DEF 14A of Eastern Bankshares, Inc.
Filed Apr 1, 2024 · FY20230001193125-24-082767
ELECTION OF DIRECTORS
ELECTION OF DIRECTORS Currently, our Board of Directors is divided into three classes of directors serving staggered three-year terms, with each class being as equal in number as possible. Directors for each class are elected at the annual meeting of shareholders held in the year in which the term for their class expires. Five directors are standing for election at the Annual Meeting. Based on the recommendation of its Nominating and Governance Committee, our Board of Directors has nominated Messrs. Bane, Chung, and Connolly and Mses. Harlam and Harney for election as directors for the three-year term expiring at the 2027 annual meeting of shareholders. Messrs. Bane, Chung, and Connolly and Mses. Harlam and Harney are each currently members of our Board of Directors. If any nominee becomes unable to serve as a director, the proxy holders may vote the proxy for the election of a substitute nominee to be designated by our Board of Directors. We do not expect that any nominee will be unable to serve. Directors serve until the expiration of their terms and until their successors have been elected and qualified or until their earlier retirement or their resignation, death or removal in accordance with our Bylaws. In accordance with an amendment approved by our shareholders in 2022, our Articles of Organization have been amended to provide that for our annual meetings of shareholders in 2025 and 2026, the classes of directors whose terms expire at those meetings will be nominated for re-election for two- and one-year terms, respectively, and our Board of Directors will be fully declassified, with all directors standing for annual election, beginning with the Company’s 2027 annual meeting of shareholders.
Recommendation
Recommendation Each of our nominees has considerable professional and business expertise. Our Board of Directors recommends a vote “FOR” each nominee based on its carefully considered judgment that the experience, qualifications, attributes and skills of each nominee qualify him or her to serve on our Board of Directors and its belief that the election of Messrs. Bane, Chung, and Connolly and Mses. Harlam and Harney as directors is in the best interests of the Company. Information regarding the experience and qualifications of each of our directors, including our five director nominees, is provided below.
Nominees for Class I Directors for the Three-Year Term That Will Expire in 2027
Nominees for Class I Directors for the Three-Year Term That Will Expire in 2027
Nominees for Class I Directors for the Three-Year Term That Will Expire in 2027
| Richard C. Bane Age 68 | Experience | | | Richard C. Bane has served as a director of Eastern Bank since 2001 and as a trustee of its predecessor holding company, Eastern Bank Corporation, since 1996. He is the Executive Chairman of Bane Care Management LLC, which operates skilled nursing facilities and assisted living facilities in Massachusetts, where he was employed from 1984 through February 2023. Mr. Bane formerly served as Chairman of the Massachusetts Senior Care Association, the state’s largest professional provider group. He lectures frequently on many aspects of senior care services and post-acute care and is considered one of New England’s senior care industry leaders. Mr. Bane is also involved in a wide range of corporate and community service activities, and he is a board member of Carney Hospital in Dorchester, MA. Mr. Bane holds an A.B. in Economics from Dartmouth College, and an MBA from Harvard Business School. He was also awarded an Honorary Doctorate from Salem State University. Qualifications | | | We believe Mr. Bane’s extensive executive management experience and civic leadership qualify him to serve on our Board of Directors. |
Nominees for Class I Directors for the Three-Year Term That Will Expire in 2027
| Joseph T. Chung Age 59 | Experience | | | Joseph T. Chung has served as a director of Eastern Bank and trustee of its predecessor holding company, Eastern Bank Corporation, since 2014. He is co-founder and Chief Executive Officer of Kinto, a care coaching platform for family caregivers looking after loved ones with Alzheimer’s Disease and related dementias, where he has served since 2019. He is also co-founder and Managing Director of Redstar Ventures, an innovative venture foundry developing a series of new companies through a topdown, market driven process, positions he has held since 2010. Prior to Kinto and Redstar, Mr. Chung was Chairman and Chief Executive Officer of Allurent and co-founder, Chairman and Chief Technology Officer of Art Technology Group, a publicly traded, global enterprise software company. Mr. Chung holds B.S. and M.S. degrees in Computer Science from the Massachusetts Institute of Technology, and he conducted his graduate work at MIT’s Media Lab. He is a Venture Partner at the Media Lab’s E14 Fund. Qualifications | | | We believe Mr. Chung’s extensive expertise in innovation and technology qualifies him to serve on our Board of Directors. |
Nominees for Class I Directors for the Three-Year Term That Will Expire in 2027
| Paul M. Connolly Age 74 | Experience | | | Paul M. Connolly has served as a director of Eastern Bank and a trustee of its predecessor holding company, Eastern Bank Corporation, since 2011. Mr. Connolly retired in 2010 as the First Vice President and Chief Operating Officer at the Federal Reserve Bank of Boston, a position he had held since 1994. As Chief Operating Officer of the Federal Reserve Bank of Boston, Mr. Connolly had responsibility for the Bank’s financial services, information technology, finance, and support and administrative activities. Mr. Connolly joined The Federal Reserve Bank in 1975. Throughout his 36-year career, he served in a variety of positions in information technology, payments, planning and economic research, served on the Federal Reserve Financial Services Policy Committee and had national leadership responsibility for payment services and financial management. He served on the Board of Directors for the John Hancock Life Insurance Companies for twelve years prior to retiring in June 2023. He received an MBA from Harvard Business School and an A.B. from Boston College. Qualifications | | | We believe Mr. Connolly’s extensive banking and regulatory experiences qualify him to serve on our Board of Directors. |
Nominees for Class I Directors for the Three-Year Term That Will Expire in 2027
| Bari A. Harlam Age 62 | Experience | | | Bari A. Harlam has served as a director of Eastern Bank and a trustee of its predecessor holding company, Eastern Bank Corporation, since 2014. Ms. Harlam is the co-founder of Trouble, LLC, a position she has held since April 2020, and has served as a member of the Boards of Directors of Aterian, Inc., since February 2020; OneWater Marine, Inc., since May 2020; and Rite Aid Corporation since August 2020. She also served on the Board of Directors of Champion Petfoods, LP. From April 2018 to March 2020, Ms. Harlam served as the Chief Marketing Officer for Hudson’s Bay Company. Prior to that, she served as the Executive Vice President of Membership, Marketing, and Analytics for BJ’s Wholesale Club, beginning in 2012. Before that, she was Chief Marketing Officer at Swipely, a technology startup, and served as Senior Vice President of Marketing for CVS Health Corporation. Ms. Harlam serves on the Board of Trustees of the Eastern Bank Foundation. Ms. Harlam has also served on the faculties of The Wharton School at the University of Pennsylvania, Columbia University’s Graduate School of Business, and the University of Rhode Island. She received her B.S., M.S., and Ph.D. from the University of Pennsylvania, The Wharton School of Business. Her work has been published in a variety of journals including Marketing Science, Journal of Marketing Research, and the Journal of Business Research. Qualifications | | | We believe Ms. Harlam’s extensive marketing and analytics expertise qualifies her to serve on our Board of Directors. |
Nominees for Class I Directors for the Three-Year Term That Will Expire in 2027
| Marisa J. Harney Age 66 | Experience | | | Marisa J. Harney has served as a director of the Company and Eastern Bank since October 2023. She most recently served as Executive Vice President and Chief Credit Officer of First Citizens BancShares, Inc. and its bank subsidiary First-Citizens Bank & Trust Company (collectively, “First Citizens”) from January 2022 through March 2023. She previously served as Executive Vice President and Chief Credit Officer of CIT Group Inc. and CIT Bank, N.A. (“CIT”), from 2018 through January 2022, when CIT merged with First Citizens, and as CIT’s Chief Credit Officer prior to that. Her 42 years of banking experience also includes roles as Chief Risk Officer of GE Capital Americas and Head of Corporate Credit Risk of the Americas for Bank of America, as well as senior credit risk positions with Credit Suisse First Boston, JPMorgan Chase & Co., and Bankers Trust Company. She holds an MBA from the New York University Stern School of Business and a bachelor’s degree in finance from Fordham University. Qualifications | | | We believe Ms. Harney’s extensive banking and risk management leadership experience qualify her to serve on our Board of Directors. |
Nominees for Class I Directors for the Three-Year Term That Will Expire in 2027
Our directors listed below are not up for election this year, and each will continue in office for the remainder of his or her specified term of office or until his or her earlier resignation, death, or removal in accordance with our Bylaws.
Class III Directors Continuing in Office (Term will expire in 2026)
Class III Directors Continuing in Office (Term will expire in 2026)
Class III Directors Continuing in Office (Term will expire in 2026)
| Luis A. Borgen Age 54 | Experience | | | Luis Borgen has served as a director of Eastern Bank and a trustee of its predecessor holding company, Eastern Bank Corporation, since 2016. From September 2019 through April 2022, he was Chief Financial Officer for athenahealth, Inc., a leading SaaS provider of healthcare software that automates and manages revenue cycle management and electronic health records for physician practices and health systems. Prior to that, he was Chief Financial Officer for Vistaprint, an e- commerce company that produces marketing products for small businesses. Previously, he served as Chief Financial Officer for two publicly traded companies: DAVIDsTEA (from 2012-2017) and DaVita Inc. (from 2010-2012). Beginning in 1997, Mr. Borgen served in increasing roles of responsibility at Staples, Inc., leading to his appointment as Senior Vice President, Finance for the U.S. Retail business. He has served on the Boards of Directors of Carter’s, Inc., since November 2021 and Synopsys, Inc., since May 2022. Mr. Borgen served in the U.S. Air Force from 1992 to 1997 and attained the rank of Captain. He holds a B.S. in Management from the United States Air Force Academy, an M.S. in Finance from Boston College and an MBA with Honors from the University of Chicago Booth School of Business. Qualifications | | | We believe Mr. Borgen’s experience with financial accounting matters and oversight of the financial reporting process of public companies qualifies him to serve on our Board of Directors. |
Class III Directors Continuing in Office (Term will expire in 2026)
| Diane S. Hessan Age 69 | Experience | | | Diane S. Hessan has served as a director of Eastern Bank and a trustee of its predecessor holding company, Eastern Bank Corporation, since 2016. She currently serves as Chief Executive Officer of Salient Ventures, an investment and advisory company with a portfolio of angel investments focused on technology companies, a position she has held since November 2016. Previously, she was Chief Executive Officer of Startup Institute, which is dedicated to helping people transform their careers to succeed in the innovation economy. She is also Chairman of C Space, where she was Founder and Chief Executive Officer for 14 years. C Space (formerly Communispace) is a market research company, which builds online communities to help marketers generate consumer insights. Ms. Hessan has served on the boards of Brightcove since March 2017 and DP Cap Acquisition Corp I since November 2021. Ms. Hessan also serves on the boards of Tufts University, Panera Brands, Sago, and Beth Israel Deaconess Medical Center. Ms. Hessan received her MBA from Harvard Business School and her B.A. in Economics and English from Tufts University. She has also received Honorary Doctorate degrees from Bentley University and the New England College of Business. Qualifications | | | We believe Ms. Hessan’s executive experience, entrepreneurial passion and customer-centric, data driven perspective qualify her to serve on our Board of Directors. |
Class III Directors Continuing in Office (Term will expire in 2026)
| Robert F. Rivers Age 59 | Experience | | | Robert F. Rivers is the Chief Executive Officer and Chair of the Board of Directors of Eastern Bankshares, Inc. and has served as the Chief Executive Officer and Chair of the Board of Directors of Eastern Bank since January 1, 2017. Mr. Rivers joined Eastern Bank in 2006 as its Vice Chair and Chief Banking Officer, becoming President in 2007, Chief Operating Officer in 2012 and an Eastern Bank director in 2015. He has also served as a trustee of Eastern Bank’s predecessor holding company, Eastern Bank Corporation, since 2007. Prior to joining Eastern, from 1991 to 2005, Mr. Rivers held a number of staff and line leadership positions at M&T Bank in Buffalo, NY. Immediately prior to joining Eastern, he was an Executive Vice President for Retail Banking at the former Commercial Federal Bank in Omaha, Nebraska, following 14 years at M&T Bank. Mr. Rivers serves as Foundation Board Chair of the Dimock Center, is a member of the executive committee of the Greater Boston Chamber of Commerce, and is a trustee of Stonehill College. He also serves on the Board of the Lowell Plan, the Advisory Boards of the Lawrence Partnership and the JFK Library Foundation, and the Boston Women’s Workforce Council. He was appointed by the Federal Reserve Bank of Boston as its Federal Advisory Council Representative in January 2023. A leader in Boston’s business community, Mr. Rivers has been recognized as a champion for social justice issues, having led the “Yes on 3” campaign to protect the rights of members of the LGBTQ+ community. He received his undergraduate degree from Stonehill College and holds an MBA from the University of Rochester. Qualifications | | | We believe that Mr. Rivers is qualified to serve as a director based upon his experience as our Chief Executive Officer beginning in January 2017, his prior service as one of our senior executive officers, his prior senior management positions at other banks, and his familiarity with the communities that Eastern serves, including through his involvement with numerous non-profit organizations in the greater Boston area. |
Class III Directors Continuing in Office (Term will expire in 2026)
| Paul D. Spiess Age 74 | Experience | | | Paul D. Spiess has served as a director of Eastern Bank and a trustee of its predecessor holding company, Eastern Bank Corporation, since 2014. He has spent fifty-two years in the banking and financial services industry, serving as former Chairman of the Board of Centrix Bank and Trust, which merged with Eastern in 2014. He also served as Executive Vice President and Chief Operating Officer of CFX Bank in Keene, New Hampshire from 1993 to 1997. From 2004 to 2010, Mr. Spiess served (pro-bono) in the office of the Governor of New Hampshire as an insurance and banking advisor. From 2000 to 2004, he served as a state legislator in Concord, New Hampshire, during which time he served on the House Commerce Committee. From 1983 to 1993, Mr. Spiess was Founder and President of Colonial Mortgage, Inc., of Amherst, New Hampshire. From 2004 through 2010, Mr. Spiess served as a health care advisor to New Hampshire Governor John Lynch and as Chairman of the Citizen’s Health Initiative. He graduated with a B.A. from Colby College in 1971 and earned an MBA degree from Boston University in 1977. Qualifications | | | We believe Mr. Spiess’s extensive knowledge of banking operations and credit risk, his experience in the banking and mortgage industries, and his board leadership experience qualify him to serve on our Board of Directors. |
Class II Directors Continuing in Office (Term Will Expire in 2025)
Class II Directors Continuing in Office (Term Will Expire in 2025)
Class II Directors Continuing in Office (Term Will Expire in 2025)
| Richard E. Holbrook Age 72 | Experience | | | Richard E. Holbrook currently serves as director and Chair Emeritus of Eastern Bank. Mr. Holbrook retired as Chair and Chief Executive Officer of Eastern Bank in 2016, having served in those roles since 2007. He also served as a trustee of its predecessor holding company, Eastern Bank Corporation, since 2001. Mr. Holbrook joined Eastern Bank in 1996 as Chief Financial Officer and Executive Vice President and was named President and Chief Operating Officer of Eastern Bank and Eastern Bank Corporation in 2001. He has more than 30 years of banking experience as a commercial lender, trust officer and planning and financial manager. During his leadership at Eastern, Mr. Holbrook served as the Federal Advisor Council representative for the First Federal Reserve District, meeting quarterly to discuss business and financial conditions with the Federal Reserve Board of Governors in Washington, D.C. Mr. Holbrook also served on the Board of Directors of the Federal Reserve Bank of Boston, and on the executive committee of the Boston Chamber of Commerce. He is also the former chair of the Massachusetts Bankers Association. He received his undergraduate degree from Yale University and his MBA from Harvard Business School. Qualifications | | | We believe Mr. Holbrook’s experience working in the banking industry, particularly his decades of past experience as a member of our executive management team, qualifies him to serve on our Board of Directors. |
Class II Directors Continuing in Office (Term Will Expire in 2025)
| Deborah C. Jackson Age 72 | Experience | | | Deborah C. Jackson, the Lead Director of Eastern Bank, has served as a director of Eastern Bank since 2000 and as a trustee of its predecessor holding company, Eastern Bank Corporation, since 2001. She served as President of Cambridge College from 2011 through December 2023. Prior to that, Ms. Jackson served for nearly a decade as Chief Executive Officer of the American Red Cross of Eastern Massachusetts, one of the nation’s largest Red Cross units. Previously, she served as Vice President of the Boston Foundation, where she managed its $50 million grant and initiatives program. Throughout her career, Ms. Jackson has served and continues to serve on numerous commissions, task forces and boards including the Boston Green Ribbon Commission; the Mayor’s Task Force to Eliminate Racial and Ethnic Disparities in Health Care; the “City to City” program focusing on national and global best practices for urban policies; and the American Red Cross National Diversity Advisory Council. Ms. Jackson served for over 15 years on the board of the American Student Assistance Corporation, the nation’s first student loan guarantor agency; and she has served on the Boston College Carroll School of Management’s Advisory Board and the boards of Milton Academy and Harvard Pilgrim Health Care. She also served as Chairman of the Board of Directors of the Association of Independent Colleges and Universities in Massachusetts and was a board member of the New England Chapter of The National Association of Corporate Directors. In addition, Ms. Jackson served as the Chair of the Audit Committee and on the Board of Directors of the Boston Stock Exchange. She currently serves on the Boards of Directors of John Hancock Investments and the Amwell Corporation, where she has served since October 2020. Ms. Jackson also serves on the Board of Trustees of the Eastern Bank Foundation. Ms. Jackson attended Hampton University, graduated from Northeastern University with a B.A. and pursued graduate studies in urban studies and planning from the Massachusetts Institute of Technology. Ms. Jackson is also the recipient of Honorary Doctorate degrees from Curry College and Merrimack Valley College. Ms. Jackson was a fellow of the British American Project of Johns Hopkins University and previously served as a fellow of the Harvard University Advanced Leadership Institute and the Harvard University Institute for College Presidents. Qualifications | | | We believe Ms. Jackson’s extensive executive, civic, community and board leadership experience qualifies her to serve on our Board of Directors. |
Class II Directors Continuing in Office (Term Will Expire in 2025)
| Peter K. Markell Age 68 | Experience | | | Peter K. Markell has served as a director of Eastern Bank and a trustee of its predecessor holding company, Eastern Bank Corporation, since 2006. He has been Executive Vice President and Chief Financial Officer of Lifespan Health Systems since January 2023. Until March 2021, he served as Executive Vice President of Administration and Finance, Chief Financial Officer and Treasurer for Mass General Brigham, which he had joined in 1999. Prior to that, he was a partner at Ernst & Young LLP. A Certified Public Accountant, Mr. Markell is a Boston College graduate with a B.A. in Accounting and Finance and serves on the Boston College Board of Trustees, where he has served as both Chairman of the Board and Chairman of the Finance Committee. Mr. Markell also currently serves on the Board of Directors of Huron Consulting Group Inc., where he is a member of its Audit and Technology and Information Security Committees, and CodaMetrix, a medical coding software platform. Qualifications | | | We believe Mr. Markell’s extensive executive, accounting, and board leadership experience qualify him to serve on our Board of Directors. |
Class II Directors Continuing in Office (Term Will Expire in 2025)
| Linda M. Williams Age 63 | Experience | | | Linda M. Williams has served as a director of the Company and Eastern Bank since October 2023. She most recently served as Chief Risk and Audit Officer and Senior Vice President for Blue Cross Blue Shield of Massachusetts (“BCBS”), with oversight of strategic enterprise risk management, internal audit, and information security, from January 2017 through January 2024. She previously served as Senior Vice President and Chief Underwriter for BCBS starting in 2010 after joining the company in 2008. Prior to that, she served as a Senior Consultant with Medwise Partners, a health insurance company consulting firm, and held underwriting leadership roles for Magellan Behavioral Health and Aetna, Inc. She has been a member of the Board of Directors of SmileDirectClub since June 2022, and she serves on its Audit Committee. She also serves on the Board of Directors of Morgan Memorial Goodwill Industries and as Trustee and Treasurer for the Robert F. Kennedy Children’s Action Corps. She holds a bachelor’s degree from Johns Hopkins University. Qualifications | | | We believe Ms. Williams’ extensive risk management, business, and audit leadership experience qualify her to serve our on Board of Directors. |
Compensation and Human Capital Management Committee
| • making recommendations to the Board regarding compensation of our directors; • overseeing the implementation of the Company’s diversity, equity and inclusion (“DE&I”) programs and policies related to human capital management; • oversight of talent management programs, including employee engagement surveys and development initiatives; and • reviewing and approving the general design and terms of any significant non-executive compensation and benefits plans. |
Certain Relationships and Related Party Transactions
| • | Executive and director compensation; |
Compensation Highlights
Compensation Highlights 2023 Executive Compensation Program Decisions At-A-Glance Our compensation program includes three main components: base salary, short-term cash incentives (as part of our Management Incentive Plan (“MIP”)), and long-term equity compensation (granted pursuant to our equity-based long-term incentive plan (“Equity LTIP”)). Each of these compensation elements serves a specific purpose in our compensation strategy. Base salary is an essential component to any market-competitive compensation program. Short-term incentives reward the achievement of annual goals, while long- term incentives drive our NEOs to focus on long-term sustainable shareholder value creation. Based on our performance and consistent with the design of our program, the C&HCM Committee made the following executive compensation decisions for fiscal year 2023 (see “Our 2023 Executive Compensation Program in Detail” within this CD&A section for more information):
Compensation Highlights
| Base Salary | No base salary increases were approved for any of the NEOs. | | Short-Term Incentives | Award payouts: Limited actual NEO MIP Award payouts for 2023 performance to 100% of their respective target. As described above in the “Business Overview” section of this CD&A, the Company experienced material non-recurring events during the year, most notably the sale of Eastern Insurance at a significant premium to our own valuation, that had not been contemplated when the C&HCM Committee set the initial MIP Net Income Target at the beginning of 2023. These events were largely responsible for actual results significantly exceeding the established target. In its assessment of overall performance results for 2023, the C&HCM Committee concluded that it would be inappropriate to determine the Actual Funding Pool solely on the established MIP Net Income Target because it would result in an unintended windfall to participants. The C&HCM Committee retains discretion to further adjust the award based on its assessment of individual performance but did not make any adjustments for 2023 award payouts. Annual target award opportunities: Targets did not increase from 2022. | | Long-Term Incentives | Annual equity grants: Structured using the same 50% performance stock units (“PSUs”) and 50% time-based restricted stock units (“RSUs”) equity vehicle mix as 2022. Targets did not increase from 2022. For PSUs, performance is based on the Company’s total shareholder return (“TSR”) relative to the KRX Banks (1) over the three-year performance period. (January 1, 2023-December 31, 2025). If the Company’s relative performance is below the threshold achievement level, no PSUs will be earned. Furthermore, if the Company’s absolute TSR is negative over the performance period, any earned payout will be capped at target. RSUs will vest in equal installments over a three-year period tied to the anniversary of the grant date, March 1, 2023. Legacy Cash-Based LTIP Awards: The Legacy LTIP awards granted to our NEOs in 2019 (“2019 LTIP Awards”) had a value of $12.70 per share when they matured on December 31, 2023. Accordingly, our NEOs received a cash payout under the Legacy LTIP for the 2019-2023 performance period, representing the final step in the transition from our legacy approach of granting 100% cash-based long-term incentive awards to our current approach of 100% equity- based long-term incentive awards (see “Transition of Long-Term Incentive Compensation” below for details). |
Compensation Highlights
(1) “KRX” refers to the KBW Regional Banking Index, an index that is designed to track the performance of regional banks and thrift institutions that are publicly traded in the U.S. “KRX Banks” refers to the companies that comprise the KRX as of the last day of the performance period, excluding companies that have any of the following characteristics: (1) headquartered in Puerto Rico; (2) announced target of a pending acquisition; and/or (3) less than three years of performance history or trading data. Transition of Long-Term Incentive Compensation: From Cash to Equity As we disclosed last year, the structural change to our long-term incentive awards, from historic cash-based awards to an equity-based approach, creates a temporary reporting anomaly in the Summary Compensation Table. Specifically, legacy cash awards must be disclosed in the final year of the performance period (when earned), while stock-based awards are disclosed in the year of the grant. Thus, so long as legacy LTIP cash grants are outstanding, we must report two cycles of long-term incentive awards in one year: the earned payout from the prior legacy cash LTIP cycle; and the grant date fair value of equity awards under the current stock-based structure. As illustrated below, for our CEO, this results in an additional $1,524,000 to be reported for 2023 in the Summary Compensation Table, even though the opportunity was established in 2019. This overlap of historic cash LTIP payouts and current equity awards reported in the Summary Compensation Table will not occur in future years, as the final performance cycle under the Legacy LTIP ended December 31, 2023. Eastern Insurance Sale Transaction Awards for Certain NEOs As described in the “Business Overview” section above, the completion of the sale of Eastern Insurance to Gallagher was a major factor in the Company’s notable success in 2023. For more than two decades, and under the leadership of its President and CEO, Mr. Lodge, Eastern Insurance grew into one of the premier insurance brokerage firms in the country, making it a highly-valuable enterprise. The success and valuation premium of the sale gave the Company the ability to place a stronger focus on its core long-term goals for the banking business and redeploy capital for in-market strategic growth opportunities, including the announced merger with Cambridge Bancorp. This milestone accomplishment required significant, additional efforts by Mr. Lodge, and two primary executive team members: Mr. James Fitzgerald, Chief Administrative Officer, Chief Financial Officer and Treasurer, Eastern Bankshares, Inc.; Vice Chair, Chief Administrative Officer and Chief Financial Officer, Eastern Bank, and Ms. Kathleen Henry, Executive Vice President, General Counsel and Corporate Secretary of Eastern Bankshares, Inc.; Executive Vice President, General Counsel, Corporate Secretary and Chief Human Resources Officer, Eastern Bank. In recognition of the extraordinary financial result obtained, and efforts expended, in connection with the sale of Eastern Insurance, and in light of the fact that the sale was not factored into any element of our 2023 executive compensation program, the C&HCM Committee approved one-time, transaction awards of $2 million, $500,000, and $500,000 to Messrs. Lodge and Fitzgerald and Ms. Henry, respectively. Mr. Lodge’s award was delivered in 100% cash and was also in consideration of the termination of his Change in Control Agreement with the Company. Mr. Fitzgerald’s and Ms. Henry’s awards were delivered in 50% cash and 50% equity. The equity portion of the EIG award was delivered using a mix of 60% PSUs and 40% RSUs, which places a heavier emphasis on performance-based equity and is consistent with the structure of our regular, annual LTI grants for 2024 (see “Changes to Our Executive Compensation Program for 2024” below). The PSUs will be measured over a three-year performance period (January 1, 2024 -December 31, 2026) based on the Company’s total shareholder return (“TSR”) relative to the KRX Banks over the performance period. The number of earned PSUs can range between 25% (threshold) and 150% (maximum) of the target award. If the Company’s performance is below the threshold achievement level, no PSUs will be earned. If the Company’s absolute TSR is negative over the performance period, any earned payout will be capped at target regardless of relative performance rating. The RSUs will vest in equal installments over a three-year period tied to the anniversary of the grant date, March 1, 2024. These transaction awards were unique to the circumstances of 2023 and do not represent the regular pay program of the Company.
Changes to Our Executive Compensation Program for 2024
Changes to Our Executive Compensation Program for 2024 The C&HCM Committee is committed to putting forth a market-competitive executive compensation program that supports the business strategy and aligns the interests of our executives and shareholders. In 2023, the C&HCM Committee worked with management and its independent compensation consultant to continue to make enhancements to features of the program, with an expanded emphasis on a long-term incentive program that incentivizes our NEOs to execute on longer-term financial goals that drive shareholder value creation, while also balancing leadership retention objectives. Effective in 2024, to continue to strengthen alignment with shareholders, the C&HCM Committee placed a heavier emphasis on performance-based equity for the NEOs by changing the mix for annual equity awards from 50% PSUs and 50% RSUs to 60% PSUs and 40% RSUs. In addition, after several years of keeping target incentive award opportunities unchanged, the C&HCM Committee adjusted the NEOs’ incentive targets to better align them with the market:
Changes to Our Executive Compensation Program for 2024
| Executive Officer | Short-Term Incentives | | Long-Term Incentives | | | | 2023 MIP Target Award Opportunity (as a % of Salary) | 2024 MIP Target Award Opportunity (as a % of Salary) | 2023 LTI Target Award Opportunity (as a % of Salary) | 2024 LTI Target Award Opportunity (as a % of Salary) | | Robert F. Rivers | 90% | 100% | 100% | 150% | | Quincy L. Miller | 60% | 75% | 60% | 115% | | James B. Fitzgerald | 60% | 75% | 60% | 100% | | Donald M. Westermann | 45% | 60% | 40% | 60% | | Kathleen C. Henry | 45% | 60% | 40% | 60% |
The Role of Our Independent Compensation Consultant
The Role of Our Independent Compensation Consultant The C&HCM Committee has the authority to engage its own advisors to assist it in carrying out its responsibilities. As part of its oversight of executive compensation and director compensation, the C&HCM Committee seeks input from its independent compensation consultant. In connection with 2023 executive compensation decisions, the C&HCM Committee engaged Pearl Meyer to advise the C&HCM Committee on the amount and form of executive compensation. The independent compensation consultant reports directly to the C&HCM Committee and does not provide any other services to the Company. The C&HCM Committee has conducted an independence assessment of Pearl Meyer in accordance with SEC and Nasdaq listing rules. Based on this review and in reliance upon a letter from the firm confirming its independence based on factors set forth in the Nasdaq rules for compensation committee advisors, the C&HCM Committee determined that Pearl Meyer is an independent advisor.
The Role of Peer Market Data
The Role of Peer Market Data We believe that a competitive pay package is a critical tool in our efforts to attract and retain qualified executives. The C&HCM Committee’s goal is to ensure that we continue to measure our compensation practices against organizations that compete with us for key executives, which are considered important benchmarks in our industry, and that are comparable in size and scope to our business. The C&HCM Committee uses a criteria-based approach in selecting peer companies. The criteria include banks and thrifts on a national exchange, geography (U.S.-based and major metropolitan areas), financial institutions of similar size (assets and revenue ranging from 0.5x to 2.0x the Company’s size), similar loan mix, and comparable market capitalization. For purposes of setting 2023 compensation levels, our compensation peer group included the following 19 companies, all of which were publicly traded commercial banks at the time of their selection to our peer group:
The Role of Peer Market Data
| Ameris Bancorp. | Glacier Bancorp, Inc. | Pinnacle Financial Partners, Inc. | | Atlantic Union Bankshares Corporation | Independent Bank Corp. | Simmons First National Corporation | | Bank OZK | Independent Bank Group, Inc. | SouthState Corporation | | BankUnited, Inc. | Old National Bancorp. | United Bankshares, Inc. | | Cathay General Bancorp | Pacific Premier Bancorp, Inc, | United Community Banks, Inc. | | F.N.B. Corporation | PacWest Bancorp, Inc. | Valley National Bancorp | | Fulton Financial Corporation | | |
The Role of Peer Market Data
In 2023, the C&HCM Committee, with the assistance of Pearl Meyer, refreshed the Company’s peer group, removing two companies for reasons due to merger and acquisition activity and replacing them with four peers that meet our criteria. As part of this review and update, the peer group used for 2024 compensation decisions was modified as follows:
The Role of Peer Market Data
| Removed | Added | | Old National Bancorp. | First Financial Bancorp. | | Valley National Bancorp | Trustmark Corporation | | | Washington Federal, Inc. | | | WSFS Financial Corporation |
The Role of Peer Market Data
In addition to peer group data, the C&HCM Committee also considers other factors when setting NEO compensation, including the skill sets of the NEOs, their individual performances, Company performance, retention risk, their tenure with the Company and succession planning.
Short-Term Incentive Plan
Short-Term Incentive Plan The MIP provides for the payment of annual cash incentive awards to the Company’s CEO, its other NEOs, members of its management committee, and select management employees (“Participants”). The C&HCM Committee believes the MIP further aligns its executive officers’ incentives with shareholder value creation. Each year (as defined below), a Participant is assigned a target award opportunity as a percentage of base salary, based in part on job responsibilities and market data. The table below summarizes the annual incentive target opportunity for 2023 for the NEOs set forth below, which did not change from 2022.
Short-Term Incentive Plan
| Named Executive Officer | Fiscal Year 2023 Salary | MIP Target Award Opportunity (as a % of Salary) (1) | MIP Target Award Opportunity ($) | | Robert F. Rivers | $995,000 | 90% | $895,500 | | Quincy L. Miller | $590,000 | 60% | $354,000 | | James B. Fitzgerald | $590,000 | 60% | $354,000 | | Donald M. Westermann | $463,500 | 45% | $208,575 | | Kathleen C. Henry | $463,500 | 45% | $208,575 |
Short-Term Incentive Plan
(1) For purposes of MIP calculations, “Base Salary” refers to a NEO’s year-end base salary rate. Actual award payouts are determined by measurement against one or more corporate performance measures (“Company Performance Measures”). Company Performance Measures are approved by the C&HCM Committee, and annual targets with respect to such performance measures are established by the Board of Directors. All awards are paid from a funding pool. The target funding pool (“Target Funding Pool”) is an amount equal to the sum of all Participants’ target awards for the year. After the end of the year, the C&HCM Committee determines performance against the applicable Company Performance Measures including whether minimum performance thresholds have been met. The funding pool from which awards under the MIP (“MIP Awards”) are actually paid (“Actual Funding Pool”) is an amount that is based on the Target Funding Pool but is adjusted to reflect the Company’s performance against the Company Performance Measures for such year. The C&HCM Committee may adjust the level or nature of Company Performance Measures to accommodate non-recurring events not contemplated when such measures were originally set, such as an acquisition or divestiture by the Company or realized securities gains/losses, and has the sole discretion to adjust the Target Funding Pool and/or the Actual Funding Pool amounts upward or downward, based on market factors, corporate events, future performance outlook, or any other situation it may deem appropriate. Individual MIP Awards are paid out of the Actual Funding Pool. The MIP Awards for the Company’s executive officers other than the CEO are approved by the C&HCM Committee. The MIP Award for the CEO is approved by the independent members of the Board of Directors, upon recommendation from the C&HCM Committee. The independent members of the Board and the C&HCM Committee, respectively, have discretion to modify the individual MIP payouts for executives based on the CEO’s and the other NEOs’ performance. Company Performance Measure For 2023, the C&HCM Committee approved GAAP Net Income as the Company Performance Measure under the MIP (“MIP Net Income”). The C&HCM Committee chose MIP Net Income because it believes that it provides a useful metric in understanding the Company’s earnings performance. Amid the challenging macroeconomic factors impacting regional financial institutions in early 2023, including the high interest rate environment that was putting pressure on net interest margins, the C&HCM Committee set the MIP Net Income Target at $145.7 million, which was aligned with our budget, and reflective of the challenges within the banking industry conditions at the time. The C&HCM Committee also established a minimum performance threshold of 80% of the MIP Net Income Target in order for any MIP Awards to be earned by our NEOs. As described above in the “Business Overview” section of this CD&A, the Company executed material non-recurring events during the year, most notably the sale of Eastern Insurance at a significant premium, as well as the securities sale with a related loss, that had not been contemplated when the C&HCM Committee set the initial MIP Net Income Target at the beginning of 2023. These events had a significant positive impact on our net income results of $232.2 million, which was 16% higher than our 2022 results of $199.8 million. Based on the business circumstances of 2023 and its holistic assessment of overall performance, the C&HCM Committee concluded that it would be inappropriate to determine the Actual Funding Pool solely on the established MIP Net Income Target of $145.7 million because that would result in an unintended windfall to participants. Instead, the C&HCM Committee exercised downward discretion and limited NEO payouts to target. While the independent members of the Board of Directors and C&HCM Committee have discretion to adjust MIP Awards based on individual performance, they did not make any such adjustments for 2023 awards. 2023 MIP Award Payouts The table below summarizes the 2023 MIP awards earned by each of the NEOs who remains an officer:
Short-Term Incentive Plan
| Named Executive Officer | MIP Award Earned in 2023 ($) (1) | MIP Award as % of Target Award | MIP Award as % of Base Salary (1) | | Robert F. Rivers | $895,500 | 100% | 90% | | Quincy L. Miller | $354,000 | 100% | 60% | | James B. Fitzgerald | $354,000 | 100% | 60% | | Donald M. Westermann | $208,575 | 100% | 45% | | Kathleen C. Henry | $208,575 | 100% | 45% |
Short-Term Incentive Plan
(1) For purposes of MIP calculations, “Base Salary” refers to a NEO’s year-end base salary rate
Long-Term Incentive Compensation
Long-Term Incentive Compensation The Company’s philosophy on long-term incentive compensation is to grant awards that provide incentives for NEOs to execute on longer term financial performance objectives. 2023 Equity-Based LTIP Awards Equity-based LTIP awards for 2023 were structured to reflect the C&HCM Committee’s commitment to putting forth a long- term incentive program that incentivizes executives to execute on longer-term financial goals that drive shareholder value creation and supports the Company’s leadership retention objectives, delivering awards using a mix of performance-based and time-based equity vehicles. Following vesting, shares are delivered net of any shares withheld to meet the recipient’s tax obligations. The 2023 awards were structured as follows:
Long-Term Incentive Compensation
| Equity Vehicle | Weight | Design At-A-Glance | | | | • Rewards achievement of financial goals measured over a three-year performance period (January 1, 2023 — December 31, 2025) and puts appropriate focus on long-term alignment and pay relative both to market peers and shareholder returns. • Performance is measured based on the Company’s total shareholder return (“TSR”) relative to the KRX Banks* over the performance period. • The number of earned PSUs can range between 25% (threshold) and 150% (maximum) of the target award. If the Company’s performance is below the threshold achievement level, no PSUs will be earned. • If the Company’s absolute TSR is negative over the performance period, any earned payout will be capped at target regardless of relative performance rating. |
Long-Term Incentive Compensation
| Equity Vehicle | Weight | Design At-A-Glance | | | | Performance Shares Units (PSUs) | 50% (at Target) | Performance Level (Relative Ranking) | | PSUs Earned at the End of the Performance Period (% of Target) | | | | Less than 25th Percentile | Below Threshold | —% | | | | 25th Percentile | Threshold | 25% | | | | 50th Percentile | Target | 100% | | | | 75th Percentile or Higher | Maximum | 150% | | | | Note: Payouts are linearly interpolated for performance between threshold and maximum. | | | | Restricted Stock Units (RSUs) | 50% | RSUs will vest in equal installments over a three-year period tied to the anniversary of the grant date, March 1, 2023. | | |
Long-Term Incentive Compensation
*“KRX” refers to the KBW Regional Banking Index, an index that is designed to track the performance of regional banks and thrift institutions that are publicly traded in the U.S. “KRX Banks” refers to the companies that comprise the KRX as of the last day of the performance period, excluding companies that have any of the following characteristics: (1) headquartered in Puerto Rico; (2) announced target of a pending acquisition; and/or (3) less than three years of performance history or trading data. The table below shows the target long-term incentive award values granted in fiscal year 2023 for each of the NEOs who is currently serving as an officer:
Long-Term Incentive Compensation
| Named Executive Officer | Fiscal Year 2023 Salary | LTI Target Award Opportunity (as a % of Salary | PSUs (at Target) | RSUs | LTI Target Award Opportunity ($) | | Robert F. Rivers | $995,000 | 100% | $498,000 | $498,000 | $996,000 | | Quincy L. Miller | $590,000 | 60% | $177,000 | $177,000 | $354,000 | | James B. Fitzgerald | $590,000 | 60% | $177,000 | $177,000 | $354,000 | | Donald M. Westermann | $463,500 | 40% | $93,000 | $93,000 | $186,000 | | Kathleen C. Henry | $463,500 | 40% | $93,000 | $93,000 | $186,000 |
Long-Term Incentive Compensation
*Actual award amounts for RSUs and PSUs at target levels were determined based on the closing price of Company common stock on the date of grant on March 1, 2023, which was $15.63 per unit. The stock award values shown in the Summary Compensation table vary slightly from the above due to, as shown in the Summary Compensation Table, (i) actual units granted were in whole units only and (ii) award amounts for PSUs related to TSR performance were determined using the Monte Carlo valuation model. Frozen LTIP Awards (Final Vesting and Payouts Under the Legacy LTIP) The legacy LTIP is a cash-based compensation plan that was designed to link incentive compensation of NEOs to factors such as the growth of Eastern’s capital, net income, Eastern’s adjusted retained earnings, or other factors. The LTIP was “frozen” in 2020 in anticipation of the Company’s IPO and transition to an equity-based long-term incentive plan, and the last awards were granted in 2019. Under the terms of the LTIP, our NEOs were eligible to receive a payout in 2024 for awards made in 2019 (“Final Outstanding LTIP Awards”), respectively. Final Outstanding 2019 LTIP Awards. For the 2019 Awards, which matured December 31, 2023, the LTIP opportunity was set in 2019 and those awards were primarily based on cumulative growth of retained earnings over the five year period, which was 55.21%. The award includes a +15% modifier based on Eastern’s ratings on the Safety and Soundness Examination over the five-year period, as well as performance against peers on key metrics. The table below shows the value of the Final Outstanding 2019 LTIP Awards for our NEOs who are current officers.
Long-Term Incentive Compensation
| Named Executive Officer | Granted 2019 Payable in 2024 | | Robert F. Rivers | $1,524,000 | | Quincy L. Miller | $508,000 | | James B. Fitzgerald | $508,000 | | Donald M. Westermann | $254,000 | | Kathleen C. Henry | $190,500 |
Double Trigger Change in Control Agreements
Double Trigger Change in Control Agreements The Company has entered into change in control agreements (“CiC Agreements”) with the NEOs and its most senior executive officers. With certain exceptions noted below, the CiC Agreements are substantially similar to each other, and provide that if, during a potential change in control period or within 18 months after the consummation of a change in control, the executive’s employment is involuntarily terminated for reasons other than for “cause,” disability or death, or the executive voluntary resigns for “good reason,” the executive would be entitled to a lump sum severance payment equal to a multiple of (a) his or her base salary, plus (b) the greater of the executive’s annual bonus for the year in which the termination occurred and the average of the executive’s bonuses for the three years immediately preceding the year in which the termination occurred. For Messrs. Rivers and Miller, the applicable multiplier is 300%; for each of the other executives who are current officers of the Company (Messrs. Fitzgerald and Westermann and Ms. Henry), the multiplier is 200%. As noted above, any payment required under the CiC Agreements will be reduced to the extent necessary to avoid penalties under (“Section 280G”) of the Internal Revenue Code of 1986, as amended (the “Code”), but only if such reduction would result in a higher after-tax amount to the executive. In exchange for the lump sum severance payments and other benefits, the CiC Agreements provide for certain post-employment obligations with respect to the executive’s ability to compete with the Company and solicit our employees or customers. In addition, if the NEO was participating in the Company’s group health and dental plans immediately prior to the their termination and elects COBRA health continuation, then the Company shall pay to the NEO a monthly cash payment for 18 months or the NEO’s COBRA health continuation period, whichever ends earlier, in an amount equal to the monthly employer contribution that the Company would have made to provide health and dental insurance to the NEO if the NEO had remained employed by the Company. The Company will use commercially reasonable efforts to provide for such payments in a manner that allows the NEO to exclude such payments from income, unless the NEO’s COBRA health continuation period ends prior to the end of the eighteen-month payment period or the Company reasonably determines such payment to be discriminatory under Section 105(h) of the Code.
No Tax Gross Ups
No Tax Gross Ups Our C&HCM Committee has determined that no tax gross-ups for purposes of excess parachute payments under Section 280G shall be provided to our executives as part of our executive compensation program. The dollar amount of the severance payment due under our CiC Agreements (as defined and further described below) will not be reduced in order to avoid an excess parachute payment under Section 280G, except in circumstances in which the application of the excise tax under Section 4999 of the Code (“Section 4999”) on the full amount of severance and other compensation deemed to be an excess parachute payment under Section 280G would leave the executive with a lower net after-tax amount than having the severance and other compensation reduced to the extent necessary so the excise tax would not apply. In circumstances in which the amount of severance and other compensation deemed to be a parachute payment under Section 280G is not reduced, the executive would owe the excise tax under Section 4999 and would not be entitled to a gross-up or reimbursement of that excise tax payment under his or her CiC Agreement.
Severance Agreements
Severance Agreements The provision of reasonable severance benefits can be important in recruiting and retaining key executives. Thus, the Company has in place separate agreements with two NEOs, Messrs. Rivers and Miller, governing certain terms of their employment with and separation from the Company in circumstances not involving a change in control of Eastern. Under the terms of those agreements, in the event an executive is terminated for cause, the executive will receive all earned but unpaid salary, all accrued but unused vacation pay, vested and accrued bonuses or other incentive compensation, and reimbursements for any reasonable, necessary and properly documented expenses. In the event of termination without cause, in addition to the payments outlined above, the Company will pay to the executive within 60 days of his termination a lump sum payment equal to 200% of his annual base compensation plus a prorated share of the annual incentive payment to which the executive would have been eligible under the MIP (described above) during the calendar year in which the termination date falls. The executive will also receive full vesting of benefits in existing grants under the Bank’s legacy LTIP. If Mr. Rivers elects COBRA coverage, Mr. Rivers will also receive 24 months of continued participation in Eastern group health and dental insurance plans, with Eastern Bank paying or reimbursing Mr. Rivers for the cost of such premiums, and Mr. Miller will receive a lump sum payment equivalent to 24x the amount of Eastern’s standard monthly contributions to Mr. Miller’s Eastern Bank group health and dental insurance premiums. The agreements provide for certain restrictive covenant obligations, which include each of Messrs. Rivers and Miller agreeing not to solicit customers and employees of Eastern Bank during their employment with Eastern Bank and continuing for a period ending 24 months following their termination of employment. In addition, Mr. Miller’s agreement also specifies that while he is employed, he will receive an annual base salary of not less than $450,000 (subject to adjustment), discretionary incentive and/or bonus compensation, and participation on generally applicable terms and conditions in other compensation and fringe benefit plans, an automobile allowance of $700 each month, and reimbursement of country club membership fees, if sought. Mr. Rivers’ agreement does not address compensation or benefits during employment.
Benefit Plans
Benefit Plans 401(k) Plan. Our 401(k) Plan allows executives and other plan participants to make elective deferrals of their compensation to the 401(k) Plan up to limits of the Internal Revenue Service (“IRS“), and in 2023 the Company made a safe harbor contribution to eligible participants’ accounts equal to 3% of the participant’s plan compensation earned during the plan year subject to IRS limits. Employee Stock Ownership Plan. Eastern Bank has an ESOP, an employee stock ownership plan, for eligible employees. Management believes the ESOP aligns the interests of all eligible employees – not just senior executives – with shareholders to create better alignment with total shareholder value. At the time of the IPO, the ESOP trustee purchased 14,940,652 shares of the Company’s common stock funded with a loan from the Company (“ESOP Loan”). The ESOP Loan is repaid principally through Eastern Bank’s contribution to the ESOP and dividends payable on common stock held by the ESOP over the term of the loan. The ESOP’s independent trustee holds the shares purchased by the ESOP in an unallocated suspense account, and releases shares on a pro rata basis as the loan is repaid. Released shares are allocated among participants on the basis of each participant’s proportional share of eligible compensation relative to the compensation of all participants. A participant cliff-vests in their benefits after three years of vesting service with Eastern Bank or a participating subsidiary. Credited service includes both calendar years of service from January 1, 2020 (the initial effective date of the ESOP) and years of vesting service that a participant has earned under the Bank’s defined benefit pension plan prior to the adoption of the ESOP. A participant also will become fully vested in their benefit upon normal retirement, early retirement, death or disability, a change in control, or termination of the ESOP. A vested participant is entitled to receive a distribution from the ESOP upon separation from service or, if earlier, plan termination. The ESOP permits a participant to direct the trustee as to how to vote the shares of common stock allocated to their account. The ESOP trustee votes unallocated shares and allocated shares for which participants do not provide voting instructions on a matter in the same ratio as those shares for which participants provide instructions, subject to fulfillment of the trustee’s fiduciary responsibilities. In October 2023 a portion of the ESOP Loan was repaid, and in February 2024, the ESOP trustee allocated shares to eligible participants for 2023. The Company makes allocations annually to eligible participants in accordance with the terms of the ESOP. Each of Messrs. Rivers, Miller, Fitzgerald, Westermann and Lodge and Ms. Henry received allocations of 947 shares (fractional shares have been rounded down) for 2023. Each of our NEOs is fully vested in his or her benefit under the ESOP. Defined Benefit Pension Plan. Eastern Bank provides pension benefits (the “Pension Plan”) to its employees, including our NEOs, through membership in the Savings Bank Employees’ Retirement Association. The Company’s Pension Plan is a noncontributory, defined benefit plan. Our annual contribution to the Pension Plan is based upon standards established by the Pension Protection Act. The contribution is based on an actuarial method intended to provide not only for benefits attributable to service to date but also for those expected to be earned in the future. Frozen Supplemental Executive Retirement Plan. Eastern had historically offered a defined contribution supplemental executive retirement plan (“SERP”), in which Messrs. Rivers, Miller, and Fitzgerald participated. Benefit accruals were frozen for then-active participants as to compensation received for work performed after 2021, and the SERP was closed to new participants. Under the SERP, each participating executive is entitled to receive a benefit following his or her separation from service. Benefit Equalization Plan. The Company maintains a non-qualified benefit equalization plan (“BEP”) to provide a pension supplement to restore pension benefits for employees whose compensation exceeds the annual statutory compensation maximum that can be considered under the defined benefit plan, and/or exceeds the annual permitted pension benefit amount under the Code. The benefit formula is the same as provided in the Pension Plan, with an offset for benefits provided by that plan. Benefits generally are paid in a lump sum in the year following retirement or death. 409A Deferred Compensation Plans. The Company maintains a 409A deferred compensation plan. The plan allows directors and selected executives to defer compensation under non-qualified deferred compensation plans. None of the NEOs participated in this plan in 2023. Executive Perquisites. Executive perquisites are not a core component of our executive compensation program. We do offer, however, our NEOs allowances for automobiles and parking. Our NEOs are entitled to reimbursement for costs associated with membership in a country club, but all of our NEOs declined to accept these club fees in 2023.
2023 Summary Compensation Table
2023 Summary Compensation Table The table below sets forth the total compensation paid to, or earned by, our NEOs for the years ended December 31, 2023, 2022 and 2021 in accordance with applicable SEC rules.
2023 Summary Compensation Table
| Summary Compensation Table (“SCT”) | | | | | | | | | | Name and Principal Position | Fiscal Year (1) | Salary (2) | Bonus (3) | Non-Equity Incentive Plan Compensation (4)(5) | Stock Awards (6) | Change In Pension Value and Non- qualified Deferred Compensation Earnings (7) | All Other Compensation (8) | Total | | Robert F. Rivers | 2023 | $995,000 | $— | $2,434,326 | $820,870 | $617,294 | $47,607 | $4,915,097 | | Chief Executive Officer and Chair of the Board of Directors | 2022 | $995,000 | $— | $976,100 | $4,503,726 | $13,486 | $255,368 | $6,743,680 | | | 2021 | $995,000 | $— | $2,757,136 | $— | $86,687 | $369,720 | $4,208,543 | | Quincy L. Miller | 2023 | $590,000 | $— | $866,942 | $292,046 | $196,629 | $41,241 | $1,986,858 | | President | 2022 | $587,500 | $— | $385,900 | $3,002,449 | $20,111 | $114,166 | $4,110,126 | | | 2021 | $575,000 | $— | $948,712 | $— | $45,562 | $224,347 | $1,793,621 | | James B. Fitzgerald | 2023 | $590,000 | $250,000 | $866,942 | $292,046 | $455,570 | $52,575 | $2,507,133 | | Chief Administrative Officer, Chief Financial Officer and Treasurer | 2022 | $587,500 | $— | $385,900 | $3,002,449 | $2,406 | $125,410 | $4,103,665 | | | 2021 | $575,000 | $— | $948,712 | $— | $69,595 | $249,614 | $1,842,921 | | Donald M. Westermann | 2023 | $463,500 | $— | $465,046 | $152,935 | $123,049 | $37,340 | $1,241,870 | | Chief Information Officer | 2022 | $461,250 | $— | $227,300 | $2,001,646 | $— | $34,504 | $2,724,700 | | Kathleen C. Henry | 2023 | $463,500 | $250,000 | $400,928 | $152,935 | $156,625 | $38,861 | $1,462,849 | | General Counsel and Corporate Secretary | 2022 | $461,250 | $— | $227,300 | $2,001,646 | $84,812 | $35,975 | $2,810,983 | | Timothy J. Lodge President & CEO, EIG | 2023 | $307,811 | $2,000,000 | $236,375 | $118,943 | $78,337 | $56,519 | $2,797,985 |
2023 Summary Compensation Table
| (1) Neither Mr. Westermann nor Ms. Henry were NEOs in 2021. Their respective compensation is therefore only disclosed for the years ended December 31 of 2022 and 2023. Mr. Lodge was a NEO only for 2023, and his compensation is therefore disclosed only for the year ended December 31, 2023. |
2023 Summary Compensation Table
| (2) Represents base salary earned in 2023, 2022 and 2021, as applicable. For Messrs. Miller, Fitzgerald and Westermann and Ms. Henry, 2022 salary changes were effective March 1, 2022. No salary changes were implemented in 2023 for our NEOs. |
2023 Summary Compensation Table
| (3) For Messrs. Fitzgerald and Lodge and Ms. Henry, represents a one-time Eastern Insurance transaction cash award to recognize their roles in 2023 of the successful sale of Eastern Insurance to Gallagher and, for Mr. Lodge, was also in consideration of his termination of his change-in-control agreement upon his separation from the Company on October 31, 2023. |
2023 Summary Compensation Table
| (4) Represents cash awards earned under the Company’s MIP during 2023, 2022 and 2021, and the amounts payable under legacy LTIP cash awards that matured on December 31, 2021 and December 31, 2023, respectively. |
2023 Summary Compensation Table
| • | MIP Awards: For Messrs. Rivers, Miller, Fitzgerald, Westermann and Lodge and Ms. Henry, amounts earned under the MIP in 2023 were $895,500, $354,000, $354,000, $208,575, $144,200, and $208,575 respectively. For Messrs. Rivers, Miller, Fitzgerald and Westermann and Ms. Henry, amounts earned under the MIP in 2022 were $976,100, $385,900, $385,900 $227,300 and $227,300 respectively. Amounts earned under the MIP in 2021 for Messrs. Rivers, Miller, and Fitzgerald were $1,075,000, $388,000 and $388,000, respectively. |
2023 Summary Compensation Table
| • | Legacy LTIP Awards: For Messrs. Rivers, Miller, Fitzgerald, Westermann and Lodge and Ms. Henry, the amounts payable under legacy LTIP awards that were granted in 2019 and |
2023 Summary Compensation Table
| matured on December 31, 2023 were $1,524,000, $508,000, $508,000, $254,000, $92,175 and $190,500 respectively. LTIP cash awards that were granted in 2018 and matured on December 31, 2022, were valued at $0, and thus no amounts are included in 2022 for the 2018 LTIP cash awards. For Messrs. Rivers, Miller and Fitzgerald, the amounts payable under legacy LTIP awards that were granted in 2017 and matured on December 31, 2021 were $1,682,136, $560,712 and $560,712, respectively. |
2023 Summary Compensation Table
| (5) The amounts payable under LTIP awards that matured in 2023 and 2021 include interest paid thereon from December 31 of the year in which they matured through the dates of payment in March 2024 and March 2022, respectively. For awards that matured in 2023, the interest amounts were $14,826 for Mr. Rivers, $4,942 for Messrs. Miller and Fitzgerald, $2,471 for Mr. Westermann and $1,853 for Ms. Henry. Mr. Lodge did not receive interest for his 2019 grant due to the timing of his payment upon his separation from the Company on October 31, 2023. For awards that matured in 2021, the interest amounts were $636 for Mr. Rivers, $212 for Mr. Miller and $212 for Mr. Fitzgerald. |
2023 Summary Compensation Table
| (6) Represents the aggregate grant date fair value of RSUs and PSUs granted in 2022 and 2023, computed in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718, which for RSUs was equal to the closing price of a share of Company common stock on the date of grant ($21.08 on March 1, 2022 and $15.63 on March 1, 2023), multiplied by the number of RSUs in the grant; for the PSUs based on EPS as the performance measure, was equal to the closing price of a share of Company common stock on the date of grant date ($21.08 on March 1, 2022), multiplied by the number of PSUs at target award levels; and for the PSUs based on TSR as the performance measure, was valued based on the probable outcome of applicable performance conditions using a Monte Carlo simulation model, which priced our common stock on the grant date ($21.15 on March 1, 2022 and $10.16 on March 1, 2023), multiplied by the number of PSUs at target award levels. If it is assumed that that the maximum level of performance under the PSUs was achieved, the grant date fair value of the 2023 PSU portion of the grant would have been $746,231 for Mr. Rivers; $265,491 for each of Messrs. Miller and Fitzgerald; $139,029 for each of Ms. Henry and Mr. Westermann; and $108,128 for Mr. Lodge. With regard to Mr. Lodge, his 2023 equity grants set forth above were forfeited upon his separation in connection with the Eastern Insurance transaction. Following Mr. Lodge’s separation, 18,976 RSUs that had been previously granted to Mr. Lodge on March 1, 2022 were subject to accelerated vesting; however, the change in fair value from grant date ($400,014) to accelerated vesting date ($208,926), based on the closing price of a share of Company common stock on October 31, 2023 ($11.01), reflects a negative value (-$191,088) and therefore was excluded from the table above. |
2023 Summary Compensation Table
| (7) Represents the change in the value of the Pension Plan and BEP for all our NEOs, for the period of January 1 to December 31 of each applicable reporting year. No change in value of the Pension Plan is shown for Mr. Westermann for 2022, as his change in value would have reflected a negative amount of (-$199,432) and was thus excluded. |
2023 Summary Compensation Table
| (8) All Other Compensation in the table above includes the amounts for 2023, 2022 and 2021, as applicable, set forth in the following table. |
2023 Summary Compensation Table
| All Other Compensation | | | | | | | | | Named Executive Officer | Fiscal Year | Perquisites (a) | 401(k) Plan Defined Contribution Plan (b) | Employer SERP Contributions (c) | Dividends Paid on Vested Equity Awards | Employer Allocations to ESOP (d) | Total (e) | | Robert F. Rivers | 2023 | $15,711 | $9,900 | $— | $8,539 | $13,457 | $47,607 | | | 2022 | $16,109 | $9,150 | $215,000 | $— | $15,109 | $255,368 | | | 2021 | $17,197 | $8,700 | $326,400 | $— | $17,423 | $369,720 | | Quincy L. Miller | 2023 | $12,192 | $9,900 | $— | $5,692 | $13,457 | $41,241 | | | 2022 | $12,307 | $9,150 | $77,600 | $— | $15,109 | $114,166 | | | 2021 | $13,424 | $8,700 | $184,800 | $— | $17,423 | $224,347 | | James B. Fitzgerald | 2023 | $23,526 | $9,900 | $— | $5,692 | $13,457 | $52,575 | | | 2022 | $23,551 | $9,150 | $77,600 | $— | $15,109 | $125,410 | | | 2021 | $16,691 | $8,700 | $206,800 | $— | $17,423 | $249,614 | | Donald M. Westermann | 2023 | $10,188 | $9,900 | $— | $3,795 | $13,457 | $37,340 | | | 2022 | $10,245 | $9,150 | $— | $— | $15,109 | $34,504 | | Kathleen C. Henry | 2023 | $11,710 | $9,900 | $— | $3,795 | $13,457 | $38,862 | | | 2022 | $11,716 | $9,150 | $— | $— | $15,109 | $35,975 | | Timothy J. Lodge | 2023 | $18,731 | $9,151 | $— | $15,180 | $13,457 | $56,519 |
2023 Summary Compensation Table
| (a) Amount includes automobile and parking and gas allowances and taxable imputed incomes. |
2023 Summary Compensation Table
| (b) Represents employer contributions under our 401(k) Plan made on behalf of the NEO. |
2023 Summary Compensation Table
| (c) Represents deemed employer SERP contributions made during 2022 and 2021 as applicable. The SERP was frozen at the end of 2021; employer SERP contributions were made in 2022 related to compensation earned in 2021. |
2023 Summary Compensation Table
| (d) Represents the value of an allocation of shares of Company common stock pursuant to the terms of the Company’s ESOP in connection with the NEO’s service in fiscal year 2023, 2022 and 2021, as applicable. The value is calculated based on the closing price of Company stock on the last day trading of the year. For 2023, the amount represents an allocation of 947 shares multiplied by $14.20; for 2022, the amount represents an allocation of 875 shares multiplied by $17.25; and for 2021, the amount represents an allocation of 863 shares multiplied by $20.17. For each NEO, as applicable, the share allocation for 2023 includes 57 additional shares acquired through dividend reinvestment; for 2022, the share allocation includes 19 additional shares acquired through dividend reinvestment; and, for 2021, the share allocation includes one additional share acquired through dividend reinvestment. |
2023 Summary Compensation Table
| (e) Our NEOs’ total compensation in the Summary Compensation Table does not include earnings on the now frozen SERP, in which Messrs. Rivers, Miller and Fitzgerald participate, because our NEOs do not receive any preferential or above-market investment earnings under such plans. Under the terms of the SERP, the value of the benefit provided increases or decreases based upon changes in one or more generally available investment benchmarks or strategies chosen by the respective participant. |
Grant of Plan-Based Awards in 2023
Grant of Plan-Based Awards in 2023 The table below provides information regarding plan-based awards granted to our NEOs in 2023.
Grant of Plan-Based Awards in 2023
| | | | | Estimated future payouts under equity incentive plan awards (1) | | | | | | Named Executive Officer | Type of Award | Grant Date | Approval Date | Threshold (#) | Target (#) | Maximum (#) | All Other Stock Awards: Number of Shares of Stocks or Units (#) (2) | Grant Date Fair Value of Stock and Option Awards | | Robert F. Rivers | RSU | 3/1/2023 | 2/23/2023 | — | — | — | 31,829 | $497,487 | | | PSU - TSR | 3/1/2023 | 2/23/2023 | 7,957 | 31,829 | 47,744 | — | $323,383 | | Quincy L. Miller | RSU | 3/1/2023 | 2/13/2023 | — | — | — | 11,324 | $176,994 | | | PSU - TSR | 3/1/2023 | 2/13/2023 | 2,831 | 11,324 | 16,986 | — | $115,052 |
Grant of Plan-Based Awards in 2023
| | | | | Estimated future payouts under equity incentive plan awards (1) | | | | | | Named Executive Officer | Type of Award | Grant Date | Approval Date | Threshold (#) | Target (#) | Maximum (#) | All Other Stock Awards: Number of Shares of Stocks or Units (#) (2) | Grant Date Fair Value of Stock and Option Awards | | James B. Fitzgerald | RSU | 3/1/2023 | 2/13/2023 | — | — | — | 11,324 | $176,994 | | | PSU - TSR | 3/1/2023 | 2/13/2023 | 2,831 | 11,324 | 16,986 | — | $115,052 | | Donald M. Westermann | RSU | 3/1/2023 | 2/13/2023 | — | — | — | 5,930 | $92,686 | | | PSU - TSR | 3/1/2023 | 2/13/2023 | 1,483 | 5,930 | 8,895 | — | $60,249 | | Kathleen C. Henry | RSU | 3/1/2023 | 2/13/2023 | — | — | — | 5,930 | $92,686 | | | PSU - TSR | 3/1/2023 | 2/13/2023 | 1,483 | 5,930 | 8,895 | — | $60,249 | | Timothy J. Lodge | RSU | 3/1/2023 | 2/13/2023 | — | — | — | 4,612 | $72,086 | | | PSU - TSR | 3/1/2023 | 2/13/2023 | 1,153 | 4,612 | 6,918 | — | $46,858 |
Grant of Plan-Based Awards in 2023
| (1) Represents PSUs that will, for each grant of PSUs based on TSR performance measures, respectively, vest in one installment on or around March 1, 2026, subject to continued service and the satisfaction of applicable performance conditions. The number of PSUs to be earned is dependent on the Company’s growth of its TSR performance, each relative to those of the KRX Banks, over the three-year performance period from January 1, 2023 through December 31, 2025. No PSUs will vest for performance below threshold levels. |
Grant of Plan-Based Awards in 2023
| (2) Represents RSUs that vest in three equal installments on the anniversaries of the grant date (March 1, 2023), subject to continued service. |
Outstanding Equity Awards at 2023 Fiscal Year End
Outstanding Equity Awards at 2023 Fiscal Year End The following table provides information regarding PSUs and RSUs, as applicable, held by our NEOs on December 31, 2023.
Outstanding Equity Awards at 2023 Fiscal Year End
| Named Executive Officer | Type and Grant Year of Equity Incentive Plan Award (1) | Equity Incentive Plan awards: Number of underlying shares that have not yet vested | Equity Incentive Plan awards: Market Value of underlying shares that have not yet vested (2) | | Robert F. Rivers | RSU -2022 | 85,389 | $1,212,524 | | | PSU -EPS 2022 | 13,342 | $189,456 | | | PSU -TSR 2022 | 13,342 | $189,456 | | | RSU - 2023 | 31,829 | $451,972 | | | PSU -TSR 2023 | 7,957 | $112,993 | | Quincy L. Miller | RSU -2022 | 56,926 | $808,349 | | | PSU -EPS 2022 | 8,895 | $126,302 | | | PSU -TSR 2022 | 8,895 | $126,302 | | | RSU - 2023 | 11,324 | $160,801 | | | PSU -TSR 2023 | 2,831 | $40,200 |
Outstanding Equity Awards at 2023 Fiscal Year End
| Named Executive Officer | Type and Grant Year of Equity Incentive Plan Award (1) | Equity Incentive Plan awards: Number of underlying shares that have not yet vested | Equity Incentive Plan awards: Market Value of underlying shares that have not yet vested (2) | | James B. Fitzgerald | RSU -2022 | 56,926 | $808,349 | | | PSU -EPS 2022 | 8,895 | $126,302 | | | PSU -TSR 2022 | 8,895 | $126,302 | | | RSU - 2023 | 11,324 | $160,801 | | | PSU -TSR 2023 | 2,831 | $40,200 | | Donald M. Westermann | RSU -2022 | 37,951 | $538,904 | | | PSU -EPS 2022 | 5,930 | $84,202 | | | PSU -TSR 2022 | 5,930 | $84,202 | | | RSU - 2023 | 5,930 | $84,206 | | | PSU -TSR 2023 | 1,483 | $21,052 | | Kathleen C. Henry | RSU - 2022 | 37,951 | $538,904 | | | PSU - EPS 2022 | 5,930 | $84,202 | | | PSU - TSR 2022 | 5,930 | $84,202 | | | RSU - 2023 | 5,930 | $84,206 | | | PSU - TSR 2023 | 1,483 | $21,052 | | Timothy J. Lodge (3) | - | 0 | $— |
Outstanding Equity Awards at 2023 Fiscal Year End
| (1) Each RSU award granted in 2022 will vest in five equal installments on the anniversaries of the grant date (March 1, 2022), subject to continued employment. RSU awards granted in 2023 will vest in three equal installments on the anniversaries of the grant date (March 1, 2023), subject to continued employment. PSUs granted in 2022 based on EPS and TSR performance, respectively, will vest in one installment on or around March 1, 2025, subject to continued employment and the satisfaction of applicable performance conditions. PSUs granted in 2023 based on TSR performance will vest in one installment on or around March 1, 2026, subject to continued employment and the satisfaction of applicable performance conditions. The number of PSUs to be earned is dependent on the Company’s growth of its EPS and TSR performance, respectively, each relative to those of the KRX Banks, over the three- year performance period from January 1, 2022 through December 31, 2024. PSU amounts for both EPS and TSR performance measure awards reflect threshold performance levels. |
Outstanding Equity Awards at 2023 Fiscal Year End
| (2) The market value of RSUs and PSU EPS and PSU TSR performance measure awards are based on the closing price of $14.20 of Company common stock on December 29, 2023, the last trading day of 2023, multiplied by the number of underlying granted but unvested units. |
Outstanding Equity Awards at 2023 Fiscal Year End
| (3) Mr. Lodge was not employed by the Company as of December 31, 2023, and the plan-based awards granted to him in 2023 were forfeited upon his separation from the Company on October 31, 2023, in connection with the Eastern Insurance transaction. |
Option Exercises and Stock Vested
Option Exercises and Stock Vested The following table provides information regarding PSUs and RSUs, as applicable, held by our NEOs on December 31, 2023. None of our NEOs owned or exercised options in 2023.
Option Exercises and Stock Vested
| | Stock Awards | | | Named Executive Officer | Number of Shares Acquired on Vesting (1) | Value Realized on Vesting ($)(2) | | Robert F. Rivers | 21,347 | $333,654 | | Quincy L. Miller | 14,231 | $222,431 | | James B. Fitzgerald | 14,231 | $222,431 | | Donald M. Westermann | 9,487 | $148,282 | | Kathleen C. Henry | 9,487 | $148,282 | | Timothy J. Lodge | 23,719 | $283,059 |
Option Exercises and Stock Vested
| (1) The Number of Shares Acquired on Vesting represents the shares underlying RSUs granted on March 1, 2022 that vested on March 1, 2023. The total represents the number of shares underlying RSUs that |
Option Exercises and Stock Vested
| vested, prior to shares withheld for taxes. For Mr. Lodge, this number additionally represents the shares underlying 18,976 RSUs granted on March 1, 2022, the vesting of which was accelerated as of October 31, 2023, the date of his separation from the Company. |
Option Exercises and Stock Vested
| (2) Value Realized on Vesting represents the number of shares underlying the RSUs that vested on March 1, 2023 multiplied by the closing price ($15.63) of Company stock on March 1, 2023. For Mr. Lodge, this value additionally represents the number of shares underlying the RSUs that vested on October 31, 2023, multiplied by the closing price ($11.01) of Company stock on October 31, 2023. |
Nonqualified Deferred Compensation
Nonqualified Deferred Compensation The Company’s nonqualified deferred contribution plans allow certain highly compensated or management employees to defer portions of their current compensation, as specified in the applicable plan documents. These plans include the SERP and the 409A Plan (as described below). Distributions of account balances under such plans may be made only in accordance with the applicable plan documents. None of these plans provide our NEOs with any preferential or above-market earnings on their account balances. Rather, the value of the benefit provided by a plan increases or decreases based upon changes in one or more generally available investment benchmarks or strategies chosen by the respective participant. Frozen Supplemental Executive Retirement Plan. Messrs. Rivers, Miller and Fitzgerald each received employer SERP contributions in 2022 for compensation earned in 2021. The SERP was frozen effective as of December 31, 2021. Although participants’ accounts will continue to be administered in accordance with the SERP document until their respective separations from service, the Company ceased accruing for benefits for SERP participants on earnings received after December 31, 2021 (other than with respect to the compensation earned in 2021). Pursuant to the terms of the frozen SERP, prior to 2022 an executive’s account was credited monthly with an amount equal to 20% of their salary and credited annually with an amount equal to 20% of their short-term incentives. Under the terms of the SERP, each executive participating in the SERP becomes entitled to receive a benefit following his separation from service with the Company. The SERP benefit vests over a 10-year period and account balances are payable as a lump sum or in annual installments, as determined in accordance with the terms of the plan. Each of Messrs. Rivers and Fitzgerald are fully vested due to being retirement eligible under the terms of the SERP, and Mr. Miller is 80% vested. 409A Deferred Compensation Plans. The Company’s 409A Plan allows directors and selected executives to defer compensation under non-qualified deferred compensation plans. Under the 409A Plan, participants could defer up to 75% of base salary and up to 100% of any incentive compensation. The balances under these plans reflect compensation deferred in prior years and are payable as a lump sum or in annual installments, as determined in accordance with the terms of the applicable plan. The table below sets forth the amounts of the contributions, earnings and value of the Company’s nonqualified deferred compensation plans in which our NEOs participated during the year ended December 31, 2023.
Nonqualified Deferred Compensation
| Nonqualified Deferred Compensation | | | | | | | Named Executive Officer | Executive contributions | Employer contributions | Aggregate earnings (1) | Aggregate withdrawals/ distributions | Aggregate balance (2) | | Robert F. Rivers | $— | $— | $1,848,993 | $— | $9,673,570 | | Quincy L. Miller | $— | $— | $338,381 | $— | $1,770,341 | | James B. Fitzgerald | $— | $— | $833,036 | $— | $3,626,575 | | Donald M. Westermann | $— | $— | $21,564 | $— | $116,467 | | Kathleen C. Henry | $— | $— | $— | $— | $— | | Timothy J. Lodge | $— | $— | $— | $— | $— |
Nonqualified Deferred Compensation
| (1) Represents the change in value for employee and Company contributions to the SERP and 409A Plan. As described above, neither of these plans provides for any preferential or above-market earnings on a participant’s account balances. |
Nonqualified Deferred Compensation
| (2) Amount shown is the sum of the value of a NEO’s account balance in the SERP and 409A Plan as of December 31, 2023, as applicable. |
Pension Benefits
Pension Benefits Defined Benefit Pension Plan. The Company provides pension benefits to its employees, including our NEOs, through membership in the Pension Plan. The Pension Plan is a noncontributory, defined benefit plan, and our annual contribution to this plan is based upon standards established by the Pension Protection Act. The Pension Plan is a cash balance format with compensation based on a participant’s earnings reported on IRS Form W-2 for the applicable year. Participants vest in their account balances after three years of eligible service and the plan provides for payment in a lump sum or, if eligible, a life annuity at retirement. All of our NEOs are fully vested in their account balances under the Pension Plan. Benefit Equalization Plan. The Company maintains the BEP, a non-qualified benefit equalization plan to provide a pension supplement to restore pension benefits for employees who were historically ineligible to participate in the SERP and whose compensation exceeds the annual statutory compensation maximum that can be considered under the Pension Plan, and/ or exceeds the annual permitted pension benefit amount under the Internal Revenue Code. The benefit formula for the BEP is the same as provided in the Pension Plan, with an offset for benefits provided by that plan. Benefits are paid in a lump sum in the year following retirement or death. Active participants in the SERP did not receive BEP benefits; Messrs. Rivers, Miller and Fitzgerald first became eligible for the BEP in 2022. The amounts reported in the table below equal the present value of the accumulated pension benefits at the end of fiscal year 2023 for each of our NEOs. The Pension Plan is referred to as the “Defined Benefit Plan” in this table.
Pension Benefits
| Pension Benefits | | | | | | Named Executive Officer | Plan Name | Number of Years of Credited Service | Present Value of Accumulated Benefit as of 12/31/2023 | Payments during last fiscal year | | Robert F. Rivers | Total | | $1,436,174 | $— | | | Defined Benefit Plan | 17.9 | $799,297 | $— | | | BEP | | $636,877 | $— | | Quincy L. Miller | Total | | $426,668 | $— | | | Defined Benefit Plan | 7.8 | $272,927 | $— | | | BEP | | $153,741 | $— | | James B. Fitzgerald | Total | | $1,018,657 | $— | | | Defined Benefit Plan | 11.7 | $700,350 | $— | | | BEP | | $318,307 | $— | | Donald M. Westermann | Total | | $990,220 | $— | | | Defined Benefit Plan | 16.7 | $439,088 | $— | | | BEP | | $551,132 | $— | | Kathleen C. Henry | Total | | $654,026 | $— | | | Defined Benefit Plan | 7.3 | $311,014 | $— | | | BEP | | $343,012 | $— | | Timothy J. Lodge | Total | | $435,882 | $— | | | Defined Benefit Plan | 10.4 | $275,111 | $— | | | BEP | | $160,771 | $— |
Potential Payments upon Termination or Change-in-Control for the Year Ended December 31, 2023
Potential Payments upon Termination or Change-in-Control for the Year Ended December 31, 2023 Executive Severance Agreements. As described above under “Severance Agreements” within the CD&A section of this Proxy Statement, each of Messrs. Rivers and Miller has entered into an executive severance agreement, which provide for certain benefits in the event that either is terminated without cause. Under each of these agreements, “cause” is defined as: • any act of gross misconduct or gross negligence which results in material harm to the Company, whether monetarily or otherwise; • any act of dishonesty, disloyalty or fraud which results in material harm to the Company, whether monetarily or otherwise; • a conviction of, or plea of nolo contendere to, any felony or any crime involving moral turpitude; or • a failure to perform a substantial portion of the duties of his position adequately for a period of more than 30 days after written notice from the Company describing such failure. Under their respective executive severance agreements, each of Messrs. Rivers and Miller, if terminated without cause, will be entitled to the respective lump sum payment described above in the CD&A section, provided that each signs a release of claims against the Company, and which release becomes effective. Neither agreement provide for additional payments in the event of death or disability, other than what each is entitled to under other existing benefit plans, although each is entitled to the benefits described above if terminated for cause. Double-Trigger Change in Control Agreements As described further above under “Double-Trigger Change in Control Agreements” within the CD&A section of this Proxy Statement, each of our NEOs who is a current officer has entered into a double-trigger CiC Agreement. These agreements entitle the NEO to a lump sum payment described above in the event that their employment is terminated while a change in control event (as described below) has occurred and is pending, or within 18 months following a change in control event, and the reason for termination is for other than the NEO’s death, disability or cause (as each of the latter terms are defined in the CiC Agreement), or is due to the NEO’s own resignation for good reason (as defined below). The CiC Agreement utilizes the following definitions: A “change of control” is defined as the consummation of any of the following events: • merger, consolidation or other business combination of the Company or Eastern Bank, after which either (A) our incumbent board of directors constitute less than two-thirds of the surviving board of directors (“Surviving Board”), or (B) less than 60% of the combined voting power of shares entitled to vote in an election of the Surviving Board is owned by persons who were shareholders of the Company prior to the merger, consolidation or other business combination; • the acquisition by any person of 25% or more of our outstanding common stock or voting securities (unless such acquisition is by an entity under our common control); • during any consecutive two year period, the failure of our incumbent directors to constitute a majority of our board of directors, with “incumbent directors” meaning directors who are members of our board of directors on the date of the agreement and members who are subsequently nominated or elected by a majority of the incumbent directors; • the sale or other disposition of all or substantially all of our assets to any person, group or entity; and • any other transaction that our board of directors deems to be a “change in control”. The term “cause” is defined as: • a material act of willful misconduct in connection with the performance of his/her duties, including, without limitation, misappropriation of the Company’s funds or property; • the conviction for, or plea of nolo contendere by the NEO to, any felony or a misdemeanor involving deceit, dishonesty, or fraud; • the commission of any misconduct, whether or not related to the Company or its affiliates, that has caused, or would reasonably be expected to cause, material detriment or damage to the Company’s or its affiliates’ reputation, business operation or relation with its employees, customers, vendors, suppliers or regulators; • continued, willful and deliberate non-performance by duties (other than by reason of the NEO’s physical or mental illness, incapacity or disability) that has continued for more than 30 days following written notice providing the details of such non-performance; • willful failure to cooperate with a bona fide internal investigation or an investigation by regulatory or law enforcement authorities, or the deliberate destruction of or deliberate failure to preserve documents or other materials relevant to such investigation, or the willful inducement of others to fail to cooperate or to fail to produce documents or other materials; or • removal or prohibition from participating in the conduct of the Company’s affairs by order issued under applicable law and regulations by a federal or state banking agency having authority over the Company. The term “good reason” is defined as: • a material diminution of the NEO’s responsibilities, authorities or control from those exercise by the NEO immediately prior to the change in control event; • any material reduction in the NEO’s annual compensation or benefits (other than across-the-board reductions affecting all of the Company’s executive officers); • the relocation of the offices at which the NEO is employed to a location more than 25 miles from such office, or the requirement to be based at a location more than 25 miles from such office; or • any material breach of the CiC Agreement by the Company. Under the CiC Agreements, each of our NEOs will be entitled to the lump sum payment described above in “Double-Trigger Change in Control Agreements” within the CD&A section of this Proxy Statement in the event of a double-trigger change in control event, provided that each signs a separation agreement and release with the Company, which then becomes irrevocable. The CiC Agreement does not provide for additional payments in the event of death or disability, other than what a NEO is entitled to under other existing benefit plans. As described above under “No Tax Gross Ups,” the dollar amount of any severance payment due under the CiC Agreements will be reduced in certain circumstances in order to avoid an excess parachute payment under Section 280G. Set forth below in the table entitled “Potential Payments Upon Termination or Change in Control” is a description of certain post-employment arrangements with our NEOs, including the severance benefits and change-in-control benefits to which they would have been entitled under applicable benefit plans as of December 31, 2023, if a termination of employment and/or a change-in-control had occurred on such date. None of our NEOs were entitled to receive payments if they were terminated for cause as of such date. Lodge Separation Payments Through October 31, 2023, Mr. Lodge was party to a CiC Agreement on substantially the same terms as those applicable to Messrs. Fitzgerald and Westermann and Ms. Henry but that also defined a change in control as “the sale of all or substantially all of the assets of EIG to any person, other than” EBC or the Bank. In connection with the sale of substantially all of the assets of EIG and his separation from EIG, and pursuant to a letter agreement effective October 31, 2023, Mr. Lodge agreed to terminate his CiC Agreement. In exchange, and
Potential Payments upon Termination or Change-in-Control for the Year Ended December 31, 2023
in light of his considerable role in the EIG transaction, Mr. Lodge received a transaction bonus of $2,000,000. Additionally, in connection with and upon his separation from the Company, Mr. Lodge received an accelerated legacy 2019 LTIP cash award of $92,175, paid at the full value that would have matured on December 31, 2023, had he continued in service; a lump-sum cash payment of his 2023 MIP award, paid at the full-year 2023 target level, of $144,200; and the accelerated vesting of 18,976 RSUs that had been granted on March 1, 2022, valued at $208,926 on October 31, 2023, as well as dividends paid in cash valued at $13,283.
Potential Payments upon Termination or Change-in-Control for the Year Ended December 31, 2023
| Potential Payments upon Termination or Change-in-Control | | | | | | Named Executive Officer | Without Cause/For Good Reason (1) | Death/Disability (2) | Retirement (3) | Change in Control (Double Trigger) (4) (5) | | Robert F. Rivers | | | | | | Salary | $1,990,000 | $— | $— | $2,985,000 | | MIP | $895,500 | $895,500 | $895,500 | $896,033 | | RSU | $— | $1,664,496 | $— | $1,664,496 | | PSU - EPS | $— | $— | $— | $757,826 | | PSU - TSR | $— | $— | $— | $1,209,797 | | Medical | $61,010 | $— | $— | $45,758 | | Quincy L. Miller | | | | | | Salary | $1,180,000 | $— | $— | $1,770,000 | | MIP | $354,000 | $354,000 | $354,000 | $354,000 | | RSU | $— | $969,150 | $— | $969,150 | | PSU - EPS | $— | $— | $— | $505,208 | | PSU - TSR | $— | $— | $— | $666,008 | | Medical | $— | $— | $— | $— | | James B. Fitzgerald | | | | | | Salary | $— | $— | $— | $1,180,000 | | MIP | $— | $354,000 | $354,000 | $354,000 | | RSU | $— | $969,150 | $— | $969,150 | | PSU - EPS | $— | $— | $— | $505,208 | | PSU - TSR | $— | $— | $— | $666,008 | | Medical | $— | $— | $— | $31,954 | | Donald M. Westermann | | | | | | Salary | $— | $— | $— | $927,000 | | MIP | $— | $208,575 | $208,575 | $233,100 | | RSU | $— | $623,110 | $— | $623,110 | | PSU - EPS | $— | $— | $— | $336,810 | | PSU - TSR | $— | $— | $— | $421,016 | | Medical | $— | $— | $— | $48,776 | | Kathleen C. Henry | | | | | | Salary | $— | $— | $— | $927,000 | | MIP | $— | $208,575 | $208,575 | $213,433 | | RSU | $— | $623,110 | $— | $623,110 | | PSU - EPS | $— | $— | $— | $336,810 | | PSU - TSR | $— | $— | $— | $421,016 | | Medical | $— | $— | $— | $46,054 |
Potential Payments upon Termination or Change-in-Control for the Year Ended December 31, 2023
| (1) Represents amounts payable under the Executive Severance Agreements for Messrs. Rivers and Miller. Salary amounts represent 200% of a NEO’s base salary rate as of December 31, 2023. The MIP amounts represent a NEO’s target payout under the MIP for 2023. For Mr. Rivers, medical represents the Company’s cost to provide medical and dental coverage for 24 months. Mr. Miller is not enrolled in the Company’s |
Potential Payments upon Termination or Change-in-Control for the Year Ended December 31, 2023
| medical or dental coverage and therefore is not entitled to severance amounts related to medical or dental under the terms of his executive severance agreements. No amount is included for equity compensation, as our equity award agreements generally provide for forfeiture upon termination or resignation except as otherwise set forth in this table, subject to certain Board and C&HCM Committee discretionary authority. |
Potential Payments upon Termination or Change-in-Control for the Year Ended December 31, 2023
| (2) MIP amounts represent an NEO’s target payout under the MIP for 2023, and RSU amounts represent the closing price of Company common stock ($14.20) on December 31, 2023, multiplied by the number of units that would vest as accelerated upon the occurrence of the qualifying event. PSUs would not be eligible for vesting until a determination is made at the end of a three-year performance period as to whether the applicable performance conditions are met and are shown at target for purposes of this table. A valuation of the PSUs at threshold performance levels for each NEO other than Mr. Lodge as of December 31, 2023, is provided in the “Outstanding Equity Awards at 2023 Fiscal Year End” table. |
Potential Payments upon Termination or Change-in-Control for the Year Ended December 31, 2023
| (3) Amounts represent an NEO’s target payout under the MIP for 2023. |
Potential Payments upon Termination or Change-in-Control for the Year Ended December 31, 2023
| (4) All NEOs who are current officers are covered by CiC Agreements. For Messrs. Rivers and Miller, salary amounts are 300% of the base salary rate at December 31, 2023, and for Messrs. Fitzgerald and Westermann and Ms. Henry, salary amounts are 200% of the base salary rate at December 31, 2023. For Messrs. Rivers and Westermann and Ms. Henry, the MIP amount is equal to the average of the MIP payouts for the preceding three (3) years (2020, 2021 and 2022), which amounts are greater than the 2023 target annual bonus. For Messrs. Miller and Fitzgerald, the MIP amount is equal to the 2023 MIP target amount, which is greater than the average of the preceding three (3) years bonus payments. Medical payment amounts for Messrs. Rivers, Fitzgerald, and Westermann and Ms. Henry represent the cost of providing 18 months of medical and dental coverage. Mr. Miller is not enrolled in the Company’s medical or dental coverage and therefore is not entitled to severance amounts related to these items. RSU and PSU amounts represent the closing price of Company common stock ($14.20) on December 31, 2023, multiplied by the number of units that would accelerate upon the occurrence of a qualifying termination following a change in control. |
Potential Payments upon Termination or Change-in-Control for the Year Ended December 31, 2023
| (5) Mr. Lodge is not represented in the above table due to the fact he was not employed by nor providing services for the Company on December 31, 2023. |
Potential Payments upon Termination or Change-in-Control for the Year Ended December 31, 2023
In addition to the amounts set forth in the table above, each of our NEOs would also receive the vested value of their accounts in the plans included in the Nonqualified Deferred Compensation and Pension Benefits tables above, which may include the SERP, the 409A Plan, the Pension Plan and the BEP.
CEO Pay Ratio
CEO Pay Ratio The following information is provided in accordance with Item 402(u) of Regulation S-K of the Securities Act of 1933, as amended. The pay ratio is an estimate of our median employee’s total compensation to that of our CEO, Mr. Rivers, for 2023, as disclosed in the Summary Compensation Table. To determine our median employee for 2023, we used our employee population as of October 1, 2023, excluding the CEO. The date of October 1st was selected to represent our employee population for the majority of 2023, which included our Eastern Insurance colleagues. As of October 1, 2023, Eastern’s employee population, consisting of all full-time, part-time and seasonal employees, was 2,138 individuals. The median of all base salaries (excluding the CEO) was reviewed to determine our median base salary as the consistently applied compensation measure. With the median employee identified, this individual’s 2023 total compensation was determined following the same measures used to determine Mr. Rivers’ total compensation in the Summary Compensation Table. These factors include base salary, incentive(s), change in pension value and all other compensation. • 2023 total annual compensation for the median employee was $88,972 • 2023 total annual compensation for Mr. Rivers, the CEO, was $4,915,097 • The result is a median employee to CEO pay ratio of 1:55.2 SEC guidelines for determining the median employee provide discretion to companies in adopting a variety of compensation measure(s) to apply to the analysis. We believe the pay ratio reported above is a reasonable estimate based on our records, but it may not be readily comparable to other companies due to factors such as location, compensation practices, exclusions, estimates or assumptions that other companies may apply.
Pay Versus Performance
Pay Versus Performance In accordance with rules adopted by the SEC, we provide the following disclosure regarding executive “Compensation Actually Paid” or “CAP” (as calculated in accordance with SEC rules) and certain Company performance for the fiscal years listed below. Please refer to the “Compensation Discussion and Analysis” section of this Proxy Statement for a more complete description of how executive compensation relates to Company performance and how the C&HCM Committee makes its decisions.
Pay Versus Performance
| | | | | | Value of Initial Fixed $100 Investment Based on: | | | | Year# | SCT Total for PEO | “Compensation Actually Paid” to PEO (1) | Average SCT Total for Non-PEO NEOs (2) | Average “Compensation Actually Paid” to Non-PEO NEOs (1) (2) | Company TSR (3) | Peer Group TSR (4) | Net Income (thousands $) (5) | | 2023 | $4,915,097 | $3,898,615 | $1,999,339 | $1,648,743 | $124.94 | $170.78 | $232,177 | | 2022 | $6,743,680 | $5,859,893 | $3,437,369 | $2,918,229 | $147.04 | $171.46 | $199,759 | | 2021 | $4,208,543 | $4,189,967 | $2,380,559 | $2,321,245 | $168.53 | $184.23 | $154,665 | | 2020 | $3,673,300 | $3,411,841 | $2,008,597 | $1,908,292 | $134.24 | $134.82 | $22,738 |
Pay Versus Performance
| (1) Compensation Actually Paid to the Primary Executive Officer (“PEO”) and Non-PEO NEOs reflects the totals from our Summary Compensation Table with the following adjustments: |
Pay Versus Performance
| • | For each of the Pension Plan and BEP, the change in the actuarial present value was replaced with each plan’s service cost. |
Pay Versus Performance
| • | For equity incentive awards, the grant date fair values computed in accordance with FASB ASC Topic 718 were replaced with year-end fair values as of December 31 as follows: |
Pay Versus Performance
2023
Pay Versus Performance
| ○ | RSUs were valued based on the closing price of a share of Company common stock on December 31, 2023 ($14.20) instead of the March 1, 2023 grant date value ($15.63), multiplied by the number of RSUs outstanding. |
Pay Versus Performance
| ○ | PSUs based on TSR performance were valued based on the probable outcome of performance conditions using a Monte Carlo simulation model, which priced Company common stock at $7.97 per share as of December 31, 2023 (instead of the actual December 31, 2023 closing price of a share of Company common stock at $14.20), multiplied by the number of PSUs outstanding at target award levels. |
Pay Versus Performance
2022
Pay Versus Performance
| ○ | RSUs were valued based on the closing price of a share of Company common stock on December 31, 2022 ($17.25) instead of the March 1, 2022 grant date value ($21.08), multiplied by the number of RSUs outstanding. |
Pay Versus Performance
| ○ | PSUs based on EPS performance were valued based on the closing price of a share of Company common stock on December 31, 2022 ($17.25), instead of on the March 1, 2022 grant date value ($21.08), multiplied by the number of PSUs outstanding at target award levels. |
Pay Versus Performance
| ○ | PSUs based on TSR performance were valued based on the probable outcome of performance conditions using a Monte Carlo simulation model, which priced Company common stock at $12.26 per share as of December 31, 2022 (instead of the actual December 31, 2022 closing price of a share of Company common stock at $17.25), multiplied by the number of PSUs outstanding at target award levels. |
Pay Versus Performance
| • | No equity awards were granted to our PEO or Non-PEO NEOs prior to 2022, and no equity awards were forfeited or both granted and vested in 2022. Thus, no adjustments were made for these items. |
Pay Versus Performance
| • | Reconciliation for the variance between Summary Compensation Table data for the PEO and Non-PEO NEOs is included below this section in the ‘Adjustments from Summary Compensation Table’ for both the PEO and the Non-PEO NEOs respectively. |
Pay Versus Performance
| (2) Our Non-PEO NEOs included for each year are as follows: |
Pay Versus Performance
| • | For 2023, our “Non-PEO NEOs” include our current NEOs, Messrs. Q. Miller, Fitzgerald, Westermann, and Lodge and Ms. Henry. |
Pay Versus Performance
| • | For 2022, our “Non-PEO NEOs” included NEOs, Messrs. Q. Miller, Fitzgerald and Westermann, and Ms. Henry. |
Pay Versus Performance
| • | For 2021, our “Non-PEO NEOs” included Messrs. Q. Miller and Fitzgerald, as well as Jan A. Miller, our former Vice Chair and Chief Commercial Banking Officer, and John F. Koegel, the former President and CEO of Eastern Insurance Group LLC. |
Pay Versus Performance
| • | For 2020, our “Non-PEO NEOs” were Messrs. Q. Miller and Fitzgerald. |
Pay Versus Performance
| (3) Company TSR reflects the value of a $100 investment made on October 15, 2020, the date the Company became a publicly listed company, through and including the end of the fiscal year for which our cumulative total shareholder return is provided. |
Pay Versus Performance
| (4) Peer Group TSR reflects the value of a $100 investment in the KRX beginning on October 15, 2020, through and including the end of the fiscal year for which our cumulative total shareholder return is provided. |
Pay Versus Performance
| (5) Under SEC rules, companies are required to provide data with respect to a “Company Selected Measure” which represents the most important financial measure that links CAP to company performance, and which is not otherwise required to be disclosed in this table. However, we do not have another financial measure that materially links CAP to company performance and, as such, we have omitted this column. |
Analysis of the Information Presented in the Pay versus Performance Table
Analysis of the Information Presented in the Pay versus Performance Table In accordance with Item 401(v) of Regulation S-K, the Company is providing the following graphical descriptions of the relationships between information presented in the Pay versus Performance table.
Compensation Actually Paid vs. Net Income
Compensation Actually Paid vs. Net Income
Compensation Actually Paid vs. Total Sha
Compensation Actually Paid vs. Total Sha
DIRECTOR COMPENSATION
DIRECTOR COMPENSATION Through December 31, 2023, each of our directors (other than the Chair of the Board) was entitled to an annual Board of Directors retainer of $55,000, an annual grant of restricted stock with a value approximately equal to $55,000, and annual committee member fees ranging from $5,000 to $10,000. The Audit, Compensation and Human Capital Management, Nominating and Governance and Risk Management committees are joint committees of the Board of Directors and the Board of Directors of Eastern Bank (“Bank Board”). Directors also receive fees for their service on committees of the Bank Board, including its trust and innovation committees, and the board of trustees of the Foundation. Chairs of certain committees also receive additional committee chair retainers ranging from $10,000 to $20,000, and the Lead Director receives an annual retainer of $40,000. In addition, directors receive per-meeting fees for attending various special or additional meetings, including those of Eastern Bank’s board of advisors, board of ambassadors, and an investment advisory committee. Directors who are also employees do not receive compensation for their service as directors. Set forth below is a summary of the compensation received by each of our non-employee directors for the year ended December 31, 2023.
DIRECTOR COMPENSATION
| Name | Fees Earned ($)(1) | Stock Awards ($)(2) | All Other Compensation ($)(3) | Total ($)(4) | | Richard C. Bane | $143,000 | $54,993 | $11,334 | $209,327 | | Luis Borgen | $102,000 | $54,993 | $11,834 | $168,827 | | Joseph T. Chung | $123,750 | $54,993 | $11,834 | $190,577 | | Paul M. Connolly | $127,750 | $54,993 | $10,834 | $193,577 | | Bari A. Harlam | $110,750 | $54,993 | $10,834 | $176,577 | | Marisa J. Harney(5) | $10,000 | $— | $250 | $10,250 | | Diane S. Hessan | $104,000 | $54,993 | $11,834 | $170,827 | | Richard E. Holbrook | $97,250 | $54,993 | $11,834 | $164,077 | | Deborah C. Jackson | $150,500 | $54,993 | $11,834 | $217,327 | | Peter K. Markell | $138,250 | $54,993 | $10,834 | $204,077 | | Paul D. Spiess | $121,750 | $54,993 | $11,834 | $188,577 | | Linda M. Williams(5) | $10,000 | $— | $— | $10,000 |
DIRECTOR COMPENSATION
| (1) Represents total fees earned in 2023, including fees deferred pursuant to the 409A Plan. |
DIRECTOR COMPENSATION
| (2) Represents the aggregate grant date fair value of restricted stock awards computed in accordance with FASB ASC Topic 718, which was equal to the closing price of a share of Company common stock on the date of grant, May 15, 2023, multiplied by the number of shares underlying the award. |
DIRECTOR COMPENSATION
| (3) For directors other than Mses. Harney and Williams, represents accrued dividends paid upon the vesting of a portion of 2021 restricted stock awards that had been granted on November 30, 2021, and the vesting of restricted stock awards that had been granted on May 17, 2022. Dividends paid for 2023 represent $10,834 for each such director. Amounts also include matching contributions to charitable institutions in the name of the director pursuant to a matching charitable gift program offered through the Foundation. Matching contributions are $1,000 for each Messrs. Borgen, Chung, Holbrook, Spiess and Mses. Jackson and Hessan; $500 for Mr. Bane and $250 for Ms. Harney. Non-employee directors may participate in this program in connection with their service as directors; matching gifts are capped at $1,000 per director per year. |
DIRECTOR COMPENSATION
| (4) Our directors’ total compensation in this table does not include earnings on the 409A Plan, a nonqualified defined contribution plan in which Mr. Connolly and Ms. Harlam participate, because the participants do not receive any preferential or above-market earnings under such plan. Under the terms of the 409A Plan, the increase in the value of the benefit provided in the 409A Plan increases (or decreases) based upon changes in one or more generally available investment benchmarks or strategies chosen by the respective participant. |
DIRECTOR COMPENSATION
| (5) Mses. Harney and Williams joined our Board of Directors in October 2023 and received fees in 2023 in connection with meeting attendance. |
DIRECTOR COMPENSATION
Director Stock Ownership Guidelines. The Company’s Board of Directors believes that the Company’s directors, including the CEO, should hold meaningful equity ownership positions in the Company, in part to align directors’ interests with those of the Company’s shareholders. Accordingly, the Board of Directors has adopted the stock ownership guidelines set forth below. Each director is expected to achieve the applicable stock ownership threshold within five years of either the date of initial implementation of the stock ownership guidelines (June 2020) or the date the director is first elected to the Board of Directors, whichever is later:
DIRECTOR COMPENSATION
| • | Non-employee directors shall hold five times the value of their cash retainers in shares of the Company’s stock; |
DIRECTOR COMPENSATION
| • | The CEO shall hold five times the value of his or her annual base salary in shares of the Company’s stock; and |
DIRECTOR COMPENSATION
| • | Any director who serves as an executive officer, other than the CEO, will be required to hold multiples of the value of his or her base salary in shares of the Company’s stock, depending on the position (and as set forth in the management stock ownership guidelines) and as established by the C&HCM Committee. |
DIRECTOR COMPENSATION
There is a one year holding period for 50% of a director’s vested shares until the applicable minimum holding requirement described above has been met. Holdings that satisfy a director’s stock ownership requirements include all outstanding shares held and all restricted stock awarded to a director. Unvested awards of performance stock units, stock options, warrants or other rights not listed above exercisable for or convertible into shares of common stock will not count towards satisfying the ownership requirement unless and until shares under such awards are actually issued to a director. Compliance with stock ownership guidelines is evaluated annually. A director is not required to purchase additional shares to satisfy the ownership requirement in the event of a decline in the Company’s stock price, but the director is generally prohibited from selling or transferring shares until the minimum ownership requirement has been achieved, except as otherwise determined by the C&HCM Committee. As of January 1, 2024, all of our non-employee directors met or were on track to meet our stock ownership guidelines within the required time period.