SCHEDULE 14A INFORMATION
Proxy Statement Pursuant To Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
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| Preliminary Proxy Statement | ☐ | Confidential, for Use of the Commission Only (as permitted byRule 14a-6(e)(2)) | |||
| Definitive Proxy Statement | |||||
☐ | Definitive Additional Materials | |||||
☐ | Soliciting Material Pursuant toSection 240.14a-12 |
STATE STREET CORPORATION
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)
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Joseph L. Hooley
Ronald P. O’Hanley
Chairman, President and Chief Executive Officer
Kennett F. BurnesApril 8, 2020
Lead Director
April [●], 2018
Dear Shareholder:
We cordially invite you to attend the 20182020 annual meeting of shareholders of State Street Corporation. The meeting will be held at One Lincoln Street, 36th Floor, Boston, Massachusetts, on May 16, 2018,20, 2020, at 9:00 a.m. Eastern Time. Due to the current Coronavirus (COVID-19) public health crisis, the annual meeting of shareholders will be conducted online via live audio webcast atwww.virtualshareholdermeeting.com/STT2020. Holding the annual meeting of shareholders in person could pose a risk to the health and safety of our shareholders, employees and directors, and as a result, we have decided to hold the annual meeting virtually. You will be able to participate, submit questions and vote your shares electronically. The proxy statement and annual meeting provide an important opportunity for us to communicate with you as shareholders, and for you to communicate with us, on important topics such as our performance, corporate governance, the effectiveness of the Board of Directors and executive compensation. Details regarding virtual admission to the meeting and the business to be conducted are more fully described in the accompanying notice of annual meeting and proxy statement. Whether or not you plan to attend the meeting online, please carefully review the enclosed proxy statement together with the annual report that accompanies it and then cast your vote. We urge you to vote regardless of the number of shares you hold. To be sure that your vote will be received in time, please cast your vote by your choice of available means at your earliest convenience. Your vote is very important to us.
In 2017, we celebrated our 225th anniversary—225 years since John Hancock signed into existence State Street’s earliest ancestor. Since that time, a lot has changed at State Street. We became the custodian for the first mutual fund, created the world’s first exchange traded fund, placed the Fearless Girl statue in the middle of New York’s financial district and expanded across countries and continents. What has remained constant is our ability to change and evolve to stay ahead of our clients’ needs and industry demands, and that is what defines our way ahead.
In our most recent year, we achieved our financial targets and continued to generate strong shareholder returns. Revenue, fee revenue, earnings per share and return on average common equity all exceeded 2016 results. Our financial results reflect increased demand from clients, continued strength across our asset management and servicing businesses and prudent expense management, as well as growing global equity markets and rising interest rates. In addition to our positive financial performance, we continued to make substantial progress against our four strategic priorities of strengthening our foundation, delivering highly valued services and solutions to our clients, engaging our people and driving our strategy.
We look forward to seeing you at the annual meeting. Your continued interest in State Street is very much appreciated.
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State Street Corporation
One Lincoln Street
Boston, MA 02111-2900
NOTICE OF STATE STREET CORPORATION 2018 ANNUAL MEETING OF SHAREHOLDERS
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April [●], 2018
PROXY STATEMENT
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The proxy statement and annual report, and the means to vote electronically, are available atwww.proxyvote.com. To view this material, you must have available the16-digit control number located on the notice mailed on April [●], 2018, on the proxy card or, if shares are held in the name of a broker, bank or other nominee, on the voting instruction form.
For more information about the annual meeting, see “General Information About the Annual Meeting.”
Voting Matters and Recommendations
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STATE STREET CORPORATION
One Lincoln Street, Boston, Massachusetts 02111
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About State Street
State Street Corporation is a financial holding company organized in 1969 under the laws of the Commonwealth of Massachusetts. State Street provides financial and managerial support to our legal and operating subsidiaries. Through our subsidiaries, including our principal banking subsidiary, State Street Bank and Trust Company, we provide a broad range of financial products and services to institutional investors worldwide. We refer to State Street Bank and Trust Company as State Street Bank or the Bank.
As of December 31, 2017, we had consolidated total assets of $238.43 billion, consolidated total deposits of $184.90 billion, consolidated total shareholders’ equity of $22.32 billion and 36,643 employees. We operate in more than 100 geographic markets worldwide, including the U.S., Canada, Europe, the Middle East and Asia.
We are a leader in providing financial services and products to meet the needs of institutional investors worldwide, with $33.12 trillion of assets under custody and administration and $2.78 trillion of assets under management as of December 31, 2017. Our clients include mutual funds, collective investment funds and other investment pools, corporate and public retirement plans, insurance companies, foundations, endowments and investment managers.
In 2017, we continued to focus on four strategic priorities: strengthen our foundation, deliver highly valued services and solutions to our clients, engage our people and drive our strategy. We performed well against our strategic priorities and achieved our financial results—with revenue, fee revenue, earnings per share and return on average common equity exceeding 2016 results—all while maintaining a strong capital position, returning value to shareholders and continuing to manage expenses. Below are summary highlights of our 2017 consolidated corporate financial performance. Additional performance indicators are presented in “Compensation Discussion and Analysis—Executive Summary—2017 Corporate Performance Highlights.”
Financial Performance Highlights
Consolidated Financial Performance
($ In millions, except per share data) | 2017
| 2016
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Revenue
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| 11,170
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| 9.4%
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Total fee revenue
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8,905
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8,116
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9.7%
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Diluted earnings per share (EPS)
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5.24
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Return on average common equity (ROE) | 10.6% | 10.5% | 1.0% | |||||||||
Total Shareholder Return (TSR)
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State Street
| S&P Financial Index
| Peer Group Median(1)
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1-Year TSR
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27.83
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%
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22.14
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%
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16.00
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%
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3-Year TSR
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| 31.90
| %
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| 47.58
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| 39.13
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Board Composition Summary
Listed in the table below are the current members of State Street’s Board of Directors
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Director Qualifications and Skills
State Street believes that our Board of Directors should have a diversity of qualifications, skill sets and experience that, when taken as a whole, best serve our company and our shareholders. Each of our directors has one or more of the following qualifications, skills or experience:
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Corporate Governance Summary
Our Board of Directors is committed to strong corporate governance practices and is intent on maintaining State Street’s reputation for quality, integrity and high ethical standards. The following is a summary of our corporate governance standards:
For more information about State Street’s corporate governance practices, see “Corporate Governance at State Street.”
Corporate Responsibility
State Street’s commitment to social and environmental responsibility and our belief in giving back to the communities in which we live and work are critical to our long-term success. We recognize that sustainable growth comes from operating with absolute integrity and in a way that respects our shareholders, clients, employees, communities and the environment. We firmly believe in the principles of sound governance and to helping our clients succeed. We are dedicated to maintaining a global and inclusive workplace where employees feel valued and engaged. We believe we have a responsibility to enrich our communities, and to be a leader in environmental sustainability, both in the way we carry out our operations and in the products and services we offer. Corporate responsibility highlights and achievements for 2017 include the following:
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Overview of 2017 Executive Compensation Program
Sound Compensation and Corporate Governance Practices
State Street develops and implements a compensation program for our Named Executive Officers, or NEOs, and other executive officers with the goals of:
attracting, retaining and motivating superior executives
rewarding those executives for meeting or exceeding annual and long-term financial and strategic objectives
driving long-term shareholder value and financial stability
providing equal pay for work of equal value
achieving the preceding goals in a manner aligned with sound risk management and our corporate values
For each of our NEOs identified in the “Compensation Discussion and Analysis,” the Executive Compensation Committee, or Compensation Committee, determines the appropriate level of total compensation for the year. We engage our largest shareholders to understand their specific perspectives on our compensation and governance programs. For 2017, we held discussions with shareholders representing more than 30% of our outstanding common stock.
At State Street, compensation to our NEOs consists of two key elements:
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For more information about executive compensation at State Street, see “Executive Compensation.”
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CORPORATE GOVERNANCE AT STATE STREET
State Street is a financial holding company whose principal subsidiary is State Street Bank and Trust Company, or State Street Bank or the Bank. State Street and the Bank are each organized under the laws of the Commonwealth of Massachusetts. In accordance with Massachusetts law and State Street’sby-laws, our Board of Directors has responsibility for overseeing the conduct of our business. Our Board is committed to strong corporate governance practices and is intent on maintaining State Street’s reputation for quality, integrity and high ethical standards.
Governance Guidelines and Independence
State Street’s Board of Directors, in its role of overseeing the conduct of our business, is guided by our Corporate Governance Guidelines, or the Guidelines. Among other things, the Guidelines describe the role of the Board of Directors, its responsibilities and functions, the director qualification and selection process and the role of the Lead Director. The Guidelines also contain categorical standards for determining director independence under New York Stock Exchange, or NYSE, listing standards. In general, a director would not be independent under these standards if the director (and in certain circumstances, a member of the director’s immediate family) has, or in the past three years had, specified relationships or affiliations with State Street, its external or internal auditors or other companies that do business with State Street (including employment by State Street, receipt of a specified level of direct compensation from State Street—other than director fees—and compensation committee interlocks). The categorical standards also provide specified relationships that, by themselves, would not impair independence. The portion of the Guidelines addressing director independence is attached asAppendix A to this proxy statement. The full Guidelines are available under the “Corporate Governance” section in the “For Our Investors” section of our website atwww.statestreet.com. In addition to the Guidelines, the charters for each principal committee of the Board are also available in the same location on our website. Except as may be specifically incorporated by reference in this proxy statement, information on our website is not part of this proxy statement.
Pursuant to the Guidelines, the Board undertook a review of director independence in early 2018. State Street, as a global financial institution and one of the largest providers of financial services to institutional investors, conducts business with many organizations throughout the world. Our directors or their immediate family members may have relationships or affiliations with some of these organizations. As provided in the Guidelines, the purpose of the director independence review was to determine whether any relationship or transaction was inconsistent with a determination that the director was independent. As a result of this review, the Board, after review and recommendation by the Nominating and Corporate Governance Committee, determined that all of ournon-management directors meet the categorical standards for independence under the Guidelines, have no material relationship with State Street (other than the role of director) and satisfy the qualifications for independence under listing standards of the NYSE. The Board had previously determined in 2017 that Ronald L. Skates and Thomas J. Wilson, who served on the Board
STATE STREET CORPORATION 1
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during 2017, were independent. In making the independence determinations in 2018, the Board considered that the below identified individuals, or their respective family members, have the following relationships or arrangements that are deemed to be immaterial under the categorical standards for independence included in the Guidelines:
commercial or charitable relationships with an entity for which the State Street director or family member serves as anon-employee director, and with respect to which the director was uninvolved in negotiating such relationship (Ms. Hill and Messrs. Burnes, de Saint-Aignan and Freda)
commercial relationships with an entity for which the State Street director or family member serves as an employee, consultant or executive officer where the director does not receive any special benefits from the transaction and the annual payments to or from the entity are equal to or less than the greater of $1 million or 2% of the consolidated gross annual revenues of the other entity during the most recent completed fiscal year (Ms. Hill and Mr. Freda)
In 2017, none of these commercial or charitable relationships with affiliated entities involved amounts paid or received by State Street exceeding 1.7% of State Street’s annual gross revenue or the greater of $1 million or 0.6% of the affiliated entity’s annual gross revenue.
We have a Standard of Conduct for Directors, which together with the Standard of Conduct for Employees, promotes ethical conduct and the avoidance of conflicts of interest in conducting our business. We also have a Code of Ethics for Senior Financial Officers (including the Chief Executive Officer), as required by the Sarbanes-Oxley Act and SEC rules. Each of these documents is available under the “Corporate Governance” section in the “For Our Investors” section of our website at www.statestreet.com. Only our Board may grant a waiver for directors, senior financial officers or executive officers from a provision of the Standard of Conduct for Directors, the Standard of Conduct for Employees or the Code of Ethics for Senior Financial Officers, and any waivers will be posted under the “Corporate Governance” section in the “For Our Investors” section of our website atwww.statestreet.com.
Composition of the Board and Director Selection Process
In connection with nominating directors for election each year and evaluating the need for new director candidates as appropriate, including skill sets, diversity, specific business background and global or international experience, the Nominating and Corporate Governance Committee, with input from the entire Board and management, focuses on the Board’s capabilities and functioning as a whole.
On an annual basis, the Nominating and Corporate Governance Committee assesses each director’s contributions to the overall effectiveness of the Board. The Committee also evaluates the experience, qualifications and attributes of each director and
2 STATE STREET CORPORATION
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recommends to the Board the director nominees that should stand for election at the next annual meeting. Based on this evaluation, the Board believes that individually each of the nominees has had substantial achievement in his or her personal and professional pursuits and has talents, experience and integrity that will contribute to the best interests of State Street and to long-term shareholder value, and the nominees as a group possess the skill sets, specific business background and global or international experience that the Board desires. The director nominee biographies set forth in this proxy statement under the heading “Item 1—Election of Directors” indicate each nominee’s qualifications, skills, experience and attributes that led the Board to conclude he or she should serve as a director of State Street.
In carrying out its responsibility to find the best qualified candidates for directors, the Nominating and Corporate Governance Committee will consider proposals for nominees from a number of sources, including recommendations from shareholders submitted upon written notice to the Chair of the Nominating and Corporate Governance Committee, c/o the Office of the Secretary of State Street Corporation, One Lincoln Street, Boston, Massachusetts 02111 (facsimile number(617) 664-8209). The Committee seeks to identify individuals qualified to become directors, consistent with the above criteria used by the Board for director candidates.
By following the procedures set forth under “General Information About the Annual Meeting—Proposals and Nominations by Shareholders,” shareholders also have the right under ourby-laws to directly nominate director candidates and, in certain circumstances, to have their nominees included in State Street’s proxy statement.
The Nominating and Corporate Governance Committee’s process for identifying and evaluating candidates includes actively seeking to identify qualified individuals by reviewing lists of possible candidates and considering proposals from a number of sources, such as members of the Board, members of management, employees, shareholders and industry contacts. The Committee’s charter grants it the authority to retain search firms to assist in conducting this search. Upon identifying a possible candidate, from whatever source, the Committee makes an initial evaluation as to whether the individual would qualify under the criteria used by the Board for director candidates. A candidate who passes the initial evaluation is then further evaluated through a process which may include obtaining and examining the individual’s resume, speaking with the person who has recommended the individual, speaking with others who may be familiar with the individual, interviews by members of the Board and the Nominating and Corporate Governance Committee with the individual, discussion at the Committee level of the individual’s possible contribution to State Street and, if appropriate, voting on the individual as a candidate. The Committee evaluates possible nominees for director without regard to whether an individual is recommended by a shareholder or otherwise.
Annual Board and Committee Evaluations
On an annual basis, the Board of Directors and each committee conducts an annual self-evaluation of its performance and effectiveness. Directors complete a questionnaire evaluating the Board and each committee they serve on, specifically focusing on areas of potential improvement. The overall performance of the Board—including its contributions to the Company—and a compilation of director responses is reviewed and discussed by the Nominating and Corporate Governance Committee and the Board. Similarly, the performance of each committee, along with specific committee member responses, is reviewed and discussed by the respective committee. The Nominating and Corporate Governance Committee further assesses whether each of the Examining and Audit Committee, Executive Compensation Committee, Risk Committee, Nominating and Corporate Governance Committee and Technology Committee has a functioning self-evaluation process and reports its findings to the Board.
Diversity
State Street does not have a formal policy with respect to diversity but, taken as a whole, strives to have a Board that reflects the diversity (in terms of a number of characteristics including gender, race, national origin, age and tenure on the Board) of State Street’s key stakeholders and of the various communities in which we operate. Presently, the Nominating and Corporate Governance Committee and the Board believe the composition of the Board, which currently reflects a range of personal and professional backgrounds, experiences and other characteristics, is reflective of this diversity. As noted above, the Nominating and Corporate Governance Committee includes diversity as a consideration in making its recommendations for nominees for director. The Committee, however, does not assign specific weight to the various factors it considers and no particular criterion is a prerequisite for nomination.
STATE STREET CORPORATION 3
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State Street has adopted a leadership structure that includes an independent Lead Director of the Board. This position is currently held by Kennett F. Burnes. Mr. Burnes was elected Lead Director to serve aone-year term as the presiding director of the independent directors of the Board (all directors, except for Mr. Hooley) in May 2017. Mr. Burnes has served in this capacity for eight annual terms. On November 7, 2017, State Street announced that Joseph L. Hooley will retire as Chief Executive Officer by the end of 2018 and will remain as a director and Chairman of the Board of Directors throughout 2019. Ronald P. O’Hanley will succeed Mr. Hooley as State Street’s Chief Executive Officer upon Mr. Hooley’s retirement.
Our Guidelines provide that any director who reaches the age of 75 will retire from the Board by the end of his or her then current term. The Board waived this requirement for our Lead Director, Mr. Burnes, who turned 75 in February 2018, so that he may continue, ifre-elected, as Lead Director until the 2019 annual meeting. The Board took this action to maintain continuity in the Lead Director position during the Company’s CEO transition described above.
Mr. Hooley, as State Street’s Chairman of the Board, presides at all meetings of the Board at which he is present. The Chairman works with the independent Lead Director in setting Board agendas and coordinating other Board activities. The Nominating and Corporate Governance Committee coordinates the annual Lead Director nomination and election process. The Committee conducts a review of the current Lead Director by soliciting feedback from members of the Board, and based upon the review, recommends that the Board of Directors elect a member of the Board as its Lead Director to serve for aone-year term. The Board of Directors believes that Mr. Hooley’s role as Chairman and Mr. Burnes’ role as Lead Director is the most effective leadership structure for State Street at this time and is in the best interests of the Board, State Street and its shareholders. Among the factors considered by the Board in determining that this leadership structure continues to be the most appropriate are:
as our Chief Executive Officer, and with his extensive work history in different roles at State Street, Mr. Hooley is more familiar with our business and strategy than an independent,non-management Chairman would be, and is thus better positioned to focus our Board’s agenda on the key issues facing State Street
a single Chairman and Chief Executive Officer provides strong, consistent and accountable leadership for State Street, without risking overlap or conflict of roles
oversight of State Street is the responsibility of our Board as a whole, and this responsibility can be properly discharged without an independent Chairman
the Chairman and our Lead Director work together to play a strong and active role in the oversight of State Street’s leadership
4 STATE STREET CORPORATION
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Communication with the Board of Directors
Shareholders and interested parties who wish to contact the Board of Directors or the Lead Director should address correspondence to the Lead Director in care of the Secretary. The Secretary will review and forward correspondence to the Lead Director or appropriate person or persons for response.
Lead Director of State Street Corporation
c/o Office of the Secretary
One Lincoln Street
Boston, MA 02111-2900
April 8, 2020 |
NOTICE OF STATE STREET CORPORATION 2020 ANNUAL MEETING OF SHAREHOLDERS
Date | May 20, 2020 | |||||
Time | 9:00 a.m., Eastern Time | |||||
Location | Virtual annual meeting of shareholders conducted via live audio webcast at: www.virtualshareholdermeeting.com/STT2020 | |||||
Purpose | 1. | To elect 11 directors | ||||
2. | To approve an advisory proposal on executive compensation | |||||
3. | To ratify the selection of Ernst & Young LLP as State Street’s independent registered public accounting firm for the year ending December 31, 2020 | |||||
4. | To act upon such other business as may properly come before the meeting and any adjournments thereof | |||||
Record Date | The directors have fixed the close of business on March 11, 2020, as the record date for determining shareholders entitled to notice of and to vote at the meeting. | |||||
Meeting Admission | If you wish to attend the annual meeting online, please enter the 16-digit control number included in your notice of Internet availability of the proxy materials or your proxy card, or by following the voting instructions that accompanied your proxy materials. A list of our registered holders as of the close of business on the record date will be made available to shareholders during the meeting atwww.virtualshareholdermeeting.com/STT2020. To access such list of registered holders beginning April 10, 2020 and until the meeting, shareholders should email State Street Investor Relations at IR@statestreet.com. | |||||
Voting by Proxy | Please submit a proxy card or, for shares held in “street name” through a broker, bank or nominee, a voting instruction form, as soon as possible, so your shares can be voted at the meeting. You may submit your proxy card or voting instruction form by mail. If you are a registered shareholder, you may also vote electronically by telephone or over the Internet by following the instructions included with your proxy card or notice of Internet availability of proxy materials. If your shares are held in “street name,” you will receive instructions for the voting of your shares from your broker, bank or other nominee, which may permit telephone or Internet voting. Follow the instructions on the voting instruction form or notice of Internet availability of proxy materials that you receive from your broker, bank or other nominee to ensure that your shares are properly voted at the annual meeting. |
By Order of the Board of Directors, |
Jeffrey N. Carp |
Secretary |
STATE STREET CORPORATION
One Lincoln Street, Boston, Massachusetts 02111
Summary Information
2020 Annual Meeting of Shareholders | ||
Date: | May 20, 2020 | |
Time: | 9:00 a.m., Eastern Time | |
Location: | Virtual annual meeting of shareholders conducted via live audio webcast at:www.virtualshareholdermeeting.com/STT2020 | |
Record date: | March 11, 2020 |
The proxy statement and annual report, and the means to vote electronically prior to the annual meeting, are available atwww.proxyvote.com. To view this material, you must have available the16-digit control number located on the notice mailed beginning on April 8, 2020, on the proxy card or, if shares are held in the name of a broker, bank or other nominee, on the voting instruction form.
More information about the annual meeting is described under the heading “General Information About the Annual Meeting.”
Voting Matters and Recommendations
Item | Board Recommendation | |
Election of Directors (see “Item 1—Election of Directors”) | FOR Each Director | |
Advisory Proposal on 2019 Executive Compensation (see “Item 2—Approval of Advisory Proposal on Executive Compensation”) | FOR | |
Ratification of Ernst & Young LLP as Independent Registered Public Accounting Firm for 2020 (see “Item 3—Ratification of the Selection of the Independent Registered Public Accounting Firm”) | FOR |
The following summary provides general information about State Street Corporation, referred to as State Street or the Company, and highlights information contained elsewhere in this proxy statement. This summary does not contain all of the information you should consider when deciding how to vote your shares. For further and more detailed information on the matters referenced below, prior to casting your vote, please carefully review the entire proxy statement and our 2019 annual report onForm 10-K. Our 2019 annual report on Form10-K accompanies this proxy statement and was previously filed with the Securities and Exchange Commission, or SEC.
State Street Corporation | i |
About State Street
State Street Corporation is a financial holding company organized in 1969 under the laws of the Commonwealth of Massachusetts. State Street provides financial and managerial support to our legal and operating subsidiaries. Through our subsidiaries, including our principal banking subsidiary, State Street Bank and Trust Company, we provide a broad range of financial products and services to institutional investors worldwide. We refer to State Street Bank and Trust Company as State Street Bank or the Bank.
As of December 31, 2019, we had consolidated total assets of $245.61 billion, consolidated total deposits of $181.87 billion, consolidated total shareholders’ equity of $24.43 billion and over 39,000 employees. We operate in more than 100 geographic markets worldwide, including the U.S., Canada, Europe, the Middle East and Asia.
We are a leader in providing financial services and products to meet the needs of institutional investors worldwide, with $34.36 trillion of assets under custody and/or administration and $3.12 trillion of assets under management as of December 31, 2019. Our clients include mutual funds, collective investment funds and other investment pools, corporate and public retirement plans, insurance companies, foundations, endowments and investment managers.
2019 began with significant industry challenges, including financial market weakness, falling interest rates and increased client fee pricing pressure, and our GAAP-basis revenue,pre-tax margin, diluted earnings per share (EPS) and return on average common equity (ROE) all decreased in 2019 from 2018. In the face of these headwinds, we acted aggressively to stabilize revenues and reduce expenses and made progress on key business objectives. Actions included:
• | strengthening our value proposition to clients, including the ongoing build-out of ourfront-to-back State Street AlphaSM platform |
successfully executing a firm-wide expense savings program that exceeded initial targets and resulted in approximately $415 million in gross expense savings during 2019
reorganized the leadership of our multi-regional international business under a single executive to further our growth objectives
Due to these actions and the steady recovery of U.S. average market levels in 2019,our financial results in the second half of the year improved relative to the first half of the year. On a GAAP basis, second half total revenue increased by approximately 3%, total fee revenue was up approximately 2% and EPS increased approximately 7% relative to the first half of the year. With regard to risk management performance, we made progress on initiatives to improve our financial risk posture, but did not achieve desired non-financial risk improvement. While we know more is required for us to advance our overall performance, we are nonetheless confident in the trajectory of our business and focused on continuing to improve our performance. The performance metrics used in our executive compensation programs are linked to the below financial results presented on anon-GAAP basis.
Financial Performance
Consolidated Financial Performance, excluding notable items,non-GAAP(1)
($ In millions, except per share data) | 2019 | 2018 | Change | |||||||||
Total fee revenue |
| $9,147 |
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| $9,462 |
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| (3.3 | )% | |||
Total revenue |
| 11,712 |
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| 12,139 |
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| (3.5 | )% | |||
Expenses |
| 8,675 |
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| 8,625 |
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| 0.6 | % | |||
Pre-tax margin |
| 25.8% |
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| 28.8% |
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| (300 | ) bps | |||
EPS |
| 6.17 |
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| 7.21 |
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| (14.4 | )% | |||
ROE |
| 10.8% |
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| 13.7% |
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| (290 | ) bps |
State Street Corporation | ii |
($ In millions, except per share data) | 2H 2019 | 1H 2019 | Change | |||||||||
Total fee revenue | $ | 4,627 | $ | 4,520 | 2.4 | % | ||||||
Total revenue | 5,907 | 5,805 | 1.8 | % | ||||||||
Expenses | 4,263 | 4,412 | (3.4) | % | ||||||||
Pre-tax margin | 27.7% | 23.9% | 380 | bps | ||||||||
EPS | 3.48 | 2.69 | 29.4 | % | ||||||||
ROE | 11.9% | 9.7% | 220 | bps |
(1) | Financial results are presented on anon-GAAP basis.Non-GAAP financial results adjust selected GAAP-basis financial results to exclude the impact of notable items outside of State Street’s normal course of business. For a reconciliation ofnon-GAAP measures presented in this proxy statement, seeAppendix C. |
State Street’s 2019 performance is reviewed in greater detail, along with relevant risks associated with our businesses, results of operations and financial condition, in our 2019 annual report on Form10-K, which accompanies this proxy statement and was previously filed with the SEC.
State Street Corporation | iii |
Director Nominees
We believe that our Board members should have complementary skills and qualifications that form a depth of broad and diverse experiences. We are intent on maintaining the Company’s reputation for quality, integrity and high ethical standards and seek director nominees who have had substantial achievement in their personal and professional pursuits and possess the talent, experience and integrity necessary to effectively oversee our businesses and strategy and enhance long-term shareholder value. Based on these desired attributes, the Board has nominated the following 11 director nominees for election at the 2020 annual meeting of shareholders.
Director Nominee | Principal Occupation | Other Public Company Boards (#) | State Street Board Roles and Memberships | |||
Marie A. Chandoha*D Director Since 2019 | Retired President and Chief Executive Officer, Charles Schwab Investment Management, Inc. | None | • Examining and Audit Committee • Technology and Operations Committee | |||
Patrick de Saint-Aignan* Director Since 2009 | Retired Managing Director and Advisory Director, Morgan Stanley | None | • Examining and Audit Committee • Executive Committee • Risk Committee (Chair) | |||
Lynn A. Dugle* Director Since 2015 | Retired Chief Executive Officer and Chairman, Engility Holdings, Inc. | 2 | • Examining and Audit Committee • Executive Committee • Technology and Operations Committee (Chair) | |||
Amelia C. Fawcett* Director Since 2006 | Chairman, Kinnevik AB | 1 | • Lead Director • Executive Committee • Human Resources Committee | |||
William C. Freda* Director Since 2014 | Retired Senior Partner and Vice Chairman, Deloitte, LLP | None | • Examining and Audit Committee (Chair) • Executive Committee • Risk Committee | |||
Sara Mathew* Director Since 2018 | Retired Chairman and Chief Executive Officer, The Dun & Bradstreet Corporation | 2 | • Nominating and Corporate Governance Committee • Risk Committee | |||
William L. Meaney* Director Since 2018 | President, Chief Executive Officer and Director, Iron Mountain Inc. | 1 | • Human Resources Committee • Technology and Operations Committee | |||
Ronald P. O’Hanley Director Since 2019 | Chairman, President and Chief Executive Officer, State Street Corporation | 1 | • Chairman • Executive Committee (Chair) • Risk Committee • Technology and Operations Committee | |||
Sean O’Sullivan* Director Since 2017 | Retired Group Managing Director and Group Chief Operating Officer, HSBC Holdings, plc | None | • Risk Committee • Technology and Operations Committee | |||
Richard P. Sergel* Director Since 1999 | Retired President and Chief Executive Officer, North American Electric Reliability Corporation | 1 | • Examining and Audit Committee • Executive Committee • Human Resources Committee (Chair) • Nominating and Corporate Governance Committee | |||
Gregory L. Summe* Director Since 2001 | Managing Partner and Founder, Glen Capital Partners, LLC | 1 | • Executive Committee • Human Resources Committee • Nominating and Corporate Governance Committee (Chair) |
*=Independent D=First-Time Nominee
State Street Corporation | iv |
Corporate Governance Summary
Our Board is committed to strong corporate governance practices and is intent on maintaining State Street’s reputation for quality, integrity and high ethical standards. In addition to adhering to the Investor Stewardship Group’s Corporate Governance Framework, as highlighted inAppendix B, the following summarizes our corporate governance standards:
Board of Directors | Shareholders Rights and Engagement | Strategy, Compensation and Risk | ||
• 10 of 11 director nominees are independent • Annual director elections • Annual assessment of effectiveness and qualifications of each director nominee • 36% of director nominees are women • Active independent Lead Director elected annually by all independent directors • Board and committees meet regularly in executive session without management present • At least 75% attendance by each director at Board and committee meetings | • Directors are elected by a majority of votes cast in uncontested election and by plurality vote in contested elections • Active shareholder engagement program • No poison pill • Proxy accessby-law allows shareholders to include director nominees in State Street’s proxy materials • No supermajority vote requirements relating to common stock | • Board and Committee oversight of: – strategy, financial performance, ethics and risk management – CEO and management succession planning – alignment of culture and human capital management with strategy and long-term objectives • Directors and executive officers are subject to stock ownership guidelines and are prohibited from short selling, options trading, hedging or speculative transactions in State Street securities • Incentive compensation subject to clawback, forfeiture and ex ante mechanisms • Monitor material activities and practices on ESG matters |
Information about State Street’s corporate governance practices, is described under the heading “Corporate Governance at State Street.”
State Street Corporation | v |
Corporate Responsibility
State Street’s commitment to social and environmental responsibility and our belief in giving back to the communities in which we live and work are critical to our long-term success. We recognize that sustainable growth comes from operating with absolute integrity and in a way that respects our shareholders, clients, employees, communities and the environment. We firmly believe in the principles of sound governance and helping our clients succeed. We are dedicated to maintaining a global and inclusive workplace where employees feel valued and engaged. We believe we have a responsibility to enrich our communities, and to be a leader in environmental sustainability, both in the way we carry out our operations and in the products and services we offer, and the Board monitors activities and practices on ESG related matters. Corporate responsibility highlights and achievements for 2019 include the following:
Leadership and Governance data is as of April 8, 2020. All other data is as of December 31, 2019.
State Street Corporation | vi |
Overview of 2019 Executive Compensation Program
Sound Compensation and Corporate Governance Practices
State Street develops and implements a compensation program for our Named Executive Officers, or NEOs, and other executive officers, which aims to:
attract, retain and motivate superior executives and drive strong leadership behaviors
reward those executives for meeting or exceeding individual and company financial and business objectives
drive long-term shareholder value and financial stability
align incentive compensation with the performance results experienced by our shareholders through the use of significant levels of deferred equity-based compensation
provide equal pay for work of equal value
achieve the preceding goals in a manner aligned with sound risk management and our corporate values
For each of our NEOs identified in the “Compensation Discussion and Analysis,” the Human Resources Committee, which was previously the Executive Compensation Committee, determines the appropriate level of total compensation for the year. We engage with our largest shareholders to understand their perspectives on our compensation and governance programs. For 2019, we engaged or requested engagement with shareholders representing more than half of our outstanding common stock.
The Committee evaluates individual compensation for our NEOs and other executive officers by looking at total direct compensation, consisting of base salary and incentive compensation. The Committee evaluates base salary and incentive compensation levels at least annually.
Base Salary.Base salary is a relatively small portion of total compensation for the NEOs.
Incentive Compensation Targets. The Committee establishes incentive compensation targets for our NEOs each year. The targets are based on each executive’s role and responsibilities, performance trend, competitive and market factors and internal equity.
What We Do • Long-term performance-based equity awards in the form of performance-based RSUs • Significant deferred equity- and cash-based incentive compensation • Active engagement with shareholders on compensation and governance issues • Close interaction between the Human Resources Committee and our Risk Committee and Examining and Audit Committee • Independent compensation consultant | • Clawback and forfeiture provisions to permit recoupment of incentive compensation • “Double-trigger”change-of-control required for deferred incentive compensation acceleration and cash payments • Stock ownership policy, including holding requirements for NEOs who are below full ownership guidelines • Non-compete and other restrictive covenants • Annual review of incentive compensation design for alignment with risk management principles | |||
What We Do Not Do • Nochange-of-control excise taxgross-up • No “single-trigger”change-of-control vesting or cash payments • No option repricing | • No short-selling, options trading, hedging or speculative transactions in State Street securities • No taxgross-ups on perquisites(1) • No multi-year guaranteed incentive awards | |||
(1) | Excluding certain international assignment and relocation benefits. |
More information about executive compensation at State Street is described under the heading “Compensation Discussion and Analysis.”
State Street Corporation | vii |
State Street Corporation | viii |
2020 NOTICE OF MEETING AND PROXY STATEMENT |
To our shareholders:
It is my privilege to serve as State Street’s independent Lead Director, and on behalf of the entire Board, I would like to thank all of you for investing in State Street.
2019 was a year of change for State Street as the Board completed its important responsibility of CEO and leadership succession planning by appointing Ron O’Hanley as Chief Executive Officer in January 2019, followed by my election in May to serve as independent Lead Director. In December, the Board appointed Ron as Chairman, after careful assessment and review of our Board leadership structure. This structure includes my role as independent Lead Director, which is similar to that of an independent Chair at many firms and includes my responsibilities to preside over Board meetings when the Chairman is not present, oversee Board and committee agendas, attend all committee meetings and work closely with the CEO. We are at a pivotal moment in State Street’s evolution, and I and the independent directors are thoughtfully engaging with Ron and his management team to oversee the implementation of our strategy and to maintain a focus on delivering long-term value for our shareholders.
In doing so, the Board is committed to strong corporate governance practices and in maintaining State Street’s reputation for quality, integrity and high ethical standards. The Board is assisted in this by our Corporate Governance Guidelines. These Guidelines define director qualification and independence standards, expectations for the Lead Director, pathways to communicate with the Board and other processes. In addition, they identify specific functions of the Board. These include reviewing the alignment of State Street’s culture with its strategy and monitoring its material activities and practices regarding environmental, social and governance matters, in addition to more traditional business and management oversight responsibilities.
As one of the largest servicers and managers of assets in the world, State Street understands the importance of effective, independent board leadership. As part of our commitment to effective governance, the Board actively evaluates its composition to reflect a balanced combination of skills, experience and diverse perspectives. In October 2019, we added to the strength and breadth of the Board with the election of Marie A. Chandoha, retired President and CEO of Charles Schwab Investment Management. As Marie joins the Board, my predecessor in the role of Lead Director, Ken Burnes, will not be standing for reelection this year. In his 17 years as a member of the Board, Ken has exemplified leadership, acumen and commitment to the Company and its shareholders, overseeing State Street’s navigation through growth and transformation. The Board and I especially thank him for his strength and dedication.
Once again, on behalf of the Board, I want to thank you for your continued support and interest in State Street and we look forward to the 2020 Annual Meeting of Shareholders.
Sincerely,
Amelia C. Fawcett
Lead Director
State Street Corporation | 1 |
2020 NOTICE OF MEETING AND PROXY STATEMENT |
Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to be Held on May 20, 2020
The proxy statement and annual report, and the means to vote electronically, are available at www.proxyvote.com. To view this material, you must have available the16-digit control number located on the notice mailed on April 8, 2020, on the proxy card or, if shares are held in the name of a broker, bank or other nominee, on the voting instruction form.
Corporate Governance at State Street
Governance Guidelines and Independence
State Street’s Board of Directors, or Board, in its role of overseeing the conduct of our business, is guided by our Corporate Governance Guidelines, or the Guidelines. Among other things, the Guidelines describe the role of the Board, its responsibilities and functions, the director qualification and selection process and the role of the Lead Director. The Guidelines also contain categorical standards for determining director independence under New York Stock Exchange, or NYSE, listing standards. In general, a director would not be independent under these standards if the director (and in certain circumstances, a member of the director’s immediate family) has, or in the past three years had, specified relationships or affiliations with State Street, its external or internal auditors or other companies that do business with State Street (including employment by State Street, receipt of a specified level of direct compensation from State Street—other than director fees—and compensation committee interlocks). The categorical standards also provide specified relationships that, by themselves, would not impair independence. The portion of the Guidelines addressing director independence is attached asAppendix A to this proxy statement. The full Guidelines are available under the “Corporate Governance” section in the “For Our Investors” section of our website atwww.statestreet.com. In addition to the Guidelines, the charters for each principal committee of the Board are available in the same location on our website. State Street also follows the governance standards relative to the Investor Stewardship Corporate Governance Group’s (ISG) framework for U.S. listed companies. State Street’s alignment with the ISG framework is attached asAppendix B to this proxy statement.
Independent Director Governance
• | The independent directors meet in an executive session presided by the independent Lead Director at every regularly scheduled meeting of the Board and otherwise as needed |
• | The meetings of the independent directors promote additional opportunities, outside the presence of management, for the directors to engage together in discussion. The regularity of these meetings fosters continuity for these discussions and allows for a greater depth and scope to the matters discussed |
Pursuant to the Guidelines, the Board undertook its annual review of director independence in early 2020. State Street, as a global financial institution and one of the largest providers of financial services to institutional investors, conducts business with many organizations throughout the world. Our directors or their immediate family members may have relationships or affiliations with some of these organizations. As provided in the Guidelines, the purpose of the director independence review was to determine whether any relationship or transaction was inconsistent with a determination that the director was independent. As a result of this review, the Board, after review and recommendation by the Nominating and Corporate Governance Committee, determined that all of our directors, with the exception of Mr. O’Hanley, meet the categorical standards for independence under the Guidelines, have no material relationship with State Street (other than the role of director) and satisfy the qualifications for independence under listing standards of the NYSE.
In making the independence determinations in 2020, the Board considered that the below identified individuals, or their respective family members, have the following relationships or arrangements that are deemed to be immaterial under the categorical standards for independence included in the Guidelines:
commercial or charitable relationships with an entity for which the State Street director or family member serves as anon-employee director, and with respect to which the director was uninvolved in negotiating such relationship (Ms. Mathew and Messrs. Burnes and Freda)
commercial relationships with an entity for which the State Street director or family member serves as an employee, consultant or executive officer where the director does not receive any special benefits from the transaction and the annual payments to or from the entity are equal to or less than the greater of $1 million or 2% of the consolidated gross annual revenues of the other entity during the most recent completed fiscal year (Messrs. Freda and Meaney)
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Corporate Governance(cont.) | 2020 NOTICE OF MEETING AND PROXY STATEMENT |
In 2019, none of these commercial or charitable relationships with affiliated entities involved amounts paid or received by State Street exceeding the greater of $1 million or 0.6% of the affiliated entity’s annual gross revenue.
We have a Standard of Conduct for Directors, which together with the Standard of Conduct for Employees, promotes ethical conduct and the avoidance of conflicts of interest in conducting our business. We also have a Code of Ethics for Senior Financial Officers (including the Chief Executive Officer), as required by the Sarbanes-Oxley Act and SEC rules. Each of these documents is available under the “Corporate Governance” section in the “For Our Investors” section of our website atwww.statestreet.com. Only our Board may grant a waiver for directors, senior financial officers or executive officers from a provision of the Standard of Conduct for Directors, the Standard of Conduct for Employees or the Code of Ethics for Senior Financial Officers, and any waivers will be posted under the “Corporate Governance” section in the “For Our Investors” section of our website atwww.statestreet.com.
In connection with nominating directors for election each year and evaluating the need for new director candidates as appropriate, including skill sets, diversity, specific business background and global or international experience, the Nominating and Corporate Governance Committee, with input from the entire Board and management, focuses on the Board’s capabilities and functioning as a whole.
Director Nominee Characteristics and Qualifications
The Board expects all directors and director nominees to possess the following attributes or characteristics:
• | unquestionable business ethics, irrefutable reputation and superior moral and ethical standards |
• | informed and independent judgment with a balanced perspective, financial literacy, mature confidence, high performance standards and incisiveness |
• | ability and commitment to attend Board and committee meetings and to invest sufficient time and energy in monitoring management’s conduct of the business and compliance with State Street’s operating and administrative procedures |
• | a global vision of business with the ability and willingness to work closely with the other Board members |
Taken as a whole, the Board expects one or more of its members to have the following skill sets, specific business background and global or international experience:
• | experience in the financial services industry |
�� | • | experience as a senior officer of a well-respected public company |
• | experience as a senior business leader of an organization active in our key international growth markets |
• | experience in key disciplines of significant importance to State Street’s overall operations |
• | qualification as an audit committee financial expert |
• | qualification as a risk management expert |
State Street Corporation | 3 |
Corporate Governance(cont.) | 2020 NOTICE OF MEETING AND PROXY STATEMENT |
Annual Director Evaluations
The Nominating and Corporate Governance Committee annually assesses each director’s performance and contributions to the overall effectiveness of the Board. The Committee discusses each director and using the evaluation criteria illustrated below measures each director’s performance. Based on the results of the evaluation, the Board believes that each of the director nominees has substantial achievement in his or her personal and professional pursuits and has talents, experience, judgement and integrity that will contribute to the best interests of State Street and to long-term shareholder value. The nominees as a group possess the skill sets, specific business background and global or international experience that the Board desires. The director nominee biographies set forth in this proxy statement under the heading “Item 1—Election of Directors” indicate each nominee’s qualifications, skills, experience and attributes that led the Board to conclude he or she should serve as a director of State Street.
Annual Board and Committee Self-Evaluation
In addition, the Board and each Board committee conducts an annual self-evaluation of its performance and effectiveness. Directors complete a questionnaire evaluating the Board and each committee on which they serve, specifically focusing on areas of potential improvement. The overall performance of the Board—including its contributions to State Street—and a compilation of director responses is reviewed and discussed by the Nominating and Corporate Governance Committee and by the full Board. Similarly, the performance of each committee, along with specific committee member responses, is reviewed and discussed by the respective committee. The Nominating and Corporate Governance Committee further assesses whether each of the Examining and Audit Committee, Human Resources Committee, Nominating and Corporate Governance Committee, Risk Committee and Technology and Operations Committee has a functioning self-evaluation process and reports its findings to the Board. The Nominating and Corporate Governance Committee concluded, that for 2019, each of the respective committees had a functioning self-evaluation process.
State Street Corporation | 4 |
Corporate Governance(cont.) | 2020 NOTICE OF MEETING AND PROXY STATEMENT |
Director Identification and Selection Process
The Board regularly reviews its composition and size to evaluate its overall effectiveness and alignment with Company strategy. As part of this review, the Nominating and Corporate Governance Committee, in conjunction with the Board, establishes the desired criteria, skills and areas of expertise needed to continue to support the Board in advancing the Company’s businesses and strategy. Once the desired characteristics are established, the Committee reviews each director candidate. Illustrated below is an overview of the process used to identify the desired attributes and to select new candidates for the Board.
Ms. Marie Chandoha is a first-time nominee for election as a director by shareholders at the 2020 annual meeting. Ms. Chandoha was first identified by a third-party search firm that was retained to identify potential director candidates. At the request of the Nominating and Corporate Governance Committee, the search firm first discussed with the members of the Committee the priority characteristics of a new director candidate, in light of the preferred individual and Board qualities discussed above. The search firm provided the Committee a list of candidates who were interested in State Street and who met the selection criteria, experience and characteristics, and the Chairman of the Board, Chair of the Nominating and Corporate Governance Committee and select members of the Committee and Board personally conducted interviews. The Board is nominating Ms. Chandoha as she meets several of the criteria identified by the Board for new directors, including Ms. Chanodha’s extensive leadership experience in the financial services industry and track record of transforming businesses. Both the Nominating and Corporate Governance Committee and the Board of Directors believes that Ms. Chandoha has the background and requisite experience to make significant contributions on many levels to State Street through her continued service as a director. Ms. Chandoha was deemed independent by the Board under the Corporate Governance Guidelines.
In carrying out its responsibility to identify the best qualified candidates for directors, the Nominating and Corporate Governance Committee will consider proposals for nominees from a number of sources, including recommendations from shareholders submitted upon written notice to the Chair of the Nominating and Corporate Governance Committee, c/o the Office of the Secretary of State Street Corporation, One Lincoln Street, Boston, Massachusetts 02111 (facsimile number(617) 664-8209). The Committee seeks to identify individuals qualified to become directors, consistent with the identified criteria.
By following the procedures set forth under “General Information About the Annual Meeting—Proposals and Nominations by Shareholders,” shareholders also have the right under ourby-laws to directly nominate director candidates and, in certain circumstances, to have their nominees included in State Street’s proxy statement.
State Street Corporation | 5 |
Corporate Governance(cont.) | 2020 NOTICE OF MEETING AND PROXY STATEMENT |
Director Nominee Qualifications, Diversity and Skills
We believe that our Board of Directors should have a variety of qualifications, skill sets and experience that, when taken as a whole, best serve the Company and our shareholders. We recognize the importance of diversity with regard to the composition of the Board and strive to have a Board that provides diversity of thought and a broad range of perspectives. In an effort to achieve these objectives, the Nominating and Corporate Governance Committee and the Board consider a wide range of attributes when determining and assessing director nominees and new candidates, including personal and professional backgrounds, gender, race, national origin and tenure of Board service. The Nominating and Corporate Governance Committee is committed to considering diversity in its director candidate recommendations. The Committee does not assign specific weight to the various factors it considers and no particular criterion is a prerequisite for nomination. As summarized below, each of our directors brings to the Board a variety of qualifications and skills and, collectively, these qualifications form a depth of broad and diverse experiences that help the Board effectively oversee our activities and operations.
State Street Corporation | 6 |
Corporate Governance(cont.) | 2020 NOTICE OF MEETING AND PROXY STATEMENT |
Leadership Transition
During the past year, the Company completed its leadership transition. On January 1, 2019, Ronald P. O’Hanley assumed the role of Chief Executive Officer and effective January 1, 2020, he was appointed as Chairman of the Board. In addition to serving as Chairman and Chief Executive Officer, Mr. O’Hanley has served as President since November 2017.
Board Governance
State Street’s leadership structure includes an independent Lead Director of the Board. This position is currently held by Amelia C. Fawcett. Dame Amelia was elected Lead Director in May 2019 for a term that expires in May 2020.
As Chairman, Mr. O’Hanley presides at all meetings of the Board of Directors during which he is present and he works with the independent Lead Director to establish the agendas for these meetings and matters on which the Board will vote.
Role of the Independent Lead Director
• | Elected annually by the independent directors to serve aone-year term |
• | Expected to participate in, and attend, meetings of all of the Board’s committees, providing valuable committee membership overlap to enable optimal agenda coordination, insight and consistency across all committees |
• | Presides at all meetings of the Board during which the Chairman is not present, including all executive sessions of independent directors |
• | Serves as a liaison between the Chairman and the independent directors |
• | Authorized to call additional meetings of the independent directors |
• | Conducts an annual process for reviewing the Chief Executive Officer’s performance and reports the results of the process to the other independent directors |
• | Communicates with the Chairman to provide feedback and implement the decisions and recommendations of the independent directors |
• | Represents the Board in discussions with stakeholders and communicates with regulators |
• | Approves, in consultation with the Chairman, the agendas for Board meetings and information sent to the Board and the matters voted on by the full Board |
State Street Corporation | 7 |
Corporate Governance(cont.) | 2020 NOTICE OF MEETING AND PROXY STATEMENT |
Board Leadership Review Process
The Nominating and Corporate Governance Committee coordinates the annual independent Lead Director nomination and election process. In addition, the Board of Directors reviews the Board leadership structure at least annually to assess and determine the appropriate structure for the Company. The Board values the flexibility to permit frequent review and determination of the appropriate leadership structure based on the opportunities and circumstances of the Company at any given time.
After the independent directors’ review and assessment, the Board of Directors believes that Mr. O’Hanley’s role as Chairman, together with a strong independent Lead Director, is currently the most effective leadership structure for State Street and is in the best interests of the Board, State Street and its shareholders.
Among the factors considered by the Board in determining that the current leadership structure is the most appropriate are:
as our Chief Executive Officer, and with his experience in various leadership roles at State Street, Mr. O’Hanley has extensive knowledge of our business and strategy and is well positioned to work with the independent Lead Director to focus our Board’s agenda on the key issues facing State Street
oversight of State Street is the responsibility of our Board as a whole, which maintains a majority of independent directors (10 out of 11 director nominees), and this responsibility can be properly discharged with a strong, active and engaged independent Lead Director
the Chairman and independent Lead Director work together to play a strong and active role in the oversight of State Street’s business strategy and operational management
Communication with the Board of Directors
Shareholders and interested parties who wish to contact the Board of Directors or the Lead Director should address correspondence to the Lead Director in care of the Secretary. The Secretary will review and forward correspondence to the Lead Director or appropriate person or persons for response.
Lead Director of State Street Corporation
c/o Office of the Secretary
One Lincoln Street
Boston, MA 02111
In addition, State Street has established a procedure for communicating directly with the Lead Director, by utilizing a third-party independent provider, regarding concerns about State Street or its conduct, including complaints about accounting, internal accounting controls or auditing matters. An interested party who wishes to contact the Lead Director may use any of the following methods, which are also described on State Street’s website atwww.statestreet.com:
For country-specific phone numbers, please visitwww.statestreet.com.
The Lead Director may forward to the Examining and Audit Committee, or to another appropriate group or department, for appropriate review, any concerns the Lead Director receives. The Lead Director periodically reports to the independent directors as a group regarding concerns received.
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Corporate Governance(cont.) | 2020 NOTICE OF MEETING AND PROXY STATEMENT |
Meetings of the Board of Directors and Annual Shareholder Meeting of Shareholders
During 2017,2019, the Board of Directors held 128 meetings, and each of the incumbent directors attended at least 75 percent of the total of all meetings of the Board and committees on whichfor such director served for the period during whichas the director served. Although State Street does not have a formal policy regarding attendance of directors at the annual meeting of shareholders, all directors are encouraged to attend. Each of the 912 directors on the Board at the time of our 20172019 annual meeting of shareholders attended the meeting.
Committees of the Board of Directors
The Board of Directors has the following principal committees to assist it in carrying out its responsibilities, and each operates under a written charter, a copy of which is available under the “Corporate Governance” section in the “For Our Investors” section of our website atwww.statestreet.com. The charter for each committee, which establishes its roles and responsibilities and governs its procedures, is annually reviewed and approved by the Board.
STATE STREET CORPORATION 5
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Examining and Audit Committee
Current Members: • William C. Freda, Chair • Marie A. Chandoha • Patrick de Saint-Aignan • Lynn A. Dugle • Richard P. Sergel 11 Meetings in 2019 | Primary Responsibilities:
• Responsible for the appointment (including qualifications, performance, independence and periodic consideration of retaining a different firm), compensation, retention, evaluation and oversight of the work of State Street’s independent registered public accounting firm, including sole authority for the establishment ofpre-approval policies and procedures for all audit engagements and anynon-audit engagements
• Discusses with the independent auditor critical accounting policies and practices, alternative treatments of financial information, the effect of regulatory and accounting initiatives and other relevant matters
• Oversees the operation of our system of internal
• Reviews the effectiveness of State Street’s compliance program and conducts an annual performance evaluation of the General Auditor, • Oversees the Company’s efforts to promote and advance a culture of compliance and ethical business practices | |
Independence:All members meet the independence requirements of the listing standards of the NYSE and the rules and regulations of the SEC.SEC and are considered audit committee financial experts (as defined by SEC rules).
State Street Corporation | 9 |
Corporate Governance(cont.) | 2020 NOTICE OF MEETING AND PROXY STATEMENT |
Executive Committee
Current Members: • Ronald P. O’Hanley, Chair • Patrick de Saint-Aignan • Lynn A. Dugle • Amelia C. Fawcett • William C. Freda • Richard P. Sergel • Gregory L. Summe 0 Meetings in 2019 | Primary Responsibilities:
•
• Reviews, approves and acts on matters on behalf of the Board
• Depending on meeting activities, if any, periodically reports to the Board |
6 STATE STREET CORPORATION
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Executive Compensation Committee
Current Members: • Richard P. Sergel, Chair* • Kennett F. Burnes • Amelia C. Fawcett • William L. Meaney • Gregory L. Summe 8 Meetings in 2019 *Sara Mathew, Chair-elect (effective May 2020) | Primary Responsibilities:
• Oversees human capital management strategies, the operation of all compensation plans, policies and programs in which executive officers participate and certain other incentive, retirement, health and welfare and equity plans in which
• Oversees the alignment of our incentive compensation arrangements with the safety and soundness of State Street, including the integration of risk management objectives and related policies, arrangements and control processes, consistent with applicable regulatory rules and guidance
• Acting together with the other independent directors, annually reviews and approves corporate goals and objectives relevant to the Chief Executive Officer’s compensation; evaluates the Chief Executive Officer’s performance; and reviews, determines and approves, in consultation with the other independent directors, the Chief Executive Officer’s compensation
• Reviews, evaluates and approves the total compensation of all executive officers
• Approves the terms and conditions of employment and any changes thereto, including any restrictive provisions, severance arrangements and special arrangements or benefits, of any executive officer
• Adopts equity grant guidelines in connection with its overall responsibility for all equity plans and monitors stock ownership of executive officers
• Appoints and oversees compensation consultants and other advisors retained by the Committee | |
Independence:All members meet the independence requirements of the listing standards of the NYSE and the rules and regulations of the SEC.NYSE.
State Street Corporation | 10 |
Corporate Governance(cont.) | 2020 NOTICE OF MEETING AND PROXY STATEMENT |
Nominating and Corporate Governance Committee
Current Members: • Gregory L. Summe, Chair • Kennett F. Burnes • Sara Mathew • Richard P. Sergel 5 Meetings in 2019 | Primary Responsibilities:
• Assists the Board with respect to issues and policies affecting our governance practices, including management succession planning, identifying and recommending director nominees • Recommends each
• Reviews and approves State Street’s related person transactions, reviews the amount and form of director compensation and reviews reports on regulatory, political and lobbying activities of State Street |
Independence:All members meet the independence requirements of the listing standards of the NYSE and the rules and regulations of the SEC.NYSE.
STATE STREET CORPORATION 7
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Risk Committee
Current Members: • Patrick de Saint-Aignan, Chair • William C. Freda • Ronald P. O’Hanley • Sara Mathew • Sean O’Sullivan 9 Meetings in 2019 | Primary Responsibilities:
• Oversees the operation of our global risk management framework, including the risk management policies for our operations
• Reviews the management of all risk applicable to our operations, including credit, market, interest rate, liquidity, operational,
• Oversees our strategic capital governance principles and controls, monitors capital adequacy in relation to risk and discharges the duties and obligations of the Board under applicable Basel, Comprehensive Capital Analysis and Review, Comprehensive Liquidity Assessment and Review and resolution and recovery planning requirements
• Conducts an annual performance evaluation of the Chief Risk Officer | |
Technology and Operations Committee
Current Members: • Lynn A. Dugle, Chair • Kennett F. Burnes • Marie A. Chandoha • William L. Meaney • Ronald P. O’Hanley • Sean O’Sullivan 8 Meetings in 2019 | Primary Responsibilities:
•
• • Reviews technology related risks, including |
Non-Employee Director Compensation
General
The Nominating and Corporate Governance Committee annually reviews, and recommends to the Board, the form and amount ofnon-employee director compensation and makes a related recommendation to the Board. Mr. Hooley is the only director who is also one of our employees, and the determination of his compensation is described under the heading “Executive Compensation—Compensation Discussion and Analysis.” Mr. Hooley receives no additional compensation for his service as a director.compensation. In conducting its review, the Committee has access to compensation consultants and other resources it deems appropriate, including peer group data. The Committee uses the same peer group the CompensationHuman Resources Committee uses for executive compensation generally and, like the CompensationHuman Resources Committee, used the services of Meridian Compensation Partners for 2017. For information2019. Information on State Street’s peer group and compensation consultant seeis described under the heading “Executive Compensation—Compensation Discussion and Analysis—Other Elements of Our Process.”
Each year, our compensation consultant assists in preparing a review of director compensation within the peer group.
State Street Corporation | 11 |
Corporate Governance(cont.) | 2020 NOTICE OF MEETING AND PROXY STATEMENT |
The Committee did not treat peer group data as definitive when determiningnon-employee director compensation. Rather, it referenced peer group compensation as well as trends in director compensation generally and within the industry and formed its own perspective on compensation for ournon-employee directors. In 2017,2019, the Committee made its recommendation to the Board, which, following the May 20172019 annual meeting of shareholders, approved director compensation for allnon-employee directors effective through the 20182020 annual meeting of shareholders. Mr. O’Hanley, as an employee director, does not receive any additional compensation for his services as a director.
8 STATE STREET CORPORATION
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Compensation
For the 2019–2020 Board year (the period between eachthe 2019 and 2020 annual meetingmeetings of shareholders,shareholders) thenon-employee directors receive the following compensation:
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(1) |
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(2) | The annual retainer and annual equity award arepro-rated for anynon-employee director joining the Board after the annual meeting. Committee retainers arepro-rated for anynon-employee director joining a committee during the Board year. |
(3) | Fornon-employee directors elected at the annual meeting, all awards made in shares of State Street common stock are granted based |
The |
For his service asNon-Executive Chairman during the 2019 calendar year, Mr. Hooley, our former Chief Executive Officer, received a cash annual retainer of $250,000 in January 2019 and an award of State Street common stock of $250,000, based on the closing price of our common stock on the NYSE on May 15, 2019, rounded up to the nearest whole share. These amounts were intended to recognize that theNon-Executive Chairman would serve for a limited duration and preside at all meetings of the Board of Directors during which he was present; work with the Chief Executive Officer and independent Lead Director to establish the agendas for Board meetings; serve as a resource to senior management and the Board on a variety of matters, including strategy, operations and stakeholder relations; and help guide the leadership transition. |
Pursuant to State Street’s Deferred Compensation Plan for Directors,non-employee directors may elect to defer the receipt of 0% or 100% of their (1) retainers, (2) meeting fees annual equity award and/or (3) annual equity grant award.meeting fees.Non-employee directors also may elect to receive their retainers in cash or shares of State Street common stock.Non-employee directors who elect to defer the cash payment of their retainers or meeting fees may choose from four notional investment fund returns for such deferred cash. Deferrals of common stock are adjusted to reflect the hypothetical reinvestment in additional shares of common stock for any dividends or other distributions on State Street common stock. Deferred amounts will be paid (a) as elected by thenon-employee director, on either the date of their terminationthe conclusion of service on the Board or on the earlier of such terminationconclusion and a future date specified, and (b) in the form elected by thenon-employee director as either a lump sum or in installments over atwo- to five-year period.
State Street Corporation | 12 |
Corporate Governance(cont.) | 2020 NOTICE OF MEETING AND PROXY STATEMENT |
Director Stock Ownership Guidelines
Under our stock ownership guidelines, allnon-employee directors are required to maintain a target level of stock ownership equal to 58 times the annual equity awardretainer of $150,000$90,000 for a total of $750,000. There is a five-yearphase-in period to achieve compliance with the guidelines.$720,000.Non-employee directors must hold all net shares received until they reach the full (notpro-rated) target ownership level is achieved.level. For purposes of these stock ownership guidelines, the value of shares owned is based on the closing price of our common stock on the NYSE on the date that we use for the beneficial ownership table below under the heading “Security Ownership of Certain Beneficial Owners and Management—Management.”Non-employee directors are credited with all shares they beneficially own for purposes of the beneficial ownership table, which includes all shares awarded as director compensation, whether immediate orincluding share awards that have been deferred.Non-employee directors are expected to attain the ownership level ratably over the phase-ina five-year period.
STATE STREET CORPORATION 9
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Our Securities Trading Policy prohibits directors from short selling State Street securities, engaging in hedging transactions in State Street securities and engaging in speculative trading of State Street securities.
As of March 1, 2018, each2, 2020, Mses. Chandoha and Mathew and Messrs. Meaney and O’Sullivan exceeded thepro-rated expected level of ownership but are below the full target ownership level, and therefore subject to the holding requirement. Each of the othernon-employee directors exceeded the full target level of ownership under the guidelines.
2019 Director Compensation
The following table shows the compensation ournon-employee directors exceptearned for Ms. Dugle and Mr. O’Sullivan, exceeded the full level of ownership under these guidelines. Ms. Dugle and Mr. O’Sullivan exceeded the pro-rated expected level of ownership, and therefore, the holding requirement applies only to them during thephase-in period.
2017 Director Compensationtheir services in 2019:
Name | Fees Earned or Paid in Cash ($) | Stock Awards(1) ($) | All Other Compensation(2) ($) | Total ($) | Fees Earned or Paid in Cash ($) | Stock Awards(1) ($) | All Other Compensation(2) ($) | Total ($) | ||||||||||||||||||||||||
(a)
| (b)
| (c)
| (g)
| (h)
| (b) | (c) | (g) | (h) | ||||||||||||||||||||||||
Kennett F. Burnes |
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$243,000 |
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$150,062 |
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$35,627 |
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$ |
428,689 |
| $ | 90,000 | $ | 195,011 | $ | 40,752 | $ | 325,763 | ||||||||||||
Marie A. Chandoha(3) | 71,667 | 130,021 | — | 201,688 | ||||||||||||||||||||||||||||
Patrick de Saint-Aignan |
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169,500 |
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150,062 |
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35,627 |
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355,189 |
| 140,000 | 195,011 | 40,752 | 375,763 | ||||||||||||||||
Lynn A. Dugle |
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157,500 |
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150,062 |
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25,289 |
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332,851 |
| 130,000 | 195,011 | 32,345 | 357,356 | ||||||||||||||||
Amelia C. Fawcett |
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164,500 |
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150,062 |
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19,406 |
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333,968 |
| 215,000 | 195,011 | — | 410,011 | ||||||||||||||||
William C. Freda |
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178,000 |
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150,062 |
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35,406 |
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363,468 |
| 140,000 | 195,011 | 40,752 | 375,763 | ||||||||||||||||
Linda A. Hill |
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118,500 |
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150,062 |
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16,520 |
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285,082 |
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Sean O’Sullivan |
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114,000 |
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150,062 |
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— |
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264,062 |
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Joseph L. Hooley(4) | 250,000 | 250,021 | 80,100 | 580,121 | ||||||||||||||||||||||||||||
Sara Mathew | 110,000 | 195,011 | — | 305,011 | ||||||||||||||||||||||||||||
William L. Meaney | 90,000 | 195,011 | 35,345 | 320,356 | ||||||||||||||||||||||||||||
Sean P. O’Sullivan | 110,000 | 195,011 | — | 305,011 | ||||||||||||||||||||||||||||
Richard P. Sergel |
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170,000 |
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150,062 |
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13,015 |
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333,077 |
| 135,000 | 195,011 | 29,999 | 360,010 | ||||||||||||||||
Ronald L. Skates(3) |
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31,500 |
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— |
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16,476 |
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47,976 |
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Gregory L. Summe |
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135,000 |
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150,062 |
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15,406 |
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300,468 |
| 110,000 | 195,011 | 40,486 | 345,497 | ||||||||||||||||
Thomas J. Wilson(3)
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19,500
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—
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—
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19,500
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(1) |
|
State Street Corporation | 13 |
Corporate Governance(cont.) | 2020 NOTICE OF MEETING AND PROXY STATEMENT |
(2) | Perquisites |
(3) |
|
(4) | For his service as Non-Executive Chairman during 2019, Mr. Hooley, our former CEO, received a $250,000 cash retainer in January 2019 and 4,045 shares of State Street common stock valued at $250,021 based on the May |
The Board has adopted a written policy and procedures for the review of any transaction, arrangement or relationship in which State Street is a participant, the amount involved exceeds $120,000 and one of our executive officers, directors or 5% shareholders (or their immediate family members), who we refer to as “related persons,” has a direct or indirect material interest. A related person proposing to enter into such a transaction, arrangement or relationship must report the proposed related-person transaction to State Street’s Chief Legal Officer. The policy calls for the proposed related-person transaction to be reviewed and, if deemed appropriate, approved by the Nominating and Corporate Governance Committee. A related-person transaction reviewed under the policy will be considered approved or ratified if it is authorized by the Nominating and Corporate Governance Committee (or the Committee Chair) after full disclosure of the related person’s interest in the transaction. Whenever practicable, the reporting, review and approval will occur prior to the transaction. If advance review is not practicable or was otherwise not obtained, the Committee will review and, if deemed appropriate, ratify the related-person transaction. The policy also permits the Committee Chair of the Committee to review and, if deemed appropriate, approve proposed related-person transactions that arise between Committee meetings, in which case they will be reported to the full Committee at its next meeting. Any ongoing related-person transactions are reviewed annually.
10 STATE STREET CORPORATION
As appropriate for the circumstances, the Nominating and Corporate Governance Committee (or the Committee Chair) will review and consider:
• | ||
the related person’s interest in the related-person transaction |
• | the approximate dollar value of the amount involved in the related-person transaction |
• | the approximate dollar value of the related person’s interest in the transaction without regard to any profit or loss |
• | whether the transaction was undertaken in the ordinary course of State Street’s business |
• | whether the transaction with the related person is on terms no less favorable to State Street than terms that could be reached with an unrelated third-party |
• | the purpose of the transaction and the potential benefits to State Street |
• | any other information regarding the related-person transaction or the related person in the context of the proposed transaction that would be material to investors in light of the circumstances of the particular transaction |
The Nominating and Corporate Governance Committee may approve or ratify the related-person transaction only if the Committee determines that, under all of the circumstances, the transaction is in, or is not inconsistent with, State Street’s best interests. The Committee may, in its sole discretion, impose such conditions as it deems appropriate on State Street or the related person in connection with approval of the related-person transaction.
State Street Corporation | 14 |
Corporate Governance(cont.) | 2020 NOTICE OF MEETING AND PROXY STATEMENT |
In addition to the transactions that are excluded by the instructions to the SEC’s related-person transaction disclosure rule, the Board has determined that the following transactions do not create a material direct or indirect interest on behalf of related persons and, therefore, are not related-person transactions for purposes of this policy:
interests arising solely from the related person’s position as an executive officer, employee or consultant of another entity (whether or not the person is also a director of such entity) that is a party to the transaction, where (1) the related person and his or her immediate family members do not receive any special benefits as a result of the transaction and (2) the annual amount involved in the transaction equals less than the greater of $1 million or 2% of the consolidated gross revenues of the other entity that is a party to the transaction during that entity’s last completed fiscal yearyear; or
a transaction that involves discretionary charitable contributions from State Street to atax-exempt organization where a related person is a director, trustee, employee or executive officer, provided the related person and his or her immediate family members do not receive any special benefits as a result of the transaction, and further provided that, where a related person is an executive officer of thetax-exempt organization, the amount of the discretionary charitable contributions in any completed year in the last 3 fiscal years is not more than the greater of $1 million, or 2% of that organization’s consolidated gross revenues in the last completed fiscal year of that organization (in applying this test, State Street’s automatic matching of director or employee charitable contributions to a charitable organization will not be included in the amount of State Street’s discretionary contributions)
On March 27, 2017, State Street entered into a series of definitive agreements with DST Systems, Inc., or DST, and its affiliates providing for, among other things, the acquisition by affiliates of DST of State Street’s interests in the parties’ joint ventures, Boston Financial Data Services, Inc., or BFDS, and International Financial Data Services Limited, or IFDS Ltd. BFDS provides shareholder recordkeeping, intermediary and investor services and regulatory compliance solutions to financial services clients in the United States, and IFDS Ltd. is an investor and policy holder administrative services and technology provider to the collective funds, insurance and retirement industries. State Street exchanged its interest in BFDS for approximately 2 million shares of State Street common stock, valued at approximately $158 million. State Street sold its interest in IFDS Ltd. and related assets for cash consideration of approximately $175 million. Stephen C. Hooley, President and Chief Executive Officer of DST, is the brother of Joseph L. Hooley, Chairman and Chief Executive Officer of State Street. Due to the change in ownership of BFDS, in accordance with the terms of the BFDS deferred compensation plan, on June 22, 2017, Mr. Joseph L. Hooley received a distribution from BFDS of his full account balance under the BFDS deferred compensation plan (approximately $2.9 million). Mr. Hooley’s participation in the plan resulted from his previously disclosed employment at BFDS, which ended in 2000. Each of these transactions was approved by State Street’s Nominating and Corporate Governance Committee in accordance with our Related Person Transaction Policy.
Based on information provided by the directors and executive officers, and obtained by the legal department, no other related-person transactions wereare required to be reported in this proxy statement under applicable SEC regulations. In addition, neither State Street nor the Bank hadhas extended a personal loan or extension of credit to any of its directors or executive officers.
STATE STREET CORPORATION 11
State Street Corporation | 15 |
| 2020 NOTICE OF MEETING AND PROXY STATEMENT |
ITEMItem 1 – ELECTION OF DIRECTORSElection of Directors
The Board of Directors unanimously recommends that you vote FOR each of the nominees for director (Item 1 on your proxy card) |
Each director elected at the 20182020 annual meeting of shareholders will serve until the next annual meeting of shareholders, except as otherwise provided in State Street’sby-laws. Of the 1011 director nominees, 910 are independent,non-management directors and 1one serves as the Chief Executive Officer of State Street. All of thenon-management directors are independent, as determined by the Board in its opinion, under the applicable definition in the NYSE listing standards and the State Street Corporate Governance Guidelines.
Pursuant to State Street’sby-laws, on February 15, 2018,20, 2020, the Board fixed the number of directors at 10, effective11 as of the date2020 annual meeting of the 2018 annual meeting.shareholders. Unless contrary instructions are given, shares represented by proxies solicited by the Board of Directors will be voted for the election of the 1011 director nominees listed below. We have no reason to believe that any nominee will be unavailable for election at the annual meeting. In the event that one or more nominees is unexpectedly not available to serve, proxies may be voted for another person nominated as a substitute by the Board or the Board may reduce the number of directors to be elected at the annual meeting. Information relating to each nominee for election as director is described below, including:
•
age and period of service as a director of State Street
•
business experience during at least the past five years (including directorships at other public companies)
•
community activities
•
other experience, qualifications, attributes or skills that led the Board to conclude the director should serve or continue to serve as a director of State Street
The Board of Directors recommends that shareholders approve each director nominee for election based upon the qualifications and attributes discussed below. See “Corporate Governance at State Street—Composition of the Board and Director Selection Process”Composition” for a further discussion of the Board’s process and reasons for nominating these candidates.
12 STATE STREET CORPORATION
State Street Corporation | 16 |
Item 1 | 2020 NOTICE OF MEETING AND PROXY STATEMENT |
MARIE A. CHANDOHA Age 58, Director since 2019 Board Roles and Committees • Examining and Audit Committee • Technology and Operations Committee | Career Highlights • Retired President and Chief Executive Officer, Charles Schwab Investment Management, Inc., the investment management subsidiary of Charles Schwab Corporation, an NYSE-listed brokerage and wealth management firm (2010 to 2019); Chief Investment Officer (2010) • Former Managing Director, Head, ETF, Index and Model-Based Fixed Income Portfolio Management, BlackRock, Inc., an investment management company (2009 to 2010); Global Head, Fixed Income Business, Barclays Global Investors (2007 to 2009) prior to acquisition by BlackRock, Inc. • FormerCo-Head and Senior Portfolio Manager of the Montgomery Fixed Income Division, Wells Capital Management, an investment management company (1999 to 2007) Qualifications and Attributes In her prior role as President and Chief Executive Officer of Charles Schwab Investment Management, Inc., Ms. Chandoha implemented a new vision of the business by reorganizing the leadership team, adding strong governance and risk management and delivering transparent,low-cost and straightforward investment products and solutions. In addition, Ms. Chandoha transformed the technology and operational platform to efficiently scale and grow the company and increased third-party distribution capabilities. Before joining Charles Schwab Investment Management, Inc., Ms. Chandoha was the Global Head of the Fixed Income Division of BlackRock, Inc. where she focused on commercialization, innovation and new product development. Ms. Chandoha’s more than 35 years of experience as a leader in the financial services industry and her record transforming businesses provides the Board with valuable expertise as State Street continues its technological innovation to continue meeting industry and client expectations. Ms. Chandoha is a trustee of the California chapter of the Nature Conservancy and previously served as member of the Board of Governors and Executive Committee of the Investment Company Institute. She received a B.A. degree in economics from Harvard University. |
PATRICK DE SAINT-AIGNAN Age 71, Director Since 2009 Board Roles and Committees • Examining and Audit Committee • Executive Committee • Risk Committee (Chair) | Career Highlights • Retired Managing Director and Advisory Director, Morgan Stanley, an NYSE-listed global financial services company (1974 to 2007); firm-wide head of the company’s risk management function (1995 to 2002) • Director, Edaris Health, Inc., a private healthcare information technology company (2007 to present) (2007 to 2016 as Forerun, prior to name change to Edaris Health, Inc. in 2016); member of the Compensation Committee • Member of Supervisory Board, BH PHARMA, a private generic drug development company (2015 to present) • Former Director, Allied World Assurance Company Holdings AG, a former NYSE-listed specialty insurance and reinsurance company acquired by Fairfax Financial Holdings in 2017 (2008 to 2017); member of the Enterprise Risk Committee (Chairman), Compensation Committee, Audit Committee and Investment Committee • Former Director, Bank of China Limited (2006 to 2008); member of the Audit Committee (Chairman), the Risk Policy Committee and the Personnel and Remuneration Committee Qualifications and Attributes Mr. de Saint-Aignan’s extensive experience in risk management, corporate finance, capital markets and firm management brings to the Board a sophisticated understanding of risk, particularly with respect to the implementation of risk and monitoring programs within a global financial services organization. Mr. de Saint-Aignan’s service on the board of directors and committees of several other companies gives him additional perspective on global management and governance. A dual citizen of the United States and France, he was honored with Risk Magazine’s Lifetime Achievement Award in 2004. Mr. de Saint-Aignan holds his B.B.A. degree from the Ecole des Hautes Etudes Commerciales and an M.B.A. from Harvard University. |
Career Highlights
Retired Chairman, President and Chief Executive Officer, Cabot
State Street Corporation
| 17 |
Item 1 | 2020 NOTICE OF MEETING AND PROXY STATEMENT |
LYNN A. DUGLE Age 60, Director Since 2015 Board Roles and Committees • Examining and Audit Committee • Executive Committee • Technology and Operations Committee (Chair) | Career Highlights • Retired Chief Executive Officer and Chairman, Engility Holdings, Inc., an NYSE-listed engineering and technology consulting company (2018 to 2019); Chief Executive Officer and Director (2016 to 2018); Director (2014 to 2018) (2014 to 2015 as TASC, prior to acquisition by Engility Holdings, Inc.; 2015 to 2018 as Engility Holdings, Inc., prior to acquisition by Science Applications International Corp. in 2019) • Director KBR, Inc., an NYSE-listed engineering, procurement, and construction company (February 2020 to present); member of Audit Committee • Director TE Connectivity Ltd., an NYSE-listed and Swiss-domiciled technology company (March 2020 to present); member of Audit Committee • Former Corporate Vice President and President, Intelligence, Information and Services, Raytheon Company, an NYSE-listed defense contractor and electronics manufacturer (2004 to 2015); Vice President, Engineering, Technology and Quality, Network Centric Systems (2004 to 2009); Vice President, Support Engineering and Six Sigma (1997 to 1999) • Former Vice President, Product, Systems Software Division, ADC Telecommunications, Inc., a former Nasdaq-listed communications company acquired in 2010 by Tyco Electronics (2002 to 2004); General Manager, Cable Systems Division (1999 to 2002) • Former Vice President, Quality & Support Engineering, Texas Instruments, Inc., a Nasdaq-listed electronics manufacturer (1982 to 1997) Qualifications and Attributes As the former Chief Executive Officer and Chairman of Engility Holdings, a leading provider of integrated solutions and services for the U.S. government, Department of Defense, federal civilian agencies and international customers, Ms. Dugle brings to the Board valuable experience in leading the development of large businesses with a focus on information, technology and security matters. Her understanding of information and technology matters provides the Board with perspective as State Street continues to transform and digitize products and services. Prior to her role at Engility, Ms. Dugle was the president of Intelligence, Information and Services at Raytheon where she was responsible for the company’s advanced cyber solutions, cyber security services and information-based solutions. She also served as vice president of engineering, technology and quality for the former Network Centric Systems business at Raytheon and was responsible for the strategic direction, leadership and operations of the engineering, technology and quality functions. Prior to Raytheon, Ms. Dugle held executive positions at ADC Telecommunications with responsibility for leading teams across Europe, Middle East and Africa and the Asia-Pacific region. She holds B.S. and B.B.A. degrees from Purdue University and an M.B.A. with a concentration in international business from the University of Texas at Dallas. |
Career Highlights
Retired Managing Director and Advisory Director, Morgan Stanley, an NYSE-listed global financial services company (1974 to 2007); firm-wide head of the company’s risk management function (1995 to 2002)
Director, Edaris Health, Inc., a private healthcare information technology company (2007 to present) (2007 to 2016 as Forerun, prior to name change to Edaris Health, Inc.; 2016 to present as Edaris Health, Inc.); member of the Compensation Committee
Member of Supervisory Board, BH PHARMA, a private generic drug development company (2015 to present)
Former Director, Allied World Assurance Company Holdings AG, a former NYSE-listed specialty insurance and reinsurance company acquired by Fairfax Financial Holdings in 2017 (2008 to 2017); member of the Enterprise Risk Committee (Chairman), Compensation Committee, Audit Committee and Investment Committee
Former Director, Bank of China Limited, (2006 to 2008); member of the Audit Committee (Chairman), the Risk Policy Committee and the Personnel and Remuneration Committee
Former Director,Non-Executive Chairman, European Kyoto Fund (2008 to 2012)
Qualifications and Attributes
Mr. de Saint-Aignan’s extensive experience in risk management, corporate finance, capital markets and firm management brings to the Board a sophisticated understanding of risk, particularly with respect to the implementation of risk and monitoring programs within a global financial services organization. Mr. de Saint-Aignan’s service on the board of directors and committees of several other companies gives him additional perspective on global management and governance. A dual citizen of the United States and France, he was honored with Risk Magazine’s Lifetime Achievement Award in 2004. Mr. de Saint-Aignan holds his B.B.A. degree from the Ecole des Hautes Etudes Commerciales and an M.B.A. from Harvard University.
14 STATE STREET CORPORATION
State Street Corporation | 18 |
Item 1 | 2020 NOTICE OF MEETING AND PROXY STATEMENT |
AMELIA C. FAWCETT Age 63, Director Since 2006 Board Roles and Committees Lead Director • Executive Committee • Human Resources Committee | Career Highlights • Chairman, Kinnevik AB, a Nasdaq Stockholm-listed long-term oriented investment company (2018 to present); Deputy Chairman (2013 to 2018);Non-Executive Director (2011 to present); member of Remuneration Committee (Chair) and Governance, Risk and Compliance Committee (Chair) • Chairman, Standards Board for Alternative Investments (2011 to present) (2011 to 2017 as Hedge Fund Standards Board; 2017 to present as Standards Board for Alternative Investments) (U.K.), a global standard-setting body for the alternative investment industry • FormerNon-Executive Director, HM Treasury, the British Government’s Economic & Finance Ministry (2012 to 2018) • FormerNon-Executive Director, Millicom International Cellular S.A., an international telecommunications and media company (2014 to 2016); member of the Remuneration Committee (Chair) and Compliance and Business Practices Committee • FormerNon-Executive Chairman, Guardian Media Group plc, a privately held diversified multimedia business in London (2009 to 2013);Non-Executive Director (2007 to 2013) • Former Vice Chairman and Chief Operating Officer of European Operations, Morgan Stanley, an NYSE-listed global financial services company (2002 to 2006) and Morgan Stanley International Limited, London (2006 to 2007); Senior Adviser (2006 to 2007); Managing Director and Chief Administrative Officer for European Operations (1996 to 2002); Executive Director (1992 to 1996); Vice President (1990 to 1992) Qualifications and Attributes Dame Amelia Fawcett, a dual American and British citizen, has many years of extensive and diverse financial services experience. At Morgan Stanley, she served in many roles including Vice Chairman and Chief Operating Officer of Morgan Stanley International and had responsibility for development and implementation of the company’s business strategy (including business integration), as well as oversight of the company’s operational risk functions, infrastructure support and corporate affairs. Prior to joining Morgan Stanley, she was an attorney at the New York-based law firm of Sullivan & Cromwell, practicing primarily in the areas of corporate and banking law in both New York and Paris. Her service on both the Court of Directors of the Bank of England (the Board of the British Central Bank) and the British Treasury provided her with valuable experience with the complex regulatory and compliance frameworks of the financial industry, both in the U.K. and internationally. Dame Amelia was awarded a CBE (Commander of the Order of the British Empire) and a DBE (Dame Commander of the Order of the British Empire) by the Queen, in both instances for services to the finance industry and in 2018 the Queen made her a Commander of the Royal Victorian Order for services as Chairman of The Prince of Wales’s Charitable Foundation. In addition, in 2004, she received His Royal Highness The Prince of Wales’s Ambassador Award recognizing responsible business activities that have a positive impact on society and the environment. Dame Amelia’s public policy experience and experience in the European banking markets provide a valuable international financial markets perspective to State Street. She formerly has served, or currently serves, in the capacity as governor of the Wellcome Trust, chairman of the Royal Botanic Gardens (Kew) (current), chairman of The Prince of Wales’s Charitable Foundation, deputy chairman and governor of the London Business School, a commissioner of theU.S.-U.K. Fulbright Commission, deputy chairman of the National Portrait Gallery, chairman of the American Friends of the National Portrait Gallery and a trustee of Project Hope (current). Dame Amelia received a B.A. degree from Wellesley College and a J.D. degree from the University of Virginia. |
Career Highlights
Chief Executive Officer and Chairman, Engility Holdings, Inc., an NYSE-listed engineering and technology consulting company (2018 to present); Chief Executive Officer and Director (2016 to 2018); Director (2014 to 2018) (2014 to 2015 as TASC, prior to acquisition by Engility Holdings, Inc.; 2015 to 2018 as Engility Holdings, Inc.)
Former Corporate Vice President and President, Intelligence, Information and Services, Raytheon Company, an NYSE-listed defense contractor and electronics manufacturer (2004 to 2015); Vice President, Engineering, Technology and Quality, Network Centric Systems (2004 to 2009); Vice President, Support Engineering and Six Sigma (1997 to 1999)
Former Vice President, Product, Systems Software Division, ADC Telecommunications, Inc., a former Nasdaq-listed communications company acquired in 2010 by Tyco Electronics (2002 to 2004); General Manager, Cable Systems Division (1999 to 2002)
Former Vice President, Quality & Support Engineering, Texas Instruments, Inc., a Nasdaq-listed electronics manufacturer (1982 to 1997)
Qualifications and Attributes
As the Chief Executive Officer and Chairman of Engility Holdings, a leading provider of integrated solutions and services for the U.S. government, Department of Defense, federal civilian agencies and international customers, Ms. Dugle brings to the Board valuable experience in leading the development of large businesses with a focus on information, technology and security matters. Her understanding of information and technology matters provides the Board with perspective as State Street continues to transform and digitize products and services. Prior to her role at Engility, Ms. Dugle was the president of Intelligence, Information and Services at Raytheon where she was responsible for the company’s advanced cyber solutions, cyber security services and information-based solutions. She also served as vice president of engineering, technology and quality for the former Network Centric Systems business at Raytheon and was responsible for the strategic direction, leadership and operations of the engineering, technology and quality functions. Prior to Raytheon, Ms. Dugle held executive positions at ADC Telecommunication with responsibility for leading teams across Europe, Middle East and Africa and the Asia-Pacific region. She holds B.S. and B.B.A. degrees from Purdue University and an M.B.A. in international business from the University of Texas at Dallas.
STATE STREET CORPORATION 15
State Street Corporation | 19 |
Item 1 | 2020 NOTICE OF MEETING AND PROXY STATEMENT |
WILLIAM C. FREDA Age 67, Director Since 2014 Board Roles and Committees • Examining and Audit Committee (Chair) • Executive Committee • Risk Committee | Career Highlights • Retired Senior Partner and Vice Chairman, Deloitte, LLP, a global professional services firm (2011 to 2014); Managing Partner of Client Initiatives (2007 to 2011); member of U.S. Executive Committee • Chairman, Hamilton Insurance Group, a global insurance and reinsurance company (2014 to present); Director (2014 to 2017); Chairman (2017 to present) • Director, Guardian Life Insurance Company, a mutual life insurance company (2014 to present) • Former Director, Deloitte Touche Tohmatsu Limited (2007 to 2013); member of Risk Committee (Chairman) (2011 to 2013) and Audit Committee (Chairman) (2008 to 2011) Qualifications and Attributes As senior partner and vice chairman of Deloitte, LLP, Mr. Freda served Deloitte’s most significant clients and maintained key relationships, acting as a strategic liaison to the marketplace as well as to professional and community organizations. Mr. Freda joined Deloitte in 1974 and built a distinguished record of service during his40-year career, having served on a wide range of multinational engagements for many of Deloitte’s largest and most strategic clients. Mr. Freda brings to the Board key insight and perspective on risk management, international expansion and client relationships gained through his extensive experience interacting with audit committees, boards of directors and senior management. He serves as a trustee of Bentley University. Previously, Mr. Freda has served as the chairman of Catholic Community Services, the United Way of Essex and West Hudson and the AICPA Insurance Companies Committee and was a U.S. Representative to the International Accounting Standards Committee’s Insurance Steering Committee. Mr. Freda received a B.S. in accounting from Bentley University. |
SARA MATHEW Age 64, Director Since 2018 Board Roles and Committees • Nominating and Corporate Governance Committee • Risk Committee | Career Highlights • Retired Chairman and Chief Executive Officer, Dun & Bradstreet Corporation, an NYSE-listed international commercial data and analytics provider (2010 to 2013); President and Chief Operating Officer (2007 to 2009); Chief Financial Officer (2001 to 2007) • Non-Executive Chairman, Federal Home Loan Mortgage Company, a government-sponsored firm operating in the secondary residential mortgage market (2019 to present); Director (2013 to present); member of Audit Committee (Chair), Executive Committee and Nominating and Governance Committee • Director, Reckitt Benckiser Group plc, an FTSE-listed Health and hygiene company (2019 to present); member of Audit Committee • Former Director, Campbell Soup Company, an NYSE-listed consumer food producer (2005 to 2019); member of Audit Committee (Chair) and Finance and Corporate Development Committee • Former Director, Shire Plc, a Nasdaq-listed FTSE 25 biopharmaceutical company (2015 to 2019; prior to acquisition by Takeda Pharmaceutical Company Limited in 2019); Chair of Audit and Risk Committee and member of Compliance and Nomination and Governance Committee • Former Director, Avon Products, Inc., an NYSE-listed beauty, household and personal care products manufacturer (2014 to 2016) • Former Vice President of Finance, ASEAN, Australasia and India, Procter and Gamble Company, an NYSE-listed international manufacturer of consumer goods (2000 to 2001); Controller and Chief Financial Officer, Baby-Care and Paper Products (1998 to 2000); other various positions through her18-year tenure Qualifications and Attributes In her prior role as chairman and chief executive officer of Dun & Bradstreet Corporation, Ms. Mathew led the company’s transformation from a data collection business into an innovative provider of data analytics and insights. Prior to her role as chairman and chief executive officer, she served as president and chief operating officer, overseeing the company’s consumer segments, and chief financial officer where she initiated and managed the redesign of the company’s accounting processes and controls. Before joining Dun & Bradstreet Corporation, Ms. Mathew held various positions at Procter and Gamble Company within finance, accounting, investor relations and brand management. Her deep background in finance, technology, corporate strategy and operations, combined with her experiences leading and overseeing a diverse assortment of international consumer-focused companies and transformational initiatives, allows Ms. Mathew to provide a unique, innovative and global perspective to State Street. Ms. Mathew received a B.S. degree in physics, mathematics and chemistry from the University of Madras, India and an M.B.A. degree in finance and marketing from Xavier University. |
Career Highlights
Deputy Chairman, Kinnevik AB, a long-term oriented investment company (2013 to present);Non-Executive Director (2011 to present); member of Remuneration Committee (Chair) and Governance, Risk and Compliance Committee (Chair)
Chairman, Standards Board for Alternative Investments (2011 to present) (2011 to 2017 as Hedge Fund Standards Board; 2017 to present as Standards Board for Alternative Investments) (U.K.), a global standard-setting body for the alternative investment industry
Non-Executive Director, HM Treasury, the British Government’s Economic & Finance Ministry (2012 to present)
FormerNon-Executive Director, Millicom International Cellular S.A., an international telecommunications and media company (2014 to 2016); member of the Remuneration Committee (Chair) and Compliance and Business Practices Committee
FormerNon-Executive Chairman, Guardian Media Group plc, a privately held diversified multimedia business in London (2009 to 2013);Non-Executive Director (2007 to 2013)
Former Vice Chairman and Chief Operating Officer of European Operations, Morgan Stanley, an NYSE-listed global financial services company (2002 to 2006) and Morgan Stanley International Limited, London (2006 to 2007); Vice President (1990 to 1992); Executive Director (1992 to 1996); Managing Director and Chief Administrative Officer for European Operations (1996 to 2002); Senior Adviser (2006 to 2007)
Qualifications and Attributes
Dame Amelia Fawcett, a dual American and British citizen, has many years of extensive and diverse financial services experience. At Morgan Stanley, she served in many roles including Vice Chairman and Chief Operating officer of Morgan Stanley International and had responsibility for development and implementation of the company’s business strategy (including business integration), as well as oversight of the company’s operational risk functions, infrastructure support and corporate affairs. Prior to joining Morgan Stanley, she was an attorney at the New York-based law firm of Sullivan & Cromwell, practicing primarily in the areas of corporate and banking law in both New York and Paris. Her service on both the Court of Directors of the Bank of England (the Board of the British Central Bank) and the British Treasury (the latter a position she still holds) provided her with valuable experience with the complex regulatory and compliance frameworks of the financial industry. Dame Amelia was awarded a CBE (Commander of the Order of the British Empire) and a DBE (Dame Commander of the Order of the British Empire) by the Queen, in both instances for services to the finance industry. In addition, in 2004, she received His Royal Highness The Prince of Wales’s Ambassador Award recognizing responsible business activities that have a positive impact on society and the environment. Dame Amelia’s public policy experience and experience in the European banking markets provide a valuable international financial markets perspective to State Street. She formerly has served, or currently serves, in the capacity as chairman of the American Friends of the National Portrait Gallery, deputy chairman of the National Portrait Gallery, chairman of The Prince of Wales’s Charitable Foundation, deputy chairman and governor of the London Business School (current), a commissioner of theU.S.-U.K. Fulbright Commission and a trustee of Project Hope (current). Dame Amelia received a B.A. degree from Wellesley College and a J.D. degree from the University of Virginia.
16 STATE STREET CORPORATION
State Street Corporation | 20 |
Item 1 | 2020 NOTICE OF MEETING AND PROXY STATEMENT |
WILLIAM L. MEANEY Age 59, Director Since 2018 Board Roles and Committees • Human Resources Committee • Technology and Operations Committee | Career Highlights • President, Chief Executive Officer and Director, Iron Mountain, Inc., an NYSE-listed information management and data backup and recovery company (2013 to present) • Former Director, Qantas Airways, an Australian Securities Exchange-listed airline (2012 to 2018); member of the Safety, Health, Environment and Security Committee and the Remuneration Committee • Former Chief Executive Officer, Zuellig Group, a privately owned long-term holding company based in Hong Kong (2004 to 2012) Qualifications and Attributes Mr. Meaney, a citizen of the United States, Switzerland and Ireland, has extensive domestic and international business experience across both established and emerging markets. As the president and chief executive officer of Iron Mountain, he has continued to lead the company as it evolves and expands its secure storage and digital transformation offerings. Before joining Iron Mountain, Mr. Meaney was the chief executive officer of Zuellig Group, where he was responsible for a diverse portfolio of Asia Pacific businesses that spanned a variety of heavily regulated and consumer-based industries, including health care, agriculture, pharmaceuticals and materials handling. He has held several senior positions throughout the airline industry, including chief commercial officer of Swiss International Airlines and executive vice president of South African Airways, founded and managed his own consulting firm and served as an operations officer with the U.S. Central Intelligence Agency. Mr. Meaney provides State Street’s Board with an acute global viewpoint on corporate strategy and business expansion founded upon his background in leading and developing large U.S. and international companies. Mr. Meaney is a member of both the FM Global advisory board and President’s Council of Massachusetts General Hospital and is a former trustee of Rensselaer Polytechnic Institute and Carnegie Mellon University. He holds a B.S. degree from Rensselaer Polytechnic Institute and an M.B.A. from Carnegie Mellon University. |
RONALD P. O’HANLEY Age 63, Director Since 2019 Board Roles and Committees Chairman of the Board • Executive Committee (Chair) • Risk Committee • Technology and Operations Committee | Career Highlights • State Street Corporation, Chairman (2020 to present); President and Chief Executive Officer (2019 to present); President and Chief Operating Officer (2017 to 2019); Vice Chairman (2017); Chief Executive Officer and President, State Street Global Advisors (2015 to 2017) • Director, Unum Group, an NYSE-listed provider of financial protection benefits in the United States and United Kingdom (2015 to present); member of the Human Capital Committee and Governance Committee • Former President of Asset Management & Corporate Services, Fidelity Investments, Inc., a multinational financial services corporation (2010 to 2014) • Former Chief Executive Officer and President, BNY Mellon Asset Management (2007 to 2010) Qualifications and Attributes Mr. O’Hanley joined State Street in 2015 to lead State Street’s investment management business as the Chief Executive Officer and President of State Street Global Advisors. Since that time, he has held several senior leadership positions within the Company, serving as Vice Chairman from January 2017 to November 2017 and President and Chief Operating Officer from November 2017 to February 2019. Effective January 1, 2019, Mr. O’Hanley began his service as Chief Executive Officer and as a member of the Board of Directors and effective January 1, 2020, he was appointed Chairman of the Board. His extensive leadership, executive management and operational experience over the last three decades in asset management and global financial services provides the Board with the experience necessary to help navigate the Company’s strategic priorities on data management, client experience and technology enhancement. Mr. O’Hanley received a B.A. degree from Syracuse University and an M.B.A. from Harvard Business School. |
Career Highlights
Retired Senior Partner and Vice Chairman, Deloitte, LLP, a global professional services firm (2011 to 2014); Managing Partner of Client Initiatives (2007 to 2011); member of U.S. Executive Committee
Former Director, Deloitte Touche Tohmatsu Limited (2007 to 2013); member of Risk Committee (Chairman) (2011 to 2013) and Audit Committee (Chairman) (2008 to 2011)
Director, Guardian Life Insurance Company, a mutual life insurance company (2014 to present)
Chairman, Hamilton Insurance Group, a global insurance and reinsurance company (2014 to present) (Director 2014 to 2017; Chairman 2017 to present)
Qualifications and Attributes
As senior partner and vice chairman of Deloitte, LLP, Mr. Freda served Deloitte’s most significant clients and maintained key relationships, acting as a strategic liaison to the marketplace as well as to professional and community organizations. Mr. Freda joined Deloitte in 1974 and built a distinguished record of service during his40-year career, having served on a wide range of multinational engagements for many of Deloitte’s largest and most strategic clients. Mr. Freda brings to the Board key insight and perspective on risk management, international expansion and client relationships gained through his extensive experience interacting with audit committees, boards of directors and senior management. He serves as a trustee of Bentley University. Previously, Mr. Freda has served as the chairman of Catholic Community Services, the United Way of Essex and West Hudson and the AICPA Insurance Companies Committee and was a U.S. Representative to the International Accounting Standards Committee’s Insurance Steering Committee. Mr. Freda received his B.S. in accounting from Bentley University.
STATE STREET CORPORATION 17
State Street Corporation | 21 |
Item 1 | 2020 NOTICE OF MEETING AND PROXY STATEMENT |
SEAN O’SULLIVAN Age 64, Director Since 2017 Board Roles and Committees • Risk Committee • Technology and Operations Committee | Career Highlights • Retired Group Managing Director and Group Chief Operating Officer, HSBC Holdings, plc., an NYSE-listed banking and financial services organization (2011 to 2014); Executive Director and Chief Technology and Services Officer, HSBC Bank plc. (2007 to 2010); other various positions throughout his34-year tenure Qualifications and Attributes As the Group Managing Director and Group Chief Operating Officer of HSBC Holdings, plc., Mr. O’Sullivan led the bank’s global operations and information technology functions, with worldwide responsibilities for business transformation, organizational restructuring and operational effectiveness. Prior to assuming the role of Group Managing Director and Group Chief Operating Officer, Mr. O’Sullivan held various positions throughout HSBC in the U.S., Canada and Europe. His long tenure at HSBC provided him with valuable experience with the operational and technology challenges faced by a large, global financial institution as well as the management of overall company effectiveness and efficiency, including development of a global approach to expense management and operational risk management. Mr. O’Sullivan is a member of the Information Technology Advisory Committee at the University of British Columbia and a former trustee of the York University Foundation. He is a dual citizen of Canada and the U.K. and received a B.A. degree from the Ivey School of Business at Western University. |
RICHARD P. SERGEL Age 70, Director Since 1999 Board Roles and Committees • Examining and Audit Committee • Executive Committee • Human Resources Committee (Chair) • Nominating and Corporate Governance Committee | Career Highlights • Retired President and Chief Executive Officer, North American Electric Reliability Corporation (NERC), a self-regulatory organization for the bulk electricity system in North America (2005 to 2009) • Director, Emera, Inc., a Toronto Stock Exchange-listed energy and services company (2010 to present) • Former President and Chief Executive Officer, New England Electric System (and its successor company, National Grid USA), an NYSE-listed electric utility (1998 to 2004) Qualifications and Attributes Mr. Sergel’s responsibilities as chief executive officer of the North American Electric Reliability Corporation included imposing statutory responsibility and regulating the industry through adoption and enforcement of standards and practices. To do so, he led NERC to establish the first set of legally enforceable standards for the U.S. bulk power system. Prior to joining NERC, he spent 25 years with the New England Electric System, where he oversaw the merger with National Grid in 2000. His extensive practical and technical expertise in navigating the energy market through regulatory change and major transactions offers the Board important perspective on the evolving financial services industry and regulatory environment. Mr. Sergel served in the United States Air Force reserve from 1973 to 1979 and has served as a director of Jobs for Massachusetts and the Greater Boston Chamber of Commerce. He is a former trustee of the Merrimack Valley United Way and the Worcester Art Museum, prior chairman of the Consortium for Energy Efficiency and was a member of the Audit Committee for the Town of Wellesley, Massachusetts. Mr. Sergel received a B.S. degree from Florida State University, an M.S. from North Carolina State University and an M.B.A. from the University of Miami. |
Career Highlights
Wallace Brett Donham Professor of Business Administration, Harvard Business School (1984 to present); former Faculty Chair, Leadership Initiative, High Potentials Leadership Program and Organizational Behavior Unit
Director, Harvard Business Publishing
Former Director, Eaton
State Street Corporation
| 22 |
Item 1 | 2020 NOTICE OF MEETING AND PROXY STATEMENT |
GREGORY L. SUMME Age 63, Director Since 2001 Board Roles and Committees • Executive Committee • Human Resources Committee • Nominating and Corporate Governance Committee (Chair) | Career Highlights • Managing Partner and Founder, Glen Capital Partners, LLC, an alternative asset investment fund (2013 to present) • Former Managing Director and Vice Chairman of Global Buyout, Carlyle Group, a Nasdaq-listed global asset manager (2009 to 2014) • Former Chairman, Chief Executive Officer and President, PerkinElmer, Inc., an NYSE-listed developer and producer of life science equipment and services (1998-2009) • Director, NXP Semiconductors, a Nasdaq-listed semiconductor manufacturer (2010 to present) (Director, 2010 to 2015 and Chairman, 2013 to 2015 as Freescale Semiconductor, Inc., prior to its acquisition by NXP Semiconductors in 2015; 2015 to present as NXP Semiconductors) • Former Director, LMI Aerospace, a Nasdaq-listed designer and provider of aerospace structures (2014 to 2017) Qualifications and Attributes Mr. Summe has extensive management experience leading large and complex corporate organizations in evolving environments. While vice chairman of Carlyle Group, he was responsible for buyout funds in financial services, infrastructure, Japan, the Middle East and African markets and served on the firm’s operating and investment committees. His experience in private equity has afforded him a deepened exposure to understanding varied business models, practices, strategies and environments and assessing value in varied international regions. During his tenure as chairman and chief executive officer at PerkinElmer, Mr. Summe led the company’s transformation from a diversified defense contractor to a technology leader in health sciences. Prior to joining PerkinElmer, Mr. Summe held leadership positions at AlliedSignal (now Honeywell), General Electric and McKinsey & Co. Mr. Summe holds B.S. and M.S. degrees in electrical engineering from the University of Kentucky and the University of Cincinnati, respectively, and an M.B.A. with distinction from the Wharton School of the University of Pennsylvania. He is also in the Engineering Hall of Distinction at the University of Kentucky. |
DIRECTOR NOT STANDING FOR REELECTION AT THE 2020 ANNUAL MEETING
Career Highlights
State Street Corporation, Chairman (2011 to present); Chief Executive Officer (2010 to present); PresidentKennett F. Burnes’ service as a director will end at the 2020 annual meeting of shareholders and Chief Operating Officer (2008 to 2014)
Former President and Chief Executive Officer, Boston Financial Data Services (1990 to 2000)
Former President and Chief Executive Officer, National Financial Data Services (1988 to 1990)
Qualifications and Attributes
the Board thanks him for his service. Mr. Hooley joined State Street in 1986 andBurnes currently serves as Chairman and Chief Executive Officer. He served as President and Chief Operating Officer from April 2008 to December 2014. From 2002 to April 2008, Mr. Hooley served as Executive Vice President and head of Investor Services and, in 2006, was appointed Vice Chairman and Global Head of Investment Servicing and Investment Research and Trading. Mr. Hooley was elected to serve on the Board of Directors in October 2009,Human Resources Committee, Nominating and he was appointed Chairman of the Board in January 2011. His leadership experienceCorporate Governance Committee and core understanding of State Street’s full range of services brings to the Board a detailed, innovativeTechnology and thorough perspective on State Street’s key operations, strategic initiatives and client relationships globally. Mr. Hooley serves asOperations Committee. He has been a member of the board of directors ofBoard since 2003 and preceded Amelia Fawcett as the Federal Reserve Bank of Boston and a member of the Financial Services Forum in Washington D.C. He is a director on the board of Boys & Girls Clubs of Boston, the President’s Council of the Massachusetts General Hospital and the Massachusetts Competitive Partnership and is a trustee of the board of Boston College. He received his B.S. degree from Boston College.independent Lead Director.
STATE STREET CORPORATION 19
State Street Corporation | 23 |
| 2020 NOTICE OF MEETING AND PROXY STATEMENT |
Career Highlights
Retired Group Managing Director and Group Chief Operating Officer (2011 to 2014), HSBC Holdings, plc., an NYSE-listed banking and financial services organization; Executive Director and Chief Technology and Services Officer, HSBC Bank plc. (2007-2010); other various positions throughout his34-year tenure.
Qualifications and Attributes
As the Group Managing Director and Group Chief Operating Officer of HSBC Holdings, plc., Mr. O’Sullivan led the bank’s global operations and information technology functions, with worldwide responsibilities for business transformation, organizational restructuring and operational effectiveness. Prior to assuming the role of Group Managing Director and Group Chief Operating Officer, Mr. O’Sullivan held various positions throughout HSBC in the U.S., Canada and Europe. His long tenure at HSBC provided him with valuable experience with the operational and technology challenges faced by a large, global financial institution as well as the management of overall company effectiveness and efficiency, including development of a global approach to expense management and operational risk management. Mr. O’Sullivan is a member of the Information Technology Advisory Committee at the University of British Columbia and a former trustee of the York University Foundation. He is a dual citizen of Canada and the U.K. and received a B.A. degree from the Ivey School of Business at Western University.
20 STATE STREET CORPORATION
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Career Highlights
Retired President and Chief Executive Officer, North American Electric Reliability Corporation, NERC, a self-regulatory organization for the bulk electricity system in North America (2005 to 2009)
Director, Emera, Inc., a Toronto Stock Exchange-listed energy and services company (2010 to present)
Former President and Chief Executive Officer, New England Electric System (and its successor company, National Grid USA), an NYSE-listed electric utility (1998 to 2004)
Qualifications and Attributes
Mr. Sergel’s responsibilities as chief executive officer of the North American Electric Reliability Corporation included imposing statutory responsibility and regulating the industry through adoption and enforcement of standards and practices. To do so, he led NERC to establish the first set of legally enforceable standards for the U.S. bulk power system. Prior to joining NERC, he spent 25 years with the New England Electric System, where he oversaw the merger with National Grid in 2000. His extensive practical and technical expertise in navigating the energy market through regulatory change and major transactions offers the Board important perspective on the evolving financial services industry and regulatory environment. Mr. Sergel served in the United States Air Force reserve from 1973 to 1979 and has served as a director of Jobs for Massachusetts and the Greater Boston Chamber of Commerce. He is a former trustee of the Merrimack Valley United Way and the Worcester Art Museum, prior chairman of the Consortium for Energy Efficiency and was a member of the Audit Committee for the Town of Wellesley, Massachusetts. Mr. Sergel received a B.S. degree from Florida State University, an M.S. from North Carolina State University and an M.B.A. from the University of Miami.
STATE STREET CORPORATION 21
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Career Highlights
Managing Partner and Founder, Glen Capital Partners, LLC, an alternative asset investment fund (2013 to present)
Former Managing Director and Vice Chairman of Global Buyout, Carlyle Group, a Nasdaq-listed global asset manager (2009 to 2014)
Former Chairman, Chief Executive Officer and President, PerkinElmer Corp, an NYSE-listed developer and producer of life science equipment and services (1998-2009)
Director, NXP Semiconductors, a Nasdaq-listed semiconductor manufacturer (2010 to present) (Director, 2010 to 2015 and Chairman, 2013 to 2015 as Freescale Semiconductor, Inc., prior to its acquisition by NXP Semiconductors in 2015; 2015 to present as NXP Semiconductors)
Former Director, LMI Aerospace, a Nasdaq-listed designer and provider of aerospace structures (2014 to 2017)
Former Director, Automatic Data Processing, Inc., a Nasdaq-listed provider of business outsourcing solutions (2007 to 2014)
Qualifications and Attributes
Mr. Summe has extensive management experience leading large and complex corporate organizations in evolving environments. While vice chairman of Carlyle Group, he was responsible for buyout funds in financial services, infrastructure, Japan, the Middle East and African markets and served on the firm’s operating and investment committees. His experience in private equity has afforded him a deepened exposure to understanding varied business models, practices, strategies and environments and assessing value in varied international regions. During his tenure as chairman and chief executive officer at PerkinElmer, Mr. Summe led the company’s transformation from a diversified defense contractor to a technology leader in health sciences. Prior to joining PerkinElmer, Mr. Summe held leadership positions at AlliedSignal (now Honeywell), General Electric and McKinsey & Co. Mr. Summe holds B.S. and M.S. degrees in electrical engineering from the University of Kentucky and the University of Cincinnati, and an M.B.A. with distinction from the Wharton School of the University of Pennsylvania. He is also in the Engineering Hall of Distinction at the University of Kentucky.
22 STATE STREET CORPORATION
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EXECUTIVE COMPENSATIONExecutive Compensation
Compensation Discussion and Analysis
In this compensation discussion and analysis, or CD&A, we describe our approach to executive compensation, including our philosophy, design and process and the alignment of our incentive compensation with our risk alignment.management principles. We also describe 2017 compensation decisions for 2019 for the following named executive officers, who we refer to as our NEOs.or NEOs:
Joseph L. HooleyRonald P. O’Hanley— ChairmanPresident and Chief Executive Officer
Eric W. Aboaf — Executive Vice President and Chief Financial Officer
Ronald P. O’HanleyFrancisco Aristeguieta— Executive Vice President and Chief OperatingExecutive Officer for International Business
Jeffrey N. Carp— Executive Vice President, Chief Legal Officer and Secretary
Andrew J. Erickson— Executive Vice President and Head of State Street Global Services
Cyrus Taraporevala — President and Chief Executive Officer of State Street Global Advisors (SSGA)
Michael W. Bell — Former Executive Vice President and Chief Financial Officer
In this CD&A, references to the Compensation Committee, or to the Committee are references to the Executive CompensationHuman Resources Committee of our Board of Directors.the Board.
CD&A Table of Contents
CD&A Table of Contents | Page | |
25 | ||
28 | ||
New Compensation Program Features for the 2019 Compensation Year | 28 | |
30 | ||
31 | ||
40 | ||
40 | ||
43 | ||
45 | ||
Executive Equity Ownership Guidelines, Practices and Policies | 45 |
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State Street Corporation
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2017 Corporate Performance Highlights
In 2017, our 225th anniversary year, we honored State Street’s heritage of stewardship and innovation by continuing to invest in, strengthen and evolve our business to meet our clients’ ever-changing needs. We achieved strong financial results for the year while advancing our digital strategy, developing new solutions to support our clients, positioning State Street for continued growth and demonstrating our ongoing commitment to risk excellence. Our results reflect strength across our asset servicing and asset management businesses, increased client demand for our products and services and disciplined expense control. Strong global equity markets and rising interest rates also created a favorable environment for revenue growth. Below are selected key indicators we use to monitor our performance. The Committee also considered these indicators in evaluating 2017 corporate performance for compensation purposes. Additional factors considered by the Committee are described under the heading “2017 Compensation Decisions—Corporate Performance.”
STATE STREET CORPORATION 23
| 2020 NOTICE OF MEETING AND PROXY STATEMENT |
Financial Performance HighlightsExecutive Summary
Consolidated Financial Performance
($ In millions, except per share data)
| 2017
| 2016
| % Change
| |||||||||
Revenue
|
$
|
11,170
|
|
$
|
10,207
|
|
|
9.4%
|
| |||
Total fee revenue
|
|
8,905
|
|
|
8,116
|
|
|
9.7%
|
| |||
Diluted earnings per share (EPS)
|
|
5.24
|
|
|
4.97
|
|
|
5.4%
|
| |||
Return on average common equity (ROE)
|
|
10.6%
|
|
|
10.5%
|
|
|
1.0%
|
|
Revenue, EPSTo better align pay outcomes with both individual and ROE, presented in accordance with U.S. generally accepted accounting principles (GAAP), all increased in 2017 from 2016corporate performance results for the year, including providing a more direct link to annual corporate results, the Committee approved a new compensation structure as shown indescribed under the table above. Results also increasedheading “New Compensation Program Features for the 2019 Compensation Year.” The payout under the 2019 program is determined based on an operating(non-GAAP) basis, which includes revenue fromnon-taxable sources on a fully taxable equivalent basis and excludes the impact of revenue and expenses outsideindividual performance (60% of the normal courseincentive award target) and corporate performance (40% of business. See “Other Elementsthe incentive award target).
Corporate Performance Summary
2019 began with significant challenges, including financial market weakness, falling interest rates and increased client fee pricing pressure, and our revenue,pre-tax margin, diluted earnings per share (EPS) and return on average common equity (ROE) all decreased in 2019 from 2018. In the face of ourProcess—Non-GAAP Information” below for an explanation of our operating(non-GAAP) basis financial presentation.
Total Shareholder Return (TSR)
State Street
| S&P Financial Index
| Peer Group Median(1)
| |||||||||||||
1-Year TSR
|
|
27.83
|
%
|
|
22.14
|
%
|
|
16.00
|
%
| ||||||
3-Year TSR
|
| 31.90
| %
|
| 47.58
| %
|
| 39.13
| %
|
|
Strategic Objective Performance Highlights
We made progress on several important strategic objectives during 2017. Thesekey business objectives. Actions included:
Grewstrengthening our asset servicing and asset management businesses,value proposition to clients, including increasingthe ongoingyear-endbuild-out assets under custody and administration (AUCA) by 15% to $33.12 trillion and assets under management (AUM) by 13% to $2.78 trillion, each compared toof ouryear-endfront-to-back 2016, supported by strong global equity marketsState Street Alpha platform
Made major stridessuccessfully executing a firm-wide expense savings program that exceeded initial targets and resulted in the implementation of State Street Beacon, our multi-year strategy to digitize our business, deliver significant value and innovation for our clients and lower expenses across the organization, includingapproximately $415 million in gross expense savings during 2019
delivered industry-leading improvementsreorganized the leadership of our multi-regional international business under a single executive to further our growth objectives
Due to these actions and the steady recovery of U.S. average market levels in speed2019,our financial results in the second half of servicethe year improved relative to the first half of the year. Total revenue for the second half of the year increased by approximately 3%, total fee revenue increased approximately 2% and transparencyEPS increased approximately 7%, in each case relative to the first half of the year. With regard to risk management performance, we made progress on initiatives to improve our financial risk posture, but did not achieve desired non-financial risk improvement. While we know more is required for our clients
achieved approximately $150 million of netpre-tax program savings target for 2017, approximately $10 million more than projected
Developed new solutions to meet our clients’ needs, including launching
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|
Continuedus to advance risk excellence as a top organizational priority, making considerable progressour overall performance, we are nonetheless confident in strengthening our controls and operating environment and reinforcing a strong culture
For further details on these and other initiatives, see below under the headings “2017 Compensation Decisions—Corporate Performance” and “2017 Compensation Decisions—Individual Compensation Decisions.”
24 STATE STREET CORPORATION
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Additional Performance Highlights
Returning Value to Shareholders
We declared total quarterly common stock dividends of $1.60 per share in 2017, or approximately $596 million, compared to total quarterly common stock dividends of $1.44 per share, or approximately $559 million, in 2016
We purchased approximately 16.8 million sharestrajectory of our common stock in 2017 at a total cost of approximately $1.45 billion, comparedbusiness and focused on continuing to purchases of approximately 21.1 million shares at a total cost of approximately $1.37 billion in 2016
Capital Levels
Our regulatory capital levels remained well above current regulatory minimum requirements in 2017.
Capital Ratio
| State Street Corporation December 31, 2017(1)
| 2017 Minimum Requirements Including Capital Conservation Buffer andG-SIB Surcharge(2)
| |||||||||||||
Common Equity Tier 1 Risk-Based Capital
|
|
11.9
|
%
|
|
6.5%
|
| |||||||||
Tier 1 Risk-Based Capital
|
|
15.0
|
%
|
|
8.0%
|
| |||||||||
Total Risk-Based Capital
|
|
16.0
|
%
|
|
10.0%
|
| |||||||||
Tier 1 Leverage
|
|
7.3
|
%
|
|
4.0%
|
|
|
|
CCAR Results
We completed the Federal Reserve’s 2017 Comprehensive Capital Analysis and Review, or CCAR process, without Federal Reserve objection toimprove our 2017 capital plan. Under Federal Reserve rules, we must submit an annual capital plan to the Federal Reserve, taking into account the results of separate stress tests designed by us and by the Federal Reserve.
Resolution Plan Assessment
As a requirement of the regulatory reforms under the Dodd-Frank Act, State Street, along with other banking institutions with $50 billion or more in total assets, periodically prepares and files its resolution plan in order to demonstrate State Street’s plan of orderly resolution in the event of major financial distress or failure. We submitted our 2017 Resolution Plan, commonly referred to as a “living will,” to the Federal Reserve and the Federal Deposit Insurance Corporation on June 30, 2017, and the agencies announced that they did not identify any deficiencies or shortcomings in the plan.
Other Matters
State Street’s 2017 performance is reviewed in greater detail, along with relevant risks associated with our business, results of operations and financial condition, in our annual report on Form10-K,performance. which accompanies this proxy statement and was previously filed with the Securities and Exchange Commission, or SEC.
2017 Leadership Transition
On November 7, 2017, we announced that Mr. Hooley will retire as Chief Executive Officer by the end of 2018 and will remain as Chairman of the Board of Directors throughout 2019. State Street’s Board of Directors appointed Mr. O’Hanley to serve as our President and Chief Operating Officer effective November 6, 2017. Mr. O’Hanley will succeed Mr. Hooley as State Street’s Chief Executive Officer upon Mr. Hooley’s retirement. As part of this transition we announced several other changes to the leadership team, including retirements, promotions and other key leadership changes. Messrs. Aboaf, Erickson and Taraporevala, in particular, saw significant increases in their responsibilities, supporting the implementation of this transition. Mr. Taraporevala was appointed President and Chief Executive Officer of SSGA, Mr. Erickson was appointed Head of State Street Global Services and Mr. Aboaf took on responsibility for our Global Strategy function, in addition to his responsibilities as our Chief Financial Officer that he assumed earlier this year.
STATE STREET CORPORATION 25
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2017 Corporate and NEO Performance Evaluations
Corporate Performance
In determining our current NEOs’ compensation for 2017,2019, the Compensation Committee evaluated State Street’s overall corporate performance. ThisConsistent with prior years, this evaluation included a structured assessment of corporate performance based on three discrete scorecards that capture State Street’s annual performance against financial, strategicbusiness and risk management objectives. Improvement in the second half of the year, particularly with respect to financial and business performance, tempered the disappointing start to 2019. However, the Committee concluded that State Street’s full year Overall Performance was Below Expectations as a result of financial and risk management performance against objectives. Our corporate performance is described in more detail under the heading “2019 Compensation Decisions—Corporate Performance.” The Committee’s conclusions are shown below:
Corporate Performance Scorecards | 2019 Committee Evaluation | |
Financial Performance | Below Expectations | |
Business Performance | At Expectations | |
Risk Management Performance | Below Expectations | |
Overall Performance | Below Expectations |
Corporate Performance Evaluation Outcome.Based on the Committee’s evaluation of State Street’s overall performance, the Committee applied a 62.5% factor against target for the corporate component of the 2019 incentive awards made to all executive officers, as described below.
NEO Performance Summary
In determining our NEOs’ compensation for 2019, the Committee also evaluated each NEO’s individual performance, including assessments of:
financial, business and risk management objectives derived from the corporate scorecards
leadership and talent-related performance, including a focus on diversity and inclusion and employee engagement and development
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Based on the year’s strong performance as described above, and detailed further under the heading “2017 Compensation Decisions—Individual Compensation Decisions,” our current NEOs were paid above their target incentives for 2017.(1)
Annual Incentive. The Compensation Committee awarded annual incentives to our current NEOs ranging from 125% to 158% of target for 2017, based on the Above Expectations assessment of overall corporate performance. Individual awards reflect the Committee’s evaluation of the current NEOs’ overall 2017 performance, which included particularly strong strategic and financial performance, achieved with appropriate consideration to risk management. Consequently, the Committee believed annual incentives above target to be appropriate.
Long-Term Incentive. The value ultimately realized from long-term incentives will be based on future stock price performance. In addition, a majority of the long-term incentive is only paid if specific financial targets are achieved. Therefore, our long-term incentive awards remain relatively consistent with target compensation levels, absent a change in the executive’s responsibilities, State Street’s long-term performance trend or market practices. As noted below under “New Compensation Program Elements,” in 2017 the Committee formalized its assessment of actions and behaviors upon which the long-term incentive may vary. The formalized assessment evaluated leadership qualities based on factors such as diversity and inclusion, talent development and employee engagement. The Committee awarded long-term incentive awards for our current NEOs ranging from 95% to 100% of target for 2017.
For additional information concerning how the Committee incorporated the individual performance of Mr. Hooley and our other current NEOs into 2017 compensation decisions, see “2017 Compensation Decisions—Individual Compensation Decisions.”
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While overall corporate performance for 2019 was Below Expectations, State Street’s management team took a number of actions that delivered strong results in the second half of 2019, reversing unsatisfactory revenue trends and exceeding expense management goals. The Committee’s review of each NEO’s individual performance is discussed in more detail in the discussion under “2019 Compensation Decisions—Individual Performance and Compensation Decisions” below.
NEO Incentive Compensation Decisions
For 2019, the Committee awarded our NEOs total incentive awards ranging from 83% to 97% of target, reflecting both our performance as a company as well as each NEO’s individual performance, as described in more detail under the heading “2019 Compensation Decisions—Individual Performance and Compensation Decisions.”
Given Mr. O’Hanley’s responsibility as Chief Executive Officer for overall company performance, the Committee’s decision on his compensation was primarily driven by its evaluation of overall company results, and he received a total incentive award of 83% of target. This decision resulted in equity- and cash-based incentive elements below target, as presented in the chart below:
NEO Incentive Compensation Mix(1)
Incentive awards are delivered through four award vehicles, as described in the “Compensation Vehicles and Design” table below. The incentive compensation mix emphasizes deferral and performance-based equity. 90% of incentive awards for our NEOs are deferred. In addition, 67% of our CEO’s and 62% of our other NEOs’ equity awards are performance-based restricted stock units, referred to as performance-based RSUs. This structure is designed to drive financial performance and to align incentives with the performance experienced by our shareholders. For 2019, incentive awards were delivered in: performance-based RSUs; deferred stock awards, referred to as DSAs; deferred value awards (deferred cash), referred to as DVAs; and immediate cash, as shown below:
(1) | Does not include Mr. Aristeguieta. In connection with his offer of employment, State Street agreed to provide Mr. Aristeguieta with 2019 incentive compensation via a pay mix consisting of: 40% performance-based RSUs; 25% DSAs; 20% DVAs; and 15% cash. |
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Sound Compensation and Corporate Governance Practices
Our NEO compensation practices are designed to support good governance and avoidmitigate against excessive risk-taking incentives.risk-taking. We regularly review and refine our governance practices considering several factors, including feedback from ongoing engagement with our shareholders.
STATE STREET CORPORATION 27
What We Do | ||||
• Significant deferred equity- and cash-based incentive compensation • Active engagement with shareholders on compensation and governance issues • Close interaction between the Human Resources Committee and our Risk Committee and Examining and Audit Committee • Independent compensation consultant
| • Clawback and forfeiture provisions to permit recoupment of incentive compensation • “Double-trigger”change-of-control required for deferred incentive compensation acceleration and cash payments • Stock ownership policy, including holding requirements for NEOs who are below full ownership guidelines • Non-compete and other restrictive covenants • Annual review of incentive compensation design for alignment with risk management principles |
What We Do Not Do | ||||
• Nochange-of-control excise taxgross-up • No “single-trigger”change-of-control vesting or cash payments • No option repricing | • No short-selling, options trading, hedging or speculative transactions in State Street securities • No taxgross-ups on perquisites(1) • No multi-year guaranteed incentive awards |
(1) | Excluding certain international assignment and relocation benefits. |
New Compensation Program Elements
We made the following enhancements to NEO compensation policies and practices in 2017:
Shareholder Outreach and“Say-on-Pay”
In reviewing compensation design and governance practices, the Compensation Committee considers market practicetrends and regulatory guidance, as well as other factors, including shareholder feedback. The Committee receives feedback from our shareholders through two primary channels:
• | Shareholder Outreach. We engage with our largest shareholders to understand their |
• | “Say-on-Pay.” At our annual shareholder meeting, we ask our shareholders to approve anon-binding advisory proposal on executive compensation. At our |
Based on discussions with our shareholders and the results of our“say-on-pay” vote, and shareholder outreach, the Committee believes that our shareholders support our overall executive compensation program. For the 20172019 compensation year, we therefore continued many of the elements of our existing compensation program, such as maintaining a high level of performance-based equity and deferral for incentive compensation awards to our NEOs, as well as emphasizingNEOs. One area of specific discussion we had with several of our shareholders in recent years involved the clarity and transparency of the relationship between individual pay foroutcomes and company performance. For example, several shareholders requested additional detail on the relationship between scorecard-based evaluations of corporate performance and alignmentindividual pay decisions. These discussions, together with shareholder interests.
long-term strategic and other considerations, informed the changes to the structure of our compensation program for 2019, described under “New Compensation Committee Process Concerning Risk AlignmentProgram Features for the 2019 Compensation Year,” below.
For 2017, we continued our focus on aligning incentive compensation with appropriate risk management principles. We provide incentives designed not to encourage unnecessary or excessive risk-taking and have established additional process controls and oversight. These features include:
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For a further discussion of the risk alignment of our compensation practices, see below under the heading “Alignment of Incentive Compensation and Risk.”
State Street’s compensation program for NEOs and other executive officers aims to:
attract, retain and motivate superior executives and drive strong leadership behaviors
reward those executives for meeting or exceeding annualindividual and long-termcompany financial and strategicbusiness objectives
drive long-term shareholder value and financial stability
align incentive compensation with the performance results experienced by our shareholders through the use of significant levels of deferred equity-based compensation
provide equal pay for work of equal value
achieve the preceding goals in a manner aligned with sound risk management and our corporate values
New Compensation Program Features for the 2019 Compensation Year
To better align pay outcomes with both corporate and individual performance results for the year, the Committee approved a new compensation structure. The changes from theSTATE STREET CORPORATIONpre-2019 29 compensation program along with the associated rationale are outlined below:
Comparison of Pre-2019 Compensation Program vs. 2019 Compensation Program for NEOs Pre-2019 Compensation Program 2019 Compensation Program Incentive Compensation Targets and Delivery Vehicles Separate annual and long-term incentive targets established for each executive officer Annual incentive award varied within a range of 0 - 200% of target and was delivered through immediate cash and DVAs Long-term incentive award varied within a range of 80 - 120% of target and was delivered through performance-based RSUs and DSAs A single total incentive target established for each executive officer Incentive award may vary within a range of 0-200% of target and is delivered through the same four vehicles used previously and described below To determine final incentive value, target is split into individual performance and corporate performance components Determining Individual Compensation Awards Annual incentive award driven by enterprise- and individual-level scorecard-based evaluations of financial, strategic and risk management performance Long-term incentive award driven by State Street's long term performance trend and the core responsibilities associated with the NEO's role overtime, including leadership and talent-related performance Determining Individual Compensation Awards Individual performance component driven by individual-level scorecard-based evaluations of individual financial, strategic, risk and leadership and talent-related performance Corporate performance component driven by enterprise-level scorecard-based evaluations of financial, strategic and risk management performance Individual and corporate performance component values are summed and delivered through established incentive award mix Rationale for Changes Separate individual and corporate performance components provide clearer accountability for individual and corporate results Pay structure results in a wider range of possible pay outcomes and more closely links equity-based awards to current year performance Individual performance component increases individual accountability for current year outcomes and results in greater pay variability The same factor is applied to the corporate performance component for all executive officers, providing a more transparent link to annual corporate results and promoting shared accountability
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Accordingly, the Committee used the following framework to determine 2019 compensation year awards for the NEOs:
Preliminary Incentive Compensation (1C) Recommendation Consideration of Other Factors Outcome & Delivery Individual Component (Individual Performance = 60% of Total 1C Tarqet) Corporate Component (Corporate Performance = 40% of Total 1C Taraet) Based on performance against individual objectives: Financial Business Risk Excellence Leadership & Talent Based on Corporate Performance scorecards: Financial Business Risk Excellence Committee and Other Directors' Evaluation of the NEOs Market compensation levels, trends, and practices Relative Performance vs. Peer Companies(1) Final CEO 1C delivered in: 10% Immediate Cash 15% Deferred Value Awards 25% Deferred Stock Awards 50% Performance-based RSUs (represents 67% of equity delivered) Final Other NEO IC delivered in(2): 10% Immediate Cash 25% Deferred Value Awards 25% Deferred Stock Awards 40% Performance-based RSUs (represents 62% of equity delivered)
(1) | Our15-company compensation peer group is described below under the heading, “Other Elements of Our Process—Peer Group and Benchmarking.” |
(2) | In connection with his offer of employment, State Street agreed to provide Mr. Aristeguieta with 2019 incentive compensation via a pay mix consisting of: 40% performance-based RSUs; 25% DSAs; 20% DVAs; and 15% cash. |
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Compensation Vehicles and Design Elements
Elements of Compensation.Compensation Design. Key elements of our total Total compensation program for our NEOs2019 was delivered via base salary and incentive compensation. Incentive compensation for 2017 are described below.2019 was delivered through the following vehicles:
Vehicle Description | Considerations and Rationale |
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(75% of incentive compensation for CEO; 65% for Other NEOs) | ||||||
Performance-
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• Equity-based compensation directly • Performance-based RSUs are aligned with our long-term performance and financial goals • Performance-based RSUs granted for 2019 and 2018 performance included pre-tax margin as a second metric in equal weight with ROE, further aligning NEO compensation with our business strategy | ||||
50% Weighting 50% Weighting ROE ROE Performance Pre-tax Margin Pre-tax Margin Performance Total Payout Range < 8% No Payout + < 24% No Payout 8.0% Threshold + 24.0% Threshold 13.0% Target + 29.0% Target > 18.0% Maximum + >34.0% Maximum = 0 - 150% Total Payout | ||||||
• Performance-based RSUs ultimately earned “cliff” vest in one installment in February 2023
• Paid in State Street shares upon vesting | ||||||
Deferred Stock Awards (DSAs) | •
• Paid in State Street shares upon vesting | • Subject to • Equity-based compensation directly | ||||
Cash-Based Incentive Compensation (25% of incentive compensation for CEO; 35% for Other NEOs) | ||||||
Deferred Value Awards (DVAs) | • DVAs are notionally invested in a money market fund
• Vest ratably in 16 quarterly installments (with the first installment vesting in May 2020) • Paid in cash upon vesting | • Subject to vesting requirements | ||||
Immediate Cash (non-deferred) | • Immediate cash award | • Provides a limited immediate incentive |
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Recourse Provisions. All incentive compensation awards for our NEOs are subject to clawback and forfeiture provisions. For more information, see the discussion under “Other Elements of Compensation—Adjustment and Recourse Mechanisms” below.
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Restrictive Covenants.Covenants. Each of ourthe deferred incentive compensation awards granted to our NEOs in 2019 includes restrictive covenants applicable to our NEOs. Beginning with awards granted for 2015 performance, we added provisions concerningnon-competition to thenon-solicitation, confidentiality andnon-disparagementnon-solicitation. provisions included historically in these awards.
20172019 Compensation Decisions
Total Compensation Approach
The Compensation Committee evaluates individual compensation for our NEOs and other executive officers by looking at total direct compensation, consisting of base salary and incentive compensation. The Committee evaluates base salary and incentive compensation levels at least annually.
Base Salary. Base salary is a fixed annual cash amount and is a relatively small portion of total compensation for the NEOs. 2017 annualNone of the NEOs received a base salary rates for the NEOs, other than Mr. Erickson, remained unchanged from their levelsincrease in 2016. Effective April 1, 2017, Mr. Erickson received an increase of $46,727 to his 2016 salary in recognition of his June 2016 appointment as Head of Investment Servicing, Americas and relative internal and external salary levels. Mr. Erickson was appointed to his current role, Head of State Street Global Services, effective in November 2017, but received no further increase to his salary at that time. Mr. Erickson’s base salary is paid in Hong Kong Dollars (HK$) rather than U.S. Dollars (US$). Base salary displayed in this CD&A for Mr. Erickson is converted from HK$ to US$ using the December 29, 2017 exchange rate of 1 HK$ to 0.127948 US$.2019.
Setting Individual Incentive Compensation.Compensation Targets. Incentive compensation is a variable amount, comprising both equity-based elements, awarded as a long-term incentive, and cash-based elements, awarded as an annual incentive both in immediate and deferred cash. The Committee believes a significant amount ofestablishes incentive compensation should take the form of both deferred awards and equity awards. Therefore, to emphasize long-term performance, a high percentage of each NEO’s total incentive compensation is delivered as an equity-based long-term incentive and a portion of the annual incentive is deferred.
By paying a significant portion of our NEOs’ compensation in equity and by requiring vesting of that component over multiple years, the Committee creates an incentive structure where both the rewards and risks of share ownership are shared by our executives and shareholders.
Individual Compensation Targets. For 2017, the Compensation Committee established compensation targets for our NEOs each current NEO’s annual and long-term incentive. Theseyear. The targets wereare based upon an assessment of theon each executive’s role and responsibilities, at State Street and relevantperformance trend, competitive and market factors as well asand internal equity.
For 2019, each NEO’s target total compensation was allocated as follows:
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NEW for 2017. In determining NEO long-term incentive grants for 2017 performance, the Compensation Committee formalized its assessment of actions and behaviors (as described above) to include factors such as diversity and inclusion, talent development and employee engagement.
The Committee establishes annual and long-term incentive compensation targets for NEOs as well as members of State Street’s Management Committee at the beginning of each year. The 2017 annual and long-term incentive compensation targets established for each of our NEOs, other than Mr. Bell, are listed in the following chart:
Name(1) | Base Salary Rate | Target Incentive Compensation(2)
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Annual | Long-Term | Total | ||||||||||||||||||
Joseph L. Hooley
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$
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Ronald P. O’Hanley
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Cyrus Taraporevala(3)(4)
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Name | Base Salary Rate | Total Target Incentive Compensation | Target Total Compensation | ||||||||||||
Ronald P. O’Hanley | $ | 800,000 | $ | 13,200,000 | $ | 14,000,000 | |||||||||
Eric W. Aboaf | 700,000 | 5,800,000 | 6,500,000 | ||||||||||||
Francisco Aristeguieta(1) | 704,000 | 6,800,000 | 7,504,000 | ||||||||||||
Jeffrey N. Carp | 650,000 | 5,500,000 | 6,150,000 | ||||||||||||
Andrew J. Erickson | 500,480 | 6,009,600 | 6,510,080 |
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32Determining Incentive Compensation Awards. STATE STREET CORPORATION
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Compensation Assessment Framework
ForFollowing the end of the performance year, the Committee evaluates the individual and corporate component values for each NEO in light of input from the Compensation Committee determinesCEO (on the appropriate level of totalother NEOs) as well as other directors, market compensation for the year. This determination is based on a subjective evaluation of many factors, includinglevels, trends and practices and corporate financial performance individual performance and market, regulatory and shareholder considerations. In evaluating these factors and making 2017 compensation decisions for the current NEOs, the Committee used the following framework:
Performance assessed under this framework drives incentive compensation determinations relative to each NEO’s targets, particularly for the annual incentive. The Committee balances corporate and individual resultspeers to reach final total compensation decisions.incentive award amounts, as described above under “New Compensation Program Features for the 2019 Compensation Year”. In doing so,evaluating performance, the Committee may consider additional factors or give greater or less weight to specific notable factors.any factor.
Once the final incentive compensation amount has been determined, the total incentive value is delivered through the established mix of performance-based RSUs, DSAs, DVAs and immediate cash vehicles described in the “Compensation Vehicles and Design” table above.
Corporate Performance
Framework Evaluation.As referenced above, theThe corporate performance framework uses a structured evaluation of three discrete, and multi-factor scorecards, which contain both quantitative and qualitative metrics, and cover:
financial performance
business performance against strategic objectives
risk management performance including
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2020 NOTICE OF MEETING AND PROXY STATEMENT |
The Committee considered the risk management performance of significant individualfinancial, business lines and functions
The Compensation Committee received financial, strategic objectives and risk management performance scorecard updatesscorecards in July and December 2017. The Compensation Committee also received an additional interim financial performance scorecard update in September 2017,2019, as well as the final 2017 financial, strategic objectives and risk management2019 scorecards in early 2018.2020. The full Board of Directors also reviews financial performance at each Board meeting. The Committee’s overall evaluation of corporate performance, balancing positive and negative performance outcomes in each of these scorecards, is a primary driver of incentive compensation decisions for our Chief Executive Officer and for the corporate performance incentive factor for our other NEOs.
In 2017, we achieved strongUnder the 2019 compensation program, all executive officers receive the same corporate performance factor for the 40% of their total target incentive that is based on the Committee’s evaluation of overall corporate performance. Improvement in the second half of the year, particularly with respect to financial and business performance, tempered the disappointing start to 2019. However, the Committee concluded that State Street’s full year performance was Below Expectations as a result of financial and risk management performance against objectives. Consequently, all executive officers received only 62.5% of the corporate performance component of their incentive compensation target, impacting both equity- and cash-based incentive compensation awards. A description of each of the three corporate performance scorecards, including second half trend evaluations, is found below.
Financial Performance.During its evaluation of 2019 performance, the Committee had access to financial results while advancingpresented in conformity with GAAP, as well as financial results presented on a basis that excludes or adjusts one or more items from GAAP. This latter basis is anon-GAAP presentation. In general, our digital strategy, developing new solutionsnon-GAAP financial results adjust selected GAAP-basis financial results to supportexclude the impact of revenue and expenses outside of State Street’s normal course of business or other notable items. Management believes that this presentation of financial information facilitates an investor’s and the Committee’s further understanding and analysis of State Street’s financial performance and trends with respect to State Street’s business operations fromperiod-to-period, including providing additional insight into our underlying margin and profitability. Financial results are presented on anon-GAAP basis in this section, unless otherwise noted.Non-GAAP financial measures should be considered in addition to, not as a substitute for or superior to, financial measures determined in conformity with GAAP. For a reconciliation ofnon-GAAP measures presented in this CD&A, seeAppendix C.
2019 began with significant challenges, including financial market weakness, falling interest rates and increased client fee pricing pressure, and our revenue,pre-tax margin, EPS and ROE all decreased in 2019 from 2018. In the face of these headwinds, we acted aggressively to stabilize revenues and reduce expenses. Actions included strengthening our value proposition to clients, positioningincluding the ongoingbuild-out of ourfront-to-back State Street for continued growthAlpha platform, and demonstratingthe successful execution of a firm-wide expense savings program that exceeded initial targets and resulted in approximately $415 million in gross expense savings during 2019.
Due to these actions and the steady recovery of U.S. average market levels in 2019, our ongoing commitmentfinancial results in the second half of the year improved relative to risk excellence. Our results reflect strength across our asset servicing and asset management businesses, increased client demand for our products and services and disciplined expense control. Strong global equity markets and rising interest rates also created a favorable environment for revenue growth.the first half of the year.
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A brief description of each of the three performance scorecards follows:Financial Performance
Performance Scorecard
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Key Areas Reviewed: |
Consolidated Financial Performance (excluding notable items,
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• Revenue | ($ in millions, except per share data)
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• Expenses | Total fee revenue | $9,147 | $9,462 | (3.3)% | Second Half Trend:
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• Pre-tax Margin | Total revenue | 11,712 | 12,139 | (3.5)% | At Expectations | |||||||||||
• EPS | Expenses | 8,675 | 8,625 | 0.6% | ||||||||||||
• ROE | Pre-tax margin | 25.8% | 28.8% | (300) bps | ||||||||||||
• Structural Expense Savings | EPS | 6.17 | 7.21 | (14.4)% | ||||||||||||
ROE | 10.8% | 13.7% | (290) bps | |||||||||||||
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Total fee revenue | $4,627 | $4,520 | 2.4% | |||||||||||||
Total revenue | 5,907 | 5,805 | 1.8% | |||||||||||||
Expenses | 4,263 | 4,412 | (3.4)% | |||||||||||||
Pre-tax margin | 27.7% | 23.9% | 380 bps | |||||||||||||
EPS | 3.48 | 2.69 | 29.4% | |||||||||||||
ROE | 11.9% | 9.7% | 220 bps | |||||||||||||
Total Shareholder Return (TSR): | | State Street | | | Peer Group Median(2) | | | S&P Financial Index |
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1-Year TSR | 29.3% | 31.8% | 32.1% | |||||||||||||
3-Year TSR | 9.2% | 24.8% | 40.4% |
Additional Financial Performance Detail
(excluding notable items,non-GAAP(1))
Full Year 2019
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• | 2019 revenue growth, EPS and ROE were in the bottom quartile relative to our peer group on a GAAP basis. Ourone-year TSR improved from (34.0%) in 2018 to 29.3% in 2019, but was slightly below our peer group median |
1H to 2H 2019
• | Total revenue and fee revenue both increased approximately 2% and servicing fees increased approximately 3% in the second half of 2019 relative to the first half of 2019 |
• | Expenses decreased from the first half of 2019 by approximately 3% for the second half of 2019 as the company executed on its expense savings plan |
• | Pre-tax margin increased from
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• | ROE increased from the first half of 2019 by 220 bps to 11.9% for the second half of 2019 |
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34 STATE STREET CORPORATION
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Business Performance
Performance Scorecard | 2019 Performance Highlights | 2019 Committee Evaluation | ||
Key Goals: • Be an essential partner—trusted, strategic and proactive • Develop a scalable, configurableend-to-end operating model that sets the industry standard • Establish initial version of ourfront-to-back platform • Establish leadership in our key products • Be a global destination for talent and become a high performing organization | • Took key actions to drive our strategic and operational objectives, including: – rolling out State Street Alpha, the industry’s firstfront-to-back platform from a single provider; – re-engineering asset servicing design in support of our plannedend-to-end operating model; – completing our senior executive client coverage model for our largest clients; and – implementing a new pricing committee that has brought a firm-wide view to client relationships, profitability and new revenue opportunities • Aligned our operating model by combining Operations, Technology and Delivery teams to strengthen business and operational connectivity • Initiated a systematic transformation of State Street with a goal of improving client, employee and shareholder experience • Broadened the composition of the company’s Management Committee, our most senior strategy and policy-making team, resulting in a more globally-focused and diverse body • Reorganized the leadership of our multi-regional international business under a single executive to further our growth objectives | Full Year Evaluation: At Expectations Second Half Trend: Consistent with Full Year Evaluation |
Risk Management Performance
Performance Scorecard | 2019 Performance Highlights | 2019 Committee Evaluation | ||
Key Areas Reviewed: • Financial and non-financial risks • Progress against risk and compliance commitments and risk mitigation programs • Process improvements in higher risk areas or activities | • Did not achieve desired non-financial risk improvement • Demonstrated positive trends in financial risk performance, including across measures of the Company’s credit, asset liability management, liquidity and capital adequacy activities • Experienced higher operational loss rates relative to the last two years due to increasedre-investment in enterprise change programs • Completed the Federal Reserve’s 2019 CCAR process, without the Federal Reserve objecting to our 2019 capital plan | Full Year Evaluation: Below Expectations Second Half Trend: Consistent with Full Year Evaluation |
State Street’s 2019 performance is reviewed in greater detail, along with relevant risks associated with our business, results of operations and financial condition, in our 2019 annual report on Form10-K, which accompanies this proxy statement and was previously filed with the SEC.
State Street Corporation | 34 |
Executive Compensation | 2020 NOTICE OF MEETING AND PROXY STATEMENT |
Individual Performance and Compensation Decisions
In addition to State Street’s overall performance described above, the Committee also consideredevaluating each NEO’s individual performance, in determining the current NEO’s total compensation. Accordingly, the Committee reviewed performance scorecards derived from our corporate performance goals and tailored to each current NEO in the following areas: strategic, financial,financial; business; risk management,management; and leadership and talent. Performance highlights and 2017the Committee’s incentive compensation and total compensation decisions for 2019 for the NEOs are describedpresented in the tablesummaries below.(1) For detail on the relationship between the 2019 amounts reported in the summaries below and those amounts reported in the Summary Compensation Table (as required by SEC rules) and related tables, please refer to the discussion under “2019 Compensation Decisions—Individual Compensation Decisions” below.
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Financial | Business | Risk Excellence | Leadership & Talent | |||
• Took swift actions to address financial headwinds
– Stabilized servicing fee revenues – Announced approximately $1.8 trillion in new servicing business wins – Announced a State Street record level of assets under management reflecting higher market levels and net inflows of approximately $100 billion • Revenue declined from 2018, reflecting the elevated level of industry servicing fee pricing pressure;pre-tax margin, EPS and ROE each declined from 2018 • Actively managed expenses, driven by new resource discipline, process reengineering and automation efforts. Exceeded initial target of $350 million in gross expense savings, finishing the year at approximately $415 million |
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•
– Re-engineered asset servicing design to support our
•
•
| •
•
•
• Did not achieve desired non-financial risk improvement • Experienced higher operational loss rates relative to the last two years as | •
•
| •
•
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for 2019 | ||
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(1) | Capital return represents total common stock dividends and common stock purchases of $2,331 million during 2019 as a percentage of net income available to common shareholders for the year ended December 31, 2019 of $2,009 million. |
| 35 |
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STATE STREET CORPORATION 35
Executive Compensation | 2020 NOTICE OF MEETING AND PROXY STATEMENT |
Eric W. Aboaf, Chief Financial Officer | ||||||||
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| Compensation for 2019 | |||||||
As Chief Financial Officer,
•
•
• Actively
• Implemented
•
•
•
• Effectively progressed
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•
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(1) |
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36 STATE STREET CORPORATION
State Street Corporation | 36 |
Executive Compensation | 2020 NOTICE OF MEETING AND PROXY STATEMENT |
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2019 Performance Highlights | Compensation for 2019 | |
Mr. Aristeguieta joined State Street in July of
•
•
• | Mr. Aristeguieta received 2019 incentive compensation of $6,800,000. Including an annualized base salary, his total compensation for 2019 would have been $7,504,000, as reflected in
|
Jeffrey N. Carp, Chief Legal Officer and | ||
2019 Performance Highlights
| Compensation for 2019 | |
• Strengthened and evolved our legal, regulatory and security functions globally • Effectively partnered with other senior leaders to drive targeted outcomes for risk, regulatory and business initiatives, including leading initiatives to create new capacity in risk-weighted assets and optimize capital and liquidity • Provided a balanced approach to legal matters and overall thought leadership to the executive team, including as an important advisor to the Chief Executive Officer • Through disciplined resourcing and headcount management, successfully delivered against expense management objectives for the legal, regulatory and security functions • Provided effective oversight and coordination of overall relationships with regulators | ||
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STATE STREET CORPORATION 37
State Street Corporation | 37 |
Executive Compensation | 2020 NOTICE OF MEETING AND PROXY STATEMENT |
Andrew J. Erickson, | ||||
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| Compensation for 2019 | |||
As Head of Global Services, Mr. Erickson
•
• • Completed our senior executive client coverage model for our largest clients • Introduced a new pricing committee that has brought a firm-wide view to • Introduced a new client onboarding process that enabled us to • Successfully launched Global Clients Division, which is responsible for building strategic relationships with our largest and | Mr. Erickson was awarded total compensation of
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38 STATE STREET CORPORATION
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STATE STREET CORPORATION 39
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Additional Factors and Individual Compensation Decisions
In addition to the corporate and individual performance factors summarized above, the Committee also took into account market compensation competitiveness in finalizing its compensation decisions.
. The Compensation Committee’s 2017 totalincentive compensation decisions for 2019 for the current NEOs relative to their targets are presented in the table below.
Annual Incentive | Long-Term Incentive | |||||||||||||||
Named Executive Officer(1) | | • Reflects performance specific to the | | | • Designed to promote long-term performance | | ||||||||||
Target | Actual | Target | Actual | |||||||||||||
Joseph L. Hooley
|
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$3,000,000
|
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$4,750,000
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$10,000,000
|
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$10,000,000
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Eric W. Aboaf(2)
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1,700,000
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2,567,000
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3,100,000
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3,100,000
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Ronald P. O’Hanley
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2,900,000
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3,944,000
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5,300,000
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5,035,000
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Andrew Erickson(2)
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1,050,000
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1,491,000
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2,000,000
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2,000,000
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Cyrus Taraporevala(2)
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1,600,000
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2,000,000
|
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1,600,000
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1,600,000
|
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Equity-Based Incentive | Cash-Based Incentive | |||||||||||||||
Named Executive Officer | Actual | Target | Actual | Target | ||||||||||||
Ronald P. O’Hanley | $ | 8,250,000 | $ | 9,900,000 | $ | 2,750,000 | $ | 3,300,000 | ||||||||
Eric W. Aboaf | 3,656,250 | 3,770,000 | 1,968,750 | 2,030,000 | ||||||||||||
Francisco Aristeguieta(1) | 4,420,000 | 4,420,000 | 2,380,000 | 2,380,000 | ||||||||||||
Jeffrey N. Carp | 3,250,000 | 3,575,000 | 1,750,000 | 1,925,000 | ||||||||||||
Andrew J. Erickson | 3,786,250 | 3,906,240 | 2,038,750 | 2,103,360 |
(1) |
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State Street Corporation | 38 |
2020 NOTICE OF MEETING AND PROXY STATEMENT |
The Compensation Committee’s 2017 total compensation decisions for 2019 for the current NEOs are presented in the table below. The table below is intended to help shareholders understand the process and philosophy the Committee used in calculating current NEO compensation for 2017 performance. Note (1) to the table below describes the relationship between the 2019 amounts reported in the table below and those amounts reported in the Summary Compensation Table (as required by SEC rules) and related tables beginning on page 49.tables.While the table below summarizes how the Committee views annual compensation, it is not a substitute for the tables and disclosures required by the SEC’sSEC rules.
Named Executive Officer | Year | Annual Base Salary | Annual Incentive Awards | Long-Term Incentive Awards | Total Compensation | |||||||||||||||||||||||
Non-Deferred Cash | DVAs/SSGA LTIP | Performance- Based RSUs | DSAs | |||||||||||||||||||||||||
Joseph L. Hooley
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2017
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$
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1,000,000
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$
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3,087,500
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$
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1,662,500
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$
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6,000,000
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$
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4,000,000
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$
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15,750,000
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| 2016
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| 1,000,000
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| 625,000
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| 1,875,000
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| 6,000,000
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| 4,000,000
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| 13,500,000
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2015
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1,000,000
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—
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—
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5,400,000
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3,600,000
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10,000,000
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Eric W. Aboaf
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2017
|
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700,000
|
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1,103,810
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1,463,190
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1,860,000
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1,240,000
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6,367,000
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Ronald P. O’Hanley
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2017
|
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800,000
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1,695,920
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2,248,080
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3,021,000
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2,014,000
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9,779,000
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2016
|
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800,000
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393,500
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2,176,500
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3,180,000
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2,120,000
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8,670,000
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Andrew Erickson
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2017
|
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446,539
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641,130
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849,870
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1,200,000
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|
800,000
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3,937,539
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Cyrus Taraporevala
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2017
|
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400,000
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600,000
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1,400,000
|
|
|
320,000
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1,280,000
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4,000,000
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Equity-Based Incentive | Cash-Based Incentive | |||||||||||||||||||||||
Named Executive Officer | Annual Base Salary | Performance- Based RSUs | DSAs | Immediate Cash | DVAs | Total Compensation(1) | ||||||||||||||||||
Ronald P. O’Hanley | $800,000 | $5,500,000 | $2,750,000 | $1,100,000 | $1,650,000 | $11,800,000 | ||||||||||||||||||
Eric W. Aboaf | 700,000 | 2,250,000 | 1,406,250 | 562,500 | 1,406,250 | 6,325,000 | ||||||||||||||||||
Francisco Aristeguieta(2) | 704,000 | 2,720,000 | 1,700,000 | 1,020,000 | 1,360,000 | 7,504,000 | ||||||||||||||||||
Jeffrey N. Carp | 650,000 | 2,000,000 | 1,250,000 | 500,000 | 1,250,000 | 5,650,000 | ||||||||||||||||||
Andrew J. Erickson | 500,480 | 2,330,000 | 1,456,250 | 582,500 | 1,456,250 | 6,325,480 |
(1) | The 2019 compensation described in the table above, which summarizes how the Committee evaluates annual total compensation, differs from the compensation described in the Summary Compensation Table |
— | Annual Base Salary. The table above reflects theyear-end annual base salary rate applicable for each |
40 STATE STREET CORPORATION
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— |
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— |
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— | Other Awards. |
— | Total Compensation. The amounts disclosed above differ from the amounts reported in column (j) of the Summary Compensation Table due to the different methodologies discussed in the notes above. Additionally, this |
(2) | In connection with his offer of employment, State Street agreed to provide Mr. |
|
Roles of the Committee and the CEO
The Compensation Committee has direct responsibility for executive officer compensation plans, policies and programs at State Street and for establishing the overall compensation philosophy for executive officers, other than the Chief Executive Officer. The Committee performs those same functions for the Chief Executive Officer in consultation with the other independent directors. Accordingly, the Committee’s compensation decisions for the Chief Executive Officer include input from the other independent directors of the Board, whether or not specifically referenced in this CD&A. In making compensation decisions for the other NEOs, the Committee considers the recommendations of the Chief Executive Officer and input from the other independent directors.
The Committee met eight times from July 2017 through March 2018 regarding 2017 NEO compensation and evaluated a broad range of corporate performance factors, individual performance updates, market information, regulatory updates and input from our shareholder engagement efforts, as well as itspay-for-performance practices and the results of our annual shareholder meeting, including“say-on-pay” results. The Committee also considered evolving trends, practices, guidance and requirements in the design, regulation, risk-alignment and governance of compensation matters in the U.S. and other jurisdictions, including Europe and Asia. During these meetings, the Committee received regular updates, including from the Committee’s independent compensation consultant, on these and other matters, particularly with respect to the financial services industry.
Peer Group and Benchmarking
Among the many factors used in determining executive compensation, we benchmark our total compensation against a peer group of other major financial services companies. The Compensation Committee did not treat peer group data as definitive when determining 2017 executive compensation. Rather, it referenced peer group compensation data as well as performance data, but formed its own perspective on compensation for our current NEOs based on a subjective evaluation of many factors.
We consider few firms to be true comparators for the specific scope of our primary business activities. We include our direct competitors as well as other firms with which we compete in some aspects of our businesses and for executive talent. The group varies in firm size and business lines and the nature of applicable regulation, including status (like State Street) as a systemically important financial institution. The peers were selected based on a screening methodology that accounts for our industry sector, size, specific business model and applicable regulatory frameworks. Our generally applicable peer group, periodically reviewed and approved by the Committee, consists of the following 12 firms:
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STATE STREET CORPORATION 41
| 2020 NOTICE OF MEETING AND PROXY STATEMENT |
Prior Year Performance-Based RSU Awards
Performance-based RSUs granted to our NEOs, as described above under “Compensation Vehicles and Design,” are subject to the achievement ofpre-established performance metrics. Our performance-based RSUs outstanding on December 31, 2019 are summarized below:
Performance Year(1) | Year of Grant | Performance Period | Performance Metric Target | Potential Payout | Payout(2) | |||||
2016 | 2017 | 2017 – 2019 | Average ROE of 11% for the 2017 to 2019 performance period | 0 – 140% | 107.7% in February 2020 based on an average adjusted ROE of 11.77% | |||||
2017 | 2018 | 2018 – 2020 | Average ROE of 13% for the 2018 to 2020 performance period | 0 – 150% | Current estimated payout below target based on 2018 – 2019 average ROE; any payout to be approved by the Committee in February/ March 2021(3) | |||||
2018 | 2019 | 2019 – 2021 | Average ROE of 13% and averagepre-tax margin of 29% for the 2019 to 2021 performance period | 0 – 150% | Current estimated payout below target based on 2019 ROE andpre-tax margin; any payout to be approved by the Committee in February/ March 2022(3) |
(1) | For additional information about the terms of these awards, see the discussion below under “Other Elements of Compensation—Adjustment and Recourse Mechanisms,” the narrative discussion following the “2019 Grants of Plan-Based Awards” table below, the “Outstanding Equity Awards at FiscalYear-End, December 31, 2019” table below and our prior year proxy statements. |
(2) | Achievement of ROE andpre-tax margin targets for performance-based RSUs is subject to adjustment forpre-established, objectively determinable factors. For the 2016 performance year awards, the Committee approved adjustments to the three-year average ROE of 10.70% to account for changes in tax laws, acquisitions and dispositions, merger and integration expenses, restructuring expenses, securities issuances and redemption expenses and legal and regulatory matters arising from prior performance periods, resulting in a three-year average adjusted ROE of 11.77%. SeeAppendix C for a reconciliation of the three-year average ROE to the three-year average adjusted ROE. In addition, all awards are subject to the Committee’s ability to exercise negative discretion in determining the payout achieved, as well as recourse mechanisms described in more detail under “Other Elements of Compensation—Adjustment and Recourse Mechanisms” below. |
(3) | Current estimated payouts based on estimated performance of relevant criteria only for completed fiscal years within the three-year performance period. This performance has not been certified and is therefore subject to adjustment based on the terms of the relevant awards. No estimate of performance for incomplete fiscal years within the performance period has been made. Final payout will be based on satisfaction of the performance criteria as certified by the Committee following the end of the full performance period. |
A subsetOther Elements of the above firms, consisting of Bank of New York Mellon, Capital One, JPMorgan, Northern Trust, PNC Financial Services, U.S. BancorpCompensation
Other Awards and Wells Fargo,Agreements
In July 2019, Mr. Aristeguieta was also used to benchmark Mr. Hooley’s compensation. The Committee believes this subset contains the comparator companies most appropriate for evaluating compensation ofhired as the Chief Executive Officer position. The Committee recognized thatfor International Business. In this role, he leads all of our international business activities including driving strategy, stewarding client engagement, developing talent, pursuing growth opportunities and maintaining regulatory relationships. Prior to joining State Street, he served as the peer group companies varyChief Executive Officer of Citigroup Asia where he was responsible for all businesses in sizethe region’s 16 markets. Mr. Aristeguieta’s hire supports a key objective of our long term strategy—namely, to win in the fastest growing and business lines. highest potential markets.
In addition, the nature of the roles of executives varies by firm. Therefore, as noted above,July 2019, in connection with his hiring, the Committee referenced peer group data, but formed its own perspectives on appropriategranted Mr. Aristeguieta equity awards totaling approximately $9.5 million, including approximately $2.35 million in performance-based RSUs, to compensate him for the loss of outstanding deferred incentive compensation levels for our current NEOs on a subjective evaluationfrom his prior employer. These awards were an important element of many factors, including those described under the heading “2017 Compensation Decisions—Total Compensation Approach.”
In 2017,attracting Mr. Aristeguieta to join State Street worked with Meridian Compensation Partners,and are described in more detail below in the Committee’s independent compensation consultant, to compile market compensation data from each applicable peer group for benchmarking purposes. The peer market compensation data, based on publicly disclosed information, was supplemented with multiple compensation surveys provided by other compensation data providers. This survey data generally covered large financial services companies with whom we may compete for talent for our executive roles. In evaluating this data, the Committee considers total compensation to consist“2019 Grants of base salary and incentive compensation. In addition to this market data, the Committee received regular updates during 2017Plan-Based Awards” table and the first quarter of 2018 regarding identified market trends and compensation actions at major financial services institutions.
Compensation Consultant
The Compensation Committee directly retains Meridian Compensation Partners to provide compensation consultingfootnotes to the Committee. Meridian regularly participated in meetings“Outstanding Equity Awards at FiscalYear-End, December 31, 2019” table.
Adjustment and executive sessions of the Committee. Meridian did not provide any other servicesRecourse Mechanisms
Incentive compensation awards to State Street during 2017.
The Committee believes the consultant’s primary representatives advising the Committee mustour NEOs are subject to adjustment and recourse mechanisms, includingex ante adjustment, forfeiture and clawback, which may be independent of management and the Committee for the consultant to provide appropriate advice on compensation matters. Therefore, the Committee adopted a policy requiring an annual assessment of compensation consultant independence based on the requirements of the NYSE. In December 2017, the Committee reviewed the independence of Meridian’s primary representatives under the policy. Following its review, the Committee determined the primary representatives of Meridian to be independent and that no conflicts of interest were raised by the services of Meridianapplied jointly, or its primary representatives.
The Committee reviews data prepared by Willis Towers Watson PLC and McLagan Partnersseparately, as part of its consideration of compensation matters. Each of these firms, engaged by our Global Human Resources group based on its specialized expertise in the financial services industry, has provided other services to State Street in the past and may do so in the future.
Non-GAAPappropriate. Information
During its evaluation of 2017 performance, the Compensation Committee had access to financial results presented in conformity with GAAP, as well as financial results presented on an operating basis, which is anon-GAAP presentation. Management has historically believed its operating-basis presentation supports additional meaningful analysis and comparisons of trends with respect to State Street’s business operations from period to period. Management may also provide, as appropriate, additionalnon-GAAP measures, including capital ratios calculated under regulatory standards scheduled to be effective in the future or other standards that management uses in evaluating State Street’s business and activities. For the full-year 2016 comparative financial information, our operating-basis financial results are presented with additional adjustments to highlight the effects of the acceleration of compensation expense and aggregate reduction of accrued tax expense we experienced in the fourth quarter of 2016. This type of additional presentation is consistent with the intent of our historical operating-basis presentation. In general, our operating-basis financial results adjust our GAAP-basis financial results to both: (1) exclude the impact of revenue and expenses outside of State Street’s normal course of business, such as restructuring charges and theone-time effects of the Tax Cuts and Jobs Act of 2017; and (2) present revenue fromnon-taxable sources, such as interest income fromtax-exempt investment securities and processing fees and other revenue associated withtax-advantaged adjustments, on a fully taxable-equivalent basis. Management has historically believed that operating-basis financial information facilitates an investor’s further understanding and analysis of State Street’s financial performance and trends, including providing additional insight into our underlying margin and profitability, in addition to financial information prepared and reported in conformity with GAAP. Thetax-equivalent adjustments provide additional comparisons of yields and margins on assets and the evaluation of investment opportunities with different tax profiles.Non-GAAP financial measures should be considered in addition to, and not as a substitute for or superior to, financial measures determined in conformity with GAAP.
42 STATE STREET CORPORATION
State Street Corporation | 40 |
| 2020 NOTICE OF MEETING AND PROXY STATEMENT |
Other Elements of Compensation
Additional elements of ourEx Ante Adjustment. Before awards are made for a given compensation programyear, all incentive awards for our NEOs, includeincluding deferred incentive awards and the following.
Recourse Mechanisms
Theimmediate cash incentive, compensation awards to our NEOs are subject to recourse mechanisms, including clawback, forfeiture andex antedownward adjustment, as described below. These awards are also subject to any compensation recovery or similar requirements under applicable law and implementing regulations and related State Street policies. This approach is intended to comply with applicable banking regulations and regulatory guidance on incentive compensation and will be interpreted and administered accordingly. In 2017, the Compensation Committee reviewed the terms of these recourse mechanisms in light of evolving market practices and extended the clawback and forfeiture provisions applicable to current NEOs to also apply to all employees at the Executive Vice President level and broadened the circumstances that may result in clawback or forfeiture under these provisions. The Committee may continue to adjust its approach for future incentive compensation awards based on market practice and regulatory guidance.
Clawback. After vesting (if applicable) and delivery to the executive, all amounts delivered to our NEOs as incentive compensation awards, including cash incentive, performance-based RSUs, DSAs, DVAs and SSGA LTIP awards, contain clawback provisions providing for the repayment of those amounts, in whole or in part, upon the occurrence of specified events. The Compensation Committee, in its discretion, determines whether clawbackthisex ante adjustment is appropriate, making that determination within four years (in the case of performance-based RSUs) or three years (in the case of all other forms of incentive compensation) of the date of the grant of the award.appropriate. The events for which clawbackex ante adjustment may occur include either:include:
if the executive’s actions exposed State Street to inappropriate risks that resulted in a “Significantly Below Expectations” rating on any of the factors on State Street’s corporate multi-factor risk scorecard, which guides State Street’s risk assessment process, or
if the executive engaged in fraudincurred significant or willful misconduct, including in a supervisory capacity, that resulted in financialrepeated compliance or reputational harm that is material torisk-related violations of State Street and resulted in termination of the executive’s employment, orStreet’s policies
if, as a result of the occurrence of a material financial restatement by State Street contained in a filing with the SEC or miscalculation or inaccuracy in financial results, performance metrics, or other criteria used in determining the amount of the award, the executive would have received a smaller or no award
Forfeiture. Before vesting and delivery to the executive, all deferred incentive compensation awards to our NEOs, including performance-based RSUs, DSAs DVAs and SSGA LTIP awards,DVAs, allow reduction or cancellation of the award, in whole or in part, upon the occurrence of specified events. The Compensation Committee, in its discretion, determines whether forfeiture is appropriate. The events for which forfeiture may occur include:
if the executive’s actions exposed State Street to inappropriate risks, including in a supervisory capacity, that resulted or could reasonably be expected to result in material losses that are or would be substantial in relation to State Street’s or a relevant business unit’s revenue, capital and overall risk tolerance
if the executive engaged in fraud, gross negligence or any misconduct, including in a supervisory capacity, that was materially detrimental to the interests or business reputation of State Street or any of its businesses
if the executive engaged in conduct that constituted a violation of State Street policies and procedures or our Standard of Conduct in a manner which either caused or could have caused reputational harm that is material to State Street or either placed or could have placed State Street at material legal or financial risk, or
if, as a result of a material financial restatement contained in an SEC filing, or miscalculation or inaccuracy in the determination of performance metrics, financial results or other criteria used in determining the amount of the award, the executive would have received a smaller or no award
In addition, all incentive awards are forfeited if thean executive’s employment is terminated by State Street for gross misconductmisconduct.
Ex Ante Adjustment.Clawback. Before planned awards are made All amounts delivered to the executive for a given compensation year, all incentive compensation for our NEOs as incentive awards, including both deferred incentive compensation awards and thenon-deferredimmediate cash incentive is subject to downward adjustment,awards, performance-based RSUs, DSAs and DVAs, contain clawback provisions providing for the repayment of those amounts, in whole or in part, upon the occurrence of specified events. The Compensation Committee, in its discretion, determines whetherex ante adjustment clawback is appropriate.appropriate, making that determination within four years (in the case of performance-based RSUs) or three years (in the case of all other incentive awards) of the award’s grant date. The events for whichex ante adjustment clawback may occur include:
if the executive’s actions exposed State Street to inappropriate risksexecutive engaged in fraud or willful misconduct, including in a supervisory capacity, that resulted in a “Significantly Below Expectations” rating on anyfinancial or reputational harm that is material to State Street and resulted in termination of the factors onexecutive’s employment
if, as a result of the occurrence of a material financial restatement by State Street’s corporate multi-factor risk scorecard, which guides State Street’s risk assessment processStreet contained in a filing with the SEC or miscalculation or inaccuracy in financial results, performance metrics, or other criteria used in determining the amount of the award, the executive would have received a smaller or no award, or
if the executive incurred significantfailed to comply with the terms of any covenant not to compete entered into with State Street
All incentive awards are also subject to any compensation recovery or repeated compliance or risk-related violationssimilar requirements under applicable laws, rules and regulations and related State Street policies and are interpreted and administered accordingly. This approach is intended to comply with applicable banking regulations and regulatory guidance on incentive compensation. In 2019, the Committee reviewed the terms of these recourse mechanisms in light of evolving market practices and added a clawback provision applicable to State Street’s policiesexecutive officers and other senior leaders providing for the repayment of incentive compensation in the event of prohibited competition during or following employment, as noted above.
STATE STREET CORPORATION 43
State Street Corporation | 41 |
| 2020 NOTICE OF MEETING AND PROXY STATEMENT |
Retirement Benefits
Our U.S.-based NEOs are eligible to participate in our 401(k) defined contribution retirement plan available to our U.S.-based employees generally. For 2017, theThe plan includedincludes a matching employer contribution of 5%. We also maintain a frozen qualified defined benefit pension plan for certain U.S. employees that determines benefits based on an account balance that is increased annually by interest credits. Mr. Hooley is the only current NEO who participates in this plan; no additional annual pay credits, however, are provided6% up to his account.Internal Revenue Code limits.
Because pension benefits under our now-frozen U.S. qualified defined benefit plan arewere limited by Internal Revenue Code restrictions, we now maintain two frozen supplemental pension programs, both of which are frozen.programs. One was designed to make up for limits imposed by the qualified plan or by thelost contributions due to Internal Revenue Code on qualified-plan benefitslimits and was frozen along with the qualified defined benefit pension plan. Mr. HooleyCarp is the only current NEO who participates in this plan. The second plan was originally designed to provide executive vice presidents orExecutive Vice Presidents and above with competitive retirement benefits to encourage their continued employment based upon a specified percentage of compensation. It was later changed to include two separate benefit components: (1) thea traditional defined benefit component, in which only Mr. HooleyCarp participates, which was substantially frozen in 2007 with all accruals ending in 2017; and (2) a defined contribution component, which was substantially frozen in January 2017 following an executive supplemental retirement plan market analysis, and in which only Messrs. HooleyCarp and Erickson participate.
hold plan balances and in which only Mr. Carp continues to receive contributions (and upon his expected retirement during 2020, no further contributions will be made to any participant under the plan). These plans are described in further detail below under the heading “Pension Benefits at FiscalYear-End.headings “2019 Pension Benefits” and “2019 Nonqualified Deferred Compensation.”
Mr.Messrs. Aristeguieta and Erickson participatesparticipate in our Hong Kong defined contribution Mandatory Provident Fund (MPF) and Occupational Retirement Scheme Ordinance (ORSO), which are retirement programs available to our Hong Kong employees generally, including Mr. Erickson.generally. In aggregate, the participant contributes 5% of his or her base salary and State Street contributes an amount equal to 10% of the participant’s base salary to the MPF and ORSO. Participant and State Street contributions based on the first 5% of monthly base salaries of up to 30,000 HK$ (approximately 3,800 US$) are contributed to the MPF; participant contributions based on monthly base salary earnings above that limit, and State Street contributions that exceed 5% of the participant’s monthly base salary (or 1,500 HK$ per month if the participant’s monthly base salary is more than 30,000 HK$), are contributed to the ORSO.
Deferred Compensation
We maintain a nonqualified deferred compensation plan that allows our U.S. NEOs and other executive officers and otherssenior employees to defer base salary and/or thea portion of annual incentive bonusesawards otherwise payable in immediate cash. State Street matches all deferrals made under this plan up to a maximum of 5% of a participant’s match-eligible compensation, comprising the lesser of (i) base salary plus immediately available cash.payable annual cash incentive compensation or (ii) $500,000, in either case reduced by the applicable Internal Revenue Code cap on annual compensation ($280,000 in 2019). Participants receive a return based on one or more notional investment options selected by the participant. Currently, the investment options available to our NEOs include a money market fund, three State Street index funds and a State Street common stock fund. The nonqualified deferred compensation plan supplements deferrals made under ourtax-qualified 401(k) plan. We provide these nonqualified deferred compensation benefits because in our experience, mostmany companies of our size provide a similar benefit to their senior employees. This plan is described below under the heading “2017“2019 Nonqualified Deferred Compensation.”
Perquisites
We provide our NEOs a modest level of perquisites, such as financial planning, annual physicals and personal liability coverage, to our NEOs.coverage. In addition, we providethe Board provided Mr. O’Hanley with an executive security package consisting of a car and driver and other security benefitsbenefits. These security measures, along with the car and driver provided to Mr. Hooley. We offerAristeguieta and the parking benefits provided to our other NEOs. We provide these benefits because we believe they are appropriate in scope and amount toNEOs, promote the effectiveness of our senior executives, allowing them greater opportunity to focus their attention on our business operations and activities. We also provided Mr. Erickson with customary international assignment benefits related to his service in the U.S. These benefits included allowances for goods, services and housing; tax preparation and advisory services; and tax equalization payments. In connection with his offer of employment, State Street agreed to provide Mr. Aristeguieta with a car and driver and club memberships, which are customary benefits for leaders in the region. The club memberships provide a venue for hosting clients, building networks with local industry leaders and developing prospects in support of Mr. Aristeguieta’s role as Chief Executive Officer for International Business. In addition, we provided Mr. Aristeguieta international assignment benefits, which included a goods and services allowance, relocation services, tax preparation and advisory services and tax equalization payments. In limited circumstances, our NEOs have combined personal travel with business travel at no incremental cost to us. We do not provide a taxgross-up for the income attributable to any perquisite for our NEOs, other than for standardcertain international assignment and relocation benefits.
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2020 NOTICE OF MEETING AND PROXY STATEMENT |
Change-of-Control Agreements
Under a long-standing program, we havechange-of-control employment agreements in place with each of our NEOs. We provide these agreements because we believe providing some protection in the event of a change of control is necessary to attract and retain high quality executives and to help address the possible inherentpotential distractions during the period leading up to a possible change of control.
Ourchange-of-control arrangements are further described below under the heading “Potential Payments upon Termination or Change of Control as of December 31, 2017.2019.”
NEO Compensation Changes for 2020
Effective at the end of the first quarter of 2020, Messrs. O’Hanley and Erickson received base salary increases to $1,000,000 and $700,000, respectively. This is the first increase to Mr. O’Hanley’s base salary since he was appointed as Chief Executive Officer on January 1, 2019. The Committee increased target total compensation for 2020 for Messrs. O’Hanley and Erickson to $14,500,000 and $7,000,000, respectively. The Committee also increased target total compensation for 2020 for Mr. Aboaf to $7,000,000. The Committee considers these base salary and target compensation increases to be appropriate based on the recent expansion of each executive’s role described in more detail under “2019 Compensation Decisions—Individual Performance and Compensation Decisions,” as well as relevant internal and external benchmarks.
Roles of the Committee and the Chief Executive Officer
The Committee has direct responsibility for our executive officer compensation plans, policies and programs. The Committee performs these responsibilities for the Chief Executive Officer in consultation with the other independent directors. In making compensation decisions for the other NEOs, the Committee considers the recommendations of our Chief Executive Officer, as well as input from the other independent directors.
After establishing each NEO’s total compensation target for 2019, the Committee met nine times from July 2019 through March 2020 regarding 2019 NEO compensation and related topics and evaluated a broad range of corporate performance factors, individual performance updates, market information, regulatory updates and input from our shareholder engagement efforts, as well as itspay-for-performance practices and the results of our annual shareholder meeting, including“say-on-pay” results. The Committee also considered evolving trends, practices, guidance and requirements in the design, regulation, risk-alignment and governance of compensation matters in the U.S. and other jurisdictions. During these meetings, the Committee received regular updates, including from the Committee’s independent compensation consultant, on these and other matters, particularly with respect to the financial services industry.
Peer Group and Benchmarking
The Committee reviews market data from our peer group as one factor evaluated in determining executive compensation. The Committee also considers peer group data in structuring the design of its executive compensation programs.
We consider few companies to be true comparators for the specific scope of our primary business activities, so we include in our peer group our direct competitors and other companies with which we compete in some aspects of our businesses and for executive talent. The companies also vary in size and the nature of applicable regulation, including status (like State Street) as a systemically important financial institution. The Committee, with the assistance of its independent compensation consultant, periodically reviews the composition of our peer group to ensure it continues to serve as an appropriate market reference for executive compensation purposes. Our generally applicable peer group, periodically reviewed and approved by the Committee, consists of the following 15 firms:
44 STATE STREET CORPORATION
State Street Corporation | 43 |
| 2020 NOTICE OF MEETING AND PROXY STATEMENT |
Ameriprise Financial, Inc. | Franklin Resources, Inc. | Northern Trust Corporation | ||||||
The Bank of New York Mellon Corporation | The Goldman Sachs Group, Inc. | The PNC Financial Services Group, Inc. | ||||||
BlackRock, Inc. | Intercontinental Exchange, Inc. | Prudential Financial, Inc. | ||||||
Capital One Financial Corporation | Invesco Ltd. | S&P Global Inc. | ||||||
The Charles Schwab Corporation | JPMorgan Chase & Co. | U.S. Bancorp |
During 2019, the Committee reviewed peer group compensation data from public sources, supplemented with data from multiple compensation surveys. This survey data generally covered large financial services companies with whom we may compete for executive talent. In evaluating the market data, the Committee considers total compensation to consist of base salary and incentive compensation. In addition to the market data, the Committee received regular updates during 2019 and the first quarter of 2020 regarding market trends and compensation actions at major financial services institutions.
The Committee recognized that the peer group companies vary in size and business lines and that the nature of executive roles varies by company. Therefore, the Committee did not treat peer group data as definitive when determining executive compensation for 2019. Rather, it referenced peer group compensation data and performance data, but formed its own perspective on compensation for our NEOs based on its subjective evaluation of many factors, including those described under the heading “2019 Compensation Decisions—Total Compensation Approach.”
Compensation Consultant
The Committee directly retains Meridian Compensation Partners to provide independent compensation consulting to the Committee. Meridian regularly participated in meetings and executive sessions of the Committee. Meridian did not provide any other services to State Street during 2019.
The Committee believes the consultant’s primary representatives advising the Committee should be independent of management and the Committee for the consultant to provide appropriate advice on compensation matters. Therefore, the Committee adopted a policy requiring an annual assessment of compensation consultant independence based on the requirements of the NYSE. In December 2019, the Committee reviewed the independence of Meridian and its primary representatives under the policy. Following its review, the Committee determined the primary representatives of Meridian to be independent and that no conflicts of interest were raised by the services of Meridian or its primary representatives.
The Committee reviews data prepared by Willis Towers Watson PLC and McLagan Partners as part of its consideration of compensation matters. Each of these companies, engaged by our Global Human Resources group based on its specialized expertise in the financial services industry, has provided other services to State Street in the past and may do so in the future.
Tax Deductibility of Executive Compensation
Section 162(m) of the U.S. Internal Revenue Code generally limits to $1 million the U.S. federal income tax deductibility of compensation paid to certain executive officers. The Committee believes that shareholder interests are best served by not restricting its discretion and flexibility in structuring compensation programs, even though such programs will result innon-deductible compensation expenses. Therefore, the Committee has approved compensation for 2019 for our NEOs that will not be fully deductible.
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2020 NOTICE OF MEETING AND PROXY STATEMENT |
Human Resources Committee Process Concerning Risk Alignment
For 2019, we continued our focus on aligning incentive compensation with appropriate risk management principles. We provide incentives that are designed not to encourage unnecessary or excessive risk-taking and have established related process controls and oversight. These features include:
• | Human Resources Committee Interaction and Overlap with Examining and Audit Committee.Members of the Committee regularly communicate with the Board’s Risk Committee and its Examining and Audit Committee to integrate input from these other committees into compensation decisions. In addition, the current Chair of the Human Resources Committee also serves on the Examining and Audit Committee. |
• | Corporate Risk Summary Review. The Human Resources Committee periodically reviews a corporate multi-factor risk scorecard, prepared by the Chief Risk Officer and confirmed by the Risk Committee, assessing firm-wide risk in several categories. |
• | Annual Compensation Risk Review.The Committee annually meets with our Chief Human Resources Officer, Chief Risk Officer and Chief Compliance Officer to evaluate our compensation programs and review an assessment of the design and operation of State Street’s incentive compensation system in providing risk-taking incentives that are consistent with the organization’s safety and soundness, as described in more detail below under the heading “Alignment of Incentive Compensation and Risk.” |
• | Risk-Based Adjustments to Incentive Compensation. We use atwo-pronged process for risk-based adjustments to incentive compensation awards for material risk-takers. This process allows for, as appropriate, both: (1) adjustments at the time awards are made (“ex ante” adjustments) and (2) adjustments after the awards are made (“ex post” adjustments) through recoupment of incentive compensation that has already been awarded via forfeiture (before vesting and delivery) or clawback (after vesting and delivery). For more information, see the discussion under “Other Elements of Compensation—Adjustment and Recourse Mechanisms,” above. |
• | Emphasis on Deferral and Equity-Based Compensation. We maintain significant levels of deferred compensation and equity-based compensation for our executives and we continue to deliver a higher percentage of our NEOs’ incentive compensation in the form of deferred compensation relative to our peer group. Combined, these elements align an executive’s compensation with the risks and performance results experienced by our shareholders. The high level of deferral places a significant amount of compensation at risk forex postadjustments in specified circumstances. |
• | Metrics and Targets for Performance-Based RSUs Aligned to Long-Term Goals. We deliver a substantial proportion of equity compensation for our executives in performance-based RSUs, aligning realized pay outcomes with our long-term strategy. Metrics used in our performance-based RSUs directly align NEO compensation with our goals. Each year, we assess target and payout ranges for new awards and set targets that the Committee believes are challenging, but achievable, which mitigates excessive risk-taking incentives. In setting targets and payout ranges, the Committee considers publicly-stated guidance and projections, current-year results and peer company financial results, among other factors. |
For a further discussion of the risk alignment of our compensation practices, see below under the heading “Alignment of Incentive Compensation and Risk.”
Executive Equity Ownership Guidelines, Practices and Policies
State Street believes executive stock ownership is key to aligningaligns our executives’ interests with those of our shareholders. It also incentsincentivizes our executives to meet our financial, strategicbusiness and risk management objectives. Therefore, we implementedmaintain the following practices, policies and guidelines.guidelines:
Stock Ownership Guidelines. Our stock ownership guidelines apply to all members of our Management Committee, including our current NEOs. These guidelines require executives to own shares of common stock with a value equal to thea multiple of the relevant executive’s annual base salary as shown below. Guideline levels are phased in over a period of five years, with the first year starting on the first January 1 after the person becomes an executive officer.is appointed to the Management Committee. The executive is expected to attain the ownership level ratably over five years and is deemed to satisfy the guideline if that ratable ownership level is met.
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2020 NOTICE OF MEETING AND PROXY STATEMENT |
Our Stock Ownership Guidelines also include a holding requirement. Under this requirement, during the five-yearphase-in period, each executive must hold 50% of the number of net shares received from a vesting event untilif the ownership requirement is not met. Following the five yearphase-in period, if the ownership guideline is not met by an executive, that executive must hold 100% of the number of net shares received from a 100% holding requirement appliesvesting event until the ownership guideline is satisfied. As of March 1, 2018,2, 2020, the holding requirement does not apply to any of the current NEOs other than Mr. Aboaf, as each exceeds their full (not ratable) ownership guideline. Mr. Aboaf joined our Management Committee in December 2016 and exceeds his ratable ownership guideline, but is subject to the holding requirement described above, as he does not yet exceed his full ownership guideline.
Name | Common Stock Ownership | Executive Exceeds Ownership Guideline | ||||||||
Ronald P. O’Hanley |
| ✓ | ||||||||
Eric W. Aboaf | 5 | ✓ | ||||||||
Francisco Aristeguieta | 5 | ✓ | ||||||||
Jeffrey N. Carp | 5 | ✓ | ||||||||
Andrew J. Erickson |
| |||||||||
|
| ✓ | ||||||||
|
|
| ||||||||
|
|
|
The level of ownership iswas calculated on March 2, 2020, the same date used for the beneficial ownership table in our annual meeting proxy statement“Security Ownership of Certain Beneficial Owners and Management Table” below, and by reference to the closing price of our common stock on the NYSE on that date. Ownership includes unvested time-vesting shares directly owned, DSAs and earned performance-based RSUs (all on anafter-tax basis), including shares held under our 401(k) retirement plan, vested shares in other State Street retirement plans and certain indirectly held shares, but excludes stock options, stock appreciation rights and unearned performance-based RSUs. This calculation differs from the calculation of shares under applicable SEC rules for purposes of the beneficial ownership table on page 76.Security Ownership of Certain Beneficial Owners and Management Table.
As noted in the table above, the stockeach NEO currently exceeds their ownership of each current NEO exceeded the expected level of ownership under these guidelines.guideline.
Securities Trading Policy; No Hedging or Speculative Trading; Rule10b5-1 Plans. State Street has a Securities Trading Policy that contains specific provisions and trading restrictions. The policy assists our directors, executive officers including our NEOs, and other designated employees with access to sensitive information to complyin complying with U.S. federal securities laws when trading in State Street securities. The policy prohibits short selling State Street securities, short, engaging in hedging transactions in State Street securities and engaging in speculative trading in State Street securities.securities by directors, executive officers, and other designated employees, as well as by other members of their household and their dependent family members, and certain accounts or entities over which the person has a control or a beneficial interest. The policy permits individuals, including our NEOs, to enter into trading plans designed to comply with Rule10b5-1 under the Securities Exchange Act of 1934. Rule10b5-1 allows executives to prearrange sales of their company’s securities in a manner designed to avoid initiating stock transactions while in possession of materialnon-public information. Our NEOs and other executive officers may, from time to time, adopt trading plans underRule 10b5-1 and effect transactions in our securities under those plans. The Securities Trading Policy is in addition to the requirementsrequirement in the State Streetour Standard of Conduct applicable tothat all employees, that theiremployees’ trading activities must be in compliance with applicable law and that they may not tradebe made on the basis of materialnon-public information.
In addition, the Standard of Conduct prohibits all employees from engaging in options, hedging, or short sales involving securities issued by State Street, and provides that anything beyond simple purchases or sales of State Street stock is strictly prohibited.
STATE STREET CORPORATION 45
|
Equity Grant Guidelines. The Compensation Committee adoptedCommittee’s Equity Grant Guidelines asare described below:
• | Annual Equity Award Grants. Annual grants of equity awards to our |
• | Other Equity Award Grants. Grants of equity awards to NEOs and other executive officers in connection with new |
State Street Corporation | 46 |
2020 NOTICE OF MEETING AND PROXY STATEMENT |
composed of (1) the Chairman of the Board, (2) the Chief Executive Officer, if a member of the Board, (3) the Committee Chair or (4) the Committee Chair along with any other member of the Committee. This type of award may be granted on the date of a scheduled meeting of the Committee, a scheduled meeting of the Board or the last business day of a calendar |
The exercise price for all stock options and stock appreciation rights will be the NYSE closing price of State Street’s common stock on the date of grantgrant.
Except for the setting of the February or March2020 meeting to occur after our public release of 2020 annual earnings, there was no program, plan or practice with respect to 2017 of timing equity awards in coordination with the release of materialnon-public information.
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2020 NOTICE OF MEETING AND PROXY STATEMENT |
Other Executive Compensation Information
Tax Deductibility of Executive Compensation
Section 162(m) of the U.S. Internal Revenue Code, or Section 162(m), generally limits to $1 million the U.S. federal income tax deductibility of compensation paid in one year to “covered employees.” Performance-based compensation paid through calendar year 2017 was not subject to the limits on deductibility of Section 162(m), provided such compensation met specified requirements, including shareholder approval of material terms of compensation. Deductibility of performance-based compensation under Section 162(m) was eliminated by the Tax Cuts and Jobs Act of 2017 effective January 1, 2018, subject to transition rules. In addition, the definition of “covered employees” under Section 162(m) was amended to expand the definition of “covered employees.” As such, effective January 1, 2018 “covered employees” include any person who was the chief executive officer or chief financial officer at any time during the tax year, as well as the next three most highly paid NEOs as of the last day of the taxable year. In addition, any person who was a covered employee as of January 1, 2017 or becomes a covered employee thereafter will remain a covered employee in perpetuity.
The Compensation Committee considers tax deductibility in making compensation decisions, to the extent deductibility is reasonably practicable and consistent with our other compensation objectives. The Compensation Committee continues to believe that shareholder interests are best served by not restricting its discretion and flexibility in structuring compensation programs, even though such programs will result innon-deductible compensation expenses.
CompensationHuman Resources Committee Report
The Compensation Committee furnishes the following report:
The Committee has reviewed and discussed the Compensation Discussion and Analysis with State Street management. Based on this review and discussion, the Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement.
Submitted by,
Richard P. Sergel, Chair
Kennett F. Burnes
Amelia C. Fawcett
Linda A. Hill
Gregory L. Summe
46 STATE STREET CORPORATION
Kennett F. Burnes Amelia C. Fawcett | William L. Meaney Gregory L. Summe |
This section provides an estimate under applicable SEC regulations of the ratio of total compensation for our Chief Executive Officer to the median of total compensation for our other employees. The methodology and the material assumptions, adjustments and estimates we used in identifying our median employee and calculating that employee’s total compensation are set forth below. This methodology may differ from that applied by other companies, including other financial services companies, under applicable SEC regulations. As a result, the information may not be comparable to similar information disclosed by other companies. In addition, because the value of health and welfare benefits paid by State Street can vary significantly, depending on the employee’s annual benefits elections, we decided to exclude the value of these benefits from the total compensation of the median employee and Mr. O’Hanley. Accordingly, the methodology differs from the methodology we used for 2018, which included health and welfare benefits.
For 2019:
the estimated median of the annual total compensation of all employees of State Street (other than Mr. O’Hanley), was $56,610; and
the annual total compensation of Mr. O’Hanley was $8,699,401
Based on the foregoing, the ratio of the annual total compensation of Mr. O’Hanley to the median of the annual total compensation of all other employees is estimated to be 154 to 1.
We identified our median employee for 2019 based on our employee population as of December 1, 2019. State Street employees are generally eligible for base pay and incentive compensation. We therefore analyzed our employee population based on these compensation elements for full year 2019. We annualized the base pay of all full and part-time employees in our employee population who were hired during 2019. Similarly, for all such employees who did not receive incentive compensation in 2019 due solely to their date of hire, we used a consistent methodology to impute annualized incentive compensation based on each employee’s level and function. We calculated the median gross pay (as described above) and selected the twelve closest employees to that value to further analyze. We then identified an employee from this group, who was reasonably representative of our workforce and whose pay was a reasonable estimate of the median pay at our organization, as the median employee. For the median employee, we combined all forms of compensation that would have been reported in the “Total” column (column (j)) of the Summary Compensation Table had disclosure of the median employee’s compensation been required in that table.
For Mr. O’Hanley, we used the amount reported in the “Total” column (column (j)) of our Summary Compensation Table.
Alignment of Incentive Compensation and Risk
We align incentive compensation with appropriate risk management principles, such as providing incentives that dodesigned not to encourage unnecessary or excessive risk-taking and establishing additional process controls and oversight where appropriate. We utilize broad and integrated processes to maintain this alignment, including to:
conduct risk-based reviews of incentive plan design
identify individuals whose normal activities may expose State Street toinvolve material amounts of riskrisk-taking
adjustapply risk-based adjustments to compensation for risk
• | implement specific Board committee review of selected control function compensation (e.g.,Board-level |
STATE STREET CORPORATION 47
State Street Corporation | 48 |
| 2020 NOTICE OF MEETING AND PROXY STATEMENT |
| Risk-Based Review of Incentive Plan Design • Incentive compensation arrangements are designed through consultation with the relevant business units, including a formalized requirement for risk review • A management committee (the Incentive Compensation Control Committee, or ICCC) comprising generally of senior representatives of our risk management and internal control functions assesses all incentive compensation arrangements to promote their consistency with the safety and soundness of State Street and with applicable regulations and guidance • Both the Human Resources Committee and a management committee focusing on compliance and ethics (the Compliance and Ethics Committee) receive and review a report containing the ICCC’s risk assessment of the design and operation of State Street’s incentive compensation system in providing incentives consistent with the organization’s safety and soundness • The Human Resources Committee interacts closely with our Risk Committee and Examining and Audit Committee, and our independent Lead Director is expected to attend all Committee meetings, providing governance continuity from both a compensation-risk perspective and also from a broader risk management perspective. The Human Resources Committee also annually meets with our Chief Human Resources Officer, Chief Risk Officer and Chief Compliance Officer to evaluate the incentive compensation plans for all State Street employees, including the NEOs, relative to risk management principles |
| Identification of Material Risk-Takers • Through a process led by our Enterprise Risk Management group, we identify the population of individuals whose normal activities may involve material risk-taking (“material risk-takers”) • Our internal compensation arrangements with these employees provide for risk-based adjustments to compensation if required, as described below |
| Risk-Based Adjustments to Compensation for Material Risk Takers • Incentive compensation awarded to material risk-takers is subject to risk-based adjustments both before and after the compensation is awarded (ex ante andex post adjustments, respectively) • Ex ante adjustments are guided by a corporate multi-factor risk scorecard, prepared by the Chief Risk Officer and confirmed by the Risk Committee, assessing firm-wide risk in several categories • Ex post adjustments include a forfeiture provision, which operates to reduce or cancel the amount remaining to be paid under the relevant award if the Committee determines that the actions of the material risk-taker exposed State Street to inappropriate risks that resulted or could reasonably be expected to result in material losses that are or would be substantial in relation to State Street’s or a relevant business unit’s revenue, capital and overall risk tolerance • Additionalex post adjustment mechanisms, including our misconduct and financial restatement-related forfeiture and clawback provisions, are applicable to all Executive Vice Presidents, including our NEOs. See above under the heading “Other Elements of Compensation—Adjustment and Recourse Mechanisms” |
State Street Corporation | 49 |
2020 NOTICE OF MEETING AND PROXY STATEMENT |
| Risk-Based Adjustments to Compensation for All Employees • Results of business unit- and corporate function-level risk assessments are used as an input to allocate bonus pools to each business unit and corporate function, as well as for furthersub-allocations • Poor risk performance, including significant or repeated compliance or risk-related violations of State Street’s policies, may result inex ante adjustments to an individual’s incentive compensation as part of a progressive discipline structure to hold individual employees accountable for their performance • All outstanding performance-based RSUs, DSAs and DVAs are subject to forfeiture if an employee is terminated for gross misconduct |
| Board Committee Review of Selected Control Function Compensation • Committees of the Board of Directors with oversight of an area managed by specific control functions assess the performance of, and individual compensation recommendations for, the heads of the relevant control function and review the compensation for the entire control function • Results of the Board-level committee assessments are reported to the Human Resources Committee as an input into final compensation determinations • This process provides the relevant committee with additional perspective on the performance of the relevant control function and whether that function is being allocated appropriate resources and compensation |
As a result of these reviews and processes, we believe that our compensation policies and practices for employees do not promote excessive risk taking and do not provide incentives to create risks that are reasonably likely to have a material adverse effect on us. We will continue to monitor developments in this area and may, as we believe appropriate, make related adjustments to our compensation practices.
48 STATE STREET CORPORATION
State Street Corporation | 50 |
| 2020 NOTICE OF MEETING AND PROXY STATEMENT |
Name and Principal (a)
| Year (b)
| Salary(1) ($) (c)
| Bonus(2) ($) (d)
| Stock ($) (e)
| Non-Equity ($) (g)
| Change in ($) (h)
| All Other ($) (i)
| Total ($) (j)
| Total without ($)
| |||||||||||||||||||||||||||||||||||||||||
Joseph L. Hooley | 2017 | $1,000,000 | $— | $10,000,028 | $4,842,269 | $3,524,957 | $113,406 | $ | 19,480,660 | $ | 15,955,703 | |||||||||||||||||||||||||||||||||||||||
Chairman and Chief Executive Officer
|
| 2016 2015
|
|
| 980,769 1,038,462
|
|
| — —
|
|
| 8,999,997 10,200,000
|
|
| 2,596,750 —
|
|
| 2,014,620 —
|
|
| 99,705 103,025
|
|
| 14,691,841 11,341,487
|
|
| 12,677,221 11,341,487
|
| |||||||||||||||||||||||
Eric W. Aboaf |
|
2017 |
|
|
700,000 |
|
|
892,500 |
|
|
1,657,398 |
|
|
2,648,207 |
|
|
— |
|
|
237,246 |
|
|
6,135,351 |
|
|
6,135,351 |
| |||||||||||||||||||||||
Executive Vice President and Chief Financial Officer
|
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| ||||||||||||||||||||||||||
Ronald P. O’Hanley |
|
2017 |
|
|
800,000 |
|
|
— |
|
|
5,299,912 |
|
|
4,068,768 |
|
|
— |
|
|
79,215 |
|
|
10,247,895 |
|
|
10,247,895 |
| |||||||||||||||||||||||
President and Chief Operating Officer
| 2016 | 784,615 | — | 4,769,962 | 2,682,307 | — | 55,948 | 8,292,832 | 8,292,832 | |||||||||||||||||||||||||||||||||||||||||
Andrew Erickson |
|
2017 |
|
|
436,253 |
|
|
— |
|
|
5,430,042 |
|
|
1,538,168 |
|
|
— |
|
|
1,022,205 |
|
|
8,426,668 |
|
|
8,426,668 |
| |||||||||||||||||||||||
Executive Vice President and Head of State Street Global Services
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| ||||||||||||||||||||||||||
Cyrus Taraporevala |
|
2017 |
|
|
400,000 |
|
|
— |
|
|
5,543,721 |
|
|
2,077,700 |
|
|
— |
|
|
68,615 |
|
|
8,090,036 |
|
|
8,090,036 |
| |||||||||||||||||||||||
President and Chief Executive Officer, State Street Global Advisors
|
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| ||||||||||||||||||||||||||
Michael W. Bell |
|
2017 |
|
|
153,846 |
|
|
— |
|
|
3,999,906 |
|
|
— |
|
|
— |
|
|
35,111 |
|
|
4,188,863 |
|
|
4,188,863 |
| |||||||||||||||||||||||
Former Executive Vice President and Chief Financial Officer
| | 2016 2015 | | 784,615 830,769 | | — — | | 3,599,969 4,200,046 | | 1,159,337 623,088 | | — — | | 34,498 34,500 | | 5,578,419 5,688,403 | | 5,578,419 5,688,403 |
Name and Principal Position | Year | Salary(1) ($) | Bonus(2) ($) | Stock Awards(3) | Non-Equity Incentive Plan Compensation(4) ($) | Change in ($) | All Other Compensation(1)(6) ($) | Total ($) | ||||||||||||||||||||||
(a) | (b) | (c) | (d) | (e) | (g) | (h) | (i) | (j) | ||||||||||||||||||||||
Ronald P. O’Hanley President and Chief Executive Officer | 2019 | $ | 800,000 | $ | — | $ | 4,926,560 | $ | 2,837,004 | $ | — | $ | 135,837 | $ | 8,699,401 | |||||||||||||||
2018 | 800,000 | — | 5,034,952 | 2,378,391 | — | 123,322 | 8,336,665 | |||||||||||||||||||||||
2017 | 800,000 | — | 5,299,912 | 4,068,768 | — | 79,215 | 10,247,895 | |||||||||||||||||||||||
Eric W. Aboaf Executive Vice President and Chief Financial Officer | 2019 | 700,000 | — | 2,584,015 | 2,010,066 | — | 82,925 | 5,377,006 | ||||||||||||||||||||||
2018 | 700,000 | — | 5,099,903 | 1,585,609 | — | 52,711 | 7,438,223 | |||||||||||||||||||||||
2017 | 700,000 | 892,500 | 1,657,398 | 2,648,207 | — | 237,246 | 6,135,351 | |||||||||||||||||||||||
Francisco Aristeguieta Executive Vice President and Chief Executive Officer for International Business
| 2019 | 325,505 | — | 9,511,387 | 2,380,000 | — | 1,135,364 | 13,352,256 | ||||||||||||||||||||||
Jeffrey N. Carp Executive Vice President, Chief Legal Officer and Secretary | 2019 | 650,000 | — | 2,580,012 | 1,810,265 | 1,205,255 | 245,747 | 6,491,279 | ||||||||||||||||||||||
Andrew J. Erickson Executive Vice President and Head of Global Services | 2019 | 500,480 | — | 2,283,584 | 2,070,122 | — | 1,312,673 | 6,166,859 | ||||||||||||||||||||||
2018 | 487,040 | — | 1,999,976 | 1,111,299 | — | 1,616,081 | 5,214,396 | |||||||||||||||||||||||
2017 | 436,253 | — | 5,430,042 | 1,538,168 | — | 1,022,205 | 8,426,668 |
|
|
(2) | Reflects |
(3) | Amounts represent the grant date fair value of |
State Street Corporation | 51 |
2020 NOTICE OF MEETING AND PROXY STATEMENT |
(4) | Represents the immediate and deferred cash (granted in DVAs) portions of incentive |
STATE STREET CORPORATION 49
|
|
2017Non-Equity Incentive Plan Compensation
| |||||||||||||||
Name
| Immediate Cash ($)
|
DVAs (including ($)
| Total ($)
| ||||||||||||
Joseph L. Hooley
|
|
$3,087,500
|
|
|
$1,754,769
|
|
|
$4,842,269
|
| ||||||
Eric W. Aboaf
|
|
1,103,810
|
|
|
1,544,397
|
|
|
2,648,207
|
| ||||||
Ronald P. O’Hanley
|
|
1,695,920
|
|
|
2,372,848
|
|
|
4,068,768
|
| ||||||
Andrew Erickson
|
|
641,130
|
|
|
897,038
|
|
|
1,538,168
|
| ||||||
Cyrus Taraporevala(A)
|
|
600,000
|
|
|
1,477,700
|
|
|
2,077,700
|
|
|
2019Non-Equity Incentive Plan Compensation | ||||||||||||||||
Name | Immediate Cash | DVAs | Dividends Credited on Outstanding DVAs | Total | ||||||||||||
Ronald P. O’Hanley | $ | 1,100,000 | $ | 1,650,000 | $ | 87,004 | $ | 2,837,004 | ||||||||
Eric W. Aboaf | 562,500 | 1,406,250 | 41,316 | 2,010,066 | ||||||||||||
Francisco Aristeguieta | 1,020,000 | 1,360,000 | — | 2,380,000 | ||||||||||||
Jeffrey N. Carp | 500,000 | 1,250,000 | 60,265 | 1,810,265 | ||||||||||||
Andrew J. Erickson | 582,500 | 1,456,250 | 31,372 | 2,070,122 |
(5) | Because our deferred compensation plans do not provide above-market earnings, no earnings are included in this column. The amounts in this column represent the change in the actuarial present value of the accumulated benefits under our qualified and nonqualified defined benefit pension plans. The plans |
2017 Change in Pension Value
| ||||||
Name | Due to Age and Proximity to Retirement(A) ($) | Due to Change in ($) | Total ($) | |||
Joseph L. Hooley
|
$1,297,107
|
$2,227,850
|
$3,524,957
|
State Street Corporation | 52 |
|
|
(6) | The following table describes the amounts set forth for |
Name | Travel Benefits(A) ($) | Personal and Home Security(B) ($) | Executive Health Screening ($) | International Assignment(C) ($) | Financial Planning/ Tax Services ($) | Personal Liability Coverage ($) | Company ($) | Other Benefits(E) ($) | Total ($) | |||||||||||||||||||||||||||||||||
Joseph L. Hooley |
|
$45,193 |
|
|
$9,698 |
|
|
$2,395 |
|
|
$ —
|
|
|
$ — |
|
|
$1,120 |
|
|
$25,000 |
|
|
$30,000 |
|
$113,406 | |||||||||||||||||
Eric W. Aboaf |
|
— |
|
|
— |
|
|
2,395 |
|
| — |
|
12,000 |
|
|
560 |
|
|
1,346 |
|
|
220,945 |
|
237,246 | ||||||||||||||||||
Ronald P. O’Hanley |
|
7,200 |
|
|
— |
|
|
2,395 |
|
|
— |
|
|
— |
|
|
1,120 |
|
|
13,500 |
|
|
55,000 |
|
79,215 | |||||||||||||||||
Andrew Erickson |
|
6,600 |
|
|
— |
|
|
2,395 |
|
|
968,604 |
|
|
— |
|
|
1,120 |
|
|
43,486 |
|
|
— |
|
1,022,205 | |||||||||||||||||
Cyrus Taraporevala |
|
6,600 |
|
|
— |
|
|
2,395 |
|
|
— |
|
|
— |
|
|
1,120 |
|
|
13,500 |
|
|
45,000 |
|
68,615 | |||||||||||||||||
Michael W. Bell |
|
— |
|
|
— |
|
|
2,395 |
|
|
— |
|
|
6,000 |
|
|
1,120 |
|
|
15,143 |
|
|
10,453 |
|
35,111 |
50 STATE STREET CORPORATION
|
Name | Executive Security(A) | International Assignment(B) | Company Contributions to Defined Contribution Plans(C) | Charitable Donations and Matching Contributions(D) | Other Benefits(E)(F) | Total | ||||||||||||||||||
Ronald P. O’Hanley | $ | 46,112 | $ | — | $ | 16,800 | $ | 55,000 | $ | 17,925 | $ | 135,837 | ||||||||||||
Eric W. Aboaf | — | — | 27,800 | 45,000 | 10,125 | 82,925 | ||||||||||||||||||
Francisco Aristeguieta | — | 755,319 | 32,551 | — | 347,494 | 1,135,364 | ||||||||||||||||||
Jeffrey N. Carp | — | — | 227,800 | 6,022 | 11,925 | 245,747 | ||||||||||||||||||
Andrew J. Erickson | — | 1,250,700 | 50,048 | — | 11,925 | 1,312,673 |
(A) |
|
|
|
|
|
(E) | Includes $6,000 for financial planning/ tax services for Messrs. O’Hanley and Aboaf; $7,800 for parking benefits for Messrs. O’Hanley, Carp and Erickson; $1,355 for personal liability coverage for Messrs. O’Hanley, Aboaf, Carp and Erickson and $678 for Mr. Aristeguieta; and $2,770 for executive health screening for each NEO. |
(F) | Includes a car and driver ($47,558) and club memberships ($296,488, which includes aone-time fixed payment of $294,400) which are customary benefits for leaders in the |
The following sets out a reasonable estimate under applicable SEC regulations of the ratio of the annual total compensation oftable above does not include any amounts for personal travel in connection with business travel by our Chief Executive OfficerNEOs because there was no aggregate incremental cost to the median of the annual total compensation of our other employees. The methodology and the material assumptions, adjustments and estimates we used in identifying our median employee and calculating that employee’s annual total compensation are set forth below. This methodology and the material assumptions, adjustments and estimates may differ materially from those applied by other companies, including other financial services companies, under applicable SEC regulations. As a result, the information below may not be comparable to similar information disclosed by other companies.
For 2017, we estimate that:Company.
the median of the annual total compensation of all employees of State Street (other than Mr. Hooley), was $82,760; and
the annual total compensation of Mr. Hooley was $19,497,361
Based on the foregoing, the ratio of the annual total compensation of Mr. Hooley to the median of the annual total compensation of all other employees is estimated to be 236 to 1.
We identified our median employee—the employee at the midpoint of our employee population—based on our employee population as of December 1, 2017. State Street employees are generally eligible for base pay and incentive pay. We therefore analyzed our employee population based on these compensation elements for full year 2017. We annualized base pay of all full and part-time employees in our employee population who were hired during 2017. Similarly, for all such employees who did not receive incentive pay in 2017 due solely to their date of hire, we used a consistent methodology to impute annualized incentive pay based on level and function. For the median employee, we combined all forms of compensation that would have been reported in the “Total” column (column (j)) of the Summary Compensation Table had disclosure of the median employee’s compensation been required in that table and then added health and welfare benefits paid by State Street.
For Mr. Hooley, we used the amount reported in the “Total” column (column (j)) of our Summary Compensation Table on page 49 and then, for consistent comparability to our median employee, added health and welfare benefits paid by State Street.
STATE STREET CORPORATION 51
State Street Corporation | 53 |
| 2020 NOTICE OF MEETING AND PROXY STATEMENT |
20172019 Grants of Plan-Based Awards
Estimated Possible Payouts UnderNon-Equity Incentive Plan Awards(1) | Estimated Future Payouts Under Equity Incentive Plan Awards | All Other Stock Awards: Number of Shares of Stock or Units (#) | Grant Date Fair Value of Stock and Option Awards(2) ($) | |||||||||||||||||||||||||||||||||||
Name (a) | Award (b) | Grant
| Threshold (c)
| Target (d)
| Maximum (e)
| Threshold (f)
| Target (g)
| Maximum (h)
| ||||||||||||||||||||||||||||||
(i)
| (j)
| |||||||||||||||||||||||||||||||||||||
Joseph L. Hooley
| 2017 Annual Incentive
|
| $ —
|
| $
| 3,000,000
|
| $
| 6,000,000
|
|
| —
|
|
| —
|
|
| —
|
|
| —
|
| $
| —
|
| |||||||||||||
Performance-Based RSU(3)
|
| 2/27/2017
|
|
| —
|
|
| —
|
|
| —
|
|
| 32,420
|
|
| 81,048
|
|
| 113,468
|
|
| —
|
|
| 5,999,984
|
| |||||||||||
Deferred Stock Award (DSA)(4)
|
| 2/27/2017
|
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| 53,398
|
|
| 4,000,044
|
| |||||||||||
Eric W. Aboaf
|
2017 Annual Incentive
|
|
—
|
|
|
1,700,000
|
|
|
3,400,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
| |||||||||||||
Performance-Based RSU(5)
|
| 2/27/2017
|
|
| —
|
|
| —
|
|
| —
|
|
| 5,374
|
|
| 13,433
|
|
| 18,807
|
|
| —
|
|
| 994,445
|
| |||||||||||
Deferred Stock Award (DSA)(6)
|
| 2/27/2017
|
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| 8,850
|
|
| 662,953
|
| |||||||||||
Ronald P. O’Hanley
|
2017 Annual Incentive
|
|
—
|
|
|
2,900,000
|
|
|
5,800,000
|
|
| —
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
| |||||||||||||
Performance-Based RSU(3)
|
| 2/27/2017
|
|
| —
|
|
| —
|
|
| —
|
|
| 17,182
|
|
| 42,955
|
|
| 60,137
|
|
| —
|
|
| 3,179,959
|
| |||||||||||
Deferred Stock Award (DSA)(4)
|
| 2/27/2017
|
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| 28,300
|
|
| 2,119,953
|
| |||||||||||
Andrew Erickson
|
2017 Annual Incentive
|
|
—
|
|
|
1,050,000
|
|
|
2,100,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
| |||||||||||||
Performance-Based RSU(3)
|
|
2/27/2017
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,636
|
|
|
11,590
|
|
|
16,226
|
|
|
—
|
|
|
858,007
|
| |||||||||||
Deferred Stock Award (DSA)(4)
|
|
2/27/2017
|
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| 7,636
|
|
| 572,013
|
| |||||||||||
Performance-Based RSU(7)
|
| 11/30/2017
|
|
| —
|
|
| —
|
|
| —
|
|
| 22,382
|
|
| 44,763
|
|
| 67,145
|
|
| —
|
|
| 4,000,022
|
| |||||||||||
Cyrus Taraporevala
|
2017 Annual Incentive
|
|
— |
|
|
1,600,000
|
|
|
3,200,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
| —
|
| |||||||||||||
Deferred Stock Award (DSA)(4)
|
| 2/27/2017
|
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
|
—
|
|
| —
|
|
| 20,422
|
|
|
1,543,699
|
| |||||||||||
Performance-Based RSU(7)
|
| 11/30/2017
|
|
| —
|
|
| —
|
|
| —
|
|
| 22,382
|
|
| 44,763
|
|
| 67,145
|
|
| —
|
|
| 4,000,022
|
| |||||||||||
Michael W. Bell
|
2017 Annual Incentive
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
| |||||||||||||
Performance-Based RSU(3)
|
|
2/27/2017
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12,968
|
|
| 32,419
|
|
| 45,387
|
|
| —
|
|
| 2,399,978
|
| |||||||||||
Deferred Stock Award (DSA)(4)
|
|
2/27/2017
|
|
| —
|
|
|
—
|
|
| —
|
|
|
—
|
|
| —
|
|
| —
|
|
| 21,358
|
|
| 1,599,928
|
|
| Estimated Possible PayoutsUnder Non-Equity Incentive Plan Awards(1)
|
|
| Estimated Future Payouts Under Equity Incentive Plan Awards
|
| | All Other Stock Awards: Number of Shares of Stock or Units (#) | | | Grant Date Fair Value of Stock and Option Awards(2) ($) | | |||||||||||||||||||||||||||
Name | Award | Grant | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | ||||||||||||||||||||||||||||||
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | |||||||||||||||||||||||||||||
Ronald P. O’Hanley | 2019Cash-Based Incentive | $ | — | $ | 3,300,000 | $ | 6,600,000 | — | — | — | — | $ | — | |||||||||||||||||||||||||
Performance-Based RSU(3) | 3/1/2019 | — | — | — | 22,222 | 44,444 | 66,666 | — | 2,955,970 | |||||||||||||||||||||||||||||
DSA(4) | 3/1/2019 | — | — | — | — | — | — | 29,168 | 1,970,590 | |||||||||||||||||||||||||||||
Eric W. Aboaf | 2019 Cash-Based Incentive | — | 2,030,000 | 4,060,000 | — | — | — | — | — | |||||||||||||||||||||||||||||
Performance-Based RSU(3) | 3/1/2019 | — | — | — | 11,656 | 23,311 | 34,967 | — | 1,550,415 | |||||||||||||||||||||||||||||
DSA(4) | 3/1/2019 | — | — | — | — | — | — | 15,299 | 1,033,600 | |||||||||||||||||||||||||||||
Francisco Aristeguieta | 2019 Cash-Based Incentive(5) | 2,380,000 | 2,380,000 | 4,760,000 | — | — | — | — | — | |||||||||||||||||||||||||||||
Performance-Based RSU(6) | 7/31/2019 | — | — | — | 22,339 | 44,678 | 67,017 | — | 2,351,403 | |||||||||||||||||||||||||||||
DSA(6) | 7/31/2019 | — | — | — | — | — | — | 24,374 | 1,390,780 | |||||||||||||||||||||||||||||
DSA(6) | 7/31/2019 | — | — | — | — | — | — | 38,156 | 2,136,354 | |||||||||||||||||||||||||||||
DSA(6) | 7/31/2019 | — | — | — | — | — | — | 23,354 | 1,281,434 | |||||||||||||||||||||||||||||
DSA(6) | 7/31/2019 | — | — | — | — | — | — | 43,788 | 2,351,416 | |||||||||||||||||||||||||||||
Jeffrey N. Carp | 2019 Cash-Based Incentive | — | 1,925,000 | 3,850,000 | — | — | — | — | — | |||||||||||||||||||||||||||||
Performance-Based RSU(3) | 3/1/2019 | — | — | — | 10,735 | 21,470 | 32,205 | — | 1,427,970 | |||||||||||||||||||||||||||||
DSA(4) | 3/1/2019 | — | — | — | — | — | — | 14,091 | 951,988 | |||||||||||||||||||||||||||||
ESRP Share Award(7) | 3/1/2019 | — | — | — | — | — | — | 2,748 | 200,054 | |||||||||||||||||||||||||||||
Andrew J. Erickson | 2019 Cash-Based Incentive | — | 2,103,360 | 4,206,720 | — | — | — | — | — | |||||||||||||||||||||||||||||
Performance-Based RSU(3) | 3/1/2019 | — | — | — | 10,301 | 20,601 | 30,902 | — | 1,370,173 | |||||||||||||||||||||||||||||
DSA(4) | 3/1/2019 | — | — | — | — | — | — | 13,520 | 913,411 |
(1) | For |
(2) | Fair value of the awards is computed in accordance with FASB ASC Topic 718, using the assumptions stated in |
(3) | Performance-based |
(4) | DSAs granted |
(5) |
|
(6) | Performance-based RSUs and DSAs granted on |
(7) |
|
State Street Corporation | 54 |
2020 NOTICE OF MEETING AND PROXY STATEMENT |
Narrative Disclosure Accompanying Grants of Plan-Based Awards Table
The awards set forth in the “Estimated Possible Payouts UnderNon-Equity Incentive Plan Awards” column of the 20172019 Grants of Plan-Based Awards table above for Messrs. O’Hanley, Aboaf, Erickson and Carp were awarded as annual incentives in the formcash-based portion of immediatethe target and deferred cash (granted in DVAs/ SSGA LTIP). The 2017 annualmaximum incentive awards referenced in this tablethat were granted as part of 20172019 incentive compensation in February 2018.compensation. The targets, minimum (0%) and maximum (200%) are described above under the heading, “Compensation Discussion and Analysis—2017New Compensation Decisions—TotalProgram Features for the 2019 Compensation Approach—Individual Compensation Targets—Annual Incentive.Year.” State Street agreed to provide Mr. Aristeguieta with cash-based incentive compensation, in the form of immediate cash and DVAs, to replace compensation he expected to receive at his prior employer. The amounts awardedactual cash-based incentive awards earned by each NEO as determined in February 2018 under these annual incentive awards are2020 is included in the 2017 row of the“Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table.
52 STATE STREET CORPORATION
|
DVAs granted in February 2020, under the State Street Corporation Supplemental Cash Incentive Plan, for 2019 performance are deferred cash units that are notionally invested in the State Street Institutional U.S. Government Money Market Fund and receive dividends when the monthly dividend rate is at least equal to 0.001 per unit. These awards vest in quarterly installments over four years from the date of grant.
The awards granted in February 2017 under the 2006 Equity Incentive Plan,2019, set forth in the “Estimated Future Payouts Under Equity Incentive Plan Awards” column of the 20172019 Grants of Plan-Based Awards table above, were performance-based RSU awards.RSUs. These awards for Messrs. Hooley, O’Hanley, Erickson and Bell were granted as part of the long-term incentivea component of each NEO’s 20162018 performance year incentive compensation. The awards granted in July 2019 to Mr. Aboaf’s award was grantedAristeguieta were intended to compensate him for the loss of 2016 compensationreplace forfeited awards from his prior employer. Payouts underThe percent at which these awards are currently shown at 100% (target); however, the percent at which the awards are actually earned will be determined based on the simple average of each calendar year’s return on equity determined under GAAPandpre-tax margin, each weighted at 50%, for the three-year period from January 1, 20172019 to December 31, 2019.2021, subject to adjustment by the Human Resources Committee forpre-established factors. Based on the satisfaction of applicable performance criteria and on certification by the Human Resources Committee following the end of the performance period, the performance-based RSUs will vest in one installment. The 2019 performance-based RSU awardsRSUs with an ROE target of 13% and aPre-tax Margin target of 29% are earned as shown in the table below:
Pre-tax Margin
| ||||||||||||||||||||||||||
Less than 24%
| 24% | 25% | 26% | 27% | 28% | 29% | 30% | 31% | 32% | 33% | 34% or Above
| |||||||||||||||
Less than
| 0%
| 25%
| 35%
| 43%
| 45%
| 48%
| 50%
| 53%
| 55%
| 58%
| 65%
| 75%
| ||||||||||||||
8% | 25% | 50% | 60% | 68% | 70% | 73% | 75% | 78% | 80% | 83% | 90% | 100% | ||||||||||||||
9% | 35% | 60% | 70% | 78% | 80% | 83% | 85% | 88% | 90% | 93% | 100% | 110% | ||||||||||||||
10% | 43% | 68% | 78% | 85% | 88% | 90% | 93% | 95% | 98% | 100% | 108% | 118% | ||||||||||||||
11% | 45% | 70% | 80% | 88% | 90% | 93% | 95% | 98% | 100% | 103% | 110% | 120% | ||||||||||||||
12% | 48% | 73% | 83% | 90% | 93% | 95% | 98% | 100% | 103% | 105% | 113% | 123% | ||||||||||||||
13% | 50% | 75% | 85% | 93% | 95% | 98% | 100% | 103% | 105% | 108% | 115% | 125% | ||||||||||||||
14% | 53% | 78% | 88% | 95% | 98% | 100% | 103% | 105% | 108% | 110% | 118% | 128% | ||||||||||||||
15% | 55% | 80% | 90% | 98% | 100% | 103% | 105% | 108% | 110% | 113% | 120% | 130% | ||||||||||||||
16% | 58% | 83% | 93% | 100% | 103% | 105% | 108% | 110% | 113% | 115% | 123% | 133% | ||||||||||||||
17% | 65% | 90% | 100% | 108% | 110% | 113% | 115% | 118% | 120% | 123% | 130% | 140% | ||||||||||||||
18% and Above
| 75%
| 100%
| 110%
| 118%
| 120%
| 123%
| 125%
| 128%
| 130%
| 133%
| 140%
| 150%
|
The DSAs granted in November 2017 under the 2017 Stock Incentive Plan for Messrs. Erickson and Taraporevala were awarded in recognition of their promotions and role in the implementation of our leadership transition announced in November 2017. Payouts under these awards are currently shown as earned at 100% (target); however, the percent at which the awards are actually earned will be determined based on the simple average of each calendar year’s return on equity determined under GAAP for the three-year period from January 1, 2018 to December 31, 2020.
DSAs,February 2019 set forth in the “All Other Stock Awards” column of the 20172019 Grants of Plan-Based Awards table above, were awarded as part of Messrs. Hooley, O’Hanley, Erickson, Taraporevala and Bell’s long-term incentivea component of their 2016each NEO’s 2018 performance year incentive compensation. Mr. Aboaf’s award was granted to compensate him for the loss of 2016 compensation from his prior employer. These awards for Messrs. Hooley, Aboaf, O’Hanley, Erickson and Bell vest ratably in annual installments over four years from the date of grant. The award forDSAs granted to Mr. Taraporevala vests ratablyAristeguieta in quarterly installments over four yearsJuly 2019 set forth in the “All Other Stock Awards” column of the 2019 Grants of Plan-Based Awards table above were intended to replace forfeited awards from his prior employer. The vesting of these DSAs is described in footnotes 11, 12, 13 and 14 to the date of grant. All DSAs were granted under the 2006“Outstanding Equity Incentive Plan.Awards at FiscalYear-End, December 31, 2019” table below.
State Street Corporation | 55 |
2020 NOTICE OF MEETING AND PROXY STATEMENT |
All performance-based RSUs and DSAs were granted provide forunder the 2017 Stock Incentive Plan and are subject to a double-trigger “double-trigger”change-of-control vesting. Service-based restrictions lapse and vesting provision. The double trigger provides, in the context of a change of control, that awards will only receiveis accelerated vesting if the executive incurs a qualified termination following the change of control. For a description of qualified terminations, see below under the headingmore details refer to “Potential Payments upon Termination orof Change of Control as of December 31, 2017.”2019—Change of Control” below.
The grant date fair value ofAll DVAs, DSAs and performance-based RSUs have a qualifying retirement provision. Under the retirement provision, service-based restrictions lapse after the participant attains the age of 55 and completes 5 years of service with State Street, with awards continuing to vest according to their original terms. Service-based restrictions lapse on all DVAs in the event a participant dies, becomes disabled and terminates employment or is basedinvoluntarily terminated without cause, and vesting is accelerated in the event of death or disability. Service-based restrictions lapse on all DSAs in the closing priceevent a participant dies, becomes disabled and terminates employment or is involuntarily terminated without cause and vesting is accelerated in the event of our common stockdeath. Service-based restrictions lapse on dateall performance-based RSUs in the event a participant dies or becomes disabled and terminates employment or is involuntarily terminated without cause, but vesting continues according to the original terms.
None of grant, adjusted if appropriate based on the award’s ability toperformance-based RSUs or DSAs receive dividends during the vesting period. No dividends or dividend equivalents are attached to the DSAs or performance-based RSUs granted in 2017. The performance-based RSU awards vest in one installment based on the satisfaction of applicable performance criteria and on certification by the Compensation Committee following the end of the performance period. The February 2017 performance-based RSUs have a maximum payout of 140% of the award target and the November 2017 performance-based RSUs have a maximum payout of 150% of the award target. State Street has stock ownership guidelines for its NEOs which are described in our “Compensation Discussion and Analysis—Executive Equity Ownership Guidelines, Practices and Policies” section.equivalents.
The DVAs (or SSGA LTIP for Mr. Taraporevala), DSAs and performance-based RSUsAll incentive compensation awarded to our NEOs areis subject to recourse mechanisms, including clawback, forfeiture andex ante adjustments, and the immediate cash awards to our NEOs are also subject to recourse mechanisms, including clawback andex ante adjustments, as described in ourabove under the heading “Compensation Discussion and Analysis—Other Elements of Compensation” section.Compensation—Adjustment and Recourse Mechanisms.”
Historically the Compensation Committee intendedTheESRP-DC granted to structure our NEO incentive compensation program so that our immediate cash incentives, DVAs/ SSGA LTIP and DSAs are Section 162(m)-qualified performance-based compensation deliveredMr. Carp in February 2019 under the Senior Executive Annual2017 Stock Incentive Plan, (SEAIP), which has been approved by our shareholders. (Our performance-based RSUs are granted under the 2006 Equity Incentive Plan and have also historically been intended to qualify under Section 162(m).) As discussedset forth in the “Compensation Discussion“All Other Stock Awards” column of the 2019 Grants of Plan-Based Awards table above, provides Mr. Carp with additional retirement benefits in accordance with the terms of his employment arrangement.ESRP-DC equity grants receive dividend equivalents prior to vesting and Analysis,” the deductibility of performance-based compensation under Section 162(m) was eliminated by the Tax Cuts and Jobs Act of 2017 effective January 1, 2018,payout. TheESRP-DC is subject to transition rules. Under the SEAIP, the Committee annually establishes a maximum payout amount for each NEO’s annual incentive award plus DSA awards. For 2017, this maximum payout amount was equal to a percentage of our operating-basis net income before income taxesretirement eligibility and incentive compensation, or Operating NIBTIC, and subject to an annual limit of $10 million per executive. Operating NIBTIC for 2017 was $4.433 billion. The 2017 SEAIP incentive target was: 0.239063% for Mr. Hooley; 0.119531% for Mr. Aboaf; 0.203203% for Mr. O’Hanley and 0.071719% for Mr. Erickson. No 2017 SEAIP target was set for Mr. Taraporevala,vesting as he was not a member of the Management Committee at the beginning of 2017, or Mr. Bell, as he was stepping down from his role as Chief Financial Officer during 2017. The Committee may use its discretion to reduce, but not increase, both the Operating NIBTIC amount used for the above purposes and the amount of compensation awarded to any one or more executives below the maximum payout amount permitteddescribed under the SEAIP. For 2017, the Committee did not exercise discretion to reduce Operating NIBTIC, but, for each NEO, the Committee exercised discretion to reduce the amount of incentive compensation awarded under the SEAIP below the applicable payout opportunity. All 2017 awards under the SEAIP fell within“2019 Nonqualified Deferred Compensation” below.
STATE STREET CORPORATION 53
State Street Corporation | 56 |
| 2020 NOTICE OF MEETING AND PROXY STATEMENT |
the incentive compensation ranges described above under the heading, “Compensation Discussion and Analysis—2017 Compensation Decisions—Total Compensation Approach—Individual Compensation Targets.”
Outstanding Equity Awards at FiscalYear-End, 2017December 31, 2019(1)
Name (a)
| Stock Awards(2) | ||||||||||||||||||||||||
Grant
| Number of (g)
| Market Value (h)
| Equity (#) (i)
| Equity ($) (j)
| |||||||||||||||||||||
Joseph L. Hooley
|
|
02/20/14
|
(3)
|
|
38,724
|
|
$
|
3,779,850
|
|
$
|
—
|
| |||||||||||||
|
02/19/15
|
(4)
|
|
27,412
|
|
|
2,675,685
|
| |||||||||||||||||
|
02/19/15
|
(5)
|
|
83,056
|
|
|
8,107,096
|
| |||||||||||||||||
|
02/29/16
|
(6)
|
|
53,108
|
|
|
5,183,872
|
| |||||||||||||||||
|
02/29/16
|
(7)
|
|
129,497
|
|
|
12,640,202
|
| |||||||||||||||||
|
02/27/17
|
(8)
|
|
53,398
|
|
|
5,212,179
|
| |||||||||||||||||
|
02/27/17
|
(9)
|
|
113,468
|
|
|
11,075,611
|
| |||||||||||||||||
Eric W. Aboaf
|
|
12/30/16
|
(10)
|
|
16,825
|
|
|
1,642,288
|
| ||||||||||||||||
|
12/30/16
|
(11)
|
|
19,452
|
|
|
1,898,710
|
| |||||||||||||||||
|
02/27/17
|
(8)
|
|
8,850
|
|
|
863,849
|
| |||||||||||||||||
|
02/27/17
|
(9)
|
|
18,807
|
|
|
1,835,751
|
| |||||||||||||||||
Ronald P. O’Hanley
|
|
04/30/15
|
(12)
|
|
13,619
|
|
|
1,329,351
|
| ||||||||||||||||
|
02/29/16
|
(6)
|
|
28,147
|
|
|
2,747,429
|
| |||||||||||||||||
|
02/29/16
|
(7)
|
|
68,633
|
|
|
6,699,267
|
| |||||||||||||||||
|
02/27/17
|
(8)
|
|
28,300
|
|
|
2,762,363
|
| |||||||||||||||||
|
02/27/17
|
(9)
|
|
60,137
|
|
|
5,869,973
|
| |||||||||||||||||
Andrew Erickson
|
|
02/20/14
|
(13)
|
|
759
|
|
|
74,086
|
| ||||||||||||||||
|
02/19/15
|
(14)
|
|
1,488
|
|
|
145,244
|
| |||||||||||||||||
|
02/29/16
|
(15)
|
|
3,634
|
|
|
354,715
|
| |||||||||||||||||
|
02/27/17
|
(8)
|
|
7,636
|
|
|
745,350
|
| |||||||||||||||||
|
02/27/17
|
(9)
|
|
16,226
|
|
|
1,583,820
|
| |||||||||||||||||
|
11/30/17
|
(16)
|
|
44,763
|
|
|
4,369,316
|
| |||||||||||||||||
Cyrus Taraporevala
|
|
04/29/16
|
(17)
|
|
17,402
|
|
|
1,698,609
|
| ||||||||||||||||
|
02/27/17
|
(18)
|
|
16,593
|
|
|
1,619,643
|
| |||||||||||||||||
|
11/30/17
|
(16)
|
|
44,763
|
|
|
4,369,316
|
| |||||||||||||||||
Michael W. Bell
|
|
02/20/14
|
(3)
|
|
19,363
|
|
|
1,890,022
|
| ||||||||||||||||
|
02/19/15
|
(4)
|
|
10,965
|
|
|
1,070,294
|
| |||||||||||||||||
|
02/19/15
|
(5)
|
|
33,222
|
|
|
3,242,799
|
| |||||||||||||||||
|
02/29/16
|
(6)
|
|
21,243
|
|
|
2,073,529
|
| |||||||||||||||||
|
02/29/16
|
(7)
|
|
51,798
|
|
|
5,056,003
|
| |||||||||||||||||
|
02/27/17
|
(8)
|
|
21,358
|
|
|
2,084,754
|
| |||||||||||||||||
|
02/27/17
|
(9)
|
|
45,387
|
|
|
4,430,225
|
|
Stock Awards(2) | ||||||||||||||||||
Name | Grant Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units, or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units, or Other Rights That Have Not Vested ($) | |||||||||||||
(a) | (g) | (h) | (i) | (j) | ||||||||||||||
Ronald P. O’Hanley | 02/29/16(3) | 9,383 | $ | 742,195 | $ | — | ||||||||||||
02/27/17(4) | 14,150 | 1,119,265 | ||||||||||||||||
02/27/17(5) | 46,263 | 3,659,403 | ||||||||||||||||
02/26/18(6) | 14,781 | 1,169,177 | ||||||||||||||||
02/26/18(7) | 29,834 | 2,359,869 | ||||||||||||||||
03/01/19(8) | 29,168 | 2,307,189 | ||||||||||||||||
03/01/19(9) | 44,444 | 3,515,520 | ||||||||||||||||
Eric W. Aboaf | 02/27/17(4) | 4,425 | 350,018 | |||||||||||||||
02/27/17(5) | 14,467 | 1,144,340 | ||||||||||||||||
02/26/18(6) | 9,101 | 719,889 | ||||||||||||||||
02/26/18(7) | 18,368 | 1,452,909 | ||||||||||||||||
02/26/18(10) | 19,751 | 1,562,304 | ||||||||||||||||
03/01/19(8) | 15,299 | 1,210,151 | ||||||||||||||||
03/01/19(9) | 23,311 | 1,843,900 | ||||||||||||||||
Francisco Aristeguieta | 07/31/19(11) | 24,374 | 1,927,983 | |||||||||||||||
07/31/19(12) | 38,156 | 3,018,140 | ||||||||||||||||
07/31/19(13) | 23,354 | 1,847,301 | ||||||||||||||||
07/31/19(14) | 43,788 | 3,463,631 | ||||||||||||||||
07/31/19(15) | 44,678 | 3,534,030 | ||||||||||||||||
Jeffrey N. Carp | 02/29/16(3) | 6,196 | 490,104 | |||||||||||||||
02/27/17(4) | 9,345 | 739,190 | ||||||||||||||||
02/27/17(5) | 30,551 | 2,416,584 | ||||||||||||||||
02/26/18(6) | 10,275 | 812,753 | ||||||||||||||||
02/26/18(7) | 20,738 | 1,640,376 | ||||||||||||||||
03/01/19(8) | 14,091 | 1,114,598 | ||||||||||||||||
03/01/19(9) | 21,470 | 1,698,277 | ||||||||||||||||
Andrew J. Erickson | 02/29/16(16) | 404 | 31,956 | |||||||||||||||
02/27/17(4) | 3,818 | 302,004 | ||||||||||||||||
02/27/17(5) | 12,482 | 987,326 | ||||||||||||||||
11/30/17(17) | 44,763 | 3,540,753 | ||||||||||||||||
02/26/18(6) | 5,871 | 464,396 | ||||||||||||||||
02/26/18(7) | 11,851 | 937,414 | ||||||||||||||||
03/01/19(8) | 13,520 | 1,069,432 | ||||||||||||||||
03/01/19(9) | 20,601 | 1,629,539 |
54 STATE STREET CORPORATION
State Street Corporation | 57 |
| 2020 NOTICE OF MEETING AND PROXY STATEMENT |
(1) |
|
(2) | Stock award values in the table above are based on the closing share price of our common stock on the NYSE on December |
(3) | DSAs |
(4) | DSAs |
(5) | Performance-based RSUs with a three-year performance measurement period (January 1, |
(6) | DSAs |
(7) | Performance-based RSUs with a three-year performance measurement period (January 1, |
(8) | DSAs |
(9) | Performance-based RSUs with a three-year performance measurement period (January 1, |
(10) | Performance-based RSUs with a three-year performance measurement period (January 1, 2018-December 31, 2020) granted to Mr. Aboaf as a promotion award; this award vests in one installment based on the satisfaction of applicable performance criteria and on certification by the Human Resources Committee following the end of the performance period. |
(11) | DSAs granted to Mr. |
(12) | DSAs granted to Mr. Aristeguieta in connection with his commencement of employment at State Street; these DSAs vest in two equal |
|
(14) | DSAs granted to Mr. Aristeguieta in connection with his commencement of employment at State Street; these DSAs vest in four equal installments. The first installment vested on February 15, 2020; the remaining installments will vest on February 15, 2021, 2022 and 2023. |
(15) | Performance-based RSUs granted to Mr. Aristeguieta in connection with his commencement of employment at State Street with a three-year performance measurement period (January 1, 2019-December 31, 2021) that will vest in one installment based on the satisfaction of applicable performance criteria and on certification by the |
DSAs |
|
|
|
Performance-based RSUs granted to Mr. Erickson as a promotion award with a three-year performance measurement period (January 1, 2018-December 31, 2020) |
State Street Corporation | 58 |
2020 NOTICE OF MEETING AND PROXY STATEMENT |
Stock Awards | ||||||||
Name | Number of Shares Acquired on Vesting(1) (#) | Value Realized on Vesting(2) ($) | ||||||
(a) | (d) | (e) | ||||||
Ronald P. O’Hanley | 88,648 | $ | 6,332,971 | |||||
Eric W. Aboaf | 31,198 | 2,241,984 | ||||||
Francisco Aristeguieta | 0 | — | ||||||
Jeffrey N. Carp | 62,056 | 4,473,808 | ||||||
Andrew J. Erickson | 5,779 | 396,710 |
(1) | Includes DSAs, performance-based RSUs and dividend shares earned on DSAs under the |
— |
|
— |
|
2017 Option Exercises and Stock Vested
Option/SAR Awards | Stock Awards | |||||||||||||||
Name (a) | Number of Shares (#) (b) | Value Realized ($) (c) | Number of Shares (#) (d) | Value Realized ($) (e) | ||||||||||||
Joseph L. Hooley
|
|
167,135
|
|
$
|
934,285
|
|
|
116,976
|
|
|
$9,583,185
|
| ||||
Eric W. Aboaf
|
|
0
|
|
|
—
|
|
|
0
|
|
|
—
|
| ||||
Ronald P. O’Hanley
|
|
0
|
|
|
—
|
|
|
16,191
|
|
|
1,332,197
|
| ||||
Andrew Erickson
|
|
0
|
|
|
—
|
|
|
5,206
|
|
|
450,823
|
| ||||
Cyrus Taraporevala
|
|
0
|
|
|
—
|
|
|
16,093
|
|
|
1,374,448
|
| ||||
Michael W. Bell
|
|
0
|
|
|
—
|
|
|
31,926
|
|
|
2,615,059
|
|
— |
|
(2) | The value realized on |
|
|
|
|
STATE STREET CORPORATION 55
|
Name | Plan Name | Number of Years (#) | Present Value of Accumulated Benefit(3) | Plan Name | Number of Years Credited Service(2) (#) | Present Value of Accumulated Benefit(3) ($) | ||||||||||||
(a)
| (b)
| (c)
| (d)
| (b) | (c) | (d) | ||||||||||||
Joseph L. Hooley
|
Retirement Plan
|
14
|
$
|
243,470
|
| |||||||||||||
Jeffrey N. Carp | Retirement Plan | 1 | $ | 16,875 | ||||||||||||||
MSRP (Management Supplemental Retirement Plan)
|
14
|
|
1,056,130
|
| ||||||||||||||
ESRP (Executive Supplemental Retirement Plan)
|
31
|
|
23,595,265
|
| MSRP (Management Supplemental Retirement Plan) | 1 | 11,692 | |||||||||||
| ||||||||||||||||||
Total
|
|
24,894,865
|
| ESRP-DB (Executive Supplemental Retirement Plan) | 12 | 8,775,302 | ||||||||||||
Total | 8,803,869 |
(1) | Mr. |
(2) | State Street Retirement Plan (Retirement Plan) and MSRP service is credited from the first anniversary of date of hire, but the plans are frozen with benefits ceasing to accrue for Mr. |
(3) | Actuarial assumptions for the year ended December 31, |
— | benefit obligations are determined using a discount rate of |
— | retirement age assumed to be |
— | nopre-retirement mortality, disability or termination assumed |
Consistent with valuation assumptions, the form of payment reflected in this December 31, |
State Street maintains
State Street Corporation | 59 |
2020 NOTICE OF MEETING AND PROXY STATEMENT |
The Retirement Plan, a qualified defined benefit plan, referredwas open to as the Retirement Plan. The Retirement Plan has beenall State Street employees after one year of service until new participation ended and it was frozen to new accruals since January 1, 2008 (or as of January 1, 2011 for Mr. Hooley who met a specified combination of age and completed years of service). Prior to 1990, the Retirement Plan was a final average pay plan.2008. Since January 1, 1990, the Retirement Plan has determined benefits using a cash balance formula. Under this formula, a notional account was established for each eligible participant whichwas increased annually by both interest credits and pay credits. Interest credits are made at a specified rate and pay credits were based upon a percentage of the participant’s pay for each applicable calendar yearsyear until the plan was frozen effective January 1, 2008 (as of January 1, 2011 for Mr. Hooley, as noted above).2008. The pay credit percentages were 4.0% for the first year of participation increasing to 11.25% for the thirtieth year and zero thereafter. Eligible pay included a participant’s salary, overtime, cashcash-based incentive compensation and commissions.
In general, until August 31, 2003, the Retirement Plan provided that eligible participants who were continuously employed since December 31, 1989 and who retired after reachingThe normal retirement age 55 would receive the greater of their cash balance account or the annual benefit derived from the “grandfathered” final average pay formula. For a participant with 30 or more years of service, the grandfathered formula would result in a benefit of 50% of final average pay (counting base salary only) minus 50% of the estimated Social Security benefit. For periods of service of less than 30 years, the benefit is reduced on a pro rata basis by year. The grandfathered portion of this “better of” treatment was frozen effective August 31, 2003 by ceasing future accruals under this formula based on a participant’s eligible average pay earned and benefit service completed after August 31, 2003. Years of service completed after that date continue to be counted, however, for purposes of determining early retirement reduction factors.
The Normal Retirement Age under the Retirement Plan is 65, although earlier retirement options are available. The Retirement Plan has a three-year vesting provision and participants who are vestedprovision. Participants are entitled to receive their vested account balances or equivalent annuities if they cease to be employed before retirement.any time following termination of employment up through normal retirement age.
To comply with federal tax rules, the Retirement Plan limits the benefit that a participant may receive and the amount of compensation that may be taken into account for any participant in any year. Consequently, State Street has maintained a supplemental retirement plan, the Management Supplemental Retirement Plan, referred to as the MSRP, that was designed to provide affected employees the benefits that would be payable under the Retirement Plan but for the limitations imposed by the Internal Revenue Code. The MSRP has beenwas frozen in the same manner as described above for the Retirement Plan.
State Street also maintains the Executive Supplemental Retirement Plan, referred to as the ESRP, to providewhich provided officers at the executive vice presidentExecutive Vice President level or higher with competitiveadditional retirement benefits andto encourage their continued employment. The ESRP provides two separate benefit components: theESRP-DB, which was substantially frozen effective January 1, 2008 and completely frozen as of December 31, 2017, and a defined contribution component(ESRP-DC), which was frozen effective January 1, 2017 with the exception of Mr. Carp whoseESRP-DC benefit continues based upon the terms of his employment agreement. For additional details about theESRP-DC, refer to the “2019 Nonqualified Deferred Compensation” table below. Officers becomebecame eligible to participate in the ESRPESRP-DB upon their appointment to an eligible position. During 2017, Messrs. Hooley, Erickson and Bell participated inAs of December 31, 2019, only Mr. Carp was credited with benefits under the ESRP, although, as described below Messrs. Erickson and Bell were only eligible to participate in the defined contribution portion of the ESRP.
The ESRP provides two separate benefit components: a traditional defined benefit component, which was frozen effective January 1, 2008, and a defined contribution component, which was frozen effective January 1, 2017.ESRP-DB. In general, the defined
56 STATE STREET CORPORATIONESRP-DB
|
benefit component of the ESRP (when expressed as a life annuity commencing at age 65) accruesaccrued at the annual rate of 2.5% of eligible earnings (generally base salary plus incentive compensation earned under the SEAIP)compensation), up to a maximum of 50% of eligible earnings. This formula benefit is offset by pension benefits from State Street or other sources, including a former employer, but excluding Social Security. For participants who retire early, the defined benefit component is generally reduced by a factor of 3% for each year under the age of 65 (the “standard reduction factors”), except that any participants who on January 1, 2005 were at least age 55 and had completed at least 10 years of service are subject instead to a monthly early retirement reduction of their formula benefit aggregating to 1% per year between age 60 and 65 and to 2.5% per year between ages 55 and 60 (the“pre-2005 reduction factors”), with the offset for other plan benefits reduced by the applicable factors under those plans.65. If a participant becomes disabled or dies before retirement eligibility, the ESRPESRP-DB pays a disability benefit equal to the participant’s accrued defined benefit component including offsets, reduced for early retirement age and multiplied by a percentage determined by dividing the sum of the participant’s age and years of service by 85, and85. If a participant dies before retirement eligibility, theESRP-DB pays a death benefit equal toone-half of the benefit calculated inunder the same manner.
For certain participants,disability provision. If a participant dies after becoming retirement eligible, the ESRP also contains special defined benefit provisions that may apply in lieu of or in additionparticipant’s beneficiary will be entitled to the general defined benefit provisions. In Mr. Hooley’s case,a lump sum equal to the actuarial equivalent of 50% of the accruedESRP-DB benefit amount otherwise payable to the participant as of the date of death, further providing full vesting. In the event of an eligible disability following retirement eligibility, theESRP-DB pays a hypothetical account balance that is periodically adjusted for interestdisability benefit equal to the participant’s otherwise payable accrued benefit as of the date of the eligible disability, actuarially converted to three equal installments. The first installment would be payable by the later of the end of the year or the fifteenth day of the third month coinciding with or following the eligible disability date. The second and third installments would be payable on the same basis asfirst and second anniversaries of the cash balance accounts under State Street’stax-qualified defined benefit plan is added to the benefit determined from the defined benefit formula under the ESRP. No offsets apply to this formula benefit. As of 2017, the balance of this hypothetical account was $1,184,310. In addition, Mr. Hooley is credited with nine additional years of service under the plan for his service at a State Street joint venture and at State Street prior to the joint venture service. These special defined benefit provisions were implemented in accordance with a 2005 amendment to the plan specifically addressing the unique circumstances of Mr. Hooley’s service.first installment, assuming continued disability eligibility.
Effective January 1, 2008, the ESRPESRP-DB was amended to freeze the defined benefit component.substantially frozen. However, theseESRP-DB benefits continued to receive a 3% index each year as acost-of-living adjustment through December 31, 2017.
The amended plan includesESRP-DB requires a transition that continued the defined benefit component for certain executives who had attained age 50 and had served as an executive vice president forparticipant to attain at least 5 years as of December 31, 2007. Mr. Hooley was provided with transition benefits which continued the defined benefit component until January 1, 2010, and his benefits are subject to the standard reduction factors. Other NEOs are ineligible to participate in the defined benefit portion of the ESRP since they were hired or appointed to an eligible position after December 31, 2007.
The defined contribution component of the ESRP was added to the plan effective January 1, 2008 and frozen effective January 1, 2017. This component of the ESRP generally provides that each of the named executive officers will receive, each year that they remain employed by State Street, an annual defined contribution credit to a book-keeping account in the amount of $200,000. Amounts credited to the account may be allocated by the executive among available notional investment options. Each of the NEOs (except Mr. Taraporevala) was also eligible to receive an additional $200,000 grant of DSAs under State Street’s equity incentive plan for each applicable year.
All defined contribution benefits under the ESRP are subject to retirement eligibility and vesting. Participants are eligible to receive one-third of their defined contribution ESRP benefit if they have attained age 53 and have a combined age and service of at least 60 (“Ruleat termination of 60”); vesting increases toemployment; otherwise, thetwo-thirdsESRP-DB on the first birthday following initial vesting and to full vesting on the second birthday following initial vesting. Defined contribution benefits under the ESRP are subject to forfeitureforfeited, except in the event a participant’s employment terminates for any reason other thanof death or disability prior toa disability.ESRP-DB benefits vest in three stages:one-third at age 53;two-thirds at age 54; and full vesting at any time. Effective August 1, 2012, for executives hired or rehired on or after that date, a minimum service requirement of five years was added to the definition of the “Rule of 60” in determining early retirement eligibility.
age 55. Vested participants who terminate their employment will receive their defined contribution benefit from the ESRPESRP-DB benefits are payable in three equal installments with payments on the first day of the month coinciding with or following each of thesix-month,one-year andtwo-year anniversaries of theirthe participant’s termination of employment. In addition,However, outstanding benefits terminateare forfeited if the participant engages in certain competitive activities withintwo-years two years of termination of employment.
The Compensation Committee approved amendments Further,ESRP-DB benefits are subject to forfeiture if the ESRPparticipant is terminated for the 2015 and 2016 compensation years that servedcertain willful failures to eliminate the generally applicable annual defined contribution credits and DSAsperform job duties, or for those years. Effective January 1, 2017, the ESRP was amended to freeze the defined contribution component to all future accruals. Account balances as of January 1, 2017 will remain in place until distributed per the terms of the plan.certain willful illegal conduct or gross misconduct.
Based on age and service to State Street as of December 31, 2019, Mr. HooleyCarp is eligible forfully vested underESRP-DB early retirement terms resulting in a lump sum value of $8,465,379 if he had retired on December 31, 2019. Mr. Carp is also fully vested under the Retirement Plan and related supplemental plans. Since Messrs. Aboaf, O’Hanley, Taraporevala and Bell were hired at State Street after December 31, 2007, they doearly retirement terms of
STATE STREET CORPORATION 57
State Street Corporation | 60 |
| 2020 NOTICE OF MEETING AND PROXY STATEMENT |
not participate in the Retirement Plan theand MSRP or the defined benefit portionresulting in lump sum values of the ESRP. Further, Messrs. Aboaf, O’Hanley$16,163 and Taraporevala did not receive any contributions$11,300, respectively if he retired on December 31, 2019. Mr. Carp would also be eligible for these benefits under the defined contribution portion of the ESRP. Mr. Bell forfeited his ESRP defined contribution account balance as he was not retirement eligible and not vested in his ESRP when he left State Street in March 2017. Mr. Erickson was not a US employee prior to the defined benefit plans closing and therefore, does not participate in the Retirement Plan, or the MSRP. Mr. Erickson is a participantMSRP andESRP-DB in the defined contribution portionevent of the ESRP; however, he is not early retirement eligible and does not meet the eligibility requirements to participate in the defined benefit portiondeath or if disabled as of the ESRP.December 31, 2019.
Under the benefit formula described above, Mr. Hooley would have received the following benefits if he had retired at the end of 2017:2019 Nonqualified Deferred Compensation
Name | Retirement Plan | MSRP | ESRP Defined Benefit(2) | ESRP Defined Contribution(3) | Total Entitled Benefit | Executive Contributions in Last FY(1) ($) | Registrant Contributions in Last FY(2) ($) | Aggregate Earnings in Last FY ($) | Aggregate Withdrawals/ Distributions(3) ($) | Aggregate Balance at Last FYE(4) ($) | ||||||||||||||||||||||||||||||
Joseph L. Hooley
| $
| 224,116
|
| $
| 974,221
|
| $
| 26,542,467
|
| $
| 3,338,007
|
| $
| 31,078,811
|
| |||||||||||||||||||||||||
(a) | (b) | (c) | (d) | (e) | (f) | |||||||||||||||||||||||||||||||||||
Ronald P. O’Hanley | $ | — | $ | — | $ | 813 | $ | — | $ | 36,316 | ||||||||||||||||||||||||||||||
Eric W. Aboaf | 14,000 | 11,000 | 9,661 | — | 64,960 | |||||||||||||||||||||||||||||||||||
Francisco Aristeguieta | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
Jeffrey N. Carp | 103,217 | 411,054 | 1,038,044 | (10,159 | ) | 5,194,337 | ||||||||||||||||||||||||||||||||||
Andrew J. Erickson | — | — | 84,914 | — | 354,766 |
(1) |
|
(2) |
|
|
2017 Nonqualified Deferred Compensation
Name | Executive ($) | Registrant ($) | Aggregate ($) | Aggregate ($) | Aggregate ($) | ||||||||||||||||||||
(a) | (b) | (c) | (d) | (e) | (f) | ||||||||||||||||||||
Joseph L. Hooley(5)
|
|
$20,000
|
|
|
$11,500
|
|
|
$778,090
|
|
|
$—
|
|
|
$4,397,673
|
| ||||||||||
Eric W. Aboaf
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
| ||||||||||
Ronald P. O’Hanley
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
| ||||||||||
Andrew Erickson
|
|
—
|
|
|
—
|
|
|
50,522
|
|
|
—
|
|
|
282,405
|
| ||||||||||
Cyrus Taraporevala
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
| ||||||||||
Michael W. Bell
|
|
1,643
|
|
|
1,643
|
|
|
26,186
|
|
|
300,497
|
|
|
—
|
|
|
|
(3) |
|
(4) | Includes each NEO’s outstanding combined MSSP andESRP-DC plan balances. Of the total amounts shown in this column, which are further broken out by plan in the |
Defined Contribution Aggregate Balances as of December 31, 2019
Aggregate Balance at Last FYE | ||||||||||||
Name | MSSP | ESRP-DC(A) | Total | |||||||||
Ronald P. O’Hanley | $ | 36,316 | $ | — | $ | 36,316 | ||||||
Eric W. Aboaf | 64,960 | — | 64,960 | |||||||||
Francisco Aristeguieta | — | — | — | |||||||||
Jeffrey N. Carp | 2,778,362 | 2,415,975 | 5,194,337 | |||||||||
Andrew J. Erickson | — | 354,766 | 354,766 |
|
State Street maintains the MSSP for designated highly compensated, or managerial employees, which includes the NEOs, excluding Mr.Messrs. Aristeguieta and Erickson, who is aare on the Hong Kong-based employeeKong payroll and isare not eligible for the MSSP. The MSSP provides eligible employees with savings and Company matching contribution opportunities beyond the Internal Revenue Code limits imposed under the SSP.tax qualified Salary Savings Program (SSP). Under the MSSP, eligible employees may elect, prior to the beginning of a year, to defer (a) from 1% to 50% of base salary for the year, and/or (b) a percentage, from 5% to 100% of otherwise immediately payable annual cash bonuscash-based incentives (net of FICA withholding), excluding any amount subject to automatic deferral..
Like the SSP, the MSSP provides a 5% employer matching contribution. For 2017,
State Street Corporation | 61 |
2020 NOTICE OF MEETING AND PROXY STATEMENT |
State Street matched all deferrals made under the MSSP for 20172019 up to a maximum of 5% of a participant’s MSSP match-eligible compensation, which is defined ascomprising the lesser of (i) base salary plus immediately payable annual cashcash-based incentive compensation or (ii) $500,000, in either case reduced by the applicable Internal Revenue Code cap on annual compensation ($270,000280,000 in 2017)2019).
58 STATE STREET CORPORATION
|
A book-keeping account is maintainedMSSP participants have several time and form of payment options for each participant reflecting deferrals, matching credits and increases or decreases based on the performance of notional investments selected by the employee, or on a default notional investment if the employee does not make a selection. A participanttheir deferrals. They may change notional investments daily. The notional investments available for 2017 and the rate of return for the year were as set forth below.
| ||||
|
| |||
|
| |||
|
| |||
|
| |||
|
|
|
Participants elect to receive either or both of their base salary or immediate cash incentive compensation deferrals from the MSSP in a lump sum payment either (i) on the first business day of the month following thesix-month anniversary of the participant’s termination of employment, or (ii) aton a specified date not earlier thanthat falls at least three years from the election date.date; if however, termination of employment occurs before the specified date, the lump sum is paid pursuant to (i) above. Participants may also elect to receive deferrals in installments over two to ten years commencing on thesix-month anniversary of the participantsparticipant’s termination of employment. Distributions are subject to certain acceleration rules. Participants may change distribution elections consistent with limitations set forth in the planMSSP and tax rules applicable to nonqualified deferred compensation. Matching and historical performance-based credits are automatically paid in a lump sum on the first day of the month following thesix-month anniversary of the employee’sparticipant’s termination of employment. A participant’s account is payable in a lump sum upon the participant’s death.death or disability. A participant who experiences a severe and unanticipated financial need may request a withdrawal of amounts deferred under the plan subject to certain restrictions.
The MSSPESRP-DC, which was amended duringgenerally frozen effective January 1, 2017, provided an annual $200,000 of deferred cash to eligible participants and an additional $200,000 grant of DSAs that receive dividends to Management Committee members, delivered through State Street’s equity incentive plan for each applicable year. With the exception of Mr. Carp, no defined contribution credits (neither deferred cash or DSAs) were made for the 2015 and 2016 in order to modify the definition of “eligible compensation” used in determining plan eligibility. The definition of “eligible compensation” now includes incentive pay contemplated under a corporate transaction that occurred during the same year. Additionally, the plan was amended during 2016 and 2017 to add State Street Global Advisors Trust Company (SSGATC) and State Street Global Markets, LLC (SSGM) as participating employers, respectively.
Amounts relatedcompensation years to the NEOs. Prior to the 2015 compensation year, Mr. Erickson receivedESRP-DC deferred cash awards. Based upon Mr. Carp’s employment agreement, he has received annual defined contribution component of the ESRP, which is describedcredits in the narrative accompanyingamount of $200,000 and additional $200,000 ESRP DSA grants, rounded up to the “2017 Pension Benefits” table, are included in the figures above in the tablenearest whole share, under the narrative of the “2017 Pension Benefits” section. The notional investment options availableState Street’s equity incentive plan for theplan years 2014, 2016, 2017, 2018 and 2019 and for plan year 2015 Mr. Carp received his annual defined contribution ESRP are the same as the notional investment options listed above for the MSSP, with the addition of sixnon-US notional funds.
Definedcredits all in deferred cash. Refer to “Defined Contribution Aggregate Balances as of December 31, 2017 (Fiscal Year End, FYE)2019” table footnote 4 above for theESRP-DC aggregate balances and footnote (A) for the balance of DSAs attributable to theESRP-DC.
AllESRP-DC benefits are subject to retirement eligibility and vesting. TheESRP-DC requires a participant to attain age 53 and have a combined age and service of at least 60 at termination of employment; otherwise, theESRP-DC benefits are forfeited, except in the event of death or a disability.ESRP-DC benefits vest in three stages:one-third at age 53;two-thirds at age 54; and full vesting at age 55. VestedESRP-DC benefits are payable in three equal installments with payments on the first day of the month coinciding with or following each of thesix-month,one-year andtwo-year anniversaries of the participant’s termination of employment. However, outstandingESRP-DC benefits are forfeited if the participant engages in certain competitive activities withintwo-years of termination of employment. Further,ESRP-DC benefits are subject to forfeiture if the participant is terminated for certain willful failures to perform job duties, or for certain willful illegal conduct or gross misconduct.
Based on age and service to State Street as of December 31, 2019, Mr. Carp is eligible forESRP-DC early retirement and is fully vested. Mr. Carp would receive $2,815,975 under theESRP-DC if he had retired on December 31, 2019. Mr. Erickson is not vested in hisESRP-DC, based on age and service to State Street, as of December 31, 2019.
A book-keeping account is maintained for each participant in the MSSP and for each participant withESRP-DC deferred cash. MSSP andESRP-DC deferred cash holdings reflect increases or decreases based on the performance of notional investments selected by the participant. The U.S. notional investments available for 2019 and the rate of return for the year were as set forth below.
Aggregate Balance at Last FYE | ||||||||||||
Name
|
MSSP ($)
|
ESRP ($)
|
Total ($)
| |||||||||
Joseph L. Hooley
|
|
$3,056,943
|
|
|
$1,340,730
|
|
|
$4,397,673
|
| |||
Eric W. Aboaf
|
|
—
|
|
|
—
|
|
|
—
|
| |||
Ronald P. O’Hanley
|
|
—
|
|
|
—
|
|
|
—
|
| |||
Andrew Erickson
|
|
—
|
|
|
282,405
|
|
|
282,405
|
| |||
Cyrus Taraporevala
|
|
—
|
|
|
—
|
|
|
—
|
| |||
Michael W. Bell
|
|
—
|
|
|
—
|
|
|
—
|
|
Notional Investment(1) | Rate of Return | |||
MSSP andESRP-DC Investments | ||||
SSGA U.S. Bond Index Fund | 10.32 | % | ||
Vanguard Prime Money Market Fund | 2.24 | % | ||
SSGA International Index Fund | 22.41 | % | ||
SSGA S&P 500 Index Fund | 31.47 | % | ||
State Street Corporation ESOP Stock Fund | 29.64 | % |
(1) | Non-US notional funds and rates of return were not provided because these funds have not been selected by our NEO participants. |
STATE STREET CORPORATION 59
State Street Corporation | 62 |
| 2020 NOTICE OF MEETING AND PROXY STATEMENT |
Potential Payments upon Termination or Change of Control as of December 31, 20172019
The tablesShown and described below showare certain potential payments that would have been made to an NEO if the NEO’s employment had terminated on December 31, 20172019 under various scenarios including a change of control. The tables do not include thebut excluding pension benefits or nonqualified deferred compensation that wouldmay be paid to an NEO which are set forthupon termination as described in the “Pension“2019 Pension Benefits” and “2017“2019 Nonqualified Deferred Compensation” tables above, exceptsections above. All U.S. severance payments due to the extent that the NEO is entitled to an additional benefitindividuals identified as “specified employees” following a resultseparation from service are delayed untilsix-months after separation in accordance with Section 409A of the termination.Internal Revenue Code.
Our NEOs do not receive any payments or continued vesting of deferred incentive awards if their employment is terminated for gross misconduct, and all deferred incentive awards are forfeited if an NEO voluntarily terminates employment prior to reaching age 55 and completing 5 years of service. Only Mr. Carp had satisfied this retirement provision as of December 31, 2019. In addition, all outstanding deferred incentive awards shown below remain subject to our recourse mechanisms described above under the heading “Compensation Discussion and Analysis—Other Elements of Compensation—Adjustment and Recourse Mechanisms.” The footnotestables below are intended only for illustrative purposes; the rights and benefits due to any executive upon an actual termination of employment or change of control can only be determined at the tables describetime of the assumptions usedpayment, based on circumstances then existing and the arrangements then in estimating the amounts shown in the tables.effect.
Joseph L. Hooley | Termination for Gross Misconduct | Retirement(1) | Death | Disability | Involuntary Termination without Cause(2) | Termination in Connection with Change of Control(3) | ||||||||||||||||||
Cash Severance Plan Benefits
|
|
$ —
|
|
|
$ —
|
|
|
$ —
|
|
|
$ —
|
|
|
$ 2,000,000
|
|
|
$10,000,000
|
(a)
| ||||||
Accelerated Vesting of Deferred Incentive Awards(4)
| ||||||||||||||||||||||||
Accelerated Vesting and Payment of Deferred Stock Awards (DSAs)
|
|
—
|
|
|
—
|
|
|
24,958,682
|
|
|
—
|
|
|
—
|
|
|
24,958,682
|
(b)
| ||||||
Accelerated Vesting and Payment of Performance-Based RSUs (RSUs)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
19,161,429
|
(c)
| ||||||
Accelerated Vesting and Payment of Deferred Value Awards (DVAs)
|
|
—
|
|
|
—
|
|
|
2,204,936
|
|
|
2,204,936
|
|
|
—
|
|
|
2,204,936
|
(d)
| ||||||
Continued Vesting of Deferred Incentive Awards(4)
| ||||||||||||||||||||||||
Continued Vesting and Payment of Deferred Stock Awards (DSAs)
|
|
—
|
|
|
24,958,682
|
|
|
—
|
|
|
24,958,682
|
|
|
24,958,682
|
|
|
—
|
| ||||||
Continued Vesting and Payment of Performance-Based RSUs (RSUs)
|
|
—
|
|
|
19,161,429
|
|
|
19,161,429
|
|
|
19,161,429
|
|
|
19,161,429
|
|
|
—
|
| ||||||
Continued Vesting and Payment of Deferred Value Awards (DVAs)
|
|
—
|
|
|
2,204,936
|
|
|
—
|
|
|
—
|
|
|
2,204,936
|
|
|
—
|
| ||||||
Additional Benefits
| ||||||||||||||||||||||||
Current Year Immediate Cash Incentives(5)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,000,000
|
(e)
| ||||||
Pension Benefit
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,788,845
|
(f)
| ||||||
Unvested Pension Benefits(6)
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
| ||||||
Continued Health & Welfare Benefit
|
|
—
|
|
|
50,916
|
|
|
—
|
|
|
—
|
|
|
33,402
|
|
|
33,402
|
| ||||||
Outplacement
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
25,000
|
| ||||||
Other Benefits
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
150,000
|
(g)
| ||||||
Total Value
|
|
—
|
|
|
46,375,963
|
|
|
46,325,047
|
|
|
46,325,047
|
|
|
48,358,449
|
|
|
68,322,294
|
|
Ronald P. O’Hanley | Death(1)(3) | Disability(1)(4) | Involuntary Termination without Cause(1)(5) | Termination in Connection with Change of Control(6) | ||||||||||||
Cash Severance | $ | — | $ | — | $ | 184,615 | $ | 6,224,000 | ||||||||
Accelerated Vesting of Deferred Incentive Awards | ||||||||||||||||
Accelerated Vesting and Payment of DSAs | 8,997,230 | — | — | 5,337,826 | ||||||||||||
Accelerated Vesting and Payment of Performance-based RSUs | — | — | — | 9,808,018 | ||||||||||||
Accelerated Vesting and Payment of DVAs | 3,513,685 | 3,513,685 | — | 3,513,685 | ||||||||||||
Continued Vesting of Deferred Incentive Awards | ||||||||||||||||
Continued Vesting and Payment of DSAs | — | 8,997,230 | 8,997,230 | — | ||||||||||||
Continued Vesting and Payment of Performance-based RSUs | 5,529,486 | 5,529,486 | 5,529,486 | — | ||||||||||||
Continued Vesting and Payment of DVAs | — | — | 3,513,685 | — | ||||||||||||
Additional Benefits | ||||||||||||||||
Current Year Incentive Compensation | — | — | 3,619,300 | 2,312,000 | ||||||||||||
Pension Benefit | — | — | — | 55,600 | ||||||||||||
Health & Welfare Benefit | 6,969 | — | 3,077 | 26,670 | ||||||||||||
Other Benefits | 66,667 | — | — | — | ||||||||||||
Outplacement | — | — | 40,000 | 40,000 | ||||||||||||
Total Value | 18,114,037 | 18,040,401 | 21,887,393 | 27,317,799 |
60 STATE STREET CORPORATION
State Street Corporation | 63 |
| 2020 NOTICE OF MEETING AND PROXY STATEMENT |
Eric W. Aboaf | Death(1)(3) | Disability(1)(4) | Involuntary Termination without Cause(1)(5) | Termination in Connection with Change of Control(6) | ||||||||||||
Cash Severance | $ | — | $ | — | $ | 161,538 | $ | 4,528,000 | ||||||||
Accelerated Vesting of Deferred Incentive Awards | ||||||||||||||||
Accelerated Vesting and Payment of DSAs | 3,424,397 | — | — | 2,280,058 | ||||||||||||
Accelerated Vesting and Payment of Performance-based RSUs | — | — | — | 6,150,995 | ||||||||||||
Accelerated Vesting and Payment of DVAs | 1,848,762 | 1,848,762 | — | 1,848,762 | ||||||||||||
Continued Vesting of Deferred Incentive Awards | ||||||||||||||||
Continued Vesting and Payment of DSAs | — | 3,424,397 | 3,424,397 | — | ||||||||||||
Continued Vesting and Payment of Performance-based RSUs | 4,533,696 | 4,533,696 | 4,533,696 | — | ||||||||||||
Continued Vesting and Payment of DVAs | — | — | 1,848,762 | — | ||||||||||||
Additional Benefits | ||||||||||||||||
Current Year Incentive Compensation | — | — | 2,074,000 | 1,564,000 | ||||||||||||
Pension Benefit | — | — | — | 55,600 | ||||||||||||
Health & Welfare Benefit | 13,403 | — | 3,414 | 29,587 | ||||||||||||
Other Benefits | 58,333 | — | — | — | ||||||||||||
Outplacement | — | — | 40,000 | 40,000 | ||||||||||||
Total Value | 9,878,591 | 9,806,855 | 12,085,807 | 16,497,002 |
Francisco Aristeguieta | Death(1)(3) | Disability(1)(4) | Involuntary Termination without Cause(1)(5) | Termination in Connection with Change of Control(6) | ||||||||||||
Cash Severance | $ | — | $ | — | $ | 162,462 | $ | 4,224,000 | ||||||||
Accelerated Vesting of Deferred Incentive Awards | ||||||||||||||||
Accelerated Vesting and Payment of DSAs | 10,257,055 | — | — | 10,257,055 | ||||||||||||
Accelerated Vesting and Payment of Performance-based RSUs | — | — | — | 3,590,324 | ||||||||||||
Accelerated Vesting and Payment of DVAs | — | — | — | — | ||||||||||||
Continued Vesting of Deferred Incentive Awards | ||||||||||||||||
Continued Vesting and Payment of DSAs | — | 10,257,055 | 10,257,055 | — | ||||||||||||
Continued Vesting and Payment of Performance-based RSUs | 3,378,519 | 3,378,519 | 3,378,519 | — | ||||||||||||
Continued Vesting and Payment of DVAs | — | — | — | — | ||||||||||||
Additional Benefits | ||||||||||||||||
Current Year Incentive Compensation | — | — | 6,800,000 | 1,408,000 | ||||||||||||
Pension Benefit | — | — | — | — | ||||||||||||
Health & Welfare Benefit | 12,124 | — | 2,964 | 25,690 | ||||||||||||
Other Benefits | 58,667 | — | — | — | ||||||||||||
Outplacement | — | — | 40,000 | 40,000 | ||||||||||||
Total Value | 13,706,365 | 13,635,574 | 20,641,000 | 19,545,069 |
Eric W. Aboaf | Termination for Gross Misconduct | Retirement(1) | Death | Disability | Involuntary Termination without Cause(2) | Termination in Connection with Change of Control(3) | ||||||||||||||||||
Cash Severance Plan Benefits
|
|
$ —
|
|
|
$ —
|
|
|
$ —
|
|
|
$ —
|
|
|
$ 753,846
|
|
|
$10,000,000
|
(a)
| ||||||
Accelerated Vesting of Deferred Incentive Awards(4)
| ||||||||||||||||||||||||
Accelerated Vesting and Payment of Deferred Stock Awards (DSAs)
|
|
—
|
|
|
—
|
|
|
2,506,137
|
|
|
—
|
|
|
—
|
|
|
2,506,137
|
(b)
| ||||||
Accelerated Vesting and Payment of Performance-Based RSUs (RSUs)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,023,372
|
(c)
| ||||||
Accelerated Vesting and Payment of Deferred Value Awards (DVAs) |
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
(d)
| ||||||
Continued Vesting of Deferred Incentive Awards(4)
| ||||||||||||||||||||||||
Continued Vesting and Payment of Deferred Stock Awards (DSAs)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,506,137
|
|
|
2,506,137
|
|
|
—
|
| ||||||
Continued Vesting and Payment of Performance-Based RSUs (RSUs)
|
|
—
|
|
|
—
|
|
|
3,023,372
|
|
|
3,023,372
|
|
|
3,023,372
|
|
|
—
|
| ||||||
Continued Vesting and Payment of Deferred Value Awards (DVAs)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
| ||||||
Additional Benefits
| ||||||||||||||||||||||||
Current Year Immediate Cash Incentives(5)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,000,000
|
(e)
| ||||||
Pension Benefit
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,692
|
(f)
| ||||||
Unvested Pension Benefits(6)
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
| ||||||
Continued Health & Welfare Benefit
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13,377
|
|
|
29,221
|
| ||||||
Outplacement
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
25,000
|
| ||||||
Other Benefits
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
50,000
|
(g)
| ||||||
Total Value
|
|
—
|
|
|
—
|
|
|
5,529,509
|
|
|
5,529,509
|
|
|
6,296,732
|
|
|
20,636,422
|
|
STATE STREET CORPORATION 61
State Street Corporation | 64 |
| 2020 NOTICE OF MEETING AND PROXY STATEMENT |
Jeffrey N. Carp | Retirement(1)(2) | Death(1)(3) | Disability(1)(4) | Involuntary Termination without Cause(1)(5) | Termination in Connection with Change of Control(6) | |||||||||||||||
Cash Severance | $ | — | $ | — | $ | — | $ | 487,500 | $ | 4,183,200 | ||||||||||
Accelerated Vesting of Deferred Incentive Awards | ||||||||||||||||||||
Accelerated Vesting and Payment of DSAs | — | 5,573,228 | — | — | 3,156,644 | |||||||||||||||
Accelerated Vesting and Payment of Performance-based RSUs | — | — | — | — | 5,927,595 | |||||||||||||||
Accelerated Vesting and Payment of DVAs | — | 2,420,269 | 2,420,269 | — | 2,420,269 | |||||||||||||||
Continued Vesting of Deferred Incentive Awards | ||||||||||||||||||||
Continued Vesting and Payment of DSAs | 5,573,228 | — | 5,573,228 | 5,573,228 | — | |||||||||||||||
Continued Vesting and Payment of Performance-based RSUs | 3,131,015 | 3,131,015 | 3,131,015 | 3,131,015 | — | |||||||||||||||
Continued Vesting and Payment of DVAs | 2,420,269 | — | — | 2,420,269 | — | |||||||||||||||
Additional Benefits | ||||||||||||||||||||
Current Year Incentive Compensation | — | — | — | 1,910,800 | 1,441,600 | |||||||||||||||
Pension Benefit | — | — | — | — | 1,372,055 | |||||||||||||||
Health & Welfare Benefit | — | 11,706 | — | 12,097 | 32,258 | |||||||||||||||
Other Benefits | — | 54,167 | — | — | — | |||||||||||||||
Outplacement | — | — | — | 40,000 | 40,000 | |||||||||||||||
Total Value | 11,124,512 | 11,190,385 | 11,124,512 | 13,574,909 | 18,573,621 |
Andrew J. Erickson | Death(1)(3) | Disability(1)(4) | Involuntary Termination without Cause(1)(5) | Termination in Connection with Change of Control(6) | ||||||||||||
Cash Severance | $ | — | $ | — | $ | 500,480 | $ | 3,181,522 | ||||||||
Accelerated Vesting of Deferred Incentive Awards | ||||||||||||||||
Accelerated Vesting and Payment of DSAs | 2,855,115 | — | — | 1,867,788 | ||||||||||||
Accelerated Vesting and Payment of Performance-based RSUs | — | — | — | 7,264,303 | ||||||||||||
Accelerated Vesting and Payment of DVAs | 1,324,108 | 1,324,108 | — | 1,324,108 | ||||||||||||
Continued Vesting of Deferred Incentive Awards | ||||||||||||||||
Continued Vesting and Payment of DSAs | — | 2,855,115 | 2,855,115 | — | ||||||||||||
Continued Vesting and Payment of Performance-based RSUs | 5,673,289 | 5,673,289 | 5,673,289 | — | ||||||||||||
Continued Vesting and Payment of DVAs | — | — | 1,324,108 | — | ||||||||||||
Additional Benefits | ||||||||||||||||
Current Year Incentive Compensation | — | — | 1,686,933 | 1,090,281 | ||||||||||||
Pension Benefit | — | — | — | — | ||||||||||||
Unvested Pension Benefits | — | — | — | 354,766 | ||||||||||||
Health & Welfare Benefit | 15,148 | — | — | 30,296 | ||||||||||||
Other Benefits | 3,253,278 | 3,209,432 | 3,208,565 | 3,250,531 | ||||||||||||
Outplacement | — | — | 15,000 | 40,000 | ||||||||||||
Total Value | 13,120,938 | 13,061,944 | 15,263,490 | 18,403,595 |
Ronald P. O’Hanley | Termination for Gross Misconduct | Retirement(1) | Death | Disability | Involuntary Termination without Cause(2) | Termination in Connection with Change of Control(3) | ||||||||||||||||||
Cash Severance Plan Benefits
|
|
$ —
|
|
|
$ —
|
|
|
$ —
|
|
|
$ —
|
|
|
$ 923,077
|
|
|
$10,000,000
|
(a)
| ||||||
Accelerated Vesting of Deferred Incentive Awards(4)
| ||||||||||||||||||||||||
Accelerated Vesting and Payment of Deferred Stock Awards (DSAs)
|
|
—
|
|
|
—
|
|
|
6,839,142
|
|
|
—
|
|
|
—
|
|
|
6,839,142
|
(b)
| ||||||
Accelerated Vesting and Payment of Performance-Based RSUs (RSUs)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,155,540
|
(c)
| ||||||
Accelerated Vesting and Payment of Deferred Value Awards (DVAs)
|
|
—
|
|
|
—
|
|
|
2,538,272
|
|
|
2,538,272
|
|
|
—
|
|
|
2,538,272
|
(d)
| ||||||
Continued Vesting of Deferred Incentive Awards(4)
| ||||||||||||||||||||||||
Continued Vesting and Payment of Deferred Stock Awards (DSAs)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,839,142
|
��
|
|
6,839,142
|
|
|
—
|
| ||||||
Continued Vesting and Payment of Performance-Based RSUs (RSUs)
|
|
—
|
|
|
—
|
|
|
10,155,540
|
|
|
10,155,540
|
|
|
10,155,540
|
|
|
—
|
| ||||||
Continued Vesting and Payment of Deferred Value Awards (DVAs)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,538,272
|
|
|
—
|
| ||||||
Additional Benefits
| ||||||||||||||||||||||||
Current Year Immediate Cash Incentives(5)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,500,000
|
(e)
| ||||||
Pension Benefit
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
27,000
|
(f)
| ||||||
Unvested Pension Benefits(6)
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
| ||||||
Continued Health & Welfare Benefit
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
16,324
|
|
|
24,842
|
| ||||||
Outplacement
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
25,000
|
| ||||||
Other Benefits
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
150,000
|
(g)
| ||||||
Total Value
|
|
—
|
|
|
—
|
|
|
19,532,954
|
|
|
19,532,954
|
|
|
20,472,355
|
|
|
38,259,796
|
|
62 STATE STREET CORPORATION
State Street Corporation | 65 |
| 2020 NOTICE OF MEETING AND PROXY STATEMENT |
Andrew Erickson | Termination for Gross Misconduct | Retirement(1) | Death | Disability | Involuntary Termination without Cause(2) | Termination in Connection with Change of Control(3)(h) | ||||||||||||||||||
Cash Severance Plan Benefits
|
|
$ —
|
|
|
$ —
|
|
|
$ —
|
|
|
$ —
|
|
|
$ 893,078
|
|
|
$6,893,580
|
(a)
| ||||||
Accelerated Vesting of Deferred
| ||||||||||||||||||||||||
Accelerated Vesting and Payment of
|
|
—
|
|
|
—
|
|
|
1,319,394
|
|
|
—
|
|
|
—
|
|
|
1,319,394
|
(b)
| ||||||
Accelerated Vesting and Payment of Performance-Based RSUs (RSUs)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,559,475
|
(c)
| ||||||
Accelerated Vesting and Payment of
|
|
—
|
|
|
—
|
|
|
696,401
|
|
|
696,401
|
|
|
—
|
|
|
696,401
|
(d)
| ||||||
Continued Vesting of Deferred Incentive Awards(4)
| ||||||||||||||||||||||||
Continued Vesting and Payment of
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,319,394
|
|
|
1,319,394
|
|
|
—
|
| ||||||
Continued Vesting and Payment of Performance-Based RSUs (RSUs)
|
|
—
|
| �� |
|
—
|
|
|
5,559,475
|
|
|
5,559,475
|
|
|
5,559,475
|
|
|
—
|
| |||||
Continued Vesting and Payment of
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
696,401
|
|
|
—
|
| ||||||
Additional Benefits
| ||||||||||||||||||||||||
Current Year Immediate Cash Incentives(5)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,000,000
|
(e)
| ||||||
Pension Benefit
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
(f)
| ||||||
Unvested Pension Benefits(6)
|
|
—
|
|
|
—
|
|
|
282,405
|
|
|
282,405
|
|
|
—
|
|
|
282,405
|
| ||||||
Continued Health & Welfare Benefit
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
29,221
|
|
|
26,295
|
| ||||||
Outplacement
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
| —
|
|
|
25,000
|
| ||||||
Other Benefits
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
50,000
|
(g)
| ||||||
Total Value
|
|
—
|
|
|
—
|
|
|
7,857,675
|
|
|
7,857,675
|
|
|
8,497,569
|
|
|
17,852,550
|
|
STATE STREET CORPORATION 63
|
Cyrus Taraporevala | Termination for Gross Misconduct | Retirement(1) | Death | Disability | Involuntary Termination | Termination in Connection with Change of Control(3)(i) | ||||||||||||||||||
Cash Severance Plan Benefits
|
|
$ —
|
|
|
$ —
|
|
|
$ —
|
|
|
$ —
|
|
|
$ 430,769
|
|
|
$ 4,371,816
|
(a)
| ||||||
Accelerated Vesting of Deferred Incentive Awards(4)
| ||||||||||||||||||||||||
Accelerated Vesting and Payment of Deferred Stock Awards (DSAs)
|
|
—
|
|
|
—
|
|
|
3,318,252
|
|
|
—
|
|
|
—
|
|
|
3,318,252
|
(b)
| ||||||
Accelerated Vesting and Payment of Performance-Based RSUs (RSUs)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,369,316
|
(c)
| ||||||
Accelerated Vesting and Payment of Deferred Cash (DVAs and SSGA LTIP)
|
|
—
|
|
|
—
|
|
|
3,632,709
|
|
|
3,632,709
|
|
|
—
|
|
|
3,632,709
|
(d)
| ||||||
Continued Vesting of Deferred Incentive Awards(4)
| ||||||||||||||||||||||||
Continued Vesting and Payment of Deferred Stock Awards (DSAs)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,318,252
|
|
|
3,318,252
|
|
|
—
|
| ||||||
Continued Vesting and Payment of Performance-Based RSUs (RSUs)
|
|
—
|
|
|
—
|
|
|
4,369,316
|
|
|
4,369,316
|
|
|
4,369,316
|
|
|
—
|
| ||||||
Continued Vesting and Payment of Deferred Cash (DVAs and SSGA LTIP)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,632,709
|
|
|
—
|
| ||||||
Additional Benefits
| ||||||||||||||||||||||||
Current Year Immediate Cash Incentives(5)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,785,908
|
(e)
| ||||||
Pension Benefit
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
27,000
|
(f)
| ||||||
Unvested Pension Benefits(6)
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
| ||||||
Continued Health & Welfare Benefit
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,772
|
|
|
18,147
|
| ||||||
Outplacement
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
25,000
|
| ||||||
Other Benefits
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
50,000
|
(g)
| ||||||
Total Value
|
|
—
|
|
|
—
|
|
|
11,320,277
|
|
|
11,320,277
|
|
|
11,760,818
|
| 17,598,148 |
(1) |
|
• | DSAs: Represents the value of DSAs and 2017 performance-based RSUs (which were earned at 107.7% of target) based on the closing share price of our |
• | Performance–based RSUs: Represents the estimated value of unearned performance-based RSUs granted in 2018 and |
• | DVAs: Represents the value of outstanding DVAs as of December 31, 2019. |
All outstanding DSAs, performance-based RSUs and DVAs include post-termination restrictive covenants concerning:non-competition, for a period of 12 months for those subject to U.S. laws (Messrs. O’Hanley, Aboaf and Carp) and six months for those subject to Hong Kong laws (Messrs. Aristeguieta and Erickson);non-solicitation for a period of six months for those subject to U.S. laws (Messrs. O’Hanley, Aboaf and Carp); and ongoing obligations of confidentiality andnon-disparagement for all NEOs.
(2) | Retirement: For purposes of the deferred awards (DSAs, performance-based RSUs and DVAs), a |
• | Deferred awards: Service-based restrictions lapse on outstanding DSAs, unearned performance-based RSUs with qualifying retirement provisions and |
(3) | Death: |
• | Deferred awards: Service-based restrictions lapse on outstanding DSAs, unearned performance-based RSUs and outstanding DVAs. The vesting of DSAs and DVAs accelerates upon death, while unearned performance-based RSUs continue to vest according to their original terms. |
• | Health & welfare benefit: State Street will bear the full cost of health and welfare insurance for the NEO’s spouse/ domestic partner and/ or dependents for aone-year period if the NEO and family were participating in State Street’s |
• | Other benefits:State Street |
(4) | Termination due to Disability: |
• | Deferred incentive awards: Service-based restrictions lapse on outstanding DSAs, unearned performance-based RSUs and outstanding DVAs. Vesting is accelerated for DVAs on disability while DSAs and performance-based RSUs continue to vest according to their original terms. |
• | Other benefits: Estimated tax equalization payments to be made for awards granted to Mr. Erickson during his international assignment for which host country taxes are due and exceed his estimated home country taxes. |
(5) | Involuntary Termination without Cause: Our NEOs are covered by State Street’s U.S. severance plan, |
• | Cash severance:The U.S. severance plan provides for |
• | Deferred incentive awards: Service-based restrictions lapse on outstanding DSAs, performance-based RSUs and DVAs. These awards all continue to vest according to their original terms. |
• | Current year incentive compensation: Employees, including our NEOs, are also eligible to receive an additional lump sum cash severance payment equal to 50% of the employee’s prior year incentive compensation award for a termination occurring on December 31, 2019. As a result, with the exception of Mr. Aristeguieta, the tables above include an amount equal to 50% of the NEO’s prior year incentive compensation award, based on the assumed December 31, 2019 termination date. Current year incentive compensation for Mr. Aristeguieta reflects the 2019 incentive compensation in his offer of employment, based on the assumed December 31, 2019 termination date. |
State Street Corporation | 66 |
2020 NOTICE OF MEETING AND PROXY STATEMENT |
• | Health & welfare benefit: The U.S. severance plan provides for continued participation in State Street’s health and welfare benefit plan for the severance period at active employee rates |
• | Other benefits: Estimated tax equalization payments to be made for awards granted to Mr. Erickson during his international assignment for which host country taxes are due and exceed his estimated home country taxes. |
• | Outplacement: Personal outplacement services by a third-party provider. |
Termination in Connection with Change of Control: Calculations assume a change of control occurred on December 31, |
|
|
64 STATE STREET CORPORATION
|
|
• | Performance-based RSUs: Service-based restrictions lapse on performance-based RSUs and vesting is accelerated. The estimated value of |
i) | Performance-based RSUs granted in |
|
|
Performance-based RSUs granted in 2017, 2018 and 2019 are valued using an “adjusted fair market value” ($80.36), which is the highest average of the reported daily high and low prices per share of our common stock on the NYSE during the sixty(60)-day period prior to the first date of actual knowledge by the Board of the circumstances that resulted in a change in control, which is assumed to be December 31, 2019.
• | DVAs: Service-based restrictions lapse on outstanding DVAs and |
• | Current year incentive compensation: The prior year’s |
Pension benefit: A lump sum payment equal to two times State Street’s annual contributions to the defined contribution retirement plans applicable to the NEO. Mr. Carp also receives an additionalESRP-DB value for two years of aging captured in an early retirement subsidy. |
• | Unvested pension benefit:The enhancement to any pension benefit otherwise owed to an executive would be paid as a lump |
|
Other benefits: Represents the estimated tax equalization payment to be made for awards granted to Mr. Erickson |
|
The change of control agreements include restrictive covenants concerningnon-solicitation for a period of 18 months following termination, and ongoing obligations of confidentiality, cooperation andnon-disparagement. |
|
|
Change of Control
State Street has entered into an agreementchange-of-control agreements with each of our NEOsNEOs. Each agreement has atwo-year term that wouldautomatically extends for an additional year at the end of each calendar year, unless State Street gives notice of nonrenewal with at least 60 days’ advance notice. The agreements become effective upon a change of control of State Street or upon a termination of employment arising in connection with or in anticipation of such change of control. A change of control is defined to include theinclude:
The acquisition of 25% or more of our outstanding stock, thestock;
The failure of incumbent directors (or their designated successors) to constitute a majority of the Board of Directors or aDirectors;
State Street Corporation | 67 |
2020 NOTICE OF MEETING AND PROXY STATEMENT |
A reorganization, merger, consolidation, sale or saleother disposition of all or substantially all of our assets in which State Street shareholders do not retain a majority of the voting power of the surviving or successor corporation and incumbent directors do not constitute a majority of the Board. These agreements haveBoard; or
Approval by shareholders of a two-year term that is annually renewed at the endcomplete liquidation or dissolution of the year, unless State Street gives the executive notice at least 60 days before the annual renewal date that the agreement will not be renewed. Mr. Erickson entered into achange-of-control agreement with the Company effective February 22, 2018.Company.
Eachchange-of-control agreement provides for two years of continued employment after a change of control on terms commensurate with those previously in effect, including base salary at an unreduced rate and minimum incentive compensation set at the targetprior year’s cash-based incentive compensation amount under the SEAIP applicable to the executive officer for the fiscal year in which the change of control occurs with the exception of(immediate cash and DVAs). For Mr. Taraporevala, whose minimum incentive compensation is set atAristeguieta, the prior year’s cashcash-based incentive (immediate and deferred including the adjustment factor) awarded under the Company’s annual incentive plan.is equal to 200% of his base salary. Each agreement also provides for two years of continued participation in savings, health and welfare benefit, fringe benefit and retirement plans, on terms no less favorable than those in effect prior to the change of control, and payment of legal fees in connection with the enforcement of the executive officer’sNEO’s rights under the agreement.
Thechange-of-control agreements also provide our NEOs with the payment of accrued salary and benefits, including apro-rated target incentive compensation amount underbased on the SEAIP (withprior year’s cash-based incentive (i.e., immediate cash and DVAs, except that for Mr. Aristeguieta, the exceptionprior year’s cash-based incentive is equal to 200% of Mr. Taraporevala, as noted above), in the event of a termination by reason ofhis base salary) upon death or termination due to disability during the employment period following a change of control, and they provide for additional severance benefits as summarized below upon the cessation of employment under a “double-trigger”double-trigger mechanism. This mechanism requires the occurrence of both a change of control and either the termination of employment without cause or by the officerNEO for good reason during thetwo-year term of the change-of-control agreement.
STATE STREET CORPORATION 65
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period.
The severance benefits provided include: (1) a lump sum payment subject to a maximum of $10 million, equal to two times the sum of base salary and the targetprior year’s cash-based incentive compensation under(i.e., immediate cash and DVAs, except that for Mr. Aristeguieta, the SEAIP (with the exceptionprior year’s cash-based incentive is equal to 200% of Mr. Taraporevala, as noted above) for the yearhis base salary), subject to a maximum of the change of control,$10 million; (2) a lump sum payment equal to two times State Street’s contributions to the defined contribution retirement plans applicable to the officer,NEO; (3) in the case of officersNEOs who are eligible to participate in State Street’s frozen qualified and supplemental defined benefit plans, a lump sum payment equal to the actuarial value of the incremental benefit that the officerNEO would have received under such plans had he or she remained employed for two years after the date of termination,termination; (4) continued employee health and welfare benefits for two years after the date of termination,termination; (5) reasonable outplacement servicesservices; and (6) to the extent not already vested, immediate vesting in benefits under the ESRP.
Since February 20, 2014, Each agreement provides that, in the eventchange-of-control benefits would exceed 110% of the maximum amount that the NEO can receive without any of the payments being subject to the excise tax imposed under Section 4999 of the Internal Revenue Code (the golden parachute excise tax), then the value of such benefits shall be either (i) subject to a cutback or (ii) delivered in full, whichever of the foregoing provides the executive the greatest benefit on anafter-tax basis (with the NEO required to pay the golden parachute excise tax). If benefits are below the 110% threshold, the NEO would be subject to an automatic cutback to the extent necessary to assure that thechange-of-control benefits are not subject to the golden parachute excise tax.
State Street’s 2006 Equity Incentive Plan, 2017 Stock Incentive Plan, AmendedDVAs, DSAs and Restated Supplemental Cash Incentive Plan, SSGA LTIP and award agreements under those plansperformance-based RSUs also provide for accelerated vesting and payment of awards under a “double trigger”double-trigger mechanism. This standard appliesOn or prior to all deferred equity and cash awards outstanding, including awards to our NEOs. Our agreements now provide, in the contextfirst anniversary of a change of control, forvesting is accelerated vesting and payment only upon a change of control andfollowing either a termination of employment without cause or by the officerNEO for good reason, in each case on or prior to the first anniversary of the change of control.reason. Performance-based RSUs will convert into State Street common stock at the following rates in the case of a change of control occurring prior to the end of the three-year performance period: (i) 100% in the case of a change of control in the first year, (ii) in the second year, at the rate obtained by averaging the actual GAAP ROE results for the first calendar year adjusted in accordance with the Plan, and 100% for each of the second and third years and (iii) in the third year, at the rate obtained by averaging the actual GAAP ROE results adjusted in accordance with the Plan, for each of the first and second calendartwo years and 100% for the third year. In the case of atwo-year performance period: (i) 100% in the case of a change of control in the first year and (ii) in the second year at the rate obtained by averaging the actual GAAP ROE results for the first calendar year, adjusted in accordance with the Plan, and 100% for the second year.
Effective March 26, 2014, eachchange-of-control agreement provides that, in the eventchange-of-control benefits would exceed 110% of the product of 2.99 multiplied by the officer’s base amount, then the value of such benefits shall be either (i) subject to a cutback or (ii) delivered in full, whichever of the foregoing provides the executive the greatest benefit on anafter-tax basis (with the golden parachute excise tax being the responsibility of the executive to pay). If benefits are below the 110% threshold, the executive would be subject to an automatic cutback to assure that thechange-of-control benefits do not exceed 2.99 times the NEO’s base amount.
The amounts set forth in the column entitled “Termination in Connection with Change of Control” in the tables above are based on the hypothetical assumption that on December 31, 2017 State Street had a change of control and that immediately thereafter, but also on December 31, 2017, the executive was terminated, received a lump sum payment of all cash entitlements under thechange-of-control agreement and all equity awards accelerated upon the change of control.
Estimated Payouts upon Termination of Employment
Mr. Bell left State Street on March 3, 2017. Pursuant to the terms of his Transition Agreement dated April 15, 2016, Mr. Bell’s outstanding equity awards will continue to vest according to their original terms. As of March 3, 2017, his 72,929 outstanding DSAs were worth $5,850,364 and his 108,806 outstanding performance-based RSUs were worth $8,728,417, based on the closing price of our common stock of $80.22 on that date. The final value of the performance-based RSUs will not be determined until after the conclusion of the performance period for each outstanding award. Mr. Bell also received $10,453 for unused vacation, as noted in the Summary Compensation Table above. Mr. Bell did not receive severance or other retirement enhancements.
66 STATE STREET CORPORATION
State Street Corporation | 68 |
| 2020 NOTICE OF MEETING AND PROXY STATEMENT |
ITEMItem 2 – APPROVAL OF ADVISORY PROPOSAL ON EXECUTIVE COMPENSATIONApproval of Advisory Proposal on Executive Compensation
The Board of Directors unanimously recommends that you vote FOR this proposal (Item 2 on your proxy card) |
The Board of Directors recommends that shareholders approve the advisory proposal on executive compensation set forth below. Unless contrary instructions are given, shares represented by proxies solicited by the Board will be voted for the approval of this advisory proposal. We believe that shareholder feedback on executive compensation is important and have provided shareholders the opportunity to vote annually on an advisory executive compensation proposal since 2009. Over the past several years shareholders have consistently approved the“say-on-pay” vote, and in 2017, 96.5%2019, over 90% of the votes cast supported the proposal.
State Street develops and implements a compensation program for our NEOs and other executive officers with the goals of:which aims to:
attracting, retainingattract, retain and motivatingmotivate superior executives and drive strong leadership behaviors
rewardingreward those executives for meeting or exceeding annualindividual and long-termcompany financial and strategicbusiness objectives
drivingdrive long-term shareholder value and financial stability
providingalign incentive compensation with the performance results experienced by our shareholders through the use of significant levels of deferred equity-based compensation
provide equal pay for work of equal value
achievingachieve the preceding goals in a manner aligned with sound risk management and our corporate values
For each NEO, the CompensationHuman Resources Committee determines the appropriate level of total compensation for the year. This determination is based on a subjective evaluation of many factors, including corporate performance, individual performance and market, regulatory and shareholder considerations. Along with the“say-on-pay” advisory proposal, we also engage with several of our largest shareholders to receive their specific perspectives on our compensation programs and governance practices. For 2017,2019, we held discussionsengaged or requested engagement with shareholders representing more than 30%half of our outstanding common stock. Based on these discussions, we believe our shareholders, in general, support our executive compensation program, and therefore, we continued many of the elements of our program, such as maintaining a high level of equity and deferral for incentive compensation awards as well as emphasizing pay for performance and alignment with shareholder interests. Our compensation practices for NEOs, including the complete framework used by the CompensationHuman Resources Committee in evaluating and making 20172019 compensation decisions, are described inabove under the heading “Compensation Discussion and Analysis.”
The advisory proposal is provided in accordance with Section 14A of the Securities Exchange Act of 1934, or the Exchange Act, and isnon-binding. The outcome of this advisory proposal does not overrule any decision by, create or imply any change to the fiduciary duties of, or create or imply any additional fiduciary duties for State Street or the Board of Directors (or any of its committees). Though the vote isnon-binding, the CompensationHuman Resources Committee will take into account the outcome of the vote on this advisory proposal when considering future executive compensation arrangements.
The text of the proposal presented for your approval is as follows:
VOTED: | That the compensation of State Street’s executives, as disclosed pursuant to the SEC’s compensation disclosure rules, as set forth in this proxy statement under the heading “Executive Compensation,” including the Compensation Discussion and Analysis, the compensation tables and related material, is approved; provided, that, this resolution shall not be binding on State Street’s Board of Directors or any of its committees and may not be construed as overruling any decision by the Board of Directors or any of its committees. |
STATE STREET CORPORATION 67
State Street Corporation | 69 |
|
Examining and Audit Committee Matters
ITEM 3 – AMENDMENT TO ARTICLES OF ORGANIZATION TO IMPLEMENT A MAJORITY VOTING STANDARD FOR SPECIFIED CORPORATE ACTIONS
State Street is asking shareholders to approve an amendment to our Articles of Organization to implement a majority voting standard for specified corporate actions. Chapter 156D of the Massachusetts Business Corporation Act currently provides that the default voting requirement for certain corporate actions is the affirmative vote of at leasttwo-thirds of the outstanding shares of common stock of a corporation. However, the Massachusetts Business Corporation Act permits corporations to modify the default voting requirements through an amendment to their Articles of Organization. The proposed amendment implements a majority voting requirement for all corporate actions to which thetwo-thirds default voting requirement would otherwise apply under the Massachusetts Business Corporation Act.
Our Board of Directors recognizes that many shareholders believe that a majority voting requirement will provide shareholders with a greater voice in expressing their views on matters impacting a corporation. Our Board of Directors believes reducing the voting requirements is in the best interest of the shareholders, and therefore, approval of this proposal by shareholders will change the voting requirement to approve certain corporate actions from the affirmative vote oftwo-thirds of the outstanding shares of common stock to the affirmative vote of at least a majority of outstanding shares of common stock. A proposed amendment and restatement of Article 6 of the Articles of Organization is set forth inAppendix B to this proxy statement, and the summary of the proposed amendment contained in this Item 3 is qualified by the full text of the proposed amendment and restatement.
If this proposal is approved, upon filing of Articles of Amendment to our Articles of Organization, the affirmative vote of at least a majority of all the shares of common stock entitled to vote on the matter and at least a majority of the shares in any voting group entitled to vote separately on the matter, will be required to approve the following corporate actions:
Amending the Articles of Organization
Acting on a merger or share exchange
Selling all or substantially all property other than in the regular course of business
Authorizing voluntary dissolution
Approving a plan of domestication to a foreign jurisdiction
Approving a plan of entity conversion to a domestic or foreign entity
68 STATE STREET CORPORATION
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EXAMINING AND AUDIT COMMITTEE MATTERS
Examining and Audit CommitteePre-Approval Policies and Procedures
State Street’s Examining and Audit Committee has establishedpre-approval policies and procedures applicable to all services provided by State Street’s independent registered public accounting firm, pursuant to which the Examining and Audit Committee reviewed for approval each particular service expected to be provided. In connection with that review, the Examining and Audit Committee is provided with detailed information so that it can make well-reasoned assessments of the impact of the services on the independence of the independent auditor.Pre-approvals could includepre-approved cost levels or budgeted amounts or a range of cost levels or budgeted amounts.Pre-approval is also required for substantive changes in terms, conditions and fee arrangements resulting from changes in the scope, structure or other items. Thepre-approvals include services in categories of audit services, audit-related services, tax services and other services (services permissible under the SEC’s auditor independence rules).rules. The services shown in the table below were approved by the Examining and Audit Committee in accordance with thesepre-approval policies and procedures.
Ernst & Young LLP, or EY, was State Street’s independent registered public accounting firm for each of the fiscal years ended December 31, 20172019 and December 31, 2016.2018. Fees incurred by State Street and its subsidiaries for professional services rendered by Ernst & Young LLPEY with respect to 20172019 and 20162018 were as follows:
Description (In millions)
| 2017
| 2016
| 2019 | 2018 | ||||||||||||
Audit Fees
|
$
|
16.2
|
|
$
|
18.6
|
| $ | 14.2 | $ | 16.2 | ||||||
Audit-Related Fees
|
|
15.4
|
|
|
15.6
|
| 15.2 | 14.8 | ||||||||
Tax Fees
|
|
7.8
|
|
|
8.6
|
| 5.8 | 5.3 | ||||||||
All Other Fees
|
|
0.0
|
|
|
4.4
|
| 0.0 | 0.0 |
Services provided under Audit Fees primarily included statutory and financial statement audits, the requirement to opine on the design and operating effectiveness of internal controlscontrol over financial reporting and accounting consultations billed as audit services. Services provided under Audit-Related Fees consisted principally of reports on the processing of transactions by servicing organizations,non-statutory audits and due diligence procedures. Services provided under Tax Fees consisted principally of compliance and corporate tax advisory services. In 2016, services provided under All Other Fees consisted of advisory services primarily related to certain regulatory initiatives. These fees were not incurred in 2017.
In addition to the services described above, Ernst & Young LLPEY provides audit and tax compliance services to certain mutual funds, exchange-traded funds, or ETFs, and foreign-based private investment funds for which State Street is the sponsor and investment adviser or manager. The mutual funds and ETFs have boards of directors or similar bodies that make their own determinations as to selection of the funds’ audit firms and approval of any fees paid to such firms. In the case of certain foreign-based private investment funds, State Street participates in the selection of the audit firm to provide the audit and tax compliance services. All of the fees for such services are paid by the mutual funds, ETFs and foreign-based private investment funds—not by State Street—and are not included in the table above.
State Street Corporation | 70 |
2020 NOTICE OF MEETING AND PROXY STATEMENT |
Report of the Examining and Audit Committee
The Examining and Audit Committee, referred to in this report as the Committee consists entirely of members who meet the independence requirements of the listing standards of the NYSE and the rules and regulations of the SEC, as determined by the Board of Directors. Further, all of the members of the Committee are financially literate, based upon their education and experience, as such qualification under the listing standards of the NYSE is interpreted by the Board. The Board has determined, based upon education and experience as a principal accounting or financial officer or public accountant, or experience actively supervising a principal accounting or financial officer or public accountant, that each member of the Committee satisfies the
STATE STREET CORPORATION 69
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definition of “audit committee financial expert,” as set out in the rules and regulations under the Exchange Act, and havehas accounting or related financial management expertise, as such qualification under the listing standards of the NYSE is interpreted by the Board. The Committee furnishes the following report:
On behalf of State Street’s Board, of Directors, the Committee oversees the operation of a system of internal controlscontrol designed to ensure the integrity of State Street’s financial statements and reports, compliance with laws, regulations and corporate policies and the qualifications, performance and independence of State Street’s independent registered public accounting firm. Additionally, the Committee oversees the Company’s efforts to promote and advance a culture of compliance and ethical business practices including the Company’s efforts to identify, manage and eliminate material conduct and reputational issues. It is management’s responsibility to prepare State Street’s consolidated financial statements and establish and maintain internal controlscontrol over financial reporting. The role of the independent registered public accountant is to independently audit the consolidated financial statements and effectiveness of internal controlscontrol over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (PCAOB).or PCAOB.
Consistent with this oversight responsibility, the Committee has reviewed and discussed with management the audited consolidated financial statements for the year ended December 31, 20172019 and their assessment of internal controlscontrol over financial reporting as of December 31, 2017. Ernst & Young LLP,2019. EY, State Street’s independent registered public accounting firm, issued their unqualified report on State Street’s consolidated financial statements and the design and operating effectiveness of State Street’s internal controlscontrol over financial reporting.
The Committee has discussed with our independent registered public accounting firmEY the matters required to be discussed by AS 1301, “Communications with Audit Committees,” issued byapplicable requirements of the PCAOB.PCAOB and the SEC. The Committee has also received the written disclosures and the letter from Ernst & Young LLPEY required by applicable requirements of the PCAOB Ethics and Independence Rule 3526,“Communicationregarding EY’s communications with Audit Committees Concerning Independence” and has conducted a discussion with Ernst & Young LLP relative to itsthe Committee concerning independence. The Committee has considered whether Ernst & Young LLP’sEY’s provision ofnon-audit services is compatible with its independence.
Based on these reviews and discussions, the Committee recommended to the Board of Directors that State Street’s audited consolidated financial statements for the year ended December 31, 2017,2019, be included in State Street’s annual report on Form 10-K for the fiscal year then ended.
Submitted by,
William C. Freda, Chair
Marie A. Chandoha
Patrick de Saint-Aignan
Lynn A. Dugle
Richard P. Sergel
| |||
| 71 |
70 STATE STREET CORPORATION
| 2020 NOTICE OF MEETING AND PROXY STATEMENT |
ITEM 4Item 3 – RATIFICATION OF THE SELECTION OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMRatification of the Selection of the Independent Registered Public Accounting Firm
The Board of Directors unanimously recommends that you vote FOR this proposal (Item 3 on your proxy card) |
The Board of Directors recommends that shareholders approve the ratification of the selection of the independent registered public accounting firm described below. The Examining and Audit Committee has appointed Ernst & Young LLP as State Street’s independent registered public accounting firm for the year ending December 31, 2018. Ernst & Young LLP2020. EY has acted as our independent auditor since 1972. We have been advised by EY that it is a registered public accounting firm with the PCAOB and that it complies with the auditing, quality control and independence standards and rules of that Board and the SEC.
Committee Responsibilities and Duties
The Examining and Audit Committee has direct responsibility for the appointment,engagement, termination, compensation, retention, evaluation and oversight of the work of our independent registered public accounting firm, including the sole authority for the establishment ofpre-approval policies and procedures for all audit andnon-audit engagements. The Examining and Audit Committee also oversees the integrity of our financial statements and reports and the qualifications, performance and independence of State Street’s independent registered public accounting firm.
The For more information, see the description in this Proxy Statement of the Examining and Audit Committee annually assessesunder the heading “Committees of the Board of Directors”.
Committee Considerations and Audit Firm Assessment
In connection with the annual appointment of EY, the independent registered public accounting firmCommittee undertook a comprehensive assessment and considersreview of EY, and considered among other factors:
IfWhether the retention of the registered public accounting firmEY is in the best interests of State Street and its shareholders
The results of an annual survey prepared by management on the performance of the independent registered public accounting firmEY
TheEY’s technical expertise, experience andgeographical footprint, knowledge level and quality of the independent registered public accounting firmservice
The recent performance of EY and the independent registered public accounting firm and lead audit partner, including quality of communication, competence and responsiveness
The independence of the independent registered public accounting firmEY
Known legal risks and significant proceedings of the independent registered accounting firminvolving EY
The fees incurred by State Street for the services rendered by the independent registered accounting firm
In accordance with SEC rules and Ernst & Young LLPEY policies, the lead audit partner must be rotated at least every five years. The Examining and Audit Committee and the Committee Chair are involved in the selection of the lead engagementaudit partner pursuant toby vetting potential candidates, analyzing candidate qualifications and conducting interviews. The Committee is also consulted regarding the rotation requirement. The Examiningfinal selection of the lead audit partner.
Recommendation and AuditVoting
The Committee and the Board of Directors believe that the continued retention of Ernst & Young LLPEY as our independent registered public accounting firm is in the best interest of State Street and its shareholders. For more information, see the discussion in this proxy statement under the heading “Examining and Audit Committee Matters.”
We have been advised by Ernst & Young LLP that it is a registered public accounting firm with the Public Company Accounting Oversight Board (United States) and complies with the auditing, quality control and independence standards and rules of that Board and the SEC.
Representatives of Ernst & Young LLP will be present at the annual meeting to respond to appropriate questions, and they will have the opportunity to make a statement if they desire. While shareholder ratification of the selection of Ernst & Young LLPEY as our independent registered public accounting firm is not required, the Board of Directors is submitting the selection of Ernst & Young LLPEY to the shareholders for ratification to learn the opinion of shareholders on the selection. Should the selection of Ernst & Young LLPEY not be ratified by the shareholders, the Examining and Audit Committee will reconsider the matter. Even in the event the selection of Ernst & Young LLPEY is ratified, the Examining and Audit Committee in its discretion may direct the appointment of a different independent registered public accounting firm at any time during the year if in its view such a change is in the best interests of State Street and its shareholders. Representatives of EY will be present at the annual meeting to respond to appropriate questions, and they will have the opportunity to make a statement if they desire.
STATE STREET CORPORATION 71
State Street Corporation | 72 |
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GENERAL INFORMATION ABOUT THE ANNUAL MEETINGGeneral Information About the Annual Meeting
Questions and Answers About Voting
Why am I receiving these materials?
State Street’s Board of Directors is soliciting your vote by proxy at the 20182020 annual meeting of shareholders. This proxy statement includes information that we are required to provide to you under the rules of the SEC and is designed to assist you in voting your shares.
Can I access State Street’s proxy materials and annual report electronically?
This proxy statement and our annual report, including our audited consolidated financial statements for the year ended December 31, 2017,2019, are available to our shareholders on the Internet. On April [•], 2018,8, 2020, we mailed to our U.S. shareholders as of March 9, 2018,11, 2020, the record date for the annual meeting, a notice containing instructions on how to access these proxy materials online and how to vote. Also on April [•], 2018,8, 2020, we began mailing printed copies of these proxy materials to shareholders that have requested printed copies and to shareholders outside the United States. If you received a notice by mail, you will not receive a printed copy of the proxy materials in the mail unless you request a copy. Instead, the notice instructs you on how to access and review online all of the important information contained in the proxy statement and annual report. The notice also instructs you on how you may submit your vote over the Internet. If you received a notice by mail and would like to receive a printed copy of our proxy materials, you should follow the instructions for requesting such materials included in the notice.
How do I request a printed copy of the proxy materials?
To request a printed copy of the proxy statement, annual report and form of proxy relating to this shareholder meeting or future shareholder meetings, visitwww.proxyvote.com, telephonecall1-800-579-1639 or send an email tosendmaterial@proxyvote.com. You must have available the16-digit control number from the notice described above.
What are the directions to the meeting?
Directions to the meeting are as follows:
From the North:
Take Expressway(I-93) South to exit 20A and follow the signs for South Station. Follow exit ramp and cross Summer Street. Turn right onto Lincoln Street. Take first left onto Bedford Street. Take first left onto Kingston Street. Entrance to the garage is on the left.
From the South:
Take Expressway(I-93) North to exit 20 (South Station). Bear left at the ramp to South Station/Chinatown. You will see State Street Financial Center directly ahead. You will be on Lincoln Street. Follow Lincoln Street through the major intersection at the lights (pass the entrance to the building). Take left onto Bedford Street. Take first left onto Kingston Street. Entrance to the garage is on the left.
From the West:
Take Mass Turnpike(I-90) to exit 24A (South Station). Turn left on Kneeland Street towards Chinatown. Turn right onto Lincoln Street at the light. Follow Lincoln Street through the major intersection at the lights (pass the entrance to the building). Take left onto Bedford Street. Take first left onto Kingston Street. Entrance to the garage is on the left.
Via Massachusetts Bay Transportation Authority:
Take the MBTA Red Line train or Commuter Rail to the South Station MBTA stop. Exit the train station and walk across Atlantic Avenue (towards Summer Street and Federal Street). Follow Summer Street to Lincoln Street.
What is the record date for the meeting?
Our Board of Directors has fixed the record date for the annual meeting as of the close of business on March 9, 2018.11, 2020.
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How many votes can be cast by all shareholders?
As of the record date, 367,874,930352,200,608 shares of our common stock were outstanding and entitled to be voted at the meeting. Each share of common stock is entitled to one vote on each matter.
How do I vote?
If your shares are registered in your name, you may vote in person atonline while virtually attending the annual meeting by visitingwww.virtualshareholdermeeting.com/STT2020 or by proxy without attending the meeting. Registered shareholders may also vote by telephone or on the Internet prior to the meeting by following the instructions included with your proxy card or the notice we mailed to you on April [•], 2018.8, 2020. In addition, if you received a printed proxy card, you may mark, sign, date and mail the proxy card you received from State Street in the postage-paid return envelope. If you vote in accordance with any of the available methods, your shares will be voted at the meeting pursuant to your instructions. If you sign and return the proxy card or vote by telephone or on the Internet but do not provide voting instructions on some or all of the proposals, your shares will be voted by the persons named in the proxy card on all uninstructed proposals in accordance with the recommendations of the Board of Directors given below.
If your shares are held in “street name” by a broker, bank or other nominee, that person, as the record holder of your shares, is required to vote your shares according to your instructions. Your bank, broker or other nominee will send you directions on how to vote those shares, which may include the ability to instruct the voting of your shares by telephone or on the Internet.Internet prior to the meeting.
If your shares are registered in your name or if your shares are held by a broker, bank or other nominee and you wish to vote in person atonline while virtually attending the meeting, you must obtain fromwill need to access the record holder, and bring with you tolive audio webcast of the meeting a legal proxy fromatwww.virtualshareholdermeeting.com/ STT2020 and follow the record holder issued in your name. Please note that this legal proxy from the record holder is in addition to the picture identification and proof of beneficial ownership requiredinstructions for your admission into the meeting.shareholder voting.
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General Information(cont.) | 2020 NOTICE OF MEETING AND PROXY STATEMENT |
What are the Board’s recommendations on how to vote my shares?
The Board of Directors recommends a vote:
Item 1 – 1—FOR election of the 1011 nominees named herein as directors (page 12)16)
Item 2 – 2—FOR approval of the advisory proposal on executive compensation (page 67)69)
Item 3 – 3—FOR amending the Articles of Organization to implement a majority voting standard for specified corporate actions (page 68)
Item 4 – FOR ratification of the selection of the independent registered public accounting firm (page 71)72)
Additionally, if other matters are presented at the annual meeting, the persons named in the proxy card as proxy holders are authorized to vote on the additional matters as they determine.
Who pays the cost for soliciting proxies by State Street?
State Street will pay the cost for the solicitation of proxies by the Board. The solicitation of proxies will be made primarily by mail and electronic means. State Street has retained Georgeson Inc. to aid in the solicitation of proxies for a fee of $19,500, plus expenses. Proxies may also be solicited by employees of State Street and its subsidiaries personally, or by mail, telephone, fax ore-mail, without any remuneration to such employees other than their regular compensation. State Street will reimburse brokers, banks, custodians, other nominees and fiduciaries for forwarding these materials to their principals to obtain authorization for the execution of proxies.
What is householding?
Some banks, brokers and other nominee record holders may be “householding” our proxy statements, annual reports and related materials. “Householding” means that only one copy of these documents may have been sent to multiple shareholders in one household. If you would like to receive your own set of State Street’s proxy statements, annual reports and related materials, or if you share an address with another State Street shareholder and together both of you would like to receive only a single set of these documents, please contact your bank, broker or other nominee.
May I change my vote?
If you are a registered shareholder, you may change your vote or revoke your proxy at any time before it is voted by notifying the Secretary in writing, by returning a signed proxy with a later date, by submitting an electronic proxy as of a later date or by virtually attending the meeting and voting in person.online during the meeting. If your shares are held in “street name,” you must contact your bank, broker or other nominee for instructions on changing your vote.
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What constitutes a quorum?
A majority of the votes entitled to be cast on a matter constitutes a quorum for action on that matter. A share once represented for any purpose at the annual meeting will be deemed present for determination of a quorum for the entire meeting and for any adjournment of the meeting (unlessmeeting; unless (1) a shareholder attends solely to object to lack of notice, defective notice or the conduct of the meeting on other grounds and the shareholder does not vote the shares or otherwise consent that they are to be deemed present or (2) in the case of an adjournment, a new record date is set for that adjourned meeting).meeting. Shares present virtually during the annual meeting will be considered shares represented in person at the meeting.
What vote is required to approve each item?
Since it is an uncontested election of directors at the annual meeting, a nominee for director will be elected to the Board of Directors if the votes cast “for” the nominee’s election exceed the votes cast “against” the nominee’s election (Item 1). If the votes cast “against” the nominee’s election exceed the votes cast “for” the nominee’s election, the nominee will not be elected to the Board of Directors. However, under Massachusetts law, if a nominee that is an incumbent director is not elected to the Board of Directors, that incumbent director will “hold over” in office as a director until his or her successor is elected or until there is a decrease in the number of directors. Under our Corporate Governance Guidelines, in an uncontested election of directors, any incumbent director who does not receive more votes cast “for” his or her election than votes cast “against” his or her election will submit to the Board a letter of resignation for consideration by the Nominating and Corporate Governance Committee. After consideration, that Committee would make a recommendation to the Board on action to be taken regarding the resignation. No such tendered resignation will be deemed effective unless and until it is accepted by action of the Board.
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General Information(cont.) | 2020 NOTICE OF MEETING AND PROXY STATEMENT |
The actions concerning the advisory proposal on executive compensation (Item 2) and the ratification of the selection of the independent registered public accounting firm (Item 4)3) will be approved if the votes cast “for” the action exceed the votes cast “against” the action. Items 2 and 43 arenon-binding proposals. The proposal to amend the Articles of Organization to implement a majority voting standard for specified corporate actions (Item 3) requires the affirmative vote of at leasttwo-thirds of the outstanding shares of our common stock to be approved.
How is the vote counted?
Votes cast by proxy or in person at the annual meeting will be counted by the persons appointed by State Street to act as tellers for the meeting.
“Abstentions” and “brokernon-votes” are not counted as votes with respect to any of the items to be voted on at the annual meeting. With respect to the proposal to amend the Articles of Organization to implement a majority voting standard for specified corporate actions (Item 3), abstentions and brokernon-votes will have the same effect as a vote against the proposal.
Stock exchange rules permit a broker to vote shares held in a brokerage account on “routine” proposals if the broker does not receive voting instructions from you. Stock exchange and SEC rules, however, prohibit brokers from voting uninstructed shares in the election of directors and executive compensation matters. Accordingly, of the matters to be voted on at the annual meeting, we believe the only “routine” proposal is the ratification of the selection of the independent registered public accounting firm (Item 4)3).
Where is the meeting held?
The annual meeting will be conducted via live audio webcast at:www.virtualshareholdermeeting.com/STT2020.
Due to the current Coronavirus (COVID-19) public health crisis, the annual meeting of shareholders will be conducted online via live audio webcast. Holding the annual meeting of shareholders in person could pose a risk to the health and safety of our shareholders, employees and directors, and as a result, we have decided to hold the annual meeting virtually. You will be able to participate, submit questions and vote your shares electronically. To do so, you will need to visitwww.virtualshareholdermeeting.com/STT2020 and use the 16-digit control number provided with the voting instructions.
Please allow ample time for the online check-in process. If you encounter any difficulties accessing the virtual meeting during the check-in or meeting time, please call the technical support number that will be posted on the login page hosting the virtual meeting.
How do I submit a question at the annual meeting?
If you wish to submit a question on the day of the annual meeting, beginning at 9:00 a.m., Eastern Time on May 20, 2020, you may login and ask a question atwww.virtualshareholdermeeting.com/STT2020. The annual meeting will be governed by our meeting guidelines posted atwww.virtualshareholdermeeting.com/STT2020 in advance of the meeting. The meeting guidelines will address the ability of shareholders to ask questions during the meeting, including rules on permissible topics, and rules for how questions and comments will be recognized and disclosed to meeting participants.
What happens if the meeting is postponed or adjourned?
Your proxy may be voted at the postponed or adjourned meeting. You will still be able to change your proxy until it is voted.
May I see a list of shareholders entitled to notice of the meeting as of the record date?
A list of our registered shareholders as of the close of business on the record date will be made available to shareholders during the meeting atwww.virtualshareholdermeeting.com/STT2020. To access such list of registered holders beginning April 10, 2020 and until the meeting, shareholders should email State Street Investor Relations at IR@statestreet.com.
What are my rights as a participant in the Salary Savings Program?
As part of its employee benefits program, State Street maintains a 401(k) plan called the Salary Savings Program, or SSP. If you participate in the SSP and have invested part or all of your account in the Employee Stock Ownership Plan fund, you are considered a named fiduciary and may direct the voting of the State Street Corporation common stock allocated to your account as of the record date.
You may give direction on the Internet, by telephone or by mail. If you do not provide timely direction as to how to vote your allocated share, your allocated share will be voted on the same proportional basis as the shares that are directed by other participants. If a matter arises at
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General Information(cont.) | 2020 NOTICE OF MEETING AND PROXY STATEMENT |
the meeting, or such other time as affords no practical means for securing participant direction, the trustee will follow the direction of the Committee designated by the Plan Sponsor, or its designee. Voting of your allocated share will occur as described above unless the trustee or plan administrator (or its designee), as applicable, determines that doing so would result in a breach of its fiduciary duty.
You must direct your vote in advance of the annual meeting so that the trustee, the registered owner of all of the shares held in the SSP, can vote in a timely manner. Regardless of what method you use to direct the trustee, the trustee must receive your
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direction no later than 11:59 p.m. Eastern Time on May 14, 201818, 2020 for your direction to be counted. Your direction will be held in confidence by the trustee. You may not provide this direction at the annual meeting. You may change your direction to the trustee by timely submitting a new direction. The last direction the trustee receives by 11:59 p.m. Eastern Time on May 14, 2018,18, 2020, will be the only one counted. If your direction by mail is received on the same day as the one received electronically, the electronic direction will be followed.
The trustee is providing the annual report, the notice of annual meeting and the proxy statement electronically to SSP participants with State Street stock in the SSP who are active employees and have a State Street-providede-mail account and Internet access. Instead of receiving these materials in paper form mailed to your home, you will haveon-line access to these materials over the Internet, thus expediting the delivery of materials and reducing printing and mailing costs. Ane-mail will be sent to all such participants with detailed instructions to access materials and give your direction ofto the trustee. You may request that paper copies be sent to you, thereby permitting you to send in your direction by mail if you prefer that method. All other participants will receive their materials in the mail.
The Board of Directors does not know of any other matters that may be presented for action at the annual meeting. Under ourby-laws, the deadline for shareholders to notify us of any proposals or director nominations to be presented for action at the 20182020 annual meeting has passed. Should any other business properly come before the meeting, the persons named on the enclosed proxy will, as stated therein, have discretionary authority to vote the shares represented by such proxies in accordance with their best judgment. See the discussion in this proxy statement under the heading “General Information About the Meeting—Questions and Answers About Voting.”
Proposals and Nominations by Shareholders
Shareholders who wish to present proposals for inclusion in State Street’s proxy materials for the 20192021 annual meeting of shareholders may do so by following the procedures prescribed in Rule14a-8 under the Exchange Act and State Street’sby-laws. To be eligible for inclusion in State Street’s proxy materials, the shareholder proposals must be received by the Secretary on or before December 6, 2018.9, 2020.
State Street’s proxy access provision permits a shareholder, or a group of up to 20 shareholders, to include director nominees in State Street’s proxy materials director nominees constituting up to 20% of the Board;materials; provided that: (1) the nominating shareholder(s) own a number of shares representing 3% or more of the total voting power of State Street’s outstanding shares of capital stock entitled to vote on the election of directors; (2) the nominating shareholder(s) have owned that number of shares continuously for at least 3 years; and (3) the nominating shareholder(s) and their director nominee(s) satisfy the requirements of Article I, Section 7(c) of theby-laws, including its requirement of timely written notice. To be timely, a proxy access notice with respect to the 20192021 annual meeting must be delivered to the Secretary no earlier than December 17, 201821, 2020 and no later than January 16, 201920, 2021 unless the date of the 20192021 annual meeting is advanced by more than 30 days or delayed by more than 60 days from the anniversary date of the 20182020 annual meeting, in which event Article I, Section 7(c) of theby-laws provides different notice requirements.
Under State Street’sby-laws, nominations for directors and proposals of business other than those to be included in State Street’s proxy materials as described above may be made by shareholders entitled to vote at the meeting if notice is timely given, contains the information required by theby-laws and such business is within the purposes specified in our notice of meeting. Except as noted below, to be timely, a notice with respect to the 20192021 annual meeting must be delivered to the Secretary no earlier than February 15, 201919, 2021 and no later than March 17, 201921, 2021 unless the date of the 20192021 annual meeting is advanced by more than 30 days or delayed by more than 60 days from the anniversary date of the 20182020 annual meeting, in which event theby-laws provide different notice requirements.
State Street’sby-laws specify requirements relating to the content of the notice that shareholders must provide to the Secretary, including a shareholder nomination for director, to be properly presented at a shareholder meeting.
Any proposal of business or nomination should be mailed to: Office of the Secretary, State Street Corporation, One Lincoln Street, Boston, Massachusetts 02111.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Security Ownership of Certain Beneficial Owners and Management
The table below sets forth the number of shares of common stock of State Street beneficially owned as of the close of business on December 31, 20172019 by each person or entity known to State Street to beneficially own five percent or more of our outstanding common stock.
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Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percent of Class | ||||||||||
BlackRock, Inc. 55 East 52nd Street New York, NY 10055 | 28,525,724 | (1) | 7.8 | % | ||||||||
The Vanguard Group 100 Vanguard Boulevard Malvern, PA 19355 | 28,325,975 | (2) | 7.7 | % | ||||||||
Massachusetts Financial Services Company (MFS) 111 Huntington Avenue Boston, MA 02199 | 23,786,425 | (3) | 6.5 | % | ||||||||
T. Rowe Price Associates, Inc. 100 E. Pratt Street Baltimore, MD 21202 | 23,658,652 | (4) | 6.5 | % | ||||||||
Longview Partners (Guernsey) Limited PO Box 559 Mill Court La Charroterie St Peter Port Guernsey GY1 6JG | 19,337,044 | (5) | 5.4 | % |
(1) | This information is based solely on a Schedule 13G filed with the SEC on February |
(2) | This information is based solely on a Schedule 13G filed with the SEC on February |
(3) | This information is based solely on a Schedule 13G filed with the SEC on February |
(4) | This information is based solely on a Schedule 13G filed with the SEC on |
(5) |
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| 2020 NOTICE OF MEETING AND PROXY STATEMENT |
The table below sets forth the number of shares of State Street common stock beneficially owned as of the close of business on March 1, 20182, 2020 by (1) each director, (2) the named executive officers as identified in the Summary Compensation Table on page 49 of this proxy statement and (3) all current directors and executive officers as a group. For this purpose, beneficial ownership is determined under the rules of the SEC. As of March 1, 2018,2, 2020, there were 368,769,990352,465,765 shares of State Street common stock outstanding. On March 1, 2018,2, 2020, each executive officer and director listed below individually, and those individuals as a group, owned beneficially less than 1% of the outstanding shares of common stock.
Name | Amount and Nature of Beneficial Ownership(1) | ||||
Eric W. Aboaf |
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Francisco Aristeguieta | 62,183 | ||||
Kennett F. Burnes | 76,082 | ||||
Jeffrey N. Carp | 154,891 | ||||
Marie A. Chandoha | 2,128 | ||||
Patrick de Saint-Aignan | 31,793 | ||||
Dugle | 10,949 | ||||
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Andrew J. Erickson | 33,868 | ||||
Amelia C. Fawcett | 38,204 | ||||
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William C. Freda | 12,859 | ||||
Sara Mathew | 5,210 | ||||
William L. Meaney | 5,385 | ||||
Ronald P. O’Hanley | 103,358 | ||||
Sean O’Sullivan | 7,256 | ||||
Richard P. Sergel | 58,862 | (2) | |||
Gregory L. Summe | 83,056 | ||||
All | 992,370 | (2)(3) |
(1) | Information in this table includes shares that the individual or group has the right to acquire within 60 days of March |
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Includes 3,111 shares held by a family member. |
(3) | Includes 13,755 shares held in trust for which a current executive officer disclaims beneficial ownership except to the extent of their pecuniary interest therein. |
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Security Ownership(cont.) | 2020 NOTICE OF MEETING AND PROXY STATEMENT |
Delinquent Section 16(a) Beneficial Ownership Reporting ComplianceReports
Section 16(a) of the Exchange Act requires State Street’s directors, executive officers and any beneficial owners of more than 10% of our common stock to file reports of ownership and changes in ownership with the SEC. State Street is not aware of any 10% beneficial owners. On June 27, 2017,November 19, 2019 Joseph L. Hooley filed an untimely Form 4 to report an October 1, 2019 automatic cash settlement of a June 9, 2017 automated conversionnotional investment based on a dividend reinvestment under the terms of the State Street common stock interests under the Boston Financial Data Services, Inc., or BFDS, deferred compensation plan into another investment option. This automatic conversion was related to DST Systems, Inc.’s acquisition of State Street’s interest in BFDS. Mr. Hooley’s participation in the plan resulted from his previously disclosed employment at BFDS, which ended in 2000.Corporation Management Supplemental Savings Plan. Based on State Street’s review, of the reports it has received and written representations from its directors and executive officers, State Street believes that all of its directors and officers otherwise complied with all Section 16(a) reporting requirements applicable to them with respect to transactions in 2017.2019.
Notice of Amendment of By-Laws
On February 20, 2020, State Street’s Board of Directors amended State Street’s by-laws to allow for the removal of any director with or without cause at a meeting of shareholders duly called and noticed for that purpose. The full text of State Street’s by-laws, as amended is filed as Exhibit 3.1 to State Street’s Current Report on Form 8-K filed with the SEC on February 20, 2020.
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2020 NOTICE OF MEETING AND PROXY STATEMENT |
Excerpt from State Street’s Corporate Governance Guidelines
The Board will have a majority of directors who meet the criteria for independence required by the New York Stock Exchange (NYSE) corporate governance standards. The Board has adopted the following guidelines to assist it in determining director independence in accordance with the NYSE standards. To be considered independent, the Board must determine, after review and recommendation by the Nominating and Corporate Governance Committee, that the director has no direct or indirect material relationship with the Company. The Board has established the following categorical guidelines to assist it in determining independence:
a. | A director will not be independent if he or she does not satisfy any of the bright-line tests set forth in Section 303A.02 (b) of the NYSE Listed Company Manual. |
b. | The following commercial or charitable relationships will not be considered to be material relationships that would impair a director’s independence: (i) if the State Street director or a member of such director’s immediate family (as defined in Section 303A of the NYSE Listed Company Manual) is a director or owner of less than a 10% ownership interest of another company (including atax-exempt organization) that does business with the Company; provided such State Street director is not involved in negotiating the transaction; (ii) if the State Street director or a member of such director’s immediate family is a current employee, consultant or executive officer of another company (including atax-exempt organization) that does business with the Company; provided that, (x) where the State Street director is an employee, consultant or executive officer of the other company, neither the director nor any of his or her immediate family members receives any special benefits as a result of the transaction and (y) the annual payments to, or payments from, the Company from, or to, the other company, for property or services in any completed fiscal year in the last three fiscal years are equal to or less than the greater of $1 million, or two percent of the consolidated gross annual revenues of the other company during the last completed fiscal year of the other company; and (iii) if the State Street director or member of such director’s immediate family is a director, trustee, employee or executive officer of atax-exempt organization that receives discretionary charitable contributions from the Company; provided such State Street director and his or her Immediate Family Members do not receive any special benefits as a result of the transaction; and further provided that, where the director or immediate family member is an executive officer of thetax-exempt organization, the amount of discretionary charitable contributions in any completed fiscal year in the last three fiscal years are not more than the greater of $1 million, or two percent of that organization’s consolidated gross revenues in the last completed fiscal year of that organization (in applying this test, State Street’s automatic matching of employee charitable contributions to a charitable organization will not be included in the amount of State Street’s discretionary contributions). |
c. | The following commercial relationships will not be considered to be a material relationship that would impair a director’s independence: lending relationships, deposit relationships or other banking relationships (such as depository, transfer, registrar, indenture trustee, trusts and estates, private banking, investment management, custodial, securities brokerage, cash management and similar services) between State Street and its subsidiaries, on the one hand, and a company with which the director or such director’s immediate family member is affiliated by reason of being a director, employee, consultant, executive officer, general partner or an equity holder thereof, on the other, provided that: (i) such relationships are in the ordinary course of the Company’s business and are on substantially the same terms as those prevailing at the time for comparable transactions withnon-affiliated persons; (ii) with respect to a loan by the Company to such company or its subsidiaries, such loan has been made in compliance with applicable law, including Regulation O of the Board of Governors of the Federal Reserve and Section 13(k) of the Securities Exchange Act of 1934, such loan did not involve more than the normal risk of collectability or present other unfavorable features, and no event of default has occurred under the loan; and (iii) payments to the Company for property or services (including fees and interest on loans but not including principal repayments) from such company does not exceed the limit provided in (b)(ii) above. |
If a relationship is described by the categorical guidelines contained in both paragraphs b. and c. above, it will not be considered to be a material relationship that would impair a director’s independence if it satisfies all of the applicable requirements of either paragraph b. or c. For relationships not covered by the categorical guidelines (either because they involve a different type of relationship or a different dollar amount), the determination of whether the relationship is material or not, and therefore whether the director would be independent or not, shall be made by the directors who satisfy the independence guidelines set forth above. The Company will explain in the next proxy statement the basis for any Board determination that a relationship was immaterial despite the fact that it did not meet the categorical guidelines of immateriality set forth above.
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2020 NOTICE OF MEETING AND PROXY STATEMENT |
Proposed Amendment and Restatement of Article 6 of State Street Articles of Organization
Article 6
By-laws
The board of directors is authorized to make, amend or repeal theby-laws of the corporation in whole or in part, except with respect to any provision thereof which by law, by these Articles oforganizationOrganization or by theby-laws requires action by thestockholdersshareholders.
Theby-laws of theCorporationcorporation may, but are not required to, provide that in a meeting ofthe shareholders other than a Contested Election Meeting (as defined below), a nominee for director shall be electedState Street’s Governance Standards Relative to the board of directors only if the votes cast “for” such nominee’s election exceed the votes cast “against” such nominee’s election (with “abstentions,” “brokernon-votes”Investor Stewardship Group’s (ISG) Corporate Governance Framework and “withheld votes” not counted as a vote “for” or “against” such nominee’s election). In a Contested Election Meeting, directors shall be elected by a plurality of the votes cast at such Contested Election Meeting. A meeting ofthe shareholders shall be a “Contested Election Meeting” if there are more persons nominated for election as directors at such meeting than there are directors to be elected at such meeting, determined as of the tenth day preceding the date of theCorporation’scorporation’s first notice to shareholders of such meeting sent pursuant to theCorporation’scorporation’sby-laws (the “Determination Date”); provided, however, that in accordance with theCorporation’scorporation’s,by-laws, shareholders are entitled to make nominations during a period of time that ends after the otherwise applicable Determination Date, the Determination Date shall instead be as of the end of such period.
Place of Meetings of theStockholdersShareholders
Meetings of thestockholdersshareholders may be held anywhere in the United States.
Partnership
The corporation may be a partner in any business enterprise which the corporation would have power to conduct by itself.
Indemnification of Directors, Officers and Others
The corporation shall to the fullest extent legally permissible indemnify each person who is or was a director, officer, employee or other agent of the corporation and each person who is or was serving at the request of the corporation as a director, trustee, officer, employee or other agent of another corporation or of any partnership, joint venture, trust, employee benefit plan or other enterprise or organization against all liabilities, costs and expenses, including but not limited to amounts paid in satisfaction of judgments, in settlement or as fines and penalties, and counsel fees and disbursements, reasonably incurred by him in connection with the defense or disposition of or otherwise in connection with or resulting from any action, suit or other proceeding, whether civil, criminal, administrative or investigative, before any court or administrative or legislative or investigative body, in which he may be or may have been involved as a party or otherwise or with which he may be or may have been threatened, while in office or thereafter, by reason of his being or having been such a director, officer, employee, agent or trustee, or by reason of any action taken or not taken in any such capacity, except with respect to any matter as to which he shall have been finally adjudicated by a court of competent jurisdiction not to have acted in good faith in the reasonable belief that his action was in the best interests of the corporation (any person serving another organization in one or more of the indicated capacities at the request of the corporation who shall not have been adjudicated in any proceeding not to have acted in good faith in the reasonable belief that his action was in the best interest of such other organization shall be deemed so to have acted in good faith with respect to the corporation) or to the extent that such matter relates to service with respect to an employee benefit plan, in the best interest of the participants or beneficiaries of such employee benefit plan. Expenses, including but not limited to counsel fees and disbursements, so incurred by any such person in defending any such action, suit or proceeding, may be paid from time to time by the corporation in advance of the final disposition of such action, suit or
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proceeding upon receipt of an undertaking by or on behalf of the person indemnified to repay the amounts so paid if it shall ultimately be determined that indemnification of such expenses is not authorized hereunder.
If, in an action, suit or proceeding brought by or in the name of the corporation, a director of the corporation is held not liable for monetary damages, whether because that director is relieved of personal liability under the provisions of this Article Six of the Articles of Organization, or otherwise, that director shall be deemed to have met the standard of conduct set forth above and to be entitled to indemnification for expenses reasonably incurred in the defense of such action, suit or proceeding.
As to any matter disposed of by settlement by any such person, pursuant to a consent decree or otherwise, no such indemnification either for the amount of such settlement or for any other expenses shall be provided unless such settlement shall be approved as in the best interests of the corporation, after notice that it involves such indemnification, (a) by vote of a majority of the disinterested directors then in office (even though the disinterested directors be less than a quorum), or (b) by any disinterested person or persons to whom the question may be referred by vote of a majority of such disinterested directors, or (c) by vote of the holders of a majority of the outstanding stock at the time entitled to vote for directors, voting as a single class, exclusive of any stock owned by any interested person, or (d) by and disinterested person or persons to whom the question may be referred by vote of the holders of a majority of such stock. No such approval shall prevent the recovery from any such officer, director, employee, agent or trustee of any amounts paid to him or on his behalf as indemnification in accordance with the preceding sentence if such person is subsequently adjudicated by a court of competent jurisdiction not to have acted in good faith in the reasonable belief that his action was in the best interests of the corporation.
The right of indemnification hereby provided shall not be exclusive of or affect any other rights to which any director, officer, employee, agent or trustee may be entitled or which may lawfully be granted to him. As used herein, the terms “director”, “officer”, “employee”, “agent” and “trustee” include their respective executors, administrators and other legal representatives, an “interested” person is one against whom the action, suit or other proceeding in question or another action, suit or other proceeding on the same or similar grounds is then or had been pending or threatened, and a “disinterested” person is a person against whom no such action, suit or other proceeding is then or had been pending or threatened.
By action of the board of directors, notwithstanding any interest of the directors in such action, the corporation may purchase and maintain insurance, in such amounts as the board of directors may from time to time deem appropriate, on behalf of any person who is or was a director, officer, employee or other agent of the corporation, or is or was serving at the request of the corporation as a director, trustee, officer, employee or other agent of another corporation or of any partnership, joint venture, trust, employee benefit plan or other enterprise or organization, against any liability incurred by him in any such capacity, or arising out of his status as such, whether or not the corporation would have the power to indemnify him against such liability.
Intercompany Transactions
No contract or transaction between the corporation and one or more of its directors or officers, or between the corporation any other organization of which one or more of its directors or officers are directors, trustees or officers, or in which any of them has any financial or other interest, shall be void or voidable, or in any way affected, solely for this reason, or solely because the director or officer is present at or participates in the meeting of the board of directors or committee thereof which authorizes, approves or ratifies the contract or transaction, if:
ISG Principle (for U.S. Listed Companies) |
Governance Standards | |
Principle 1 Boards are accountable to | • All directors stand for shareholder election annually • Majority voting standard in uncontested director elections, and incumbent directors not receiving majority support must tender their resignation for consideration by the Board • Proxy access for shareholders • Board annually reviews and approves Corporate Governance Guidelines to assist in the exercise of duties and responsibilities. These Guidelines, along with Board committee charters, standards of conduct and other governance information, are posted on State Street’s website | |
Principle 2 Shareholders should be entitled to voting rights in proportion to their economic interest | • One class of common stock, with each share carrying equal voting rights (a“one-share,one-vote” standard) | |
Principle 3 Boards should be responsive to shareholders and | • Process in place for shareholders and interested parties to communicate with Lead Director • Proactive annual shareholder engagement provides feedback to relevant Board committees | |
Principle 4 Boards should have a strong, independent leadership structure | • Strong independent Lead Director with clearly defined duties that are disclosed • Annual public disclosure of the • All principal Board committees have independent chairs | |
Principle 5 Boards should adapt structures and practices that enhance their effectiveness | • 10 of 11 director nominees are independent • Directors reflect a diverse mix of industry, regulatory, management, technology, risk and other experience and skills relevant to State Street’s businesses and strategies • 4 out of 11 director nominees are women • Active Board refreshment with 6 new directors • Key Board committees (Examining and Audit Committee; Human Resources Committee; and Nominating and Corporate Governance Committee) are fully independent. State Street also has a Risk Committee, on which the Chairman serves along with 4 independent directors • Annual Board-level assessment of each director’s contributions, skills, committee assignments and tenure when analyzing the overall composition and effectiveness of the Board • Board has full and free access to officers and employees • During 2019, each of the incumbent directors attended at least 75% of the total of all meetings of the Board and committees on which the director served during his or her service as a director, and each of the 11 nominees who were then a director attended the 2019 annual shareholder meeting | |
Principle 6 Boards should develop management incentive structures that are aligned with the long-term strategy of the company | • Executive compensation program received over 90% shareholder support at the 2019 annual meeting of shareholders • Human Resource Committee evaluates corporate performance, individual performance and market, regulatory and shareholder considerations when making total compensation determinations for each member of State Street’s Management Committee, which includes all executive officers - Corporate performance is determined by assessing the company’s financial performance, achievement of strategic objectives and risk management performance - Individual performance assessments are determined based on the executive’s strategic, financial, risk excellence and leadership contributions • Corporate and individual performance assessments for Named Executive Officers are described below under the heading “Compensation Discussion and Analysis” |
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B-2
State Street Corporation | B-1 |
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Common or interested directors may be counted in determining the presence of a quorum at a meeting of the board of directors or of a committee thereof which authorizes, approves or ratifies the contract or transaction. No director or officer of the corporation shall be liable or accountable to the corporation or to any of itsstockholdersshareholders or creditors or to any other person, either for any loss to the corporation or to any other person or for any gains or profits realized by such director or officer, by reason of any contract or transaction as to which clauses (a), (b) or (c) above are applicable.
A director of this corporation shall not be personally liable to the corporation or itsstockholdersshareholders for monetary damages for breach of fiduciary duty as a director notwithstanding any provision of law imposing such liability, provided, however, that this paragraph of Article Six shall not eliminate the liability of a director to the extent such liability is imposed by applicable law (i) for any breach of the director’s duty of loyalty to this corporation or itsstockholdersshareholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) for any transaction from which the director derived an improper personal benefit, or (iv) for paying a dividend, approving a stock repurchase or making loans which are illegal under certain provisions of Massachusetts law, as the same exists or hereafter may be amended. If Massachusetts law is hereafter amended to authorize the further limitation of the legal liability of the directors of this corporation, the liability of the directors shall then be deemed to be limited to the fullest extent then permitted by Massachusetts law as so amended. Any repeal or modification of this paragraph of this Article Six which may hereafter be effected by thestockholdersshareholders of this corporation shall be prospective only, and shall not adversely affect any limitation on the liability of a director for acts or omissions prior to such repeal or modification.Appendix C
Vote Required for Certain MattersReconciliation ofNon-GAAP Measures
As permitted pursuantIn addition to Section 7.27(b) of the Massachusetts Business Corporation Act (the “MBCA”), the corporation has providedpresenting State Street’s financial results in conformity with U.S. generally accepted accounting principles, or GAAP, management also presents certain financial information on a basis that the following actions will require the specific shareholder vote provided below:
Domestication into Foreign Jurisdiction
Unless a greater percentage vote,excludes or action byadjusts one or more items from GAAP. This latter basis is anon-GAAP presentation. In general, ournon-GAAP financial results adjust selected GAAP-basis financial results to exclude the impact of revenue and expenses outside of State Street’s normal course of business or other notable items, such as acquisition and restructuring charges, repositioning charges, gains/losses on sales. Management believes that this presentation of financial information facilitates an investor’s and the Committee’s further understanding and analysis of State Street’s financial performance and trends with respect to State Street’s business operations fromperiod-to-period, including providing additional separate voting groups, is required by these Articles of Organization, by theinsight into our underlying margin and profitability.
by-lawsNon-GAAP of the corporation, pursuant to Section 10.21 of the MBCA, or by the board of directors of the corporation, acting pursuant to subsection (3) of Section 9.21 of the MBCA, approval of a plan of domestication of the corporation to a foreign jurisdiction in accordance with Section 9.21 of the MBCA shall require the affirmative vote of at least a majority of all the shares entitled generally to vote on the matter by these Articles of Organization, andfinancial measures should be considered in addition at leastto, not as a majority of the sharessubstitute for or superior to, financial measures determined in any voting group entitled to vote separately on the matter by the MBCA, by these Articles of Organization, by theby-laws of the corporation, or by action of the board of directors pursuant to subsection (3) of Section 9.21 of the MBCA.
Entity Conversion
Unless a greater percentage vote, or action by one or more additional separate voting groups, is required by these Articles of Organization, by theby-laws of the corporation, pursuant to Section 10.21 of the MBCA, or by the board of directors of the corporation, acting pursuant to subsection (3) of Section 9.52 of the MBCA, approval of a plan of entity conversion to a domestic or foreign other entity in accordanceconformity with Section 9.52 of the MBCA shall require the affirmative vote of at least a majority of all the shares entitled generally to vote on the matter by these Articles of Organization, and in addition at least a majority of the shares in any voting group entitled to vote separately on the matter by the MBCA, by these Articles of Organization, by theby-laws of the corporation, or by action of the board of directors pursuant to subsection (3) of Section 9.52 of the MBCA.GAAP.
2H19 vs 1H19 Change | 2019 vs 2018 Change | |||||||||||||||||||||||||||||||||||||||||||||||
(Dollars in millions, except | 1Q19 | 2Q19 | 1H19 | 3Q19 | 4Q19 | 2H19 | Amount | % | 2018 | 2019 | Amount | % | ||||||||||||||||||||||||||||||||||||
Fee Revenue: | ||||||||||||||||||||||||||||||||||||||||||||||||
Total revenue, GAAP-basis | $ | 2,260 | $ | 2,260 | $ | 4,520 | $ | 2,259 | $ | 2,368 | $ | 4,627 | $ | 107 | 2.4% | $ | 9,454 | $ | 9,147 | $ | (307 | ) | (3.2 | )% | ||||||||||||||||||||||||
Add: Legal and related | — | — | — | — | — | — | 8 | — | ||||||||||||||||||||||||||||||||||||||||
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Total revenue, excluding notable items | $ | 2,260 | $ | 2,260 | $ | 4,520 | $ | 2,259 | $ | 2,368 | $ | 4,627 | 107 | 2.4% | $ | 9,462 | $ | 9,147 | $ | (315 | ) | (3.3 | )% | |||||||||||||||||||||||||
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Total Revenue: | ||||||||||||||||||||||||||||||||||||||||||||||||
Total revenue, GAAP-basis | $ | 2,932 | $ | 2,873 | $ | 5,805 | $ | 2,903 | $ | 3,048 | $ | 5,951 | $ | 146 | 2.5% | $ | 12,131 | $ | 11,756 | $ | (375 | ) | (3.1 | )% | ||||||||||||||||||||||||
Add: Legal and related | — | — | — | — | — | — | 8 | — | ||||||||||||||||||||||||||||||||||||||||
Less: Other income | — | — | — | — | (44 | ) | (44 | ) | — | (44 | ) | |||||||||||||||||||||||||||||||||||||
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Total revenue, excluding notable items | $ | 2,932 | $ | 2,873 | $ | 5,805 | $ | 2,903 | $ | 3,004 | $ | 5,907 | $ | 102 | 1.8% | $ | 12,139 | $ | 11,712 | $ | (427 | ) | (3.5 | )% | ||||||||||||||||||||||||
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Total Expenses: | ||||||||||||||||||||||||||||||||||||||||||||||||
Total expense, GAAP-basis | $ | 2,293 | $ | 2,154 | $ | 4,447 | $ | 2,180 | $ | 2,407 | $ | 4,587 | $ | 140 | 3.1% | $ | 9,015 | $ | 9,034 | $ | 19 | 0.2 | % | |||||||||||||||||||||||||
Less: Acquisition and restructuring costs | (9 | ) | (12 | ) | (21 | ) | (27 | ) | (29 | ) | (56 | ) | (24 | ) | (77 | ) | ||||||||||||||||||||||||||||||||
Less: Repositioning charges | — | — | — | — | (110 | ) | (110 | ) | (324 | ) | (110 | ) | ||||||||||||||||||||||||||||||||||||
Less: Legal and related | (14 | ) | — | (14 | ) | (18 | ) | (140 | ) | (158 | ) | (42 | ) | (172 | ) | |||||||||||||||||||||||||||||||||
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Total expense, excluding notable items | $ | 2,270 | $ | 2,142 | $ | 4,412 | $ | 2,135 | $ | 2,128 | $ | 4,263 | $ | (149 | ) | (3.4 | )% | $ | 8,625 | $ | 8,675 | $ | 50 | 0.6 | % | |||||||||||||||||||||||
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B-3
State Street Corporation | C-1 |
Amendment to Articles of Organization
Unless a greater percentage vote, or action by one or more additional separate voting groups, is required by these Articles of Organization, by theby-laws of the corporation, pursuant to Section 10.21 of the MBCA, or by the board of directors of the corporation, acting pursuant to subsection (c) of Section 10.03 of the MBCA, adoption of an amendment to these Articles of Organization in accordance with Section 10.03 of the MBCA shall require the affirmative vote of at least a majority of all the shares entitled generally to vote on the matter by these Articles of Organization, and in addition at least a majority of the shares of any voting group entitled to vote separately on the matter by the MBCA, by these Articles of Organization, by theby-laws of the corporation, or by action of the board of directors pursuant to subsection (c) of Section 10.03 of the MBCA.
Merger or Share Exchange
Unless a greater percentage vote, or action by one or more additional separate voting groups, is required by these Articles of Organization, by theby-laws of the corporation, pursuant to Section 10.21 of the MBCA, or by the board of directors of the corporation, acting pursuant to subsection (3) of Section 11.04 of the MBCA, approval by the shareholders of a plan of merger or share exchange in accordance with Section 11.04 of the MBCA shall require the affirmative vote of at least a majority of all the shares entitled generally to vote on the matter by these Articles of Organization, and in addition at least a majority of the shares in any voting group entitled to vote separately on the matter by the MBCA, by these Articles of Organization, by theby-laws of the corporation, or by action of the board of directors pursuant to subsection (3) of Section 11.04 of the MBCA.
Sale of Substantially All of the Property
Unless a greater percentage vote, or action by one or more additional separate voting groups, is required by these Articles of Organization, by theby-laws of the corporation, pursuant to Section 10.21 of the MBCA, or by the board of directors of the corporation, acting pursuant to subsection (b) of Section 12.02 of the MBCA, approval of a sale, lease, exchange or other disposition of all, or substantially all, of the property of the corporation, otherwise than in the usual and regular course of business, in accordance with Section 12.02 of the MBCA shall require the affirmative vote of at least a majority of all the shares entitled generally to vote on the matter by these Articles of Organization, and in addition at least a majority of the shares in any voting group entitled to vote separately on the matter by the MBCA, by these Articles of Organization, by theby-laws of the corporation, or by action of the board of directors pursuant to subsection (b) of Section 12.02 of the MBCA.
Voluntary Dissolution of the Corporation
Reconciliation ofNon-GAAP Measures(cont.) 2020 NOTICE OF MEETING AND PROXY STATEMENT (Dollars in millions, except State Street CorporationUnless a greater percentage vote, or action by one or more additional separate voting groups, is required by these Articles of Organization, by theby-laws of the corporation, pursuant to Section 10.21 of the MBCA, or by the board of directors of the corporation, acting pursuant to subsection (c) of Section 14.02 of the MBCA, adoption of a proposal to dissolve the corporation in accordance with Section 14.02 of the MBCA shall require the affirmative vote of at least a majority of all the votes entitled generally to vote on the matter by these Articles of Organization, and in addition at least a majority of the shares in any voting group entitled to vote separately on the matter by the MBCA, by these Articles of Organization, by theby-laws of the corporation, or by action of the board of directors pursuant to subsection (c) of Section 14.02 of the MBCA. 2H19 vs 1H19
Change 2019 vs 2018
Change
Earnings per share) 1Q19 2Q19 1H19 3Q19 4Q19 2H19 Amount % 2018(1) 2019 Amount % Net Income Available to Common Stockholders: Net Income Available to Common Stockholders, GAAP-basis $ 452 $ 537 $ 989 $ 528 $ 492 $ 1,020 $ 31 3.1% $ 2,404 $ 2,009 $ (395) (16.4)% Less: Acquisition and restructuring costs 9 12 21 27 29 56 24 77 Less: Repositioning charges — — — — 110 110 324 110 Less: Legal and related 14 — 14 18 140 158 50 172 Less: Other Income — — — — (44) (44) — (44) Less: Preferred securities redemption(1) — — — — 22 22 — 22 Tax impact of notable items (2) (3) (5) (12) (25) (37) (89) (42) Net Income Available to Common Stockholders, excluding notable items $ 473 $ 546 $ 1,019 $ 561 $ 724 $ 1,285 $ 266 26.1% $ 2,713 $ 2,304 $ (409) (15.1)% Diluted Earnings per Share: Diluted earnings per share, GAAP-basis $ 1.18 $ 1.42 $ 2.60 $ 1.42 $ 1.35 $ 2.77 $ 0.17 6.5% $ 6.39 $ 5.38 $ (1.01) (15.8)% Less: Acquisition and restructuring costs 0.02 0.03 0.05 0.06 0.06 0.11 0.05 0.16 Less: Repositioning charges — — — — 0.22 0.22 0.65 0.22 Less: Legal and related 0.04 — 0.04 0.03 0.38 0.41 0.12 0.44 Less: Other Income — — — — (0.09) (0.09) — (0.09) Less: Preferred securities redemption(1) — — — — 0.06 0.06 — 0.06 Diluted earnings per share, excluding notable items $ 1.24 $ 1.45 $ 2.69 $ 1.51 $ 1.98 $ 3.48 $ 0.79 29.4% $ 7.21 $ 6.17 $ (1.04) (14.4)% Return on Equity: Return on Equity, GAAP-basis 8.7% 10.1% 9.4% 9.7% 9.0% 9.4% 0 bps 0.9% 12.1% 9.4% (270) bps (22.4)% Less: Acquisition and restructuring costs 0.2% 0.2% 0.2% 0.5% 0.5% 0.5% 0.1% 0.4% Less: Repositioning charges 0.0% 0.0% 0.0% 0.0% 2.0% 1.0% 1.6% 0.5% Less: Legal and related 0.2% 0.0% 0.1% 0.3% 2.6% 1.5% 0.3% 0.7% Less: Other Income 0.0% 0.0% 0.0% 0.0% (0.8)% (0.4)% 0.0% (0.2)% Less: Preferred securities redemption(1) 0.0% 0.0% 0.0% 0.0% 0.4% 0.2% 0.0% 0.1% Tax impact of notable items 0.0% 0.0% 0.0% (0.2)% (0.4)% (0.3)% (0.4)% (0.1)% Return on Equity, excluding notable items 9.1% 10.3% 9.7% 10.3% 13.3% 11.9% 220 bps 22.7% 13.7% 10.8% (290) bps (21.4)% B-4C-2
Reconciliation ofNon-GAAP Measures(cont.) | 2020 NOTICE OF MEETING AND PROXY STATEMENT |
2H19 vs 1H19 Change | 2019 vs 2018 Change | |||||||||||||||||||||||||||||||||||||||||||||||
(Dollars in millions, except | 1Q19 | 2Q19 | 1H19 | 3Q19 | 4Q19 | 2H19 | Amount | % | 2018(1) | 2019 | Amount | % | ||||||||||||||||||||||||||||||||||||
Pre-Tax Margin: | ||||||||||||||||||||||||||||||||||||||||||||||||
Total Revenue: | ||||||||||||||||||||||||||||||||||||||||||||||||
Total revenue, GAAP-basis | $ | 2,932 | $ | 2,873 | $ | 5,805 | $ | 2,903 | $ | 3,048 | $ | 5,951 | $ | 12,131 | $ | 11,756 | ||||||||||||||||||||||||||||||||
Add: Legal and related | — | — | — | — | — | — | 8 | — | ||||||||||||||||||||||||||||||||||||||||
Less: Other Income | — | — | — | — | (44) | (44) | — | (44) | ||||||||||||||||||||||||||||||||||||||||
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Total revenue, excluding notable items | $ | 2,932 | $ | 2,873 | $ | 5,805 | $ | 2,903 | $ | 3,004 | $ | 5,907 | $ | 12,139 | $ | 11,712 | ||||||||||||||||||||||||||||||||
Provision of loan losses | 4 | 1 | 5 | 2 | 3 | 5 | 15 | 10 | ||||||||||||||||||||||||||||||||||||||||
Total Expenses: | ||||||||||||||||||||||||||||||||||||||||||||||||
Total expense, GAAP-basis | $ | 2,293 | $ | 2,154 | $ | 4,447 | $ | 2,180 | $ | 2,407 | $ | 4,587 | $ | 9,015 | $ | 9,034 | ||||||||||||||||||||||||||||||||
Less: Acquisition and restructuring costs | (9) | (12) | (21) | (27) | (29) | (56) | (24) | (77) | ||||||||||||||||||||||||||||||||||||||||
Less: Repositioning charges | — | — | — | — | (110) | (110) | (324) | (110) | ||||||||||||||||||||||||||||||||||||||||
Less: Legal and related | (14) | — | (14) | (18) | (140) | (158) | (42) | (172) | ||||||||||||||||||||||||||||||||||||||||
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Total expense, excluding notable items | $ | 2,270 | $ | 2,142 | $ | 4,412 | $ | 2,135 | $ | 2,128 | $ | 4,263 | $ | 8,625 | $ | 8,675 | ||||||||||||||||||||||||||||||||
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Income before tax expense, excluding notable items | $ | 658 | $ | 730 | $ | 1,388 | $ | 766 | $ | 873 | $ | 1,639 | $ | 3,499 | $ | 3,027 | ||||||||||||||||||||||||||||||||
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Income before tax expense, GAAP- basis | $ | 635 | $ | 718 | $ | 1,353 | $ | 721 | $ | 638 | $ | 1,359 | $ | 3,101 | $ | 2,712 | ||||||||||||||||||||||||||||||||
Pre-tax Margin: | ||||||||||||||||||||||||||||||||||||||||||||||||
Pre-tax Margin, GAAP-basis | 21.7% | 25.0% | 23.3% | 24.8% | 20.9% | 22.8% | (50) bps | (2.0)% | 25.6% | 23.1% | (250) bps | (9.9)% | ||||||||||||||||||||||||||||||||||||
Less: Acquisition and restructuring costs | 0.3% | 0.4% | 0.4% | 1.0% | 1.0% | 1.0% | 0.2% | 0.7% | ||||||||||||||||||||||||||||||||||||||||
Less: Repositioning charges | 0.0% | 0.0% | 0.0% | 0.0% | 3.6% | 1.9% | 2.7% | 0.9% | ||||||||||||||||||||||||||||||||||||||||
Less: Legal and related | 0.5% | 0.0% | 0.2% | 0.6% | 4.7% | 2.7% | 0.3% | 1.5% | ||||||||||||||||||||||||||||||||||||||||
Less: Other Income | 0.0% | 0.0% | 0.0% | 0.0% | (1.1)% | (0.7)% | 0.0% | (0.4)% | ||||||||||||||||||||||||||||||||||||||||
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Pre-tax Margin, excluding notable items | 22.5% | 25.4% | 23.9% | 26.4% | 29.1% | 27.7% | 380 bps | 16.0% | 28.8% | 25.8% | (300) bps | (10.5)% | ||||||||||||||||||||||||||||||||||||
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(1) | We redeemed all outstanding Series E noncumulative perpetual preferred stock on December 15, 2019 at a redemption price of $750 million ($100,000 per share equivalent to $25.00 per depositary share) plus accrued and unpaid dividends. The difference between the redemption value and the net carrying value of $22 million resulted in an EPS impact of approximately ($0.06) per share in 2019. |
State Street Corporation | C-3 |
Reconciliation ofNon-GAAP Measures(cont.) | 2020 NOTICE OF MEETING AND PROXY STATEMENT |
Reconciliation ofNon-GAAP 3 year average Return on Equity (ROE) - for 2017-2019 Performance-based RSUs
2017-2019 ROE - 3 year average, GAAP basis | 10.70% | |||
Less:Pre-established performance-based RSU adjustments: | ||||
Tax law changes | 0.20% | |||
Acquisitions and dispositions | (0.07)% | |||
Merger and integration expenses | 0.13% | |||
Restructuring expenses | 0.51% | |||
Security issuances/ redemptions expense | (0.01)% | |||
Legal and regulatory – matters arising from prior periods | 0.31% | |||
2017-2019 ROE - 3 year average, Adjusted ROE | 11.77% | |||
State Street Corporation | C-4 |
State Street Corporation
One Lincoln Street
Boston, MA 02111-2900
Preliminary Proxy Materials
SubjectVOTE BY INTERNET
Before The Meeting - Go to Completion
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www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Time on May 19, 2020. Have your proxy card in hand when you access the web site and follow the instructions to STATE STREET CORPORATION obtain your records and to create an electronic voting instruction form.
ONE LINCOLN STREET
BOSTON, MA 02111 During The Meeting - Go to www.virtualshareholdermeeting.com/STT2020
You may attend the meeting via the Internet and vote during the meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time on May 19, 2020. Have your proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge,
51 Mercedes Way, Edgewood, NY 11717.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
E41295-P02683-Z71791
E97419-P35420-Z76531 KEEP THIS PORTION FOR YOUR RECORDS
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY
STATE STREET CORPORATION
The director Board nominee of Directors in Item recommends 1 and FOR a Items vote FOR 2 and each 3.
Item 1. To elect 11 directors.
Nominees for Director: For Against Abstain For Against Abstain
1a. P. de Saint-Aignan ! ! ! 1j. R. Sergel ! ! ! 1b. M. Chandoha ! ! ! 1k. G. Summe ! ! !
1c. L. Dugle ! ! ! Item 2. To approve an advisory proposal on executive ! ! ! compensation.
1d. A. Fawcett ! ! ! Item 3. To ratify the selection of Ernst & Young LLP as State Street’s ! ! ! independent registered public accounting firm for the year ending December 31, 2020.
1e. W. Freda ! ! !
In their discretion, the proxies are authorized to vote upon such other business 1f. S. Mathew ! ! ! as may properly come before the meeting or any adjournment thereof.
1g. W. Meaney ! ! ! 1h. R. O’Hanley ! ! ! 1i. S. O’Sullivan ! ! !
NOTE: Shareholder - Please sign exactly as your name appears hereon.
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
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Dear Shareholder:
We cordially invite you to attend the 20182020 Annual Meeting of Shareholders of State Street Corporation. The meeting will be held at One Lincoln Street, 36th Floor, Boston, Massachusetts, on Wednesday, May 16, 2018,20, 2020, at 9:00 a.m. Eastern Time.
Due to the current Coronavirus (COVID-19) public health crisis, the Annual Meeting of Shareholders will be conducted online via live audio webcast at www.virtualshareholdermeeting.com/STT2020. Holding the Annual Meeting of Shareholders in person could pose a risk to the health and safety of our shareholders, employees and directors, and as a result, we have decided to hold the Annual Meeting virtually. You will be able to participate, submit questions and vote your shares electronically.
Details regarding admission to the meeting and the business to be conducted are more fully described in the accompanying noticeNotice of annual meetingAnnual Meeting and proxy statement.
Proxy Statement.
Your vote is very important. Whether or not you plan to attend the meeting, please carefully review the enclosed proxy statement and then cast your vote. We urge you to vote regardless of the number of shares held. Please mark, sign, date and promptly mail this proxy card in the return envelope. You may also vote electronically by telephone or over the Internet by following the instructions included with this proxy card. In any event, to be sure that your vote will be received in time, please cast your vote by your choice of available means at your earliest convenience.
We look forward to seeing you at the annual meeting.Annual Meeting. Your continuing interest in State Street is very much appreciated.
PLEASE NOTE: If you plan to attend the meeting, please allow additional time for registration Sincerely, Ronald P. O’Hanley
Chairman, President and security clearance. You will be asked to present valid picture identification acceptable to our security personnel, such as a driver’s license or passport. Public fee-based parking is available at State Street’s headquarters at One Lincoln Street (entrance from Kingston Street). Other public fee-based parking is available nearby at the Hyatt Hotel (entrance from Avenue de LaFayette).
Chief Executive Officer
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com.
Please Note: A list of our registered holders as of the close of business on the record date will be made available to shareholders during the meeting at www.virtualshareholdermeeting.com/STT2020. To access such list of registered holders beginning April 10, 2020 and until the meeting, shareholders should email State Street Investor Relations at IR@statestreet.com.
E97420-P35420-Z76531
STATE STREET CORPORATION
Annual Meeting of Shareholders - May 20, 2020
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, revoking all proxies, hereby appoints Ilene Fiszel-Bieler, Jeremy Kream and Shannon Stanley, or any of them, with full power of substitution, as proxies to vote all shares of common stock of State Street Corporation which the undersigned is entitled to vote at the Annual Meeting of Shareholders of State Street Corporation to be held on May 20, 2020 at 9:00 a.m. Eastern Time, or at any adjournment thereof, as indicated on the reverse side, and in their discretion on any other matters that may properly come before the meeting or any adjournment thereof.
To vote in accordance with the recommendations of the Board of Directors, just sign and date the other side; no boxes need to be checked. The shares represented by this proxy will be voted in accordance with the specification made. If no specification is made, the proxy will be voted FOR the eleven director nominees and FOR Items 2 and 3.
E41296-P02683-Z71791
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