DEF 14A of Flagstar Bank, National Association
Filed Apr 25, 2025 · FY20240001140361-25-015714
(Name of Registrant as specified in its Charter)
Over the next three years as we strive to transform Flagstar Bank into a top-quartile performing regional bank, these three goals will serve as our north star. We feel that the Bank is on the right path and makes progress every quarter. We are also on track to reach full-year profitability in 2026, and, as I said on our fourth-quarter 2024 earnings conference call, I believe that we will be profitable in the fourth-quarter of 2025. One of the lynch pins underlying our return to profitability is a $600 million or 23% annualized reduction in our operating expenses (excluding merger-related expenses and intangible amortization). These cost reductions are focused in five areas: compensation and benefits; real estate optimization; the outsourcing/offshoring of many of our back-office operations; additional vendor cost savings; and lower FDIC insurance expenses. We have already realized approximately 80% of these cost savings and expect to realize the remaining cost savings over the next several quarters. Importantly, as we reduce costs, at the same time, we are investing across various businesses, including our corporate and commercial banking business and within risk management to ensure that risk-taking activities align with the Bank’s strategy and risk appetite. We are also investing in our IT and operations infrastructure. Recently, the Board of Directors approved a $90 million investment to modernize technology and operations in 2025. As part of this investment, we have made a strategic shift to a hybrid-managed services model. This approach leverages a combination of internal talent and the industry-leading capabilities of two global services providers to create the new Flagstar S2 Bank platform – Simple and Sophisticated. The new platform is being built to enable our market strategy, strengthen our brand, and provide faster delivery of modern products and services into our markets. Importantly, this shift creates the necessary technology and operations foundation to accelerate an improved employee and customer experience along with the development of modern capabilities to support the Strategic Plan. Over the course of last year, I spent a great deal of time talking to our teammates and our customers, either through in-person townhalls, virtual meetings, retail branch visits, or through a number of meet and greets across the country. All the feedback received from these conversations was very valuable, but three things stood out. One, we have great teammates from three quality legacy organizations, who are dedicated and eager to serve their retail, business, and private banking customers; two, we have a loyal customer base which appreciates their relationship with the Bank; and three, we have one of the best regional banking franchises in the country, with strong footholds in the greater New York/New Jersey metropolitan region and in the upper Midwest, along with a significant presence in fast-growing markets in Florida and the West Coast. These three qualities will be essential in helping the organization transform into a well-diversified, high-performing regional bank. On behalf of our Board of Directors and Executive Leadership team, I would like to express our thanks to our teammates, customers, and shareholders for your continued trust and support.
The Company’s Notice of Annual Meeting, Proxy Statement, and 2024 Annual Report to Shareholders
| • | The Company utilized long-term, equity-based compensation as an essential element of the management restructuring plan with key hires awarded significant stock option grants tied to extended vesting schedules. Messrs. Otting, Gifford, Nguyen and Raffetto received stock option grants in the form of inducement awards when they joined the Company and Messrs. Davis and Smith received stock option grants in lieu of participation in a program similar to the Company’s former performance share-based incentive program. |
The Company’s Notice of Annual Meeting, Proxy Statement, and 2024 Annual Report to Shareholders
| • | In recognition of the unique business imperatives faced by the Company in 2024, the Compensation Committee adopted a Company-wide incentive plan that focused on the attainment of specific operational goals including (i) improving regulatory compliance and risk management controls; (ii) bolstering management talent; (iii) achieving milestones along the path toward creating a diversified, high performing regional bank; and (iv) taking essential steps toward improving the Company’s capital and liquidity position, enhancing the quality of the Company’s financial reporting structure and achieving expense reductions. The Company made awards to Messrs. Otting, Davis, Nguyen, Raffetto and Smith at target and to Mr. Gifford, who transitioned from his Chief Financial Officer role in late 2024, at 67 percent of target. |
The Company’s Notice of Annual Meeting, Proxy Statement, and 2024 Annual Report to Shareholders
| (3) Includes the following shares of unvested restricted stock awards: Mr. Smith – 78,338; and Mr. Davis – 44,478; and the following restricted stock units that could be triggered to vest or will vest within 60 days: Mr. Callanan – 14,078; Mr. Lux – 13,542; Mr. Puwalski – 13,542; Mr. DiNello – 13,542; Mr. Mnuchin – 13,542; Mr. Otting – 252,951; Mr. Berlinski – 13,542; Mr. Frank – 13,542; Ms. Whip – 13,542; and Mr. Davis – 10,843. |
The Company’s Notice of Annual Meeting, Proxy Statement, and 2024 Annual Report to Shareholders
| • | Achieved 11.83% CET1 capital level, which was better than the Company’s long-term forecast. |
The Company’s Notice of Annual Meeting, Proxy Statement, and 2024 Annual Report to Shareholders
| • | Use equity compensation as a long-term incentive tool to attract and retain key executives. |
The Company’s Notice of Annual Meeting, Proxy Statement, and 2024 Annual Report to Shareholders
| • | We allocate incentive compensation between fixed and variable, annual and long-term, and cash and equity compensation to encourage strategies and actions that are in the Company’s long-term best interests; |
The Company’s Notice of Annual Meeting, Proxy Statement, and 2024 Annual Report to Shareholders
| • | We determine annual incentive award payouts based on a variety of performance indicators, thus diversifying the risk associated with any single performance factor; |
The Company’s Notice of Annual Meeting, Proxy Statement, and 2024 Annual Report to Shareholders
| • | Our annual incentive plan is not overly leveraged and include appropriate maximum payout caps; |
Allen C. Puwalski
| NAME AND PRINCIPAL POSITION(1) | YEAR | SALARY ($) | BONUS(2) ($) | STOCK AWARDS(3) ($) | STOCK OPTIONS(4) ($) | NON-EQUITY INCENTIVE PLAN COMPENSATION(5) ($) | ALL OTHER COMPENSATION(6) ($) | TOTAL COMPENSATION ($) | | Joseph M. Otting Executive Chairman, President and CEO | 2024 | 918,269 | ― | ― | 31,500,000 | 2,250,000 | 148,803 | 34,817,072 | | Lee. M. Smith Senior EVP/ Chief Financial Officer | 2024 | 772,692 | ― | 1,000,000 | 4,560,000 | 700,000 | 44,163 | 7,076,855 | | | 2023 | 900,000 | ― | 1,125,006 | ― | ― | 562,985 | 2,587,991 | | | 2022 | 67,482 | ― | 3,375,009 | ― | ― | ― | 3,442,491 | | Richard Raffetto Senior EVP/President of Commercial and Private Banking | 2024 | 258,462 | 900,000 | ― | 4,560,000 | 700,000 | 234,692 | 6,653,154 | | Reginald E. Davis Senior EVP/President Consumer and Small Business Lending | 2024 | 707,308 | ― | ― | 4,560,000 | 700,000 | 80,010 | 6,047,318 | | | 2023 | 709,615 | ― | 720,000 | ― | ― | 366,144 | 1,795,759 | | | 2022 | 41,154 | ― | 1,900,005 | ― | ― | ― | 1,941,159 | | Bao Nguyen Senior EVP/General Counsel and Chief of Staff | 2024 | 449,615 | 125,000 | ― | 4,560,000 | 700,000 | 13,800 | 5,848,415 | | Thomas R. Cangemi Former Chief Executive Officer | 2024 | 230,481 | ― | ― | ― | ― | 27,707 | 258,188 | | | 2023 | 1,275,000 | ― | 3,187,506 | ― | ― | 374,585 | 4,837,091 | | | 2022 | 1,275,000 | ― | 2,996,246 | ― | 1,732,000 | 277,108 | 6,280,354 | | John J. Pinto Former Chief Financial Officer | 2024 | 582,692 | ― | ― | ― | ― | 15,416 | 598,108 | | | 2023 | 750,000 | ― | 1,050,005 | ― | ― | 166,747 | 1,966,752 | | | 2022 | 750,000 | ― | 1,050,006 | ― | 736,000 | 100,167 | 2,636,173 | | Craig Gifford Former Chief Financial Officer | 2024 | 455,000 | ― | ― | 4,560,000 | 500,000 | 63,821 | 5,578,821 | | Alessandro P. DiNello Former Executive Chairman, President and Chief Executive Officer | 2024 | 450,000 | ― | 4,112,666 | 8,560,000 | ― | ― | 13,122,666 |
Allen C. Puwalski
| (2) The amounts reported in these columns represent the amount of Compensation Actually Paid to Joseph Otting, Alessandro DiNello, and Thomas R. Cangemi, and average amount of Compensation Actually Paid to Other NEO’s as computed in accordance with Item 402(v) of Regulation S-K. The amounts do not reflect the actual amount of compensation earned by or paid to Mr. Otting, Mr. DiNello, Mr. Cangemi and the Other NEO’s during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to the SCT to determine the Compensation Actually Paid: |
Pay Versus Performance Relationship Disclosures
Pay Versus Performance Relationship Disclosures In accordance with SEC rules, the following charts illustrate how the compensation actually paid of our Named Executive Officers aligns with the Company’s financial performance as measured by total shareholder return (TSR), net income, and Diluted Earnings Per Share (EPS). Compensation Actually Paid(1) compared to TSR:
Pay Versus Performance Relationship Disclosures
| 50 | 2025 PROXY STATEMENT |
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Compensation Actually Paid(1) compared to Net (Loss) Income: Compensation Actually Paid(1) compared to Diluted EPS(2):
Pay Versus Performance Relationship Disclosures
| (1) 2024 Compensation Actually Paid (CAP) to CEO aggregates compensation actually paid to the three CEO’s during 2024. |
Pay Versus Performance Relationship Disclosures
| (2) Diluted EPS amounts for 2021 and 2020 have not been adjusted to reflect the impact of the one-for-three reverse stock split announced by the Company on June 27, 2024, that was effective July 11, 2024. |
Pay Versus Performance Relationship Disclosures
| 2025 PROXY STATEMENT | 51 |
Pay Versus Performance Relationship Disclosures
Proposal 1: Election of Directors All persons standing for election as directors were unanimously nominated by the Nominating and Corporate Governance Committee. No director nominee being nominated as a director is being proposed for election pursuant to any arrangement or understanding between any such director nominee and the Company. Mr. Callanan was nominated to the Board by the Liberty Investors to serve as a director on the Board pursuant to the Liberty Investors’ rights under the Liberty Investment Agreement. The Board of Directors currently consists of nine members. All directors presently serve as directors of the Company and the Bank. Directors of the Board are elected for staggered terms of three years each, with the term of office of one of the three classes of directors expiring each year. Directors serve until their successors are elected and qualified.
Pay Versus Performance Relationship Disclosures
| | The board of directors recommends that you vote “for” the election of each of the nominees named in this proxy statement. |
Pay Versus Performance Relationship Disclosures
The nominees proposed for election at this year’s Annual Meeting are Brian R. Callanan, Marshall Lux, and Allen C. Puwalski. The Nominating and Corporate Governance Committee approved, and recommended to the Board of Directors, the director nominees standing for election at the 2025 Annual Meeting. All of the nominees proposed for election at the 2025 Annual Meeting are current members of the Board, and the Company received no nominations from shareholders for the election of directors to the Board. In the event that any such nominee is unable to serve or declines to serve for any reason, it is intended that the proxies will be voted for the election of such other person as may be designated by the Nominating and Corporate Governance Committee. The Board has no reason to believe that any of the persons named will be unable or unwilling to serve. If a nominee is not elected by the requisite vote, he must tender his or her irrevocable contingent resignation, and the Board, through a process originated by the Nominating and Corporate Governance Committee, will decide whether to accept the resignation. It is intended that the shares represented by the enclosed proxy card, if executed, dated, and returned without voting instructions, will be voted “FOR” the election of each of the nominees proposed by the Board of Directors.
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| 52 | 2025 PROXY STATEMENT |
Pay Versus Performance Relationship Disclosures
Directors will be elected by a majority of the votes cast in connection with their election. The following table indicates the names, ages, tenure, and principal professional experience of the current members of our Board of Directors as of the Record Date:
Pay Versus Performance Relationship Disclosures
| NAME | INDEPENDENT | AGE | DIRECTOR SINCE | PRINCIPAL PROFESSIONAL EXPERIENCE | | Milton Berlinski | Yes | 68 | 2024 | Investment Banking | | Brian R. Callanan | Yes | 44 | 2024 | Investment Banking, Government | | Alessandro P. DiNello | No | 70 | 2022 | Banking | | Alan Frank | Yes | 73 | 2024 | Auditing | | Marshall Lux | Yes | 65 | 2022 | Banking, Insurance, FinTech | | Steven T. Mnuchin | Yes | 62 | 2024 | Investment Banking, Government | | Joseph M. Otting | No | 67 | 2024 | Banking, Government, Regulatory | | Allen C. Puwalski | Yes | 60 | 2024 | Banking, Forensic Accounting, Regulatory | | Jennifer R. Whip | Yes | 64 | 2022 | Mortgage Lending |
Pay Versus Performance Relationship Disclosures
| 2025 PROXY STATEMENT | 53 |
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The following table presents a summary of the various experience, expertise, and/or attributes of our Board members as of the Record Date:
Pay Versus Performance Relationship Disclosures
| SKILLS, EXPERIENCE AND ATTRIBUTES OF OUR BOARD OF DIRECTORS | | | | | | | | | | | TOTAL | | | Leadership / Executive Management Experience operating in an executive leadership position demonstrating the ability to understand and direct business operations, analyze risk, manage human capital, oversee implementation of organizational change and deliver strategic plans. | | | | | | | | | | 9 | | | Financial Services / Banking Industry Board or management experience in retail banking, commercial banking, mortgage lending, mortgage servicing, consumer lending, small business banking, investment banking and/or other financial services. | | | | | | | | | | 9 | | | Technology / Systems Leadership and understanding of technology, digital platforms and cyber risk | | | | | | | | | | 6 | | | Public Accounting and Financial Reporting Experience assessing or overseeing performance of companies or public accounting firms regarding preparation, auditing or evaluation of financial statements | | | | | | | | | | 9 | | | Public Company Corporate Governance Experience serving as a board member or senior executive at a public company and/or experience with public company governance issues, policies and best practices. | | | | | | | | | | 9 | | | Business Operations and Strategic Planning Experience setting long-term corporate vision and goals, developing products and services, evaluating competitive position and assessing progress toward achievement | | | | | | | | | | 9 | | | Compliance / Regulatory / Legal Experience with regulated businesses, regulatory requirements and compliance, legal expertise, and relationships with federal and state agencies. | | | | | | | | | | 9 | | | Risk Management Significant understanding and experience with identification, assessment and oversight of risk management programs and practices | | | | | | | | | | 8 | | | Real Estate / Housing Board or management experience in multi-family real estate and lending, commercial real estate and lending, construction and industrial real estate and lending, residential mortgage lending, and mortgage servicing | | | | | | | | | | 8 | | | Sustainability, Charitable, or other Corporate Responsibility Experience and leadership in embracing corporate responsibility and encouraging a positive impact through philanthropic efforts, volunteering, charitable giving, and other activities related to the environment, consumers, employees, and communities. | | | | | | | | | | 6 | | | Human Capital Management and Compensation Understanding executive compensation issues, succession planning, talent management and development | | | | | | | | | | 7 |
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| 54 | 2025 PROXY STATEMENT |
Pay Versus Performance Relationship Disclosures
DIRECTOR QUALIFICATIONS AND BUSINESS EXPERIENCE The following provides information about each member of the Company’s Board of Directors, including their business experience, and additional information about the specific experience, qualifications, attributes, or skills that led to the Board’s conclusion that each should serve as a director of the Company. Ages presented are as of the Record Date. Nominees:
Pay Versus Performance Relationship Disclosures
| Director since: 2024 Age: 44 Committees: Audit Risk Assessment | Brian R. Callanan BUSINESS EXPERIENCE: Mr. Callanan is a Senior Managing Director and General Counsel at Liberty Strategic Capital, a Washington, D.C.-based private equity firm with approximately $3 billion in assets under management. He serves on the firm’s Investment Committee, leads its legal function, and plays an active role in the firm’s financial sector investment efforts. He also serves on the Board of Directors of Zimperium Inc., a leading mobile cybersecurity business. Prior to joining Liberty, Mr. Callanan served as General Counsel of the U.S. Department of the Treasury from 2019 to 2021, leading a team of approximately 2,000 lawyers across the department and its bureaus. As Chief Legal Officer, Mr. Callanan played a key role on major Treasury initiatives including the implementation of historic economic rescue programs in response to COVID-19, the design of new economic sanctions, the expansion of national security reviews of foreign investment, and the implementation of tax reform. As Deputy General Counsel from 2017 to 2019, he managed major litigation and advised on regulatory reform efforts, among other responsibilities. For his service, he received the Alexander Hamilton Award, the department’s highest honor. Mr. Callanan previously worked in private practice as a litigator in Washington, D.C., where he represented clients across a range of industries in regulatory litigation and government investigations. He also previously served as Staff Director and General Counsel of the U.S. Senate Permanent Subcommittee on Investigations and served as a senior advisor to Senator Rob Portman. A graduate of Harvard Law School and Claremont McKenna College, Mr. Callanan clerked for Judge A. Raymond Randolph of the U.S. Court of Appeals for the District of Columbia Circuit. QUALIFICATIONS: Mr. Callanan’s government and legal experience are beneficial to the Company in its regulatory relationships and its transformation and maturity as a Category IV bank. |
Pay Versus Performance Relationship Disclosures
| 2025 PROXY STATEMENT | 55 |
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| Director since: 2022 Age: 65 Committees: Compensation Nominating and Corp. Governance Risk Assessment Technology (Chair) Other Public Company Directorships: Mphasis Corporation | Marshall Lux BUSINESS EXPERIENCE: Mr. Lux is a prominent financial services industry professional whose career spans nearly four decades and crosses a broad variety of financial industry subsectors, including consumer finance, commercial banks, insurance companies, broker/dealers, wealth and asset management firms, card companies, private equity, and FinTechs. Mr. Lux’s experiences at McKinsey & Company and elsewhere during his career included advising financial institutions regarding various risk and compliance matters, including in consumer compliance matters relating to retail banking, mortgage lending, and other lending. Throughout his career he has built strong relationships as a trusted advisor to C-suite executives. He attended Princeton University as an undergraduate and Harvard Business School for his graduate studies. Upon graduating from Harvard in 1986, Mr. Lux began working at McKinsey & Company, where he advised companies on core strategies and operational issues, including with respect to consumer compliance issues, mergers and merger integration, new product design and rollout, expense management, credit quality, crisis management, and capital initiatives. Mr. Lux left McKinsey as a Senior Partner after nearly 20 years to join one of his clients, J.P. Morgan, as Global Chief Risk Officer for Chase Consumer Bank. In this capacity, he managed a staff of 10,000 employees around the world, reported to the Company’s Board of Directors, and worked hand-in-hand on the Consumer Bank risk strategy with CEO Jamie Dimon. During his tenure at JP Morgan, he developed a number of risk strategies and models which helped successfully steer the bank through the mortgage crisis, also advising regarding various consumer compliance matters relating to JPMC’s mortgage lending. In 2009 he left J.P. Morgan to return to his consulting roots with the Boston Consulting Group (“BCG”) where he was their first directly elected Senior Partner, advising many of the same financial services companies that he had advised earlier in his career. At BCG, Mr. Lux continues his focus on advising financial service companies, including residential mortgage lenders and other consumer credit providers. In 2014, he transitioned from a Senior Partner at BCG to a Senior Advisor. He currently is a member of the board of directors of Mphasis (NSE: MPHASIS) and previously served on the former publicly traded global IT company, DHB Capital Corp. Additionally, he serves on the boards of a privately held small business lender and a privately held global IT platform solutions company. He is also a director of the Guardian Life Mutual Funds, a wealth management arm of the Guardian Life Insurance Company. In addition to his board involvement, Mr. Lux also advises a number of FinTech companies that are involved in payment systems, mortgage lending, digital assets, cybersecurity, and wealth management. QUALIFICATIONS: Mr. Lux’s experience and contributions advance the Board’s objective of maintaining a membership of experienced and dedicated individuals with diverse backgrounds, perspectives, skills, and other qualities that are beneficial to the Company and the Bank. |
Pay Versus Performance Relationship Disclosures
| 56 | 2025 PROXY STATEMENT |
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| Director since: 2024 Age: 60 Committees: Audit Compensation Risk Assessment (Chair) | Allen C. Puwalski BUSINESS EXPERIENCE: Mr. Puwalski started his 30-year career in banking as a field examiner and capital markets specialist for the FDIC in its New York region following the commercial real estate crisis of the late 1980s. When he left the FDIC in 2004, he was the Chief of Bank Analysis in the FDIC’s Division of Insurance and was managing the analysis, publications, and policy development of a 15-person multi-disciplinary team of PhD economists, CPAs, CFAs, and commissioned bank examiners. The substantive work of this group included bank failure projection modeling, early development of bank stress testing, and the quantitative justification for risk-based deposit insurance pricing. After several years as a global financial sector team lead for CFRA, an independent research firm specializing in forensic accounting research and analytics, Mr. Puwalski joined Paulson and Co. in 2007 as the firm’s first financials sector specialist. At Paulson, Mr. Puwalski executed complex transactions with high returns across the full capital structure in both liquid and PE-style investing in the U.S. and Europe. Mr. Puwalski was also a director at OneWest Bank, N.A. prior to its sale to CIT Group Inc. in 2015, and headed the community bank strategy for SoFi Technologies during its bank chartering and listing process. At present, Mr. Puwalski is a founding partner of Cybiont Capital, LLC, a company specializing in fundamental bank analysis and advising in community bank investing. Mr. Puwalski earned a Bachelor of Arts degree in economics and certificate of finance from the University of Maryland, Baltimore County, and he is a Chartered Financial Analyst. QUALIFICATIONS: With his extensive experience in banking, finance, forensic accounting, and regulatory examinations, Mr. Puwalski brings valuable insight to the Board of the Company and furthers the Board’s objectives of maintaining a membership of experienced and dedicated individuals with diverse backgrounds, perspectives, skills, and other qualities that are beneficial to the Company and the Bank. |
Pay Versus Performance Relationship Disclosures
| 2025 PROXY STATEMENT | 57 |
Pay Versus Performance Relationship Disclosures
Current Directors:
Pay Versus Performance Relationship Disclosures
| Director since: 2024 Age: 68 Committees: Compensation (Chair) Executive Nominating and Corp. Governance | Milton Berlinski BUSINESS EXPERIENCE: Mr. Berlinski in 2013 co-founded Reverence Capital Partners, L.P., a private investment firm focused on three complementary strategies: (i) financial services-focused private equity, (ii) opportunistic, structured credit, and (iii) real estate solutions. Reverence Capital Partners, L.P. manages in excess of $10 billion in assets under management and focuses on thematic investing in leading global financial services businesses. Mr. Berlinski co-founded Reverence Capital Partners, L.P. after concluding a 26-year career at Goldman Sachs. He joined Goldman Sachs in 1986 and served as a founding member of the Financial Institutions Group in Investment Banking, focusing on banks, consumer and commercial finance companies, asset management, insurance, and capital markets. Mr. Berlinski also served as Head of Strategy and Corporate Development both before and after Goldman Sachs’ IPO, assisting the firm’s Executive Office and division leaders to create and execute a strategy to build out Goldman Sachs’ global footprint. For the final 10 years of his Goldman Sachs tenure, Mr. Berlinski had global responsibility for coverage of the firm’s financial sponsor and hedge fund clients, overseeing a dramatic increase in revenue from the business and working alongside Goldman Sachs’ Merchant Banking team on co-investment opportunities in transactions involving the firm’s clients. Mr. Berlinski has led or executed over 300 transactions in financial services across all subsectors, including numerous strategic acquisitions by Goldman Sachs. Mr. Berlinski was a member of the Operating Committee and the Compensation Committee during his time at Goldman Sachs. He received a BA in engineering from California State University, Northridge, in 1978 and an MBA from the Wharton School of the University of Pennsylvania in 1980. Mr. Berlinski serves on the board of directors for Russell Investments, Venerable Holdings (HoldCo), Transact, Osaic (f/k/a Advisor Group), DMG Bancshares, Ministry Brands, Allspring Global Investments, CAIS, SEIA, and EverBank (f/k/a TIAA Bank). He formerly served on the board of directors for Kabbage, Obra Capital, Diamond Resorts, and Victory Capital (NASDAQ: VCTR). He also serves on the board of the Ronald McDonald House, the Advisory Board of the Wharton School and The Mount Sinai Department of Surgery Advisory Board. He is a board member of the New America Alliance, supporting Latino leadership in entrepreneurship, corporate America, and public service. In addition, he serves on the board of directors of Sponsors for Educational Opportunity (SEO), which has made a lifetime of achievement possible for nearly 20,000 talented young people from underserved and underrepresented communities around the United States. QUALIFICATIONS: Mr. Berlinski brings years of banking and acquisitions experience to the Company advancing the Board’s objective of maintaining a membership of experienced dedicated individuals with diverse backgrounds, perspectives, skills, and other qualities that are beneficial to the Company and the Bank. |
Pay Versus Performance Relationship Disclosures
| 58 | 2025 PROXY STATEMENT |
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| Director since: 2022 Age: 70 Committees: Technology Executive | Alessandro P. DiNello BUSINESS EXPERIENCE: Mr. DiNello serves as a Director of the Company and the Bank. From December 2022 through June 5, 2024, he served as Non-Executive Chairman of both the Company and the Bank Boards. He served as President and Chief Executive Officer of the Company from February 23, 2024, through Mr. Otting’s appointment as President and Chief Executive Officer on April 1, 2024. Prior to the Flagstar/New York Community merger on December 1, 2022, he served as President, CEO, and a Director of Flagstar Bank, F.S.B. (now chartered as Flagstar Bank, N.A.) and Flagstar Bancorp, Inc., since mid-2013. Before that, he was President and Chief Administrative Officer of Flagstar Bank, and for a number of years Executive Vice President of Retail Banking. Under his leadership, Flagstar consistently delivered solid results, underpinned by careful, thoughtful growth and industry-leading risk management. During his career at Flagstar Bank, he served as head of branch banking, retail product strategy, marketing, communications, internet banking, and branch expansion. He also was in charge of the bank’s technology, operations, and commercial units, and he led the government affairs and community relations initiatives. Mr. DiNello serves as a board member of St. Joseph Mercy Oakland Hospital – Trinity Health. He is a founding member of the Detroit Sports Organizing Corp. and served as co-chair of the Economic Development Strategy Task Force of the Detroit Metropolitan Affairs Coalition. He is a past director of both the Western Michigan University Foundation and the National Board of Trustees of the Crohn’s & Colitis Foundation where he served on the Executive Committee as Treasurer and as Chairman of the Finance Committee. He is a recipient of the Honoree Award from the Crohn’s & Colitis Foundation, the Outstanding Alumni Achievement Award from Haworth College of Business, the Distinguished Alumni Award from Western Michigan University, the Humanitarian Award from the Michigan Roundtable for Diversity & Inclusion, the Courage in Leadership Award from the North Oakland (Michigan) NAACP, the Partner in Progress Award from the City of Pontiac, Michigan, the Regional Ambassador Award from the Southeast Michigan Council of Governments, and the Troy Community Champion Award from the Troy Community Foundation. His most recent recognition was the Maverick Award which he received from the Florida Minority Reinvestment Coalition. Mr. DiNello earned a bachelor’s in business administration degree in accounting from Western Michigan University. QUALIFICATIONS: Mr. DiNello’s experience and intimate knowledge of the Company’s business and operations provide the Board specific experience and expertise that are beneficial to the Company and the Bank. |
Pay Versus Performance Relationship Disclosures
| 2025 PROXY STATEMENT | 59 |
Pay Versus Performance Relationship Disclosures
| Director since: 2024 Age: 73 Committees: Audit (Chair) Risk Assessment | Alan Frank BUSINESS EXPERIENCE: Mr. Frank is a retired Audit Partner from Deloitte & Touche where he was employed for 40 years. While at Deloitte, Mr. Frank led audit service teams from 1983 to 2012 and the Southern California consumer business and middle market audit practices from 1986 through 2010. He is also a former member of the board and audit committee chairman of OneWest Bank Group LLC and CIT Group Inc. Currently, he is a member of the board and audit committee chairman of Andalusian Credit Company, LLC, a privately held financial services company whose principal business consists of senior secured loans to middle market companies. Mr. Frank graduated from the University of Southern California with a Bachelor of Science Degree. QUALIFICATIONS: Mr. Frank brings significant experience in auditing, mergers and acquisitions, financial reporting matters, initial public offerings and high growth companies to the Company advancing the Board’s objective of maintaining a membership of experienced dedicated individuals with diverse backgrounds, perspectives, skills, and other qualities that are beneficial to the Company and the Bank. |
Pay Versus Performance Relationship Disclosures
| 60 | 2025 PROXY STATEMENT |
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| Director since: 2024 Age: 62 Committees: Compensation Executive Nominating and Corp. Governance (Chair) | Steven T. Mnuchin BUSINESS EXPERIENCE: Secretary Steven T. Mnuchin serves as the Founder and Managing Partner of Liberty Strategic Capital and chairs the firm’s Investment Committee. Liberty Strategic Capital is a Washington, DC-based private equity firm focused on strategic investments in technology, financial services and fintech, and new forms of content. In addition to serving as a director of Flagstar Financial, Inc. and its subsidiary, Flagstar Bank, N.A., Secretary Mnuchin currently serves on the boards of directors of Liberty Strategic Capital portfolio companies Cybereason Inc. (since 2021), Satellogic Inc. (since 2022), and Zimperium, Inc. (since 2022). He previously served on the boards of directors of Contrast Security, Inc. (2022-2023) and BlueVoyant, Inc. (2022-2023). Prior to founding Liberty, Mr. Mnuchin served as the 77th Secretary of the Treasury from February 2017 through January 2021. As Secretary, Mr. Mnuchin was responsible for leading the U.S. Treasury, whose mission is to maintain a strong economy, foster economic growth, and create job opportunities by promoting the conditions that enable prosperity at home and abroad. He was also responsible for strengthening national security by combating economic threats and protecting the U.S. financial system, as well as managing the U.S. Government’s finances. Mr. Mnuchin also oversaw Cybersecurity for the financial services sector and all Treasury bureaus including the IRS. Secretary Mnuchin played a pivotal role in shaping and advancing the Administration’s economic agenda, including the passage and implementation of the Tax Cuts and JOBS Act and the CARES Act. He also led the Treasury Department’s regulatory reform efforts. Secretary Mnuchin was chair of the Committee on Foreign Investment in the United States (CFIUS) and was a member of the National Security Council. He was responsible for using economic tools to combat terrorist financing and other threats to the United States and its allies. Prior to his confirmation, he served as Founder, Chairman, and Chief Executive Officer of Dune Capital Management. He founded OneWest Bank Group LLC and served as its Chairman and Chief Executive Officer until its sale to CIT Group Inc. Earlier in his career, Secretary Mnuchin worked at The Goldman Sachs Group, Inc., where he was a Partner and served as Chief Information Officer, with responsibility for the firm’s global information and technology strategy and operations. He has extensive experience in global financial markets and investments. Secretary Mnuchin is committed to philanthropic activities and previously served as a member of the board of directors of the Museum of Contemporary Art Los Angeles (MOCA), the Whitney Museum of Art, the Hirshhorn Museum and Sculpture Garden on the National Mall, the UCLA Health System, the New York Presbyterian Hospital, and the Los Angeles Police Foundation. Secretary Mnuchin was born and raised in New York City. He holds a BA from Yale University. QUALIFICATIONS: With his extensive experience in corporate finance, investment banking, technology and government, Secretary Mnuchin brings valuable insight to the Board of the Company in overseeing a wide range of banking, investment, governance, and cybersecurity matters, and furthers the Board’s objective of maintaining a membership of experienced dedicated individuals with diverse backgrounds, perspectives, skills, and other qualities that are beneficial to the Company and the Bank. |
Pay Versus Performance Relationship Disclosures
| 2025 PROXY STATEMENT | 61 |
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| Director since: 2024 Age: 67 Committees: Executive (Chair) Technology | Joseph M. Otting BUSINESS EXPERIENCE: Mr. Otting serves as President and Chief Executive Officer of the Company and the Bank, having been appointed to this position effective as of April 1, 2024. Additionally, he was named Executive Chairman of the Company and the Bank on June 5, 2024. He became an employee of the Company on March 6, 2024, and he has served as a member of the Boards of the Company and Bank since March 11, 2024. Mr. Otting is an American businessman and government official having served as the 31st Comptroller of the Currency from November 2017 to 2020. Prior to becoming Comptroller of the Currency, Mr. Otting was an executive in the banking industry. He served as President of CIT Bank and Co-President of CIT Group Inc. from August 2015 to December 2015. Mr. Otting previously was President, Chief Executive Officer, and a member of the board of directors of OneWest Bank, N.A. Prior to joining OneWest Bank, he served as Vice Chairman of U.S. Bancorp, where he managed the Commercial Banking Group and served on U.S. Bancorp’s Executive Management Committee. He also served as a member of U.S. Bank’s main subsidiary banks’ board of directors. From 1994 to 2001, Mr. Otting was Executive Vice President and Group Head of Commercial Banking at Union Bank of California. Before joining Union Bank, he held positions in branch management, preferred banking, and commercial lending at Bank of America. Mr. Otting has played significant roles in charitable and community development organizations. He has served as a board member for the California Chamber of Commerce, the Killebrew-Thompson Memorial Foundation, the Associated Oregon Industries, the Oregon Business Council, the Portland Business Alliance, the Minnesota Chamber of Commerce, and Blue Cross Blue Shield of Oregon. He was also a member of the Financial Services Roundtable, the Los Angeles Chamber of Commerce, and the Board and Executive Committee of the Los Angeles Economic Development Corporation. He currently serves on the Governing Board of Directors of Operation Hope and a board member of OASIS. He is the Chairman of the Board of Andalusian Credit Company and a board member of Talino Labs and Blockchain. Mr. Otting holds a bachelor of arts in management from the University of Northern Iowa and is a graduate of the School of Credit and Financial Management, which was held at Dartmouth College in Hanover, New Hampshire. QUALIFICATIONS: Mr. Otting’s extensive banking, government and regulatory experience and contributions advance the Board’s objective of maintaining a membership of experienced and dedicated individuals with diverse backgrounds, perspectives, skills, and other qualities that are beneficial to the Company and the Bank. |
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| 62 | 2025 PROXY STATEMENT |
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| Director since: 2022 Age: 64 Committees: Audit Risk Assessment Technology | Jennifer R. Whip BUSINESS EXPERIENCE: Ms. Whip is a principal with Cambridge One, LLC, and was a long-time executive with Fannie Mae. In her 26 years with Fannie Mae she held numerous key roles, including leading nationwide single-family business development strategies, managing relationships with some of Fannie’s largest lenders, developing lending solutions to underserved communities, and directing lender management and strategic initiatives for Fannie Mae’s eChannel. At Garrett, McCauley & Co., a consulting firm to the financial services industry, she was part of a team that helped banks and mortgage lenders increase revenues, control costs, and better manage risks. She was a founding member of the Fannie Mae Diversity Advisory Council, an executive sponsor of the INDUS Employee Resource Group at Fannie Mae, an employee resource group for Fannie Mae employees of Indian and Pakistani descent, and a former advisory board member of the Neighborhood Housing Services of New York City. She also currently holds the Certified Mortgage Banker designation from the Mortgage Bankers Association (MBA). She received awards from Fannie Mae for volunteerism, as well as for her support of its Hispanic Networking Group. QUALIFICATIONS: Ms. Whip provides broad experience in housing finance, strategic initiatives and risk management, bringing varied perspective to the Board’s oversight over these principal business areas, furthering the Board’s objectives of maintaining a membership of experienced and dedicated individuals with diverse backgrounds, perspectives, skills, and other qualities that are beneficial to the Company and the Bank. |
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| 2025 PROXY STATEMENT | 63 |
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EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS AND THEIR BUSINESS EXPERIENCE George F. Buchanan III. Mr. Buchanan, age 55, joined the Company as Executive Vice President and Chief Risk Officer in March 2024. Prior to joining the Company, Mr. Buchanan spent 13 years at Regions Bank, where he held several roles of escalating responsibility, across various risk disciplines. Most recently, he served in Regions’ credit review area. Prior to this, he spent five years as Chief Risk Officer for Consumer Banking and Wealth Management, with responsibility for all aspects of risk management. Additionally, Mr. Buchanan led numerous areas within the credit division, including commercial, private wealth, small business, and business services. Mr. Buchanan brings over 30 years of financial services-related risk management and credit experience, having previously held roles at First Union, AmSouth Bank, US Bank, and Regions Bank. Mr. Buchanan is very active in professional and civic activities holding seats on several Boards and Committees. Currently, he serves on the National Board of Directors for the ProSight Financial Association as well as on their RMA Journal Editorial Advisory Board. He is also on the Boards of Directors of Tru Fund Financial Services, Inc., the Harbert College of Business Alumni Council and MBA Advisory Boards for Auburn University, and the Auburn University Graduate Education Development Council. Previously, he served on numerous Councils and Committees for the Risk Management Association, the Board of Directors for Opera Birmingham, the Advisory Board for the UAB Comprehensive Cancer Center, the Board of the Regions Community Development Corporation, and as Past President and Board Member of the Small Business Financial Exchange. He also was a long-time member of the Consumer Bankers Association Small Business Committee. Mr. Buchanan holds an MBA in Finance from Auburn University and a Bachelor’s Degree in Business Administration, Marketing from the University of Illinois. Reginald E. Davis. Mr. Davis, age 61, joined the Company as Senior Executive Vice President and President of Banking on December 1, 2022. In this role, he is responsible for all non-mortgage lending, Government Banking, Treasury Management, strategic alliances, and all of Retail Banking. From April 2020 until the December 2022 Flagstar Bancorp, Inc. merger, Mr. Davis was Executive Vice President and President of Banking at Flagstar Bank F.S.B. Mr. Davis has 35 years of banking experience, including at SunTrust, now Truist, where he was head of business banking. He also served as President of RBC Bank USA, the U.S. banking division of the Royal Bank of Canada, and as a senior executive and member of the Operating Committee for Wachovia (now Wells Fargo), where he held a number of senior roles. He started his banking career at First Union Bank. Mr. Davis serves on the board of the Lincoln Financial Group and is a member of the 100 Black Men of Atlanta. Previously, he served as chair of the Morehouse College Dean’s Advisory Board and as a board member of the Atlanta Chamber of Commerce. He also serves as a member of the Board of Directors of the Flagstar Bank Foundation. His past recognitions include being named by Black Enterprise Magazine as one of the 75 most powerful African Americans in corporate America, and in 2021 by Savoy Magazine in its list of Most Influential Black Corporate Directors. Kris Gagnon. Mr. Gagnon, age 72, serves as Senior Executive Vice President and Chief Credit Officer of the Company. He brings more than 35 years of banking leadership experience to the team having spent 30 years at Bank of America in various senior leadership roles, including as Enterprise Credit Risk Executive, Chief Risk Officer of the Global Corporate and Commercial Bank, and Chief Credit Officer for the Commercial Banking, Leasing and Global Treasury Services Division. Following those roles, Mr. Gagnon served as Chief Credit Officer at Banc of California from 2018 to 2020 and at CIT Bank (formerly OneWest Bank) from 2011 to 2017, as well as various credit risk related leadership roles since 1981. Mr. Gagnon also serves as Chairman of the Investment Committee of Andalusian Credit Company. Bryan Marx. Mr. Marx, age 49, joined the Company as Executive Vice President and Chief Accounting Officer in connection with the completion of the Company’s acquisition of Flagstar Bancorp, Inc. on December 1, 2022. From
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| 64 | 2025 PROXY STATEMENT |
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2013 to November 30, 2022, Mr. Marx served as Chief Accounting Officer of Flagstar. Prior to joining Flagstar, he was in public accounting for 15 years, most recently with PricewaterhouseCoopers LLP as a senior manager in their Banking and Capital Markets practice working with clients in the Detroit area and overseas. Mr. Marx currently serves on the board of Boys Hope Girls Hope Detroit, an organization centered on cultivating youth empowerment through the foundation of education and holistic support, and serves as the chairperson of the finance committee. Mr. Marx graduated from Michigan State University with a Bachelor of Arts degree in accounting and previously served on the Michigan State University Accounting and Information Systems External Advisory Board. He is also a member of the American Institute of Certified Public Accountants and the Michigan Association of Certified Public Accountants. Bao Nguyen. Mr. Nguyen, age 43, joined the Company as Senior Executive Vice President, General Counsel and Chief of Staff on April 12, 2024. Mr. Nguyen brings more than 15 years of experience as a financial services attorney. Prior to joining Flagstar, he was a Partner with Skadden, Arps, Slate, Meagher & Flom LLP where he advised global and regional financial institutions, fintech and digital asset companies and private equity firms on the regulatory aspects of complex transactions, charters, compliance matters and enforcement issues. Prior to joining Skadden, he held senior positions with the Office of the Comptroller of the Currency (OCC), including as Acting Chief Counsel and, most recently, as Principal Deputy Chief Counsel. During his time at the OCC, he also served as Acting Chief of Staff and Senior Advisor at the Federal Housing Finance Agency. Earlier in his career, Mr. Nguyen held senior roles at the Board of Governors of the Federal Reserve System, and as a Banking Fellow in the U.S. Senate, negotiating key reforms to the U.S. regulatory framework as part of the Dodd-Frank Act. Mr. Nguyen graduated from North Carolina State University with a Bachelor of Arts in History and a law degree from UNC-Chapel Hill School of Law. Richard Raffetto. Mr. Raffetto, age 56, serves as Senior Executive Vice President and President of Flagstar Bank's Commercial & Private Banking businesses. In this role, Mr. Raffetto oversees all of Flagstar's commercial banking, corporate banking and private banking activities, including related product groups. Mr. Raffetto joined Flagstar in July 2024 after more than thirty years in banking and over twenty years in increasingly senior and executive leadership positions. From 2020 to 2024, Mr. Raffetto served as president and a director of City National Bank, the U.S. commercial and private banking subsidiary of Royal Bank of Canada. He most recently led CNB's commercial lines of business and products, including its leasing, treasury management, commercial cards and capital markets units. Prior, Mr. Raffetto spent approximately 13 years at U.S. Bank as an executive vice president in its commercial and corporate banking organization and 14 years at BNY Mellon in its corporate banking client management unit. Mr. Raffetto holds an MBA in Finance from NYU's Stern School of Business and a BS in Finance from the University of Pennsylvania's Wharton School of Business. Scott P. Shepherd. Mr. Shepherd, age 61, joined the Company as Senior Executive Vice President and President of Commercial Real Estate Banking on April 15, 2024. Mr. Shepherd is a senior executive with a more than 20-year track record building and leading teams in commercial real estate, creating value through lending, debt restructuring, workouts and acquisitions. Most recently, he served as Managing Director, The Ruth Group, a commercial real estate investor and operator, where he focused on securing debt and equity financing to acquire value-add office and industrial conversion properties and complex restructurings. Prior to that he founded Archbell Capital, a commercial real estate bridge lender focused on institutional quality deal sponsors across property types. Mr. Shepherd also spent six years at OneWest Bank where he was the Head of the Commercial Real Estate Group. While there, he launched a CRE lending business that originated over $3.5 billion in loan commitments and led workouts of $2 billion of acquired loans. He started his real estate finance career at Goldman Sachs, where he was an investment banker for ten years. Mr. Shepherd graduated from Northwestern University with a Bachelor of Arts degree in economics and holds an MBA in management from the Wharton School of the University of Pennsylvania.
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| 2025 PROXY STATEMENT | 65 |
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Lee M. Smith. Mr. Smith, age 49, has served as Senior Executive Vice President and Chief Financial Officer (CFO) of the Company and its bank subsidiary, Flagstar Bank, N.A., since December 28, 2024. Prior he served as Senior Executive Vice and President of Mortgage from December 1, 2022, to December 27, 2024. In the CFO this role, he is responsible for financial aspects of the Bank including strategy, balance sheet and liquidity management and cost optimization. He is also responsible for the Bank’s mortgage businesses, Community Reinvestment Act matters and the Office of Corporate Responsibility including ESG, DEI and the Flagstar Foundation. Mr. Smith joined Flagstar in 2013 as Executive Vice President and Chief Operating Officer and held that position until his appointment as head of Mortgage. As COO, he played an integral role in the turnaround of Flagstar in addition to his responsibilities for several key business units – including shared services, banking operations, mortgage operations and mortgage servicing – as well as leading Bank strategy, balance sheet and cost optimization, and mergers and acquisitions. Prior to joining Flagstar, Mr. Smith was a partner with MatlinPatterson Global Advisers LLC, a private equity fund based in New York, where he managed a number of portfolio companies across a multitude of industries and sat on various boards. Earlier in his career, he was a senior director at Zolfo Cooper LLC, an advisory and interim management firm. Additionally, he served as a vice president in Ernst & Young’s national restructuring group in both New York and the United Kingdom. Mr. Smith serves on the board of trustees of Cranbrook Schools and sits on both the finance and audit committees of the board of governors and is chairman of the Cranbrook Institute of Science. He is also chairman of the Detroit Local Initiatives Support Corporation, which is dedicated to revitalizing distressed neighborhoods and communities in Detroit and is part of the national LISC network. He is a member of the Institute of Chartered Accountants in England and Wales. DIRECTOR SUCCESSION The Nominating and Corporate Governance Committee periodically reviews with the Board the skills and characteristics appropriate for Board members. The Board seeks differences in its members with respect to background, skills and expertise, industry knowledge, and experience. In accordance with our Company’s Bylaws, an individual may not be elected, appointed, or nominated as a Director after December 31st of the year in which an individual attains the age of 75, provided, however, that the Board, by written resolution approved by a majority of the disinterested members of the whole Board, may exclude an incumbent director from such age limitation. The members of the Board are the same members of the Bank’s Board of Directors, each of whom is elected annually by the Board. The Bank’s Bylaws also provide the same age limitation considerations as our Bylaws and, as a result, the Nominating and Corporate Governance Committee of the Bank’s Board discusses and considers such age limitation of all incumbent members each year. In addition, in connection with the March 2024 capital raise transaction, pursuant to their respective Investment Agreements, the Liberty Investors have the right to nominate two representatives to be elected to the Board and the Reverence Investors have the right to nominate one representative to be elected to the Board. The Liberty Investors nominated Steven T. Mnuchin and Brian R. Callanan, and the Reverence Investors nominated Milton Berlinski as their director representative. DIRECTOR COMPENSATION 2024 was a year of significant transition for our Board. The turnover in Board membership resulted in changes to the composition of key Board committees as new members were appointed to committees that were consistent with their background and experience. For 2024, the Board retained the basic structure of the existing director compensation program as in existence prior to March 2024 while committing to annual review and benchmarking of the program to ensure consistency with the design features and compensation levels at peer companies and with industry best practices.
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| 66 | 2025 PROXY STATEMENT |
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Our Approach to Director Compensation We compensate our directors with the following objectives in mind:
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| • | The level of director compensation should recognize the significant amount of work expected from a director at an institution the size of the Company, taking into account the time commitment necessary to prepare for meetings that cover complex strategic and operational matters and the duration and frequency of such meetings. |
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| • | Director compensation should include a meaningful equity component that helps align the interests of directors with our shareholders and directors are encouraged to retain equity through stock ownership guidelines, subject to regulatory and compliance limitations. |
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| • | The structure of the program must be transparent to shareholders so they can understand the business reasons for specific director compensation decisions. |
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| • | The program is designed to ensure that director independence is not compromised by excessive compensation levels. |
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Our directors fulfill a critical oversight role for the Company, in part through their service on Board committees that have been assigned specific functional responsibilities. The level of engagement of our directors reflects a keen awareness of their responsibilities as directors of a publicly traded financial institution that operates within a complex business and regulatory environment. The Company and Bank Audit, Risk Assessment, Compensation and other Committees meet frequently to ensure appropriate oversight of the areas that fall within the scope of their respective charters. Given the complexity of the matters considered by these committees, each meeting represents a substantial time commitment for committee members, requiring significant preparation in advance to facilitate an understanding of items on the meeting agenda. In addition to committee service, directors are expected to prepare for and attend regularly scheduled board meetings that requires significant preparation. Director Compensation Review The Compensation Committee monitors changes in the structure of director pay programs industry-wide and among our peers as part of the Committee’s annual review of director compensation. The Committee’s review, with assistance by its independent consultant, is designed to identify and incorporate best practices while ensuring that the program is aligned with our director pay objectives. The Committee considers the cost of the director compensation program on an individual director basis and on an aggregate basis. To maintain consistency with peer group practices, the Committee has maintained a balanced mix of cash retainers and equity compensation for directors. 2024 Director Compensation In 2024, each non-employee director received an annual retainer of $75,000 for service on the Board. The Board’s Non-Executive Chairman received an annual retainer of $250,000 and the Board’s Lead Independent/Presiding Director received an annual retainer of $52,500 in addition to the $75,000 annual retainer paid to non-employee directors. Each non-employee director also receives equity compensation in the form of a restricted stock award with a one-year vest. The table below shows the 2024 retainer schedule for Board committee service:
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| BOARD COMMITTEE | CHAIR ($) | MEMBER ($) | | Audit | $35,000 | $15,000 | | Compensation | 20,000 | 10,000 | | Nominating and Corporate Governance | 20,000 | 7,500 | | Risk Assessment | 35,000 | 15,000 | | Technology | 20,000 | 7,500 |
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| 2025 PROXY STATEMENT | 67 |
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The following table provides details of the 2024 compensation received by all individuals who served as non-employee directors of the Company for Board and Board committee service, including certain directors who terminated service during 2024.
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| NON-EMPLOYEE DIRECTORS(1) | FEES EARNED OR PAID IN CASH ($) | STOCK AWARDS(2) ($) | ALL OTHER COMPENSATION(3) ($) | TOTAL ($) | | Milton Berlinski(4) | 97,978 | 104,779 | — | 202,757 | | Brian R. Callanan(5) | 3,279 | 5,682 | — | 8,961 | | Alessandro P. DiNello | 159,310(6) | 149,999 | 976 | 310,285 | | Alan Frank | 113,101 | 201,926 | — | 315,027 | | Marshall Lux | 127,152 | 126,438 | 748 | 254,338 | | Steven T. Mnuchin(7) | 135,860 | 104,779 | — | 240,639 | | Allen C. Puwalski | 126,776 | 204,772 | — | 331,548 | | Jennifer R. Whip | 120,157 | 126,438 | 748 | 247,343 | | Thomas R. Cangemi | 4,529 | — | — | 4,529 | | James C. Carpenter | 23,429 | 115,005 | 748 | 139,182 | | Hanif Dahya | 29,836 | 115,005 | 913 | 145,754 | | Leslie Dunn | 22,794 | 115,005 | 814 | 138,613 | | Toan C. Huynh | 9,590 | 115,005 | 748 | 125,343 | | Lawrence Rosano | 22,309 | 115,005 | 814 | 138,128 | | Ronald A. Rosenfeld | 21,824 | 115,005 | 814 | 137,643 | | Lawrence J. Savarese | 25,635 | 115,005 | 913 | 141,553 | | Peter Schoels | 97,787 | 126,438 | 748 | 224,973 | | David L. Treadwell | 31,551 | 115,005 | 748 | 147,304 | | Robert Wann | 18,914 | 115,005 | 748 | 134,667 |
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| (1) Ms. Huynh resigned from the Board on February 6, 2024. Mr. Dahya resigned from the Board on February 25, 2024. Mr. Cangemi served as a non-employee director for a brief period following his resignation as the Company's Chief Executive Officer, and he resigned from the Board on March 11, 2024. Messrs. Carpenter, Rosano, Rosenfeld, Wann, and Ms. Dunn resigned from the Board on March 11, 2024. Mr. Savarese resigned from the Board on March 13, 2024. Mr. Treadwell resigned from the Board on March 19, 2024. Mr. Schoels resigned from the Board on October 24, 2024. |
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| (2) Represents the full grant date fair value of each award calculated in accordance with FASB ASC Topic 718. The awards were made in the form of restricted stock or restricted stock units vesting on the first anniversary of the grant date. |
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| (3) The All Other Compensation column includes dividends paid with respect to equity awards. |
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| (4) Mr. Berlinski was designated as a director by Reverence Capital Partners LP, and director compensation received by Mr. Berlinski for Board service was assigned to Reverence Capital. |
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| (5) Mr. Callanan, who joined the Board on December 16, 2024, was designated as a director by Liberty 77 Capital L.P., and director compensation received by Mr. Callanan for Board service was assigned to Liberty 77 Capital. |
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| (6) Includes retainers paid while serving as Board Chairman through June 4, 2024. Mr. DiNello also received separate compensation for the period in which he served as Executive Chairman, President and Chief Executive Officer. See Summary Compensation Table for additional information. |
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| (7) Mr. Mnuchin was designated as a director by Liberty 77 Capital L.P., and director compensation received by Mr. Mnuchin for Board service was assigned to Liberty 77 Capital. |
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Director Stock Ownership Guidelines. Our directors are subject to stock ownership guidelines that require them to hold Company stock with a value equal to five times their annual cash board retainer. All non-employee directors are either in compliance with this requirement or within the five-year phase-in period applicable to new directors. Director Benefits. The Company provides limited life insurance coverage for directors.
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| 68 | 2025 PROXY STATEMENT |
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Director Equity Compensation. Directors participate in the Company’s equity compensation program and such awards are an integral part of each director’s annual compensation. Compensation Committee Interlocks and Insider Participation. No executive officer of the Company or the Bank serves, or has served, as a member of the compensation committee of another entity, one of whose executive officers serves on the Compensation Committee of the Company. No executive officer of the Company or the Bank serves, or has served, as a director of another entity, one of whose executive officers serves on the Compensation Committee of the Company. TRANSACTIONS WITH CERTAIN RELATED PERSONS The federal banking laws require that all loans or extensions of credit to executive officers and directors must be made on substantially the same terms (including interest rates and collateral) and follow substantially the same credit underwriting procedures as those prevailing at the time for comparable transactions with other persons. Furthermore, they must not involve more than the normal risk of repayment or present other unfavorable features. Accordingly, the Bank, from time to time, has made and may continue to make mortgage loans to its directors, officers, and employees, including consumer loans or loans to purchase or refinance personal residences, and may make loans secured by income-producing properties to entities in which a director or officer has an ownership interest (or, in the case of directors, a management interest), provided that all such loans are made in accordance with federal banking laws and are made in the ordinary course of business; do not involve a more than normal risk of collectability, or present other unfavorable features; and are made on substantially the same terms (including interest rates and collateral requirements) as those prevailing at the same time for comparable transactions with unaffiliated persons. In accordance with prior written Company policies, the Board of Directors has reviewed a summary of any and all such transactions the Company has entered or may enter into with its directors and executive officers (and their immediate family members) and with firms that employ directors, as well as any other related-person transactions, for the purpose of recommending to the disinterested members of the Board of Directors that the transactions are fair, reasonable, and within Company policy, and should be ratified and approved. The Board of Directors also reviews any transactions reported to the Board by the Company’s Corporate Secretary that are required to be reported under SEC regulations. Additionally, in accordance with federal regulations, the Board of Directors reviews all loans made to a director or executive officer in an amount that, when aggregated with the amount of all other loans to such person and his or her related interests, exceeds the greater of $25,000 or 5% of the Company’s capital and surplus (up to a maximum of $500,000), and such loan must be approved in advance by a majority of the disinterested members of the Board of Directors. Pursuant to the Company’s Code of Business Conduct and Ethics and other business standards applicable to them, all executive officers and directors of the Company must disclose any existing or emerging conflicts of interest to the Chief Executive Officer. Such potential conflicts of interest include, but are not limited to, any position or interest (financial or otherwise) which could materially conflict with an executive officer’s or director’s performance, or which affects such executive officer’s or director’s independence or judgment concerning transactions between the Company, its customers, suppliers, or competitors. March 2024 Capital Raise Transaction. On March 7, 2024, the Company entered into separate investment agreements with (a) the Liberty Investors, (b) the Hudson Bay Investors, (c) the Reverence Investors and (d) Other Investors. On March 11, 2024, the Company entered into separate amendments to the Original Investment Agreements with the Liberty Investors, the Hudson Bay Investors and the Reverence Investors. Steven T. Mnuchin is the Founder and Managing Director of Liberty Strategic Capital, the parent company of the Liberty Investors, and Brian R. Callanan is Managing Director and General Counsel of Liberty Strategic. Milton Berlinski is the Co-Founder of Reverence Capital Partners, L.P. Pursuant to the Investment Agreements, on the terms and subject to the conditions set forth therein, at the Closing, the Investors invested an aggregate of approximately $1.05 billion in the Company for the sale and issuance of: (a) 76,630,965 shares of Common Stock (which was subsequently reduced by the July 2024 reverse stock split), at a purchase price per share of $2.00; (b) 192,062 shares of Series B Preferred Stock, at a price per share of $2,000 and each share of which is currently convertible into 333.3333 shares of Common Stock (or, in certain limited circumstances, one share of Series C Preferred Stock ); (c) 256,307 shares of Series C Preferred Stock, at a price per
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| 2025 PROXY STATEMENT | 69 |
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share of $2,000; all of which shares of Series C Preferred Stock were subsequently converted into approximately 256 million shares of Common Stock (which was subsequently reduced by the July 2024 reverse stock split); and (d) the Issued Warrants, which were not exercisable for 180 days after the Closing, affording the holder thereof the right, until the seven-year anniversary of the issuance of such Issued Warrant, to purchase for $2,500 per share, as adjusted, shares of the Series D NVCE Stock. Each share of Series D NVCE Stock is convertible into 333.3333 shares of Common Stock, and all of which shares of Series D NVCE Stock, upon issuance, will represent the right (on an as converted basis) to receive approximately 105 million shares of Common Stock after giving effect to the July 2024 reverse stock split. At the Closing, the Liberty Investors became entitled to nominate two representatives to be elected to the Board of Directors, so long as the Liberty Investors and its affiliates beneficially own at least the lesser of (i) 2.5% of the outstanding shares of Common Stock (on an as-converted basis) or (ii) 25% of the shares of Common Stock (on an as-converted basis) that the Liberty Investors beneficially owned immediately following the Closing. The Liberty Investors have nominated Steven T. Mnuchin and Brian R. Callanan as their two director representatives. At the Closing, the Reverence Investors became entitled to nominate one representative to be elected to the Board of Directors, so long as the Reverence Investors and their affiliates beneficially own at least the lesser of (i) 2.5% of the outstanding shares of Common Stock (on an as-converted basis) or (ii) 25% of the shares of Common Stock (on an as-converted basis) that the Reverence Investors beneficially owned immediately following the Closing. The Reverence Investors have nominated Milton Berlinski as their director representative. SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company’s executive officers and directors, and persons who own more than 10% of a registered class of the Company’s equity securities, to file reports of ownership and changes in ownership with the SEC. Executive officers, directors, and greater than 10% shareholders are required by the SEC regulations to furnish the Company with copies of all Section 16(a) forms they file. Delinquent Section 16(a) Reports. Based solely on its review of copies of the reports of ownership furnished to the Company, or any written representations received by the Company that no other reports were required, the Company believes that during the 2024 fiscal year, its executive officers and directors complied with applicable reporting requirements for transactions in the Company’s securities, except that Mr. Thomas Borruso while acting as an Interim Chief Risk Officer was one day late filing his Form 3, and Mr. R. Patrick Quinn our former EVP, General Counsel and Corporate Secretary failed to timely file a Form 4 to report one transaction that was subsequently reported on a Form 5 on February 10, 2025.
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| 70 | 2025 PROXY STATEMENT |
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Proposal 2: Ratification of the Appointment of Independent Registered Public Accounting Firm The Company’s independent registered public accounting firm for the fiscal year ended December 31, 2024, was KPMG LLP. The Company’s Audit Committee has reappointed KPMG LLP to continue as the independent registered public accounting firm of the Bank and the Company for the year ending December 31, 2025, subject to ratification of such appointment by the Company’s shareholders. Representatives of KPMG LLP will be present at the Annual Meeting and will have the
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| | The board of directors recommends that you vote “for” the ratification of the appointment of KPMG LLP as the independent registered public accounting firm of the company. |
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opportunity to make a statement if they desire to do so and will be available to respond to appropriate questions from shareholders present at the Annual Meeting. If the ratification and appointment of the independent registered public accounting firm is not approved by shareholders at the Annual Meeting, the Audit Committee will consider other independent registered public accounting firms. In addition, even if the ratification of the independent registered public accounting firm is approved by shareholders at the Annual Meeting, the Audit Committee may also consider and appoint other independent registered public accounting firms in the future if it determines that such appointment is in the best interests of the Company and its shareholders. Unless marked to the contrary, the shares represented by the enclosed proxy card, if properly signed and dated, will be voted FOR ratification of the appointment of KPMG LLP as the independent registered public accounting firm of the Company. The Audit Committee will consider on a case-by-case basis and, if appropriate, approve all audit and non-audit services to be provided by the Company’s independent registered public accounting firm. Alternatively, the Audit Committee may adopt a policy for pre-approval of audit and permitted non-audit services by the independent registered public accounting firm. In 2024, all audit-related services, tax services, and other services were approved by the Audit Committee, which concluded that the provision of such services by KPMG LLP was compatible with the maintenance of that firm’s independence in the conduct of its audit functions. The affirmative vote of a majority of the votes cast in person or by proxy at the Annual Meeting will be required to approve the proposal to ratify the appointment of the Company’s independent registered public accounting firm. You may vote “For,” “Against,” or “Abstain” from voting on this Proposal. Abstentions and broker non-votes will have no effect on the outcome of this Proposal.
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| 2025 PROXY STATEMENT | 71 |
Pay Versus Performance Relationship Disclosures
AUDIT COMMITTEE REPORT TO SHAREHOLDERS The Audit Committee of the Company’s Board of Directors is composed of Messrs. Frank (Chair), Callanan, Puwalski, and Ms. Whip, all of whom are non-employee, independent directors, and operates in such role under a written charter adopted by the Board of Directors. The Company’s management is responsible for the Company’s internal control over financial reporting. The independent registered public accounting firm is responsible for performing an independent audit of the Company’s consolidated financial statements and issuing an opinion on the conformity of those financial statements to GAAP. The independent registered public accounting firm is also responsible for issuing an opinion on the effectiveness of the Company’s internal control over financial reporting. The Audit Committee oversees the Company’s internal controls and financial reporting process on behalf of the Board of Directors. Management has discussed with and represented to the Audit Committee that the Company’s consolidated financial statements were prepared in accordance with GAAP, and the Audit Committee has reviewed and discussed the consolidated financial statements with management and the KPMG representatives, including with respect to matters required to be discussed under Public Company Accounting Oversight Board (PCAOB) Auditing Standard No. 1301, Communications with Audit Committees (AS 1301) and detailed discussion of the firm’s evaluation and conclusions about significant and critical accounting policies and practices, critical accounting estimates, significant unusual transactions, and the Company’s financial reports. In addition, the Audit Committee has received from KPMG written disclosures regarding its independence required by PCAOB Ethics and Independence Rule 3526, Communication with Audit Committees Concerning Independence, and has discussed with the independent registered public accounting firm its independence from the Company and its management. In concluding that the firm is independent, the Audit Committee considered, among other factors, whether the non-audit services provided by the firm in 2024 were compatible with its independence. The Audit Committee meets with the independent registered public accounting firm, with and without management present, to discuss the results of their examinations, their evaluation of the Company’s internal control over financial reporting, the overall quality of the Company’s financial reporting process, and the overall scope and plans for its 2025 audit. In performing these functions, the Audit Committee acts only in an oversight capacity. In its oversight role, the Audit Committee relies on the work and assurances of the Company’s management, which has the primary responsibility for financial statements and reports, and of the independent registered public accounting firm, which, in its reports, expresses an opinion on the conformity of the Company’s financial statements to GAAP, and an opinion on the effectiveness of the Company’s internal control over financial reporting. The Audit Committee’s oversight does not provide it with an independent basis to determine that management has maintained appropriate accounting and financial reporting principles or policies, or appropriate internal control over financial reporting designed to assure compliance with accounting standards and applicable laws and regulations. Furthermore, the Audit Committee’s considerations and discussions with management and the independent registered public accounting firm do not assure that the Company’s financial statements are presented in accordance with GAAP, that the audit of the Company’s financial statements has been carried out in accordance with the standards of the PCAOB, or that the Company’s independent registered public accounting firm is in fact independent. On the basis of the foregoing, the Audit Committee, by vote of the Audit Committee Chairman Frank, Messrs. Callanan and Puwalski, and Ms. Whip, approved and recommended to the Board that the audited consolidated financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, for filing with the SEC.
Pay Versus Performance Relationship Disclosures
| 72 | 2025 PROXY STATEMENT |
Pay Versus Performance Relationship Disclosures
In reliance on the reviews, discussions and recommendations referred to above, the Board of Directors approved that the audited consolidated financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, for filing with the SEC. The Audit Committee and the Board of Directors also have approved, subject to shareholder ratification, the selection of KPMG as the Company’s independent registered public accounting firm to audit the Company’s consolidated financial statements for the year ending December 31, 2025. As of the date of this proxy statement, the Audit Committee now consists of the following members: