UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant ¨x Filed by a Party other than the Registrant ¨
Check the appropriate box:
|
| |
X ¨ | Preliminary Proxy Statement |
| | |
| ¨ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
| | |
¨x | Definitive Proxy Statement |
| | |
| ¨ | Definitive Additional Materials |
| | |
| ¨ | Soliciting Material Pursuant to § 240.14a-12 |
Boston Private Financial Holdings, Inc.
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
X No fee required.
¨ Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
| |
| (1) | Title of each class of securities to which transaction applies: |
| |
| (2) | Aggregate number of securities to which transaction applies: |
| |
| (3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11(Set forth the amount on which the filing fee is calculated and state how it was determined): |
| |
| (4) | Proposed maximum aggregate value of transaction: |
Fee paid previously with preliminary materials.
¨ Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
| |
| (1) | Amount Previously Paid: |
| |
| (2) | Form, Schedule or Registration Statement No.: |
BOSTON PRIVATE FINANCIAL HOLDINGS, INC.
Ten Post Office Square
Boston, Massachusetts 02109
Dear Fellow Shareholders:
On behalf of the Board of Directors and the management of Boston Private Financial Holdings, Inc. (the "Company"“Company”), you are invited to attend the Company's 2013Company’s 2015 Annual Meeting of Shareholders. The meeting will be held on l, l, 2013Wednesday, April 15, 2015 at l:10:00 l.m.,a.m. Eastern time, at Ten Post Office Square, 2nd Floor, Boston, Massachusetts 02109.
The attached Notice of the 2015 Annual Meeting of Shareholders and Proxy Statement describe the formal business to be conducted at the meeting. Please refer to the Proxy Statement for detailed information on each of the proposals. Only shareholders of record at the close of business on l, 2013,March 4, 2015 may vote at the meeting or any postponements or adjournments of the meeting.
On behalf of the Board of Directors and all employees of Boston Private Financial Holdings, Inc., I thank you for your continued support of our Company.
YOUR VOTE IS VERY IMPORTANT. Whether or not you plan to attend the 2015 Annual Meeting of Shareholders, please vote in order to ensure the presence of a quorum.
|
|
| |
| Sincerely, |
| |
/s/ CLAYTON G. DEUTSCH |
| Clayton G. Deutsch |
| Chief Executive Officer and President |
| |
| Boston, Massachusetts |
| Dated: March 13, 2015 |
YOUR VOTE IS VERY IMPORTANT. PLEASE VOTE WHETHER OR NOT YOU PLAN TO
ATTEND THE MEETING.
BOSTON PRIVATE FINANCIAL HOLDINGS, INC.
Ten Post Office Square
Boston, Massachusetts 02109
NOTICE OF 2015 ANNUAL MEETING OF SHAREHOLDERS
To Be Held on l, l, 2013
NOTICE IS HEREBY GIVEN that the 2013 Annual Meeting of Shareholders of Boston Private Financial Holdings, Inc. (the "Company") will take place at Ten Post Office Square, 2nd floor, Boston, Massachusetts 02109 on l, l, 2013 at l:00l.m., Eastern time, for the following purposes: |
| | |
1.TIME AND DATE PLACE | to | 10:00 a.m. Eastern Time, Wednesday, April 15, 2015
Ten Post Office Square
Boston, Massachusetts 02109 |
| ITEMS OF BUSINESS | (1) | To elect the fournine director nominees named in the Proxy Statement to serve until the 20142016 annual meeting and until their successors are duly elected and qualified; |
| qualified. |
2. | to(2) | To approve aan advisory, non-binding advisory resolution regardingon the compensation of the Company's named executive officers; |
| officers as disclosed in the Proxy Statement. |
3. | to amend(3) | To ratify the Company's Restated Articlesselection of Organization to eliminateKPMG, LLP as the supermajority voting requirementCompany’s independent registered public accounting firm for removal of directors; |
| fiscal 2015. |
4. | to amend the Company's Restated Articles of Organization to eliminate the supermajority voting requirement for amending the Restated Articles of Organization; and |
| (4) | |
5. | toTo transact any other business that may properly come before the meeting. |
| RECORD DATE | | Only shareholders of record at the close of business on March 4, 2015 may vote at the meeting or any postponements or adjournments of the meeting. |
| PROXY VOTING | | Your vote is very important. Please complete, date, sign and return the accompanying proxy card or vote electronically via the Internet or by telephone. The enclosed return envelope requires no additional postage if mailed in the United States. For specific instructions on how to vote your shares, please refer to the section entitled “Voting Options.” |
Only shareholders of record at the close of business on l, 2013 may vote at the meeting or any postponements or adjournments of the meeting.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF
PROXY MATERIALS FOR THE MEETING
The Company's Annual Report on Form 10-K for the period ending December 31, 2012 and the 2013 Proxy Statement are available at www.edocumentview.com/bpfh. These documents are also available free of charge by calling the Company's toll-free number (888) 666-1363 or by contacting the Company's investor relations department by email at investor-relations@bostonprivate.com.
Your vote is very important. Please complete, date, sign and return the accompanying proxy card or vote electronically via the Internet or by telephone. The enclosed return envelope requires no additional postage if mailed in the United States. For specific instructions on how to vote your shares, please refer to the section entitled "Proxy Voting Options." We look forward to your attendance in person or by proxy.
By Order of the Board of Directors,
MARGARET W. CHAMBERS
Corporate Secretary
Boston, Massachusetts
Dated: l, 2013March 13, 2015
Important Notice Regarding the Availability of Proxy Materials for the 2015 Annual Meeting of Shareholders to be held on Wednesday, April 15, 2015. The Company’s Annual Report on Form 10-K for the period ending December 31, 2014 and the 2015 Proxy Statement are available at www.edocumentview.com/bpfh. These documents are also available free of charge by calling the Company’s toll-free number (888) 666-1363 or by contacting the Company’s investor relations department by email at investor-relations@bostonprivate.com.
TABLE OF CONTENTS
BOSTON PRIVATE FINANCIAL HOLDINGS, INC.
Ten Post Office Square
Boston, Massachusetts 02109
PROXY STATEMENT
Annual Meeting of Shareholdersfor the
To be held on l, l, 20132015 ANNUAL MEETING OF SHAREHOLDERS
GENERAL
The Company'sCompany’s Board of Directors (the "Board"“Board”) is furnishing youmaking this Proxy Statement and solicits your proxyavailable to you in connection with the solicitation of proxies by our Board for the 20132015 Annual Meeting of Shareholders (the "Meeting"“Meeting”). The Meeting will be held on lWednesday, April 15, 2015 at l:10:00 l.m,a.m. Eastern time, at Ten Post Office Square, 2nd Floor, Boston, Massachusetts 02109.
VOTING AND QUORUMINFORMATION
Record Date.The record date for the Meeting is March 4, 2015 (the “Record Date”). At the close of business on the Record Date, there were 83,120,436 shares of the Company’s common stock entitled to be voted at the Meeting, and there were 1,070 shareholders of record. There are no other outstanding shares that are eligible to vote.
Voting Your Proxy.l, 2013 (the "Record Date"). Only shareholders of record at the close of business on the Record Date are entitled to vote at the Meeting. Shareholders of the Company's outstanding common stock, par value $1.00 per share, and Series B preferred stock, par value $1.00, are entitled to vote at the Meeting. Each outstanding share of common stock is entitled to one vote on each matter before the Meeting. Each outstanding share of Series B preferred stock is entitled to vote, separate from the shares of common stock, on Proposal 4. At the close of business on the Record Date, there were
lVote Required. shares of the Company's common stock and 401 shares of the Company's Series B preferred stock outstanding and entitled to be voted at the Meeting, and there were l shareholders of record.
A quorum of the common stock must be present at the Meeting for any business to be conducted. In addition, a quorum of the Series B preferred stock must be present for a vote on Proposal 4. The presence, in person or by proxy, of the holders of at least a majority of the votes entitled to be cast on a matter for each voting group constitutes a quorum. Abstentions will be counted for purposes of determining whether a quorum is present. Broker non-votes will not be counted for purposes of determining whether a quorum is present. If a quorum is not present, the Meeting will be adjourned until a quorum is obtained.
Director nominees under Proposal 1 must receive a plurality of the votes cast by shareholders in order to be elected. A proxy vote that withholds authority to vote for a particular nominee or nominees and broker non-votes will have no effect on the outcome of the election of the nominees.
The approval of Proposal 2 to approve the advisory, non-binding advisory resolution on executive compensation requires the affirmative vote of a majority of the votes cast at the Meeting. Abstentions and broker non-votes will have no effect on the outcome of the votes for this proposal.
The approvalratification of Proposal 3 to amend the Company's Restated Articlesselection of Organization to eliminate the supermajority voting requirement for the removal of directorsCompany’s registered independent public accounting firm requires the affirmative vote of not less than two-thirdsa majority of the total votes eligible to be cast at the Meeting. Abstentions and broker non-votes will have the same effect as a vote AGAINST Proposal 3.
The approval of Proposal 4 to amend the Company's Restated Articles of Organization to eliminate the supermajority voting requirement for amending the Restated Articles of Organization requires (i) the affirmative vote of not less than two-thirds of the total votes eligible to be cast at the Meeting and (ii) the affirmative vote of 66 2/3% of the outstanding Series B preferred stock, voting as a single class. Abstentions and broker non-votes will have the same effect as a vote AGAINST Proposal 4.
We are first sending this Proxy Statement and the accompanying materials to shareholders on or about l, 2013.March 13, 2015.
PROXY VOTING OPTIONS
Whether or notYour vote is very important. Even if you expectplan to be present atattend the Meeting you are requested toin person, please cast your vote your shares at your earliest convenience. Promptly voting your shares will ensure the presence of a quorum at the Meeting.as soon as possible by:
Voting by Mail:Mail. The accompanying proxy card, if properly completed, signed, dated and returned in the enclosed envelope, will be voted in accordance with your instructions. The enclosed envelope requires no additional postage if mailed in the United States.
Voting via the InternetTelephone or by Telephone:Internet. If you hold your shares of common stock directly and not in street name, you may vote via the Internet or by telephone or Internet by following the instructions included on your proxy card. If you vote via the Internet or by telephone or Internet, you do not have to mail in your proxy card. InternetTelephone and telephoneInternet voting are available 24 hours a day. Votes submitted through the Internet or by telephone or Internet must be received by 2:00 a.m., Eastern time, on l, 2013. Please do not return the enclosed proxy card if you are voting via the Internet or by telephone.April 15, 2015.
Voting in Person at the Meeting:Meeting. If you are a registered shareholder as of the Record Date and attend the Meeting, you may deliver your completed proxy card in person. Additionally, we will have ballots available for those registered shareholders as of the Record Date who wish to vote in person at the Meeting.
A shareholder of record may revoke a proxy any time before the polls close by submitting a later dated vote via the Internet, by telephone, byInternet, or mail, or by delivering instruments to the Corporate Secretary before the Meeting or by appearing in person at the Meeting and specifically withdrawing any previously voted proxy.
PLEASE DO NOT RETURN THE ENCLOSED PROXY CARD IF YOU ARE 1
VOTING VIA THE INTERNET OR BY TELEPHONE.
PROXIESMATTERS AND VOTING RECOMMENDATIONS
By submitting your proxy (either by signing and returningone of the enclosed proxy card or by voting electronically via the Internet or by telephone),methods listed above, you authorize Margaret W. Chambers, Executive Vice President, General Counsel and Corporate Secretary, and David J. Kaye, Executive Vice President, Treasurer and Chief Financial Officer, to represent you and vote your shares at the Meeting in accordance with your instructions. If a properly executed proxy is submitted and no instructions are given, the proxy will be voted in accordance with the Board'sBoard’s recommendations as follows:
FOR the four director nominees for election to the Board of Directors; |
| | | | | |
| Proposal | | | Board Recommendation | | Page Reference (for more detail) |
| Item 1 | Elect the nine director nominees named in this Proxy Statement to serve until the 2016 annual meeting and until their successors are duly elected and qualified. | | FOR each Director Nominee | | |
| Item 2 | Approve an advisory, non-binding resolution on the compensation of the Company’s named executive officers. | | FOR | | |
| Item 3 | Ratify the selection of KPMG, LLP as the Company’s independent registered public accounting firm for fiscal 2015. | | FOR | | |
FOR the non-binding, advisory resolution regarding the compensation of the Company's named executive officers;
FOR the approval of the amendment to the Company's Restated Articles of Organization to eliminate the supermajority voting requirement for the removal of directors; and
FOR the approval of the amendment to the Company's Restated Articles of Organization to eliminate the supermajority voting requirement for amending the Restated Articles of Organization.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors is not aware of any other matters to be considered at the Meeting. If any other matters properly come before the Meeting, the proxies will be voted at the discretion of the proxy holders.
ANNUAL REPORT
All shareholders of record are being sent a copy of the Company's 2012Company’s 2014 Annual Report to Shareholders and the Annual Report on Form 10-K for the fiscal year ended December 31, 2012,2014, which contains audited financial statements of the Company for the fiscal years ended December 31, 2012, 20112014, 2013 and 2010,2012, as filed with the Securities and Exchange Commission ("SEC"(“SEC”) on l, 2013.March 2, 2015. These reports, however, are not part of the proxy soliciting material.
A copy of the Company'sCompany’s Annual Report on Form 10-K filed with the SEC, including all exhibits, may be obtained free of charge by writing to Boston Private Financial Holdings, Inc., Ten Post Office Square, Boston, Massachusetts 02109, Attention: Corporate Secretary, or by accessing the "Investor Relations" section of the Company'sCompany’s website at www.bostonprivate.com, and selecting the link “Documents/SEC filings” under "Documents/SEC filings."the “Investor Relations” tab.
PROPOSAL 1
ELECTION OF DIRECTORS
The Company'sCompany’s Restated Articles of Organization, as amended to date, provide that beginning at the 2013 Annual Meeting of Shareholders (“2013 Meeting”), directors shall be elected annually for terms of one year, except that any director in office at the 2013 Meeting whose three-year term expires at the annual meeting of shareholders to be held in calendar year 2014 orand 2015 shall continue to hold office until the end of the three-year term for which such director was elected and until such director'sdirector’s successor shall have been elected and qualified. At the annual meeting of shareholders to be held in 20162015 and at each annual meeting of shareholders thereafter, all directors shall be elected for terms expiring at the next annual meeting of shareholders and until such directors'directors’ successors shall have been elected and qualified.
The Board of Directors of the Company currently consists of ten members. At this year’s annual meeting, shareholders will be asked to elect nine members. The termsdirectors, eight of four members - Eugene S. Colangelo, Clayton G. Deutsch, Allen L. Sinai, and Stephen M. Waters - expirewhom are currently serving as directors of the MeetingCompany. Mrs. Hoffman and these directorsMr. Alexander will not stand for re-election atre-election. After evaluating the Meeting asperformance and experience of each of the current Directors and the composition of the full Board, the Compensation, Governance and Executive Committee of the Board has recommended one new director nominee for election to fill one of the vacant seats. This nominee is Mark D. Thompson. Each of the nine director nominees proposed by the Board.
Each nominee has agreed to continueconsented to serve as a Directordirector if re-elected.elected at this year’s annual meeting. Each nominee elected as a director will serve until the next annual meeting and until his or her successor has been elected and qualified. If any nominee shall become unavailable for any reason, all proxies will be voted FORis unable to serve as a director at the election of such other person asannual meeting, the Board may reduce the number of Directors may recommend.
The Board of Directors unanimously recommends a vote FOR each of its four nominees.
INFORMATION REGARDING DIRECTORS
The following table sets forth certain information regarding the Directors of the Company, including the nominees for electiondirectors to be elected at the 2013 Annual Meeting of Shareholders, based on information furnished by them to the Company:annual meeting.
|
| | | | | |
| | | Age | | Director Since |
Directors Nominated for Election at the 2013 Annual Meeting of Shareholders
| | | | |
| Eugene S. Colangelo *(1)(2) | Westborough, MA | 65 |
| | 1987 |
| Clayton G. Deutsch (2) | Boston, MA | 57 |
| | 2010 |
| Allen L. Sinai *(2) | Lexington, MA | 73 |
| | 1995 |
| Stephen M. Waters #*(2) | Greenwich, CT | 66 |
| | 2004 |
| | | | | |
| Directors Whose Terms Expire at the 2014 Annual Meeting of Shareholders | | | | |
| Deborah F. Kuenstner * | Newton, MA | 54 |
| | 2007 |
| William J. Shea * | North Andover, MA | 65 |
| | 2004 |
| | | | | |
| Directors Whose Terms Expire at the 2015 Annual Meeting of Shareholders | | | | |
| Herbert S. Alexander * | Westborough, MA | 70 |
| | 1991 |
| Lynn Thompson Hoffman * | Santa Fe, NM | 64 |
| | 1994 |
| John Morton III * | Annapolis, MD | 69 |
| | 2008 |
| | | | | |
| |
(1) | Includes service as a director of Boston Private Bank & Trust Company ("Boston Private Bank"), a wholly-owned subsidiary of the Company, prior to the formation of the holding company structure in 1988. |
| |
(2) | Nominee for re-election. |
Director and Nominee Qualifications
This section provides information as of the date of this Proxy Statement about each member of the Company's Board of Directors, including the nominees for election or re-election at the Meeting. The biographical description below for each nominee includes the specific experience, qualifications, attributes and skills that led to the conclusion by the Board of Directors that such person should serve as a Director of the Company. The biographical description below for each Director who is not standing for election includes the specific experience, qualifications, attributes and skills that the Board of Directors would expect to consider if it were making a conclusion currently as to whether such person should serve as a Director. The Board of Directors did not currently evaluate whether the Directors who are not standing for re-election at this Meeting should serve as Directors, as the terms for which they have been previously elected continue beyond the Meeting.
In addition to the information presented below regarding each Director'sDirector’s specific experience, qualifications, attributes and skills, the Board also believes that all of the Directors have a reputation for integrity, honesty and adherence to high ethical standards. They each have demonstrated business acumen and an ability to exercise sound judgment, as well as a commitment to service to the Company.
Herbert S. Alexander. Mr. Alexander became a DirectorThe Board has determined that each nominee, except Messrs. Deutsch and Thompson, qualifies as an independent director under the NASDAQ listing standards.
If any of the Company in 1991. He is founder and Chairmannominees shall become unavailable for any reason, all proxies will be voted FOR the election of Alexander, Aronson, Finning & Co., P.C., a firm of certified public accountants and consultants established in 1973. Mr. Alexander is the Chief Financial Officer and a director of Wirefab, Inc., a manufacturer of aluminum, steel and stainless steel wire products, established in 1955. He serves on the Investment Committee of Morgan Memorial Goodwill Industries in Boston, Massachusetts. He formerly served onsuch other person as the Board of Directors may recommend.
The Board of Directors unanimously recommends a vote FOR each of its nine director nominees.
INFORMATION REGARDING DIRECTOR NOMINEES
The following table sets forth certain information regarding the nominees for election at the 2015 Annual Meeting of Shareholders, based on information furnished by them to the Company:
|
| | | | | |
| | Age | | Director Since | | Independent |
| Board Nominees | | | | | |
| Clayton G. Deutsch | 59 | | 2010 | | NO |
| Deborah F. Kuenstner | 56 | | 2007 | | YES |
| Gloria C. Larson | 64 | | 2015 | | YES |
| John Morton III | 71 | | 2008 | | YES |
| Daniel P. Nolan | 62 | | 2014 | | YES |
| Brian G. Shapiro | 61 | | 2014 | | YES |
| Mark D. Thompson | 58 | | Nominee | | NO |
| Stephen M. Waters, Chairman of the Board | 68 | | 2004 | | YES |
| Donna C. Wells | 53 | | 2014 | | YES |
| | | | | | |
Director Nominee Qualifications
This section provides information as of the Massachusetts Societydate of Certified Public Accountants andthis Proxy Statement about each nominee for election or re-election at the Massachusetts Easter Seal Society. Additionally, heMeeting. It is aexpected that each member of the Advisory Council of the Northeastern University Graduate School of Professional Accounting, and is a Trustee of the Worcester Art Museum, where he is the Chairman of its Audit Committee and a member of the Finance Committee. Mr. Alexander was President and Chairman of the Board, of Directors of the International Association of Practising Accountants from November 2006including nominees, if elected, will also be appointed to October 2009. Mr. Alexander is also on the board of directors of Boston Private Bank & Trust Company. With his years of specific experience as the named partner of Alexander, Aronson, Finning & Co.Company (the “Bank”), P.C., Mr. Alexander brings to the Board of Directors invaluable business, financial, accounting and management experience. Mr. Alexander's experience, which also includes membership in various professional societies, and his service on a number of audit committees, has provided him with valuable experience dealing with the evaluation of financial statements, accounting principles and financial reporting rules and regulations.
Eugene S. Colangelo. Mr. Colangelo joined our Board in 1987. He is Chairmanwholly-owned subsidiary of the Board of Julio Enterprises and has served as such since the early 1980s. Julio Enterprises, a conglomerate headquartered in Westborough, Massachusetts, operates numerous businesses including retail, publishing and real estate. He was formerly a member of the Board of Directors of Morgan Memorial Goodwill Industries in Boston, Massachusetts, andCompany. Each nominee is currently a member of that organization's Retail Oversight Committee. Mr. Colangelo has served as Chairmanthe board of directors of the Board of Directors of Boston Private Bank & Trust Company since 1999. The Board believes that Mr. Colangelo's extensive entrepreneurial experience and understanding of what makes a business run effectively and efficiently make him an effective member of the Board of Directors. Further, his long-standing involvement with the Company's largest affiliate, Boston Private Bank & Trust Company, and his extensive contacts in the local community, provide insights that are particularly valuable for the Board and, combined, make him an excellent candidate for membership on the Board.Bank. For more information see “Corporate Governance.”
Clayton G. Deutsch. Deutsch
Mr. Deutsch is Chief Executive Officer and President of the Company, which he joined in August 2010. Mr. Deutsch is a member of the Company'sCompany’s Leadership Team and has over 30 years of experience in the financial services industry. He began his career in banking in the 1970s beforeat Society Corporation, the predecessor to Key Corp. Prior to joining McKinsey &the Company, in 1980. Most recently, he was a director at McKinsey & Company, which he joined in 1980, and served as Global Leader of that firm'sfirm’s Merger Management Practice. During his time at McKinsey, he developed deep experience working with many leading financial institutions, with a particular focus in the private banking, wealth advisory, and wealth management sectors, as he helped establish and build McKinsey'sMcKinsey’s Financial Services practice globally. As a senior leader at McKinsey, Mr. Deutsch managed the Midwest complex of McKinsey offices including Chicago, Pittsburgh, Minneapolis, Cleveland and Detroit, and founded and led the Great Lakes Financial Services practice. Throughout his career with McKinsey, he consulted with financial services providers and other businesses on global strategy development, performance improvement, M&A strategy and corporate governance, among other areas. Mr. Deutsch also served as Chairman of McKinsey'sMcKinsey’s Principal Review Committee, a member of the Director Review Committee, a long-time member of the Shareholders Council (McKinsey's(McKinsey’s board of directors) and Chair of the Professional Standards Committee. Before joining McKinsey, he began his career at Society Corporation, the predecessor to KeyCorp. In addition to Mr. Deutsch'sDeutsch’s management expertise, he brings to our Board extensive knowledge of financial services strategies. His skills at directing corporate strategy provide our Board with a valuable resource as the Company manages throughexpands its recent restructuring and repositions.strategic direction. Mr. Deutsch'sDeutsch’s extensive experience in the financial services industry and deep strategic expertise make him an excellent candidatenominee for the Board.
Lynn Thompson Hoffman. Mrs. Hoffman is an independent director, private investor and former real estate developer specializing in historic renovations in Boston. She served as the Lead Director of the Company from 2005 to 2010, chairs the Compensation Committee, and previously chaired the Finance and Governance Committees of the Board. She has previously served on the two principal banking subsidiary boards of the Company, Boston Private Bank & Trust Company, in Boston, Massachusetts and Borel Private Bank & Trust Company in Northern California prior to its merger into Boston Private Bank & Trust Company. She chaired the Loan Committee at Boston Private Bank and served on its Audit Committee. Her bank board service spans three decades, beginning as a Director of First Mutual Savings Bank in Boston, Massachusetts. With a Juris Doctorate from Boston University School of Law, Mrs. Hoffman is a retired member of the Boston Bar Association. Her professional experience includes investment banking with Paine Webber and executive management with Houghton Mifflin Company. She currently serves as an advisor to the New Mexico State
Investment Council Investment Committee which manages $16 billion in sovereign wealth assets for the citizens of the state. As a graduate of Pitzer College in Claremont, California and a former resident of Atherton, California, Mrs. Hoffman has geographic knowledge of both the Boston and Northern California areas. She presently resides in Santa Fe, New Mexico and Punta Mita, Mexico and is fluent in Spanish. She has extensive non-profit board experience and community involvement including the Santa Fe Opera, New Mexico Museum Foundation, Massachusetts Society for the Prevention of Cruelty to Children, Babson College, the New England Conservatory and Harvard Community Health Plan. Ms. Hoffman contributes board leadership, real estate and investment banking experience, executive management, legal knowledge and geographic diversity.
Deborah F. Kuenstner.
Ms. Kuenstner is the Chief Investment Officer atof Wellesley College. Before joining Wellesley College in February of 2009, Ms. Kuenstner was Chief Investment Officer and Vice President of Investment Management at Brandeis University from 2007 to January 2009. Prior to working at Brandeis, Ms. Kuenstner was Managing Director of Research for Fidelity Management & Research Company, the investment management organization of Fidelity Investments. Ms. Kuenstner was the Chief Investment Officer, Global Value, at Putnam Investments from 2000 to 2004. Her other roles at Putnam included Chief Investment Officer, International Value and Senior Portfolio Manager, International Equities. Prior to that, she worked at DuPont Pension Fund Investment in Wilmington, Delaware as a Senior Portfolio Manager, International Equities. Ms. Kuenstner has also been a Vice President, International Investment Strategist, at Merrill Lynch, in addition to Economist at the Federal Reserve Bank of New York. Ms. Kuenstner was actively involved in the Board of Pensions of the Presbyterian Church USA from 1996-2004 as Investment Committee Chair, Director, and most recently, Co-opted Director. Ms. Kuenstner brings to the Board valuable
experience and knowledge about the financial services industry generally and, in particular, the investment management arena, alongarena. Along with this experience, her economic and risk management expertise.expertise make her an excellent nominee for the Board.
Gloria C. Larson
Ms. Larson was elected to Board in January 2015. She currently serves as the President of Bentley University and is the first woman to hold this position. Ms. Larson formerly served as the Co-Chair of the Government Strategies Group at Foley Hoag LLP, and from 1996 until 2007 managed a practice that covered a broad array of federal, state and local regulatory and business development issues. Widely influential in economic policy, Ms. Larson was Secretary of Economic Affairs for the Commonwealth of Massachusetts from 1993 to 1996 and was responsible for developing and promoting economic growth policies and fostering employment opportunities. She served as the Commonwealth of Massachusetts Secretary of Consumer Affairs and Business Regulation from 1991 to 1993, where she was responsible for regulatory oversight of banking, insurance and energy, as well as consumer protection. Prior to her state service, she oversaw business and regulatory issues at the federal level as a senior official with the Federal Trade Commission (FTC), where she served as Deputy Director of Consumer Protection from 1990 to 1991 and as Attorney Advisor to Commissioner Patricia P. Bailey from 1981 to 1988. Ms. Larson has been honored and recognized by many groups for her contributions to state economic development policy and her commitment to civic engagement. Ms. Larson currently serves as a member of the Council of Economic Advisors, as well as the Massachusetts Clean Energy Center and the Commonwealth’s Successful Women, Successful Families Task Force. Ms. Larson is a member of the Executive Committee of the American College and University Presidents Climate Commitment and a member of the Liberal Education and America’s Promise (LEAP) Presidents’ Trust. She served for more than a decade as Chairman of the Massachusetts Convention Center Authority (MCCA), was the first woman to serve as Chairman of the Greater Boston Chamber of Commerce, where she continues to serve on the Chamber’s Executive Committee. Ms. Larson presently holds the post of President of the Massachusetts Conference for Women. In addition, she is a board or advisory council member of several prominent professional, charitable and civic organizations. In addition to serving on the Company’s Board of Directors, Ms. Larson currently serves as a Director of Unum Group, chairing Unum’s Regulatory Compliance Committee. She previously served as a director on the boards of KeySpan Energy and RSA Security, as well as a member of the board of Blue Cross Blue Shield of MA. Ms. Larson’s deep ties in the Boston community, as well as her public company and financial sector experience, will be of great value to the Company as it continues to focus on its strategic goal of becoming a premier national wealth management and private banking company. We believe that Ms. Larson’s expertise in the regulatory oversight of banking and the financial services industry, and her experience managing regulatory and business development issues qualify her as an excellent nominee for the Board.
John Morton III.
Mr. Morton is a seasoned bank executive with over 35 years of banking and financial services experience. He has extensive experience leading organizational turnarounds, acquisition integrations, business growth and corporate governance activities. Mr. Morton was a director of Fortress International Group, Inc. from January 2007, and served as Chairman from December 2008 to January 2012, when he resigned from the Board.board. Mr. Morton served as an advisor to Fortress International Group, Inc.'s Board’s board through the first quarter of 2012. He has been a Director of the Company since August 2008, of Barry-Wehmiller Companies, Inc. since July 2007, and Dynamac International Inc,Inc., from the late 1980s until it was sold in early 2010. Mr. Morton served as a Directordirector of Broadwing Corporation from April 2006 to January 2007. He served as President of Premier Banking for Bank of America Corp. from August 2004 to September 2005. From 1997 to 2001, Mr. Morton served as President of the Mid-Atlantic Region, Bank of America. He was President of the Private Client Group of NationsBank from 1996 to 1997. From 1994 to 1996, he served as Chairman, and Chief Executive Officer and President of The Boatmen'sBoatmen’s National Bank of St. Louis, and as Chief Executive Officer of Farm and Home Financial Corporation from 1992 to 1993. In 1990 and 1991, Mr. Morton served as Perpetual Financial Corporation'sCorporation’s Chairman, Chief Executive Officer and President. He served in the U.S. Navy as a lieutenant aboard the nuclear submarine U.S.S. George Washington Carver. He serves as Chairman of the Maryland Stadium Authority, as Commissioner of the Maryland State Lottery and Gaming Control Commission, Director, U.S. Naval Institute, and Directordirector of the U.S. Naval Academy Foundation Athletic and Scholarship Programs. We believe Mr. Morton'sMorton is a valuable nominee for the Board in light of his experience as the chairman, chief executive officer and president of several banking institutions, coupled with his service on a number of public company boards, allows him to bringboards. He brings to the Board operational expertise, a deep background in the financial services industry, and a comprehensive understanding of the Company's business.Company’s business, all of which make him particularly qualified and an excellent nominee to serve on the Board.
Daniel P. Nolan
William J. Shea. Mr. Shea is the Executive ChairmanNolan currentlyserves as President and CEO of Caliber ID, Inc. (formerly Lucid,Inc.)Hugh Johnson Advisors, LLC, a manufacturer of in-vivo and ex-vivo cellular imaging equipment, basedregistered investment advisor located in Rochester,Albany, New York. He wasMr. Nolan is also a managing partner of DLBprincipal in NPV Capital LLC, a start-up private equity company locatedand real estate investment firm that he formed in Wilton, Connecticut until DecemberJuly 2007. Prior to holding these positions he was a partner in Ayco Company, L.P., a wholly owned subsidiary of Goldman Sachs. During his twenty-eight year career, from August 1978 through April 2007, at Ayco, Mr. Nolan provided tax, investment and financial planning advice to Ayco’s highest net worth clients. He served as Executive Chairmana Regional Vice President of Royaltwo of Ayco’s regional offices and held a variety of management positions, serving on both the Senior Management Committee and
the Strategic Planning Committee. Mr. Nolan founded and led the firm’s Special Investment Group, creating venture capital, private equity and hedge fund opportunities for the firm’s clients. In July 2003, Ayco was sold to The Goldman Sachs Group and Mr. Nolan led the effort to integrate Ayco into Goldman’s Private Wealth Management practice. He previously served on the board of Capital Bank & Sun Alliance USA, Inc. from 2005 to 2006.Trust, a community bank headquartered in Albany, New York. Mr. Shea servedNolan is a trustee of Albany Law School as President and Chief Executive Officerwell as The College of Conseco, Inc. from 2001 to 2004, where he successfully managed that firm's restructuring process. Prior to joining Conseco,St. Rose. Mr. Shea served as ChairmanNolan is a member of the Boardboard of directors of NSC de Puerto Rico, Inc. and the Center for Centennial Technologies,Disability Services Endowment and a public manufacturing company. Mr. Shea also served as Vice Chairman and Chief Financial Officer of BankBoston, Inc. prior to its acquisition by Fleet Financial Group in 1999, where he had responsibility for all financial aspectsmember of the corporation, investor relations, riskCollege Affairs Committee of the Albany Medical Center Board of Directors. Mr. Nolan’s proven business acumen, as demonstrated by his success in founding and leading several companies, is a valuable resource as the Company continues to build on its current strategy. He has significant leadership, operational and investment management capital markets and private banking, among other areas. He began his career infinancial expertise. Further, Mr. Nolan offers the financial services area with Coopers & Lybrand, where he spent twenty years,Board a unique perspective into a number of important areas including strategic planning and rose to serve as Vice Chairman and Firm Council Member. He serves as Chairman ofwealth management. We believe that Mr. Nolan’s extensive experience make him an excellent nominee for the Board of World Gold Trust Services, Inc. (WGTS) which hasDirectors.
Brian G. Shapiro
Mr. Shapiro is a CPA and serves as its mainthe Managing Partner of The Shapiro Group, a Los Angeles based boutique CPA firm that he founded. The firm specializes in strategic planning for taxes, investments and business the second largest ETFdecisions of high net worth individuals, pass-thru entities and corporations. Prior to forming The Shapiro Group in 1983, Mr. Shapiro served as Tax Manager for Arthur Young & Company, where he was designated a national firm specialist for securities transactions and investment planning. Mr. Shapiro is active in community and philanthropic organizations in the world (approximately $70 billion in market capitalization holding physical gold) trading underLos Angeles community and organizations connected with the symbol GLD onUniversity of Wisconsin-Madison. He is a past president of the NYSE Arca Exchange. Mr. Shea formerly served onUniversity of Wisconsin Alumni Club of Los Angeles, an emeritus member of the Dean’s Advisory Board of The Wisconsin School of Business and a member of the Executive
Committee forUniversity of Wisconsin Bascom Hill Society. He is also an active member of the Boston Stock ExchangeWater Buffalo Club, a Los Angeles charity support group, and the BoardsBig Ten Club of Trustees for Children's Hospital Boston and Northeastern University.Southern California. Mr. Shea hasShapiro served as the Chairman of the Board of Demoulas Supermarkets since 1999First Private Bank & Trust from April 2008 until its merger into Boston Private Bank & Trust Company in 2011. He currently chairs the Company’s and serves on the BoardsBank’s Risk Management Committee. Mr. Shapiro’s expertise in finance, investment management and accounting make him a vital asset in the continued growth of AIG SunAmericathe Bank and NASDAQ OMX BX. Mr. Shea is also onthe Company. His previous tenure as a director at Boston Private Bank & Trust Company provides the Board of Directors additional insight into the Bank’s operations and business. We believe Mr. Shapiro’s extensive experience and financial expertise make him an excellent nominee for the Board of Directors.
Mark D. Thompson
Mr. Thompson is the chief executive officer and president of Boston Private Bank & Trust Company and is also a member of the Bank’s board of directors. He has been a member of the Company’s Leadership Team since September 2010. In his role as CEO of the Bank, Mr. Thompson is responsible for the overall performance of Boston Private Bank & Trust Company. Mr. Shea's experience as a chief executive officer of a public insurance companyHe joined Boston Private Bank & Trust Company in 1994 and as a chief financial officer of a bank, as well as his work on various public company boards, allows Mr. Shea to bring relevant and extensive business, management, banking, accounting and operational experience to the Board.
Dr. Allen L. Sinai. Dr. Sinai has been President, Chief Executive Officer and Chief Global Economist/Strategist of Decision Economics, Inc. since 1996. Decision Economics, Inc. is a U.S. and global economic and financial information and investment advisory firm located in New York, London and Boston serving mainly financial institutions. Dr. Sinai is responsible for Decision Economics, Inc. forecasts and analysis of the U.S. and world economies and financial markets, tactical and strategic asset allocation, and for translating this information for use in bottom-line decisions by senior level decision-makers in financial institutions, corporations and government. Dr. Sinai is also responsible for the business operations and financial performance of Decision Economics, Inc. Previously, Dr. Sinai served for over 13 years at Lehman Brothers, where he was Managing Director and Chief Global Economist, and the Director of Lehman Brothers Global Economics. He also served as Executive Vice President and Chief Economist of The Boston Company, a subsidiary of Shearson Lehman Brothers. Prior to Lehman Brothers, Dr. Sinai was Chief Financial EconomistTreasurer from 1994-2001, President from 2001-2003 and Senior Vice President at the Lexington, Massachusetts based Data Resources, Inc. and Co-Chair of DRI's largest business unit, the Financial Institution Group. Dr. Sinai has taught at numerous universities, including Brandeis, the Massachusetts Institute of Technology, Boston University, New York University and the University of Illinois-Chicago. He is a past President and Fellow of the Eastern Economic Association and a past President of the North American Economics and Finance Association. He has been Chairman of the Committee on Developing American Capitalism and a past member of the Time Magazine Board of Economists. Dr. Sinai's extensive business and financial services industry experience and understanding, his background as Chief Executive Officer from 2003 to the present. Prior to joining the Bank, Mr. Thompson was an Executive Vice President and Chief Economistfounding officer of Wainwright Bank & Trust Company and was Vice President - Private Banking at Decision Economics Inc.,Boston Safe Deposit & Trust Company. Mr. Thompson’s extensive experience in banking and his knowledge and deep contacts in finance, government and industry, U.S and globally, makeas leader of Boston Private Bank & Trust Company makes him a sophisticated contributor on the Board and an excellent candidate.nominee for the Board.
Stephen M. Waters.
Mr. Waters is Chairman of the Board of the Company and the Bank, and is Managing Partner of Compass Advisers GroupPartners Advisors LLP and its advisory and investment subsidiaries, which he founded in 1996. Prior to this, Mr. Waters spent over twenty years advising corporate and financial entities both in the U.S. and internationally. Mr. Waters served from 1992 to 1996 as Co-Chief Executive Officer of Morgan Stanley Europe and was a member of Morgan Stanley'sStanley’s worldwide 12-person Operating Committee. Mr. Waters joined Morgan Stanley as a Managing Director in the Mergers and Acquisitions Department in June 1988 and was Co-Director of that department from January 1990 to early 1992. Mr. Waters was Co-Director of the Mergers and Acquisition Department at Shearson Lehman Brothers from 1985 to 1988. He serves on the Board of Directors of Valero Energy Corporation where he sits on the audit and compensation committees. Mr. Waters brings over thirty-five35 years of specific and relevant financial services experience to the Board, along with a deep understanding and practical knowledge of the investment management business. Mr. Waters'Waters’ background as a chief executive officer and director, as well as his extensive experience in investment management, economics and mergers and acquisitions makes him an excellent candidatenominee for the Board.
Donna C. Wells
Ms. Wells became a member of the Company’s Board of Directors in July 2014. She is currently Board Director, President and CEO of Mindflash Technologies, Inc., a private, Palo Alto, California company providing the market-leading cloud-based platform for employee and customer training. Prior to Mindflash, Ms. Wells had a nearly 20 year career in the financial services industry, including experience leading transitions from offline to online business models within Fortune 1000 companies and successfully disrupting established players with small, start-up teams as a serial entrepreneur. Ms. Wells began her career at American Express as a member of the Corporate Strategic Planning group and later held positions of increasing responsibility
in that company’s Consumer and Corporate Card businesses. She later helped establish a new, strategic product development function for Charles Schwab’s retail business and ultimately held responsibility for product development and marketing to customer segments representing 70% of all Schwab client households. This early experience with the power and scale afforded by online financial service delivery drove Ms. Wells to leadership roles with three of the most innovative companies in this space: MyCFO Wealth Management (sold to Harris Bank), Intuit and Mint.com (sold to Intuit). Ms. Wells’s teams’ work has won multiple Webby’s (the “Oscars of the Internet”) and recognition as a Tech Pioneer by the World Economic Forum in Davos. She has been named a Top 25 Women in Tech to Watch by Accenture and a Marketing Executive of the Year Finalist by the Wall Street Journal. Ms. Wells is a native Californian and returned to live in the Bay Area in 1995, following 14 years on the East Coast and in Asia. Ms. Wells’ extensive experience in the financial services industry and her expertise surrounding online financial service delivery qualifies her as an excellent nominee to serve on the Board of Directors.
CORPORATE GOVERNANCE
The business of the Company is managed under the direction of the Company'sCompany’s Board of Directors in accordance with the Massachusetts General Laws and the Company'sCompany’s Restated Articles of Organization and by-laws. The Board of Directors provides oversight of the Company'sCompany’s activities for the benefit of its shareholders and other constituencies, which includes the Company'sCompany’s regulators, affiliated companies, employees, customers, suppliers, creditors and the communities in which the Company and its affiliates conduct business. The table below lists many of our governance practices.
|
| |
| Board and Other Governance Information | |
| Majority Voting for Directors | Yes |
| Annual Election of All Directors | Yes |
| Diverse Board (as to Gender, Composition, Skills, Experience, etc.)* | Yes |
| Annual Board and Committee Self-Evaluation | Yes |
| Separate Chairman and CEO | Yes |
| Independent Directors Meet Without Management at Each Regularly Scheduled Board Meeting | Yes |
| Annual Independent Director Evaluation of CEO | Yes |
| Code of Business Conduct and Ethics for Directors | Yes |
| Board Level Risk Management Committee | Yes |
| Size of Board* | 9 |
| Number of Independent Directors* | 7 |
| Average Director Age* | 62 |
| Average Director Tenure (in Years)* | 4.5 |
| Annual Equity Grant to Directors | Yes |
| Disclosure Committee for Financial Reporting | Yes |
| *Based on nominated Board | |
Corporate Governance Guidelines
The Board of Directors has a particular focus on corporate governance, developing the strategic direction of the Company, and seeking to ensure the success of the Company'sCompany’s business through the appointment and retention of qualified executive management. The Board is committedhas documented its commitment to strongserve the best interests of the Company and its shareholders in its Corporate Governance Guidelines which, among other things, describe our corporate governance practices and is responsible for ensuring that the Company's business is conducted in a responsible manner with integrityaddress issues such as director qualification standards, director responsibilities, board composition and high ethical standards.structure, performance evaluation and succession planning.
Board Leadership Structure
In accordance with the Company'sCompany’s by-laws, the Board of Directors elects the Chairman of the Board and appoints the President, who also serves as Chief Executive Officer ("CEO"(“CEO”). The Board of Directors has adopted a policy that provides for the separation of the roles of Chairman and Chief Executive Officer.
The Compensation, Governance and Executive Committee has established a Statement of Roles and Responsibilities ("Statement"(“Statement”) for the non-executive Chairman of the Board.Board of Directors (“non-executive Chair”). The Statement provides that
the position of non-executive Chairman may only be held by a
member of the Board of Directors who has been determined to be "independent"“independent” under the Marketplace Rules of the Financial Industry Regulatory Authority applicable to NASDAQ-listed companiesNASDAQ listing standards (the "NASDAQ Rules"“NASDAQ Rules”). The non-executive Chairman is to be elected by the Company'sCompany’s Board of Directors annually and may be removed at any time with or without cause. The non-executive Chairman of the Board is responsible for the management, development and effective functioning of the Board of Directors and provides leadership in every aspect of the Board'sBoard’s oversight of the Company. The non-executive Chairman of the Board acts in an advisory capacity to the Chief Executive OfficerCEO and President of the Company, and to other executive officers in matters concerning the interests of the organization and the Board, as well as serving as the liaison between management and the Board.Board of Directors. The duties of the Chairman of the Board include the following:
setting agendas for the Board meetings in consultation with the Chief Executive Officer;CEO;
chairing Board meetings and ensuring that Board functions are carried out effectively;
establishing and chairing executive sessions of independent directors and providing feedback to the Chief Executive Officer,CEO, as appropriate;
serving as liaison for chairs of affiliated company boards;
facilitating the Board'sBoard’s efforts to create and maintain practices that respond to feedback from shareholders and other stakeholders;
representing the Board at meetings with major shareholders and other stakeholder groups on governance related matters, as may be requested from time to time;
providing advice to the Chief Executive OfficerCEO on majorstrategic and or material issues;
facilitating effective communication between directorsDirectors and management, both inside and outside of meetings of the Board;
working with the Chief Executive OfficerCEO to ensure management strategies, plans and performance are appropriately risk assessed and representedpresented to the Board;
advising management in the planning of the strategy meeting; and
performing such other duties as the Board may from time to time delegate.
The Compensation, Governance and Executive Committee conducts a periodic review of the role and responsibilities of the non-executive Chairman each year, and this review is then presented to the full Board of Directors.
Risk Oversight
The Board of Directors plays an important role in the risk oversight of the Company and is involved in risk oversight through direct decision-making authority with respect to significant matters, including the development of limits and specific risk tolerances, and the oversight of management by the Board of Directors and its committees. The Board of Directors and its committees also are each directly responsible for considering risks and the oversight of risks relating to decisions that each committee is responsible for making. In light of the Company'sCompany’s overall business and market, the extensive regulatory schemes under which the Company and all of its affiliates operate, and the complexities of the Company'sCompany’s operations as a whole, the Board has established a Risk Management Committee which is tasked with specific responsibility for direct oversight of all of the risks inherent in the Company'sCompany’s business, along with management of the enterprise-wide risk management program. The Risk Management Committee consults with each of the other committees of the Board of Directors for an analysis of their areas of risk, as well as with management and outside experts, and provides regular, detailed reporting and recommendations on risk-related actions to the full Board. The Risk Management Committee also monitors the risk management function and conducts risk assessments for all of the Company'sCompany’s subsidiaries, participates directly in the risk management committee meetings of Boston Private Bank & Trust Company, (the "Bank"), which is the Company'sCompany’s largest subsidiary, adopts and directs the implementation of risk management policies that relate to both the Company and its subsidiaries, and analyzes reporting regarding the same.
In addition to the Risk Management Committee, the Board of Directors administers its risk oversight function through (1) through:
the review and discussion of regular, periodic reports to the Board of Directors and its committees on topics relating to the risks that the Company faces, including, among others, credit risk, market risk, interest rate risk, operational risks, and regulatory risk and various other matters relating to the Company's business; (2) risk;
the required approval by the Board of Directors (or a committee thereof) of significant transactions and other decisions, including, among others, final budgets, material uses of capital, strategic direction, and executive management hiring and promotions; (3)
the direct oversight of specific areas of the Company'sCompany’s business by the Risk Management Committee, the Audit and Finance Committee, the CompensationWealth Management/Trust and Investment Committee, and the Compensation, Governance and Executive Committee; and (4)
regular periodic reports from the Company'sCompany’s internal and external auditors and other third party consultants regarding various areas of potential risk, including, among others, those relating to the Company'sCompany’s internal
controls and financial reporting.
The Board of Directors also relies on management to bring significant matters impacting the Company and its subsidiaries to the Board'sBoard of Directors’ attention.
Risk Review and Analysis
The Company'sCompany’s Chief Risk Officer and Director ofChief Human Capital Resources Officer discuss, evaluate and review the Company'sCompany’s compensation programs annually as part of the Company'sCompany’s management risk review process. The findings of this review are presented to the Compensation, Governance and Executive Committee annually for further evaluation and discussion with particular focus on the following key areas: (1) the compensation plans of the persons identified as named executive officers ("NEOs"(“NEOs”) in this Proxy Statement to ensure that such plans do not encourage the NEOs to take unnecessary or excessive risks that threaten the value of the Company; (2) employee compensation plans in light of the risks posed to the Company by such plans and how to limit these risks; and (3) employee compensation plans to ensure these plans do not encourage the manipulation of reported earnings to enhance compensation. NEO Compensation Plans are described in detail in "“Compensation Discussion and Analysis."”
The Compensation, Committee'sGovernance and Executive Committee’s review focuses on incentive compensation plans (asas opposed to base salary plans or standard benefit arrangements),arrangements, as the Company believes that incentive compensation arrangements have the greatest potential to encourage inappropriate risk-taking, and/or encourage the manipulation of earnings to enhance compensation. The Company also believes that its base salary and benefit arrangements are generally reasonable (i.e., not excessive) and appropriate, considering the Company'sCompany’s compensation philosophy and industry and regional differences.
The Compensation, Governance and Executive Committee evaluated each plan using the following risk categories: acceptable to low risk, moderate level of risk, and significant risk/potential for material adverse impact. The majority of the Company'sCompany’s incentive compensation plans were rated in the "acceptable“acceptable to low risk category." Any "moderate level of risk" concern areas were considered immaterial and the” The Company believes appropriate mitigants are in place to minimize the risk for permitting unnecessary and inappropriate risk-taking or encouraging the manipulation of earnings to enhance compensation. Such mitigants include the addition of mechanisms to claw-back compensation, enhanced governance processes for compensation reviews and the on-going monitoring of employee compensation that may trigger automatic individual or plan reviews. In addition, steps have been taken, and there are continuing efforts to implement additional mitigants, such as expanding discretion over formulaic incentive plans, synchronizing the timing of payment under all employee plans, segregating decision making authority under certain compensation plans, and ensuring adequate internal controls through periodic reviews of all plans.
The Compensation, Governance and Executive Committee believes that the balance of base compensation, variable annual incentive bonuses determined based on Company and individual performance, and long-term equity incentive compensation is weighted such that excessive or unnecessary risk taking will not be encouraged by the variable elements of compensation. Further, the Compensation, Governance and Executive Committee believes that the long-term equity components of compensation encourage the Company'sCompany’s executives to focus on elements of the Company'sCompany’s performance to influence long-term value creation and share price appreciation.
Committees of the Board and Related Matters
The Board of Directors currently has fivefour standing Committees: the Audit and Finance Committee,Committee; Compensation, Committee,Governance and Executive Committee; Risk Management Committee,Committee; and Wealth Management CommitteeManagement/Trust and GovernanceInvestment Committee. The following table sets forth membership on the Committees and the number of meetings held during 2012.
|
| | | | | | | | | | |
| | | | | | | | | | | |
Name | | Audit and Finance | | Compensation | | Governance | | Risk Management | | Wealth Management Committee(3) |
| Herbert S. Alexander | | l | | | | | | l | | |
| Eugene S. Colangelo | | | | l | | Chair | | | |
|
| Lynn Thompson Hoffman | | | | Chair | | l | | | | l |
| Deborah F. Kuenstner(1) | | | | l | | l | | Chair | | Chair |
| John Morton III | | l | |
| |
| | l | | l |
| William J. Shea(2) | | Chair | | l | | l | | | |
|
| Allen L. Sinai | | l | | | | | | l | | |
| Stephen M. Waters | | | | l | | l | | | |
|
| Number of Committee Meetings Held in 2012 | | 12 | | 8 | | 8 | | 12 | | 5 |
| | | | | | | | | | | |
| |
(1) | Deborah F. Kuenstner left the Compensation Committee as of July 2012 and joined the Wealth Management Committee as of July 2012. |
| |
(2) | William J. Shea joined the Compensation Committee as of July 2012 and left the Governance Committee as of July 2012. |
| |
(3) | The Wealth Management Committee is a joint committee with the Bank. As such, two Bank directors, John Clymer and James Schmidt, are also members of this Committee. |
Each committee was comprised solely of members of the Board of Directors who have been determined to meet the definition of "independent"“independent” in accordance with the NASDAQ Rules. All of the committees have adopted charters that provide a statement of the respective committee'scommittee’s roles and responsibilities. Current charters for those committees that are mandated under the NASDAQ RulesAudit and Finance Committee and the Compensation, Governance and Executive Committee are available in the Investor Relations/Corporate Governance section of the Company'sCompany’s website at www.bostonprivate.com.
The following table sets forth membership on the committees and the number of meetings held during 2014.
|
| | | | | | | | |
| Name | | Audit and Finance | | Compensation, Governance and Executive | | Risk Management | | Wealth Management/Trust and Investment Committee |
| Herbert S. Alexander | | Ÿ | | | | Ÿ | | |
| Lynn Thompson Hoffman (1) | | Ÿ | | Ÿ | | | | Chair (7) |
| Deborah F. Kuenstner (2) | | | | Ÿ | | Ÿ | | Ÿ |
| John Morton III (3) | | Chair (7) | | | | Ÿ | | Ÿ |
| Daniel P. Nolan (4) | | | | Ÿ | | | | Ÿ |
| Brian G. Shapiro (5) | | Ÿ | | | | Chair (7) | | |
| Stephen M. Waters | | | | Chair (7) | | | | |
| Donna C. Wells (6) | | | | | | Ÿ | | Ÿ |
| Number of Committee Meetings Held in 2014 | | 13 | | 13 | | 9 | | 9 |
| | | | | | | | | |
| |
| (1) | Lynn Thompson Hoffman left the Compensation, Governance and Executive Committee as of April 2014 and joined the Audit and Finance Committee as of April 2014. |
| |
| (2) | Deborah F. Kuenstner left the Risk Management Committee as of April 2014. |
| |
| (3) | John Morton III left the Wealth Management/Trust and Investment Committee as of April 2014. |
| |
| (4) | Daniel P. Nolan joined the Board of Directors, the Compensation, Governance and Executive Committee and the Wealth Management/Trust and Investment Committee as of April 2014. |
| |
| (5) | Brian G. Shapiro joined the Board of Directors, the Audit and Finance Committee, and the Risk Management Committee as of April 2014. |
| |
| (6) | Donna C. Wells joined the Board of Directors, the Risk Management Committee, and the Wealth Management/Trust and Investment Committee as of July 2014. |
| |
| (7) | Indicates Chair as of December 31, 2014. |
Attendance at Board and Committee Meetings, Annual Meeting
The Board of Directors held eleven meetings of the full Board during 2014. Each incumbent Director who was a Director in 2014 attended at least 75% of the aggregate number of meetings of the full Board of Directors and relevant committees. The Company does not have a policy of requiring Directors to attend the annual meeting of shareholders. The Company does, however, typically schedule a meeting of its Board of Directors the day before or close to the annual meeting of shareholders to facilitate each Director’s attendance at the annual meeting of shareholders. Of the eight members then on the Board, seven attended the Company’s 2014 annual meeting.
Executive Sessions without Management
To promote open discussion among the non-management Directors, the Board of Directors schedules regular executive sessions in which the non-management Directors meet without management’s participation. Such sessions are scheduled to occur at every regularly scheduled Board and committee meeting. The Chairman of the Board is the presiding Director at such executive sessions.
Audit and Finance Committee
Each member
The majority of members of the Audit and Finance Committee is an "audit“audit committee financial expert"expert” as defined in SEC regulations and isall members are independent as defined under the NASDAQ Rules. Pursuant to the Audit and Finance Committee'sCommittee’s charter, the Audit and Finance Committee assists the Board in its oversight of (1) the process of reporting the Company'sCompany’s financial statements; (2) the system of internal controls as it relates to financial reporting; (3) the external audit process; (4) the Company'sCompany’s process for monitoring compliance with laws and regulations;regulations and code of conduct; (5) the review and approval of the Company's dividend;Company’s declaration of dividends; and (6) the qualifications, independence and performance of the Company'sCompany’s independent registered public accounting firm.firm in accordance with SEC regulations. The Audit and Finance Committee is solely responsible for retaining the Company'sCompany’s independent registered public accounting firm. The Audit and Finance Committee also conducts analysis and makes recommendations to the Board and management regarding the Company'sCompany’s financial planning, capital structure, capital raising, proposed acquisitions, mergers and divestitures, overall strategic planning, and financial performance, where relevant.
Risk Management Committee
The Risk Management Committee’s responsibilities are described above under “Risk Oversight.”
Wealth Management/Trust and Investment Committee
The Wealth Management/Trust and Investment Committee provides strategic direction and oversight on behalf of both the Board of Directors and the board of directors of the Bank regarding the Company’s wealth management businesses, both in the registered investment advisory affiliates and in the Bank’s Trust division. The Committee assists the boards in analyzing the optimal means of enhancing the Company’s performance and expanding its acquisition and retention of private clients through these businesses. The Committee also assists the Bank in fulfilling its fiduciary responsibilities relating to the operation of trusts and the administration of fiduciary accounts. The Committee offers oversight and guidance to management relating to capital allocations and with respect to leveraging synergies within the wealth management business.
Compensation, Governance and Executive Committee
The Compensation, Governance and Executive Committee makes recommendations to the Board of Directors, where necessary, on certain matters including, but not limited to, changes to compensation plans and the adoption of new plans, changes to the Chief Executive Officer'sCEO’s compensation and changes to Board compensation programs of the Company. In addition, the Committee serves as the Executive Committee of the Bank’s board of directors. The Compensation, Governance and Executive Committee has been delegated the authority by the Board of Directors to approve compensation matters for all executive officers. Compensation decisions relating to the Chief Executive OfficerCEO are also reviewed by the Board. For additional information on the Compensation, Committee'sGovernance and Executive Committee’s process for the consideration and determination of the executive officer and director compensation, please see "“Compensation Discussion and Analysis."”
Risk Management Committee
The Risk Management Committee's responsibilities are described above under "Risk Oversight."
Governance Committee
The Compensation, Governance and Executive Committee periodically reviews the arrangements for the overall governance of the Company by the Board of Directors and its committees and, among other things, assists the Board of Directors by evaluating the performance
of the Board and its committees, identifies individuals qualified to become members of the Board, recommends the slate of candidates to be nominated for election to the Board of Directors and on the boards at the Company'sCompany’s subsidiaries (wherewhere such membership is not otherwise mandated by contract),contract, recommends the members and the Chairschairs of the committees of the Board, adopts and implements governance practices and policies applicable to both the Company and its subsidiaries, and reviews and assesses the charters of all of the committees of the Board.
Wealth Management Committee
The Wealth Management Committee provides strategic direction and oversight on behalf of both the Board of Directors of the Company and the Board of Directors of Boston Private Bank & Trust Company (jointly the "Boards") regarding the Company's wealth management businesses, both in the registered investment advisory affiliates and in Boston Private Bank & Trust Company's Investment Management and Trust division. The Committee also assists the Boards in analyzing the optimal means of enhancing the Company's performance and expanding its acquisition and retention of private clients through these businesses.
Executive Sessions without Management
To promote open discussion among the non-management Directors, the Board of Directors schedules regular executive sessions in which the non-management Directors meet without management's participation. Such sessions are scheduled to occur at every regularly scheduled Board and committee meeting. The Chairman of the Board is the presiding Director at such executive sessions.
Board of Directors Meetings
The Board of Directors held nine meetings of the full Board during 2012. Each incumbent Director attended at least 75% of the aggregate number of meetings of the full Board of Directors and relevant committees.
Directors' Attendance at Annual Meetings
The Company does not have a policy of requiring Directors to attend the annual meeting of shareholders. The Company does, however, typically schedule a meeting of its Board of Directors the day before or close to the annual meeting of shareholders to facilitate each Director's attendance at the annual meeting of shareholders. Of the nine members then on the Board, eight attended the Company's 2012 annual meeting.
Code of Business Conduct and Ethics
The Company has adopted a Code of Business Conduct and Ethics, which applies to all of the Company's and its subsidiaries' employees, officers, and directors. In addition, the Company maintains procedures for the confidential, anonymous submission of any complaints or concerns about the Company, including complaints regarding accounting, internal accounting controls or auditing matters. Shareholders may access the Code of Business Conduct and Ethics in the Corporate Governance section of the Company's website at www.bostonprivate.com.
Consideration of Director Nominees
The Compensation, Governance and Executive Committee is responsible for identifying, assessing and recommending the slate of candidates to be nominated for election to the Board of Directors of the Company.Directors. The Compensation, Governance and Executive Committee uses a variety of methods for identifying and evaluating nominees for Director, and the Governance Committee assesses the mix of skills and the
performance of the Board as a whole on an annual basis. In the course of establishing the slate of nominees for Director each year, the Compensation, Governance and Executive Committee will consider whether any vacancies on the Board are expected due to retirement or otherwise, the skills represented by retiring and continuing Directors, and additional skills highlighted during the annual Board self-assessment process that could improve the overall quality and ability of the Board to carry out its function. In the event that vacancies are anticipated or arise, the Compensation, Governance and Executive Committee considers various potential candidates for Director. Candidates may come to the attention of the Compensation, Governance and Executive Committee through the business and other networks of the existing members of the Board or from management. The Compensation, Governance and Executive Committee may also solicit recommendations for Director nominees from independent search firms or any other source it deems appropriate, and has most recently sourced non-incumbent candidates through the retention of such independent search firms.firms and through the boards of its affiliates. When an incumbent Director is up for re-election, the Compensation, Governance and Executive Committee reviews the performance, skills and characteristics of such incumbent Director before making a determination to recommend that the full Board nominate him or her for re-election.
In light of the Board's commitment to the highest quality corporate governanceThe Compensation, Governance and the changing environment facing the financial services industry, the Board has requested that the Governance Committee develop and implement a plan over the next year to analyze opportunities to improve the effectiveness and efficiency of the Board structure, including an analysis of both the composition and size of the Board as a whole, as well as for the boards of the Company's subsidiaries.
The GovernanceExecutive Committee requires all nominees and candidates to possess the highest personal and professional ethics, integrity and values; to be committed to representing the long-term interests of our shareholders; to be able to devote the appropriate amount of time to be consistently informed about the Company'sCompany’s business and strategy, with a balanced perspective, strong business and financial acumen; and the ability to approach all decision making with a high level of confidence and independence. In addition to reviewing a candidate'scandidate’s background and accomplishments, candidates are reviewed in the context of the current composition of the Board of Directors and the evolving needs of the Company.
Following the 2014 annual meeting, the Board of Directors sought to recruit additional Board members whose qualifications aligned with the Company’s long-term strategy. After considering a number of candidates submitted by directors, management and a third-party search firm, the Board recommended that Ms. Wells and Ms. Larson be elected to the Board.
Pursuant to guidelines established by the Board, no more than twothe CEO of the Company will always be a member of the Board, the CEO of the Bank may serve as a member of the Board and all other members of the Board canmust be executive members, and all others must meet the definition of "independent"“independent” under the NASDAQ Rules. On an annual basis, the Compensation, Governance and Executive Committee reviews the "independent"“independent” status of each member of the Board to determine whether any relationship is inconsistent with a determination that the Director was independent. The most recent review was undertaken in January of 20132015 and, as a result, the Board, after review and recommendation by the Compensation, Governance and Executive Committee, determined that each of the Company'sCompany’s non-executive directors (Ms.(Mses. Kuenstner, Larson and Wells, Mrs. Hoffman and Messrs. Alexander, Colangelo, Morton, Shea, Sinai,Nolan, Shapiro and Waters) meets the qualifications for independence in accordance with the NASDAQ Rules.
Directors of the Company are nominated in accordance with the Company'sCompany’s by-laws, which provide that Directors may be nominated (1) by a majority of the Board of Directors, or (2) by any holder of record of any shares of the capital stock of the Company entitled to vote at the annual meeting of shareholders. While the Compensation, Governance and Executive Committee does not have a formal policy regarding the consideration of any Director candidates recommended by shareholders, candidates recommended by a shareholder are evaluated on the same basis as candidates recommended from other sources. A shareholder wishing to nominate a Director separately from the slate of Directors nominated by the Company for the 20132016 annual meeting should follow the procedures described in this Proxy Statement under the heading "“Submission of Shareholder Proposals for 20142016 Annual Meeting."” Any shareholder who seeks to make such a nomination for the 20142016 annual meeting must be present in person at such annual meeting.
In light of the Board’s commitment to the highest quality corporate governance and the changing environment facing the financial services industry, the Compensation, Governance and Executive Committee, at the request of the Board, analyzed opportunities to improve the effectiveness and efficiency of the Board structure. Based on this review and subsequent recommendation to the Board, the board of Boston Private Bank & Trust Company was consolidated with the Company’s Board of Directors in 2014. In addition, the Board of Directors has adopted formal Corporate Governance Guidelines.
Code of Business Conduct and Ethics
Shareholders'The Company has adopted a Code of Business Conduct and Ethics which applies to all of the Company’s and its subsidiaries’ employees, officers, and directors. In addition, the Company maintains procedures for the confidential, anonymous submission of any complaints or concerns about the Company, including complaints regarding accounting, internal accounting controls or auditing matters. Shareholders may access the Code of Business Conduct and Ethics in the Investor Relations/Corporate Information/Corporate Governance section of the Company’s website at www.bostonprivate.com.
Shareholders’ Communications with the Board of Directors
Shareholders wishing to communicate with the Company'sCompany’s Board of Directors should address their communications to the Company'sCompany’s investor relations department by email at investor-relations@bostonprivate.com, by phone at 888-666-1363 or by mail sent to the Company'sCompany’s main address at Ten Post Office Square, Boston, Massachusetts 02109, Attention: Investor Relations. The mailing envelope should contain a clear notation indicating that the enclosed letter is a "Shareholder-Board Communication"“Shareholder-Board Communication” or "Shareholder-Director“Shareholder-Director Communication."” All such letters should clearly state whether the intended recipients are all members of the Board or certain specified individual Directors. All communications will be reviewed by the Company'sCompany’s investor relations department, which will determine whether the communication will be relayed to the Board or the Director. Except for resumes, sales and marketing communications or notices regarding seminars or conferences, summaries of all shareholder communications will be provided to the Board.
INFORMATION REGARDING EXECUTIVE OFFICERS
The following table lists the name, age and position of each executive officer of the Company.
|
| | | | | |
Name
| Age
| | Age | | Position
|
| Margaret W. Chambers | 53 | 55 |
| | Executive Vice President, General Counsel and Corporate Secretary of the Company; Director - KLS Professional Advisors Group, LLC; Secretary - Boston Private Bank & Trust Company. |
| Clayton G. Deutsch | 57 | 59 |
| | Chief Executive Officer and President of the Company; Director - Boston Private Bank & Trust Company Anchor Capital Advisors LLC, Bingham, Osborn & Scarborough, LLC, KLS Professional Advisors Group, LLC, Dalton, Greiner, Hartman, Maher & Co., LLC, and the Company. |
Martha T. HigginsCorey A. Griffin | 49 | 53 |
| | Executive Vice President, Director - Human Capital Resources of the Company.Corporate Development and Wealth Management Strategy |
David J. KayeMartha T. Higgins | 48 | 51 |
| | Executive Vice President and Chief Human Resources Officer |
| David J. Kaye | | 50 |
| | Executive Vice President, Treasurer and Chief Financial Officer of the Company; Director - Bingham, Osborn & Scarborough, LLC, and Anchor Capital Advisors, LLC. |
| W. Timothy MacDonald | 54 | 56 |
| | Executive Vice President and Chief Risk Officer at both the Company and Boston Private Bank & Trust Company.Company |
| Peter J. Raimondi | | 59 |
| | Chief Executive Officer, Boston Private Wealth LLC |
| Mark D. Thompson | 56 | 58 |
| | Chief Executive Officer and President and Director of Boston Private Bank & Trust Company.Company |
Pursuant to the by-laws of the Company, the President, Treasurer and Secretary of the Company hold office until the first meeting of the Directors following the next annual meeting of shareholders, or any special meeting held in lieu thereof.shareholders. Other officers shall hold office for the same term described above, unless a shorter term is specified in the vote electing or appointing them.
Margaret W. Chambers. Ms. Chambers is Executive Vice President, General Counsel and Corporate Secretary for the Company. She has over 25 years of experience in the legal arena focusing on financial services matters. She is responsible for overseeing the Company'sCompany’s operations from a legal perspective including merger and acquisition activities, divestitures, regulatory examinations, corporate governance, board materials and relations, regulatory filings, real estate, risk management and compliance, employment and insurance matters. She also works as part of the executive management team on strategic planning and related matters. Prior to joining the Company in2002,in 2002, Ms. Chambers served as Executive Vice President and General Counsel for Funds Distributor, Inc., a Boston Institutional Group company. Before joining Funds Distributor, she served as Vice President and Assistant General Counsel at the investment management firm of Loomis, Sayles & Company, L.P. Prior to her position with Loomis, she was an associate with the law firm of Ropes & Gray focusing on securities regulatory matters, including investment company, investment advisory, broker-dealer, and securities offering matters. Ms. ChambersShe currently serves on the Board of Directors of KLS Professional Advisors Group, LLC, and is the secretary of Boston Private Bank & Trust Company bothand Boston Private Wealth LLC, all of which are affiliates of the Company. Ms. Chambers is a member of the Company'sCompany’s Leadership Team.
Corey A. Griffin. Mr. Griffin joined the Company in 2014 as the Director of Corporate Development and Wealth Management Strategy. He is the former President of The Davis Companies, an institutional real estate investment manager, and the former Chairman and CEO of The Boston Company Asset Management, a subsidiary of Bank of New York Mellon. Under Mr. Griffin’s leadership, the Boston Company opened offices worldwide while developing a $75 billion global, multi-strategy equity business across the style and capitalization spectrum with clients in North and South America, Europe, Asia and Africa.
He also served as a member of the Bank of New York Mellon’s Operating, Ethics, and Product Development Committees and as a board member of Standish Mellon Asset Management. Mr. Griffin is a member of the Company’s Leadership Team.
Martha T. Higgins. Ms. Higgins joined the Company in 2008 as Executive Vice President Director-Human Capital Resources.and is currently the Company’s Chief Human Resources Officer. She is responsible for enterprise-wide human capital initiatives and serves as an advisor to senior management and to the Company'sCompany’s affiliate partners on human capital strategy, workforce planning and overall workforce effectiveness. In addition, she supports the Company'sCompany’s Board Compensation, Governance and Executive Committee and is a member of the Company'sCompany’s Leadership Team. Prior to joining the Company, Ms. Higgins was a Senior Consultant at W.T. Haigh & Company, an executive compensation and human resources consulting firm in Cambridge, Massachusetts, which serves as independent advisor to the Company'sCompany’s Compensation, Governance and Executive Committee. She has over 2025 years of experience working in the financial services industry. Ms. Higgins started her career at The Boston Company and also worked for Fidelity Investments as a Senior Compensation Consultant. She is a Certified Equity Professional and Certified Professional Coach, and is also a member of Boston Private Bank & Trust Company’s Executive Leadership Team and Policy Group.
David J. Kaye. Mr. Kaye joined the Company in 2007 as Executive Vice President and Chief Financial Officer. Before joining the Company, Mr. Kaye served as Senior Vice President and Chief Financial Officer for Columbia Management, Bank of America'sAmerica’s asset management organization. He led a team of finance professionals with responsibility for all financial reporting for the organization and served as a strategic advisor to the group'sgroup’s President. Prior to that position, Mr. Kaye was the Chief Financial Officer of Bank of America'sAmerica’s Private Bank. Previously, Mr. Kaye was the Vice President and Controller for Goldman Sachs Asset Management, heading a team that performed all financial reporting functions for the division. Earlier in his career, he held several finance positions at Lehman Brothers, and was a consultant with Coopers & Lybrand Consulting. He is a Certified Management Accountant (CMA). Mr. Kaye is a member of the Company'sCompany’s Leadership Team that is responsible
for developing the Company'sCompany’s strategy and serves on the Board of Directors of Bingham, Osborn & Scarborough LLC, and Anchor Capital Advisors LLC, bothBoston Private Bank & Trust Company, and Boston Private Wealth LLC, all of which are affiliates of the Company.
W. T.Timothy MacDonald. Mr. MacDonald joined the Company in 20092009. First serving as Senior Vice President, Deputy Chief Risk Officer, and has served as a key member of the Company's Enterprise Risk Management Group. In March 2011 he was appointed Seniornamed Executive Vice President and Chief Risk Officer of Boston Private Bank & Trust Company. InCompany in March 2011 and, in January 2013, Mr. MacDonald was elected Executive Vice President and Chief Risk Officer of the CompanyCompany. As Chief Risk Officer Mr. MacDonald oversees all aspects of the Enterprise Risk Management program. He is authorized to discharge the program in a manner consistent with the Company’s current and heanticipated risk profile and strategic plan. Mr. MacDonald is a member of the Company'sCompany’s Leadership Team. He continues to serveTeam and he also functions as Chiefchair of the Risk OfficerManagement Steering Committee and member of Boston Private Bank & Trust Company. As Chief Risk Officer, he assumesExecutive ALCO. Mr. MacDonald serves as the Chair of the Risk Management Oversight Committee at the Bank and serves as a member of the bank'sBank’s key governing committees, including its Executive Leadership Team, Policy Group.Group, and ALCO. He previously held key positions at GE Capital from2006 to 2009, where he was responsible for overseeing various initiatives as Vice President of Risk Monitoring and Controllership. Mr. MacDonald has also worked with KPMG, the Federal Reserve Bank of Boston and Shawmut Bank. He is a Chartered Financial Analyst charterholder and an active member of PRMIA (Professional Risk Managers'Managers’ International Association) where he volunteers as a member of the Steering Committee for the Boston Chapter..
Mark D. Thompson.Peter J. Raimondi. Mr. Thompson isRaimondi joined the chief executive officer and presidentCompany in 2014 as the CEO of Boston Private Wealth LLC (“BPW”), a wholly owned subsidiary of Boston Private Bank & Trust CompanyCompany. Mr. Raimondi has more than three decades of wealth management and investment expertise and is also onwidely known for his vision within an evolving financial industry. Prior to joining the Bank's boardCompany, Mr. Raimondi was the Founder and Chief Executive Officer of directors.Banyan Partners LLC, which, through organic growth and seven strategic acquisitions over a five-year period, became one of the fastest growing independent investment advisory firms in the country with over $4.3 billion in assets under management and nine regional offices. Prior to establishing Banyan Partners, Mr. Raimondi founded The Colony Group in Boston, which was known for its financial planning and tax counseling. He has beenholds a Juris Doctorate from Boston University School of Law and is a member of the Company's Leadership Team since September 2010. In his role,Massachusetts Bar. Mr. ThompsonRaimondi leads BPW, guiding the executive team and serving on BPW’s board. He also is responsible for the overall performancea member of the Company's private bank. He joined Boston Private Bank & Trust Company in 1994Company’s Executive Leadership Team and servedPolicy Group, as executive vice president and treasurer from 1994-2001, president from 2001-2003 and Chief Executive Officer from 2003 towell the present. Prior to joining Boston Private Bank & Trust Company, Mr. Thompson was an Executive Vice President and founding officer of Wainwright Bank & Trust Company and was vice president - Private Banking at Boston Safe Deposit & Trust Company.Company’s Leadership Team.
For biographical information regarding Clayton G. Deutsch and Mark D. Thompson see "“Information Regarding DirectorsDirector Nominees."”
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires that the Company’s officers and directors and persons who own beneficially more than 10% of the Company’s outstanding shares of common stock file reports of ownership and changes in ownership with the SEC. Based solely upon a review of the reports and amendments thereto filed with the SEC under Section 16(a), copies of which are required to be furnished to the Company under SEC regulations, during and with respect to fiscal year 2014, no officer, director or person who owns beneficially more than 10% of the Company’s outstanding shares of common stock failed to file such reports on a timely basis.
PRINCIPAL SHAREHOLDERS
The following table sets forth the beneficial ownership of the Company’s common stock as of March 4, 2015 with respect to (1) each Director and nominee for director; (2) each of the Company’s executive officers identified in this Proxy Statement; and (3) all Directors and executive officers of the Company as a group.
|
| | | | | | | | | |
| Name* | | Common Stock(2) | | Exercisable Options | | Percentage of Outstanding Stock |
| Current Directors (1) | | | | | | |
| Herbert S. Alexander | | 129,986 |
| | 26,566 |
| | ** |
|
| Lynn Thompson Hoffman | | 63,845 |
| | 15,544 |
| | ** |
|
| Deborah F. Kuenstner | | 100,446 |
| | 10,653 |
| | ** |
|
| Gloria C. Larson | | 1,200 |
| | — |
| | ** |
|
| John Morton III | | 50,074 |
| | 47,597 |
| | ** |
|
| Daniel P. Nolan | | 30,597 |
| | — |
| | ** |
|
| Brian G. Shapiro | | 78,267 |
| | — |
| | ** |
|
| Stephen M. Waters | | 46,767 |
| | 15,544 |
| | ** |
|
| Donna C. Wells | | 3,512 |
| | — |
| | ** |
|
| Named Executive Officers (3) | | | | | | |
| Clayton G. Deutsch | | 885,002 |
| | — |
| | 1.06 | % |
| Corey A. Griffin | | 5,944 |
| | — |
| | ** |
|
| David J. Kaye | | 108,506 |
| | 27,740 |
| | ** |
|
| Peter J. Raimondi | | 780,045 |
| | — |
| | ** |
|
| Mark D. Thompson | | 481,154 |
| | 66,790 |
| | ** |
|
| All Current Directors, Nominees and Executive Officers as a Group (17 Persons) (4) | | 2,877,541 |
| | 269,243 |
| | 3.79 | % |
| |
| * | Unless otherwise indicated, the address is c/o Boston Private Financial Holdings, Inc., Ten Post Office Square, Boston, MA 02109. |
| |
| ** | Represents less than 1% |
| |
| (1) | Percentages held by executive officers and Directors individually and as a group are calculated on the basis of 83,120,436 shares of common stock outstanding as of March 4, 2015. |
| |
| (2) | Beneficial share ownership is determined pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as amended. Accordingly, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise has or shares the power to vote such security or the power to dispose of such security. The amounts set forth above as beneficially owned include shares owned, if any, by spouses and relatives living in the same home as to which beneficial ownership may be disclaimed. |
| |
| (3) | Performance shares are not included as executive officers have no beneficial interest in such shares until established performance criteria are met. Please see “Compensation Discussion and Analysis.” |
| |
| (4) | Includes shares held by all of the Company’s current executive officers and Directors. |
The following table lists certain persons known by the Company to own beneficially more than five percent of the Company’s outstanding shares of common stock as of March 4, 2015.
|
| | | | |
| Name and Business Address of Beneficial Owner | | Amount and Nature of Beneficial Ownership | | Percentage of Outstanding Stock |
| BlackRock, Inc., 40 East 52nd Street, New York, NY 10022 | | 7,111,032(1) | | 8.60% |
| FMR, LLC, 245 Summer Street, Boston, MA 02210 | | 6,824,786(2) | | 8.24% |
| The Vanguard Group, 100 Vanguard Blvd., Malvern, PA 19355 | | 5,392,003(3) | | 6.51% |
| |
| (1) | Based on a report filed with the Securities and Exchange Commission as of January 22, 2015, and reflecting a December 31, 2014 position. |
| |
| (2) | Based on a report filed with the Securities and Exchange Commission as of February 13, 2015, and reflecting a December 31, 2014 position. |
| |
| (3) | Based on a report filed with the Securities and Exchange Commission as of February 11, 2015, and reflecting a December 31, 2014 position. |
COMPENSATION DISCUSSION AND ANALYSIS
Executive Summary
This Compensation Discussion and Analysis ("(“CD&A"&A”) describes the Company'sCompany’s executive compensation philosophy, programsprogram, including 2014 total compensation for the Company’s Named Executive Officers (“NEOs”), and policies for 2012, and key elements of the 2013 program. The CD&A describes how the Compensation, Governance and Executive Committee of the Company'sCompany’s Board of Directors (the "Committee"“Committee”) determined 20122014 compensation for the Company's executives, including the persons identified asCompany’s NEOs, in this Proxy Statement. The NEOs included are:listed below:
•Executives reported in last year's CD&A:
Clayton G. Deutsch, Chief Executive Officer and President
•David J. Kaye, Executive Vice President, Treasurer and Chief Financial Officer
•Mark D. Thompson, Chief Executive Officer and President BPBTC- Boston Private Bank & Trust Company
New Named Executive Officers:
•James D. Dawson, Executive Vice President (Separated as of December 28, 2012)
•Margaret W. Chambers, Executive Vice President and General Counsel
•Martha T. Higgins,Corey A. Griffin, Executive Vice President and Director of Human Capital ResourcesCorporate Development and Wealth Management Strategy
Peter J. Raimondi, President and Chief Executive Officer - Boston Private Wealth LLC
On May 1, 2014 Mr. Griffin joined the Company having spent six and a half months (September 16, 2013 through April 30, 2014) in a consulting capacity with the Company.
On October 2, 2014, Mr. Raimondi joined the Company in connection with the acquisition of Banyan Partners LLC (“Banyan”), a firm he founded in 2006.
All compensation actions taken in 20122014 and recommended for 20132015 reflect the Company'sCompany’s commitment to shareholder-aligned governance and compensation arrangements. The executive compensation philosophyprogram and related actions are intended to reward sustained, long-term performance and returns for shareholders consistent with the Company'sCompany’s overall risk profile and disciplined growth strategy.
What the Company's three-yearCompany’s Executive Compensation Program Promotes
| |
| ü | Pay for performance. A significant percentage (73% for the CEO and President, and 63% for other NEOs) of annual target direct compensation (base salary plus short-term incentives (“STI”) plus long-term incentives (“LTI”)) is variable, performance-based pay connected directly to the performance of the Company. As Mr. Raimondi’s compensation is currently governed by an employment agreement entered into in connection with the acquisition of Banyan, his compensation is tied more specifically to performance of Boston Private Wealth LLC (“BPW”) for the short term, rather than to the performance of the Company as a whole. A description of Mr. Raimondi’s employment arrangements, including the applicable Management Bonus Plan that was established as part of the Asset Purchase Agreement (“APA”) at the time of the acquisition of Banyan, is included in “Analysis of 2014 Compensation Actions and 2015 Recommended Actions.” |
Mix of Performance-Based, Variable Pay Versus Fixed Pay
|
| | | | | | |
| | Variable Compensation | | | | Fixed Compensation |
| |
| ü | Conservative base salaries, limited executive benefits. The Company has kept executive base salaries flat for several years, continuing its philosophy that the majority of executive compensation should be driven by performance outcomes and de-emphasizing fixed base salaries. Aside from an annual flexible executive benefits account ranging in value by NEO from $20,000 to $65,000 and legacy long-term care and long-term disability benefits provided to Mr. Thompson, the Company does not currently offer other executive benefits. |
| |
| ü | A balanced performance orientation and “stretch goals.” With the exception of Mr. Raimondi (as noted above), the Company uses a “balanced scorecard” for short-term incentives to align its executive performance with the Company’s strategic and operational priorities to position the Company for growth and sustained profitability. The Company weights compensation toward rewards that are contingent upon achieving the Company’s most important performance objectives, with priority focus on Return on Average Common Equity (“ROACE”) and GAAP Net Income as the primary metrics for the scorecard. Prior to 2014, there was a Company performance scorecard and a separate scorecard for the Company’s largest affiliate, Boston Private Bank & Trust Company (the “Bank”). In 2014 the Company moved to a consolidated performance scorecard for both its Company and Bank executives to align further its executives with the Company’s consolidated strategy and business plan. |
Consistent with 2013, in 2014, 50% of the scorecard was directly tied to ROACE and Net Income, the Company’s primary metrics. The remaining 50% of the scorecard was tied to secondary metrics including revenue growth, AUM net flows, capital adequacy and balance sheet growth. The balanced scorecard metrics are determined on an annual basis and include targets with a considerable degree of stretch in order to position the
Company as a top quartile performer against its peer group (identified below) and the broader banking industry. For example, in 2014 the Company was slightly under its ROACE scorecard target, yet ranked well above the median on ROACE performance when compared to its peer group. The secondary metrics were revised slightly in 2014 to reflect the ongoing strategic priorities of the Company, with the main change being the replacement of efficiency ratio with pre-tax, pre-provision earnings growth. In addition, several strategic priorities are considered in the final determination of the annual bonus pool and financial plan. These plans are reviewed annually byused as modifiers on the Company's Boardtotal earned pool based on the primary and secondary metrics.
| |
| ü | Equity-based incentives. The Company promotes the use of equity-based incentives, with 60% of long-term incentive value granted each year delivered in performance-vesting restricted stock, (“performance shares”), tied to three-year target goals that are intended to position the Company in the top quartile against its peer group, and 40% delivered in time-based restricted stock. The Company continues to exclude stock options from its equity mix for NEOs, and in 2013, the Company replaced stock options with performance shares for all of its employees receiving equity awards to strengthen further the long-term performance orientation of its programs. In addition, as described in the “Analysis of 2014 Compensation Actions”section, the Company made one-time performance-oriented, retention awards to Mr. Deutsch and Mr. Thompson, further increasing their equity stakes in the Company and strengthening management continuity through retention of these executives over the next three to five year period in the Company’s growth cycle. Finally, beginning with the hiring of Mr. Griffin in May of 2014, the Company expanded the use of its Purchased Matched Restricted Shares program for select executives to encourage executives to make a significant investment in the Company’s stock, using their own capital. |
| |
| ü | Caps/maximum incentive earn-outs on annual incentives and performance share awards. The Company limits the total amount of incentives that can be earned each year by its executives. This limitation (along with the balanced scorecard framework noted above) ensures that executives are rewarded within the Company’s risk/reward profile to take appropriate, but not excessive, risk. The following chart illustrates the short-term incentive and long-term incentive actual performance payouts (percent of target awards) relative to the maximum payouts that could be earned based on limits defined in the executive compensation program. Mr. Raimondi is paid pursuant to his Employment Agreement, as noted above. |
| |
| ü | Strong pay for performance correlation and market competitive pay. The Company delivers market-competitive total compensation in line with industry and peer group performance in order to attract and retain top executive talent. The Company uses an independent, third-party consultant to conduct periodic market total compensation reviews against its peer group to ensure appropriate competitive pay and a strong pay/performance correlation relative to the Company’s peer group and reports back the pay/performance correlation to the Committee on an annual basis. |
| |
| ü | Meaningful equity ownership guidelines. The Company promotes executive stock ownership through ownership guidelines and in 2014 increased its ownership guidelines, previously ranging from one to five times |
base salaries, to two to six times base salaries effective January 1, 2015. With the exception of Directors.Mr. Griffin who joined the Company in May of 2014, all executives have attained their guidelines. Although Mr. Raimondi is the only executive who does not have a formal ownership guideline, he currently owns .94% of the Company’s common stock as a result of the Banyan acquisition and his related compensation arrangement entered into October 2, 2014. Mr. Deutsch currently owns over 1% of the Company’s common stock and Mr. Thompson owns .58% of the Company’s common stock.
| |
| ü | Reasonable severance policy. In July of 2014 the Committee approved a severance policy for its executives with an officer designation of Executive Vice President that provides for severance benefits in the event that an executive’s position is eliminated, or the executive is terminated “not for cause.” The severance policy provides for a benefit of one times base salary, plus “target bonus,” plus accelerated vesting of all unvested stock awards on a pro-rata basis (pro-ration on accelerated shares is determined using the time period from grant date to the date of separation), plus reasonable outplacement costs. Severance benefits are provided in exchange for a general release and two-year non-solicitation (of clients and employees) provisions. |
| |
| ü | Clawbacks on incentive compensation in the event of a material restatement. Incentive awards are subject to clawback in the event of a material financial restatement. |
| |
| ü | Double-trigger equity in the event of a change-in-control. All current equity grant award agreements provide for double-trigger (i.e., change-in-control event and termination of employment) vesting in the event of a change-in-control in which equity grants are not assumed, substituted or continued. |
| |
| ü | Tax deductibility of incentive compensation. The Company considers the tax deductibility of its incentive compensation awards through 162(m) performance-based provisions. |
What the Company’s Executive Compensation Program Does Not Promote
| |
| û | Guaranteed minimum bonuses. If the Company does not achieve any of the performance scorecard threshold levels, which are on average set at 70% of the respective performance target, bonuses of the executive team can be reduced to zero. The Company does not offer minimum bonus guarantees to existing or new executives. |
| |
| û | Change-in-control agreements. Beginning in 2010, with the hiring of its current CEO and President, the Company ceased offering specific change-in-control agreements to its executives. For Mr. Deutsch, reasonable severance protection is included in his employment agreement related to certain separation events which are described in the “Employment Agreements and Executive Severance and Change-In-Control” section. On March 29, 2011, the Company eliminated Mr. Thompson’s change-in-control agreement when his employment agreement became effective and replaced prior change-in-control benefits with reasonable severance protection if Mr. Thompson were to lose his job in certain “not for cause” or “for good reason” termination situations. Any remaining change-in-control agreements all have double-trigger benefit provisions. Mr. Kaye is the only current NEO with a legacy change-in-control agreement in addition to the standard provisions in the equity award agreements. |
| |
| û | Executive perquisites. With the exception of executive flexible benefit accounts described above, and the legacy, grandfathered Long Term Care and Disability Plans at the Bank, the Company does not offer executive perquisites (such as country club memberships, company-owned cars, use of private planes, supplemental retirement plans, etc.) to any of its current NEOs. |
| |
| û | Tax gross-ups. The Company does not provide tax gross-ups to its executives. |
| |
| û | Dividends on unvested equity awards. Beginning with the shares granted in 2013, the Company does not pay dividends on any unvested equity award until the shares are earned and vested. |
| |
| û | Stock option repricings or exchanges of underwater stock options. The Company has a sizable number of underwater stock options that have not been repriced or exchanged. The Company’s equity incentive plan does not permit the repricing or exchange of underwater stock options without shareholder approval. |
| |
| û | Insider trading and employee hedging. Company policy prohibits hedging by any of its executives and Board members. |
Say on Pay and Compensation Program Changes for 2014 and 2015
The Company'sCompany’s shareholders approved the “say on pay” resolution in 2014 with 95% of the votes cast in favor of the resolution, up from 91% in 2013. The Company believes these votes affirm shareholder support of its approach to executive compensation programs and, policies are designed to reflect our ongoing commitment to:
Deliver market-competitive total compensationas a result, the Compensation, Governance and Executive Committee made minimal changes to the Company's senior executives.
Weightexecutive compensation toward rewardsprogram in 2014 and 2015. The Company also believes that are contingent upon achievingits executive compensation program is appropriately structured with a strong performance objectives.
Align performance targetsorientation, balanced risk-reward profile and related compensation levelsis well aligned with shareholder value creation.interests.
Directly link performance compensation (bonus and equity awards) with a robust set of strategic and financial metrics established by the Committee of the Board to support the Company's long-term high performance.
20122014 Operational and Financial Highlights
The Company increasedcontinued to produce strong profitability metrics and delivered higherdeliver solid returns for ourits shareholders in 2012,2014, reflected in the following metrics:
•GAAP Net Income increased from $39.1 million in 2011 to $53.3 million in 2012 (an increase of 36.7%).
•GAAP Earnings Per Share (EPS)(“EPS”) rose from $0.46$0.68 in 20112013 to $0.61$0.79 per share in 2012 (an2014, an increase of 32.6%)16%.
•GAAP Net Income was $68.8 million in 2014 as compared to $70.5 million in 2013 due to an after tax gain that was realized in 2013 on the sale of its Pacific Northwest offices.
Return on Average Common Equity (ROAE) increased from 7.3%(“ROACE”) was 10.6% in 20112014 as compared to 9.2%11.7% in 2012 (an increase of 26%).2013.
Total stock price appreciation in 20122014 was 13.5%6.7%, following a strong 21% increase in 2011, and outperforming the KBW Regional Bank Index (KRX)(“KRX”) average of 10.5% in 2012.
•Total Shareholder Return (TSR) -- stock price appreciation plus dividends -- was 14.0% in 2012 and 21.9% in 2011.0.4%.
The Company'sCompany’s cumulative stock price appreciation from August of 2010 (Mr. Deutsch'sDeutsch’s arrival) through December of 20122014 was 35.9%104%, outperforming both the KBW Regional Banking IndexKRX gain at 11.5%of 64% and the S&P 500 gain of 26.7%87% for the same time period.
Source: FactSet/IPREO
The Company completedincreased its dividend four times in the past eight quarters, from a multi-year restructuring program as partquarterly dividend of management's commitment$0.01 per share, to building core profitability$0.05, $0.07, $0.08 and achievingmost recently $0.09 per share, which was paid in February 2015.
Total Shareholder Return (“TSR”), stock price appreciation plus dividends, is shown below:
The Company exceeded the Company's long-term stated ROAE targetmedian TSR of 12%. At the same time,its peer group in 2014.
Despite a low interest rate environment, the Company continued to reduce its risk profile, strengthen itsdemonstrate progress in expense and balance sheet enhance portfolio constructionmanagement, and product diversificationexhibited strong capital ratios and build its capital base. Select examples of the foregoingfee-based revenue growth. Additional financial highlights include:
Expense savings of $10 million identified
Core Fees and Income increased by 13% in 2012 as part of a Company-wide restructuring program (impact anticipated to be realized in 2013 and future years).2014.
Non-Performing Assets (NPA)(“NPA”) as a percentage of Total Assets, as of December 31, 2012,2014, decreased to 1.05%0.66% from a fourth quarter level of 1.21%0.71% in 20112013 and 1.95%1.00% in 2010.2012.
TangibleTier 1 Common Equity (TCE) to Tangible remained strong in 2014 at 9.8%, versus 9.9% in 2013 and 8.7% in 2012.
Assets (TA) increased to 7.7% in 2012 from 7.4% in 2011Under Management/Advisory growth of 23% over 2013, ending 2014 at $29.9 billion.
4% year-over-year loan growth and 6.3% in 2010.7% year-over-year deposit growth, which met or exceeded goals.
TCE/Risk-Weighted Assets (RWA) increased to 10.5% in 2012 from 10.3% in 2011 and 9.4% in 2010.
In addition to progress againstattaining key financial metrics, the Company made progresssignificant headway against key strategic milestones including:including the October 2, 2014 acquisition of Banyan, a leading wealth management firm with over $4 billion in AUM/AUA.
CompletedPeer Group and Total Compensation Market Benchmarking
The Committee, in February 2014, approved an updated peer group to be used for compensation and performance comparisons. This peer group, listed below, includes one wealth manager and fifteen banks which were selected based on similar size in assets and revenues; revenue mix (targeting above 20% in fee revenue mix as the post-merger integration of all of our Private Banking businesses, operations,Company’s fee mix is currently 43%); private banking business orientation (as opposed to community/retail banking orientation); and, staff.
Simplified the Company's business model throughas much as possible, markets and geographic locations, a significant streamlining and restructuring of the Company's senior executive team.
Completed the sale of Davidson Trust Company to Bryn Mawr Trust Company.
Announced the sale of the Pacific Northwest offices of Boston Private Bank & Trust Company to Sterling Financial Corporation, with an expected closekey factor in the secondCompany’s ability to attract and retain key private banking and investment talent.
Selecting a peer group purely on comparable asset size does not meet the Company’s screening criteria in terms of including banks that are located in comparable geographic, metropolitan locations with a private banking (versus retail branch) orientation, and a higher fee-based revenue mix. The following companies were included in the Company’s 2014 peer group:
|
| |
| Brookline Bancorp, Inc. | PacWest Bancorp |
| Bryn Mawr Bank Corporation | PrivateBancorp, Inc. |
| City National Corporation | Signature Bank |
| CoBiz Financial Inc. | Silvercrest Asset Management Group, Inc. |
| First Republic Bank | Washington Trust Bancorp, Inc. |
| Independent Bank Corporation | Webster Financial Corporation |
| MB Financial, Inc. | Wintrust Financial Corporation |
| National Penn Bancshares, Inc. | WSFS Financial Corporation |
This peer group was reviewed in January 2015 and no changes were made to the peer group for 2015.
The peer group is a market frame of reference for compensation and performance comparisons. In addition, W.T. Haigh & Company, the Company’s compensation consultant, provides other relevant market reference points such as broader financial services and general industry compensation survey data covering companies of similar size to augment this peer group data, if appropriate.
The last market compensation review was conducted by W.T. Haigh & Company in the fourth quarter of 2013.
Successful balance sheet management2014 for the Company’s CEO and other select executive positions. Based on the market comparative data used, the Company’s overall enterprise-wide risk management.compensation position for executive positions was determined to be competitive with market (mid-market range). Actual compensation versus market may vary year-to-year based on overall Company performance, individual contributions and cost considerations.
Pay Versus Performance Relative to Bank Peer Group
In October 2012, the Company's independentsecond quarter of 2014, the Company’s compensation consultant,W.T. Haigh & Company, conducted aanother pay for performance analysis for the Committee. This analysis compared the Company'sCompany’s actual paid compensation for select NEOs in 20122013 and performance (TSR for one(one and three yearsthree-year TSR and ROAE growth year-over-year)Return on Equity (“ROE”) growth) to the pay and performance of peer bankscompanies for the same period. The conclusion, as indicated in the chart below, was that the Company'sCompany’s performance ranked in the top quartile (85th percentile)71st percentile while compensation ranked in the mid-market50th percentile.
Analysis of 2014 Compensation Actions and 2015 Recommended Actions
The following compensation actions pertain to all NEO’s with the exception of Mr. Raimondi, whose compensation is governed by an employment agreement as noted above and described in summary below. The full agreement is disclosed in exhibit 10.49 on Form 10/K-A filed on March 13, 2015.
The Committee met on January 20, 2015 and approved 2014 bonus funding for NEOs, with the exception of Mr. Raimondi, at 110% of target award levels based on a comprehensive review and discussion of the Company’s performance. Target award levels vary by position and range (60th percentile)from 125% of base salary for the CEO to 100% of base salary for other NEOs. The Committee approved individual bonuses for executives on February 9, 2015. The CEO’s bonus was approved by the full Board on February 10, 2015. Bonus actions compared financial results against the performance scorecard for annual incentives; strategic factors, including the acquisition of Banyan Partners in the fourth quarter; credit quality; improvement in overall employee engagement scores; regulatory and risk management discipline; and relative performance against the Company’s peer group. All NEOs were considered to be strong contributors to the Company’s overall 2014 financial results and a consistent payout as a percent of target award levels was recommended across all positions, reinforcing an overall strong team orientation, yet allowing meaningful differentiation of bonuses awarded given the base salary differences by position. See “Annual Executive Incentive Plan” for further details.
The Committee met on April 15, 2014 and approved equity grant recommendations for NEOs at 100% of target award levels. Target award levels vary by position and range from 150% of base salary for the CEO to 100% for other NEO positions. The CEO’s equity award was approved by the full Board on April 16, 2014. Equity awards were granted 60% in performance shares and must be earned based on future performance (three-year performance period) and 40% in time-based restricted stock with a three-year cliff vesting period. Given the team performance orientation to managing the Company, and the strong performance of individuals on the team, equity awards were allocated in a consistent manner across the NEO positions. 2015 equity awards will not be granted until May of 2015; however on February 9, 2015 the Committee approved the equity value for May 15, 2015 awards at up to 100% of target awards levels. 2015 equity awards granted in May 2015 will be reported in next year’s CD&A.
As in 2013, NEOs did not receive salary increases for 2014.
Mr. Deutsch and Mr. Thompson One-Time Supplemental Performance/Retention Awards
During the five year period since Mr. Deutsch joined the Company as CEO and Mr. Thompson’s responsibility was expanded to include nation-wide private banking operations, the Company has produced top quartile performance in terms of total shareholder return versus the regional banking index. Mr. Deutsch and Mr. Thompson successfully led a Company-wide effort to build capital, reduce risk, and improve overall financial performance as evidenced by the Company’s top quartile performance in return on average tangible equity over the past three years. Their leadership has enabled a dramatic turnaround in earnings over the past five years - from a loss of $.29 per share in 2010 to a profit of $.79 per share in 2014. The stock price and overall market capitalization has more than doubled during that period.
On December 15, 2014 and February 9, 2015, the Committee and Board, in consultation with W.T. Haigh & Company on compensation structure and levels, approved one-time supplemental performance/retention grants for Mr. Deutsch and Mr. Thompson, respectively. These awards are intended to motivate the continued achievement of the Company’s performance goals, strengthen the retention of these two executives during a critical juncture in the Company’s growth phase, and reinforce the Company’s commitment to its long-term strategy and vision of becoming a leading wealth management and private banking firm. Mr. Deutsch’s award was approved by the full Board on December 17, 2014.
The Committee’s and Board’s primary objective with these awards is to provide strong leadership continuity during a key business building phase, and meaningful performance-based incentives tied to the achievement of ambitious growth and return goals in a challenging yield environment. Award amounts vest over three years for Mr. Deutsch and three to five years for Mr. Thompson with time frames determined after a full discussion of targeted retention periods considering the different career trajectories and retirement horizons. Awards were also considered in the context of each executive’s targeted annual total compensation package and with a decision to keep the executives’ base salaries flat over the retention period. Awards are heavily performance-based (60% of the value) and this performance portion will vest only to the extent that three-year performance goals are attained. Importantly, and as noted below, the Company’s average return on common equity must reach 12%, a level not attained since 2003.
The Committee and Board strongly believe these one-time Supplemental Performance/Retention Awards are in the best interests of shareholders to keep two executives with high performance track records at the Company engaged and focused on achieving
sustained, profitable growth for the next three to five years as the Company implements its growth initiatives and strategic vision.
Details of the awards follow:
Mr. Deutsch's Supplemental Performance/Retention Grant
Grant value: $2,000,000.
Grant mix: 60% ($1,200,000) in performance shares; 40% ($800,000) in time-based restricted stock.
Vesting: Three-year vesting (100% of the shares vest after three-years).
| |
| ◦ | Relative performance of Return on Tangible Common Equity versus peers (three-year average) |
| |
| ◦ | Fee Revenue Growth (three-year compounded average growth rate) |
The time-based restricted stock vests subject to Mr. Deutsch's continued employment through the vesting date.
Shareholder Say-on-Pay VotesMr. Thompson’s Supplemental Performance/Retention Grant
Grant mix: 60% ($450,000) in performance shares; 40% ($300,000) in time-based restricted stock.
Vesting: Three-year vesting (100% of the shares vest after three years) for performance shares provided the performance goals are met. Five-year vesting (one-third of the shares vest after years three, four and five from the grant date) for time-based restricted stock.
The performance shares and the time-based restricted stock vest subject to the same performance and employment restrictions as defined above for Mr. Deutsch.
The Committee used a five-year vesting date for Mr. Thompson as opposed to the three-year vesting date for Mr. Deutsch to consider the different retirement horizons and career trajectories for each executive.
Mr. Raimondi Employment Agreement
The Company provides its shareholdersentered into an Employment Agreement with Mr. Raimondi on October 2, 2014 in connection with the opportunity to cast an annual advisory vote on executive compensation (a "say-on-pay proposal"). Atacquisition of Banyan Partners by the Company's 2012 annual meeting of shareholders, 90%Bank. The following provides a summary of the votes castkey components of Mr. Raimondi’s agreement and compensation:
Term of agreement: Five years.
Base salary: $600,000.
Annual cash bonus: Eligible to participate in Boston Private Wealth Management Bonus Plan with a bonus pool that is funded at 10% of pre-bonus profit plus 25% of Excess EBITDA (Earnings Before Income, Tax, Depreciation and Amortization) Margin Bonus Pool (as defined), if applicable (30% EBITDA margin threshold before excess bonus pool applies). Any excess EBITDA bonus to be paid in shares of restricted stock with one-year cliff vesting. For 2014, Mr. Raimondi was paid a discretionary bonus of $106,000 which reflected one quarter of a full year’s bonus, funded based upon an agreed upon bonus pool for 2014 as part of the Banyan acquisition.
Annual equity awards: Eligible to receive annual equity awards based on performance, adjusted for any stock awards earned from the Excess EBITDA Margin Bonus Pool, if applicable.
Flexible executive benefit: $20,000 annually to be used for reimbursements (without tax-gross-ups) for certain financial planning and health and wellness related benefits.
Retention bonus: $1,250,000 granted in restricted stock on October 2, 2014 with three-year cliff vesting subject to continued employment. The value was converted to 99,657 restricted shares using the average of the Company’s stock price for the twenty (20) consecutive trading days ending on (and including) the third complete trading day immediately prior to the grant date of $12.543. This conversion formula was used to account for volatility in the trading of the Company’s stock and to provide a more normalized stock price for the conversion of the retention bonus to equity. The 99,657 restricted shares were then granted at the fair market value (FMV) closing price ($12.48) of the Company’s stock on the say-on-pay proposal at that meeting were votedgrant date, or October 2, 2014.
Severance: Twenty-four months of base salary continuation with pro-rata bonus in favoryear of termination, full vesting of the proposalRetention Bonus if not yet vested and pro-rated vesting for any other stock based awards that are subject to approveservice based vesting.
Non-competition and non-solicitation:Two year provisions post termination.
Mr. Griffin Consulting Arrangement and New Hire Purchased Restricted Stock Grant
Prior to joining the executive compensation.Company on May 1, 2014, Mr. Griffin was employed by the Company as a consultant. Mr. Griffin’s Consulting Agreement was entered into on September 16, 2013 and provided for the following compensation components:
Cash compensation at $50,000 per month (total fees paid during consulting period were $200,000).
Discretionary year-end bonus (actual bonus paid was $58,333) tied to Mr. Griffin’s work with respect to identification of wealth management opportunities and other strategic growth initiatives.
Reimbursement for reasonable and customary travel and out-of-pocket expenses incurred by Mr. Griffin in performing services pursuant to the agreement, in accordance with the Company’s Travel and Expense Policy.
In addition, on August 15, 2014, Mr. Griffin was granted an option to purchase $400,000 in Company stock with a three-year window period for purchases and a Company match in restricted shares on all shares purchased over the three-year window period. The Committee believes this affirms shareholders' supportmatched shares vest over five years from the grant date (33% after years three, four and five). Mr. Griffin will forfeit any portion of the Company's approach to executive compensation, andmatched shares if an equivalent number of shares are not purchased over the Committee did not change its general approach in 2012. The Committee will continue to considerthree-year window period. Purchased shares must be held through the outcomeend of the Company's say-on-pay votes when making future compensation decisions for its NEOs.five-year vesting period.
Compensation Components and Mix of Compensation
The Company'sCompany’s direct compensation components consist of base salary, performance-based annual cash incentives, performance-based equity incentives and service-based equity incentives. The Company continues to emphasize performance-based, variable pay in its executive compensation programs. For example, annual cash incentives can range from 0% of target
awards up to 200% of target awards based on performance that is typically measured over one year within the framework of a three-year performance horizon. Equity incentives consist of a combination of time-based restricted stock (40% of targeted equity compensation award for 2012)2014) and performance-based restricted stock or "performance shares"“performance shares” (60% of targeted equity compensation award for 2012)2014). Performance shares vest only if and to the extent earned based on the achievement of three-year, forward-looking metrics. The Company'sCompany’s overall executive compensation mix is targeted to approximate one-third base salary and two-thirds annual and equity incentives. The Company intends to continuecontinues to evolve this mix more heavily towards long-term performance-based equity incentives over time. incentives. The following chart illustratescharts illustrate the mix of fixed (base salary) versus variable (incentives/equity) pay and also performance-based versus service-based pay for the Company's NEOs:
Principles for Setting Compensation Levels
Factors considered by the Company in setting executive compensation levels include:
| |
1. | Performance of the Company (short-term and long-term results generally against pre-established targets/goals and in relation to results of peer companies) |
| |
2. | Risk analysis (compensation to encourage executives to take appropriate but not excessive risk) |
| |
3. | Alignment with shareholder value creation |
| |
4. | Retention of the executive team |
| |
5. | Overall cost (relative to budget and other financial considerations) |
| |
6. | Internal relationships/relative value of positions |
| |
8. | Regulatory requirements and guidelines |
The Company's compensation programs and policies are designed to:
Increase weighting of performance-oriented compensation versus base salary, with increasing emphasis on long-term results.
Increase weighting for performance share awards versus time-lapse restricted shares in the mix of equity grants.
Reward multi-year performance, and achievement of specific performance metrics, designed to:
| |
◦ | Reinforce the Company's lowered risk profile and specifically align with principles established as part of the Company's annual risk review of incentive programs. |
| |
◦ | Position the Company for growth and profitability. |
| |
◦ | Reinforce priority focus on ROAE and GAAP Net Income as primary performance metrics for executive incentive plans. |
Emphasize equity compensation and long-term stock ownership by executives (and Board members).
Continue a policy of reducing and eliminating executive gross-ups.
Continue a policy of claw-back provisions in executive incentive plans calling for the repayment of bonuses in the event of material financial misstatements. In this regard, the Company incorporated claw-back provisions into the
equity awards granted to executives in 2011 and 2012 and intends to continue this practice, subject to any changes in applicable laws regarding claw-backs.27
Continue a policy of reducing and eliminating luxury/status benefits or SERPs, and promote the use of annual flexible benefit accounts (with fixed dollar limits) that support executives in managing their personal lives given the amount of time that is required to manage the Company.
Base Salary
The Committee reviews the base salaries of its NEOs each year, with salary increases, if any, taking effect on January 1. Salary increases are generally based on an executive'sexecutive’s performance within specific areas of accountability, external market competitiveness andand/or internal budget considerations. The Chief Financial Officer was the only executive to receive a base salary increase (13.3% increase) in 2012 based on competitive market considerations. There were no base salary increases for any of the NEOs in 2013.either 2014 or 2015 based on the Company’s compensation philosophy of de-emphasizing base salaries in the total compensation mix.
Annual Executive Incentive Plan
The
Following its usual practice, the Committee established an annual incentive target for 2014 for each NEO for 2012,other than Mr. Raimondi, stated as a percentpercentage of base salary. Incentive target levels are based on each executive'sexecutive’s role, organization level, impact on annual performance and competitive considerations. Executives can earn from 0% up to 200% of target based on performance against pre-defined metrics. Targets are reviewed annually by the Committee and adjusted as appropriate to consider market competitiveness and desired mix of annual and long-term incentives. In 2012,2014, the Board and Committee established a Balanced Scorecardperformance scorecard framework for compensation actions in 20122014 that weighted both primary and secondary financial goals important to the Company's return toCompany’s profitability and sustainable growth. Details of this performance-based framework, associated financial metrics, the Company'sCompany’s achievement of these metrics and the Committee'sCommittee’s determination with respect to overall performance are detaileddescribed in the scorecard below.
|
| | | |
| | | |
| | 2012 Targeted Performance Levels | 2012 Actual Performance Levels and Weighted Funding |
| | Target | Result | Weighted Funding* |
| I. Primary Financial Metrics (50% overall weighting) | | | |
| ROAE | 8.9% | 9.2% | 36.4% |
| GAAP Net Income ($millions) | $53 | $53 | 20.5% |
| | | | |
| II. Secondary Financial Metrics (50% overall weighting) | | | |
| TCE/RWA vs. Peers | Median | Median | 8.5% |
| Efficiency Ratio | 70% | 73% | 5.6% |
| NPA/Assets vs. Peers | Median | 29th% | —% |
| Loan Growth (year-over-year) | 8% | 9.5% | 15.9% |
| AUM Net Flows ($ in millions) | $1,465 | $621 | 5.6% |
| Revenue Growth (year-over-year) | 3% | —% | —% |
| Total Funding Level (% of Target) | | | 92.5% |
|
| | | | | |
| | 2014 Targeted Performance Levels | | 2014 Actual Performance Levels and Weighted Funding |
| | Target | | Result | | Weighted Funding* |
| I. Primary Financial Metrics (50% overall weighting) | | | | | |
| ROACE | 11.0% | | 10.6% | | 27% |
| GAAP Net Income ($millions) | $66 | | $69 | | 24% |
| | | | | | |
| II. Secondary Financial Metrics (50% overall weighting) | | | | | |
| Fee Revenue Growth (year-over-year) | 9% | | 13% | | 22% |
| Total Revenue Growth (year-over-year) | 4% | | 7% | | 16% |
| Tier 1 Common Ratio (Minimum) | 9.2% | | 9.8% | | 4% |
| Efficiency Ratio | 66% | | 67% | | 4% |
| AUM Net Flows ($ in millions) | $935 | | ($348) | | —% |
| Deposit Growth (YTD Avg.) | 7% | | 10% | | 14% |
| Loan Growth (YTD Avg.) | 6% | | 6% | | 5% |
| Total Scorecard Funding Level (% of Target) | | | | | 116% |
| Discretionary Factor Applied: +/- 20% (-6% applied) | | | | | (6)% |
| Final Funding Level (with discretionary factor) | | | | | 110% |
| |
| * | Determined by the Committee based on primary and secondary financial results versus target. The Committee exercised its negative discretion in developing overallthe final funding noted above based on a maximum incentive pool available fortied to financial performance under the Annual Executive Incentive Plan of $4.6 Million.$5.06 million. The Committee, in consultation with the Company'sCompany’s management and W. T. Haigh & Company, selected each of the primary and secondary financial metrics to align executive behaviors with critical strategic priorities that were approved by the Board as part of the Company's 2012Company’s 2014 Strategic Plan. These goals are long-term in nature and were selected to drive sustained, long-term profitabilityprofitable growth and financial strength. Based on a comprehensive review by the Committee, with input from the full Board, it was determined that the Company met its earnings targets identified and, as noted above, a total incentive pool of approximately 92.5%116% of target bonus awards was approvedfunded based on the financial scorecard. After deliberation by the Committee, the pool was then adjusted downwards by 6% from 116% to 110% to correct for the Company's executive positions.immediate effects of the Banyan acquisition on both Fee Revenue and Total Revenue Growth, as well as to consider the performance against strategic initiatives. |
The following table outlines the annual incentive targets for 20122014 and the actual bonus received by each NEO:.
TARGET AND ACTUAL BONUS DETAILS
| | | | | | | | | | | | | | | | | | | | | | | | |
Executive | Base Salary | Target Bonus % of Base Salary | Target Bonus | Minimum (0% of Target) | Maximum (200% of Target) | Actual Bonus | Actual as % of Target (2) | | Annual Base Salary | | Target Bonus % of Base Salary | | Target Bonus | | Minimum (0% of Target) | | Maximum (200% of Target) | | Actual Bonus | | Actual as % of Target |
| C. Deutsch | $ | 675,000 |
| 125 | % | $ | 843,750 |
| — |
| $ | 1,687,500 |
| $ | 780,500 |
| 92.5 | % | | $ | 675,000 |
| | 125 | % | | $ | 843,750 |
| | $ | — |
| | $ | 1,687,500 |
| | $ | 928,100 |
| | 110 | % |
| D. Kaye | 425,000 |
| 100 | % | 425,000 |
| — |
| 850,000 |
| 393,125 |
| 92.5 | % | | 425,000 |
| | 100 | % | | 425,000 |
| | — |
| | 850,000 |
| | 467,500 |
| | 110 | % |
| M. Thompson (1) | 730,000 |
| 68 | % | 500,000 |
| — |
| 1,000,000 |
| 516,500 |
| 103.3 | % | | 730,000 |
| | 68 | % | | 500,000 |
| | — |
| | 1,000,000 |
| | 550,000 |
| | 110 | % |
| M. Chambers | 360,000 |
| 100 | % | 360,000 |
| — |
| 720,000 |
| 333,000 |
| 92.5 | % | |
| M. Higgins | 250,000 |
| 75 | % | 187,500 |
| — |
| 375,000 |
| 173,438 |
| 92.5 | % | |
| C. Griffin (2) | | | 400,000 |
| | 100 | % | | 400,000 |
| | — |
| | 800,000 |
| | 440,000 |
| | 110 | % |
| P. Raimondi (2), (3) | | | 600,000 |
| | N/A |
| | N/A |
| | — |
| | N/A |
| | N/A |
| | N/A |
|
| |
| (1) | Mr. Thompson's Target BonusThompson’s target bonus is 100% of his "Bonus Eligible Base Salary"“bonus eligible base salary” of $500,000, which equates to 68% of his current total base salary of $730,000. Whereas in 2013 a separate Bank scorecard was used to determine the majority of Mr. Thompson earned his 2012Thompson’s bonus, based 80% onin 2014 all executives were covered by a consolidated Company scorecard to further strengthen alignment of the Bank's performance (performance factor of 106% of target)Company’s executives across the Bank and 20% on the Company's performance (performance factor of 92.5% of target) for a blended result of 103.3% of his target bonus. The Bank's performance scorecard included the same metrics as the Company scorecard detailed above with one additional metric: Deposit Growth. While the Company scorecard results were based on the consolidated performance ofstrategy and financial plan for the Company and all of its affiliates, the Bank scorecard results were based solely on the Bank's performance.overall Company. |
| |
| (2) | All executive bonuses equal 92.5%Mr. Griffin’s and Mr. Raimondi’s base salaries reflect their current annualized base salaries.
|
| |
| (3) | Mr. Raimondi does not have a “target” bonus but rather is paid out of their target bonus with the exception of Mr. Thompson, who was paid a bonus based on Company and Bank performanceManagement Bonus Plan pool as described above. Mr. Dawson's bonus is excluded from the above table asin his bonus was negotiated as part of his separation package, and not based on or paid under the Company's Annual Incentive Bonus Plan and the performance factors described above. Mr. Dawson's Bonus is included in the "Bonus" column in the Summary Compensation Table. Mr. Dawson's separation package with the Company is discussed below under the heading "Separation Agreements."employment agreement. |
Equity-Based Long-Term Incentives
Overview of Program:
The Committee considers long-term equity-based compensation to be an integral part of the Company'sCompany’s compensation program and grants equity each year to its NEOs, typically in the May time frame.May. The Company'sCompany’s primary grant forms for its executives are:
1. Performance Sharesshares (60% of an executive'sexecutive’s target award value), and
2. Time-vested Restricted StockTime-based restricted stock (40% of an executive'sexecutive’s target award value).
The Committee reviews the mix of grant forms annually. annually. Performance shares are earned and vest at the end of the three-year performance period only if and to the extent targeted results are achieved within the acceptable performance range (threshold tosignificantto significant over-achievement) as determined by the Committee. Performance shares are forfeited in the event that targeted results are not achieved. Time-vestedTime-based restricted stock will vest in full three years from the date of grant subject to the executive'sexecutive’s continued employment through the vesting date.
Vesting of Performance Share Award for the 2010-20122012-2014 Performance Period:Period
The performance shares for the 2010-20122012-2014 performance period vestedvest on May 15, 2015 and the Company'sCompany’s NEOs earned 150%70% of the targeted performance shares based on GAAP EPS performance.ROACE performance for the 2012-2014 performance period. The Company earned EPSCompany’s ROACE in 2014 was 10.6% versus a target goal of $.61/share in 2012 (which exceeded12%, or 70% of the target goal for the performance periodperiod. The Committee examined the secondary performance metrics and further reduced the funding to 67% of $.51 andtarget, primarily due to the outperformance goal forCompany’s shortfall in targeted revenue growth over the performance period of $.56).2012-2014 period. The following table outlines these vested awards:the awards earned based upon performance with additional vesting subject to continued employment through May 15, 2015:
| | Executive | | Grant Date | | Target Number of Shares | | Performance Metric Achieved | | Total Shares Vested Based upon Performance | | Fair Value of Total Shares Vested at Vest Date | | Grant Date | | Target Number of Shares | | Performance Metric Achieved | | Total Shares Vested Based upon Performance | | Fair Value of Total Shares Vested at Vest Date |
| C. Deutsch | | 7/31/2010 | | 61,774 |
| | 150% | | 92,661 |
| | $ | 865,454 |
| | 5/15/2012 |
| | 61,864 |
| | 67% | | 41,449 |
| | TBD |
| D. Kaye | | 5/14/2010 | | 26,132 |
| | 150% | | 39,198 |
| | 366,109 |
| | 5/15/2012 |
| | 17,184 |
| | 67% | | 11,513 |
| | TBD |
| M. Chambers | | 5/14/2010 | | 23,519 |
| | 150% | | 35,279 |
| | 329,506 |
| |
| M. Higgins | | 5/14/2010 | | 13,066 |
| | 150% | | 19,599 |
| | 183,055 |
| |
| J. Dawson (1) | | 5/14/2010 | | 19,538 |
| | 150% | | 29,307 |
| | 273,727 |
| |
| M. Thompson | | | 5/15/2012 |
| | 30,550 |
| | 67% | | 20,469 |
| | TBD |
| C. Griffin (1) | | | — |
| | — |
| | — |
| | — |
| | — |
|
| P. Raimondi (1) | | | — |
| | — |
| | — |
| | — |
| | — |
|
| | | | | | | | | | | | |
| |
| (1) | Mr. Griffin and Mr. Raimondi were not employed in 2012 and therefore did not participate in the 2012-2014 Performance Share cycle. |
(1) Mr. Dawson's 2012 time-vested restricted grant was pro-rated to 3,796 shares which resulted in his forfeiting 14,534 shares of the original award and his 2012 performance grant was pro-rated to 5,695 shares which resulted in his forfeiting 21,800 shares of the original award.2014 Equity Awards
2012 Equity Awards:
In 2012,2014, the Company granted equity awards to its NEOs of performance shares and time-vestedtime-based restricted stock under the Company'sCompany’s 2009 Amended and Restated Stock Option and Incentive Plan.
The total long-term incentive award values set forth below were approved by the Committee on April 24, 2012 (April 25th15, 2014 and on April 16, 2014 by the Board for the PresidentCEO and CEO).President. For 2012,2014, 60% of the grant date fair value of the award was delivered in the form of performance shares and 40% of the grant date fair value of the award was delivered in the form of time-vestedtime-based restricted stock. The approved values were converted to a fixed number of time-based restricted shares and performance shares using the average daily average stock price for the 30 days prior to the conversion date of $9.82$13.46 per share. The conversion price was approved by the Committee on April 24, 2012.15, 2014. This methodology is used to provide an equity award that considerstakes into account the share price of the Company over the prior 30-day period, as opposed to a single trading day. Once the number of shares was determined and approved by the Committee, shares were granted at the closing price of $9.05$12.01 on May 15, 2012,2014, the approved grant date under the Company'sCompany’s equity grant policy. Awards were determined based on each executive'sexecutive’s performance, criticality of position and relevant employment agreement terms, as applicable.
The 20122014 performance shares will be earned or forfeited based on the Company'sCompany’s performance for the January 1, 20122014 to December 31, 20142016 period, following the conclusion of such performance period, with 0-150% (0-180% with +/-20% adjustment described below) of the shares earned tied to the Company'sCompany’s achievement of the following metrics:
| |
| 1. | Primary Metric: ROAE versusAverage ROACE of 12% over the internal 20142014-2016 time frame. The goal of 12%.was based on achieving a top-quartile ranking relative to industry analyst expectations for our peer group. |
| |
| 2. | Secondary Metrics: The Committee may adjust total shares earned based on the primary ROAEROACE metric by +/- 20% based on the following secondary performance considerations: |
TCE/RWA•Revenue Growth (December 31, 2013-December 31, 2016 CAGR)
•Growth in 2014 versus peers.Pre-Tax, Pre-Provision (“PTPP”) Income
•Efficiency Ratio in 2014 versus internal three-year goal.2016
Revenue Growth versus peers.
NPA/Assets versus peers.
The 2014 ROAEROACE goal was selected as the primary metric to motivate attainment of a three-year ROAEthe Company’s long-term ROACE target tied to(which represents top quartile performance in the Company's three-year strategic plan.industry). Secondary metrics were also designedselected to align with the Company's critical capital,Company’s emphasis on top-line growth, while continuing to focus on expense management anddiscipline (efficiency ratio) to produce solid growth objectives over the same three-year period.in profits.
Actual equity grants awarded to the Company'sCompany’s NEOs in 20122014 are set forth in the table below. As described further in the footnotes below, a significant portion of the stock awards (60% of the total) must be earned based on performance with the potential for an earn-out of 0% to 180% of the target performance shares awarded.
GRANT DATE FAIR VALUE OF AWARDS TABLE
| | | | | 2012 Awards | | | | 2014 Awards |
| | | | | Time-Vesting Restricted Stock | | Performance-Based Restricted Stock | | Time-Based Restricted Stock | | Performance-Based Restricted Stock |
Executive | | Grant Date | | Number of Stock Awards | | Grant Date Fair Value (1) | | Target Number of Shares Granted | | Grant Date Fair Value: Target (1) | | Maximum Number of Shares Potentially Earned (2) | | Grant Date Fair Value: Maximum (1) | | Grant Date | | Number of Stock Awards | | Grant Date Fair Value (1) | | Target Number of Shares Granted | | Grant Date Fair Value: Target (1) | | Maximum Number of Shares Potentially Earned (2) | | Grant Date Fair Value: Maximum (1) |
| C. Deutsch | | 5/15/2012 | | 41,242 |
| | $ | 373,240 |
| | 61,864 |
| | $ | 559,869 |
| | 111,355 |
| | $ | 1,007,763 |
| | 5/15/2014 | | 30,090 |
| | $ | 361,381 |
| | 45,134 |
| | $ | 542,059 |
| | 81,241 |
| | $ | 975,704 |
|
| | | | 12/17/2014 | | 60,883 |
| | 800,003 |
| | 91,324 |
| | 1,199,997 |
| | 164,383 |
| | 2,159,993 |
|
| D. Kaye | | 5/15/2012 | | 11,456 |
| | 103,677 |
| | 17,184 |
| | 155,515 |
| | 30,931 |
| | 279,926 |
| | 5/15/2014 | | 9,474 |
| | 113,783 |
| | 14,211 |
| | 170,674 |
| | 25,579 |
| | 307,204 |
|
| M. Thompson | | 5/15/2012 | | 20,367 |
| | 184,321 |
| | 30,550 |
| | 276,478 |
| | 54,990 |
| | 497,660 |
| | 5/15/2014 | | 16,345 |
| | 196,303 |
| | 24,518 |
| | 294,461 |
| | 44,132 |
| | 530,025 |
|
| M. Chambers | | 5/15/2012 | | 10,998 |
| | 99,532 |
| | 16,497 |
| | 149,298 |
| | 29,694 |
| | 268,731 |
| |
| M. Higgins | | 5/15/2012 | | 5,092 |
| | 46,083 |
| | 7,637 |
| | 69,115 |
| | 13,746 |
| | 124,401 |
| |
| J. Dawson (3) | | 5/15/2012 | | 18,330 |
| | 165,887 |
| | 27,495 |
| | 248,830 |
| | 49,491 |
| | 447,894 |
| |
| C. Griffin | | | 5/15/2014 | | 5,944 |
| | 71,387 |
| | 8,916 |
| | 107,081 |
| | 16,048 |
| | 192,736 |
|
| | | | | | | | | | | | | | | 8/15/2014 | | 33,200 |
| | 400,060 |
| | — |
| | — |
| | — |
| | — |
|
| P. Raimondi | | | 10/2/2014 | | 99,657 |
| | 1,243,719 |
| | — |
| | — |
| | — |
| | — |
|
| |
| (1) | Based upon the closing prices on May 15, 20122014 of $9.05.$12.01, August 15, 2014 of $12.05, October 2, 2014 of $12.48 and December 17, 2014 of $13.14, respectively. |
(2) Maximum shares potentially earned is equal to 180% of the target performance shares granted.
| |
(3)(2) | Mr. Dawson's 2012 time-vested restricted grant was pro-ratedMaximum shares potentially earned are equal to 3,796 shares, which resulted in his forfeiting 14,534 shares180% of the original award, and his 2012target performance grant was pro-rated to 5,695 shares which resulted in his forfeiting 21,800 shares of the original award.granted. |
Outstanding
Matching Restricted Stock/Inducement Awards for Mr. Deutsch and Mr. Thompson:Thompson
A key component of
Mr. Deutsch'sDeutsch’s and Mr. Thompson'sThompson’s employment agreements included one-time matching restricted stock awards.awards tied to each executive’s personal investment in the Company’s stock. These grants enhance the Company'sCompany’s ability to retain Mr. Deutsch and Mr. Thompson by vesting shares in three equal installments on each of the third, fourth and fifth anniversaries of the grant date. Additionally, they provide a significant incentive to Mr. Deutsch and Mr. Thompson to make a substantial direct investment in the Company. Terms of the awards stipulate that the grants will be forfeited if Mr. Deutsch and Mr. Thompson do not purchase an equivalent number of shares of Company stock before, in the case of Mr. Deutsch, the second anniversary of his commencement date, and in the case of Mr. Thompson, the third anniversary of the effective date of his employment agreement, and hold such stock through certain vesting dates. Mr. Deutsch'sDeutsch’s matching restricted stock award was granted on July 31, 2010 (called the "inducement award"“inducement award” and described in the Company'sCompany’s 2011 Proxy Statement)proxy statement) with a grant date fair value of $2 million (302,572 shares). As of December 31, 2012,2010 (five months after his start date with the Company), Mr. Deutsch had satisfied 100% of his $2 million purchase requirement. Mr. Thompson'sThompson’s matching restricted stock award was granted on May 13, 2011 with a grant date fair value of $600,000 (93,458 shares). As of DecemberJanuary 31, 2012,2014, Mr. Thompson had purchased 45,454 shares and satisfied 49%100% of his purchase requirement.
Special Supplemental Performance/Retention Equity Grants for Mr. Deutsch and Mr. Thompson
These awards are described in detail in the “Analysis of 2014 Compensation Actions and 2015 Recommended Actions”section.
Equity Grant Policy
The Company has adopted an Equity Grant Policy, as amendedapproved in July 2012,2014, to ensure that its equity granting practices are maintained in strict compliance with the Company'sCompany’s equity plans, policies and all applicable laws, and specifically to prevent backdating of any equity grant, or manipulationchanging of the timing of equity grants with thein relation to public release of material information with the intent of benefiting a grantee under an equity award. The policy became effective for equity grants made after March 31, 2007. The Company'sCompany’s policy is that equity grants occur on a pre-established day during each calendar quarter after the Company'sCompany’s financial results for the prior quarter have been publicly disclosed. Accordingly, the grant date for all equity grants is generally the 15th day of the month (or the last business day before the 15th day of the month) following the quarterly Board meeting.meeting, unless approved otherwise by the Committee. The grant date shall not precede the date the grant was authorized by the Committee, and the grant date for any new hire shall not precede the employee'semployee’s date of hire. In addition, the policy provides that all awards and award terms are approved by the Committee in advance of the grant date; the Company'sdate. The Company executives do not have an ability to select a grant date;date, and the option exercise price is the closing price of the underlying stock on the date of grant.
Executive Stock Ownership and Share Retention Guidelines
The Committee implemented executive stock ownership guidelines in July 2008 and revised these guidelines in July 2012of 2014 to increase the fixed share minimums.guidelines based upon a comprehensive review and recommendation by W.T. Haigh & Company, the Company’s compensation consultant. The requirements in the guidelines are expressed as the lesser of a multiple of an executive'sexecutive’s base salary or a fixed number of shares. The Company and the Committee review executive officer stock holdings versus the ownership guidelines at least annually.
Ownership guideline multiples arewere increased from five times base salary to six times base salary for the Company’s CEO and increased from one to three times base salary to two to four times base salary for other NEO positions. NEOs must meet the lesser of the fixed share guideline (337,500(350,000 for the Company’s CEO and 25,000 - 219,00092,000 to 225,000 for other NEO positions) or the salary multiple guideline. As of December 31, 2012, all executives had met the stated minimum ownership requirements.
In addition, there is a holding requirement equal to 50% of profit shares (net shares after cost of purchase, if any, and tax liability) until the minimum threshold is attained .attained. The following table shows the NEO’s stock ownership relative to the guidelines as of December 31, 2014.
|
| | |
| Name | Guideline (multiple of salary) | Status |
| Mr. Deutsch | 6 x Base Salary ($4,050,000) | Meets Requirement |
| Mr. Thompson | 4 x Base Salary ($2,920,000) | Meets Requirement |
| Mr. Kaye | 3 x Base Salary ($1,275,000) | Meets Requirement |
| Mr. Griffin | 3 x Base Salary ($1,200,000) | Does Not Meet Requirement -- NEW (at 42% of Guideline) |
| Mr. Raimondi | No Stated Guideline | Owns 680,388 Shares (subject to lock up) - Exceeds $9 million in value based on closing price of the Company’s stock as of December 31, 2014 of $13.47 |
Based on the beneficial ownership calculation as reported in this Proxy Statement, as of December 31, 2012,2014, the CEO owned 1.10%1.06% and other NEOs (excluding former executive officers) as a group owned 1.15%2.69% of the Company'sCompany’s common stock.
Peer Group and Total Compensation Market Benchmarking
The Committee approved an updated peer group in October 2012 to be used for future compensation and performance comparisons. This peer group, listed below, includes 15 banks which were selected based on similar size in assets and revenues; revenue mix; private banking business orientation; and, as much as possible, markets and geographic locations, a key factor in the Company's ability to attract and retain key private banking and investment talent.
Selecting a peer group purely on comparable asset size does not meet the Company's screening criteria in terms of including banks that are located in comparable geographic, metropolitan locations with a private banking (versus retail branch) orientation, and a higher fee-based revenue mix. The Company eliminated SVB Financial Group from the 2012 peer list to more appropriately represent its current business mix, competitive geographic markets and private banking segment focus as SVB Financial is heavily focused on Venture Capital with an increasing international business. All other banks included in the Company's updated peer group were included in the 2012 peer group, as follows:.
|
| |
| |
Brookline Bancorp, Inc. | National Penn Bancshares, Inc. |
Bryn Mawr Bank Corporation | PacWest Bancorp |
Cullen/Frost Bankers, Inc. | PrivateBancorp, Inc. |
Signature Bank | First Republic Bank |
CoBiz Financial Inc. | Washington Trust Bancorp, Inc. |
City National Corporation | Webster Financial Corporation |
Independent Bank Corporation | Wintrust Financial Corporation |
MB Financial, Inc. | |
This peer group is a market frame of reference for compensation and performance comparisons. In addition, W.T. Haigh & Company, the Company's independent consultant, will provide other relevant market reference points such as broader financial services and general industry compensation survey data covering companies of similar size to augment this peer group data, if appropriate.
The last market compensation review was conducted by W.T. Haigh & Company in the first quarter of 2013 for the Company's CEO and other select executive positions. Based on the market comparative data used, the Company's overall compensation position for executive positions was determined to be competitive with market (mid-market range). Actual compensation versus market will vary year-to-year based on overall Company performance, individual contributions and cost considerations.
Role of Compensation, Governance and Executive Committee, Outside Advisors and Management in Compensation Decisions
The Committee, pursuant to its charter, provides management and the Board with guidance on matters of executive and director compensation and related benefits. The Committee meets in executive sessions when discussing CEO performance and specific actions related to CEO compensation. The Committee approves all compensation actions with respect to the Company'sCompany’s CEO, and recommends to the Board of Directors that the Board of Directors also approve such compensation actions. The Committee approves all compensation actions for the Company'sCompany’s other executive officers after reviewing the recommendations of the CEO. The Committee relies on management and outside advisers for staff work and technical guidance in conducting its affairs. It retains full authority to engage independent third party advisers, and for the past several years has retained W. T. Haigh & Company to conduct independent studies and provide objective advice on executive and director compensation. W. T. Haigh & Company'sCompany’s primary role with the Company is as independent adviser to the Committee on executive compensation matters. In 2012,2014, W.T. Haigh & Company played a significant advisory role with respect to executive pay versus performance, market benchmarking, compensation philosophy and overall executive compensation program directions, recommendations to increase executive stock ownership guidelines, recommendations on the one-time retention/performance grants for Mr. Deutsch and Mr. Thompson, and a review of Board compensation and provides ongoing supportmatters related to the Committee in executive compensation matters.Company’s Board consolidation. From time to time, W.T. Haigh & Company works directly with management
with the consent of the Committee. However, in 2012,2014, W.T. Haigh & Company'sCompany’s services related solely to Committee matters and no conflicts of interest were noted.
The Company also retains Goodwin Procter LLP for legal services on executive compensation matters, including drafting of legal plan documents. The Company may use other firms from time to time in the normal course of business.
Executive Benefits and Perquisites
The Company has been scaling back on executive benefits and perquisites over the past several years. For example, the Company no longer offers a CEO SERP benefit, has eliminated all gross-up payments for its executive officers, and has discontinued offering change-in-control benefits for new employees. Any change-in-control benefits that currently exist are "grandfathered" benefits and are "double trigger" benefits coupled with non-solicitation and other Company protections.
NEOs are entitled to a flexible benefit amount to be used for financial products and services including life insurance, financial planning, long-term care insurance and other health and wellness benefits that enable the executives to better manage and balance their personal lives given the amount of time spent at work. The flexible amount is a fixed maximum annual benefit ranging from $65,000 for the CEO, and $10,000 tobetween $20,000 and $40,000 for other NEOs. NEOs are also eligible for an annual physical exam. The full value of all perquisites is reported as income to the individuals and, accordingly, is taxable. The flexible benefit may not be used for any type of personal luxury or entertainment expenditures. In addition, Mr. Thompson participates in a long-term care and long-term disability insurance program sponsored by Boston Private Bank & Trust Company, which was in effect prior to the effective date of his employment agreement with the Company.
NEOs are also eligible for Company-sponsored benefit programs available broadly to Company employees, including healthcare, dental and dentalvision benefits, short-term and long-term disability, life insurance, a 401(k) Profit Sharing Plan and the Company'sCompany’s Employee Stock Purchase Plan. The Board of Directors revised its Company-wide luxury expenditure policy in July 2012. The Company's Excessive and Luxury Expenditure Policy is posted on the Company's website.
Employment Agreements and Executive Severance and Change in ControlChange-in-Control Agreements
To maintain management continuity
The Company no longer provides executive change-in-control agreements in the event of a change in controlchange-in-control of the Company, theCompany. The Company has change in control agreementsa grandfathered change-in-control agreement with allone of the Company'sCompany’s NEOs, exceptMr. Kaye. Mr. Deutsch, Mr. Thompson and Mr. Thompson, whoRaimondi have each entered into employeeemployment agreements with the CompanyCompany. Both the grandfathered change-in-control agreement and the employment agreements are described below.
The Company's change in control agreements provide
Mr. Kaye’s change-in-control agreement provides a severance payment equal to 2.5 times an executive'shis annual cash compensation as defined in the agreements,agreement, and a pro-rated bonus for the year in which the change in controlchange-in-control occurs. Any equity awards granted on or after May 15, 2011 are or will be subject to "double trigger"“double trigger” vesting (as opposed to accelerated vesting) in the event of a change in controlchange-in-control in which an assumption of the award occurs.does not occur.
All of the Company's change in control arrangements are "double trigger" arrangementsMr. Kaye’s change-in-control arrangement is a “double trigger” arrangement (i.e., benefits are paid in the event that there is both a change in controlchange-in-control and a termination of employment following certain triggering events, for example, elimination of the executive'sexecutive’s position, as defined in the agreements)agreement) and limitlimits payments so that no payments can be deemed to be "parachute payments"“excess parachute payments” under Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code"“Code”), and no excise tax gross-ups are provided.
As part of their employment agreements, and in lieu of change in controlchange-in-control agreements, Mr. Deutsch and Mr. Thompson were given separate severance protection at two times their annual cash compensation if their employment is terminated by the Company without "cause"“cause” or by the executives for "good“good reason,"” each as defined in their employment agreements. Equity awards are also subject to “double trigger” vesting in the event of a change-in-control in which an assumption of the awards does not occur.
Mr. Raimondi’s employment agreement is described in “Analysis of 2014 Compensation Actions and 2015 Recommended Actions.”
Payments and benefits payable to the NEOs in connection with a termination of employment or change in controlchange-in-control are discussed in greater detail under "“Executive Agreements and Potential Payments Upon Termination or Change in ControlChange-in-Control."”
Separation Agreements
On October 30, 2012, the Company entered into a separation agreement with Mr. Dawson. Under the terms of the separation agreement, Mr. Dawson received the following payments and benefits, subject to a release of claims against the Company:
Continued payment of his base salary of $450,000 for a one-year period following his separation date of December 28, 2012.
Supplemental payment in the amount of $850,000, payable as a lump-sum, in recognition of Mr. Dawson's 16 years of service and significant contributions to the Company.
A bonus in the amount of $450,000 in lieu of any bonus payable under the Company's executive bonus plan for 2012, payable as a lump-sum.
Payment of the final installment of the special retention award granted to Mr. Dawson in August 2009 in the amount of $66,667, payable in a lump-sum.
Certain health and outplacement benefits, including payment with respect to continuation coverage under COBRA for up to 12 months in the same proportion as if Mr. Dawson had remained employed and a lump-sum payment of $52,320 in connection with the transfer of a Long-Term Care Insurance Policy presently maintained by the Company.
Accelerated vesting with respect to a pro-rated number of shares of time-vesting restricted stock, calculated based on the number of days from the applicable grant date to the date of separation.
Mr. Dawson remains eligible to vest in a pro-rated portion of outstanding performance share awards held by Mr. Dawson, based on the number of days Mr. Dawson was employed from the applicable grant date through the date of separation during the applicable performance period, if any only if, and to the extent that such shares are earned based on the performance targets established for the applicable performance period.
Outstanding vested options held by Mr. Dawson remain exercisable in accordance with their applicable terms.
Executive Deferred Compensation Plan
The Company offers a deferred compensation plan that enables certain executives, including each of the NEOs, to defer a portion of their income. Amounts deferred are excluded from an executive'sexecutive’s taxable income and are not deductible by the Company until paid. Executives select from a limited number of mutual funds and the deferred amounts are increased or decreased to correspond to changes in market value of these underlying hypothetical mutual fund investments. Any increase in value is recognized as compensation expense. The Company maintains a Rabbi trust with respect to these obligations. None of the NEOs participated in the Executive Deferred Compensation Plan in 2012,2014, although Mr. Thompson and Mr. Dawson had an outstanding deferred compensation balancesbalance as of December 31, 20122014 from deferrals from prior years.years of $70,554.
Tax, Regulatory and Accounting Implications
The Company believes it is in compliancecomplies with respect to all tax, regulatory and accounting standards. Furthermore, the Committee will continue to review each element of compensation and take the appropriate steps to ensure tax deductibility to the extent permitted under applicable law and to the extent this can be accomplished without sacrificing flexibility and other important objectives of the overall compensation program for its executives.
Compensation, Governance and Executive Committee Report
The Compensation, Governance and Executive Committee of the Board of Directors has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on this review and discussions, the Committee recommended to the Board that the Compensation Discussion and Analysis be included in the Company'sCompany’s Proxy Statement.
Submitted by the Compensation, Governance and Executive Committee of the Board:
Lynn Thompson Hoffman, Chair
Eugene S. Colangelo
William J. Shea
Stephen M. Waters, Chair
Deborah F. Kuenstner
Daniel P. Nolan
Gloria C. Larson
Executive Compensation TablesEXECUTIVE COMPENSATION TABLES
The following tables and footnote disclosures set forth information concerning the compensation paid to or earned by the NEOs, including the CEO, the Chief Financial Officer and the next three most highly compensated executive officers of the Company, who served in such capacities during 2012 and for one additional individual for whom disclosure would have been provided had he been serving as an executive officer at the end of 2012.2014.
SUMMARY COMPENSATION TABLE |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (a) | | (b) | | (c) | | | (d) | | | (e) | | | (f) | | | (g) | | | (h) |
Name and Principal Position | | Year | | Salary ($) | | Bonus ($) | | Stock Awards Grant Date Fair Value ($)(5) | | Non-Equity Incentive Plan Compensation ($)(7) | | All Other Compensation ($) | | Total ($) |
| Clayton G. Deutsch | | 2012 | | $ | 675,000 |
| | | 0 |
| | | $ | 933,109 |
| (6) | | $ | 780,500 |
| | | $ | 95,226 |
| (8) | | $ | 2,483,835 |
|
| CEO and President | | 2011 | | 675,000 |
| | | — |
| | | 920,711 |
| | | 1147500 |
| | | 89,231 |
| | | 2,832,442 |
|
| | | 2010 | | 282,981 |
| (2) | | — |
| | | 3,154,067 |
| | | 180,000 |
| (2) | | 72,924 |
| | | 3,689,972 |
|
| | | | | | | | | | | | | | | | | | | | |
| David J. Kaye | | 2012 | | 425,000 |
| | | 33,333 |
| (3) | | 259,192 |
| (6) | | 393,125 |
| | | 26,470 |
| (8) | | 1,137,120 |
|
Executive Vice President and Chief Financial Officer | | 2011 | | 375,000 |
| | | 33,333 |
| (3) | | 255,754 |
| | | 535,000 |
| | | 24,990 |
| | | 1,224,077 |
|
| | 2010 | | 375,000 |
| | | 33,333 |
| (3) | | 414,976 |
| | | 190,000 |
| | | 9,402 |
| | | 1,022,711 |
|
| | | | | | | | | | | | | | | | | | | | |
| Mark D. Thompson | | 2012 | | 730,000 |
| | | | | | 460,799 |
| (6) | | 516,500 |
| | | 80,159 |
| (8) | | 1,787,458 |
|
| CEO and President, BPBTC | | 2011 | | 730,000 |
| | | — |
| | | 1,800,001 |
| | | 736,000 |
| | | 79,047 |
| | | 3,345,048 |
|
| | | 2010 | | 730,000 |
| | | — |
| | | 442,647 |
| | | 530,000 |
| | | 35,046 |
| | | 1,737,693 |
|
| | | | | | | | | | | | | | | | | | | | |
| Margaret W. Chambers | | 2012 | | 360,000 |
| | | 33,333 |
| (3) | | 248,830 |
| (6) | | 333,000 |
| | | 31,213 |
| (8) | | 1,006,376 |
|
Executive Vice President and General Counsel | | 2011 | | 360,000 |
| | | 33,333 |
| (3) | | 245,520 |
| | | 480,000 |
| | | 29,362 |
| | | 1,148,215 |
|
| | 2010 | | 360,000 |
| | | 33,333 |
| (3) | | 373,482 |
| | | 180,000 |
| | | 11,469 |
| | | 958,284 |
|
| | | | | | | | | | | | | | | | | | | | |
| Martha T. Higgins | | 2012 | | 250,000 |
| | | 25,000 |
| (3) | | 115,198 |
| (6) | | 173,438 |
| | | 19,655 |
| (8) | | 583,291 |
|
| Executive Vice President | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| James D. Dawson (1) | | 2012 | | 450,000 |
| | | 516,667 |
| (3), (4) | | 414,717 |
| (6) | | — |
| | | 894,119 |
| (8) | | 2,275,503 |
|
| Executive Vice President | | 2011 | | 450,000 |
| | | 66,667 |
| (3) | | 409,210 |
| | | 600,000 |
| | | 38,997 |
| | | 1,564,874 |
|
| | 2010 | | 450,000 |
| | | 36,111 |
| (3) | | 311,232 |
| | | 150,000 |
| | | 27,950 |
| | | 975,293 |
|
| | | | | | | | | | | | | | | | | | | | |
|
| | | | | | | | | | | |
| (1) | Mr. Dawson separated from the Company effective December 28, 2012. | | | | | | |
| (2) | Reflects pro-rata salary and bonus as Mr. Deutsch's employment commenced on July 31, 2010. |
| | | | | | | | |
| (3) | In 2009, Messrs. Kaye and Dawson, Ms. Chambers and Ms. Higgins, received retention bonuses of $100,000, $200,000, $100,000 and $75,000 respectively, all vesting over a three-year period. These amounts reflect the amount earned in each year of the vesting period. |
| (4) | Mr. Dawson received a discretionary bonus in the amount of $450,000 as part of his separation agreement. |
| | |
| (5) | The amounts in column (e) reflect the grant date fair value of the equity awards in accordance with ASC Topic 718, Compensation-Stock Compensation ("ASC 718") pursuant to the 2009 Stock Option and Incentive Plan. Information about the assumptions used to value these awards can be found in Part II. Item 8. "Financial Statements and Supplementary Data - Note 18: Employee Benefits" of the Company's 2012 Annual Report on Form 10-K. |
| | | | | | | | |
| (6) | 2012 Stock Awards Grant Date Fair Value data includes performance shares which could, based on performance, result in the earn-out of additional shares for above target outperformance (and an increase in the grant date fair value, based on the incremental shares earned, using the original $9.05 price). |
| | Named executive | | Target performance shares granted | | Maximum shares potentially earned | | Increase in grant date fair value based on incremental shares that may be earned at maximum performance level |
| | Clayton G. Deutsch | | 61,864 |
| | 111,355 |
| | $ | 447,894 |
|
| | David J. Kaye | | 17,184 |
| | 30,931 |
| | 124,410 |
|
| | Mark D. Thompson | | 30,550 |
| | 54,990 |
| | 221,182 |
|
| | James D. Dawson | | 27,495 |
| | 49,491 |
| | 199,064 |
|
| | Margaret W. Chambers | | 16,497 |
| | 29,694 |
| | 119,433 |
|
| | Martha T. Higgins | | 7,637 |
| | 13,746 |
| | 55,286 |
|
| | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (a) | | (b) | | (c) | | (d) | | (e) | | (f) | | (g) | | (h) |
Name and Principal Position | | Year | | Salary ($) | | Bonus ($) | | Stock Awards Grant Date Fair Value ($)(4) | | Non-Equity Incentive Plan Compensation ($)(7) | | All Other Compensation ($) | | Total ($) |
| Clayton G. Deutsch | | 2014 | | $ | 675,000 |
| | | $ | — |
| | | $ | 2,903,440 |
| (5),(6) | | $ | 928,100 |
| | | $ | 180,392 |
| (8) | | $ | 4,686,932 |
|
| CEO and President | | 2013 | | 675,000 |
| | | — |
| | | 1,036,700 |
| | | 843,800 |
| | | 176,161 |
| | | 2,731,661 |
|
| | | 2012 | | 675,000 |
| | | — |
| | | 933,109 |
| | | 780,500 |
| | | 95,226 |
| | | 2,483,835 |
|
| | | | | | | | | | | | | | | | | | | | |
| David J. Kaye | | 2014 | | 425,000 |
| | | — |
| | | 284,457 |
| (5) | | 467,500 |
| | | 40,660 |
| (8) | | 1,217,617 |
|
| Executive Vice President, Treasurer and Chief Financial Officer | | 2013 | | 425,000 |
| | | — |
| | | 304,516 |
| | | 425,000 |
| | | 39,905 |
| | | 1,194,421 |
|
| | 2012 | | 425,000 |
| | | 33,333 |
| (2) | | 259,192 |
| | | 393,125 |
| | | 26,470 |
| | | 1,137,120 |
|
| | | | | | | | | | | | | | | | | | | | |
| Mark D. Thompson | | 2014 | | 730,000 |
| | | — |
| | | 490,764 |
| (5) | | 550,000 |
| | | 140,128 |
| (8) | | 1,910,892 |
|
| CEO and President, Boston Private Bank & Trust Company | | 2013 | | 730,000 |
| | | — |
| | | 505,808 |
| | | 528,000 |
| | | 117,590 |
| | | 1,881,398 |
|
| | 2012 | | 730,000 |
| | | — |
| | | 460,799 |
| | | 516,500 |
| | | 80,159 |
| | | 1,787,458 |
|
| | | | | | | | | | | | | | | | | | | | |
| Corey A. Griffin | | 2014 | | 263,077 |
| (1 | ) | | — |
| | | 578,528 |
| (5) | | 440,000 |
| | | 266,133 |
| (8) | | 1,547,738 |
|
Executive Vice President and Director of Corporate Development & Wealth Management Strategy | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| Peter J. Raimondi | | 2014 | | 140,768 |
| (1 | ) | | 106,000 |
| (3) | | 1,243,719 |
| (5) | | N/A |
| | | — |
| (8) | | 1,490,487 |
|
| CEO of Boston Private Wealth | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
|
| | | | | | | | | | | |
| (1) | Mr. Griffin’s and Mr. Raimondi’s salaries reflect partial year salaries based on their respective hire dates. |
| | | | | | | | |
| (2) | In 2009, Mr. Kaye received a retention bonus of $100,000, vesting over a three-year period. This amount reflects the amount earned in the last year of the vesting period. |
| | |
| (3) | This amount reflects Mr. Raimondi’s 2014 discretionary bonus based on a pro-rated period from October 2, 2014 to December 31, 2014. |
| | |
| (4) | The amounts in column (e) reflect the grant date fair value of the equity awards in accordance with ASC Topic 718, Compensation-Stock Compensation (“ASC 718”) pursuant to the 2009 Amended and Restated Stock Option and Incentive Plan. Information about the assumptions used to value these awards can be found in Part II. Item 8. “Financial Statements and Supplementary Data - Note 18: Employee Benefits” of the Company’s 2014 Annual Report on Form 10-K. |
| | | | | | | | |
| (5) | 2014 Stock Awards Grant Date Fair Value data includes performance shares which could, based on performance, result in the earn-out of additional shares for above target outperformance (and an increase in the grant date fair value, based on the incremental shares earned, using the original $12.01 price): |
| | NEO | | Target performance shares granted | | Maximum shares potentially earned | | Increase in grant date fair value based on incremental shares that may be earned at maximum performance level |
| | Clayton G. Deutsch | | 45,134 |
| | 81,241 |
| | $ | 433,645 |
|
| | David J. Kaye | | 14,211 |
| | 25,579 |
| | 136,530 |
|
| | Mark D. Thompson | | 24,518 |
| | 44,132 |
| | 235,564 |
|
| | Corey A. Griffin | | 8,916 |
| | 16,048 |
| | 85,655 |
|
| | Peter J. Raimondi | | — |
| | — |
| | — |
|
| | | | | | | | |
|
| | | | | | | | | | | |
| (6) | 2014 Stock Awards Grant Date Fair Value data includes performance shares which could, based on performance, result in the earn-out of additional shares for above target outperformance (and an increase in the grant date fair value, based on the incremental shares earned, using the original $13.14 price): |
| | NEO | | Target performance shares granted | | Maximum shares potentially earned | | Increase in grant date fair value based on incremental shares that may be earned at maximum performance level |
| | Clayton G. Deutsch | �� | 91,324 |
| | 164,383 |
| | $ | 959,995 |
|
35
| |
(7) | The amounts in column (f) reflect the annual incentive awards to the named individuals under the 2010, 2011 and 2012 Annual Executive Incentive Plan. Mr. Deutsch's 2010 bonus was earned for a partial year based on his employment date of July 31, 2010. Mr. Thompson and Mr. Dawson were subject to TARP bonus restrictions. As such, Mr. Thompson did not earn or accrue a bonus for the period from June 15, 2009 through June 16, 2010, and Mr. Dawson did not earn or accrue a bonus for the period from January 1, 2010 through June 16, 2010. |
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| (8) | All Other Compensation is composed of the following amounts: |
| | Compensation item | | Clay Deutsch | | David Kaye | | Mark Thompson | | Margaret Chamber | | Martha Higgins | | James Dawson |
| | Matching contribution to 401(k) plan | | $ | 7,500 |
| | $ | 7,500 |
| | $ | 7,500 |
| | $ | 7,500 |
| | $ | 7,500 |
| | $ | 7,500 |
|
| | Dividends paid on unvested stock grants | | 19,976 |
| | 3,714 |
| | 10,385 |
| | 3,713 |
| | 2,155 |
| | 4,319 |
|
| | Executive medical services | | 2,750 |
| | — |
| | — |
| | — |
| | — |
| | 2,300 |
|
| | Life insurance premiums | | 57,708 |
| | 4,814 |
| | 30,000 |
| | — |
| | — |
| | 3,740 |
|
| | Long-term disability premiums | | 7,292 |
| | — |
| | 8,568.29 |
| | — |
| | — |
| | 10,724 |
|
| | Long term care premiums | | — |
| | 10,442 |
| | 13,706 |
| | 20,000 |
| | 10,000 |
| | 13,080 |
|
| | Tax and financial planning | | — |
| | — |
| | 7,500 |
| | — |
| | — |
| | — |
|
| | Fitness fees | | — |
| | — |
| | 2,500 |
| | — |
| | — |
| | 2,456 |
|
| | Separation Agreement | | — |
| | — |
| | — |
| | — |
| | — |
| | 850,000 |
|
| | Miscellaneous items | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| | | | | | | | | | | | | | |
| | Total All Other Compensation | | $ | 95,226 |
| | $ | 26,470 |
| | $ | 80,159 |
| | $ | 31,213 |
| | $ | 19,655 |
| | $ | 894,119 |
|
| | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | |
| (7) | The amounts in column (f) reflect the annual incentive awards to the named individuals under the 2012, 2013 and 2014 Annual Executive Incentive Plan. |
| | | | | | | | | | | | |
| (8) | All Other Compensation is composed of the following amounts: |
| | Compensation item | | Clayton G. Deutsch | | David J. Kaye | | Mark D. Thompson | | Corey A. Griffin | | Peter J. Raimondi |
| | Matching contribution to 401(k) plan | | $ | 7,800 |
| | $ | 7,800 |
| | $ | 7,800 |
| | $ | 7,800 |
| | $ | — |
|
| | Dividends paid on unvested stock grants | | 102,142 |
| | 12,884 |
| | 68,479 |
| | — |
| | — |
|
| | Executive medical services | | 5,450 |
| | — |
| | 2,750 |
| | — |
| | — |
|
| | Life insurance premiums | | 57,708 |
| | 9,564 |
| | 30,000 |
| | — |
| | — |
|
| | Long-term disability premiums | | 7,292 |
| | — |
| | 8,568 |
| | — |
| | — |
|
| | Long term care premiums | | — |
| | 10,412 |
| | 13,706 |
| | — |
| | — |
|
| | Tax and financial planning | | — |
| | — |
| | 8,825 |
| | — |
| | — |
|
| | Fitness fees | | — |
| | — |
| | — |
| | — |
| | — |
|
| | Consulting Agreement (Earned up to April 30, 2014) | | — |
| | — |
| | — |
| | 258,333 |
| | — |
|
| | Miscellaneous items | | — |
| | — |
| | — |
| | — |
| | — |
|
| | | | | | | | | | | | |
| | Total All Other Compensation | | $ | 180,392 |
| | $ | 40,660 |
| | $ | 140,128 |
| | $ | 266,133 |
| | $ | — |
|
| | | | | | | | | | | | |
GRANTS OF PLAN-BASED AWARDS
| | | (a) | | (b) | | | | (c) | | (d) | | (e) | | (f) | | (g) | | (h) | | (i) | | (j) | | (k) | | (l) | | (b) | | | | (c) | | (d) | | (e) | | (f) | | (g) | | (h) | | (i) | | (j) | | (k) | | (l) |
| | | | | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | | All Other Stock Awards: Number of Shares of Stock or Units # | | All Other Option Awards Number of Securities Underlying Options # | | Exercise or Base Price of Option Awards ($/share) | | Grant Date Fair Value of Stock and Option Awards ($)(3) | | | | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | | All Other Stock Awards: Number of Shares of Stock or Units # | | All Other Option Awards Number of Securities Underlying Options # | | Exercise or Base Price of Option Awards ($/share) | | Grant Date Fair Value of Stock and Option Awards ($)(3) |
| Name | | Grant Date | | Grant Approved Date | | Threshold $ | | Target $ | | Maximum $ | | Threshold # | | Target # | | Maximum # | | | | | Grant Date | | Grant Approved Date | | Threshold $ | | Target $ | | Maximum $ | | Threshold # | | Target # | | Maximum # | |
| Clayton G. Deutsch | | 5/15/2012 | | 4/25/2012 | | | | | | | | 30,932 |
| | 61,864 |
| | 111,355 |
| | 41,242 |
| | — |
| | $ | — |
| | 933,109 |
| | 5/15/2014 | | 4/16/2014 | | | | | | | | 22,567 |
| | 45,134 |
| | 81,241 |
| | 30,090 |
| | — |
| | $ | — |
| | $ | 903,440 |
|
| | | 2012 | | | | 421,875 |
| | 843,750 |
| | 1,687,500 |
| | |
| | | | |
| | |
| | |
| | |
| | |
| | 12/17/2014 | | | | | | | | 45,662 |
| | 91,324 |
| | 164,383 |
| | 60,883 |
| | — |
| | — |
| | 2,000,000 |
|
| | | | 2014 | | | | $ | 421,875 |
| | $ | 843,750 |
| | $ | 1,687,500 |
| | |
| | | | |
| | |
| | |
| | |
| | |
|
| David J. Kaye | | 5/15/2012 | | 4/24/2012 | | | | | | | | 8,592 |
| | 17,184 |
| | 30,931 |
| | 11,456 |
| | — |
| | — |
| | 259,192 |
| | 5/15/2014 | | 4/15/2014 | | | | | | | | 7,105 |
| | 14,211 |
| | 25,579 |
| | 9,474 |
| | — |
| | — |
| | 284,457 |
|
| | | 2012 | | | | 212,500 |
| | 425,000 |
| | 850,000 |
| | |
| | | | |
| | |
| | |
| | |
| | |
| | 2014 | | | | 212,500 |
| | 425,000 |
| | 850,000 |
| | |
| | | | |
| | |
| | |
| | |
| | |
|
| Mark D. Thompson | | 5/15/2012 | | 4/24/2012 | | | | | | | | 15,275 |
| | 30,550 |
| | 54,990 |
| | 20,367 |
| | — |
| | — |
| | 460,799 |
| | 5/15/2014 | | 4/15/2014 | | | | | | | | 12,259 |
| | 24,518 |
| | 44,132 |
| | 16,345 |
| | — |
| | — |
| | 490,764 |
|
| | | 2012 | | | | 250,000 |
| | 500,000 |
| | 1,000,000 |
| | |
| | | | |
| | |
| | |
| | |
| | |
| | 2014 | | | | 250,000 |
| | 500,000 |
| | 1,000,000 |
| | |
| | | | |
| | |
| | |
| | |
| | |
|
| Margaret W. Chambers | | 5/15/2012 | | 4/24/2012 | | | | | | | | 8,248 |
| | 16,497 |
| | 29,694 |
| | 10,998 |
| | — |
| | — |
| | 248,830 |
| |
| Corey A. Griffin | | | 5/15/2014 | | 4/15/2014 | | | | | | | | 4,458 |
| | 8,916 |
| | 16,048 |
| | 5,944 |
| | — |
| | — |
| | 178,468 |
|
| | | 2012 | | | | 180,000 |
| | 360,000 |
| | 720,000 |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | 8/15/2014 | | | | | | | | — |
| | — |
| | — |
| | 33,200 |
| | — |
| | — |
| | 400,060 |
|
| Martha T. Higgins | | 5/15/2012 | | 4/24/2012 | | | | | | | | 3,818 |
| | 7,637 |
| | 13,746 |
| | 5,092 |
| | — |
| | — |
| | 115,198 |
| |
| | | 2012 | | | | 93,750 |
| | 187,500 |
| | 375,000 |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | 2014 | | | | 200,000 |
| | 400,000 |
| | 800,000 |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
|
James D. Dawson | | 5/15/2012 | | 4/24/2012 | | | | | | | | 13,747 |
| | 27,495 |
| | 49,491 |
| | 18,330 |
| (4 | ) | — |
| | — |
| | 414,717 |
| |
| Peter J. Raimondi | | | 10/2/2014 | | | | | | | | — |
| | — |
| | — |
| | 99,657 |
| | — |
| | — |
| | 1,243,719 |
|
| | | 2012 | | | | 225,000 |
| | 450,000 |
| | 900,000 |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | | | | | | | | | | | | | | | | | | | |
| |
| (1) | The amounts shown in column (c) reflect the minimum threshold payment levels, which are 50% of the target amount shown in column (d). The amount shown in column (e) is 200% of the target amount shown in column (d), as awarded under the Company'sCompany’s Executive Bonus Plan. |
| |
| (2) | The number of shares shown in column (f) reflect the minimum threshold number of shares, which are 50% of the target amount shown in column (g); the number of shares shown in column (h) is 180% of the target amount shown in column (g) as awarded under the Company'sCompany’s 2009 Amended and Restated Stock Option and Incentive Plan. For a description of these awards see "Equity-Based“Equity-Based Long-Term Incentives."” |
| |
| (3) | This column shows the grant date fair value of equity awards in accordance with ASC 718. Information about the assumptions used to value these awards can be found in Part II. Item 8. "Financial“Financial Statements and Supplementary Data - Note 19:18: Employee Benefits"Benefits” of the Company's 2012Company’s 2014 Annual Report on Form 10-K. |
| |
(4) | Mr. Dawson's 2012 time lapse restricted grant was pro-rated to 3,796 sharesDeutsch’s December 17, 2014 award is a one-time supplemental award of which resulted in his forfeiting 14,534 shares60% of the original award and his 2012target value ($2 million) is tied to the achievement to specific performance grant was pro-rated to 5,695 shares which resulted in his forfeiting 21,800 shares of the original award. As a result of such forfeiture, Mr. Dawson will only be eligible to earn a pro-rata portion of his target performance share award and not the maximum award.targets. |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
The following table provides information with respect to holdings of exercisable and unexercisable stock options and unvested restricted stock and performance share awards held by the NEOs as of December 31, 2012.2014.
| | | (a) | | (b) | | (c) | | (d) | | | | (f) | | (g) | (h) | | (I) | (j) | | (b) | | (c) | | (d) | | (e) | | (f) | | (g) | (h) | | (i) | (j) |
| | | Option Awards | | Stock Awards | | Option Awards | | Stock Awards |
| | | Number of Securities Underlying Unexercised Options (1) | | | | Shares or Units of Stock That Have Not Vested | | Equity Incentive Plan Awards: Unearned Shares, Units or Other Rights That Have Not Vested | | Number of Securities Underlying Unexercised Options (1) | | | | Shares or Units of Stock That Have Not Vested | | Equity Incentive Plan Awards: Unearned Shares, Units or Other Rights That Have Not Vested |
| Name | | (#) Exercisable | | (#) Unexercisable | | (#) Equity Incentive Plan Awards | | Option Exercise Price ($) | | Option Expiration Date | | Number (#) | | Market Value ($) (2) | | Number (#) | | Market or Payout Value ($) (2) | |
| NEO | | | (#) Exercisable | | (#) Unexercisable | | (#) Equity Incentive Plan Awards | | Option Exercise Price ($) | | Option Expiration Date | | Number (#) | | Market Value ($) (2) | | Number (#) | | Market or Payout Value ($) (2) |
| Clayton G. Deutsch | | — |
| | — |
| | — |
| | $ | — |
| | 41,242 |
| | $ | 371,590 |
| (3) | | 61,864 |
| (10) | | $ | 557,395 |
| | — |
| | — |
| | — |
| | $ | — |
| | 60,883 |
| | $ | 820,094 |
| (3) | | 91,324 |
| (13) | | $ | 1,230,134 |
|
| | | | — |
| | — |
| | — |
| | — |
| | 30,090 |
| | 405,312 |
| (4) | | 45,134 |
| (14) | | 607,955 |
|
| | | | — |
| | — |
| | — |
| | — |
| | 42,057 |
| | 566,508 |
| (5) | | 63,085 |
| (15) | | 849,755 |
|
| | | — |
| | — |
| | — |
| | — |
| | 57,365 |
| | 516,859 |
| (4) | | 86,048 |
| (11) | | 775,292 |
| | — |
| | — |
| | — |
| | — |
| | 41,242 |
| | 555,530 |
| (6) | | 61,864 |
| (16) | | 833,308 |
|
| | | — |
| | — |
| | — |
| | — |
| | 45,954 |
| | 414,046 |
| (5) | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 15,318 |
| | 206,333 |
| (7) | | — |
| | — |
|
| | | — |
| | — |
| | — |
| | — |
| | 302,572 |
| | 2,726,174 |
| (6) | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 100,847 |
| | 1,358,409 |
| (8) | | — |
| | — |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| David J. Kaye | | 7,500 |
| | — |
| | — |
| | 9.03 |
| | 8/15/2018 | | 11,456 |
| | 103,219 |
| (3) | | 17,184 |
| (10) | | 154,828 |
| | 7,500 |
| | — |
| | — |
| | 9.03 |
| | 8/15/2018 | | 9,474 |
| | 127,615 |
| (4) | | 14,211 |
| (14) | | 191,422 |
|
| | | 20,240 |
| | — |
| | — |
| | 20.37 |
| | 5/15/2018 | | 15,935 |
| | 143,574 |
| (4) | | 23,902 |
| (11) | | 215,357 |
| | 20,240 |
| | — |
| | — |
| | 20.37 |
| | 5/15/2018 | | 12,354 |
| | 166,408 |
| (5) | | 18,530 |
| (15) | | 249,599 |
|
| | | — |
| | — |
| | — |
| | — |
| | 26,132 |
| | 235,449 |
| (7) | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 11,456 |
| | 154,312 |
| (6) | | 17,184 |
| (16) | | 231,468 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Mark D. Thompson | | 7,500 |
| | — |
| | — |
| | 9.03 |
| | 8/15/2018 | | 20,367 |
| | 183,507 |
| (3) | | 30,550 |
| (10) | | 275,256 |
| | 7,500 |
| | — |
| | — |
| | 9.03 |
| | 8/15/2018 | | 16,345 |
| | 220,167 |
| (4) | | 24,518 |
| (14) | | 330,257 |
|
| | | 24,290 |
| | — |
| | — |
| | 20.37 |
| | 2/15/2018 | | 93,458 |
| | 842,057 |
| (8) | | 93,458 |
| (11) | | 842,057 |
| | 24,290 |
| | — |
| | — |
| | 20.37 |
| | 2/15/2018 | | 20,520 |
| | 276,404 |
| (5) | | 30,779 |
| (15) | | 414,593 |
|
| | | 20,000 |
| | — |
| | — |
| | 29.84 |
| | 2/15/2017 | | 74,767 |
| | 673,651 |
| (9) | | — |
| | — |
| | 20,000 |
| | — |
| | — |
| | 29.84 |
| | 2/15/2017 | | 20,367 |
| | 274,343 |
| (6) | | 30,550 |
| (16) | | 411,509 |
|
| | | 15,000 |
| | — |
| | — |
| | 29.74 |
| | 2/17/2016 | | 55,749 |
| | 502,298 |
| (7) | | — |
| | — |
| | 15,000 |
| | — |
| | — |
| | 29.74 |
| | 2/17/2016 | | 62,299 |
| | 839,168 |
| (9) | | — |
| | — |
|
| | | 15,000 |
| | — |
| | — |
| | 27.06 |
| | 2/11/2015 | | — |
| | — |
| | — |
| | — |
| | 15,000 |
| | — |
| | — |
| | 27.06 |
| | 2/11/2015 | | 37,384 |
| | 503,562 |
| (10) | | — |
| | — |
|
| | | 15,000 |
| | — |
| | — |
| | 27.16 |
| | 2/27/2014 | | — |
| | — |
| | — |
| | — |
| | | | | | | | | | | | | | | | |
| Corey A. Griffin | | | — |
| | — |
| | — |
| | — |
| | 33,200 |
| | 447,204 |
| (11) | | 8,916 |
| (14) | | 120,099 |
|
| | | 15,000 |
| | — |
| | — |
| | 18.79 |
| | 4/30/2013 | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 5,944 |
| | 80,066 |
| (4) | | — |
| | — |
|
| | | 11,000 |
| | — |
| | — |
| | 16.72 |
| | 2/14/2013 | | — |
| | — |
| | — |
| | — |
| | | | | | | | | | | | | | | | |
| Peter J. Raimondi | | | — |
| | — |
| | — |
| | — |
| | 99,657 |
| | 1,342,380 |
| (12) | | — |
| | — |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| Margaret W. Chambers | | 7,500 |
| | — |
| | — |
| | 9.03 |
| | 8/15/2018 | | 10,998 |
| | 99,092 |
| (3) | | 16,497 |
| (10) | | 148,638 |
| |
| | | 11,600 |
| | — |
| | — |
| | 20.37 |
| | 5/15/2018 | | 15,297 |
| | 137,826 |
| (4) | | 22,946 |
| (11) | | 206,743 |
| |
| | | 10,000 |
| | — |
| | — |
| | 29.84 |
| | 2/15/2017 | | 23,519 |
| | 211,906 |
| (7) | | — |
| | — |
| |
| | | 8,000 |
| | — |
| | — |
| | 29.74 |
| | 2/17/2016 | | — |
| | — |
| | — |
| | — |
| |
| | | 10,000 |
| | — |
| | — |
| | 27.06 |
| | 2/11/2015 | | — |
| | — |
| | — |
| | — |
| |
| | | 10,000 |
| | — |
| | — |
| | 27.16 |
| | 2/27/2014 | | — |
| | — |
| | — |
| | — |
| |
| | | 1,000 |
| | — |
| | — |
| | 24.42 |
| | 12/12/2013 | | — |
| | — |
| | — |
| | — |
| |
| | | 7,500 |
| | — |
| | — |
| | 16.72 |
| | 2/14/2013 | | — |
| | — |
| | — |
| | — |
| |
| | | | | | | | | | | | | | | | | | |
| Martha T. Higgins | | 7,500 |
| | — |
| | — |
| | 9.03 |
| | 8/15/2018 | | 5,092 |
| | 45,879 |
| (3) | | 7,637 |
| (10) | | 68,809 |
| |
| | | 7,240 |
| | — |
| | — |
| | 20.37 |
| | 2/15/2018 | | 7,082 |
| | 63,809 |
| (4) | | 10,623 |
| (11) | | 95,713 |
| |
| | | — |
| | — |
| | — |
| | — |
| | 13,066 |
| | 117,725 |
| (7) | | — |
| | — |
| |
| | | | | | | | | | | | | | | | | | |
| James D. Dawson | | 7,500 |
| | — |
| | — |
| | 9.03 |
| | 1/27/2013 | | — |
| | — |
| | 5,695 |
| (10) | | 51,312 |
| |
| | | 61,360 |
| | — |
| | — |
| | 9.13 |
| | 1/27/2013 | | — |
| | — |
| | 23,629 |
| (11) | | 212,897 |
| |
| | | 9,000 |
| | — |
| | — |
| | 29.84 |
| | 1/27/2013 | | — |
| | — |
| | — |
| | — |
| |
| | | 10,000 |
| | — |
| | — |
| | 29.74 |
| | 1/27/2013 | | — |
| | — |
| | — |
| | — |
| |
| | | 12,000 |
| | — |
| | — |
| | 27.06 |
| | 1/27/2013 | | — |
| | — |
| | — |
| | — |
| |
| | | 10,000 |
| | — |
| | — |
| | 27.16 |
| | 1/27/2013 | | — |
| | — |
| | — |
| | — |
| |
| | | 2,500 |
| | — |
| | — |
| | 24.42 |
| | 1/27/2013 | | — |
| | — |
| | — |
| | — |
| |
| | | 9,000 |
| | — |
| | — |
| | 16.72 |
| | 1/27/2013 | | — |
| | — |
| | — |
| | — |
| |
| | | | | | | | | | | | | | | | | | |
|
| |
| (1) | All securities issued under the Company'sCompany’s 1997 Long-Term Incentive Plan, the Company'sCompany’s 2004 Stock Option and Incentive Plan, the Company'sCompany’s 2009 Amended and Restated Stock Option and Incentive Plan, or the Company'sCompany’s 2010 Inducement Stock Plan. |
| | |
| (2) | The market value is based on the closing price of the Company'sCompany’s common stock on December 31, 20122014 of $9.01,$13.47, multiplied by the applicable number of shares of restricted stock or performance shares. |
| | |
| (3) | This award vests on May 15, 2015.December 17, 2017. |
| | |
| (4) | This award vests on May 13, 2014.15, 2017. |
| | |
| (5) | This award vests on May 15, 2016. |
| |
| (6) | This award vests on May 15, 2015. |
| |
| (7) | This award vests in five equal annual installments beginning on July 31, 2011. |
| | |
(6)(8) | This award vests in three equal annual installments beginning on July 31, 2013. |
| | |
(7) | This award vests on May 14, 2013. |
| |
(8)(9) | This award vests in three equal annual installments beginning on March 29, 2014. |
| | |
(9)(10) | This award vests in five equal annual installments beginning on March 29, 2012. |
| |
| (11) | This award vests in three equal annual installments beginning on August 15, 2017. |
| |
| (12) | This award vests on October 2, 2017. |
|
| | | | | | | |
| (13) | 2014 Stock Awards include performance shares which could, based on performance for the 2015 - 2017 performance period, result in the earn-out of additional shares for above target outperformance as set forth below. |
| | NEO | | Target performance shares granted | | Maximum shares potentially earned |
| | Clayton G. Deutsch | | 91,324 |
| | 164,383 |
|
| | | | | | |
|
| | | | | | | | |
| (10) | 2012 Stock Awards include performance shares which could, based on performance for the 2012 - 2014 performance period, result in the earn-out of additional shares for above target outperformance as set forth below. |
| | Named executive | | Target performance shares granted | | Maximum shares potentially earned | |
| | Clayton G. Deutsch | | 61,864 |
| | 111,355 |
| |
| | David J. Kaye | | 17,184 |
| | 30,931 |
| |
| | Mark D. Thompson | | 30,550 |
| | 54,990 |
| |
| | James D. Dawson | | 27,495 |
| | 49,491 |
| |
| | Margaret W. Chambers | | 16,497 |
| | 29,694 |
| |
| | Martha T. Higgins | | 7,637 |
| | 13,746 |
| |
| | | | | | | |
|
| | | | | | | |
| (14) | 2014 Stock Awards include performance shares which could, based on performance for the 2014 - 2016 performance period, result in the earn-out of additional shares for above target outperformance as set forth below. |
| | NEO | | Target performance shares granted | | Maximum shares potentially earned |
| | Clayton G. Deutsch | | 45,134 |
| | 81,241 |
|
| | David J. Kaye | | 14,211 |
| | 25,579 |
|
| | Mark D. Thompson | | 24,518 |
| | 44,132 |
|
| | Corey A. Griffin | | 8,916 |
| | 16,048 |
|
| | | | | | |
|
| | | | | | | | |
| (11) | 2011 Stock Awards include performance shares which could, based on performance for the 2011 - 2013 performance period, result in the earn-out of additional shares for above target outperformance as set forth below. |
| | Named executive | | Target performance shares granted | | Maximum shares potentially earned | |
| | Clayton G. Deutsch | | 86,048 |
| | 154,886 |
| |
| | David J. Kaye | | 23,902 |
| | 43,023 |
| |
| | Mark D. Thompson | | 93,458 |
| | 168,224 |
| |
| | James D. Dawson | | 38,244 |
| | 68,839 |
| |
| | Margaret W. Chambers | | 22,946 |
| | 41,302 |
| |
| | Martha T. Higgins | | 10,623 |
| | 19,121 |
| |
| | | | | | | |
|
| | | | | | | |
| (15) | 2013 Stock Awards include performance shares which could, based on performance for the 2013 - 2015 performance period, result in the earn-out of additional shares for above target outperformance as set forth below. |
| | NEO | | Target performance shares granted | | Maximum shares potentially earned |
| | Clayton G. Deutsch | | 63,085 |
| | 113,553 |
|
| | David J. Kaye | | 18,530 |
| | 33,354 |
|
| | Mark D. Thompson | | 30,779 |
| | 55,402 |
|
| | | | | | |
|
| | | | | | | |
| (16) | 2012 Stock Awards include performance shares which could, based on performance for the 2012 - 2014 performance period, result in the earn-out of additional shares for above target outperformance as set forth below. Note: The Committee met on March 10, 2015 and determined the final shares earned at 67% of target performance shares granted. |
| | NEO | | Target performance shares granted | | Maximum shares potentially earned |
| | Clayton G. Deutsch | | 61,864 |
| | 111,355 |
|
| | David J. Kaye | | 17,184 |
| | 30,931 |
|
| | Mark D. Thompson | | 30,550 |
| | 54,990 |
|
| | | | | | |
OPTION EXERCISES AND STOCK VESTED
The following table provides information with the respect to restricted stock and performance share awards that vested as of December 31, 2012.during 2014.
|
| | | | | | | | |
| (a) | | (b) | | (c) | | (d) | | (e) |
| Name | | Number of Shares Acquired on Exercise # (1) | | Value Realized on Exercise $ | | Number of Shares Acquired on Vesting # (1) (2) | | Value Realized on Vesting $ (2) (3) |
| Clayton G. Deutsch | | — | | $— | | 173,530 | | $2,157,050 |
| David J. Kaye | | — | | — | | 15,935 | | 196,479 |
| Mark D. Thompson | | — | | — | | 49,850 | | 662,507 |
| Corey A. Griffin | | — | | — | | — | | — |
| Peter J. Raimondi | | — | | — | | — | | — |
| | | | | | | | | |
|
| | | | | | | | |
| (a) | | (b) | | (c) | | (d) | | (e) |
| Name | | Number of Shares Acquired on Exercise # (1) | | Value Realized on Exercise $ | | Number of Shares Acquired on Vesting # (1) (2) (3) | | Value Realized on Vesting $ (2) (3) |
| Clayton G. Deutsch | | — | | $— | | 107,979 | | $1,009,596 |
| David J. Kaye | | — | | — | | 52,070 | | 478,224 |
| Mark D. Thompson | | — | | — | | 60,276 | | 547,059 |
| James D. Dawson | | — | | — | | 44,654 | | 407,400 |
| Margaret W. Chambers | | — | | — | | 49,141 | | 450,244 |
| Martha T. Higgins | | — | | — | | 28,510 | | 260,669 |
| | | | | | | | | |
| | | (1) | All securities issued under the Company's 2004 Stock Option and Incentive Plan, the Company's 2009 Stock Option and Incentive Plan, or the Company's 2010 Inducement Stock Plan. | All securities issued under the Company’s 2004 Stock Option and Incentive Plan, the Company’s 2009 Amended and Restated Stock Option and Incentive Plan, or the Company’s 2010 Inducement Stock Plan. |
| | | | | | | | | | | | |
| (2) | The number and value realized of shares acquired on vesting in 2012 includes performance shares for the 2010 - 2012 performance period, which, based on performance, resulted in the grant of the following shares with respect to such performance period. This increased the fair value at the vest date by the following amounts based on the incremental shares earned, using the close price on the vest date, January 16, 2013, as listed. | The number and value realized of shares acquired on vesting in 2014 includes the following time-restricted shares with fair value at the vest date, using the close price on the vest date, as listed below. |
| | Named executive | | Target performance shares granted | | Total shares granted based on performance | | Fair Value per Share at Vest Date | | Value realized on vesting, based on total shares granted based on performance | NEO | | Total shares granted | | Weighted Average Vest Date Fair Value per Share | | Value realized on vesting, based on total shares granted | |
| | Clayton G. Deutsch | | 61,774 |
| | 92,661 |
| | $9.34 | | $ | 865,454 |
| Clayton G. Deutsch | | 173,530 |
| | $12.43 | | $ | 2,157,050 |
| |
| | David J. Kaye | | 26,132 |
| | 39,198 |
| | 9.34 | | 366,109 |
| David J. Kaye | | 15,935 |
| | 12.33 | | 196,479 |
| |
| | James D. Dawson | | 19,538 |
| | 29,307 |
| | 9.34 | | 273,727 |
| Mark D. Thompson | | 49,850 |
| | 13.29 | | 662,507 |
| |
| | Margaret W. Chambers | | 23,519 |
| | 35,279 |
| | 9.34 | | 329,506 |
| Corey A. Griffin | | — |
| | — | | — |
| |
| | Martha T. Higgins | | 13,066 |
| | 19,599 |
| | 9.34 | | 183,055 |
| Peter J. Raimondi | | — |
| | — | | — |
| |
| | | | | | | | | | | | | |
| | | | | | | | |
| (3) | The number and value realized of shares acquired on vesting in 2012 includes the following time-restricted shares with fair value at the vest date, using the close price on the vest date, as listed. | |
| | Named executive | | Total shares granted | | Weighted Average Vest Date Fair Value per Share | | Value realized on vesting, based on total shares granted | |
| | Clayton G. Deutsch | | 15,318 |
| | $9.41 | | $ | 144,142 |
| |
| | David J. Kaye | | 12,872 |
| | 8.71 | | 112,115 |
| |
| | Mark D. Thompson | | 60,276 |
| | 9.08 | | 547,059 |
| |
| | James D. Dawson | | 15,347 |
| | 8.71 | | 133,672 |
| |
| | Margaret W. Chambers | | 13,862 |
| | 8.71 | | 120,738 |
| |
| | Martha T. Higgins | | 8,911 |
| | 8.71 | | 77,615 |
| |
| | | | | | | | | |
NON-QUALIFIED DEFERRED COMPENSATION
| | | | | | | | | | | | | | (b) | | (c) | | (d) | | (e) | | (f) |
| (a) | | (b) | | (c) | | (d) | | (e) | | (f) | |
Name | | Executive Contributions in Last FY $ | | Registrant Contributions In Last FY $ | | Aggregate Earnings in Last FY $ | | Aggregate Withdrawals/ Distributions $ | | Aggregate Balance at Last FYE $(1) | | Executive Contributions in Last FY $ | | Registrant Contributions in Last FY $ | | Aggregate Earnings in Last FY $ | | Aggregate Withdrawals/ Distributions $ | | Aggregate Balance at Last FYE $(1) |
| Mark D. Thompson | | $- | | $- | | $ | 5,050 |
| | $ | — |
| | $ | 53,787 |
| | $ | — |
| | $ | — |
| | $ | 6,333 |
| | $ | — |
| | $ | 70,554 |
|
| James D. Dawson | | — |
| | — |
| | 119,955 |
| | (170,228 | ) | | 846,447 |
| |
| | | | | | | | | | | | | | | | | | | | | |
| |
| (1) | Deferred compensation accounts are deemed invested in mutual funds managed by third party administrators. |
Executive Agreements and
Potential Payments Upon Termination or Change In ControlChange-in-Control
Employment Agreements with the Company’s Chief Executive Officer Employment Agreementand President, and Boston Private Bank & Trust Company’s Chief Executive Officer and President
TheOn June 7, 2010, the Company entered into an employment agreement with its Chief Executive Officer and President, Mr. Deutsch. On March 29, 2011, the Company entered into an employment agreement with Mr. Deutsch to serve asThompson, the Company's CEOChief Executive Officer and President on June 7, 2010, and Mr. Deutsch's employment with the Company under the employment agreement commenced on July 31, 2010. The terms of the employment agreement remain in effect during Mr. Deutsch's employment with theBoston Private Bank & Trust Company.
In addition to the compensation and benefit arrangements described in detail above, under the terms of the employment agreements, each of Mr. Deutsch isand Mr. Thompson will be eligible to receive certain payments and benefits if his employment is terminated under certain conditions. For any termination of service, Mr. Deutsch would be entitled to any earned but unpaid salary and incentive compensation. He will receive unpaid expense reimbursements, accrued but unused vacation and any vested benefits he may have under any employee benefit plan of the Company.
If Mr. Deutsch'sDeutsch’s or Mr. Thompson’s employment is terminated by the Company without "cause"“cause,” or heif Mr. Deutsch or Mr. Thompson terminates his employment for "good“good reason,"” as both of those terms are defined in the applicable employment agreement, he wouldwill be entitled to receive the following:following payments and benefits:
Subjectsubject to signing a general release of claims in favor of the Company, he would receive a severance payment equal to two times the sum of (1) his base salary (or, in the case of Mr. Thompson, his bonus eligible base salary) and (2) his target annual bonus, paid out in substantially equal installments in accordance with the Company'sCompany’s payroll practice over 24 months.months;
Allall stock options and other stock-based awards held by Mr. Deutsch (1) that are subject only to service-based vesting only shall vest in full and become exercisable or non-forfeitable as of the date of termination (for grants made beginningtermination. Commencing in 2011, time-based grants arerestricted stock awards granted to Mr. Deutsch and Mr. Thompson will instead be subject to proratedpro-rated vesting per the applicable award agreements based on the portion of the applicable vesting period completed as of the date of termination), or (2)termination, pursuant to the terms of the applicable award agreements);
all stock options and other stock-based awards that are subject to performance-based vesting shall vest upon the completion of the performance period to which such vesting schedule relates provided that vestingaward relates. Vesting of such awardthese awards shall be proratedpro-rated based on the portion of the applicable performance period completed as of the date of termination.termination; and
Subjectsubject to the co-payment of premium amounts at the active employees'employees’ rate, Mr. Deutsch and Mr. Thompson may continue to participate in the Company'sCompany’s group health, dental and vision programprograms for up to 24 months.
The payments described above will immediately cease if Mr. Deutschthe executive breaches certain non-competition, non-solicitation, non-disparagement, confidentiality, third-party agreements and/or cooperation provisions of Mr. Deutsch'sthe executive’s employment agreement.
If Mr. Deutsch'sDeutsch’s or Mr. Thompson’s employment is terminatedterminates due to death or disability, hethey would each be entitled to receive the following:
a portion of his annual bonus for the year of termination pro-rated for the number of days employed during the year to the date of termination; and
all stock options and other stock-based awards held by Mr. Deutsch (1) that are subject only to time-based vesting only shall vest in full and become exercisable or non-forfeitable as of the date of termination, or (2)termination; and
all stock options and other stock-based awards that are subject to performance-based vesting shall vest upon the completion of the performance period to which such vesting schedule relates provided that vestingrelates. Vesting of such award shall be proratedpro-rated based on the portion of the applicable performance period completed as of the date of termination.
These pro-rated annual bonus payments and vesting of outstanding equity incentive grants will be made at the same time and in the same form as would be the case if his employment had not terminated due to death or disability.
If amounts payable to Mr. Deutsch or Mr. Thompson, whether under Mr. Deutsch'sthe employment agreement or otherwise, give rise to the excise tax imposed by Section 4999 of the Code, Mr. Deutschthe executive will receive the greater after-tax amount of either (1) the full payment minus the sum of all excise, federal, state and local income and employment taxes, or (2) a reduced payment that does not give rise
to the excise tax imposed by Section 4999 of the Code minus the sum of all federal, state and local income and employment taxes.Code. Under the terms of histhese employment agreement,agreements, neither Mr. Deutsch is notnor Mr. Thompson will be entitled to any tax gross-up related to severance payments.
If Mr. Raimondi’s employment is terminated, by the Company without cause or if Mr. Raimondi terminates his employment for “good reason” as defined in his employment agreement, he will be entitled to receive the following payments and benefits: (1) subject to signing a general release of claims in favor of the Company, a severance payment equal to two times his base salary (2) a pro-rata bonus in the year of termination (3) full vesting of his retention bonus, if not yet vested and pro-rata vesting for any other stock awards.
Change-In-Control Agreement with Mr. Kaye
The Company has previously entered into a change-in-control agreement with Mr. Kaye that provides for certain payments and other benefits in connection with a “terminating event” that occurs within the two-year period following tablea change-in-control of the Company. For purposes of these agreements, the term “terminating event” includes the following: (1) a material diminution in the executive’s responsibilities, authority or duties; (2) a material diminution in the executive’s base salary or target annual bonus other than across the board salary reductions based on the Company’s financial performance similarly affecting all or substantially all senior management employees of the Company; (3) a material change in the geographic location at which the executive provides services to the Company; or (4) the material breach of the agreement by the Company, as set forth in the amountsagreements. In connection with any such terminating event within the applicable period following a change-in-control, Mr. Kaye will be eligible to receive the following payments and benefits:
a lump-sum cash severance payment equal to 2.5 times annual compensation (sum of base salary and average bonus payments for the three most recent taxable years preceding termination);
a pro-rated bonus for fiscal year in which the termination occurs; and
accelerated vesting of all outstanding, unvested stock option and stock awards.
Notwithstanding the foregoing, the Company will not be required to make any payment under the agreements to the extent such payment would constitute a parachute payment for purposes of Section 280G of the Code.
Equity Award Agreements
Pursuant to the terms of the Company’s current forms of restricted stock award agreements granted to the Company’s NEOs, in the event that would have been paidan executive’s employment is terminated by the Company without “cause,” (1) a pro-rated number of shares of time-based restricted stock will vest, and (2) a pro-rated number of performance shares will remain eligible to Mr. Deutsch under hisvest based on actual Company performance for the applicable performance period. In connection with a termination of employment agreementdue to an executive’s death or disability, all outstanding awards of stock options or time-vesting restricted stock will vest and a pro-rated number of performance shares will remain eligible to vest based on actual Company performance for the applicable performance period.
In the event of a change-in-control of the Company in which restricted stock awards are assumed, continued or substituted for new awards, (1) time-based restricted stock awards will vest in the event that the executive’s employment is terminated by the Company or its successor without cause within 24 months following such change-in-control, and (2) the parties to such change-in-control may adjust the performance metrics applicable to any performance share awards. In the event that restricted stock awards are not assumed or continued in a change-in-control or substituted for new awards, then (i) time-based restricted stock awards will vest upon and subject to the occurrence of such change-in-control, and (ii) a pro-rated portion of the performance shares will vest.
The table below sets forth the cash severance, bonus (if any), value of accelerated vesting of equity awards and value of health benefits payable to each NEO in the event of a termination byof employment without cause, or due to death or disability, a change-in-control of the Company, without "cause" or by Mr. Deutsch for "good reason" other than in connection with a change in control; upon death or disability; upon a change in control without termination and upon a termination by the Company without "cause" or by Mr. Deutsch for "good reason" in connection withof employment following a change in control occurring,change-in-control, and assuming, in each case, as ofthat the applicable triggering event(s) occurred on December 31, 2012:2014. Estimated equity values in the table below are calculated assuming the closing price of the Company’s stock on December 31, 2014 of $13.47.
|
| | | | | | | | |
CEO Employment Agreement | | Without Cause/For Good Reason | | Change In Control (no termination) (3) | | Change In Control (Termination Without Cause/For Good Reason) | | Death/Disability |
| Multiple of compensation | | 2.0 | | — | | 2.0 | | — |
| Cash severance | | $3,037,500 | | $— | | $3,037,500 | | $— |
| Pro-rated bonus for fiscal year of termination | | $— | | $— | | $— | | $780,500 |
| Accelerated and/or pro-rated vesting of outstanding non-vested stock grants (1) | | $4,033,673 | | $— | | $4,564,742 | | $4,564,742 |
| Benefits Continuation (estimate) (2) | | $22,589 | | $— | | $22,589 | | — |
| Fringe Benefits (maximum annual cap) | | $65,000 | | $— | | $65,000 | | — |
| | | | | | | | | |
| Total | | $7,158,762 | | $— | | $7,689,831 | | $5,345,242 |
| | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | |
| Name | | Payment/Benefit | | Termination without Cause/for Good Reason | | Termination due to death or disability | | Change-in-Control (no termination) | | Termination without Cause/for Good Reason in connection with a Change-in-Control (6) |
| Clayton G. Deutsch | | Cash Severance | | $ | 3,037,500 |
| | $ | — |
| | $ | — |
| | $ | 3,037,500 |
|
| | Pro-Rated Bonus | | — |
| | 843,750 |
| | — |
| | — |
|
| | Accelerated Vesting of Equity (1) | | 3,784,428 |
| | 5,244,000 |
| | — |
| | 5,244,000 |
|
| | Benefits (3) | | 39,238 |
| | — |
| | — |
| | 39,238 |
|
| | Fringe Benefits (maximum annual cap) | | 65,000 |
| | — |
| | — |
| | 65,000 |
|
| | Total | | $ | 6,926,166 |
| | $ | 6,087,750 |
| | $ | — |
| | $ | 8,385,738 |
|
| | | | | | | | | | | |
| David J. Kaye | | Cash Severance | | $ | 850,000 |
| | $ | — |
| | $ | — |
| | $ | 2,133,854 |
|
| | Pro-Rated Bonus | | — |
| | — |
| | — |
| | 467,500 |
|
| | Accelerated Vesting of Equity (2), (4) | | 629,362 |
| | 825,950 |
| | — |
| | 825,950 |
|
| | Benefits (3) | | — |
| | — |
| | — |
| | 43,445 |
|
| | Fringe Benefits (maximum annual cap) | | 20,000 |
| | — |
| | — |
| | 20,000 |
|
| | Total | | $ | 1,499,362 |
| | $ | 825,950 |
| | $ | — |
| | $ | 3,490,749 |
|
| | | | | | | | | | | |
| Mark D. Thompson | | Cash Severance (5) | | $ | 2,000,000 |
| | $ | — |
| | $ | — |
| | $ | 2,000,000 |
|
| | Pro-Rated Bonus | | — |
| | 550,000 |
| | — |
| | — |
|
| | Accelerated Vesting of Equity (2), (4) | | 2,096,130 |
| | 2,767,090 |
| | — |
| | 2,767,090 |
|
| | Benefits (3) | | 35,407 |
| | — |
| | — |
| | 35,407 |
|
| | Fringe Benefit (maximum annual cap) | | 40,000 |
| | — |
| | — |
| | 40,000 |
|
| | Total | | $ | 4,171,537 |
| | $ | 3,317,090 |
| | $ | — |
| | $ | 4,842,497 |
|
| | | | | | | | | | | |
| Peter J. Raimondi | | Cash Severance | | $ | 1,200,000 |
| | $ | — |
| | $ | — |
| | $ | 1,200,000 |
|
| | Pro-Rated Bonus (8) | | 106,000 |
| | — |
| | — |
| | 106,000 |
|
| | Accelerated Vesting of Equity (7) | | 1,342,380 |
| | — |
| | — |
| | 1,342,380 |
|
| | Benefits (3) | | 30,027 |
| | — |
| | — |
| | 30,027 |
|
| | Fringe Benefit (maximum annual cap) | | 20,000 |
| | — |
| | — |
| | 20,000 |
|
| | Total | | $ | 2,698,407 |
| | $ | — |
| | $ | — |
| | $ | 2,698,407 |
|
| | | | | | | | | | | |
| |
| (1) | Performance share grants pro-rated based on grant date for each performance/vesting cycle. Beginning with 2011 grants, time-based grants are pro-rated (not fully accelerated) in termination without cause/for good reason and fully accelerated in a change in control termination. |
| |
(2) | Health and dental continuation for two years using premium rates at December 31, 2012. |
| |
(3) | In the event of a change in controlchange-in-control with no termination, with the exception of Mr. Deutsch'sDeutsch’s 2010 Inducement Plan grants, all outstanding, non-vested grants of time-based restricted stock would vest if the acquiring company elected not to assume or replace the outstanding grants, and all performance-based restricted stockperformance shares would vest pro ratapro-rata based on the number of days from the grant date to the date of the change in control. |
Boston Private Bank & Trust Company Chief Executive Officer and President - Employment Agreement
The Company entered into an employment agreement with Mr. Thompson, the Chief Executive Officer and President of Boston Private Bank & Trust Company, on March 29, 2011. The terms of the employment agreement remain in effect during Mr. Thompson's employment with the Company.
In addition to the compensation and benefit arrangements described in detail above, Mr. Thompson is eligible to receive certain payments and benefits if his employment is terminated under certain conditions. For any termination of service, Mr. Thompson would be entitled to any earned but unpaid salary and incentive compensation. He will receive unpaid expense reimbursements, accrued but unused vacation and any vested benefits he may have under any employee benefit plan of the Company.
If Mr. Thompson's employment is terminated by the Company without "cause" or he terminates his employment for "good reason," as both of those terms are defined in the employment agreement, he would be entitled to receive the following:
Subject to signing a general release of claims in favor of the Company, he would receive a severance payment equal to two times the sum of (x) the Executive Bonus Eligible Base Salary, as defined in the employment agreement, and (y) his target annual bonus paid out in substantially equal installments in accordance with the Company's payroll practice over 24 months.
All stock options and other stock-based awards held by Mr. Thompson (1) that are subject only to service-based vesting shall vest in full and become exercisable or non-forfeitable as of the date of termination (for grants made beginning in 2011, time-based grants are subject to prorated vesting per the applicable award agreements based on the portion of the applicable vesting period completed as of the date of termination), or (2) that are subject to performance-based vesting shall vest upon the completion of the performance period to which such vesting schedule relates provided that vesting of such award shall be prorated based on the portion of the applicable performance period completed as at the date of termination.
Subject to the co-payment of premium amounts at the active employees' rate, Mr. Thompson's may continue to participate in the Company's group health, dental and vision program for 24 months.
The payments described above will immediately cease if Mr. Thompson breaches certain non-competition, non-solicitation, non-disparagement, confidentiality, third-party agreements and/or cooperation provisions of Mr. Thompson's employment agreement.
If Mr. Thompson's employment is terminated due to death or disability, he would be entitled to receive the following:
a portion of his annual bonus for the year of termination pro-rated for the number of days employed during the year to the date of termination; and
All stock options and other stock-based awards held by Mr. Deutsch (A) that are subject only to time-based vesting shall vest in full and become exercisable or non-forfeitable as of the date of termination, or (B) that are subject to performance-based vesting shall vest upon the completion of the performance period to which such vesting schedule relates provided that vesting of such award shall be prorated based on the portion of the applicable performance period completed as of the date of termination.
These pro-rated annual bonus payments and vesting of outstanding equity incentive grants will be made at the same time and in the same form as would be the case if his employment had not terminated due to death or disability.
If amounts payable to Mr. Thompson, whether under Mr. Thompson's employment agreement or otherwise, give rise to the excise tax imposed by Section 4999 of the Code, Mr. Thompson will receive the greater after-tax amount of either (1) the full payment minus the sum of all excise, federal, state and local income and employment taxes, or (2) a reduced payment that does not give rise to the excise tax imposed by Section 4999 of the Code minus the sum of all federal, state and local income and employment taxes. Under the terms of his employment agreement, Mr. Thompson is not entitled to any tax gross-up related to severance payments.
The following table set forth the amounts that would have been paid to Mr. Thompson under his employment agreement in the event of a termination by the Company without "cause" or by Mr. Thompson for "good reason" other than in connection with a change in control; upon death or disability; upon a change in control without termination and upon a termination by the Company without "cause" or by Mr. Thompson for "good reason" in connection with a change in control occurring, in each case, as of December 31, 2012:
|
| | | | | | | | | | | | | | |
BPBTC CEO & President Employment Agreement | | Without Cause/For Good Reason | | Change In Control (no termination) (4) | | Change In Control (Termination Without Cause/For Good Reason) | | Death/Disability |
| Multiple of compensation | | 2.0 | | — | | 2.0 | | — |
| Cash severance (1) | | $ | 2,000,000 |
| | $— | | $ | 2,000,000 |
| | $— |
| Pro-rated bonus for fiscal year of termination | | $ | — |
| | $— | | $ | — |
| | $ | 516,500 |
|
| Accelerated and/or pro-rated vesting of outstanding non-vested stock grants (2) | | $ | 1,521,698 |
| | $— | | $ | 2,714,971 |
| | $ | 2,714,971 |
|
| Benefits Continuation (estimate) (3) | | $ | 32,650 |
| | $— | | $ | 32,650 |
| | $— |
| Fringe Benefits (maximum annual cap) | | $ | 40,000 |
| | $— | | $ | 40,000 |
| | $— |
| | | |
| | | | |
| | |
|
| Total | | $ | 3,594,348 |
| | $— | | $ | 4,787,621 |
| | $ | 3,231,471 |
|
| | | |
| | | | |
| | |
|
| |
(1) | Benefit is based on "bonus eligible base salary" of $500,000 plus target bonus of 100%.change-in-control. |
| |
| (2) | Performance share grantsshares pro-rated based on grant date for each performance/vesting cycle. Beginning with 2011 grants, time-based grants are proratedrestricted stock is pro-rated (not fully accelerated) inupon termination without cause/for good reason and fully accelerated in a change in controlchange-in-control termination. |
| |
| (3) | Health and dental continuation were calculated for two years using premium rates at December 31, 2012.2014. |
| |
| (4) | In the event of a change in controlchange-in-control with no termination, all outstanding, non-vested grants of time-based restricted stock would vest if the acquiring company elected not to assume or replace the outstanding grants, and all performance-based restricted stock would vest pro rata based on the number of days from the grant to the date of the change in control. In addition, although Mr. Thompson currently has 93,458 unvested matching restrictedperformance shares outstanding, he would only have been vested on the number of shares that he purchased towards the company match as of 12/31, or 45,454 shares. The 93,458 shares are used for the purposes of calculating the total. |
Change In Control Agreements
The Company entered into change in control agreements with its NEOs effective as of the date of their respective agreements. The agreements provide for certain payments and other benefits upon the occurrence of a "terminating event" such as (1) a material diminution in the Executive's responsibilities, authority or duties; (2) a material diminution in the Executive's Base Salary or Target Annual Bonus except for across the board salary reductions based on the Company's financial performance similarly affecting all or substantially all senior management employees of the Company; (3) a material change in the geographic location at which the Executive provides services to the Company; or (4) the material breach of the agreement by the Company as defined in the agreements, and following certain change in control events, including but not limited to, the consolidation or merger of the Company or a change in the beneficial ownership of the Company as defined in the agreements at any time during a two-year period after such change in control. All agreements are "double trigger" agreements. The key provisions of the change in control agreements for the NEOs are as follows:
Lump-sum cash severance payment equal to 2.5 times annual compensation (sum of base salary and average bonus payments for the three most recent taxable years preceding termination).
Pro-rata bonus (for fiscal year in which termination occurs).
Accelerated vesting of outstanding, unvested stock option and stock awards.
Notwithstanding the foregoing, the Company will not be required to make any payment under the agreements to the extent such payment would constitute a parachute payment.
The following table provides quantification of the above benefits assuming a change in control occurred and each executive experienced a termination event as of December 31, 2012 (and assuming all change in control protection agreements were in place as of that date). Estimated stock values are calculated assuming the closing price of the Company's stock on December 30, 2012 of $9.01.
EXECUTIVE BENEFIT AND PAYMENTS UPON CHANGE IN CONTROL TERMINATION UNDER CHANGE IN CONTROL AGREEMENTS
Change in Control Termination
|
| | | | | | | | | | | | |
| | | Current Named Executive Officers |
Executive Benefit and Payments | | David J. Kaye | | Margaret W. Chambers | | Martha Higgins |
| | | | | | | |
| Multiple of compensation | | 2.50 | | 2.50 | | 2.50 |
| Cash severance | | $ | 1,994,271 |
| | $ | 1,727,500 |
| | $ | 1,061,198 |
|
| Pro-rated bonus for fiscal year of termination | | $393,125 | | $333,000 | | $173,438 |
| Accelerated vesting of non-vested stock grants (1) | | $852,427 | | $804,206 | | $391,935 |
| Benefits Continuation (estimate) (2) | | $40,812 | | $40,812 | | $40,812 |
| Fringe Benefits (maximum annual cap) | | $20,000 | | $20,000 | | $10,000 |
| | | | | | | |
| Total | | $3,300,635 | | $2,925,518 | | $1,677,383 |
| | | | | | | |
| |
(1) | In the event of a change in control with no termination, all outstanding, non-vested grants of time-based restricted stock would vest if the acquiring Company elected not to assume or replace the outstanding grants,and all performance-based restricted stock would vest pro-rata based on the number of days from the grant to the date of the change in control.change-in-control. |
| |
(2)(5) | Health and dental continuationBenefit is based on “bonus eligible base salary” of $500,000 plus target bonus of 100%. |
| |
| (6) | Triggering termination of employment includes a termination in connection with a “terminating event,” as defined in the applicable Change-in-Control Agreement for two and a half years using premium rates at December 31, 2012.Mr. Kaye. |
All payments calculated in respect to the Company's change in control protection agreements shall be reduced to the extent needed to ensure tax deductibility by the Company thereby bringing them within the limitations of Section 280G of the Code.
Other Termination of Employment
In addition, pursuant to the terms of the(7) Mr. Raimondi’s equity award agreements granted to NEOs in 2011 and 2012, in the event that an executive's employment is terminated by the Company without "cause,"the executive will (a) vest with respect to a pro-rated number of shares of time-vesting restricted stock, and (b) remain eligible to vest with respect to a pro-rated number of performance shares based on actual Company performance for the applicable performance period. In connection with a termination of employment due to an executive's death or disability, an executive will fully vest with respect to any outstanding awardssixty days after termination
(8) Mr. Raimondi’s bonus reflects time period of stock options or time-vesting restricted stock, and will remain eligible to vest with respect to a pro-rated number of performance shares based on actual Company performance for the applicable performance period. The table below sets forth the value of such accelerated vesting assuming each executive (other than Mr. Deutsch and Mr. Thompson discussed above), assuming such termination of employment without "cause" or due to death or disability occurred onOctober 2, 2014 through December 31, 2012 based on the closing price of the Company's stock on December 31, 2012 of $9.01.2014.
|
| | | | |
| | | | | |
Current Named Executive Officer | | Termination Without Cause | | Death and Disability |
| | | | | |
| David J. Kaye | | $454,199 | | $631,150 |
| Margaret W. Chambers | | $423,670 | | $591,776 |
| Martha T. Higgins | | $213,310 | | $293,592 |
Compensation Committee Interlocks and Insider Participation in Compensation Decisions
Messrs.From January 1, 2014 through April 15, 2014, the Compensation and Governance Committee members were Lynn Thompson Hoffman, Chair, William J. Shea (until his resignation April 3, 2014), Vice Chair, Eugene S. Colangelo, Deborah F. Kuenstner, and Stephen M. Waters. On April 16, 2014 following the consolidation of the Company and Bank boards, the Compensation and Governance Committee became the Compensation, Governance and Executive Committee, whose members are Stephen M. Waters, Shea (partial year), Ms.Chair, Deborah F. Kuenstner, (partial year) and Mrs. Hoffman servedDaniel P. Nolan. The Compensation, Governance and Executive Committee, as memberswas the Compensation and Governance Committee, is comprised entirely of the independent directors listed above. No member of the Compensation, Governance and Executive Committee during the fiscal year ended December 31, 2012. None of these individuals has ever been anis a current or was a former officer or employee of the Company or any of its subsidiaries. Ms. Kuenstner left the Compensation Committee as of July 2012 at which time Mr. Shea joined the Compensation Committee. Mr. Shea has never been an officer or employee of the Company or any of its subsidiaries.
Compensation of Directors
In October of 2013, the Board approved a new compensation schedule for directors effective with the Board year beginning May 1, 2014. The Board compensation schedule was revised to account for the consolidation of the Company and Bank Boards. The current Board has nine outside directors.
Board Retainer
Directors of the Company who are not full-time employees of the Company or any of its subsidiaries receive compensation under a compensation program which became effective May 1, 2012. The2014 which includes an annual retainer fee of $120,000, of which fifty percent ($60,000) is payable in cash as a cash retainer and fifty percent ($60,000) is payable in Company stock as a stock retainer. The prior schedule was $45,000 in cash as a cash retainer and $45,000 in stock as a stock retainer, for Directorsa total retainer of the Company who are not full-time employees of the Company is $45,000.$90,000. The non-executive Chair'sChair’s supplemental annual retainer fee is $95,000.$50,000, of which 50%, or $25,000 is paid in cash, for a total cash retainer of $85,000, and 50%, or $25,000 is paid in stock, for a total stock retainer of $85,000. The annualtotal Chair retainer fees are payable 100% in cash; however, eachis $170,000 versus the prior total Chair retainer of $140,000. Each Director has the optioncan elect to receive up to 100% of the annual cash retainer fee in stock. $25,000 of the non-executive Chair's annual cash retainer fee will be delivered in stock
Committee Retainers
Effective May 1, 2014 committee retainers were eliminated with the option (at the non-executive Chair's discretion)exception of an annual $3,000 retainer for the non-executive ChairCommittee Chairs. Effective May 1, 2014 it is assumed that each Director will serve on two committees with a supplemental retainer of $10,000 for any Director serving on three or more committees.
Prior to receive up to 100% of the annual cash retainer in stock. In addition,May 1, 2014 non-employee Directors who serveserved as committee members receivereceived an additional annual retainer fee, payable in cash, of $15,000 for the Audit and Finance, Compensation and theGovernance, and Risk Management Committees, and $9,000 for the Governance Committee and the Wealth Management Committee. Chairs of committees receivereceived an annual retainer fee of $18,000 for the Audit and Finance, Compensation and Governance, and Risk Management Committees, and $12,000 for the Governance Committee and the Wealth Management Committee. Directors maycould serve on more than two committees. In addition to the foregoing, any non-employee Director serving simultaneously as a member of the Board of Directors of the Company and the Boardboard of Directorsdirectors of a subsidiary of the Company may receivereceived retainer fees for each board on which he or she serves. served.
Stock Ownership Guidelines
Directors receive their stock retainer, and any portion of the Company also receive $45,000their cash retainer that is elected to be paid in stock, in shares of common stock whichstock. These shares are purchased by the Company at fair market value on each of the Company'sCompany’s quarterly grant dates and deposited in each Director'sDirector’s brokerage account. The Company believes that directorDirector stock ownership is important, and has implemented a minimum stock ownership guideline threshold for outside directorsDirectors equal to the lower of (a) five times the annual cash retainer of $60,000 or $300,000 in value (was previously five times the annual cash retainer of $45,000 or $225,000$225,000), or (b) 22,500 shares. The non-executive Chair is required to hold $425,000 in value ($350,000based on his $85,000 annual cash retainer (5 x $85,000 = $425,000) or 42,500 shares. The prior stock ownership guideline for the non-executive Chair).Chair was $350,000 in value or 35,000 shares. In addition, there is a holding requirement for all directors equal to 50% of profit shares (net shares after cost of purchase, if any, and tax liability) until the minimum threshold is attained.
Upon the retirement of Mr. Colangelo and Mr. Sinai as directors of the Company effective April 16, 2014, the Board approved the extension of their 2008 stock option exercise term by two years to provide for the full ten-year exercise term in recognition of their distinguished service as directors of the Company.
DIRECTOR COMPENSATION
| | | | | | | | | | | | | | (b) | | (c) | | (d) | | (e) | | (f) | | (g) | | (h) | | (i) |
| (a) | | (b) | | (c) | | (d) | | (e) | | (f) | | (g) | | (h) | | (i) | |
Name and Principal Position | | Year | | Fees Earned or Paid in Cash ($) | | Stock Awards ($)(1) | | Option Awards ($) | | Non-Equity Incentive Plan Compensation ($) | | Change in Pension Value and NQ Deferred Compensation Earnings ($) | | All Other Compensation ($) | | Total ($) | | Year | | Fees Earned or Paid in Cash ($) | | Stock Awards ($)(1) | | Option Awards ($) | | Non-Equity Incentive Plan Compensation ($) | | Change in Pension Value and NQ Deferred Compensation Earnings ($) | | All Other Compensation ($) | | Total ($) |
| Board of Directors | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Herbert S. Alexander, CPA (2) | | 2012 | | $ | 63,750 |
| | $ | 56,250 |
| | — |
| | $- | | $ - | | $- | | $ | 120,000 |
| |
| Herbert S. Alexander (2) | | | 2014 | | $ | 55,000 |
| | $ | 72,313 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 127,313 |
|
| Eugene S. Colangelo (3) | | 2012 | | 71,000 |
| | 46,000 |
| | — |
| | — |
| | — | | — | | 117,000 |
| | 2014 | | 29,500 |
| | 30,313 |
| | — |
| | — |
| | — |
| | — |
| | 59,813 |
|
| Lynn Thompson Hoffman | | 2012 | | 76,500 |
| | 45,000 |
| | — |
| | — |
| | — | | — | | 121,500 |
| | 2014 | | 66,000 |
| | 61,313 |
| | — |
| | — |
| | — |
| | — |
| | 127,313 |
|
| Deborah F. Kuenstner | | 2012 | | 63,500 |
| | 62,500 |
| | — |
| | — |
| | — | | — | | 126,000 |
| | 2014 | | 61,000 |
| | 72,313 |
| | — |
| | — |
| | — |
| | — |
| | 133,313 |
|
| John Morton III | | 2012 | | 78,250 |
| | 45,000 |
| | — |
| | — |
| | — | | — | | 123,250 |
| | 2014 | | 75,000 |
| | 52,500 |
| | — |
| | — |
| | — |
| | — |
| | 127,500 |
|
| William J. Shea (4) | | 2012 | | 52,500 |
| | 67,500 |
| | — |
| | — |
| | — | | — | | 120,000 |
| |
| Daniel P. Nolan | | | 2014 | | — |
| | 60,000 |
| | — |
| | — |
| | — |
| | — |
| | 60,000 |
|
| Brian G. Shapiro (4) | | | 2014 | | 30,000 |
| | 31,500 |
| | — |
| | — |
| | — |
| | — |
| | 61,500 |
|
| William J. Shea (5) | | | 2014 | | 13,968 |
| | 45,409 |
| | — |
| | — |
| | — |
| | — |
| | 59,377 |
|
| Dr. Allen L. Sinai | | 2012 | | 75,000 |
| | 45,000 |
| | — |
| | — |
| | — | | — | | 120,000 |
| | 2014 | | 37,500 |
| | 29,813 |
| | — |
| | — |
| | — |
| | — |
| | 67,313 |
|
| Stephen M. Waters | | 2012 | | 76,500 |
| | 87,500 |
| | — |
| | — |
| | — | | — | | 164,000 |
| |
| Stephen M. Waters (6) | | | 2014 | | 85,000 |
| | 86,313 |
| | — |
| | — |
| | — |
| | — |
| | 171,313 |
|
| Donna C. Wells | | | 2014 | | 18,424 |
| | 18,424 |
| | — |
| | — |
| | — |
| | — |
| | 36,848 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| |
| (1) | Includes portion of cash retainer paid in stock. Also includes a stock award payment of $7,313 for all Company directors with the exception of Mr. Morton, Mr. Nolan, Mr. Shapiro and Ms. Wells. This stock payment was related to the portion of a 2008 director’s stock option grant that was cancelled when it was determined that the award had been granted in excess of the annual award limit for directors (9,880 stock options were granted versus the 7,500 award limit as defined in the 2004 Stock Option and Incentive Plan). The Company immediately reduced the stock option award to 7,500 stock options and cancelled the number of stock options that were granted above the 7,500 award limit to comply with the Plan. As a result of this administrative error, the Company provided a payment in stock to account for the lost compensation to directors as a result of the partial stock option cancellation. Also includes a stock award payment of $2,089 for Mr. Alexander and Mr. Colangelo respectively with respect to the same issue with a stock option that was granted for their service on the board of Boston Private Bank & Trust Company (5,680 stock options granted versus a limit of 5,000). |
| |
| (2) | Mr. Alexander received an additional $56,500$29,589 for his service on the board of Boston Private Bank & Trust Company during 2012.2014. |
| |
| (3) | Mr. Colangelo received an additional $58,000$34,089 for his service on the board of Boston Private Bank & Trust Company during 2012.2014. Mr. Colangelo served as the Chairman of the Bank Board until April of 2014. |
| |
| (4) | Mr. SheaShapiro received an additional $63,000$33,250 for his service on the board of Boston Private Bank & Trust Company during 2012.2014. |
| |
| (5) | Mr. Shea received an additional $26,667 for his service on the board of Boston Private Bank & Trust Company during 2014. Mr. Shea served as Chair of the Audit Committee of the Bank through April of 2014. |
| |
| (6) | Chairman of the Board. |
Report of the Audit and Finance Committee
REPORT OF THE AUDIT AND FINANCE COMMITTEE
The following is the report of the Audit and Finance Committee with respect to the Company'sCompany’s audited consolidated financial statements for the fiscal year ended December 31, 2012.2014. The Audit and Finance Committee acts under a written charter which specifies the scope of the Audit and Finance Committee'sCommittee’s responsibilities and how it carries out those responsibilities. Each member of the Audit and Finance Committee is listed below and is independent within the definition of the NASDAQ Rules.
While the Audit and Finance Committee oversees the Company'sCompany’s financial reporting process for the Board of Directors consistent with its charter, management has primary responsibility for this process, including the Company'sCompany’s system of internal controls, and for the preparation of the Company'sCompany’s consolidated financial statements in accordance with U.S. generally accepted accounting principles. In addition, the Company'sCompany’s independent registered public accounting firm is responsible for auditing those consolidated financial statements, and not the Audit and Finance Committee.
The Audit and Finance Committee has reviewed and discussed the Company'sCompany’s December 31, 20122014 audited consolidated financial statements with management and with KPMG LLP, the Company'sCompany’s independent registered public accounting firm ("KPMG"(“KPMG”). The Audit and Finance Committee also has discussed with KPMG the matters required to be discussed by Statement on Auditing Standards No. 6116 (Communication with Audit Committees). In addition, the Audit and Finance Committee has also received from KPMG the written disclosures and the letter required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant'saccountant’s communications with the Audit and Finance Committee concerning independence, and has discussed with KPMG its independence from the Company. The Audit and Finance Committee also considered whether KPMG'sKPMG’s provision of non-audit services to the Company is compatible with its independence.
Based on the reviews and discussions referred to above, the Audit and Finance Committee recommended to the Board of Directors that the audited consolidated financial statements be included in the Annual Report on Form 10-K for the year ended December 31, 20122014 for filing with the Securities and Exchange Commission.
Submitted by the Audit and Finance Committee:
William J. Shea,
John Morton III, Chair
Herbert S. Alexander
John Morton IIILynn Thompson Hoffman
Allen L. SinaiBrian G. Shapiro
The foregoing report shall not be deemed to be "soliciting material"“soliciting material” or to be "filed"“filed” with the SEC and should not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into
any filing under the Securities Act of 1933, as amended, or under the Securities Exchange Act of 1934, as amended (the "Exchange Act"“Exchange Act”), except to the extent that the Company specifically incorporates this information by reference and shall not otherwise be deemed filed under such acts.
Audit FeesAUDIT FEES
The following table presents fees for professional audit services rendered by KPMG for the audit of the Company'sCompany’s annual financial statements for 20122014 and 2011,2013, and fees billed for other services rendered by KPMG.
| | | | 2012 | | 2011 | | 2014 | | 2013 |
| Audit fees (1) | $ | 1,040,000 |
| | $ | 1,460,000 |
| | $ | 784,500 |
| | $ | 1,027,000 |
|
| Audit related fees (2) | 144,500 |
| | 261,000 |
| | 41,384 |
| | 716,900 |
|
| | | | |
| |
| Audit and audit related fees | $ | 1,184,500 |
| | $ | 1,721,000 |
| | 825,884 |
| | 1,743,900 |
|
| Tax fees | | | 78,837 |
| | — |
| | — |
|
| All other fees (3) | 37,000 |
| | 89,010 |
| | — |
| | 29,000 |
|
| |
| | |
| |
| Total fees | $ | 1,221,500 |
| | $ | 1,888,847 |
| | $ | 825,884 |
| | $ | 1,772,900 |
|
| |
| | | |
| |
| (1) | Audit fees for 20122014 and 20112013 include fees billed for the annual audit and quarterly reviews. |
| |
| (2) | Audit related fees for 20122014 and 20112013 primarily include fees billed in each of the last two fiscal years for consents issued, comfort letter procedures, and consultations related to various transactions and other matters. |
| |
| (3) | All other fees for 2012 and 20112013 include fees billed in each ofduring the last two fiscal yearsyear for the audit of the employee benefit plans and other review services. |
KPMG audited the Company'sCompany’s consolidated financial statements for the year ended December 31, 2012. KPMG has been the Company's independent registered public accounting firm for more than five years.2014. The Company expects representatives of KPMG to be present at the Meeting. These representatives will have the opportunity to make a statement if they desire to do so, and are expected to be available to respond to appropriate questions. The
In February 2015, the Audit and Finance Committee conducts an annualcompleted the process to review the appointment of the externalCompany’s independent registered accounting firm and to select a new lead audit partner. In the course of the review, the Committee considers, among other things, (1) historical and recent performance on the Company’s audit; (2) tenure as the Company’s independent auditor and based onfamiliarity with our operations; (3) the appropriateness of fees; and (4) the auditor’s independence. As a result of this review will be selectingand following careful deliberation, the Company's auditor in April 2013.Committee has re-appointed KPMG, LLP as the Company’s independent registered public accounting firm and as auditors of the Company’s consolidated financial statements for 2015. KPMG, LLP has served as the Company’s independent registered public accounting firm for over ten years.
The Audit and Finance Committee pre-approves all auditing services and the terms thereof (which may include providing comfort letters in connection with securities underwritings) and non-audit services (other than non-audit services prohibited under Section 10A(g) of the Exchange Act or the applicable rules of the SEC or the Public Company Accounting Oversight Board) to be provided to the Company by KPMG; however, the pre-approval requirement is waived with respect to the provision of non-audit services for the Company if the "“de minimus"” provisions of Section 10A(i)(1)(B) of the Exchange Act are satisfied. There were no services provided under the "“de minimus"” provision in 2012.2014. The authority to pre-approve non-audit services may be delegated to one or more members of the Audit and Finance Committee, who shall present all decisions to pre-approve an activity to the full Committee at its first meeting following such decision.
PROPOSAL 2
PRINCIPAL STOCKHOLDERSADVISORY (NON-BINDING) VOTE ON EXECUTIVE COMPENSATION
As required by Section 14A of the Exchange Act, the Board of Directors is submitting for shareholder approval, on an advisory, non-binding basis, the compensation paid to the Company’s named executive officers as described in this Proxy Statement pursuant to Item 402 of Regulation S-K. As previously disclosed by the Company, the shareholders of the Company voted on an advisory, non-binding basis, and the Board of Directors determined, to hold an advisory vote on executive compensation annually.
The resolution that is the subject of this proposal is an advisory, non-binding resolution and will not have any binding legal effect regardless of whether or not it is approved, and may not be construed as overruling a decision by the Company or the Board of Directors or creating or implying any change to the fiduciary duties of the Board. Furthermore, because this advisory, non-binding resolution relates primarily to compensation that has already been paid or contractually committed for the Company’s named executive officers, there is generally no opportunity for the Board to revisit those decisions. However, the Compensation, Governance and Executive Committee intends to take the results of the vote on this proposal into account in its future decisions regarding the compensation of the Company’s named executive officers.
The Company’s compensation program is designed to attract, motivate and retain the named executive officers who are critical to the Company’s success by offering a combination of base salary and annual and long-term incentives that are closely aligned with the Company’s annual and long-term performance objectives. Please see the section titled “Compensation Discussion and Analysis” for additional information about the Company’s executive compensation programs.
We believe that the effectiveness of our compensation programs is demonstrated by the accomplishments of management over the last fiscal year as detailed in our discussion in the section titled“Compensation Discussion and Analysis.”
For these reasons, the Board of Directors recommends that shareholders vote in favor of the following resolution:
RESOLVED, that the compensation of the Company’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, the compensation tables and narrative discussion, be approved.
The Board of Directors unanimously recommends that shareholders vote FOR approval of the compensation of the Company’s named executive officers.
PROPOSAL 3
RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit and Finance Committee has selected KPMG as the Company’s independent registered public accounting firm to perform the audit of the Company’s consolidated financial statements for fiscal year 2015.
Although ratification by shareholders is not required by law or by the Company’s bylaws, the Audit and Finance Committee believes that submission of its selection to shareholders is a matter of good corporate governance. If the shareholders fail to ratify the selection, the Audit and Finance Committee will take that fact into consideration, together with such other factors it deems relevant, in determining whether to retain KPMG as our independent registered public accounting firm in the future. Even if the selection is ratified, the Audit and Finance Committee, in its discretion, may direct the appointment of a different independent registered public accounting firm at any time during the year if the Committee determines that such change would be in the best interests of the Company and its shareholders.
Representatives of KPMG will be present at the Annual Meeting, will be given an opportunity to make a statement at the meeting if they desire to do so, and will be available to respond to appropriate questions from shareholders.
The Audit and Finance Committee reviews audit and non-audit services performed by KPMG, as well as the fees charged by KPMG for such services. In its review of non-audit service fees, the Audit and Finance Committee considers, among other things, the possible effect of the performance of such services on the auditor’s independence. Additional information concerning the Audit and Finance Committee and its activities with KPMG can be found in the “Corporate Governance - Committees of the Board and Related Matters” and “Report of the Audit and Finance Committee” sections of this Proxy Statement.
Pre-approval Policy and Procedures
Pursuant to the Audit and Finance Committee Charter, all audit and non-audit services provided to the Company by KPMG must be pre-approved by the Audit and Finance Committee. The Company’s Internal Audit Policy provides for (a) general pre-approval of audit-related services which do not exceed certain aggregate dollar thresholds approved by the Audit and Finance Committee, and (b) specific pre-approval of all other permitted services and any proposed services which exceed these same dollar thresholds. The Audit and Finance Committee is also mindful of the relationship between fees for audit and non-audit services in deciding whether to re-approve any such services. It may determine, for each fiscal year, the appropriate ratio between the total amount of fees for audit, audit related and tax services and the total amount of fees for certain permissible non-audit services classified as “all other fees.”
The Audit and Finance Committee pre-approved all audit and non-audit fees of KPMG during fiscal 2014.
The Board of Directors unanimously recommends that shareholders vote FOR the ratification of the selection of KPMG as the Company's independent registered public accounting firm.
OTHER BUSINESS
The Board of Directors is not aware of any other business that may properly come before the Meeting. If any other matters properly come before the Meeting, the proxies will be voted at the discretion of the proxy holders.
EQUITY COMPENSATION PLAN INFORMATION
The following table sets forth the beneficial ownershipprovides information as of the Company'sDecember 31, 2014 regarding shares of common stock that may be issued under the Company’s equity compensation plans including the Company’s Amended and Restated 1997 Long-Term Incentive Plan (the “1997 Plan”), the 1998 Amendment and Restatement of Directors’ Stock Option Plan (the “1998 Plan”), the Company’s 2004 Stock Option and Incentive Plan (“2004 Plan”), the Company’s 2009 Amended and Restated Stock Option and Incentive Plan (“2009 Plan”), the Company’s 2010 Inducement Stock Plan (the “Inducement Plan”), and the Company’s 2001 Employee Stock Purchase Plan, as of March 4, 2013 with respect to (1) each DirectorAmended and nominee for director; (2) each of the Company's executive officers of the Company identified in this Proxy Statement; and (3) all Directors and executive officers of the Company as a group.
Restated (“2001 ESPP”).
|
| | | | | | | | |
| | | | | | | |
Name | | Common Stock(2) | | Exercisable Options | | Percentage of Outstanding Stock |
| Current Directors and Nominees*(1) | | | | | | |
| Herbert S. Alexander | | 114,757 | | 37,626 |
| | ** |
|
| Eugene S. Colangelo | | 147,532 | (3) | 37,626 |
| | ** |
|
| Lynn Thompson Hoffman | | 100,727 | | 22,924 |
| | ** |
|
| Deborah F. Kuenstner | | 87,101 | | 13,033 |
| | ** |
|
| John Morton III | | 45,742 | | — |
| | ** |
|
| William J. Shea | | 186,827 | | 17,924 |
| | ** |
|
| Allen L. Sinai | | 66,469 | | 22,924 |
| | ** |
|
| Stephen M. Waters | | 43,420 | | 17,924 |
| | ** |
|
| Named Executive Officers*(4) | | | | | | |
| Margaret W. Chambers | | 136,692 | | 58,100 |
| | ** |
|
| Clayton G. Deutsch | | 862,446 | | — |
| | 1.1 | % |
| Martha T. Higgins | | 68,524 | | 14,740 |
| | ** |
|
| David J. Kaye | | 117,056 | | 27,740 |
| | ** |
|
| Mark D. Thompson | | 369,245 | | 111,790 |
| | ** |
|
| All Current Directors and Executive Officers as a Group (14 Persons)(5) | | 2,382,477 | | 394,513 |
| | 3.51 | % |
|
| | | | | | | | | | | | |
| | | Equity Compensation Plan Information |
| Plan category | | Number of securities to be issued upon exercise of outstanding options, warrants and rights | | Weighted Average exercise price of outstanding options, warrants and rights | | Number of securities remaining available for future issuance under equity compensation plan (excluding securities referenced in column (a)) |
| | | (a) | | (b) | | (c) |
| Equity compensation plans approved by security holders (1) | | 2,324,844 |
| (3), (4) | | $ | 12.02 |
| | 3,274,352 |
| (5), (6) |
| Equity compensation plans not approved by security holders (2) | | — |
| | | $ | — |
| | 91,897 |
| |
| | | | | | | | | |
| Total | | 2,324,844 |
| | | $ | 12.02 |
| | 3,366,249 |
| |
| | | | | | | | | |
| |
* | Unless otherwise indicated, the address is c/o Boston Private Financial Holdings, Inc., Ten Post Office Square, Boston, MA 02109. |
| |
** | Represents less than 1% |
| |
| (1) | Percentages held by executive officersThe 2004 Plan, the 2009 Plan, the 1997 Plan, the 1998 Plan, and Directors individually and as a group are calculated on the basis of 78,997,218 shares of common stock outstanding as of March 4, 2013.2001 ESPP. |
| |
| (2) | Beneficial share ownershipThe Inducement Plan. The Company’s Board of Directors approved the Inducement Plan, which has not been approved by the Company’s shareholders. The purpose of the Inducement Plan is determined pursuant to Rule 13d-3 undergrant equity awards (stock options, restricted stock, restricted stock units, stock appreciation rights and other stock awards) to new employees as an inducement to join the Securities Exchange Act of 1934, as amended. Accordingly, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise has or shares the power to vote such security or the power to dispose of such security. The amounts set forth above as beneficially owned include shares owned, if any, by spouses and relatives living in the same home as to which beneficial ownership may be disclaimed.Company. |
| |
| (3) | Includes 20,736Does not include purchase rights accruing under the 2001 ESPP because the purchase price (and therefore the number of shares owned by twoto be purchased) will not be determined until the end of Mr. Colangelo's children. Mr. Colangelo disclaims any beneficial ownership of such shares.the purchase period. |
| |
| (4) | PerformanceIncludes 690,542 shares are not included as executive officers have no beneficial interest in such shares until establishedof restricted stock that could be issued if certain performance criteriametrics are met. Please see "Compensation Discussion and Analysis."
|
| |
| (5) | Includes 2,882,787 shares held by all ofavailable for future issuances under the Company's current executive officers including Directors. |
The following table lists certain persons known by the Company to own beneficially more than five percent of the Company's outstanding shares of common stock as of March l, 2013.
|
| | | | |
| Name and Business Address of Beneficial Owner | | Amount and Nature of Beneficial Ownership | | Percentage of Outstanding Stock |
| Black Rock, Inc., 40 East 52nd Street, New York, New York 10022 | | 6,559,655 | (1) | 8.31% |
| DBD Cayman, LTD. c/o The Carlyle Group, 1001 Pennsylvania Avenue NW, Suite 220 S., Washington, D.C., 20004 | | 7,756,022 | (2) | 9.94% |
| The Vanguard Group, 100 Vanguard Blvd., Malvern, Pennsylvania 19355 | | 4,235,239 | (3) | 5.36% |
| Wellington Management Company, LLP,280 Congress Street, Boston, MA 02210 | | 4,928,702 | (4) | 6.24% |
| | | | | |
| |
(1) | Based on a report filed with2004 and 2009 Plans and 1,082,108 shares available under the Securities and Exchange Commission as of February 1, 2013, and reflecting a December 31, 2012, position.2001 ESPP, less the incremental shares discussed above in note (4) to this table. |
| |
(2)(6) | Based on a report filed withIncludes 59,315 shares issued in January 2015 under the Securities and Exchange Commission as of August 19, 2011, reflecting an August 19, 2011, position. DBD Cayman, Ltd. is2001 ESPP for the general partner of TCG Holdings Cayman II, L.P., which is the general partner of TC Group Cayman Investment Holdings, L.P., which is the sole shareholder of Carlyle Financial Services, Ltd., which is the general partner of TCG Financial Services L.P., which is the general partner of BP Holdco, L.P. Accordingly, each of DBD Cayman, Ltd., TCG Holdings Cayman II, L.P., TC Group Cayman Investment Holdings, L.P., Carlyle Financial Services, Ltd. and TCG Financial Services L.P. may be deemed to be a beneficial owner of shares of Common Stock owned by BP Holdco, L.P. On February 28, 2012, the Company repurchased for cash all of the warrants held by BP Holdco and John Morton. The Company (i) repurchased warrants held by BP Holdco, representing the right (subject to the exercise and other limitations therein) toJuly 1 through December 31, 2014 purchase 5,383,891 shares of Common Stock for $14,836,928.28, (ii) repurchased warrants held by Mr. Morton, representing the right (subject to the exercise and other limitations therein) to purchase 59,174 shares of common stock, for $28,155.00 and (iii) made a cash payment of $134,916.72 to BP Holdco in respect of a cash payment that would have been payable to BP Holdco upon exercise of the warrants held by Mr. Morton.period. |
| |
(3) | Based on a report filed with the Securities and Exchange Commission as of February 13, 2013, and reflecting a December 31, 2012 position. |
| |
(4) | Based on a report filed with the Securities and Exchange Commission as of February 14, 2013, and reflecting a December 31, 2012 position. |
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act, requires that the Company's officers and directors, and persons who own beneficially more than 10% of the Company's outstanding shares of Common Stock file reports of ownership and changes in ownership with the SEC. Based solely upon a review of the reports and amendments thereto filed with the SEC under Section 16(a), copies of which are required to be furnished to the Company under SEC regulations, during and with respect to fiscal year 2012, no officer, director or person who owns beneficially more than 10% of the Company's outstanding shares of common stock failed to file such reports on a timely basis, except that Clayton G. Deutsch and Martha Higgins inadvertently failed to timely file a report with respect to one transaction each.
RELATED PARTY TRANSACTIONS
The Company sends out questionnaires to its directors and officers, and those of its majority or wholly-owned subsidiaries regarding related party transactions. If there are any affirmative responses, the Board reviews them and the terms and conditions of any such transactions. There was onewere no related party transaction. Stephen M. Waters, who is a director and Chairman of the Board of Directors of the Company, had one loan and one line of credit totaling approximately $9.5 million with Boston Private Bank & Trust Company. While both the loan and the line of credit with Boston Private Bank & Trust Company were originated prior to Mr. Waters becoming a Director of the Company, he borrowed additional funds against his line of credittransactions in 2011. Both the loan and the line of credit were closed in 2012. All loans were made in the ordinary course of business under normal credit terms, including interest rates and collateral requirements prevailing at the time of origination for comparable transactions with other persons, and do not represent more than normal credit risk.2014.
EQUITY COMPENSATION PLAN INFORMATION
The following table provides information as of December 31, 2012 regarding shares of common stock of the Company that may be issued under the Company's existing equity compensation plans, including the Company's Amended and Restated 1997 Long-Term Incentive Plan (the "1997 Plan"), the 1998 Amendment and Restatement of Directors' Stock Option Plan (the "1998 Plan"), the Company's 2004 Stock Option and Incentive Plan ("2004 Plan"), the Company's 2009 Stock Option and Incentive Plan (the "2009 Plan"), the Company's 2010 Inducement Stock Plan (the "Inducement Plan"), the 2006 Non-Qualified Employee Stock Purchase Plan (the "2006 ESPP"), and the Company's 2001 Employee Stock Purchase Plan (as amended and restated) (the "2001 ESPP").
|
| | | | | | | | | | | | |
| | | Equity Compensation Plan Information |
Plan category | | Number of securities to be issued upon exercise of outstanding options, warrants and rights | | Weighted Average exercise price of outstanding options, warrants and rights | | Number of securities remaining available for future issuance under equity compensation plan (excluding securities referenced in column (a)) |
| | | (a) | | (b) | | (c) |
| Equity compensation plans approved by security holders (1): | | 3,598,628 |
| (3), (4) | | $ | 15.23 |
| | 3,276,395 |
| (5), (6) |
| Equity compensation plans not approved by security holders (2): | | — |
| | | $ | — |
| | 84,701 |
|
|
| | | | | | | | | |
| Total | | 3,598,628 |
| | | $ | 15.23 |
| | 3,361,096 |
| |
| | | | | | | | | |
| |
(1) | The 2004 Plan, the 2009 Plan, the 1997 Plan, the 1998 Plan, the 2006 ESPP and the 2001 ESPP. |
| |
(3) | Does not include purchase rights accruing under the 2006 ESPP and the 2001 ESPP because the purchase price (and therefore the number of shares to be purchased) will not be determined until the end of the purchase period. |
| |
(4) | Includes 424,046 shares of restricted stock that could be issued if certain performance metrics are met. |
| |
(5) | Includes 3,324,624 shares available for future issuances under the 2004 and 2009 Plans and 375,817 shares available under the 2001 ESPP, less the incremental shares discussed above in note (4) to this table. |
| |
(6) | Includes 71,891 shares issued in January 2013 under the 2001 ESPP for the July 1 through December 31, 2012 purchase period. |
The Company's Board of Directors approved the Inducement Plan, which has not been approved by the Company's shareholders. The purpose of the Inducement Plan is to grant equity awards (stock options, restricted stock, restricted stock units, stock appreciation rights and other stock awards) to new employees as an inducement to join the Company.
PROPOSAL 2
ADVISORY (NON-BINDING) VOTE ON EXECUTIVE COMPENSATION
As required by Section 14A of the Exchange Act the Board of Directors is submitting for shareholder approval, on an advisory basis, the compensation paid to the Company's named executive officers as described in this Proxy Statement pursuant to Item 402 of Regulation S-K. As previously disclosed by the Company, the Board of Directors has determined that it will hold an advisory vote on executive compensation on an annual basis.
The resolution that is the subject of this proposal is a non-binding advisory resolution and will not have any binding legal effect regardless of whether or not it is approved, and may not be construed as overruling a decision by the Company or the Board of Directors or creating or implying any change to the fiduciary duties of the Board. Furthermore, because this non-binding advisory resolution relates primarily to compensation that has already been paid or contractually committed for the Company's named executive officers, there is generally no opportunity for the Board to revisit those decisions. However, the Compensation Committee intends to take the results of the vote on this proposal into account in its future decisions regarding the compensation of the Company's named executive officers.
The Company's compensation program is designed to attract, motivate and retain the named executive officers who are critical to the Company's success, by offering a combination of base salary and annual and long-term incentives that are closely aligned with the Company's annual and long-term performance objectives. Please see the section titled "Compensation Discussion and Analysis" for additional information about the Company's executive compensation programs.
We believe that the effectiveness of our compensation programs is demonstrated by the accomplishments of management over the last fiscal year as detailed in our discussion in the section titled"Compensation Discussion and Analysis."
For these reasons, the Board of Directors recommends that shareholders vote in favor of the following resolution:
RESOLVED, that the compensation of the Company's named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, the compensation tables and narrative discussion, be approved.
The Board of Directors unanimously recommends that shareholders vote FOR approval of the compensation of the Company's named executive officers.
PROPOSALS 3 AND 4
APPROVAL OF AMENDMENTS TO
THE RESTATED ARTICLES OF ORGANIZATION
TO ELIMINATE SUPERMAJORITY VOTING REQUIREMENTS
The Company is seeking shareholder approval to amend the Company's Restated Articles of Organization, as amended, to eliminate the supermajority voting requirements in Article 6, Section 6.1 and Article 6, Section 6.9 of the Restated Articles of Organization. The following discussion is qualified in its entirety by the text of the proposed amendments, which are attached to this Proxy Statement as Annex A and Annex B, respectively.
Following the 2012 AnnualMeeting of Shareholders, the Board of Directors and its Governance Committee engaged in a review of the supermajority voting requirements of our Restated Articles of Organization and by-laws. A shareholder proposal was presented in the Proxy Statement for the 2012 Annual Meeting of Shareholders that requested the Board of Directors to take the necessary steps to change each shareholding voting requirement in the Company's Restated Articles of Organization or by-laws that calls for a greater than a simple-majority vote (i.e., a "supermajority" vote) to a "majority of votes cast for or against the proposal in compliance with applicable law." The shareholder proposal received a significant level of support from our shareholders.
Under our current Restated Articles of Organization, there are two actions that require a supermajority vote of shareholders: (1) an amendment to the Restated Articles of Organization, and (2) the removal of a Director. Currently, an amendment to the Restated Articles of Organization that would change the Company's name or change the total number and classes of stock that the Company is authorized to issue must be approved by a majority of the Board of Directors and at least a majority of the total votes eligible to be cast by shareholders. All other amendments to our Restated Articles of Organization require the approval of a majority of the Board and at least two-thirds of the total votes eligible to be cast by shareholders and, in certain circumstances, approval of the holders of at least 66 2/3% of the Series B preferred stock outstanding. In addition, under our current Restated Articles of Organization, a Director may be removed only for cause by 66 2/3% of the shares of common stock entitled to vote in an election of directors.
The supermajority voting requirement for amendments to our Restated Articles of Organization is consistent with Massachusetts law; however, Massachusetts law permits our Restated Articles of Organization to specify a lower voting requirement, though this lower threshold may not be less than a majority of the shares eligible to vote on the matter. In addition, under Massachusetts law, unless otherwise provided by a company's articles of organization or by-laws, a director may be removed by the shareholders if the number of votes cast to remove such director exceeds the number of votes cast not to remove such director. There are no provisions in our by-laws that call for a supermajority vote.
The Board acknowledges the sentiment of our shareholders expressed at the 2012 AnnualMeeting of Shareholders, and believes that eliminating the supermajority voting requirements would be consistent with the Company's commitment to good corporate governance. In light of these considerations, and upon the recommendation of the Governance Committee, our Board of Directors unanimously adopted amendments to Article 6, Section 6.1 and Article 6, Section 6.9 of the Company's Restated Articles of Organization, and recommends that shareholders approve these amendments.
If approved by the shareholders, the proposed amendments to the Restated Articles of Organization will become effective upon the filing of Articles of Amendment with the Secretary of the Commonwealth for The Commonwealth of Massachusetts.
PROPOSAL 3
APPROVAL OF AMENDMENT TO ARTICLE 6, SECTION 6.1
OF THE RESTATED ARTICLES OF ORGANIZATION
At the Meeting, shareholders will be asked to approve the amendment of Article 6, Section 6.1, of the Restated Articles of Organization, as reflected in Annex A, to provide that a Director or the entire Board of Directors may be removed for cause only by the shareholders if the number of votes cast to remove such director exceeds the number of votes cast not to remove such director.
Approval of this proposal requires the affirmative vote of not less than two-thirds of the total votes eligible to be cast at the Meeting. Abstentions and broker non-votes will have the same effect as a vote AGAINST this proposal.
PROPOSAL 4
APPROVAL OF AMENDMENT TO ARTICLE 6, SECTION 6.9
OF THE RESTATED ARTICLES OF ORGANIZATION
At the Meeting, shareholders will be asked to approve the amendment of Article 6, Section 6.9, of the Restated Articles of Organization, as reflected in Annex B, to provide that amendments to the Company's Restated Articles of Organization, which must first be approved by the affirmative vote of at least a majority of the Directors of the Company then in office, must thereafter be approved by the affirmative vote of not less than a majority of the total votes eligible to be cast at a duly constituted meeting, consistent with applicable law.
Approval of this proposal requires (1) the affirmative vote of not less than two-thirds of the total votes eligible to be
cast at the Meeting and (2) the affirmative vote of 66 2/3% of the outstanding Series B preferred stock, voting as a single class. Abstentions and broker non-votes will have the same effect as a vote AGAINST this proposal.
The Board of Directors unanimously recommends that shareholders vote FOR approval of the amendments to the Company's Restated Articles of Organization, as described in Proposals 3 and 4.
SOLICITATION OF PROXIES
The cost of solicitation of proxies in the form enclosed herewith will be borne by the Company. In addition to the solicitation of proxies by mail, the Company'sCompany’s regular employees may also solicit proxies personally or by telephone. Banks, brokerage houses, custodians, nominees and other fiduciaries have been requested to forward proxy materials to the beneficial owners of shares of common stock held of record by them. Such custodians will be reimbursed for their expenses. The Company will pay the expenses of soliciting proxies, including the reasonable charges and expenses of brokerage firms and others for forwarding solicitation material to beneficial owners of stock. The Company'sCompany’s representatives may solicit proxies by mail, telephone, electronic or facsimile transmission, or personal interview.
SUBMISSION OF STOCKHOLDERSHAREHOLDER PROPOSALS FOR 20142016 ANNUAL MEETING
Shareholder proposals intended to be presented at the next annual meeting of shareholders and which are to be considered for inclusion in the Company'sCompany’s Proxy Statement and form of proxy for that meeting, must be received by the Company on or before November 15, 2013.17, 2015. These proposals must also comply with the rules of the SEC governing the form and content of proposals in order to be included in the Company'sCompany’s Proxy Statement and form of proxy. Any such proposals should be mailed to: Corporate Secretary, Boston Private Financial Holdings, Inc., Ten Post Office Square, Boston, Massachusetts 02109.
A shareholder of record who wishes to present a proposal at the next annual meeting, other than a proposal to be considered for inclusion in the Company'sCompany’s Proxy Statement described above, must provide written notice of such proposal and appropriate supporting documentation, as set forth in the Company'sCompany’s by-laws, to the Company at its principal executive office no earlier than December 18, 2013,17, 2015, nor later than January 17, 2014;18, 2016; provided, however, that in the event the annual meeting is scheduled to be held on a date more than 30 days before the first anniversary of the date of the preceding year'syear’s annual meeting (the "Anniversary Date"“Anniversary Date”) or more than 60 days after the Anniversary Date, timely notice by the shareholder must be delivered not earlier than the close of business on the later of (1) the 90th day prior to the scheduled date of such annual meeting or (2) the 10th day following the first date on which the date of such annual meeting is publicly disclosed. Proxies solicited by the Board of Directors will confer discretionary voting authority with respect to these proposals, subject to SEC rules governing the exercise of this authority. Any such proposal should be mailed to: Corporate Secretary, Boston Private Financial Holdings, Inc., Ten Post Office Square, Boston, Massachusetts 02109.
ANNEX A
ARTICLE 6: OTHER LAWFUL PROVISIONS
SECTION 6.1 Directors.
(i) Subject to this Section 6.1(i), the Board of Directors shall be and is divided into three classes (Class I, Class II and Class III). The initial directors of the corporation shall hold office as follows: the first class of directors shall hold office initially for a term expiring at the annual meeting of stockholders to be held in 1995, the second class of directors shall hold office initially for a term expiring at the annual meeting of stockholders to be held in 1996, and the third class of directors shall hold office initially for a term expiring at the annual meeting of stockholders to be held in 1997, with the members of each class to hold office until their respective successors are duly elected and qualified. At each annual meeting of stockholders of the corporation, the successors to the class of directors whose term expires at that meeting shall be elected to hold office for a term expiring at the annual meeting of stockholders held in the third year following the year of their election and until their respective successors are elected and qualified, until the annual meeting of stockholders to be held in 2013. Beginning with the annual meeting of stockholders to be held in 2013, directors shall be elected annually for terms of one year, except that any director in office at the 2013 annual meeting whose three-year term expires at the annual meeting of stockholders to be held in calendar year 2014 or 2015 shall continue to hold office until the end of the three-year term for which such director was elected and until such director's successor shall have been elected and qualified. At the annual meeting of stockholders to be held in 2016 and at each annual meeting of stockholders thereafter, all directors shall be elected for terms expiring at the next annual meeting of stockholders and until such directors' successors shall have been elected and qualified.
(ii) Subject to the rights of the holders of any preferred stock then outstanding, a director or the entire Board of Directors may be removed by the stockholders only if the number of votes cast to remove such director exceeds the number of votes cast not to remove such director, and then, only for cause. For purposes of this Section 6.1, "cause" shall be defined to mean only the following: (i) conviction of a felony, (ii) declaration of unsound mind by order of court, (iii) gross dereliction of duty, (iv) commission of an act involving moral turpitude, or (v) commission of an action which constitutes intentional misconduct or a knowing violation of law if such action in either event results both in an improper substantial personal benefit and a material injury to the Corporation.
ANNEX B
ARTICLE 6: OTHER LAWFUL PROVISIONS
SECTION 6.9 Amendment of Articles of Organization. No amendment, addition, alteration, change or repeal of these Articles of Organization shall be made, unless the same is first approved by the affirmative vote of at least a majority of the directors of the corporation then in office, and thereafter approved by the stockholders by an affirmative vote of not less than a majority of the total votes eligible to be cast at a duly constituted meeting, or, in the case of Articles 1 or 3 of the Articles, by an affirmative vote of not less than a majority of the total votes eligible to be cast at a duly constituted meeting. Unless otherwise provided by law, any amendment, addition, alteration, change or repeal so acted upon shall be effective on the date it is filed with the Secretary of State of The Commonwealth of Massachusetts or on such other date as specified in such amendment, addition, alteration, change or repeal and/or as the Secretary of State may specify.
