| • | | Board Elections. To be elected to serve until our 2009 annual meeting and until his or her successor is elected and qualifies, a director nominee (see page 5) must obtain the affirmative vote of a majority of the total votes cast at the Meeting for and against such nominee. Please see page 10 for a discussion of our majority voting provisions. Stockholders may not cumulate their votes in director elections. Abstentions and broker non-votes are not considered votes cast andbut an abstention is not counted as a vote cast. An abstention on Proposal 3 will have the same effect as a vote against. An abstention has no effect on the vote on any other proposal.What is the effect of a broker non-vote?
If a broker casts a vote on Proposal 4 (ratification of the appointment of KPMG LLP as our independent registered public accounting firm), the vote will be included in determining whether a quorum exists for holding the Annual Meeting. The broker does not have authority to vote on the other proposals absent directions from the beneficial owner. As a result, if the beneficial owner does not vote on Proposals 1 or 2, so that there is a “broker non-vote” on those items, the broker non-votes do not count as votes cast for those proposals. Thus, a broker non-vote will not impact the following: | ■ | our ability to obtain a quorum (unless a broker does not cast a vote on Proposal 4 as described in the preceding paragraph), |
| ■ | the outcome with respect to the election of directors (Proposal 1), |
| ■ | the outcome of this matter. | | | • | | Charter Amendment to Increase Authorized Stock. To become effective, the proposed charter amendment must be approved by the affirmative vote ofon a majority of the total number of shares of common stock outstanding and entitled to vote. Abstentions and broker non-votes will have the same effect as a vote against this proposal. | | | • | | Ratify the Appointment of KPMG LLP. Approval of this proposal that requires the affirmative vote of a majority of the total votes cast at the Meeting. Abstentions and broker non-votes are not considered votes cast and will have no effect on the outcome of this matter. | | | • | | Stockholder Proposal. If this proposal is presented at the Meeting, approval would require the affirmative vote of a majority of the total votes cast at the Meeting. Abstentions(Proposals 2 and broker non-votes are not considered votes cast and will have no effect on the outcome of this matter.4). |
A broker non-vote with respect to Proposal 3 will have the same effect as a vote against.
Who will count the votes?
Representatives of our proxy tabulator, Broadridge, will tabulate the votes and act as inspectors of election for the Annual Meeting.Where can I find the voting results of the Annual Meeting?
The preliminary voting results will be announced at the Annual Meeting. The final voting results will be tallied by the inspectors of election and disclosed by the Company in a Current Report on Form 8-K filed with the SEC within four business days following the Annual Meeting. Is my vote confidential? All votes, however cast, are confidential.
Yes. The vote of each stockholder is held in confidence from Price Group’s directors, officers, and employees. We do not know how any person or entity voted a proxyvotes unless this information is voluntarily disclosed. What is “householding” and how does it affect me? Solicitation
Some banks, brokers, and other nominees engage in the practice of Proxies“householding” our proxy statements and annual reports. This means that only one copy of our proxy statement and annual report to stockholders may be sent to multiple stockholders in your household unless you request otherwise. We will promptly deliver a separate copy of our 2017 Annual Report to Stockholders or this proxy statement to you if you share an address subject to householding. Please contact our chief legal officer and corporate secretary at 100 East Pratt Street, Mail Code BA-1360, Baltimore, MD 21202, or by telephone at 410-345-2628. Please contact your bank, broker, or other nominees if you wish to receive individual copies of our Proxy Materials in the future. Please contact your bank, broker, or other intermediary, or our chief legal officer and corporate secretary at 100 East Pratt Street, Mail Code BA-1360, Baltimore, MD 21202, or by telephone at 410-345-2628, if members of your household are currently receiving individual copies and you would like to receive a single household copy for future meetings. Can I choose to receive the proxy statement and the 2017 Annual Report to Stockholders on the Internet instead of receiving them by mail?
Yes. If you are a registered stockholder or beneficial owner, you can elect to receive future annual reports and proxy statements on the Internet only and not receive copies in the mail by visiting proxyvote.com. You will need to have your proxy card (or the Notice or the email message you receive with instructions on how to vote) in hand when you access the website. Your request for electronic transmission will remain in effect for all future annual reports and proxy statements, unless withdrawn. Withdrawal procedures also are at this website. The 2017 Annual Report to Stockholders is being mailed to stockholders in advance of, or together with, this proxy statement. If you hold Price Group shares in your own name and received more than one copy of the 2017 Annual Report to Stockholders at your address and wish to reduce the number of reports you receive and save the Company the cost of producing and mailing these reports, you should contact Price Group’s mailing agent Broadridge, at 1-866-540-7095 to discontinue the mailing of reports on the accounts you select. At least one account at your address must continue to receive an annual report, unless you elect to view future annual reports over the Internet. The mailing of dividend checks, dividend reinvestment statements, proxy materials, and special notices will not be affected by your election to discontinue duplicate mailings of annual reports. Registered stockholders may resume the mailing of an annual report to an account by calling Broadridge at 1-866-540-7095. If you TABLE OF CONTENTS own shares through a broker, bank, or other nominee and received more than one 2017 Annual Report to Stockholders, please contact the holder of record to eliminate duplicate mailings. Who pays the cost of this proxy solicitation?
We will pay for the costs of preparing materials for the Annual Meeting and soliciting proxies. We expect that solicitation will occur primarily through the mail, but proxies also may be solicited personally or by telephone, telegram,email, letter, or facsimile. To assist in soliciting proxies, we have retained Georgeson Inc.Morrow Sodali LLC, 470 West Avenue, Stamford, CT 06902 for a fee of $6,000$7,000, plus reimbursement of out-of-pocket expenses. We ask securities brokers, custodians,banks, and other nominees and fiduciaries to forward materials for the Annual Meeting to our beneficial stockholders as of the record date,Record Date, and we will reimburse them for the reasonable out-of-pocket expenses they incur. Directors, officers, and employees of Price Group and our subsidiaries may solicit proxies personally or by other means, but will not receive additional compensation. Stockholders are requested to return their proxies without delay.AttendingCan I find additional information on the MeetingCompany’s website?
We invite all stockholders, especially those who owned shares as
Yes. Although the information contained on our website is not part of the record date, to attend the Meeting. If you are a “registered holder” (also known as a “record holder”) of our common stock, which means that your shares are represented by certificates or ledger entries in your own name directly registered with our transfer agent, Wells Fargo Bank, N.A., you must bring identification with you to the Meeting to allow us to verify your ownership. If your common stock is held in “street name,” which means that the shares are held for your benefit in the name of a broker, bank or other intermediary,Proxy Materials, you will need to bring a brokerage account statement or letter from your broker, bank orfind information about the Company and our corporate governance practices at trow.client.shareholder.com/corporate-governance.cfm. Our website contains information about our Board, Board committees, Corporate Governance Guidelines, and other intermediary reflecting stock ownership in order to be admitted to the Meeting.matters. Voting and Revocation
Registered HoldersProposal 1
If you are a registered holder as of the record date, you will be able to vote your proxy in three ways:
| 1) | | by mail- complete the enclosed proxy card and return it in the postage-paid envelope provided; | | | 2) | | by telephone- call 1-800-560-1965 and then follow the voice instructions. Please have your proxy card and the last four digits of your social security number or tax identification number available when you call; or | | | 3) | | by using the Internet- as prompted by the menu found at http://www.eproxy.com/trow/, follow the instructions to obtain your records and create an electronic ballot. Please have your proxy card and the last four digits of your social security number or tax identification number available when you access this voting site. |
Our counsel has advised us that these three voting methods are permitted under the corporate law of Maryland, the state in which we are incorporated.
The BoardElection of Directors has selected Edward C. Bernard, James A.C. Kennedy, and Brian C. Rogers to act as proxies. When you sign and return your proxy card to Wells Fargo Bank, N.A., our transfer agent and proxy tabulator, or vote your shares using the telephone or Internet, you appoint Messrs. Bernard, Kennedy and Rogers as your representatives at the Meeting. You may also attend the Meeting and vote in person.
Regardless of the voting method you use, you may revoke your proxy and cast a new vote at the Meeting, if we are able to verify that you are a registered holder of our common stock, by filing a notice revoking the prior proxy and then voting in person. You may also change your vote before the Meeting by delivering a letter revoking the proxy to our Secretary (Barbara A. Van Horn, T. Rowe Price Group, Inc., 100 East Pratt Street, Mail Code BA-1099, Baltimore, MD 21202) or by properly submitting another proxy bearing a later date. If you vote by telephone or access the Internet voting site, you may also revoke your proxy by re-voting using the same procedure no later than noon Central Time on Wednesday, April 9, 2008. The last proxy properly submitted by you before voting is closed at the Meeting will be counted.
Shares Held in Street Name
If you have selected a broker, bank, or other intermediary to hold your shares rather than having them directly registered with our transfer agent, Wells Fargo Bank, N.A., you still will receive a full Meeting package including a proxy card to vote your shares. As a beneficial owner of our stock, you will receive instructions from your broker, bank, or other intermediary on the procedure to follow to vote your shares. Your brokerage firm also may permit you to vote your proxy by telephone or the Internet. If you do not vote your proxy, your brokerage firm has the authority under applicable stock market rules to vote those shares for or against “routine” matters at its discretion. Where a matter is not considered routine, shares held by your broker will not be voted absent specific instruction from you, which means your shares may go unvoted and not affect the outcome if you do not specify a vote.Please be aware that beneficial owners of shares held by brokers, banks or other intermediaries may not vote their shares in person at the Meeting unless they first obtain a written authorization to do so from their broker, bank, or other intermediary and can only change or revoke previously issued voting instructions pursuant to instructions provided by their broker, bank or other intermediary.Since the ownership of shares held in brokerage accounts cannot be verified at the Meeting, please allow sufficient time for revised voting instructions to reach your intermediary and for your proxy to be re-voted before the Meeting.We urge you to vote by following the instructions of your broker, bank, or other intermediary.
4
PROPOSAL 1
ELECTION OF DIRECTORS
In this proxy statement, ninetwelve director nominees all of whom are incumbents, are presented pursuant to the recommendation of the Nominating and Corporate Governance Committee. All have been nominated by the Board of Directors to hold office until the next annual meeting of stockholders and until their respective successors are elected and qualify. RECOMMENDATION OF THE BOARD OF DIRECTORS; VOTE REQUIRED Recommendation of the Board of Directors; Vote Required
We recommend that you vote FOR all the nominees under Proposal 1.1. All properly executed proxies received in time to be tabulated for the Annual Meeting will be voted FOR the election of the nominees named below unless otherwise specified. Shares held by a bank, broker, or other nominee will not be voted on this Proposal absent specific instruction from you, which means your shares may go unvoted and not affect the outcome if you do not specify a vote. If any nominee becomes unable or unwilling to serve between now and the Annual Meeting, proxies will be votedFORthe election of a replacement recommended by the Nominating and Corporate Governance Committee and approved by the Board of Directors. MAJORITY VOTING
We have adopted a majority voting standard for the election of our directors. Under our current By-Laws, in an uncontested election, a nominee will not be elected unless he or she receives more “FOR” votes than “AGAINST” votes. Under Maryland law, any incumbent director not so elected would continue in office as a “holdover” director until removed or replaced. As a result, the By-Laws also provide that any director who fails to obtain the required vote in an uncontested election must submit his or her resignation to the Board. The Nominees; Independence Determinations The following are brief biographical sketchesBoard must decide whether to accept or decline the resignation, or decline the resignation with conditions, taking into consideration the Nominating and Corporate Governance Committee’s recommendation after consideration of all factors deemed relevant, within 90 days after the nine nominees. Unless otherwise noted, all havevote has been officers of the organizations named below or of affiliated organizations as their principal occupations for more than five years. Nominees who are employees of Price Group also may serve as directors or officers of Price Associates or T. Rowe Price International, each of which is an investment advisercertified. Plurality voting will apply to certain of the Price funds.contested elections.NON-EMPLOYEE DIRECTOR INDEPENDENCE DETERMINATIONS
The Board of Directors has considered the independence of current Board members and nominees not employed by theT. Rowe Price organization and has concluded that Messrs. Brady, Broaddus, Hebb, and Taylor, Dr. Sommer, and Ms. Whittemore qualifyeach such director other than Mr. Rogers qualifies as an independent directorsdirector within the meaning of the applicable rules of Thethe NASDAQ Stock Market LLC.Global Select Market. To our knowledge, there are no family relationships among our directors or executive officers. A brother-in-law TABLE OF CONTENTS In making its determination of Mr. Hebbindependence, the Board applied guidelines that it has beenadopted concluding that the following relationships should not be considered material relationships that would impair a non-executive employee of Price Associates since 1989. director’s independence: | ■ | relationships where a director or an immediate family member of a director purchases or acquires investment services, investment securities, or similar products and services from the Company or one of its sponsored mutual funds so long as the relationship is on terms consistent with those generally available to other persons doing business with the Company, its subsidiaries, or its sponsored investment products; and |
| ■ | relationships where a corporation, partnership, or other entity with respect to which a director or an immediate family member of a director is an officer, director, employee, partner, or member purchases services from the Company, including investment management or defined contribution retirement plan services, on terms consistent with those generally available to other entities doing business with the Company or its subsidiaries. |
The Board consideredbelieves that this relationshippolicy sets an appropriate standard for dealing with ordinary course of business relationships that may arise from time to time. THE NOMINEES AND THEIR QUALIFICATIONS, SKILLS, AND EXPERIENCE
In considering the overall qualifications of our nominees and their contributions to our Board, and in assessing Mr. Hebb’s independence. Thedetermining our need for additional members of the Board, also consideredwe seek to create a Board consisting of members with a diverse set of experiences and attributes who will be meaningfully involved in our Board activities and will facilitate a transparent and collaborative atmosphere and culture. Our Board members generally develop a long-term association with the relationshipsCompany, which we believe facilitates a deeper knowledge of Mr. Hebbour business and Ms. Whittemoreits strategies, opportunities, risks, and challenges. At the same time, we periodically look for additions to entities which use Price Associatesour Board to enhance our capabilities and bring new perspectives and ideas to our Board. We will consider Board members with diverse capabilities, and we generally look for investment managementBoard members with capabilities in one or more of the following areas: accounting and 401(k) administrativefinancial reporting, financial services and money management, investments, made by company officersgeneral economics and industry oversight, legal, government affairs and corporate governance, general management, international, marketing and distribution, and technology and facilities management. Each of our directors provides significant individual attributes important to the overall makeup and functioning of our Board, which are described in entities affiliated with Mr. Hebb.the biographical summaries provided below: TABLE OF CONTENTS The Board of Directors recommends that you voteFORall of the following nominees:  Mark S. Bartlett
Retired Managing Partner
Ernst & Young
Age 67 | Mr. Bartlett has been an independent director of Price Group since 2013 and serves as chairman of the Audit Committee and as a member of the Executive Compensation and Management Development Committee. Until retiring in 2012, Mr. Bartlett was a partner at Ernst & Young, serving as managing partner of the firm’s Baltimore office and senior client service partner for the mid-Atlantic region. Mr. Bartlett began his career at Ernst & Young in 1972 and has extensive experience in financial services, as well as other industries.
Mr. Bartlett received his B.S. from West Virginia University and attended the Executive Program at the Kellogg School of Business at Northwestern University. He also earned the designation of certified public accountant.
Mr. Bartlett is a member of the board of directors and is the chairman of the audit committee of Rexnord Corporation and Williams Scotsman; he also serves on the nominating and corporate governance committee of Williams Scotsman. He is also a member of the board of directors and a member of the audit committee of FTI Consulting, Inc.
Mr. Bartlett offers the Board significant accounting and financial reporting experience as well as expertise in the accounting-related rules and regulations of the Securities and Exchange Commission. He has extensive finance knowledge, with a broad range of experience in financing alternatives including the sale of securities, debt offerings, and syndications. | | | | |  Edward C. Bernard
Vice Chairman
T. Rowe Price Group, Inc.
Age 62 | Mr. Bernard has been a director of Price Group since 1999, the vice chairman since 2007, a vice president since 1989, and an employee since 1988. He has overseen the Company’s marketing, distribution, client service, information technology, and communications activities since 2006 and serves on the Management and Management Compensation Committees. Mr. Bernard is chairman of the board of all of the sponsored T. Rowe Price mutual funds and trusts (Price funds). Mr. Bernard has 29 years of experience in the investment management industry, all of which have been with T. Rowe Price. Mr. Bernard recently announced his intention to retire from T. Rowe Price on December 31, 2018, marking 30 years of outstanding service to our Company and our clients. Upon reelection at the 2018 Annual Meeting, he will remain a member of the Board of Directors through the April 2019 Annual Meeting of Stockholders, but will not stand for reelection to the Board in 2019.
Mr. Bernard received his B.A. from Brown University and an M.B.A. from New York University.
In addition to his responsibilities at T. Rowe Price, Mr. Bernard serves as a member of the board of governors and a member of the executive committee of the Investment Company Institute, the national trade association for the mutual fund industry.
Mr. Bernard provides the Board with direct access to the person responsible for all of our marketing, distribution, and client service activities, as well as information technology and communications. He also serves as the primary liaison to the Price funds’ board of directors. |
Edward C. Bernard, age 52, has been a director of Price Group since 1999, the vice chairman since 2007, a vice president since 1989, the director of the company’s distribution, client service, technology, and communications activities since 2006, and an employee since 1988. He is the chairman of the board of all of the 57 Price fund companies on which he serves as a director or trustee.
8 James T. BradyROWE PRICE GROUP
, age 67, has been an independent director of Price Group since 2003, and is the chairman of the Audit Committee and a member of the Executive Compensation Committee. He has been the Mid-Atlantic managing director of Ballantrae International Ltd., a management consulting firm, since 1999. Mr. Brady is a director of NexCen Brands, Inc., an owner, manager and developer of intellectual property; Constellation Energy Group, a diversified energy company; and McCormick & Company, Inc., a manufacturer, marketer, and distributor of spices and seasonings. J. Alfred Broaddus, Jr., age 68, has been an independent director of Price Group since 2004, and is a member of the Audit and Executive Compensation Committees. He is the immediate past president of the Federal Reserve Bank of Richmond from which he retired in August 2004. Mr. Broaddus also is a director of Albemarle Corporation, a manufacturer of specialty chemicals; Markel Corporation, a specialty insurer; and Owens & Minor, Inc., a distributor of medical and surgical supplies.
Donald B. Hebb, Jr.,age 65, has been an independent director of Price Group since 1999, is the chairman of the Executive Compensation Committee, and serves on the Nominating and Corporate Governance Committee. Mr. Hebb is the Chairman and, from 1993 until 2007, was the managing general partner of ABS Capital Partners, a private equity firm.TABLE OF CONTENTS | |  Mary K. Bush
Chairman
Bush International, LLC
Age 69 | Ms. Bush has been an independent director of Price Group since 2012 and serves on the Executive Compensation and Management Development Committee and the Nominating and Corporate Governance Committee. She has served as the chairman of Bush International, LLC, an advisor to U.S. corporations and foreign governments on international capital markets and strategic business and economic matters, since 1991. Earlier in her career, she managed global banking and corporate finance relationships at New York money center banks including Citibank, Banker’s Trust, and Chase.
Ms. Bush holds an M.B.A. from the University of Chicago and a B.A. in economics and political science from Fisk University.
Ms. Bush is a member of the board of directors, risk oversight committee, and nominating and corporate governance committee of Discover Financial Services; a member of the board of directors, audit committee and retirement plan committee of ManTech International Corporation; a member of the board of directors, audit committee, and compensation policy committee of Marriott International; and a member of the board of directors and chairman of the audit committee for Bloom Energy. Ms. Bush also was a director of the Pioneer Family of Mutual Funds from 1997 to 2012 and UAL Corporation from 2006 to 2010.
Ms. Bush brings to our Board extensive financial and governmental affairs experience, her knowledge of corporate governance and financial oversight gained from her membership on the boards of other public companies, knowledge of public policy matters, and her significant experience providing strategic advisory services in the financial and international arenas. | | | | | 
H. Lawrence Culp, Jr.
Senior Lecturer
Harvard Business School
Age 54 | Mr. Culp has been an independent director of Price Group since 2015 and serves on the Executive Compensation and Management Development Committee and the Nominating and Corporate Governance Committee. Mr. Culp is a senior lecturer at Harvard Business School, focusing on leadership, strategy, and general management, and a senior advisor at Bain Capital Private Equity. Prior to his retirement, Mr. Culp joined Danaher Corporation in 1990 and subsequently served as president of multiple operating businesses prior to becoming chief operating officer in 2000; he served as president and chief executive officer of Danaher Corporation from 2001 to 2014.
Mr. Culp holds a B.A. in economics from Washington College and an M.B.A. from Harvard Business School.
Mr. Culp currently serves as the chairman of the board of visitors and governors of Washington College and as a member of the board of trustees of Wake Forest University. Formerly, Mr. Culp served as the chairman of the board of trustees for Potomac School and he served as a nonexecutive director at GlaxoSmithKline PLC.
Mr. Culp brings to the Board valuable leadership and management experience gained while serving as president and chief executive officer of Danaher Corporation, a publicly traded, multinational corporation. He also contributes substantial strategic leadership, operational, and financial experience to the Board. |
James A.C. Kennedy, age 54, has been a director of Price Group since 1996, the chief executive officer and president since 2007, the director of the equity division of Price Associates from 1997 through 2006, the director of equity research from 1987 through 1999, a vice president since 1981, and an employee since 1978. He is a member of the Executive Committee. Mr. Kennedy served as a director or trustee of 23 of the Price fund companies until April 2006.
PROXY STATEMENT Brian C. Rogers2018, age 52, has been a director of Price Group since 1997, the chairman of the board since 2007, the chief investment officer since 2004, a vice president since 1985, and an employee since 1982. He is a member of the Executive Committee. Mr. Rogers serves as a director or trustee of 26 Price fund companies and is the president of three Price fund companies. 9
Dr. Alfred Sommer, age 65, has been an independent director of Price Group since 2003 and serves on the Executive Compensation and Nominating and Corporate Governance Committees. From 1990 to September 2005, he was the dean of the Johns Hopkins Bloomberg School of Public Health, where he is now dean emeritus, and continues as a professor of Epidemiology, Ophthalmology, and International Health. Dr. Sommer also is a director of Becton, Dickinson and Company, a medical technology company.
TABLE OF CONTENTS | |  Dr. Freeman A. Hrabowski, III
President
University of Maryland,
Baltimore County
Age 67 | Dr. Hrabowski has been an independent director of Price Group since 2013 and serves on the Audit Committee and Executive Compensation and Management Development Committee. He has served as president of the University of Maryland, Baltimore County (UMBC), since 1992. His research and publications focus on science and math education, with special emphasis on minority participation and performance. He is also a leading advocate for greater diversity in higher education. He serves as a consultant to the National Science Foundation, the National Institutes of Health, the National Academies, and universities and school systems nationally.
Dr. Hrabowski holds a Ph.D. in higher education administration and statistics and an M.A. in mathematics from the University of Illinois at Urbana-Champaign. He also holds a B.A. in mathematics from Hampton Institute (now Hampton University).
Dr. Hrabowski serves as director and member of the corporate and governance committee of McCormick & Company, Inc. Dr. Hrabowski also served on the board of Constellation Energy Group, Inc., until 2012.
Dr. Hrabowski brings to our Board valuable strategic and management leadership experience from his role as president of UMBC, as well as his extensive knowledge and dedication to greater education and workforce development. He also contributes corporate governance oversight from his experience serving as a director on other public-company boards. | | | | |  Robert F. MacLellan
Nonexecutive Chairman
Northleaf Capital Partners
Age 63 | Mr. MacLellan has been an independent director of Price Group since 2010 and serves as chairman of the Executive Compensation and Management Development Committee and a member of the Audit Committee. Since November 2009, Mr. MacLellan has been the nonexecutive chairman of Northleaf Capital Partners, an independent global private markets fund manager and advisor. From 2003 to November 2009, Mr. MacLellan served as chief investment officer of TD Bank Financial Group (TDBFG), where he was responsible for overseeing the management of investments for its Employee Pension Fund, The Toronto-Dominion Bank, TD Mutual Funds, and TD Capital Group. Earlier in his career, Mr. MacLellan was managing director of Lancaster Financial Holdings, a merchant banking group acquired by TDBFG in March 1995. Prior to that, he was vice president and director at McLeod Young Weir Limited (Scotia McLeod) and a member of the corporate finance department responsible for a large number of corporate underwritings and financial advisory assignments.
Mr. MacLellan holds a B.Comm. from Carleton University and an M.B.A. from Harvard Business School, and is a chartered accountant.
Mr. MacLellan serves as the chairman of the board of Yellow Media, Inc., a public company based in Montreal.
Mr. MacLellan brings substantial experience and perspective to the Board with respect to the financial services industry, particularly his expertise with respect to investment-related matters, including those relating to the mutual fund industry and the institutional management of investment funds, based on his tenure as chief investment officer of a major financial institution. He also brings an international perspective to the Board as well as significant accounting and financial reporting experience. |
10 Dwight S. TaylorT. ROWE PRICE GROUP
, age 63, has been an independent director of Price Group since 2004, and is a member of the Audit and Executive Compensation Committees. Since 1999, he has been the president of COPT Development & Construction Services, LLC, a commercial real estate developer which is a subsidiary of Corporate Office Properties Trust. Mr. Taylor also is a director of MICROS Systems, Inc., a provider of information technology for the hospitality and retail industry. TABLE OF CONTENTS | |  Brian C. Rogers
Nonexecutive Chairman
T. Rowe Price Group, Inc.
Age 62 | Mr. Rogers retired as an executive of T. Rowe Price on March 31, 2017. He remains on the Board, serving as nonexecutive chair and as a member of the Executive Committee. He served as chairman from 2007 to 2017 and as chief investment officer from 2004 to 2017. He has been a director of Price Group since 1997. Mr. Rogers has held a variety of other senior leadership roles and has been involved with investment management with T. Rowe Price since joining the Company in 1982. Prior to joining the Company, Mr. Rogers was employed by Bankers Trust Company.
Mr. Rogers earned an A.B. from Harvard University and an M.B.A. from Harvard Business School. Mr. Rogers has also earned his chartered financial analyst and chartered investment counselor designations.
Mr. Rogers is a member of the board of directors of United Technologies Corporation. He also serves on the board of directors of Harvard Management Company and as a member of the Board of Trustees of The Brookings Institution.
Mr. Rogers brings to the Board insight into the critical investment component of our business based on his 38-year career in the investment management industry, which includes nearly 35 years with the Company. | | | | |  Olympia J. Snowe
Chair and Chief
Executive Officer
Olympia Snowe, LLC
Age 71 | Ms. Snowe has been an independent director of Price Group since June 2013 and serves as a member of the Executive Compensation and Management Development Committee and as chair of the Nominating and Corporate Governance Committee. She is chair and chief executive officer of Olympia Snowe, LLC, a policy and communications consulting firm, and a senior fellow at the Bipartisan Policy Center. Ms. Snowe served in the U.S. Senate for the State of Maine from 1995 to 2013 and as a member of the U.S. House of Representatives from 1979 to 1995. While in the U.S. Senate, she served as chair and was the ranking member of the Senate Committee on Small Business and Entrepreneurship and served on the Senate Finance Committee. She also served as chair of the Subcommittee on Seapower for the Senate Armed Services Committee.
Ms. Snowe earned a B.S. from the University of Maine and has received honorary degrees from many colleges and universities.
Ms. Snowe is a member of the board of directors, audit committee, and medical affairs committee of Aetna Inc., a diversified health care benefits company. Ms. Snowe is also a member of the board of directors of Synchrony Financial and serves as a member of the audit committee and chairman of the nominating and corporate governance committee, as well as a director on the board of Synchrony Bank and serves on the Synchrony Bank audit committee.
Ms. Snowe brings a broad range of valuable leadership and public policy experience to the Board. She also has extensive experience with complex issues relevant to the Company’s business, including budget and fiscal responsibility; economic, tax and regulatory policy; education; retirement and aging; women’s issues; health care; foreign affairs; and national security. |
TABLE OF CONTENTS | | | |  William J. Stromberg
President and Chief
Executive Officer
T. Rowe Price Group, Inc.
Age 58 | Mr. Stromberg is president and chief executive officer of the Company and is a member of its Board of Directors. He is the chairman of the Company’s Management and Management Compensation Committees. Mr. Stromberg served as the head of Equity from 2009 to 2015 and the head of U.S. Equity from 2006 to 2009. He also served as a director of Equity research from 1996 to 2006, as a portfolio manager of the Capital Opportunity Fund (2000 to 2007) and the Dividend Growth Fund (1992 to 2000), and as an Equity investment analyst from 1987 to 1992. Prior to joining the firm in 1987, Mr. Stromberg was employed by Westinghouse Defense as a systems engineer.
Mr. Stromberg earned a B.A. from Johns Hopkins University and an M.B.A. from the Tuck School of Business at Dartmouth. Mr. Stromberg also has earned the chartered financial analyst designation.
He currently serves on the Johns Hopkins University board of trustees and the Hopkins Whiting School of Engineering advisory council. Mr. Stromberg previously served nine years on the Catholic Charities board of trustees, with two years as board president.
Mr. Stromberg brings to the Board insight into the critical investment component of our business based on the leadership roles he has held in the Equity Division of Price Group and his 30-year career with the Company. | | |  Richard R. Verma
Vice Chairman
and Partner
The Asia Group
Age 49 | Mr. Verma has been nominated for addition to the Board as an independent director at the Annual Meeting. Following his election to the Board, he will serve as a member of the Executive Compensation and Management Development Committee and the Audit Committee.
Mr. Verma is vice chairman and partner at The Asia Group. He previously served as United States ambassador to India from 2014 to 2017. Prior to his service as U.S. ambassador, Mr. Verma joined Steptoe & Johnson LLP, a global law firm, in 1998 and held many roles, including partner and senior counselor from 2011 to 2014. Mr. Verma also served as assistant secretary of state for legislative affairs from 2009 to 2011 and senior national security advisor to the Senate majority leader from 2004 to 2007. Mr. Verma is a U.S. Air Force veteran who, during active duty, served as judge advocate.
Mr. Verma holds a B.S. degree in industrial engineering from Lehigh University, an L.L.M. in international law from Georgetown University Law Center, and a J.D. from American University’s Washington College of Law.
Mr. Verma brings substantial experience and a global perspective to the Board with respect to public policy, business, foreign and legislative affairs, strategic leadership, and corporate social responsibility. |
TABLE OF CONTENTS | |  Sandra S. Wijnberg
Executive Advisor
Aquiline Capital Partners
Age 61 | Ms. Wijnberg has been an independent director of Price Group since 2016 and is a member of the Executive Compensation and Management Development Committee and the Audit Committee.
Ms. Wijnberg is an executive advisor of Aquiline Capital Partners, a private-equity investment firm specializing in the financial services sector. From 2007 to 2014, she was a partner and chief administrative officer of Aquiline Holdings LLC, a registered investment advisor and the holding company for Aquiline Capital Partners. Previously, Ms. Wijnberg served as the senior vice president and chief financial officer of Marsh & McLennan Companies, Inc., and was treasurer and interim chief financial officer of YUM! Brands, Inc. Prior to that she held financial positions with PepsiCo, Inc., and worked in investment banking at Morgan Stanley. In addition, from 2014 through 2015, Ms. Wijnberg was deputy head of mission for the Office of the Quartet.
Ms. Wijnberg currently serves on the board of directors and is a member of the audit committee of Automatic Data Processing, Inc., and from 2003 to 2016 served on the board of directors of Tyco International, PLC, and from 2007 to 2009 served on the board of directors of TE Connectivity, Inc. She is also a director of Seeds of Peace, the Alliance for Young Artists & Writers, Spark MicroGrants, and the John Simon Guggenheim Memorial Foundation.
Ms. Wijnberg holds a B.A. in English literature from the University of California, Los Angeles, and an M.B.A. from University of Southern California’s Marshall School of Business, for which she is a member of the board of leaders.
Ms. Wijnberg brings to our Board a global perspective along with substantial financials sector, corporate finance, and management experience based on her roles at Aquiline Capital Partners, Marsh & McLennan, and YUM! Brands, Inc. | | |  Alan D. Wilson
Retired Executive Chairman
McCormick &Company, Inc.
Age 60 | Mr. Wilson has been an independent director of Price Group since 2015 and serves as a member of the Nominating and Corporate Governance Committee and the Executive Compensation and Management Development Committee. Mr. Wilson currently serves on the board of McCormick & Company, Inc. He joined McCormick & Company, Inc., in 1993 and held many executive management roles, including chairman, president, and chief executive officer.
Mr. Wilson graduated from the University of Tennessee in 1980 with a B.S. in communications. He attended school on a R.O.T.C. scholarship and, following college, served as a U.S. Army captain, with tours in the United States, United Kingdom, and Germany.
Mr. Wilson currently serves on the board of directors of Westrock Company and is a member of the nominating and corporate governance committee and the finance committee. He also chairs the board of visitors of University of Maryland, Baltimore County, and currently serves on the University of Tennessee’s Business School advisory board.
Mr. Wilson brings to our Board significant executive management experience, having led a publicly traded, multinational company. He also adds additional perspective to the Board regarding matters relating to general management, strategic leadership, and financial matters. |
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TABLE OF CONTENTS THE BOARD OF DIRECTORS AND COMMITTEES
Anne Marie Whittemore, age 61, has been an independent director of Price Group since 1995, is the chairperson of the Nominating and Corporate Governance Committee, and serves on the Executive and Executive Compensation Committees. She has been designated the Lead Director by our independent directors since April 2005. Ms. Whittemore is a partner in the law firm of McGuireWoods LLP, and is a director of Albemarle Corporation, a manufacturer of specialty chemicals, and Owens & Minor, Inc., a distributor of medical and surgical supplies.
The Board of Directors and Committees
During 2007,2017, the Board of Directors held seven meetings and acted on one other occasion byapproved two matters via unanimous written consent. Each director attended at least 75% of the combined total number of meetings of the Board and Board committees of which he or she was a member. Consistent with the company’sCompany’s Corporate Governance Guidelines, the independent directors meetmet in executive session at eachsix of the Board meeting.meetings in 2017. Our Corporate Governance Guidelines provide that all directors are expected to attend each annual meeting of stockholders. All nominees for director submitted to the stockholders for approval at last year’s annual meeting on April 12, 2007,26, 2017, attended that meeting, and we anticipate that all nominees will attend the 20082018 Annual Meeting. Our Board of Directors has an Executive Committee, an Audit Committee, an Executive Committee, an Executive Compensation and Management Development Committee, and a Nominating and Corporate Governance Committee. OurThe Board has also authorized a Management Committee that is made up entirely of Directorssenior officers of the Company. The Board has adopted a separate written charter for each of the Audit Committee, the Executive Compensation and Management Development Committee, and the Nominating and Corporate Governance Committee. Current copies of each charter, our Corporate Governance Guidelines, and other corporate governance materials are available atour Code of Ethics for Principal Executive and Senior Financial Officers can be found on our website, www.troweprice.com,troweprice.com, by clicking on “Company Info & Press.selecting “Investor Relations” and then “Corporate Governance.” Pursuant to rules promulgated under the Sarbanes-Oxley Act, the Board has adopted a Code of Ethics for Principal Executive and Senior Financial Officers. This Code is intended to deter wrongdoing and promote honest and ethical conduct,conduct; full, timely, and accurate reporting,reporting; compliance with laws,laws; and accountability for adherence to the Code, including internal reporting of Code violations. A copy of the Code of Ethics for Principal Executive and Senior Financial Officers was filed withis available on our website. We intend to satisfy the Securitiesdisclosure requirements regarding any amendment to, or waiver from, a provision of the Code of Ethics for Principal Executive and Exchange CommissionSenior Financial Officers by making disclosures concerning such matters available on February 7, 2008 as Exhibit 14 tothe Investor Relations page of our Annual Report on Form 10-K. website.We also have a Code of Ethics and Conduct that is applicable to all employees and directors of the company.Company. It is the company’sCompany’s policy for all employees to participate annually in continuing education and training relating to the Code of Ethics and Conduct. During 2007, Mr. Kennedy, Mr.2017, Messrs. Rogers, and Ms.Stromberg, and Anne Marie Whittemore served on the Executive Committee. The Executive Committee functions between meetings of the Board of Directors and possesses the authority to exercise all the powers of the Board except as limited by Maryland law. If the committee acts on matters requiring formal Board action, those acts are reported to the Board of Directors at its next meeting for ratification. The committeeExecutive Committee did not take any action during 2007. Messrs. Brady, Broaddus,Bartlett and TaylorMacLellan; and Dwight S. Taylor; Dr. Hrabowski; and Ms. Wijnberg serve on the Audit Committee, which met sixfive times during 2007.2017. The Board of Directors has determined that each of Messrs. Brady, Broaddus, and Taylorthe Audit Committee members meet the independence and financial literacy criteria of the NASDAQ Global Select Market and the Securities and Exchange Commission. The Board also has concluded that Mr. Brady, who is the chairman of the audit committee of each of the three other public companies on which he serves as a directorMessrs. Bartlett and was an audit partner of Arthur Andersen LLP for 20 years until he left the firm in 1995, meetsMacLellan and Ms. Wijnberg meet the criteria for an audit committee financial expert as established by the SecuritiesSEC. Mr. Bartlett is a certified public accountant, was an audit partner at Ernst & Young for 28 years until he left the firm in 2012, and Exchange Commission. serves as the chairman of the audit committee of Rexnord Corporation and Williams Scotsman and as a member of the audit committee of FTI Consulting, Inc. Mr. MacLellan is a chartered accountant and was a member of the audit committees for Ace Aviation Holdings, Inc., and Maple Leaf Sports and Entertainment, Ltd. Ms. Wijnberg was the chief financial officer of Marsh & McLennan Companies, Inc., from 2000 to 2006 and interim chief financial officer of YUM! Brands in 1999. She is currently a member of the audit committee for Automatic Data Processing, Inc., and she served as member and chairperson of the audit committees of Tyco International and TE Connectivity, respectively.Audit Committee’s Primary Responsibilities The primary purpose of the Audit Committee is to assist the Board in fulfilling its oversight responsibilities with respect to (1) the integrity of our financial statements and other financial information provided by us to our stockholders,stockholders; (2) the retention of our independent registered public accounting firm, including oversight of the terms of its engagement and its performance, TABLE OF CONTENTS qualifications, and independence, andindependence; (3) the performance of our internal audit function, internal controls, and disclosure controls.controls; and (4) the Company’s risk management framework. The Audit Committee also provides an avenue for communication among our internal auditors, financial management, chief risk officer, independent registered public accounting firm, and the Board and is responsible for procedures involving the receipt, retention, and treatment of complaints or concerns regarding accounting, internal accounting controls, and auditing matters, including confidential, anonymous employee submissions. The independent registered public accounting firm reports directly to the Audit Committee and is ultimately accountable to this committee and the Board for the audit of our consolidated financial statements. Related Person Transaction Oversight The Audit Committee is responsible under its charter for reviewing related person transactions and any change in, or waiver to, our Code of Ethics for our Principal Executive and Senior Financial Officers. Our Board has adopted a written Policy for the Review and Approval of Transactions with Related Persons. Any transaction that would require disclosure under Item 404(a) of Regulation S-K will not be initiated or materially modified until our Audit Committee has approved such transaction or modification and will not continue past its next contractual termination date unless it is annually re-approvedreapproved by our Audit Committee. During its deliberations, the Audit Committee must consider all relevant details regarding the transaction including, but not limited to, any role of our employees in arranging the transaction, the potential benefits to our company,Company, and whether the proposed transaction is competitively bid or otherwise is on terms comparable to those available to an unrelated third party or our employees generally. The Audit Committee approves only those transactions whichthat it determines in good faith to be on terms that are fair to us and comparable to those that could be obtained in an arms-length negotiation with an unrelated third party. Risk Management Oversight The Audit Committee oversees and evaluates our policies with respect to significant risks and exposures faced by the Company and the steps taken to assess, monitor, and manage those risks. The Company’s Risk Management Oversight Committee, chaired by the chief risk officer and comprised of other senior members of management, directs the development and maintenance of comprehensive risk management policies and procedures for the Company. It also monitors on a regular basis the significant risks inherent to our business, including investment risk, reputational risk, business continuity risk, and operational risk. The chief risk officer, director of internal audit, and officers responsible for financial reporting, legal, and compliance periodically report to the Audit Committee. Based on these reports, the Audit Committee reports and makes recommendations as necessary to the full Board with respect to managing our overall risk. The report of the Audit Committee appears on page 23. 6
Executive Compensation Committee Messrs. Hebb, Brady, Broaddus, and Taylor, Dr. Sommer, and Ms. WhittemoreManagement Development CommitteeAll of the non-employee independent directors of the Board serve on the Executive Compensation and Management Development Committee (Compensation Committee), which met fivesix times during 2007.2017. The Compensation Committee approved one matter via unanimous written consent during 2017. The Board of Directors has determined that each of these members meets the independence criteria of NASDAQ.the NASDAQ Global Select Market. The report of the Executive Compensation Committee appears on page 22. The committeeCompensation Committee is responsible to the Board, and ultimately to our stockholders, for: | • | ■ | determining the compensation of the chief executive officer and other executive officers; |
| | • | ■ | reviewing and approving general salary and compensation policies for the rest of our senior officers; |
| | • | ■ | overseeing the administration of our Annual Incentive Compensation Pool, stockequity incentive plans, and employee stock purchase plan;Employee Stock Purchase Plan; |
| | • | ■ | assisting management in designing new compensation policies and plans; and |
| | • | ■ | reviewing and discussing the Compensation Discussion and Analysis and other compensation disclosures with management. |
The committeeCompensation Committee has delegated compensation decisions regarding non-executivenonexecutive officers, including the establishment of specific salary and incentive compensation levels and certain matters relating to stock-based compensation, to the Management Compensation Committee, which is a committee comprised of senior leaders of Price Group senior officers.Group. TABLE OF CONTENTS Early each year, the committeeCompensation Committee meets with the Management Compensation Committeemembers of senior management in order to discuss goals and objectives for the coming year, including goals and objectives applicable to the named executive officers listed in our Summary Compensation Table on page 17. At this meeting,Table. In addition, the committeeCompensation Committee determines eligibility for the Annual Incentive Compensation Pool and sets forth the maximum percentage which couldthat may be paid to each participant. The committee typically begins consideration of the annual equity grant program at its June meeting, assessing the likely overall size and parameters of the program. Further consideration of the program takes place at subsequent meetings, with the actual grants made at a regularly scheduled committee meeting. At its meeting in December, meeting, the committeeCompensation Committee evaluates executive performance during the year as part of its discussionsdetermination of appropriate incentive compensation awards. The Compensation Committee awards equity incentive grants to employees from stockholder-approved long-term incentive plans as part of the Company’s annual compensation program. The Compensation Committee has, for a number of years, made equity grants in two tranches consisting generally of equal or nearly equal grants in February and September. In 2017, the Compensation Committee moved to an annual grant in December to more closely align our equity incentive grants to the timing of our annual bonus and other compensation decisions. Role of Executive Officers The committeeCompensation Committee solicits input from the Chief Executive Officerchief executive officer and the Management Compensation Committee regarding general compensation policies, including the appropriate level and mix of compensation. The committeeCompensation Committee also consults with the Chief Executive Officerchief executive officer regarding the appropriate bonus and salary levels for other executive officers. Role of Compensation Consultants During 2017, the Compensation Committee carefully reviewed its engagement with Frederic W. Cook & Co., Inc. (“FWCook”) has been(FW Cook), and sent a request for proposal to eight compensation consulting firms. After a thorough review and evaluation of the committee’srespondents, Johnson Associates was selected as the Compensation Committee’s new compensation consultant, for many years and was last reappointedit began working with the Compensation Committee in February 2006. TheySeptember 2017. FW Cook and Johnson Associates have no relationship with Price Group other than as the committee’s consultant. AtCompensation Committee’s consultants. See the February“Role of Independent Compensation Consultant” section of our Compensation Discussion and December meetingsAnalysis for additional details of the committee, FWCook provided information regarding trends and best practices in executive compensation at corporations similar to Price Group in size and industry focus. In addition, FWCook provided the committee with competitive compensation data that was considered when setting compensation for the named executive officers. their role.Nominating and Corporate Governance Committee Ms.Mses. Snowe, Bush, and Whittemore, Mr. Hebb, and Dr. SommerMessrs. Culp and Wilson serve on our Nominating and Corporate Governance Committee, which met on six occasions during 2007.2017. The Nominating and Corporate Governance Committee approved one matter via unanimous written consent during 2017. The Board of Directors has determined that all Nominating and Corporate Governance Committee members meet the independence criteria of NASDAQ.the NASDAQ Global Select Market. The principal purpose and goal of this committee is to maintain and cultivate the effectiveness of the Price Group’s Board of Directors and provide general oversight regardingoversee its governance matters.policies. Among the committees’sNominating and Corporate Governance Committee’s responsibilities are Board and committee composition, and director qualifications, orientation and education, and Board evaluations, and senior management succession planning. Theyevaluations. Members identify, evaluate, and nominate Board candidates, periodicallycandidates; review the continued appropriateness of Board membership for each director, including upon a change in employment, and consider any director resignation submitted under the company’s majority voting policy. The committee reviews the compensation of independent directors,directors; and overseesoversee procedures regarding stockholder nominations and other communications to the Board. In addition, they are also responsible for monitoring compliance with and recommending any changes to the company’sCompany’s Corporate Governance Guidelines. A report on the committee’sNominating and Corporate Governance Committee’s activities appearsbegins on page 10.20 of this proxy statement. Management Committee The Management Committee is responsible for guiding, implementing, and reviewing major policy and operating initiatives of the Company. Mr. Stromberg is chairman of the Management Committee, and Mr. Bernard and other senior officers of the Company are also members. The Management Committee reports to the Board on the management and operation of the Company through Messrs. Stromberg and Bernard. As of March 16, 2018, current members of the Management Committee include: Christopher D. Alderson, co-head of global equity; Scott B. David, head of individual and retirement plan services; Céline S. Dufétel, chief financial officer and treasurer; Nigel K. Faulkner, head of technology; Robert C.T. Higginbotham, head of global investment management services; David Oestreicher, chief legal counsel and corporate secretary; Sebastien Page, head of global multi-asset; Dorothy C. “Dee” Sawyer, head of human resources; Robert W. Sharps, head of investments; Eric L. Veiel, co-head of global equity; and Edward A. Wiese, head of fixed income. Each of these members brings extensive experience and wisdom to the management and leadership of the Company. TABLE OF CONTENTS
Compensation of Directors The Nominating and Corporate Governance Committee is responsible for periodically reviewing non-employee director compensation and recommendingbenefits and recommends changes, if appropriate, to the full Board. Our non-employee director compensation program is designed to accomplish a number of objectives: | ■ | Align the interests of our non-employee directors with those of our stockholders; |
| ■ | Provide competitive compensation for service to the Board by our non-employee directors; |
| ■ | Maintain appropriate consistency with our approach to compensation for our executive officers and senior employees; and |
| ■ | Attract and retain a diverse mix of capable and highly qualified directors. |
We provide both cash and equity compensation to our directors and believe that, over time, cash and equity compensation should reflect approximately 40% and 60%, respectively, of total compensation paid to our directors. The cash compensation component is based primarily on an annual retainer coupled with fees for committee attendance, lead director role, and committee chair roles. Equity compensation historically has consisted of equity awards in the form of options or full value awards, at the election of the director. We believe our total compensation package and compensation structure is comparable to and in line with other major financial service companies. The Nominating and Corporate Governance Committee periodically reviews non-employee director compensation and benefits and recommends changes, if appropriate, to the full Board based upon its review and consideration of competitive market practices. Following the engagement in October 2016 of Pearl Meyer & Partners (Pearl Meyer), an independent compensation consultant, which provided a review of our compensation practices in relation to market conditions, the Committee determined that its compensation practices were generally competitive and that no significant changes were required. However, based on Pearl Meyer’s feedback, we did decide to provide a fixed dollar amount of equity compensation of independent$200,000 per director once a year rather than a fixed number of shares twice a year, which had been the practice in prior years, in order to better maintain consistent alignment in the relative contribution of cash and equity compensation to total director compensation. We also concluded that, consistent with our approach to equity incentives for our executive officers, we would move away from a menu-based plan that allowed directors.In conducting its review, it will consult with FWCook to select among options, restricted shares, and restricted stock units to a consistent awarding of full value share awards to our directors. Directors maintained the right to select between restricted shares or restricted stock units in order to provide an opportunity for deferral of income if a director so elects. For Mr. Rogers’ role as wella non-employee director and for the important Board leadership role as nonexecutive chair, the Executive Compensation Committee decided to pay Mr. Rogers total annual compensation of $400,000, including $100,000 in the standard annual cash retainer, $100,000 for his service as appropriatechair of the Board, and a cash amount of $200,000 in lieu of participating in the annual equity award. Mr. Rogers’ annual non-employee director compensation amounts were prorated for the period April 2017 through December 2017, following Mr. Rogers’ retirement as an executive of the Company on March 31, 2017. For 2017, the Committee approved the payment of fees to establish whether such compensation is adequate. The following table sets forth information regarding the compensation earnedFederal Trade Commission for filings required to be made by or awarded to directors who served on our BoardMr. Rogers under the Hart-Scott-Rodino Antitrust Improvements Act of Directors in 2007. Directors who are also officers1976, as amended (HSR Act), as a result of Price Group do not receive separate directors’his stock ownership of the Company. Mr. Rogers was responsible for any taxes due as a result of the Company paying the HSR Act filing fees and have been omitted from this table since they appearwas not provided a tax gross-up payment. Equity-Based Compensation in our Summary Compensation Table. 2007 Director Compensation(1)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | Stock | | Option | | | | | | | | Fees Earned | | Awards | | Awards | | All Other | | | | Name | | in Cash | | (2), (3), (4), (5) | | (2), (3), (4), (5) | | Compensation | | Total | | James T. Brady | | $ | 101,500 | | | $ | 53,625 | | | $ | 33,837 | | | $ | 7,500 | (6) | | $ | 196,462 | | | J. Alfred Broaddus, Jr. | | $ | 96,500 | | | $ | 54,034 | | | $ | 33,837 | | | $ | 7,500 | (6) | | $ | 191,871 | | | Donald B. Hebb, Jr. | | $ | 96,500 | | | $ | 53,625 | | | $ | 33,837 | | | $ | 7,500 | (6) | | $ | 191,462 | | | Dr. Alfred Sommer | | $ | 85,500 | | | $ | 54,034 | | | $ | 33,837 | | | $ | 5,000 | (6) | | $ | 178,371 | | | Dwight S. Taylor | | $ | 96,500 | | | $ | 54,034 | | | $ | 33,837 | | | $ | 4,500 | (6) | | $ | 188,871 | | | Anne Marie Whittemore | | $ | 95,000 | | | $ | — | | | $ | 86,143 | | | $ | 7,500 | (6) | | $ | 188,643 | |
| | | (1) | | Includes only those columns relating to compensation awarded to, earned by, or paid to non-employee directors for their services in 2007. All other columns have been omitted. | | (2) | | Amounts included in the table represent the compensation cost recognized in our 2007 financial statements relating to stock and stock option awards granted to each non-employee director as part of their 2006 and 2007 semi-annual grants, and in the case of Messrs. Broaddus and Hebb, the compensation cost related to the dividend equivalents awarded on their outstanding stock units. The grant-date fair value of the award is being recognized as compensation cost over the requisite service period pursuant to Statement of Financial Accounting Standards No. 123R,Share-Based Payments (“SFAS 123R”). | | (3) | | The grant-date fair value of stock awards was measured using the grant-date market price of a Price Group common share. The grant-date fair value of options was computed, using the Black-Scholes option-pricing model. The following weighted average assumptions were used in the option-pricing model for the grant years indicated: |
| | | | | | | | | | | | | 2006 | | 2007 | | Expected life in years | | | 4.1 | | | | 6.5 | | | Expected volatility | | | 23 | % | | | 27 | % | | Dividend yield | | | 1.7 | % | | | 1.7 | % | | Risk-free interest rate | | | 4.8 | % | | | 4.4 | % |
| | | (4) | | The following represents the equity awards granted to each of the non-employee directors named above in 2007 and their corresponding grant-date fair value as determined in footnote three above. Under the 2007 Non-Employee Director Plan, each director selects the type, among stock options, restricted stock awards, or stock units, of award they receive semi-annually. In 2007, Messrs. Brady and Hebb each selected restricted stock awards while Messrs. Broaddus, Sommer and Taylor each selected stock units. The holders of stock units received dividend equivalents in the form of additional vested stock units on the dividend payment date for the second and third quarters of 2007. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | Number of | | | | | | Grant Date Fair | | | | | | Number of | | Securities | | Exercise Price of | | Value of Stock | | | | | | Shares of Stock | | Underlying | | Option Awards | | and Option | | Director | | Grant Date | | or Units | | Options | | per Share | | Awards | | | | Messrs. Brady and Hebb | | 04/30/2007 | | | 1,200 | | | | | | | | | | | $ | 59,616 | | | | | 10/26/2007 | | | 1,200 | | | | | | | | | | | $ | 74,052 | | | | | | | | | | | | | | | | | | | | | | | Messrs. Broaddus, | | 04/30/2007 | | | 1,200 | | | | | | | | | | | $ | 59,616 | | | Sommer, and Taylor | | 07/09/2007 | | | 3.810 | | | | | | | | | | | $ | 204 | | | | | 10/05/2007 | | | 3.546 | | | | | | | | | | | $ | 205 | | | | | 10/26/2007 | | | 1,200 | | | | | | | | | | | $ | 74,052 | | | | | | | | | | | | | | | | | | | | | | | Ms. Whittemore | | 04/30/2007 | | | | | | | 4,000 | | | $ | 49.68 | | | $ | 56,760 | | | | | 10/26/2007 | | | | | | | 4,000 | | | $ | 61.71 | | | $ | 77,320 | |
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| | | (5) | | The aggregate number of equity awards outstanding as of December 31, 2007 are: |
| | | | | | | | | | | | | | | | | Stock Awards or | | Option | | | | Director | | Stock Units | | Awards | | Total | | James T. Brady | | | 2,400 | | | | 16,000 | | | | 18,400 | | | J. Alfred Broaddus, Jr. | | | 2,407 | | | | 36,000 | | | | 38,407 | | | Donald B. Hebb, Jr. | | | 2,400 | | | | 74,000 | | | | 76,400 | | | Dr. Alfred Sommer | | | 2,407 | | | | 46,000 | | | | 48,407 | | | Dwight S. Taylor | | | 2,407 | | | | 36,000 | | | | 38,407 | | | Anne Marie Whittemore | | | — | | | | 78,000 | | | | 78,000 | |
| | | (6) | | Personal gifts matched by our sponsored T. Rowe Price Associates Foundation, Inc. to qualified charitable organizations. |
Pursuant to the 20072017 Non-Employee Director Equity Plan (the “Plan”)(2017 Director Plan) approved by the stockholders on April 12, 2007,26, 2017, each newly elected Board member is awarded an initial grant in the form, at their election, of restricted shares or restricted stock units having a value on the date of grant of $300,000 that vests one-year after the grant date. In each subsequent year, each non-employee director, except Mr. Rogers, is awarded, semi-annual grants ofat their choice of options to purchase 4,000 common shares of Price Group, 1,200election, restricted shares or 1,200restricted stock units. Each non-employee director must elect the type of awards to be granted under the Plan by filing an election form with the Treasurer of Price Group. The election form remains in effect from year-to-year unless a new election form is filed by December 31 of the year preceding the calendar year for which the modification takes effect. These periodic grants will be made as of the close of businessunits on the thirdfirst business day followingafter the releaseAnnual Meeting having a value on the date of our earnings for eachgrant of $200,000. For Mr. Rogers, the quarters ended March 31 and September 30. Committee determined that, in light of his already significant stock ownership, they would pay him a cash amount of $200,000 in lieu of participating in the annual equity award provided to non-employee directors.Each of the award types vest upon the earliest of the non-employee director’s death or date on which the director becomes totally and in the case of options become exercisablepermanently disabled, one year after theirthe grant date, ifor the day before the annual meeting held in the calendar year after the year in which the grant is made, or the date on which a change in control occurs, provided the director is thencontinues to be a member of the Board or, if earlier, upon the non-employee director’s death. Options are granted at the fair market value on the dates of grant, can be exercised up to five years after the director is no longer serving on the Board, and have a maximum term of 10 years from the date of grant. applicable date. Restricted shares entitle the holder to allthe rights of a stockholder, including voting, dividend, and distribution rights, but are nontransferable until they vest. Under the Plan, vestedVested stock units will be settled in shares of our common stock or cash, in the case of fractional shares, upon a non-employee director’s separation from service. Non-employee directors holding stock units are not TABLE OF CONTENTS entitled to voting, dividend, distribution, or other rights until the corresponding shares of our common stock are issued upon settlement; however, if and when we pay a cash dividend to our common stockholders, we will creditissue dividend equivalents in the form of additional vested stock units. Under the 2017 Director Plan, dividends and dividend equivalents payable with respect to unvested restricted shares and unvested stock units will be subjected to the same vesting and risks of forfeiture as the restricted shares and stock units to which they are attributable. The 2017 Director Plan includes a provision that accelerates the vesting of all outstanding awards in connection with a change-in-controlchange in control of Price Group. Upon a change-in-control,change in control, any outstanding stock units will be settled in cash or shares at the discretion of the Board of Directors. Fees and Other Compensation in 2017 In February 2007,addition to the equity-based awards, non-employee directors, except Mr. Rogers, received the following in 2017: | ■ | An annual retainer of $100,000 for all non-employee directors; |
| ■ | A fee of $1,500 for each committee meeting attended; |
| ■ | A fee of $15,000 for the lead director; |
| ■ | A fee of $20,000 and $5,000, for the chairperson of the Audit Committee and each Audit Committee member, respectively; |
| ■ | A fee of $10,000 for the chairperson of the Compensation Committee; |
| ■ | A fee of $10,000 for the chairperson of the Nominating and Corporate Governance Committee; |
| ■ | Directors and all U.S. employees of Price Group and its subsidiaries are eligible to have our sponsored T. Rowe Price Foundation match personal gifts up to an annual limit to qualified charitable organizations. For 2017, non-employee directors were eligible to have up to $10,000 matched; |
| ■ | The reimbursement of reasonable out-of-pocket expenses incurred in connection with their travel to and from, and attendance at each meeting of the Board and its committees and related activities, including director education courses and materials; and |
| ■ | The reimbursement of spousal travel to and from and participation in events held in connection with the annual joint Price Group and Price funds’ Board of Directors meeting. |
The annual retainer and Corporate Governance Committee developedfees noted above are prorated for the period of time during the calendar year that each director held the position. Pursuant to the Outside Directors Deferred Compensation Plan, non-employee directors can elect to defer payment of their director fees until the next calendar year. Any such election needs to be received prior to the beginning of the year they wish to have their payment deferred. Dr. Hrabowski, Ms. Snowe, and approvedMr. Wilson elected to have their 2017 director fees deferred to 2018. There will be no change to the cash compensation of our non-employee director ownershipdirectors in 2018. Ownership and retention guidelines. Under these guidelines, eachRetention Guidelines Each non-employee director is required to hold shares of our common stock having a value equal to three times his or her current cash retainer by February 2012, or within five years of the director’s appointment to the Board. Directors added to the Board whichever is later. Directors currently in office thusprior to 2015 have an ownership goal of $225,000. Directors$225,000, while Messrs. Culp and Wilson, and Ms. Wijnberg each have an ownership goal of $300,000. Based on changes adopted for 2017 and beyond, directors who join the Board in the future, including Mr. Verma, will have an ownership goal of threefive times the annual cash retainer in effect on the date they join the Board. For purposes of the calculation, unvested restricted shares of restricted stock and outstanding stock units are counted, but unexercised stock options are not. Once this ownership goal is achieved, the number of shares required to be held becomes fixed and must be maintained until the end of the director’s service on the Board. Until the ownership goal is achieved, the director is expected to retain “net gain shares” resulting from the exercise of stock options or vesting of restricted stock granted under the Plan.applicable director plan. Net gain shares are the shares remaining after payment of the stock option exercise price and taxes owed with respect to the exercise or vesting event. In addition, net gain shares realized under the Planapplicable director plan after the ownership goal is achieved are expected to be held for two years prior to sale or other transfer, but not beyond the end of the director’s service on the Board. All of our incumbent directors have achieved and maintain the ownership goal as of the date of this proxy statement. In addition18 T. ROWE PRICE GROUP
TABLE OF CONTENTS 2017 Director Compensation1 The following table sets forth information regarding the compensation earned by, or paid to, the equity-based awards, non-employee directors who served on our Board of Directors during 2017. Directors who are also officers of Price Group do not receive the following:separate directors’ fees and have been omitted from this table. Mr. Stromberg and Mr. Bernard appear in our Summary Compensation Table as named executive officers. Name | Fees Earned
or Paid
in Cash | Stock
Awards2,3 | All Other
Compensation4 | Total | Mark S. Bartlett | $ | 136,500 | | $ | 200,065 | | $ | 10,000 | | $ | 346,565 | | Mary K. Bush | $ | 118,000 | | $ | 229,776 | | $ | 10,000 | | $ | 357,776 | | H. Lawrence Culp, Jr. | $ | 115,000 | | $ | 200,065 | | $ | 10,000 | | $ | 325,065 | | Dr. Freeman A. Hrabowski, III | $ | 121,500 | | $ | 215,911 | | $ | 10,000 | | $ | 347,411 | | Robert F. MacLellan | $ | 131,500 | | $ | 211,242 | | $ | 10,000 | | $ | 352,742 | | Olympia J. Snowe | $ | 128,000 | | $ | 211,039 | | $ | 10,000 | | $ | 349,039 | | Brian C. Rogers5 | $ | 300,000 | | $ | — | | $ | 248,269 | | $ | 548,269 | | Dwight S. Taylor | $ | 121,500 | | $ | 265,950 | | $ | 10,000 | | $ | 397,450 | | Anne Marie Whittemore | $ | 133,000 | | $ | 230,094 | | $ | 10,000 | | $ | 373,094 | | Sandra S. Wijnberg | $ | 121,500 | | $ | 210,171 | | $ | 10,000 | | $ | 341,671 | | Alan D. Wilson | $ | 118,000 | | $ | 221,535 | | $ | 10,000 | | $ | 349,535 | |
| •1 | Includes only those columns relating to compensation awarded to, earned by, or paid to non-employee directors for their services in 2017. All other columns have been omitted. |
| An annual retainer of $75,000; | | | 2 | • | | A fee of $1,500 for each committee meeting attended; | | | • | | A fee of $10,000 and $5,000, forThe following table represents the Chairmanequity awards granted in 2017 to certain of the Audit Committee andnon-employee directors named above. In accordance with the 2017 Director Plan, each Audit Committee member, respectively; | | | • | | A feenon-employee director was awarded a grant date value of $5,000 for both$200,000. The equity value was converted to awards or units, using the Chairmanclosing stock price of our common stock on the date of grant. Fractional shares were rounded up to the nearest whole share. The holders of restricted stock units also receive dividend equivalents in the form of additional vested stock units on each of the Executive Compensation Committee andCompany’s dividend payment dates. Fractional shares earned as dividend equivalents have been rounded to the Chairmannearest whole share. |
Director | Grant Date | Number of
Restricted
Shares | Number of
Restricted
Units | Grant Date Fair
Value of Stock
and Option
Awards | Mark S. Bartlett | | 4/27/2017 | | | 2,837 | | | | | $ | 200,065 | | Mary K. Bush | | 3/30/2017 | | | | | | 108 | | $ | 7,341 | | | | 4/27/2017 | | | 2,837 | | | | | $ | 200,065 | | | | 6/29/2017 | | | | | | 100 | | $ | 7,403 | | | | 9/28/2017 | | | | | | 83 | | $ | 7,460 | | | | 12/28/2017 | | | | | | 71 | | $ | 7,507 | | H. Lawrence Culp, Jr. | | 4/27/2017 | | | 2,837 | | | | | $ | 200,065 | | Dr. Freeman A. Hrabowski, III | | 3/30/2017 | | | | | | 40 | | $ | 2,708 | | | | 4/27/2017 | | | | | | 2,837 | | $ | 200,065 | | | | 6/29/2017 | | | | | | 59 | | $ | 4,348 | | | | 9/28/2017 | | | | | | 49 | | $ | 4,381 | | | | 12/28/2017 | | | | | | 42 | | $ | 4,409 | | Robert F. MacLellan | | 3/30/2017 | | | | | | 40 | | $ | 2,762 | | | | 4/27/2017 | | | 2,837 | | | | | $ | 200,065 | | | | 6/29/2017 | | | | | | 38 | | $ | 2,785 | | | | 9/28/2017 | | | | | | 31 | | $ | 2,806 | | | | 12/28/2017 | | | | | | 27 | | $ | 2,824 | | Olympia J. Snowe | | 3/30/2017 | | | | | | 22 | | $ | 1,504 | | | | 4/27/2017 | | | | | | 2,837 | | $ | 200,065 | | | | 6/29/2017 | | | | | | 42 | | $ | 3,134 | | | | 9/28/2017 | | | | | | 35 | | $ | 3,158 | | | | 12/28/2017 | | | | | | 30 | | $ | 3,178 | | Dwight S. Taylor | | 3/30/2017 | | | | | | 239 | | $ | 16,280 | | | | 4/27/2017 | | | 2,837 | | | | | $ | 200,065 | | | | 6/29/2017 | | | | | | 222 | | $ | 16,416 | | | | 9/28/2017 | | | | | | 184 | | $ | 16,542 | | | | 12/28/2017 | | | | | | 158 | | $ | 16,647 | |
TABLE OF CONTENTS Director | Grant Date | Number of
Restricted
Shares | Number of
Restricted
Units | Grant Date Fair
Value of Stock
and Option
Awards | Anne Marie Whittemore | | 3/30/2017 | | | | | | 91 | | $ | 6,213 | | | | 4/27/2017 | | | | | | 2,837 | | $ | 200,065 | | | | 6/29/2017 | | | | | | 106 | | $ | 7,882 | | | | 9/28/2017 | | | | | | 88 | | $ | 7,942 | | | | 12/28/2017 | | | | | | 76 | | $ | 7,992 | | Sandra S. Wijnberg | | 3/30/2017 | | | | | | 37 | | $ | 2,497 | | | | 4/27/2017 | | | 2,837 | | | | | $ | 200,065 | | | | 6/29/2017 | | | | | | 34 | | $ | 2,518 | | | | 9/28/2017 | | | | | | 28 | | $ | 2,537 | | | | 12/28/2017 | | | | | | 24 | | $ | 2,554 | | Alan D. Wilson | | 3/30/2017 | | | | | | 60 | | $ | 4,098 | | | | 4/27/2017 | | | | | | 2,837 | | $ | 200,065 | | | | 6/29/2017 | | | | | | 78 | | $ | 5,749 | | | | 9/28/2017 | | | | | | 64 | | $ | 5,793 | | | | 12/28/2017 | | | | | | 55 | | $ | 5,830 | |
| 3 | The following table represents the aggregate number of equity awards outstanding as of December 31, 2017. The outstanding equity awards held by Mr. Rogers were granted while he was an executive officer of the Nominating and Corporate Governance Committee;Company. |
9
Director | Unvested
Stock Awards | Unvested
Stock Units | Unexercised
Option Awards | Total | Vested Stock
Units | Mark S. Bartlett | | 2,837 | | | | | | | | | 2,837 | | | | | Mary K. Bush | | 2,837 | | | | | | | | | 2,837 | | | 13,241 | | H. Lawrence Culp, Jr. | | 2,837 | | | | | | 8,700 | | | 11,537 | | | | | Dr. Freeman A. Hrabowski, III | | | | | 2,892 | | | 26,008 | | | 28,900 | | | 4,885 | | Robert F. MacLellan | | 2,837 | | | | | | 51,268 | | | 54,105 | | | 4,981 | | Brian C. Rogers | | | | | 10,830 | | | 132,462 | | | 143,292 | | | | | Olympia J. Snowe | | | | | 2,892 | | | | | | 2,892 | | | 2,713 | | Dwight S. Taylor | | 2,837 | | | | | | | | | 2,837 | | | 29,363 | | Anne Marie Whittemore | | | | | 2,892 | | | 29,141 | | | 32,033 | | | 11,205 | | Sandra S. Wijnberg | | 2,837 | | | | | | | | | 2,837 | | | 4,504 | | Alan D. Wilson | | | | | 2,892 | | | | | | 2,892 | | | 7,391 | |
| •4 | | Directors and all employees of Price Group and its related affiliates are eligible to directPersonal gifts matched by our sponsored T. Rowe Price Associates Foundation Inc. to match personal gifts up to an annual limit to qualified charitable organizations. For 2007, non-employee directors wereMr. Rogers was eligible to have up to $7,500 matched; and | | | • | | The reimbursement of reasonable out-of-pocket expenses incurred in connection with their travel to and from, and attendance at, each meetingfor a $25,000 match as he was an executive officer of the BoardCompany for part of Directorsthe year before serving as nonexecutive chair on the Board. |
| 5 | All other compensation includes $98,269 for the compensation Mr. Rogers earned before his retirement as an executive officer of the Company on March 31, 2017, $125,000 paid on behalf of Mr. Rogers for individual filings submitted pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, and its committees and related activities, including director education courses and materials.a $25,000 match to the T. Rowe Price Foundation. |
Pursuant to the Outside Directors Deferred Compensation Plan, non-employee directors can elect to defer payment of their director fees until the next calendar year. Any such election needs to be received prior to the beginning of the year they wish to have deferred. No director deferred his or her 2007 fees.
Report of the Nominating and Corporate Governance Committee Our Nominating and Corporate Governance Committee has general oversight responsibility for governance of the Company, including the assessment and recruitment of new director candidates and the evaluation of director and Board performance. We monitor regulatory and other developments in the governance area with a view toward both legal compliance and maintaining governance practices at the Company consistent with what we consider to be best practices. Corporate Governance Developments in 20072017 Management Succession This Committee oversees ongoing management succession planning and monitors the development and evaluation of senior leaders of the firm. In 2017, the Company completed the final phase of its management succession plan for Brian C. Rogers, who served as our chief investment officer since 2004. Effective March 31, 2017, we appointed six senior investment leaders to share chief investment officer (CIO) responsibilities, which include providing investment thought leadership, partnering with Majority Voting20 T. ROWE PRICE GROUP
TABLE OF CONTENTS investment division leaders to develop investment talent and capabilities, serving as mentors for the firm’s investment professionals, and visiting with clients around the world. Robert W. Sharps, our group CIO, coordinates the activities of the CIO group, which, among other things, facilitates the other CIOs’ ability to remain active as investors on behalf of our clients. In January 2017, the Company announced that Kenneth V. Moreland, chief financial officer and treasurer of the Company, would retire from the Company. After an extensive search, the firm announced that Céline Dufétel, a managing director of Neuberger Berman and former McKinsey & Company partner, would join the firm as vice president in Director Elections During 2007,late 2017 and would assume the company transitioned from plurality to majority voting for uncontested electionsroles of directors. Under plurality voting, the candidate who receives the most votes is elected. This standard was common among public companies for many years,chief financial officer (CFO) and considered desirable to prevent disenfranchisement of stockholderstreasurer in the eventfirst quarter of a contested election. However, certain stockholders2018. As CFO, Ms. Dufétel will provide global leadership and governance rating services have expressed growing dissatisfactionoversight for all financial activities of the firm, as well as manage the various functions within the CFO Group, including Finance, Treasury, Risk, Audit, Corporate Real Estate & Facilities, and Business Services. She also will assume responsibility for the corporate strategy team and lead the firm’s relationships with analysts and T. Rowe Price Group stockholders.While this Committee has primary responsibility for CEO and director succession, our Executive Compensation and Management Development Committee periodically receives reports from management concerning the plurality standard and a desire for greater stockholder influence over uncontested elections. As a result, during 2007 we recommended,development of leadership within the Company and the full Board approved, amendmentssuccession planning that is occurring with respect to senior leadership positions. A comprehensive report on these matters was provided to the company’s AmendedCompensation Committee at one of its meetings during 2017, and Restated By-Laws to implement majority voting in uncontested director elections. Under the current By-Laws, in an uncontested election a nominee will not be elected unless he or she receives more “for” votes than “against” votes. Under Maryland law, any incumbent director not so elected would continue in office as a “holdover” director until removed or replaced. As a result, the By-Laws also provide that any director who fails to obtain the required vote in an uncontested election must submit his or her resignation to the Board. The Board must decide whether to accept or decline the resignation, or decline the resignation with conditions, taking into consideration this committee’s recommendation after consideration of all factors deemed relevant, within 90 days after the vote has been certified. Plurality voting will still apply to contested elections.
We recommended,Compensation Committee and the Board approved, corresponding changes to the company’s Corporate Governance Guidelines and the Charter of this committee. You can find the full text of the current Corporate Governance Guidelines and our Charter at the company’s website, www.troweprice.com, by clickingreceive periodic updates on “Company Info & Press.”
Stock Ownership Guidelines
In 2007, we adopted stock ownership guidelines for the company’s executive officers. Under these guidelines, key executives are required to reach specified levels of ownership by December 31, 2012 or, if later, within five years after assuming a position covered by the guidelines. The Chairman, Vice Chairman, and President are expected to own common stock of the company with a value equivalent to 10 times their respective base salaries. Other executive officers are expected to maintain ownership positions equivalent to five- or three- times their base salary, depending on their seniority. We believe that these guidelines further develop and align the common interests of management and stockholders in the long-term growth of our company. This follows our adoption in February 2007 of stock ownership guidelines for non-employee directors as described earlier in this proxy statement under the section “Director Compensation.” The committee will monitor compliance with these guidelines.
matters.Board Evaluations In January 2008,2018, we asked all Board members to reply to an anonymous evaluation questionnaire regarding the performance of the Board and its committees during 2007.2017. Feedback from these questionnaires was supplemented by interviews of each independent director by our lead independent director. We discussed the results of ourthe evaluations and interviews at our meeting on February 14, 2008,13, 2018, and provided a full report to the Board. Consistent with past practice, we will implement suggestions and conclusions from the evaluation process during the course of the upcoming year. We plan to continue to conduct evaluations and interviews each year and to periodically modify our procedures to ensure that we receive candid feedback and are responsive to future developments and suggestions from our directors. Charter and Bylaw Review We routinely review and consider our governance profile and during the course of 2017 we reviewed our Charter and By-Laws to determine whether there were any updating amendments or modifications that would be appropriate. As part of that review, we reconsidered a provision of our Charter that provides that any stockholder holding 15% or more of the outstanding shares of common stock of the Company would only be entitled to vote shares up to the 15% level. This Charter provision was adopted by us in the 1980s at the time we originally became a public company. The Committee and the Board concluded that, as a matter of good corporate governance, the provision should be removed. In addition, it is the only portion of the Company’s Charter that requires a two-thirds vote to be amended; all other Charter provisions can be amended by the affirmative vote of a majority of the outstanding shares entitled to be voted. Accordingly, removing the 15% Charter provision also eliminates this supermajority vote provision, which we also considered to be favorable to our governance profile. These changes are being recommended to the stockholders elsewhere in this proxy statement. Board Leadership Lead Independent Director Transition The lead independent director role was created in 2004 and has continually developed since that time. The lead independent director chairs Board meetings at which the chairperson is not present, approves Board agendas and meeting schedules, and oversees Board materials distributed in advance of Board meetings. The lead independent director also calls meetings of the independent directors, chairs all executive sessions of the independent directors, and acts as liaison between the independent directors and management. The lead independent director is available to the chief legal officer to discuss and, as necessary, respond to future developments. stockholder communications to the Board.At the upcoming Annual Meeting, Mr. Wilson will succeed Ms. Whittemore as the lead independent director. Ms. Whittemore has acted as the lead independent director since April 2016. During 2015, Mr. Bartlett replaced Mr. MacLellan as the chairman of the Audit Committee, Mr. MacLellan replaced Mr. Taylor as the chairman of the Executive Compensation Committee, and Ms. Snowe replaced Dr. Alfred Sommer as chair of the Nominating and Corporate Governance RatingsCommittee. Our Corporate Governance Guidelines provide that periodic rotation of committee membership and chairpersons is desirable and that chairpersons generally will be considered for change at least every five years. This is not an absolute rule, however, and in some circumstances continued service on a committee or as chairperson by persons with particular skills may be warranted. WePROXY STATEMENT 2018 21
TABLE OF CONTENTS Nonexecutive Chair of the Board of Directors In April 2017, Mr. Rogers assumed his role as the nonexecutive chair of the Board of Directors. This allows us to continue to monitorbenefit from the company’s corporate governance ratings in order to assess possible improvements. As a result of this review in 2007, we introducedsignificant experience and leadership provided by Mr. Rogers. In his role as the non-executive chair, Mr. Rogers works closely with our lead independent director and executive officer stock ownership guidelinesCEO to provide leadership to our Board of Directors. Independent Leadership We believe that the current combination of a nonexecutive chairperson and more rigorous trackinga well-empowered lead independent director provides independent leadership of our Board of Directors. We also note that the Company has a strong independent Board, with three-quarters of the members being independent under the NASDAQ Global Select Market standards. In addition, this Committee, the Audit Committee, and the Compensation Committee are all composed entirely of independent directors, and our chairperson and lead independent director, education programs. together with these Committees, have significant and meaningful responsibilities designed to foster critical oversight and good governance practices. We believe that our structure is appropriate at this time and serves well the interests of the Company and its stockholders.Director Qualifications and the Nominations Process There have been a number of Board retirements over the past few years, including the retirement of Mr. Taylor and Ms. Whittemore, longtime members of our Board of Directors, at the upcoming Annual Meeting. As a result, the Committee has been very active in recruiting and considering new director candidates, adding Ms. Wijnberg in 2016 and Messrs. Culp and Wilson in 2015. As indicated elsewhere in this proxy statement, Mr. Verma has been nominated for addition to the Board at the upcoming Annual Meeting. After the 2018 Annual Meeting, the Board will have 12 members, nine of whom are independent. The tenure of our independent directors will be varied, with seven of our independent directors joining the Board after 2012. We believe that the nominees presented in this proxy statement constitute a Board with an appropriate level and diversity of experience, education, skills, and independence. We routinely consider whether additional independent directors should be added to the Board, and may add new members in the future. In considering the need for additional independent directors, we consider any expected Board departures and retirements and factor succession planning for the Board members into our deliberations, with particular reference to specific skills and capabilities of departing Board members. While we continue to look for additional directors with diverse and relevant backgrounds, we are very pleased with our current complement of directors and the varied perspectives they bring to the Board.This committee supervises the nomination process for directors. We consider the performance, independence, experience,diversity, and other characteristics of our incumbent directors, including their willingness to serve for an additional term, and any change in their employment or other circumstances in considering their re-nominationrenomination each year. In considering diversity, we consider diversity of background and experience as well as ethnic, gender, racial, and other forms of diversity. Although we do not have a formal policy regarding diversity in identifying nominees for a directorship, we monitor the diversity profile of the Board and consider it an important factor relevant to any particular nominee and to the overall composition of our Board. In the event that a vacancy exists or we decide to increase the size of the Board, we identify, interview and examine, and make recommendations to the Board regarding appropriate candidates. 10
We identify potential candidates principally through suggestions from the company’sCompany’s directors and senior management. The Chief Executive Officerchairman and chief executive officer and other Board members may also seek candidates through informal discussions with third parties. We also consider candidates recommended or suggested by stockholders as described below.In evaluating potential candidates, we consider independence from management, background, experience, expertise, commitment, diversity, age, number of other public board and related committee seats held, and potential conflicts of interest, among other factors, as well asand take into account the composition of the Board at the time of the assessment. All candidates for nomination must: | • | ■ | demonstrate unimpeachable character and integrity; |
| | • | ■ | have sufficient time to carry out their duties; |
| | • | ■ | have experience at senior levels in areas of expertise helpful to the companyCompany and consistent with the objective of having a diverse and well-rounded Board; and |
| | • | ■ | have the willingness and commitment to assume the responsibilities required of a director of the company.Company. |
In addition, candidates expected to serve on the Audit Committee must meet independence and financial literacy qualifications imposed by the NASDAQ Global Select Market and by the Securities and Exchange CommissionSEC and other applicable law. Candidates expected to serve on this committee or the Executive Compensation Committee must meet independence qualifications set out by the NASDAQ Global Select Market, and members of the Executive Compensation Committee maymust also be required to meet additional independence tests.tests imposed by the TABLE OF CONTENTS NASDAQ Global Select Market. Our evaluations of potential directors include, among other things, an assessment of a candidate’s background and credentials, personal interviews, and discussions with appropriate references. Once we have selected a candidate, we present him or her to the full Board for election if a vacancy occurs or is created by an increase in the size of the Board during the course of the year, or for nomination if the director is to be first elected by stockholders. All directors serve for one-year terms and must stand for re-electionreelection annually. Director Orientation and Continuing Education and Development When a new independent director joins the Board, we provide an orientation program for the purpose of providing the new director with an understanding of the operations and the financial condition of the Company as well as the Board’s expectations for its directors. Each director is expected to maintain the necessary knowledge and information to perform his or her responsibilities as a director. To assist the directors in understanding the Company and its industry and maintaining the level of expertise required for the director, the Company will, from time to time and at least annually, offer Company-sponsored continuing education programs or presentations in addition to briefings during Board meetings relating to the competitive and industry environment and the Company’s goals and strategies. The Board has joined the National Association of Corporate Directors, which provides resources that help directors strengthen board leadership. Each director is encouraged to participate at least once every three years in continuing education programs for public-company directors sponsored by nationally recognized educational organizations not affiliated with the Company. The cost of all such continuing education is paid for by the Company. Shareholder Proposals We from time to time receive shareholder proposals from our stockholders intended for inclusion in our proxy statement. We typically will work with Company management in reviewing these proposals and determine an appropriate course of action in response, including, where necessary, a statement of our position for or in opposition to the proposal from the stockholder. Policy withWith Respect to the Consideration of Director Candidates Recommended or Nominated by Stockholders A stockholder who wishes to recommend a candidate for the Board should send a letter to the chairperson of this committee at the company’sCompany’s principal executive offices providing (a)(i) information relevant to the candidate’s satisfaction of the criteria described above under “Director Qualifications and the Nominations Process” and (b)(ii) information that would be required for a director nomination under Section 1.11 of the company’sCompany’s Amended and Restated By-Laws. The committee will consider and evaluate candidates recommended by stockholders in the same manner it considers candidates from other sources. Acceptance of a recommendation does not imply that the committee will ultimately nominate the recommended candidate. Proxy Access and Nominations In late 2015, we adopted a proxy access right to permit a stockholder, or a group of up to 20 stockholders, owning 3% or more of the Company’s outstanding common stock continuously for at least three years, to nominate and include in the Company’s proxy materials director-nominees constituting up to two individuals or 20% of the Board (whichever is greater), provided that the stockholder(s) and the nominee(s) satisfy the requirements specified in the amended By-Laws. Section 1.13 of Price Group’s Amended and Restated By-Laws sets out the procedures a stockholder must follow to use proxy access. Section 1.11 of Price Group’s Amended and Restated By-Laws sets out the procedures a stockholder must follow in order to nominate a candidate for Board membership.membership outside of the proxy access process. For these requirements, please refer to the Amended and Restated By-Laws as of December 13, 2007,10, 2015, filed with the Securities and Exchange CommissionSEC on December 18, 2007,10, 2015, as Exhibit 3(ii) to a Current Report on Form 8-K. Olympia J. Snowe, Chair
Mary K. Bush
H. Lawrence Culp, Jr.
Anne Marie Whittemore Chairperson
Donald B. Hebb, Jr.
Alfred SommerAlan D. Wilson PROXY STATEMENT PROPOSAL 22018 23
APPROVAL The BoardSecurity Ownership of DirectorsCertain Beneficial Owners and Management Stock Ownership of 5% Beneficial Owners To our knowledge, these are the company has unanimously adopted resolutions, at its meeting on February _, 2008, declaring advisable and recommending to the company’s stockholders for their approval an amendment to the company’s charter to increase the authorized sharesfollowing beneficial owners of more than 5% of our outstanding common stock from 500,000,000 to 750,000,000. The textas of the proposed amendment is included in the form of Articles of Amendment attached hereto as Exhibit A. Although we have no current plans to issue any of the authorized, unreserved and unissued shares of common stock or the additional shares of common stock proposed to be authorized, the proposed charter amendment puts the Board in a position to be more responsive to market conditions and, if in the company’s and stockholders’ best interests, authorize a stock split in the future. The most recent charter amendment addressing authorized share provisions was passed by stockholders in April 1998, when the number of common shares was revised to the current 500,000,000. In June 2006, the common stock was split two-for-one. As of the February 11, 2008 record date, there were approximately ___million shares issued and ___million shares reserved for issuance under our existing stock incentive and stock purchase plans. With only 500,000,000 authorized common shares, we are unable to consider effecting another two-for-one stock split without asking stockholders to authorize a sufficient number of shares to accomplish it.23, 2018.Name and Address | Amount and Nature of
Beneficial Ownership | Percent of Class | BlackRock, Inc. | | | | | | | 55 East 52nd Street | | | | | | | New York, NY 10055 | 17,337,902 shares1 | | 7.09 | % | | | | | | State Street Corporation | | | | | State Street Financial Center | | | | | One Lincoln Street | | | | | Boston, MA 02111 | 13,314,981 shares2 | | 5.44 | % | | | | | | The Vanguard Group | | | | | 100 Vanguard Boulevard | | | | | Malvern, PA 19355 | 18,340,906 shares3 | | 7.50 | % |
| 1 | Based solely on information contained in a Schedule 13G/A filed with the SEC on January 29, 2018, by BlackRock, Inc. Of the 17,337,902 shares beneficially owned, BlackRock, Inc., has sole power to vote or direct the vote of 15,119,431 shares and sole power to dispose or to direct the disposition of 17,337,902 shares. |
| 2 | Based solely on information contained in a Schedule 13G filed with the SEC on February 14, 2018, by State Street Corporation. State Street Corporation has shared power to vote or direct the vote and shared power to dispose or direct the disposition of 13,314,981 shares. |
| 3 | Based solely on information contained in a Schedule 13G/A filed with the SEC on February 12, 2018, by The Vanguard Group. Of the 18,340,906 shares beneficially owned, The Vanguard Group has sole power to vote or direct the vote of 337,685 shares, sole power to dispose or to direct the disposition of 17,964,212 shares, shared power to vote or direct the vote of 45,545 shares, and shared power to dispose or to direct the disposition of 376,694 shares. |
11
If the amendment is approved, the newly authorized shares of common stock will have all the rights and privileges of the shares of common stock presently authorized. Once shares of the common stock are authorized, the Board of Directors may issue them without stockholder approval except as required by law or regulations. Although we have no present intention to issue any of the newly authorized shares, they could be used for a variety of corporate purposes, including the raising of additional capital to support expansion of our growth, either internally generated or through acquisitions, and stock issuances in connection with the acquisition of other business organizations, employee incentive plans, and stock split-ups and stock dividends. We are cognizant of the continuing trend toward consolidation in the investment management industry and believe there may be opportunities for growth through acquisition in the future. While we could in the future consider possible acquisitions, the company is not currently a party to any agreements or understandings regarding any material acquisitions. Acquisitions involving stock issuances above certain enumerated thresholds would require stockholder approval under applicable rules of NASDAQ and in some circumstances Maryland law. At the present time, there are no agreements, understandings, or arrangements providing for any additional stock issuances, other than through our existing stock incentive and stock purchase plans.
The Board of Directors is required to make any determination to issue shares of common stock based on its judgment as to the best interests of our stockholders and company. Although the Board of Directors has no present intention of doing so, it could issue shares of common stock that could make more difficult or discourage an attempt to obtain control of the company by means of merger, tender offer, proxy contest, or other means. When, in the judgment of the Board of Directors, this action will be in the best interests of our stockholders and company, such shares could be used to create voting or other impediments or to discourage persons seeking to gain control of the company. Such shares could be privately placed with purchasers favorable to the Board of Directors in opposing such action. The issuance of new shares could also be used to dilute the stock ownership of a person or entity seeking to obtain control of the company should the Board of Directors consider the action of such entity or person not to be in the best interests of our stockholders and our company. In addition, our charter currently authorizes the Board to classify and issue preferred stock and provides for reduced voting authority for certain persons and groups who beneficially own or otherwise have ownership or voting authority with respect to more than 15% of our common stock. Although we do not presently expect to enforce such provisions, they along with the additional authorized common shares may be beneficial to incumbent management and have an adverse effect on stockholders seeking to change the control of our company.
Recommendation of the Board of Directors; Vote Required
The Board of Directors has declared advisable and recommends that you vote FOR an amendment to the company’s charter to increase the authorized shares of common stock from 500,000,000 to 750,000,000. All properly executed proxies received in time to be tabulated for the Meeting will be voted FOR approval of this amendment to our charter unless otherwise specified.In order to be adopted at the Meeting, Proposal 2 must be approved by the affirmative vote of a majority of the total number of shares of common stock outstanding and entitled to vote. Accordingly, abstentions and broker non-votes will have the same effect as a vote against the amendment.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Stock Ownership of Management The following table sets forth information regarding the beneficial ownership of our common stock as of the record date, February 11, 2008,23, 2018, by (i) each director and each nominee for director, (ii) each person named in the Summary Compensation Table, on page 17, and (iii) all directors and executive officers as a group. Share amounts and percentages shown for each individual or group in the table assume the exercise of all stock options exercisable by such individual or group within 60 days of the record date and the settlement of restricted stock units that are vested or will vest within 60 days of the record date. Except as otherwise noted, all shares are owned individually with sole voting and dispositive power. Name of Beneficial Owner | Amount of Beneficial
Ownership | Percent of
Class1 | Christopher D. Alderson | | 583,016 | 2 | | | * | Mark S. Bartlett | | 19,237 | 3 | | | * | Edward C. Bernard | | 1,983,304 | 4 | | | * | Mary K. Bush | | 18,678 | 5 | | | * | H. Lawrence Culp, Jr. | | 19,958 | 6 | | | * | Dr. Freeman A. Hrabowski, III | | 64,041 | 7 | | | * | Robert F. MacLellan | | 59,086 | 8 | | | * | Kenneth V. Moreland | | 92,284 | | | | * | Brian C. Rogers | | 2,797,302 | 9 | | 1.1 | % | Robert W. Sharps | | 428,614 | 10 | | | * | Olympia J. Snowe | | 12,013 | 11 | | | * | William J. Stromberg | | 1,087,223 | 12 | | | * | Dwight S. Taylor | | 33,400 | 13 | | | * | Richard R. Verma | | — | 14 | | | * | Anne Marie Whittemore | | 51,231 | 15 | | | * | Sandra S. Wijnberg | | 7,341 | 16 | | | * | Alan D. Wilson | | 7,391 | 17 | | | * | Directors and All Executive Officers as a Group (21 persons) | | 7,692,895 | 18 | | 3.1 | % |
| | | | | | | | | | | Amount of Beneficial | | Percent of | Name of Beneficial Owner | | Ownership | | Class (1) | | Edward C. Bernard | | | (2) | | | | | | James T. Brady | | | (3) | | | | | | J. Alfred Broaddus | | | (4) | | | | | | Donald B. Hebb, Jr. | | | (5) | | | | | | James A.C. Kennedy | | | (6) | | | | | | Kenneth V. Moreland | | | (7) | | | | | | Brian C. Rogers | | | (8) | | | | | | Dr. Alfred Sommer | | | (9) | | | | | | William J. Stromberg | | | (10) | | | | | | Dwight S. Taylor | | | (11) | | | | | | Anne Marie Whittemore | | | (12) | | | | | | Directors & All Executive Officers as a Group (16 persons) | | | (13) | | | | | |
12
| | | (1)1 | | Beneficial Ownershipownership of less than one percent1% is represented by an asterisk (*). |
TABLE OF CONTENTS | (2)2 | | Includes 619,341240,121 shares that may be acquired by Mr. Alderson within 60 days upon the exercise of stock options and 262,000 shares held by a member of Mr. Alderson’s family. |
| 3 | Includes 2,837 unvested restricted stock awards. |
| 4 | Includes (i) 163,716 shares that may be acquired by Mr. Bernard within 60 days upon the exercise of stock options. Also includes 48,000options, (ii) 279,463 shares ownedheld in a family trust, (iii) 60,500 shares held by a member of Mr. Bernard’s family.family, and (iv) 846,210 shares held by trusts for which Mr. Bernard is a trustee and disclaims beneficial ownershipownership. Neither he nor any member of the shares identifiedhis family has any economic interest in the preceding sentence.trusts described in (iv). |
| (3)5 | | Includes 2,4002,837 unvested restricted stock awards and 16,00013,241 vested stock units that will be settled in shares of the Company’s common stock upon Ms. Bush’s separation from the Board. |
| 6 | Includes (i) 8,700 shares that may be acquired by Mr. BradyCulp within 60 days upon the exercise of stock options.options, (ii) 2,837 unvested restricted stock awards, (iii) 1,123 shares held in a family trust and foundation, (iv) 884 shares held by a family member’s trust, and (v) 2,064 shares held by a limited liability company in which Mr. Culp has an interest and disclaims beneficial ownership. |
| (4)7 | | Includes 36,000(i) 26,008 shares that may be acquired by Mr. BroaddusDr. Hrabowski within 60 days upon the exercise of stock options.options, (ii) 4,885 vested stock units that will be settled in shares of the Company’s common stock upon Dr. Hrabowski’s separation from the Board, and (iii) 33,148 shares held by a member of Dr. Hrabowski’s family. |
| (5)8 | | Includes 2,400 unvested restricted stock awards and 74,000(i) 51,268 shares that may be acquired by Mr. HebbMacLellan within 60 days upon the exercise of stock options.options, (ii) 2,837 unvested restricted stock awards, and (iii) 4,981 vested stock units that will be settled in shares of the Company’s common stock upon Mr. MacLellan’s separation from the Board. |
| (6)9 | | Includes 897,882 shares that may be acquired by Mr. Kennedy within 60 days upon the exercise of stock options. | | (7) | | Includes 71,200 shares that may be acquired by Mr. Moreland within 60 days upon the exercise of stock options. | | (8) | | Includes 616,240(i) 106,122 shares that may be acquired by Mr. Rogers within 60 days upon the exercise of stock options.options, (ii) 200,000 shares held by a member of Mr. Rogers’ family, and (iii) 150,000 shares held in a family trust in which Mr. Rogers disclaims beneficial ownership. |
| (9)10 | | Represents allIncludes 125,025 shares that may be acquired by Dr. SommerMr. Sharps within 60 days upon the exercise of stock options.options and 21,081 unvested restricted stock awards. |
| (10)11 | | Includes 463,6162,713 vested stock units that will be settled in shares of the Company’s common stock upon Ms. Snowe’s separation from the Board. |
| 12 | Includes (i) 112,912 shares that may be acquired by Mr. Stromberg within 60 days upon the exercise of stock options.options, (ii) 400,000 shares held by a limited liability company in which Mr. Stromberg has an interest, and (iii) 66,000 shares held in a family trust for which Mr. Stromberg disclaims beneficial ownership. |
| (11)13 | | Includes 36,0002,837 unvested restricted stock awards and 29,363 vested stock units that will be settled in shares that may be acquired byof the Company’s common stock upon Mr. Taylor within 60 days uponTaylor’s separation from the exerciseBoard. |
| 14 | Mr. Verma has been nominated for addition to the Board at the Annual Meeting and does not own any shares of stock options.the Company’s common stock. |
| (12)15 | | Includes 70,00029,141 shares that may be acquired by Ms. Whittemore within 60 days upon the exercise of stock options.options and 11,205 vested stock units that will be settled in shares of the Company’s common stock upon Ms. Whittemore’s separation from the Board. |
| (13)16 | | Includes 4,980,1732,837 unvested restricted stock awards and 4,504 vested stock units that will be settled in shares of the Company’s common stock upon Ms. Wijnberg’s separation from the Board. |
| 17 | Includes 7,391 vested stock units that will be settled in shares of the Company’s common stock upon Mr. Wilson’s separation from the Board. |
| 18 | Includes (i) 953,511 shares that may be acquired by all directors and executive officers as a group within 60 days upon the exercise of stock options. These shares also include 155,482 sharesoptions, (ii) 41,547 unvested restricted stock awards held by certain directors and executive officers, (iii) 78,285 stock units held by eight of the non-employee directors that are vested and will be settled in shares of the Company’s common stock upon their separation from the Board, and (iv) 2,435,673 shares held by family members, held in an account pledged as collateral for anotherfamily trusts or limited liability companies of certain executive officer’s credit line.officers and held by trusts in which certain executive officers are trustees. |
PROXY STATEMENT SECTION2018 25
TABLE OF CONTENTS Section 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCEBeneficial Ownership Reporting Compliance We believe that in 2007 our directors and officers timely compliedall filing requirements to comply with the requirements of Section 16(a) of the Securities Exchange Act to report ownership, and transactions which change ownership,were met during the calendar year 2017, except for the late filing of SEC Form 4 in September 2017 for certain of our common stock. executive officers as a result of an administrative error. The original filing for these executive officers’ transactions were due on September 8, 2017, but were not filed until September 19, 2017. Each late Form 4 reported one transaction for Messrs. Alderson, Bernard, Moreland, Stromberg, and Wiese.COMPENSATION OF NAMED EXECUTIVE OFFICERSDISCUSSION AND ANALYSIS The Compensation Discussion and Analysis Overview
Our (CD&A) provides an overview and analysis of our executive compensation philosophy and addresses the principal elements used to compensate our executive officers. In this section, we address the 2017 compensation determinations and the rationale for those determinations for our named executive officers (NEOs). This CD&A should be read together with the compensation tables that follow this section. Our NEOs for 2017 are as follows:Name | Title | William J. Stromberg | President and Chief Executive Officer | Kenneth V. Moreland | Chief Financial Officer and Treasurer | Edward C. Bernard | Vice Chairman | Christopher D. Alderson | Co-head of Global Equity | Robert W. Sharps | Co-head of Global Equity1 |
| 1 | Effective March 1, 2018, Mr. Sharps became the Head of Investments. |
Executive Summary Our compensation programs recognize and reward performance, with a focus on rewarding the intermediate- and long-term achievements of our NEOs, as measured by a number of factors, including: | ■ | financial performance and financial stability of Price Group; |
| ■ | relative investment performance of our investment products; and |
| ■ | performance of our NEOs against corporate and individual goals established at the beginning of the year. |
Our compensation programs are also designed to reward for other important contributions such as our culture, service quality, customer retention, risk management, corporate reputation, and the quality of our team of associates and collaboration within those teams. The majority of NEO compensation is performance-based and includes a material equity component, thereby ensuring compensation is dependent on the Company’s annual and longer-term performance. Overall, 2017 was a very good year for T. Rowe Price, our clients, and our stockholders. We delivered strong relative investment performance for our clients, experienced diversified organic growth across geographies and distribution channels, delivered strong financial results while investing for growth, and continued our track record of strong returns of capital to our stockholders. These results, which are further detailed below, were considered by the Compensation Committee in setting 2017 pay for our NEOs. For 2017, performance-based incentives awarded to William J. Stromberg, our president and chief executive officer (“NEO”)(CEO) increased 25% over the prior year, with the majority of the increase in performance-based restricted stock units. This increase reflects both the Committee’s assessment of Mr. Stromberg’s performance in his second year as CEO and an evaluation of competitive levels of compensation among peers. We expect that long-term equity incentives will play an important part of future increases in CEO pay. Mr. Moreland retired in early 2018 and received a retirement payment in lieu of a 2017 bonus or long-term equity award. The terms of his arrangement are discussed under the Post-Employment Payments section of this CD&A on page 41. TABLE OF CONTENTS The mix of compensation elements awarded this year to our CEO and other continuing NEOs, as illustrated below, reflects our compensation philosophy. Fixed base salary composes a small portion of overall compensation, whereas performance-based pay, in annual cash incentives and long-term equity awards, represents the most significant portion. 
2017 PERFORMANCE HIGHLIGHTS
Each year, we identify both long-term and short-term goals that are designed to promote a team-oriented structure that operates in the best interests of our clients, associates, and stockholders. Our performance against our 2017 goals and objectives, which are described on page 36, was as follows: | ■ | Investment performance relative to our peers has been strong over a long period. The percentage of our Price funds across their share classes and our asset allocation funds that outperformed their comparable Lipper averages on a total return basis and percentage in top Lipper quartile for the one-, three-, five-, and 10-years ended December 31, 2017, were: |
| One year | Three years | Five years | 10 years | Outperformed Lipper averages | | | | | | | | | | | | | All Price funds (across their share classes) | | 72 | % | | 84 | % | | 82 | % | | 81 | % | Asset allocation | | 86 | % | | 97 | % | | 93 | % | | 93 | % | | | | | | | | | | | | | | Top Lipper quartile | | | | | | | | | | | | | All Price funds (across their share classes) | | 38 | % | | 50 | % | | 55 | % | | 57 | % | Asset allocation | | 59 | % | | 60 | % | | 82 | % | | 86 | % |
| ■ | 88% of our rated Price funds’ assets under management ended the year with an overall rating of four or five stars from Morningstar. |
| ■ | The performance of our funds and institutional strategies against benchmarks remains competitive over longer periods. |
| ■ | Our strong investment performance, combined with our growing distribution reach, helped us extend our leadership position in a number of core businesses. |
TABLE OF CONTENTS | ■ | Our operating results have increased significantly over the last five years. Results for 2017 in comparison to the prior two years, and to 2012, are as follows: |
| | Assets
Under
Management
(in billions) | |
Net
Revenue
(in billions) | | Net Operating
Income
(in billions) | |
Operating
Margin
| | Net Income
Attributable
to TRPG
(in billions) | | Diluted
Earnings per
Share
| | Non-GAAP
Diluted
Earnings per
Share
| | Cash
Returned to
Stockholders
(in billions) |
2017
| |
$991.1
| |
$4.8
| |
$2.1
| |
44%
| |
$1.5
| |
$5.97
| |
$5.43
| |
$1.0
| | | | | | | | | |
2016
| |
$810.8
| |
$4.2
| |
$1.7
| |
41%
| |
$1.2
| |
$4.75
| |
$4.49
| |
$1.2
| | | | | | | | | |
2015
| |
$763.1
| |
$4.2
| |
$1.9
| |
45%
| |
$1.2
| |
$4.63
| |
$4.39
| |
$2.0
| | | | | | | | | |
2012
| |
$489.5
| |
$3.0
| |
$1.4
| |
45%
| |
$.8
| |
$3.36
| |
$3.20
| |
$.7
|
| ■ | In 2017, strong relative investment performance, robust markets, and solid organic growth increased our assets under management by $180.3 billion to $991.1 billion at December 31, 2017. During 2017, clients added $14.0 billion while market appreciation and income, net of distributions not reinvested, added $166.3 billion. As a result, our net revenue increased 13.5% over 2016, as average assets under management increased 16.8%. |
| ■ | Our overall financial condition remains very strong, as we finished the year with $5.8 billion of stockholders’ equity, $2.7 billion of cash and discretionary investments in T. Rowe Price investment products, and no debt. We also had redeemable seed capital investments in T. Rowe Price investment products of $1.2 billion at December 31, 2017. |
| ■ | We increased our annual recurring dividend for the 31st consecutive year, by 5.6%. The average increase in our annual recurring dividend has been 12.0% over the last 10 years. We expended $458.1 million to repurchase 6.6 million shares, or 2.7% of our outstanding common stock, in 2017. Dividends and stock repurchases will vary depending upon our financial performance and liquidity, market conditions, and other relevant factors. |
| ■ | We have seen early, but encouraging, signs of success in the execution of our strategic initiatives to strengthen and extend our core businesses across products, distribution, and technology. Some successes include: |
| ■ | We have more than doubled our multi-asset team over the last two years in order to broaden our global product suite and build consultative solutions in Asia Pacific and Europe, the Middle East, and Africa. Our multi-asset products now make up 29.5% of our assets under management. |
| ■ | A number of the new investment strategies and vehicles we launched from 2015 through 2017 have gained traction, including the Active Plus Portfolios and the I Classes of our Price fund offerings. |
| ■ | We expanded our distribution reach by making our Price funds available to retail investors and advisors on no-transaction-fee platforms at Fidelity and Charles Schwab. |
| ■ | We opened our Maryland Innovation Center, which has introduced a variety of new digital capabilities across our Individual Investors and Retirement Plan Services channels. |
| ■ | We launched our New York Technology Development Center, where a growing team of specialized technology professionals and data scientists are focused on improving client experiences, enhancing client segmentation, and augmenting our investment process. |
| ■ | We completed the acquisition of the Henderson High Yield Opportunities Fund in May 2017, providing additional high yield capacity. Performance remains strong, and assets under management has grown significantly since the acquisition. |
TABLE OF CONTENTS | ■ | We successfully completed key phases of the fund accounting and portfolio recordkeeping systems transition to BNY Mellon, which will enable us to finalize fund accounting transition in the third quarter of 2018. |
| ■ | We have added several key new leaders into the Company, with an emphasis in investments, distribution, and technology; the high-priority areas of our strategic investments. |
EXECUTIVE COMPENSATION PRACTICES
At the 2017 annual meeting, our stockholders cast a non-binding advisory vote on the compensation of the NEOs. Nearly 96% of the shares voted approved the compensation paid to our NEOs. The Compensation Committee welcomed this feedback and considers it supportive of our approach to provide a significant portion of the compensation of our executive officers, including our NEOs, as restricted stock units that vest over time and for our NEOs to be subject to preestablished performance goals based on relative operating margin so that their interests are effectively aligned with the future performance of the Company. The Compensation Committee continues to implement and maintain practices in our compensation programs and related areas that reflect responsible corporate governance and compensation practices. These practices include the following: | What We Do | | What We Don’t Do | | Include all independent directors on the Compensation Committee. | | Allow executives or independent directors to short-sell the Company stock or hedge to offset a possible decrease in the market value of Company stock held by them. | | | | | | Impose significant stock ownership and retention requirements on our independent directors, NEOs, and other select members of senior management. | | Enter into change-in-control agreements with any of our executive officers. | | | | | | Emphasize variable compensation, including long-term equity incentive compensation. | | Provide excise tax gross-ups. | | | | | | Award restricted stock units that are subject to a 12-month objective performance-based earning period and a five-year ratable vesting schedule. | | Enter into broad-based employment agreements with our United States-based executive officers. | | | | | | Impose double-trigger vesting on acceleration of awards granted under our 2012 Long-Term Incentive Plan (2012 Incentive Plan) in the event we are acquired or taken over by another company. | | Pay dividends on unearned performance-based restricted stock units. | | | | | | Engage an independent compensation consultant who provides services only to the Compensation Committee and provides no other services to the Company or its management. | | Accelerate the vesting of equity awards on an executive officer’s retirement. | | | | | | Use a comprehensive risk management program designed to identify, evaluate, and control risks and our compensation and stock ownership programs work within this risk management system. | | Permit the repricing or exchange of equity awards in any scenario without stockholder approval. | | | | | | Have a recoupment policy for both cash and equity incentive compensation in place for executive officers in the event of a material restatement of our financial results within three years of the original reporting. | | Sponsor any supplemental executive retirement plans or provide significant perquisites and other personal benefits to our executive officers. | | | | |
TABLE OF CONTENTS Executive Compensation Philosophy and Objectives Our NEO compensation programs are designed to satisfy two core objectives: | •■ | | retaining the mostattract and retain talented of a small pool ofand highly skilled investment professionals;management professionals with deep experience in investments, business leadership and client service; and |
| | •■ | | maintaining a close communitymaintain alignment of interests between themour management professionals and our common stockholders by linking their total compensation to ourfocusing on long-term corporate performance.performance and value creation, emphasizing appropriate enterprise risk-taking, reinforcing a “client-focused” and collaborative culture, and reward associates for the achievement of strategic goals. |
We strive to maintain the highest levels of performance within the investment management and financial services industries. Success in these sectors requires the leadership of experienced managers with extensive and specialized training and expertise. The pool of high-quality candidates is smaller than the leadership needs for us and our competitors, resulting in significant competition for available talent. We consider each of our NEOs to be an invaluable resource, and over many years with us they have developed as a cohesive and complementary management team. We believe it is imperative that our NEO compensation packages remain attractive and competitive in comparison to peer companies. At the same time, we recognize that NEO compensation should be straight-forward, goal-oriented, longer-term focused, transparent, and consistent with the interests of our stockholders. Our NEO compensation is primarily based on incentive compensation, with the intention that base salaries constitute a relatively small portion of overall compensation. Our compensation programs are designed to reward NEOs for short-term success as well as long-term performance, as measured by the financial performance of Price Group and by the relative investment performance of our investment funds and portfolios. Our compensation programs also are designed to reward the more intangible, but still critical, contributors to our success, such as service quality, corporate integrity, institutional loyalty, and corporate reputation.
Our Executive Compensation Committee is responsible for determining the compensation of our NEOs.stockholder interests. In making these determinations, the committee receives input from FWCook, an independent compensation consultant retained by the committee, who provides information about the competitive market for senior management in the investment management and financial services industries. The committee also receives input from the Chief Executive Officer and other senior executive officers of the company, including information concerning compensation paid to senior officers of the company who are not the NEOs and the relationship of that compensation to available data about compensation paid to senior personnel in other investment management and financial services companies. You can find more information regarding our Executive Compensation Committee and how it operates on page 7.
The discussion below addresses the principal elements of our NEO compensation. Please also consult the compensation tables beginning on page 17 for more detailed information.
13
Base Salary
We pay base salaries at amounts expected to constitute significantly less than 50% of total compensation, so that the substantial majority of NEO compensation is dependent on our continued success and growth. Each of our NEOs was paid a base salary of $350,000 for 2007, and is expected to be paid the same base salary for 2008.
Incentive Compensation
We strongly believe thataddition, NEO compensation should be consistent with the interests of our stockholders, and therefore should belinked directly linked to our overall corporate performance, as well as to our success in achieving our long-term strategic goals. We traditionally have not offeredKEY ELEMENTS OF 2017 NEO COMPENSATION
Our compensation program consists primarily of three elements: base salary, annual cash incentives, and long-term equity awards. By design, a significant portion of NEO compensation is performance-based, which aligns pay to Company performance and to their individual performance against goals. There is no preestablished formula for the allocation between cash and noncash compensation or between short-term and long-term compensation. Instead, each year the Compensation Committee determines, in its discretion, the appropriate level and mix of short-term and long-term awards to our senior executives employment agreements or severance or change-of-control agreements. In addition, whileNEOs to reward annual performance and to encourage meeting our executives participatelong-term strategic goals. The key features and purpose of the primary compensation elements are detailed in a defined contribution retirement plan, we do not provide them any supplemental retirement benefits. Accordingly, we believe that our incentive and equity compensation programs are extremely critical to maintaining the competitiveness of our compensation arrangements, particularly given the absence of these other supplemental benefits or plans.table below. Element | Key Features | Purpose | Salary | ■ Fixed annual cash amount.
■ Salary paid to our most senior personnel in
the U.S. has been capped at $350,000
since 2005.
■ Mr. Alderson’s salary has been capped at
£240,000 since January 1, 2017. | ■ Represents a smaller component of total
compensation, so that the substantial
majority of NEO compensation is dependent
on performance-based annual incentives as
well as long-term equity incentives. |
We have
TABLE OF CONTENTS Element | Key Features | Purpose | Annual Incentive Compensation Pool (AICP) | ■ Represents a material portion of the NEO’s
total compensation.
■ Administered by the Compensation
Committee.
■ The AICP is part of the Company’s overall
bonus pool, in which nearly all employees
participate.
■ The AICP represents an aggregate maximum
bonus pool available to the NEOs and other
executive officers that is based solely on the
financial performance of the Company in the
current fiscal year. The Compensation
Committee annually determines the
maximum percentage of the total bonus pool
set by the AICP that can be awarded to
each NEO.
■ Actual bonus amounts awarded to each NEO
are based on Company financial and
operating performance relative to annual
goals and objectives plus individual
performance and contributions of each NEO
toward those results.
■ Actual amounts for each NEO are typically
significantly less than the maximum amount
determined under the plan. | ■ Provides structure for incentive compensation
and, coupled with the use of discretion by the
Compensation Committee, aligns cash
compensation of the NEOs and other senior
management to the annual performance of
the Company.
■ Motivates our NEOs and other senior
management to achieve goals and objectives
that are consistent with our long-term
strategy.
■ Provides competitive cash compensation to
attract and retain diverse high-quality talent. | Long-Term Equity Incentives | ■ Represents a material portion of the NEO’s
total compensation.
■ The value of the grant for each NEO is based
on the NEO’s relative level of corporate
management and functional responsibility,
competitive assessment of similar roles within
the marketplace, individual performance, and
expected future long-term contributions.
■ For 2017, all long-term equity award values
granted to NEOs were performance-based
restricted stock units.
■ Grants are awarded at the regularly
scheduled December meeting of the
Compensation Committee.
■ The performance-based restricted stock units
an NEO can earn can range from 0-100% of
the total units granted based on an operating
margin performance relative to peers.
■ For the 2017 annual grant, earned units will
vest at a rate of 20% per year starting in
February of the year following the end of the
performance period. | ■ Creates strong alignment of the financial
interests of our NEOs directly to long-term
performance, as measured by our relative
profitability and stock price.
■ Provides a significant incentive to our NEOs
and other senior management to protect and
enhance long-term stockholder value.
■ Motivates our NEOs and other senior
management to focus on long-term
performance and profitability.
■ Enhances the link between compensation
and company performance through the
granting of performance-based restricted
stock units.
■ Provides competitive compensation to attract
and retain diverse high-quality talent. |
TABLE OF CONTENTS Annual Incentive Compensation Pool to provide cash compensation that sets maximum bonus amounts based entirely on performance, and generally results in cash compensation after review and finalization by the Committee which is based both on current and long-term performance. The stock incentive program is designed to provide equity compensation primarily linked to longer-term performance. At the beginning of each year, the Management Compensation Committee, which is made up of the senior executive officers of the company, will, in conjunction with the Executive Compensation Committee of the Board of Directors, identify goals and objectives for the upcoming year. Some of the objectives will be relatively consistent from year to year while others will vary depending upon the initiatives that will be undertaken in that year. All are designed to be consistent with a strategy to manage Price Group toward long-term goals with the objective of a team-oriented structure that operates in the best long-term interests of clients, associates and stockholders. Goals and objectives established for 2007 included the following:
| • | | Recruit, train and retain the highest quality associates; | | | • | | Sustain the strong relative investment results of our mutual funds and other investment portfolios; | | | • | | Maintain high awareness, positive brand image and our reputation for integrity; | | | • | | Continue to strengthen our diversified distribution strategy; | | | • | | Enhance organizational capabilities to manage sustained growth and the increasing scope and complexity of our business; | | | • | | Implement important capital projects and evaluate other requirements to support future growth; and | | | • | | Maintain strong relative financial performance. |
In assessing the performance of our NEOs during 2007, we considered their performance against these and other objectives and noted the following:
| • | | The company had a strong financial performance in 2007 achieving record revenues, net income, earnings per share, assets under management and stockholders’ equity; | | | • | | Relative investment performance continued at a very favorable level with at least 72% of our funds across their share classes outperforming their comparable Lipper averages on a total return basis for the three-, five-, and 10-year periods ended December 31, 2007, and Morningstar awarding four or five stars to funds accounting for more than 72% of our rated funds’ assets under management; | | | • | | We were successful in our recruiting efforts, including numerous key senior hires, and continued to attract, train, and mentor our high quality staff; | | | • | | We continued to distribute effectively across multiple channels of distribution, and for the 2007 year had net cash inflows of $33.8 billion and ended the year with assets under management of $400 billion. | | | • | | In 2007, we completed several facilities expansion and renovation projects and initiated new projects to accommodate future growth in operations. |
14
In addition, the committee recognized that management has continued to create an environment of cooperation and collaboration among its employees while recognizing and rewarding individual achievement. Further, the committee believes that the firm’s reputation of high integrity has been maintained.
Annual Incentive Compensation Pool
All of our NEOs participated in our Annual Incentive Compensation Pool approved by Price Group’s stockholders at our 2003 Annual Meeting. The Annual Incentive Compensation Pool is designeddetermined by the annual performance of the Company and is intended to coordinatepermit bonuses paid to our NEOs to qualify for a federal income tax deduction under Section 162(m) of the Internal Revenue Code. The maximum bonus forpool under the AICP is an NEO with our performance over a calendar year. It provides for a bonus pool based onamount equal to 6% of the first $50 million of “adjusted earnings,” plus 8% of the amount by which “adjusted earnings”, which exceed $50 million. Adjusted earnings is defined as income before income taxes as reflected in our audited consolidated statements of income, adjusted to exclude certain extraordinary, unusual, or nonrecurring items,items; any charge relating to goodwill,goodwill; and the effect of changes in accounting policy.
The amounts awarded under the AICP are considered to be part of the overall annual bonus program in which nearly all of the employees of the Company are eligible to participate. The size of the Company’s total annual bonus pool is determined by the Compensation Committee and Management Compensation Committee and is based on the Company’s financial, reputational, and operational success over time, with a focus on valuing performance that serves the needs of our clients and the best long-term interests of our stockholders. In addition, we also consider the Company’s investment performance and service quality for clients, progress toward stated objectives relating to the Company’s long-term strategies, and the need to remain competitive to retain our key personnel. Compensation Committee’s Use of Discretion The Compensation Committee has exercised negative discretion to pay significantly less than the maximum amount available to each NEO under the Annual IncentiveAICP. The Compensation PoolCommittee believes that discretion is funded in an amount equal to 6% of “adjusted earnings” up to $50 million, plus 8%a critical feature of the amount by which “adjusted earnings” exceed $50 million. Early in 2007,Company’s executive compensation program. While the Executive Compensation Committee approveduses financial and other metrics to set the participation of Messrs. Kennedy, Rogers and Bernard each at a level of up to 19% of the bonus pool, Mr. Stromberg at a level of up to 16%maximum amount of the bonus pool and Mr. Moreland atas a level of up to 7%factor in the evaluation of the bonus pool. Otherperformance of our senior officers of the company participateexecutives, our business is dynamic and requires us to respond rapidly to changes in the remainder of the pool.market conditions and other factors outside our control that impact our financial performance. The percentages set a maximum amount that could be awarded under the terms of the Annual Incentive Compensation Pool to each NEO, and reflect an expectation of possible relative participation in that pool by the NEOs based largely on their respective roles. In setting the percentages, the Executive Compensation Committee considered it likelybelieves that ita rigid, formulaic program based strictly on metrics could have unintended consequences such as encouraging executives to place undue focus on achieving specific metrics at the expense of others. In addition, formulaic compensation would exercise discretion consistent with past practicenot permit adjustments based on factors beyond the control of our executives as well as relative performance in relation to pay lower thanmarket conditions and less quantifiable factors such as recognition of key individual achievements. Discretion also allows the maximum amount after assessingCompensation Committee to fully consider the overall contributionperformance of our executives, and performance ofit allows the Compensation Committee to maintain alignment between the bonus amounts paid to the NEOs and the bonus amounts paid to other senior personnel of the Company. Long-Term Equity Incentives We believe our long-term equity program is a significant factor in maintaining a strong correlation between the compensation levels withinof our top managers and professionals, including our NEOs, and the company. Individual bonuses awarded bylong-term interests of our clients and stockholders. Given the Executiveimportance of this factor, the Compensation Committee for 2007 are detailedincreased the percentage of each NEO’s compensation as long-term equity incentives in the Summary Compensation Table on page 17 under the column labeled “Non-Equity Incentive Plan Compensation.” The Executive Compensation Committee determined these bonus amounts based on2017, excluding Mr. Moreland who had a variety of factors, including the assessment factors discussed above under Incentive Compensation. In addition, the Executive Compensation Committee considered in the case of Messrs. Kennedy, Rogers, and Bernard their handling of the additional responsibility transitioned to them as a result of the senior management changes over the last few years and their assumption of joint responsibilityspecial retirement arrangement. This is most prevalent for the overall managementCEO.Our approach to long-term equity compensation for our NEOs has incorporated different award vehicles (e.g., stock options, restricted stock, or restricted stock units) and direction of the company. The committee considered alsohas varied over time. Starting in the case of Mr. Kennedy his responsibility and performance as Chief Executive Officer and President of the company; in the case of Mr. Rogers the committee also considered his responsibility as Chairman of the Board and his continued investment responsibilities and performance as Chief Investment Officer;2016, we moved away from stock options to granting restricted stock units and, in the case of Mr. Bernardour NEOs, performance-based restricted stock units. The use of performance-based equity compensation is prevalent among our competitors as it offers a more stable long-term incentive while still maintaining stockholder alignment. We will continue to monitor our usage and mix of specific equity award types and make adjustments as long-term business needs or market practice changes. Additionally, prior to 2017, we made our equity grants in two tranches in February and September. For 2017, we changed to a single annual grant in December to more closely align our equity incentive grants to the committee also considered his responsibilitytiming of our annual bonus and other compensation decisions. Over time, equity compensation is intended to represent a material portion of an NEO’s total realized compensation. As mentioned, the equity award value is meant to be a long-term reflection of the value added by the individual as well as their potential for interactionsfuture contributions to the Company. The total equity award value granted to an NEO from year to year is based on an evaluation of the individual’s performance and an assessment of the NEO’s relevant compensation positioning versus market peers in similar roles. The ultimate value realized from an equity award fluctuates with the company’s sponsored mutual fund boardsCompany’s market price, thus aligning NEO pay with stockholder interests. TABLE OF CONTENTS RISK MANAGEMENT AND THE ALIGNMENT OF MANAGEMENT WITH OUR STOCKHOLDERS
In determining the structure of our executive compensation program and marketingthe appropriate levels of incentive opportunities, the Compensation Committee considers whether the program rewards reasonable risk-taking and distribution matters. Lastly,whether the committee consideredincentive opportunities achieve the proper balance between the need to reward employees and the need to manage risk and protect stockholder returns. While the design of our executive compensation program is primarily performance-based, we believe that it does not encourage excessive risk-taking. Ongoing and active discussions with management regarding progress on short-term and long-term goals enables informed decisions while avoiding the risks that can be associated with managing short-term results to achieve predetermined formulaic outcomes. Our compensation programs are designed to provide executive officers with appropriate incentives to create long-term value for stockholders while taking thoughtful and prudent risks to grow value over time. We believe that our equity program, our stock ownership guidelines, and the very significant stock ownership of our NEOs create important links between the financial interests of our executives and long-term performance and mitigate any incentive to disregard risks in return for potential short-term gains. In addition, the Company has in place a robust risk management program designed to identify, evaluate, and control risks. Through this program, we take a companywide view of risks and have a network of systems and oversight to ensure that risks are not viewed in isolation and are appropriately controlled and reported, including a system of reporting to the chief executive officer, the Audit Committee, and the full Board of Directors. We believe that our compensation and stock ownership programs work within this risk management system. TABLE OF CONTENTS Process for Determining Executive Compensation The Compensation Committee has established a comprehensive process for: | ■ | reviewing our executive compensation program designs to ensure that they are aligned to our philosophy and objectives, |
| ■ | establishing goals to assess performance against, and |
| ■ | setting compensation for the NEOs and other senior executives. |
The table below summarizes the actions taken by the Compensation Committee throughout 2017. First Quarter |
| Second Quarter | ■ Discuss the Company’s strategic imperatives and
related goals and objectives for the year.
■ Designate participants in AICP and set each NEO’s
maximum payout percentage.
■ Certify prior-year financial results for payout of the
AICP and determine whether performance thresholds
on prior-year restricted stock units had been met. | | ■ Review our compensation governance practices.
■ Assess progress against the Company’s strategic
imperatives and related goals and objectives for the
year.
■ Review the Company’s current year-to-date
performance, including financial, investment, and
client service performance.
■ Consider with members of the Management
Compensation Committee the potential funding size
of the overall annual bonus pool. |
Third Quarter |
| Fourth Quarter | ■ Review with management and our independent
compensation consultant the external trends in both
the investment management industry and more
broadly, regulatory and other developments affecting
executive compensation.
■ Assess progress against the Company’s strategic
imperatives and related goals and objectives for
the year.
■ Review the Company’s current year-to-date
performance, including financial, investment, and
client service performance.
■ Consider with members of the Management
Compensation Committee the potential funding size
of the overall annual bonus pool.
■ Consider stockholder and proxy advisor feedback in
connection with our say-on-pay vote results. | | ■ Review projected peer compensation data provided
by our independent compensation consultant and
McLagan Partners survey data.
■ Evaluate the Company’s performance against its
goals.
■ Evaluate executive officer performance against goals
of their respective roles, with input from the CEO for
certain other executive officers.
■ Approve the size of the Company’s overall annual
bonus pool and determine the annual incentive cash
pool payout to each NEO and other AICP
participants.
■ Consider with the members of the Management
Compensation Committee the size and parameters of
the year’s equity incentive program.
■ Define the performance metric and performance
period for restricted stock units granted to our
executive officers as part of the annual equity
incentive program. |
ROLE OF INDEPENDENT COMPENSATION CONSULTANT
Johnson Associates provides the Compensation Committee with information about the competitive market for senior management in the case of Mr. Stromberg his responsibility to manage the U.S. equity investment management groupand financial services industries and compensation trends across industries generally. A representative from Johnson Associates attended and presented to the Compensation Committee on these matters at their meeting in September 2017. Johnson Associates also provided guidance and assistance to the Compensation Committee as it made its 2017 incentive compensation decisions at its December 2017 meeting. TABLE OF CONTENTS Frederic W. Cook & Co., Inc. served as the Compensation Committee’s independent compensation consultant through August 2017. After conducting a process to review its compensation consulting relationship, in September 2017, the Compensation Committee replaced FW Cook and engaged Johnson Associates as their independent compensation consultant. The Compensation Committee benefited from each consultant’s broad experience in advising compensation committees, in-depth understanding of investor perspectives on compensation, and familiarity with our compensation programs and policies and those in the financial services industry. The Compensation Committee will continue to periodically review its relationship with Johnson Associates and their continued appointment as the Committee’s independent consultant. Many of our key competitors are not publicly traded or are subsidiaries of larger companies. These competitors generally do not make public the compensation data of their top executive officers. At the October 2017 Compensation Committee meeting, Johnson Associates presented a report of expected competitive pay for each NEO based on current industry trends and their market evaluation of each NEO’s role. This data, along with competitive market data provided to management by McLagan Partners (McLagan) and input from the CEO and other senior executive officers of the company and his participationCompany, provided guidance to the Committee in their compensation decisions for each NEO. McLagan has an extensive database on compensation for most investment management companies, including private companies for which information is not otherwise generally available. McLagan summarizes data by role across multiple companies without specifically identifying information for a particular company. Management uses the Management Committee, andsummary information from McLagan for a reasonable estimation of compensation levels in the caseindustry for persons with specific roles relevant to our business (e.g., portfolio manager, analyst, client service manager, etc.). Relevant portions of Mr. Moreland his performancethis information are shared by executive management with the Compensation Committee. McLagan works with management and does not act as Chief Financial Officer.a compensation consultant to the Compensation Committee. Neither FW Cook nor Johnson Associates has provided any services to the Company other than those provided to the Compensation Committee in their role as independent consultant. The incentive bonus awardCompensation Committee has assessed the independence of FW Cook and Johnson Associates pursuant to SEC rules and concluded that the work performed by each NEO was considerably less than the maximum available to him under the 2007 bonus pool.advisor does not raise any conflicts of interest. COMPETITIVE POSITIONING In considering these factors and making these determinations, the committee also considered
The Compensation Committee annually reviews competitive data regarding compensation at peer companies in the investment management industry with their independent compensation consultant and other financial services industries.management. We do not set compensation levels to fall within specific ranges compared with benchmark data. Instead, we use the information developed by management using proxy data for peer group companies and survey data provided by McLagan and others about the competitive market for senior management to gain a general understanding of current compensation practices and to assist in the development of compensation programs and setting compensation levels for our senior executives. In this regard, FWCook provided the Executive Compensation Committee withreviewed compensation data for a competitive group comprisedcomprising of 10the nine asset management companies listed below: Affiliated Managers Group, Inc. | Eaton Vance Corp. | Invesco Ltd. | AllianceBernstein L.P. | Federated Investors, Inc. | Janus Capital Group, Inc. | BlackRock, Inc. | Franklin Resources, Inc. | Legg Mason, Inc. |
The companies making up the peer group listed above were selected because they are public company traditional asset managers with significant assets under management. The Compensation Committee continuously reviews the composition of this peer group to analyze our executive compensation program and 10 financial services companies.determine whether any changes should be made. In addition management made availableto specific information on these companies, the Compensation Committee reviewed aggregated summary compensation data based on information from surveys that include some of the peer companies listed above as well as other public and nonpublic companies with which we compete for executive talent, including the Capital Group Companies Inc., Fidelity Investments, Goldman Sachs Group Inc., JPMorgan Chase, MFS Investment Management, Oppenheimer & Co. Inc., Pacific Investment Management Company LLC., Putnam Investments, The Vanguard Group Inc., Wellington Management Company LLP, and Western Asset Management Co. In light of our overall performance in 2017, the Compensation Committee believes that the compensation paid to our CEO and other NEOs is reasonable in relation to the committee detailed compensation data providedpaid by McLagan Partnersour peer companies both on an absolute basis and in comparison to relevant from a competitive standpoint tofinancial performance metrics. TABLE OF CONTENTS 2017 Compensation Decisions Given our shared and collaborative leadership structure, when setting the compensation set for other senior officersin 2017, the Compensation Committee considered the collective contribution of the company.NEOs to the Company’s strategic imperatives as highlighted in the executive summary to this CD&A as well as their contributions to the related annual goals described below. The committee notedCompensation Committee considered each NEO’s individual contributions to the achievement of these and longer-term goals and the NEO’s individual performance in its deliberations that ittheir functional responsibilities. The Compensation Committee also looked to maintain reasonable alignment between the compensation of the NEOs and other senior personnel in order to retain talent and maintain an internally consistent compensation environment. BASE SALARY
Each of our NEOs based in the U.S. had a collaborative environment. While itbase salary of $350,000 for 2017. This level of base salary is consistent with the base salary paid to our most senior personnel and has not changed since 2005. Mr. Alderson is based in the U.K. and was paid a base salary of £240,000 in 2017. INCENTIVE COMPENSATION
At the beginning of 2017, the Compensation Committee identified goals for the NEOs and other senior management. Performance relative to these goals guides our cash and equity incentive program decisions for each NEO. Some of the objectives are relatively consistent from year to year, while others will vary depending upon the strategic initiatives for that year. Accordingly, some of the goals are longer term in nature and others are specifically focused on annual or other short-term objectives. All are designed to promote a team-oriented structure that operates in the best interests of clients, associates, and stockholders. Taking into account the unique challenges of an investment management firm, goals are intended to optimize management’s effectiveness in managing factors within its control, while positioning the Company to successfully navigate market volatility and other external factors beyond management’s control. Long-term goals that apply every year include the objective to recruit, develop, and retain diverse associates of the highest quality while creating an environment of collaboration and appropriately rewarding individual achievements and initiatives. This focus on our associates is intended to create a combination of talent, culture, and processes that will allow us to achieve superior investment results, market our products effectively, and deliver outstanding service on a global basis. Specific goals established for 2017, and against which performance of our NEOs was judged at year-end, consisted of the following: Perform for Our Clients | ■ | Sustain strong long-term investment results and competitiveness of our investment strategies. |
| ■ | Expand and enhance our investment capabilities and products to meet evolving client demands, while managing investment capacity. |
| ■ | Maintain our reputation for integrity, as well as our positive brand image and competitive name awareness. |
Invest in Our People | ■ | Attract, develop, and retain top senior leadership and investment talent and plan for management succession. |
| ■ | Continue to develop human talent capabilities, attract and retain a collaborative and diverse workforce, and enhance internal communications. |
Enhance Our Global Capabilities and Infrastructure | ■ | Evolve our enterprise culture, workplace, and organizational capabilities to position us for long-term success. |
| ■ | Ensure that our global investment operating model, capabilities, and processes continue to evolve to be successful on a larger scale. |
| ■ | Sustain and enhance our diversified distribution strategy and capabilities to support long-term organic growth. |
| ■ | Continue appropriate investment to enhance our organizational, systems, and risk management capabilities to effectively manage the increasing scope and complexity of our business in a global context. |
TABLE OF CONTENTS Deliver and Grow Operating Results and Maintain Financial Strength | ■ | Manage our financial position and financial performance to protect and benefit our clients, associates, and stockholders, striking a balance between short-term financial results and the need to continuously invest in long-term capabilities. |
Individual Performance Considerations In addition to the Company’s performance highlighted in the executive summary on page 26, the Compensation Committee considered the following individual contributions when setting 2017 compensation, with the exception of Kenneth V. Moreland who was compensated for 2017 under a separate retirement agreement. Name | Compensation Committee Considerations | William J. Stromberg
President and Chief
Executive Officer | Role Considerations | ■ | Leadership, responsibility, and performance in second year as president and chief executive officer, and chair of our Management Committee and Management Compensation Committee. | | | | | Individual Achievements | | ■ | Led the ongoing execution of our integrated enterprise strategy. This included significant enhancements to the Company’s governance of enterprise change programs and continued evolution of our organizational structure. | | ■ | Broadened the Management Committee with several new appointments, and transitioned new leaders into the Investments and Finance functions. | | ■ | Overall investment performance remained very strong for three-, five-, and 10- year periods against peers and benchmarks; investment performance was very competitive in 2017. | | ■ | Annual net revenues grew 14% and diluted earnings per share on a non-GAAP basis increased 21%, despite significant reinvestment back into the business to grow and diversify the Company. Return on equity was a healthy 28% for 2017, compared with 25% in 2016. The Company returned $1.0 billion to stockholders in 2017 through dividends and share repurchases, and the balance sheet strengthened further with $2.7 billion of cash and discretionary investments.
| Edward C. Bernard
Vice Chairman | Role Considerations | ■ | Leadership, responsibility, and performance as chair of the Price funds’ Boards and as leader of the marketing, distribution, operations, technology and legal functions. | | | | | Individual Achievements | | ■ | Lead support role to chief executive officer in development and implementation of a new integrated strategy. Managed the continuing implementation of a new operating model aligning operations with its related distribution function, and reorganized distribution channels. | | ■ | Key contributor on a variety of committees including Management, Management Compensation, and the Product Steering Committee, which he chairs. | | ■ | Oversaw creation of our client experience and delivery transformation work. This capability will enhance the client experience of our individual investor and retirement plan participants while improving our effectiveness and efficiency. | | ■ | Guided the distribution and service groups which contributed to the Company’s increase in organic growth to 1.7% while also maintaining high customer satisfaction. | | ■ | Oversaw a significant increase in productivity of our technology efforts - increasing functionality while improving controls and efficiency.
|
TABLE OF CONTENTS Name | Compensation Committee Considerations | Christopher D. Alderson
Co-head of Global Equity | Role Considerations | ■ | Leadership, responsibility, and performance as co-head of global equity, head of International Equity, and chair of the International Steering Committee. | | | | | Individual Achievements | | ■ | Investment performance for International Equity continued to be strong for one-, three-, and five-years against peers and benchmarks. Central leadership role in developing the talent and culture of the team to deliver excellent results at scale. | | ■ | Developed a three-year product road map for international equity products and led its early implementation. | | ■ | Significant succession planning contributions and a key leader of our Brexit planning efforts. Key contributor on a variety of committees including, Management, Asset Allocation, and the Product Steering Committee. | | ■ | Outstanding client development contributions across U.S., Europe, and Asia.
| Robert W. Sharps
Co-head of Global Equity | Role Considerations | ■ | Leadership, responsibility, and performance in first year as co-head of global equity and group chief investment officer. | | | | | Individual Achievements | | ■ | Excellent global equity investment performance over one-, three-, five- and 10-years with continued strengthening of the investment teams and collaboration between them. | | ■ | Coordinated activities of our newly formed six-person chief investment officer group. Excellent representation of the Company as group CIO. | | ■ | Influential oversight of global trading including successfully transitioning to a new global head of trading. | | ■ | Key contributions as director of certain Price funds’ boards and as contributor to our Price Group board meetings. | | ■ | Key contributor on a variety of committees, including Management, U.S. Equity, International Equity, Fixed Income, Asset Allocation, and the Product Steering Committee. | | ■ | Leadership role in preparing the Company for implementation of MiFID II regulation. |
Annual Incentive Compensation The AICP for 2017 was $195.4 million, compared with $161.1 million for 2016. In calculating the AICP for 2017, the Company’s 2017 audited income before taxes of $2,455.1 million was adjusted in accordance with the terms of the AICP for the nonrecurring insurance recoveries related to the Dell appraisal rights matter to determine adjusted earnings as defined under the AICP. The Compensation Committee approved, at the beginning of the year for each of the NEOs and certain other executive officers of the Company, the maximum percentage of the AICP that could be paid to each participant. The percentages assigned reflect an expectation of relative participation in the pool by the NEOs and certain other executive officers largely due to their respective roles and contribution to the Company rather than a prediction of the likely amount that ultimately will be awarded. In 2017, the Committee elected to allocate only 50% of the AICP to our CEO and five other executive officers with the expectation that actual awards would be significantly less than the maximum amounts allocated to each officer. Accordingly, $97.7 million of the pool was not available for bonus allocations. TABLE OF CONTENTS The table below sets forth the maximum payout (in millions) based on the total bonus pool allocated to each NEO, with the exception of Kenneth V. Moreland who was compensated for 2017 under a separate retirement agreement, and the actual bonus determinations (in millions) made by the Compensation Committee for our NEOs for the years 2017 and 2016. Name | 2017 Maximum
Payout Based
on Total Pool | 2017
Payout | 2016
Payout | Percentage
Change Over 2016
Payout | William J. Stromberg | $ | 21.9 | | $ | 7.6 | | $ | 6.9 | | 10.9% | Edward C. Bernard | $ | 19.9 | | $ | 6.0 | | $ | 5.3 | | 13.2% | Christopher D. Alderson | $ | 19.9 | | $ | 5.8 | 1 | $ | 5.4 | 1 | 6.9% | Robert W. Sharps | $ | 19.9 | | $ | 7.3 | | | n/a | | n/a |
| 1 | Bonus amounts received by Mr. Alderson pursuant to his employment agreement are paid in British pounds. In 2017, Mr. Alderson received a bonus of GBP 4.5 million, an increase of 12.5% over his GBP 4.0 million bonus payout in 2016. |
The Compensation Committee does not currently expectuse a formulaic approach in determining the maximum percentage of the pool that can be paid out or the actual amount paid to do so,each of the committee does retainNEOs. In this regard, the Compensation Committee considered it likely that it would exercise negative discretion consistent with past practice to pay significantly less than the maximum amount to the NEOs. Among other things, exercising such negative discretion allows the Company to spread more of the total available annual bonus pool to a broader group of contributors within the Company and maintains alignment between the bonus amounts paid to the NEOs and expected bonuses paid to peers with similar roles at our competitors. The Compensation Committee has the power to authorize additional incentive compensation or bonuses outside the AICP, but did not do so in 2017 other than in connection with the retirement agreement for Mr. Moreland. Equity Incentive Compensation Beginning in 2017, the Compensation Committee approved a change from twice-a-year grants made in February and September to a once-a-year grant made in December. The change was made to consolidate the equity grant awards into the Company’s year-end compensation process. By doing so, all elements of year-end compensation could be communicated at one time. Also as a result of the Annual Incentivegrant timing change, dividend equivalents on unvested units that would have accrued if the grant had been made earlier in the year were lost. The Compensation Pool. Bonuses underCommittee approved a one-time supplemental cash payment in 2017 to continuing equity incentive compensation recipients, including certain NEOs, equivalent to the Annual Incentive Compensation Pool are structured to be deductible under Section 162(m)value of cash dividend equivalents lost as a result of the Internal Revenue Code. Section 162(m) denies publicly-held corporations the federal income tax deduction for compensation in excess of $1 million paid to the chief executive officer and the three other most highly compensated officers during a fiscal year, other than the chief financial officer, unless the compensation is “performance-based.” We believe that the Annual Incentive Compensation Pool satisfies the “performance-based” requirements of Section 162(m); however, there can be no assurance that we will be able to achieve such deductibilitychange in the future.
Stock Option Awards
We also consider it crucial to maintain a strong association between our NEO compensation and our stockholders’ long-term interests. We believe that our equity compensation programaward timing. The amount of this payment is a significant factor in achieving this goal. Equity compensation is intended to represent a material portion of our NEOs’ total compensation.
Although the Executive Compensation Committee has the authority to grant stock appreciation rights and restricted stock awards in addition to stock options, to date options have been the primary form of equity compensation and the only awards that have been made to our NEOs. We have historically used stock options rather than other forms of equity compensation; however, we may grant restricted stock awards to our NEOsreferenced in the future. bonus column of the Summary Compensation Table on page 43.As part of our annual equity incentive program, the Compensation Committee recommended to the Board of Directors, and the full Board approved, the granting of an equity award program, we grantedvalue in restricted stock units and performance-based restricted stock units to employees, including our NEOs, optionsat the regularly scheduled committee meeting in December 2017. Mr. Moreland, who retired in early 2018, did not receive a 2017 equity award as he was being compensated under a separate retirement agreement. Each equity award value was converted to purchase an aggregate of 430,000 sharesunits using the closing stock price of our common stock representing 8%on the date of all optionsgrant. The NEOs were granted the following equity incentive value (in millions) and resulting performance-based restricted stock units in 2017. Name | Equity
Incentive
Value | Performance-
Based
Restricted
Stock Units | William J. Stromberg | $ | 3.6 | | | 34,876 | | Edward C. Bernard | $ | 1.6 | | | 15,719 | | Christopher D. Alderson | $ | 2.0 | | | 19,649 | | Robert W. Sharps | $ | 3.1 | | | 29,964 | | Total Granted to NEOs | $ | 10.3 | | | 100,208 | |
The NEOs’ grants represent 5% of the total equity awards we awarded to our employees in 2007.2017 under our annual equity incentive program. The foregoing percentage excludes replenishment options which were automatically granted when shares already owned were relinquished in paymentNEOs’ grants over the previous five years have represented on average 4% of the exercise pricetotal equity awards we granted in each year. The Compensation Committee has emphasized the need to provide a greater percentage of an outstanding non-qualified optionexecutive officer compensation in the form of equity awards for 2017 and has thus increased grant sizes. TABLE OF CONTENTS Performance-Based Restricted Stock Units - Performance Thresholds and Vesting Similar to prior years, the performance thresholds established by the Compensation Committee for the performance-based restricted stock units granted prior to November 2004. In determining these option grants, the committee took into account, among other factors, the existing share ownership levels of our NEOs. 15
With the exception of grants to new employees and replenishment grants, all equity grants to employees, including the option grantsin 2017 to our NEOs were based on the Company’s operating margin for the performance period compared with the average operating margin of a designated group of public company peers (Industry Average Margin) that was composed of: Affiliated Managers Group, Inc., AllianceBernstein L.P., BlackRock, Inc., Eaton Vance Corp., Federated Investors, Inc., Franklin Resources, Inc., Invesco Ltd., and Legg Mason, Inc. This is the same proxy peer group listed above that is used in evaluating the competitive positioning of our compensation program, excluding Janus Capital Group, Inc., which was removed as a peer due to its acquisition in 2017. The Compensation Committee selected operating margin as the sole performance metric because it is a key indicator of profitability and relative financial performance in the asset management industry. Operating margin was determined by dividing net operating income by total revenues for the performance period, as reported in the consolidated financial statements filed with the SEC or, if such financial statements are not available for a peer company at the time of determination, as otherwise disclosed in a press release by such peer company; in each case, net operating income is adjusted to exclude the effects of goodwill impairment, the cumulative effect of changes in accounting policies or principles, and gains or losses from discontinued operations, as each is reflected on the face of or in the notes to the relevant financial statements.The following table sets forth the performance thresholds and related percentage of restricted stock units eligible to be earned that were established by the Compensation Committee for the 2017 awards. TROW Operating Margin as
Percent of Industry Average
Margin | >=100% | 90%-99% | 80%-89% | 70%-79% | 60%-69% | 50%-59% | <50% | Amount of Restricted Stock
Units Eligible to be Earned | 100% | 90% | 80% | 70% | 60% | 50% | 0% |
As detailed in the table below, the NEOs earned the full number of eligible restricted stock units in 2017 that were granted in February 2016 and September 2016. Grant Date | Performance Period | TROW Operating Margin
as Percent of Industry
Average Margin | Amount Earned and
Subject to Standard
Vesting Schedule | Vesting Start
Month/Year | February 2016 | January 1, 2016 to December 31, 2016 | Greater than 100% | 100% Granted | December 2017 | September 2016 | July 1, 2016 to June 30, 2017 | Greater than 100% | 100% Granted | December 2017 | December 2017 | January 1, 2018 to December 31, 2018 | Indeterminable at this time | February 2019 |
Restricted stock units earned by each NEO following the completion of the relevant 12-month performance period vests at a rate of 20% per year beginning in the month and year specified in the chart above once the Compensation Committee certifies the number of awards earned. Other Compensation Policies and Practices DEFINED CONTRIBUTION PLAN
Our U.S. retirement program provides retirement benefits based on the investment performance of each participant’s account. For 2017, we contributed $148,176 to this program for our U.S.-based NEOs as a group. We provide this program to all U.S. employees in order to assist them in their retirement planning. The contribution amounts are based on plan formulas that apply to all employees. Mr. Alderson is located in the U.K. and we pay him cash in lieu of a contribution to the U.K. pension program as a result of a Fixed Protection election made on September 6, 2007,with the U.K. tax authorities, which required him to opt out of the U.K. pension program. In 2017, we paid him $28,934, which is consistent with our policy to award equity grants at a regularly scheduled meeting of the Executive Compensation Committee. Since the options vest ratably over five years and will not be fully exercisable until 2012, and the exercise price is set at the grant-date fair value of $50.02, we believe the option grants provide added incentive for our management team to strive for continued long-term growth and profitability. The timing of replenishment grants, which are discussed in greater detail on page 19, is determined solely by the option holder, because such grants occur automatically when an eligible non-qualified option is exercised by relinquishing shares already owned in payment of the exercise price. The Management Compensation Committee, pursuant to authority delegated to it by the Executive Compensation Committee, granted equity awards to a few non-executive new hires. All new employee grants were awardedbased on the first business day ofcontribution formula in the month followingprogram and is equal to the start of employment.amount he would have received had he stayed in the program. 40 Stock Ownership GuidelinesT. ROWE PRICE GROUP
During 2007,
TABLE OF CONTENTS PERQUISITES AND OTHER PERSONAL BENEFITS
We do not provide significant perquisites and other personal benefits to our executive officers. We make available to all senior officers programs related to executive health benefits and parking. We also cover certain costs associated with the NEOs’ spouses’ participation in events held in connection with the annual Price Group and Price funds joint Board of Directors adoptedmeeting as well as other business-related functions. Mr. Alderson also receives, along with other senior personnel outside the United States, a minor travel insurance allowance. Additionally, the Compensation Committee has approved the payment of fees to the Federal Trade Commission for any filings required to be made by our executive officers under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended as a result of their stock ownership guidelinesof the Company. The executive officer is responsible for any taxes due as a result of the Company paying the HSR Act filing fees and are not provided a tax gross-up payment. SUPPLEMENTAL SAVINGS PLAN
The Supplemental Savings Plan provides certain senior officers, including the NEOs, the opportunity to defer receipt of up to 100% of their cash incentive compensation earned for a year during which services are provided. The amounts deferred are adjusted in accordance with the hypothetical investments chosen by the officer from a list of products under our U.S. retirement program. Any amounts so deferred must be deferred for a period of at least two years but may be deferred for a longer period or until termination of employment. Distributions from the Supplemental Savings Plan are made in a lump-sum payment or as installment payments for up to 15 years. For 2017, each of the NEOs elected to have a portion of their AICP payout deferred. See our Nonqualified Deferred Compensation Table on page 50 for more information. POST-EMPLOYMENT PAYMENTS
The Company entered into an agreement (Agreement) with Mr. Moreland, its chief financial officer and treasurer, related to the retention of his services during a transition period preceding his retirement. Pursuant to the Agreement, and its subsequent amendment, the Company retained the services of Mr. Moreland as the chief financial officer and treasurer of the Company through the filing of the Form 10-K for the Company’s 2017 fiscal year on February 16, 2018. In addition to the continuation of his current $350,000 base salary during the period in 2017 and 2018 in which he was employed, he received additional compensation at the time of his retirement from the Company in an amount equal to $1,725,000. As a condition to receipt of this payment, Mr. Moreland agreed, among other things, to remain with the Company as provided above, and to fully comply with the terms of the Agreement, including confidentiality and non-solicitation of employees. Except as described above, we have not entered into severance or other post-employment agreements with any of our other NEOs. Consequently, we generally do not have any commitments to make post-employment payments to them. All agreements for stock option and stock awards granted to employees from our equity plans prior to February 2012 include provisions that may accelerate the vesting of outstanding equity awards upon the grantee’s death or in connection with a change in control of Price Group or, at the administrator’s discretion, upon disability of the grantee. We changed these acceleration provisions for stock options and stock awards granted on and after February 23, 2012, in the following ways: We aligned the treatment of the awards in the event of a grantee’s death or termination of employment due to total disability so that vesting acceleration will occur in both events. In addition, we provided for “double-trigger” vesting acceleration in the event the equity incentive awards are not terminated as part of the change-in-control transaction. This means that in such a circumstance, accelerated vesting only occurs if, at the time of or within 18 months after the change-in-control transaction, a participant’s employment is terminated involuntarily without cause or the participant resigns with good reason (generally requiring a material diminution in authority or duties, material reduction in compensation, or relocation by a substantial distance). If the acquiring entity requires that we terminate outstanding equity incentive awards as part of the change-in-control transaction, vesting also will accelerate and award holders will be given an opportunity to exercise outstanding stock options before such termination. The Compensation Committee can modify or rescind these provisions or adopt other acceleration provisions. See our Potential Payments on Termination or Change in Control on page 50 for further details. RECOUPMENT POLICY
Our Board of Directors has adopted a Policy for Recoupment of Incentive Compensation for executive officers of the Company. This policy provides that in the event of a determination of a need for a material restatement of the Company’s financial results within three years of the original reporting, the Board will review the facts and circumstances that led to the requirement for the restatement and will take actions it deems necessary and appropriate. The Board will consider whether any executive officer received incentive compensation, including equity awards, based on the original financial statements that TABLE OF CONTENTS in fact was not warranted based on the restatement. The Board will also consider the accountability of any executive officer whose acts or omissions were responsible in whole or in part for the events that led to the restatement. The actions the Board could elect to take against a particular executive officer include: the recoupment of all or part of any bonus or other incentive compensation paid to the executive officer, including recoupment in whole or in part of equity awards; disciplinary actions, up to and including termination; and/or the pursuit of other available remedies, at the Board’s discretion. STOCK OWNERSHIP GUIDELINES
We have a stock ownership policy for our executive officers. The guidelines provideThis policy provides that our NEOs and our other key executivesexecutive officers are expected to reach levels of ownership determined as a stated multiple of an executive’s base salary within five years after the adoption of the guidelines or, if later, within five years from the date when the executive assumed his or her position. The stated ownership multiples are 10 times base salary for the President, Vice ChairmanCEO and Chairman,vice chairman, five times base salary for other members ofthose executive officers on our Management Committee, and three times base salary for otherthe remaining executive officers. Payment Once the executive officer reaches the ownership target, the number of HSR Act Fees
Certainshares needed to reach the level is expected to be retained. All of our NEOs’ ownership levels are substantially above their required stock ownership guideline.TAX DEDUCTIBILITY OF COMPENSATION
Prior to January 1, 2018, Section 162(m) of the Internal Revenue Code generally disallowed a tax deduction to public corporations for compensation greater than $1.0 million paid for any fiscal year to certain “covered employees,” defined under Section 162(m) as the corporation’s chief executive officer and to the three most highly compensated executive officers other than the chief executive officer and the chief financial officer. Certain forms of performance-based compensation, however, were excluded from the $1.0 million deduction limit if certain requirements were met. In connection with making compensation decisions, the Compensation Committee has always considered the potential tax deductibility of executive compensation under Section 162(m) and sought to qualify certain elements of these applicable executives’ compensation as performance-based. Tax deductibility, however, is not the sole factor used by the Compensation Committee in setting compensation. Corporate objectives may not necessarily align with the requirements for full deductibility under Section 162(m). Accordingly, the Compensation Committee reserves the right to make payments or awards that are not deductible under Section 162(m) if the Compensation Committee determines that such nondeductible payments or awards are otherwise in the best interests of the Company and our stockholders. Effective January 1, 2018 Section 162(m) was amended by the 2017 U.S. tax reform, originally known as the Tax Cuts and Jobs Act of 2017 (Tax Reform), to disallow a tax deduction for all compensation, including Messrs. Kennedy and Rogers, have been requiredperformance-based compensation, in excess of $1.0 million a public corporation pays to submit filingsits covered employees, as defined under Section 162(m) as amended by the Tax Reform, unless the compensation qualifies for transition relief applicable to compensation payable pursuant to a written binding contract that was in effect on November 2, 2017. Guidance defining the Hart-Scott-Rodino Antitrust Improvements Actscope of 1976, based on their ownershipthe transition relief has not yet been issued. Notwithstanding the Compensation Committee’s efforts to structure the compensation paid or payable to the Company’s covered employees in a manner intended to be exempt from the Section 162(m) deduction limits, because of our common stock. We pay filing fees on behalfambiguities and uncertainties as to the application and interpretation of our executive officers when such filings are required because the filings are a direct result of each NEO’s position with our companySection 162(m) and the equity awards we have granted to them, and we believe that not payingregulations issued thereunder, including the fees would be inconsistent with our goal of encouraging stock ownership among our NEOs. We also paid an additional amount sufficient to cover the estimated tax liability resulting from our paymentuncertain scope of the filing fees to help ensure that there is no significant out-of-pocket cost to our NEOstransition relief in connection with this filing obligation.the Tax Reform’s repealing the deduction limit exemption under Section 162(m), no assurance can be given that compensation intended to satisfy the requirements for exemption from Section 162(m) will satisfy the exception or fall within the transition relief. ACCOUNTING FOR STOCK-BASED COMPENSATION Defined Contribution Plan
Our U.S. retirement program provides retirement benefitsWe account for stock-based compensation in accordance with generally accepted accounting principles. Pursuant to the guidance, stock-based compensation expense is measured on the grant date based on the investment performancefair value of the award. We recognize stock-based compensation expense ratably over the requisite service period of each participant’s account. For 2007,award and we contributed $147,500 to this program for our NEOs as a group. We provide this program to our NEOsconsider, in the case of performance-based restricted shares and to all U.S. employees in order to assist them in their retirement planning. We calculateunits, the contribution amounts based on plan formulas that apply to all employees, including NEOs.probability of the performance thresholds being met. 42 Post-Employment PaymentsT. ROWE PRICE GROUP
We have not entered into agreements with any
TABLE OF CONTENTS Report of the Executive Compensation and Management
Development Committee As part of our NEOs, soresponsibilities, we do not anticipate making any post-employment payments to them. All existing option agreements heldhave reviewed and discussed with management the Compensation Discussion and Analysis required by all grantees under our 2001 and 2004 Stock Incentive Plans include a provision that may accelerate the vestingItem 402(b) of outstanding but unexercisable options so that all options will become exercisable in connection with a change in control of Price Group and remain exercisable for a one-year period thereafter. The Executive Compensation Committee can modify or rescind this provision, or adopt other acceleration provisions. See our Outstanding Equity Awards TableRegulation S-K, which begins on page 1926 of this proxy statement. Based on such review and discussions, we have recommended to the Board of Directors the inclusion of the Compensation Discussion and Analysis in this proxy statement and in the Company’s Annual Report on Form 10-K for further details. 16
Robert F. MacLellan, ChairmanMark S. BartlettMary K. BushH. Lawrence Culp, Jr.Dr. Freeman A. Hrabowski, IIIOlympia J. SnoweDwight S. TaylorAnne Marie WhittemoreSandra S. WijnbergAlan D. WilsonCompensation of Named Executive OfficersSUMMARY COMPENSATION TABLE1 Summary Compensation Table(1).
The following table summarizes the total compensation of our named executive officers,NEOs, who are the Chief Executive Officer,chief executive officer, the Chief Financial Officerchief financial officer, and our three other most highly compensated executive officers. Name and Principal
Position | Year | Salary | Bonus3 | Stock
Awards4 | Option
Awards5 | Non-Equity
Incentive Plan
Compensation6 | All Other
Compensation7 | Total | William J. Stromberg
President and Chief
Executive Officer | | 2017 | | $ | 350,000 | | $ | 39,759 | | $ | 3,550,028 | | $ | — | | $ | 7,600,000 | | $ | 130,182 | | $ | 11,669,969 | | | 2016 | | $ | 350,000 | | $ | — | | $ | 1,800,045 | | $ | — | | $ | 6,850,000 | | $ | 82,350 | | $ | 9,082,395 | | | 2015 | | $ | 350,000 | | $ | — | | $ | 807,923 | | $ | 609,650 | | $ | 6,600,000 | | $ | 79,700 | | $ | 8,447,273 | | Kenneth V. Moreland
Chief Financial Officer
and Treasurer | | 2017 | | $ | 350,000 | | $ | 1,725,000 | | $ | — | | $ | — | | $ | — | | $ | 73,352 | | $ | 2,148,352 | | | 2016 | | $ | 350,000 | | $ | — | | $ | 485,061 | | $ | — | | $ | 1,000,000 | | $ | 80,742 | | $ | 1,915,803 | | | 2015 | | $ | 350,000 | | $ | — | | $ | 265,460 | | $ | 200,290 | | $ | 900,000 | | $ | 80,412 | | $ | 1,796,162 | | Edward C. Bernard
Vice Chairman | | 2017 | | $ | 350,000 | | $ | 17,920 | | $ | 1,600,037 | | $ | — | | $ | 6,000,000 | | $ | 81,095 | | $ | 8,049,052 | | | 2016 | | $ | 350,000 | | $ | — | | $ | 1,450,036 | | $ | — | | $ | 5,300,000 | | $ | 79,836 | | $ | 7,179,872 | | | 2015 | | $ | 350,000 | | $ | — | | $ | 692,505 | | $ | 522,568 | | $ | 5,300,000 | | $ | 78,969 | | $ | 6,944,042 | | Christopher D. Alderson2
Co-head of Global Equity | | 2017 | | $ | 309,300 | | $ | 21,345 | | $ | 2,000,072 | | $ | — | | $ | 5,799,200 | | $ | 32,800 | | $ | 8,162,717 | | | 2016 | | $ | 305,057 | | $ | — | | $ | 1,700,041 | | $ | — | | $ | 5,423,240 | | $ | 57,999 | | $ | 7,486,337 | | | 2015 | | $ | 343,970 | | $ | — | | $ | 923,340 | | $ | 696,762 | | $ | 5,732,835 | | $ | 65,405 | | $ | 7,762,312 | | Robert W. Sharps
Co-head of Global
Equity | | 2017 | | $ | 350,000 | | $ | 34,159 | | $ | 3,050,036 | | $ | — | | $ | 7,300,000 | | $ | 84,169 | | $ | 10,818,364 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Non-equity | | | | | | Name and Principal | | | | | | | | | | | | | | Option Awards | | incentive plan | | All other | | | | Position | | Year | | Salary | | Bonus | | (2) | | compensation (3) | | compensation (4) | | Total | | | | James A.C. Kennedy | | | 2007 | | | $ | 350,000 | | | $ | — | | | $ | 1,361,386 | | | $ | 5,750,000 | | | $ | 281,249 | | | $ | 7,742,635 | | | Chief Executive Officer and President | | | 2006 | | | $ | 350,000 | | | $ | — | | | $ | 975,626 | | | $ | 4,300,000 | | | $ | 57,161 | | | $ | 5,682,787 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Brian C. Rogers | | | 2007 | | | $ | 350,000 | | | $ | — | | | $ | 2,012,738 | | | $ | 6,250,000 | | | $ | 279,087 | | | $ | 8,891,825 | | | Chairman and Chief Investment Officer | | | 2006 | | | $ | 350,000 | | | $ | — | | | $ | 1,953,759 | | | $ | 4,800,000 | | | $ | 121,374 | | | $ | 7,225,133 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Edward C. Bernard | | | 2007 | | | $ | 350,000 | | | $ | — | | | $ | 1,712,006 | | | $ | 5,000,000 | | | $ | 57,915 | | | $ | 7,119,921 | | | Vice Chairman and President, T. Rowe Price Investment Services | | | 2006 | | | $ | 350,000 | | | $ | — | | | $ | 1,651,453 | | | $ | 3,800,000 | | | $ | 57,161 | | | $ | 5,858,614 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | William J. Stromberg | | | 2007 | | | $ | 350,000 | | | $ | — | | | $ | 1,542,854 | | | $ | 4,400,000 | | | $ | 57,066 | | | $ | 6,349,920 | | | Director of Equities and Director of Global Equity Research | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Kenneth V. Moreland | | | 2007 | | | $ | 350,000 | | | | — | | | $ | 525,940 | | | $ | 650,000 | | | $ | 59,435 | | | $ | 1,585,375 | | | Chief Financial Officer | | | 2006 | | | $ | 350,000 | | | $ | 500,000 | | | $ | 431,090 | | | | — | | | $ | 48,661 | | | $ | 1,329,751 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | (1)1 | | Includes only those columns relating to compensation awarded to, earned by, or paid to the NEOs in 20062017, 2016, and 2007, except with respect to Mr. Stromberg, who was not an NEO in 2006.2015. All other columns have been omitted. We have excluded Mr. Sharps’ compensation for 2016 and 2015, as he was not a named executive officer in these years. |
| | (2)2 | Cash amounts received by Mr. Alderson pursuant to his employment agreement are paid in British pounds. In calculating the U.S. equivalent for amounts that are not denominated in U.S. dollars, the Company converts each payment to Mr. Alderson into U.S. dollars based on an average daily exchange rate during the applicable year. The average exchange rates for 2017, 2016, and 2015 were 1.28870, 1.35581 and 1.52876 U.S. dollars per British pound, respectively. Mr. Alderson’s 2016 cash compensation was lower compared with 2015 in U.S. dollar terms as a result of the significant decline in British pounds against the U.S. dollar. In British pounds, Mr. Alderson’s cash compensation was £4,740,000 in 2017 (12.2% increase), £4,225,000 in 2016 (6.3% increase), and £3,975,000 in 2015. |
| The 2007 amounts included3 | Messrs. Stromberg, Bernard, Alderson, and Sharps, along with other equity incentive participants, were paid a one-time supplemental cash bonus in 2017 for the table representcash dividend equivalents lost as a result of changing from a semiannual equity grant to |
TABLE OF CONTENTS an annual equity grant. For Mr. Moreland, the 2017 amount was earned under a retirement agreement and paid out at the time of his retirement from the Company in 2018. This retirement amount was earned in lieu of a 2017 bonus under the annual incentive compensation pool and an equity award. See the Post-Employment Payments section of the Compensation Discussion and Analysis on page 41 for further details. | 4 | Represents the compensation cost recognized in Price Group’s 2007 financial statements relating to stock option awards granted to each NEO as part of our 2002 through 2007 annual award programs, and in the case of Messrs. Kennedy, Rogers, Bernard, and Stromberg, 2007 replenishment grants. The grant-datefull grant date fair value of each annual award is being recognizedperformance-based restricted stock units granted. The fair value was computed using the market price per share of T. Rowe Price common stock on the date of grant multiplied by the target number of units, as this was considered the probable outcome. See the Grants of Plan-Based Awards Table for the target number of units for 2017. |
| 5 | As discussed in our Compensation Discussion and Analysis, we did not utilize options in our 2017 and 2016 equity compensation cost overprogram. Rather, we granted all performance-based restricted stock units. For 2015, the requisite service period pursuant to SFAS 123Ramounts represent the full grant date fair value computed using the Black-Scholes option-pricing model. The following representsA description of the weighted-average assumptions used for volatility, risk-free interest rate, dividend yield, and expected life in the years indicated: |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2002 | | 2003 | | 2004 | | 2005 | | 2006 | | 2007 | | | | | | Expected life in years | | | 5.7 | | | | 5.5 | | | | 5.2 | | | | 5.5 | | | | 5.5 | | | | 5.4 | | | | Expected volatility | | | 36 | % | | | 35 | % | | | 33 | % | | | 29 | % | | | 26 | % | | | 23 | % | | | Dividend yield | | | 1.4 | % | | | 1.5 | % | | | 1.7 | % | | | 1.7 | % | | | 1.7 | % | | | 1.7 | % | | | Risk-free interest rate | | | 4.0 | % | | | 3.6 | % | | | 3.7 | % | | | 4.2 | % | | | 4.6 | % | | | 4.3 | % | | | |
| | | | | | | A further description of these assumptionsoption-pricing model is included in the Significant Accounting Policies for Stock Awards and Options on page 31Stock-Based Compensation of the 20072017 Annual Report to Stockholders. |
| | (3)6 | | Represents cash amounts awarded by the Executive Compensation Committee and paid to NEOs under the 20072017 Annual Incentive Compensation Pool. See our Compensation Discussion and Analysis and the Grants of Plan BasedPlan-Based Awards Table for more details ofregarding the workings of this plan. The 2017 amounts include amounts elected to be deferred by all NEOs under the Supplemental Savings Plan. See the Nonqualified Deferred Compensation Table for further details. |
| | (4)7 | | The following types of compensation are included in the all other compensation“All Other Compensation” column for 2007:2017: |
Name | Contributions
to Retirement
Program | Retirement
Program Limit
Bonusa | Matching
Contributions to
Stock Purchase
Planb | Matching Gifts
to Charitable
Organizationsc | Hart-Scott-
Rodino
Feesd | Perquisites
and Other
Personal
Benefitse | Total | William J. Stromberg | $ | 36,000 | | $ | 4,176 | | $ | 4,000 | | $ | 25,000 | | $ | 45,000 | | $ | 16,006 | | $ | 130,182 | | Kenneth V. Moreland | $ | 40,176 | | $ | 4,176 | | $ | 4,000 | | $ | 25,000 | | $ | — | | $ | — | | $ | 73,352 | | Edward C. Bernard | $ | 36,000 | | $ | 4,176 | | $ | 4,000 | | $ | 25,000 | | $ | — | | $ | 11,919 | | $ | 81,095 | | Christopher D. Alderson | $ | — | | $ | 28,934 | | $ | — | | $ | 3,866 | | $ | — | | $ | — | | $ | 32,800 | | Robert W. Sharps | $ | 36,000 | | $ | 4,176 | | $ | 4,000 | | $ | 25,000 | | $ | — | | $ | 14,993 | | $ | 84,169 | |
| a | a. | | Contributions made to the T. Rowe Price U.S. Retirement Program. This plan provides retirement benefits based on contributions by the employee and the company as well as the investment performance of each plan participant’s account. Each NEO received a contribution of $29,500. | | | | b. | | Each NEO earned $4,363 in additional cashCash compensation for the amount calculated under the U.S. Retirement Programretirement program that could not be credited to their retirement accounts for 2007in 2017 due to the contribution limits imposed under Section 415 of the Internal Revenue Code. For Mr. Alderson, the amount represents cash paid in lieu of a contribution to the U.K. pension program as result of a Fixed Protection election he made with the U.K. tax authorities which required him to opt out of the U.K. pension program. The amount is based on the contribution formula in the pension program and is equal to the amount he would have received had he stayed in the pension program. |
| | | c. | | Messrs. Rogers and Moreland were paid $1,500 each in directors’ fees by a wholly owned subsidiary of Price Associates. | | | | d. | b | Matching contributions were made on behalf of Messrs. Kennedy, Bernard, and Moreland in the amount of $4,000 each.Mr. Stromberg received a matching contribution in the amount of $3,000 for the same period. Matching contributions are paid under our Employee Stock Purchase Plan which is offered to all employees of Price Group and its related affiliates. | | | | e. | | A fee of $125,000 was paid on behalf of both Messrs. Kennedy and Rogers with their individual filings submitted pursuant to the HSR Act. An additional amount of $98,334 was paid to both Messrs. Kennedy and Rogers to cover their estimated tax liability associated with our payment of the filing fee. See our Compensation Discussion and Analysis for further discussion of the reimbursement of these HSR Act fees.subsidiaries. |
17
| f. | c | NEOs, directors, and all employees of Price Group and its related affiliatessubsidiaries are eligible to direct our sponsored T. Rowe Price Associates Foundation, Inc. to matchhave personal gifts up to an annual limit to qualified charitable organizations.organizations matched by our sponsored T. Rowe Price Foundation in the case of U.S. employees, and Price Group, in the case of employees outside the U.S. For 2007,2017, all of the NEOs were eligible to have up to $25,000 matched. |
| d | Fees associated with Hart-Scott-Rodino antitrust filings. See our Compensation Discussion and did have gifts matched of $20,000.Analysis for further details. |
| | g.e | | Each ofCosts incurred by Price Group under programs available to all senior officers, including the NEOs, was reimbursed amounts less then $400for executive health benefits and parking, as well as certain costs covered by Price Group relating to cover his related estimated tax liability associatedspousal participation in events held in connection with the receiptPrice Group and Price funds annual joint Board of service anniversary andDirectors meeting as well as other gifts totaling less than $500. | | | h. | | Perquisites and other personal benefits in the aggregate were less than $10,000 for each NEO. As a general rule, the company does not provide significant perquisites or other personal benefits to its executive officers.business-related functions. |
44 2007 Grants of Plan-Based Awards TableT. ROWE PRICE GROUP
TABLE OF CONTENTS 2017 GRANTS OF PLAN-BASED AWARDS TABLE1 (1).
The following table provides information concerning each plan-based award granted in 20072017 to the executive officers named in the Summary Compensation Table and other information regarding their grants. | Grant Date | Date of
Compensation
Committee
Meeting at
Which Grant
Was Approved | Estimated Possible
Payouts under
Non-Equity Incentive
Plan Awards2 | Estimated Possible
Payouts Under Equity
Incentive Plan Awards | Grant Date
Fair Value
of Stock
Awards4 | Name | Threshold
($) | Maximum
($) | Target
(#) | Maximum
(#) | William J. Stromberg | | 2/15/20172 | | | | | $ | — | | $ | 21,934,880 | | | | | | | | | | | | | 12/6/20173 | | 12/5/2017 | | | | | | | 34,876 | 34,876 | $ | 3,550,028 | | Kenneth V. Moreland | | 2/15/20172 | | | $ | — | | $ | 3,988,160 | | | | | | | Edward C. Bernard | | 2/15/20172 | | | $ | — | | $ | 19,940,800 | | | | | | | | | 12/6/20173 | | 12/5/2017 | | | | | | | 15,719 | 15,719 | $ | 1,600,037 | | Christopher D. Alderson | | 2/15/20172 | | | $ | — | | $ | 19,940,800 | | | | | | | | | 12/6/20173 | | 12/5/2017 | | | | | | | 19,649 | 19,649 | $ | 2,000,072 | | Robert W. Sharps | | 2/15/20172 | | | $ | — | | $ | 19,940,800 | | | | | | | | | 12/6/20173 | | 12/5/2017 | | | | | | | 29,964 | 29,964 | $ | 3,050,036 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Estimated Possible Payouts under | | Number of | | Exercise Price | | | | | | | | | | Non-Equity Incentive Plan | | Securities | | of Option | | | | | | | | | | Awards | | Underlying | | Awards per | | Grant Date | | Name | | Grant Date | | Threshold | | Maximum (2) | | Options | | Share | | Fair Value (5) | | | | James A.C. Kennedy | | | 02/14/2007 | | | $ | — | | | $ | 16,177,360 | | | | | | | | | | | | | | | | | | 02/28/2007 | (4) | | | | | | | | | | | 11,039 | | | $ | 46.56 | | | $ | 86,215 | | | | | | 07/03/2007 | (4) | | | | | | | | | | | 21,975 | | | $ | 53.54 | | | $ | 26,150 | | | | | | 09/06/2007 | (3) | | | | | | | | | | | 100,000 | | | $ | 50.02 | | | $ | 1,381,000 | | | | | | 11/15/2007 | (4) | | | | | | | | | | | 9,639 | | | $ | 63.47 | | | $ | 11,760 | | | | | | 12/19/2007 | (4) | | | | | | | | | | | 8,843 | | | $ | 60.64 | | | $ | 41,739 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Brian C. Rogers | | | 02/14/2007 | | | $ | — | | | $ | 16,177,360 | | | | | | | | | | | | | | | | | | 05/24/2007 | (4) | | | | | | | | | | | 60,585 | | | $ | 49.08 | | | $ | 410,160 | | | | | | 09/06/2007 | (3) | | | | | | | | | | | 100,000 | | | $ | 50.02 | | | $ | 1,381,000 | | | | | | 12/14/2007 | (4) | | | | | | | | | | | 67,038 | | | $ | 62.50 | | | $ | 326,475 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Edward C. Bernard | | | 02/14/2007 | | | $ | — | | | $ | 16,177,360 | | | | | | | | | | | | | | | | | | 05/24/2007 | (4) | | | | | | | | | | | 49,337 | | | $ | 49.08 | | | $ | 283,577 | | | | | | 09/06/2007 | (3) | | | | | | | | | | | 100,000 | | | $ | 50.02 | | | $ | 1,381,000 | | | | | | 12/19/2007 | (4) | | | | | | | | | | | 21,668 | | | $ | 60.64 | | | $ | 152,326 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | William J. Stromberg | | | 02/14/2007 | | | $ | — | | | $ | 13,623,040 | | | | | | | | | | | | | | | | | | 06/14/2007 | (4) | | | | | | | | | | | 35,520 | | | $ | 52.14 | | | $ | 327,139 | | | | | | 09/06/2007 | (3) | | | | | | | | | | | 90,000 | | | $ | 50.02 | | | $ | 1,242,900 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Kenneth V. Moreland | | | 02/14/2007 | | | $ | — | | | $ | 5,960,080 | | | | | | | | | | | | | | | | | | 09/06/2007 | (3) | | | | | | | | | | | 40,000 | | | $ | 50.02 | | | $ | 552,400 | | | |
| | | | | (1)1 | | Includes only those columns relating to plan-based awards granted during 2007.2017. All other columns have been omitted. |
| | (2)2 | | For 2007, the Executive Compensation Committee awarded significantly less than the maximum amount to the NEOs and the actual amount awarded has been disclosed in the Summary Compensation Table on page 17 under “Non-Equity Incentive Plan Compensation.” The maximum represents the highest possible bonusamount that could have been paid to each of these individuals under the 20072017 Annual Incentive Compensation Pool based on our 20072017 audited financial statements. See our Compensation Discussion and Analysis and the narrative below for more details. The Executive Compensation Committee has discretion to award no bonus under this program, or to award up to the maximum bonus. As a result, there is no minimum amount payable even if performance goals are met. For 2017, the Compensation Committee awarded significantly less than the maximum amount to the NEOs and the actual amount awarded has been disclosed in the Summary Compensation Table under “Non-Equity Incentive Plan Compensation.” See our Compensation Discussion and Analysis for additional information regarding the Annual Incentive Compensation Pool. |
| | (3)3 | | Represents performance-based restricted stock optionsunits granted as part of ourthe Company’s annual award program. These options were awardedequity incentive program from the 2004 Stockits 2012 Long-Term Incentive Plan. These performance-based restricted stock units are subject to a performance-based vesting threshold with a 12-month performance period. The performance period for the December 2017 grant will run from January 1, 2018, to December 31, 2018. For each grant, the target payout represents the number of restricted stock units to be earned by the NEO if the Company’s operating margin for the performance period is at least 100% of the average operating margin of a designated peer group. The Company’s operating margin performance below this target threshold results in forfeiture of some or all of the restricted stock units. The number of restricted stock units earned by the NEO following the performance period is also subject to time-based vesting before they are settled in shares of our common stock. Vesting occurs 20% on each of these options is based on2/28/2019, 2/28/2020, 2/26/2021, 2/28/2022, and 2/28/2023. These grant agreements include a provision that allows for the named executive officer continuing to render service and occurs at a ratecontinued vesting of 20% per yearthe remainder of the grant, from the date of grant.separation if certain age and service criteria are met for the U.S.-based NEOs and a service criteria is met for Mr. Alderson. Dividends on these performance-based restricted stock units are accrued during the performance period and are only paid on those units earned. Additional information related to these performance-based restricted stock units, including a listing of companies in the designated peer group, are included in our Compensation Discussion and Analysis. |
| | (4)4 | | Represents a replenishment grant that vests immediately. All replenishment grants were awarded from our 2004 Stock Incentive Plan, which was approved by our stockholders on April 8, 2004. The timing of replenishment grants, which are discussed in further detail below, is determined solely by the option holder, because such grants occur automatically when an eligible non-qualified stock option is exercised by relinquishing shares already owned in payment of the exercise price. | | | (5) | | Represents the full grant-dategrant date fair value computedof the performance-based restricted stock units granted in accordance with SFAS 123R,2017. The grant date fair value of the performance-based restricted stock units was measured using the Black-Scholes option-pricing model. A descriptionmarket price per share of T. Rowe Price common stock on the assumptions used for volatility, risk-free interest rate, dividend yield, and expected life to determinedate of grant multiplied by the grant-date fair value is includedtarget number of units noted in Significant Accounting Policies for Stock Awards and Options on page 31 of the 2007 Annual Report to Stockholderstable, as well as a footnote tothis was considered the Summary Compensation Table on page 17. The grant-date fair value is recognized as compensation cost in our financial statements over the requisite service period pursuant to SFAS 123R.probable outcome. |
18PROXY STATEMENT 2018 45
TABLE OF CONTENTS OUTSTANDING EQUITY AWARDS TABLE AT DECEMBER 31, 20171
The Annual Incentive Compensation Pool was funded based on income before taxes of $1,076.8 million as reported in our audited consolidated statement of income on page 27 of our 2007 Annual Report to Stockholders, without any adjustment. The total bonus pool based on the calculation detailed in the Compensation Discussion and Analysis on page 13, was therefore, $85.1 million. Early in 2007, the Executive Compensation Committee approved the participation of Messrs. Kennedy, Rogers, and Bernard each at a level up to 19% of the bonus pool, Mr. Stromberg at a level of up to 16% of the bonus pool and Mr. Moreland at a level of up to 7% of the bonus pool.
Stock options granted under our annual award program are granted at the fair market value on the date of grant and generally become exercisable in five equal increments on the first through fifth anniversaries of the grant date. Replenishment grants, which are made available only in conjunction with non-qualified options originally granted prior to November 2004, allow an option holder to receive additional options if an eligible non-qualified stock option is exercised by relinquishing shares already owned in payment of the exercise price. The replenishment options are granted at fair market value on the date of exercise of the option giving rise to the replenishment grant and may themselves be exercised until the expiration date of the option exercised. The replenishment options, which are equal in number to the shares relinquished, are exercisable immediately. The company ceased granting options with a replenishment feature after October 2004.
Outstanding Equity Awards Table at December 31, 2007(1).The following table shows information concerning optionequity incentive awards outstanding at December 31, 20072017, for each NEO. There isThe grant agreements for all unexercisable option awards and unvested stock awards include a provision in all existing option agreements held by all grantees under our 2001 and 2004 Stock Incentive Plans that may accelerate theallows for continued vesting of outstanding but unexercisable options so that all options will become exercisable in connection with a change-in-control of Price Group and remain exercisable for a one-year period thereafter. The Executive Compensation Committee may modify or rescind this provision, or make other provisionsof 36 months for acceleratingawards granted before 2017, and for the ability to exercise options.remaining unvested portion for awards granted in 2017, from the date of separation if certain age and service criteria are met for the U.S.-based NEOs and a service criteria is met for Mr. Alderson. | | Option Awards | Stock Awards | Name | Grant Date | Number of
Securities
Underlying
Unexercised
Options:
Exercisable | Number of
Securities
Underlying
Unexercised
Options:
Unexercisable | Option
Exercise
Price | Option
Expiration
Date | Number
of Shares
or Units
of Stock
That
Have Not
Vested
(#) | Market Value
of Shares
or Units
of Stock
That Have Not
Vested
($)2 | Equity
Incentive
Plan
Awards:
Number of
Unearned
Units That
Have Not
Vested (#) | Equity
Incentive
Plan
Awards:
Market Value
of Unearned
Units That
Have Not
Vested ($)2 | William J. Stromberg | | 2/17/2011 | | | 44,240 | | | | | $ | 67.561 | | | 2/17/2021 | | | | | | | | | | | | | | | | 9/8/2011 | | | 44,241 | | | | | $ | 48.560 | | | 9/8/2021 | | | | | | | | | | | | | | | | 2/23/2012 | | | 22,119 | | | | | $ | 59.069 | | | 2/23/2022 | | | | | | | | | | | | | | | | 9/6/2012 | | | 20,819 | | | | | $ | 60.798 | | | 9/6/2022 | | | | | | | | | | | | | | | | 2/21/2013 | | | 16,399 | | | 4,0993a | | $ | 69.671 | | | 2/21/2023 | | | 1,2004a | | $ | 125,9164a | | | | | | | | | | 9/10/2013 | | | 16,399 | | | 4,1003a | | $ | 70.285 | | | 9/10/2023 | | | 1,2004b | | $ | 125,9164b | | | | | | | | | | 2/19/2014 | | | 10,762 | | | 7,1743b | | $ | 77.944 | | | 2/19/2024 | | | 2,1004c | | $ | 220,3534c | | | | | | | | | | 9/9/2014 | | | 10,761 | | | 7,1753b | | $ | 78.442 | | | 9/9/2024 | | | 2,1004d | | $ | 220,3534d | | | | | | | | | | 2/19/2015 | | | 7,174 | | | 10,7623c | | $ | 80.949 | | | 2/19/2025 | | | 3,1504e | | $ | 330,5304e | | | | | | | | | | 9/10/2015 | | | 7,000 | | | 10,5003c | | $ | 70.920 | | | 9/10/2025 | | | 3,1504f | | $ | 330,5304f | | | | | | | | | | 2/17/2016 | | | | | | | | | | | | | | | 10,2484g | | $ | 1,075,3234g | | | | | | | | | | 9/8/2016 | | | | | | | | | | | | | | | 10,4604h | | $ | 1,097,5684h | | | | | | | | | | 12/6/2017 | | | | | | | | | | | | | | | | | | | | | 34,8765 | | $ | 3,659,5395 | | Kenneth V. Moreland | | 2/17/2011 | | | 1,479 | | | | | $ | 67.561 | | | 2/17/2021 | | | | | | | | | | | | | | | | 2/23/2012 | | | 1,300 | | | | | $ | 59.069 | | | 2/23/2022 | | | | | | | | | | | | | | | | 9/6/2012 | | | 1,300 | | | | | $ | 60.798 | | | 9/6/2022 | | | | | | | | | | | | | | | | 2/21/2013 | | | 1,230 | | | 1,2293a | | $ | 69.671 | | | 2/21/2023 | | | 3604a | | $ | 37,7754a | | | | | | | | | | 9/10/2013 | | | 1,231 | | | 1,2293a | | $ | 70.285 | | | 9/10/2023 | | | 3604b | | $ | 37,7754b | | | | | | | | | | 2/19/2014 | | | 1,179 | | | 2,3563b | | $ | 77.944 | | | 2/19/2024 | | | 6904c | | $ | 72,4024c | | | | | | | | | | 9/9/2014 | | | 1,179 | | | 2,3573b | | $ | 78.442 | | | 9/9/2024 | | | 6904d | | $ | 72,4024d | | | | | | | | | | 2/19/2015 | | | 1,179 | | | 3,5353c | | $ | 80.949 | | | 2/19/2025 | | | 1,0354e | | $ | 108,6034e | | | | | | | | | | 9/10/2015 | | | 1,150 | | | 3,4503c | | $ | 70.920 | | | 9/10/2025 | | | 1,0354f | | $ | 108,6034f | | | | | | | | | | 2/17/2016 | | | | | | | | | | | | | | | 2,7624g | | $ | 289,8174g | | | | | | | | | | 9/8/2016 | | | | | | | | | | | | | | | 2,8194h | | $ | 295,7984h | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | Number of Securities Underlying | | | | | | | | Unexercised Options | | Option Exercise | | Option Expiration | | Name | | Exercisable | | Unexercisable (9) | | Price | | Date | | | | James A.C. Kennedy | | | 164,400 | | | | | | | $ | 17.875 | | | | 12/21/2008 | | | | | | 8,843 | (2) | | | | | | $ | 60.640 | | | | 12/21/2008 | | | | | | 153,400 | | | | | | | $ | 15.375 | | | | 09/03/2009 | | | | | | 155,000 | | | | | | | $ | 19.500 | | | | 11/20/2010 | | | | | | 112,400 | | | | | | | $ | 12.850 | | | | 09/21/2011 | | | | | | 11,039 | (2) | | | | | | $ | 46.560 | | | | 09/21/2011 | | | | | | 92,800 | | | | | | | $ | 13.670 | | | | 07/30/2012 | | | | | | 80,000 | | | | 20,000 | (3) | | $ | 21.725 | | | | 12/11/2013 | | | | | | 60,000 | | | | 40,000 | (5) | | $ | 30.775 | | | | 12/20/2014 | | | | | | 40,000 | | | | 60,000 | (6) | | $ | 32.620 | | | | 10/03/2015 | | | | | | 20,000 | | | | 80,000 | (7) | | $ | 46.190 | | | | 11/01/2016 | | | | | | | | | | 100,000 | (8) | | $ | 50.020 | | | | 09/06/2017 | | | | | Brian C. Rogers | | | 67,038 | (2) | | | | | | $ | 62.500 | | | | 12/21/2008 | | | | | | 60,585 | (2) | | | | | | $ | 49.080 | | | | 09/03/2009 | | | | | | 155,000 | | | | | | | $ | 19.500 | | | | 11/20/2010 | | | | | | 34,350 | (2) | | | | | | $ | 36.660 | | | | 09/21/2011 | | | | | | 24,800 | | | | | | | $ | 13.670 | | | | 07/30/2012 | | | | | | 31,832 | (2) | | | | | | $ | 41.225 | | | | 07/30/2012 | | | | | | 10,635 | (2) | | | | | | $ | 41.130 | | | | 07/30/2012 | | | | | | 96,000 | | | | 24,000 | (3) | | $ | 21.725 | | | | 12/11/2013 | | | | | | 72,000 | | | | 48,000 | (5) | | $ | 30.775 | | | | 12/20/2014 | | | | | | 44,000 | | | | 66,000 | (6) | | $ | 32.620 | | | | 10/03/2015 | | | | | | 20,000 | | | | 80,000 | (7) | | $ | 46.190 | | | | 11/01/2016 | | | | | | | | | | 100,000 | (8) | | $ | 50.020 | | | | 09/06/2017 | | | | | Edward C. Bernard | | | 45,306 | (2) | | | | | | $ | 49.080 | | | | 12/21/2008 | | | | | | 71,789 | (2) | | | | | | $ | 41.420 | | | | 09/03/2009 | | | | | | 145,000 | | | | | | | $ | 19.500 | | | | 11/20/2010 | | | | | | 16,078 | (2) | | | | | | $ | 60.640 | | | | 11/20/2010 | | | | | | 37,262 | (2) | | | | | | $ | 33.105 | | | | 09/21/2011 | | | | | | 12,258 | (2) | | | | | | $ | 33.545 | | | | 09/21/2011 | | | | | | 4,031 | (2) | | | | | | $ | 49.080 | | | | 09/21/2011 | | | | | | 26,426 | (2) | | | | | | $ | 33.105 | | | | 07/30/2012 | | | | | | 13,040 | (2) | | | | | | $ | 33.545 | | | | 07/30/2012 | | | | | | 10,561 | (2) | | | | | | $ | 41.420 | | | | 07/30/2012 | | | | | | 5,590 | (2) | | | | | | $ | 60.640 | | | | 07/30/2012 | | | | | | 96,000 | | | | 24,000 | (3) | | $ | 21.725 | | | | 12/11/2013 | | | | | | 72,000 | | | | 48,000 | (5) | | $ | 30.775 | | | | 12/20/2014 | | | | | | 44,000 | | | | 66,000 | (6) | | $ | 32.620 | | | | 10/03/2015 | | | | | | 20,000 | | | | 80,000 | (7) | | $ | 46.190 | | | | 11/01/2016 | | | | | | | | | | 100,000 | (8) | | $ | 50.020 | | | | 09/06/2017 | | | | | William J. Stromberg | | | 32,558 | (2) | | | | | | $ | 30.695 | | | | 09/03/2009 | | | | | | 38,504 | (2) | | | | | | $ | 31.305 | | | | 09/03/2009 | | | | | | 78,150 | (2) | | | | | | $ | 36.180 | | | | 11/20/2010 | | | | | | 18,378 | (2) | | | | | | $ | 20.975 | | | | 09/21/2011 | | | | | | 17,800 | (2) | | | | | | $ | 21.450 | | | | 09/21/2011 | | | | | | 21,126 | (2) | | | | | | $ | 36.495 | | | | 09/21/2011 | | | | | | 5,520 | (2) | | | | | | $ | 52.140 | | | | 09/21/2011 | | | | | | 22,800 | | | | | | | $ | 13.670 | | | | 07/30/2012 | | | | | | 16,948 | (2) | | | | | | $ | 24.195 | | | | 07/30/2012 | | | | | | 22,474 | (2) | | | | | | $ | 36.495 | | | | 07/30/2012 | | | | | | 9,358 | (2) | | | | | | $ | 43.820 | | | | 07/30/2012 | | | | | | 24,000 | | | | 24,000 | (3) | | $ | 21.725 | | | | 12/11/2013 | | | | | | 30,000 | (2) | | | | | | $ | 52.140 | | | | 12/11/2013 | | | | | | 66,000 | | | | 44,000 | (5) | | $ | 30.775 | | | | 12/20/2014 | | | | | | 40,000 | | | | 60,000 | (6) | | $ | 32.620 | | | | 10/03/2015 | | | | | | 20,000 | | | | 80,000 | (7) | | $ | 46.190 | | | | 11/01/2016 | | | | | | | | | | 90,000 | (8) | | $ | 50.020 | | | | 09/06/2017 | | | | | Kenneth V. Moreland | | | 13,200 | | | | 16,000 | (4) | | $ | 26.940 | | | | 04/01/2014 | | | | | | 30,000 | | | | 20,000 | (5) | | $ | 30.775 | | | | 12/20/2014 | | | | | | 20,000 | | | | 30,000 | (6) | | $ | 32.620 | | | | 10/03/2015 | | | | | | 8,000 | | | | 32,000 | (7) | | $ | 46.190 | | | | 11/01/2016 | | | | | | | | | | 40,000 | (8) | | $ | 50.020 | | | | 09/06/2017 | | | |
1946 T. ROWE PRICE GROUP
TABLE OF CONTENTS | | Option Awards | Stock Awards | Name | Grant Date | Number of
Securities
Underlying
Unexercised
Options:
Exercisable | Number of
Securities
Underlying
Unexercised
Options:
Unexercisable | Option
Exercise
Price | Option
Expiration
Date | Number
of Shares
or Units
of Stock
That
Have Not
Vested
(#) | Market Value
of Shares
or Units
of Stock
That Have Not
Vested
($)2 | Equity
Incentive
Plan
Awards:
Number of
Unearned
Units That
Have Not
Vested (#) | Equity
Incentive
Plan
Awards:
Market Value
of Unearned
Units That
Have Not
Vested ($)2 | Edward C. Bernard | | 2/17/2011 | | | 50,569 | | | | | $ | 67.561 | | | 2/17/2021 | | | | | | | | | | | | | | | | 2/23/2012 | | | 26,023 | | | | | $ | 59.069 | | | 2/23/2022 | | | | | | | | | | | | | | | | 9/6/2012 | | | 23,421 | | | | | $ | 60.798 | | | 9/6/2022 | | | | | | | | | | | | | | | | 2/21/2013 | | | 18,449 | | | 4,6113a | | $ | 69.671 | | | 2/21/2023 | | | 1,3504a | | $ | 141,6564a | | | | | | | | | | 9/10/2013 | | | 13,119 | | | 3,2803a | | $ | 70.285 | | | 9/10/2023 | | | 9604b | | $ | 100,7334b | | | | | | | | | | 2/19/2014 | | | 10,762 | | | 7,1743b | | $ | 77.944 | | | 2/19/2024 | | | 2,1004c | | $ | 220,3534c | | | | | | | | | | 9/9/2014 | | | 9,224 | | | 6,1503b | | $ | 78.442 | | | 9/9/2024 | | | 1,8004d | | $ | 188,8744d | | | | | | | | | | 2/19/2015 | | | 6,149 | | | 9,2253c | | $ | 80.949 | | | 2/19/2025 | | | 2,7004e | | $ | 283,3114e | | | | | | | | | | 9/10/2015 | | | 6,000 | | | 9,0003c | | $ | 70.920 | | | 9/10/2025 | | | 2,7004f | | $ | 283,3114f | | | | | | | | | | 2/17/2016 | | | | | | | | | | | | | | | 8,2564g | | $ | 866,3024g | | | | | | | | | | 9/8/2016 | | | | | | | | | | | | | | | 8,4264h | | $ | 884,1404h | | | | | | | | | | 12/6/2017 | | | | | | | | | | | | | | | | | | | | | 15,7195 | | $ | 1,649,3955 | | Christopher D. Alderson | | 9/8/2010 | | | 41,639 | | | | | $ | 45.793 | | | 9/8/2020 | | | | | | | | | | | | | | | | 2/17/2011 | | | 40,921 | | | | | $ | 67.561 | | | 2/17/2021 | | | | | | | | | | | | | | | | 2/17/2011 | | | 689 | | | | | $ | 70.330 | | | 2/17/2021 | | | | | | | | | | | | | | | | 9/8/2011 | | | 41,639 | | | | | $ | 48.560 | | | 9/8/2021 | | | | | | | | | | | | | | | | 2/23/2012 | | | 20,819 | | | | | $ | 59.069 | | | 2/23/2022 | | | | | | | | | | | | | | | | 9/6/2012 | | | 20,819 | | | | | $ | 60.798 | | | 9/6/2022 | | | | | | | | | | | | | | | | 2/21/2013 | | | 16,399 | | | 4,1003a | | $ | 69.671 | | | 2/21/2023 | | | 1,2004a | | $ | 125,9164a | | | | | | | | | | 9/10/2013 | | | 16,399 | | | 4,1003a | | $ | 70.285 | | | 9/10/2023 | | | 1,2004b | | $ | 125,9164b | | | | | | | | | | 2/19/2014 | | | 12,299 | | | 8,2003b | | $ | 77.944 | | | 2/19/2024 | | | 2,4004c | | $ | 251,8324c | | | | | | | | | | 9/9/2014 | | | 12,299 | | | 8,2003b | | $ | 78.442 | | | 9/9/2024 | | | 2,4004d | | $ | 251,8324d | | | | | | | | | | 2/19/2015 | | | 8,199 | | | 12,3003c | | $ | 80.949 | | | 2/19/2025 | | | 3,6004e | | $ | 377,7484e | | | | | | | | | | 9/10/2015 | | | 8,000 | | | 12,0003c | | $ | 70.920 | | | 9/10/2025 | | | 3,6004f | | $ | 377,7484f | | | | | | | | | | 2/17/2016 | | | | | | | | | | | | | | | 9,6794g | | $ | 1,015,6174g | | | | | | | | | | 9/8/2016 | | | | | | | | | | | | | | | 9,8794h | | $ | 1,036,6034h | | | | | | | | | | 12/6/2017 | | | | | | | | | | | | | | | | | | | | | 19,6495 | | $ | 2,061,7705 | |
TABLE OF CONTENTS | | Option Awards | Stock Awards | Name | Grant Date | Number of
Securities
Underlying
Unexercised
Options:
Exercisable | Number of
Securities
Underlying
Unexercised
Options:
Unexercisable | Option
Exercise
Price | Option
Expiration
Date | Number
of Shares
or Units
of Stock
That
Have Not
Vested
(#) | Market Value
of Shares
or Units
of Stock
That Have Not
Vested
($)2 | Equity
Incentive
Plan
Awards:
Number of
Unearned
Units That
Have Not
Vested (#) | Equity
Incentive
Plan
Awards:
Market Value
of Unearned
Units That
Have Not
Vested ($)2 | Robert W. Sharps | | 2/17/2011 | | 41,638 | | | | $ | 67.561 | | | 2/17/2021 | | | | | | | | | | | | | | | | 2/23/2012 | | 4,163 | | | | $ | 59.069 | | | 2/23/2022 | | | | | | | | | | | | | | | | 9/6/2012 | | 20,819 | | | | $ | 60.798 | | | 9/6/2022 | | | | | | | | | | | | | | | | 2/21/2013 | | 16,399 | | 4,0993a | | $ | 69.671 | | | 2/21/2023 | | | 1,2006a | | $ | 125,9166a | | | | | | | | | | 9/10/2013 | | 16,399 | | 4,1003a | | $ | 70.285 | | | 9/10/2023 | | | 15,0816a | | $ | 1,582,4496a | | | | | | | | | | 2/19/2014 | | 12,299 | | 8,2003b | | $ | 77.944 | | | 2/19/2024 | | | 2,4006b | | $ | 251,8326b | | | | | | | | | | 9/9/2014 | | 12,299 | | 8,2003b | | $ | 78.442 | | | 9/9/2024 | | | 2,4006b | | $ | 251,8326b | | | | | | | | | | 2/19/2015 | | 12,299 | | 18,4493c | | $ | 80.949 | | | 2/19/2025 | | | 5,4006c | | $ | 566,6226c | | | | | | | | | | 9/10/2015 | | 12,000 | | 18,0003c | | $ | 70.920 | | | 9/10/2025 | | | 5,4006c | | $ | 566,6226c | | | | | | | | | | 2/17/2016 | | | | | | | | | | | | | 113,8644g | | $ | 11,947,7504g | | | | | | | | | | 2/17/2016 | | | | | | | | | | | | | 15,0886d | | $ | 1,583,1846d | | | | | | | | | | 9/8/2016 | | | | | | | | | | | | | 15,3996d | | $ | 1,615,8176d | | | | | | | | | | 12/6/2017 | | | | | | | | | | | | | | | | | | | 29,9645 | | $ | 3,144,1235 | |
| | | (1)1 | | Includes only those columns for which there arethat related to outstanding equity awards at December 31, 2007.2017. All other columns have been omitted. |
| (2)2 | | Represents a replenishment grant that vests immediately. For more information regarding replenishment grants, please refer to the discussion on page 19. | | (3) | | Vests in full on 12/11/2008. | | (4) | | Vesting occurs 50% on each of 04/01/2008, and 04/01/2009. | | (5) | | Vesting occurs 50% on each of 12/20/2008, and 12/20/2009. | | (6) | | Vesting occurs 33 1/3% on each of 10/03/2008, 10/03/2009, and 10/03/2010. | | (7) | | Vesting occurs 25% on each of 11/01/2008, 11/01/2009, 11/01/2010, and 11/01/2011. | | (8) | | Vesting occurs 20% on each of 09/06/2008, 09/06/2009, 09/06/2010, 09/06/2011 and 09/06/2012. | | (9) | | Assuming that a change-in-control of the company had caused the vestingThe market value of these options to accelerate as currently contemplated under the terms of our 2001 and 2004 Stock Incentive Plans, the potential amount, as of December 31, 2007, that would be realized upon the exercise of the vested options would be $5,944,100 in the case of Mr. Kennedy; $6,511,120 in the case of Messrs. Rogers, and Bernard; $6,112,540 in the case of Mr. Stromberg; and $2,897,420 in the case of Mr. Moreland. The amounts arestock awards was calculated using the difference between the exerciseclosing market price per share of the options and the closing price of ourPrice Group’s common stock on December 31, 2007.2017. |
| 3 | The following table represents the vesting schedules of the unexercisable outstanding option awards at December 31, 2017. |
Footnote | Percentage of Outstanding | | Vest Dates | | 3a | 100% | 12/10/2018 | | | 3b | 50% | 12/10/2018 | 12/10/2019 | | 3c | 33% | 12/10/2018 | 12/10/2019 | 12/10/2020 |
| 4 | For each performance-based restricted stock unit award outstanding at December 31, 2017, the following table includes the date of the meeting or unanimous consent at which the Compensation Committee certified that the performance threshold was met, the award’s performance period, and the award’s remaining vesting schedule. |
Footnote | Meeting/
Unanimous
Written
Consent | Performance
Period Start
Date | Performance
Period End Date | Percentage
of
Outstanding | Vest Dates | 4a | | Feb-2014 | | January 1, 2013 | December 31, 2013 | 100% | 12/10/2018 | | | | 4b | | Sep-2014 | | July 1, 2013 | June 30, 2014 | 100% | 12/10/2018 | | | | 4c | | Feb-2015 | | January 1, 2014 | December 31, 2014 | 50% | 12/10/2018 | 12/10/2019 | | | 4d | | Sep-2015 | | July 1, 2014 | June 30, 2015 | 50% | 12/10/2018 | 12/10/2019 | | | 4e | | Feb-2016 | | January 1, 2015 | December 31, 2015 | 33% | 12/10/2018 | 12/10/2019 | 12/10/2020 | | 4f | | Sep-2016 | | July 1, 2015 | June 30, 2016 | 33% | 12/10/2018 | 12/10/2019 | 12/10/2020 | | 4g | | Feb-2017 | | January 1, 2016 | December 31, 2016 | 25% | 12/10/2018 | 12/10/2019 | 12/10/2020 | 12/10/2021 | 4h | | Sep-2017 | | July 1, 2016 | June 30, 2017 | 25% | 12/10/2018 | 12/10/2019 | 12/10/2020 | 12/10/2021 |
| 5 | If the Company’s operating margin for the 12-month performance period January 1, 2018 to December 31, 2018, is at least 100% of the average operating margin of a designated peer group, all of these restricted stock units will vest 20% on each of 2/28/2019, 2/28/2020, 2/26/2021, 2/28/2022, and 2/28/2023. |
| 6 | Mr. Sharps received restricted stock awards and restricted stock unit awards through September 2016. The following table represents the vesting schedules of the outstanding stock awards at December 31, 2017. |
TABLE OF CONTENTS Footnote | Remaining Percentage Vesting | Vest Dates | 6a | 100% | 12/10/2018 | | | | 6b | 50% | 12/10/2018 | 12/10/2019 | | | 6c | 33% | 12/10/2018 | 12/10/2019 | 12/10/2020 | | 6d | 25% | 12/10/2018 | 12/10/2019 | 12/10/2020 | 12/10/2021 |
202017 OPTION EXERCISES AND STOCK VESTED TABLE
2007 Option Exercises Table (1). The following table shows aggregatedaggregate stock option exercises and restricted stock awards vesting in 20072017 and the related value realized on those exercisesevents for each of the NEOs. The value realized on exercise is the difference between the market price of the underlying securities on the date of exercise and the exercise price, multiplied by the number of shares acquired.
| Option Awards | Stock Awards | Name | Number of Shares
Acquired on
Exercise1,5 | Value Realized on
Exercise2 | Number of Shares
Acquired on Vesting5 | Value Realized on
Vesting | William J. Stromberg | | 143,508 | | $ | 5,852,140 | | | 14,251 | 3 | $ | 1,464,290 | 3 | Kenneth V. Moreland | | 194,054 | | $ | 5,507,517 | | | 4,244 | 3 | $ | 436,071 | 3 | Edward C. Bernard | | — | | $ | — | | | 13,079 | 3 | $ | 1,343,867 | 3 | Christopher D. Alderson | | 91,605 | | $ | 5,309,572 | | | 14,488 | 3 | $ | 1,489,771 | 3 | Robert W. Sharps | | 196,275 | | $ | 7,279,683 | | | 60,766 | 3,4 | $ | 6,243,707 | 3, 4 |
| | | | | | | | | | | | | Number of Shares | | | | | | Acquired on | | Value Realized | | Name | | Exercise(2), (3) | | on Exercise | | James A.C. Kennedy | | | 213,175 | | | $ | 7,865,475 | | | Brian C. Rogers | | | 548,650 | | | $ | 19,171,483 | | | Edward C. Bernard | | | 282,358 | | | $ | 9,218,380 | | | William J. Stromberg | | | 240,328 | | | $ | 7,429,728 | | | Kenneth V. Moreland | | | 6,800 | | | $ | 195,812 | |
| | | | | (1)1 | | Includes only those columns relating to 2007 option exercises. All other columns have been omitted. | | | (2) | | Represents the total number of shares underlying the exercised stock options. |
| | (3)2 | Computed using the difference between the market price of Price Group’s common stock on the date of exercise and the exercise price, multiplied by the number of shares acquired. |
| For some3 | Reflects the number of shares underlying the performance-based restricted stock units earned and vested. The value realized on vesting is computed using the closing market price per share of Price Group’s common stock on the vest date (December 8, 2017) multiplied by the number of restricted stock units vesting. The following table shows the aggregate restricted stock units for the NEOs by date of award: |
Date of Award | Performance Period
Completion Date | Number of Shares
Acquired on Vesting | Market Price on
Vest Date | Value Realized on
Vesting | 2/23/2012 | | 12/31/2012 | | | 4,350 | | $ | 102.75 | | $ | 447,056 | | 9/6/2012 | | 6/30/2013 | | | 4,125 | | $ | 102.75 | | $ | 423,937 | | 2/21/2013 | | 12/31/2013 | | | 4,110 | | $ | 102.75 | | $ | 422,396 | | 9/10/2013 | | 6/30/2014 | | | 3,720 | | $ | 102.75 | | $ | 382,323 | | 2/19/2014 | | 12/31/2014 | | | 3,645 | | $ | 102.75 | | $ | 374,617 | | 9/9/2014 | | 6/30/2015 | | | 3,495 | | $ | 102.75 | | $ | 359,205 | | 2/19/2015 | | 12/31/2015 | | | 3,495 | | $ | 102.75 | | $ | 359,205 | | 9/10/2015 | | 6/30/2016 | | | 3,495 | | $ | 102.75 | | $ | 359,205 | | 2/17/2016 | | 12/31/2016 | | | 36,199 | | $ | 102.75 | | $ | 3,719,636 | | 9/8/2016 | | 6/30/2017 | | | 7,893 | | $ | 102.75 | | $ | 811,198 | |
| 4 | Mr. Sharps was awarded restricted shares and restricted stock units until September 2016. The table below shows, by date of the award, the number of restricted stock awards vested and value realized that was computed using the closing market price per share of Price Group’s common stock on the vest date multiplied by the number of restricted stock awards vesting. |
Date of Award | Vesting Date | Number of Shares
Acquired on Vesting | Market Price on
Vest Date | Value Realized
on Vesting | 2/23/2012 | | 12/8/2017 | | | 1,200 | | $ | 102.75 | | $ | 123,300 | | 9/6/2012 | | 12/8/2017 | | | 1,200 | | $ | 102.75 | | $ | 123,300 | | 2/21/2013 | | 12/8/2017 | | | 1,200 | | $ | 102.75 | | $ | 123,300 | | 9/10/2013 | | 12/8/2017 | | | 15,081 | | $ | 102.75 | | $ | 1,549,573 | | 2/19/2014 | | 12/8/2017 | | | 1,200 | | $ | 102.75 | | $ | 123,300 | | 9/9/2014 | | 12/8/2017 | | | 1,200 | | $ | 102.75 | | $ | 123,300 | | 2/19/2015 | | 12/8/2017 | | | 1,800 | | $ | 102.75 | | $ | 184,950 | | 9/10/2015 | | 12/8/2017 | | | 1,800 | | $ | 102.75 | | $ | 184,950 | | 2/17/2016 | | 12/8/2017 | | | 3,771 | | $ | 102.75 | | $ | 387,470 | | 9/8/2016 | | 12/8/2017 | | | 3,849 | | $ | 102.75 | | $ | 395,485 | |
TABLE OF CONTENTS | 5 | The number of shares actually acquired was less than the number presented in the tabletables above as a result of tendering shares for payment of the exercise price and the withholding of shares forto pay taxes. The total net shares received wereby each NEO is as follows: |
Name | Net Shares Acquired
on Exercise | Net Shares Acquired
on Vesting | William J. Stromberg | | 33,411 | | | 7,043 | | Kenneth V. Moreland | | 51,801 | | | 2,145 | | Edward C. Bernard | | — | | | 6,674 | | Christopher D. Alderson | | 91,605 | | | 7,680 | | Robert W. Sharps | | 44,768 | | | 30,044 | |
2017 NONQUALIFIED DEFERRED COMPENSATION TABLE
The amounts in the following table represent each NEO’s account activity under the Supplemental Savings Plan, which was effective on January 1, 2015. Name | Executive’s
Contributions
in Last FY1 | Registrants
Contributions
in Last FY | Aggregate
Earnings in Last
FY2 | Aggregate
Withdrawals/
Distributions | Aggregate
Balance at Last
FYE3 | William J. Stromberg | $ | 2,600,000 | | $ | — | | $ | 163,016 | | $ | — | | $ | 6,665,594 | | Kenneth V. Moreland | $ | — | | $ | — | | $ | 215,522 | | $ | — | | $ | 1,171,776 | | Edward C. Bernard | $ | 3,000,000 | | $ | — | | $ | 577,905 | | $ | — | | $ | 6,700,479 | | Christopher D. Alderson4 | $ | 5,355,600 | | $ | — | | $ | 260,072 | | $ | — | | $ | 2,623,741 | | Robert W. Sharps | $ | 3,300,000 | | $ | — | | $ | 928,280 | | $ | — | | $ | 8,629,519 | |
| 1 | | | | James A.C. Kennedy | | | 116,088 | | Brian C. Rogers | | | 211,064 | | Edward C. Bernard | | | 111,610 | | William J. Stromberg | | | 128,425 | These amounts represent a portion of the bonus awarded to each NEO under the 2017 Annual Incentive Compensation Pool and are reported as Non-Equity Incentive Plan Compensation in the Summary Compensation Table. Under the Supplemental Savings Plan, certain senior officers, including the NEOs, have the opportunity to defer receipt of up to 100% of their cash incentive compensation earned for a respective calendar year during which services are provided. |
| 2 | Each participant has the ability to allocate their account balance across a number of Price funds and the flexibility to rebalance their account as often as they would like. The amounts deferred are adjusted daily based on the investments chosen by the participant and, therefore, are not above market or preferential. As such, the earnings reported in this column are not included in the Summary Compensation Table. |
| 3 | These amounts represent the aggregate balances in each NEO’s account at December 31, 2017. A portion or all of each NEO’s, except Mr. Moreland’s, 2017 deferral election was not contributed to their account until 2018, as the bonus awarded under the 2017 Annual Incentive Compensation Pool was not certified by the Compensation Committee until then. Additionally, the aggregate balance for Messrs. Stromberg, Moreland, Bernard, and Alderson include amounts previously reported as Non-Equity Incentive Plan Compensation in a prior year Summary Compensation Table. |
| 4 | Mr. Alderson elected to defer £4,000,000 of his annual bonus in 2017. The Company converted this deferral into U.S. dollars based on the exchange rate of 1.3389, which is the rate on the day all employee bonuses were paid. |
POTENTIAL PAYMENTS ON TERMINATION OR CHANGE IN CONTROL
All agreements for stock options and stock awards granted to employees from our equity incentive plans include provisions that may result in vesting acceleration of outstanding equity awards in connection with a change in control of Price Group or upon the grantee’s death or termination of employment due to total disability. See the “Post-Employment Payments” section of the Compensation Discussion and Analysis for more details on these vesting acceleration provisions. Assuming that an event caused the vesting of all outstanding unvested stock options and stock awards on December 31, 2017, to accelerate, the amount that would be realized upon the exercise of these stock options and vesting of restricted stock awards and units held by our NEOs would be $23,415,810 in the case of Mr. Sharps; $7,053,161 in the case of Mr. Alderson; $8,471,437 in the case of Mr. Stromberg; $5,778,103 in the case of Mr. Bernard, and $1,437,206 in the case of Mr. Moreland. These amounts are calculated using the closing price of our common stock on December 31, 2017, for outstanding restricted stock awards and units and the difference between the closing price of our common stock on December 31, 2017, and the exercise price of each unexercisable stock option. In addition, all agreements for stock options and stock awards granted on and after February 23, 2012, and through December 5, 2017, included a provision that allows for continued vesting for a period of 36 months from the grantee’s date of TABLE OF CONTENTS termination if certain age and service criteria or, for certain grantees outside the United States, a specified service criteria are met. All agreements for stock awards granted on or after December 6, 2017, include a provision that allows for continued vesting post-separation so long as the same criteria described above are met. As of December 31, 2017, Mr. Moreland and Mr. Bernard have met such criteria. CEO PAY RATIO
Our CEO pay ratio is calculated in accordance with Item 402(u) of Regulation S-K. We identified the median employee by examining the 2017 salary and annual cash bonus paid to all associates, excluding our CEO, who were employed on December 31, 2017. All active associates were included in the sample. This includes associates working on a full-time, part-time, or interim basis. We did not make any adjustments or estimates with respect to salary, nor did we annualize the compensation for associates who began employment after the start of the fiscal year. We applied the local currency to U.S. dollar exchange spot rate as of December 31, 2017, to the compensation paid to our non-U.S. associates to facilitate comparison of all associates in U.S. dollars. Upon identifying the median associate, total compensation was calculated for this individual using the same methodology we use for our NEOs as set forth in the 2017 Summary Compensation Table on page 43. For 2017, Mr. Stromberg had an annual total compensation of $11,669,969 as reflected in the Summary Compensation Table. Our median associates’ 2017 annual total compensation was $96,190. Thus, Mr. Stromberg’s 2017 annual total compensation was approximately 121 times that of our median associate. Equity Compensation Plan Information. The following table sets forth information regarding outstanding stock options and restricted stock units and shares reserved for future issuance under our equity compensation plans as of December 31, 2007.2017. None of the plans have outstanding warrants or rights other than stock options and restricted stock units. All plans have been approved by our stockholders. Plan Category | Number of Securities to Be
Issued Upon Exercise of
Outstanding Options and
Settlement of Restricted
Stock Units (a) | Weighted-Average
Exercise Price of
Outstanding Options | Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation
Plans (excluding securities
reflected in column (a)) | Equity compensation plans approved by stockholders | | 20,856,3201 | | $ | 66.98 | 1 | | 21,139,0762 | | Equity compensation plans not approved by stockholders | | — | | | — | | | — | | Total | | 20,856,320 | | $ | 66.98 | | | 21,139,076 | |
Equity Compensation Plan Information
| | | | | | | | | | | | | | | | | Number of Securities to be | | | | | | Number of Securities | | | | Issued Upon Exercise of | | | | | | Remaining Available | | | | Outstanding Options and | | Weighted-Average | | for Future Issuance | | | | Vesting of Restricted Stock | | Exercise Price of | | Under Equity | | Plan Category | | Units | | Outstanding Options | | Compensation Plans | | | | Equity Compensation Plans Approved by Stockholders | | | 41,170,448 | (1) | | $ | 31.16 | | | | 24,981,779 | (2) | | | | |
| | | | | (1)1 | | Includes 140,2735,635,197 shares that may be issued underupon settlement of outstanding restricted stock units. The weighted-average exercise price pertains only to the 41,030,17515,221,123 outstanding stock options. |
| | (2)2 | | Includes 21,621,779 shares that may be issued under our 2004 Stock Incentive2007 Plan 2001 Stockand 2012 Incentive Plan and 2007 Non-Employee Director Equity Plan, and 3,360,0002,693,679 shares that may be issued under our Employee Stock Purchase Plan. No shares have been issued under the Employee Stock Purchase Plan since its inception; all plan shares have been purchased in the open market.The number of shares available for future issuance under the 2012 Incentive Plan will increase under the terms of the 2004 Stock Incentive Planplan as a result of all future common stock repurchases that we make from proceeds generated by stock option exercises that occur after the inception of the 2004 Stock2012 Incentive Plan. The 2004 Stock2012 Incentive Plan and the 2001 Stock Incentive Plan both allowallows for the grant of stock options, stock appreciation rights, and stock awards including restricted stock and restricted stock units. The maximum number of shares that may be issued in connection with future stock awards is 2,000,000 under the 2004 Stock Incentive Plan and 1,332,300 under the 2001 Stock Incentive Plan.full-value awards. |
21PROXY STATEMENT 2018 51
TABLE OF CONTENTS Proposal 2
Advisory Vote on the Compensation Paid to Our Named Executive Officers
INTRODUCTION
REPORT OF THE EXECUTIVE COMPENSATION COMMITTEE
In this report,We believe that our NEO compensation is straight-forward, goal-oriented, long-term focused, transparent, and consistent with the terms “we”interests of our stockholders. Our incentive compensation programs recognize and “our” referreward performance, with a focus on rewarding the intermediate- and long-term achievements of our NEOs, as measured by a number of factors, including (i) the financial performance and financial stability of Price Group, (ii) the relative investment performance of our mutual funds and other investment portfolios, and (iii) the performance of our NEOs against the corporate and individual goals established at the beginning of the year. These programs are also designed to reward for other important contributions to our success, including corporate integrity, service quality, customer loyalty, risk management, corporate reputation, and the quality of our team of professionals and collaboration within that team. Our equity awards create a strong alignment of the financial interests of our NEOs directly to the memberslong-term performance of our Company, as measured by our stock price.NEO compensation in 2017 was aligned with our financial and operational performance for 2017. The structure of the Executive Compensation Committee, eachcompensation for our CEO and other NEOs reflects our performance-based compensation philosophy, which ties a significant portion of whom is listed attheir pay to the endsuccess of this report. As part of our responsibilities, we have reviewedthe Company and discussed with managementto their individual performance goals.We urge you to read the Compensation Discussion and Analysis requiredsection of this proxy statement for additional details on our executive compensation policies and practices, including our compensation philosophy and objectives and the 2017 compensation decisions for our NEOs. We believe that, viewed as a whole, our compensation practices and policies are appropriate and fair to both the Company and its executives and to our stockholders. PROPOSAL
We are asking you to vote on the adoption of the following resolution: BE IT RESOLVED by the stockholders of Price Group, that the stockholders approve the compensation of the Company’s Named Executive Officers as disclosed pursuant to Item 402(b)402 of Regulation S-K which begins on page 13in the Company’s proxy statement for the 2018 Annual Meeting of Stockholders. As an advisory vote, this proxy statement. Based on such review and discussions, we have recommended toProposal is non-binding. Although the vote is non-binding, the Board of Directors and the inclusionCompensation Committee value the opinions of our stockholders and will consider the outcome of the Compensation Discussionvote when designing and Analysis in this proxy statementadministering our compensation programs and in the company’s Annual Report on Form 10-Kwhen making future compensation decisions for the year ended December 31, 2007. Donald B. Hebb, Jr., Chairman
James T. Brady
J. Alfred Broaddus, Jr.
Dr. Alfred Sommer
Dwight S. Taylor
Anne Marie Whittemore
PROPOSAL 3
RATIFICATIONour NEOs.RECOMMENDATION OF THE APPOINTMENTBOARD OF KPMG LLP AS OUR INDEPENDENTDIRECTORS; VOTE REQUIRED REGISTERED PUBLIC ACCOUNTING FIRM FOR 2008
The Audit Committee reappointed KPMG as Price Group’s independent registered public accounting firm for 2008 at its January 2008 meeting, and submits this reappointment for ratification by our stockholders. KPMG was first appointed to serve as our independent registered public accounting firm on September 6, 2001.
Representatives of KPMG are expected to be present at the Meeting and will have the opportunity to make a statement and respond to appropriate questions from stockholders.
Recommendation of the Board of Directors; Vote Required
We recommend that you vote FOR Proposal 3,2, the ratificationapproval of the appointmentcompensation of KPMG LLPour NEOs as our independent registered public accounting firm for 2008.disclosed in the proxy statement pursuant to the SEC’s compensation disclosure rules. All properly executed proxies received in time to be tabulated for the Annual Meeting will be voted FOR the ratificationapproval of the appointmentcompensation of KPMGour named executive officers as our independent registered public accounting firm for 2008disclosed in this proxy statement pursuant to the SEC’s compensation disclosure rules unless otherwise specified.In order to be adopted at the Annual Meeting, Proposal 32 must be approved by the affirmative vote of a majority of the total votes cast at the Annual Meeting. Abstentions and broker non-votes are not considered votes cast and will have no effect on the outcome of the vote. Proposal 3
Charter Amendment to Eliminate the Provision That Limits Voting of ShareOwnership to 15% of the Outstanding Shares INTRODUCTION
Article EIGHTH, Section (3) of the Charter of the Company restricts the rights of any person or “group” that is a beneficial owner of more than 15% of the common stock of the Company from voting any shares of common stock of the Company held in excess of the 15% threshold. This Charter provision was adopted by the Company when it went public as a protection against market accumulators who might seek to take control of the Company. TABLE OF CONTENTS The Board has reviewed the advantages and disadvantages of maintaining a Charter provision restricting the rights of persons or “groups” beneficially owning more than 15% of the outstanding shares of common stock of the Company to vote their shares of common stock held in excess of the 15% threshold under Article EIGHTH, Section (3) of the Charter. The Board recognizes that this Charter provision provides protection for the Company by reducing the vulnerability of the Company to hostile and potentially abusive takeover practices. However, the Board also understands that, in general, it is not a common charter provision, and is not the exclusive means that the Company may protect itself from hostile and potentially abusive takeover practices. After evaluating the various considerations in favor of and against maintaining a Charter provision restricting the rights of persons or “groups” beneficially owning more than 15% of the outstanding shares of common stock of the Company to vote their shares of common stock held in excess of the 15% threshold, the Board resolved to eliminate this provision from the Charter of the Company and to make conforming amendments to remove the relevant portions of Article SIXITH, Section (2), and Article EIGHTH Section (5) of the Charter that reference the eliminated provision and to renumber the remaining Sections in Article EIGHTH of the Charter, by adoption of the Articles of Amendment included in the Appendix to this proxy statement (Charter Amendment), which the Board determined was advisable and in the best interests of the stockholders. The Board further resolved that the Charter Amendment be submitted to the stockholders of the Company for approval at the 2018 Annual Meeting. As required by Article EIGHTH, Section (5) of the Charter, the Charter Amendment must be approved by the affirmative vote of stockholders holding two-thirds of the total number of shares of all classes outstanding and entitled to vote on the Charter Amendment. Article EIGHTH, Section (3) is the only provision of the Charter that requires a supermajority vote to be amended. Accordingly, if this Proposal 3 is approved by the stockholders, then any subsequent amendments to the Charter would only require approval by stockholders holding a majority of the outstanding shares of common stock of the Company. If this Proposal 3 is approved by the stockholders, the Charter Amendment will become effective on the filing of the Articles of Amendment in the form included in the Appendix with the Maryland State Department of Assessments and Taxation (SDAT). The Company would make the filing with the SDAT promptly after approval of the proposal at the 2018 Annual Meeting. If this Proposal 3 is not approved by our stockholders, then no amendments to the Charter will be made and the restrictions on the rights of any person or “group” that is a beneficial owner of more than 15% of the common stock of the Corporation from voting any shares of common stock of the Corporation held in excess of 15% under Article EIGHTH, Section (3) of the Charter will remain in effect. RECOMMENDATION OF THE BOARD OF DIRECTORS; VOTE REQUIRED
The Board recommends that the stockholders vote FOR Proposal 3, the Amendment to the Charter of the Company to eliminate the provision restricting any person or “group” that beneficially owns more than 15% of the outstanding shares of common stock of the Company from voting any shares held in excess of the 15% threshold. All properly executed proxies received in time to be tabulated for the Annual Meeting will be voted FOR the approval of the Amendment of the Articles of Incorporation unless otherwise specified. Proposal 3 requires an affirmative vote of the holders of two-thirds of the total number of shares of all classes outstanding and entitled to vote on such matters. A broker non-vote with respect to Proposal 3 will have the same effect as a vote against. Proposal 4
Ratification of the Appointment of KPMG LLP as Our Independent Registered Public Accounting Firm for 2018 INTRODUCTION
The Audit Committee is directly responsible for the appointment, compensation, retention, and oversight of the independent registered public accounting firm retained to audit Price Group’s consolidated financial statements. To execute this responsibility, the Audit Committee engages in an evaluation of the independent auditor’s qualifications, performance, and independence and periodically considers whether the independent registered public accounting firm should be rotated and the advisability and potential impact of selecting a different independent registered public accounting firm. The Audit Committee has reappointed KPMG LLP to serve as our independent registered public accounting firm for 2018. KPMG was first appointed to serve as our independent registered public accounting firm on September 6, 2001. In accordance TABLE OF CONTENTS with SEC rules and KPMG policies, lead and reviewing audit partners are subject to rotation requirements that limit the number of consecutive years they may provide service in that capacity to five years. The process for selection of the lead audit partner pursuant to this rotation policy has included a discussion between the chair of the Audit Committee and the candidate for the role, as well as discussion of the selection by the full Committee with management. The Audit Committee and the Board of Directors believe that the continued retention of KPMG as our independent registered public accounting firm is in the best interest of Price Group and our stockholders, and we are asking our stockholders to ratify the selection of KPMG as our independent registered public accounting firm for 2018. Representatives of KPMG are expected to be present at the Annual Meeting and will have the opportunity to make a statement and respond to appropriate questions from stockholders. RECOMMENDATION OF THE BOARD OF DIRECTORS; VOTE REQUIRED
We recommend that you vote FOR Proposal 4, the ratification of the appointment of KPMG as our independent registered public accounting firm for 2018. All properly executed proxies received in time to be tabulated for the Annual Meeting will be voted FOR the ratification of the appointment of KPMG as our independent registered public accounting firm for 2018 unless otherwise specified. In order to be adopted at the Annual Meeting, Proposal 4 must be approved by the affirmative vote of a majority of the total votes cast at the Annual Meeting. In the event Proposal 34 does not obtain the requisite number of affirmative votes, the Audit Committee will reconsider the appointment of KPMG. Disclosure Abstentions are not considered votes cast and will have no effect on the outcome of Fees Charged by the Independent Registered Public Accounting Firmvote.DISCLOSURE OF FEES CHARGED BY THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The following table summarizes the fees charged by KPMG for services rendered to Price Group and its subsidiaries during 20062016 and 2007.2017. All services were approved by the Audit Committee pursuant to the pre-approvalpreapproval procedures described below. Type of Fee | 2016 | 2017 | Audit Fees1 | $ | 2,565,468 | | $ | 3,054,532 | | Audit-Related Fees2 | | 84,303 | | | 120,444 | | Tax Fees3 | | 920,662 | | | 881,072 | | All Other Fees4 | | 65,250 | | | 82,088 | | | $ | 3,635,683 | | $ | 4,138,136 | |
Amount Billed and Paid
| | | | | | | | | | | Type of Fee | | 2006 | | | 2007 | | Audit Fees(1) | | $ | 856,700 | | | $ | 980,499 | | Audit-Related Fees(2) | | | 59,350 | | | | 56,409 | | Tax Fees(3) | | | 416,670 | | | | 388,727 | | All Other Fees(4) | | | 205,157 | | | | 108,004 | | | | | | | | | | | | | $ | 1,537,877 | | | $ | 1,533,639 | | | | | | | | | |
| | | | | (1)1 | | Aggregate fees charged for annual audits, quarterly reviews, and the reports of the independent registered public accounting firm on internal control over financial reporting as of December 31, 20062016 and 2007.2017. |
| | (2)2 | | Aggregate fees charged for assurance and related services that are reasonably related to the performance of the audit and are not reported as Audit Fees. In 20062016 and 2007,2017, these services included audits of several affiliated entities, such asincluding the corporate retirement plans, the T. Rowe Price Foundation, Inc., fees for consultations concerning financial accounting and accounting consultations regarding new accounting requirements.reporting matters, and fees associated with KPMG’s consents related to registration filings. |
| | (3)3 | | Aggregate fees charged for tax compliance, planning, and consulting. Of the $881,072 in 2017, $664,522 is related to tax preparation.compliance and preparation and $216,550 is related to tax planning. |
| | (4)4 | | AggregateBoth 2016 and 2017 include fees charged for anKPMG’s performance of attestation engagementengagements related to our compliance with the Global Investment Performance Presentation Standards (GIPS) and for tax consulting. The 2007 amount also includes the costfees related to attend executive education courses.education. |
22
AUDIT COMMITTEE PRE-APPROVALPREAPPROVAL POLICIES
The Audit Committee has adopted policies and procedures which set forth the manner in which the committee will review and approve all audit and non-audit services to be provided by the independent registered public accounting firm before that firm is retained for such services. The pre-approvalpreapproval policies and procedures are as follows: | • | ■ | Any audit or non-audit service to be provided to Price Group by the independent registered public accounting firm must be submitted to the Audit Committee for review and approval. The proposed services are submitted on the Audit Committee’s “Independent Registered Public Accounting Firm Audit and Non-AuditNon-audit Services Request Form” with a description of the services to be performed, fees to be charged, and affirmation that the services are not prohibited under Section 201 of the Sarbanes-Oxley Act of 2002. The form must be approved by Price Group’s Chief Executive Officer, Chief Financial Officer,chief executive officer, chief financial officer, or Directordirector of Internal Auditinternal audit prior to submission to the Audit Committee. |
TABLE OF CONTENTS | | • | ■ | The Audit Committee in its sole discretion then approves or disapproves the proposed services and documents such approval, if given, by signing the approval form. Pre-approvalPreapproval actions taken during Audit Committee meetings are recorded in the minutes of the meetings. |
| | • | ■ | Any audit or non-audit service to be provided to Price Group whichthat is proposed between meetings of the Audit Committee will be submitted to the Audit Committee chairman on a properly completed “Independent Registered Public Accounting Firm Audit and Non-AuditNon-audit Services Request Form” for the chairman’s review and pre-approvalpreapproval and will be included as an agenda item at the next scheduled Audit Committee meeting. |
REPORT OF THE AUDIT COMMITTEEReport of the Audit Committee
The Audit Committee oversees Price Group’s financial reporting process on behalf of the Board of Directors. Our committee held sixfive meetings during 2007.2017. Management has the primary responsibility for the financial statements and the reporting process, including internal controlcontrols over financial reporting. The independent registered public accounting firm is responsible for expressing an opinion on the conformity of Price Group’s audited financial statements with generally accepted accounting principles and an opinion on the effectiveness of Price Group’s internal controlcontrols over financial reporting. We appointed KPMG as Price Group’s independent registered public accounting firm for 20072017 after reviewing that the firm’s performance and independence from management and that appointment was ratified by our stockholders at the 2007 Annual Meeting.2017 annual meeting. We reappointed KPMG as Price Group’s independent registered public accounting firm for 2008fiscal year 2018 at our regularly scheduled January 20082018 meeting, after conducting the same set of reviews. In fulfilling our oversight responsibilities, we reviewed and discussed with management the audited financial statements prior to their issuance and publication in the 20072017 Annual Report on Form 10-K and in the 20072017 Annual Report to Stockholders. We reviewed with KPMG its judgments as to the quality, not just the acceptability, of Price Group’s accounting principles and discussed with its representatives other matters required to be discussed under generally accepted auditing standards, including matters required to be discussed in accordance with the Statement on Auditing Standards No. 114,The Auditor’s Communication with those Charged with Governance,of the Auditing Standards Board of the American Institute of Certified Public Accountants, as adopted by the Public Company Accounting Oversight Board.Board (PCAOB) Auditing Standard No. 16-Communications with Audit Committees. We also discussed with KPMG its independence from management and Price Group and received its written disclosures pursuant to applicable independence standards including Independence Standards Board Standard No. 1,Independence Discussionsrequirements of the PCAOB regarding the independent accountant’s communication with Audit Committees.the audit committee concerning independence. We further considered whether the non-audit services described elsewhere in this proxy statement provided by KPMG are compatible with maintaining its independence. We also discussed with management their evaluation of the effectiveness of Price Group’s internal controlcontrols over financial reporting as of December 31, 2007.2017. We discussed with KPMG its evaluation of the effectiveness of Price Group’s internal controlcontrols over financial reporting. We further discussed with Price Group’s internal auditors and KPMG the overall scope and plans for their respective audits. We met with the internal auditors and KPMG, with and without management present, to discuss the results of their examinations and their evaluations of Price Group’s internal controls. Lastly, as part of our responsibilities for oversight of the Price Group’s risk management process, we reviewed and discussed with the chief risk officer the Company’s framework with respect to the risk assessment, including discussions of individual risk areas, as well as an annual summary of the overall process. In reliance upon the reviews and discussions referred to above, we recommended to the Board of Directors, and the Board approved, the inclusion of the audited financial statements in the Annual Report on Form 10-K for the year ended December 31, 2007,2017, for filing with the Securities and Exchange Commission. James T. Brady,SEC.Mark S. Bartlett, Chairman
J. Alfred Broaddus, Jr.Dr. Freeman A. Hrabowski, III
Robert F. MacLellan
Dwight S. Taylor
Sandra S. Wijnberg PROXY STATEMENT PROPOSAL 42018 55
STOCKHOLDER PROPOSAL In accordance with
TABLE OF CONTENTS Stockholder Proposals for the rules of the Securities and Exchange Commission, we have set forth below2019 Annual Meeting Any stockholder who wishes to submit a proposal or nominate a director for consideration at the 2019 Annual Meeting and supporting statement from stockholders. Price Group and our Board of Directors accept no responsibility for the stockholderinclude that proposal or its supporting statement. We received substantially identical proposals from several proponents. Set out belownomination in italics is, verbatim, athe 2019 proxy statement should send their proposal and supporting statement substantially consistent with and representative of all such submissions. This stockholder proposal is required to be voted upon at the Meeting only if properly presented at the Meeting. As explained below, our Board of Directors unanimously recommends that you voteAGAINSTthis stockholder proposal, and we ask that you read and consider management’s response, which follows the stockholder proposal. 23
We will promptly provide the names and addresses of the proponents of this stockholder proposal and the number of shares of our common stock owned by them; please send a letter to our Corporate Secretary, Barbara A. Van Horn, T. Rowe Price Group, Inc., c/o chief legal officer and corporate secretary, 100 East Pratt Street, Mail Code BA-1099,BA-1360, Baltimore, MD 21202, or fax your information requestand comply with the notice and other requirements described below.Proposals must be received no later than November 16, 2018, and satisfy the requirements under applicable SEC rules (including SEC Rule 14a-8) to 1-410-345-3223 or call 1-410-345-7733. Stockholder Proposal
“Resolved, Shareowners requestbe included in the proxy statement and on the proxy card that will be used for solicitation of proxies by the Board for the 2019 Annual Meeting.We have adopted a proxy access right to permit a stockholder, or a group of Directors authorize and prepare a reportup to shareowners which discusses how our investment policies address20 stockholders, owning 3% or could address human rights issues, at reasonable cost and excluding proprietary information, by October 2008. Such a report should review the current investment policiesmore of the company with a view toward adding appropriate policiesCompany’s outstanding common stock continuously for at least three years to nominate and procedures to apply when a portfolio company, and its subsidiaries or affiliates, in which we have invested is identified as contributing to human rights violations through their businesses, investments or operations in a country with a clear pattern of genocide or mass atrocities.” Supporting Statement
“Proponents believe the report should consider various strategies, such as shareowner engagement with portfolio companies, and screening or divestment of stock as appropriate.
Proponents believe one example, clearly demonstrating the need for this report concerns the ongoing atrocities in Sudan, and how certain types of foreign investment contribute to the conflict.
Sudan’s western region, Darfur, continues to experience human rights abuses on an unimaginable scale, including systematic and widespread murder, torture, rape, abduction, looting and forced displacement. Since February 2003, hundreds of thousands of civilians have been killed by both deliberate and indiscriminate attacks, and 2.5 million civiliansinclude in the region have been displaced.
Much of the revenue fueling this conflict is generated by Sudan’s oil industry. Rather than funding social development, the majority of these revenues are funneled into military expenditures.
With little capitalCompany’s proxy materials directors constituting up to two individuals or expertise to efficiently extract its own oil, Sudan relies almost entirely on foreign companies for both. The oil industry in Sudan is dominated by four foreign companies: China National Petroleum Corporation of China, Petronas of Malaysia, Oil and Natural Gas Corporation of India, and Sinopec of China.
Over 20 US states and 50 colleges have adopted Sudan investment policies, including engagement, screening and divestment, regarding these and other foreign companies operating in certain sectors in Sudan. A 1997 presidential executive order generally bars American companies and citizens from conducting business in Sudan. In 2007, President Bush reinforced that executive order.
Proponents believe that our company, as a shareowner, has a responsibility to address this internationally condemned conflict.”
Your Company’s Response
The Board of Directors and senior management of the company share the proponents’ concern about human rights abuses occurring in the Darfur region of Sudan and elsewhere in the world. We agree that the situation in Darfur is reprehensible and a great human tragedy. We share the global humanitarian viewpoint that more needs to be done, and we believe intervention by international authorities is the best remedy for the situation. We hope that a political solution can be reached by responsible parties to end this tragedy.
As investment fiduciaries, we believe we must manage T. Rowe Price funds and other client portfolios to maximize their returns consistent with their investment policies and objectives. As fundamental investors, the key to our investment process is balancing each security’s potential return against its potential risk, and selecting investments that offer risk-reward profiles that are appropriate for each portfolio. Our investment professionals assess numerous factors during the security selection process, including both financial and non-financial factors. While understanding financial results is a critical step in the process, so too are evaluating a company’s strategic objectives, capital stewardship, reputation, leadership quality, governance practices, corporate values and other intangible elements of the business. We define risk as the amalgamation of dozens of these financial and non-financial factors, and our investment process endeavors to appropriately weigh these risks in determining whether a security should be purchased or sold.
In an effort to further enhance our ability to monitor potential risks associated with our clients’ investments in companies with business ties to Sudan or other troubled areas of the world, we have taken steps over the past year that we believe substantially address the proponents’ concerns. We have engaged in discussions with management teams of companies with operations in these regions to better understand their level of involvement. We have also retained a third-party research provider with expertise in screening for socially responsible investments to assist our investment staff in identifying companies with the most significant exposure to Sudan. We have urged our analysts and portfolio managers to use this research in assessing the companies they analyze. This research helps our investment professionals remain informed of additional risk factors unique to Sudan, such as reputational loss, product boycotts, or even divestiture campaigns.
We hope that our stockholders can appreciate that we have carefully considered what our response should be to global concerns regarding human rights abuses in Sudan and other areas. We consider these and many other types of risk when we decide whether an investment is appropriate for a particular portfolio. We have devoted company personnel and resources to assessing this and many other areas of environmental, social and governance risk, and we integrate that assessment into our investment process. Finally, we have published on our web site special disclosure describing how non-financial risk related to Sudan and other troubled regions is evaluated within our investment process.
The Board of Directors believes that these actions substantially address the proponents’ concerns, and that further action would be largely duplicative and an unnecessary expense. We, therefore, unanimously recommend a vote against this stockholder proposal.
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Recommendation20% of the Board (whichever is greater), provided that the stockholder(s) and the nominee(s) satisfy the requirements specified in the amended By-Laws. To be considered timely under our proxy access provisions, stockholder nominations must be received on or after October 17, 2018 and on or before November 16, 2018, inclusive.Our By-Laws also require advance notice of Directors; Vote Required We recommend that you vote AGAINST Proposal 4, theany proposal by a stockholder proposal set forth above. All properly executed proxies received in time to be tabulated for the meeting will be voted AGAINST the stockholder proposal unless otherwise specified. If presented at the 2019 Annual Meeting Proposal 4 must be approved by the affirmative vote of a majority of the total votes cast in order to be adopted at the Meeting. Abstentions and broker non-votes are not considered votes cast and will have no effect on the outcome of the vote. The stockholder proposal set forth above is a request to the Board of Directors to consider a matter. If the proposal passes, the Board of Directors may consider, in its business judgment, whether to take the requested action or not, but itthat is not legally obligated to do so.
STOCKHOLDER PROPOSALS FOR THE 2009 ANNUAL MEETING
Qualified stockholders who wish to have proposals presented at the 2009 annual meeting of stockholders must deliver them to Price Group by October 31, 2008,included in order to be considered for inclusion in next year’sour proxy statement and on the proxy pursuantcard, including any proposal for the nomination of a director for election.To be properly brought before the 2019 Annual Meeting, written nominations for directors or other business to Rule 14a-8 under the Securities Exchange Actbe introduced by a stockholder must be received on or after December 27, 2018, and on or before January 26, 2019. A notice of 1934. Anya stockholder proposal or director nomination formust contain the information required by our 2009 annual meeting that is submitted outsideBy-Laws about the processes of Rule 14a-8 willmatter to be considered “untimely” if we receive itbrought before December 11, 2008, or after January 10, 2009. Such proposalsthe Annual Meeting and nominations must be made in accordanceabout the stockholder proponent and persons associated with the Amended and Restated By-Lawsstockholder through control, ownership of Price Group. An untimely proposal may be excluded from consideration at our 2009 annual meeting.
Allthe shares, agreement, or coordinated activity. We reserve the right to reject proposals and nominations must be delivered to Price Group’s Secretary at 100 E. Pratt Street, Mail Code BA-1099, Baltimore, MD 21202.
that do not comply with these requirements.Pursuant to Maryland law and our Amended and Restated By-Laws, a special meeting of our stockholders can generally be called by the Chairmanchairman of the Board, our President,president, our Board of Directors, or upon the written request of stockholders entitled to cast at least 25% of all votes entitled to be cast at the special meeting. STOCKHOLDER COMMUNICATIONS WITH THE BOARD OF DIRECTORSStockholder Communications
With the Board of DirectorsOur Board members are interested in hearing the opinions of the stockholders. The following procedures have been established by the Nominating and Corporate Governance Committee has established the following procedures in order to facilitate communications between our stockholders and our Board of Directors: | 1)■ | | Stockholders may send correspondence, which should indicate that the sender is a stockholder, to our Board of Directors or to any individual director by mail to T. Rowe Price Group, Inc., c/o Chief Legal Officer, P.O. Box 17134, Baltimore, MD 21297-1134, or by e-mailemail to stockholdercommunications@troweprice.com.contact_the_board@troweprice.com or by Internet at trow.client.shareholder.com/contactBoard.cfm. |
| | 2) | ■ | Our Chief Legal Officerchief legal officer will be responsible for the first review and logging of this correspondence. The officer will forward the communication to the director or directors to whom it is addressed unless it is a type of correspondence whichthat the Nominating and Corporate Governance Committee has identified as correspondence whichthat may be retained in our files and not sent to directors. |
| | | ■ | The Nominating and Corporate Governance Committee has authorized the Chief Legal Officerchief legal officer to retain and not send to directors communications that: (a) are advertisingthe following types of communications: |
| ■ | Advertising or promotional in nature (offering goods or services); (b) solely relate to complaints |
| ■ | Complaints by clients with respect to ordinary course of business customer service and satisfaction issues; provided, however, that the chief legal officer will notify the chair of the Nominating and Corporate Governance Committee of any complaints that, in the opinion of the chief legal officer, warrant immediate committee attention by their nature or (c)frequency; or |
| ■ | Those clearly are unrelated to our business, industry, management, or Board, or committee matters. These types of communications will be logged and filed, but not circulated to directors. Except as set forth in the preceding sentence, the Chief Legal Officer will not screen communications sent to directors. |
TABLE OF CONTENTS These types of communications will be logged and filed but not circulated to directors. Except as set forth in the preceding sentence, the chief legal officer will not screen communications sent to directors. | | 3) | ■ | The log of stockholder correspondence will be available to members of the Nominating and Corporate Governance Committee for inspection. At least once each year, the Chief Legal Officerchief legal officer will provide to the Nominating and Corporate Governance Committee a summary of the communications received from stockholders, including the communications not sent to directors in accordance with screening procedures approved by the Nominating and Corporate Governance Committee.Committee. |
STOCKHOLDERS SHARING THE SAME ADDRESS
Some banks, brokers and other intermediaries engage in the practice of “householding” our proxy statements and annual reports. This means that only one copy of our proxy statement and annual report to stockholders may be sent to multiple shareholders in your household unless you request otherwise. We will promptly deliver a separate copy of our 2007 Annual Report to Stockholders or this proxy statement to you if you share an address subject to householding. Please contact our Corporate Secretary at 100 East Pratt Street, Mail Code BA-1099, Baltimore, MD 21202, or by telephone at 410-345-7733.PROXY STATEMENT 2018 57
Please contact your bank, broker or other intermediary if you wish to receive individual copies of our proxy materials in the future. Please contact your bank, broker or other intermediary, or our Corporate Secretary as provided above if members of your household are currently receiving individual copies and you would like to receive a single household copy for future meetings.
OTHER MATTERS
TABLE OF CONTENTS We know of no other matters to be presented to you at the Meeting. As stated in an earlier section, if other matters are considered at the Meeting or any adjournment or postponement thereof, Messrs. Bernard, Kennedy, and Rogers will vote on these matters in accordance with their judgment of the best interests of Price Group.
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T. ROWE PRICE GROUP, INC.ARTICLES OF AMENDMENTExhibit A
T. ROWE PRICE GROUP, INC.
ARTICLES OF AMENDMENT T. Rowe Price Group, Inc., a Maryland corporation, having its principal office in Baltimore City, Maryland (which is hereinafter called the “Corporation”), hereby certifies to the State Department of Assessments and Taxation of Maryland that:
FIRSTFIRST:: The charter of the Corporation (the “Charter”) is hereby amended as follows:
(a) ArticleSIXTH, Paragraph (a)of the charterCharter of the Corporation is hereby amended as follows:(a) Article SIXTH of the Charter is hereby amended by amending and restating subsection (b)(2) in its entirety to read as follows: SIXTH: (a)The total number“(2) Each share of sharesCommon Stock shall have one vote, and, except as otherwise provided in respect of stockany Preferred Stock, the exclusive voting power for all purposes shall be vested in the holders of all classes which the Corporation has authorityCommon Stock.” (b) Article EIGHTH of the Charter is hereby amended by deleting subsection (3) in its entirety and renumbering the subsequent subsections (4) through (7), inclusive, as subsections (3) through (6), inclusive. (c) Article EIGHTH of the Charter is hereby amended by amending and restating newly renumbered subsection (4) in its entirety to issue is 770,000,000 sharesread as follows: “(4) Notwithstanding any provision of capital stock (par value $.20 per share) amounting in aggregate par value to $154,000,000,law requiring the authorization of which 750,000,000 shares (par value $.20 per share) amounting in aggregate par value to $150,000,000 are classified as “Common Stock” and 20,000,000 shares (par value $.20 per share) amounting in aggregate par value to $4,000,000 are classified as “Preferred Stock.” SECOND: (a) Asany action by a greater proportion of immediately before the amendment the total number of shares of stock of all classes whichof capital stock, such action shall be valid and effective if authorized by the Corporation has authority to issue is 520,000,000 shares,affirmative vote of which 20,000,000 shares are Preferred Stock (par value $.20 per share) and 500,000,000 shares are Common Stock (par value $.20 per share).
(b) As amendedthe holders of a majority of the total number of shares of stock of all classes whichoutstanding and entitled to vote thereon.”SECOND: The foregoing amendment does not increase the Corporation has authority to issue is 770,000,000 shares, of which 20,000,000 shares are Preferred Stock (par value $.20 per share) and 750,000,000 shares are Common Stock (par value $.20 per share). (c) The aggregate par value of all shares having a par value is $104,000,000 before the amendment and $154,000,000 as amended.
(d) The preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends, qualifications and terms and conditions of redemption of each class of capitalauthorized stock of the Corporation have not been changed by this Amendment.
Corporation.THIRD:The foregoing amendment to the Charter of the Corporation has been duly approved and advised by the Board of Directors and approved by the stockholders of the Corporation as required by law. FOURTH:The undersigned President and Secretaryforegoing amendment to the Charter of the Corporation acknowledgeshall become effective upon acceptance for record by the Maryland State Department of Assessments and Taxation. FIFTH: The undersigned acknowledges these Articles of Amendment to be the corporate act and deed of the Corporation, and further, as to all matters or facts required to be verified under oath, the undersigned President and Secretary of the Corporation acknowledgeacknowledges that to the best of hisher or herhis knowledge, information and belief, these matters and facts relating to the Corporation are true in all material respects and that this statement is made under the penalties offor perjury. IN WITNESS WHEREOF the Corporation, T. ROWE PRICE GROUP, INC., has caused these Articles of Amendmentpresents to be signed in its name and on its behalf by its President and attested towitnessed by its Secretary on this ___ day of ___, 2008. WITNESS: | T. ROWE PRICE GROUP, INC. | | | | | T. Rowe Price Group, Inc.
| | | By: | | | David Oestreicher,
Chief Legal Officer and Corporate Secretary | | James A.C. Kennedy | | | | William J. Stromberg,
President and Chief Executive Officer and President | | |
Attest:, 2008
Barbara A. Van Horn
Secretary
A-1
58 T. ROWE PRICE GROUP INC.
ANNUAL MEETING OF STOCKHOLDERS
Thursday, April 10, 2008 at 10:00 a.m.
THE T. ROWE PRICE CORPORATE CAMPUS
4515 Painters Mill Road
Owings Mills, Maryland 21117-4903
DIRECTIONS TO THE ANNUAL MEETING OF STOCKHOLDERS
From the north:Take I-83 south to I-695 (Baltimore Beltway) west (toward Pikesville). Take Exit 19 to I-795 north to Exit 4. Bear left onto the ramp (Owings Mills Town Center) and bear left again at the next fork in the ramp so that you can turn left at the first light (Red Run Boulevard). Turn right at the second light onto Painters Mill Road and then left at the second light into the campus.
From the south:Take I-83 north to I-695 (Baltimore Beltway) west (toward Pikesville). Take Exit 19 to I-795 north to Exit 4. Bear left onto the ramp (Owings Mills Town Center) and bear left again at the next fork in the ramp so that you can turn left at the first light (Red Run Boulevard). Turn right at the second light onto Painters Mill Road and then left at the second light into the campus.
From the east:Take I-695 (Baltimore Beltway) west to Exit 19 north onto I-795. Take I-795 to Exit 4. Bear left onto the ramp (Owings Mills Town Center) and bear left again at the next fork in the ramp so that you can turn left at the first light (Red Run Boulevard). Turn right at the second light onto Painters Mill Road and then left at the second light into the campus.
From the west:Take I-70 east to I-695 (Baltimore Beltway) north (toward Towson). At Exit 19, proceed north onto I-795. Take I-795 to Exit 4. Bear left onto the ramp (Owings Mills Town Center) and bear left again at the next fork in the ramp so that you can turn left at the first light (Red Run Boulevard). Turn right at the second light onto Painters Mill Road and then left at the second light into the campus.
After entering the campus, follow the signs to the building where the annual
meeting will be held. Free parking is available in the garage opposite the building.
T. ROWE PRICE GROUP, INC.
2008 Proxy
Revocable Proxy Solicited on Behalf of the Board of Directors
I hereby appoint Edward C. Bernard, James A.C. Kennedy, and Brian C. Rogers, together and separately, as proxies to vote all shares of common stock which I have power to vote at the annual meeting of stockholders to be held on Thursday, April 10, 2008, at 10:00 a.m., at the offices of the company located at 4515 Painters Mill Road, Owings Mills, Maryland 21117-4903, and at any adjournments or postponements thereof, in accordance with the instructions on the reverse side of this proxy card and as if I were present in person and voting such shares. The proxies are authorized in their discretion to vote upon such other business as may properly come before the meeting and they may name others to take their place. I also hereby acknowledge receipt of the Notice of Annual Meeting and Proxy Statement, dated, 2008, and Price Group’s 2007 Annual Report to Stockholders.
CONTENTSPLEASE VOTE YOUR PROXY PROMPTLY.
See reverse side for voting instructions.
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Company # | | | | | | | | | | THERE ARE THREE WAYS TO VOTE YOUR PROXY
| | | | | | | | | | |
Your telephone or Internet vote authorizes the Named Proxies to vote your shares in the same manner as if you marked, signed and returned your proxy card.
VOTE BY PHONE — TOLL FREE — 1-800-560-1965 — QUICK *** EASY *** IMMEDIATE
ŵ | | Use any touch-tone telephone to vote your proxy 24 hours a day, 7 days a week, until Noon (Central Time) on Wednesday, April 9, 2008. | | ŵ | | Please have your proxy card and the last four digits of your Social Security Number or Tax Identification Number available. Follow the simple instructions the voice provides you. |
VOTE BY INTERNET —http://www.eproxy.com/trow/- QUICK *** EASY *** IMMEDIATE
ŵ | | Use the Internet to vote your proxy 24 hours a day, 7 days a week, until Noon (Central Time) on Wednesday, April 9, 2008. | | ŵ | | Please have your proxy card and the last four digits of your Social Security Number or Tax Identification Number available. Follow the simple instructions to obtain your records and create an electronic ballot. |
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we’ve provided or return it to T. Rowe Price Group, Inc., c/o Shareowner Servicessm , P.O. Box 64873, St. Paul, MN 55164-0873.
If you vote by phone or the Internet, please do not mail your Proxy Card
òPlease detach hereò
The Board of Directors Recommends a Vote FOR All Nominees Listed in Item 1, and FOR Items 2, 3 and 5.
The Board of Directors Recommends a Vote AGAINST Item 4.
| | | | | | | | | | | | | | | | | | | | | | | | | | | 1. | | Election of | | | 01 | | | Edward C. Bernard | | | 04 | | | Donald B. Hebb, Jr. | | | 07 | | | Dr. Alfred Sommer | | o Vote FOR | | o Vote AGAINST | | | | directors: | | | 02 | | | James T. Brady | | | 05 | | | James A.C. Kennedy | | | 08 | | | Dwight S. Taylor | | all nominees | | all nominees | | | | | | | 03 | | | J. Alfred Broaddus, Jr. | | | 06 | | | Brian C. Rogers | | | 09 | | | Anne Marie Whittemore | | (except as marked) | | |
TABLE OF CONTENTS | | | | | | | | | | | | | | | | | | | | (Instructions: To vote against any indicated nominee, write | | | | | | | | | the number(s) of the nominee(s) in the box provided to the right.) | | | | | | | | | | | | |
| | | | | | | | | | | | | | | 2. | | Approval of the proposed charter amendment to increase authorized common stock | | o | | FOR | | o | | AGAINST | | o | | ABSTAIN | | | | | | | | | | | | | | | | 3. | | Ratification of the appointment of KPMG LLP as our independent registered public accounting firm for 2008 | | o | | FOR | | o | | AGAINST | | o | | ABSTAIN | | | | | | | | | | | | | | | | 4. | | Approval of the stockholder proposal regarding an investment policies report, as described in the proxy statement which accompanies this proxy card | | o | | FOR | | o | | AGAINST | | o | | ABSTAIN |
TABLE OF CONTENTS | | | | | | | | | | | 5. | | In their discretion, the proxies are authorized to vote upon such other business and further business as may properly come before the meeting or any adjournments and postponements thereof. | | o | | FOR | | o | | WITHHOLD |
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED, OR IF NO DIRECTION IS GIVEN, WILL BE VOTEDFOR ITEMS 1, 2, 3 AND 5, ANDAGAINST ITEM 4.TABLE OF CONTENTS | | | | | | | Address Change? Mark Box ¨
| | Indicate changes below: | | Date | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Signature(s) in Box
Please sign exactly as your name(s) appears on the Proxy. If held in joint tenancy, all persons should sign. Trustees, administrators, etc., should include title and authority. Corporations should provide the full name of the corporation and the title of the authorized officer signing the Proxy. |
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