INFORMATION
Exchange Act of 1934 (Amendment No. _____)
☒
☐
(NamePayment of Person(s) Filing Proxy Statement, if other thanFee (Check the Registrant)
| appropriate box) ☒ No fee required. ☐ Fee computed on table below per Exchange Act Rules 14a-6(i)(l) and 0-11. (1) | ||
| Title of each class of securities to which transaction applies: | ||
INC.
April __, 2013
We
2013 was a transitional year for our Company. We listed our stock on the NASDAQ exchange,2019 and beyond, we completed an IPO stock offering, we issued debt, and our strategies produced record earnings. We also expanded our franchise into New York City and New England, strengthened our capital position, and grew both loans and deposits. We are excited about 2014our prospects. Our strategic priorities in 2019 are: 1) create shareholder value through improved profitability; 2) focus and grow core banking operations; 3) achieve profitability at BankMobile and grow for 2-3 years before monetizing the many opportunities we haveinvestment; 4) strengthen our mix of assets and liabilities; and 5) deploy excess capital to further growbenefit shareholders. We recently announced a core EPS target of $3 per share in 2020 as an important milestone on our path to $4 of core EPS within 3-4 years. We believe that the stock movement from current levels today to a trading price reflective of $4 of EPS over the next 3-4 years should drive significant shareholder value.
team members thank you for your interest in Customers Bancorp, Inc.
the Proxy Statement carefully before voting your shares.
 |
 |
Jay S. Sidhu Chairman and Chief Executive Officer |
An
| 1. | To elect |
| To ratify the appointment of |
| 3. | To approve a non-binding advisory resolution on executive officer compensation; |
| 4. | To approve an amendment to the Company’s Amended and Restated Articles of Incorporation to adopt a majority voting standard in uncontested elections of directors; |
| 5. | To approve the 2019 Stock Incentive Plan; and |
| 6. | The transaction of such other business as may properly come before the Annual Meeting, and any adjournment or postponement of the Annual Meeting. |
The directorsDirectors of the Company unanimously believebelieves that Proposals 1 2 and 3through 5 are in the best interests of the Company and its shareholders, and urge shareholders to vote “"
This proxy statement5.
By Order of the Board of Directors
Glenn A. Yeager, Corporate Secretary
Mailed on or about April
.
| By Order of the Board of Directors |
 |
| Michael De Tommaso, Corporate Secretary |
| To be mailed on or about April 17, 2019 |
| Audit and Other Fees Paid to Independent Registered Public Accounting | ||
| Pre-approval of Audit and Non-Audit Services | ||
| PROPOSAL 3: A NON-BINDING ADVISORY VOTE ON EXECUTIVE COMPENSATION | ||
| PROPOSAL 4: APPROVAL OF AN AMENDMENT TO THE AMENDED AND RESTATED ARTICLES OF INCORPORATION TO ADOPT A MAJORITY VOTING STANDARD IN UNCONTESTED ELECTIONS OF DIRECTORS | ||
PROPOSAL 5: APPROVAL OF THE 2019 STOCK INCENTIVE PLAN | ||
| AUDIT COMMITTEE REPORT | ||
| Code of Ethics and Business Conduct | ||
| Director Independence Standards | ||
| Stock Ownership Requirements | ||
| Board Responsibilities | ||
| Director Qualifications | ||
| Director Nominations | ||
| Board Leadership and Oversight | ||
| Board Committees | ||
| Board Committee Descriptions and Responsibilities | ||
| COMPENSATION DISCUSSION AND ANALYSIS | ||
| Executive Compensation Philosophy | ||
| Compensation Setting Process | ||
| Elements of | ||
| APPENDIX A: FULL TEXT OF THE PROPOSED AMENDMENT 4 TO THE EXISTING ARTICLES | ||
| APPENDIX B: 2019 STOCK INCENTIVE PLAN | ||
| APPENDIX C: RECONCILIATION OF GAAP AND NON-GAAP FINANCIAL MEASURES | ||
| PROXY CARD | ||
| Customers Bancorp, Inc. 2019 Annual Meeting of Shareholders | |
| Thursday, May 30, 2019 | |
| 9:00 a.m., EDT | |
| Place: | DoubleTree Hotel by Hilton Reading |
| 701 Penn Street, Reading, PA 19601 |
| Items for Vote | Board Recommendation | |
| 1. Elect THREE Class II Directors; | FOR all nominees | |
| 2. Ratify the appointment of | FOR | |
| 3. Approve a non-binding advisory resolution on executive officer compensation; | FOR | |
| 4. Approve an amendment to the Company’s Amended and Restated Articles of Incorporation to adopt a majority voting standard in uncontested elections of directors; and | FOR | |
| 5. Approve the 2019 Stock Incentive Plan | FOR | |
PROXY STATEMENT
's 2019 Annual Meeting of Shareholders
 | Using the internet |  | Scanning the QR Barcode on your voting materials, where available |
| YOUR VOTE IS IMPORTANT, REGARDLESS OF HOW MANY SHARES YOU OWN. WHETHER YOU PLAN TO ATTEND THE MEETING OR NOT, PLEASE FOLLOW THE INSTRUCTIONS ON THE NOTICE AND ACCESS CARD TO REVIEW THE PROXY AND ANNUAL REPORT AND FOR INTERNET AND TELEPHONE VOTING INSTRUCTIONS, OR TO REQUEST PHYSICAL DELIVERY OF THE PROXY STATEMENT, ANNUAL REPORT AND PROXY CARD WITH A PRE-ADDRESSED ENVELOPE. PLEASE RETURN THE PROXY CARD, IF REQUESTED, PROMPTLY IN THE ENCLOSED ENVELOPE PROVIDED WITH THE ANNUAL MEETING MATERIALS, OR FOLLOW THE INSTRUCTIONS ON THE PROXY CARD FOR INTERNET OR TELEPHONE VOTING. IF YOU ATTEND THE MEETING AND PREFER TO VOTE IN PERSON, YOU MAY DO SO, EVEN IF YOU SUBMIT YOUR PROXY PRIOR TO THE MEETING. YOU MAY REVOKE YOUR PROXY AT ANY TIME PRIOR TO ITS USE FOR ANY PURPOSE BY GIVING WRITTEN NOTICE OF REVOCATION TO OUR CORPORATE SECRETARY AT OUR WYOMISSING OFFICE AT 1015 PENN AVE. SUITE 102, WYOMISSING, PENNSYLVANIA 19610. YOU MAY ALSO APPEAR IN PERSON AT THE ANNUAL MEETING AND THEN VOTE IN PERSON. NOTE THAT ATTENDANCE AT THE ANNUAL MEETING ALONE IS NOT SUFFICIENT TO REVOKE YOUR PROXY. A LATER DATED PROXY REVOKES AN EARLIER DATED PROXY. |
your shares and present it to the inspector of election with your ballot.
For purposes of this Proxy Statement, any references to the "
Board of Directors" or the "Board" refer to the Board of Directors of Customers Bancorp, Inc.card or follow the instructions on the proxy card to vote using the internet or telephone.
meeting and is making the Proxy Statement and 2018 Annual Report available to you electronically.
| 1. | To elect |
| To ratify the appointment of |
5. held as of the Record Date. cast. Beneficial Owner: Shares Registered in the Name of Broker, Bank, or Other Agent. If your shares of the Proposals 2, 3, 4 and 5, and " This is also the process by which you may communicate with the Lead Independent Director and our non-employee Directors as a group. term named in Proposal 1; 2019;3. To approve a non-binding advisory resolution on executive officer compensation; 4. To approve an amendment to the Company’s Amended and Restated Articles of Incorporation to adopt a majority voting standard in uncontested elections of directors; and 5. To approve the 2019 Stock Incentive Plan The Company’sCompany's Board of Directors recommends a vote “"FOR”" each of the Board of Director’s nominees identified in this Proxy Statement, and “"FOR”" Proposals 2, 3, 4 and 3 above.How many votes do I have?Each holder of the Company’sCompany's Voting Common Stock is entitled to one vote per share held.What is a quorum?For a proposal to be considered at the meeting, a quorum must be present. The presence, in person or by proxy, of shareholders entitled to cast at leastholders of a majority of shares of the votes which all shareholders are entitled to cast on the particular matterCompany's Voting Common Stock will constitute a quorum for purposes of considering such matter.conducting business at the Annual Meeting. The shareholders present, in person or by proxy, at a duly organized meeting can continue to do business until adjournment, notwithstanding the withdrawal of enough shareholders to leave less than a quorum.Abstentions and “broker non-votes” (that is, shares heldShares of the Company’s Voting Common Stock represented by a broker or nominee that are representedproperly executed and delivered proxy which casts a vote on any matter, other than a procedural matter, will be counted as present at the meeting, but with respectAnnual Meeting for purposes of determining a quorum, without regard to which such brokerwhether the proxy is marked or nominee is not instructed todesignated as casting a vote or abstaining on a particular proposalmatter. Shares of the Company’s Voting Common Stock represented by broker non-votes will be counted as present for purposes of determining a quorum if such shares have been voted on any matter other than a procedural matter. “Broker non-votes” are shares held in record name by brokers or other nominees on behalf of beneficial owners as to which (i) instructions have not been received from the beneficial owners or persons entitled to vote; and does(ii) the brokers or other nominees do not have discretionary voting power) will be counted for the purpose of determining whetherpower to vote such shares on a quorum is present.Your shares will be counted toward the quorum only if you submit a valid proxy (or one is submitted on your behalf by your broker, bank, or other agent) or if you are present at the meeting. particular proposal.If there is no quorum, a majority of all votes cast at the meeting may adjourn the meeting to another date.What vote is required?For Proposal 1, if a quorum is present, the candidates receiving the highest number of votes cast shall be elected. Cumulative voting is not permitted. “Withheld”"Withheld" votes and broker non-votes will not count in determining the number ofas votes required to elect a director, and they will not count in favor of or against a director’s election.For Proposals 2, 3, 4 and 3,5, if a quorum is present, the affirmative vote of a majority of the stock having voting powers, present,shares of Voting Common Stock cast, in person or by proxy at the Annual Meeting, is required to approve such proposals. Abstentions and broker non-votes are not deemed to constitute “votes cast”"votes cast" and, therefore, do not count either for or against approval of thethose proposals.For beneficial owners, the rules that guide how most brokers vote your stock have changed over the last several years. The rules provide that brokerage firms or other nominees may not vote your shares with respect to matters that are not “routine”"routine" under the rules. The rules now provide that the election of directorsDirectors is not a “routine”"routine" matter. The ratification andof the appointment of our independent registered public accounting firm for 20142019 is the only current proposal that is considered a “routine”"routine" matter under the rules and, therefore, brokerage firms and other nominees have the authority under the rules to vote your unvoteduninstructed shares only with respect to that matter if you have not furnished voting instructions within a specified period of time prior to the meeting.For any matter to be voted on exceptProposal 1, the election of directors,Directors, you may vote “"FOR” or “Against” or abstain from voting. For the election of directors, you may vote “FOR”" the director nominees or your authority may be “Withheld”"WITHHELD" for one or more of the nominees. For Proposals 2, 3, 4 and 5, you may vote "FOR" or "AGAINST" or "ABSTAIN" from voting. The procedures for voting are as follows:Shareholder of Record: Shares Registered in Your Name. If you are a shareholder of record, you may vote in person at the meeting. Alternatively, you may vote by proxy by following the instructions on the Notice and Access card sent to you using the internet or telephone, or if you request paper copies of the proxy, annual report and proxy card, you may vote using the accompanying proxy card or by following the instructions on the accompanying proxy card to vote by internet or telephone. Whether or not you plan to attend the meeting, we urge you to vote by proxy to ensure your vote is counted. You may still attend the meeting and vote in person if you have already voted by proxy. In such case, notify the Corporate Secretary before the meeting begins of your presence at the meeting and your intention to revoke your previously voted proxy.To vote in person, come to the meeting and we will give you a ballot when you arrive.ToIf you received a Notice and Access card, to vote by internet or telephone, follow the instructions of the Notice and Access card. If you order paper copies of the Proxy Statement, annual report and proxy card, to vote by mail, simply complete, sign, and date the accompanying proxy card separately mailed to you and return it promptly in the envelope provided. To vote by internet or telephone, follow the instructions on the accompanying proxy card for internet or telephone voting.If you return your signed proxy card to us before the meeting, or you vote by internet or telephone, we will vote your shares as you direct unless you revoke your proxy.2Company’sCompany's Voting Common Stock are held in “street"street name,”" that is, your shares are held in the name of a brokerage firm, bank, or other nominee, in lieu of a proxyNotice and Access card you should receive a voting instruction form from that institution by mail. Complete and mailreturn the voting instruction card as instructed to ensure that your vote is counted.If your shares are held in street name and you wish to vote in person at the meeting, you must obtain a legal proxy issued in your name from the record holder (that is, your brokerage firm, bank or other nominee) and bring it with you to the meeting. We recommend that you vote your shares in advance as described above so that your vote will be counted if you later decide not to attend the meeting.What if I return a proxy card but do not make specific choices?If you return a signed proxy card without marking any voting selections, your shares will be voted “FOR” Proposals 2, 3, 4 and 3,5, and “FOR” each director nominatedthe nominees recommended by the Board of Directors. If any other matter is properly presented at the meeting, then one of the proxies named on the proxy card will vote your shares using his or her best judgment.What if I receive more than one proxy card or voting instruction form?If you receive more than one proxy card, Notice and Access card, or voting instruction formcard because your shares are held in multiple accounts or registered in different names or addresses, please be sure to complete, sign, date, and returneach proxy card, or vote your shares online for each Notice and Access card received and return each voting instruction formcard to ensure that all of your shares will be voted. Only shares relating to proxy cards and voting instruction forms that have been signed, dated, and timely returned or shares that have been voted online relating to Notice and Access cards, will be counted in the quorum and voted.Who will count the votes and how will my votes be counted?Votes will be counted by the judge of election appointed by the Board of Directors for the Annual Meeting. The judge of election will count, “"FOR” and “," "AGAINST” votes for each of proposal 2 and 3, and “FOR” and “WITHHELD”" or "ABSTAIN" votes, as applicable, for the director nominees named on your proxy card.Can I change my vote after I have sent you my proxy?Yes. You can revoke your proxy at any time before the applicable vote at the meeting. If you are the record holder of your shares, you may revoke your proxy in any one of three ways:·You may submit another properly completed proxy with a later date;·You may send a written notice that you are revoking your proxy to our Corporate Secretary at our principal executive offices: 1015 Penn Ave. Suite 103, Wyomissing, Pennsylvania 19610; or·You may attend the meeting and vote in person (however, simply attending the meeting will not, by itself, revoke your proxy; you must notify the Corporate Secretary before the meeting begins of your presence at the meeting and your intention to revoke your previously voted proxy).You may submit another properly completed proxy with a later date;You may send a written notice that you are revoking your proxy to our Corporate Secretary at our principal executive offices: 1015 Penn Ave. Suite 103, Wyomissing, Pennsylvania 19610; orYou may attend the meeting and vote in person (however, simply attending the meeting will not, by itself, revoke your proxy; you must notify the Corporate Secretary before the meeting begins of your presence at the meeting and your intention to revoke your previously voted proxy).If your shares are held by a broker, bank, or other agent, you should follow the instructions provided by them.How may I communicate with the Board of Directors?Please address any communications to the Company’sCompany's Board of Directors, or any individual director, in writing to the Company’sCompany's Corporate Secretary at 1015 Penn Ave., Wyomissing, Pennsylvania 19610. The Corporate Secretary will relay all shareholder communications to the Board of Directors or any individual director to whom communications are directed.Who will bear the cost of soliciting proxies?The Company will bear the entire cost of the solicitation of proxies for the meeting, including the preparation, assembly, printing, and distribution of this Proxy Statement, the Notice and Access mailing, the proxy card and any additional solicitation materials furnished to shareholders. Copies of solicitation materials will be furnished to brokerage houses, fiduciaries, and custodians holding shares in their names that are beneficially owned by others so that they may forward the solicitation materials to the beneficial owners. The Company may reimburse such persons for their reasonable expenses in forwarding solicitation materials to beneficial owners. The Company has engaged Eagle Rock Proxy Advisors,Georgeson, Inc. ("Georgeson"), a professional proxy solicitation firm, (“Eagle Rock”), to assist in the solicitation of proxies for the 20142019 Annual Meeting of Shareholders. Eagle RockMeeting. Georgeson will be paid a fee of approximately five thousand dollars ($5,000). The solicitation of proxies may be supplemented by solicitation by personal contact, telephone, facsimile, email, or any other means by the Company’s directors,Company's Directors, officers, or employees. No additional compensation will be paid to those individuals for any such services.3How can I find out the results of the voting at the meeting?The Company will provide the voting results in a Form 8-K to be filed with the Securities and Exchange Commission ("SEC") no later than the fourth business day after the Annual Meeting.What is the recommendation of the Board of Directors?The Company’sCompany's Board of Directors recommends a vote:FOR each of the proposal to elect twonominees for election as Class III directorsII Directors of the Company to serve a three-year term;FOR the proposal to adopt the Customers Bancorp, Inc. 2014 Employee Stock Purchase Plan; andFORthe proposalBDO USA,Deloitte & Touche LLP as the independent registered public accounting firm of the Company for the fiscal year ending December 31, 2014.FOR Proposal 3 to approve a non-binding advisory resolution on executive officer compensation;FOR Proposal 4 to approve an amendment to the Company’s Amended and Restated Articles of Incorporation to adopt a majority voting standard in uncontested elections of directors; andFOR Proposal 5 to approve the 2019 Stock Incentive Plan.With respect to any other matter that properly comes before the meeting, the proxies will vote in accordance with their best judgment. The judge of election for the meeting will be a representative of our transfer agent, Broadridge Corporate Issuer Solutions,Computershare, Inc., or, in his or her absence, one or more other individuals to be appointed in accordance with the Company’sCompany's bylaws.UnlessIf you give other instructions on yourvote pursuant to the Notice and Access cards, or using the proxy card, and you do not specify how you want to vote, the persons named as proxies on your signed proxy card will vote in accordance with the recommendations of the Company’sCompany's Board of Directors with respect to each of the proposals and the election of director,proposal, and in their discretion with respect to any other matter properly brought before the Annual Meeting.Whom should I call if I have questions about the meeting?You should contact GlennMichael A. Yeager,DeTommaso, our Corporate Secretary, at (484) 359-7136334-4233 for questions about the meeting.COMMUNICATIONS WITH SHAREHOLDERS AND INVESTORSThe Company has continued to develop and enhance its programs to communicate and interact with shareholders and other current and potential investors.The Communication Program builds on the Company's effort and includes:Quarterly investor presentations;Periodic "letters" to shareholders and investors;Investor days, which provide an opportunity for all investors to have dialog with our independent DirectorsProxy statements, annual reports, other filings with the SEC and the Company's online presence;Attendance, presentations, and meetings at various investor conferences; andDirect shareholder and investor outreach to seek input on specific matters.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENTThe following table sets forth the beneficial ownership of shareholders holding more than 5.0% of our Voting Common Stock as of March 15, 2019:Name and Address of Beneficial Owner Voting
Common Stock Percent of
Class of
Voting Common
Stock (1)BlackRock, Inc.
55 East 52 nd Street
New York, NY 10055 4,480,650 (2) 14.40 % Dimensional Fund Advisors LP
6300 Bee Cave Road
Austin, TX 78746 2,661,955 (3) 8.55 % Vanguard Group Inc.
100 Vanguard Blvd.
Malvern, PA 19355 1,835,387 (4) 5.90 % (1 ) Based on 31,117,093 shares of Customers Bancorp, Inc. common stock outstanding as of March 15, 2019. (2 ) This information is based on Schedule 13G/A filed with the Securities and Exchange Commission on January 24, 2019 by BlackRock, Inc. (3 ) This information is based on Schedule 13G/A filed with the Securities and Exchange Commission on February 8, 2019 by Dimensional Fund Advisors LP. (4 ) This information is based on Schedule 13G/A filed with the Securities and Exchange Commission on February 11, 2019 by Vanguard Group Inc. The following table sets forth information, as of March 17, 201415, 2019, with respect to the beneficial ownership of each director, each beneficial owner known to us of more than five percent (5%) of our outstanding Voting Common Stock,Director, each named executive officer, and all directorsDirectors and named executive officers as a group. Percent of Voting Class of Name and Address Common
Stock Voting
Common of Beneficial Owner (2) (1) (2) (3) Stock (2) Directors and Officers Bhanu Choudhrie (4) 866,507 3.72% Steven J. Zuckerman 15,405 * T. Lawrence Way 210,137 * John R. Miller 33,709 * Daniel K. Rothermel 36,930 * Jay S. Sidhu 578,249 2.46% Richard A. Ehst 1,666 * Robert E. Wahlman 30,000 * Warren Taylor 29,925 * Glenn A. Hedde 36,358 * James D. Hogan (5) 14,925 * All directors and named executive officers
as a group (11 persons) 1,853,811 7.85% Greater than 5% Shareholders Wellington Management Company, LLP (6)
280 Congress Street - Boston, MA 02210 1,542,704 6.52% Opus Capital Group, LLC (7)
221 East Fourth Street, Suite 2700 - Cincinnati, OH 45202 1,321,417 3.72% 4Name and Address
of Beneficial Owner (2) Voting
Common Stock (1) (2) (3) Percent of
Class of
Voting Common
Stock (2)Directors Andrea Allon (4) 13,747 * Rick Burkey (5) 54,443 * Bhanu Choudhrie (6) 671,704 2.16 % Daniel K. Rothermel 73,744 * Jay S. Sidhu (3) (7) 1,776,309 5.59 % T. Lawrence Way 208,771 * Steven J. Zuckerman (8) 44,567 * Executive Officers who are not Directors Richard A. Ehst 114,055 * Glenn A. Hedde (3) 73,884 * Steven J. Issa 101 * Carla A. Leibold 3,324 * All Directors and named executive officers
as a group (11 persons) 3,034,649 9.54 % * Less than 1% *Less than 1%(1 (1))Based on information furnished by the respective individual and our share records. Shares are deemed to be beneficially owned by a person if he or she directly or indirectly has or shares the power to vote or dispose of the shares, whether or not he or she has any economic interest in the shares. Unless otherwise indicated, the named beneficial owner has sole voting and dispositive power with respect to the shares. (2 (2))Beneficial ownership for each listed person as of March 17, 201415, 2019, includes shares issuable pursuant to warrants or options to purchase stock held by such person which are exercisable within 60 days afterof March 17, 2014.15, 2019. Shares subject to warrants or options exercisable within 60 days of March 17, 201415, 2019 are deemed outstanding for purposes of computing the percentage of class of Voting Common Stock attributable to the person or group holding such options, or warrants, but are not deemed outstanding for purposes of computing the percentage of any other person or group. Unless otherwise indicated, the address for each beneficial owner is c/o Customers Bancorp, Inc., 1015 Penn Ave., Wyomissing, Pennsylvania 19610.(3 (3))Includes shares of Voting Common Stock issuable upon the exercise of warrants in the following amounts: Mr. Choudhrie – 32,377; Mr. Way – 2,270; Mr. Zuckerman – 6,195; Mr. Sidhu – 278,119. Includes shares of our Voting Common Stock issuable upon the exercise of stock options in the following amount:amounts: Mr. HoganSidhu – 10,000.679,701; Mr. Hedde – 12,834.(4 (4))Ms. Allon has an indirect beneficial ownership interest in 965 of these securities through her spouse. (5 ) Mr. Burkey has an indirect beneficial ownership interest in 977 of these securities through his company, BB Investment Group and in 2,811 of these securities through his spouse. (6 ) Mr. Choudhrie has an indirect beneficial ownership interest in 828,318646,764 of these securities through his company, Lewisburg LLC.(7 (5))Mr. Hogan resignedSidhu also serves as Chief FinancialExecutive Officer and Executive Vice Presidentof Customers Bancorp, Inc.(8 ) Mr. Zuckerman irrevocably transferred the current equivalent of 218,254 shares of Customers Bancorp, Inc. common stock to Sageworth Trust Company, Trustee of the Victoria H. Zuckerman 2006 MG Trust dated 8/21/2006 on August 30, 2013.(6)Wellington Management Company, LLP,May 8, 2012. Mr. Zuckerman has an indirect beneficial ownership interest in its capacity as investment adviser, may be deemed to beneficially own the securities which are held of record by clients of Wellington Management.(7)Opus Capital Group, LLC, in its capacity as investment adviser, may be deemed to beneficially own the securities which are held of record by clients of Opus Capital.56,815 shares through Steven J. Zuckerman Revocable Trust.
One
Class III —TermII — Term to Expire in 2017:
T. Lawrence Way,2022.
81
Doctor.
Steven J. Zuckerman, Director – Age 50
Mr. Zuckerman was President and CEO of Clipper Magazine for 30 years until his retirement in June 2013. He graduated from Franklin & Marshall College with a B.A. in Business Management in 1985. While in college, he co-founded the Campus Coupon Clipper, a predecessor to Clipper Magazine, now a full-service media company, with numerous subsidiaries including Loyal Customer Club, Spencer Advertising & Marketing, Clipper Web Development, The Menu Company, Total Loyalty Solutions, Clipper Graphics and Clipper TV. Clipper Magazine has hundreds of individual market editions in over 31 states with over 1,000 employees around the country, including approximately 500 in Lancaster County, Pennsylvania. He is a partner in Opening Day Partners, owner and operator of the Atlantic League of Professional Baseball Teams and Stadiums in New Jersey, Maryland and South Central Pennsylvania. He is also a partner in Oaktree Development Group, a real estate development company in Lancaster, PA.
Mr. Zuckerman’s experiences in the advertising industry make him uniquely situated to provide the board with insight in the key areas of marketing and customer strategies.
Board.
Director.
The shareholders are being asked to vote to adopt the Customers Bancorp, Inc. 2014 Employee Stock Purchase Plan (the “Purchase Plan”). The following summary of major features of the Purchase Plan is subject to the specific provisions in the full text of the Purchase Plan set forth asExhibit A to this Proxy Statement.
The approval of the Purchase Plan will enable the Company to achieve the following intended outcomes:
1. Encourage and enable team members of the Company and its 50% or more controlled subsidiaries to acquire a proprietary interest in the Company through the ownership of shares of Company common stock.
2. Continue to support the Company’s view that team members who participate in the Purchase Plan will have a closer identification with the Company by virtue of their ability, as shareholders, to participate in the Company’s growth and earnings.
Shares of Company common stock will be purchased directly from the Company from authorized but previously unissued shares or shares held in the treasury. Proceeds from the sale of the common stock pursuant to the Purchase Plan will be used by the Company for general corporate purposes. It is the Company’s intention that the Purchase Plan qualifies as an “employee stock purchase plan” under Section 423 of the Internal Revenue Code of 1986, as amended (the “Code”).
The purpose of the Purchase Plan is to encourage and enable team members of the Company or any of the Company’s 50% or more controlled subsidiaries to acquire a proprietary interest in the Company through the ownership of shares to Company common stock. The Company believes that team members who participate in the Purchase Plan will have a closer identification with the Company by virtue of their ability, as shareholders, to participate in the Company’s growth and earnings.
The Purchase Plan is designed to meet the requirements of Code Section 423 and to reflect prevailing corporate governance and compensation best practices. The following is a summary of the key provisions of the Purchase Plan:
Administration of the Purchase Plan
The Compensation Committee of the Board administers the Purchase Plan. The Committee has the authority to make a final and binding determination of all questions of, and interpretations with respect to, the operation of the Purchase Plan.
Participation in the Purchase Plan
There are four consecutive quarterly subscription periods in each calendar year. A subscription period begins on the first day of the pay period in which each January 1, April 1, July 1, and October 1 falls and continues until the next subscription period commences. A team member may begin participating in the Purchase Plan effective at the beginning of a subscription period. Once enrolled in the Purchase Plan, a participant is able to purchase Company common stock with payroll deductions at the end of each pay period. Once a quarterly subscription period is over, a participant is automatically enrolled in the next subscription period, unless such participant chooses to withdraw from the Purchase Plan.
A participant may designate payroll deductions to be used to purchase stock at a rate that is at least 1% and that does not exceed 15% of such participant’s earnings. A participant may only change the percentage of earnings that is deducted to purchase shares under the Purchase Plan (other than to withdraw entirely from the Purchase Plan, as set forth below) effective at the beginning of the following subscription period.
At the end of each pay period, payroll deductions are applied automatically to purchase Company common stock. The price of each share of Company common stock purchased under the Purchase Plan during a quarterly subscription period will be equal to its fair market value on the relevant purchase date less a 15% discount. Fair market value is defined as the closing sale price per share as listed on NASDAQ on such date. The number of shares purchased is determined by dividing the payroll deductions for the payroll period by the price paid by the participant. Fractional shares are issued, so no funds will be carried over to the next period. All shares purchased are credited to the participant but are initially registered in the name of the Company’s transfer agent.
Shares purchased by a participant under the Purchase Plan may not be sold or otherwise disposed of by the participant for a period of one year from the first day of the calendar quarter in which they were purchased, except in the case of the participant’s termination of employment before the end of this one-year period. Thereafter, the participant is free to do whatever the participant wishes with the shares, including sell them or have the shares transferred directly into such participant’s name or into the participant’s name with another as joint tenants with right of survivorship.
If the event of a stock dividend, stock split, reverse stock split, recapitalization, reorganization, merger, spin-off, or similar event affecting the common stock, the Board will appropriately adjust the number of shares available under the Purchase Plan.
A participant is not permitted to purchase shares under the Purchase Plan if the participant would own Company common stock possessing 5% or more of the total combined voting power or value of all classes of the Company stock. A participant is also not permitted to purchase Company common stock with a fair market value in excess of $25,000 in any one calendar year. These limitations are to ensure that the Purchase Plan complies with Code requirements and are determined based upon the fair market value of shares purchased on each bi-weekly purchase date.
A participant does not have the rights of a shareholder until the shares of stock are actually purchased. A participant may not transfer the right to purchase stock under the Purchase Plan.
Each participant will be provided with a quarterly written statement indicating the number of shares of stock purchased under the Purchase Plan for such quarter, the aggregate number of shares accumulated under the Purchase Plan, and other relevant information.
Withdrawing from the Purchase Plan
A participant may stop participating in the Purchase Plan at any time. If a participant withdraws from the Purchase Plan, participation will end effective at the beginning of the next payroll period. If a team member who has previously withdrawn from the Purchase Plan, or who has reduced his or her payroll deduction percentage to 0%, wishes to resume participation, the team member may not re-enroll as of any date prior to the first quarterly subscription period beginning in the next calendar year. If a participant terminates employment at the Company at any time, participation in the Purchase Plan automatically terminates.
The Board has the power to amend or terminate the Purchase Plan at any time, except that the Board may not, without first obtaining shareholder approval, increase the number of shares reserved under the Purchase Plan other than as otherwise provided in the Purchase Plan, change the eligibility requirements to participate in the Purchase Plan, or otherwise materially change the benefits provided in the Purchase Plan.
Certain Federal Income Tax Consequences of the Purchase Plan
The following summarizes the federal income tax consequences of a team member’s participation in the Purchase Plan based on the pertinent provisions of the Code currently in effect. This summary does not address federal employment taxes, state and local income taxes, and other taxes that may be applicable and is not intended to be a complete description of the tax consequences of participation in the Purchase Plan.
The Purchase Plan is intended to be an “employee stock purchase plan” within the meaning of Section 423 of the Code. A participant will not recognize taxable income upon enrollment in the Purchase Plan or purchasing shares. In general, a participant recognizes taxable income in the year in which the shares of stock purchased under the Purchase Plan are sold or otherwise disposed of (including by gift).
Qualifying Dispositions. If the shares are not disposed of until at least two years has passed from the start of the quarterly subscription period in which the shares were acquired (a “qualifying disposition”), the participant will have ordinary income in the year of the qualifying disposition equal to the lesser of (i) the amount by which the fair market value of the shares on the date of such disposition exceeds the purchase price paid for such shares, or (ii) 15% of the fair market value of the shares on the start of the quarterly subscription period in which the shares were acquired. The amount of ordinary income will be added to the tax basis of the stock and any additional gain recognized upon the qualifying disposition will be a long-term capital gain. If the fair market value on the date of the qualifying disposition is less than the purchase price paid for the shares, there will be no ordinary income and any loss will be a long-term capital loss.
Disqualifying Dispositions. If shares acquired under the Purchase Plan are disposed of at any time within two years from the start of the quarterly subscription period in which such shares were acquired (a “disqualifying disposition”), the participant will have ordinary income in the year of the disqualifying disposition equal to the amount by which the fair market value of the shares on the purchase date exceeded the purchase price. The amount of the ordinary income will be added to the tax basis of the stock, and any resulting gain or loss upon the disposition will be a capital gain or loss. The capital gain or loss will be long-term if the stock has been held for more than one year.
Participants may be limited in their ability to take capital losses that may be incurred. Maximum tax rates applicable to capital gains vary, so treatment of any particular participant’s capital gains will also vary.
The Company is not entitled to any federal income tax deduction attributable to shares acquired under the Purchase Plan at the time they are acquired. The Company will not be entitled to any such tax deduction attributable to shares if the shares are disposed of in a qualifying disposition. If, however, a participant disposes of shares acquired under the Purchase Plan in a disqualifying disposition, the Company may take a tax deduction for the year of the disqualifying deduction in an amount equal to the ordinary income the participant recognizes in the disposition.
It is not possible to determine the number of shares of stock that will be purchased under the Purchase Plan in the future by any particular individual.
THE BOARD RECOMMENDS A VOTE “FOR” APPROVAL OF PROPOSAL 2 TO ADOPT THE CUSTOMERS BANCORP, INC. 2014 EMPLOYEE STOCK PURCHASE PLAN.
EQUITY COMPENSATION PLAN INFORMATION
The following table provides certain summary information as of December 31, 2013 concerning our compensation plans (including individual compensation arrangements) under which shares of our common stock may be issued.
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SEC on March 7, 2019.
Firm
| Services Rendered | Fiscal 2013 | Fiscal 2012 | ||||||
| Audit Fees (1) | $ | 19,500 | $ | 227,454 | ||||
| Audit-Related Fees (2) | 48,754 | 55,722 | ||||||
| Tax Fees (3) | 0 | 68,793 | ||||||
| Total | $ | 68,254 | $ | 351,969 | ||||
| Services Rendered | Fiscal 2018 | Fiscal 2017 | ||||||
Audit Fees (1) | $ | 898,322 | $ | 847,171 | ||||
Audit-Related Fees (2) | 117,340 | 206,538 | ||||||
| Total | $ | 1,015,662 | $ | 1,053,709 | ||||
| (1) | Audit fees consisted principally of fees related to audit services in connection with the |
| (2) | Audit-related fees primarily consisted of fees for services in connection with |
On July 2, 2013, the Company dismissed ParenteBeard as the principal accountants for the Company. The decision to change the Company's principal accountants was recommended by the Audit Committee (the "Audit Committee") of the Company's Board of Directors and subsequently approved by the Board. Concurrently therewith, the Audit Committee recommended, and the Board approved, the accounting firm of BDO as its new principal accountants for the year ending December 31, 2013.
The audit reports of ParenteBeard on the consolidated financial statements of the Company as of and for the years ended December 31, 2012 and 2011 did not contain any adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principle.
During the Company’s two most recently completed fiscal years and through the date of the Company’s engagement of BDO, there were no disagreements or reportable events, as described in Item 304(a)(1)(iv) or Item 304(a)(1)(v) of Regulation S-K, on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which, if not resolved to the satisfaction of ParenteBeard, would have caused it to make reference to the subject matter thereof in connection with its report.
During the Company’s two most recently completed fiscal years and through the date of the Company’s engagement of BDO, the Company did not consult with BDO regarding (i) the application of accounting principles to a specific completed or contemplated transaction, or the type of audit opinion that might be rendered on the Company’s consolidated financial statements, and no written report or oral advice was provided by BDO that was an important factor considered by the Company in reaching a decision as to accounting, auditing or financial reporting issues, or (ii) any matter that was either the subject of a disagreement or reportable event, as described in Item 304(a)(1)(iv) or Item 304(a)(1)(v) of Regulation S-K, respectively.
The Company requested and received from ParenteBeard a letter, dated July 2, 2013, addressed to the Securities and Exchange Commission (the "Commission") stating whether or not ParenteBeard agreed with the above statements. A copy of the letter was filed as Exhibit 99.1 (which was incorporated by reference therein) to the Current Report on Form 8-K filed July 3, 2013.
All services performed for the Company by BDO USA, LLP during 2013 were pre-approved by the Audit Committee.
John R. Miller
OUR BOARD OF DIRECTORS AND MANAGEMENT
The Board members of the Company are:
| Name | Director Since* | Position | Age | Term Expires: | ||||
| Bhanu Choudhrie | 2013 | Director | 35 | 2013 | ||||
| Daniel K. Rothermel | 2009 | Director, Lead Independent Director | 76 | 2016 | ||||
| John R. Miller | 2010 | Director | 67 | 2016 | ||||
| Jay S. Sidhu | 2009 | Director, Chairman and Chief Executive Officer | 62 | 2015 | ||||
| T. Lawrence Way | 2005 | Director | 65 | 2014 | ||||
| Steven J. Zuckerman | 2009 | Director | 50 | 2014 |
| Name | Director Since* | Position With Customers Bancorp | Age | Term Expires: | ||||
| T. Lawrence Way | 2005 | Director | 70 | 2020 | ||||
| Steven J. Zuckerman | 2009 | Director | 55 | 2020 | ||||
| Bhanu Choudhrie | 2009 | Director | 40 | 2021 | ||||
| Jay S. Sidhu | 2009 | Director, Chairman and Chief Executive Officer | 67 | 2021 | ||||
| Andrea Allon | 2016 | Director | 57 | 2019 | ||||
| Rick B. Burkey | 2016 | Director | 73 | 2019 | ||||
| Daniel K. Rothermel | 2009 | Lead Independent Director | 81 | 2019 | ||||
| * | Pre-2011 dates include services as a director of Customers Bank prior to its reorganization into a bank holding company structure pursuant to which Customers Bank became a wholly-owned subsidiary of the Company (the |
Officer
and Chairman of the Nominating and Corporate Governance Committee and Directors' Risk Committee
private equity experience. Board. and Chairman of the Compensation Committee 72 Smithfield, R.I. He resides in Cumberland, Rhode Island. 58 create a continual feedback loop. The committees responsible for governing compliance, and the executive officers responsible for day-to-day management of risks within the policy defined tolerances. Standards membership to the Board. The N&CG Committee deems appropriate. In evaluating director nominees, the The N&CG Committee identifies nominees by first evaluating the current members of the expiring class of The Board of Directors Board and senior management, including advising the Chairman and the Chief Executive Officer of the Board's informational needs and approving the types and forms of information sent to the Board; (v) serve as an additional point of contact for Board members and shareholders, and be available for consultation and direct communication with major shareholders; (vi) facilitate the Board's review and consideration of shareholder proposals properly submitted for inclusion in the Company's annual Proxy Statement; (vii) serve as a "sounding board" and advisor to the Chairman and Chief Executive Officer; (viii) contribute to the performance review of the Chairman and Chief Executive Officer; and (ix) stay informed about the strategy and performance of the Company and reinforce that expectation for all Board members. The Lead Independent Director also has the responsibility of acting as a liaison between management and the non-management Directors, advising the Chairman and Chief Executive Officer on the efficiency of the Board meetings, and facilitating teamwork and communication between the non-management Directors and management. Regulatory Management Committee, committees formed at the Bank Board level to specifically oversee Bank compliance with laws and regulations, also reports to the Company's Board. These summary reports are generally oral, although can be in writing, and assist the Directors in the early identification of emerging issues and risks to the Company accomplishing its mission of creating shareholder value. The Board of Customers also created a Management Risk Committee to monitor and oversee all risks of Customers Bank in a more detailed fashion. The Board will regularly ask a committee to investigate or focus on emerging risks or issues. The committees will also provide guidance and make recommendations to management on how to best approach issues and risks and bring any material issues to the attention of the full Board. and as needed meetings. Pursuant to the Company's bylaws, the Board of Directors has the ability to establish such other permanent or temporary committees as the Board deems necessary for the proper conduct of the business of the Company. The Audit, Compensation, and N&CG Committees are comprised exclusively of Directors who meet the criteria for independence required by the NYSE and all other applicable laws, rules and regulations regarding director independence. The Directors' Risk Committee includes a Director who also serves as Chief Executive Officer. Management Directors may attend the general session of any regularly scheduled committee meeting at the pleasure of the committee chair. and two Company-wide Risk Summits in 2018. The Directors' Risk Committee Charter is available on our website at www.customersbank.com, by selecting "Investor Relations," "Governance Documents," and finally selecting the Risk Committee Charter. The Board of Directors has determined that each member of the Audit Committee in 2018 was independent as independence for Audit Committee members is defined under the NYSE rules, and has further determined the members meet the financial and accounting expertise and literacy standards pursuant to Rule 10A-3 promulgated under the Securities Exchange Act of 1934, as amended. The Board determined that Ms. Allon qualified as an "audit committee financial expert" within the meaning of the rules of the SEC and the NYSE. or any insiders, other than for routine banking activities. NYSE rules. its executives to that performance and success. Our executive compensation program is designed to attract highly qualified individuals, retain those individuals in a competitive marketplace for executive talent and motivate performance in a manner that Plan 112,000 stock options. purposes, and provide a car allowance for Mr. Issa. We provide country club memberships for Messrs. Sidhu and Issa. We also provided a car allowance and country club membership for Mr. Wahlman, our former CFO. CFO Mortgage Companies Community Banking and withholding; (2) any unvested equity awards he has received will vest in full; (3) he will be entitled to an allocable fraction of any page Retired Executive Vice President and On August 14, 2017, we entered into a Change of Control Agreement with Ms. Leibold. Under the Change of Control Agreement, the executive is entitled to certain payments if her employment is terminated other than for Cause, or by the executive for Good Reason, in each case within one year after a Change in Control of the Company. If these events occur, the executive is entitled to a single lump sum payment, subject to tax withholding obligations, of (i) two hundred percent (200%) of the highest rate of base annual salary in effect for the executive during the twelve month period prior to termination of employment, and (ii) two hundred percent (200%) of the average of the aggregate annual performance bonuses earned by the executive during each of the three preceding fiscal years. The Change of Control Agreement contains non-solicitation and similar covenants that remain in effect for a period of twelve months following termination upon a Change in Control, as well as covenants related to confidentiality of proprietary information. Assuming termination following a change in control, Ms. Leibold's payments had an estimated value as described in the following table. December 31, 2018, payments and benefits estimated due to Messrs. Sidhu, Ehst, Issa and Hedde and to determine the annual total compensation of our median employee and CEO: BENEFICIAL OWNERSHIP REPORTING COMPLIANCE transaction; (d) On February 21, 2018, Mr. Issa filed one late Form 4 reporting one late transaction; (e) On February 21, 2018, Mr. Ehst filed one late Form 4 reporting one late transaction; (f) On February 21, 2018, Mr. Hedde filed one late Form 4 reporting one late transaction; (g) On July 19, 2018, Mr. Ehst filed one late Form 4 reporting one late transaction; (h) On July 19, 2018, Mr. Wahlman filed one late Form 4 reporting one late transaction; (i) On July 19, 2018, Mr. Sidhu filed one late Form 4 reporting one late transaction; (j) On October 1, 2018, Mr. Issa filed one late Form 4 reporting one late transaction; (k) On December 10, 2018, Ms. Leibold filed one late Form 4 reporting one late transaction; (l) On December 14, 2018, Mr. Skumin filed one late Form 3 reporting one late transaction; and (m) On March 29, 2019, Mr. Hedde file one late Form 4 reporting one late transaction. Aggregate Business Conduct The 19, 2019. SEC's rules. was available electronically for their inspection and use at www.customersbank.com, and selecting "Investor Relations" and then "SEC Filings." Participant under Section unissued shares or previously issued shares of Stock reacquired by the Company on the open market or by private purchase. Notwithstanding the foregoing, (i) except as all Awards or portions thereof or with respect to all Participants. The Committee may take different actions with respect to the vested and unvested portions of an Award. similar law or regulation) or unless the Company has received an opinion of counsel, satisfactory to the Company, that such shares may be offered or sold without such registration pursuant to an available exemption therefrom and the terms and conditions of such exemption have been fully complied with. The Company shall be under no obligation to register for sale or resale under the Securities Act any of the shares of Stock to be offered or sold under the Plan or any shares of Stock to be issued upon exercise or settlement of Awards. If the shares of Stock offered for sale or sold under the Plan are offered or sold pursuant to an exemption from registration under the Securities Act, the Company paid on Options or Stock Appreciation Rights.John R. Miller,Bhanu Choudhrie, DirectorMr. Choudhrie has served as a Director age 67Mr. Miller, a retired CPA, has been aof Customers Bank since July 2009, and was an original member of Customers Bancorp’s Board. On January 30, 2013, the Company’s Board of TrusteesDirectors re-appointed Mr. Bhanu Choudhrie to a vacant Board seat with a term expiring in 2015. Mr. Choudhrie had stepped down as a Director in October 2011 pending the January 2013 notification of Wilkes University since 1996,completion of the Federal Reserve Bank’s standard name check on him in connection with his U.K. citizenship. Mr. Choudhrie is a private equity investor with investments in the United States, United Kingdom, Europe and Asia. He is currently a Director of C&C Alpha Group Limited, a London based family private equity group. C&C Alpha Group was founded in 2002 and has its global headquarters in London and offices in several countries. Its team comprises entrepreneurs, financial analysts, project developers, project managers and consultants. Mr. Choudhrie is also Director of C&C Alpha Group Investments Ltd, a Dubai entity; and Director and officer of various investment and operating entities formed and/or doing business in the United States, United Kingdom, Europe and Asia. Mr. Choudhrie also currently serves as Chairmana Trustee of the Board,Path to Success, a position which he also held from 2005 to 2008. He has also been the Chairman of the Board of Trustees of the Osborn Retirement Community since 2006. Mr. Miller served in various capacities as an accountant at KPMG LLP, a global accounting, tax and advisory firm, from 1968 to January 2005, including tenure as Vice Chairman from 1999 to 2004, as a member of the Board of Directors from 1993 to 1997,United Kingdom registered charity, and as a member ofDirector and President for the Choudhrie Family Foundation, a U.S. Foundation. In March 2016, Mr. Choudhrie completed the Harvard Business School Owner/President Management Committee from 1997 to 2004. He wasProgram.Mr. Choudhrie's broad international expertise provides the Chairman of the United States Comptroller General’s Governmental Auditing Standards Advisory Council from 2001 to 2008. He has received the Ellis Island Medal of Honor, recognizing distinguished Americans who have made significant contributions to the nation’s heritage. Mr. Miller is a graduate of Wilkes UniversityBoard with a B.S. in Commerceglobal market perspective and Finance.Mr. Miller’s 36 years of experience at KPMG, LLP and 7 years as Chairman of the US Comptroller’s General Auditing Standards Advisory Council have given him valuable experience and insight into auditing, accounting and financial reporting, making him a valuable asset to the board.T. Lawrence Way, Director and Chairman of the Audit Committee – Age 65Mr. Way a retired CPA, was the Chairman and CEO of Alco Industries, Inc., a diversified industrial manufacturing company, from 2000 until his retirement on December 31, 2010. During his 34 year career with Alco Industries, Mr. Way held a variety of positions including that of Chief Financial Officer and President. He is a Certified Public Accountant, received a MastersMaster’s in Business Administration from Mount St. Mary’s College, a Juris Doctor degree from Rutgers-Camden School of Law, and graduated from Tufts University. He has experience in varied areas of management, finance, operations, and mergers and acquisitions.Mr. Way’s background as an attorney and retired Certified Public Accountant, as well as his experience leading a company through the current economic, social and governance issues as Chairman and Chief Executive Officer of Alco Industries, Inc., make him well-suited to serve on the board.Steven J. Zuckerman, Director – Age 50Mr. Zuckerman was President and CEO offounded Clipper Magazine for 30 years until his retirement in June 2013. He graduated from1983 as a junior at Franklin & Marshall College in Lancaster, PA. He graduated with a B.A.BA in Business Management in 1985. While in college, he co-founded the Campus Coupon1985 and went on to build Clipper into a predecessor to Clipper Magazine, now a full-servicenationwide media company with numerous subsidiaries including Loyal Customer Club,over 1,000 employees, publishing and direct mailing advertising magazines to 500 markets in 31 states. His subsidiary companies include Spencer Advertising, & Marketing, Clipper Web Development, The Menu Company, Total Loyalty Solutions, Clipper Web Development, Clipper Graphics and Clipper TV. Clipper Magazine has hundredsJaxxon Promotions. In 2003, he sold his company to Gannett Corporation, publishers of individual market editions in over 31 states with over 1,000 employees around the country, including approximately 500 in Lancaster County, Pennsylvania.USA Today. He continued as CEO until June 2013. Since 2013, Mr. Zuckerman is a partner and works in Opening Day Partners, owner and operator of the Atlantic League of Professional Baseball Teams and Stadiums in New Jersey, Maryland and South Central Pennsylvania. He is also a partner inhis real estate development firm, Oaktree Development Group, a real estate development companyminor league baseball team, The Lancaster Barnstormers, and other entrepreneurial ventures including a digital marketing company.His experience in Lancaster, PA.Mr. Zuckerman’s experiences in the advertising industry makeleadership, entrepreneurship, and building companies makes him uniquely situated to provide the boardBoard with insight in the key areas of leadership development, marketing, and customer strategies.Bhanu Choudhrie,Andrea Allon, Director – Age 35Mr. ChoudhrieAndrea Allon has served as a director of Customers Bank since July 2009, and was an original memberthe Chief Operating Officer of the Company’s board. On January 30, 2013, the Company’s BoardChamber of Directors re-appointed Mr. Bhanu Choudhrie to a vacant board seat with a term expiring in 2015. As previously disclosed, Mr. Choudhrie stepped down as a director in October 2011 pending the January 2013 notification of completionCommerce for Greater Philadelphia since May 2006, one of the Federal Reserve Bank’s standard name check on him related to his U.K. citizenship. Mr. Choudhrie is a private equity investor with investmentslargest and oldest chambers of commerce in the United States, United Kingdom, EuropeStates. Prior to joining the Chamber, Ms. Allon was a Partner of Ernst & Young LLP overseeing audit services provided to public companies primarily in the financial services and Asia.technologyindustries. Ms. Allon spent over 20 years with Ernst & Young in the Philadelphia and New York offices and has also taught accounting and auditing at the college level as an adjunct instructor. Ms. Allon earned her MBA from Columbia University and a Bachelor of Science from the Wharton School of the University of Pennsylvania.Ms. Allon's long experience in public accounting as well as her experience with the Chamber of Commerce provide the Board with may insights on business, internal controls, and governance matters that are of great value to the Board.Rick B. Burkey, Director and Chairman of the Compliance CommitteeMr. Burkey graduated from Lehigh University with a B.S. degree in civil engineering. He has been Executive Directorover 45 years of C&C Alpha Group Limited, a London based family private equity group, since November 2006,experience in Commercial and was the Executive Director of C&C Business Solutions Ltd. from June 2003 to November 2006. C&C Alpha Group was founded in 2002. The company, with global headquarters in London, has established offices in several countries. Its team comprises entrepreneurs, financial analysts, project developers, project managersIndustrial Construction and consultants. Additionally, Mr. Choudhrie is a director of Atlantic Coast Financial Corporation, the holding company for Atlantic Coast Bank, with main offices in Jacksonville, Florida. Mr. Choudhrie alsoReal Estate Development. He currently serves as Chairman of the Board of Burkey Construction Co. and is a TrusteeDirector of Associated Construction & Management Corp. He is actively involved in the ownership and management of numerous real estate ventures including Industrial Park Development & Senior Housing. Previously serving on the Board of Berkshire Bank, Mr. Burkey now serves as a United Kingdom registered charity – “PathDirector of Customers Bancorp, Inc., which acquired Berkshire Bank in 2011.Mr. Burkey's insights into the real estate markets are important to Success.”As an executive of a UK-based firm with international interests, Mr. Choudhrie provides the board with a global market perspective.
Board given Customer's loan portfolio composition.15Named Executive OfficersMembers of the executive management team are an essential component of Customers' governance and risk management processes and the Company's success. The Company exercises great care in the selection of its executive team members, carefully assessing the skills and personal attributes that each member brings to the organization. As the leaders of the Company, the executive management team members are well qualified for their roles and work together with other management members to build the Company and create shareholder value. Key recent business experience of each of the non-director named executive officers is as follows:Richard A. Ehst, President and Chief Operating Officer – Age 68Mr. Ehst joined Customers Bank as President and Chief Operating Officer in August 2009. Mr. Ehst was previously an Executive Vice President, Commercial Middle Market, Mid-Atlantic Division, of Sovereign Bank. Before this role, Mr. Ehst served as Regional President for Berks County from 2004 until 2009 and Managing Director of Corporate Communications for Sovereign from 2000 until 2004 where his responsibilities included reputation risk management and marketing services support systems. Mr. Ehst also began serving as a Trustee of Albright College in 2010. Before joining Sovereign Bank, Mr. Ehst was an independent consultant to more than 70 financial institutions in the mid-Atlantic region, including Sovereign Bank, where he provided guidance on regulatory matters, mergers and acquisitions and risk management.Mr. Ehst has extensive knowledge and lengthy experience in the banking industry, as well as superlative business development skills which provide significant value to the board.Robert E. Wahlman,Carla A. Leibold, Executive Vice President, Chief Financial Officer of the Company and Treasurer – Age 51Ms. Leibold joined Customers Bank – Age 58Mr. Wahlman joined the Companyin 2013 as Senior Vice President, Chief Accounting Officer and Customers Bank asController. Earlier in 2018, Ms. Leibold was promoted to Executive Vice President, Chief Accounting Officer and Chief Financial Officer in August 2013.Controller. Prior to joining Customers Bank, Ms. Leibold served as the principal accounting officer for Farmer Mac where she was the Vice President and Controller from 2010-2013. She also served as the Director of Accounting and Financial Reporting of Farmer Mac from 2007-2010. Ms. Leibold started her career in public accounting and held various roles of increasing leadership responsibility at Sallie Mae and Freddie Mac before joining Farmer Mac. Ms. Leibold holds a B.S. in Accounting from The Pennsylvania State University. She is a Certified Public Accountant and is a member of the American Institute of Certified Public Accountants.Steven J. Issa, Executive Vice President, Chief Lending Officer, New England President of Commercial/Specialty Lending – Age 64Mr. Wahlman was employedIssa has been in the banking industry for over 40 years. In addition to being Chief Lending Officer and a Market President, Mr. Issa is responsible for New England Commercial Lending and Customers Commercial Finance, LLC, with loan commitments in excess of $1 billion dollars. Immediately prior to joining Customers Bank, Mr. Issa served as Executive Vice President/Managing Director Commercial/Specialty Lending at Flagstar Bank. Prior to Flagstar Bank, he spent thirteen years at Sovereign/Santander, as Regional President and ChiefManaging Director for the Southern New England Commercial/Specialty/Retail Banking Group. Prior to joining Sovereign, Mr. Issa served in a variety of executive positions with FleetBoston Financial Officer of Doral Financial Corporation, and servedShawmut Bank. Mr. Issa has been very active in the Rhode Island community, presently serving on the BoardBoards of Doral Bank, from March 2009 through May 2013. From January 2001 through March 2009, Mr. Wahlman served as Chief Financial Officer (2006 - 2009)the Greater Providence Chamber of Commerce, Beacon Mutual Insurance Co., Presidents Council at Providence College, Miriam Hospital and Controller (2001 - 2006)the Governor’sCommodore Advisory Boards. A native of Merrill Lynch, Inc.’s US domiciled banks, and also served for a time on the Board of Directors of Merrill Lynch’s European and South American banking subsidiaries. Previously, Mr. Wahlman had served as Controller for Cigna Corporation’s life insurance subsidiaries and Connecticut operations (1998 - 2001), as Director of CorporateRhode Island, he holds an undergraduate degree in Accounting and other positions for Bank One Corporation (1992 - 1998), Accounting Fellow for the US Government Accountability Office (1991 - 1992), Senior Manager and other positions for KPMG Peat Marwick (1983 - 1991), and commercial loan officer for First National Bank of Commerce (1981-1983). Mr. Wahlman received his MBA (Finance) and BA (Economics and History)an M.B.A. from theBryan University of Arkansas, passed the CPA examination in 1983 and maintained an active CPA license through 2010.Glenn A. Hedde, Executive Vice President and President of Banking to Mortgage CompaniesCustomers Bank Warehouse Lending – Age 53Mr. Hedde is the President of Banking to Mortgage Companies.Customers Bank Warehouse Lending. He joined Customers Bank in August 2009. Mr. Hedde was the President of Commercial Operations at Popular Financial Holdings, LLC from 2000 to 2008. During his time at Popular Financial, Mr. Hedde was a member of a senior leadership team with direct responsibility for the management of $300+ million in warehouse lending. Additionally, Mr. Hedde was responsible for business development, risk management, collateral operations and compliance. Mr. Hedde worked in mortgage banking, business development and credit quality management for various companies including GE Capital Mortgage Services, Inc. and PNC Bank from 1992 through 2000.Warren Taylor, Executive Vice President and President and Director of Community Banking – Age 55Mr. TaylorBOARD AND CORPORATE GOVERNANCECustomers Bancorp, Inc. is the President and Director of Community Banking. He joined Customers Bank in July 2009. Mr. Taylor was employed by Sovereign Bank for 20 years in the role of Division President. At Sovereign Bank, Mr. Taylor was responsible for retail banking in various markets in southeastern Pennsylvania and central and southern New Jersey. Mr. Taylor was actively involved with team member selection from the branch manager role and higher. Further, at Sovereign Bank, Mr. Taylor identified de-novo branch sites and negotiated real estate deals and construction contracts for new branches. Before Sovereign Bank, Mr. Taylor was Chief Executive Officer of Yardley Bank for Savings. Mr. Taylor is an active member of the New Jersey State Board of Directors for the March of Dimes, past Treasurer for such organization and winner of the March of Dimes national award.The Board of Directors believes that our Chief Executive Officer is best situatedcommitted to serve as Chairman because he is the director most familiar with our businessmaintaining sound corporate governance principles and the financial services industry,highest standards of ethical conduct, helping to ensure that we are in compliance with applicable corporate governance laws and most capable of effectively identifying strategic prioritiesregulations and leading the discussion and execution of strategy. Independent directors and management have different perspectives and roles in strategy development. Our independent directors bring experience, oversight and expertise from outside the Company and industry, while the Chief Executive Officer brings industry-specific experience and expertise. The Board believes that the combined role of Chairman and Chief Executive Officer promotes strategy development, and its execution, and facilitates information flow between management and the Board, which are essential to effective governance.16Ongoing Shareholder Engagement and our Response Risk Management Directors' Risk CommitteeOne of the key responsibilities of the Board is to develop strategic directionOngoing Shareholder Engagement and hold management accountable for the execution of strategy once it is developed. The Board believes the combined role of Chairman and Chief Executive Officer, together with a Lead Independent Director having the duties described below, is in the best interest of shareholders because it provides the appropriate balance between management and strategy development on the one hand and independent oversight on the other.Daniel K. Rothermel, an independent director who serves as Chairman of the Nominating and Corporate Governance Committee, was selected by the Board of Directors to serve as the Lead Independent Director. As Lead Independent Director, Mr. Rothermel presides over all Board meetings when the Chairman is not present, and presides over meetings of the non-management directors held in executive session. The Lead Independent Director has the responsibility of meeting and consulting with the Chairman and Chief Executive Officer on Board and committee meeting agendas, acting as a liaison between management and the non-management directors, including maintaining frequent contact with the Chairman and Chief Executive Officer and advising him on the efficiency of the Board meetings, and facilitating teamwork and communication between the non-management directors and management.The Board of Directors believes that establishing the right “tone at the top” and full and open communication between management and the Board of Directors are essential for effective risk management and oversight. At each regular Board meeting, the directors receive a summary on areas of material risk to Customers Bank, including credit, market, liquidity and operational risk. These summary reports are in a scorecard structure and they assist the directors in the early identification of risks. The Board of Customers Bank also created a Board Risk Management Committee and a management Risk Committee to monitor and oversee all risk of Customers Bank in a more detailed fashion. The Board can ask either committee to research issues and address any risk issues that merit additional focus and attention. These committees develop recommendations to manage risk and bring any material issues to the attention of the full Board.The Board of Directors has an active role, as a whole and also at the committee level, in overseeing management of our risks. The Audit Committee assists the Board of Directors in fulfilling its oversight responsibilities with respect to areas of financial reporting and compliance with laws, rules and regulations applicable to us, including those related to accounting regulation. The Audit Committee is composed of independent, non-executive directors free from any relationship that would interfere with the exercise of his or her independent judgment. The independent auditors are ultimately accountable to the Audit Committee and the Board of Directors. The Audit Committee reviews the independence and performance of the auditors and annually recommends to the Board of Directors the appointment of the independent auditors or approves any discharge of auditors when circumstances warrant. The chief internal auditor reports directly to the Audit Committee. The annual risk assessment and internal audit plan are approved by the Audit Committee. The Audit Committee performs other oversight functions as requested by the Board of Directors.The Compensation Committee assists the Board of Directors in fulfilling its oversight responsibilities with respect to our compensation policies and programs. Our ResponseThe Nominating and Corporate Governance Committee assists("N&CG Committee") and Compensation Committee regularly consider the feedback received from shareholders, as well as outside proxy advisory services. The N&CG Committee Chairman was directly involved in outreach to our major institutional shareholders. The N&CG Committee, Compensation Committee, Audit Committee, full Board of Directors, and management are very appreciative of the willingness of our shareholders to provide their input, which has helped shape and strengthen our corporate governance in recent years. Engagement feedback related to corporate governance is discussed below, and feedback related to executive compensation is discussed more fully in the Compensation Discussion and Analysis section beginning on page 40.What We Heardfrom ShareholdersCustomers' Response Some of our shareholders advocated one or more of the following corporate governance changes: Customers Bancorp has grown in a rapid but controlled manner. The Company believes that its corporate governance practices are generally in line with other small- and mid- cap bank peers, but recognizes that as it grows, it will transition away from practices designed for smaller companies, and gradually adopt the corporate governance practices of larger and more mature institutions. •With respect to the Board, our shareholders generally seek greater diversity, possible tenure limits, and a better understanding of how the Board evaluates its performance, composition, independence, and succession planning. •Our shareholders consider adopting a majority vote standard the most important governance change. Over the past year, the Company took the following steps: 1) moved to an annual frequency for the Say on Pay vote, and •Moving to annual the say on pay votes would give shareholders the opportunity for more regular feedback on executive compensation. 2) is seeking shareholder approval for a majority voting standard for uncontested director elections. As it continues to grow, the Company expects the N&CG Committee to continue to review and recommend the best path forward to the Board. Corporate Governance HighlightsCustomers' Board governance has many diverse elements, in general characterized by the following major highlights:Board of Directors • A very experienced and diverse board: 14% female, 28% minority. The board takes diversity, experience director qualifications and Environmental, Social and Governance (ESG) matters very seriously • Six out of seven Directors are independent (the other is our CEO). Two have CPA licenses and all Directors offer significant financial expertise • Independent Lead Director who conducts regular executive sessions with and without Chairman and CEO; involved in formation of agendas of Board meetings, Board retreats, and Board / management retreats • The Compensation Committee is also charged with succession planning • All standing Board committees except Directors' Risk consist solely of independent Directors • Held 16 Board meetings in 2018 • Board meets regularly in executive session • Over 96% attendance by Directors at 2018 Board meetings • The Board conducts an explicit examination of the roles and responsibilities of the overall Board as well as each of the Board Committees via the periodic completion of a performance self-assessment • Bi-annual off-site retreats to discuss corporate strategy, annual and three-year business plans, and strategic options, as well as Board access to various levels of management at the Company • 100% of Directors serve on two or fewer public company boards; any director that is CEO of a public company serves on no more than one other public company board • The Board conducts a thorough strategic options analysis each year, with contributions from outside advisers Shareholder Rights and Engagement • N&CG Committee and Compensation Committee members, CEO, and senior management participated in our investor outreach program with the Company's largest institutional investors. The outreach program was conducted throughout the year. The Chairs of our Audit Committee, Compensation Committee, and Risk Committee also attended the company's Investor Day in October, meeting with many shareholders and analysts that cover the Company • Investor feedback drives continual enhancements to disclosures, compensation matters, and corporate governance Compensation • All compensation is based upon a clearly defined, quantitative pay-for-performance compensation philosophy and model described in greater detail in the Compensation Discussion and Analysis section beginning on page 40• Multiple executive compensation clawback and recoupment requirements covering both cash and equity for annual and long-term awards • Stock ownership and retention policies for our non-management Directors and executive officers • Prohibit hedging of Company securities • Independent compensation consultant engaged by Compensation Committee • A thorough review of peer group is conducted annually to include similarly sized institutions in similar markets and similar lines of business, as well as certain other peers where the Company competes for talent or engages in a unique regional / national line of business Strategy and Risk • Board oversight of Company's strategy, financial performance, risk management framework, and risk appetite including a thorough annual strategic option analysis • Risk oversight by full Board and its committees; twice annually hold off-site all-day Risk Summit meetings of Board and management • Directors' Risk Committee chaired by the Lead Independent Director includes members of the Board's standing committees. The Directors' Risk Committee held 10 meetings and 2 Company-wide Risk Summits in 2018 • Board reinforcement and oversight of strong ethics and risk practices • Compensation programs consistent with risk management and safety and soundness considerations • Board oversight of CEO and management succession planning; a clear CEO & COO succession plan is in place • Active Bank Board engagement with regulatory matters through its Regulatory Management Committee These highlights are examined in greater depth in the following review of Customers' corporate governance philosophy and practices.Corporate Governance PrinciplesThe Board of Directors has adopted Corporate Governance Guidelines to provide the framework for effective governance of the Board and the Company. These guidelines are available on the Company's website at www.customersbank.com, by selecting "Investor Relations," and then "Governance Documents."The Company's mission and corporate purpose is to create a strong, sound and profitable financial services company committed to long-term growth in shareholder value. To guide the Company in achieving its mission, the Company has adopted certain corporate values to provide the foundation for the Company's corporate culture and to promote the highest ethical conduct among its Directors, officers and team members.The Board of Directors of the Company is elected by its shareholders to oversee and advise management in the conduct of the Company's affairs and business and to guide management in the accomplishment of its mission to create shareholder value. In this regard, the Board continuously promotes an environment within the Company that is conducive to sound corporate governance, including periodic review, refinement and approval of these Corporate Governance Guidelines and the Code of Ethics and Business Conduct, and development of board committees that are designed to effectively accomplish the Board's oversight and advisory responsibilities.Given the role of guiding the Company in the creation of shareholder value, the Board recognizes that the long-term economic interests of shareholders can often be furthered by giving appropriate and responsible consideration to the interests and concernsof other constituencies, such as the Company's customers, investors, team members and local communities, as well as government officials, regulatory agencies, and the general public.Code of Ethics, Business Conduct, and ESGEach of our Directors, officers and employees is required to comply with the Customers Bancorp, Inc. Code of Ethics and Business Conduct ("Code of Conduct") adopted by us. The Code of Conduct which is acknowledged annually by the Company's Directors, officers, and team members, sets forth policies covering a broad range of subjects and requires compliance with laws and regulations applicable to our business. The Code of Conduct is available on our website at www.customersbank.com, by selecting "Investor Relations," and then "Governance Documents;" any amendments to the Code of Conduct will be posted in the same location.Unlawful sexual harassment, long a problem in many workplaces, remains one the most visible employment issues in corporate America today. Consistent with the Company’s current policies and processes, the Company and Board of Directors remain committed to a zero-tolerance policy regarding sexual harassment and behaviors that contribute to a hostile work environment. The Company and Board of Directors remain focused on the prevention of workplace harassment through the application of enhanced education and training to support and encourage a climate of mutual respect among all team members. Each of our Directors, officers and team members are required annually to review and provide acknowledgment of their understanding of the Company’s Code of Conduct. The Code of Conduct addresses the Company’s commitment to providing an inclusive, respectful, and non-discriminatory working environment, free from harassment or any other inappropriate conduct.The Board of Directors recognizes the importance of its responsibilities as it relates to Environmental, Social and Governance (ESG) matters. The Board intends in 2019 to expand the duties of its Nominating and Corporate Governance Committee to include oversight of the Company's ESG responsibilities.Risk ManagementBanks are in the business of taking risk, and we consider prudent risk management key to our success over time. The responsibility for risk management begins with the Board of Directors. The Board is responsible for setting an appropriate tone at the top for risk culture. Further, the Board is responsible for challenging management and holding senior management accountable for the management of risk.Management is responsible for producing the Company’s Risk Appetite Statement which is approved annually by the Board. Management sets the tone for risk throughout the organization and monitors areas of potential risk. At each regular meeting of the Board of Directors, in fulfilling its oversight responsibilities with respectmanagement reports on risk and is responsible for escalating existing and emerging risks to the Board. Some of the key risks that we manage include liquidity, governance, credit, interest rate sensitivity, cybersecurity, and fraud.Board of Directors / Board Committees 
Senior Management / Management Committees Ÿ Set an appropriate tone at the top for risk culture Ÿ Provide updates to the Board of Directors or Risk Committee in a timely manner Ÿ Hold senior management accountable for adhering to Risk Management Framework (RMF) Ÿ Establish and implement RMF and Risk Appetite for annual board approval Ÿ Hold 1st and 2nd Line of Defense responsible for managing risk assessment of respective activities Ÿ Aggregate and report risk assessment results Ÿ Exercise independent judgment Ÿ Execute delegated authorities from the Board Ÿ Effectively challenge management and management committee Ÿ Escalate current and emerging risks to appropriate management committee(s) Ÿ Review and approve talent management, including succession planning Ÿ Formalize on-going training to all Directors Ÿ Discuss and escalate current and emerging risks to appropriate Board committee(s) Ÿ Provide effective challenge of risk decisions Enterprise Risk Management (ERM) is a framework for risk management which includes identifying potential risks and opportunities, evaluation, determination of risks associatedthe right course of action, and on-going monitoring. The goal is to proactively identify potential sources of risk, manage them in a manner consistent with Board of Directors organizationthe Company’s risk appetite, and membership, and succession planning for our directors.Board also has a Risk Committee fordiagram below illustrates Customers' ERM structure; the holding company which reports and assistskey risks, the Board of Directors on overseeingactive oversight role, key policies defining our risk tolerances and reviewing information regarding our enterprise riskcontrols, the management framework.
Director IndependenceAll the Directors, other than the Chairman and CEO, are independent Directors as determined by the Board. The Board has adopted the Director Independence Standards set forth in our Corporate Governance Guidelines to assist the Board in making director independence determinations. The Director Independence Standards are intended to comply with the New York Stock Exchange ("NYSE") corporate governance rules, the Sarbanes-Oxley Act of 2002, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the implementing rules of the Securities and Exchange Commission ("SEC") thereunder (or any other legal or regulatory requirements, as applicable) and the Federal Deposit Insurance Corporation Improvement Act. The Board, with the assistance of the N&CG Committee, will make independence determinations on an annual basis at the time the Board approves director nominees for inclusion in the Proxy Statement and, if a director joins the Board between annual meetings, at such time based on the applicable NYSE requirements and an evaluation of all of the relevant facts and circumstances.Directors are requested to inform the Chair of the N&CG Committee and the Chief Executive Officer of any circumstance that might reasonably affect his or her independence under the requirements of the NYSE and these guidelines. If so notified, the Board, with the assistance of the Committee, will re-evaluate, as promptly as practicable thereafter, such director's independence. The Board will include the Chief Executive Officer, and the Board may elect or nominate other members of management as Directors.Of the directorsDirectors of the Company who have served since January 1, 2013,during 2018, each of Messrs. Choudhrie, Miller,Burkey, Rothermel, Way, and Zuckerman and Ms. Allon (who remain as current directorsDirectors of the Company) is considered independent, as independence for Board members is defined under NASDAQ Rules.NYSE rules. In determining whether these directorsDirectors met the definition of an independent director, the Board of Directors considered routine banking transactions between Customers Bank or its affiliates and certain of the directors,Directors, their family members and businesses with whom they are associated, such as loans, deposit accounts, routine purchases of insurance or securities brokerage products, any overdrafts that may have occurred on deposit accounts, any contributions we made to non-profit organizations with whom any of the directorsDirectors are associated, and any transactions that are discussed under “Transactions"Transactions With Related Parties.” "Stock Ownership Requirements & Prohibition of HedgingIn 2016, the Board adopted a stock ownership policy for Directors and executive management. There is a five year implementation period for Directors and management to reach the targeted level of stock ownership, which means that covered persons have until at least January 2021 to reach targeted ownership levels.Each non-management director is required to own shares of the Company's common stock having a value equal to five times the annual cash retainer. Directors have five years from their appointment to the board to reach the targeted level, and then they must maintain at least that stock ownership level while serving as a member of the Board and for one year after service as a director terminates.In addition, when determining Mr. Zuckerman’s independence,key members of the executive management team are required to own shares of the Company's common stock. The share ownership requirement is intended to align the interests of the executive with the interests of the shareholders so that decisions are consistently made considering the shareholders' interests. The ownership requirement varies from six times the executive's (Chief Executive Officer's) base salary, to three times the executive's (Chief Operating and Chief Financial Officers') base salary, to one times the executive's (as determined by the Board consideredof Directors, primarily Executive Vice Presidents') base salary.Under our Code of Conduct, our officers, Directors and deemed immaterial certain advertising arrangements we have with Clipper Magazineteam members are prohibited from short selling of or other hedging transactions involving Company securities, or the purchase or sale of derivatives related to the Company securities.Board ResponsibilitiesThe Board of Directors has many responsibilities, some requiring a very diverse set of general management as well as specific skills.The primary functions of the Board of Directors of the Company include the following:Act in the best interests of the Company and its affiliates,shareholders, and set a climate of corporate trust, confidence and overall transparency. In discharging these responsibilities, the Board relies on the expertise, honesty and integrity of the Company's executive management, other senior officers, the internal audit function, the independent accountants, and outside advisors and consultants.Ensure policies and processes are in place for which Mr. Zuckermanmaintaining the integrity and reputation of the Company and reinforcing a culture of ethical conduct of business, compliance with laws and regulations and management of all key business risks.Develop strategic direction and hold management accountable for the execution of strategy, once it is developed.Oversee the direction and management of the Company.Establish and periodically review, update and amend corporate governance guidelines.Establish and periodically review, update and amend codes of ethics and other appropriate policies for Directors, officers and team members.Establish and periodically review key policies guiding management in the level of risk the Company is willing to assume, including credit, liquidity, interest rate, operational, reputational, regulatory, and other risks.Review, advise, consult and approve business strategies and the strategic plan constructed to guide management's efforts to enhance long-term shareholder value.Oversee and evaluate internal control systems and processes, financial reporting, and public disclosure of information.Oversee and evaluate management's implementation of, and compliance with, the Company's risk management policies.Monitor corporate performance on an on-going basis against the profit plan and the performance of peer companies.Periodically review the Chief Executive Officer. See “Transactions with Related Parties”Officer's performance and annually approve his compensation.Conduct management succession planning and review.Conduct a self-evaluation at least annually to determine whether the Board and its committees are functioning effectively.The Board executes its oversight responsibilities directly and through its committees.Director QualificationsThe N&CG Committee identifies or evaluates and recommends candidates for more detail on these relationships.17Information about Board Committeestable below highlightsBoard has approved the following minimum qualifications for first-time nominees for director: (i) individuals of the highest character and integrity, (ii) a demonstrated breadth and depth of management and/or leadership experience, preferably in a senior leadership role (e.g., chief executive officer, managing partner, president) in a large or recognized organization or governmental entity; (iii) financial literacy or other professional or business experience relevant to an understanding of the Company and its business; and (iv) a demonstrated ability to think and act independently as well as the ability to work constructively in a collegial environment. In identifying candidates, nominees for director, or evaluating individuals recommended by shareholders, the N&CG Committee shall determine, in its sole discretion, whether an individual meets the minimum qualifications approved by the Board and will consider the current membership composition of our directors on our Board committees for the Company:Nominating andNameExecutiveAuditCompensationRiskCorporate GovernanceDaniel K. RothermelXXXX*X*Jay S. SidhuX*X*T. Lawrence WayXX*XSteven J. ZuckermanX*XJohn R. MillerXXXBhanu Choudhrie*Committee ChairEach of our Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee have adopted charters which are available on our website,www.customersbank.com, by clicking on “About Us” and then “Corporate Governance.”In 2013, the Company’s Board of Directors met 14 times. Each of the Company’s 2013 directors attended 75% or more of the meetings of the full Board of Directors and the committees of the Board on which he served in 2013.While we have no formal policy regarding director attendance at our Annual Meeting, we make every effort to schedule our Annual Meeting at a time and date to maximize attendance by directors, taking into account the directors’ schedules. We believe that Annual Meetings provide an opportunity for shareholders to communicate with directors and have requested that all directors make every effort to attend our Annual Meetings. Historically, more than a majoritylight of the directors have done so; for example, in 2013, all but onediverse communities and geographies served by the Company and the interplay of the directors (who was travelling outcandidate's or nominee's experience, education, skills, background, gender, race, ethnicity and other qualities and attributes with those of the country) ofother Board members, as well as such other factors as the Company’s then-directors attended the 2013 Annual Meeting.Director NominationsOur bylaws contain provisions that address the process by which a shareholder may nominate a directorcandidate to stand for election to the Board of Directors at our Annual Meeting of Shareholders.Nominating and Corporate GovernanceN&CG Committee (the “Committee”) considers the following factors:·The appropriate size of our Board of Directors and its committees;·The perceived needs of the Board for particular skills, background, and business experience;·The skills, background, reputation, and business experience of nominees compared to the skills, background, reputation, and business experience already possessed by other members of the Board; and·The nominees’ independence.The appropriate size of our Board of Directors and its committees;The perceived needs of the Board for particular skills, background, and business experience;The skills, background, reputation, and business experience of nominees compared to the skills, background, reputation, and business experience already possessed by other members of the Board; andThe nominees' independence.There are no stated minimum criteria for director nominees, and the N&CG Committee may also consider such other factors as it may deem are in our best interests and the interests of our shareholders. The N&CG Committee does, however, believe it appropriate for at least one member of the Board to meet the criteria for an “Audit"Audit Committee financial expert,”" that a majority of the members of the Board meet the definition of “independent director”"independent director" under NASDAQ Rules,NYSE rules, and that one or more key members of management participate as members of the Board.While we have no formal policy with respect to diversity on the Board, in order to enhance the overall quality of the Board’sBoard's deliberations and decisions, the N&CG Committee seeks candidates with diverse professional backgrounds and experiences, representing a mix of industries and professions, and with varied skill sets and expertise.18directorsDirectors willing to continue in service. Current members of the expiring class with skills and experience that are relevant to our business and who are willing to continue in service are considered for re-nomination, balancing the value of continuity of service, by members of the expiring class with that of obtaining a new perspective. If any member of the expiring class does not wish to continue in service or if the N&CG Committee or the Board decides not to re-nominate a member for reelection, the N&CG Committee identifies the desired skills and experience of a new nominee, and discusses with the Board suggestions as to individuals that meet the criteria. The N&CG Committee has not in the past engaged third parties to identify, evaluate, or assist in identifying potential nominees, but relies on community and business contacts it has established through its directors,Directors, officers and professional advisors to help it identify potential director candidates when a specific need is identified.The N&CG Committee will evaluate any recommendation for a director nominee proposed by a shareholder. In order to be evaluated in connection with the Committee’sN&CG Committee procedures for evaluating potential director nominees, any recommendation for director nominee must be submitted in accordance with our procedures for shareholder nominees described below. In particular, all nominations made by a shareholder must be made in writing, delivered or mailed by registered or certified mail, postage prepaid, return receipt requested, to the Secretary of the Company (at our corporate headquarters in Wyomissing, Pennsylvania) and received by the Secretary not less than ninety (90) days nor more than one hundred and twenty (120) days prior to any meeting of the shareholders called for the election of directors.Directors. If the date of the annual meeting is more than thirty (30) days before or more than sixty (60) days after such anniversary date, notice by the shareholder must be so received not earlier than the one hundred and twentieth (120th) day prior to such annual meeting and not later than the later of the ninetieth (90th) day prior to such annual meeting or the tenth (10th) day following the day on which public announcement (by press release reported by a national news service or an SEC filing pursuant to Section 13, 14 or 15(d) of the Securities Exchange Act of 1934 (“("Exchange Act”Act")) is first made by the Company of the date of the annual meeting.Every nomination must include: (a) the consent of the person nominated to serve as a director if elected; (b) the name, age, business address and residence address of the nominee; (c) the principal occupation or employment of the nominee; (d) the class and number of shares of the Company beneficially owned by the nominee; (e) the name and address of the notifying shareholder; (f) the class and number of shares of the Company owned by the notifying shareholder; (g) any option, warrant, convertible security, stock appreciation right, or other derivative positions held or beneficially held (directly or indirectly) by such shareholder andor such beneficial owner and whether and the extent to which any hedging or other transaction or series of transactions has been entered into by or on behalf of, or any other agreement, arrangement or understanding has been made, the effect or intent of which is to increase or decrease the voting power or economic profit of such shareholder or such beneficial owner with respect to the Company’sCompany's securities; (h) any proxy, contract, arrangement, understanding or relationship pursuant to which such shareholder or beneficial owner, if any, has a right to vote any shares of any security of the Company or has granted any such right to any person or persons; (i) a description of all arrangements or understandings between the shareholder and the nominee and any other person or persons (naming such person or persons) pursuant to which the nomination is to be made by shareholder and the reasons for such nomination; (j) all information that would be relevant to a determination by the Board of Directors in its sole discretion as to whether the nominee proposed by such shareholder is “independent”"independent" within the meaning of all applicable securities law, and stock exchange and NASDAQ requirements; (k) all information that would be relevant to a determination by the Board of Directors (or any relevant committee) in its sole discretion as to whether the nominee proposed by such shareholder meets the standards for Board membership set forth by the Board of Directors (or any committee thereof) in any publicly available documents, and (l) all other information relating to the nominee and the notifying shareholder that is required to be disclosed in solicitations of proxies for election of directorsDirectors in an election contest, or is otherwise required, in each case pursuant to Regulation 14A under the Exchange Act and Rule 14a-11 there under (including such person’sperson's written consent to being named in the proxy statementProxy Statement as a nominee). Additionally, the nomination must be accompanied by the nominee’s acknowledgementnominee's acknowledgment and agreement (in form reasonably acceptable to the Board of Directors) that (x) he or she is not and will not become a party to (1) any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to how such person, if elected as a director of the Company, will act or vote on any issue or question (a “Voting Commitment”"Voting Commitment") that has not been disclosed to the Company, or (2) any Voting Commitment that could limit or interfere with such person’sperson's ability to comply, if elected as a director of the Company, with such person’sperson's fiduciary duties under applicable law; and (y) if elected, he or she would meet and comply with all applicable publicly disclosed corporate governance, conflict of interest, confidentiality and stock ownership and trading policies and guidelines of the Company.Board Leadership and Corporate Governance CommitteeOur NominatingOversightChairman of the BoardGiven the existence of a Lead Independent Director and Corporate Governance Committee has responsibility for identifyingthe Company's overall governance profile, as well as the Board's belief that it should maintain the flexibility to determine the leadership of the Company, the Board does not have a fixed policy regarding the separation of the offices of the Chairman of the Board and evaluating candidates for directorthe Chief Executive Officer. The Board believes that the Board should select the Chairman of the Board, from time to time, based on criteria that it deems to be in the best interests of the Company and recommending the nomination of directors to the full Board. This Committee:·Reviews and assesses the adequacy of our corporate governance guidelines, personal codes of conduct and related internal policies and guidelines;·Assists the Board in interpreting and applying corporate governance guidelines, and recommends any proposed changes to the Board of Directors for approval; and
its shareholders.19·Makes recommendations to the Board regarding non-management director compensation.has determinedbelieves that each memberour Chief Executive Officer is best suited to serve as Chairman because he is the director most familiar with our business and the financial services industry, and most capable of effectively identifying strategic priorities and leading the discussion and execution of strategy. Independent Directors and management have different perspectives and roles in strategy development. Our independent Directors bring experience, oversight and expertise from outside the Company and industry, while the Chief Executive Officer brings industry-specific experience and expertise. The Board believes that the combined role of Chairman and Chief Executive Officer promotes effective strategy development, and its execution, and facilitates information flow between management and the Board, which are essential to effective governance.As noted above, one of the Nominating and Corporate Governance Committee in 2013 was independent as defined under NASDAQ Rules.While the Nominating and Corporate Governance Committee held no formal meetings during 2013, the memberskey responsibilities of the NominatingBoard is to develop strategic direction and Corporate Governancehold management accountable for the execution of strategy once it is developed. The Board believes the combined role of Chairman and Chief Executive Officer, together with a Lead Independent Director having the duties described below, is in the best interest of shareholders because it provides the appropriate balance between management and strategy development on the one hand and independent oversight on the other.Lead Independent DirectorDaniel K. Rothermel, an independent director who serves as Chairman of the N&CG Committee took actionand the Directors' Risk Committee, was selected by the Board of Directors to serve as the Lead Independent Director. As Lead Independent Director, Mr. Rothermel presides over all Board meetings when the Chairman is not present, and presides over meetings of the non-management Directors held in connectionexecutive session. The Lead Independent Director also has the responsibilities to (i) following consultation with the fulfillmentChairman and Chief Executive Officer and other Directors, approve Board meeting agendas and schedules, assuring that there is sufficient time for discussion of their duties as described above during a meetingall agenda items; (ii) call special meetings or executive sessions of the full boardBoard and call and chair executive sessions or meetings of directors in March of 2013.The Audit Committee oversees our accountingthe non-management or independent Directors and, financial reporting processesas appropriate, provide feedback to the Chairman and Chief Executive Officer, and otherwise serve as a liaison between the independent Directors and the auditsChairman;(iii) work with committee chairs to ensure coordinated coverage of our financial statements. For this purpose,Board responsibilities; (iv) facilitate communication between the Audit Committee performs several functions:·Approves in advance the engagement of the independent registered public accounting firm for all audit and non-audit services, and approves the fees and other terms of the engagement;·Maintains responsibility for the appointment, compensation, oversight, retention and termination of our independent registered public accounting firm and evaluates the qualifications, performance, and independence of the independent registered public accounting firm;·Establishes, maintains and oversees procedures to facilitate the receipt, retention and treatment of complaints received from third parties regarding accounting, internal accounting controls, or auditing matters;·Reviews and discusses, with our independent registered public accounting firm, the adequacy and effectiveness of, the Company’s internal controls, including any significant deficiencies in the design or operation of internal controls and significant changes in internal controls reported by the independent auditor or management, and receives reports from management regarding the Company’s internal controls and procedures;·Reviews the critical accounting policies and all alternative treatments of financial information discussed by the independent registered public accounting firm with management, and reviews with management significant judgments made in the preparation of financial statements;·Reviews, with management and our independent registered public accounting firm, our financial reporting processes and internal financial controls;·Reviews the annual audited financial statements and recommends to the Board of Directors their inclusion in our annual report;·Reviews the quarterly financial statements and earnings press releases;·Reviews and approves any related party transactions; and·Periodically reviews and discusses with the independent registered public accounting firm the matters required to be discussed by Statement on Accounting Standards No. 61 (Codification of Statements on Auditing Standards No. 380) and any formal written statements received from the independent registered public accounting firm.Board of Directors OversightAs a commercial bank, Customers operates in a world with many various risks that must be effectively controlled in order for the Company to achieve its mission of increasing shareholder value. The Board of Directors believes that establishing the right "tone at the top" and full and open communication between management and the Board of Directors are essential for effective risk management and oversight and accomplishment of its mission. The Board has determined that each memberestablished key committees to help it in its oversight of the Company's risks, specifically the Directors' Risk Committee, the Audit Committee, in 2013 was independent as independence for Auditthe Compensation Committee, members is defined underand the NASDAQ rules, and has further determined that Mr. Miller is an “audit committee financial expert” withinN&CG Committee.At each regular Board meeting, the meaningDirectors receive a summary on areas of material interest or risk to Customers from each of the rulesrespective Board committee chairpersons conducting meetings between Board meetings. In addition, the Chairperson of the SecuritiesCustomers Bank Board Consumer Compliance Committee and Exchange Commission.The Board committees are briefly explained in the following paragraphs, and their responsibilities more fully described in the immediately following sections.The Board has established a Directors' Risk Committee which reports and assists the Board of Directors on overseeing and reviewing information regarding our enterprise risk management framework. The Directors' Risk Committee defines the risk appetite of the Company, and oversees the risks assumed by the Company to ensure consistency with the risk appetite. Members of management may be invited by the Directors' Risk Committee to attend meetings thereof. The Directors' Risk Committee held a Company-wide Risk Summit twice in 2018 with the Directors, management and select experts. The Chief Risk Officer reports directly to the Directors' Risk Committee to facilitate clear unfettered communication between the risk professionals and the Board.The Audit Committee held 6assists the Board of Directors in fulfilling its oversight responsibilities with respect to areas of financial reporting including those related to accounting regulation. The Audit Committee consists of independent, non-executive Directors free from any relationship that would interfere with the exercise of his or her independent judgment. The independent auditors are ultimately accountable to the Audit Committee and the Board of Directors. The Audit Committee reviews the independence and performance of the auditors and annually recommends to the Board of Directors the appointment of the independent auditors or approves any discharge of auditors when circumstances warrant. The chief internal auditor reports directly to the Audit Committee to facilitate clear unfettered communication between the internal audit team and the Board. The annual internal audit risk assessment and internal audit plan are approved by the Audit Committee. The Audit Committee performs other oversight functions as requested by the Board of Directors.The Compensation Committee assists the Board of Directors in fulfilling its oversight responsibilities with respect to our compensation policies and programs and the related risks. The N&CG Committee assists the Board of Directors in fulfilling its oversight responsibilities with respect to the management of risks associated with Board of Directors organization and membership, and succession planning for our Directors.Board CommitteesThe by-laws of the Company give the Board authority to designate the committees of the Board. The committee structure and committee assignments are reviewed annually by the Board and the Board assigns Board members to various committees. The Board believes that experience and continuity are more important than mandatory rotation of committee assignments or chairs. Standing committees include: Directors' Risk, Audit, Compensation, and N&CG Committee, each of which is comprised principally (or exclusively, as noted) of non-management Directors and has regularly scheduled meetings during 2013.Each committee has its own charter that complies with the NYSE corporate governance listing standards and any other applicable laws, rules and regulations. Each charter sets forth the purposes and responsibilities of the committee as well as legal or other requirements affecting the committee, the source of the committee's authority, minimum membership, membership requirements, the minimum number of meetings per year and procedures for committee member appointment. The charters also address committees reporting to the Board and provide for periodic self-evaluation.The committee chair, in consultation with management and other committee members, develops the committee's agenda. The committee chair, in consultation with the Chairman, Lead Independent Director and/or other committee members, determines whether special committee meetings or longer meetings are advisable. The committee chair reports on a committee's meeting at the full Board meeting following the committee meeting.The Board's standing committees also may act as committees of Customers Bank pursuant to the authorization granted to those committees by the governing documents of and resolutions adopted by the Bank's Board of Directors and the Company's Board. Each standing committee shall exercise its oversight responsibilities with the understanding that the Bank's interests are not to be subordinated to the interests of the parent holding company in a way as to jeopardize the safety and soundness of the Bank.Board Committee MembershipThe table below highlights the membership composition of our Directors on our Board committees for the Company:Nominating
and
Corporate GovernanceName Executive Audit Risk Compensation Andrea Allon X X Rick Burkey X X Bhanu Choudhrie X Daniel K. Rothermel X X* X X* X Jay S. Sidhu X* X T. Lawrence Way X X* X Steven J. Zuckerman X X* * Committee Chair Committee ChartersThe Directors' Risk, Audit, Compensation, and N&CG Committees have each adopted charters which are available on our website, www.customersbank.com, by selecting "Investor Relations," and then "Governance Documents."Board of Directors Meeting AttendanceCustomers' Board of Directors is scheduled to meet monthly, or as needed. In 2018, the Company's Board of Directors met 16 times. Each of the Company's 2018 Directors attended 75% or more of the applicable meetings of the full Board of Directors and the committees of the Board on which he or she served in 2018.While we have no formal policy regarding director attendance at our Annual Meeting, we make every effort to schedule our Annual Meeting at a time and date to maximize attendance by Directors, taking into account the Directors' schedules. We believe that Annual Meetings provide an opportunity for shareholders to communicate with Directors and have requested that all Directors make every effort to attend our Annual Meetings. Historically, with few exceptions, all of the Directors have done so. Six of the seven Directors attended the 2018 Annual Meeting of the shareholders.Board Committee Descriptions and ResponsibilitiesFollowing is a more detailed description of each of the Board committees and their responsibilities:Directors' Risk CommitteeThe Directors' Risk Committee reports and assists the Board of Directors onin overseeing and reviewing the information regarding our enterprise risk management framework, including the policies, procedures and practices employed to manage credit risk, market risk, operational risk, legal/regulatorycompliance risk, information technology risk, cyber security risk and regulationregulatory risk. For this purpose, the Directors' Risk Committee performs the following functions:20
Reviews and approves the charters of the Directors' Risk Committee, Management ALCO and Management Risk Committees. The Committee reviews and approves our significant risk assessment and risk management policies. In addition, the Committee retains the ability to authorize management to develop and implement any additional policies relating to risk assessment and management;Table of Contents·Reviews and approves the charters of the Board Risk Committee, Management ALCO and Management Risk Committees. The Committee reviews and approves our significant risk assessment and risk management policies. In addition, the Committee retains the ability to authorize management to develop and implement any additional policies relating to risk assessment and management;·Receives information from the Chief Credit Officer and discuss matters related to the management of credit risk as appropriate;·Receives information from the Chief Executive Officer, Chief Financial Officer and director of Enterprise Risk Management regarding the activities of Management and ALCO Committee and discusses matters related to the management of market risk and our aggregate risk profile as appropriate;·Receives information from the Chief Auditor regarding matters related to risk management throughout the enterprise as appropriate;·Receives information from the General Counsel regarding matters related to Legal and Compliance risk;·Identifies and prioritizes the risk factors and projected mitigation strategies associated with each CAMELS+ component. In so doing, the Committee has assigned responsibility of each risk factor to management and will continue to monitor our performance and controls;·Identifies key ratios and established risk tolerance thresholds in order to assess the current and projected level of risk; and·Reviews the overall enterprise risk priorities and discusses the strategic initiatives required to improve our risk profile. As part of these reviews, discusses both internal and external factors that could impact the risk portion of the enterprise.Receives information from the Chief Credit Officer and discusses matters related to the management of credit risk as appropriate;Receives information from the Chief Executive Officer, Chief Financial Officer and director of Enterprise Risk Management regarding the activities of Management and ALCO Committees and discusses matters related to the management of market risk and our aggregate risk profile as appropriate;Receives information from the Chief Internal Auditor regarding matters related to risk management throughout the enterprise as appropriate;Receives information from the General Counsel regarding matters related to legal and compliance risk;Identifies and prioritizes the risk factors and projected mitigation strategies associated with each CAMELS+ component. In so doing, the Committee has assigned responsibility of each risk factor to management and continuously monitors performance and controls;Receives and discusses information regarding the allowance for loan and lease loss estimation methodology and estimates;Identifies key ratios and established risk tolerance thresholds in order to assess the current and projected level of risk; andReviews the overall enterprise risk priorities and discusses the strategic initiatives required to improve our risk profile. As part of these reviews, discusses both internal and external factors that could impact the risk portion of the enterprise.The Directors' Risk Committee held 12ten meetings during 2013.Audit CommitteeThe CompensationAudit Committee oversees our accounting and financial reporting processes, the effectiveness of internal controls over financial reporting and operational areas, and the audits of our financial statements and internal control effectiveness assertions. For this purpose, the Audit Committee performs several functions:Approves in advance the engagement of the independent registered public accounting firm for all audit and non-audit services, and approves the fees and other terms of the engagement;Maintains responsibility for the appointment, compensation, oversight, retention and termination of our independent registered public accounting firm and evaluates the qualifications, performance, and independence of the independent registered public accounting firm;Establishes, maintains and oversees procedures to facilitate the receipt, retention and treatment of complaints received from third parties regarding accounting, internal accounting controls, or auditing matters;Reviews and discusses, with our independent registered public accounting firm, the adequacy and effectiveness of the Company's internal controls, including any significant deficiencies in the design or operation of internal controls and significant changes in internal controls reported by the independent auditor or management, and reviews and discusses reports from management and Internal Audit regarding the Company's internal controls and procedures;Reviews the critical accounting policies and alternative treatments of financial information discussed by the independent registered public accounting firm with management, and reviews with management significant judgments made in the preparation of the financial statements;Reviews, with management and our independent registered public accounting firm, our financial reporting processes and internal financial controls;Reviews the annual audited financial statements and recommends to the Board of Directors:·Periodically reviews, evaluates, and recommends to the Board the compensation and benefits provided to the executive officers and reports to the Board concerning its recommendations for final Board approval;·Establishes Chief Executive Officer compensation and works with the Chief Executive Officer to set President, Chief Financial Officer, and other officer compensation;·Considers the effectiveness of risk management strategies and the values of similar incentives to the senior executive officers of comparable companies;·Directors their inclusion in our Annual Report; Reviews and approves corporate goals and objectives relevant to the compensation of the executive officers, evaluate the performance of the executive officers in light of those goals and objectives, and approve the level of the executive officers’ compensation based on that evaluation, subject to final approval by the Board;·Administers the stock option or other equity incentive plans subject to final approval by the Board, with delegation of certain authority with respect to the grant of stock options and restricted stock units to the Chief Executive Officer;·Reviews and advises on general salary, employee benefits, and other general compensation matters with the Company’s management;·Annually review and assess compensation programs; and·Reviews and discusses with management the compensation and related disclosures to be included in the Company’s annual proxy statement or annual report.For additional details regarding the Compensation Committee’s rolequarterly financial statements and earnings press releases;Reviews and approves related party transactions;Periodically reviews and discusses with the independent registered public accounting firm the matters required to be discussed by PCAOB Auditing Standard 1301 (Communications with Audit Committees) and any formal written statements received from the independent registered public accounting firm; andMeets with the external audit firm, chief internal auditor, chief financial officer, and chief accounting officer in determining executive compensation, please see “Executive Compensation; Compensation Discussion and Analysis” beginning at page 22session to discuss matters of this Proxy Statement.
concern or the overall conduct of the financial activities of the Company.21The Audit Committee held 24 meetings during 2018.The Audit Committee Charter is available on our website at www.customersbank.com, by selecting "Investor Relations," "Governance Documents," and finally selecting the Audit Committee Charter.Compensation CommitteeThe Compensation Committee is charged with the responsibility of the development and oversight of the Company's compensation philosophy for compensating executive management, officers and other key personnel. It is the Company's objective to compensate its team members at a level sufficient to attract, motivate, and retain the talent needed to achieve the Company's mission to create shareholder value. The Compensation Committee determines that the officers and key management personnel of the Company are compensated with salary, supplemental and incentive compensation, and benefits that are consistent with its philosophy and mission.The Compensation Committee Charter is available on our website at www.customersbank.com, by selecting "Investor Relations," "Governance Documents," and finally selecting the Compensation Committee Charter.The Compensation Committee's duties include the following:Review, evaluate, and recommend to the Board the compensation of, and benefits provided to, the Company's executive officers, including the Chief Executive Officer, at least annually, and report to the Board concerning its recommendations for final Board approval; provided that the Chief Executive Officer may not be present during voting or deliberations on his or her compensation;Consider the effectiveness of risk management strategies utilized during the year and the value of similar incentives to the senior executive officers of comparable companies;Review and approve corporate goals and objectives relevant to the compensation of the executive officers, evaluate the performance of the executive officers in light of those goals and objectives, and approve the level of the executive officers' compensation based on that evaluation, subject to final approval by the Board;Annually review and adjust (if necessary) the selected peer group used to benchmark appropriate compensation levels;Administer the Company's equity incentive plans, including without limitation, making grants (subject to final approval by the Board) and monitoring awards under such plans, interpreting the terms of such plans and taking such other actions as contemplated by such plans;Review and advise on: (i) general salary, (ii) employee benefits, and (iii) other general compensation matters, with the Company's management;Annually review and assess compensation programs to determine if they expose the Company to unnecessary or excessive risk and to implement policies and practices that may help manage and monitor such risk within acceptable parameters; andReview and discuss with management the Compensation Discussion and Analysis ("CD&A") and related disclosures to be included in the Company's annual Proxy Statement or annual report on Form 10-K ("SEC Filings") and, based thereon, determine whether to recommend to the Board that the CD&A be included in the Company's annual Proxy Statement or annual report on Form 10-K.For additional details regarding the Compensation Committee's role in determining executive compensation, please see "Executive Compensation; Compensation Discussion and Analysis" beginning at page 40 of this Proxy Statement.The Compensation Committee held 3 meetings during 2018.To execute its responsibilities, the Compensation Committee may determine it is advisable to use expert compensation consultants, legal counsel or other advisers. The Compensation Committee is authorized as follows:The Committee may, in its sole discretion, retain or obtain the advice of a compensation consultant, legal counsel or other adviser.The Committee shall be directly responsible for the appointment, termination, compensation and oversight of the work of any compensation consultant, legal counsel and other adviser retained by the Committee.The Company must provide for appropriate funding, as determined by the Committee, for payment of reasonable compensation to a compensation consultant, legal counsel or any other adviser retained by the Committee.The Committee may select, or receive advice from, a compensation consultant, legal counsel or other adviser to the Committee, other than in-house legal counsel, only after taking any potential conflicts of interest into consideration.Compensation Committee Member IndependenceThe Board of Directors has determined that the members of the Compensation Committee in 2013 was2018, Mr. Zuckerman and Mr. Rothermel, were independent as independence for Compensation Committee members is defined under the NASDAQNYSE rules.The Compensation Committee held one meeting during 2013.Compensation ConsultantIn 2013, the Compensation Committee retained VistraPartners, LLC (“VistraPartners”) to provide compensation analysis for the Company’s 2013/2014 compensation. The services provided included compensation analysis, preparation of a report that compared each named executive officer’s compensation to peer group executive compensation, and having a representative attend meetings of the Compensation Committee and the Board of Directors as appropriate to discuss executive compensation. The Company paid VistraPartners $96,000 for services rendered in connection with their engagement as a compensation consultant, and $21,000 for all other services rendered in 2013, which consisted of outsourced human resources, recruiting, employee benefits and related services. From its inception until February 2013, the Company depended on VistraPartners to fulfill substantially all of its human resource services needs as the Company did not have an internal human resources division. In March 2013, the Company established an internal human resources division, and therefore has discontinued its use of VistraPartners for human resource services. The Compensation Committee is aware that, given the fees paid to VistraPartners for non-compensation consultant services, the potential for a conflict of interest exists. However, since the Company has established an internal human resources division, it has not and does not anticipate engaging VistraPartners for non-compensation consultant services in the future, and has determined that a conflict of interest does not exist.Compensation Committee Interlocks and Insider ParticipationExcept for the relationships of Mr. Zuckerman described below, noneNone of the members of our Compensation Committee had any relationship requiring disclosure pursuant to Item 404 of Regulation S-K under the Securities Act nor any other interlocking relationships as defined by the SEC. For the year ended December 31, 2013, Customers Bank paid, for advertisingOur Code of Ethics and marketing services, approximately $187,000 to Clipper MagazineBusiness Conduct prohibits any transactions between Compensation Committee members and its division, Spencer Advertising Marketing as well as Jaxxon Promotions, Inc. Mr. Zuckerman, a director of the Company was the President and Chief Executive Officer of Clipper Magazine, an affiliate of Gannett Co., Inc., until his retirement in June 2013, and holds 25% of the issued and outstanding capital stock of Jaxxon Promotions, Inc.For the year ended December 31, 2013, the Company has paid approximately $3,800 to Jastrem Premium Landscapes. An immediate family member of an Executive Vice President of the Bank is the sole proprietor of Jastrem Premium Landscapes.Risk Assessment of Compensation Policies and PracticesOurDuring 2017, our management team, with the assistance of compensationour consultant, VistraPartners,Compensation Advisors, conducted an assessment of the risks related to or arising from our compensation policies and practices. The Compensation Committee reviewed and discussed this risk assessment with management and VistraPartners.Compensation Advisors. Based on this assessment, the Compensation Committee determined that any risks arising from our compensation policies and practices for our employeesteam members are not reasonably likely to have a material adverse effect on the Company.The Compensation Committee has been informed of questions and suggestions made regarding compensation practices and metrics by shareholders collected as part of Customers' investor outreach efforts. The most significant of these comments and suggestions are presented the Compensation Discussion and Analysis section of this proxy beginning on page 40.Nominating and Corporate Governance CommitteeAmong its responsibilities, the N&CG Committee has responsibility for identifying and evaluating candidates for director and recommending the nomination of EthicsDirectors to the full Board. The Nominating and Business ConductEach of our directors, officers and employees are required to comply with the Customers Bancorp, Inc. Code of Ethics and Business Conduct adopted by us (“Code of Conduct”). The Code of Conduct sets forth policies covering a broad range of subjects and requires compliance with laws and regulations applicable to our business. The Code of ConductCorporate Governance Committee Charter is available on our website atwww.customersbank.com,, under by selecting "Investor Relations," "Governance Documents," and finally selecting the “About Us-Corporate Governance-CodeNominating and Corporate Governance Committee Charter. This Committee:Reviews and assesses the adequacy of Conduct” captions. We will post to our websitecorporate governance guidelines, personal codes of conduct and related internal policies and guidelines;Assists the Board in interpreting and applying corporate governance guidelines, and recommends any amendmentsproposed changes to the CodeBoard for approval; andMakes recommendations to the Board regarding non-management director compensation.The Board has determined that each member of Conduct, or waiver from the provisions thereof for executive officers or directors,N&CG Committee in 2018 was independent as defined under the “About Us-Corporate Governance-Code of Conduct” caption.The N&CG Committee held 2 meetings during 2018.EXECUTIVE COMPENSATIONCOMPENSATION DISCUSSION AND ANALYSISThisOverview I. Executive Summary How our Pay Program Works Target Pay Mix Key Changes in Compensation Plan for 2019 Alignment of Pay and Performance Another View of Pay and Performance Alignment: Realizable Pay Compensation Governance Ongoing Shareholder Engagement and our Response II. Executive Compensation Philosophy III. Compensation Setting Process Role of Compensation Committee Role of Management Compensation Consultant Peer Groups Consideration of Risk IV. Elements of 2018 Executive Compensation Summary of Compensation Base Salary Annual Incentive Awards Long-Term Equity Incentives Bonus Recognition and Retention Program ("BRRP") V. Additional Compensation Policies and Practices Executive Stock Ownership Requirements Clawback Policy Anti-Hedging Policies Separation Agreement with Bob Wahlman Employee Benefits Employment Agreements OverviewThe following Compensation Discussion & Analysis (“CD&A”) provides an overview of the Company's philosophy, objectives, process, and Analysis describesstructure of our 2018 executive compensation programprogram. Further, it discusses our Compensation Committee’s rationale and addresses howdecision-making process. This CD&A is intended to be read in conjunction with the tables which immediately follow this section and the accompanying narrative disclosure, which provide further historical compensation information for our 2018 named executive officers (“NEOs”):Jay S. Sidhu Chairman & Chief Executive Officer Richard A. Ehst President & Chief Operating Officer Carla A. Leibold* Executive Vice President & Chief Financial Officer Glenn A. Hedde Executive Vice President & President of Banking to Mortgage Companies Steven J. Issa Executive Vice President & Chief Lending Officer Robert E. Wahlman Former Executive Vice President & Chief Financial Officer *Carla A. Leibold was promoted to Executive Vice President and Chief Financial Officer following Robert E. Wahlman’s resignation in November 2018.I. Executive SummaryIn 2018, the Company made great strides in delivering on its operational and financial strategic goals. This included generating core earnings per share of $2.43, a year-over-year increase of approximately 10%; improving our capital ratios; growing commercial and industrial loans by 20%; increasing demand deposits by 22%; and decreasing lower-yielding multi-family and commercial real estate loans by $455 million, or approximately 10%. In 2019, we madewill remain focused on further improving our profitability and our capital ratios, strengthening the balance sheet through a remix in our assets and liabilities, expanding our net interest margin and increasing our ROAA and ROCE, as targets along our path to earning $3 in Core EPS in 2020 and $4+ in Core EPS within 3-4 years, which we expect to drive significant shareholder value creation.Going forward, we will focus on five key strategic priorities:1) Create shareholder value through improved profitability 2) Focus and grow core banking operations 3) Achieve profitability at BankMobile and grow for 2-3 years before monetizing the investment 4) Improve our mix of assets and liabilities, seeking a net interest margin of 2.75% or higher by the end of 2019 5) Deploy excess capital to benefit shareholders To successfully achieve each of these priorities, we must continue to employ and motivate a highly-talented executive team. Our Compensation Committee believes that executive compensation decisions for our senior executive officers during fiscal year 2013. The senior executive officers covered by this Compensation Discussionshould be linked to the Company's overall financial performance, strategic success and Analysis are the “named executive officers” set forth in the Summary Compensation Table beginning on page 26 of this proxy statement (“Summary Compensation Table”).22Compensation Objectivesshareholder returns, and the Focuscontribution of Compensation Rewardsmaximizes corporate performancesupports achievement of our mission of increasing shareholder value while ensuring that these programs do not encourage unnecessary or excessive risks that threaten the value of the Company.We seek to align individual performance with long-term strategic business objectives and shareholder value, and believe that the combination of executive compensation provided fulfills these objectives.Currently, our executive compensation program has three key elements: (1) salary, (2) bonus,as developed and (3) long-term equity incentives. The mix of short term performance incentives versus long term incentives are reviewed annually by the Compensation Committee with the intention of achieving a reasonable balance of those incentives. However, we do not have set percentages of short term versus long term incentives. We also do not have a policy with respect to the mix between the cash and equity components of executive compensation, althoughimplemented, as noted below certain portions of the annual bonus are paidpresented in stock and subject to a long-term vesting period before payout.Compensation philosophythis CD&A, achieves these objectives.How Our Pay Program WorksOur guiding principle is ultimately determined by the Board of Directors, based upon the recommendations of the Compensation Committee, which is comprised solely of independent directors as defined by the rules of NASDAQ. Our Chief Executive Officer makes recommendations to the Compensation Committee concerning the compensation of other executive officers, but does not participate in establishing his own compensation. As part of this process, the Compensation Committee reviews a report provided by its compensation consultant, VistraPartners, LLC (“Consultant”) that compares each named executive officer’s compensation to peer group executive compensation (“Report”). The Compensation Committee generally seeks to provide salary and bonus compensation to the named executive officers at approximately the median of its competitors in the banking industry the high performing Regional Banks and Banks in $5 to $10 billion in asset size. In 2013 the Compensation Committee used information from the Regional and National Banks to establish salarycompensation programs that are fair and bonus levelsreasonable, market competitive and performance driven. Our compensation programs are designed to attract, motivate and retain qualified and talented executives, motivating them to achieve our business goals and rewarding them for the named executive officers that were at or near the median practices. The Compensation Committee retains the flexibility to consider, in its sole discretion, various subjective factors when making compensation decisions.The guiding principle of our compensation philosophy is that the compensation of executive officers should be based primarily on the financial performance of the Company, and partially on individual performance. While this “pay-for-performance” philosophy requires the Compensation Committee to first consider our profitability, the Compensation Committee does not intend to reward unnecessary or excessive risk taking. These principles are reflected in the specific elements of the compensation program, particularly the bonussuperior short- and long-term equity income programs, as described below.Role of the Compensation CommitteeThe Compensation Committee assists the Board of Directors in discharging its responsibilities regardingperformance. When doing this, our compensation and benefit plans and practices. Authority granted to the Compensation Committee is established bymindful to align the Board of Directors and also set forth in the Charter of the Compensation Committee. In 2013, the Compensation Committee strongly considered the recommendations of the Chief Executive Officer regarding the other named executive officers. The recommendations of the Compensation Committee were presented for discussion and final approval at meetings of the full Board of Directors.Specific Elements of the Compensation ProgramDescribed below are the key elementsinterests of our executives with those of our shareholders in order to attain our ultimate objective of driving long-term, sustainable shareholder value. Our compensation program forutilizes three primary elements:
Target Pay MixWe utilize the namedabove-mentioned primary compensation elements to create executive officers.We believecompensation packages that a key objective of the salary structure isinclude somewhat below average base salaries and significant variable, at-risk pay in order to maintain reasonable “fixed” compensation costs, while taking into account the performance of the named executive officers. Base salaries are reviewed annually by the Compensation Committeealign pay with performance. The balance between thesecomponents may change from year to determine if any base pay changes should be made for the named executive officers. Base pay changes, if any, are normally determined after considering the executive’s current base pay position relative to the peer group as reflected in the Report, ourperformance and the individual’s contribution to that performance for the prioryear and the national and regional economic conditions, their effect upon us and how the executive has dealt with them within his or her area of responsibility. In February 2013, the Compensation Committee reviewed the Report and,year based on corporate strategy and objectives, among other considerations. For fiscal year 2018, our NEOs had the recommendation of the Consultant, determined to increase the salary of the named executive officers, which decision was ratified by the Board of Directors and is disclosedfollowing target pay mix:
Key Changes in the Summary Compensation TablePlan for 2013. These salaries were generally set at or near the median salary for the peer group for their position with the Company. In making this decision to increase salaries for 2013, the Compensation Committee also considered the strong performance of Customers Bank in 2013, including strong growth in assets, loans, customer base and return on equity, along with the Chief Executive Officer’s leadership in driving this performance. With regard to the named executive officers other than the Chief Executive Officer,2019For 2019, the Compensation Committee considered their contributions to the Company's focus on improving performance of Customers Bank (overall and in their functional area)23in 2013 as reported by the Chief Executive Officer and his recommendation to increase their salary. Given the factors discussed above and our significantrather than asset growth, and evolution as a bank since 2009, including raising approximately $308 million in equity, increasing assets to over $3 billion and significantly increasing our equity base, in February 2013accordingly reviewed compensation plans for smaller asset-sized peers. Considering this approach, the Compensation Committee determined to increase salarieshas established new targets and maximums for 2013.Bonusesboth the short-term and long-term incentive plans. The changes in targets are designed to motivate executives by rewarding performance. detailed below.Annual Performance Award: Target as a % of Salary Targets Lower Targets Maximums Lower Maximums For 2018 For 2019 For 2018 For 2019 CEO 150% 85% 225% 120% COO 75% 50% 113% 80% CFO 65% 50% 98% 80% Long Term Incentive Plan: Target as a % of Salary Targets Lower Targets Maximums Maximums For 2018 For 2019 For 2018 For 2019 CEO 150% 85% 200% 136% COO 75% 65% 100% 104% CFO 65% 65% 85% 104% For all of the named executive officers other than Mr. Hedde, bonuses for 2011 were determined at the discretion of2019's annual performance award, the Compensation Committee which considered our financial performance, including strong growth in assets, loans, customer base and return on equity, along withhas chosen the recommendationsfollowing three goals:1. Meet Board approved 2019 Profit Plan for core earnings (50% weight).2. Achieve a minimum margin of the Chief Executive Officer with regard2.75% by Q4 2019 (25% weight).3. BankMobile to the other named executive officers. The decision ofachieve profitability by Q4 2019 (25% weight).Additionally, the Compensation Committee for 2013 bonuses was ratified by our Boardwill review further the Company's peer group, and is likely to expand the total number of Directors. Based on these considerations, in February 2013 the Compensation Committee reviewed the Reportcompanies and determined to pay a bonus to these named executive officersensure that was near the median bonus of the peer group for their position, which decision was ratified by the Board. The Chief Executive Officer also recommended these bonuses for the other executive officers, which was based on their respective contributions to the performance of the areas for which they are responsible. The amount of these cash bonuses for 2013 is disclosed in the footnotes to the “Bonus” column of the Summary Compensation Table for each of the named executive officers. A portion of each cash bonus was delivered in 3 year Cliff Vesting Restricted Stock Units to ensure longer-term stability of Executives with the Bank.The 2013 bonus for Mr. Hedde is based on a bonus pool, which is a percentage of the net profit of the mortgage warehouse division, which bonus pool is to be allocated among the employees of this division. Mr. Hedde’s share of this bonus pool wasdetermined by discussion between Mr. Hedde and the Chief Executive Officer in 2013 following the determination of the amount of the bonus pool, whichamount was presented to the Compensation Committee as a recommendation from the Chief Executive Officer, and was also ratified by the Board. This bonus was paid 40% in cash and 60% in restricted stock units that vest on the third anniversary of the date of the award. The restricted stock portion was implemented to encourage a long-term view for the operation of this division.The named executive officers were also given the opportunity to participate in our Bonus Recognition and Retention Plan, where they can defer the receipt of a portion of their cash bonus to receive restricted stock in lieu of cash, which restricted stock will vest if the executive officer continues to be employedhave good overlap in geography,business mix, and size for five years afterthe date of the bonus award. See “Bonus Recognition and Retention Plan” for a description of this plan, along with the footnotes to the Summary Compensation Table for a description of the deferrals made by the named executive officers under this plan for their 2013 bonuses. These awards of stock are subject to forfeiture if the executive does not remain employed over the five year vesting period, which serves to incentivize and retain executives.Long-Term Equity Incentive CompensationLong-term incentive compensation is intended to motivate and retain executives and reward them based on long-term company performance.2019. The Compensation Committee believes that equity- based incentive arrangements are among the most effective means availablealso expects to the Company of aligning the interests of executives with the objectives of shareholders generally, and of building their long-term commitment to the organization. Our shareholders have approved the Management Stock Purchase Plan, the 2010 Stock Option Plan, the Amended and Restated 2004 Incentive Equity and Deferred Compensation Plan, anddiscontinue the Bonus Recognition and Retention Program (referredthis year, given the planned new stock plan and the long-term incentive plan begun in 2018.Alignment of Pay and Performance
Our compensation program is grounded in a quantified and clearly articulated and measured pay-for-performance philosophy. Performance goals in both our short- and long-term incentive plans are set at challenging levels, with the ultimate goal that the achievement of meaningful metrics will drive long-term, sustainable shareholder value growth. When financial and stock performance goals are not met, pay outcomes for our executives should reflect this reality.One way to collectivelylook at the alignment of pay and performance would be directional correlation between performance and pay, as “equitywell as components of pay: when performance goes up, does pay rise? Conversely, when performance goals are not achieved, does pay decline? While there are other factors certainly to consider, and there is a lag effect due to the timing of award grants, a look at our CEO pay (as reported in the Summary Compensation Table) over the past five years is indicative of this directional pay and performance alignment.Another View of Pay and Performance Alignment: Realizable PayThe previous graphic doesn’t fully tell our pay for performance story, however. Instead, we believe stockholders should understand how much of that target compensation programs”).Ourvalue is actually “realizable” by executives. This comparison in the accompanying chart is another demonstration of the alignment between pay and performance that permeates our pay programs.As shown, over the past 3 years, our CEO has received options and restricted stock that total approximately $12 million in target, grant date fair value; however, due to our disappointing short-term stock price performance, the actual value that our CEO could realize from these equity awards is far less. In fact, it’s nearly 75% less than the target value, and could be considerably less if the performance based vesting criteria are not achieved by the end of the vesting period. All options granted to our CEO in 2017 contain the performance requirement that the market price of our voting common stock trade above $40 per share for a period of 10 days during the vesting period.
"Target Shares” is the value of equity (restricted stock units and stock option grants) based on the grant date fair value.“Realizable” is defined as the equity compensation earned or deliverable for each year calculated as of the end of the 2018 fiscal year, including the intrinsic value of long-term incentive plan components, as valued on December 31, 2018 (the last trading day of fiscal year 2018) using the year-end share price of $19.80/share. Options are valued based on spread value as of December 31, 2018.Compensation GovernanceOur Compensation Committee continues to strengthen our plans, policies and practices, and review risk mitigation and governance matters, to ensure that our executive compensation program is incorporating market best practices. These practices, which encourage actions that are in the long-term interests of our shareholders and the Company, include:What We Do What We Don’t Do ü Pay-for-performance philosophy and culture X No immediate vesting (“single‑trigger”) of equity awardsüStrong emphasis on performance-based incentive awards X No hedging of Company sharesü Comprehensive clawback policy, addressing both equity and cash awards X No backdating or repricing of stock option awardsü Responsible use of shares under our long-term incentive program X No highly leveraged incentive plans that encourage excessive risk takingü Rigorous stock ownership requirements for all executives and non-executive directors X No resetting of financial targets for performance-based incentive awardsü Engage an independent compensation consultant, who performs no other consulting work for Customersü Conduct annual shareholder outreachOngoing Shareholder Engagements and Our ResponseAt our May 2018 Annual Meeting, our say-on-pay proposal received approximately 52% support from our shareholders after receiving only 48% support in 2015. Subsequent to these disappointing outcomes, the Company has been highly focused on soliciting input and feedback to identify the cause of these vote results. We have been committed to ongoing shareholder engagement discussions and outreach, and we appreciate and seek input from our largest shareholders regarding our executive compensation and governance practices. We are focused on fostering strong shareholder relationships leading to mutual understanding of issues and approaches, ultimately resulting in compensation plan design and implementation strategies that foster long-term growth and are supportable by shareholders.In 2018, we proactively reached out to holders of 61% of our outstanding shares, or the 25 largest shareholders of the Company. We successfully conducted meaningful engagements with shareholders representing more than 25% of our common shares. The discussions were led by our CFO and our Director of Investor Relations, with participation by Board Directors when requested by the shareholder. Results of these conversations were reported to and discussed by the entire Board. Through these conversations, as well as input from a leading proxy advisory firm, we have gained more in-depth understanding of investor viewpoints and concerns that we have incorporated into restructuring our compensation programs permitand philosophy.Recent changes that were heavily influenced by shareholder feedback include:What We Heard What We Did Demonstrate how pay and performance are aligned over time Ÿ After reviewing the basic structure of pay mix and components, we adopted a completely formulaic approach that aligns pay with performance by establishing an LTI plan that is entirely quantitative and paid entirely in stock units with a 60/40 performance / time-based vesting mix.Ÿ Strengthened our CD&A disclosure regarding how performance affects pay outcomes.Overlapping/inappropriate selection of performance metrics for short-term and long-term awards Ÿ TSR was viewed as inappropriate to be short-term metric so we eliminated the TSR metric from STI and introduced a LTI plan with 3-year relative TSR metric.Ÿ Under the 2018 Compensation Plan, the performance metrics are newly selected as below:STI LTI Actual Core EPS vs. Budget EPS3-Year Relative TSRYear-end Capital vs. Targets3-Year Relative ROACE Net Core (1) Deposit Growth (1) Core deposits are defined as all DDA, non-brokered MMDA and CDs, and brokered MMDA and CDs with direct Customers relationship.3-Year Relative Average Non-Performing Assets to Total Assets Performance goals were not disclosed for performance-based awards and difficult to determine rigor Ÿ We discuss performance goals in more detail in this year’s proxy disclosure along with the actual achievement and how it incurs incentives for executives.Frequent evaluation on compensation practices might be valuable Ÿ Starting in 2018, the Company committed to an annual frequency for the say-on-pay vote, providing more real-time feedback on compensation decisions.Concerns on Excise Tax Gross-Up Ÿ Customers has eliminated the excise tax gross-up from all agreements established in 2014 or later and committed that gross-ups will not be allowed in future agreements. Ÿ Only the pre-existing employment agreements for the current CEO and COO retain the gross-up, and these provisions will sunset with the retirement of the existing officers.In addition to compensation related feedback, we also received input regarding other areas of our corporate governance which is discussed on page 29 in the section titled "Ongoing Shareholder Engagement and Our Response."II. Executive Compensation PhilosophyOur Compensation Committee believes that our executive compensation program is aligned with our long-term strategic goals, long-term value creation for our shareholders and sound risk management. Our guiding principle is to establish compensation programs that are fair and reasonable, market competitive and performance driven. We seek to compensate our executives in a manner that will attract, motivate and retain the talent we need to achieve both short-term and long-term business objectives.Core Compensation PrinciplesIn determining the level and type of compensation for base salary and incentives, our core compensation principles are as follows:We believe in pay for performance, encouraging achievement of strategic objectives and creation of shareholder value.We will pay compensation that is fair and market competitive, keeping mindful of programs that may encourage excessive compensation.We will maintain an appropriate balance between base salary and short- and long-term incentive opportunities, generally with below average base salaries.We will provide executive incentive compensation opportunities contingent on the Company's annual and long-term performance, as well as individual contributions.Our incentive programs are designed to motivate and reward our leadership team, while avoiding those components that may lead our employees to take inappropriate risks.Our incentive programs will incorporate an appropriate retention element in order to maintain a consistent, high performing management team.We seek to ensure comparative compensation across all divisions and departments of the Company while considering position requirements, geography, responsibilities and other relevant factors applicable to job performance.Our incentive compensation programs will focus on key performance metrics, including Company profitability, business area contribution to profitability and individual performance, consistent with the Company's strategic objectives.III. Compensation Setting ProcessRole of Compensation CommitteeThe Compensation Committee is responsible for the design, implementation and administration of the compensation program for our executive officers, including but not limited to our CEO and other NEOs. The Committee participates in the consideration of employment of prospective executive officers of the Company. The Committee also administers the Company’s equity-based incentive plans and, accordingly, is responsible for reviewing cash and equity incentives payable to executives and has the authority to grant restricted shares of to all participants under the Company’s equity award plans, and to determine all terms and conditions of such awards. Although the Compensation Committee retains an independent compensation consultant to grant stock options, restricted stock,advise on compensation planning, the Committee retains, and other typesdoes not delegate, any of awards on a discretionary basis, subjectits responsibility to ratification by the Boarddetermine executive compensation.Role of Directors. Upon determination of our performance for the prior fiscal year, in February of each yearManagementAlthough the Compensation Committee assesses if it will grant long-term equity awards, although it may grant awardsis ultimately responsible for designing our executive compensation program, input from our Chief Executive Officer and other members of senior management is critical in ensuring that the Compensation Committee has the appropriate information needed to make informed decisions. The Chief Executive Officer and other members of the executive management team participate in compensation-related activities in an informational and advisory capacity, and the Chief Executive Officer presents performance summaries for the other named executive officers and recommendations relating to their compensation to the Compensation Committee for its review and approval.Compensation ConsultantThe Compensation Committeethe services of McLagan, an Aon Company ("McLagan") to assist with executive compensation planning and to provide compensation analysis for the Company's 2018 compensation awards. McLagan was retained by and reports directly to the Compensation Committee.The Compensation Committee considered the independence of McLagan in light of SEC rules and NYSE listing standards. The Compensation Committee requested and received a report from McLagan addressing McLagan’s independence and the independence of its advisors involved in the engagement which included (i) other services provided to us by McLagan; (ii) fees paid by us as a percentage of McLagan’s total revenue; (iii) policies or procedures maintained by McLagan that are designed to prevent a conflict of interest; (iv) any business or personal relationships between the senior advisors and any member(s) of the Compensation Committee; (v) any company stock owned; and (vi) any business or personal relationships between our executive officers and the senior advisors. The Compensation Committee discussed these considerations and concluded that the work performed by McLagan involved in the engagement did not raise any conflict of interest. The Company paid McLagan $139,604 for services rendered in connection with their engagement as a compensation consultant for the year ended December 31, 2018.Peer GroupsThe Compensation Committee refers to a comparative group of companies when evaluating executive compensation. At least annually, the Committee evaluates the peer group for suitability and modifies the peer group as needed. Our Compensation Committee utilizes this peer group data as one reference point along with various other factors, such as the individual's performance, experience, and competitive market conditions. As such, the Committee does not commit to setting our executive pay levels at any timeparticular percentile of the yearpeer group.The general criteria we used for selecting the 2018 peer group:Size - publicly owned banks of comparative size of asset size between $5 billion and $30 billion, from approximately 0.7x to 3.0x our assetsBusiness - banks with predominately commercial loansRegion - operating in the northeast and Mid-Atlantic statesUniquecharacteristics - companies we normally compete with for talent due to our unique business model, as well as our participation in certain regional and national businesses.In terms of asset size, Customers is approximately the same size as the median of the peer group. Certain larger companies were included in the peer group (notably Fulton, Sterling, Valley National, FNB) because Customers believe that those institutions are competitors in its discretion for new hires, outstanding performance or otherwise. Options are granted to reward the executive for transactions to increase the value of the Company, and the structure of these options also serves to retain and incentivize the executive due tothe five year vesting of these options.Perquisites, Post Retirement and Other Elements of Compensation for Executive OfficersIn orderefforts to attract and retain qualified executives, wetalent. The selected peer group for 2018 included:Berkshire Hills Bancorp, Inc. Boston Private Financial Holdings, Inc. Community Bank System, Inc. Eagle Bancorp, Inc. F.N.B. Corporation First Commonwealth Financial Corporation Fulton Financial Corporation Independent Bank Corp. Investors Bancorp, Inc. NBT Bancorp Inc. Northwest Bancshares, Inc. Provident Financial Services, Inc. S&T Bancorp, Inc. Sterling Bancorp Valley National Bancorp WSFS Financial Corporation Consideration of RiskThe Compensation Committee strives to provide executives withstrong incentives to management for the long-term, while avoiding excessive risk taking in the short term. Goals and objectives reflect a varietymix of benefits and perquisites, consisting primarilymultiple quantitative factors to avoid excessive reliance on a single performance measure. As a matter of retirement benefits through a 401(k) plan, executive life insurance, andbest practice, beginning in 2010, the use of automobiles. Details ofCompensation Committee began to periodically review the values of these benefits and perquisites that were paidrelationship between the incentive compensation provided to the named executive officers and any related incentives to take on inappropriate risk to achieve performance goals, and to confirm that the incentive compensation criteria do not encourage unnecessary and excessive risk.The periodic risk assessment includes an evaluation of:the design of proposed incentive plans to ensure they satisfy regulatory requirements and do not encourage excessive or imprudent risk taking;the internal controls over determining incentive payments and a review of the accuracy of the incentive payments and any related accruals; andthe Board of Directors' oversight of the incentive compensation program to determine if it provides effective governance over the program and satisfies regulatory expectations.The most recent risk assessment conducted in 2013 may be found2017 concluded that our incentive compensation plans provide incentives that appropriately balance risk and reward; are compatible with effective controls and risk management; are supportive of strong governance, including active oversight by the Board of Directors; and are not reasonably likely to have a material adverse effect on Customers.IV. Elements of 2018 Executive CompensationWe pay our named executive officers in accordance with a pay for performance philosophy by providing competitive compensation for demonstrated performance. The Compensation Committee employs a total compensation approach in establishing executive compensation opportunities, consisting of base salary, annual incentive compensation, long-term equity awards (which include performance- and time-vesting restricted stock), a competitive benefits package and limited perquisites.In 2018, the footnotes and narratives inCompany adopted a new executive compensation program that incorporates the feedback gathered from our investors as well as information on market practices from our independent compensation consultants to adhere to industry best practices. A significant portion of the compensation awards are performance based to align executives’ interests with shareholders. The performance targets are set as a percentage of salary with the ability to scale up or down depending upon what extent performance targets are reached.The following table outlines the major elements of 2018 total compensation of our NEOs:Element Term Strategic Role Fixed Base Salary Short Term Ÿ Helps attract and retain executives through market-competitive base pay Ÿ Based on individual performance, experience, and scope of responsibility Performance-based Annual Performance Awards Short Term(cash) and Long Term(equity) Ÿ Encourages achievement of short-term strategic and financial performance metrics that create shareholder value Ÿ In 2018, corporate performance metrics included: actual Core EPS vs. budget EPS, year-end capital ratio at targets set at start of year, and Net Core Deposit Growth exceeds 75% net loan growth Ÿ In 2018, the plan design was intended for awards to be made 75% cash and 25% RSUs, which have a 3-year ratable vesting schedule that is a strong incentive for retention. The Compensation Committee determined that the CEO, COO, and CFO should not receive cash bonuses, and so these awards were paid entirely in RSUs for 2018. Long-Term Incentive Awards Long Term Ÿ Aligns executives' interests with those of shareholders, motivates and rewards long-term sustained performance and creates a retention incentive through multi-year vesting Ÿ In 2018, equity awards consisted entirely of RSUs Ÿ 40% time based (3-year vesting) Ÿ 60% performance based (3-year cliff vesting) BRRP Long Term Ÿ Aligns executive interests with shareholders’ long-term interests by encouraging the deferral of a portion of the annual performance award received with a Company match, all in Company equity Ÿ Encourages a focus on long-term shareholder value creation through 5-year cliff vesting Ÿ The BRRP is expected to be eliminated in 2019 Fixed Other Compensation Short Term Ÿ Establishes limited perquisites in line with market practice, as well as health and welfare benefits on the same basis as our general employee population Summary of 2018 Compensation Table. Salary Salary is 100% paid in cash; both Annual Performance Award and Long-Term Incentive Awards are calculated as a multiple of salary. 2018 Annual Performance Award % of Annual Salary Position Target Maximum Chief Executive Officer 150% 225% President and Chief Operating Officer 75% 113% Chief Financial Officer 65% 98% Annual performance awards are paid: 2018 Target 2018 Actual Cash 75% —% RSUs with 3-year ratable vesting. 25% 100% Weighting of metric Performance Metrics for Grant of Award Actual Core EPS vs. budgeted EPS 50% Year-end capital ratios at targets set at start of year 25% Net core (1) deposit growth exceeds 75% net loan growth 25% (1) Core deposits are defined as all DDA, non-brokered MMDA and CDs, and brokered MMDA and CDs with direct Customers relationship. Award Class Award Multiple 120% of metric target 150% 110% of metric target 125% 100% of metric target 100% 80% of metric target 50% Less than 80% of metric target 0% 2018 Long Term Incentive Plan % of Annual Salary Position Target Maximum Chief Executive Officer 150% 200% President and Chief Operating Officer 75% 100% Chief Financial Officer 65% 85% Long-Term Incentive Awards are 100% Restricted Stock Units (RSUs): 40% of award time based with ratable vesting over three years 60% of award performance based restricted stock units with three year cliff vesting Weighting of metric Performance Metrics to Vest Award Three year Relative Total Shareholder Return 33% Three year Relative ROACE 33% Three year Relative Average Non-Performing Assets to Total Assets 34% Award Class Award Multiple 120% of metric target 150% 110% of metric target 125% 100% of metric target 100% 80% of metric target 50% Less than 80% of metric target 0% All deferred compensation awards are subject to other vesting requirements as specified in Customers' Compensation Philosophy and both cash and equity awards are subject to clawback provisions. For 2019, the Compensation Committee has changed target and maximum award amounts for both the annual performance award and long-term incentive plan, as well as the goals for the annual incentive award. Those changes are detailed in the above section "Key Changes in Compensation Plan for 2019" on page 42.Employment and Other AgreementsBase SalaryThe Compensation Committee believes that itbase salaries for named executive officers should be targeted at the lower end of market competitive levels, which is offset by an above average bonus potential.In setting base salary levels, the Compensation Committee assesses:competitive base salary information and peer market dataindividual performanceleadershipoperational effectivenessexperience in the best interestindustrycompetitive market conditionsOur CEO's, COO's, and CFO's salaries had not been increased since 2016, so the amount of increase in 2018 covered two years of merit increases. For 2018, our NEOs received the Company to promote stability and continuity of senior management. following base salary compensation:Executive 2016Base Salary 2017Base Salary 2018Base Salary 2018 % Change Jay S. Sidhu $ 636,000 $ 636,000 $ 736,000 15.7 % Richard A. Ehst 425,000 425,000 475,000 11.8 % Carla A. Leibold — — 300,000 N/A Glenn A. Hedde 250,000 255,461 260,000 1.8 % Steven J. Issa 312,000 318,816 325,000 1.9 % Robert E Wahlman 370,000 370,000 400,000 8.1 % The Compensation Committee seekstook into consideration all of the aforementioned criteria as well as overall Company performance and total compensation mix to obtaindetermine 2018 base salary levels. Merit increases were deemed appropriate as indicated in the table above.Annual Incentive AwardsAnnual performance awards are provided to reward our employees for achieving and exceeding predefined performance goals, including Company performance, division/department performance and individual contribution by the employee, as appropriate for the employee's position and role in the Company.The Compensation Committee defines performance measures and goals for three of our named executive officers (our CEO, CFO and COO). Based on the weighted level of performance achieved versus pre-defined metrics, these executives can earn an award greater than or less than target, ranging from 0% up to 150% of target. The performance measures support our strategic plan and are utilized to create accountability and ensure rewards are tied to our financial and strategic success.For 2018, target annual incentive opportunities were as follows (% of salary):Executive Target Maximum Jay S. Sidhu 150% 225% Richard A. Ehst 75% 113% Carla A. Leibold 65% 98% 2018 Performance Metrics and ResultsThe performance measures utilized in 2018 are summarized below:Metric Weighting Threshold Target Outperformance Maximum Core EPS (1) vs. Budget EPS 50% 80% 100% 110% 120% Year-End Capital vs. Targets 25% 80% 100% 110% 120% Net Core Deposit Growth 25% 80% 100% 110% 120% Performance Award 80% 100% 110% 120% (1) Core Earnings is a Non-GAAP measure, defined as net income to common shareholders adjusted for unusual income or expense items asdetermined appropriate by the Compensation Committee to exclude from the calculation of the annual performance award.These three goals were chosen because of their alignment with near-term achievements that should drive shareholder value over the long-term.Actual Core EPS vs. budgeted EPS is weighted 50%, vs. 25% for each of the other two factors because of the importance of achieving the financial goals established at the start of the year. Actual Core EPS vs. budget was chosen as a metric because management should have significant influence over achieving the financial goals as set by the Board, and Core EPS is a primary valuation driver for the stock.The year-end capital goal was set because of the importance shareholders place on capital ratios to place a limit on leverage and risk taking in achieving the Core EPS goal.Net core deposit growth as a percentage of net loan growth because of the importance of core deposit funding in creating value in banking. Core deposit funding is a priority across the institution and it was determined that accountability at the senior executive level was appropriate.Actual achievement versus these three metrics was as follows: 2018 Actual Performance and Results 2018 Earned Award Metric Weighting Performance Factor % Core EPS vs. Budget 50 % 93.57 % 83.9 % Capital vs. Targets 25 % 103.5 % 108.9 % Deposit Growth 25 % 251.75 % 150.0 % Performance Award 106.7 % Actual performance against the three goals was as follows:Actual Core EPS vs. budgeted EPS. Core EPS was $2.43, equal to 93.57% of the $2.60 budgetThree out of four regulatory capital ratios as well as the TCE ratio exceeded year-end capital targets. Only CET1, which was 8.96%, was 4 bps below the 9.00% target. The five capital ratios averaged 103.5% of their respective targets.Core deposits (total deposits excluding brokered money market and brokered CDs) increased $144 million in 2018, and gross loans declined $162 million. Given the reduction in loans, deposit growth was 251.75% of the target.2018 Earned BonusesBased upon the preceding performance calculation, the Compensation Committee authorized payouts for the annual performance award to the three eligible executives as follows:Executive 2018 Earned Incentives Target Actual Approved by Compensation Committee Payout %1$ Cash Stock Cash Stock2Jay S. Sidhu 160% $1,177,748 $883,311 $294,437 $0 $1,177,748 Richard A. Ehst 80% $380,048 $285,036 $95,012 $0 $380,048 Carla A. Leibold 69% $277,368 $208,026 $69,342 $0 $277,368 (1) Payout % is calculated with the multiplier of 106.7% from the Company’s 2018 performance factor applied to the executives’ individual target bonus %. (2) The equity portion vests ratably over a three-year period, with one-third vesting on each anniversary of the grant date. The target for the annual performance award was targeted at 75% cash and 25% Restricted Stock Units, but for the 2018 annual performance awards, the Compensation Committee determined that no cash bonus should be paid, and so 100% of the award was made as equity in the form of Restricted Stock Units. The decision to pay the annual bonus in RSUs was intended to further align compensation with stock performance over time. The equity portion vests ratably over a three-year period, with one-third vesting on each anniversary of the grant date.Annual Incentives for Other NEOsThe awards for Mr. Issa and Mr. Hedde are based upon their share of a pool for their respective business units, which is calculated as a percentage of the pretax profit of their businesses, adjusted for overall company performance. Mr. Issa's annual performance award reflects his role as Chief Lending Officer, as well as President of the New England division. Mr. Hedde's annual performance award reflects his role as president of the mortgage warehouse lending business.Long-Term Equity IncentivesLong-term equity incentives represent the largest at-risk element of our executive compensation program. Our equity incentives are designed to align the interests of our executive officers with those of our stockholders by creating an incentive for our executive officers to maximize stockholder value.Equity grants are made within the context of three programs:A portion of the annual performance award that is payable in cash may be voluntarily deferred by certain executives into the Bonus Recognition and Retention Program (“BRRP”), as further described below; andLong-term incentive plan equity grants are made annually with a significant performance based vesting component to align with the company's long-term goals.Long-term incentives are delivered entirely in the form of Restricted Stock Units (RSUs), with 40% of the awards time-based and 60% of the awards performance-based. The Compensation Committee believes this goal by providing reasonable assurancemix further reinforces our pay for performance philosophy, serves as a strong retention vehicle, and aligns executive and stockholder interests.The awards had the following vesting and performance criteria:Time-vesting RSUs - These awards vest ratably over three years, with one-third of the shares vesting each year on the anniversary of the grant date.Performance-based RSUs - these awards vest based on performance with regards to certainthe following metrics:Metrics Weighting 3-year Relative Total Shareholder Return 33% 3-year Relative ROACE 33% 3-year Relative Average Non-Performing Assets to Total Assets 34% These performance based goals were chosen because:Three year relative TSR was chosen because the shareholder return is considered a good measure of the value that management is creating for shareholders over a period of time.Three year relative ROACE was chosen because it is viewed as a good measure of the Company's profitability and the returns it generates off of its seniorbalance sheet. This profitability is also expected to be a driver of shareholder value over time.Three year relative average nonperforming assets to total assets was chosen as a metric to capture asset quality. The Company believes that the riskiness of the balance sheet determines the amount of capital that should be held (achieving the targeted capital levels is a component of the annual performance awards), and capturing non-performing assets as a percent of assets is the most meaningful metric for measuring the asset quality, a key element for a sustainable profitable bank through all economic cycles, and measuring the credit risk profile of the Company.For each goal, awards vest based on performance as follows: Performance Requirement(% of peer group median)Performance Award Multiple Threshold 80% 50% Target 100% 100% Outperformance 110% 125% Maximum 120% 150% 2018 Long-term Equity GrantsLong-term equity grants were made to our executives so theyas follows in the past year:Executive RSUs (#) Grant Date Fair Value ($) Jay S. Sidhu 32,908 $1,136,505 Richard A. Ehst 12,289 $424,409 Carla A. Leibold 10,068 $240,033 Robert E. Wahlman 6,899 $238,257 Glenn A. Hedde 12,647 $300,029 Steven J. Issa 15,361 $410,049 Awards to our CEO, COO, and former CFO were made under the long term incentive plan at targeted award amounts; 60% have performance based vesting criteria.Bonus Recognition and Retention ProgramFor 2018, the Bonus Recognition and Retention Program ("BRRP") (which meets the definition of nonqualified deferred compensation under IRC Section 409A) was a separate long-term incentive program established for the CEO, COO, CFO, CLO and other selected executives. The objective of the Plan was to encourage retention and align executive and shareholder long term interests. Key elements of the BRRP include:Voluntary deferral of 25% to 50% of the participant's annual performance award received in cash.Company providing a 100% match on the deferral amount.Deferred cash amounts are converted to RSUs and are subject to a five-year cliff vesting schedule.Distributions under the program are made as common stock of the Company.If the executive leaves before the end of the vesting period, the executive forfeits both the voluntary deferral and the match that has not vested within the account.Participants' accounts will fully vest upon retirement (as defined in the plan document), an involuntary termination prior to retirement (other than for cause), death or disability.Long term, the value of the account is tied to the Company stock price, which aligns the executive's interest with the shareholders' interests and encourages a focus on long-term performance.Customers does not include performance-based vesting criteria for the BRRP program as the award is deferred voluntarily from the annual performance based award made to the executive (which was achieved based on performance), and it is believed by the Compensation Committee that conditioning vesting on future Company performance will discourage executive participation in the program. The Company plans to retire the Bonus Recognition and Retention Program subject to the approval of the 2019 Stock Incentive Plan.V. Additional Compensation Policies and PracticesExecutive Stock Ownership RequirementsTo help ensure a strong alignment between executives and shareholder interests, the Company has adopted an equity ownership policy. The Company requires the executive management team to have an equity ownership interest in Customers Bancorp, Inc., in accordance with the following schedule:Position Requirement Chief Executive Officer 6x Annual Base Salary Chief Operating Officer, Chief Financial Officer 3x Annual Base Salary Other Executive Officers (1)1x Annual Base Salary (1 ) Excludes the Chief Internal Auditor, Chief Risk Officer, and Chief Credit Officer. The Compensation Committee defines which executive vice presidents are subject to the share ownership requirements. Equity ownership interests that are counted towards meeting this requirement include the value of all owned or vested stock issued by Customers Bancorp, Inc., including shares held in the employee stock purchase plan, unvested restricted share units, and unvested deferred units (including both the employee and the employer contribution to the BRRP). The value of stock options, vested or unvested, are not distractedconsidered in meeting the equity ownership requirements. Restricted share units that vest can be sold by an executive in order to generate sufficient cash to cover the tax obligation associated with the shares vesting.Executives have five years from March 2016 or the executive's date of hire to accumulate their duties, especiallyrespective ownership interest in lightcompliance with these guidelines. The current value of the uncertainty caused by adverse market conditionsshares the executive will own after any sale of common stock, other than a sale of common stock to meet tax obligations, must exceed the equity ownership requirement. It is permissible for the executive who does not meet the ownership requirements to exercise vested options in a cash settlement.Clawback PolicyAll equity and cash awards are subject to Customers’ clawback policy. Customers reserves the continued consolidationright to “clawback” up to 100% of unvested restricted shares, options, or other stock based compensation awards as well as cash compensation in the banking industry. These employment agreements provideevent that subsequent discovery reveals that the awards were made based on faulty financial results. Additional clawback provisions will be incorporated as promulgated by the SEC or other regulatory body.Anti-Hedging PolicyBoth the Company’s Code of Conduct and Insider Trading Policy prohibit the Company’s Directors, officers and team members from engaging in hedging transactions involving the Company’s securities.Separation Agreement with Bob WahlmanAs of November 21, 2018, Bob Wahlman, our former CFO, left the Company for severancepersonal reasons and to be paid to the executives24inpursue other interests. In connection with his departure, the Company entered into a terminationLetter Agreement and General Release with Mr. Wahlman, pursuant to which he was entitled to receive the following:An aggregate $1,107,292, reflecting 2 years of employment, including severance following a changecurrent base salary, as well as two times an average bonus for the past three years;Immediate vesting of control. A summary26,894 shares of the estimated payments to be made as a resultRSUs; andImmediate vesting of these severance and change of control provisions are described under “Potential Payments upon a Change of Control”. All of these agreements that provide for severance payments following termination in connection with a change in control are structured as “double triggers” based on the Compensation Committee’s determination that such payments should only be made if we terminate the employee in connection with a change in control. For the foregoing reasons, we also adopted a Supplemental Executive Retirement Plan for Mr. Sidhu. See “Employee Benefits – Supplemental Executive Retirement Plan for Chairman and Chief Executive Officer” and the “Pension Benefits” table for more information on this plan for Mr. Sidhu.Employee BenefitsWe provide health, life, vision and dental insurance, to the named executive officersand matching 401(k) contributions, on terms similar to those provided to other employees generally. See “Insurance”"Insurance" and "401(k) Retirement Savings and Profit Sharing Plan" below. We also provide car allowances to each of Messrs. Sidhu and Ehst and we provide Mr. Sidhu with an automobile which heautomobiles they primarily usesuse for business purposes.401(k) Retirement Savings and Profit Sharing PlanCustomers Bank has a 401(k) profit sharing plan whereby eligible employees may contribute up to 15%100% of their salary to such plan.plan up to the IRS annual contribution limit. Customers Bank provides a matching contribution equal to 50% of the first 6% of the contribution made by the employee. Employer contributions for the year ended December 31, 2013 were approximately $621,000.InsuranceAll eligible full-time employees of Customers Bank are covered as a group by basic hospitalization, major medical, long-term disability, term life and prescription drug plans. Customers Bank pays the total cost of such plans for employees with the exception of the major medical and the prescription drug plan, in which cost sharing and co-payments are required by the employees.Compliance with Section 409A of the Internal Revenue CodeThe executive compensation arrangements are intended to be maintained in conformity with the requirements of Section 409A of the Internal Revenue Code, which imposes certain restrictions on deferred compensation arrangements and tax penalties on the affected employees if their deferred compensation arrangements do not comply with those restrictions.Supplemental Executive Retirement Plan for Chairman and Chief Executive OfficerPursuant to Mr. Sidhu’sSidhu's employment agreement, we have established a supplemental executive retirement plan (“SERP”("SERP") for Mr. Sidhu.Sidhu in 2010. The SERP is a deferred compensation plan whereby we created a reserve account on our books for Mr. Sidhu. During the third quarter of 2010, we credited an amount to this account that was sufficient to create a hypothetical fund that would provide payments of $300,000 per year for fifteen years commencing on Mr. Sidhu’sSidhu's sixty-fifth birthday, assuming a rate of return of 7% per year, compounded annually. Additionally, we will credit the account with any gains or losses as if we had deposited the amounts in certain investment funds selected by Mr. Sidhu. Mr. Sidhu’sSidhu's is now fully vested in the SERP.Mr. Sidhu’sSidhu's entire interest in the account will be paid to him in fifteen annual installments beginning generally upon the later of (a) his separation from service, with us, or (b) his sixty-fifth birthday. Mr. Sidhu is now 67 years of age and is therefore entitled to SERP payments. Any portion of Mr. Sidhu’sSidhu's interest in the account remaining upon his death will be paid to his beneficiary in a single lump sum. In the event of Mr. Sidhu’sSidhu's death prior to the later of (a) his separation from service with us, or (b) his sixty-fifth birthday, $3.0 million will be paid to his beneficiary in a single lump sum in lieu of the installment payments described above.These obligations under the SERP will be general unsecured obligations by us to pay money in the future. Mr. Sidhu will have no rights to any assets or investments held by us to meet our obligations under the SERP, except as a general creditor of us.Our compensation methods are discretionary and balance short and long-term goals for our executive officers. The Compensation Committee strives to provide strong incentives to manage us for the long-term, while avoiding excessive risk taking in the short term. Goals and objectives reflect a fair mix of quantitative and qualitative factors to avoid excessive reliance on a single performance measure. As a matter of best practice, beginning in 2010, the Compensation Committee began to annually to review the relationship between the risk management practices and the incentive compensation provided to the named executive officers to confirm that the incentive compensation does not encourage unnecessary and excessive risk.Risk Management Checks and BalancesThe Compensation Committee believes that the design and governance of our executive compensation program are consistent with best practices in risk management. The design of the executive compensation program supports our risk management goals through an interlocking set of checks and balances.·Rather than determining incentive compensation awards based on a single metric, the Committee applies its informed judgment taking into account factors such as quality and sustainability of earnings, successful implementation of strategic initiatives and adherence to risk and compliance policies and our other core values.25·To further ensure that executive officers are focused on long-term performance, a significant portion of our incentive awards (including bonuses paid in stock) are provided as long-term equity awards that do not become earned and paid until three to five years after the grant date.·Use of equity awards aligns executive officers’ interests with the interests of shareholders, and their significant stock ownership further enhances this alignment.Together, these features of the executive compensation program are intended to:·Ensure that compensation opportunities do not encourage excessive risk taking;·Focus executive officers on managing the Company towards creating long-term, sustainable value for shareholders; and·Provide appropriate levels of realized rewards over time.Compliance with Section 409A of the Internal Revenue CodeThe executive compensation arrangements are intended to be maintained in conformity with the requirements of Section 409A of the Internal Revenue Code, which imposes certain restrictions on deferred compensation arrangements and tax penalties on the affected employees if their deferred compensation arrangements do not comply with those restrictions.The Compensation Committee of the Board of Directors has reviewed and discussed with management the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K and, based upon this review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the Company’s Annual Report on Form 10-K and this Proxy Statement.Compensation Committee:Steven J. Zuckerman, ChairDaniel K. RothermelThe table below sets forth the compensation for each of the named executive officers for the fiscal years ended December 31, 2013, 2012 and 2011. Stock Option All Other Salary Bonus Awards Awards Compensation Total Year ($) ($) (2) (8) ($)(8) ($)(9) ($)(10) ($)(2) Jay S. Sidhu 2013 500,000 687,500 (3) — 1,957,971 16,262 3,161,733 Chairman & CEO 2012 500,000 767,307 (3) 2,666,661 2,175,332 24,593 6,133,893 2011 300,000 450,000 (3) — 976,212 13,454 1,739,666 Richard A. Ehst 2013 350,000 185,938 (4) — 293,697 5,783 835,418 President & COO 2012 320,000 234,736 (4) 666,666 326,299 10,000 1,557,701 2011 225,000 140,625 (4) — 146,433 14,250 526,308 Robert E. Wahlman 2013 128,588 59,250 (5) — 75,012 9,208 272,058 Executive Vice President & 2012 — — — — — — 2011 — — — — — — Glenn A. Hedde 2013 210,000 240,000 (6) 409,505 — 6,300 865,805 Executive Vice President & 2012 200,000 273,000 (6) 538,423 — 5,954 1,017,377 President of Banking to 2011 190,000 383,600 (6) 293,748 27,615 5,662 900,625 Warren Taylor 2013 210,000 110,000 (7) — — — 320,000 Executive Vice President and 2012 200,000 120,000 (7) 133,333 49,540 — 502,873 President & Director of 2011 190,000 112,500 (7) — 55,230 — 357,730 James D. Hogan 2013 136,154 — — — 26,931 163,085 Retired Executive Vice 2012 116,923 35,000 — 23,427 5,200 180,550 President & CFO 2011 65,000 — — — — 65,000 26(1)The following columns are intentionally omitted from this table: Non-Equity Incentive Plan Compensation, Change in Pension Value, and Nonqualified Deferred Compensation Earnings.(2)Amounts in 2011 and 2012 have been revised to reflect full bonuses paid to the executives for the respective periods including cash paid and the grant date fair value of any stock and related Company match granted in lieu of cash at the election of the executive, as calculated in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718.(3)Mr. Sidhu earned a bonus of $500,000 for 2013. Of this amount, he received $187,500 in cash, $62,500 in restricted stock units, and elected to defer $250,000 under the BRRP in the form of an equivalent number of restricted stock units. After a five-year vesting period, he will receive his deferred bonus, along with a Company match of $250,000 ($500,000 in total), all in the form of shares of our Voting Common Stock plus any shares resulting from the deemed reinvestment of dividends on those shares. If Mr. Sidhu does not remain employed by us during the five-year vesting period, he will forfeit the right to receive those shares. Mr. Sidhu’s total deferred bonus, including the Company match, and the cash bonus earned for 2013 are reflected in the Bonus column in the table above. The award of the restricted stock units totaling $62,500 is considered 2014 compensation and will be reflected as such in the Proxy Statement for the 2015 Annual Meeting of Shareholders. Since the deferred compensation of restricted stock units and the Company match were granted in 2014, they are excluded from the Grants of Plan Based Awards Table in this Proxy Statement, but will be reflected in the Grants of Plan Based Awards Table in the Proxy Statement for the 2015 Annual Meeting of Shareholders.Mr. Sidhu earned a bonus of $500,000 for 2012. Of this amount, he received $250,000 in cash and elected to defer $250,000 under the BRRP in the form of an equivalent number of restricted stock units. After a five-year vesting period, he will receive his deferred bonus, along with a Company match of $250,000 ($500,000 in total), in the form of 34,722 shares of Voting Common Stock plus any shares resulting from the deemed reinvestment of dividends on those 34,722 shares. If Mr. Sidhu does not remain employed by us during the five-year vesting period, he will forfeit the right to receive those shares. Mr. Sidhu earned a bonus of $300,000 for 2011. Of this amount, he received $150,000 in cash and elected to defer $150,000 under the BRRP in the form of an equivalent number of restricted stock units. After a five-year vesting period, he will receive his deferred bonus, along with a Company match of $150,000 ($300,000 in total), in the form of 23,809 shares of Voting Common Stock plus any shares resulting from the deemed reinvestment of dividends on those 23,809 shares. If Mr. Sidhu does not remain employed by us during the five-year vesting period, he will forfeit the right to receive those shares.(4)Mr. Ehst earned a bonus of $175,000 for 2013. Of this amount, he received $98,438 in cash, $32,812 in restricted stock units, and elected to defer $43,750 under the BRRP in the form of an equivalent number of restricted stock units. After a five-year vesting period, he will receive his deferred bonus, along with a Company match of $43,750 ($87,500 in total), all in the form of shares of our Voting Common Stock plus any shares resulting from the deemed reinvestment of dividends on those shares. If Mr. Ehst does not remain employed by us during the five-year vesting period, he will forfeit the right to receive those shares. Mr. Ehst’s total deferred bonus, including the Company match, and the cash bonus earned for 2013 are reflected in the Bonus column in the table above. The award of the restricted stock units totaling $32,812 is considered 2014 compensation and will be reflected as such in the Proxy Statement for the 2015 Annual Meeting of Shareholders. Since the deferred compensation of restricted stock units and the Company match were granted in 2014, they are excluded from the Grants of Plan Based Awards Table in this Proxy Statement, but will be reflected in the Grants of Plan Based Awards Table in the Proxy Statement for the 2015 Annual Meeting of Shareholders.Mr. Ehst earned a bonus of $180,000 for 2012. Of this amount, he received $135,000 in cash and elected to defer $45,000 under the BRRP in the form of an equivalent number of restricted stock units. After a five-year vesting period, he will receive his deferred bonus, along with a Company match of $45,000 ($90,000 in total), in the form of 6,250 shares of Voting Common Stock plus any shares resulting from the deemed reinvestment of dividends on those 6,250 shares. If Mr. Ehst does not remain employed by us during the five-year vesting period, he will forfeit the right to receive those shares. Mr. Ehst earned a bonus of $112,500 for 2011. Of this amount, he received $84,375 in cash and elected to defer $28,125 under the BRRP in the form of an equivalent number of restricted stock units. After a five-year vesting period, he will receive his deferred bonus, along with a Company match of $28,125 ($56,250 in total), in the form of 4,464 shares of Voting Common Stock plus any shares resulting from the deemed reinvestment of dividends on those 4,464 shares. If Mr. Ehst does not remain27employed by us during the five-year vesting period, he will forfeit the right to receive those shares. (5)Mr. Wahlman earned a bonus of $79,000 for 2013. Of this amount, he received $59,250 in cash and $19,750 in restricted stock units. Since the award of the restricted stock units was granted in 2014, it is considered 2014 compensation and will be reflected as such in the Proxy Statement for the 2015 Annual Meeting of Shareholders.(6)Mr. Hedde earned a bonus of $200,000 for 2013. Of this amount, he received $40,000 in cash, $60,000 in restricted stock units, and elected to defer $100,000 under the BRRP in the form of an equivalent number of restricted stock units. After a five-year vesting period, he will receive his deferred bonus, along with a Company match of $100,000 ($200,000 in total), all in the form of shares of our Voting Common Stock plus any shares resulting from the deemed reinvestment of dividends on those shares. If Mr. Hedde does not remain employed by us during the five-year vesting period, he will forfeit the right to receive those shares. Mr. Hedde’s total deferred bonus, including the Company match, and the cash bonus earned for 2013 are reflected in the Bonus column in the table above. The award of the restricted stock units totaling $60,000 is considered 2014 compensation and will be reflected as such in the Proxy Statement for the 2015 Annual Meeting of Shareholders. Since the deferred compensation of restricted stock units and the Company match were granted in 2014, they are excluded from the Grants of Plan Based Awards Table in this Proxy Statement, but will be reflected in the Grants of Plan Based Awards Table in the Proxy Statement for the 2015 Annual Meeting of Shareholders.Mr. Hedde earned a bonus of $682,505 for 2012. Of this amount, he received $273,000 in cash and $409,505 in restricted stock units. These restricted stock units will become 100% vested on the third anniversary of the date of grant. The award of the restricted stock units occurred in March 2013 and is considered 2013 compensation.Mr. Hedde earned a bonus of $679,090 for 2011. Of this amount, he received $164,400 in cash, $411,000 in restricted stock units, and elected to defer $109,600 under the BRRP in the form of an equivalent number of restricted stock units. After a five-year vesting period, he will receive his deferred bonus, along with a Company match of $109,600 ($219,200 in total), in the form of 17,396 shares of Voting Common Stock plus any of the shares resulting from the deemed reinvestment of dividends on those 17,396 shares. If Mr. Hedde does not remain employed during this five-year vesting period, he will forfeit the right to receive those shares. The award of the restricted stock units not related to the BRRP is considered 2012 compensation.(7)Mr. Taylor earned a bonus of $80,000 for 2013. Of this amount, he received $30,000 in cash, $10,000 in restricted stock units, and elected to defer $40,000 under the BRRP in the form of an equivalent number of restricted stock units. After a five-year vesting period, he will receive his deferred bonus, along with a Company match of $40,000 ($80,000 in total), all in the form of shares of our Voting Common Stock plus any shares resulting from the deemed reinvestment of dividends on those shares. If Mr. Taylor does not remain employed by us during the five-year vesting period, he will forfeit the right to receive those shares. Mr. Taylor’s total deferred bonus, including the Company match, and the cash bonus earned for 2013 are reflected in the Bonus column in the table above. The award of the restricted stock units totaling $10,000 is considered 2014 compensation and will be reflected as such in the Proxy Statement for the 2015 Annual Meeting of Shareholders. Since the deferred compensation of restricted stock units and the Company match were granted in 2014, they are excluded from the Grants of Plan Based Awards Table in this Proxy Statement, but will be reflected in the Grants of Plan Based Awards Table in the Proxy Statement for the 2015 Annual Meeting of Shareholders.Mr. Taylor earned a bonus of $80,000 for 2012. Of this amount, he received $40,000 in cash and elected to defer $40,000 under the BRRP. After a five-year vesting period, he will receive his deferred bonus, along with a Company match of $40,000 ($80,000 in total), in the form of 5,554 shares of Voting Common Stock plus any of the shares resulting from the deemed reinvestment of dividends on those 5,554 shares. If Mr. Taylor does not remain employed during the five-year vesting periods, he will forfeit the right to receive those shares.Mr. Taylor earned a bonus of $75,000 for 2011. Of this amount, he received $37,500 in cash and elected to defer $37,500 under the BRRP. After a five-year vesting period, he will receive his deferred bonus, along with a Company match of $37,500 ($75,000 in total), in the form of 5,952 shares of Voting Common Stock plus any of the shares resulting from the deemed reinvestment of dividends on those 5,952 shares. If Mr. Taylor does not remain employed during the five-year vesting periods, he will forfeit the right to receive those shares.28(8)Represents the aggregate grant date fair value, calculated in accordance with FASB ASC Topic 718, of the stock awards described in footnotes 3-7 above. The grant date fair values have been determined based on the assumptions and methodologies set forth in our 2013 financial statements (NOTE 14 - SHARE-BASED COMPENSATION PLANS).(9)Represents the aggregate grant date fair value, as calculated in accordance with FASB ASC Topic 718, of option awards. See footnote 1 to the “Grant of Plan-Based Awards” table for more information on these options. The grant date fair values have been determined based on the assumptions and methodologies set forth in our 2013 financial statements (NOTE 14 - SHARE-BASED COMPENSATION PLANS).(10)The amounts listed in this column include matching 401(k) contributions paid under our 401(k) Retirement Savings and Profit Sharing Plan for each of Messrs. Sidhu, Wahlman, and Hedde; car allowance payments for Mr. Wahlman; apartment rental and travel expenses for Mr. Hogan, and temporary housing for Mr. Wahlman; a country club membership for Mr. Sidhu in 2012; and a golf club membership for Mr. Ehst in 2011. We provide Messrs. Sidhu and Ehst with automobiles which they primarily use for business purposes. All Other Compensation for Messrs. Sidhu and Ehst also includes the value attributable to their personal use of these automobiles in 2013, 2012 (Mr. Sidhu only), and 2011 (Mr. Sidhu only.)29GRANTS OF PLAN-BASED AWARDS(5) (6)The following table sets forth certain information regarding awards granted to each of our named executive officers with respect to 2013: All other stock
awards:
Number of
shares of
Common Stock All other option
awards: Number of
shares of Common
Stock underlying
options Exercise or
base price of
option awards Grant date fair
value of stock and
option awards Name Grant Date (#)(1) (#)(2) ($/Share)(3) ($)(4) Jay S. Sidhu 05/22/2013 — 617,910 16.75 1,957,971 Richard A. Ehst 05/22/2013 — 92,687 16.75 293,697 Robert E. Wahlman 08/05/2013 — 20,000 17.18 75,012 Glenn A. Hedde 03/15/2013 27,410 — — 409,505 (1)Represents restricted stock units issued to Mr. Hedde under the 2004 Plan in lieu of a portion of Mr. Hedde’s cash bonus earned for 2012.(2)Includes options awarded on May 22, 2013 to Messrs. Sidhu and Ehst under the 2010 Stock Option Plan pursuant to the terms of their respective employment agreements. These awards vest on the fifth anniversary of the date of grant, subject to a condition that the value of our Voting Common Stock increase by 50% during the life of the option and subject to accelerated vesting in certain circumstances. See “Stock Option Grants in Connection with Recent Transactions” and “Officer Employment Agreements” for more information about these awards. Also includes options awarded on August 5, 2013 to Mr. Wahlman under the 2004 Plan with vesting on the fifth anniversary of the date of grant. All of these options entitle the holder to purchase shares of Voting Common Stock.(3)The exercise price for the stock options awarded to Messrs. Sidhu and Ehst was the public offering price of our Voting Common Stock as published in our prospectus supplement dated May 15, 2013. The exercise price for the stock options awarded to Mr. Wahlman was the closing price of our Voting Common Stock on the date of grant as quoted on the NASDAQ Global Select Market.(4)Represents the grant date fair value, as calculated in accordance with FASB ASC Topic 718, of these option or stock awards. The grant date fair value has been determined based on the assumptions and methodologies set forth in the consolidated financial statements included in NOTE 14-SHARE-BASED COMPENSATION PLANS of our Annual Report on Form 10-K for the year ended December 31, 2013.(5)The following columns are intentionally omitted from this table: Estimated Future Payouts under Non-Equity Incentive Plan Awards, and Estimated Future Payouts under Equity Incentive Plan Awards.(6)Excludes awards of restricted stock units and Company matches in 2014 upon each executive’s election to defer a portion of his 2013 bonus, as described in footnotes (3), (4), (5), (6) and (7) of the Summary Compensation Table as such awards and match were granted in 2014.Amended and Restated 2004 Incentive Equity and Deferred Compensation PlanAt our annual meeting in 2012, our shareholders approved the amendment and restatement of our 2004 Plan, primarily to reflect changes effectuated by the Reorganization and increase the number of shares authorized to be issued pursuant to grants under the 2004 Plan. The purpose of the 2004 Plan is to promote the success and enhance our value by linking the personal interests of the members of the board of directors and our employees, officers and executives to those of our shareholders and by providing such individuals with an incentive for outstanding performance in order to generate superior returns to our shareholders. The 2004 Plan is further intended to provide us flexibility to motivate, attract and retain the services of members of our board of directors, employees, officers and executives.30The 2004 Plan is administered by the Compensation Committee of the board of directors or, in certain cases, by the full board of directors. It provides for the grant of options, some or all of which may be structured to qualify as incentive stock options under Section 422 of the Code (“ISOs”) if granted to employees, and for the grant of stock appreciation rights, restricted stock and unrestricted stock up to a total of 2,500,000 shares of common stock. As of December 31, 2013, 1,713,639 shares were available for grant under the 2004 Plan. Unless sooner terminated by the board, the 2004 Plan will expire on September 6, 2021, which is ten (10) years from the date the 2004 Plan was last approved by our shareholders.Amended and Restated 2010 Stock Option PlanIn December 2010, our shareholders approved the 2010 Stock Option Plan, which was amended and restated in March 2012 by our Board of Directors primarily to reflect changes effectuated by the Reorganization. The 2010 Stock Option Plan provides for the grant of stock options to our management personnel, other employees and non-employee members of the Board of Directors. The purpose of the 2010 Stock Option Plan is to promote our success and enhance our value by linking the personal interest of our employees, officers, executives and non-employee directors to those of our shareholders and by providing those individuals with an incentive for outstanding performance in order to generate superior returns to shareholders. The 2010 Stock Option Plan provides flexibility for us to motivate, attract, and retain the services of our employees, officers, executives and non-employee directors upon whose judgment, interest and special effort the successful conduct of our operations largely depend. The options can take the form of either tax-qualified ISOs or non-qualified stock options (“NQOs”), although only NQOs may be granted to non-employee directors.The 2010 Stock Option Plan consists of a pool of 3,333,334 shares of our Voting Common Stock and Class B Non-Voting Common Stock. At December 31, 2013, 784,963 shares were available for grant under this plan. The 2010 Stock Option Plan is administered by the Compensation Committee of the Board of Directors or, in certain cases, by the full Board of Directors. The maximum number of shares underlying options granted to any single participant during a fiscal year shall be 2,222,223 shares of common stock. All employees are potentially eligible to receive options under the 2010 Stock Option Plan. In making determinations regarding the potential eligibility of any employee, the Compensation Committee may take into account the nature of the services rendered by the employee, his or her present and potential contributions to our success and such other factors as the Compensation Committee in its discretion deems relevant.The Compensation Committee is authorized to grant stock options to participants subject to the following terms and conditions: (1) the exercise price per share of an option must not be less than the fair market value of one share at the time the option is granted, and the term of an option must not be longer than ten (10) years from the date of grant; and (2) in the case of a participant who owns stock representing more than 10% of the total combined voting power of us at the time of the grant of an option to that participant, the option cannot qualify as an ISO unless the exercise price is at least 110% of the fair market value of the stock at the time of grant and the term is no longer than five years from the date of grant.Unless sooner terminated by the Board, the 2010 Stock Option Plan will expire ten (10) years from the date the 2010 Stock Option Plan was approved by our shareholders, which was December 9, 2010. The termination of the 2010 Stock Option Plan must not affect any option that is outstanding on the termination date without the consent of the participant. Offers granted under the 2010 Stock Option Plan are, by their terms, not transferable other than by will or laws of descent and distribution. No right or interest of a participant in any offer may be pledged, encumbered, or hypothecated to or in favor of any party other than us, or be subject to any lien, obligation, or liability of that participant to any other party other than us; provided, however, that the foregoing must not be deemed to imply any obligation of ours to lend against or accept a lien or pledge of any offer for any reason.Bonus Recognition and Retention ProgramIn December 2010, our shareholders approved the BRRP, which was amended and restated in March 2012 by our Board of Directors primarily to reflect changes effectuated by the Reorganization. The BRRP provides specified benefits to a select group of management and highly compensated employees who contribute materially to our continued growth, development and future business success that are eligible under the BRRP. Participation in the BRRP is limited to a select group of management and highly compensated employees, as determined by the Compensation Committee in its sole discretion. From that group, the Committee selects, in its sole discretion, the employees who are eligible to participate in the BRRP, which always includes our Chief Executive Officer.As a condition of participation, each selected employee must annually complete and return to the Committee (or its designee) the forms the Committee may prescribe, including an annual deferral election form. Each election made by a participant to defer receipt of a portion of his or her bonus for a given calendar year must be filed no later than December 31 prior to the calendar year with respect to which the relevant bonus may be earned; provided, however, in the event an employee is hired during a plan year and is designated as being eligible to participate for that year, the employee may commence participation for that year by filing a deferral election within 30 days of employment. Each eligible employee must file a new deferral election for each year with respect to which he or she desires to defer receipt of a portion of a bonus.31A participant may elect to defer receipt of not less than 25%, nor more than 50%, of his or her bonus payable with respect to each year of participation. Shares of Voting Common Stock having a value equal to the portion of the bonus deferred by a participant will be allocated to an annual deferral account (the “Annual Deferral Account”) established by us for the year of deferral. On the same day that the shares of common stock attributable to a deferred bonus are allocated to the Annual Deferral Account, a matching amount equal to an identical number of shares of common stock shall be allocated to the Annual Deferral Account. The Annual Deferral Account shall be increased by that number of shares of common stock having a value equal to the amount of any cash dividend payable with respect to the number of shares of common stock allocated to the Annual Deferral Account. The BRRP is a formula based plan that does not provide for a maximum number of shares to be issued, but it is limited by the amount of the cash bonuses awarded annually to those persons selected to participate.In the event a participant files a deferral election and subsequently terminates as an employee prior to the date bonuses are paid, if (a) he or she is entitled to a bonus notwithstanding termination and (b) the termination of employment is related to death, disability, or is involuntary or related to a change in control, then the bonus and the related matching amount shall be distributed to the individual or his or her beneficiary in cash or invested and so distributed in common stock, at the Compensation Committee’s election, within 60 days following the date that year’s bonuses are paid.A participant becomes 100% vested in an Annual Deferral Account on the fifth anniversary date of the initial funding of the account, provided he or she remains continuously employed by us from the date of funding to the anniversary date. Vesting is accelerated in the event of involuntary termination other than for cause, retirement at or after age 65, death, termination on account of disability, or a change in control of the Company.As ofEmployment AgreementsOn December 31, 2013 we have issued restricted stock units for 107,172 shares of Voting Common Stock under BRRP.Stock Option Grants in Connection with Recent TransactionsOptions to purchase 617,910 and 92,687 shares of voting common stock, representing 10% and 1.5% of the aggregate number of shares issued in the May 2013 public offering of our voting common stock, were granted to Messrs. Sidhu and Ehst, at the completion of the offering pursuant to their existing employment agreements, respectively.As long as these individuals remain employees or directors, the options will vest 5 years from the date of grant, subject to earlier vesting upon a change in control of us or a termination without cause of the executive’s employment. In addition, the options will vest upon resignation for “good reason” in accordance with the provisions of each individual’s employment agreement but not upon any other voluntary resignation. Even if vested, an award may not be exercised unless and until, at any time during the option life, the value of our Voting Common Stock appreciates by 50% above the value of the Voting Common Stock at the time the option was granted.2012 Restricted Stock Rewards ProgramDue to our significant growth and evolution as a bank since 2009, including increasing assets to over $3 billion and significantly increasing our equity base, in February 2012 the Compensation Committee recommended and the Board of Directors approved a restricted stock reward program that provided for the grant of restricted stock units to certain directors and senior executives of Customers Bancorp and Customers Bank. Pursuant to the program, restricted stock units for 185,189 shares of our Voting Common Stock and 211,640 shares of our Class B Non-Voting Common Stock were granted on February 16, 2012 pursuant to the 2004 Plan. Of this amount, our named executive officers received restricted stock units for 126,988 shares of Voting Common Stock and 211,640 shares of Class B Non-Voting Common Stock in the aggregate and our non-employee directors received 15,876 shares of Voting Common Stock in the aggregate. One requirement for vesting is that the recipient of the restricted stock units remains an employee or director of ours, through December 31, 2016. The restricted stock units held by an employee or director are forfeited if he or she ceases to be an employee or director prior to that date. The second vesting requirement for each award (both must be met to vest) is that our Voting Common Stock trades at a price greater than $18.90 per share (adjusted for any stock splits or stock dividends) for at least 5 consecutive trading days during the five year period ending December 31, 2016. If the restricted stock units vest, the recipient will receive shares of our common stock on December 31, 2016. However, upon a change in control of us resulting in any one shareholder owning more than 24.9% of the outstanding stock of Customers Bancorp prior to December 31,30, 2016, all restricted stock units held by employees and directors automatically vest and they will receive shares of our common stock at that time.On March 26, 2012, we entered into an amended and restated employment agreement with Mr. Sidhu as Chairman and CEO of Customers Bank.Customers. Under the terms of the agreement, Mr. Sidhu will receive a minimum base salary plus a performance-based incentive bonus and a monthly car allowance. The term of the agreement is annually extended to another year unless Mr. Sidhu or wethe Company give notice to the contrary. Mr. Sidhu will also be entitled to cash or equity incentive compensation up to the amount of his base salary under an executive incentive plan to be approved by the Board of Directors. Mr. Sidhu’sThe December 30, 2016 employment agreement also provideswith Mr. Sidhu eliminated the previous employment agreement provisions providing that32for every issuance of shares made by us Customers, in connection with an acquisition or a raise of capital:capital, (i) up to $400 million, we must grant Mr. Sidhu options to purchase up to 10%10.0% of the shares issued in such issuance; (ii) from $401 million to $749 million, we must grant Mr. Sidhu options to purchase up to 6.7% of the shares issued in such issuance; and (iii) above $750 million of equity, we must grant Mr. Sidhu options to purchase up to 3.4% of the shares issued in such issuance. Our Board of Directors and Mr. Sidhu intend that the 2004 Plan or the 2010 Stock Option Plan, or both, each as more fully described above, will be used to fulfill the provisions of Mr. Sidhu’s employment agreement requiring us to issue to Mr. Sidhu options or warrants to acquire shares issued in connection with acquisitions or raises of capital. As of December 31, 2013, approximately $308 million of equity had been issued since 2009 pursuant to acquisitions or capital raises.Under the employment agreement, we also agreed that our Board of Directors will develop and implement a nonqualified retirement income plan designed to provide Mr. Sidhu with a retirement benefit, targeted at $300,000 per year (depending on performance of the investments in the informal funding vehicle) for 15 years commencing upon his retirement at or after age 65, subject to his ability to qualify for a variable life insurance policy to be owned by us to fund the plan. The Board of Directors is to reviewreviewed the plan at the end of the fourth year of his employment and determine whetherdetermined it ismay be appropriate to increase the target benefit amount in light of his compensation at that time.somefuture date. Under the employment agreement, Mr. Sidhu was to become vested in this retirement benefit after seven years of continuous service with us, or upon his termination of employment under circumstances that would result in our obligation to pay him severance compensation. Ultimately, the plan (which was developed and approved by the Board of Directors) provided for funding towards a target benefit of $300,000 per year, and for immediate vesting upon the effective date of the plan. See discussion of the “Nonqualified"Nonqualified Deferred Compensation”Compensation" on page 3691 of this proxy statement.AsProxy Statement.On December 30, 2016, the Company and Mr. Sidhu also entered into a letter agreement (the "Sidhu Letter Agreement"), which, subject to certain conditions, provided for the payment of March 26, 2012,a one-time cash bonus to Mr. Sidhu in connection with the completion of the sale of the BankMobile division of Customers Bank ("BankMobile") to a third party. However, due to the change in strategy to dispose of the BankMobile business via a spin-off of the BankMobile business to the Customers Bancorp, Inc. shareholders through an in-kind dividend and subsequent merger of that business into another bank, which will not generate any revenue to Customers, the letter agreement was terminated by Mr. Sidhu. No payments were made to Mr. Sidhu pursuant to this letter agreement.On December 30, 2016, we also entered into amended and restated employment agreements with Mr. Ehst.Ehst as Chief Operating Officer of Customers. With respect to Mr. Ehst’sEhst's employment agreement, the term of the agreement is annually extended for another year unless Mr. Ehst or we give notice to the contrary. Mr. Ehst receives a minimum base salary, plus incentive compensation in cash or equity or both and in such amounts as determined by the Board of Directors in accordance with incentive programs developed for him. Mr. Ehst’sThe December 30, 2016 employment agreement provideswith Mr. Ehst also eliminated the previous employment contract provisions providing that for every issuance of shares made by usCustomers, in connection with an acquisition or a raise of capital, (i) up to $400 million, we must grant Mr. Ehst options to purchase up to 1.5% of the shares issued in such issuance; (ii) from $401 million to $749 million, we must grant Mr. Ehst options to purchase up to 1% of the shares issued in such issuance; and (iii) above $750 million of equity, we must grant Mr. Ehst options to purchase up to 0.5% of the shares issued in such issuance.Each of Messrs. Sidhu and Ehst will be entitled to severance compensation under the agreementtheir respective agreements if he terminates his employment for “Good Reason”"Good Reason" (as defined in their respective employment agreements), if his employment is terminated by us other than for “Cause”"Cause" (as defined in their respective employment agreements) during the employment term or on expiration of the employment term. If a “Change"Change in Control”Control" (as defined in their respective employment agreements) has not occurred within twelve months before termination of employment, then: (1) he will receive the sum of his then current base salary plus the average of his last three years’years' annual cashperformance bonuses, for the greater of (a) one yearthree years in the case of Mr. Sidhu and two years in the cases of Mr. Ehst, or (b) the period of time remaining in his employment term, generally payable in equal installments on his normal pay dates, subject to normal tax deductions and withholding; (2) any unvested equity awards he has received will vest in full; (3) he will be entitled to an allocable fraction of any cash bonus that would have been payable to him for the current year had he remained employed through the date of payment; and (4) we will continue to provide health insurance (including dental if applicable) and any life or disability insurance benefits (“("health benefits”benefits") for the shorter of the period on which his cash severance compensation is measured or the maximum period we are then permitted to extend his benefit under the applicable plan or policy or applicable law. If a Change in Control shall have occurred within twelve months before termination of his employment, then: (1) he will receive cash equal to three times the sum of his then current base salary plus the average of his annual cashperformance bonuses for the immediately preceding three years, payable in a lump sum; (2) any unvested equity awards he has received will vest in full; (3) he will be entitled to an allocable fraction of any cashperformance bonus that would have been payable to him for the current year had he remained employed through the date of payment; (4) we shall continue to provide health benefits for the shorter of three years or the maximum period we are then permitted to extend his benefit under the applicable plan or policy or applicable law; and (5) if applicable, reimbursement of any “parachute payment”"parachute payment" excise tax under Section 4999 of the Code, grossed up to include any additional taxes payable on that benefit.On August 5, 2013,March 1, 2014, we entered into an employment agreement with Mr. WahlmanIssa as Chief Financial OfficerPresident of New England Commercial Banking Group of Customers Bank. With respect to Mr. Wahlman’sIssa's employment agreement, the term of the agreement is annually extended for another year unless Mr. WahlmanIssa or we give notice to the contrary. Mr. WahlmanIssa receives a minimum base salary, plus incentive compensation in cash or equity or both and in such amounts as determined by the Board of Directors in accordance with incentive programs developed for him. In addition, the Bank shall reimburse the Executive for reasonable moving (relocation) expenses. Mr. WahlmanIssa will be entitled to severance compensation under the agreement if he terminates his employment for “Good Reason”"Good Reason" (as defined in the employment agreement), if his employment is terminated by us other than for “Cause”"Cause" (as defined in the employment agreement) during the employment term or on expiration of the employment term. If a “Change"Change in Control”Control" (as defined in the employment agreement) has not occurred within twelve months before termination of employment, then: (1) he will receive the sum of his then current base salary plus the averagehighest of his last three years’years' annual cashperformance bonuses, for the greater of two(a) three years or (b) the period of time remaining in his employment term, generally payable in equal installments on his normal pay dates, subject to normal tax deductions33cashannual performance bonus that would have been payable to him for the current year had he remained employed through the date of payment; and (4) we will continue to provide health insurance (including dental if applicable) and any life or disability insurance benefits (“("health benefits”benefits") for the shorter of the period on which his cash severance compensation is measured or the maximum period we are then permitted to extend his benefit under the applicable plan or policy or applicable law. If a Change in Control shall have occurred within twelve months before terminationof his employment, then: (1) he will receive cash equal to three times the sum of his then current base salary plus the averagehighest of his annual cashperformance bonuses for the immediately preceding three years, payable in a lump sum; (2) any unvested equity awards he has received will vest in full; (3) he will be entitled to an allocable fraction of any cashannual performance bonus that would have been payable to him for the current year had he remained employed through the date of payment; and (4) we shall continue to provide health benefits for the shorterlonger of three years or the maximum period we are then permitted to extend his benefit under the applicable plan or policy or applicable law; and (5) if applicable, reimbursement of any “parachute payment” excise tax under Section 4999law.COMPENSATION COMMITTEE REPORTThe Compensation Committee of the Code, grossed upBoard of Directors has reviewed and discussed with management the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K and, based upon this review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement and incorporated in the Company's Annual Report on Form 10-K.Compensation Committee:Steven J. Zuckerman, ChairDaniel K. RothermelEXECUTIVE COMPENSATIONThe following table discloses the compensation paid or awarded with respect to our named executive officers during the years indicated. The Compensation Discussion and Analysis contains information concerning how the Compensation Committee viewed its 2018 compensation decisions for the named executive officers.The table below sets forth the compensation for each of the named executive officers for the fiscal years ended December 31, 2018, 2017, and 2016. The amounts reported for 2018 include equity awards made in 2018 for 2017 performance and other special matters. The bonus column of the table includes the annual performance award payable in cash, any additional taxesexecutive elected compensation deferral, and the Company match of the executive deferral election as described in the BRRP description, but excludes the portion of the annual performance award that is payable in RSUs, which is included in the following year (the year when granted) under Stock Awards.Summary Compensation Table(10) Year Salary
($) Bonus
($) Stock
Awards
($) (7) Option
Awards
($) (8) All Other
Compensation
($) (9) Total
($)Jay S. Sidhu 2018 680,932 — (1) 1,136,505 — 11,649 1,829,086 Chairman & CEO 2017 636,000 — (1) 2,007,402 5,380,768 22,513 8,046,683 2016 636,000 1,093,125 (1) 98,456 1,840,121 23,044 3,690,746 Richard A. Ehst 2018 475,000 — (2) 424,409 — 10,000 909,409 President & COO 2017 425,000 — (2) 788,955 869,754 10,558 2,094,267 2016 425,000 199,219 (2) 49,228 276,018 8,206 957,671 Carla A. Leibold 2018 248,056 — (3) 240,033 — 7,440 495,529 Executive Vice President & Chief Financial Officer Robert E. Wahlman 2018 400,000 — (4) 238,257 — 83,469 721,726 Former Executive Vice President & 2017 370,000 — (4) 28,940 434,877 26,948 860,765 Chief Financial Officer 2016 370,000 317,969 (4) 28,733 — 26,467 743,169 Glenn A. Hedde 2018 260,000 99,934 (5) 300,030 — 8,100 668,064 Executive Vice President & 2017 255,461 325,000 (5) 200,007 — 8,100 788,568 President of Banking to
Mortgage Companies 2016 250,000 300,000 (5) 56,824 — 6,221 613,045 Steven J. Issa 2018 324,800 25,000 (6) 247,520 — 26,259 623,579 Executive Vice President & 2017 318,816 308,750 (6) 96,910 — 27,554 752,030 Chief Lending Officer 2016 312,000 265,625 (6) 37,500 — 27,336 642,461 (1) Mr. Sidhu earned a bonus of $1,177,748 for 2018, all of which was received in restricted stock units. Mr. Sidhu did not accept an annual performance bonus for 2017. Mr. Sidhu did receive $7,288,785 of equity compensation for 2016 performance and other matters during 2017 as discussed in the long-term equity incentives section of the Compensation Discussion and Analysis on that benefit.Mr. Sidhu earned a bonus of $795,000 for 2016. Of this amount, he received $298,125 in cash, $99,375 in restricted stock units, and elected to defer $397,500 under the BRRP in the form of an equivalent number of restricted stock units. After a five year vesting period, he will receive his deferred bonus, along with a Company match of $397,500, ($795,000 in total), all in the form of shares of our Voting Common Stock plus any shares resulting from the deemed reinvestment of dividends on those shares. If Mr. Sidhu does not remain employed by us during the five-year vesting period, or does not meet one of the vesting criteria identified in Customers' compensation philosophy, he will forfeit the right to receive those shares.(2) Mr. Ehst earned a bonus of $380,048 for 2018, all of which was received in restricted stock units. Mr. Ehst did not accept an annual performance bonus for 2017. Mr. Ehst did receive $1,592,280 of equity compensation for 2016 performance and other matters during 2017 as discussed in the long-term equity incentives section of the Compensation Discussion and Analysis.Mr. Ehst earned a bonus of $265,625 for 2016. Of this amount, he received $199,219 in cash and $66,406 in restricted stock units.(3) Ms. Leibold earned a bonus of $277,368 for 2018, all of which was received in restricted stock units, including $100,012 which was granted in 2018 and included in the table above. The remaining $177,056 will be included in the 2020 Proxy Statement. (4) Mr. Wahlman did not earn a bonus for 2018. Mr. Wahlman did not accept an annual performance bonus for 2017. Mr. Wahlman did receive $434,877 of equity compensation for 2016 performance and other matters during 2017 as discussed in the long-term equity incentives section of the Compensation Discussion and Analysis.Mr. Wahlman earned a bonus of $231,250 for 2016. Of this amount, he received $86,719 in cash, $28,906 in restricted stock units, and elected to defer $115,625 under the BRRP in the form of an equivalent number of restricted stock units. In connection with Mr. Wahlman's departure, Mr. Wahlman and the Company entered into a Letter Agreement and General Release dated December 10, 2018 pursuant to which Mr. Wahlman received the immediate vesting of 26,894 shares of previously awarded restricted stock units of the Company and 112,000 previously awarded stock options to purchase stock of the Company.(5) Mr. Hedde earned a bonus of $399,964 for 2018. Of this amount, he received $99,934 in cash and $300,030 in restricted stock units (all of which were granted in 2018 and included in the table above).Mr. Hedde earned a bonus of $325,000 for 2017, all of which was received in cash.Mr. Hedde earned a bonus of $500,000 for 2016. Of this amount, he received $300,000 in cash and $200,000 in restricted stock units.(6) Mr. Issa earned a bonus of $175,000 for 2018. Of this amount, he received $25,000 in cash and $150,000 in restricted stock units (all of which were granted in 2018 and included in the table above). Mr. Issa earned a bonus of $325,000 for 2017. Of this amount, he received $146,250 in cash, $97,500 in restricted stock units, and elected to defer $81,250 under the BRRP in the form of an equivalent number of restricted stock units. After a five year vesting period, he will receive his deferred bonus, along with a Company match of $81,250 ($162,500 in total), all in the form of shares of our Voting Common Stock plus any shares resulting from the deemed reinvestment of dividends on those shares. If Mr. Issa does not remain employed by us during the five-year vesting period, or does not meet one of the vesting criteria identified in Customers' compensation philosophy, he will forfeit the right to receive those shares.Mr. Issa earned a bonus of $250,000 for 2016. Of this amount, he received $140,625 in cash, $46,875 in restricted stock units, and elected to defer $62,500 under the BRRP in the form of an equivalent number of restricted stock units. After a five year vesting period, he will receive his deferred bonus, along with a Company match of $62,500 ($125,000 in total), all in the form of shares of our Voting Common Stock plus any shares resulting from the deemed reinvestment of dividends on those shares. If Mr. Issa does not remain employed by us during the five-year vesting period, or does not meet one of the vesting criteria identified in Customers' compensation philosophy, he will forfeit the right to receive those shares.(7) Represents the aggregate grant date fair value, calculated in accordance with FASB ASC Topic 718, of the stock awards described in footnotes 1 through 6 above. The grant date fair values have been determined based on the assumptions and methodologies set forth in our 2018 financial statements (NOTE 13 - SHARE-BASED COMPENSATION PLANS).(8) Represents the aggregate grant date fair value, as calculated in accordance with FASB ASC Topic 718, of option awards. The grant date fair values have been determined based on the assumptions and methodologies set forth in our 2018 financial statements (NOTE 13 - SHARE-BASED COMPENSATION PLANS).(9) The amounts listed in this column include matching 401(k) contributions paid under our 401(k) Retirement Savings and Profit Sharing Plan for each of Messrs. Sidhu, Wahlman, Issa, and Hedde and Ms. Leibold; car allowances and country club memberships for Messrs. Wahlman and Issa; and a country club membership for Mr. Sidhu. We provide Messrs. Sidhu and Ehst with automobiles which they primarily use for business purposes. All Other Compensation for Messrs. Sidhu and Ehst also includes the value attributable to their personal use of these automobiles in 2018, 2017, and 2016. All Other Compensation for Mr. Wahlman also includes amounts paid to Mr. Wahlman in connection with his November 21, 2018 separation of employment with the Company for payment in lieu notice, employer share of health benefits for two months, and 45 days of car allowance, (10) The following columns are intentionally omitted from this table: Non-Equity Incentive Plan Compensation, Change in Pension Value, and Nonqualified Deferred Compensation Earnings. The table also does not reflect expected long-term equity incentive awards for 2018 performance that may be awarded consistent with the Company's new compensation plan which will be disclosed in the 2020 proxy. OUTSTANDING EQUITY AWARDS AT FISCAL YEAR ENDGrants of Plan Based Awards(1)The following table sets forth certain information regarding awards granted to each of our named executive officers during 2018. 60% of the RSUs issued on July 2, 2018 to Messrs. Sidhu, Ehst and Wahlman are subject to additional performance-based vesting criteria consistent with the compensation plan implemented in 2018. The Compensation Discussion and Analysis includes additional information regarding the incentive awards made to named executive officers and our share based compensation programs. All other
stock awards:
Number of
shares of
Common Stock All other option
awards: Number
of shares of
Common Stock
underlying
options Exercise or
base price of
option awards Grant date fair
value of stock and
option awardsName Grant Date (#) (#) ($/Share) ($) (2)Jay S. Sidhu 7/2/2018 32,908 — — 1,136,505 Richard A. Ehst 7/2/2018 12,289 — — 424,409 Carla A. Leibold 3/1/2018 4,840 — — 140,021 10/23/2018 5,228 — — 100,012 Robert E. Wahlman 7/2/2018 6,899 — — 238,257 Glenn A. Hedde 6/4/2018 4,805 — — 150,012 10/23/2018 7,842 — — 150,017 Steven J. Issa 3/1/2018 8,989 — — 260,052 9/26/2018 6,372 — — 149,997 (1) The following columns are intentionally omitted from this table: Estimated Future Payouts under Non-Equity Incentive Plan Awards, and Estimated Future Payouts under Equity Incentive Plan Awards. (2) Represents the grant date fair value, as calculated in accordance with FASB ASC Topic 718, of these option or stock awards. The grant date fair value has been determined based on the assumptions and methodologies set forth in the consolidated financial statements included in NOTE 13 - SHARE-BASED COMPENSATION PLANS of our Annual Report on Form 10-K for the year ended December 31, 2018. Outstanding Equity Awards at Fiscal Year End(1)The following table sets forth information on outstanding warrants, option awards and stock awards held by the named executive officers at December 31, 2013,2018, including the number of shares underlying each stock option, and warrant, the exercise price and the expiration date of each outstanding option, and warrant, and the number of shares and market value of stock awards. Option Awards Stock Awards Name & Principal Position Number of
Securities
Underlying
Options
Exercisable
(#) Number of
Securities
Underlying
Options
Unexerciseable
(#) Option
Exercise
Price
($/share) Option
Expiration
Date Number of
shares or
units of
stock that
have not
vested (#) Market
value of
shares or
units of
stock that
have not
vested ($)Jay S. Sidhu — 448,754 (2) 9.75 04/06/2020 — — Chairman and — 11,667 (3) 10.50 07/14/2020 — — Chief Executive Officer — 74,422 (4) 12.00 12/28/2020 — — — 76,459 (5) 12.00 01/31/2021 — — — 33,517 (6) 12.00 02/28/2021 — — — 26,831 (7) 12.00 03/07/2021 — — — 62,399 (8) 13.20 09/17/2021 — — — 98,485 (9) 13.20 09/30/2021 — — — 711,182 (10) 14.00 09/20/2022 — — — 617,910 (11) 16.75 05/22/2023 — — — — — — 23,809 (15) 487,132 — — — — 211,640 (18) 4,330,154 — — — — 34,722 (19) 710,412 Richard A. Ehst — 67,313 (2) 9.75 04/06/2020 — — President and — 1,750 (3) 10.50 07/14/2020 — — Chief Operating Officer — 11,163 (4) 12.00 12/28/2020 — — — 11,469 (5) 12.00 01/31/2021 — — — 5,028 (6) 12.00 02/28/2021 — — — 4,025 (7) 12.00 03/07/2021 — — — 9,360 (8) 13.20 09/17/2021 — — — 14,773 (9) 13.20 09/30/2021 — — — 106,677 (10) 14.00 09/20/2022 — — — 92,687 (11) 16.75 05/22/2023 — — — — — — 4,464 (15) 91,333 — — — — 52,910 (18) 1,082,539 — — — — 6,250 (19) 127,875 Robert E. Wahlman 20,000 (20) 17.18 08/05/2023 — — Executive Vice President and Chief Financial Officer 34 Option Awards Stock Awards Name & Principal Position Number of
Securities
Underlying
Options
Exercisable
(#) Number of
Securities
Underlying
Options
Unexerciseable
(#) Option
Exercise
Price
($/share) Option
Expiration
Date Number of
shares or
units of
stock that
have not
vested (#) Market
value of
shares or
units of
stock that
have not
vested ($)Jay S. Sidhu 679,701 (2) --- 15.23 5/22/2023 --- --- Chairman and --- 310,000 (3) 23.36 8/26/2025 --- --- Chief Executive Officer --- 241,500 (4) 25.97 11/9/2026 --- --- --- 120,000 (5) 28.24 7/26/2027 --- --- --- 500,000 (6) 26.65 12/20/2027 --- --- --- --- --- --- 28,321 (7) 515,442 --- --- --- --- 31,430 (8) 572,026 --- --- --- --- 34,314 (9) 624,515 --- --- --- --- 1,430 (10) 26,026 --- --- --- --- 1,930 (11) 35,126 --- --- --- --- 23,158 (12) 421,476 --- --- --- --- 75,745 (13) 1,378,559 --- --- --- --- 13,163 (14) 239,567 --- --- --- --- 19,745 (15) 359,359 Richard A. Ehst --- 46,395 (3) 23.36 8/26/2025 --- --- President and --- 36,225 (4) 25.97 11/9/2026 --- --- Chief Operating Officer --- 100,000 (6) 26.65 12/20/2027 --- --- --- --- --- --- 4,957 (7) 90,217 --- --- --- --- 5,238 (8) 95,332 --- --- --- --- 5,719 (9) 104,086 --- --- --- --- 715 (10) 13,013 --- --- --- --- 1,290 (11) 23,478 --- --- --- --- 11,811 (13) 214,960 --- --- --- --- 15,168 (16) 276,058 --- --- --- --- 4,916 (14) 89,471 --- --- --- --- 7,373 (15) 134,189 Carla A. Leibold --- 5,000 (3) 23.36 8/26/2025 --- --- Executive Vice President and --- --- --- --- 291 (10) 5,296 Chief Financial Officer --- --- --- --- 486 (12) 8,845 --- --- --- --- 4,840 (20) 88,088 --- --- --- --- 5,228 (24) 95,150 Option Awards Stock Awards Name & Principal Position Number of
Securities
Underlying
Options
Exercisable
(#) Number of
Securities
Underlying
Options
Unexerciseable
(#) Option
Exercise
Price
($/share) Option
Expiration
Date Number of
shares or
units of
stock that
have not
vested (#) Market
value of
shares or
units of
stock that
have not
vested ($)Steven J. Issa --- 5,500 (18) 17.65 2/20/2024 --- --- Executive Vice President and --- 10,000 (3) 23.36 8/26/2025 --- --- Chief Lending Officer --- --- --- --- 5,238 (8) 95,332 --- --- --- --- 4,358 (9) 79,316 --- --- --- --- 545 (10) 9,919 --- --- --- --- 3,642 (12) 66,284 --- --- --- --- 911 (11) 16,580 --- --- --- --- 1,785 (17) 32,487 --- --- --- --- 3,371 (20) 61,352 --- --- --- --- 5,618 (21) 102,248 6,372 (23) 115,970 Glenn A. Hedde 3,667 (19) --- 8.86 4/6/2020 --- --- Executive Vice President and 9,167 (25) --- 10.91 2/17/2021 --- --- President of Banking to --- --- --- --- 11,328 (7) 206,170 Mortgage Companies --- --- --- --- 13,410 (8) 244,062 --- --- --- --- 19,804 (9) 360,433 --- --- --- --- 826 (10) 15,033 --- --- --- --- 3,884 (11) 70,689 --- --- --- --- 4,805 (22) 87,451 --- --- --- --- 7,842 (24) 142,724 Warren Taylor — 16,667 (2) 9.75 04/06/2020 — — Executive Vice President and — 16,667 (12) 12.00 02/17/2021 — — President and Director of — 6,667 (13) 12.60 02/16/2022 — — Community Banking — 10,000 (14) 14.94 11/28/2022 — — — — — — 5,952 (15) 121,778 — — — — 10,582 (18) 216,508 — — — — 5,554 (19) 113,635 Glenn A. Hedde — 3,334 (2) 9.75 04/06/2020 — — Executive Vice President and — 8,334 (12) 12.00 02/17/2021 — — President of Banking to — — — — 17,396 (15) 355,922 Mortgage Companies — — — — 24,479 (16) 500,840 — — — — 32,150 (17) 657,789 — — — — 10,582 (18) 216,508 — — — — 27,410 (21) 560,809 James D. Hogan 10,000 (22) — 14.94 11/28/2017 — — Chief Financial Officer (1)(1 ) Except as otherwise noted in a footnote, all awards relate to shares of Voting Common Stock. At December 31, 2013,2018, the closing market price of our Voting Common Stock, as listed on NASDAQ Global SelectThe New York Stock Exchange, was $20.46.$18.20. The following columns are intentionally omitted from this table: Option Awards: Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options, Stock Awards: Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested, and Stock Awards: Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested.(2 (2))These stock options vested on the fifth anniversary of the date of grant (May 22, 2018). (3 ) The stock options vest on the fifth anniversary of the date of grant (April 6, 2015),(August 26, 2020) and are subject to a condition that the market price of our Voting Common Stock increase by 50% (to $14.63) during the life of the option and subject to accelerated vesting in certain circumstances.performance criteria.(4 (3)These stock options vest on the fifth anniversary of the date of grant (July 14, 2015), subject to a condition that the market price of our Voting Common Stock increase by 50% (to $15.75) during the life of the option and subject to accelerated vesting in certain circumstances.(4)These stock options vest on the fifth anniversary of the date of grant (December 28, 2015), subject to a condition that the market price of our Voting Common Stock increase by 50% (to $18.00) during the life of the option and subject to accelerated vesting in certain circumstances.(5)These stock options vest on the fifth anniversary of the date of grant (January 31, 2016), subject to a condition that the market price of our Voting Common Stock increase by 50% (to $18.00) during the life of the option and subject to accelerated vesting in certain circumstances.(6)These stock options vest on the fifth anniversary of the date of grant (February 28, 2016), subject to a condition that the market price of our Voting Common Stock increase by 50% (to $18.00) during the life of the option and subject to accelerated vesting in certain circumstances.(7)These stock options vest on the fifth anniversary of the date of grant (March 7, 2016), subject to a condition that the market price of our Voting Common Stock increase by 50% (to $18.00) during the life of the option and subject to accelerated vesting in certain circumstances.(8)These stock options vest on the fifth anniversary of the date of grant (September 17, 2016), subject to a condition that the market price of our Voting Common Stock increase by 50% (to $19.80) during the life of the option and subject to accelerated vesting in certain circumstances. This grant entitles Mr. Sidhu to purchase 62,399 shares of Class B Non-Voting Common Stock.(9)These stock options vest on the fifth anniversary of the date of grant (September 30, 2016), subject to a condition that the market price of our Voting Common Stock increase by 50% (to $19.80) during the life of the option and subject to accelerated vesting in certain circumstances. This grant entitles Mr. Sidhu to purchase 98,485 shares of Class B Non-Voting Common Stock.35(10)These stock options vest on the fifth anniversary of the date of grant (September 20, 2017), subject to a condition that the market price of our Voting Common Stock increase by 50% (to $21.00) during the life of the option and subject to accelerated vesting in certain circumstances.(11)These stock options vest on the fifth anniversary of the date of grant (May 22, 2018), subject to a condition that the market price of our Voting Common Stock increase by 50% (to $25.13) during the life of the option and subject to accelerated vesting in certain circumstances.(12)These stock options vest on the fifth anniversary of the date of grant (February 17, 2016), subject to a condition that the market price of our Voting Common Stock increase by 50% (to $18.00) during the life of the option and subject to accelerated vesting in certain circumstances.(13)These stock options vest on the fifth anniversary of the date of grant (February 16, 2017), subject to a condition that the market price of our Voting Common Stock increase by 50% (to $18.90) during the life of the option and subject to accelerated vesting in certain circumstances.(14))These stock options vest on the fifth anniversary of the date of grant (November 28, 2017)9, 2021) and are subject to certain performance criteria.(5 ) The stock options vest on the fifth anniversary of the date of grant (July 26, 2022), subject to a condition that the market price of our Voting Common Stock increase by 50% (to $22.41)trade above $40 per share for ten days during the lifevesting period.(6 ) The stock options vest on the fifth anniversary of the option anddate of grant (December 20, 2022), subject to accelerateda condition that the market price of our Voting Common Stock trade above $40 per share for ten days during the vesting in certain circumstances.period.(7 (15))The restricted stock units, issued under the BRRP, vest on the fifth anniversary of the date of grant (February 20, 2019). (8 ) The restricted stock units, issued under the BRRP, vest on the fifth anniversary of the date of grant (January 22, 2020). (9 ) The restricted stock units, issued under the BRRP, vest on the fifth anniversary of the date of grant (February 16, 2017)2021).(10 (16)The restricted stock units vested on the third anniversary of the date of grant (February 17, 2014).(17))The restricted stock units vest annually in thirds on the third anniversary of the date of grant (February 16, 2015)2017, 2018, and 2019). At December 31, 2018, one-third of the grant was unvested.(11 (18))The restricted stock units vest annually in thirds on the anniversary of the date of grant (February 28, 2018, 2019, and 2020). At December 31, 2016 subject to a condition that2018, two-thirds of the Bancorp’s Voting Common Stock trades at a price greater than $18.90 per share for at least five consecutive trading days during the five-year period ending December 31, 2016 (this conditiongrant was satisfied in December 2013) and subject to accelerated vesting in certain circumstances. The restricted stock units issued to Mr. Sidhu are for Class B Non-Voting Common Stock.unvested.(12 (19))The restricted stock units, issued under the BRRP, vest on the fifth anniversary of the date of grant (December(February 28, 2017)2022).(13 (20)These stock options vest on August 5, 2018.(21))The restricted stock units vest on the third anniversary of the date of grant (March (November 9, 2020) and are subject to certain performance criteria.(14 ) The restricted stock units vest annually in thirds on the anniversary of the date of grant (July 2, 2019, 2020, and 2021). (15 2016)) The restricted stock units vest on third anniversary date of the grant grant (July 2, 2021) and are subject to certain performance criteria. (16 ) The restricted stock units vest on the third anniversary of the date of grant (June 1, 2020) and are subject to certain performance criteria. (17 ) The restricted stock units vest on the third anniversary of the date of grant (June 1, 2020). (22)(18 ) The stock options vest on the fifth anniversary of the date of grant (February 20, 2019). (19 ) These stock options vested on February 28, 2013.the fifth anniversary of the date of grant (April 6, 2015).(20 ) The restricted stock units vest annually in thirds on the anniversary of the date of grant (March 1, 2019, 2020, and 2021). (21 ) The restricted stock units, issued under the BRRP, vest on the fifth anniversary of the date of grant (March 1, 2023). (22 ) The restricted stock units vest annually in thirds on the anniversary of the date of grant (June 4, 2019, 2020, and 2021). (23 ) The restricted stock units vest annually in thirds on the anniversary of the date of grant (September 26, 2019, 2020, and 2021). (24 ) The restricted stock units vest annually in thirds on the anniversary of the date of grant (October 23, 2019, 2020, and 2021). (25 ) These stock options vested on the fifth anniversary of the date of grant (February 17, 2016). Option Exercises and Stock VestingThe following table sets forth information on stock option exercises and stock vesting for the named executive officers for the fiscal year ended December 31, 2018. Option Awards Stock Awards Name Number of Shares
Acquired on Exercise
# Value Received
on Exercise
$ Number of Shares
Acquired on Vesting
# Value Received
on Vesting
$Jay S. Sidhu — — 3,705 112,217 Richard A. Ehst 101,956 1,496,790 2,015 60,876 Carla Leibold — — 818 24,734 Robert E. Wahlman — — 27,974 565,213 Steven J. Issa 11,001 173,262 1,524 46,080 Glenn A. Hedde — — 3,605 107,889 Pension BenefitsCustomers does not provide a pension plan to its employees.Nonqualified Deferred CompensationThe following Nonqualified Deferred Compensation table summarizes activity during 20132018 and the account balance as of December 31, 20132018 for our non-qualified defined contribution plans that provide for the deferral of compensation.NONQUALIFIED DEFERRED COMPENSATION Executive
Contributions
in Last FY Registrant
Contribution
in Last FY Aggregate
Earnings
(Losses)
in Last
FY Aggregate
Withdrawals/Distributions Aggregate
Balance at
Last FYName ($) ($) ($) ($) ($) Jay S. Sidhu (1) -0- -0- 601,241 -0- 3,469,023 Executive
Contributions
in Last FY Registrant
Contribution
in Last FY Aggregate
Earnings
(Losses) in
Last FY Aggregate
Withdrawals/Distributions Aggregate
Balance at Last
FYName ($) ($) ($) ($) ($) Jay S. Sidhu (1) -0- -0- (288,870 ) -0- 4,320,665 (1) Represents the supplemental executive retirement plan (“SERP”("SERP") for Mr. Sidhu. As a result of the acquisition of USA Bank on July 9, 2010, Mr. Sidhu’sSidhu's SERP became effective, and Mr. Sidhu is entitled to receive the balance of the SERP account payable over 15 years commencing upon the later of his separation from service or his 65th birthday. If Mr. Sidhu dies prior to his payment commencement date, his beneficiary receives a lump sum payment equal to $3,000,000. If Mr. Sidhu dies after reaching age 65, his beneficiary receives the remainder of his scheduled retirement benefits. If Mr. Sidhu’sSidhu's employment is terminated for cause, he forfeits the benefits provided under the SERP. See “Supplemental"Supplemental Executive Retirement Plan for Chairman and Chief Executive Officer”Officer" for more details on Mr. Sidhu’sSidhu's SERP. The Company also has “CompanyCompany Owned Life Insurance (COLI)”("COLI") on36Mr. Sidhu. The premiums paid during the year ended December 31, 2013 totaled $465,234.policy was fully funded in 2014. The policy has a net surrender value of $2,260,616$3,052,801 and a face value or net death benefit amount of $6,100,000.POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROLPotential Payments Upon Termination Or Change In ControlThe tables below show the value of estimated payments pursuant to the employment agreements, equity plans and other plans described above upon a termination of employment, including gross-up payments for any excise tax on the parachute payments upon a change of control, for each of Messrs. Sidhu and Ehst. All termination events are assumed to occur on December 31, 2013.2018. The payments represent the maximum possible payments under interpretations and assumptions most favorable to the executive officer. The amounts shown in the tables include estimates of amounts that would be paid to the executive upon the occurrence of the specified event. The actual amounts to be paid to the named executive officers can only be determined at the time of their termination and may be more or less than the amounts contained in the tables and the various agreements and plans. See “Officer"Officer Employment Agreements”Agreements" for more details.Assuming the noted events had occurred on December 31, 2013, payments and benefits estimated due to Messrs. Sidhu, Ehst and Wahlman would be estimated as follows:Jay S. Sidhu Termination Without
Cause or For Good
Reason (5) Termination in
Connection with Change
in Control (5) Death Base Salary (1) $ 1,325,000 $ 1,500,000 — Bonus (2) $ 1,733,000 $ 1,900,000 — Value of Health and Welfare Benefits (3) $ 45,695 $ 49,800 — Death Benefit (4) — — $ 3,200,000 TOTAL $ 3,103,695 $ 3,449,800 $ 3,200,000 Richard A. Ehst Termination Without
Cause or For Good
Reason (5) Termination in
Connection with Change
in Control (5) Death Base Salary (1) $ 807,500 $ 1,050,000 — Bonus (2) $ 514,800 $ 561,300 — Value of Health and Welfare Benefits (3) $ 40,390 $ 44,058 — Death Benefit (4) — — $ 200,000 TOTAL $ 1,361,690 $ 1,655,358 $ 200,000 Robert E. Wahlman Termination Without
Cause or For Good
Reason (5) Termination in
Connection with Change
in Control (5) Death Base Salary (1) $ 945,000 $ 945,000 — Bonus (2) $ 237,000 $ 237,000 — Value of Health and Welfare Benefits (3) $ 61,250 $ 61,250 — Death Benefit (4) — — $ 200,000 TOTAL $ 1,243,250 $ 243,250 $ 200,000 (1)Represents continuation of salary payments for the payout period provided under each named executive officer’s applicable employment agreement.37(2)Represents payment of an amount representing the average of the executive’s cash bonuses for the two fiscal years preceding the fiscal year of termination (2011 and 2012) over the payout period provided under each named executive officer’s applicable employment agreement.(3)Represents payment of premiums for continued health and other welfare benefit insurance over the payout period provided under each named executive officer’s applicable employment agreement.(4)In Mr. Sidhu’s case, represents an uninsured death benefit payable under his Supplemental Executive Retirement Plan. In the cases of Mr. Ehst and Mr. Hogan, represents the proceeds of group term life insurance, the premiums for which are paid by us.(5)While the employment agreements of these named executive officers provide for the time-based vesting requirements of equity-based awards to be met upon termination, no amounts are shown as these awards also require 50% increase in the value of the common stock, which did not occur as of the assumed termination date of December 31, 2013.James D. HoganMr. Hogan didMs. Leibold does not have an employment agreement with the Company providing for compensation in connection with termination or a change of control. Mr. Hogan resigned his employment on August 30, 2013. Mr. Hogan received no additional payments upon his resignation, beyond any accrued but unpaid salary and retained the 10,000 stock options which had vested in February 2013.Glenn A. Hedde and Warren TaylorMessrs. Hedde and Taylor do not have employment agreements with us providing for compensation in connection with severance or a change of control.Mr. Hedde does not have an employment agreement with us providing for compensation in connection with severance or a change of control. On January 30, 2013, we entered into a Change of Control AgreementsAgreement with each of Messrs. Hedde and Taylor (each, a “Change of Control Agreement”).Mr. Hedde. Under eachthe Change of Control Agreement, the executive is entitled to certain payments if his employment is terminated other than for Cause, or by the executive for Good Reason, in each case within one year after a Change in Control of the Bancorp. If these events occur, the executive is entitled to a single lump sum payment, subject to tax withholding obligations, of (i) two hundred percent (200%) of the highest rate of base annual salary in effect for the executive during the twelve month period prior to termination of employment, and (ii) two hundred percent (200%) of the average of the aggregate annual cash performance bonuses earned by the executive during each of the three preceding fiscal years. Each Change of Control Agreement also provides for a reduction of the payments to the executive in order to avoid excise taxes under Section 4999 of the Internal Revenue Code of 1986, as amended. EachThe Change of Control Agreement contains non-competition, non-solicitation and similar covenants that remain in effect for a period of twelve months following termination upon a Change in Control, as well as covenants related to confidentiality of proprietary information. The change of control agreement also provides for the vesting of any previously unvested restricted stock and stock options. Assuming termination following a change in control, Messrs. Hedde and TaylorMr. Hedde's payments had an estimated value as follows:Glenn Hedde Termination in Connection
with Change in Control Base Salary $ 420,000 Bonus $ 473,000 Warren Taylor Termination in Connection
with Change in Control Base Salary $ 420,000 Bonus $ 157,000
described in the following table.38Restricted Stock Units VestingAssuming the noted events had occurred on Change in ControlTaylor have been awarded restricted stock units under the terms of certain plans and award agreements. (SeeOUTSTANDING EQUITY AWARDS AT FISCAL YEAR END TABLE) In accordance with their terms, these restricted stock unitsMs. Leibold would be estimated as follows:Jay S. Sidhu Resignation For Good
Reason or Termination
Without Cause Termination in
Connection with Change
in Control Death Salary and Annual Performance Award (1) $ 11,079,285 $ 11,079,285 $ — Annual Incentive/Bonus (2) 1,177,748 1,177,748 — Health and Welfare Benefits (3) 67,403 67,403 — Stock Options (4) — — — Restricted Shares (4) 4,172,095 4,172,095 4,172,095 Death Benefit (5) — — 3,130,000 Excise Tax Gross Up — — — TOTAL $ 16,496,531 $ 16,496,531 $ 7,302,095 Richard A. Ehst Resignation For Good
Reason or Termination
Without Cause Termination in
Connection with Change
in Control Death Salary and Annual Performance Award (1) $ 2,363,603 $ 3,545,405 $ — Annual Incentive/Bonus (2) 380,048 380,048 — Health and Welfare Benefits (3) 51,370 77,055 — Stock Options (4) — — — Restricted Shares (4) 1,040,803 1,040,803 1,040,803 Death Benefit (5) — — 200,000 Excise Tax Gross Up — — — TOTAL $ 3,835,824 $ 5,043,311 $ 1,240,803 Carla A. Leibold Resignation For Good
Reason or Termination
Without Cause Termination in
Connection with Change
in Control Death Salary and Annual Performance Award (1) $ — $ 853,333 $ — Annual Incentive/Bonus (2) — — — Health and Welfare Benefits (3) — — — Stock Options (4) — — — Restricted Shares (4) — 197,379 197,379 Death Benefit (5) — — 200,000 TOTAL $ — $ 1,050,712 $ 397,379 Steven J. Issa Resignation For Good
Reason or Termination
Without Cause Termination in
Connection with Change
in Control Death Salary and Annual Performance Award (1) $ 2,006,802 $ 1,948,440 $ — Annual Incentive/Bonus (2) 325,000 325,000 — Health and Welfare Benefits (3) 67,562 67,562 — Stock Options (4) 3,025 3,025 3,025 Restricted Shares (4) 579,488 579,488 579,488 Death Benefit (5) — — 200,000 TOTAL $ 2,981,877 $ 2,923,515 $ 782,513 Glenn A. Hedde Resignation For Good
Reason or Termination
Without Cause Termination in
Connection with Change
in Control Death Salary and Annual Performance Award (1) $ — $ 1,473,000 $ — Annual Incentive/Bonus (2) — — — Stock Options (4) — — — Restricted Shares (4) — 1,126,562 1,126,562 Death Benefit (5) — — 200,000 TOTAL $ — $ 2,599,562 $ 1,326,562 (1) Represents continuation of severance payments for the payout period provided under each named executive officer's applicable employment agreement. Severance payment calculation is based on base salary at the time of termination as well as the average of the executive's annual performance bonus (excluding the Company match of any deferred compensation) for the three fiscal years preceding the fiscal year of termination (2018, 2017, and 2016) as defined in the executive's employment agreement. Mr. Issa's severance payment is based on the highest bonus paid to him as provided in his agreement. (2) Represents the portion of the Annual Incentive Bonus for the fiscal year of the Executive's termination that, would have been payable to the Executive had he remained employed through the date of payment. (3) Represents payment of premiums for continued health and other welfare benefit insurance over the payout period provided under each named executive officer's applicable employment agreement. (4) Stock options and restricted shares also vest at the time Messrs. Sidhu, Ehst, Issa or Hedde and Ms. Leibold elect to retire upon reaching age 65 or with the consent of the Compensation Committee. (5) In Mr. Sidhu's case, includes the proceeds of group term life insurance, the premiums for which are paid by us as well as an uninsured death benefit payable under his Supplemental Executive Retirement Plan. In the cases of Mr. Ehst, Ms. Leibold, Mr. Hedde and Mr. Issa represents the proceeds of group term life insurance, the premiums for which are paid by us. The excise tax gross-up provisions are included only in the eventcontracts of the executive’s death or disability, orCEO and COO. The protection provided to these executive officers most responsible for creating shareholder value was a commitment made by the Company in its early stages of development when such measure helped recruit and subsequently retain the quality of management and leadership necessary to develop a $250 million asset bank to a nearly $10 billion asset bank. The excise tax gross up calculation is very complex with many different components. To calculate the tax gross up management considered all sources of payments that may result from a change in control, including accelerated vesting of deferred compensation and that the excise tax gross up is also a payment made in connection with a change in control. Based uponThe deferred compensation calculation considered whether the deferred compensation was time based or performance based, the remaining vesting period if the deferred compensation payment was only time based, whether the deferred compensation performance criteria had been met, and the remaining time period to vest if the performance criteria was met, and the federal tax related interest rate. Given Mr. Sidhu's and Mr. Ehst's level of compensation for 2018, the Company estimated that an excise payment would not be owed to Mr. Sidhu and Mr. Ehst, assuming a fair market valuehypothetical change of $20.46 per share for our Common Stock, the value of these awards that would have been received by the following named executive officers had a change in control event occurred on December 31, 2013 is as follows:2018. Customers' Board of Directors Compensation Committee has directed that the excise tax gross ups not be included in any future employment contracts, that the provision be retained in the current contracts pursuant to the Company's previous commitments, and that the excise tax gross up "sunset" with the departure or retirement of the current CEO and COO.CEO Pay RatioAs required by Item 402(u) of Regulation S-K, we are providing the following information:For fiscal 2018, our last completed fiscal year:The median of the annual total compensation of all employees of our Company (other than Mr. Sidhu), was $82,725.The annual total compensation of Mr. Sidhu, -$5,527,698; Mr. Ehst - $1,301,747; Mr. Hedde - $2,291,868;our Chairman & CEO, as reported, was $1,829,086 for 2018.Based on this information, the ratio for 2018 of the annual total compensation of our Chairman & CEO to the median of the annual total compensation of all employees is 22.1x to 1.We completed the following steps to identify the median of the annual total compensation of all our employees and Mr. Taylor - $451,921.1. The rules require a company to identify its median employee once every three years unless there has been a change in the company's employee population or compensation arrangements that would reasonably result in a significant change in the pay ratio disclosure. We do not believe there has been any material change at the Company. 2. As of December 31, 2018, our employee population consisted of approximately 765 individuals, including any full-time, part-time, temporary, or seasonal employees employed on that date. 3. To find the median of the annual total compensation of all our employees (other than our CEO), we used wages from our payroll records as reported to the Internal Revenue Service on Form W-2 for fiscal 2018. In making this determination, we annualized the compensation of full-time and part-time permanent employees who were employed on December 31, 2018, but did not work for us the entire year. No full-time equivalent adjustments were made for part time employees or former employees who terminated their employment during the year. 4. We identified an initial median employee using this compensation measure and methodology, which was consistently applied to all our employees included in the calculation. We identified an anomaly with this employee’s 2018 compensation that would have significantly impacted our pay ratio and therefore substituted this employee with an adjacent employee with substantially similar W-2 compensation to that of the original identified employee. 5. After identifying the median employee, we added together all of the elements of such employee’s compensation for 2018 in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K, resulting in annual total compensation of $82,725. 6. With respect to the annual total compensation of our CEO, we used the amount reported in the Total column of our 2018 Summary Compensation Table. DIRECTOR COMPENSATIONWe have compensated our non-employee directorsDirectors for their services and expect to continue this practice. Information relating to the compensation of our non-employee directorsDirectors during 20132018 is set forth in the table below.Name Fees Earned or
Paid in Cash (3) Stock Awards (4) Total John R. Miller $ 29,654 $ 43,222 $ 72,876 Daniel K. Rothermel 29,654 74,272 103,926 T. Lawrence Way 29,654 53,572 83,226 Steven J. Zuckerman 29,654 53,572 83,226 Bhanu Choudhrie 29,654 32,872 62,526 Name Fees Earned or
Paid in Cash (3) (4) Stock Awards (4) Total Andrea Allon $39,839 $90,184 $130,023 Bhanu Choudhrie 40,537 76,999 117,536 Daniel K. Rothermel 39,678 147,312 186,990 T. Lawrence Way 39,678 112,585 152,263 Steven Zuckerman 39,678 112,585 152,263 Rick Burkey 39,678 112,585 152,263 (1)(1 ) The following columns are intentionally omitted from this table: Option Awards, Non-Equity Incentive Plan Compensation, Change in Pension Value and Nonqualified Deferred Compensation Earnings, and All Other Compensation. (2 (2))Jay S. Sidhu is not included in this table as he is an employee of the Company and the Bank and thus receives no compensation for his service as a director.(3 (3))Each of our non-employee directors received $5,000 of their director fees for 2013 inIncludes cash and the grant date fair value of shares elected to receive the remainderbe received in Voting Common Stock. See the narrative after this Director Compensation Table for details regarding this election.lieu of cash payments.(4 (4))Represents the grant date forfair value of suchstock awards other than those received in lieu of cash payments, calculated in accordance with FASB ASC Topic 718.For 2013, compensationCompensation for non-employee directorsDirectors included a cash fee of $20,000$40,000 per year, payable in installments at the end of each calendar quarter. In addition, each non-employee director received 1,588quarter, and 3,000 shares of our Voting Common Stock issued under the 2004 Plan. Furthermore, the Director serving as the Chairman of the Compliance Committee will receive an additional 1,100 shares, and each non-employee director made an annual election, prior to the beginning of the year,2018 and annually thereafter, to have allnone, 50%, or none100% of his director’s feesthe cash fee paid in the form of Voting Common Stock, commencing April 1, 2013. Those directors electing to have all of their remaining cash fees for the year paid in the form of stock received an additional 1,191 shares. Also, for 2013, directorsStock.Furthermore, Directors serving in certain positions received an additional award of stock as follows:·1,000 shares for the Chairman of each of the Audit Committee and the Compensation Committee;·2,000 shares for the Chairman of the Nominating and Corporate Governance Committee, who was also the Lead Director; and·500 shares for the Audit Committee Financial Expert.1,100 shares for the Chairman of each of the Audit Committee and the Compensation Committee;2,200 shares for the Chairman of the Nominating and Corporate Governance Committee, who was also the Lead Independent Director; and550 shares for the Audit Committee Financial Expert.Customers does not provide any additional director benefits, a director retirement plan, or fee deferral programs.SECTION 16(a) Beneficial Ownership Reporting ComplianceSection 16(a) of the Securities Exchange Act of 1934 requires our directorsDirectors and certain officers, and persons who own more than ten percent of any class of the Company’sCompany's registered securities, to file, in their personal capacities, reports of ownership and changes in ownership on Forms 3, 4, and 5 with the Securities and Exchange Commission. The Securities Exchange Commission requires officers, directors, and greater-than-ten-39percent beneficial owners to furnish us with copies of all Forms 3, 4, and 5 they file. Based solely on a review of Forms 3, 4 and 5, and amendments thereto, filed during or with respect to 2013,2018, and written representations from the applicable reporting persons, we believe that all of our officers and directorsDirectors complied with all their applicable filing requirements during the fiscal year ended December 31, 2013,2018, except thatthat: (a) due to printer error, the Forms 3 filed for each of Messrs. Zuckerman, Way, Rothermel, Miller, Choudhrie, Sidhu, Taylor and Ehst were filed on May 16, 2013, which was one day late, (b) on November 13, 2013,On February 21, 2018, Mr. TaylorWahlman filed one late Form 4 reporting one late transaction, (c) on September 4, 2013, Mr. Choudhrietransaction; (b) On February 21, 2018, Ms. Leibold filed one late Form 4 reporting twoone late transactions, and (d) on September 4, 2013,transaction; (c) On February 21, 2018, Mr. Sidhu filed one late Form 4 reporting twoone late transactions.TRANSACTIONS WITH RELATED PARTIESLoans to Executives and DirectorsCustomers Bank makes loans to executive officers and directorsDirectors of the Company and the Bank in the ordinary course of its business. These loans are currently made on substantially the same terms, including interest rates and collateral, as those prevailing at the time the transaction is originated for comparable transactions with nonaffiliated persons, and do not involve more than the normal risk of collectabilitycollectibility or present any other unfavorable features. Federal regulations prohibit Customers Bank from makingloans to executive officers and directorsDirectors at terms more favorable than could be obtained by persons not affiliated with Customers Bank. Our policy towards loans to executive officers and directorsDirectors currently complies with this limitation.ForDuring 2018, the year endedBoard of Directors approved one extension of credit for $474 thousand to 200 Water Property Owner, LLC, which was outstanding as of December 31, 2013, we paid approximately $187,0002018. This LLC is owned by Company and Bank Director, Bhanu Choudhrie, and Bank Director, Samvir Sidhu, son of the Company's and Bank's Chairman and CEO. The extensions of credit to Clipper Magazine200 Water Property Owner LLC was made in conformity with Regulation O, our Transaction Policy (as described below) and its division, Spencer Advertising Marketing as well as Jaxxon Promotions, Inc. Mr. Zuckerman, a director,all applicable law and regulations. During 2018, an extension of credit totaling $8 million to Megalith Capital Group II, LP ("Megalith"), previously approved by the Board of Directors in 2016, matured on February 1, 2018 and was not renewed or extended. Megalith is owned by Company and Bank Director, Bhanu Choudhrie, and Bank Director, Samvir Sidhu, son of the Chief Executive OfficerCompany's and Bank's Chairman and CEO. The extension of Clipper Magazine, an affiliatecredit to Megalith was made in conformity with Regulation O, our Transaction Policy and all applicable law and regulations.Code of Gannett Co., Inc. until his retirement in June 2013,Ethics and remains a 25% shareholder of Jaxxon Promotions, Inc.Certain of our directors purchased securities for aggregate purchase prices in excess of $120,000 in our May 2013 public offering of Voting Common Stock and/or our July 2013 Offering of 6.375% Senior Notes Due 2018 (“Senior Notes”). The chart below indicates the number and types of securities purchased as well as the amount paid for such securities. Name Number and Type of Securities
Purchase Price Jay S. Sidhu, Chairman and Chief Executive Officer 14,925 shares of Voting Common Stock $ 249,994 T. Lawrence Way, Director 24,628 shares of Voting Common Stock 412,519 Warren Taylor, Executive Officer 14,925 shares of Voting Common Stock 249,994 T. Lawrence Way, Directors 16,000 shares of Senior Notes due 2018 400,000 We have a Code of Ethics and Business Conduct applicable to our directors,Directors, officers and employees,team members, including our Chief Executive Officer, Chief Financial Officer and all of our other executives pursuant to which all directors,Directors, officers and employeesteam members must promptly disclose to us, any material transactions, activities or relationships that reasonably could be expected to give rise to an actual or apparent conflict of interest with the Company, including Customers Bank. In approving or rejecting the proposed agreement,arrangement, the Board of Directors must consider the relevant facts and circumstances available and deemed relevant, including, but not limited to the risks, costs and benefits to us, the terms of the transaction, the availability of other sources for comparable services or products, and, if applicable, the impact on a director’sdirector's independence. The Board of Directors may only approve those agreementsactivities or relationships that, in light of known circumstances, are in, or are not inconsistent with, our best interests, as the Board of Directors determines in the good faith exercise of its discretion.Company’sCode of Conduct prohibits transactions involving Directors and executive officers with the Company, including Customers Bank, other than routine banking services. Affiliate and Related Party Transaction Policy and Compliance PlanThe Company's Board of Directors has also adopted the Affiliate and Related Party Transaction Policy and Compliance Plan (the “Transaction Policy”"Transaction Policy"). The Transaction Policy is a written policy and set of procedures for the review and approval or ratification of transactions involving Affiliates and Related Parties (as such terms are defined in the Transaction Policy).Related Parties are defined in the Transaction Policy as owners of more than 5% of any class of voting securities of the Company, directorsDirectors or executive officers of the Company, or nominees to become directors,Directors, since the beginning of the last fiscal year, and “related persons”"related persons" and others as provided in Item 404 of Regulation S-K under the Securities Act of 1933, as amended, immediate family members if involved in Company transactions and organizations, including charitable, where the foregoing have a material relationship or interest to such organization. Affiliates are defined in the Transaction Policy as “affiliates”"affiliates" as provided in Sections 23A and 23B of the Federal Reserve Act and Regulation W issued by the Board of Governors of the Federal Reserve System, and can include anyone that controls, that is under common control with, or that is controlled by the Company, investment funds where an affiliate is a fund investment advisor, and “executive officers”"executive officers", “directors”"Directors", “principal shareholders”"principal shareholders", “related interests”"related interests" of a person,40“insider” "insider", “immediate family”"immediate family" and “Subsidiary”"Subsidiary" as defined in Regulation O issued by the Board of Governors of the Federal Reserve System.The Transaction Policy is administered through the Company’sCompany's Audit Committee, with appropriate involvement and input from the Company’sCompany's Audit and Legal and Compliance Departments (collectively, the “Committee”).Departments. The Audit Committee (i) has the responsibility to interpret and enforce the Transaction Policy, (ii) may amend the Transaction Policy from time to time and (iii) may delegate administrative responsibilities within the Company or to third parties as the Audit Committee deems appropriate to accomplish the objectives of the Transaction Policy. All transactions covered by the Transaction Policy are prohibited unless approved or ratified by the Audit Committee and, when determined necessary by the Audit Committee pursuant to the Related Transaction Policy, the Company’sCompany's Board of Directors.Transactions involving Affiliates that are subject to the Transaction Policy include extensions of credit, purchase or sale of loans, referrals or brokerage of loans, indebtedness to another “member bank”"member bank" or correspondent bank, purchases of or investments in securities, purchase or sale of services, goods and other assets, issuance of guarantees, acceptances or letters of credit and third party transactions where an Affiliate benefits from transaction proceeds.Transactions involving Related Parties that are subject to the Transaction Policy include transactions where there is a direct or indirect interest by the Related Party and the amount involved is over $120,000.Transactions covered by the Transaction Policy are required to be referred to the Audit Committee. The Legal and Compliance Department is responsible for coordinating the performance of appropriate legal research and obtaining opinions regarding the disposition of the transaction, and communicating such information to the Audit Committee with recommendations, including if any regulatory application needs to be prepared to report or obtain authorization of the transaction. The Audit Committee will approve, ratify, recommend change to or deny the transaction, or schedule the referral for follow up reporting or presentations. Material transactionsand transactions covered by Regulation O are required to be referred by the Audit Committee to the Company’sCompany's Board of Directors for disposition.Samvir Sidhu, son of the Company's and Bank's Chairman and CEO, earned $117,536 during fiscal year 2018 for services performed as a Bank director; his compensation was on identical terms as other Bank Directors. For 2018, the Bank's director fees were increased to $40,000 per year plus 3,000 shares of our Voting Common Stock, payable in installments at the end of each calendar quarter.Luvleen Sidhu, daughter of the Company's and Bank's Chairman and CEO, served as President and Chief Strategy Officer of BankMobile, a division of Customers Bank, during 2018 and currently serves in that position. Ms. Sidhu reports to Customers Bank's President and Chief Operating Officer Richard Ehst. During fiscal year 2018, Ms. Sidhu earned cash compensation of $250,000 and was awarded 3,268 restricted stock units with a grant date fair value of $62,517, which vest annually in thirds as long as Ms. Sidhu remains employed by the Company. Ms. Sidhu did not receive any other compensation during 2018 except for the matching 401(k) contributions paid under the Company's 401(k) Retirement Savings and Profit Sharing Plan, which is available to team members generally. Her current base salary for 2019 is $250,000 and she is eligible to receive an annual performance based bonus with terms and conditions the same as other non-executive officers of Customers. All elements of compensation for both Samvir Sidhu and Luvleen Sidhu were ratified by the Audit Committee.BankMobile Technologies, Inc., a wholly owned subsidiary of Customers Bank, leases 1,684 square feet of office space at 535 Fifth Avenue, borough of Manhattan in New York City pursuant to an Office Space Conditions of Use Agreement dated September 26, 2018 (the “Use Agreement”). The Use Agreement is with Megalith Capital Management LLC (“Megalith Capital”), a Delaware limited liability company for which Samvir Sidhu (a director of Customer Bank and son of the Company's and Bank's Chairman and CEO) is the founder and CEO. Pursuant to the terms of the Use Agreement, the Bank paid Megalith Capital an aggregate of $33,200 (monthly license fee of $8,000/month plus utilities and maintenance costs) in 2018. The Use Agreement expires on September 1, 2020 unless renewed or sooner terminated. Due to the personal interest of Samvir Sidhu, the Audit Committee commissioned an independent office lease evaluation in 2018 comparing and contrasting the square footage and license fee terms to other office space then currently available in New York City’s Midtown. The Audit Committee reached the conclusion that the proposed terms and conditions of the Use Agreement represent fair market terms and conditions for New York City's Midtown.SHAREHOLDER PROPOSALSShareholder Proposals for Inclusion in the 20152020 Proxy StatementThe Corporation’sCompany's shareholders are entitled to submit proposals to be included in our proxy materials for the Annual Meeting of Shareholders in 2015,2020, provided that these matters are appropriate for shareholder action and that the shareholder complies with all of the applicable rules and requirements set forth in the rules and regulations of the Securities and Exchange Commission, including Rule 14a-8 of the Securities Exchange Act of 1934, as amended. To be eligible for inclusion, shareholder proposals must be received by our Corporate Secretary at 1015 Penn Ave., Wyomissing, Pennsylvania 19610 no later than December 16, 2014.Director Nominations and Other Shareholder Proposals for Presentation at the 20152019 Annual MeetingOur Amended and Restated Bylaws require advanced notice of any proposal of business to be brought before an annual meeting by a shareholder that will not be included in our proxy materials, including any such proposal for the nomination for election of a director. Any such shareholder proposal must be a matter appropriate for shareholder action that complies with the procedural requirements of the Corporation’sCompany's Amended and Restated Bylaws and for which written notice is received by our Corporate Secretary at 1015 Penn Ave., Wyomissing, Pennsylvania 19610 not later than the 90th day and not earlier than the 120th day prior to the first anniversary of the preceding year’syear's annual meeting (unless the date of the next Annual Meetingannual meeting has been changed by more than 30 days from the first anniversary date, in which case the Amended and Restated Bylaws provide alternative dates for timeliness). Accordingly, any shareholder who wishes to have a nomination or other business considered by shareholders at the 20152020 Annual Meeting must deliver written notice to the Corporate Secretary (containing the information required by the Amended and Restated Bylaws) no earlier than January 15, 2015,31, 2020, and no later than January 14, 2015.March 1, 2020. Any proposal received outside of these dates will be considered untimely. For proposals that are timely filed, the CorporationCompany retains discretion to vote proxies it receives provided (i) the CorporationCompany includes in its proxy statementProxy Statement advice on the nature of the proposals and how it intends to exercise its voting discretion, and (ii) the proponent does not issue a proxy statement in accordancecomply with the procedures under Section 14a-4(c)(2)applicable provisions of the Exchange Act.OTHER BUSINESSThe Board of Directors does not know of any other business to come before the meeting. However, if any additional matters are presented at the Annual Meeting, it is the intention of persons named in the accompanying proxy to vote the proxy in accordance with their judgment on those matters.41ANNUAL REPORTA Notice and Access card was mailed on or about April 17, 2019 to our shareholders of record as of the close of business on April 5, 2019 informing those shareholders that a copy of our Annual Report on Form 10-K for the fiscal year ended December 31, 2013,2018, containing, among other things, financial statements examined by our independent registered public accounting firm, was mailed withas well as this Proxy Statement, on or about April 15, 2014 to the shareholders of record as of the close of business on March 31, 2014.Upon written request of any shareholder, a copy of our Annual Report on Form 10-K for the fiscal year ended December 31, 2013,2018, including the financial statements and schedules, required to be filed with the SEC may be obtained, without charge, from the Company’sCompany's Corporate Secretary at 1015 Penn Ave., Wyomissing, Pennsylvania 19610. The Annual Report on Form 10-K can also be obtained by going to the Corporation’sCompany's website at www.customersbank.com/investor_relations.php by clicking on the “Annual Report” tab.SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND THE MEETING ARE URGED TO SIGN, DATE AND RETURN PROMPTLY THE ENCLOSED PROXY INCARD THAT WAS SEPARATELY MAILED TO ALL SHAREHOLDERS OR FOLLOW THE ENVELOPEINSTRUCTIONS FOR INTERNET OR TELEPHONE VOTING THAT WERE PROVIDED WHICH REQUIRES NO ADDITIONAL POSTAGE IF MAILED INAS PART OF THE UNITED STATES.NOTICE AND ACCESS CARD. By Order of the Board of Directors Glenn A. Yeager,Michael De Tommaso, Corporate Secretary 42APPENDIX A: FULL TEXT OF THE PROPOSED AMENDMENT TO AMENDED AND RESTATED ARTICLES OF INCORPORATION Exhibit ACUSTOMERS BANCORP, INC.2014 EMPLOYEE STOCK PURCHASE PLANARTICLE 1 — PURPOSE AND SCOPE OF THE PLANSection 1.1 PURPOSE. The Customers Bancorp, Inc. Employee Stock Purchase Plan is intendedCharter will be amended to encourage Team Member participation inadd a new Article, to be identified as Article Eighteenth, the ownership and economic progresstext of which shall read as follows:“EIGHTEENTH: In an election of directors of the Company. This Plan is intended to qualify as an employee stock purchase plan within the meaning of Code Section 423.Section 1.2 DEFINITIONS. Unless the context clearly indicates otherwise,Corporation, the following terms haveshall apply:In an election of directors of the meaning set forth below:(a) “BoardCorporation that is not a contested election (as defined in this Article EIGHTEENTH), each share of Directors” meanscapital stock of the Corporation entitled to vote in an election of directors shall be entitled to vote “for” or “against” or to abstain from voting for each nominee for election as a director.Subject to the rights of any class or series of stock entitled to elect members of the board of directors of the Company.(b) “Code”Corporation, in an election of directors of the Corporation that is not a contested election, to be elected as a director, a nominee for election as a director must receive the affirmative vote of a majority of the votes cast with respect to the election of that nominee. For purposes of this Article EIGHTEENTH, the “affirmative vote of a majority of the votes cast” means that the number of shares voted “for” must exceed the number of shares voted “against” with respect to the election of that nominee. For the avoidance of doubt, abstentions and broker non-votes will not be included in the votes cast.Subject to the rights of any class or series of stock entitled to elect members of the board of directors of the Corporation, in an election of directors of the Corporation that is a contested election, the nominees for election as directors of the Corporation receiving the highest number of affirmative votes shall be elected.For purposes of this Article EIGHTEENTH, a “contested election” means any election of directors in which the number of candidates for election as directors exceeds the number of directors to be elected. The determination of the number of candidates for purposes of this Article EIGHTEENTH shall be made by the Secretary of the Corporation as of (i) the expiration of the time fixed by the Corporation’s bylaws (as then in effect) for advance notice by a shareholder of an intention to nominate candidates for election as directors of the Corporation or (ii) in the absence of such an advance notice provision, at a time publicly announced by the board of directors which is not more than 14 days before notice is given of the meeting of shareholders of the Corporation at which the election is to occur. The determination that an election is a “contested election” for purposes of this Article EIGHTEENTH shall be determinative only as to the timeliness of a notice of an intention to nominate candidates for election as directors and not otherwise as to the validity of such notice.If a nominee for director who is an incumbent director standing for re-election is not elected and no successor has been elected at the meeting of the shareholders of the Corporation with respect to such nominee’s election, such director shall promptly tender his or her resignation to the board of directors. Such resignation shall be contingent only upon acceptance of the resignation by the board of directors. The Nominating and Governance Committee of the board of directors shall make a recommendation to the board of directors as to whether to accept or reject the tendered resignation, or whether other action should be taken. The board of directors shall act on the tendered resignation, taking into account the recommendation of the Nominating and Governance Committee, and publicly disclose (by a press release, a filing with the Securities and Exchange Commission or other broadly disseminated means of communication) its decision regarding the resignation tendered by the director and the rationale for the determination by the board of directors within 90 days from the date of the certification of the election results. The Nominating and Governance Committee in making its recommendation, and the board of directors in making its determination, may each consider any factors or other information that the Nominating and Governance Committee and the board of directors, as applicable, considers appropriate and relevant under the circumstances. The director tendering his or her resignation pursuant to this Article EIGHTEENTH shall not participate in the recommendation of the Nominating and Governance Committee or the determination of the board of directors with respect to his or her resignation. If such incumbent director’s resignation is not accepted by the board of directors, such director shall continue to serve until the next annual meeting at which the class of directors of which such director is a member stands for election and until his or her successor is duly elected, or his or her earlier death, resignation or removal.If a director’s resignation is accepted by the board of directors pursuant to this Article EIGHTEENTH, or if a nominee for director is not elected and such nominee is not an incumbent director standing for re-election, then the board of directors, in its sole discretion, may fill any resulting vacancy pursuant to the provisions of Article EIGHTH hereof and Article Four, Section 4.04 of the Corporation’s Amended and Restated Bylaws, as amended (or successor provision), or may decrease the size of the Board of Directors pursuant to the provisions of Article EIGHTH hereof and Article Four, Section 4.03 of the Corporation’s Amended and Restated Bylaws, as amended (or successor provision).To be eligible to be a nominee for election or re-election as a director of the Corporation, a person must deliver to the Secretary of the Corporation a written agreement, in the form provided by the Secretary of the Corporation that he or she will abide by the requirements of this Article EIGHTEENTH with respect to the obligation to tender his or her resignation under the conditions described in this Article EIGHTEENTH.”APPENDIX B: 2019 STOCK INCENTIVE PLAN CUSTOMERS BANCORP, INC.2019 Stock Incentive Plan1.Purpose.The purpose of the Plan is to assist Customers Bancorp, Inc. (the “Company”) in attracting, retaining, motivating, and rewarding certain employees, officers, and directors of, and consultants and advisors to, the Company and Subsidiaries of the Company and promoting the creation of long-term value for shareholders of the Company by closely aligning the interests of such individuals with those of such shareholders. The Plan authorizes the award of Stock-based compensation to Eligible Persons to encourage such Eligible Persons to expend maximum effort in the creation of shareholder value.2.Definitions.For purposes of the Plan, the following terms shall be defined as set forth below:(a)“Affiliate” means, with respect to a Person, any other Person that, directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such Person.(b)“Award” means any Option, Restricted Stock Award, Unrestricted Stock Award, Restricted Stock Unit, Stock Appreciation Right, Performance Award, or other Stock-based award granted to a Participant under the Plan.(c)“Award Agreement” means an Option Agreement, a Restricted Stock Agreement, an RSU Agreement, an SAR Agreement, a Performance Award Agreement, or an agreement governing the grant of any other Stock-based Award granted under the Plan.(d)“Board” means the Board of Directors of the Company.(e)“Cause” means, with respect to a Participant and in the absence of an Award Agreement or Participant Agreement otherwise defining Cause, (1) the Participant’s plea of nolo contendere to, conviction of or indictment for, any crime (whether or not involving the Company or its Affiliates) (i) constituting a felony or (ii) that has, or could reasonably be expected to result in, an adverse impact on the performance of the Participant’s duties to the Service Recipient, or otherwise has, or could reasonably be expected to result in, an adverse impact on the business or reputation of the Company or its Affiliates, (2) conduct of the Participant, in connection with his or her employment or service, that has resulted, or could reasonably be expected to result, in material injury to the business or reputation of the Company or its Affiliates, (3) any material violation of the policies of the Service Recipient, including, but not limited to, those relating to sexual harassment or the disclosure or misuse of confidential information, or those set forth in the manuals or statements of policy of the Service Recipient; (4) the Participant’s act(s) of gross negligence or willful misconduct in the course of his or her employment or service with the Service Recipient; (5) misappropriation by the Participant of any assets or business opportunities of the Company or its Affiliates; (6) embezzlement or fraud committed by the Participant, at the Participant’s direction, or with the Participant’s prior actual knowledge; or (7) willful neglect in the performance of the Participant’s duties for the Service Recipient or willful or repeated failure or refusal to perform such duties. If, subsequent to the Termination of a Participant for any reason other than by the Service Recipient for Cause, it is discovered that the Participant’s employment or service could have been terminated for Cause, such Participant’s employment or service shall, at thediscretion of the Committee, be deemed to have been terminated by the Service Recipient for Cause for all purposes under the Plan, and the Participant shall be required to repay to the Company all amounts received by him or her in respect of any Award following such Termination that would have been forfeited under the Plan had such Termination been by the Service Recipient for Cause. In the event that there is an Award Agreement or Participant Agreement defining Cause, “Cause” shall have the meaning provided in such agreement, and a Termination by the Service Recipient for Cause hereunder shall not be deemed to have occurred unless all applicable notice and cure periods in such Award Agreement or Participant Agreement are complied with.(f)“Change in Control” means:(1) The consummation of a merger or consolidation of the Company with or into another entity or any other corporate reorganization (however effected, including by general offer or court-sanctioned compromise, arrangement or otherwise) if more than 50% of the combined voting power of the continuing or surviving entity’s issued shares or securities outstanding immediately after such merger, consolidation or other reorganization is owned by persons who were not shareholders of the Company immediately prior to such merger, consolidation or other reorganization; (2) The sale, transfer or other disposition of all or substantially all of the Company’s assets; (3) Individuals who constitute the Board (the “Incumbent Directors”) cease for any reason, including, without limitation, as a result of a tender offer, proxy contest, merger or similar transaction, to constitute at least a majority of the Board; provided, however, that any individual shall be considered an Incumbent Director if such person’s election or nomination for election was approved by a vote of at least a majority of the Incumbent Directors; but, provided further that any such person whose initial assumption of office is in connection with an actual or threatened solicitation of proxies or consents by or on behalf of a person other than the Board, including by reason of agreement intended to avoid or settle any such actual or threatened contest or solicitation, shall not be considered an Incumbent Director;(4) Any transaction as a result of which any person becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing at least 50% of the total voting power represented by the Company’s then outstanding voting securities (e.g., issued shares). For purposes of this subsection (d), the term “person” shall have the same meaning as when used in sections 13(d) and 14(d) of the Exchange Act but shall exclude (i) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or of any Subsidiary, and (ii) a company owned directly or indirectly by the shareholders of the Company in substantially the same proportions as their ownership of the shares of Stock of the Company; or (5) The completion of a liquidation or dissolution of the Company. Notwithstanding the foregoing, in the case of an Award that constitutes deferred compensation subject to section 409A of the Code, no “Change in Control” shall be deemed to have occurred as a result of any event unless that event has resulted in a “change in the ownership or effective control” of the Company or “in the ownership of a substantial portion of the assets” of the Company within the meaning of section 409A(a)(2)(A)(v) of the Code and the regulations and guidance issued thereunder. The Committee shall have full and final authority, which shall be exercised in its sole discretion, to determine conclusively whether a Change in Control has occurred pursuant to the above definition, the date of such Change in Control and any incidental matters relating thereto; provided that any exercise of authority in conjunction with a determination of whether a Change in Control is a “change in control event” as defined in U.S. Treasury Regulation Section 1.409A-3(i)(5) shall be consistent with such regulation.(g)“Code” means the U.S. Internal Revenue Code of 1986, as amended and as the same may be further amended from time to time, including the rules and the Treasury Regulations promulgated thereunder.(c) “Committee”regulations thereunder and any successor provisions, rules and regulations thereto.(h)“Committee” means the Compensation CommitteeBoard or such other committee consisting of two or more individuals appointed by the Board of Directors, which shallto administer the Plan asand each other individual or committee of individuals designated to exercise authority under the Plan.(i)“Company” means Customers Bancorp, Inc.(j)“Corporate Event” has the meaning set forth in Section 11(b) hereof.(k)“Data” has the meaning set forth in Section 21(f) hereof.(l)“Disability” means, in the absence of an Award Agreement or Participant Agreement otherwise defining Disability, the permanent and total disability of such Participant within the meaning of Section 22(e)(3) of the Code. In the event that there is an Award Agreement or Participant Agreement defining Disability, “Disability” shall have the meaning provided in Section 1.3.(d) “Common Stock”such Award Agreement or Participant Agreement.(m)“Disqualifying Disposition” means any disposition (including any sale) of Stock acquired upon the common stockexercise of an Incentive Stock Option made within the period that ends either (1) two years after the date on which the Participant was granted the Incentive Stock Option or (2) one year after the date upon which the Participant acquired the Stock.(n)“Effective Date” means March 27, 2019, which is the date on which the Plan was approved by the Board.(o)“Eligible Person” means (1) each employee and officer of the Company and such other securities which may be substituted therefor pursuant to Section 4.2.(e) “Company” means Customers Bancorp, Inc.(f) “Compensation” means a Team Member’s salary or hourly base rateany of pay, as the case may be, but excluding overtime pay, bonuses, commissions, disability payments, workers’ compensation payments, and any other payment in excessits Affiliates, (2) each non-employee director of normal salary or hourly pay, received by a Team Member for services performed for the Company or any of its Affiliates; (3) each other natural Person who provides substantial services to the Company or any of its Affiliates as a Subsidiary duringconsultant or advisor (or a wholly owned alter ego entity of the natural Person providing such services of which such Person is an Option Period. Any adjustments to Compensation shall be made onemployee, shareholder or partner) and who is designated as eligible by the next available Pay Date.(g) “Continuous Service” means the period of time, uninterrupted by a termination of employment, that a Team MemberCommittee, and (4) each natural Person who has been employedoffered employment by the Company or a Subsidiary,any of its Affiliates; both, immediately preceding the first day of the Subscription Period in whichexercise any right relating to an Award until such Team Member wishes to participate in the Plan. Such period of time shall include any leave of absence permittedPerson has commenced employment or required to be taken into account by applicable Treasury Regulations.(h) “Effective Date” means the effective date of this Plan as set forth in Section 1.4.(i) “Enrollment Period” means the period beginning on March 1 and ending on the following March 15, the period beginning on June 1 and ending on the following June 15, theperiod beginning on September 1 and ending on the following September 15, and the period beginning on December 1 and ending on the following December 15.(j) “Exercise Date” means each Pay Date.(k) “Fair Market Value” of a share of Common Stock on any given date means (a) if the Common Stock is readily tradable on an established securities market, the closing price on the date of determination, or the last trading day preceding the date of determination if the date of determination is not a trading date, or (b) if the Common Stock is not readily tradable on an established securities market, the value determined by application of a reasonable valuation method selected by the Committee, in either case in accordance with the requirements of Code Section 423.(l) “Leave of Absence” means, for purposes of participation in the Plan, a Team Member’s sick leave or other leave of absence approved by the Company, except that where the period of leave exceeds 90 days and the Team Member’s right to reemployment is not guaranteed by statute or by contract, the Team Member shall not be deemed on a Leave of Absence as of the 91st day of such sick leave or other leave of absence, such Team Member’s employment relationshipservice with the Company or its Affiliates; be deemed terminated, and such Team Member’s right to participateinclude only those corporations or other entities in the Plan and to purchase Common Stock hereunder shall terminate.(m) “Offering Date” means the day beginning at 12:01 a.m. on the Saturday following each Pay Date.(n) “Option Period” means each period beginning on an Offering Date and ending on the next succeeding Exercise Date. The initial Option Period shall begin on the first Offering Date that follows or coincides with the Effective Date.(o) “Option Price” means the purchase price of a share of Common Stock hereunder as provided in Section 3.1.(p) “Participant” means any Team Member who (i) is eligible to participate in the Plan under Section 2.1 and (ii) elects to participate.(q) “Pay Date” means the Company’s regularly scheduled bi-weekly or other periodic date on which Team Members receive their paychecks.(r) “Plan” means the Customers Bancorp, Inc. Employee Stock Purchase Plan, as the same may be amended from time to time.(s) “Plan Year” means the 12-consecutive-month period beginning on January 1st and ending on the following December 31st.A-2(t) “Stock Purchase Account” or “Account” means an account established and maintained in the name of each Participant to record the dollar amounts accumulated on such Participant’s behalf each Option Period.(u) “Stock Purchase Agreement” means the form prescribed by the Committee that must be executed by a Team Member who elects to participate in the Plan. The proper execution and filing of such form shall constitute the grant of an option from time to time to the Team Member in accordance with the terms of the Plan and the terms of such form.(v) “Subscription Period” means each period in each Plan Year (i) beginning on the first day of the pay period in which each January 1 falls and continuing through the last day of the pay period in which the following March 31 falls; (ii) beginning on the first day of the pay period in which each April 1 falls and continuing through the last day of the pay period in which the following June 30 falls; (iii) beginning on the first day of the pay period in which each July 1 falls and continuing through the last day of the pay period in which the following September 30 falls; and (iv) beginning on the first day of the pay period in which each October 1 falls and continuing through the last day of the pay period in which the following December 31 falls.(w) “Subsidiary” means any corporation (other than the Company) in an unbroken chain of corporations or other entities beginning with the Company if, at the beginning of an Option Period,where each of the corporations or other entities in the unbroken chain other than the last corporation in the unbroken chainor other entity owns stock possessing 50at least fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations or other entities in such chain.(x) “Team Member” meansthe chain, and (ii) with respect to any common lawAward that is intended to be an Incentive Stock Option, the term “a Subsidiary.(y) “Team Member Services”any of its Affiliates for purposes of eligibility for participation in the Plan.(p)“Exchange Act” means the Company department responsible for personnel matters pertainingU.S. Securities Exchange Act of 1934, as amended from time to time, including the rules and regulations thereunder and any successor provisions, rules and regulations thereto.(q)“Expiration Date” means, with respect to an Option or Stock Appreciation Right, the date on which the term of such Option or Stock Appreciation Right expires, as determined under Section 5(b) or 8(b) hereof, as applicable.(r)“Fair Market Value” means, as of any date when the Stock is listed on one or more national securities exchanges, the closing price reported on the principal national securities exchange on which such Stock is listed and traded on the date of determination or, if the closing price is not reported on such date of determination, the closing price reported on the most recent date prior to the date of determination. If the Stock is not listed on a national securities exchange, “Fair Market Value” shall mean the amount determined by the Board in good faith, and in a manner consistent with Section 409A of the Code, to be the fair market value per share of Stock.(s)“GAAP” has the meaning set forth in Section 9(f)(3) hereof.(t)“Incentive Stock Option” means an Option intended to qualify as an “incentive stock option” within the meaning of Section 422 of the Code.(u) “Nonqualified Stock Option” means an Option not intended to be an Incentive Stock Option.(v)“Option” means a conditional right, granted to a Team Member.1.3 ADMINISTRATION OF PLAN5 hereof, to purchase Stock at a specified price during a specified time period.(w)“Option Agreement” means a written agreement between the Company and a Participant evidencing the terms and conditions of an individual Option.(x)“Participant” means an Eligible Person who has been granted an Award under the Plan or, if applicable, such other Person who holds an Award.(y)“Participant Agreement” means an employment or other services agreement between a Participant and the Service Recipient that describes the terms and conditions of such Participant’s employment or service with the Service Recipient and is effective as of the date of determination.(z)“Performance Award” means an Award granted to a Participant under Section 9 hereof, which Award is subject to the achievement of Performance Objectives during a Performance Period. A Performance Award shall be designated as a Performance Share or a Performance Unit at the time of grant.(aa)“Performance Award Agreement” means a written agreement between the Company and a Participant evidencing the terms and conditions of an individual Performance Award.(ab) “Performance Objectives” means the performance objectives established pursuant to the Plan for Participants who have received Performance Awards.(ac) “Performance Period” means the period of time designated by the Committee over which the achievement of one or more Performance Objectives will be measured for the purpose ofdetermining a Participant’s right to and the payment of an Award. Performance Periods may be of varying and overlapping duration, at the sole discretion of the Committee.(ad)“Performance Share” means a Performance Award denominated in shares of Stock which may be earned in whole or in part based upon the achievement of Performance Objectives during a Performance Period.(ae) “Performance Unit” means a Performance Award denominated as a notional unit representing the right to receive one share of Stock (or the cash value of one share of Stock, if so determined by the Committee) which may be earned in whole or in part based upon the achievement of Performance Objectives during a Performance Period.(af) “Person” means any individual, corporation, partnership, firm, joint venture, association, joint-stock company, trust, unincorporated organization, or other entity.(ag) “Plan” means this Customers Bancorp, Inc. 2019 Stock Incentive Plan, as amended from time to time.(ah) “Qualified Member” means a member of the Committee who is a “Non-Employee Director” within the meaning of Rule 16b-3 under the Exchange Act or an “independent director” as defined under, as applicable, the NYSE Listed Company Manual or other applicable stock exchange rules.(ai) “Qualifying Committee” has the meaning set forth in Section 3(b) hereof.(aj) “Restricted Stock” means Stock granted to a Participant under Section 6 hereof that is subject to certain restrictions and to a risk of forfeiture.(ak)“Restricted Stock Agreement” means a written agreement between the Company and a Participant evidencing the terms and conditions of an individual Restricted Stock Award.(al)“Restricted Stock Unit” means a notional unit representing the right to receive one share of Stock (or the cash value of one share of Stock, if so determined by the Committee) on a specified settlement date.(am)“RSU Agreement” means a written agreement between the Company and a Participant evidencing the terms and conditions of an individual Award of Restricted Stock Units.(an) “SAR Agreement” means a written agreement between the Company and a Participant evidencing the terms and conditions of an individual Award of Stock Appreciation Rights.(ao)“Securities Act” means the U.S. Securities Act of 1933, as amended from time to time, including the rules and regulations thereunder and any successor provisions, rules and regulations thereto.(ap) “Service Recipient” means, with respect to a Participant holding an Award, either the Company or an Affiliate of the Company by which the original recipient of such Award is, or following a Termination was most recently, principally employed or to which such original recipient provides, or following a Termination was most recently providing, services, as applicable.(aq)“Stock” means the common stock, par value $1.00 per share, of the Company, and such other securities as may be substituted for such stock pursuant to Section 12 hereof.(ar)“Stock Appreciation Right” means a conditional right to receive an amount equal to the value of the appreciation in the Stock over a specified period. Except in the event of extraordinary circumstances, as determined in the sole discretion of the Committee, or pursuant to Section 11(b) hereof, Stock Appreciation Rights shall be settled in Stock.(as)“Substitute Award” has the meaning set forth in Section 4(a) hereof.(at)“Subsidiary” means any corporation, partnership, joint venture, limited liability company or other entity during any period in which at least a majority of the voting or profits interest is owned, directly or indirectly, by the Company or any successor to the Company.(au)“Termination” means the termination of a Participant’s employment or service, as applicable, with the Service Recipient; provided, however, that, if so determined by the Committee at the time of any change in status in relation to the Service Recipient (e.g., a Participant ceases to be an employee and begins providing services as a consultant, or vice versa), such change in status will not be deemed a Termination hereunder. Unless otherwise determined by the Committee, in the event that the Service Recipient ceases to be an Affiliate of the Company (by reason of sale, divestiture, spin-off, or other similar transaction), unless a Participant’s employment or service is transferred to another entity that would constitute the Service Recipient immediately following such transaction, such Participant shall be deemed to have suffered a Termination hereunder as of the date of the consummation of such transaction. Notwithstanding anything herein to the contrary, a Participant’s change in status in relation to the Service Recipient (for example, a change from employee to consultant) shall not be deemed a Termination hereunder with respect to any Awards constituting “nonqualified deferred compensation” subject to Section 409A of the Code that are payable upon a Termination unless such change in status constitutes a “separation from service” within the meaning of Section 409A of the Code. Any payments in respect of an Award constituting nonqualified deferred compensation subject to Section 409A of the Code that are payable upon a Termination shall be delayed for such period as may be necessary to meet the requirements of Section 409A(a)(2)(B)(i) of the Code. On the first business day following the expiration of such period, the Participant shall be paid, in a single lump sum without interest, an amount equal to the aggregate amount of all payments delayed pursuant to the preceding sentence, and any remaining payments not so delayed shall continue to be paid pursuant to the payment schedule applicable to such Award.3. Administration.(a)Authority of the Committee. TheExcept as otherwise provided below, the Plan shall be administered by the Committee. SubjectThe Committee shall have full and final authority, in each case subject to direction byand consistent with the Board of Directors and the express provisions of thisthe Plan, to (1) select Eligible Persons to become Participants, (2) grant Awards, (3) determine the Committee shalltype, number of shares of Stock subject to, other terms and conditions of, and all other matters relating to, Awards, (4) prescribe Award Agreements (which need not be authorized to prescribe, amend,identical for each Participant) and rescind rules and regulations relating to the Plan and the Committee’s administration thereof; to interpret the Plan; to fix the terms of an offering under the Plan; to prescribe the maximum percentage of payroll deductions permitted for a Subscription Period; to restrict participation in the Plan consistent with any requirement of law or regulation; and to make all other determinations necessary to the administration of the Plan, including appointment(5) construe and interpret the Plan and Award Agreements and correct defects, supply omissions, and reconcile inconsistencies therein, (6) suspend the right to exercise Awards during any period that the Committee deems appropriate to comply with applicable securities laws, and thereafter extend the exercise period of individualsan Award by an equivalent period of time or such shorter period required by, or necessary to facilitate the day-to-day operation thereof. The Committee’scomply with, applicable law, and (7) make all other decisions and determinations as the Committee may deem necessary or advisable for the administration of the Plan. Any action of the Committee shall be final, conclusive, and binding on all Persons, including,without limitation, the Company, its shareholders and Affiliates, Eligible Persons, Participants, and beneficiaries of Participants. Notwithstanding anything in the Plan to the interpretationcontrary, the Committee shall have the ability to accelerate the vesting of any outstanding Award at any time and operationfor any reason, including upon a Corporate Event, subject to Section 11(d), or in the event of a Participant’s Termination by the Service Recipient other than for Cause, or due to the Participant’s death, Disability or retirement (as such term may be defined in an applicable Award Agreement or Participant Agreement, or, if no such definition exists, in accordance with the Company’s then-current employment policies and guidelines). For the avoidance of doubt, the Board shall have the authority to take all actions under the Plan that the Committee is permitted to take.(b)Manner of Exercise of Committee Authority. At any time that a member of the Committee is not a Qualified Member, any action of the Committee relating to an Award granted or to be granted to a Participant who is then subject to Section 16 of the Exchange Act in respect of the Company, must be taken by the remaining members of the Committee or a subcommittee, designated by the Committee or the Board, composed solely of two or more Qualified Members (a “Qualifying Committee”). Any action authorized by such a Qualifying Committee shall be deemed the action of the Committee for purposes of the Plan. The express grant of any specific power to a Qualifying Committee, and the taking of any action by such a Qualifying Committee, shall not be construed as limiting any power or authority of the Committee.(c)Delegation. To the extent permitted by applicable law, the Committee may delegate to officers or employees of the Company or any of its Affiliates, or committees thereof, the authority, subject to such terms as the Committee shall determine, to perform such functions under the Plan, including, but not limited to, administrative functions, as the Committee may determine appropriate. The Committee may appoint agents to assist it in administering the Plan. Any actions taken by an officer or employee delegated authority pursuant to this Section 3(c) within the scope of such delegation shall, for all purposes under the Plan, be deemed to be an action taken by the Committee. Notwithstanding the foregoing or any other provision of the Plan to the contrary, any Award granted under the Plan to any Eligible Person who is not an employee of the Company or any of its Affiliates (including any non-employee director of the Company or any Affiliate) or to any Eligible Person who is subject to Section 16 of the Exchange Act or is to be granted a Qualified Performance-Based Award must be expressly approved by the Committee or Qualifying Committee in accordance with subsection (b) above.(d)Sections 409A and 457A. The Committee shall take into account compliance with Sections 409A and 457A of the Code in connection with any grant of an Award under the Plan, to the extent applicable. While the Awards granted hereunder are intended to be structured in a manner to avoid the imposition of any penalty taxes under Sections 409A and 457A of the Code, in no event whatsoever shall the Company or any of its Affiliates be liable for any accelerated or additional tax, interest, or penalties that may be imposed on a Participant as a result of Section 409A or Section 457A of the Code or any damages for failing to comply with Section 409A or Section 457A of the Code or any similar state or local laws (other than for withholding obligations or other obligations applicable to employers, if any, under Section 409A or Section 457A of the Code).4.Shares Available Under the Plan; Other Limitations.(a)Number of Shares Available for Delivery. Subject to adjustment as provided in Section 11 hereof, the total number of shares of Stock reserved and available for delivery in connection with Awards under the Plan shall be finalOne Million Five Hundred Thousand (1,500,000). Shares of Stock delivered under the Plan shall consist of authorized and conclusive.may be required by reason of Section 1.4 EFFECTIVE DATE OF PLAN422 of the Code, the number of shares of Stock available for issuance hereunder shall not be reduced by shares issued pursuant to Awards issued or assumed in connection with a merger or acquisition as contemplated by NYSE Listed Company Manual Section 303A.08, or other applicable stock exchange rules, and their respective successor rules and listing exchange promulgations (each such Award, a “Substitute Award”); and (ii) shares of Stock shall not be deemed to have been issued pursuant to the Plan with respect to any portion of an Award that is settled in cash.(b)Share Counting Rules. The effectiveIf all or any part of an Award expires, lapses or is terminated, converted into an award in respect of shares of another entity in connection with a spin-off or other similar event, exchanged for cash, surrendered, repurchased, canceled without having been fully exercised or forfeited, in any case in a manner that results in the Company acquiring Shares covered by the Award at a price not greater than the price paid by the Participant for such Shares or not issuing any shares of Stock covered by the Award, the unused shares covered by the Award will, as applicable, become or again be available for Awards under the Plan. To the extent that all or any part of an Award other than an Option expires, lapses, is terminated, converted into an award in respect of shares of another entity in connection with a spin-off or other similar event, exchanged for cash, surrendered, repurchased, canceled without having been fully exercised or forfeited, the Shares available under the Plan shall be increased by one Share for each Share subject to such Award (or applicable part thereof). Notwithstanding anything to the contrary contained herein, the following shares of Stock shall not be added to the shares authorized for grant hereunder and shall not be available for future grants of Awards: (i) shares tendered by a Participant or withheld by the Company in payment of the exercise price of an Option; (ii) Shares tendered by the Participant or withheld by the Company to satisfy any tax withholding obligation with respect to an Award; (iii) shares subject to a Stock Appreciation Right that are not issued in connection with the stock settlement of the Stock Appreciation Right on exercise thereof; and (iv) shares purchased on the open market by the Company with the cash proceeds received from the exercise of Options. Notwithstanding the provisions of this Section, no shares may again be optioned, granted or awarded if such action would cause an Incentive Stock Option to fail to qualify as an incentive stock option under Section 422 of the Code.(c)Shares Available Under Acquired Plans. To the extent permitted by NYSE Listed Company Manual Section 303A.08 or other applicable stock exchange rules, subject to applicable law, in the event that a company acquired by the Company or with which the Company combines has shares available under a pre-existing plan approved by shareholders and not adopted in contemplation of such acquisition or combination, the shares available for grant pursuant to the terms of such pre-existing plan (as adjusted, to the extent appropriate, using the exchange ratio or other adjustment or valuation ratio of formula used in such acquisition or combination to determine the consideration payable to the holders of common stock of the entities party to such acquisition or combination) may be used for Awards under the Plan and shall not reduce the number of shares of Stock reserved and available for delivery in connection with Awards under the Plan; provided that Awards using such available shares shall not be made after the date awards could have been made under the terms of such pre-existing plan, absent the acquisition or combination, and shall only be made to individuals who were not employed by the Company or any subsidiary of the Company immediately prior to such acquisition or combination.(d)Minimum Vesting Period. No Award may vest over a period that is less than one (1) year from the date of grant; provided, however, that the foregoing minimum vesting period shall not apply: (i) to Awards granted in payment of or exchange for an equivalent amount of salary, bonus or other earned cash compensation (including Performance Shares); (ii) to a Substitute Award that does not reduce the vesting period of the award being replaced or assumed; or (iii) to Awards involving an aggregate number of shares of Stock not in excess of five percent (5%) of the aggregate number of shares of Stock that may be delivered in connection with Awards (as set forth in Section 4 hereof).(e)Limitation on Awards to Non-Employee Directors. Notwithstanding anything herein to the contrary, the maximum value of any Awards granted to a non-employee director of the Company (other than the lead independent director) in any one calendar year, taken together with any cash fees paid to such non-employee director during such calendar year, shall not exceed $200,000, and the maximum value of any Awards granted to the lead independent director in any one calendar year, taken together with any cash fees paid to such director during such calendar year, shall not exceed $300,000 (in both cases, calculating the value of any such Awards based on the grant date fair value of such Awards for financial reporting purposes and excluding, for this purpose, the value of any dividend equivalent payments paid pursuant to any Award granted in a previous year).5.Options.(a)General. Certain Options granted under the Plan may be intended to be Incentive Stock Options; however, no Incentive Stock Options may be granted hereunder following the tenth (10th) anniversary of the earlier of (i) the date the Plan is adopted by the first January 1, April 1, July 1, or October 1 following the later of (a)Board and (ii) the date on which the Plan is approved by shareholders of the Company approve the Plan. Options may be granted to Eligible Persons in such form and having such terms and conditions as the Committee shall deem appropriate; provided, however, that Incentive Stock Options may be granted only to Eligible Persons who are employees of the Company or an Affiliate (as such definition is limited pursuant to Section 2(o) hereof) of the Company. The provisions of separate Options shall be set forth in separate Option Agreements, which agreements need not be identical. No dividends or dividend equivalents shall be paid on Options.(b)Term. The term of each Option shall be set by the Committee at the time of grant; provided, however, that no Option granted hereunder shall be exercisable after, and each Option shall expire, ten (10) years from the date it was granted.(c)Exercise Price. The exercise price per share of Stock for each Option shall be set by the Committee at the time of grant and shall not be less than the Fair Market Value on the date of grant, subject to Section 5(g) hereof in the case of any Incentive Stock Option. Notwithstanding the foregoing, in the case of an Option that is a Substitute Award, the exercise price per share of Stock for such Option may be less than the Fair Market Value on the date of grant; provided, that such exercise price is determined in a manner consistent with the provisions of Section 409A of the Code and, if applicable, Section 424(a) of the Code.(d)Payment for Stock. Payment for shares of Stock acquired pursuant to an Option granted hereunder shall be made in full upon exercise of the Option in a manner approved by the Committee, which may include any of the following payment methods: (1) in immediately available funds in U.S. dollars, or by certified or bank cashier’s check, (2) by delivery of shares of Stock having a value equal to the exercise price, (3) by a vote sufficientbroker-assisted cashless exercise in accordance with procedures approved by the Committee, whereby payment of the Option exercise price or tax withholding obligations may be satisfied, in whole or in part, with shares of Stock subject to meet the requirementsOption by delivery of Code Section 423(b)(2),an irrevocable direction to a securities broker (on a form prescribed by the Committee) to sell shares of Stock and to deliver all or (b)part of the effectivesale proceeds to the Company in payment of the aggregate exercise price and, if applicable, the amount necessary to satisfy the Company’s withholding obligations, or (4) by any other means approved by the Committee (including, by delivery of a notice of “net exercise” to the Company, pursuant to which the Participant shall receive the number of shares of Stock underlying the Option so exercised reduced by the number of shares of Stock equal to the aggregate exercise price of the Option divided by the Fair Market Value on the date of exercise). Notwithstanding anything herein to the Company’s registration statement undercontrary, if the Securities
Committee determines that any form of paymentA-3available hereunder would be in violation of Section 402 of the Sarbanes-Oxley Act of 1933,2002, such form of payment shall not be available.(e)Vesting. Options shall vest and become exercisable in such manner, on such date or dates, or upon the achievement of performance or other conditions, in each case as amended, registeringmay be determined by the sharesCommittee and set forth in an Option Agreement; provided, however, that notwithstanding any such vesting dates, the Committee may in its sole discretion accelerate the vesting of Common Stock for issuance under the Plan and Participant’s interests hereunder.Section 1.5 TERMINATION OF PLAN. The Board of Directors shall have the right to terminate the Planany Option at any time. Upontime and for any reason. Unless otherwise specifically determined by the Committee, the vesting of an Option shall occur only while the Participant is employed by or rendering services to the Service Recipient, and all vesting shall cease upon a Participant’s Termination for any reason. If an Option is exercisable in installments, such termination,installments or portions thereof that become exercisable shall remain exercisable until the dollar amount, ifOption expires, is canceled or otherwise terminates.(f)Termination of Employment or Service. Except as provided by the Committee in an Option Agreement, Participant Agreement or otherwise:(1)In the event of a Participant’s Termination prior to the applicable Expiration Date for any in eachreason other than (i) by the Service Recipient for Cause, or (ii) by reason of the Participant’s Account shall be distributeddeath or Disability, (A) all vesting with respect to such Participant.ARTICLE II — PARTICIPATIONSection 2.1 ELIGIBILITY. Each Team Member, whoParticipant’s Options outstanding shall cease, (B) all of such Participant’s unvested Options outstanding shall terminate and be forfeited for no consideration as of the first daydate of such Termination, and (C) all of such Participant’s vested Options outstanding shall terminate and be forfeited for no consideration on the earlier of (x) the applicable Expiration Date and (y) the date that is ninety (90) days after the date of such Termination.(2)In the event of a Subscription PeriodParticipant’s Termination prior to the applicable Expiration Date by reason of such Participant’s death or Disability, (i) will have at least 30 daysall vesting with respect to such Participant’s Options outstanding shall cease, (ii) all of Continuous Service,such Participant’s unvested Options outstanding shall terminate and (ii) will be a Team Member whose customary employment is more than 20 hours per week, may become a Participant by executingforfeited for no consideration as of the date of such Termination, and filing with Team Member Services a Stock Purchase Agreement during the Enrollment Period immediately preceding(iii) all of such Subscription Period. Such participationParticipant’s vested Options outstanding shall beginterminate and be forfeited for no consideration on the next Subscription Period following Team Member Services receiptearlier of (x) the applicable Expiration Date and (y) the date that is twelve (12) months after the date of such Termination. In the event of a properly completed Stock Purchase Agreement. Any electionParticipant’s death, such Participant’s Options shall remain exercisable by the Person or Persons to participate shall be effective subjectwhom such Participant’s rights under the Options pass by will or by the applicable laws of descent and distribution until the applicable Expiration Date, but only to the Company’s policy on personal securities transactions or similar policyextent that may be in effectthe Options were vested at the time of such election. An election to participate shall continue in effect until terminationTermination.(3)In the event of participation occurs in accordance with Article V.Section 2.2 PAYROLL DEDUCTIONS. Payment for shares of Common Stock purchased under the Plan shall be made solely by authorized payroll deduction from each payment of Compensation in accordance with thea Participant’s Stock Purchase Agreement. Deductions from payroll shall be expressed as a percentage of Compensation not less than 1% and not greater than 15%. A Participant may not increase or decrease the percentage deduction during a Subscription Period (other than to withdraw or terminate participation pursuant to Article V hereunder). A Participant’s Stock Purchase Agreement shall remain in effect for all subsequent Subscription Periods unless revised in accordance with this Section 2.2. SubjectTermination prior to the Company’s policy on personal securities transactionsapplicable Expiration Date by the Service Recipient for Cause, all of such Participant’s Options outstanding (whether or similar policy thatnot vested) shall immediately terminate and be forfeited for no consideration as of the date of such Termination.(g)Special Provisions Applicable to Incentive Stock Options.(1)No Incentive Stock Option may be in effectgranted to any Eligible Person who, at the time the Option is granted, owns directly, or indirectly within the meaning of such election, however, a Participant may change the percentage deduction for any subsequent Subscription Period by filing notice thereof with Team Member Services during the time period described in Section 2.1 for filing a Stock Purchase Agreement. If a Participant reduces his percentage reduction to 0%, he may not execute a new Stock Purchase Agreement designating a percentage greater than 0% which will become effective earlier than the first Subscription Period beginning in the following Plan Year. Amounts deducted from a Participant’s Compensation pursuant to this section shall be credited to such Participant’s Account.Section 2.3 TRANSFER OF PAYROLL DEDUCTIONS. All payroll deductions withheld by a Subsidiary under the Plan shall be immediately transferred to the Company.Section 2.4 LEAVE OF ABSENCE. If a Participant goes on a Leave of Absence, such Participant’s participation in the Plan shall continue provided that such Participant continues to receive Compensation. If such Participant ceases to receive Compensation while on a Leave of Absence, such Participant’s participation shall automatically terminate.ARTICLE III — PURCHASE OF SHARESA-4Section 3.1 OPTION PRICE. The Option Price for any Subscription Period shall be 85%424(d) of the Fair Market Value of a share of Common Stock on the first day of such Subscription Period.Section 3.2 PURCHASE OF SHARES. On each Exercise Date, the amount in a Participant’s Stock Purchase Account shall be charged with the aggregate Option Price of the largest number of shares of Common Stock (including fractional shares) that can be purchased with such amount.Section 3.3 LIMITATIONS ON PURCHASE. No Participant shall purchase Common Stock hereunder in any calendar year having a Fair Market Value ofCode, stock possessing more than $25,000, and no such purchase shall exceed the limitations imposed by Code Section 423(b)(8). Further, no Participant shall purchase Common Stock hereunder during a Subscription Period if such Participant shall be deemed to possess fiveten percent (5%(10%) or more of the total combined voting power or value of all classes of stock of the Company or of any parent or subsidiary thereof, unless such Incentive Stock Option (i) has an exercise price of at least one hundred ten percent (110%) of the Fair Market Value on the date of the grant of such Option and (ii) cannot be exercised more than five (5) years after the date it is granted.(2)Each Participant who receives an Incentive Stock Option must agree to notify the Company in writing immediately after the Participant makes a Subsidiary under CodeDisqualifying Disposition of any Stock acquired pursuant to the exercise of an Incentive Stock Option.6.Restricted Stock.(a)General. Restricted Stock may be granted to Eligible Persons in such form and having such terms and conditions as the Committee shall deem appropriate. The provisions of separate Awards of Restricted Stock shall be set forth in separate Restricted Stock Agreements, which agreements need not be identical. Subject to the restrictions set forth in Section 423(b)(3)6(b) hereof, and except as otherwise set forth in the applicable Restricted Stock Agreement, the Participant shall generally have the rights and privileges of a shareholder as to such Restricted Stock, including the right to vote such Restricted Stock. Unless otherwise set forth in a Participant’s Restricted Stock Agreement, and subject to Section 21(q), cash dividends and stock dividends, if any, with respect to the Restricted Stock shall be withheld by the Company for the Participant’s account, and shall be subject to forfeiture to the same degree as the shares of Restricted Stock to which such dividends relate.(b)Vesting and Restrictions on Transfer. Restricted Stock shall vest in such manner, on such date or dates, or upon the achievement of performance or other conditions, in each case as may be determined by the Committee and set forth in a Restricted Stock Agreement; provided, however, that notwithstanding any such vesting dates, the Committee may in its sole discretion accelerate the vesting of any Award of Restricted Stock at any time and for any reason. Unless otherwise specifically determined by the Committee, the vesting of an Award of Restricted Stock shall occur only while the Participant is employed by or rendering services to the Service Recipient, and all vesting shall cease upon a Participant’s Termination for any reason. In addition to any other restrictions set forth in a Participant’s Restricted Stock Agreement, the Participant shall not be permitted to sell, transfer, pledge, or otherwise encumber the Restricted Stock prior to the time the Restricted Stock has vested pursuant to the terms of the Restricted Stock Agreement.(c)Termination of Employment or Service. Except as provided by the Committee in a Restricted Stock Agreement, Participant Agreement or otherwise, in the event of a Participant’s Termination for any reason prior to the time that such Participant’s Restricted Stock has vested, (1) all vesting with respect to such Participant’s Restricted Stock outstanding shall cease, and (2) as soon as practicable following such Termination, the Company shall repurchase from the Participant, and the Participant shall sell, all of such Participant’s unvested shares of Restricted Stock at a purchase price equal to the original purchase price paid for the Restricted Stock; provided that, if the original purchase price paid for the Restricted Stock is equal to zero dollars ($0), such unvested shares of Restricted Stock shall be forfeited to the Company by the Participant for no consideration as of the firstdate of such Termination.7.Restricted Stock Units.(a)General. Restricted Stock Units may be granted to Eligible Persons in such form and having such terms and conditions as the Committee shall deem appropriate. The provisions of separate Restricted Stock Units shall be set forth in separate RSU Agreements, which agreements need not be identical.(b)Vesting. Restricted Stock Units shall vest in such manner, on such date or dates, or upon the achievement of performance or other conditions, in each case as may be determined by the Committee and set forth in an RSU Agreement; provided, however, that notwithstanding any such vesting dates, the Committee may in its sole discretion accelerate the vesting of any Restricted Stock Unit at any time and forany reason. Unless otherwise specifically determined by the Committee, the vesting of a Restricted Stock Unit shall occur only while the Participant is employed by or rendering services to the Service Recipient, and all vesting shall cease upon a Participant’s Termination for any reason.(c)Settlement. Restricted Stock Units shall be settled in Stock, cash, or property, as determined by the Committee, in its sole discretion, on the date or dates determined by the Committee and set forth in an RSU Agreement. Unless otherwise set forth in a Participant’s RSU Agreement, a Participant shall not be entitled to dividends, if any, or dividend equivalents with respect to Restricted Stock Units prior to settlement.(d)Termination of Employment or Service. Except as provided by the Committee in an RSU Agreement, Participant Agreement or otherwise, in the event of a Participant’s Termination for any reason prior to the time that such Participant’s Restricted Stock Units have been settled, (1) all vesting with respect to such Participant’s Restricted Stock Units outstanding shall cease, (2) all of such Participant’s unvested Restricted Stock Units outstanding shall be forfeited for no consideration as of the date of such Termination, and (3) any shares remaining undelivered with respect to vested Restricted Stock Units then held by such Participant shall be delivered on the delivery date or dates specified in the RSU Agreement.Compliance With Section 409A. Unless the Committee provides otherwise in an Award Agreement, each Restricted Stock Unit shall be paid in full to the Participant no later than the fifteenth day of such Subscription Period. For purposesthe third month after the end of the preceding sentence,first calendar year in which the ownership attribution rulesRestricted Stock Unit is no longer subject to a “substantial risk of forfeiture” within the meaning of Code Section 424(d) shall apply and Common Stock409A. If the Committee provides in an Award Agreement that a ParticipantRestricted Stock Unit is intended to be subject to Code Section 409A, the Award Agreement shall include terms that are intended to satisfy the requirements of Section 409A.8.Stock Appreciation Rights.(a)General. Stock Appreciation Rights may purchase under outstanding optionsbe granted to Eligible Persons in such form and having such terms and conditions as the Committee shall deem appropriate. The provisions of separate Stock Appreciation Rights shall be treated as stock ownedset forth in separate SAR Agreements, which agreements need not be identical. No dividends or dividend equivalents shall be paid on Stock Appreciation Rights.(b)Term. The term of each Stock Appreciation Right shall be set by the Participant.Section 3.4 RESTRICTION ON TRANSFERABILITY. Rights to purchase sharesCommittee at the time of grant; onlyafter, and each Stock Appreciation Right shall expire, ten (10) years from the date it was granted.(c)Base Price. The base price per share of Stock for each Stock Appreciation Right shall be set by the Participant. Such rightsCommittee at the time of grant and shall not be transferableless than the Fair Market Value on the date of grant. Notwithstanding the foregoing, in the case of a Stock Appreciation Right that is a Substitute Award, the base price per share of Stock for such Stock Appreciation Right may be less than the Fair Market Value on the date of grant; provided, that such base price is determined in a manner consistent with the provisions of Section 409A of the Code.(d)Vesting. Stock Appreciation Rights shall vest and become exercisable in such manner, on such date or dates, or upon the achievement of performance or other conditions, in each case as may be determined by the Committee and set forth in a SAR Agreement; provided, however, that notwithstanding any such vesting dates, the Committee may in its sole discretion accelerate the vesting of any Stock Appreciation Right at any time and for any reason. Unless otherwise specifically determined by the Committee, the vesting of a Stock Appreciation Right shall expireoccur only while the Participant is employed byor rendering services to the Service Recipient, and all vesting shall cease upon a Participant’s death.ARTICLE IV — PROVISIONS RELATING TO COMMON STOCKSection 4.1 COMMON STOCK RESERVEDTermination for any reason. If a Stock Appreciation Right is exercisable in installments, such installments or portions thereof that become exercisable shall remain exercisable until the Stock Appreciation Right expires, is canceled or otherwise terminates.(e)Payment upon Exercise. Payment upon exercise of a Stock Appreciation Right may be made in cash, Stock, or property as specified in the SAR Agreement or determined by the Committee, in each case having a value in respect of each share of Stock underlying the portion of the Stock Appreciation Right so exercised, equal to the excess (if any) of the Fair Market Value of one (1) share of Stock on the exercise date over the base price of the Stock Appreciation Right. For purposes of clarity, each share of Stock to be issued in settlement of a Stock Appreciation Right is deemed to have a value equal to the Fair Market Value of one (1) share of Stock on the exercise date. In no event shall fractional shares be issuable upon the exercise of a Stock Appreciation Right, and in the event that fractional shares would otherwise be issuable, the number of shares issuable will be rounded down to the next lower whole number of shares, and the Participant will be entitled to receive a cash payment equal to the value of such fractional share.(f)Termination of Employment or Service. Except as provided by the Committee in a SAR Agreement, Participant Agreement or otherwise:(1)In the event of a Participant’s Termination prior to the applicable Expiration Date for any reason other than (i) by the Service Recipient for Cause, or (ii) by reason of the Participant’s death or Disability, (A) all vesting with respect to such Participant’s Stock Appreciation Rights outstanding shall cease, (B) all of such Participant’s unvested Stock Appreciation Rights outstanding shall terminate and be forfeited for no consideration as of the date of such Termination, and (C) all of such Participant’s vested Stock Appreciation Rights outstanding shall terminate and be forfeited for no consideration on the earlier of (x) the applicable Expiration Date and (y) the date that is ninety (90) days after the date of such Termination.(2)In the event of a Participant’s Termination prior to the applicable Expiration Date by reason of such Participant’s death or Disability, (i) all vesting with respect to such Participant’s Stock Appreciation Rights outstanding shall cease, (ii) all of such Participant’s unvested Stock Appreciation Rights outstanding shall terminate and be forfeited for no consideration as of the date of such Termination, and (iii) all of such Participant’s vested Stock Appreciation Rights outstanding shall terminate and be forfeited for no consideration on the earlier of (x) the applicable Expiration Date and (y) the date that is twelve (12) months after the date of such Termination. In the event of a Participant’s death, such Participant’s Stock Appreciation Rights shall remain exercisable by the Person or Persons to whom such Participant’s rights under the Stock Appreciation Rights pass by will or by the applicable laws of descent and distribution until the applicable Expiration Date, but only to the extent that the Stock Appreciation Rights were vested at the time of such Termination.(3)In the event of a Participant’s Termination prior to the applicable Expiration Date by the Service Recipient for Cause, all of such Participant’s Stock Appreciation Rights outstanding (whether or not vested) shall immediately terminate and be forfeited for no consideration as of the date of such Termination.9.Performance Awards.(a) General. Performance Awards may be granted to Eligible Persons in such form and having such terms and conditions as the Committee shall deem appropriate. The provisions of separatePerformance Awards, including the determination of the Committee with respect to the form of payout of Performance Awards, shall be set forth in separate Performance Award Agreements, which agreements need not be identical. Unless otherwise set forth in an Award Agreement evidencing a Participant’s Performance Award, and subject to Section 4.2,21(q), (i) cash dividends and stock dividends, if any, with respect to the Performance Shares shall be withheld by the Company for the Participant’s account, and shall be subject to forfeiture to the same degree as the Performance Shares to which such dividends relate and (ii) a Participant shall not be entitled to dividends, if any, or dividend equivalents with respect to Performance Units that are not earned and vested.(b)Value of Performance Awards. Each Performance Unit shall have an initial value that is established by the Committee at the time of grant. Each Performance Share shall have an initial value equal to the Fair Market Value of the Stock on the date of grant. In addition to any other non-performance terms included in the Performance Award Agreement, the Committee shall set the applicable Performance Objectives in its discretion, which objectives, depending on the extent to which they are met, will determine the value and number of Performance Units or Performance Shares, as the case may be, that will be paid out to the Participant.(c)Earning of Performance Awards. Upon the expiration of the applicable Performance Period or other non-performance-based vesting period, if longer, the holder of a Performance Award shall be entitled to receive the following payout: if the holder holds Performance Units or Performance Shares, payout on the value and number of the applicable Performance Units or Performance Shares earned by the Participant over the Performance Period, to be determined as a function of the extent to which the corresponding Performance Objectives have been achieved and any other non-performance-based terms met. The Committee may specify a target, threshold or maximum amount payable and may set a formula for determining the amount of Performance Awards earned if performance is at or above the threshold level but falls short of the maximum achievement of the specified Performance Objectives.(d)Form and Timing of Payment of Performance Awards. Payment of earned Performance Awards shall be as determined by the Committee and as evidenced in the Performance Award Agreement. Subject to the terms of the Plan, the Committee, in its sole discretion, may pay earned Performance Units and Performance Shares in the form of cash, Stock, or other Awards (or in any combination thereof) equal to the value of the earned Performance Units or Performance Shares, as the case may be, at the close of the applicable Performance Period, or as soon as practicable after the end of the Performance Period. Any cash, Stock, or other Awards issued in connection with a Performance Award may be issued subject to any restrictions deemed appropriate by the Committee.(e)Termination of Employment or Service. Except as provided by the Committee in a Performance Award Agreement, Participant Agreement or otherwise, if, prior to the end of an applicable Performance Period, a Participant undergoes a Termination for any reason, all of such Participant’s Performance Awards shall be forfeited by the Participant to the Company for no consideration.(f)Performance Objectives.(1)Each Performance Award shall specify the Performance Objectives that must be achieved before such Performance Award shall become earned. The Company may also specify a minimum acceptable level of achievement below which no payment will be made and may set forth a formula for determining the amount of any payment to be made if performance is at or above such minimum acceptable level but falls short of the maximum achievement of the specified Performance Objectives.(2)Performance Objectives may be established on a Company-wide basis, project or geographical basis or, as the context permits, with respect to one or more than $1,000,000business units, divisions, lines of business or business segments, subsidiaries, products, or other operational units or administrative departments of the Company (or in combination thereof) or may be related to the performance of an individual Participant and may be expressed in absolute terms, or relative or comparative to (A) current internal targets or budgets, (B) the past performance of the Company (including the performance of one or more subsidiaries, divisions, or operating units), (C) the performance of one or more similarly situated companies, (D) the performance of an index covering multiple companies, or (E) other external measures of the selected performance criteria.(3)Unless specified otherwise by the Committee (i) in the Performance Award Agreement at the time the Performance Award is granted or (ii) in such other document setting forth the Performance Objectives at the time the Performance Objectives are established, the Committee, in its sole discretion, will appropriately make adjustments in the method of calculating the attainment of Performance Objectives for a Performance Period to provide for objectively determinable adjustments, modifications or amendments, as determined in accordance with Generally Accepted Accounting Principles (“GAAP”), including, without limitation, for one or more of the following items of gain, loss, profit or expense: (A) determined to be items of an unusual nature or of infrequency of occurrence or non-recurring in nature; (B) related to changes in accounting principles under GAAP or tax laws; (C) related to currency fluctuations; (D) related to financing activities (e.g., effect on earnings per share of issuing convertible debt securities); (E) related to restructuring, divestitures, productivity initiatives or new business initiatives; (F) related to discontinued operations that do not qualify as a segment of business under GAAP; (G) attributable to the business operations of any entity acquired by the Company during the fiscal year; (H) non-operating items; and (I) acquisition or divestiture expenses.(g)Negative Discretion. Notwithstanding satisfaction of any completion of any Performance Objectives, the number of shares of Common Stock, cash or other benefits granted, issued, retainable and/or vested under a Performance Award on account of satisfaction of such Performance Objectives may be sold pursuantreduced by the Committee on the basis of such further considerations as the Committee, in its sole discretion, will determine.10.Other Stock-Based Awards.The Committee is authorized, subject to options grantedlimitations under applicable law, to grant to Participants such other Awards that may be denominated or payable in, valued in whole or in part by reference to, or otherwise based upon or related to Stock, as deemed by the Committee to be consistent with the purposes of the Plan. The Committee may also grant Stock as a bonus (whether or not subject to any vesting requirements or other restrictions on transfer), and may grant other Awards in lieu of obligations of the Company or an Affiliate to pay cash or deliver other property under the Plan. In addition, atPlan or under other plans or compensatory arrangements, subject to such terms as shall be determined by the beginning of each Plan Year,Committee. The terms and conditions applicable to such Awards shall be determined by the Committee and evidenced by Award Agreements, which agreements need not be identical.11.Adjustment for Recapitalization, Merger, etc.(a)Capitalization Adjustments. The aggregate number of shares of Common Stock reserved for issuance under this Plan shall be increased automatically by a number of shares equal to one percent (1%) of the total outstanding shares of the Company as of the immediately preceding December 31; provided, however, that such annual increases shall in no event cause the number of shares issuable under this Plan to exceed $500,000 shares. Such number shall be subject to adjustments effected in accordance with Section 4.2.Section 4.2 ADJUSTMENT FOR CHANGES IN COMMON STOCK.(a) In the event that the shares of Common Stock of the Company as presently constituted, shall be changed into or exchanged for a different number or kind of shares of stock or other securities of the Company or of another corporation (whether by reason of merger, consolidation, recapitalization, reclassification, split-up, combination of shares or otherwise) or if the number of such shares of Common Stock shall be increased or decreased through the payment of a stock dividend, stock split, or reverse stock split, then, subject to the provisions of subsection (c) below, there shall be substituted for or added to each share of Common Stock that was theretofore appropriated, or that thereafter may become subject to an offering under the Plan, the number and kind of shares of stock or other securities into which each outstandingA-5share of the Common Stock shall be so changed or for which each such share shall be exchanged or to which such share shall be entitled, as the case may be. Outstanding Stock Purchase Agreements shall be deemed to be amended as to price and other terms, as may be necessary to appropriately reflect the foregoing events.(b) If there shall be any other changedelivered in the number or kind of the outstanding shares of Common Stock, or of any stock or other securities in which such stock shall have been changed or for which it shall have been exchanged, and if a majority of the disinterested members of the Board of Directors shall, in its sole discretion, determine that such change equitably requires an adjustment in any offering that was theretofore made or that may thereafter be made under the Plan, then such adjustment shall be made in accordanceconnection with such determination.(c) An offering pursuant to the Plan shall not affect in any way the right or power of the Company to make adjustments or reclassifications, reorganizations or changes in its capital or business structure, to merge, to consolidate, to dissolve, to liquidate, or to sell or transfer all or any part of its business or assets.Section 4.3 INSUFFICIENT SHARES. If the aggregate funds available for the purchase of Common Stock on any Exercise Date would cause an issuance of shares in excess of the remaining number of shares provided forAwards (as set forth in Section 4.1, (i) the Committee shall proportionately reduce the number of shares that would otherwise be purchased by each Participant in order to eliminate such excess, (ii) any cash remaining in each Participant’s Stock Purchase Account shall be distributed to such Participant at the next available Pay Date, and (iii) the Plan shall automatically terminate immediately after such Exercise Date.Section 4.4 CONFIRMATION OF PURCHASES; REGISTRATION OF SHARES. Each Participant shall be provided with a quarterly written statement indicating4 hereof), the number of shares of Common Stock purchased undercoveredby each outstanding Award, and the Planprice per share of Stock underlying each such Award shall be equitably and proportionally adjusted or substituted, as determined by the ParticipantCommittee, in its sole discretion, as to the number, price, or kind of a share of Stock or other consideration subject to such quarter,Awards (1) in the aggregate numberevent of changes in the outstanding Stock or in the capital structure of the Company by reason of stock dividends, extraordinary cash dividends, stock splits, reverse stock splits, recapitalizations, reorganizations, mergers, amalgamations, consolidations, combinations, exchanges, or other relevant changes in capitalization occurring after the date of grant of any such Award (including any Corporate Event); (2) in connection with any extraordinary dividend declared and paid in respect of shares of Common Stock, accumulated underwhether payable in the Planform of cash, stock, or any other form of consideration; or (3) in the event of any change in applicable laws or circumstances that results in or could result in, in either case, as determined by the Committee in its sole discretion, any substantial dilution or enlargement of the rights intended to be granted to, or available for, Participants in the Plan.(b)Corporate Events. Notwithstanding the foregoing, except as provided by the Committee in an Award Agreement, Participant Agreement or otherwise, in connection with (i) a merger, amalgamation, or consolidation involving the Company in which the Company is not the surviving corporation, (ii) a merger, amalgamation, or consolidation involving the Company in which the Company is the surviving corporation but the holders of shares of Stock receive securities of another corporation or other property or cash, (iii) a Change in Control, or (iv) the reorganization, dissolution or liquidation of the Company (each, a “Corporate Event”), the Committee may provide for any one or more of the following:(1)The assumption or substitution of any or all Awards in connection with such Corporate Event, in which case the Awards shall be subject to the adjustment set forth in subsection (a) above, and to the extent that such Awards are Performance Awards or other relevant informationAwards that vest subject to the achievement of Performance Objectives or similar performance criteria, such Performance Objectives or similar performance criteria shall be adjusted appropriately to reflect the Corporate Event;(2)The acceleration of vesting of any or all Awards not assumed or substituted in connection with such Corporate Event, subject to the consummation of such Corporate Event; provided that any Performance Awards or other Awards that vest subject to the achievement of Performance Objectives or similar performance criteria will be deemed earned (i) based on actual performance through the date of the Corporate Event, or (ii) at the target level (or if no target is specified, the maximum level), in the event actual performance cannot be measured through the date of the Corporate Event, in each case, with respect to the Participant’s participation in the Plan. All shares purchased shall be credited to such Participant, but shall initially be registered in the nameall unexpired Performance Periods or Performance Periods for which satisfaction of the Company’s nominee, as agentPerformance Objectives or other material terms for the Participant. Such nominee will holdapplicable Performance Period has not been certified by the Participant’s share certificates untilCommittee prior to the date of the Corporate Event;(3)The cancellation of any or all Awards not assumed or substituted in connection with such timeCorporate Event (whether vested or unvested) as of the consummation of such Participant’s participation in the Plan terminates or such Participant files a written requestCorporate Event, together with the nomineepayment to have a certificate or certificates issuedthe Participants holding vested Awards (including any Awards that would vest upon the Corporate Event but for such cancellation) so canceled of an amount in respect of cancellation equal to an amount based upon the per-share consideration being paid for the Stock in connection with such Participant’s name. ExceptCorporate Event, less, in the case of death,Options, Stock Appreciation Rights, and other Awards subject to exercise, the applicable exercise or base price; provided, however, that holders of Options, Stock Appreciation Rights, and other Awards subject to exercise shall be entitled to consideration in respect of cancellation of such Awards only if the per-share consideration less the applicable exercise or base price is greater than zero dollars ($0), and to the extent that theper-share consideration is less than or equal to the applicable exercise or base price, such Awards shall be canceled for no consideration;(4)The cancellation of any certificate issuedor all Options, Stock Appreciation Rights and other Awards subject to exercise not assumed or substituted in connection with such Corporate Event (whether vested or unvested) as of the consummation of such Corporate Event; provided that all Options, Stock Appreciation Rights and other Awards to be so canceled pursuant to this paragraph (4) shall first become exercisable for a period of at least ten (10) days prior to such Corporate Event, with any exercise during such period of any unvested Options, Stock Appreciation Rights or other Awards to be (A) contingent upon and subject to the occurrence of the Corporate Event, and (B) effectuated by such means as are approved by the Committee; and(5)The replacement of any or all Awards (other than Awards that are intended to qualify as “stock rights” that do not provide for a “deferral of compensation” within the meaning of Section 409A of the Code) with a cash incentive program that preserves the value of the Awards so replaced (determined as of the consummation of the Corporate Event), with subsequent payment of cash incentives subject to the same vesting conditions as applicable to the Awards so replaced and payment to be made within thirty (30) days of the applicable vesting date.Payments to holders pursuant to paragraph (3) above shall be made in cash or, in the sole discretion of the Committee, and to the extent applicable, in the form of such other consideration necessary for a Participant must initially be issuedto receive property, cash, or securities (or a combination thereof) as such Participant would have been entitled to receive upon the occurrence of the transaction if the Participant had been, immediately prior to such transaction, the holder of the number of shares of Stock covered by the Award at such time (less any applicable exercise or base price). In addition, in connection with any Corporate Event, prior to any payment or adjustment contemplated under this subsection (b), the Participant’s name aloneCommittee may require a Participant to (A) represent and warrant as to the unencumbered title to his or inher Awards, (B) bear such Participant’s name and another as joint tenants with right of survivorship. Registrationpro-rata share of any shares following the death of a Participant willpost-closing indemnity obligations, and be subject to the same rulespost-closing purchase price adjustments, escrow terms, offset rights, holdback terms, and similar conditions as are then applicablethe other holders of Stock, and (C) deliver customary transfer documentation as reasonably determined by the Committee. The Committee need not take the same action or actions with respect to decedent shareholders generally.(c)Fractional Shares. Any adjustment provided under this Section 4.5 RIGHTS AS SHAREHOLDERS AND DISPOSITION OF COMMON STOCK.(a) The11 may, in the Committee’s discretion, provide for the elimination of any fractional share that might otherwise become subject to an Award. No cash settlements shall be made with respect to fractional shares so eliminated.(d)Double-Trigger Vesting. Notwithstanding any other provisions of Common Stock purchasedthe Plan, an Award Agreement or Participant Agreement to the contrary, with respect to any Award that is assumed or substituted in connection with a Change in Control, the vesting, payment, purchase or distribution of such Award may not be accelerated by reason of the Change in Control for any Participant unless the Participant experiences an involuntary Termination as a result of the Change in Control. Unless otherwise provided for in an Award Agreement or Participant Agreement, any Award held by a Participant onwho experiences an Exercise Dateinvoluntary Termination as a result of a Change in Control shall for allimmediately vest as of the date of such Termination. For purposes of this Section 11(d), a Participant will be deemed to have been issued and sold at the close of business on such Exercise Date. Participants for whom shares have been purchased shall be entitled to all rightsexperience an involuntary Termination as a result of a shareholder with respect to such shares, includingChange in Control if the right to receive dividends andParticipant experiences a Termination by the right
Service Recipient other than for Cause as defined in the applicable Award Agreement, Participant Agreement, or in a written changeA-6to vote. The Company will take such steps as may be necessary to ensure that each Participant whose shares are held in name ofcontrol, retention, severance or similar plan maintained by the Company’s nominee enjoys such rights.(b) In no event shall shares of Common Stock purchased by a Participant hereunder be sold or otherwise disposed of prior to the earlier of (i) one year after the first day of the calendar quarterCompany in which the Exercise Date with respect to those shares fell, (ii) the Participant’s death,Participant participates), or (iii) the date onotherwise experiences a Termination under circumstances which entitle the Participant ceases to be employed by the Company and any Subsidiary.Section 4.6 CORPORATE REORGANIZATIONS, LIQUIDATION, ETC. In the event of any corporate merger, consolidation, acquisition of propertymandatory severance payment(s) pursuant to applicable law or, stock, separation, reorganization or liquidation, provision may be made for the substitution of a new option for an old option, or an assumption of an old option, by an employer corporation or a corporation related to such corporation. Any provision for such substitution or assumption shall be subject to the limitations and provisions of Code Section 424.ARTICLE V — TERMINATION OF PARTICIPATIONSection 5.1 WITHDRAWAL. Subject to the Company’s policy on personal securities transactions or similar policy that may be in effect at the time, a Participant may withdraw from the Plan at any time by filing notice of withdrawal with the Company’s nominee prior to an Offering Date. Upon filing proper notice, participation in the Plan will cease effective the following Offering Date. Any Participant who withdraws from the Plan may again become a Participant by satisfying the eligibility requirements and filing a Stock Purchase Agreement as set forth in Section 2.1, but no such Stock Purchase Agreement shall be effective earlier than the first Subscription Period beginning in the following Plan Year.Section 5.2 TERMINATION OF ELIGIBILITY. If a Participant ceases to be employed by the Company or a Subsidiary or otherwise becomes ineligible to participate in the Plan as set forth in Section 2.1, such Participant’s participation in the Plan shall thereupon automatically terminate. In such event, the dollar amount, if any, in such Participant’s Stock Purchase Account shall be distributed to such Participant (or in the case of death, to such Participant’s designated beneficiary(ies)) and no further shares will be purchased on such Participant’s behalf. For purposes of this section, a Participant’s participation in the Plan will not automatically terminate if such Participant becomes an individual on a Leave of Absence permitted or required to be taken into account by applicable Treasury Regulations or other law. Any Participant whose participation in the Plan is terminated pursuant to this Section may again become a Participant by satisfying the eligibility requirements and executing and filing a Stock Purchase Agreement as set forth in Section 2.1.Section 5.3 NO INTEREST. No interest will be credited or paid on cash balances in a Participant’s Stock Purchase Account.ARTICLE VI — GENERAL PROVISIONSA-7Section 6.1 TAX WITHHOLDING; INFORMATION RETURNS. Each Participant shall be deemed to have consented to any income tax withholding that may hereafter be required by reason of such Participant’s participation in the Plan or the disposition of, or payment of any dividends on, shares acquired by such Participant under the Plan. The proper officersnon-employee director of the Company, if the non-employee director’s service on the Board terminates in connection with or as a result of a Change in Control, in each case, at any time beginning on the date of the Change in Control up to and each Subsidiary shall prepare and, where required, timely file such tax information returns and other notices as may be required by lawincluding the first (1st) anniversary of the Change in Control.12.Use of Proceeds.The proceeds received from time to time.Section 6.2 NOTICES. Any notice that a Team Member filesthe sale of Stock pursuant to the Plan shall be made on forms prescribed byused for general corporate purposes.13.Rights and Privileges as a Shareholder.Except as otherwise specifically provided in the Committee andPlan, no Person shall be effective as soon as administratively possible afterentitled to the rights and privileges of Stock ownership in respect of shares of Stock that are subject to Awards hereunder until such notice is receivedshares have been issued to that Person.14.Transferability of Awards.Awards may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by Team Member Serviceswill or by the Company’s nominee, asapplicable laws of descent and distribution, and to the caseextent subject to exercise, Awards may be.Section 6.3 CONDITION OF EMPLOYMENT.not be exercised during the lifetime of the grantee other than by the grantee. Notwithstanding the foregoing, except with respect to Incentive Stock Options, Awards and a Participant’s rights under the Plan shall be transferable to a Participant’s spouse, lineal ascendants, lineal descendants, or to a duly established trust for the benefit of one or more of these individuals.15.Employment or Service Rights.No individual shall have any claim or right to be granted an Award under the Plan or, having been selected for the grant of an Award, to be selected for the grant of any other Award. Neither the creation of the Plan nor participation therein,any action taken hereunder shall be deemed to createconstrued as giving any individual any right of continued employmentto be retained in the employ or in any way affect the rightservice of the Company or an Affiliate of the Company.16.Compliance with Laws.The obligation of the Company to deliver Stock upon issuance, vesting, exercise, or settlement of any Award shall be subject to all applicable laws, rules, and regulations, and to such approvals by governmental agencies as may be required. Notwithstanding any terms or conditions of any Award to the contrary, the Company shall be under no obligation to offer to sell or to sell, and shall be prohibited from offering to sell or selling, any shares of Stock pursuant to an Award unless such shares have been properly registered for sale with the U.S. Securities and Exchange Commission pursuant to the Securities Act (or with a Subsidiarysimilar non‑U.S. regulatory agency pursuant to terminate a Team Member.may restrict the transfer of such shares and may legend the Stock certificates representing such shares in such manner as it deems advisable to ensure the availability of any such exemption.17.Withholding Obligations.As a condition to the issuance, vesting, exercise, or settlement of any Award (or upon the making of an election under Section 6.4 AMENDMENT OF THE PLAN83(b) of the Code), the Committee may require that a Participant satisfy, through deduction or withholding from any payment of any kind otherwise due to the Participant, or through such other arrangements as are satisfactory to the Committee, the amount of all federal, state, and local income and other taxes of any kind required or permitted to be withheld in connection with such issuance, vesting, exercise, or settlement (or election). The Committee, in its discretion, may permit shares of Stock to be used to satisfy tax withholding requirements, and such shares shall be valued at their Fair Market Value as of the issuance, vesting, exercise, or settlement date of the Award, as applicable. Depending on the withholding method, the Company may withhold by considering the applicable minimum statutorily required withholding rates or other applicable withholding rates in the applicable Participant’s jurisdiction, including maximum applicable rates that may be utilized without creating adverse accounting treatment under Financial Accounting Standards Board Accounting Standards Codification Topic 718 (or any successor pronouncement thereto).18.Amendment of the Plan or Awards.(a)Amendment of Plan. The Board of Directorsor the Committee may amend the Plan at any time and from time to time,time.(b)Amendment of Awards. The Board or the Committee may amend the terms of any one or more Awards at any time and from time to time.(c)Shareholder Approval; No Material Impairment. Notwithstanding anything herein to the contrary, no amendment to the Plan or any Award shall be effective without shareholder approval to the extent that such approval is required pursuant to applicable law or the applicable rules of each national securities exchange on which the Stock is listed. Additionally, no amendment to the Plan or any Award shall materially impair a Participant’s rights under any Award unless the Participant consents in writing (it being understood that no action taken by the Board or the Committee that is expressly permitted under the Plan, including, without limitation, any actions described in Section 11 hereof, shall constitute an amendment to the Plan or an Award for such purpose). Notwithstanding the foregoing, subject to the limitations of applicable law, if any, and without an affected Participant’s consent, the Board or the Committee may amend the terms of the Plan or any one or more Awards from time to time as necessary to bring such Awards into compliance with applicable law, including, without limitation, Section 409A of the Code.(d)No Repricing of Awards Without Shareholder Approval. Notwithstanding subsection (a) or (b) above, or any other provision of the Plan, the repricing of Awards shall not be permitted without shareholder approval. For this purpose, a “repricing” means any of the following (or any other action that has the same effect as any of the following): (1) changing the terms of an Award to lower its exercise or base price (other than on account of capital adjustments resulting from share splits, etc., as described in Section 11(a) hereof), (2) any other action that is treated as a repricing under GAAP, and (3) repurchasing for cash or canceling an Award in exchange for another Award at a time when its exercise or base price is greater than the Fair Market Value of the underlying Stock, unless the cancellation and exchange occurs in connection with an event set forth in Section 11(b) hereof.19.Termination or Suspension of the Plan.The Board or the Committee may suspend or terminate the Plan at any time. Unless sooner terminated, the Plan shall terminate on the day before the tenth (10th) anniversary of the date the shareholders of the Company approve the Plan. No Awards may be granted under the Plan while the Plan is suspended or after it is terminated; provided,however, that following any suspension or termination of the Plan, the Plan shall remain in effect for the purpose of governing all Awards then outstanding hereunder until such time as all Awards under the Plan have been terminated, forfeited, or otherwise canceled, or earned, exercised, settled, or otherwise paid out, in accordance with their terms.20.Effective Date of the Plan.The Plan is effective as of the Effective Date, subject to shareholder approval.21.Miscellaneous.(a)Certificates. Stock acquired pursuant to Awards granted under the Plan may be evidenced in such a manner as the Committee shall determine. If certificates representing Stock are registered in the name of the Participant, the Committee may require that (1) such certificates bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such Stock, (2) the Company retain physical possession of the certificates, and (3) the Participant delivers a stock power to the Company, endorsed in blank, relating to the Stock. Notwithstanding the foregoing, the Committee may determine, in its sole discretion, that the Stock shall be held in book-entry form rather than delivered to the Participant pending the release of any applicable restrictions.(b)Other Benefits. No Award granted or paid out under the Plan shall be deemed compensation for purposes of computing benefits under any retirement plan of the Company or its Affiliates nor affect any benefits under any other benefit plan now or subsequently in effect under which the availability or amount of benefits is related to the level of compensation.(c)Corporate Action Constituting Grant of Awards. Corporate action constituting a grant by the Company of an Award to any Participant will be deemed completed as of the date of such corporate action, unless otherwise determined by the Committee, regardless of when the instrument, certificate, or letter evidencing the Award is communicated to, or actually received or accepted by, the Participant. In the event that the corporate records (e.g., Committee consents, resolutions or minutes) documenting the corporate action constituting the grant contain terms (e.g., exercise price, vesting schedule or number of shares of Stock) that are inconsistent with those in the Award Agreement as a result of a clerical error in connection with the preparation of the Award Agreement, the corporate records will control and the Participant will have no legally binding right to the incorrect term in the Award Agreement.(d)Clawback/Recoupment Policy. Notwithstanding anything contained herein to the contrary, all Awards granted under the Plan shall be and remain subject to any incentive compensation clawback or recoupment policy currently in effect or as may be adopted by the Board (or a committee or subcommittee of the Board) and, in each case, as may be amended from time to time. No such policy adoption or amendment shall in any event require the prior consent of any Participant. No recovery of compensation under such a clawback policy will be an event giving rise to a right to resign for “good reason” or “constructive termination” (or similar term) under any agreement with the Company or any of its Affiliates. In the event that an Award is subject to more than one such policy, the policy with the most restrictive clawback or recoupment provisions shall govern such Award, subject to applicable law.(e)Non-Exempt Employees. If an Option is granted to an employee of the Company or any of its Affiliates in the United States who is a non-exempt employee for purposes of the Fair Labor Standards Act of 1938, as amended, the Option will not be first exercisable for any shares of Stock until at least six (6) months following the date of grant of the Option (although the Option may vest prior to such date). Consistent with the provisions of the Worker Economic Opportunity Act, (1) if such employee dies or suffers a Disability, (2) upon a Corporate Event in which such Option is not assumed, continued, or substituted, (3) upon a Change in Control, or (4) upon the Participant’s retirement (as such term may be defined in the applicable Award Agreement or a Participant Agreement, or, if no such definition exists, in accordance with the Company’s then current employment policies and guidelines), the vested portion of any Options held by such employee may be exercised earlier than six (6) months following the date of grant. The foregoing provision is intended to operate so that any income derived by a non-exempt employee in connection with the exercise or vesting of an Option will be exempt from his or her regular rate of pay. To the extent permitted and/or required for compliance with the Worker Economic Opportunity Act to ensure that any income derived by a non-exempt employee in connection with the exercise, vesting or issuance of any shares under any other Award will be exempt from such employee’s regular rate of pay, the provisions of this Section 21(e) will apply to all Awards.(f)Data Privacy. As a condition of receipt of any Award, each Participant explicitly and unambiguously consents to the collection, use, and transfer, in electronic or other form, of personal data as described in this Section 21(e) by and among, as applicable, the Company and its Affiliates for the exclusive purpose of implementing, administering, and managing the Plan and Awards and the Participant’s participation in the Plan. In furtherance of such implementation, administration, and management, the Company and its Affiliates may hold certain personal information about a Participant, including, but not limited to, the Participant’s name, home address, telephone number, date of birth, social security or insurance number or other identification number, salary, nationality, job title(s), information regarding any securities of the Company or any of its Affiliates, and details of all Awards (the “Data”). In addition to transferring the Data amongst themselves as necessary for the purpose of implementation, administration, and management of the Plan and Awards and the Participant’s participation in the Plan, the Company and its Affiliates may each transfer the Data to any third parties assisting the Company in the implementation, administration, and management of the Plan and Awards and the Participant’s participation in the Plan. Recipients of the Data may be located in the Participant’s country or elsewhere, and the Participant’s country and any given recipient’s country may have different data privacy laws and protections. By accepting an Award, each Participant authorizes such recipients to receive, possess, use, retain, and transfer the Data, in electronic or other form, for the purposes of assisting the Company in the implementation, administration, and management of the Plan and Awards and the Participant’s participation in the Plan, including any requisite transfer of such Data as may be required to a broker or other third party with whom the Company or the Participant may elect to deposit any shares of Stock. The Data related to a Participant will be held only as long as is necessary to implement, administer, and manage the Plan and Awards and the Participant’s participation in the Plan. A Participant may, at any time, view the Data held by the Company with respect except,to such Participant, request additional information about the storage and processing of the Data with respect to such Participant, recommend any necessary corrections to the Data with respect to the Participant, or refuse or withdraw the consents herein in writing, in any case without cost, by contacting his or her local human resources representative. The Company may cancel the Participant’s eligibility to participate in the Plan, and in the Committee’s discretion, the Participant may forfeit any outstanding Awards if the Participant refuses or withdraws the consents described herein. For more information on the consequences of refusal to consent or withdrawal of consent, Participants may contact their local human resources representative.(g)Participants Outside of the United States. The Committee may modify the terms of any Award under the Plan made to or held by a Participant who is then a resident, or is primarily employed or providing services, outside of the United States in any manner deemed by the Committee to be necessary or appropriate in order that such Award shall conform to laws, regulations, and customs of the country in which the Participant is then a resident or primarily employed or providing services, or so that the value and other benefits of the Award to the Participant, as affected by non-U.S. tax laws and other restrictions applicable as a result of the Participant’s residence, employment, or providing services abroad, shall be comparable to the value of such Award to a Participant who is a resident, or is primarily employed or providing services, in the United States. An Award may be modified under this Section 21(g) in a manner that is inconsistent with the express terms of the Plan, so long as such modifications will not contravene any applicable law or regulation or result in actual liability under Section 16(b) of the Exchange Act for the Participant whose Award is modified. Additionally, the Committee may adopt such procedures and sub-plans as are necessary or appropriate to permit participation in the Plan by Eligible Persons who are non-U.S. nationals or are primarily employed or providing services outside the United States.(h)Change in Time Commitment. In the event a Participant’s regular level of time commitment in the performance of his or her services for the Company or any of its Affiliates is reduced (for example, and without limitation, if the Participant is an employee of the Company and the employee has a change in status from a full-time employee to a part-time employee) after the date of grant of any Award to the Participant, the Committee has the right in its sole discretion to (i) make a corresponding reduction in the number of shares of Stock subject to any portion of such Award that is scheduled to vest or become payable after the date of such change in time commitment, and (ii) in lieu of or in combination with such a reduction, extend the vesting or payment schedule applicable to such Award. In the event of any such reduction, the Participant will have no right with respect to any portion of the Award that is so reduced or extended.(i)No Liability of Committee Members. Neither any member of the Committee nor any of the Committee’s permitted delegates shall be liable personally by reason of any contract or other instrument executed by such member or on his or her behalf in his or her capacity as a member of the Committee or for any mistake of judgment made in good faith, and the Company shall indemnify and hold harmless each member of the Committee and each other employee, officer, or director of the Company to whom any duty or power relating to the administration or interpretation of the Plan may be allocated or delegated, against all costs and expenses (including counsel fees) and liabilities (including sums paid in settlement of a claim) arising out of any act or omission to act in connection with the Plan, unless arising out of such Person’s own fraud or willful misconduct; provided, however, that approval of the Board shall be required for the payment of any amount in settlement of a claim against any such Person. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such Persons may be entitled under the Company’s shareholders, no amendmentcertificate or articles of incorporation or by-laws, each as may (i) increasebe amended from time to time, as a matter of law, or otherwise, or any power that the aggregate numberCompany may have to indemnify them or hold them harmless.(j)Payments Following Accidents or Illness. If the Committee shall find that any Person to whom any amount is payable under the Plan is unable to care for his or her affairs because of sharesillness or accident, or is a minor, or has died, then any payment due to such Person or his or her estate (unless a prior claim therefor has been made by a duly appointed legal representative) may, if the Committee so directs the Company, be paid to his or her spouse, child, relative, an institution maintaining or having custody of such Person, or any other Person deemed by the Committee to be a proper recipient on behalf of such Person otherwise entitled to payment. Any such payment shall be a complete discharge of the liability of the Committee and the Company therefor.(k)Governing Law. The Plan shall be governed by and construed in accordance with the internal laws of the Commonwealth of Pennsylvania without reference to the principles of conflicts of laws thereof.(l)Electronic Delivery. Any reference herein to a “written” agreement or document or “writing” will include any agreement or document delivered electronically or posted on the Company’s intranet (or other shared electronic medium controlled or authorized by the Company to which the Participant has access) to the extent permitted by applicable law.(m)Arbitration. All disputes and claims of any nature that a Participant (or such Participant’s transferee or estate) may have against the Company arising out of or in any way related to the Plan or any Award Agreement must be submitted solely and exclusively to binding arbitration in accordance with the then-current employment arbitration rules and procedures of the American Arbitration Association (AAA) to be held in Berks County, Pennsylvania. All information regarding the dispute or claim and arbitration proceedings, including any settlement, shall not be disclosed by the Participant or any arbitrator to any third party without the written consent of the Company, except with respect to judicial enforcement of any arbitration award. Any arbitration claim must be brought solely in the Participant’s (or such Participant’s transferee’s or estate’s) individual capacity and not as a claimant or class member (or similar capacity) in any purported multiple-claimant, class, collective, representative or similar proceeding, and the arbitrator may not permit joinder of any multiple claimants and their claims without the express written consent of the Company. Any arbitrator selected to adjudicate the claim must be knowledgeable in the industry standards and practices, and, by signing an Award Agreement, each Participant will be deemed to agree that any claims pursuant to the Plan or an Award Agreement is inherently a matter involving interstate commerce and thus, notwithstanding the choice of law provision included herein, the Federal Arbitration Act shall govern the interpretation and enforcement of this arbitration provision. The arbitrator shall not be permitted to be reservedaward any punitive or similar damages, but may award attorney’s fees and expenses to the prevailing party in any arbitration. Any decision by the Boardarbitrator shall be binding on all parties to the arbitration.(n)Statute of DirectorsLimitations. A Participant or any other person filing a claim for benefits under the Plan must file the claim within one (1) year of the date the Participant or other person knew or should have known of the facts giving rise to the claim. This one-year statute of limitations will apply in any forum where a Participant or any other person may file a claim and, unless the Company waives the time limits set forth above in its sole discretion, any claim not brought within the time periods specified shall be waived and forever barred.(o)Funding. No provision of the Plan shall require the Company, for the purpose of satisfying any obligations under the Plan, to purchase assets or place any assets in a trust or other entity to which contributions are made or otherwise to segregate any assets, nor shall the Company be required to maintain separate bank accounts, books, records, or other evidence of the existence of a segregated or separately maintained or administered fund for such purposes. Participants shall have no rights under the Plan other than as providedunsecured general creditors of the Company, except that insofar as they may have become entitled to payment of additional compensation by performance of services, they shall have the same rights as other employees and service providers under general law.(p)Reliance on Reports. Each member of the Committee and each member of the Board shall be fully justified in Section 4.2, (ii) materially changerelying, acting, or failing to act, and shall not be liable for having so relied, acted, or failed to act in good faith, upon any report made by the independent public accountant of the Companyand its Affiliates and upon any other information furnished in connection with the Plan benefits provided for herein, (iii) change the definitionby any Person or Persons other than such member.(q)Treatment of a Subsidiary, or (iv) materially change the eligibility requirements for Team Members. Any amendmentDividends and Dividend Equivalents on Unvested Awards. Notwithstanding any other provision of the Plan mustto the contrary, with respect to any Award that provides for or includes a right to dividends or dividend equivalents, if dividends are declared during the period that an equity Award is outstanding, such dividends (or dividend equivalents) shall be made in accordance withaccumulated but remain subject to vesting requirement(s) to the same extent as the applicable provisions ofAward and shall only be paid at the Code.Section 6.5 APPLICATION OF FUNDS. All funds receivedtime or times such vesting requirement(s) are satisfied. Except as otherwise determined by the Company by reasonCommittee, no interest will accrue or be paid on the amount of a purchase of shares hereunder mayany cash dividends withheld. No dividends or dividend equivalents shall be used for any corporate purpose.(r)Code Section 6.6 LEGAL RESTRICTIONS409A. The Company shall not be obligated to sell shares of Common Stock hereunder if counselAnything under the Plan or an Award Agreement to the Company determines that such sale would violate any applicable law or regulation.Section 6.7 NUMBER. Whenever used herein, singular words shall include the plural, and vice versa, as the context requires.Section 6.8 GOVERNING LAW. Exceptcontrary notwithstanding, to the extent preempted by Federal law,applicable, it is intended that any Awards under the Plan which provide for a “deferral of compensation” subject to Section 409A of the Code and rules, regulation and guidance issued thereunder (collectively, “Code Section 409A”) shall comply with the provisions of Code Section 409A and the Plan and all rights and obligations thereunderapplicable Awards shall be construed and enforcedapplied in accordancea manner consistent with this intent. In furtherance thereof, any amount constituting a “deferral of compensation” under Treasury Regulation Section 1.409A-1(b) that is payable to a Participant upon a Separation from Service of the Participant (within the meaning of Treasury Regulation Section 1.409A-1(h)) (other than due to the Participant’s death), occurring while the Participant shall be a “specified employee” (within the meaning of Treasury Regulation Section 1.409A-1(i)) of the Company or applicable Subsidiary, shall not be paid until the earlier of (x) the date that is six months following such Separation from Service or (y) the date of the Participant’s death following such Separation from Service.(s)Titles and Headings. The titles and headings of the sections in the Plan are for convenience of reference only, and in the event of any conflict, the text of the Plan, rather than such titles or headings, shall control.* * *Adopted by the Board of Directors: March 27, 2019Approved by the Shareholders: [__], 2019Termination Date: [__], 2029CUSTOMERS BANCORP, INC. AND SUBSIDIARIES APPENDIX C: RECONCILIATION OF GAAP TO NON-GAAP MEASURES (Dollars in thousands)Customers believes that the non-GAAP measurements disclosed within this document are useful for investors, regulators, management and others to evaluate our results of operations and financial condition relative to other financial institutions. Presentation of these non-GAAP financial measures is consistent with how Customers evaluates its performance internally and these non-GAAP financial measures are frequently used by securities analysts, investors, and other interested parties in the evaluation of companies in Customers' industry. These non-GAAP financial measures exclude from corresponding GAAP measures the impact of certain elements that we do not believe are representative of our financial results, which we believe enhance an overall understanding of our performance. Investors should consider our performance and financial condition as reported under GAAP and all other relevant information when assessing our performance or financial condition. Although non-GAAP financial measures are frequently used in the evaluation of a company, they have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of our results of operations or financial condition as reported under GAAP.The following tables present reconciliations of GAAP to non-GAAP measures disclosed within this document.Core Earnings - Customers Bancorp Twelve Months Ended December 31, 2018 Twelve Months Ended December 31, 2017 USD Per share USD Per share GAAP net income to common shareholders $ 57,236 $ 1.78 $ 64,378 $ 1.97 Reconciling items (after tax): Impairment loss on equity securities — — 12,934 0.40 Executive severance expense 1,421 0.04 — — Merger and acquisition related expenses 3,312 0.10 256 0.01 Losses on sale of multi-family loans 868 0.03 — — Losses (gains) on investment securities 15,646 0.49 (5,597 ) (0.17 ) Core earnings $ 78,483 $ 2.43 $ 71,971 $ 2.21 Net Interest Margin, Tax Equivalent - Customers Bancorp Twelve Months Ended December 31, 2018 2017 Q4 2018 Q3 2018 Q2 2018 Q1 2018 Q4 2017 GAAP net interest income $ 257,877 $ 267,343 $ 61,524 $ 64,001 $ 67,322 $ 65,031 $ 68,300 Tax-equivalent adjustment 685 645 171 172 171 171 245 Net interest income tax equivalent $ 258,562 $ 267,988 $ 61,695 $ 64,173 $ 67,493 $ 65,202 $ 68,545 Average total interest earning assets $ 10,011,799 $ 9,820,762 $ 9,518,120 $ 10,318,943 $ 10,329,530 $ 9,881,220 $ 9,758,987 Net interest margin, tax equivalent 2.58 % 2.73 % 2.57 % 2.47 % 2.62 % 2.67 % 2.79 % Tangible Common Equity to Tangible Assets December 31, 2018 December 31, 2017 GAAP - Total shareholders' equity $ 956,816 $ 920,964 Reconciling items: Preferred stock (217,471 ) (217,471 ) Goodwill and other intangibles (16,499 ) (16,295 ) Tangible common equity $ 722,846 $ 687,198 Total assets $ 9,833,425 $ 9,839,555 Reconciling items: Goodwill and other intangibles (16,499 ) (16,295 ) Tangible assets $ 9,816,926 $ 9,823,260 Tangible common equity to tangible assets 7.36 % 7.00 % Tangible Book Value per Common Share December 31, 2018 GAAP - Total shareholders' equity $ 956,816 Reconciling items: Preferred stock (217,471 ) Goodwill & other intangibles (16,499 ) Tangible common equity $ 722,846 Common shares outstanding 31,003,028 Tangible book value per common share $ 23.32 
Admission Ticket IMPORTANT ANNUAL MEETING INFORMATIONElectronic Voting InstructionsAvailable 24 hours a day, 7 days a week!Instead of mailing your proxy, you may choose one of the votingmethods outlined below to vote your proxy.VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR.Proxies submitted by the internet or telephone must be received by 1:00 a.m., Eastern Time, on May 30, 2019.
Vote by internet • Go to www.envisionreports.com/CUBI • Or scan the QR code with your smartphone • Follow the steps outlined on the secure websiteVote by telephone• Call toll free 1-800-652-VOTE (8683) within the USA, US territories &Canada on a touch tone telephone• Follow the instructions provided by the recorded messageUsing a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas.☒ Annual Shareholder Meeting Proxy Card ( )IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.AProposals — The Board of Directors recommends a vote FOR all the nominees listed in Proposal 1, and FOR Proposals 2, 3, 4 and 5.1. Election of Directors: For Withhold For Withhold For Withhold 01 - Andrea Allon ☐ ☐ 02 - Rick B. Burkey ☐ ☐ 03 - Daniel K. Rothermel ☐ ☐ For Against Abstain 2. To ratify the appointment of Deloitte & Touche LLP as independent registered public accounting firm of the Company for the fiscal year ending December 31, 2019 ☐ ☐ ☐ 3. To approve a non-binding advisory resolution on executive officer compensation ☐ ☐ ☐ 4. To approve an amendment to the Company’s Amended and Restated Articles of Incorporation to adopt a majority voting standard in uncontested elections of directors ☐ ☐ ☐ 5. To approve the 2019 Stock Incentive Plan ☐ ☐ ☐ BNon-Voting ItemsChange of Address — Please print your new address below.Comments — Please print your comments below.Meeting Attendance Mark the box to the rightif you plan to attend theAnnual Meeting.☐CAuthorized Signatures — This section must be completed for your vote to be counted. — Date and Sign BelowPlease sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title.Date (mm/dd/yyyy) — Please print date below. Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box. / /2019 Annual Meeting Admission Ticket2019 Annual Meeting ofCustomers Bancorp, Inc. Shareholders30 May, 2019 at 9:00 am. Eastern TimeDoubleTree by Hilton Reading701 Penn Street, Reading, PA 19601Upon arrival, please present this admission ticketand photo identification at the registration desk.Directions to the Customers Bancorp, Inc. 2019 Annual Meeting of Shareholders can be found athttp://doubletree3.hilton.com/en/ hotels/pennsylvania/doubletree-by-hilton-hotel-reading-RDGDTDT/index. htmlby clicking on "Maps & Directions"IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.Proxy — Customers Bancorp, Inc.2019 Annual Meeting of ShareholdersProxy Solicited by Board of Directors for Annual Meeting — May 30, 2019Jay S. Sidhu and Michael A. DeTommaso, or any of them, each with the domestic internal lawpower of substitution, are hereby authorized to represent and vote the shares of the Commonwealthundersigned, with all the powers which the undersigned would possess if personally present, at the Annual Meeting of Pennsylvania.Shareholders of Customers Bancorp, Inc. to be held on May 30, 2019 or at any postponement or adjournment thereof.Shares represented by this proxy, when properly executed, will be voted as directed by the shareholder. If no such directions are indicated, the shares represented by this proxy will be voted FOR each of the nominees recommended by the Board of Directors and FOR Proposals 2, 3, 4 and 5.In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting.