DEF 14A of Pathward Financial, Inc.
Filed Jan 17, 2024 · FY20230001104659-24-004482
2023 Board Diversity Matrix (as of 10/01/2022)
2023 Board Diversity Matrix (as of 10/01/2022)
2023 Board Diversity Matrix (as of 10/01/2022)
| TOTAL NUMBER OF DIRECTORS9 | | | | | | Part 1: Gender Identity | Female | Male | Non-Binary | Did Not Disclose Gender | | Directors | 3 | 6 | — | — | | Part 2: Demographic Background | | | | | | African American or Black | — | 1 | | | | Alaskan Native or Native American | — | — | | | | Asian | — | — | | | | Hispanic or Latinx | — | — | | | | Native Hawaiian or Pacific Islander | — | — | | | | White | 3 | 5 | | | | Two or more races or ethnicities | — | — | | | | LGBTQ+ | — | — | | | | Did not disclose demographic background | — | — | | |
2023 Board Diversity Matrix (as of 10/01/2022)
| | The Board unanimously recommends that you vote FOR each of the director nominees. |
2023 Board Diversity Matrix (as of 10/01/2022)
| | ▼ | | | | | | | | | | Proxy Statement Summary | Corporate Governance & Board Matters | Executive Officers | Executive Compensation | 2023 Omnibus Incentive Plan | Audit-Related Matters | Stock Ownership Information | Information about the Annual Meeting | Additional Information | Appendix A |
2023 Board Diversity Matrix (as of 10/01/2022)
Nominee Seeking Election for a Term to Expire in 2026
2023 Board Diversity Matrix (as of 10/01/2022)
| CHRISTOPHER (“CHRIS”) PERRETTA | | CURRENT TERM TO EXPIRE IN 2024 NEW TERM TO EXPIRE IN 2026 | | Age 66 Director since 2023 INDEPENDENT | Committees ▶ Risk ▶ Nominating | Other Boards ▶ Advanced Cyber Security Center (since 2012) ▶ Netscout Systems, Inc., a public company (since 2014) ▶ Pathward, N.A. (since 2021) | | | Career Highlights MUFG Americas and MUFG Union Bank ▶ Chief Information and Operations Officer (2017 until his retirement in 2019) State Street Corporation ▶ Global Chief Information Officer (“CIO”) and member of the management committee General Electric Capital Corporation Held various executive positions, including: ▶ CIO, North American Consumer Financial Services unit ▶ Chief Technology Officer, General Electric Capital ▶ CIO, General Electric Commercial Finance | Other Prior Directorships ▶ Deutsche Bank Trust NA Skills and Experience The Board believes that Perretta’s extensive experience in the information technology and cybersecurity areas, as well as public company board experience, enable him to provide the Board key expertise in these areas. He also has extensive expertise in risk and finance, operations (profit and loss), regulation, and governance, which enable him to provide the Board extensive technology, operations, financial and management expertise. |
2023 Board Diversity Matrix (as of 10/01/2022)
Nominees Seeking Election for a Term to Expire in 2027
2023 Board Diversity Matrix (as of 10/01/2022)
| BECKY S. SHULMAN | | CURRENT TERM TO EXPIRE IN 2024 NEW TERM TO EXPIRE IN 2027 | | Age 59 Director since 2016 INDEPENDENT VICE CHAIR | Committees ▶ Audit ▶ Risk (Chair) | Other Boards ▶ Pathward, N.A. (since 2016; Vice Chair since 2021) | | | Career Highlights Card Compliant, LLC, a fintech company delivering compliance solutions for regulatory, legal, and accounting challenges in the payments space, headquartered in Leawood, Kansas ▶ President (current) ▶ Has held various other executive positions since 2012, including Chief Financial Officer and Chief Operating Officer. H&R Block, Inc. ▶ Chief Financial Officer ▶ Treasurer U.S. Central Credit Union ▶ Chief Investment Officer | Other Prior Directorships ▶ H&R Block Bank (2009 until its sale in 2015) Skills and Experience The Board believes that the experience, qualifications, attributes, and skills that Shulman developed through her positions at Card Compliant and H&R Block, as well as her service on our Board and various Board committees, enable her to provide the Board extensive financial and management expertise. |
2023 Board Diversity Matrix (as of 10/01/2022)
| | ▼ | | | | | | | | | | Proxy Statement Summary | Corporate Governance & Board Matters | Executive Officers | Executive Compensation | 2023 Omnibus Incentive Plan | Audit-Related Matters | Stock Ownership Information | Information about the Annual Meeting | Additional Information | Appendix A |
2023 Board Diversity Matrix (as of 10/01/2022)
| LIZABETH H. ZLATKUS | | CURRENT TERM TO EXPIRE IN 2024 NEW TERM TO EXPIRE IN 2027 | | Age 65 Director since 2021 INDEPENDENT | Committees ▶ Audit ▶ Compensation | Other Boards ▶ Axis Capital Holdings, Limited, a public company member of the Finance and Executive Committees and Chair of the Audit Committee (since 2019) ▶ Pathward, N.A. (since 2021) | | | Career Highlights The Hartford Financial Services Group Held various executive positions (1983 until her retirement in 2011), including: ▶ Chief Financial Officer ▶ Chief Risk Officer ▶ President of two significant divisions ▶ Co-President, The Hartford Life Insurance Companies | Other Prior Directorships Served on four other public company boards, including: ▶ Boston Private Financial Holdings, Inc. (2015 to 2021) ▶ Indivior PLC (2016 to 2019) Skills and Experience The Board believes that Zlatkus’ extensive experience in the financial services arena, where she has deep expertise in risk and finance, operations (profit and loss), regulation and governance, as well as public company board experience, enable her to provide the Board extensive risk, operations, governance, financial and management expertise. |
2023 Board Diversity Matrix (as of 10/01/2022)
Directors Continuing in Office
2023 Board Diversity Matrix (as of 10/01/2022)
| DOUGLAS J. HAJEK | | TERM TO EXPIRE IN 2026 | | Age 74 Director since 2013 INDEPENDENT CHAIR | Committees ▶ ESG | Other Boards ▶ Vice Chair, South Dakota Building Authority ▶ Vice Chair, Educational Enhancement Finance Corporation ▶ Pathward, N.A. (since 2013; Chair since 2021) | | | Career Highlights Davenport, Evans, Hurwitz & Smith, LLP, a law firm ▶ Of Counsel (current) ▶ Has worked as an attorney concentrating in corporate and financial services matters since 2000, including as Partner and Of Counsel. U.S. Bank and two independent banks ▶ Held management positions in commercial banking South Dakota Legislature ▶ Conducted government relations work, involving the drafting and enactment of key South Dakota banking and trust legislation | Other Prior Directorships ▶ Vice Chair, Pathward Financial and Pathward, N.A. (2019 to 2021) Skills and Experience The Board believes that the experience, qualifications, attributes, and skills that Hajek developed through his banking, lobbying, and legal work, as well as his service on our Board and past service on various Board committees, enable him to provide the Board with extensive expertise regarding the regulation, operations, and management of Pathward Financial. |
2023 Board Diversity Matrix (as of 10/01/2022)
| | ▼ | | | | | | | | | | Proxy Statement Summary | Corporate Governance & Board Matters | Executive Officers | Executive Compensation | 2023 Omnibus Incentive Plan | Audit-Related Matters | Stock Ownership Information | Information about the Annual Meeting | Additional Information | Appendix A |
2023 Board Diversity Matrix (as of 10/01/2022)
| ELIZABETH G. HOOPLE | | TERM TO EXPIRE IN 2025 | | Age 65 Director since 2014 INDEPENDENT | Committees ▶ Compensation ▶ Nominating (Chair) | Other Boards ▶ Pathward, N.A. (since 2014) | | | Career Highlights Bank On Marketing, a consulting firm, working with Banks, Fintechs and startup firms with a focus on go to market strategy, customer experience design ad product marketing in the payments sphere ▶ Founder and Financial Services Consultant (March 2013 to present) Wells Fargo ▶ Head of Marketing, Consumer Credit and Payments divisions (1998 to 2013) ▶ Holds several patents for developing “My Spending Report,” an online personal financial and budgeting tool created for wellsfargo.com Providian Financial ▶ Held senior management positions in the Real Estate and Credit divisions Citigroup ▶ Held senior management positions in the Consumer Banking Group, where she introduced the world’s first major Photocard product | Skills and Experience The Board believes that the experience, qualifications, attributes, and skills that Hoople developed through her years of involvement in various capacities in the financial services industry, including developing innovative products and services that enhance the customer experience and resulted in the launch of many industry leading and high engagement products as well as her service on our Board and various Board committees, enable her to provide the Board extensive expertise regarding Pathward Financial’s operations and management. |
2023 Board Diversity Matrix (as of 10/01/2022)
| | ▼ | | | | | | | | | | Proxy Statement Summary | Corporate Governance & Board Matters | Executive Officers | Executive Compensation | 2023 Omnibus Incentive Plan | Audit-Related Matters | Stock Ownership Information | Information about the Annual Meeting | Additional Information | Appendix A |
2023 Board Diversity Matrix (as of 10/01/2022)
| RONALD D. MCCRAY | | TERM TO EXPIRE IN 2025 | | Age 66 Director since 2021 INDEPENDENT | Committees ▶ Compensation (Chair) ▶ ESG | Other Boards ▶ Dallas News Corporation, a public company (since 2010) ▶ Power School Group, LLC., a public company (since 2021) ▶ Emeritus Trustee, Presidential Advisor and Former Vice Chair of the Board of Trustees, Cornell University ▶ Pathward, N.A. (since 2021) | | | Career Highlights RLJ Equity Partners, a private equity firm ▶ Advisor (2015 to present) 645 Ventures, a high technology venture capital firm ▶ Advisor (2016 to present) Career Education Corp. (now Perdoceo Education Corporation) ▶ Chairman, Interim President and Chief Executive Officer (2015 to 2016) NIKE, Inc. ▶ Chief Administrative Officer (2007 to 2009) Kimberly Clark Corporation Served in various roles as a lawyer (1987 to 2007), including: ▶ SVP, Law and Government Affairs ▶ Chief Compliance Officer | Skills and Experience The Board believes that McCray has significant experience and knowledge in the leadership of large organizations, accounting, finance, corporate governance, risk management, operations and marketing, as well as public company board experience. These skills, together with his legal training and experience, serve to strengthen the Board’s collective qualifications, skills and experience. |
2023 Board Diversity Matrix (as of 10/01/2022)
| BRETT L. PHARR | | TERM TO EXPIRE IN 2025 | | Age 62 Director since 2021 | Committees ▶ None | Other Boards ▶ Pathward, N.A. (since 2021) | | | Career Highlights Pathward Financial and Pathward N.A. ▶ Chief Executive Officer (October 2021 to present) ▶ Co-President and Chief Operating Officer (June 2020 to October 2021) ▶ Executive Vice President, Group Head of Governance, Risk and Compliance (February 2019 to June 2020) Citizens Bank ▶ Senior Risk Director, Consumer Division, where he built a best practice enterprise risk organization and culture that enhanced competitive advantage, solidified brand identity, and increased shareholder confidence Bank of America ▶ Held roles in the Commercial and Consumer lines of business, Business Transformation, Mergers and Acquisitions and Risk, for 32 years | Skills and Experience The Board believes that Pharr’s experience in business leadership and transformation, along with risk and compliance at Pathward and other banking institutions, enable him to provide the Board with experience and skills that strengthen the overall effectiveness of the Board. Pharr is a member of Pathward’s Executive Committee |
2023 Board Diversity Matrix (as of 10/01/2022)
| | ▼ | | | | | | | | | | Proxy Statement Summary | Corporate Governance & Board Matters | Executive Officers | Executive Compensation | 2023 Omnibus Incentive Plan | Audit-Related Matters | Stock Ownership Information | Information about the Annual Meeting | Additional Information | Appendix A |
2023 Board Diversity Matrix (as of 10/01/2022)
| KENDALL E. STORK | | TERM TO EXPIRE IN 2026 | | Age 70 Director since 2016 INDEPENDENT | Committees ▶ Audit (Chair) ▶ Risk | Other Boards ▶ Pathward, N.A. (since 2016) | | | Career Highlights Citibank ▶ Sioux Falls Site President, for 17 years (1999 until his retirement in 2016) ▶ President and CEO, Citibank, South Dakota | Other Prior Directorships ▶ Citibank, South Dakota, serving for 12 years as a Board Member, seven of those as Chair Skills and Experience The Board believes that the experience, qualifications, attributes, and skills that Stork developed through his position at Citibank, as well as his strong financial services background and his service on our Board and various Board committees, enable him to provide the Board extensive financial and management expertise. |
2023 Board Diversity Matrix (as of 10/01/2022)
| | ▼ | | | | | | | | | | Proxy Statement Summary | Corporate Governance & Board Matters | Executive Officers | Executive Compensation | 2023 Omnibus Incentive Plan | Audit-Related Matters | Stock Ownership Information | Information about the Annual Meeting | Additional Information | Appendix A |
2023 Board Diversity Matrix (as of 10/01/2022)
Corporate Governance
DIRECTOR COMPENSATION FOR FISCAL YEAR 2023*
DIRECTOR COMPENSATION FOR FISCAL YEAR 2023* The following table presents the amounts paid to each of Pathward Financial’s non-employee directors:
DIRECTOR COMPENSATION FOR FISCAL YEAR 2023*
| Name | Fees Earned or Paid in Cash ($) | Stock Awards(1) ($) | All Other Compensation(2) ($) | Total ($) | | Douglas J. Hajek | 130,000 | 133,812 | 575 | 264,387 | | Elizabeth G. Hoople | 71,500 | 133,812 | 575 | 205,887 | | Michael R. Kramer(3) | 0 | 0 | 75,280 | 75,280 | | Ronald D. McCray | 70,000 | 133,812 | 575 | 204,387 | | Frederick V. Moore(4) | 67,000 | 133,812 | 575 | 201,387 | | Christopher Perretta(5) | 60,000 | 133,812 | 295 | 194,107 | | Becky S. Shulman | 92,000 | 133,812 | 575 | 226,387 | | Kendall E. Stork | 76,000 | 133,812 | 575 | 210,387 | | Lizabeth H. Zlatkus | 69,500 | 133,812 | 575 | 203,887 |
DIRECTOR COMPENSATION FOR FISCAL YEAR 2023*
* Columns for “Option Awards,” Non-Equity Incentive Plan Compensation,” and “Change in Pension Value and Non-Qualified Deferred Compensation Earnings,” have been omitted because they are not applicable. (1) Amounts reflect the aggregate grant date fair value of stock awards. For this purpose, we have used the closing price of the shares on September 27, 2023, the date the awards were approved by the Board under the 2023 Omnibus Incentive Plan, even though this is not the accounting grant date for the awards, which will be the date the 2023 Omnibus Incentive Plan is approved by stockholders. Using the value as of the Board approval date better reflects for stockholders the Board’s decisions regarding these awards and the fiscal year 2023 director compensation design. See, also, Note 13 to our Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2023 (“fiscal year 2023 Annual Report on Form 10-K”) and Proposal 3 below. (2) Represents the amount of cash dividend equivalents paid in fiscal year 2023 as if the 2,950 shares of fiscal year 2023 stock awards had been granted on February 28, 2023 to each director, except Kramer. For Kramer, includes payments made in fiscal year 2023 pursuant to a letter of understanding regarding advisory services between the Company and Kramer, dated March 1, 2023. (3) Kramer’s service as a member of the Pathward Financial Board ended as of the fiscal year 2022 annual meeting held on February 28, 2023. (4) Moore will cease being a member of the Pathward Financial Board as of the end of the fiscal year 2023 annual meeting. Perretta was appointed to the Pathward Financial Board on February 28, 2023.
DIRECTOR COMPENSATION FOR FISCAL YEAR 2023*
| | | ▼ | | | | | | | | | Proxy Statement Summary | Corporate Governance & Board Matters | Executive Officers | Executive Compensation | 2023 Omnibus Incentive Plan | Audit-Related Matters | Stock Ownership Information | Information about the Annual Meeting | Additional Information | Appendix A |
Strong Performance in Fiscal Year 2023
| | | | | 132% | 142% | VARIES | | Incentive plan payout for NEOs for EPS metric | Incentive plan payout for NEOs for ROA metric | Incentive plan payout for Individual Discretionary assessment of an NEO’s performance |
COMPENSATION ELEMENTS
| | | Pay Element | How Delivered | Objective | Key Features | | ◀ FIXED ▶ | Short- Term | Base salary | ▶ Cash | ▶ Reward individual executive officers based on their qualifications, experience, and the value of the position to the organization | ▶ Targets on average at market 50th percentile, with actual salaries above or below that level to reflect each individual’s performance, business impact, internal equity, and other factors | | ◀ AT RISK / VARIABLE ▶ | | Annual incentive awards | ▶ Cash | ▶ Reward executive officers for Pathward Financial’s annual performance compared to predefined corporate financial goals ▶ Reward executive officers for achieving strategic and individual goals | ▶ Financial results account for 70% of total target award, weighted between net income (45%) and return on assets (25%), with the remaining 30% based on a Strategic/Individual assessment of individual performance | | | Long-Term | Long-term incentive awards | ▶ Performance shares ▶ Performance-contingent restricted stock | ▶ Reward executive officers for Pathward Financial’s long-term performance compared to predefined corporate financial goals, while recognizing ongoing economic and industry uncertainty ▶ Align executive officers’ interests with multi-year stockholders’ interests ▶ Facilitate retention | ▶ For fiscal year 2023, performance shares were based on three-year EPS results against target metrics. Earned shares cliff vest upon completion of the three-year assessment period. ▶ Performance-contingent restricted stock awards vest upon satisfaction of an annual minimum capital goal, with ratable vesting over a three-year period |
PAY AND GOVERNANCE POLICIES AND PRACTICES
| ▶ Executive pay is linked to company performance through annual cash and long-term equity incentive awards | ▶ Executive officers must meet and maintain market-competitive minimum stock ownership requirements | | ▶ Target compensation includes a mix of annual and long-term incentives, cash and equity components, and fixed and variable pay | ▶ NEOs do not have employment agreements and certain of our equity award grant agreements include double-trigger change-in-control provisions | | ▶ Incentive financial target goals are set at the start of the performance period at levels intended to be challenging but achievable and to tie accountability to our budget/long-term strategic plan. Executive pay and company performance are reviewed and compared to a relevant peer group of companies and other comparable companies that are regularly reviewed and updated as necessary | |
PAY AND GOVERNANCE POLICIES AND PRACTICES
| What We Do | What We Don’t Do | | Link over 50% of NEO target pay to company performance through annual cash and at-risk long-term equity incentive awards Balance annual cash and long-term equity incentives and fixed and variable pay Compare executive compensation and company performance to relevant peer group companies Require executive officers to meet minimum stock ownership requirements Provide limited perquisites Hire independent compensation consultants to advise the Compensation Committee and promote best governance practices Consider both Pathward Financial and individual performance results to ensure differentiated effort and results are appropriately rewarded Have robust clawback policies | No pay policies or practices that pose material adverse risk to Pathward Financial No excise tax gross-ups related to change-in-control transactions No minimum guaranteed cash performance-based incentive awards for regular incentive cycles No hedging or pledging of Pathward Financial Common Stock by officers and non-employee directors |
Role of the Compensation Consultant
Role of the Compensation Consultant Since May 2019, the Compensation Committee has engaged Pay Governance LLC (“Pay Governance”) on an annual basis as its independent compensation consultant to assist with executive and non-employee director compensation. Pay Governance helped the Compensation Committee prepare for fiscal year 2023 executive compensation decisions by: ▶ reviewing the pay peer group; ▶ assessing executive officer and non-employee director pay against the peer group and other comparable companies; ▶ analyzing the annual cash and long-term equity incentive award plans; ▶ summarizing current market trends. The Compensation Committee assessed Pay Governance’s independence in fiscal year 2023 and considers them to be independent with no conflicts of interest.
Competitive Assessment
Competitive Assessment Pathward Financial generally targets total pay opportunities within a competitive range near the 50th percentile for comparable companies for experienced executive officers who consistently meet performance expectations. Ultimate compensation positioning varies based on performance, experience, future potential, internal equity and other considerations, including specific individual factors. For example: ▶ Target pay opportunities for newly promoted executive officers and those with less experience typically are below the market 50th percentile; ▶ Target pay opportunities for executives with significant experience, specialized skills and other unique characteristics typically are higher than the market 50th percentile; ▶ Actual incentive award payouts will vary from the target pay opportunities based on company and individual performance. Recent annual incentive payouts reflect the outcome of our pay-for-performance philosophy, with payouts, as a percentage of target, varying commensurate with performance results relative to goals set at the start of the year. The last three years of annual incentive payouts for financial measures varied from 200% of target (fiscal year 2021), 90% (fiscal year 2022), and 136% (fiscal year 2023). For assistance with setting fiscal year 2023 target pay levels, the Compensation Committee reviewed the target pay levels for a pay peer group developed with the input of Pay Governance and broader fintech industry data at comparable companies. Selection of the comparator companies considered various factors, including: ▶ Industry ▶ Business mix ▶ Location ▶ Size (assets and market cap). The peer group listed below, which reflects two removals (Cardtronics and Great Western, both due to acquisition) from the fiscal year 2022 peer group, was one of many reference points used to help develop the fiscal year 2023 executive compensation program. Following the sale of our community bank division to Central Bank in 2020, Pathward no longer has any traditional branch-based operations. This completed our shift from a traditional regional bank to a more diverse and complex national bank with a focus on financial technology that has different talent requirements. Given that the changes to Pathward Financial’s business model have occurred recently, there may be some differences to the comparator groups used by some institutional investors and proxy advisory firms. However, Pathward Financial believes the relevant market for talent to execute Pathward Financial’s business strategy is a peer group of direct competitors and other comparable companies that have similar commercial finance and payment businesses.
Fiscal Year 2023 Peer Group
Fiscal Year 2023 Peer Group
Fiscal Year 2023 Peer Group
| ▶ ACI Worldwide, Inc. | ▶ Green Dot Corporation | ▶ The Bancorp, Inc. | | ▶ Axos Financial, Inc. | ▶ GreenSky, Inc. | ▶ TriState Capital Holdings, Inc. | | ▶ CURO Group Holdings Corp. | ▶ Lending Club Corporation | ▶ Triumph Financial, Inc. | | ▶ Customers Bancorp, Inc. | ▶ Live Oak Bancshares, Inc. | ▶ World Acceptance Corporation | | ▶ Enova International, Inc. | ▶ MoneyGram International, Inc. | ▶ WSFS Financial Corporation |
Annual Incentive Awards
Annual Incentive Awards The objective of the annual cash incentive program is to align payouts with our annual financial performance results, strategic execution and individual performance. Effective fiscal year 2022, all annual incentives delivered to our NEOs are paid in cash (instead of the prior practice of a mix of restricted stock and cash).
Annual Incentive Awards
| For each of the NEOs, the Compensation Committee sets a threshold, target, and maximum aggregate amount of annual incentive compensation as a percentage of base salary based on market competitiveness, internal equity, level of responsibility and other factors. All of the NEOs’ annual awards are contingent on meeting corporate financial goals (weighted 70%) and Strategic/Individual goals (weighted 30%). | |
Annual Incentive Awards
The threshold, target, and maximum award opportunities for the NEOs employed at the end of fiscal year 2023 are shown below:
Potential Annual Incentive Awards as a Percentage of Base Salary
Potential Annual Incentive Awards as a Percentage of Base Salary
Potential Annual Incentive Awards as a Percentage of Base Salary
| Named Executive Officer | Threshold | Target | Maximum | | Brett L. Pharr | 50% | 100% | 185.0% | | Glen W. Herrick | 45% | 90% | 166.5% | | Anthony M. Sharett | 45% | 90% | 166.5% | | Charles C. Ingram | 35% | 70% | 129.5% | | Nadia A. Dombrowski | 35% | 70% | 129.5% |
ANNUAL INCENTIVE PERFORMANCE METRICS
ANNUAL INCENTIVE PERFORMANCE METRICS For fiscal year 2023, annual incentive awards were determined based on the same metrics as the prior year, described below.
ANNUAL INCENTIVE PERFORMANCE METRICS
| Performance Metric | Weighting | Why Metric Was Chosen | | | Net Income | | | This is a foundational measure of our overall profitability | | Return On Assets | | | This efficiency measure is used to ensure that our investments achieve desired returns, reflecting our net income divided by average total assets | | Strategic/Individual | | | This component allows the Compensation Committee to qualitatively evaluate the management team on a number of strategic/individual measures on a discretionary basis, without allocating any specific percentages to these factors |
ANNUAL INCENTIVE PERFORMANCE METRICS
Any annual incentive earned is paid entirely in cash for all NEOs. Special circumstances may arise that merit discretionary adjustments that vary from the plan design of awards, such as if the performance of a single department disproportionately impacts the results for executive officers in other departments. The Compensation Committee will document the specific rationale for any such adjustments and share that information with the affected executive officer(s). There were no discretionary adjustments that varied from the plan design for fiscal year 2023.
PERFORMANCE GOALS AND ACTUAL PERFORMANCE
PERFORMANCE GOALS AND ACTUAL PERFORMANCE The Compensation Committee established threshold, target, and maximum goals for Pathward Financial’s financial performance metrics, which provide 70% of the target incentive award opportunity. Target goals for these metrics were based on our long-term strategic plan. After comparing these performance goals to Pathward Financial’s actual fiscal year 2023 results for Net Income and Return on Assets (shown below), the Compensation Committee determined that performance was achieved at 136% of target for the weighted achievement of the financial measures as shown below.
PERFORMANCE GOALS AND ACTUAL PERFORMANCE
| | | | ▼ | | | | | | | | Proxy Statement Summary | Corporate Governance & Board Matters | Executive Officers | Executive Compensation | 2023 Omnibus Incentive Plan | Audit-Related Matters | Stock Ownership Information | Information about the Annual Meeting | Additional Information | Appendix A |
COMPANY PERFORMANCE MULTIPLIER CALCULATION
| Metric | Threshold (50% Payout) | Target (100% Payout) | Maximum (200% Payout) | Weighting | Payout Level* | | Net Income (dollars in thousands) | | | | | 132% | | Return on Assets | | | | | 142% | | | Weighted Payout for Company Financial Performance | | | | 136% |
COMPANY PERFORMANCE MULTIPLIER CALCULATION
* When performance falls between two goal levels, the payout is calculated by linear interpolation. The Strategic/Individual component provides the remaining 30% of the annual incentive awards and reflects a qualitative assessment of other financial, operational, and individual performance factors, including ESG. The Strategic/Individual payout levels reflect consideration by the Compensation Committee and the CEO (except with respect to his own award) of various factors such as their contribution to company, business unit and functional results. In developing the payouts, the Compensation Committee considered the individual performance assessments which covered key categories, as relevant for the officer, such as: ▶ Mission and Vision ▶ Enterprise Performance ▶ Business/Functional Unit ▶ Leadership and Influence Final assessments also considered challenges and opportunities arising during the year and the individual’s contributions to solutions, actions and other steps to best support Pathward Financial’s strategy, needs and objectives. To determine the CEO’s annual incentive award, the Board discussed the CEO’s performance during a meeting without the CEO in attendance.
COMPANY PERFORMANCE MULTIPLIER CALCULATION
| Named Executive Officer | Strategic/Individual Payout Multiplier (30% of Award Total) | Company Payout Multiplier (70% of Award Total) | Total Payout Multiplier | | Brett L. Pharr | 135% | 136% | 135% of Target | | Glen W. Herrick | 150% | | 140% of Target | | Anthony M. Sharett | 120% | | 131% of Target | | Charles C. Ingram | 130% | | 134% of Target | | Nadia A. Dombrowski | 135% | | 135% of Target |
ANNUAL INCENTIVE AWARD PAYOUTS
ANNUAL INCENTIVE AWARD PAYOUTS The total incentive awards paid to the NEOs for fiscal year 2023 are shown below.
ANNUAL INCENTIVE AWARD PAYOUTS
| Named Executive Officer | Base Salary* ($) | Target Incentive Level | Payout Multiplier | Actual Total Incentive* ($) | | Brett L. Pharr | 700 | 100% | 135% | 948 | | Glen W. Herrick | 550 | 90% | 140% | 693 | | Anthony M. Sharett | 520 | 90% | 131% | 613 | | Charles C. Ingram | 460 | 70% | 134% | 431 | | Nadia A. Dombrowski | 500 | 70% | 135% | 474 |
ANNUAL INCENTIVE AWARD PAYOUTS
Dollar values are in thousands and rounded.
ANNUAL INCENTIVE AWARD PAYOUTS
| | | | ▼ | | | | | | | | Proxy Statement Summary | Corporate Governance & Board Matters | Executive Officers | Executive Compensation | 2023 Omnibus Incentive Plan | Audit-Related Matters | Stock Ownership Information | Information about the Annual Meeting | Additional Information | Appendix A |
Long-Term Incentive Awards
Long-Term Incentive Awards For fiscal year 2023, all of the NEOs received the same long-term incentive (“LTI”) awards, with the award opportunity designed as shown below.
Long-Term Incentive Awards
| Type of Equity | Portion of Target LTI Opportunity | Potential Award Amount | Vesting Terms | Performance Metrics | | Performance-Contingent Restricted Stock | 50% | 0 to 100% of target | Vest ratably over three years if earned | Annual capital goal | | Performance Shares | 50% | 0 to 200% of target | Cliff vest (to the extent earned) after completion of the three-year performance period | Annually-set EPS goals (EPS was chosen due to its foundational nature as a measure of our overall profitability) |
PERFORMANCE-CONTINGENT RESTRICTED STOCK
PERFORMANCE-CONTINGENT RESTRICTED STOCK The performance-contingent restricted stock awards granted for fiscal years 2021 (for Herrick only), 2022 and 2023 include a minimum annual capital goal of 8.0% for fiscal year 2023 in order for the fiscal year 2023 annual tranche to become vested. That minimum annual capital goal was achieved for fiscal year 2023.
PERFORMANCE SHARES
PERFORMANCE SHARES Performance shares granted for fiscal years 2022 and 2023 become earned based on achievement of EPS performance goals over the applicable three-year performance period. EPS was identified as the best measure for assessing our success in delivering long-term profitable growth. Due to our ongoing business transformation, several key leadership changes, and continued economic and industry uncertainty, we set EPS goals at the start of each fiscal year, which reflects the challenges of setting reasonable multi-year goals. The number of shares earned are determined at the end of the three-year period based on the average of the three years’ payout factors resulting from EPS goal achievement. As described below, the performance shares granted to Herrick for fiscal year 2021 completed their three-year performance period as of the end of fiscal year 2023 and were earned at 160% of target, based on achievement of EPS, return on equity, and relative total stockholder return performance goals. For more information on the performance shares granted for fiscal year 2021, please see the “New Long-Term Incentive Plan” section on page 38 of our proxy statement published January 14, 2021. All three outstanding performance share awards included an EPS performance goal established for fiscal year 2023. The EPS target goal was based on our fiscal year 2023 long-term strategic plan. The EPS threshold goal was set at a level that the Compensation Committee determined would warrant an award of 50% of target and the maximum goal was set at a significant stretch level warranting a payout of 200% of target. The payout percentage will be interpolated for performance between levels (if above threshold). A similar process was followed for setting the goals for fiscal years 2021 and 2022 and will be followed for future years in the applicable performance periods. After comparing the EPS performance goals to Pathward Financial’s actual fiscal year 2023 results (shown below), the Compensation Committee determined that performance was achieved at 149% of target.
Fiscal Year 2023 EPS Performance Goals and Results
Fiscal Year 2023 EPS Performance Goals and Results
Fiscal Year 2023 EPS Performance Goals and Results
| Metric | Threshold | Target | Maximum | Weighting | | Fiscal Year 2023 EPS | | | | |
Fiscal Year 2023 EPS Performance Goals and Results
| | | | ▼ | | | | | | | | Proxy Statement Summary | Corporate Governance & Board Matters | Executive Officers | Executive Compensation | 2023 Omnibus Incentive Plan | Audit-Related Matters | Stock Ownership Information | Information about the Annual Meeting | Additional Information | Appendix A |
Fiscal Year 2023 EPS Performance Goals and Results
The following sections show the final performance and payout results for the fiscal year 2021 performance share units and the performance status for the fiscal year 2022 and 2023 performance shares units through the end of the last fiscal year.
FISCAL YEAR 2021 PERFORMANCE SHARE UNITS (HERRICK Only): Goals, Results, and Payout
FISCAL YEAR 2021 PERFORMANCE SHARE UNITS (HERRICK Only): Goals, Results, and Payout
FISCAL YEAR 2021 PERFORMANCE SHARE UNITS (HERRICK Only): Goals, Results, and Payout
| Goals | Fiscal Year | Performance Goals | | | Actual Results | Percentage of Target Earned | Allocated Shares Earned | | | | Threshold | Target | Maximum | | | | | Earnings Per Share (67% weighting) | 2021 | $2.41 | $3.01 | $3.46 | $4.38 | 200% | 5,296 | | | 2022 | $3.92 | $4.91 | $5.89 | $4.71 | 90% | 3,574 | | | 2023 | $4.37 | $5.46 | $6.55 | $5.99 | 149% | 5,918 | | Total Allocated Shares Earned | | | | | | | 14,788 | | Return on Equity (8% weighting) | 2021 | 15.4% | 19.3% | 23.2% | 24.4% | 200% | 2,648 | | Three Year Total Shareholder Return (25% weighting) | 2021- 2023 | 30th Percentile | 50th Percentile | 80th Percentile or Higher | 93rd Percentile | 200% | 7,944 |
FISCAL YEAR 2022 PERFORMANCE SHARE UNITS: Goals and Results (through end of last FISCAL year)
FISCAL YEAR 2022 PERFORMANCE SHARE UNITS: Goals and Results (through end of last FISCAL year)
FISCAL YEAR 2022 PERFORMANCE SHARE UNITS: Goals and Results (through end of last FISCAL year)
| Goals | Fiscal Year | Performance Goals | | | Actual Results | Percentage of Target Earned | | | | Threshold | Target | Maximum | | | | Earnings Per Share (100%) | 2022 | $3.92 | $4.91 | $5.89 | $4.71 | 90% | | | 2023 | $4.37 | $5.46 | $6.55 | $5.99 | 149% | | | 2024 | TBD | TBD | TBD | TBD | TBD | | 3-year Average Percentage of Target Earned | | | | | | TBD |
FISCAL YEAR 2023 PERFORMANCE SHARE UNITS: GOALS AND RESULTS (THROUGH END OF LAST FISCAL YEAR)
FISCAL YEAR 2023 PERFORMANCE SHARE UNITS: GOALS AND RESULTS (THROUGH END OF LAST FISCAL YEAR)
FISCAL YEAR 2023 PERFORMANCE SHARE UNITS: GOALS AND RESULTS (THROUGH END OF LAST FISCAL YEAR)
| Goals | Fiscal Year | Performance Goals | | | Actual Results | Percentage of Target Earned | | | | Threshold | Target | Maximum | | | | Earnings Per Share (100%) | 2023 | $4.37 | $5.46 | $6.55 | $5.99 | 149% | | | 2024 | TBD | TBD | TBD | TBD | TBD | | | 2025 | TBD | TBD | TBD | TBD | TBD | | 3-year Average Percentage of Target Earned | | | | | | TBD |
FISCAL YEAR 2023 PERFORMANCE SHARE UNITS: GOALS AND RESULTS (THROUGH END OF LAST FISCAL YEAR)
Annually we reevaluate our officer pay program to ensure the design best aligns to our strategy for both the upcoming year and the applicable three-year periods. For the long-term incentive award opportunity, we expect to continue emphasizing performance-based awards through a mix of award types and measures and assessing performance over rolling three-year periods.
PEER GROUP CHANGES
PEER GROUP CHANGES In fiscal year 2019, our peer group had 23 companies that included many regional banks. In fiscal year 2023, our peer group was significantly reconstituted to reflect our evolving business strategy and contains companies that are primarily in the payments, commercial finance and similar businesses (which can be described as “fintech” companies). This change reflected our markets for business, talent and investors. As a result, our peer group no longer includes traditional regional banks and holding companies, which are far less complex than Pathward Financial and Pathward, N.A. and typically not a source of executive-level talent for Pathward. See “Competitive Assessment” above for additional information on our current peer group.
Post-Employment: Change in Control and Severance Arrangements
Post-Employment: Change in Control and Severance Arrangements Under the terms of Pathward Financial’s equity-based compensation plans and severance policies that were effective as of September 30, 2023, including the Executive Severance Pay Policy, the NEOs are entitled to payments and benefits on the
Post-Employment: Change in Control and Severance Arrangements
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Post-Employment: Change in Control and Severance Arrangements
occurrence of specified events, including termination of employment and a change in control of Pathward Financial. The Compensation Committee analyzed the terms of similar arrangements for comparable executive officers at Pathward Financial’s peers in determining an appropriate level of compensation and benefits in the event of a change in control or separation of employment. Additionally, the Compensation Committee considered market practices and recommended pay practices by institutional investor advisory firms, including requiring double triggers for certain severance benefits and vesting of equity. An estimate of the compensation that would have been payable had change-in-control terms been triggered as of 2023 fiscal-year end under Pathward Financial’s Executive Severance Pay Policy, are described in the section entitled “Potential Payments Upon Termination or Change in Control.”
Post-Employment: Change in Control and Severance Arrangements
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Post-Employment: Change in Control and Severance Arrangements
Compensation Tables The following table sets forth compensation information for each of the fiscal years ended September 30, 2021, 2022, and 2023, for Pathward Financial’s NEOs, as applicable.
SUMMARY COMPENSATION TABLE
SUMMARY COMPENSATION TABLE
SUMMARY COMPENSATION TABLE
| Name and Principal Position(1) | Year | Salary ($) | Bonus ($) | Stock Awards(2) ($) | Non-Equity Incentive Plan Compensation(3) ($) | All Other Compensation(4) ($) | Total ($) | | Brett L. Pharr CEO | 2023 | 700,000 | — | 2,100,013 | 947,800 | 136,318 | 3,884,131 | | | 2022 | 650,000 | — | 2,556,981 | 555,263 | 49,189 | 3,811,433 | | | 2021 | 420,000 | — | 106,323 | 466,000 | 38,453 | 1,030,776 | | Glen W. Herrick EVP and CFO | 2023 | 550,000 | 270,000 | 880,042 | 692,505 | 218,112 | 2,610,658 | | | 2022 | 525,000 | — | 839,988 | 453,600 | 72,494 | 1,891,082 | | | 2021 | 488,520 | — | 881,678 | 678,000 | 146,094 | 2,194,292 | | Anthony M. Sharett President | 2023 | 520,000 | — | 832,034 | 612,612 | 80,321 | 2,044,967 | | | 2022 | 500,000 | — | 1,166,030 | 384,000 | 35,530 | 2,085,560 | | | 2021 | 395,187 | — | 242,740 | 292,000 | 27,546 | 957,473 | | Charles C. Ingram EVP and Chief Product and Technology Officer | 2023 | 460,000 | — | 276,012 | 431,158 | 67,162 | 1,234,332 | | | 2022 | 400,000 | — | 759,052 | 244,800 | 20,975 | 1,424,827 | | | 2021 | 383,100 | — | 432,092 | 319,000 | 24,407 | 1,158,599 | | Nadia A. Dombrowski EVP and Chief Legal and Administrative Officer | 2023 | 480,000 | — | 276,012 | 473,900 | 18,673 | 1,248,585 | | | 2022 | 280,000 | 50,000 | 280,027 | 183,600 | 14,891 | 808,518 |
SUMMARY COMPENSATION TABLE
(1) The positions listed were those held as of September 30, 2023. (2) The amounts included under the Stock Awards column reflect the grant date fair value of stock awards granted in the fiscal year indicated. The assumptions used in the calculation of these amounts are disclosed in Note 13 to the Consolidated Financial Statements included in our fiscal year 2023 Annual Report on Form 10-K. For additional information about the awards granted in fiscal year 2023, see the Grants of Plan-Based Awards Table. The following provides additional information: ▶ The amounts in this column for fiscal years 2021 and 2022 do not necessarily correspond to the pay-for-performance compensation decisions made by the Compensation Committee for the fiscal years reflected therein, for two reasons: • For certain of the NEOs, the amount for a given fiscal year includes awards granted under the previous incentive compensation program, in which restricted stock awards were granted early in the fiscal year as part of the annual incentive award made for performance in the preceding fiscal year. Under the incentive compensation program which began with fiscal year 2022 (or fiscal year 2021 for Herrick), NEOs no longer receive any portion of their annual incentive award as restricted stock. • For fiscal year 2022, the amount in this column for each of the NEOs (except Herrick) includes the grant date fair value for both (i) the restricted stock award granted early in fiscal year 2022 under the previous incentive compensation program as part of the annual incentive award for performance in fiscal year 2021 and (ii) the performance-contingent restricted stock and performance share unit awards granted under the new long-term incentive compensation program for fiscal year 2022. This same pattern of overlapping awards occurred for Herrick in fiscal year 2021, when he made an early transition to the new incentive compensation program. • For fiscal year 2023, the amount in this column for each of the NEOs represents the grant date fair value of the fiscal year 2023 performance-contingent restricted stock and performance share unit awards. There were no awards for fiscal year 2022 performance granted in fiscal year 2023 for the NEOs. ▶ See the Compensation Discussion and Analysis for additional information about the fiscal year 2023 annual and long-term incentive compensation awards for the NEOs. ▶ Performance share units granted in a fiscal year are included based on the assumption that target performance is probable. For the performance share units granted for fiscal year 2023, the grant date value of the performance share awards, if performance was assumed at maximum (200%) would have been as follows: Pharr, $2,100,005; Herrick, $880,019; Sharett, $832,042; Ingram, $276,023; and Dombrowski, $276,023. ▶ Performance contingent restricted stock awards are included upon the assumption that it is probable the applicable capital goals will be achieved. Amounts included under the Non-Equity Incentive Compensation column reflect the cash portion of the annual incentive award earned for the fiscal year indicated. As discussed in the Compensation Discussion and Analysis, effective fiscal year 2022 (and fiscal year 2021 for Herrick), the entire annual incentive award is delivered as a cash award. Under the previous compensation program
SUMMARY COMPENSATION TABLE
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SUMMARY COMPENSATION TABLE
used in prior years, a portion of the annual incentive award was delivered as a cash award and a portion was delivered as a restricted stock award which was included in the Stock Awards column for the year in which it was granted, rather than the performance year in which it was earned. (4) The following provides additional information about amounts included in the All Other Compensation column for fiscal year 2023. ▶ For Pharr, the amount includes $107,710 as a company contribution to the Nonqualified Deferred Compensation Plan, $19,200 as a company contribution to the Pathward National Association 401(k) Plan, $8,808 in dividends paid on unvested restricted stock shares, and a $600 remote employee stipend. ▶ For Herrick, the amount includes $173,978 as a company contribution to the Nonqualified Deferred Compensation Plan, $19,200 as a company contribution to the Pathward National Association 401(k) Plan, $13,474 in dividends paid on unvested restricted stock shares, $10,859 for the personal portion of country club membership costs, and a $600 remote employee stipend. ▶ For Sharett, the amount includes $61,499 as a company contribution to the Nonqualified Deferred Compensation Plan, $13,615 as a company contribution to the Pathward National Association 401(k) Plan, $4,247 in dividends paid on unvested restricted stock shares, a $600 remote employee stipend, and $360 for cash payment in lieu of participation in the company’s group health insurance plan. ▶ For Ingram, the amount includes $44,400 as a company contribution to the Nonqualified Deferred Compensation Plan, $19,200 as a company contribution to the Pathward National Association 401(k) Plan, $2,963 in dividends paid on unvested restricted stock shares, and a $600 remote employee stipend. For Dombrowski, the amount includes $16,382 as a company contribution to the Pathward National Association 401(k) Plan, $1,331 in dividends paid on unvested restricted stock shares, a $600 remote employee stipend, and $360 for cash payment in lieu of participation in the company’s group health insurance plan.
SUMMARY COMPENSATION TABLE
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GRANTS OF PLAN BASED AWARDS
GRANTS OF PLAN BASED AWARDS The following table sets forth information concerning awards made during the fiscal year ended September 30, 2023, for Pathward Financial’s NEOs.
GRANTS OF PLAN BASED AWARDS
| | | Cash | | | | Equity | | | | | | | | | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards(1)(3) | | | Estimated Future Payouts Under Equity Incentive Plan Awards(4) | | | All Other Stock Awards: Number of Shares of Stock or Units (#) | Grant Date Fair Value of Stock and Option Awards(5) ($) | | Name | Type of Award(2) | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | | | | Brett L. Pharr | FY23PSU | 11/2/2022 | | | | 13,481 | 26,963 | 53,926 | | 1,050,002 | | | FY23RSA | 11/2/2022 | | | | | 26,623 | | | 1,050,011 | | | CASH | | 350,000 | 700,000 | 1,295,000 | | | | | | | Glen W. Herrick | FY23PSU | 11/2/2022 | | | | 5,649 | 11,299 | 22,598 | | 440,010 | | | FY23RSA | 11/2/2022 | | | | | 11,157 | | | 440,032 | | | CASH | | 247,500 | 495,000 | 915,750 | | | | | | | Anthony M. Sharett | FY23PSU | 11/2/2022 | | | | 5,341 | 10,683 | 21,365 | | 416,021 | | | FY23RSA | 11/2/2022 | | | | | 10,548 | | | 416,013 | | | CASH | | 234,000 | 468,000 | 865,800 | | | | | | | Charles C. Ingram | FY23PSU | 11/2/2022 | | | | 1,772 | 3,544 | 7,087 | | 138,012 | | | FY23RSA | 11/2/2022 | | | | | 3,499 | | | 138,000 | | | CASH | | 161,000 | 322,000 | 595,700 | | | | | | | Nadia A. Dombrowski | FY23PSU | 11/2/2022 | | | | 1,772 | 3,544 | 7,087 | | 138,012 | | | FY23RSA | 11/2/2022 | | | | | 3,499 | | | 138,000 | | | CASH | | 175,000 | 350,000 | 647,500 | | | | | |
GRANTS OF PLAN BASED AWARDS
(1) Amounts presented under “Estimated Possible Payouts Under Non-Equity Incentive Plan Awards” reflect the range of what was eligible to be earned based upon performance. Please see the Compensation Discussion and Analysis for Fiscal Year 2023 section of this document for discussion of cash and equity amounts granted or earned during fiscal year 2023. (2)
GRANTS OF PLAN BASED AWARDS
| Type of Award | Description | | CASH | Fiscal year 2023 annual incentive award opportunity (all cash) | | FY23RSA | Performance contingent restricted stock award granted as part of fiscal year 2023 long-term incentive, vesting in thirds on each October 16 of 2023, 2024, and 2025 (subject to meeting minimum capital requirements) | | FY23PSU | Three-year cliff vesting performance share unit award granted as part of fiscal year 2023 long-term incentive for the three-year performance period beginning October 1, 2022, with a vesting date of October 16, 2025 |
GRANTS OF PLAN BASED AWARDS
(3) Represents fiscal year 2023 cash incentive award opportunity. See Compensation Discussion and Analysis—Annual Incentive Awards for additional details. (4) Represents the award opportunity for the FY23PSU and FY23RSA awards. See Compensation Discussion and Analysis—Long Term Incentive Awards for additional details. Amounts in this column reflect the aggregate grant date fair value of awards. The assumptions used in the calculation of these amounts are disclosed in Note 13 to our Consolidated Financial Statements included in our fiscal 2023 Annual Report on Form 10-K.
GRANTS OF PLAN BASED AWARDS
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OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END 2023
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END 2023 The following table sets forth information as of September 30, 2023, concerning unvested stock awards held by Pathward Financial’s NEOs.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END 2023
| | Stock Awards | | | | | Name | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(1) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(2) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(1) | | Brett L. Pharr | 9,377(3) | 432,186 | 78,724 | 3,628,407 | | Glen W. Herrick | 45,000(4) | 2,074,050 | 35,023 | 1,614,187 | | Anthony M. Sharett | 4,111(5) | 189,476 | 33,187 | 1,529,586 | | Charles C. Ingram | 9,148(6) | 421,631 | 10,682 | 492,333 | | Nadia A. Dombrowski | 2,942(7) | 135,597 | 9,760 | 449,860 |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END 2023
(1) The dollar value of the awards is calculated using the closing market price of $46.09 per share of our unrestricted common stock on September 29, 2023, the last trading day in fiscal year 2023. (2) Performance share units are reflected based on actual performance through the most recent fiscal year plus assumed target performance for future fiscal years in the applicable performance period. Performance contingent restricted stock awards are reflected based on assumed target performance for the remainder of the performance period. Performance share units will vest, to the extent earned based on performance, in the fiscal quarter immediately following the completion of the applicable three-year performance period—i.e., on September 30, 2024 for the fiscal year 2022 PSUs and on September 30, 2025 for the fiscal year 2023 PSUs. Performance contingent restricted stock awards vest ratably in one-third increments over a three-year period if Basel III capital ratios are maintained. For a full discussion of the Company’s performance-based awards, please see the Compensation Discussion and Analysis section.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END 2023
| Name | Type of Award | Description | Shares/Units (#) | Vesting Date(s) | | Brett L. Pharr | FY23RSA | Performance contingent restricted stock award | 26,623 | October 16, 2023, 2024, and 2025 | | | FY23PSU | Performance share unit award | 31,332 | October 16, 2025 | | | FY22RSA | Performance contingent restricted stock award | 4,688 | September 30, 2024 | | | FY22PSU | Performance share unit award | 16,081 | September 30, 2024 | | Glen W. Herrick | FY23RSA | Performance contingent restricted stock award | 11,157 | October 16, 2023, 2024, and 2025 | | | FY23PSU | Performance share unit award | 13,130 | October 16, 2025 | | | FY22RSA | Performance contingent restricted stock award | 2,423 | September 30, 2024 | | | FY22PSU | Performance share unit award | 8,313 | September 30, 2024 | | Anthony M. Sharett | FY23RSA | Performance contingent restricted stock award | 10,548 | October 16, 2023, 2024, and 2025 | | | FY23PSU | Performance share unit award | 12,414 | October 16, 2025 | | | FY22RSA | Performance contingent restricted stock award | 2,308 | September 30, 2024 | | | FY22PSU | Performance share unit award | 7,917 | September 30, 2024 | | Charles C. Ingram | FY23RSA | Performance contingent restricted stock award | 3,499 | October 16, 2023, 2024, and 2025 | | | FY23PSU | Performance share unit award | 4,118 | October 16, 2025 | | | FY22RSA | Performance contingent restricted stock award | 692 | September 30, 2024 | | | FY22PSU | Performance share unit award | 2,373 | September 30, 2024 | | Nadia A Dombrowski | FY23RSA | Performance contingent restricted stock award | 3,499 | October 16, 2023, 2024, and 2025 | | | FY23PSU | Performance share unit award | 4,118 | October 16, 2025 | | | FY22RSA | Performance contingent restricted stock award | 484 | September 30, 2024 | | | FY22PSU | Performance share unit award | 1,659 | September 30, 2024 |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END 2023
(3) Of these shares, 5,377 shares vested on October 16, 2023; and 4,000 shares will vest on February 25, 2024. (4) Of these shares, 22,500 shares vested on October 1, 2023; and 22,500 shares will vest on October 1, 2024.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END 2023
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OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END 2023
Of these shares, 5,494 shares vested on October 16, 2023; and 3,654 shares will vest on October 16, 2024. (7) Of these shares, 981 shares vested on October 16, 2023; 981 shares will vest October 16, 2024; and 980 shares will vest October 16, 2025.
OPTION EXERCISES AND STOCK VESTED FOR FISCAL YEAR 2023
OPTION EXERCISES AND STOCK VESTED FOR FISCAL YEAR 2023 The following table sets forth information concerning restricted stock awards held by Pathward Financial’s NEOs that were exercised or became vested, as applicable, during the fiscal year ended September 30, 2023. As none of the NEOs have any outstanding stock option awards, no stock options were exercised or became vested during the fiscal year ended September 30, 2023.
OPTION EXERCISES AND STOCK VESTED FOR FISCAL YEAR 2023
| | Stock Awards | | | Name | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(1) | | Brett L. Pharr | 17,274 | 742,754 | | Glen W. Herrick | 55,110 | 2,262,926 | | Anthony M. Sharett | 10,391 | 426,612 | | Charles C. Ingram | 6,627 | 254,754 | | Nadia A. Dombrowski | 484 | 22,308 |
OPTION EXERCISES AND STOCK VESTED FOR FISCAL YEAR 2023
(1) Reflects the market value of the stock awards on the date of vesting, which for each of the awards equals the per share closing price of Pathward Financial Common Stock as reported by the NASDAQ Stock Market on the vesting date (or the previous Friday if the vesting date falls on a weekend).
NONQUALIFIED DEFERRED COMPENSATION PLANS
NONQUALIFIED DEFERRED COMPENSATION PLANS
Nonqualified Deferred Compensation Plans for Fiscal Year 2023
Nonqualified Deferred Compensation Plans for Fiscal Year 2023
Nonqualified Deferred Compensation Plans for Fiscal Year 2023
| Name | Plan Name | Executive Contributions in FY2023 ($) | Pathward Contributions in FY2023(1) ($) | Aggregate Earnings in FY2023 ($) | Aggregate Withdrawals/ Distributions in FY2023 ($) | Aggregate Balance at September 30, 2023 ($) | | Brett L. Pharr | NQDC Plan | — | 107,710 | 7,171 | — | 140,796 | | Glen W. Herrick | NQDC Plan | — | 173,978 | 68,212 | _ | 726,947 | | Anthony M. Sharett | NQDC Plan | — | 61,499 | 7,851 | — | 82,676 | | Charles C. Ingram | NQDC Plan | — | 44,399 | 1,639 | — | 46,039 | | Nadia A. Dombrowski | NQDC Plan | — | — | — | — | — |
Nonqualified Deferred Compensation Plans for Fiscal Year 2023
(1) Pathward contributions to the NQDC Plan are reported as “All Other Compensation” in the Summary Compensation Table. The table above shows information regarding the NEOs’ benefits under the NQDC Plan.
The NQDC Plan
The NQDC Plan The NQDC Plan is a supplemental benefit plan by which NEOs and certain other eligible employees may receive discretionary employer contributions. The contributions are intended to make up for Internal Revenue Code limits on the amounts that may be contributed to a participant’s qualified retirement plan account. Pursuant to the terms of the NQDC Plan, such contributions are considered immediately vested. The NQDC Plan is an unfunded, unsecured arrangement. Amounts credited are adjusted for earnings based on the participant’s election from a menu of notional investment choices based on publicly available mutual funds covering a range of investment categories, including target date funds. A participant may elect when they commence participation in the NQDC Plan to receive their account balance upon separation from service via a single, lump sum payment or a series of installment payments over the course of 10 years or less, unless such account balance is equal to or less than $50,000 or the separation of service is due to the participant’s death or disability, in which case the account will be distributed in a single, lump sum payment. In certain cases, payments may be subject to a 6-month payment delay upon separation from service to comply with applicable tax laws. NQDC Plan participants may also apply for distribution of their account balance via a single, lump sum payment upon the occurrence of an unforeseeable emergency, as defined by the NQDC Plan. All benefits paid pursuant to the NQDC Plan are designed to be taxable as ordinary income at the time of distribution.
The NQDC Plan
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Potential Payments Upon Termination or Change in Control
Potential Payments Upon Termination or Change in Control Pathward Financial and Pathward, N.A. have adopted an Executive Severance Pay Policy (the “Severance Policy”) that first became effective for fiscal year 2022. The Severance Policy applies to the CEO, President, Executive Vice Presidents who sit on the Executive Committee, and other select employees identified by the CEO and approved by the Compensation Committee (each, an “Eligible Employee”). As a result, all of the NEOs are covered by the Severance Policy. The Severance Policy provides that if the involuntary termination of an Eligible Employee occurs without Cause (as defined in the Severance Policy), and not related to a change-in-control (as defined in the Severance Policy), the Eligible Employee will be entitled to: (1) equal consecutive cash installment payments over a period of 12 months (24 months for the CEO) in a cumulative amount equal to 100% (200% for the CEO) of the Eligible Employee’s annual base salary, plus 100% (200% for the CEO) of the Eligible Employee’s annual target cash bonus; (2) the continuation of certain medical benefits for one year (two years for the CEO); (3) continued vesting of the unvested equity awards previously granted to the Eligible Employee (subject to performance results for the applicable performance periods), except if the termination occurs within 6 months of the fiscal year in which an equity award was granted, in which case such equity award grants shall be forfeited; and (4) payment of up to $10,000 for employee outplacement services. If the involuntary termination of an Eligible Employee occurs without Cause, but related to a change-in-control (meaning the termination occurs within 24 months after the change in control), the Eligible Employee will be entitled to: (1) a lump-sum cash payment no later than 75 days following the termination in an amount equal to 100% (200% for the CEO) of the Eligible Employee’s annual base salary, plus an amount equal to 100% (200% for the CEO) of the Eligible Employee’s annual target cash bonus; (2) the continuation of certain medical benefits for one year (two years for the CEO); (3) full vesting of the unvested equity awards previously granted to the Eligible Employee; and (4) payment of up to $10,000 for employee outplacement services. The Severance Policy conditions all payments and benefits upon an Eligible Employee’s execution of a release in favor of Pathward, which includes non-disparagement covenants, and a non-solicitation obligation which applies to Pathward’s customers, employees, and third-party relationships for a period of 12 months following the termination of the Eligible Employee’s employment. In addition, award agreements for performance-contingent restricted stock awards, performance share units, and other awards of restricted stock granted under the Amended and Restated 2002 Omnibus Incentive Plan generally provide for immediate or continued vesting of such awards (subject to the achievement of applicable performance goals in the case of performance-contingent restricted stock awards and performance share units) in case of termination of service by death, disability, or retirement, so long as the termination of service occurs at least six months after the beginning of the fiscal year in which such award was granted. “Retirement” for this purpose means a voluntary termination after having either (i) attained age 65, or (ii) attained a combined age and years of service equal to at least 70. As of the end of fiscal year 2023, the only NEO eligible for retirement was Herrick. Apart from any termination of employment, the award agreements and the terms of the Amended and Restated 2002 Omnibus Incentive Plan also provide for full vesting of the awards if, upon a change in control of Pathward Financial, such awards are unvested and have not otherwise terminated. The following table sets forth the payments and benefits that would be due and payable to the NEOs under the Severance Policy and the terms of their outstanding equity awards in the following scenarios (assuming such event occurred on September 30, 2023): (i) a termination of employment due to death or disability, (ii) a retirement (if eligible), (iii) an involuntary termination without cause and not related to a change in control, (iv) an involuntary termination without cause and related to a change in control, and (v) a change in control (without any accompanying termination of employment). The value for vesting of equity awards in the table is based on the closing price of our common stock on the last day of the most recent fiscal year (September 29, 2023, the last trading day), $46.09 per share, and assumes future performance goals
Potential Payments Upon Termination or Change in Control
| | | | ▼ | | | | | | | | Proxy Statement Summary | Corporate Governance & Board Matters | Executive Officers | Executive Compensation | 2023 Omnibus Incentive Plan | Audit-Related Matters | Stock Ownership Information | Information about the Annual Meeting | Additional Information | Appendix A |
Potential Payments Upon Termination or Change in Control
would be achieved at target. An NEO who experienced a voluntary termination (not retirement-eligible) or a termination for cause would not receive any of the payments or other benefits described in the table below and would forfeit all unvested equity awards. Notwithstanding the foregoing, all listed NEOs would still be eligible to receive other payments and benefits in which they were already vested at the time of termination, under any employment contract, plan or other arrangement with Pathward Financial, including amounts under retirement programs, in accordance with their terms (the “non-severance benefits”). Such non-severance benefits are not detailed in this section. Compensation paid to NEOs, including under any employment contract, if any, plan, or retirement program, is also subject to certain regulatory requirements regarding the payment of compensation to such NEOs and may be subject to clawback provisions under certain circumstances.
Potential Payments Upon Termination or Change in Control
| Name | Benefit | Death or Disability(1) ($) | Retirement(2) ($) | Termination without Cause not in connection with a Change of Control(3) ($) | Termination without Cause in connection with a Change of Control(4) ($) | Change of Control(5) ($) | | Brett L. Pharr | Cash Payment(s) | — | — | 2,800,000 | 2,800,000 | — | | | Vesting of Equity Awards | 4,060,575 | — | 4,060,575 | 4,060,575 | 4,060,575 | | | Medical Benefits | — | — | 36,677 | 36,677 | — | | | Outplacement Services | — | — | 10,000 | 10,000 | — | | | Total | 4,060,575 | — | 6,907,252 | 6,907,252 | 4,060,575 | | Glen W. Herrick | Cash Payment(s) | — | — | 1,045,000 | 1,045,000 | — | | | Vesting of Equity Awards | 3,688,214 | 3,688,214 | 3,688,214 | 3,688,214 | 3,688,214 | | | Medical Benefits | — | — | 28,864 | 28,864 | — | | | Outplacement Services | — | — | 10,000 | 10,000 | — | | | Total | 3,688,260 | 3,688,260 | 4,772,124 | 4,772,124 | 3,688,260 | | Anthony M. Sharett | Cash Payment(s) | — | — | 988,000 | 988,000 | — | | | Vesting of Equity Awards | 1,719,065 | — | 1,719,065 | 1,719,065 | 1,719,065 | | | Medical Benefits | — | — | 288 | 288 | — | | | Outplacement Services | — | — | 10,000 | 10,000 | — | | | Total | 1,719,065 | — | 2,717,353 | 2,717,353 | 1,719,065 | | Charles C. Ingram | Cash Payment(s) | — | — | 782,000 | 782,000 | — | | | Vesting of Equity Awards | 913,965 | 913,965 | 913,965 | 913,965 | 913,965 | | | Medical Benefits | — | — | 29,152 | 29,152 | — | | | Outplacement Services | — | — | 10,000 | 10,000 | — | | | Total | 914,057 | — | 1,735,209 | 1,735,209 | 914,057 | | Nadia A. Dombrowski | Cash Payment(s) | — | — | 782,000 | 782,000 | — | | | Vesting of Equity Awards | 585,435 | — | 585,435 | 585,435 | 585,435 | | | Medical Benefits | — | — | — | — | — | | | Outplacement Services | — | — | 10,000 | 10,000 | — | | | Total | 585,435 | — | 1,377,435 | 1,377,435 | 585,435 |
Potential Payments Upon Termination or Change in Control
(1) Represents the value of unvested performance-contingent restricted stock awards, performance share units, and other unvested shares of restricted stock as of the end of the most recent fiscal year (September 30, 2023) that would immediately vest or continue to vest (subject to the achievement of applicable performance goals in case of performance-contingent restricted stock awards and performance share units). (2) Herrick became retirement-eligible in March 2023. None of the other NEOs were eligible for retirement as of the end of the most recent fiscal year (September 30, 2023). (3) Represents amounts payable under the Severance Policy for such termination of employment, and includes the value of unvested performance-contingent restricted stock awards, performance share units, and other unvested shares of restricted stock as of the end of the most recent fiscal year (September 30, 2023) that would continue to vest (subject to achievement of applicable performance goals in case of performance-contingent restricted stock awards and performance share units). (4) Represents amounts payable under the Severance Policy and includes the value of unvested performance-contingent restricted stock awards, performance share units, and other unvested shares of restricted stock as of the end of the most recent fiscal year (September 30, 2023) that would immediately vest upon such termination of employment. Represents the value of unvested performance-contingent restricted stock awards, performance share units, and other unvested shares of restricted stock as of the end of the most recent fiscal year that would immediately vest upon a change in control.
CEO Pay Ratio Disclosure
CEO Pay Ratio Disclosure Pathward Financial is required to disclose the ratio of the CEO’s annual total compensation to the annual total compensation of our median-paid employee. To identify Pathward Financial’s median employee, we prepared a list of all individuals employed by Pathward Financial on September 30, 2023 (excluding the CEO), whether employed on a full-time, part-time, temporary or seasonal basis. SEC rules permit registrants to use a consistently applied compensation measure (“CACM”) to identify the median employee from the employee population. We used base pay, overtime pay, and cash incentive awards, as reflected in Pathward Financial’s payroll records, as our CACM. Based on the CACM methodology described above, we identified the median employee and then estimated the annual total compensation for this employee, consistent with the rules used to determine total compensation in the Summary Compensation Table for the NEOs. Accordingly, annual total compensation for the median employee was $93,917. The CEO’s total compensation was $3,884,129, resulting in a ratio of approximately 41:1. We believe this pay ratio is a reasonable estimate calculated in a manner consistent with SEC rules. Because the SEC rules for identifying the median employee and calculating that employee’s annual total compensation allow companies to use different methodologies, apply certain exclusions, and make reasonable estimates and assumptions, Pathward Financial’s pay ratio may not be comparable to pay ratios reported by other companies.
Pay versus Performance
Pay versus Performance As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(v) of Regulation S-K promulgated under the Exchange Act, we are providing the following information about the relationship between executive compensation actually paid and certain financial performance of the Company. For further information concerning the Company’s variable pay-for-performance philosophy and how the Company aligns executive compensation with the Company’s performance, refer to the Compensation Discussion and Analysis section. For purposes of the tables below, the principal executive officer (“PEO”) and non-PEO named executive officers for 2021, 2022 and 2023 are the following:
Pay versus Performance
| Year | PEO | Non-PEO Named Executive Officers | | 2023 | Brett L. Pharr | Glen W. Herrick, Anthony M. Sharett, Charles C. Ingram and Nadia A. Dombrowski | | 2022 | Brett L. Pharr | Glen W. Herrick, Anthony M. Sharett, Charles C. Ingram, Nadia A. Dombrowski, and Kia S. Tang | | 2021 | Bradley C. Hanson | Brett L. Pharr, Glen W. Herrick, Anthony M. Sharett, Charles C. Ingram, Kia S. Tang, Sheree S. Thornsberry and Shelly A. Schneekloth |
Pay versus Performance
| (A) | (B) | (C) | (D) | (E) | (F) | (G) | (H) | (I) | | Year | Summary Compensation Table Total for PEO(1) ($) | Compensation Actually Paid to PEO(2) ($) | Average Summary Compensation Table Total for Non-PEO Named Executive Officers(3) ($) | Average Compensation Actually Paid to Non-PEO Named Executive Officers(4) ($) | Value of Initial Fixed $100 Investment Based on: | | Net Income(7) ($ in Millions) | Company- Selected Performance Measure (EPS)(8) ($) | | | | | | | Total Shareholder Return(5) ($) | Peer Group Total Shareholder Return(6) ($) | | | | 2023 | 3,884,131 | 5,077,889 | 1,784,636 | 2,463,709 | 242.98 | 128.21 | 163.6 | 5.99 | | 2022 | 3,811,433 | 2,817,840 | 1,437,513 | 1,392,760 | 173.04 | 136.72 | 156.4 | 5.26 | | 2021 | 5,040,345 | 7,442,578 | 1,259,474 | 1,286,933 | 274.27 | 161.72 | 141.7 | 4.38 |
Pay versus Performance
(1) The dollar amounts reported in column (B) are the amounts of total compensation reported for the PEO for fiscal years 2021, 2022, and 2023 in the “Total” column of the Summary Compensation Table for the applicable year. The dollar amounts reported in column (C) represent the amount of “compensation actually paid” to the PEO, as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual amount of compensation earned by or paid to the PEO during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to the PEO’s total compensation for each year, by subtracting the amounts in the Reported Value of Equity Award column and adding the amounts in the Equity Award Adjustments column, to determine the “compensation actually paid,” as defined by the SEC:
Pay versus Performance
| Year | Reported Summary Compensation Table Total for PEO ($) | Minus Reported Value of Equity Awards(a) ($) | Plus Equity Award Adjustments(b) ($) | Equals Compensation Actually Paid to PEO ($) | | 2023 | 3,884,131 | 2,100,013 | 3,293,771 | 5,077,889 | | 2022 | 3,811,433 | 2,556,981 | 1,563,388 | 2,817,840 | | 2021 | 5,040,345 | 2,494,513 | 4,896,747 | 7,442,578 |
Pay versus Performance
The grant date fair value of equity awards represents the total of the amounts reported in the “Stock Awards” column in the Summary Compensation Table for the applicable year which are comprised of performance share units and restricted stock granted from 2016 through 2023. (b) The values provided in the Equity Award Adjustments column were determined as follows:
Pay versus Performance
| Year | YE Value of Respective Year Awards Outstanding as of YE ($) | Plus Change in Value as of YE for Prior Year Awards Outstanding as of YE ($) | Plus Change in Value as of Vesting Date for Prior Year Awards that Vested During the Year ($) | Minus Value as of YE for Any Equity Awards Previously Granted that Failed to Vest in the Current Year ($) | Equals Value of Equity Award Adjustments ($) | | 2023 | 2,671,146 | 395,817 | 226,808 | 0 | 3,293,771 | | 2022 | 1,205,069 | 263,664 | 94,654 | 0 | 1,563,388 | | 2021 | 3,818,833 | 984,671 | 492,336 | 399,093 | 4,896,747 |
Pay versus Performance
The amounts are based on the fair value of the equity awards as of the applicable year end or vesting date as required by SEC rules. Measurement date equity fair values are calculated with assumptions derived on a basis consistent with those used for grant date fair value purposes. Restricted stock awards are valued based on the stock price on the relevant measurement date. Performance stock units are adjusted to reflect an accrued payout factor consistent with assumptions used for ASC 718 purposes, and the stock price on the relevant measurement date. (3) The dollar amounts reported in column (D) are the average of the amounts of total compensation reported for our non-PEO named executive officers for fiscal years 2021, 2022, and 2023 in the “Total” column of the Summary Compensation Table for the applicable year. (4) The dollar amounts reported in column (E) represent the average amount of “compensation actually paid” to the non-PEO named executive officers for each year, as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual average amount of compensation earned by or paid to the non-PEO named executive officers during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to the non-PEO named executive officers’ average total compensation for each year, by subtracting the amounts in the Average Reported Value of Equity Awards column and adding the amounts in the Average Equity Award Adjustments column, to determine the “compensation actually paid,” as defined by the SEC:
Pay versus Performance
| Year | Average Reported Summary Compensation Table Total for Non-PEO Named Executive Officers ($) | Minus Average Reported Value of Equity Awards(a) ($) | Plus Average Equity Award Adjustments(b) ($) | Equals Average Compensation Actually Paid to Non-PEO Named Executive Officers ($) | | 2023 | 1,784,636 | 566,025 | 1,245,098 | 2,463,709 | | 2022 | 1,437,513 | 698,636 | 653,882 | 1,392,760 | | 2021 | 1,259,474 | 325,488 | 352,947 | 1,286,933 |
Pay versus Performance
The grant date fair value of equity awards represents the total of the amounts reported in the “Stock Awards” column in the Summary Compensation Table for the applicable year, which are comprised of performance share units and restricted stock granted from 2016 through 2023. The values provided in the Average Equity Award Adjustments column were determined as follows:
Pay versus Performance
| Year | Average YE Value of Respective Year Awards Outstanding as of YE ($) | Plus Average Change in Value as of YE for Prior Year Awards Outstanding as of YE ($) | Plus Average Change in Value as of Vesting Date for Prior Year Awards that Vested During the Year ($) | Minus Average Value as of YE for Any Equity Awards Previously Granted that Failed to Vest in the Current Year ($) | Equals Average Value of Equity Award Adjustments ($) | | 2023 | 719,960 | 370,099 | 155,039 | 0 | 1,245,098 | | 2022 | 354,303 | 204,471 | 95,108 | 0 | 653,882 | | 2021 | 213,199 | 91,910 | 60,961 | 13,122 | 352,947 |
Pay versus Performance
The amounts are based on the fair value of the equity awards as of the applicable year end or vesting date as required by SEC rules. Measurement date equity fair values are calculated with assumptions derived on a basis consistent with those used for grant date fair value purposes. Restricted stock awards are valued based on the stock price on the relevant measurement date. Performance stock units are adjusted to reflect an accrued payout factor consistent with assumptions used for ASC 718 purposes, and the stock price on the relevant measurement date. (5) Reflects the cumulative total shareholder return (“TSR”) of a $100 investment in Pathward Financial, Inc. common stock, assuming such investment occurred on October 1, 2020 and all dividends were reinvested. Historical stock performance is not necessarily indicative of future stock performance. (6) Reflects the cumulative TSR of a $100 investment in our peer group for this Pay versus Performance table, the S&P 600 Financials Index, which is used in the stock performance graph required by Item 201(e) of Regulation S-K included in our Annual Report for the applicable fiscal year, assuming such investment occurred on October 1, 2020 and all dividends were reinvested. Historical stock performance is not necessarily indicative of future stock performance. (7) The dollar amounts reported in column (H) represent the amount of net income reflected in the Company’s audited financial statements for the applicable fiscal year. (8) The “Company-Selected Measure” (as defined in Item 402(v) of Regulation S-K, is our diluted earnings per share (“EPS”), as reflected in the Company’s audited financial statements for the applicable fiscal year.
Compensation Actually Paid and Cumulative TSR
Compensation Actually Paid and Cumulative TSR The chart below demonstrates the relationship between CAP amounts for our PEO and average non-PEO named executive officers and our net income.
Compensation Actually Paid and Net Income
Compensation Actually Paid and Net Income The chart below demonstrates the relationship between CAP amounts for our PEO and average non-PEO named executive officers and our EPS.
Compensation Actually Paid and EPS
Compensation Actually Paid and EPS The chart below demonstrates the relationship between the cumulative TSR of the Company and the cumulative TSR of the applicable peer group, the S&P 600 Financials Index.
Proposal 1: Election of Directors
Proposal 1: Election of Directors Directors are elected by a plurality of the votes cast, in person or by proxy. This means that the three director nominees with the most affirmative votes will be elected. Broker non-votes and shares of Pathward Financial Common Stock that are represented by a proxy that is marked “vote withheld” for the election of one or more director nominees will have no effect on the vote for the election of directors. If a director nominee is unable to stand for election, the Board may either reduce the number of directors to be elected or select a substitute nominee. If a substitute nominee is selected, the proxy holders will vote your shares for the substitute nominee, unless you have withheld the authority to do so. As of the date of this proxy statement, we are not aware of any reason that a director nominee would be unable to or would decline to stand for election.