time, each share of Common Stock of the Corporation issued immediately prior to the Effective Time will be reclassified into 165,582 issued, fully paid and nonassessable shares of Common Stock, without any action required on the part of the Corporation or the holders of such Common Stock. No fractional shares of Common Stock will be issued in connection with the reclassification of shares of Common Stock provided herein. In lieu of fractional shares, holders of such Common Stock will receive a cash payment equal to the fair value of such fractional shares, as determined in good faith by the Board of Directors of the Corporation (the “Board of Directors”). From and after the Effective Time, stock certificates representing the Common Stock issued immediately prior to the Effective Time, if any, shall represent the number of whole shares of Common Stock into which such Common Stock shall have been reclassified pursuant to this Certificate of Incorporation.
(b) Preferred Stock. The Board of Directors is hereby empowered, without any action or vote by the Corporation’s stockholders (except as may otherwise be provided by the terms of any class or series of Preferred Stock then outstanding), to authorize by resolution or resolutions from time to time the issuance of one or more classes or series of Preferred Stock and to fix the rights, preferences, privileges and restrictions thereof, including dividend rights, dividend rates, conversion rights, voting rights, terms of redemptions, redemption prices and liquidation preferences with respect to each such class or series of Preferred Stock and the number of shares constituting each such class or series, and to increase or decrease the number of shares of any such class or series to the extent permitted by Delaware Law.
Section 4.02. Voting Rights. Each holder of Common Stock, as such, shall be entitled to one vote for each share of Common Stock held of record by such holder on all matters on which stockholders generally are entitled to vote;provided,however, that, except as otherwise required by law, holders of Common Stock, as such, shall not be entitled to vote on any amendment to this Certificate of Incorporation (including any certificate of designations relating to any class or series of Preferred Stock) that relates solely to the terms of one or more outstanding classes or series of Preferred Stock if the holders of such affected class or series are entitled, either separately or together with the holders of one or more other such classes or series, to vote thereon pursuant to this Certificate of Incorporation (including any certificate of designations relating to any class or series of Preferred Stock) or pursuant to Delaware Law.
Except as otherwise required by law, holders of any class or series of Preferred Stock, as such, shall be entitled only to such voting rights, if any, as shall expressly be granted thereto by this Certificate of Incorporation (including any certificate of designations relating to such series of Preferred Stock).
Section 4.03. Dividends and Distributions. Subject to applicable law and the rights, if any, of the holders of any outstanding class or series of Preferred Stock or any class or series of stock having a preference over or the right to participate with the Common Stock with respect to the payment of dividends and other distributions in cash, property of the Corporation or shares of stock of the Corporation, such dividends and other distributions may be declared and paid on the Common Stock out of the assets of the Corporation that are by law available therefor at such times and in such amounts as the Board of Directors in its discretion shall determine.
Section 4.04. Liquidation, Dissolution or Winding Up. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation, after payment or provision for payment of the debts and other liabilities of the Corporation and of the preferential and other amounts, if any, to which the holders of Preferred Stock shall be entitled, the holders of all outstanding shares of Common Stock shall be entitled to receive the remaining assets of the Corporation available for distribution ratably in proportion to the number of shares held by each such stockholder.
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| 2021 | 2020 | 2020 | ||||||||||||||||||
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| Total revenue, Underlying: | ||||||||||||||||||||
| Total revenue (GAAP) | A | $ | 6,647 | $ | 6,905 | $ | (258) | (4%) | ||||||||||||
| Less: Notable items | - | - | - | - | ||||||||||||||||
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| Total revenue, Underlying (non-GAAP) | B | $ | 6,647 | $ | 6,905 | $ | (258) | (4%) | ||||||||||||
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| Noninterest expense, Underlying: | ||||||||||||||||||||
| Noninterest expense (GAAP) | C | $ | 4,081 | $ | 3,991 | $ | 90 | 2% | ||||||||||||
| Less: Notable items | 105 | 125 | (20) | (16) | ||||||||||||||||
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| Noninterest expense, Underlying (non-GAAP) | D | $ | 3,976 | $ | 3,866 | $ | 110 | 3% | ||||||||||||
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| Net income, Underlying: | ||||||||||||||||||||
| Net income (GAAP) | E | $ | 2,319 | $ | 1,057 | $ | 1,262 | 119% | ||||||||||||
| Add: Notable items, net of income tax benefit | 78 | 83 | (5) | (6) | ||||||||||||||||
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| Net income, Underlying (non-GAAP) | F | $ | 2,397 | $ | 1,140 | $ | 1,257 | 110% | ||||||||||||
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| Net income available to common stockholders, Underlying: | ||||||||||||||||||||
| Net income available to common stockholders (GAAP) | G | $ | 2,206 | $ | 950 | $ | 1,256 | 132% | ||||||||||||
| Add: Notable items, net of income tax benefit | 78 | 83 | (5) | (6) | ||||||||||||||||
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| Net income available to common stockholders, Underlying (non-GAAP) | H | $ | 2,284 | $ | 1,033 | $ | 1,251 | 121% | ||||||||||||
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| Efficiency ratio and efficiency ratio, Underlying: | ||||||||||||||||||||
| Efficiency ratio | C/A | 61.40% | 57.80% | 360 | bps | |||||||||||||||
| Efficiency ratio, Underlying (non-GAAP) | D/B | 59.82 | 55.99 | 383 | bps | |||||||||||||||
| Return on average tangible common equity and return on average tangible common equity, Underlying: | ||||||||||||||||||||
| Average common equity (GAAP) | I | $ | 21,025 | $ | 20,438 | $ | 587 | 3% | ||||||||||||
| Less: Average goodwill (GAAP) | 7,062 | 7,049 | 13 | - | ||||||||||||||||
| Less: Average other intangibles (GAAP) | 54 | 64 | (10) | (16) | ||||||||||||||||
| Add: Average deferred tax liabilities related to goodwill (GAAP) | 381 | 376 | 5 | 1 | ||||||||||||||||
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| Average tangible common equity | J | $ | 14,290 | $ | 13,701 | $ | 589 | 4% | ||||||||||||
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| Return on average tangible common equity | G/J | 15.44% | 6.93% | 851 | bps | |||||||||||||||
| Return on average tangible common equity, Underlying (non-GAAP) | H/J | 15.98 | 7.53 | 845 | bps | |||||||||||||||
| Net income per average common share - basic and diluted and net income per average common share - basic and diluted, Underlying: | ||||||||||||||||||||
| Average common shares outstanding - basic (GAAP) | K | 425,669,451 | 427,062,537 | (1,393,086) | -% | |||||||||||||||
| Average common shares outstanding - diluted (GAAP) | L | 427,435,818 | 428,157,780 | (721,962) | - | |||||||||||||||
| Net income per average common share - basic (GAAP) | G/K | $ | 5.18 | $ | 2.22 | $ | 2.96 | 133 | ||||||||||||
| Net income per average common share - diluted (GAAP) | G/L | 5.16 | 2.22 | 2.94 | 132 | |||||||||||||||
| Net income per average common share - basic, Underlying (non-GAAP) | H/K | 5.37 | 2.42 | 2.95 | 122 | |||||||||||||||
| Net income per average common share - diluted, Underlying (non-GAAP) | H/L | 5.34 | 2.41 | 2.93 | 122 | |||||||||||||||
| Tangible book value per common share: | ||||||||||||||||||||
| Common shares - at period-end (GAAP) | M | 422,137,197 | 427,209,831 | (5,072,634) | (1%) | |||||||||||||||
| Common stockholders’ equity (GAAP) | $ | 21,406 | $ | 20,708 | $ | 698 | 3 | |||||||||||||
| Less: Goodwill (GAAP) | 7,116 | 7,050 | 66 | 1 | ||||||||||||||||
| Less: Other intangible assets (GAAP) | 64 | 58 | 6 | 10 | ||||||||||||||||
| Add: Deferred tax liabilities related to goodwill (GAAP) | 383 | 379 | 4 | 1 | ||||||||||||||||
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| Tangible common equity | N | $ | 14,609 | $ | 13,979 | $ | 630 | 5% | ||||||||||||
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| Tangible book value per common share | N/M | $ | 34.61 | $ | 32.72 | $ | 1.89 | 6% | ||||||||||||
| CITIZENS FINANCIAL GROUP, INC. PROXY STATEMENT - APPENDIX A | |||
ARTICLE 5
BYLAWS
Section 5.01. Bylaws. The Board of Directors shall have the power to adopt, amend or repeal the bylaws of the Corporation (the “Bylaws”).
ARTICLE 6
BOARDOF DIRECTORS
Section 6.01. Power of the Board of Directors. The business and affairs of the Corporation shall be managed by or under the direction of a Board of Directors.
Section 6.02. Number of Directors. The number of directors that shall constitute the Board of Directors shall, as of the Effective Time, consist of not less than five nor more than twenty-five persons. The exact number of directors that shall constitute the Board of Directors shall be fixed exclusively by one or more resolutions adopted from time to time solely by the affirmative vote of a majority of the Board of Directors.
Section 6.03. Election of Directors. There shall be no cumulative voting in the election of directors. Election of directors need not be by written ballot unless the Bylaws so provide.
Section 6.04. Vacancies. Vacancies on the Board of Directors resulting from death, resignation, removal or otherwise and newly created directorships resulting from any increase in the number of directors shall, except as otherwise required by law, be filled solely by a majority of the directors then in office (although less than a quorum) or by the sole remaining director, and each director so elected shall hold office until the next election of directors.
Section 6.05. Removal. Any director may be removed, with or without cause, by an affirmative vote of the holders of not less than a majority of the total voting power of all outstanding securities of the Corporation generally entitled to vote in the election of directors, voting together as a single class.
Section 6.06. Preferred Stock Directors. Notwithstanding anything else contained herein, whenever the holders of one or more classes or series of Preferred Stock shall have the right, voting separately as a class or series, to elect directors, the election, term of office, filling of vacancies, removal and other features of such directorships shall be governed by the terms of such class or series of Preferred Stock adopted by resolution or resolutions adopted by the Board of Directors pursuant to Section 4.01 hereto, and such directors so elected shall not be subject to the provisions of this Article 6 unless otherwise provided therein.
ARTICLE 7
MEETINGSOF STOCKHOLDERS
Section 7.01. Annual Meetings. An annual meeting of stockholders for the election of directors and for the transaction of such other business as may properly come before the meeting shall be held at such place, on such date, and at such time as the Board of Directors shall determine.
Special Meetings.For so long as The Royal Bank of Scotland Group plc (“Parent”) continues to beneficially own, directly or indirectly, securities representing at least 50% of the total voting power of all the then outstanding securities of the Corporation entitled to vote generally in the election of directors, voting together as a single class, special meetings of the stockholders may be called by a majority of the total voting power of all the then outstanding securities of the Corporation entitled to vote generally in the election of directors, voting together as a single class. From and after the date on which Parent ceases to beneficially own, directly or indirectly, securities representing at least 50% of the total voting power of all the then outstanding securities of the Corporation entitled to vote generally in the election of directors, voting together as a single class, special meetings of the stockholders may be called onlySpecial meetings of the stockholders may be called by or at the
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direction of the chairman of the Board of Directors, the chief executive officer of the Corporation or the Board of Directors acting pursuant to a resolution adopted by a majority of the Board of Directors.,or by the Secretary upon written request by record stockholders owning at least twenty five (25) percent of the voting power of all outstanding shares of common stock of theCorporation as determined pursuant to the Bylaws and who otherwise comply with such other requirements and procedures set forth in the Bylaws, as now or hereinafter in effect.Notwithstanding the foregoing, whenever holders of one or more classes or series of Preferred Stock shall have the right, voting separately as a class or series, to elect directors, such holders may call, pursuant to the terms of such class or series of Preferred Stock adopted by resolution or resolutions of the Board of Directors pursuant to Section 4.01 hereto, special meetings of holders of such Preferred Stock.
Section 7.02. Action by Written Consent.For so long as Parent continues to beneficially own, directly or indirectly, securities representing at least 50% of the total voting power of all the then outstanding securities of the Corporation entitled to vote generally inthe election of directors, voting together as a single class, any action required or permitted to be taken at any annual or special meeting of stockholders may be effected by written consent without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action to be so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all securities entitled to vote thereon were present and voted and shall be delivered to the Corporation by delivery to its registered office in Delaware, its principal place of business, or to an officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to the Corporation’s registered office shall be by hand or by certified or registered mail, return receipt requested. From and after the date on which Parent ceases to beneficially own, directly or indirectly, securities representing at least 50% of the total voting power of all the then outstanding securities of the Corporation entitled to vote generally in the election of directors, voting together as a single class, anyAny action required or permitted to be taken at any annual or special meeting of stockholders may be effected only upon the vote of stockholders at an annual or special meeting duly noticed and called in accordance with Delaware Law, as amended from time to time, and this Article 7 and may not be taken by written consent of stockholders without a meeting. Notwithstanding the foregoing, holders of one or more classes or series of Preferred Stock may, to the extent permitted by and pursuant to the terms of such class or series of Preferred Stock adopted by resolution or resolutions of the Board of Directors pursuant to Section 4.01 hereto, take action by written consent.
ARTICLE 8
INDEMNIFICATION
Section 8.01. Limited Liability. A director or officer of the Corporation shall not be liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director to the fullest extent permitted by Delaware Law. Neither the amendment nor the repeal of this Article 8 shall eliminate or reduce the effect thereof in respect of any state of facts existing or act or omission occurring, or any cause of action, suit or claim that, but for this Article 8, would accrue or arise, prior to such amendment or repeal.
Section 8.02. Right to Indemnification.
(a) Each person (and the heirs, executors or administrators of such person) who was or is a party or is threatened to be made a party to, or is involved in any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that such person is or was a director or officer of the Corporation or is or was serving at the request of the Corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise, shall be indemnified and held harmless by the Corporation to the fullest extent permitted by Delaware Law. The right to indemnification conferred in this Article 8 shall also include the right to be paid by the Corporation the expenses incurred in connection with any such proceeding in advance of its final disposition to the fullest extent authorized by Delaware Law.
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(b) The Corporation may, by action of its Board of Directors, provide indemnification to such of the employees and agents of the Corporation to such extent and to such effect as the Board of Directors shall determine to be appropriate and authorized by Delaware Law.
Section 8.03. Insurance. The Corporation shall have power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss incurred by such person in any such capacity or arising out of such person’s status as such, whether or not the Corporation would have the power to indemnify such person against such liability under Delaware Law.
Section 8.04. Nonexclusivity of Rights. The rights and authority conferred in this Article 8 shall not be exclusive of any other right that any person may otherwise have or hereafter acquire.
Section 8.05. Preservation of Rights. Neither the amendment nor repeal of this Article 8, nor the adoption of any provision of this Certificate of Incorporation or the Bylaws, nor, to the fullest extent permitted by Delaware Law, any modification of law, shall adversely affect any right or protection of any person granted pursuant hereto existing at, or arising out of or related to any event, act or omission that occurred prior to, the time of such amendment, repeal, adoption or modification (regardless of when any proceeding (or part thereof) relating to such event, act or omission arises or is first threatened, commenced or completed).
ARTICLE 9
MISCELLANEOUS
Section 8.06.Certain Acknowledgement. In recognition and anticipation that (a) certain directors, principals, officers, employees and/or other representatives affiliated with Parent and its Affiliates (as defined below) may serve as directors, officers or agents of the Corporation and (b) Parent and its Affiliates may now engage and may continue to engage in the same or similar activities or related lines of business as those in which the Corporation, directly or indirectly, may engage and/or other business activities that overlap with or compete with those in which the Corporation, directly or indirectly, may engage, theprovisions of this Article 9 are set forth to regulate and define the conduct of certain affairs of the Corporation with respect to certain classes or categories of business opportunities as they may involve any of Parent or its Affiliates and the powers, rights, duties and liabilities of the Corporation and its directors, officers and stockholders in connection therewith.
Section 8.07.Competition and Corporate Opportunities; Renouncement. None of (a) Parent or any of its Affiliates (the Persons (as defined below) identified above being referred to, collectively, as “Identified Persons” and, individually, as an “Identified Person”) shall, to the fullest extent permitted by law or regulation, including the rules of any exchange on which the Company’s securities are listed, have any duty to refrain from directly or indirectly (i) engaging in the same or similar business activities or lines of business in which the Corporation or any of its Affiliates now engages or proposes to engage or (ii) otherwise competing with the Corporation or any of its Affiliates, and, to the fullest extent permitted by law or regulation, including the rules of any exchange on which the Company’s securities are listed, no Identified Person shall be liable to the Corporation or its stockholders or to any Affiliate of the Corporation for breach of any fiduciary duty solely by reason of the fact that such Identified Person engages in any such activities. To the fullest extent permitted by law or regulation, including the rules of any exchange on which the Company’s securities are listed, the Corporation hereby renounces any interest or expectancy in, or right to be offered an opportunity to participate in, any business opportunity which may be a corporate opportunity for an Identified Person and the Corporation or any of its Affiliates, except as provided in Section 9.03 hereof. Subject to Section 9.03, in the event that any Identified Person acquires knowledge of a potential transaction or other business opportunity which may be a corporate opportunity for itself, herself or himself and the Corporation or any of its Affiliates, such Identified Person shall, to the fullest extent permitted by law or regulation, including the rules of any exchange on which the Company’s securities are listed, have no duty to communicate or offer such transaction or other business opportunity to the Corporation or any of its Affiliates and, to the fullest extent permitted by law or regulation, including the rules of any exchange on which the Company’s securities are listed, shall not be liable to the Corporation or its
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stockholders or to any Affiliate of the Corporation for breach of any fiduciary duty as a stockholder, director or officer of the Corporation solely by reason of the fact that such Identified Person pursues or acquires such corporate opportunity for itself, herself or himself, or offers or directs such corporate opportunity to another Person or does not provide notice of such corporate opportunity to the Corporation.
Section 8.08.Allocation of Corporate Opportunities. The Corporation does not renounce its interest in any corporate opportunity offered to any director affiliated with Parent if such opportunity is offered to such person in his or her capacity as a director or officer of the Corporation, and the provisions of Section 9.02 hereof shall not apply to any such corporate opportunity.
Section 8.09.Certain Matters Deemed Not Corporate Opportunities. In addition to and notwithstanding the foregoing provisions of this Article 9, a corporate opportunity shall not be deemed to be a potential corporate opportunity for the Corporation if it is a business opportunity that (a) the Corporation is neither financially or legally able, nor contractuallypermitted to undertake, (b) from its nature, is not in the line of the Corporation’s business oris of no practical advantage to the Corporation or (c) is one in which the Corporation has no interest or reasonable expectancy.
Section 8.10.Certain Definitions. For purposes of this Article 9, (a) “Affiliate” shall mean (i) in respect of Parent, any Person that, directly or indirectly, is controlled by Parent, controls Parent or is under common control with Parent and shall include any principal, member, director, partner, stockholder, officer, employee or other representative of any of the foregoing (other than the Corporation and any entity that is controlled by the Corporation) and (ii) in respect of the Corporation, any Person that, directly or indirectly, is controlled by the Corporation; and (b) “Person” shall mean any individual, corporation, general or limited partnership, limited liability company, joint venture, trust, association or any other entity.
Section 8.11.Notice of this Article. To the fullest extent permitted by law or regulation, including the rules of any exchange on which the Company’s securities are listed, any Person purchasing or otherwise acquiring any interest in any shares of capital stock of the Corporation shall be deemed to have notice of and to have consented to the provisions of this Article 9.
ARTICLE 10ARTICLE 9
SEVERABILITY
Section 10.01Section 9.01. Severability. If any provision or provisions of this Certificate of Incorporation shall be held to be invalid, illegal or unenforceable as applied to any circumstance for any reason whatsoever, the validity, legality and enforceability of such provisions in any other circumstance and of the remaining provisions of this Certificate of Incorporation (including, without limitation, each portion of any paragraph of this Certificate of Incorporation containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby.
ARTICLE 11ARTICLE 10
FORUM
Section 11.01Section 10.01. Forum. Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall, to the fullest extent permitted by law or regulation, including the rules of any exchange on which the Company’s securities are listed, be the sole and exclusive forum for (a) any derivative action or proceeding brought on behalf of the Corporation, (b) any action asserting a claim of breach of a fiduciary duty owed by any director, officer, or other employee of the Corporation to the Corporation or the Corporation’s stockholders, (c) any action asserting a claim arising pursuant to any provision of the Delaware Law, this Certificate of Incorporation (as it may be amended or restated) or the Bylaws or (d) any action asserting a claim governed by the internal affairs doctrine. Any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the Corporation shall be deemed to have notice of and consented to the provisions of thisArticle 11Article 10.
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SECTION 12ARTICLE 11
AMENDMENTS
Section 12.01Section 11.01. Amendments. The Corporation reserves the right to amend this Certificate of Incorporation in any manner permitted by the Delaware Law and all rights and powers conferred upon stockholders, directors and officers herein are granted subject to this reservation. Notwithstanding the foregoing,from and after the date on which Parent ceases to beneficially own, directly or indirectly, securities representing at least 50% of the total voting power of all the then outstanding securities of the Corporation entitled to vote generally in the election of directors, voting together as a single class,the provisions set forth in Section 4.02 and Articles 6, 7, 8,9 and Article 12and this Article 11 may not be repealed or amended in any respect, and no other provision may be adopted, amended or repealed which would have the effect of modifying or permitting the circumvention of the provisions set forth in any of Section 4.02 and Articles 6, 7, 8,9 and12this Article 11, unless such action is approved by the affirmative vote of the holders of not less than 75% of the total voting power of all outstanding securities of the Corporation generally entitled to vote in the election of directors, voting together as a single class.
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IN WITNESS WHEREOF, the undersigned has executed this Certificate of Incorporation this22nd day of August, 2014 23rd day of April, 2020.
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This document contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements regarding potential future share repurchases and future dividends are forward-looking statements. Also, any statement that does not describe historical or current facts is a forward-looking statement. These statements often include the words “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “goals,” “targets,” “initiatives,” “potentially,” “probably,” “projects,” “outlook” or similar expressions or future conditional verbs such as “may,” “will,” “should,” “would,” and “could.”
Forward-looking statements are based upon the current beliefs and expectations of management, and on information currently available to management. Our statements speak as of the date hereof, and we do not assume any obligation to update these statements or to update the reasons why actual results could differ from those contained in such statements in light of new information or future events. We caution you, therefore, against relying on any of these forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance. While there is no assurance that any list of risks and uncertainties or risk factors is complete, important factors that could cause actual results to differ materially from those in the forward-looking statements include the following, without limitation:
Negative economic and political conditions that adversely affect the general economy, housing prices, the job market, consumer confidence and spending habits which may affect, among other things, the level of nonperforming assets, charge-offs and provision expense;
The rate of growth in the economy and employment levels, as well as general business and economic conditions, and changes in the competitive environment;
Our ability to implement our business strategy, including the cost savings and efficiency components, and achieve our financial performance goals;
Our ability to meet heightened supervisory requirements and expectations;
Liabilities and business restrictions resulting from litigation and regulatory investigations;
Our capital and liquidity requirements (including under regulatory capital standards, such as the U.S. Basel III capital rules) and our ability to generate capital internally or raise capital on favorable terms;
The effect of changes in interest rates on our net interest income, net interest margin and our mortgage originations, mortgage servicing rights and mortgages held for sale;
Changes in interest rates and market liquidity, as well as the magnitude of such changes, which may reduce interest margins, impact funding sources and affect the ability to originate and distribute financial products in the primary and secondary markets;
The effect of changes in the level of checking or savings account deposits on our funding costs and net interest margin;
Financial services reform and other current, pending or future legislation or regulation that could have a negative effect on our revenue and businesses;
A failure in or breach of our operational or security systems or infrastructure, or those of our third party vendors or other service providers, including as a result of cyber-attacks; and
Management’s ability to identify and manage these and other risks.
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In addition to the above factors, we also caution that the actual amounts and timing of any future common stock dividends or share repurchases will be subject to various factors, including our capital position, financial performance, capital impacts of strategic initiatives, market conditions and regulatory and accounting considerations, as well as any other factors that our Board of Directors deems relevant in making such a determination. Therefore, there can be no assurance that we will repurchase shares from or pay any dividends to holders of our common stock, or as to the amount of any such repurchases or dividends.
More information about factors that could cause actual results to differ materially from those described in the forward-looking statements can be found under “Risk Factors” in Part I, Item 1A in our Annual Report on Form 10-K for the year ended December 31, 2019, filed with the United States Securities and Exchange Commission on February 24, 2020.
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The document contains Key Performance Metrics (KPMs) that are used by our management to gauge our performance and progress over time in achieving our strategic and operational goals and also in comparing our performance against our peers. References in this document to “Underlying” results, which were referred to as “Adjusted” results in periods prior to 2017, are considerednon-GAAP financial measures and exclude certain notable items that may occur in that period which management does not consider indicative of ouron-going financial performance. References to “Underlying results before the impact of Acquisitions” exclude the impact of acquisitions that occurred after second quarter 2018 and notable items, as applicable. We believe thesenon-GAAP financial measures provide useful information to investors because they are used by management to evaluate our operating performance and makeday-to-day operating decisions. In addition, we believe our Underlying results in any given reporting period reflect ouron-going financial performance and increase comparability ofperiod-to-period results, and, accordingly, are useful to consider in addition to our GAAP financial results.
For additional information on our use of KPMs andnon-GAAP financial measures, see pages37-38 of our 2019 Annual Report on Form10-K, in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Introduction—Key Performance Metrics Used by Management andNon-GAAP Financial Measures” of Part II, Item 7. See the tables below for calculations of KPMs and reconciliations ofnon-GAAP financial measures used herein.
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Key performance metrics,non-GAAP financial measures and reconciliations
Normalized for change in accounting principle and Impact of share repurchases halted due to COVID-19 by Regulators
(in millions, except share,per-share and ratio data)
| QUARTERLY TRENDS | FULL YEAR | |||||||||||||||||||||||||||||||||
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| 4Q19 Change | 2019 Change | |||||||||||||||||||||||||||||||
| 4Q19 | 3Q13 | 3Q13 | 2019 | 2018 | 2018 | |||||||||||||||||||||||||||||
| $/bps | % | $/bps | % | |||||||||||||||||||||||||||||||
| Total revenue, Underlying: | ||||||||||||||||||||||||||||||||||
| Total revenue (GAAP) | A | $1,637 | $1,153 | $484 | 42 | % | $6,491 | $6,128 | $363 | 6 | % | |||||||||||||||||||||||
| Less: Notable items | — | — | — | — | — | (5 | ) | 5 | 100 | |||||||||||||||||||||||||
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| Total revenue, Underlying(non-GAAP) | B | $1,637 | $1,153 | $484 | 42 | % | $6,491 | $6,133 | $358 | 6 | % | |||||||||||||||||||||||
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| Noninterest expense, Underlying and Noninterest expense, Underlying excluding acquisitions: | ||||||||||||||||||||||||||||||||||
| Noninterest expense (GAAP) | C | $986 | $788 | $198 | 25 | % | $3,847 | $3,619 | $228 | 6 | % | |||||||||||||||||||||||
| Less: Notable items | 37 | — | 37 | 100 | 68 | 54 | 14 | 26 | ||||||||||||||||||||||||||
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| Noninterest expense, Underlying(non-GAAP) | D | 949 | 788 | 161 | 20 | 3,779 | 3,565 | 214 | 6 | |||||||||||||||||||||||||
| Less: Acquisitions impact | 40 | — | 40 | 100 | 149 | 60 | 89 | 148 | ||||||||||||||||||||||||||
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| Noninterest expense, Underlying excluding Acquisitions(non-GAAP) | $909 | $788 | $121 | 15 | % | $3,630 | $3,505 | $125 | 4 | % | ||||||||||||||||||||||||
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| Net income, Underlying: | ||||||||||||||||||||||||||||||||||
| Net income (GAAP) | E | $450 | $144 | $306 | 213 | % | $1,791 | $1,721 | $70 | 4 | % | |||||||||||||||||||||||
| Add: Notable items, net of income tax expense (benefit) | 4 | — | 4 | 100 | 17 | 16 | 1 | 6 | ||||||||||||||||||||||||||
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| Net income, Underlying(non-GAAP) | F | $454 | $144 | $310 | 215 | % | $1,808 | $1,737 | $71 | 4 | % | |||||||||||||||||||||||
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| Net income available to common stockholders, Underlying: | ||||||||||||||||||||||||||||||||||
| Net income available to common stockholders (GAAP) | G | $427 | $144 | $283 | 197 | % | $1,718 | $1,692 | $26 | 2 | % | |||||||||||||||||||||||
| Add: Notable items, net of income tax expense (benefit) | 4 | — | 4 | 100 | 17 | 16 | 1 | 6 | ||||||||||||||||||||||||||
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| Net income available to common stockholders, Underlying(non-GAAP) | H | $431 | $144 | $287 | 199 | % | $1,735 | $1,708 | $27 | 2 | % | |||||||||||||||||||||||
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| Efficiency ratio and efficiency ratio, Underlying: | ||||||||||||||||||||||||||||||||||
| Efficiency ratio | C/A | 60.28 | % | 68.49 | % | (821 | ) bps | 59.28 | % | 59.06 | % | 22 | bps | |||||||||||||||||||||
| Efficiency ratio, Underlying(non-GAAP) | D/B | 58.02 | 68.49 | (1,047 | ) bps | 58.23 | 58.13 | 10 | bps | |||||||||||||||||||||||||
| Return on average tangible common equity and return on average tangible common equity, Underlying: | ||||||||||||||||||||||||||||||||||
| Average common equity (GAAP) | I | $20,400 | $19,627 | $773 | 4 | % | $20,325 | $19,645 | $680 | 3 | % | |||||||||||||||||||||||
| Less: Average goodwill (GAAP) | 7,044 | 6,876 | 168 | 2 | 7,036 | 6,912 | 124 | 2 | ||||||||||||||||||||||||||
| Less: Average other intangibles (GAAP) | 69 | 9 | 60 | NM | 71 | 14 | 57 | NM | ||||||||||||||||||||||||||
| Add: Average deferred tax liabilities related to goodwill (GAAP) | 373 | 325 | 48 | 15 | 371 | 359 | 12 | 3 | ||||||||||||||||||||||||||
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| Average tangible common equity | J | $13,660 | $13,067 | $593 | 5 | % | $13,589 | $13,078 | $511 | 4 | % | |||||||||||||||||||||||
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| Return on average tangible common equity | G/J | 12.39 | % | 4.34 | % | 805 bps | 12.64 | % | 12.94 | % | (30) bps | |||||||||||||||||||||||
| Return on average tangible common equity, Underlying(non-GAAP) | H/J | 12.49 | 4.34 | 815 bps | 12.76 | 13.06 | (30) bps | |||||||||||||||||||||||||||
| Tangible book value per common share: | ||||||||||||||||||||||||||||||||||
| Common shares - atperiod-end (GAAP) | K | 433,121,083 | 466,007,984 | (32,886,901 | ) | (7 | %) | |||||||||||||||||||||||||||
| Common stockholders’ equity (GAAP) | $20,631 | $19,977 | $654 | 3 | ||||||||||||||||||||||||||||||
| Less: Goodwill (GAAP) | 7,044 | 6,923 | 121 | 2 | ||||||||||||||||||||||||||||||
| Less: Other intangible assets (GAAP) | 68 | 31 | 37 | 119 | ||||||||||||||||||||||||||||||
| Add: Deferred tax liabilities related to goodwill (GAAP) | 374 | 366 | 8 | 2 | ||||||||||||||||||||||||||||||
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| Tangible common equity | L | $13,893 | $13,389 | $504 | 4 | % | ||||||||||||||||||||||||||||
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| Tangible book value per common share | L/K | $32.08 | $28.73 | $3.35 | 12 | % | ||||||||||||||||||||||||||||
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| 2019 | 3Q13 | 3Q13 | |||||||||||||||
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Total revenue, Underlying: | |||||||||||||||||
Total revenue (GAAP) | A | $6,491 | $1,153 | ||||||||||||||
Less: Notable items | — | — | |||||||||||||||
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Total revenue, Underlying(non-GAAP) | B | $6,491 | $1,153 | ||||||||||||||
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Noninterest expense, Underlying: | |||||||||||||||||
Noninterest expense (GAAP) | C | $3,847 | $788 | ||||||||||||||
Less: Notable items | 68 | — | |||||||||||||||
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Noninterest expense, Underlying(non-GAAP) | D | $3,779 | $788 | ||||||||||||||
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Net income, Underlying: | |||||||||||||||||
Net income (GAAP) | E | $1,791 | $144 | ||||||||||||||
Add: Notable items, net of income tax expense (benefit) | 17 | — | |||||||||||||||
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Net income, Underlying(non-GAAP) | F | $1,808 | $144 | ||||||||||||||
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Net income available to common stockholders, Underlying: | |||||||||||||||||
Net income available to common stockholders (GAAP) | G | $1,718 | $144 | ||||||||||||||
Add: Notable items, net of income tax expense (benefit) | 17 | — | |||||||||||||||
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Net income available to common stockholders, Underlying(non-GAAP) | H | $1,735 | $144 | ||||||||||||||
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Efficiency ratio and efficiency ratio, Underlying: | |||||||||||||||||
Efficiency ratio | C/A | 59.28 | % | 68.49 | % | (921) bps | |||||||||||
Efficiency ratio, Underlying(non-GAAP) | D/B | 58.23 | 68.49 | (1,026) bps | |||||||||||||
Return on average tangible common equity and return on average tangible common equity, Underlying: | |||||||||||||||||
Average common equity (GAAP) | I | $20,325 | $19,627 | ||||||||||||||
Less: Average goodwill (GAAP) | 7,036 | 6,876 | |||||||||||||||
Less: Average other intangibles (GAAP) | 71 | 9 | |||||||||||||||
Add: Average deferred tax liabilities related to goodwill (GAAP) | 371 | 325 | |||||||||||||||
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Average tangible common equity | J | $13,589 | $13,067 | ||||||||||||||
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Return on average tangible common equity | G/J | 12.64 | % | 4.34 | % | 830 bps | |||||||||||
Return on average tangible common equity, Underlying(non-GAAP) | H/J | 12.76 | 4.34 | 842 bps | |||||||||||||
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| FULL YEAR | 3-Year Average | |||||||||||||||||||||||||||||||||
| 2019 | 2018 | 2017 | 2016 | 2015 | 2014 | 2017-2019 | 2014-2016 | |||||||||||||||||||||||||||
| Net income available to common stockholders, Underlying: | ||||||||||||||||||||||||||||||||||
| Net income available to common stockholders (GAAP) | G | $1,718 | $1,692 | $1,638 | $1,031 | $833 | $865 | |||||||||||||||||||||||||||
| Add: Restructuring charges, net of tax expense (benefit) | — | — | — | — | 16 | 72 | ||||||||||||||||||||||||||||
| Add: Special items, net of income tax expense (benefit) | — | — | — | — | 15 | (147 | ) | |||||||||||||||||||||||||||
| Add: Notable items, net of income tax expense (benefit) | 17 | 16 | (340 | ) | (19 | ) | — | — | ||||||||||||||||||||||||||
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| Net income available to common stockholders, Underlying(non-GAAP) | H | $1,735 | $1,708 | $1,298 | $1,012 | $864 | $790 | |||||||||||||||||||||||||||
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| Return on average tangible common equity and return on average tangible common equity, Underlying: | ||||||||||||||||||||||||||||||||||
| Average common equity (GAAP) | I | $20,325 | $19,645 | $19,618 | $19,698 | $19,354 | $19,399 | |||||||||||||||||||||||||||
| Less: Average goodwill (GAAP) | 7,036 | 6,912 | 6,883 | 6,876 | 6,876 | 6,876 | ||||||||||||||||||||||||||||
| Less: Average other intangibles (GAAP) | 71 | 14 | 2 | 2 | 4 | 7 | ||||||||||||||||||||||||||||
| Add: Average deferred tax liabilities related to goodwill (GAAP) | 371 | 359 | 534 | 502 | 445 | 377 | ||||||||||||||||||||||||||||
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| Average tangible common equity | J | $13,589 | $13,078 | $13,267 | $13,322 | $12,919 | $12,893 | |||||||||||||||||||||||||||
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| Return on average tangible common equity | G/J | 12.64 | % | 12.94 | % | 12.35 | % | 7.74 | % | 6.45 | % | 6.71 | % | 12.64 | % | 6.97 | % | |||||||||||||||||
| Return on average tangible common equity, Underlying(non-GAAP) | H/J | 12.76 | 13.06 | 9.79 | 7.60 | 6.69 | 6.13 | 11.87 | 6.81 | |||||||||||||||||||||||||
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| FULL YEAR | 3-Year Cumulative Total | FULL YEAR | 3-Year Average | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2019 | 2018 | 2017 | 2016 | 2015 | 2014 | 2017-2019 | 2014-2016 | 2021 | 2020 | 2019 | 2018 | 2017 | 2016 | 2019-2021 | 2016-2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income available to common stockholders, Underlying: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income available to common stockholders, Normalized: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income available to common stockholders (GAAP) | A | $2,206 | $950 | $1,718 | $1,692 | $1,638 | $1,031 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Add: Restructuring charges, net of tax expense (benefit) | — | — | — | — | — | �� | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Add: Special items, net of income tax expense (benefit) | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Add: Notable items, net of income tax expense (benefit) | 78 | 83 | 17 | 16 | (340) | (19) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Add: Effect of change in accounting principle, net of income tax expense (benefit) | (616) | 686 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Net income available to common stockholders (GAAP) | G | $1,718 | $1,692 | $1,638 | $1,031 | $833 | $865 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income available to common stockholders, Normalized (non-GAAP) | B | $1,668 | $1,719 | $1,735 | $1,708 | $1,298 | $1,012 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Add: Restructuring charges, net of tax expense (benefit) | — | — | — | — | 16 | 72 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Return on average tangible common equity and return on average tangible common equity, Normalized: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Average common equity (GAAP) | C | $21,025 | $20,438 | $20,325 | $19,645 | $19,618 | $19,698 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Less: Average goodwill (GAAP) | 7,062 | 7,049 | 7,036 | 6,912 | 6,883 | 6,876 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Less: Average other intangibles (GAAP) | 54 | 64 | 71 | 14 | 2 | 2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Add: Average deferred tax liabilities related to goodwill (GAAP) | 381 | 376 | 371 | 359 | 534 | 502 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Add: Special items, net of income tax expense (benefit) | — | — | — | — | 15 | (147 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Average tangible common equity | D | $14,290 | $13,701 | $13,589 | $13,078 | $13,267 | $13,322 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Add: Effect of change in accounting principle | 380 | 344 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Less: Impact of share repurchases halted due to COVID-19 by Regulators | 660 | 370 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Add: Notable items, net of income tax expense (benefit) | 17 | 16 | (340 | ) | (19 | ) | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Average tangible common equity, Normalized (non-GAAP) | E | $14,010 | $13,675 | $13,589 | $13,078 | $13,267 | $13,322 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Net income available to common stockholders, Underlying(non-GAAP) | H | $1,735 | $1,708 | $1,298 | $1,012 | $864 | $790 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Return on average tangible common equity | A/D | 15.44% | 6.93% | 12.64% | 12.94% | 12.35% | 7.74% | 11.67 | % | 11.01% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Return on average tangible common equity, Normalized (non-GAAP)1 | B/E | 11.91 | 12.58 | 12.76 | 13.06 | 9.79 | 7.60 | 12.41 | % | 10.15 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Net income per average common share - basic and diluted and net income per average commonshare - basic and diluted, Underlying: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| FULL YEAR | Cumulative | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2021 | 2020 | 2019 | 2018 | 2017 | 2016 | 2019-2021 | 2016-2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income per average common share - basic and diluted and net income per average common share - basic and diluted, Normalized: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Average common shares outstanding- basic (GAAP) | M | 449,731,453 | 478,822,072 | 502,157,440 | 522,093,545 | 535,599,731 | 556,674,146 | F | 425,669,451 | 427,062,537 | 449,731,453 | 478,822,072 | 502,157,440 | 522,093,545 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Less: Impact of share repurchases halted due to COVID-19 by Regulators | 14,801,122 | 5,895,475 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Average common shares outstanding - basic (non-GAAP) | G | 410,868,329 | 421,167,062 | 449,731,453 | 478,822,072 | 502,157,440 | 522,093,545 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Average common shares outstanding - diluted (GAAP) | N | 451,213,701 | 480,430,741 | 503,685,091 | 523,930,718 | 538,220,898 | 557,724,936 | H | 427,435,818 | 428,157,780 | 451,213,701 | 480,430,741 | 503,685,091 | 523,930,718 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Less: Impact of share repurchases halted due to COVID-19 by Regulators | 14,801,122 | 5,895,475 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Average common shares outstanding - diluted (non-GAAP) | I | 412,634,696 | 422,262,305 | 451,213,701 | 480,430,741 | 503,685,091 | 523,930,718 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Net income per average common share - basic (GAAP) | G/M | $3.82 | $3.54 | $3.26 | $1.97 | $1.55 | $1.55 | $10.62 | $5.07 | A/F | $5.18 | $2.22 | $3.82 | $3.54 | $3.26 | $1.97 | $11.22 | $8.77 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income per average common share - diluted (GAAP) | A/H | 5.16 | 2.22 | 3.81 | 3.52 | 3.25 | 1.97 | 11.19 | 8.74 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income per average common share - basic, Normalized (non-GAAP) | B/G | 4.06 | 4.08 | 3.86 | 3.57 | 2.59 | 1.94 | 12.00 | 8.10 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income per average common share - diluted, Normalized (non-GAAP)1 | B/I | 4.04 | 4.07 | 3.84 | 3.56 | 2.58 | 1.93 | 11.96 | 8.07 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income per average common share - diluted (GAAP) | G/N | 3.81 | 3.52 | 3.25 | 1.97 | 1.55 | 1.55 | 10.58 | 5.07 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income per average common share - basic, Underlying(non-GAAP) | H/M | 3.86 | 3.57 | 2.59 | 1.94 | 1.61 | 1.42 | 10.02 | 4.97 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income per average common share - diluted, Underlying(non-GAAP) | H/N | 3.84 | 3.56 | 2.58 | 1.93 | 1.61 | 1.42 | 9.98 | 4.96 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1Totalsmay be effected due to rounding | 1Totalsmay be effected due to rounding |
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C123456789 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext ENDORSEMENT_LINE SACKPACK MR A SAMPLE DESIGNATION (IF ANY) ADD 1 ADD 2 ADD 3 ADD 4 ADD 5 ADD 6Your vote matters – here’s how to vote! You may vote online or by phone instead of mailing this card. Online Go to www.investorvote.com/CFG or scan the QR code — login details are located in the shaded bar below. Phone Call toll free 1-800-652-VOTE (8683) within the USA, US territories and Canada Save paper, time and money! Sign up for electronic delivery at www.investorvote.com/CFG Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. Annual Meeting Proxy Card IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. A Proposals — The Board of Directors recommends a vote FOR all nominees in Proposal 1, FOR Proposal 2, FOR Proposal 3 and A FOR Proposals 2-5.Proposal 4. 1. Election of Directors: 01 - For Against Abstain For Against Abstain For Against Abstain + 01—Bruce Van Saun For Against Abstain 02 - 02—Lee Alexander 03—Christine M. Cumming For Against Abstain 03 - William P. Hankowsky For Against Abstain 04 - Howard W. Hanna III 05 - Leo I. (“Lee”) Higdon 06 - 06—Edward J. (“Ned”) 04—Kevin Cummings* 05—William P. Hankowsky Kelly III 07 - Charles J. (“Bud”) Koch 08 - 07—Robert G. Leary 09 - 08—Terrance J. Lillis 10 - 09—Michele N. Siekerka* 10—Shivan Subramaniam 11 - 11—Christopher J. Swift 12—Wendy A. Watson 12 - 13—Marita Zuraitis *The elections of Mr. Cummings and Ms. Siekerka are subject to the completion of the Investors Bancorp, Inc. acquisition. Should the acquisition not close by the Annual Meeting, their elections by stockholders will not be considered at the Annual Meeting. For Against Abstain For Against Abstain 2. Advisory vote on executive compensation. For Against Abstain 3. Ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for 2020. For Against Abstain2022. 4. AmendManagement Proposal to amend the Company’s Certificate of Incorporation to provide stockholders with the right to call a special meeting. 5. Amend the Company’s Certificate of Incorporation to remove non-operative provisions relating to our former parent.Eliminate Supermajority Vote Requirements. B Authorized Signatures —This— This section must be completed for your vote to count. Please date and sign below. Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title. Date (mm/dd/yyyy) — Please print date below. Signature 1 —Please— Please keep signature within the box. Signature 2 — Please keep signature within the box. C 1234567890 JNT MR A SAMPLE (THIS AREA IS SET UP TO ACCOMMODATE 140 CHARACTERS) MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND 1UPX 456002 037EZB
Citizens Financial Group, Inc. 2020 Annual Meeting of Stockholders April 23, 2020, at 9:00 a.m. Eastern Time One Citizens Plaza, Providence, Rhode Island 02903 IFProxy Card 1234 5678 9012 345 qIF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. Proxy —q
The 2022 Annual Meeting of Stockholders of Citizens Financial Group, IncTM.Inc. will be held on Thursday April 28, 2022, at 9:00 a.m. One Citizens Plaza, Providence, Rhode Island 02903 Small steps make an impact. Help the environment by consenting to receive electronic delivery, sign up at www.investorvote.com/CFG qIF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q Proxy – Citizens Financial Group, Inc. Notice of 20202022 Annual Meeting of Stockholders Proxy Solicited by Board of Directors for Annual Meeting —– April 23, 202028, 2022 Bruce Van Saun, Stephen T. GannonMalcolm Griggs and Robin S. Elkowitz or any of them, each with the power of substitution, are hereby authorized to represent and vote the shares of the undersigned, with all the powers which the undersigned would possess if personally present, at the Annual Meeting of Stockholders of Citizens Financial Group, Inc. to be held on April 23, 202028, 2022 at 9:00 a.m. Eastern Time, at One Citizens Plaza, Providence, Rhode Island 02903 or at any postponement or adjournment thereof. Shares represented by this proxy will be voted as specified by the stockholder. If no such directions are indicated, the Proxies will have authority to vote FOR all nominees in Proposal 1, FOR Proposal 2, FOR Proposal 3 and FOR Proposals 2-5.Proposal 4. In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting. (Items to be voted appear on reverse side) C Non-Voting Items Change of Address — Please print new address below. Comments — Please print your comments below. Meeting Attendance Mark box to the right if you plan to attend the Annual Meeting.
The Board recommends a vote FOR each of the nominees
The Board recommends a vote FOR APPROVAL of the Company’s executive compensation
