DEF 14A 1 nc10020096x1_def14a.htm DEF 14A

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

 

WASHINGTON, D.C. 20549

SCHEDULE 14A

 

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17901 Von Karman Avenue, Suite 1200

Irvine, California 92614

949-864-8000

 

Notice of 2021 Annual Meeting of Stockholders

 

Fellow Stockholders:

We are pleased to invite you to attend the 2021 Annual Meeting of Stockholders of Pacific Premier Bancorp, Inc., or the Company. This year’s Annual Meeting will be held on Monday, May 17, 2021, at 9:00 a.m., Pacific Time, at the Company’s offices located at 17901 Von Karman Avenue, Suite 1200, Irvine, California.

The stockholders will consider and act upon the following matter at this year’s Annual Meeting:

1.

To elect ten (10) directors, each for a one-year term, or until their successors are elected and qualified;

 
 
2.
To approve, on a non-binding advisory basis, the compensation of the Company’s named executive officers;
 
 
3.
To ratify the appointment of Crowe LLP as the Company’s independent auditor for the fiscal year ending December 31, 2021;
 
 
4.
To transact such other matters as may properly come before the meeting and at any postponement or adjournment thereof. Management is not aware of any other such business.


Your vote is very important. We encourage you to vote via the Internet, telephone or, if you received printed copies, sign and return your proxy card prior to the Annual Meeting, so that your shares of common stock will be represented and voted at the Annual Meeting regardless of whether you attend.

Accessing the Annual Meeting. Because of the protocols that federal, state, and local governments have imposed due to the COVID-19 pandemic, and recommended safety procedures provided by the Centers for Disease Control and Prevention, we are limiting in-person attendance at the Annual Meeting. You must notify us if you desire to attend the Annual Meeting in person. We also are providing stockholders who are not able to attend the Annual Meeting but who otherwise would like to listen to the Annual Meeting the option to access the meeting via telephone. The enclosed proxy statement has more information on how to notify us should you intend to attend the Annual Meeting in person and how to access the Annual Meeting via telephone.

The Board of Directors has fixed March 23, 2021 as the record date for determination of stockholders entitled to receive notice of and to vote at the Annual Meeting and any postponement or adjournment thereof. Only those stockholders of record as of the close of business on that date will be entitled to vote at the Annual Meeting or at any such adjournment.

By Order of the Board of Directors,

 

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Steven R. Gardner

Chairman, President and Chief Executive Officer

Irvine,  California

April 7, 2021

 

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TABLE OF CONTENTS 

 

PROXY STATEMENT SUMMARY

1

   

General Information

1

   

Matters to be Voted Upon

1

   

Important Notice Regarding Access to the Annual Meeting via Telephone

1

   

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting

1

   

2020 Performance Highlights

2

   

Overview of Voting Matters

3

   

Director Nominees

4

   

Executive Compensation Highlights

5

   

Our Compensation Philosophy

6

   

Independent Auditor Matters

6

   

Important Dates for 2022 Annual Meeting

6

   

PROPOSAL NO. 1—ELECTION OF DIRECTORS

7

   

Biographies of Nominated Directors

9

   

Executive Officers Who Are Not Serving As Directors

16

   

Corporate Governance and Board Matters

23

   

Human Capital Resource Management

27

   

Environmental, Social and Governance

28

   

Principal Holders of Common Stock

29

   

Security Ownership of Directors and Executive Officers

30

   

Compensation of Non-Employee Directors

31

   

Certain Relationships and Related Transactions

33

 

 

 

PROPOSAL NO. 2—ADVISORY APPROVAL OF OUR EXECUTIVE COMPENSATION

 34

   

Executive Compensation Discussion & Analysis

35

   

Executive Compensation Philosophy

37

   

Pay for Performance and Pay at Risk

39

   

How Executive Compensation Decisions are Made

40

   

Stockholder Outreach and “Say-on-Pay”

42

   

Elements of Executive Compensation Program

43

   

Executive Compensation Policies

51

   

CEO Pay Ratio Disclosure

52

   

Compensation Committee Report

53

   

Summary Compensation Table

54

   

Grants of Plan-Based Awards in 2020

55

   

Outstanding Equity Awards

56

   

Exercised Options and Restricted Stock Vested in 2020

57

   

Nonqualified Deferred Compensation

57

   

Employment Agreements, Salary Continuation Plans, Severance, and Change-in-Control Payments

58

   

Summary of Potential Termination Payments

60

   
PROPOSAL NO. 3—RATIFICATION OF THE APPOINTMENT OF CROWE LLP AS THE COMPANY’S INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING DECEMBER 31, 2021

62

   

Meeting and Other Information

65

   

Stockholder Proposals or Nominations

67

   

Company Documents and Other Matters

68

   

GAAP Reconciliations

69


 

 

 

PROXY STATEMENT SUMMARY

 

This summary highlights information contained elsewhere in the proxy statement of Pacific Premier Bancorp, Inc., which we refer to as the Company. This summary provides an overview and is not intended to contain all the information that you should consider before voting. We encourage you to read the entire Proxy Statement for more detailed information on each topic prior to casting your vote.

 

 

GENERAL INFORMATION

 

Meeting:

Annual Meeting of Stockholders

Date:

Monday, May 17, 2021

Time:

9:00 a.m., Pacific Time

Location:

17901 Von Karman Avenue, Suite 1200, Irvine, California 92614

Record Date:

Close of Business on March 23, 2021

Stock Symbol:

PPBI

Exchange:

NASDAQ Global Select

Common Stock Outstanding as of the Record Date:

94,684,272

How to Vote Your Shares:

Online

 www.proxyvote.com

 

By Phone  

 Call the number at the top of your proxy card

 

By Mail      

 Complete, sign, date and return your proxy card in the envelope provided

 

 

 

MATTERS TO BE VOTED UPON:

 

 

Board Recommendation

Proposal 1 Election of Directors

FOR each director nominee

Ø Page 7

Proposal 2 Advisory resolution to approve, on a non-binding basis, the compensation of the Company’s named executive officers as disclosed in the accompanying proxy statement

FOR

Ø Page 34

Proposal 3 Ratification of the Appointment of Crowe LLP as our independent registered public accounting firm for the year ending December 31, 2021.

FOR

Ø Page 62

 

IMPORTANT NOTICE REGARDING ACCESS TO THE ANNUAL MEETING VIA TELEPHONE

Because of the ongoing COVID-19 pandemic, we are providing stockholders an opportunity to listen to the Annual Meeting via telephone. You can access this option by dialing 866-290-5777 immediately prior to the start time for the Annual Meeting and asking to be joined into the Pacific Premier Bancorp, Inc. call.

Stockholders accessing the meeting via telephone will not be able to vote their shares of common stock via telephone during the Annual Meeting. As a result, if you plan to listen to the Annual Meeting via telephone, it is important that you vote your proxy prior to the Annual Meeting. For details on how to vote your proxy, please refer to Meeting and Other Information How to Vote on page 66 of this Proxy Statement.

 

 

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING

 

 

Our Notice of Meeting and Proxy Statement, the 2020 Annual Report to Stockholders and our Annual Report on Form 10-K for the year ended December 31, 2020, are available on the Internet at www.proxyvote.com and from our corporate website at www.ppbi.com under the “Investors” section. Information on this website, other than the Proxy Statement, is not a part of the enclosed Proxy Statement.

 

1 

2020 PERFORMANCE HIGHLIGHTS

The following 2020 Performance Highlights are qualified by reference to our Annual Report on Form 10-K for the year ended December 31, 2020, which we refer to as our 2020 Annual Report. For more complete information regarding our 2020 performance, please review our 2020 Annual Report.

 

Our Organization’s Acquisition History has Created Greater Stockholder Value

We have a long history of strategic growth through accretive acquisitions. In June 2020, we completed the 11th and largest acquisition in our organization’s history when we acquired Opus Bank or Opus. On the date of acquisition, Opus added approximately $8.32 billion in assets, $5.94 billion in loans, and $6.91 billion in deposits to our balance sheet. Within approximately four months after closing the acquisition, we completed the system conversion, branch consolidations, and staffing adjustments that allowed us to quickly begin realizing the synergies from this transaction. The Opus acquisition was transformative to our business, creating what we believe is a premier commercial bank in the Western United States.

The tables below reflect our growth since 2013 and the impact that growth has had on our tangible book value per share, total revenue and efficiency ratio, all of which impact our long-term stockholder value.

 

 

 

(1)

Please refer to the “GAAP Reconciliations” included at Annex A to this Proxy Statement with respect to our presentation of tangible book value per share and efficiency ratio.

 

We Produced Results for Our Stockholders in 2020

 

$313.5 million

Pre-Provision Net Revenue*

+58.47%

PPBI 5-yr TSR

80th Percentile

KBW Regional Bank Index**

$1.95

Adjusted EPS*

0.93%

Adjusted ROAA*

11.00%

Adjusted ROATCE*

$79.9 million

Dividends Paid to Stockholders

 

*

As discussed in detail below, as a result of our acquisition of Opus in 2020 and in order to reflect an “apples-to-apples” comparison with our peers, the indicated metrics have been adjusted to eliminate the impact of merger-related costs associated with the Opus acquisition and the non-cash provision for credit losses triggered by the Opus acquisition and required by the recently- effective Current Expected Credit Loss, or CECL, framework. Please refer to the “GAAP Reconciliations” included in Annex A to this proxy statement. Pre-provision net revenue is calculated as the sum of net interest income before provision for credit losses and total noninterest income less noninterest expense, exclusive of merger-related costs.

**

Total shareholder return (TSR) assumes dividends paid during the performance period are reinvested. Percentile ranking is relative to the total shareholder return of the KBW Regional Bank Index members over the same period.

2 

 

WE WERE THERE FOR OUR STAKEHOLDERS THROUGHOUT THE COVID-19 PANDEMIC

Throughout the pandemic, our management team consistently found ways to deliver for our clients, our communities and our employees.

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OVERVIEW OF VOTING MATTERS

The vote required for each proposal presented at the Annual Meeting and the effect of uninstructed shares and abstentions on each proposal is as follows:

 

 

 

Proposal

Vote Required

Broker Non-Votes Allowed

 

 

Abstentions

 

 You May Vote

Proposal 1 Election of Directors

Majority of Votes Cast*

No

No Effect

FOR, AGAINST or ABSTAIN

Proposal 2 Advisory Vote on Approval of Named Executive Officer Compensation

Majority of Votes Cast

No

No Effect

FOR, AGAINST or ABSTAIN

Proposal 3 Ratification of Independent Auditors

Majority of Votes Cast

Yes

No Effect

FOR, AGAINST or ABSTAIN

  

*

Voting standard for uncontested director elections.

3 

DIRECTOR NOMINEES

Additional details about each of the director nominees can be found beginning on page 9.

 


Name

Age

Director Since

Independent

2020 Committee Memberships

Ayad A. Fargo

60

2016

Audit, Enterprise Risk

Steven R. Gardner, Chair, CEO & President

60

2000

 

N/A

Joseph L. Garrett

72

2012

Compensation, Enterprise Risk

Jeffrey C. Jones, Lead Independent Director

 66

2006

Audit, Compensation, Nominating/Governance

M. Christian Mitchell

65

2018

Audit*, Enterprise Risk, Nominating/Governance

Barbara S. Polsky

66

2019

Compensation*, Nominating/Governance

Zareh H. Sarrafian

57

2016

Audit, Nominating/Governance*

Jaynie Miller Studenmund

66

2019

Compensation, Enterprise Risk*

Cora M. Tellez

71

2015

Compensation

Richard C. Thomas

72

2020

Audit, Nominating/Governance

 

*

Indicates Committee Chairperson

 

Board of Director and Governance Highlights

 

Board Independence

 

Board Practices

 

Board Accountability

 

Stockholder Alignment

 

 

 

 

 

 

 

Lead Independent Director to enhance robust independent oversight

All directors are independent except for CEO

100% independent Board committees, with female Chairs leading 50% of Board committees

Independent directors conduct regular executive sessions led by the Lead Independent Director

Board and committee ability to hire outside advisors, independent of management

 

Annual Board and committee assessments

Risk oversight and strategic planning by full Board and committees

Outside public board service limited to three additional boards

Board has direct access to all of our senior executive officers

Independent directors evaluate CEO performance and approve CEO compensation

 

Annual election of all directors

Majority vote for uncontested elections

Stockholders have the ability to call a special meeting with 10% support

Stockholder engagement program with feedback incorporated into Board deliberations

 

Robust stock ownership guidelines for all Directors and Named Executive Officers

Clawback policy for both cash and equity incentives

Maintain restrictions on hedging and pledging shares of our stock

Double-trigger vesting for all severance

 

4 

 Diverse Mix of Board Skills, Qualifications and Attributes*

 

Diverse Mix of Board Skills, Qualifications and Attributes*

 

Fargo

Gardner

Garrett

Jones

Mitchell

Polsky

Sarrafian

Studenmund

Tellez

Thomas

Banking/Financial Services Expertise

 

X

X

X

X

X

X

X

X

X

Audit Committee Financial Expert

Qualifications

 

X

 

X

X

 

X

X

X

X

Enterprise Risk Management

 

X

 

X

X

X

X

X

X

X

Public Company Governance

X

X

X

X

X

X

X

X

X

X

Leadership

X

X

X

X

X

X

X

X

X

X

Finance/Accounting

X

X

X

X

X

X

X

X

X

X

Government and Public Affairs 

 

 

X

 

X

X

 

 

 

 

Human Capital Resource Management

 

X

 

 

 

 

X

X

X

 

  

*

If a director is not included for a particular item, it does not mean that the director does not possess that experience, qualification, skill, or attribute. We look to each director to be knowledgeable in these areas; however, we’ve only assigned directors to each item when that item is a particular skill, qualification, or attribute that the director brings to the Board.

 

EXECUTIVE COMPENSATION HIGHLIGHTS

The Compensation Discussion and Analysis beginning on page 35 gives a more detailed description of the Corporation’s compensation policies which include the following highlights:

 

WHAT WE DO:

 

WHAT WE DON’T DO:

 

 

 

 

 

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Align short-term and long-term incentive plan targets with business goals and stockholder interests

 

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Provide Section 280G gross-up payments

 

 

 

 

 

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Conduct annual say-on-pay advisory vote

 

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Reward executives for taking excessive, inappropriate or unnecessary risk

 

 

 

 

 

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Conduct stockholder outreach to solicit feedback and discuss our compensation practices

 

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Allow the repricing or backdating of equity awards

 

 

 

 

 

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Retain an independent compensation consultant to advise our Compensation Committee

 

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Provide multi-year guaranteed salary increases or non- performance bonus arrangements

 

 

 

 

 

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Use performance metrics that compare our performance to an external benchmark

 

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Rely exclusively on total stockholder return as our only performance metric

 

 

 

 

 

image 

Maintain an insider trading policy

 

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Award incentives for below-threshold performance

 

 

 

 

 

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Maintain a “clawback” policy that applies to NEOs and other senior executives

 

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Pay dividends on unearned or unvested performance-based equity awards

 

 

 

 

 

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Maintain a robust stock ownership policy for executive officers

 

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Permit hedging and pledging of our stock by executives

 

 

 

 

 

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Re-evaluate and update the composition of our peer group regularly, particularly in light of our recent significant growth

 

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Have single trigger vesting on our equity and equity-based awards

 

 

 

 

 

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Limit vesting of performance-based RSUs in the event the results of a performance metric are negative

 

 

 

 

 

 

 

 

 

5 

OUR COMPENSATION PHILOSOPHY

Our Compensation Committee has established three key principles that provide the framework for our executive compensation program:

 

Alignment with Stockholder Interests

Executive compensation is tied to financial performance and achievement of strategic goals

Stock ownership requirements

Disincentives for excessive risk-taking

 

 

Pay for Performance

Focus on both short-term and long-term performance

Compensation is tied to financial metrics that further our strategic plan

Performance is evaluated based on stockholder value, profitability and risk management

 

 

Attract and Retain Key Executives

Peer group benchmarking ensures pay is competitive in the market.

Executives must remain with the Company to earn incentive compensation.

 

INDEPENDENT AUDITOR MATTERS

As a matter of good corporate practice, we are seeking your ratification of Crowe LLP as our independent registered public accounting firm for the 2021 fiscal year. If our stockholders do not ratify the selection of Crowe LLP, the Audit Committee may reconsider its selection.

For 2020, the total fees for services provided by Crowe LLP were $2,512,400, of which 99.5% represented audit and audit-related fees.

 

IMPORTANT DATES FOR 2022 ANNUAL MEETING

Stockholder proposals for inclusion in our 2022 proxy statement pursuant to SEC Rule 14a-8 must be received by us by December 8, 2021. Notice of stockholder proposals for the 2022 annual meeting outside of SEC Rule 14a-8 must be received by us no earlier than January 17, 2022 and no later than February 16, 2022.

6 

PROPOSAL NO.1—ELECTION OF DIRECTORS

 

Our Board of Directors Recommends a Vote “FOR” All Nominees.

 

Our Directors

 

We are pleased to propose ten (10) director nominees for election this year. We believe that our director nominees, individually and together as a whole, possess the requisite skills, experience and qualifications necessary to maintain an effective Board to serve the best interests of the Company and its stockholders. All nominees are incumbent directors and are deemed independent, except for our CEO.

 

Selecting and Nominating Director Candidates

 

Our Nominating and Governance Committee is responsible for selecting and nominating director candidates and for carrying out the Board’s commitment to maintaining a balanced and diverse composition of members. The Committee identifies candidates for membership on the Board and recommends such candidates’ nomination to the Board based on their ability to diversify and complement the Board’s existing strengths.

 

Our stockholders may propose director candidates for consideration by the Nominating and Governance Committee by submitting the individual’s name and qualifications to our Corporate Secretary at 17901 Von Karman Avenue, Suite 1200, Irvine, CA 92614 in accordance with, and with such other information as may be required by, our Bylaws. Our Nominating and Governance Committee will consider all director candidates properly submitted by our stockholders in accordance with our Bylaws and Corporate Governance Policy.

 

Board Diversity

 

We embrace diverse perspectives. We believe different points of view brought through diverse representation lead to better business performance, decision making, and understanding of the needs of our diverse clients, employees, stockholders, business partners and other stakeholders. This applies equally to our Board.

 

Our Board believes that its members must reflect a balanced mix of skills, experience, backgrounds and attributes applicable to our business, strategy and stakeholder interests. Our Board takes a multi-dimensional approach to diversity and considers a variety of skills and attributes such as:

 

 

 Ø

Industry experience, particularly in banking and our client industries;

 

 Ø

Functional, technical or other professional expertise; and

 

 Ø

Gender, age and racial/ethnic diversity.

  

Director Qualifications

 

In light of our business, the primary areas of experience, qualifications and attributes typically sought by the Nominating and Governance Committee in director candidates include, but are not limited to, the following primary areas:

 

 

 Ø

Banking/Financial Services Expertise: Experience with the commercial banking or financial services industry, to help support and grow our core business.

 

 Ø

Audit Committee Financial Expert Qualifications: Experience in accounting, financial reporting or audit processes, to oversee our financial position and reporting.

 

 Ø

Enterprise Risk Management: Knowledge of or experience with key risk oversight or risk management functions, including data privacy and cybersecurity, to help oversee the dynamic risks we face.

 

 Ø

Public Company Governance: Experience in public company governance, including corporate governance best practices and policies and managing relations with key stakeholders.

 

 Ø

Finance/Accounting: Experience in financial management and capital allocation to oversee our financial position and to assess our strategic objectives from a financial perspective.

 

 Ø

Leadership: Experience holding significant leadership positions, particularly as a CEO or head of a significant business line, to help us drive business strategy, growth and performance.

 

 Ø

Government and Public Affairs: Knowledge of or experience in regulated industries or governmental organizations to oversee our highly regulated business that is affected by regulatory and governmental actions.

 

 Ø

Human Capital Resource Management: Knowledge of or experience with human capital resource management strategies and oversight.

 

7 

 

Additionally, the Nominating and Governance Committee may consider other areas relevant to the Company’s strategic growth and business needs, as it determines necessary, including the important attributes, such as: strong strategic, critical and innovative thinking; sound business judgment; high ethical standards; collegial spirit; ability to debate and challenge constructively; and availability and commitment to serve.

 

Voting for Director Nominees

 

Majority Vote Standard. Because the election of directors to occur at the Annual Meeting is not contested, the vote required for the election of each of the ten (10) director nominees by the stockholders is the affirmative vote of a majority of the votes cast in favor of or against the election of such director nominee. If the election of directors were a contested election, which it is not, director nominees would be elected by a plurality of the votes cast at a meeting of stockholders by the holders of shares entitled to vote in the election. There is no cumulative voting for our directors.

 

Voting of Proxies. Unless instructions to the contrary are specified in a proxy properly voted and returned through available channels, the proxies will be voted FOR each of the nominees listed below. If you indicate “abstain” for a particular nominee on your proxy card, your vote will not be considered in determining whether a nominee has received the affirmative vote of a majority of the votes cast in an uncontested election or a plurality of the votes cast in a contested election. The election of directors is considered a “non-routine” item upon which brokerage firms may not vote in their discretion on behalf of their clients if such clients have not furnished voting instructions. Therefore, broker “non-votes” will not be considered in determining whether a nominee has received the affirmative vote of a majority of the shares in an uncontested election or a plurality of the shares in a contested election.

 

8 

 

BIOGRAPHIES OF NOMINATED DIRECTORS

 

The biographies of each of our director nominees are set forth below. Each of our director nominees also serves as a director of Pacific Premier Bank.

 

  Steven R. Gardner

 

 

image

 

Age: 60

 

Director Since: 2000

 

Chairman, President and CEO of

Pacific Premier Bancorp, Inc.

 

Chairman and CEO of Pacific

Premier Bank

 

Biography:

Mr. Gardner has served as President, Chief Executive Officer and a director of the Company since 2000. Mr. Gardner has served as the Chief Executive Officer and a director of the Bank since 2000, and also served as the Bank’s President from 2000 until 2016. Mr. Gardner became Chair of the Board of the Company and the Bank in May 2016. Mr. Gardner has more than 30 years of experience as a commercial banking executive. He has extensive knowledge of all facets of financial institution management. Having completed 12 acquisitions of whole banks, specialty finance lines of business and FDIC failed banks, Mr. Gardner is an expert in all areas of mergers and acquisitions as well as capital market transactions.

Prior to joining the Company, he was an executive officer of Hawthorne Financial Corporation since 1997, responsible for all credit administration and portfolio management. He has served in senior management positions at both commercial banks and thrift institutions.

 

Other Directorships and Positions

• Director, Federal Reserve Bank of San Francisco (2013-2019)

• Director and Chairman of the Finance Committee, Federal Home Loan Bank of San Francisco (2014-2017; Chairman of Finance Committee 2015-2016)

• Vice Chairman, Federal Reserve Bank of San Francisco’s Community Depository Institutions Advisory Council (2011-2013)

• Director and Member, Executive Committee of the Independent Community Bankers of America (“ICBA”) (2011-2013)

• Director, ICBA Holding Company and ICBA Securities, a registered broker-dealer (2009-2014)

 

Education

• Bachelor’s degree from California State University, Fullerton

• Attended graduate school at California State University, Long Beach.

 

Director Qualification Highlights

• Extensive leadership experience as the Company’s current Chairman, President and CEO and prior executive management roles

• Expert experience in areas of mergers and acquisitions as well as capital market transactions

9 

 

   Jeff C. Jones

 

 

image

 

Age: 66

 

Director Since: 2006

 

Former Managing Partner and

Executive Committee Member of

Frazer, LLP

 

Board Committee(s):

• Audit

• Compensation

• Nominating and Governance

 

Independent Lead Director

 

Biography:

Mr. Jones was appointed to serve as a member of the Boards of Directors of the Company and the Bank in 2006, and served as Chairman of the Board of the Company and the Bank from August 2012 to May 2016 and currently serves as the lead independent director. Mr. Jones is the former Managing Partner and Executive Committee member of, and partner in, the regional accounting firm Frazer, LLP, where he has worked since 1977. Currently Mr. Jones serves as Senior Tax Partner in the Frazer, LLP Tax Department. Mr. Jones has over 40 years of experience in servicing small and medium sized business clients primarily within the real estate, construction, and agricultural industries. Mr. Jones is a CPA in California, is licensed as a life insurance agent and holds a Series 7 securities license.

 

Other Directorships and Positions

• Advisory Board Member, John E. and Susan S. Bates Center for Entrepreneurship and Leadership, Lewis and Clark College (January 2021-present)

• Principal, Mariners Capital LLC, which syndicates commercial industrial real estate projects (2009-present)

• President, Inland Exchange, Inc., an accommodator corporation (1989-1993)

 

Education

• Bachelor’s degree in Business Administration from Lewis and Clark College in Portland, Oregon

• Masters of Business Taxation from Golden Gate University

 

Director Qualification Highlights

• Career-long finance, accounting and audit experience

• Extensive finance and management experience in the finance and real estate industries

10 

 

   M. Christian Mitchell

 

 

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Age: 65

 

Director Since: 2018

 

Retired Senior Partner of Deloitte

 

Board Committee(s):

• Audit (Chair)

• Enterprise Risk

• Governance

 

Independent

 

Biography:

Mr. Mitchell is a retired Deloitte senior partner, where he served as the national managing partner for the firm’s Mortgage Banking/Finance Companies practice and was a founding member of the board of directors of Deloitte Consulting USA, among other leadership roles. Prior to the acquisition of Grandpoint Capital, Inc., Mr. Mitchell served as Lead Independent Director and chaired the Audit and Risk Committees for Grandpoint Capital, Inc.

 

Mr. Mitchell taught as an adjunct Accounting Professor at the University of Redlands from 2006 through May 2010 and a guest lecturer from 2010 to 2017. In 2011 and 2012, Directorship magazine named Mr. Mitchell to the “100 Most Influential People in Corporate Governance” list.

 

Other Directorships and Positions

• Lead Independent Director, Western Asset Mortgage Capital Corporation (NYSE: WMC), a public mortgage REIT, Chair of the Audit Committee and member of the Compensation, Nominating and Corporate Governance and Risk Committees (2012-present)

• Director, Parsons Corporation (NYSE: PSN), a digitally-enabled solutions provider focused on the defense, intelligence and critical infrastructure markets, Chair of the Audit Committee and member of the Corporate Governance and Responsibility and Executive Committees (2013-present)

• Director and Vice Chairman, Marshall & Stevens, Inc., a Los Angeles-based national financial valuation and advisory firm (2008-present)

• Director, Stearns Holdings, LLC, a national independent mortgage company (2013-present)

• Chairman Emeritus, the National Association of Corporate Directors, Pacific Southwest Chapter (2018-present)

• Director, the National Association of Corporate Directors (2017-2019)

• Director, Huntington Hospital, a non-profit where Mr. Mitchell serves as Chair of the Audit and Compliance Committee, and Vice Chair of the Finance and Investment Committee and a member of the Executive Committee (2018-present)

• Managing Partner, The Holdsworth Group Advisory Services, LLC (January 2021-present)

 

Education

• Bachelor’s degree in accounting from University of Alabama, graduating summa cum laude

 

Director Qualification Highlights

• Extensive experience as a director of multiple public and private companies

• Career-long audit and financial expertise in numerous industries

11 

 

   Barbara S. Polsky

 

 

 image

 

Age: 66

 

Director Since: 2019

 

General Counsel and Chief Legal

Officer of Jiko Group, Inc. and

Former Partner at Manatt, Phelps

& Phillips, LLP

 

Board Committee(s):

• Compensation (Chair)

• Nominating and Governance

 

Independent

 

Biography:

Ms. Polsky is General Counsel and Chief Legal Officer of Jiko Group, Inc., a financial technology company and bank holding company, as of August 2020. Prior to that, Ms. Polsky was a partner at the law firm of Manatt, Phelps & Phillips, LLP (“MPP”) in Los Angeles. Through her 30+ years of law firm practice and her years as General Counsel at both publicly traded bank and specialty finance companies, Ms. Polsky has extensive knowledge concerning domestic and foreign banks, financial holding companies, savings associations, mortgage, other specialty finance and financial technology companies, as well as lending and securities transactions, mergers and acquisitions, governance and regulatory and compliance matters. Ms. Polsky frequently lectures at investment banking and commercial banking seminars on mergers and acquisitions, bank capital augmentation and compliance matters.

 

Other Directorships and Positions

• Director, ConnexPay, LLC (2018-present)

• Executive Vice President and General Counsel, City National Corporation and City National Bank (1999-2001)

• Executive Vice President and General Counsel, Aames Financial Corporation and Aames Home Loan (1996-1999)

 

Education

• Bachelor’s degree from the University of Michigan

• Juris Doctorate from the University of Michigan Law School, magna cum laude

 

Director Qualification Highlights

• In-depth experience in investment banking and commercial banking

• Unique legal advisory experience relating to lending and securities transactions, mergers and acquisitions, governance and regulatory and compliance matters


   Zareh H. Sarrafian

 

 

image

 

Age: 57

 

Director Since: 2016

 

Chief Executive Officer of

Riverside University Health

System

 

Board Committee(s):

• Nominating and Governance (Chair)

• Audit

 

Independent

 

Biography:

Mr. Sarrafian’s significant experience and leadership in the healthcare industry spans over 25 years. In 2015 Mr. Sarrafian assumed the role of Chief Executive Officer for Riverside University Health System. Mr. Sarrafian oversees the delivery of healthcare to over 2.4 million residents within Riverside County. The healthcare system includes a major academic Medical Center, 14 Outpatient Care Clinics, Department of Public Health, and the Department of Behavioral Health. Prior to joining Riverside County, Mr. Sarrafian served as Chief Administrative Officer for Loma Linda University Medical Center, which included 4 hospitals with over 1000 patient beds. Prior to that, he served as Administrator for Loma Linda University Children’s Hospital and Chief Executive Officer of the Loma Linda University Behavioral Medicine Center. Mr. Sarrafian’s many years of service to the healthcare industry includes the positions of Chief Financial Officer for Kaiser Permanente Medical Center, Riverside, for 10 years, as well as Morris & Grayson, Inc., La Quinta, CA.

 

Other Directorships and Positions

• Director, Switch, Inc. (NYSE: SWCH), member of the Audit and Nominating and Governance Committees (2018-present)

• Director, Riverside County Chamber of Commerce (2017-present)

• Director, SCAF and SBOC (2005-2016)

• Trustee, Loma Linda University Health (2019-Present), member of Finance, Audit and Investment Committees

• Director Urban Promise International (2016 - present)

• Director La Sierra University Foundation (2010 - present)

 

Education

• Bachelor’s degree from California State Polytechnic University, Pomona

• Master of Business Administration from California State University, San Bernardino

 

Director Qualification Highlights

• Career-long management experience in executive leadership roles

• In-depth experience in public company oversight


12 

 

   Jaynie M. Studenmund

 

 

image

 

Age: 66

 

Director Since: 2019

 

Former Executive Vice President

and Head of Retail & Business

Banking, First Interstate Bank

and Great Western Bank

 

Board Committee(s):

• Enterprise Risk (Chair)

• Compensation

 

Independent

 

Biography:

Ms. Studenmund is a seasoned, goal oriented, independent board member who brings significant executive experience across a number of industries, including financial services, digital, health care and consumer businesses. Today, she serves on a portfolio of corporate and non-profit boards and over time, has been on seven public boards, three private boards, and numerous non-profit boards. In terms of her career as an operating executive, Ms. Studenmund served as a banking executive for 20 years, primarily at First Interstate Bank of California where she was Executive Vice President for Retail and Business Banking and began as the SVP and Chief Marketing Officer. During the consolidation era in banking, she also held similar roles at Great Western Bank and Home Savings of America (now part of JP Morgan Chase). Following her financial services career,

Ms. Studenmund joined the Internet sector, where she was the President and Chief Operating Officer for PayMyBills.com and the Chief Operating Officer of Overture Services, a public Company that transformed online advertising by pioneering paid search and grew to over a billion dollars in profitable revenue in three years.

Ms. Studenmund began her career as a management consultant with Booz, Allen & Hamilton.

 

Other Directorships and Positions

• Director, CoreLogic (Nasdaq: CLGX) (2012-present)

• Director, ExlService Holdings, Inc. (Nasdaq: EXLS) (2018-present)

• Director, select funds for Western Asset Management (2004-present)

• Life Trustee and Board Chair, Huntington Hospital (1998-present)

• Director (and past Board Chair), Flintridge Preparatory School (2015-present)

• Director, Pinnacle Entertainment (2012-2018)

• Director, Lifelock (2015-2017)

• Director, Orbitz Worldwide (2007-2014)

• Director, Aquantive (2004-2007)

• Co-founder and executive committee member, the Enduring Heroes Foundation (2014-present)

• NACD Board Leadership Fellow (2018-present)

 

Education

• Phi Beta Kappa graduate of Wellesley College

• Master of Business Administration from Harvard Business School

 

Director Qualification Highlights

• Significant executive experience across a number of industries, including financial services, digital, health care and consumer businesses

• Long-term executive management experience with financial institutions in the Company’s market

13 

 

   Ayad A. Fargo

 

 

 image

 

Age: 60

 

Director Since: 2016

 

President of Biscomerica Corporation

 

Board Committee(s):

• Audit

• Enterprise Risk

 

Independent

 

Biography:

Mr. Fargo has served as the President of Biscomerica Corporation, a food manufacturing company based in Rialto, California since 1980. Biscomerica serves all classes of trade globally within the food industry, manufacturing and co-packing a wide range of products for various Fortune 500 companies. Mr. Fargo was appointed to serve as a member of the Boards of Directors of the Company and the Bank in January 2016, in connection with the Company’s acquisition of Security California Bancorp, a California corporation (“SCAF”) and its banking subsidiary Security Bank of California, a Riverside, California based state chartered bank (“SBOC”).

 

Other Directorships and Positions

• Director, SCAF and SBOC (2005-2016)

• Chairman of the Board, RPG, a leading global packaging company headquartered in Germany (2008-2016)

• Chairman of the Board, Bossar Packaging S.A., headquartered in Spain (2010-2015)

 

Education

• Bachelor’s degree from Walla Walla University

 

Director Qualification Highlights

• In-depth experience in public company oversight

• Career-long management experience in executive leadership roles


   Joseph L. Garrett

 

 

 image

 

Age: 72

 

Director Since: 2012

 

Former Chairman, President and

Chief Executive Officer of

American Liberty Bank

 

Board Committee(s):

• Compensation

• Enterprise Risk

 

Independent

 

Biography:

Since 2003, Mr. Garrett has been a principal at Garrett, McAuley & Co., which provides advisory services to commercial banks, thrifts, mortgage banking companies, Government Sponsored Enterprises, and private equity firms. He has been published widely on banking and finance and also advised one of the world’s largest pension funds on structured debt instruments. Each year he and his firm advised over fifty such entities, both private and public.

 

Other Directorships and Positions

• President, Chief Executive Officer, a member and chairman of the Board of Directors for both American Liberty Bank and Sequoia National Bank (1989-1994 and 2000-2004)

• Director, Hamilton Savings Bank (1984-1989)

• Member, the California State Controller’s Advisory Commission on Public Employee Retirement Systems (1988-1994)

• Member, the National Advisory Council for the Institute of Governmental Studies at the University of California (Berkeley) (2016-present)

 

Education

• Bachelor’s degree from the University of California (Berkeley)

• Master of Business Administration from the University of California (Berkeley)

• Master’s degree from the University of Washington (Seattle)

 

Director Qualification Highlights

• Extensive experience in the commercial banking and financial services industry

• Executive leadership experience, including prior president and CEO roles at multiple commercial banks

 

14 

 

   Cora M. Tellez

 

 

 image

 

Age: 71

 

Director Since: 2015

 

Chief Executive Officer and

President of Sterling Health

Services Administration, Inc.

and Sterling Self Insurance

Administration

 

Board Committee(s):

• Compensation

 

Independent

 

Biography:

Ms. Tellez has served as the Chief Executive Officer and President of both Sterling Health Services Administration, Inc. and Sterling Self Insurance Administration since founding the companies in 2003 and 2010, respectively. Ms. Tellez previously served as the President of the health plans division of Health Net, Inc., an insurance provider that operated in seven states. She also has served as President of Prudential’s western healthcare operations, CEO of Blue Shield of California, Bay Region, and Regional Manager for Kaiser Permanente of Hawaii.

 

Other Directorships and Positions

• Director, HMS Holdings, Inc., Chair of the Nominating and Governance Committee and member of the Audit and Compensation Committees (2012-present, Lead Independent Director since 2019)

• Director, CorMedix (2014-2017)

• Director, the Institute for Medical Quality, a non-profit organization (2002-2019)

• Director, UC San Diego’s Center for Integrative Medicine, a non-profit organization (2012-2019)

• Founder and Board Chair, Amazing Care Charitable Foundation (2020-present)

 

Education

• Bachelor’s degree from Mills College

• Master’s degree in public administration from California State University, Hayward

 

Director Qualification Highlights

• Career-long executive management experience in the health services industry

• Long-standing director experience with both public and private companies


   Richard C. Thomas

 

 

 image

 

Age: 72

 

Director Since: 2020

 

Former Executive Vice President

and Chief Financial Officer of

CVB Financial Corp. and Citizens

Business Bank

 

Board Committee(s):

• Audit

• Nominating and Governance

 

Independent

 

Biography:

Mr. Thomas served as a director of Opus Bank from August 2017 until it was acquired by the Company in June 2020. His professional career spans over 35 years within the financial services and accounting and audit industries. He most recently served as Executive Vice President and Chief Financial Officer of CVB Financial Corp. (“CVB”) and its principal subsidiary, Citizens Business Bank, from 2010 until his retirement in 2016. From 2009 to 2010, Mr. Thomas served as Executive Vice President and Chief Risk Officer of Community Bank in Pasadena, where he developed a risk-based audit program and oversaw internal audits, including the documentation and testing of internal controls, in operations, regulatory compliance and credit reviews. Prior to Community Bank, Mr. Thomas was an audit partner at Deloitte & Touche LLP for 22 years leading teams in auditing financial statements and internal controls certifications, consulting in accounting, regulatory compliance, cost reduction strategies, and public filings, including registration statements, and mergers and acquisitions. Mr. Thomas is a Certified Public Accountant (inactive) and a member of the American Institute of Certified Public Accountants.

 

Other Directorships and Positions

• Director and Chairman of the Audit Committee, Opus Bank (2017-2020)

 

Education

• Bachelor of Business degree in Accountancy from Western Illinois University

 

Director Qualification Highlights

• Career-long management experience in the financial services and accounting and audit industries

• Extensive finance, accounting and auditing experience

 

15 

 

EXECUTIVE OFFICERS WHO ARE NOT SERVING AS DIRECTORS

 

Below is information regarding each of our executive officers who are not directors of the Company or Bank.

 

   Edward E. Wilcox

 

 

image

 

Age: 54

 

Year of Hire: 2003

 

President and Chief Operating

Officer of the Bank

 

B.A., New Mexico State

University

 

Mr. Wilcox has served in key leadership positions with the Bank since 2003, including Chief Credit Officer, Chief Lending Officer, and Chief Banking Officer. He has served in his current role since May 2016. Mr. Wilcox oversees several business lines and operational units critical to the successful execution of the Bank’s strategies.

Mr. Wilcox’s professional career spans 30 years with an extensive background in commercial banking, real estate lending, credit administration, secondary marketing, depository services, and regulatory oversight.

 

Relevant Prior Experience:

• Loan Production Manager, Hawthorne Savings Bank

• Secondary Marketing Manager, First Fidelity Investment & Loan

• Asset Manager, REO Manager and Real Estate Analyst at various financial institutions.


   Ronald J. Nicolas, Jr.

 

 

 image

 

Age: 62

 

Year of Hire: 2016

 

Senior Executive Vice President

and Chief Financial Officer of the

Company and the Bank

 

B.S. and M.B.A., Canisius College

 

Mr. Nicolas oversees all finance, accounting and treasury functions as well as investor relations, human resources and loan servicing administration of the Company and the Bank. He serves as Chairman of the Bank’s Asset Liability and Financial Disclosure Committees. He has successfully led four mergers and acquisitions since joining the Company and the Bank, and many critical projects, most recently the adoption of CECL in 2020. In addition, throughout his career, he has led many capital raising endeavors, including an initial public offering and recapitalization. Mr. Nicolas has over 30 years of leadership experience with publicly-held banks, and has served as Chief Financial Officer of both the Company and the Bank since May 2016.

 

Relevant Prior Experience:

• Executive Vice President and Chief Financial Officer at each of the following financial institutions:

Ø Banc of California

Ø Carrington Holding Company, LLC

Ø Residential Credit Holdings, LLC

Ø Fremont General and Fremont Investment & Loan

Ø Aames Investment/Financial Corp.

• Served in various capacities with KeyCorp, a $60 billion financial institution, including the following:

Ø Executive Vice President Group Finance, KeyCorp

Ø Executive Vice President, Treasurer and Chief Financial Officer, KeyBank USA

Ø Vice President of Corporate Treasury, KeyBank USA

• Various financial and accounting roles at HSBC-Marine Midland Banks

 

16 

 

   Michael S. Karr

 

 

image

 

Age: 52

 

Year of Hire: 2006

 

Senior Executive Vice President

and Chief Risk Officer of the

Bank

 

B.A., cum laude, Claremont

McKenna College

 

M.B.A., University of California,

Irvine

 

Mr. Karr oversees the Bank’s enterprise risk management and credit functions. He was appointed Chief Risk Officer of the Bank in March 2018, and is also the Chairman of the Bank’s Enterprise Risk Management Committee. Mr. Karr previously served twelve years as the Chief Credit Officer of the Bank and was responsible for overseeing the Bank’s credit functions, including all lending and portfolio operations, prior to and through the Great Financial Crisis. He also led credit due diligence and integration through 10 of our 11 acquisitions. Outside the Bank, Mr. Karr serves as a Director for the Small Business Development Corporation of Orange County, a public benefit corporation that focuses on the economic development of underserved communities in California, targeting minority, woman, disabled, and veteran-owned businesses, as well as industries of greater need.

 

Relevant Prior Experience:

• Vice President of Commercial Real Estate Asset Management Department, Fremont Investment & Loan


   Thomas E. Rice

 

 

 image

 

Age: 49

 

Year of Hire: 2008

 

Senior Executive Vice President

and Chief Innovation Officer of

the Bank

 

B.S., DeVry University

 

Mr. Rice began his journey with Pacific Premier Bank in 2008 with extensive financial technology consulting experience. Mr. Rice was appointed Chief Innovation Officer of the Bank in 2018. In this capacity he leads with a client-first mindset overseeing the development of innovative technology focused on seamless digital experiences for commercial clients. Mr. Rice leads the Bank’s Information Technology functions as well as Treasury Management and Digital Banking. Mr. Rice previously served as the Chief Operating Officer, responsible for overseeing the deposit operations of the Bank, and prior to that Chief Information Officer. Mr. Rice is responsible for overseeing acquisition-related systems conversions and technology platform consolidations. He currently serves as Chairman of the Bank’s Operations Committee.

 

Prior to joining the Bank, Mr. Rice was a founding partner at Compushare Inc. for twelve years. He oversaw the firm’s expansion and technology consulting, specializing in M&A, security and compliance services for financial institutions.

 

Relevant Prior Experience:

• Senior Vice President, Information Technology Director, Vineyard Bank

• Partner and Director of Operations, Compushare, Inc.

 

17 

 

   Steven R. Arnold

 

 

image

 

Age: 50

 

Year of Hire: 2016

 

Senior Executive Vice President

and General Counsel of the Bank

 

B.A., Brigham Young University

 

J.D., George Mason University

School of Law

 

Mr. Arnold oversees our corporate governance, legal support, and regulatory compliance functions. He has more than 20 years’ experience in the industry and has advised financial institutions of all sizes on a variety of topics, including corporate governance, loan documentation, deposit operations, treasury management services, BSA/ AML/OFAC, consumer compliance, fair lending, privacy, vendor management, contract negotiation, etc.

Mr. Arnold has also served as the Corporate Secretary of the Company since May 2017.

 

Relevant Prior Experience:

• Partner in the Financial Services Group, Manatt, Phelps & Phillips, LLP

• Managing Counsel, Toyota Financial Services


  Daniel C. Borland

 

 

image

 

Age: 58

 

Year of Hire: 2020

 

Senior Executive Vice President

and Head of Commercial Real

Estate and SBA

 

B.S., University of California,

Irvine

 

M.B.A., University of Southern

California

 

Mr. Borland joined the Pacific Premier Bank team as Senior Executive Vice President, Head of Commercial Real Estate and SBA in March 2020. Mr. Borland oversees the loan production and associated underwriting/ analytical teams for the commercial real estate group which includes construction, bridge and term loans to the Bank’s commercial income property investor and developer clients. Mr. Borland also oversees the SBA lending area, which includes business development and processing of those loans and relationships. Since 2002, Mr. Borland has served on the board of Irvine Children’s Fund, a non-profit providing educational day care for children of working parents.

 

Relevant Prior Experience:

• Orange-San Diego County Market Manager, Commercial Real Estate, Wells Fargo Bank

• Executive Vice President, President of Commercial Real Estate Banking, Opus Bank

• Senior Vice President, Southern California Market Manager, JP Morgan Chase Commercial Real Estate

 

 

 

18 

Teresa M. Dawson

 

image

Age: 51

Year of Hire: 2011

Senior Executive Vice President
and Chief Strategic Project
Officer of the Bank

 

Ms. Dawson is responsible for the execution of strategic projects and facilities administration. Previously,

Ms. Dawson served as Senior Executive Vice President and Chief Retail Administration Officer of the Bank, and was responsible for the operations of the Retail Bank, Bank Acquisition Project Management and Client Services functions. She has led system conversions and integrations for the Company’s seven (7) most recent acquisitions. Ms. Dawson was hired in March 2011 as the Bank’s Project Conversion Manager. In March 2013, she was appointed Senior Vice President and Director of Branch Operations and assumed the responsibility of the Bank’s branch network, bank operations, facilities, bank security and acquisitions. In February 2017, Ms. Dawson was appointed as the Senior Vice President and Director of Banking Operations, focusing on central operations.

Relevant Prior Experience:

Held operational and technological positions with various financial institutions beginning in 1988

  

Ernest W. Hwang

 

image

 

Mr. Hwang provides leadership throughout the organization in areas such as commercial lending, loan and deposit pricing, product development and marketing. He has served as Senior Executive Vice President and Chief Banking Officer since January 2018. Previously, Mr. Hwang served as the Bank’s Senior Executive Vice President and President of Commercial Banking.

Relevant Prior Experience:

Director and President, SCAF

Founding Director, Vice Chairman and Chief Lending Officer, SBOC

Senior Vice President, City National Bank

Commercial Banker, Security Pacific National Bank

Commercial Banker, Bank of California (Mitsubishi Bank)

 

Age: 57

Year of Hire: 2016

Senior Executive Vice President and Chief Banking Officer of the Bank

B.S., Loma Linda University

Graduate, Pacific Coast Banking School at the University of Washington

 

 

 

 
19

 

 

Richard J. Immesberger

 

 

image

 

Mr. Immesberger oversees the strategic development and delivery of Pacific Premier Trust’s services across the United States. Pacific Premier Trust focuses on the custody of retirement account assets, with a specialty in alternative assets.

 

Relevant Prior Experience:

Chair of the Board and CEO, PENSCO Trust Company

National Director of Trust & Estate Settlement Services, BMO Harris Bank

Chair of the Board and CEO, BMO Delaware Trust Company

President and member of the Board of Directors, UBS Trust Company

Executive Vice President, Trust & Wealth Management, WSFS Bank

President, Retirement Industry Trust Association

 

Age: 55

Year of Hire: 2020

Senior Executive Vice President and President of Pacific Premier Trust

B.B.A., City University of New York, Baruch College

Graduate, University of Delaware, Stonier Graduate School of Banking

 

 

Donn B. Jakosky

 

 

image

Age: 67

Year of Hire: 2017

Senior Executive Vice President and Chief Credit Officer of the Bank

B.A. and M.B.A., University of California, Los Angeles

 

Mr. Jakosky is responsible for overseeing our credit functions, including all lending and portfolio operations. He was appointed Executive Vice President and Chief Credit Officer of the Bank in March 2018 and was promoted to Senior Executive Vice President in December 2018. He is also Chairman of the Bank’s Credit and Portfolio Review Committee. Prior to his appointment as Chief Credit Officer, he served as Deputy Chief Credit Officer of the Bank, during which time he assisted in the oversight of all of the Bank’s credit and lending functions.

Relevant Prior Experience:

Executive Vice President/Chief Credit Officer, Blue Gate Bank

Executive Vice President and Chief Credit Officer, Community Bank

Executive Vice President and Chief Credit Officer, 1st Century Bank

Senior Vice President/Senior Credit Administrator and Asset Based Lending Manager, Mellon 1st Business Bank

Senior credit officer roles at the following financial institutions:

Bank of America

Sanwa Bank

 

20 

 

 

Peggy Ohlhaver Ed.D.

 

image

 

Ms. Ohlhaver is responsible for leading the Bank’s overall human resources strategy and supports the Compensation Committee of the Board of Directors. As Chief Human Resources Officer, Ms. Ohlhaver develops and oversees the execution of the Bank’s Human Resources strategy, including talent acquisition, leadership development, employee relations, performance management, Human Resources technology systems, compensation and benefits. She has transformed the function, culture, and impact of human resources across the Company to support our business goals and strategies as well as the needs and aspirations of our employees.

 

Relevant Prior Experience:

Vice President, Human Resources Business Partner, JP Morgan Chase & Co.

First Vice President, Sr. Human Resources Manager, Washington Mutual

Sr. Compensation Consultant, American Savings Bank

 

Age: 64

Year of Hire: 2016

Senior Executive Vice President and Chief Human Resources Officer

B.S., Indiana University

M.S. and EdD., Chapman University

 

  

James A. Robinson, Jr.

 

image

 

 

Mr. Robinson currently leads the Market Presidents within the Bank’s commercial banking platform. He has served as Senior Executive Vice President and Head of Commercial Banking since January 2018. In this capacity he oversees the bank’s $5 billion commercial loan portfolio and is responsible for directing the strategic growth and business development of clients in the Orange County, Los Angeles, San Diego, Inland Empire, California Central Coast, Arizona, Nevada, Oregon and Washington regions. Mr. Robinson has spent 29 years in various commercial banking positions and formerly served as the Bank’s Regional President for the Inland Empire and Coachella regions. Mr. Robinson assisted the Bank in the integration of the commercial banking teams when the Bank acquired both Grandpoint Bank and Opus Bank. He currently serves as the Chair of the Bank’s Production Committee and a member of Credit and Portfolio Review Committee.

 

Relevant Prior Experience:

Executive Vice President, Commercial Banking Manager, SBOC

 

Age: 50

Year of Hire: 2016

Senior Executive Vice President and Head of Commercial Banking of the Bank

B.A., University of California, Riverside

Graduate, Pacific Coast Banking School at the University of Washington

 

 

 
21

 

 

Sherri V. Scott

 

image

 

 

Ms. Scott heads up the Bank’s CRA and Fair Banking compliance functions as well as the Bank’s Environment, Social and Corporate Governance (ESG) program. Under her leadership, the Bank has consistently received highly positive feedback and superior CRA ratings from examiners, auditors and community partners. Her leadership and efforts resulted in the Bank receiving highly coveted letters of support from community advocates, facilitating the Bank’s merger and acquisition activities without a formal community agreement. Ms. Scott currently serves on the Board of Directors for Oasis Center International and For the Child.

 

Relevant Prior Experience:

CRA Officer, Hawthorne Savings

First Vice President, CRA Officer, Nara Bank

First Vice President, CRA Officer, Community Bank

First Vice President, CRA Officer, OneWest Bank

First Vice President, CRA and Fair Lending Officer, Luther Burbank Savings

 

Age: 58

Year of Hire: 2013

Senior Executive Vice President and Director of ESG & Corporate Responsibility

B.S., University of California, Los Angeles

 

 

Lori R. Wright, C.P.A.

 

image

 

Ms. Wright is responsible for the corporate accounting, financial reporting, accounting and tax policy, and accounts payable functions. She has served as Executive Vice President and Deputy Chief Financial Officer since 2020. Previously, Ms. Wright served as the Bank’s Executive Vice President and Chief Accounting Officer since 2018. Ms. Wright also serves as the Company’s principal accounting officer and previously served as Senior Vice President and Controller of the Bank.

 

Relevant Prior Experience:

Controller, California Republic Bank

Controller, San Diego County Credit Union

Chief Financial Officer, Solarity Credit Union

 

 

Age: 41

Year of Hire: 2016

Executive Vice President and Deputy Chief Financial Officer of the Bank

B.S., Central Washington University

M.B.A., Washington State University

 

 

 
22

 

CORPORATE GOVERNANCE AND BOARD MATTERS

Corporate Governance 

We value strong corporate governance principles and adhere to the highest ethical standards. These principles and standards, along with our core values of fairness and caring, assist us in achieving our corporate mission. To foster strong corporate governance and business ethics, our Board of Directors continues to take many steps to strengthen and enhance our corporate governance practices and principles. To that end, we have adopted certain corporate governance guidelines, which are embodied in the Corporate Governance Policy that our Board has approved to achieve the following goals:


 

to promote the effective functioning of the Company’s Board of Directors;

 

to ensure that the Company conducts all of its business in accordance with the highest ethical and legal standards; and

 

to enhance long-term stockholder value.

The full text of our Corporate Governance Policy is available from our website at www.ppbi.com under the Investors section. Our stockholders may also obtain a written copy of the guidelines at no cost by writing to us at 17901 Von Karman Avenue, Suite 1200, Irvine, California 92614, Attention: Investor Relations Department, or by calling (949) 864-8000.

The Nominating and Governance Committee of our Board of Directors administers our Corporate Governance Policy, reviews performance under the guidelines and the content of the guidelines annually and, when appropriate, recommends that our Board approve updates and revisions to our Corporate Governance Policy.

 

Board Independence and Leadership

The Board of Directors has determined that, with the exception of Mr. Gardner, our Chairman, President and CEO, all of our current directors are “independent” within the meaning of the director independence standards of NASDAQ and the SEC.

 

Lead Independent Director

Our Corporate Governance Policy provides that our Board of Directors must have either a non-executive Chairperson or a lead independent director to ensure independent Board leadership and that the Company is managed for the long-term benefit of its stockholders. Each year, the Board evaluates its leadership structure to ensure that it remains appropriate. Currently, the offices of Chairman of the Board of Directors and CEO are jointly held and the independent directors have elected Mr. Jones as our lead independent director. In his role as lead independent director, Mr. Jones:

 


ensures active participation of the independent directors in setting agendas and establishing priorities for the Board;

 


presides at all meetings of the Board at which the Chairman is not present, including executive sessions of the independent directors;

 


coordinates administration of the annual Board evaluation; and

 


serves as a liaison between the Chairman and the independent directors.

                                            

Executive Sessions

The Company’s independent directors meet in executive sessions without management at least twice on an annual basis in conjunction with regularly scheduled board meetings. During 2020, the independent directors met seven times in executive sessions without the presence of management.

 

Annual Board and Board Committee Evaluations

The Nominating and Governance Committee of the Board, in coordination with the Lead Independent Director and full Board, conducts an annual evaluation of the Board’s performance and effectiveness, either the Board as a whole and/or on an individual director basis. The Nominating and Governance Committee develops and implements a process for such evaluation and review, which may involve outside consultants or advisers and may include a review of how certain attributes affect Board effectiveness, such as Board size, meeting frequency, quality and timing of information provided to the Board, director communication, director education, director skills and qualifications, director independence and Board strategy sessions. Our most recent annual Board evaluation was conducted at the full Board and individual director levels.

As part of the annual Board evaluation process, the Nominating and Governance Committee, in coordination with the Board, implements and develops a process to assess committee performance and effectiveness. The assessments are conducted on an annual basis and include a self-assessment by each committee. The review includes an evaluation of various areas that may include committee size, composition, performance, coordination among committee members and among the standing committees, and involvement with the full Board. The results of the committee performance assessments are reviewed by each committee, as well as by the Nominating and Governance Committee, and discussed with the full Board.

 

Annual CEO Performance Evaluation

Each year, the Nominating and Governance Committee approves a process to solicit feedback from each individual director, other than our CEO. Our Lead Independent Director, in coordination with our Nominating and Governance and Compensation Committees, leads this process.

 

 
23

 

CEO and Executive Succession Planning

As a matter of sound governance, the Board, as a whole or from time to time through a special committee, reviews and discusses the Company’s contingency or long-term plans for CEO and executive succession. These efforts may involve seeking input from our current CEO, as well as external advisors, to the extent the Board deems appropriate. Succession plans are reviewed by the Nominating and Governance Committee, which recommends succession plans to the full Board for approval, typically on an annual basis.

 

Communications with the Board

Individuals may submit communications to any individual director, including our presiding Chairman, our Board as a group, or a specified Board committee or group of directors, including our non-management directors, by sending the communications in writing to the following address: Pacific Premier Bancorp, Inc., 17901 Von Karman Avenue, Suite 1200, Irvine, California 92614. The Company’s Corporate Secretary will sort the Board correspondence to classify it based on the following categories into which it falls: stockholder correspondence, commercial correspondence, regulatory correspondence or customer correspondence. All stockholder correspondence will then be forwarded to the Board members to whom it is directed.

 

Board Oversight of Strategy and Direct Contact with Management

Our Board is actively engaged in overseeing the Company’s strategy. Each year, the Board conducts an annual in-depth, multi-day session to discuss the current strategic landscape as well as strategic and organic growth plans and to review our overall business. Discussion topics may include new or expanded lines of business, products and services; clients and market share; financial outlook; competition; environmental sustainability; human capital management; regulatory environment; and updates in corporate governance and stockholder relations. Discussions about the Company’s strategic priorities and goals, as well as execution on those priorities and goals, also are held during the Board’s regular meetings.

All of our directors have access to our CEO and our senior executive officers at any time to discuss any aspect of our business. In addition, there generally are frequent opportunities for directors to meet with other members of our management team.

 

Board Risk Oversight

 

Our Board’s Role in Risk Oversight

Our Board believes that understanding, identifying and managing risk are essential to our Company’s success. Our entire Board is responsible for overseeing the Company’s risk management processes and regularly discusses the Company’s risk profile and how best to manage the most significant risks the Company faces. Each of the other Board committees is engaged in overseeing the Company’s risks as they relate to that committee’s respective areas of oversight. For example, the Compensation Committee engages in periodic risk assessments to review and evaluate risks in relation to our compensation programs. The Board also specifically delegates certain risk oversight functions to the Audit and Enterprise Risk Committees.

 

 


The Audit Committee is responsible for monitoring business risk practices and legal and ethical programs, which helps the Board fulfill its risk oversight responsibilities relating to the Company’s financial statements, financial reporting process and regulatory requirements. The Audit Committee also oversees our corporate compliance programs, as well as the internal audit function.

 


The Enterprise Risk Committee oversees the design and implementation of our enterprise risk management program. Our Enterprise Risk Committee’s primary purposes are to (i) monitor and review our enterprise risk management framework and risk appetite for credit, market, liquidity, operational, information technology, compliance and legal, strategic, and reputation risks, and (ii) monitor and review the adequacy of our enterprise risk management functions.

 

Risk Appetite Statement

The Board oversees, and approves on at least an annual basis, the Company’s Risk Appetite Statement, which sets forth the tolerance levels with respect to the amount and types of key risks underlying the Company’s business. The Enterprise Risk Committee is responsible for recommending changes to the Risk Appetite Statement for approval by the Board, as well as overseeing the Company’s compliance with the statement. Our other Board committees also share responsibility for the Risk Appetite Statement by overseeing and approving applicable risk metrics, including risk limits and thresholds, for each of their relevant areas of responsibility.

 

Risk & Controls

With oversight from our Board and its committees, we are focused on, and continually invest in, our risk management and control environment. Our business teams, supported by our risk, compliance, legal, finance and internal audit functions, work together to identify and manage risks applicable to our business, as well as to enhance our control environment. Particular areas of focus include, among other areas, financial reporting, data management, privacy, bank regulatory requirements, and as further discussed below, cybersecurity.

We have adopted a three lines of defense model to control risk-taking. Our first line of defense – our business lines and support functions – identifies, assesses, monitors, and manages risk in these areas in accordance with established policies and procedures. Our second line of defense – independent risk management, including enterprise risk management, information security and compliance functions – coordinates and oversees the implementation of the enterprise risk management framework, including monitoring the risk management activities of the first line of defense, and provides effective challenge to management’s decisions. Our third line of defense – Internal Audit – provides independent assurance to the Audit Committee of the Board on the design and effectiveness of our internal controls.

 

 
24

Cybersecurity

Cybersecurity is a major component of our overall risk management approach. By the very nature of our business, handling sensitive data is a part of daily operations and is taken very seriously by all employees. The threat of cybersecurity attacks is ever changing, becoming more sophisticated by the day, and requires all levels of the organization to be cognizant and aware of these threats at all times. As such, we maintain a comprehensive cybersecurity strategy that includes, but is not limited to: regular employee cybersecurity training and communications; preventative, detective, alerting, and defense in-depth technologies; regular internal and third-party program oversight; policies and procedures regularly reviewed and designed with regulatory and industry guidance; and regular reviews of vendors who maintain sensitive data on behalf of the Bank. Our Board of Directors reviews our information security program at least annually, and our Enterprise Risk Committee receives management updates about information security matters on a quarterly basis.

 

Director Matters and Meeting Attendance

 

Outside Directorships

We encourage all directors to carefully consider the number of other company boards of directors on which they serve, taking into account the time required for board attendance, conflicts of interests, participation, and effectiveness on these boards. Pursuant to our Corporate Governance Policy, no director may serve on more than four (4) total public company boards of directors, including the Board. Directors are asked to report all directorships, including advisory positions, accepted, as well as to notify the Nominating and Governance Committee in advance of accepting any invitation to serve on another public company board.

 

Meeting Attendance — Board and Committee Meetings and Annual Meeting of Stockholders

Our Board of Directors met 16 times during 2020 and anticipates holding eight regularly-scheduled Board meetings in 2021, and any special meetings that may be necessary or appropriate. Each director attended in person or via teleconference at least 75% of the Board and applicable Board committee meetings during 2020.

It is the Board’s policy that each director employs his or her best efforts to attend our annual stockholder meeting. Nine (9) of our then-serving Board members attended our 2020 Annual Meeting of Stockholders.

 

Total Meetings — 42

Board

16

 

Nominating and Governance Committee

8

Audit Committee

7

 

Enterprise Risk Committee

4

Compensation Committee

7

 

 

 

Corporate Code of Business Conduct and Ethics

We have implemented a Code of Business Conduct and Ethics applicable to our directors, CEO and all of our officers and employees. Our Code of Business Conduct and Ethics provides fundamental ethical principles to which these individuals are expected to adhere. Our Code of Business Conduct and Ethics operates as a tool to help our directors, officers, and employees understand and adhere to the high ethical standards required for employment by, or association with, the Company and the Bank.

Our directors are expected to avoid any action, position or interest that conflicts with an interest of the Company, or gives the appearance of a conflict. As a result, our directors must disclose all business relationships with the Company and with any other person doing business with us to the entire Board and to recuse themselves from discussions and decisions affecting those relationships. In addition, each director is subject to the Company’s Related Party Transactions Policy, pursuant to which transactions between the Company or the Bank, on one hand, and any of our directors or certain of their affiliates, on the other hand, need to be approved or ratified by disinterested members of the Nominating and Governance Committee, if not otherwise pre-approved under the terms of the policy. For more information, see “Transactions with Certain Related Persons” under “Related Transactions and Other Matters.”

Our Code of Business Conduct and Ethics is available from our website at www.ppbi.com under the Investors section. Our stockholders may also obtain written copies at no cost by writing to us at 17901 Von Karman Avenue, Suite 1200, Irvine, California 92614, Attention: Investor Relations Department, or by calling (949) 864-8000. Any future changes or amendments to our Code of Business Conduct and Ethics and any waiver that applies to one of our senior financial officers or a member of our Board of Directors will be posted to our website.

 

Board Committees

We believe our Board has created a sound committee structure designed to help the Board carry out its responsibilities in an effective and efficient manner. While the Board may form from time to time ad hoc or other special purpose committees, there are four (4) standing Board committees: Audit, Compensation, Nominating and Governance and Enterprise Risk.

 

 
25

 

Committee Membership, Responsibilities and Meetings

All chairpersons of our four (4) standing committees are independent and appointed annually by the Board. Each chairperson presides over committee meetings; oversees meeting agendas; serves as liaison between the committee members and the Board, as well as between committee members and management; and works actively and closely with executive and senior management on all committee matters, as appropriate.

Each committee meets regularly, at least on a quarterly basis. The committees, typically through their committee chairpersons, routinely report their actions to, and discuss their recommendations with, the full Board. In addition, certain committees periodically hold extended meetings dedicated to discussing key strategic matters or other business items that are relevant or subject to the committee’s oversight responsibilities on a more in-depth basis.

The Board has determined that each of the current members of the four (4) standing Board committees is “independent” within the meaning of applicable SEC rules, NASDAQ director independence standards and other regulatory requirements, to the extent applicable. The names of the current members (chairpersons’ names in bold) and highlights of some of the key oversight responsibilities of the Board Committees are set forth below:

 

Audit Committee

M. Christian Mitchell, Ayad A. Fargo, Jeffrey C. Jones, Richard C. Thomas and Zareh H. Sarrafian

Key Oversight Responsibilities

Selecting and communicating with the Company’s independent auditors.

Reporting to the Board on the general financial condition of the Company and the results of the annual audit.

Ensuring that the Company’s activities are being conducted in accordance with applicable laws and regulations.

The Board of Directors has determined that each of Messrs. Jones, Mitchell, Thomas and Sarrafian satisfies the requirements established by the SEC for qualification as an “audit committee financial expert,” and is independent under the NASDAQ listing standards and rules of the SEC.

Compensation Committee

Barbara S. Polsky, Cora M. Tellez, Jaynie Miller Studenmund, Jeffrey C. Jones and Joseph L. Garrett

Key Oversight Responsibilities

Reviews the amount and composition of director compensation from time to time and makes recommendations to the Board when it concludes changes are needed.

Oversees the Bank’s compensation policies, benefits and practices

Approves all stock option, restricted stock and restricted stock unit grants

Determines the annual salary, the annual bonus, stock options, and restricted stock grants of our NEOs

Approves the compensation structure for other members of our senior management team.

Enterprise Risk Committee

Jaynie Miller Studenmund, Ayad A. Fargo, Joseph L. Garrett and M. Christian Mitchell

Key Oversight Responsibilities

Monitors and reviews the Company’s enterprise risk management framework and risk appetite for credit, market, liquidity, operational, information technology, compliance and legal, strategic and reputation risks.

Monitors and reviews the adequacy of enterprise risk management functions; and report its conclusions and recommendations to the Board.

Reviews the Company’s risk profile for alignment with the Company’s strategic objectives and risk appetite, including compliance with risk limits and thresholds set forth in our Risk Appetite Statement.

Reviews all significant policies and contingency plans, including any legally-required stress testing processes as frequently as economic conditions or the condition of the Company may warrant, but no less than annually.

Reviews cybersecurity threat reports regarding the assessment of current security updates, cyber statistics, core elements and controls, and key IT trends affecting information security.

Nominating and Governance Committee

Zareh H. Sarrafian, Barbara S. Polsky, Jeffrey C. Jones, M. Christian Mitchell and Richard C. Thomas

Key Oversight Responsibilities

Nominating candidates as directors and to determine satisfaction of independence requirements.

Overseeing our Board governance structure and policies.

CEO and management succession planning.

Conducting annual Board evaluations, in coordination with the Lead Independent Director.

Overseeing our Environmental, Social and Governance initiatives.

 

 
26

 

Committee Governance

 

Committee Charters

Each committee is governed by a charter that is approved by the Board, which sets forth each committee’s purpose and responsibilities. The Board reviews the committees’ charters, and each committee reviews its own charter, on at least an annual basis. The charters of each committee are available on our website, www.ppbi.com under “Investors.”

The charters provide that each committee have adequate resources and authority to discharge its responsibilities, including appropriate funding for the retention of external consultants or advisers, as the committee deems necessary or appropriate.

 

Compensation Committee Interlocks and Insider Participation

For 2020, the Compensation Committee was comprised of Ms. Polsky, Ms. Studenmund and Ms. Tellez, as well as Messrs. Garrett, and Jones, each of whom was an independent director. None of these individuals is or has been an officer or employee of the Company during the last fiscal year or as of the date of this Proxy Statement, or is serving or has served as a member of the compensation committee of another entity that has an executive officer serving on the Compensation Committee. No executive officer of the Company served as a director of another entity that had an executive officer serving on the Compensation Committee. Finally, no executive officer of the Company served as a member of the compensation committee of another entity that had an executive officer serving as a director of the Company.

  

HUMAN CAPITAL RESOURCE MANAGEMENT

Our culture and approach to human capital resource management is embodied in our Success Attributes: Achieve, Communicate, Improve, Integrity, and Urgency. These principles have been the drivers of our performance and continued to serve us well in 2020 as we executed our strategic growth strategy and navigated the COVID-19 pandemic. We believe in the value of teamwork and the power of diversity. We expect and encourage participation and collaboration. We value accountability because it is essential to our success, and we accept our responsibility to hold ourselves and others accountable for meeting commitments and achieving exceptional standards of performance. Highlights of our approach to human capital resource management include:

 

 

Diversity, Equality, and Inclusion. We believe that diversity of thought and experiences results in better outcomes for all of our stakeholders and empowers our employees to make more meaningful contributions within our Company and communities. The graphics below highlights our diverse workforce based upon how our employees self-identify. We believe this diversity has contributed to our success. We do not and will not tolerate discrimination in any form with respect to any aspect of employment. Our current initiatives reflect our ongoing efforts as we continue to foster a diverse, inclusive, and equitable workplace.

image

 

 
27

 

 

 

Investing in Our Human Capital. We endeavor to provide our employees with careers instead of jobs, and as such, full-time employees comprise the majority of our staff. We encourage professional and personal development and offer our employees professional development and training opportunities as well as generous tuition reimbursement resources. We are committed to identifying and remediating inequities in compensation outcomes and promotion opportunities.

 

Health & Safety. Our health and safety program consists of policies, procedures, and guidelines, and mandates all tasks be conducted in a safe and efficient manner complying with all local, state and federal safety and health regulations, and special safety concerns. The health and safety program encompasses all facilities and operations and addresses on-site emergencies, injuries and illnesses, evacuation procedures, cell phone usage, and general safety rules. By way of example of our commitment to our employees’ health and safety, since the onset of the COVID-19 pandemic, we have taken the following steps for our employees:

 

Provided personal protective equipment to our employees at all locations;

 

Reconfigured corporate offices and branches to keep employees safe;

 

Offered and paid for on-site rapid COVID-19 testing for all employees and their partners; and

 

Provided ongoing education to employees on the efficacy of vaccines, provided resources regarding available vaccines and awarded hourly employees receiving a vaccination during business hours a 4-hour pay allocation.

 

ENVIRONMENTAL, SOCIAL AND GOVERNANCE

Our commitment to sustainability begins at the top of our organization with our Board. The Board has made its Nominating and Governance Committee, which is composed entirely of independent directors, responsible for overseeing our strategy, policies and initiatives related to our environmental, social and governance (“ESG”) program. The Nominating and Governance Committee directly reports to the Board and reviews and advises on the Company’s ESG policies and disclosures, oversees management’s implementation of ESG initiatives, and advises the Board on significant ESG-related matters. While the Nominating and Governance Committee is responsible for overall strategies, policies and initiatives related to ESG, specific aspects of ESG are overseen by other Board committees (e.g., the Enterprise Risk Committee will oversee specific aspects of the Company’s environmental initiatives, such as identifying and mitigating climate-related risks in relation to our credit underwriting and administration standards).

In February of 2021, Sherri Scott, our Head of Fair and Responsible Banking, was promoted to serve as our Director of ESG and Corporate Responsibility. In that capacity, Ms. Scott engages with a broad range of internal and external stakeholders, including our Board of Directors, clients, consumer advocates and community leaders to help inform and shape our ESG programs. In addition, we created and filled the new position of Corporate Social Responsibility Officer in 2020. This position supports the Director of ESG and Corporate Responsibility in updating the Nominating and Governance Committee on ESG initiatives and developments. The Corporate Social Responsibility Officer also oversees the ESG reporting and disclosure process, monitors trends and best practices, supports existing ESG projects and helps develop new sustainability initiatives.

We have established a management-level ESG Management Group to help the Director of ESG and Corporate Responsibility, Corporate Social Responsibility Officer and senior management develop, implement, and manage the Company’s ESG program. The ESG Management Group is chaired by the Director of ESG and Corporate Responsibility, and its membership includes our President, Chief Financial Officer, Chief Risk Officer, Chief Human Resources Officer, Chief Credit Officer, Chief Marketing Officer, Chief Information Officer, Chief Innovation Officer, Chief Strategic Project Officer, General Counsel, Chief Securities Counsel, Director of Investor Relations, and the Corporate Social Responsibility Officer. The ESG Management Group operates as a steering committee with three working groups, including the: Sustainability Working Group (Environmental), the Social Responsibility Working Group (Social), and Governance & Disclosure Working Group (Governance).

For more details regarding our ESG initiatives, you are encouraged to read our inaugural ESG Report, which can be found on our website at www.ppbi.com under the “Investors” tab.

 

 
28

  

PRINCIPAL HOLDERS OF COMMON STOCK

The following table sets forth information as to those persons or entities believed by management to be beneficial owners of more than 5% of the Company’s outstanding shares of common stock on the Record Date or as represented by the owner or as disclosed in certain reports regarding such ownership filed by such persons with the Company and with the SEC, in accordance with Sections 13(d) and 13(g) of the Exchange Act. Other than those persons listed below, the Company is not aware of any person, as such term is defined in the Exchange Act, that beneficially owns more than 5% of the Company’s common stock as of the Record Date.

 

 

Amount and Nature of
Beneficial Ownership

 

Percent of Class(1)

BlackRock Inc.

55 East 52nd Street New York, NY 10055

13,718,099(2)

14.49%

The Vanguard Group

100 Vanguard Blvd.

Malvern, PA 19355

  9,862,919 (3)

10.42%

Dimensional Fund Advisors LP

6300 Bee Cave Road.

Austin, TX 78746

 6,191,543(4)

6.54%

T. Rowe Price Associates, Inc.

100 East Pratt St.

Baltimore, MD 21202

  6,173,151(5)

6.52%


(1)

As of March 23, 2021, there were 94,684,272 shares of Company common stock outstanding on which “Percent of Class” in the above table is based.

(2)

As reported in a Schedule 13 G/A filed with the SEC on January 26, 2021 for the calendar year ended December 31, 2020, BlackRock Inc. reported having sole voting power over 13,546,619 shares and sole dispositive power over 13,718,099 shares.

(3)

As reported in a Schedule 13 G/A filed with the SEC on February 10, 2021 for the calendar year ended December 31, 2020, The Vanguard Group reported having sole voting power over 0 shares and sole dispositive power over 9,698,959 shares.

(4)

As reported in a Schedule 13 G/A filed with the SEC on February 12, 2021 for the calendar year ended December 31, 2020, Dimensional Fund Advisors LP reported having sole voting power over 6,007,667 shares and sole dispositive power over 6,191,543 shares.

(5)

As reported in a Schedule 13 G/A filed with the SEC on February 16, 2021 for the calendar year ended December 31, 2020, T. Rowe Price Associates, Inc. reported having sole voting power over 1,404,476 shares and sole dispositive power over 6,173,151 shares.

 

 
29

 

 

 

SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS

This table and the accompanying footnotes provide a summary of the beneficial ownership of our common stock as of the Record Date, by (i) our directors,

(ii) our named executive officers, and (iii) all of our current directors and executive officers as a group. The following summary is based on information furnished by the respective directors and officers. Each person has sole voting and investment power with respect to the shares they beneficially own.

 

 

 

 

 

Total Beneficial Ownership

 

Common
Stock

Restricted
Stock(1)

Options

Exercisable(2)

 

#(3)

 

%(4)

Name

A

B

C

D

E

Ayad A. Fargo

299,332

4,948

304,280

*

Joseph L. Garrett

78,366

4,948

25,000

108,314

*

Jeffrey C. Jones

127,478

4,948

22,500

154,926

*

M. Christian Mitchell

18,048

4,948

22,996

*

Barbara S. Polsky

4,948

4,948

*

Zareh H. Sarrafian

24,914

4,948

29,862

*

Jaynie M. Studenmund

4,948

4,948

*

Cora M. Tellez

18,453

4,948

23,401

*

Richard C. Thomas

9,258

1,445

10,703

*

Steven R. Gardner

249,649

158,101

407,750

*

Edward Wilcox

107,944

57,969

62,531

228,444

*

Ronald J. Nicolas, Jr.

27,055

51,742

78,797

*

Michael S. Karr

51,543

23,538

45,000

120,081

*

Thomas E. Rice

64,080

28,817

92,897

*

Stock ownership of all directors and executive officers as a group (24 persons)

1,199,897

539,941

192,531

1,932,369

2.04%

*

Represented less than 1% of outstanding shares.

(1)

In accordance with applicable SEC rules, shares of restricted stock constitute beneficial ownership because the holder has voting power, but not dispositive power.

(2)

In accordance with applicable SEC rules, stock options that are exercisable or will become exercisable, and restricted stock units that will be settled, within 60 days after the Record Date are included in this column.

(3)

The amounts are derived by adding shares, restricted stock and options exercisable listed in columns A, B and C of the table.

(4)

The amounts contained in column E are derived by dividing the amounts in column D of the table by (i) the total outstanding shares of 94,684,272 plus (ii) the amount in column C for that individual or the group, as applicable.

Delinquent Section 16(a) Reports

Pursuant to Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the related rules and regulations, our directors and executive officers and any beneficial owners of more than 10% of any registered class of our equity securities, are required to file reports of their ownership, and any changes in that ownership, with the SEC. To our knowledge and based solely on our review of copies of these reports and on written representations from such reporting persons, we believe that during 2020, all such persons filed all ownership reports and reported all transactions on a timely basis.

 

 
30

 

 

 

COMPENSATION OF NON-EMPLOYEE DIRECTORS

Our compensation for our non-employee directors is designed to be competitive with other financial institutions that are similar in size, complexities or business models. Our Board of Directors, acting upon a recommendation from the Compensation Committee, annually determines the non-employee directors’ compensation for serving on the Board of Directors and its committees. Our CEO, the only employee director on the Board, does not receive any payment for his services as a director.

 

2020 Director Compensation

No changes to our non-employee director compensation structure were made in 2020. The Director’s Compensation Table below sets forth the current committee membership assignments, as well as the amounts earned or paid to each non-employee member of our Board of Directors during the year ended December 31, 2020. Individual compensation reflects the base cash and equity compensation, as well as incremental committee chairperson and membership fees, as applicable. Each director serves on at least one committee.

Aggregate Director Compensation in 2020. In accordance with applicable SEC rules and regulations, the following table reports all compensation the Company paid during 2020 to its non-employee directors.

 

2020 DIRECTOR COMPENSATION

Name

 

Fees
Earned or
Paid in
Cash

 

Stock Awards(2)

 

Option
Awards(2)

 

Changes In
Nonqualified
Deferred
Compensation
Earnings

 

All Other
Compensation

 

Total

 

John J. Carona(1)

 

$41,833 

 

$66,000 

 

$   —     

 

$  —   

 

$  —   

 

$  107,833    

 

Ayad A. Fargo

 

66,250

 

66,000

 

 

 

 

132,250

 

Joseph L. Garrett

 

69,833

 

66,000

 

 

 

 

135,833

 

Jeffrey C. Jones

 

74,000

 

66,000

 

 

 

 

140,000

 

M. Christian Mitchell

 

73,500

 

66,000

 

 

 

 

139,500

 

Michael J. Morris(1)

 

48,667

 

66,000

 

 

 

 

114,667

 

Barbara S. Polsky

 

69,958

 

66,000

 

 

 

 

135,958

 

Zareh H. Sarrafian

 

73,500

 

66,000

 

 

 

 

139,500

 

Jaynie M. Studenmund

 

70,000

 

66,000

 

 

 

 

136,000

 

Cora M. Tellez

 

65,333

 

66,000

 

 

 

 

131,333

 

Richard C. Thomas

 

22,750

 

 

 

 

 

22,750

 

 

(1)

Messrs. Carona and Morris resigned from the Board in 2020 effective as immediately prior to the effective time of the Opus acquisition. All of the shares of restricted stock awarded to them were accelerated to vest upon their resignation.


(2)

These amounts represent the aggregate grant date fair value of restricted stock granted in 2020, calculated in accordance with FASB ASC Topic 718. Assumptions used in the calculation of these amounts are discussed in Note 17 to our Consolidated Audited Financial Statements for the fiscal year ended December 31, 2020, included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020. Fair value is based on 100% of the closing price per share of our common stock on the date of grant. At December 31, 2020, each of the non-employee directors named in the above table held 3,503 shares of restricted stock except for Mr. Thomas who did not hold any shares. In addition, at December 31, 2020, Mr. Garrett held options to acquire 25,000 shares of our common stock and Mr. Jones held options to acquire 22,500 shares of our common stock.

 

Elements of Director Compensation

Compensation for our non-employee directors reflects a combination of cash (annual retainer fees and committee retainer fees) and equity (annual restricted stock unit awards), as outlined in the Schedule of Director Fees below. The chairpersons of the Board and each committee are also entitled to annual chairperson fees.

 

 
31

 

 

 

Summary of Annual Director Fees

Director Fee:

$65,000

Chairperson Fees:

$15,000 Audit Committee

$10,000 Compensation Committee

$10,000 Enterprise Risk Committee

$7,500 Nominating and Governance Committee

Committee Member Fees

$2,500 Audit Committee

$1,000 Compensation Committee

$1,000 Enterprise Risk Committee

$750 Nominating and Governance Committee

Equity Awards

$66,000 in shares of restricted stock

Travel Expenses

Directors are eligible for reimbursement for their reasonable expenses incurred in connection with attendance at meetings or the performance of their director duties in accordance with Company policy

 

Stock Compensation

Each non-employee director is eligible for a grant of shares of restricted stock issued from our Amended and Restated 2012 Long-Term Incentive Plan, as amended, as recommended by the Compensation Committee. The shares of restricted stock that the Company awards to its directors fully vest as of the first anniversary of the date of grant, subject to earlier vesting on termination of service in certain circumstances. On March 31, 2020, each of our non-employee directors serving at that time was granted 3,503 shares of restricted stock, which had a value of approximately $66,000 as of the date of grant, based upon the closing price of the Company’s common stock as of that date.

 

Health Insurance Benefits

Effective 2020, non-employee directors can no longer elect to receive insurance benefits from the Company, including long-term care insurance or health care insurance.

 

Deferred Compensation Plan

 

The Bank created a Directors’ Deferred Compensation Plan in September 2006 which allowed non-employee directors to defer Board of Directors’ fees and provided for additional contributions from any opt-out portion of the long-term care insurance plan. See “Health Insurance Benefits” under “Compensation of Non-Employee Directors.” As of December 2016, the Directors’ Deferred Compensation Plan was frozen such that no new contributions may be made and existing balances remain until distribution. The Directors’ Deferred Compensation Plan is unfunded. The Company is under no obligation to make matching contributions to the Directors’ Deferred Compensation Plan. The deferred compensation was credited with interest by the Bank at prime plus one percent through January 31, 2014, after which the rate was changed to prime minus one percent. The director’s account balance is payable upon retirement or resignation. The table below shows the totals for the Deferred Compensation Plan contributions and earnings for our Directors for the year ended December 31, 2020.

 

 

32 

 

2020 NONQUALIFIED DIRECTOR DEFERRED COMPENSATION

 

 

Name

 

Aggregate
Balance at Fiscal
Year-End Prior to
Last Fiscal

Year-End($)

 

 

Director
Contributions in
Last Fiscal Year
($)

 

 

Contributions in
Lieu of Health
Insurance in Last
Fiscal Year ($)

 

 

 

Aggregate
Earnings in Last
Fiscal Year ($)

 

 

 

Aggregate
Withdrawals/
Distributions ($)

 

 

Aggregate
Balance at Last
Fiscal Year-End
($)

John J. Carona(1)

 

15,974

 

 

 

 

 

15,974

Ayad A. Fargo

 

2,312

 

 

 

 

 

2,312

Joseph L. Garrett

 

 

 

 

 

 

Jeffrey C. Jones

 

52,555

 

 

 

 

 

52,555

M. Christian Mitchell

 

 

 

 

 

 

Michael J. Morris(1)

 

 

 

 

 

 

Barbara S. Polsky

 

 

 

 

 

 

Zareh H. Sarrafian

 

 

 

 

 

 

Jaynie M. Studenmund

 

 

 

 

 

 

Cora M. Tellez

 

4,048

 

 

 

 

 

4,048

(1) Messrs. Carona and Morris resigned from the Board in 2020 effective as immediately prior to the effective time of the Opus acquisition. Mr. Carona’s aggregate balance was paid out in full subsequent to December 31, 2020.

 

Stock Ownership Guidelines for Directors

The Board of Directors has adopted stock ownership guidelines for non-employee directors, which require that each non-employee director own shares of the Company’s common stock having a value of at least equal to five times the director’s annual cash retainer for service on the Board of the Company or the Bank Board (not including committee-related fees). New directors have five years after joining the Board of Directors or the Bank Board to meet the guidelines. Restricted stock and restricted stock units, and a portion of the shares that may be acquired by exercise of vested in-the-money stock options, are treated as stock ownership for this purpose. As of the date of this Proxy Statement, all directors met or exceeded the ownership guidelines to the extent applicable to them.

  

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Related Party Transaction Policy

Our Board has adopted a written policy governing the approval of related-party transactions, which we refer to as our RPT Policy. A “related party transaction” means any transaction, arrangement or relationship (including any indebtedness or guarantee of indebtedness) in which (i) the Company or any of its subsidiaries is or will be a participant, (ii) the aggregate amount involved will or may be expected to exceed $120,000 in any fiscal year, and (iii) any “related party” (i.e., an executive officer, director, nominee for director, any stockholder owning more than 5% of any class of the Company’s voting securities, or an immediate family member of the any of these parties) has or will have a direct or indirect material interest. In summary, the RPT Policy provides that, unless a transaction is deemed to be pre-approved (such as compensation-related payments for services provided and routine banking-related services), each related party transaction must be approved by disinterested members of the Nominating and Governance Committee.

 

Insider Loans

Certain of our officers and directors, as well as their immediate family members and affiliates, are customers of, or have had transactions with us in the ordinary course of business. These transactions include deposits, loans and other financial services related transactions. Related party transactions are made in the ordinary course of business, on substantially the same terms, including interest rates and collateral (where applicable), as those prevailing at the time for comparable transactions with persons not related to us, and do not involve more than normal risk of collectability or present other features unfavorable to us. As of the date of this filing, no related party loans were categorized as nonaccrual, past due, restructured or potential problem loans.

 

33 

 

PROPOSAL NO. 2—ADVISORY APPROVAL OF OUR
EXECUTIVE COMPENSATION

 

 

The Board of Directors Recommends a Vote FOR the Approval of the Compensation of our Named Executive Officers, as Disclosed in this Proxy Statement.

Our advisory vote on executive compensation (otherwise known as “Say on Pay”) is held annually. This vote provides our stockholders the opportunity to vote to approve, on an advisory basis, the compensation of our Named Executive Officers (“NEOs”) as further described in the “Compensation Discussion and Analysis” section of this Proxy Statement, including the accompanying compensation tables and narrative discussion therein. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our NEOs and the philosophy, policies and practices described in this Proxy Statement.

We ask our stockholders to indicate their support for our executive compensation program for our NEOs and vote “FOR” the following resolution at the Annual Meeting:

 

“RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED.”

Because your vote is advisory, it will not be binding upon the Board or the Compensation Committee and may not be construed as overruling any decision by the Board or the Compensation Committee. However, the Board and Compensation Committee value the opinion of our stockholders and will take into consideration the outcome of this advisory vote when considering future executive compensation arrangements.

Stockholders are encouraged to carefully review the following “Compensation Discussion and Analysis” and “Compensation for Named Executive Officers” sections for a detailed discussion of our executive compensation program for our NEOs.

 

Vote Required

Your vote on this proposal is an advisory vote, which means that the Company and the Board are not required to take any action based on the outcome of the vote. However, the Compensation Committee will consider the vote of our stockholders on this proposal when determining the nature and scope of future executive compensation programs.

The affirmative vote of holders of the majority of the shares for which votes on the proposal are cast at the Annual Meeting is needed to approve this proposal on a non-binding advisory basis. Abstentions and broker non-votes will not be counted as votes cast and, therefore, will not affect this proposal. Further, the failure to vote, either by proxy or in person, will not have an effect on this proposal. Unless instructions to the contrary are specified in a proxy properly voted and returned through available channels, the proxies will be voted FOR this proposal.

 

34 

 

EXECUTIVE COMPENSATION DISCUSSION & ANALYSIS

In this Executive Compensation Discussion & Analysis, or CD&A, we explain our 2020 compensation program for our CEO, our CFO and our three highest paid other executive officers, whom we collectively refer to as our NEOs. The Compensation Committee of our Board has designed our NEO compensation program to align executive compensation with the Company’s achievement of its strategic objectives, its financial performance and the creation of long-term value for our stockholders. In designing our NEO compensation program, the Compensation Committee is mindful of the perspectives our key stakeholders may have with respect to matters regarding executive compensation.

Strategic acquisitions historically have been and continue to be a key component of our growth strategy, and as such, play an important role in our NEO compensation decisions. This was particularly true in 2020 as we announced and completed our acquisition of Opus Bank, or Opus, which was the largest acquisition in our history. The tables below reflect our growth since 2013 and the impact that growth has had on our tangible book value per share and total revenue, as well as our significantly improved efficiency ratio, all of which impact our long-term stockholder value.

 

image                                                                             image

 

image 

                                                                                 

 

(1)Please refer to the “GAAP Reconciliations” included at Annex A to this Proxy Statement with respect to our presentation of tangible book value per share and efficiency ratio.

 

35 

 

In designing our NEO compensation program, our Compensation Committee focused on balancing the desire to compensate and reward our NEOs for results that align with our strategic objectives, with ensuring that our NEO compensation program does not create incentives for our NEOs to promote undue

risk-taking for our organization. The Compensation Committee believes that tying a significant portion of our NEOs’ overall compensation to our long-term profitability and the long-term performance of our stock as compared to our peers provides a meaningful balance between these objectives. In addition, our Compensation Committee recognizes the impact strategic acquisitions can have on short-term financial measures – particularly with respect to merger- related costs, – which, if unadjusted, create meaningful incongruencies when comparing our performance relative to that of our peer group. In 2020, this impact was further exacerbated as a result of recent U.S. GAAP accounting changes referred to as Current Expected Credit Loss, or CECL, which affects certain initial, non-cash valuation adjustments with respect to acquired loan and securities portfolios in a way that can (and in 2020 did) materially, and negatively, affect our reported results of operations. To that end, our Compensation Committee has determined that it is important to consider the impact of these one-time, merger-related costs and non-cash adjustments on our financial results when assessing our performance against pre-established operating metrics, as well to facilitate and enhance the evaluation of our performance relative to our peers.

The following graphic highlights the key factors and outcomes with respect to our NEO compensation program for 2020.

Executive Compensation At-A-Glance

 

Named Executive Officers

 

2020 Company Highlights

 

 

 

Steven R. Gardner: Chairman of the Board, President and CEO of the Company and Chairman of the Board and CEO of the Bank

 

Completion of Opus Acquisition

 

  ● Largest acquisition in company history.

Edward E. Wilcox: President and COO of the Bank


Ronald J. Nicolas, Jr.: Senior EVP and CFO of the Company and the Bank

 

Michael S. Karr: Senior EVP and Chief Risk Officer of the Bank

 

Thomas E. Rice: Senior EVP and Chief Innovation Officer of the Bank

 

 

 
● Added $8.32 billion in assets, $5.94 billion in loans, and $6.91 billion in deposits.
 

  

Implementation of CECL

 

● Resulted in non-cash income statement charge unique to the 2020 Opus acquisition, even though no “actual” loss was incurred.

 

  

2020 Executive Compensation Highlights

 

2020 Financial Highlights

     

2020 Say-on-Pay Results: 81.4% approval of compensation program.

 

Stockholder Outreach: Continued and enhanced stockholder outreach program, engaging with institutional holders representing approximately 55% of outstanding shares.

 

CEO Variable and “At Risk” Pay: 84% of CEO’s total compensation.

 

2020 Annual Incentive Cash Payments: Our adjusted EPS, ROAA, and ROATCE, along with important qualitative factors, warranted incentive payouts to our NEOs.*

 

Long-Term Incentives:

● 50% time-based restricted stock
● 50% performance-based RSUs

 

Pre-Provision Net Revenue*
$313.5 million

 

Adjusted EPS*
$1.95

 

Adjusted ROAA*
0.93%

 

Adjusted ROATCE*
11.00%

 

TSR and Ranking vs. KBW Regional Bank Index**

 

 

1-Year   3-Year   5-Year

 

    +0.35%   -15.81%   +58.47%  
    78th Percentile   39th Percentile   80th Percentile  

*As discussed in detail below, as a result of our acquisition of Opus in 2020 and in order to reflect an “apples-to-apples” comparison with our peers, the indicated metrics have been adjusted to eliminate the impact of merger-related costs associated with the Opus acquisition and the non-cash provision for credit losses triggered by the Opus acquisition and required by the recently-effective CECL framework. Please refer to the “GAAP Reconciliations” included in Annex A to this proxy statement. Pre-provision net revenue is calculated as the sum of net interest income before provision for credit losses and total noninterest income less noninterest expense, exclusive of merger-related costs.


** Total shareholder return (TSR) assumes dividends paid during the performance period are reinvested. Percentile ranking is relative to the total shareholder return of the KBW Regional Bank Index members over the same period.

 

36 

 

EXECUTIVE COMPENSATION PHILOSOPHY

 

Executive Compensation Program Principles. Our Compensation Committee has established three key principles that provide the framework for our executive compensation program:

 

 

Alignment with Stockholder Interests.

Our executives’ interests should be aligned with the interests of our stockholders.

 

● Executive compensation is tied to financial performance and achievement of strategic goals. Key components of NEO and executive officer compensation are earned only if certain financial and
non-financial objectives that our Board and Compensation Committee have identified as value-enhancing are achieved.

 

● Stock ownership requirements. Our executive stock ownership guidelines require our NEOs to accumulate and maintain a meaningful position in shares of Company common stock to strengthen the alignment of their interests with those of long-term stockholders.

 

● Disincentives for excessive risk-taking. We believe that our executive compensation program is designed to balance risk and financial results in a manner that does not encourage imprudent risk-taking. Key design features include our “clawback” policy and our restrictions against hedging and pledging of our stock.

 

Pay for Performance.

Executive pay should be linked to achieving our long-term and short-term business goals.

 

● Focus on both short-term and long-term performance. We deliver incentive-based compensation both as annual cash and longer-term, equity-based awards predicated on achieving prospective financial goals.

 

● Compensation is tied to financial metrics that further our strategic plan. Both short-term and long-term performance goals are focused on our key financial metrics and strategic plans, which may take several quarters or years to realize.

 

● Performance is evaluated based on Stockholder Value, Profitability, and Risk Management. The Compensation Committee annually establishes specific performance metrics which are linked to short- and long-term incentive compensation outcomes and how well we perform relative to the industry and our peers.

 

Attract and Retain Key Executives.

Our executive compensation program should attract and retain executives who are capable and motivated to help us continue to grow and prudently manage our business.

 

● Peer group used to ensure pay is competitive in the market. Our Compensation Committee reviews executive compensation levels paid by members of our peer group based on available data, as well as benchmarking data from our compensation consultant, with the dual goals of paying total compensation at a level commensurate with how well we perform compared to our peer group and rewarding our executives for achieving strategic goals while maintaining discipline and prudence.

 

● Executives must remain with the Company to receive incentive compensation. Long-term incentive compensation makes up a large portion of executive compensation packages; approximately 67% of the long-term incentive compensation does not vest, if at all, for three years.

 

Our executive compensation program is designed with these principles in mind. This philosophy guides our Compensation Committee in all decisions regarding executive compensation.

 

Compensation Governance and Best Practices. Our Compensation Committee regularly reviews our compensation practices and policies to ensure that they further our executive compensation philosophy and reduce unnecessary risk. The following table summarizes our executive compensation plan features and what we believe are “best practices” in terms of designing and administering the plan.

 

37 

 

   

WHAT WE DO:

 

WHAT WE DON’T DO:

         
image 

Align short-term and long-term incentive plan targets with business goals and stockholder interests

 

 image

Provide Section 280G gross-up payments

 

 

 

 

 

image 

Conduct annual say-on-pay advisory vote

 

 image

Reward executives for taking excessive, inappropriate or unnecessary risk

 

 

 

   

image

Conduct stockholder outreach to solicit feedback and discuss our compensation practices

 

 image

Allow the repricing or backdating of equity awards

 

 

 

   

image

Retain an independent compensation consultant to advise our Compensation Committee

 

 image

Provide multi-year guaranteed salary increases or non- performance bonus arrangements

 

 

 

   

image

Use performance metrics that compare our performance to an external benchmark

 

 image

Rely exclusively on total stockholder return as our only performance metric

 

 

 

   

image

Maintain an insider trading policy

 

 image

Award incentives for below-threshold performance

 

 

 

   

image

Maintain a “clawback” policy that applies to NEOs and other senior executives

 

 image

Pay dividends on unearned or unvested performance-based awards

 

 

 

   

image

Maintain a robust stock ownership policy for executive officers

 

 image

Permit hedging and pledging of our stock by executives

 

 

 

   

image

Re-evaluate and update the composition of our peer group regularly, particularly in light of our recent significant growth

 

 image

Have single trigger vesting on our equity and equity-based awards

 

 

 

   
image

Limit vesting of performance-based RSUs in the event the results of a performance metric are negative

 

 

 

         

 

38 

 

PAY FOR PERFORMANCE AND PAY AT RISK

 

We strive to ensure that there is long-term alignment between NEO pay and Company performance. As we have refined our executive compensation program over the past several years, we continued to monitor CEO pay as it relates to our performance to ensure this alignment.

We believe that a significant portion of our NEOs’ total compensation should be “at risk,” meaning that its payment or vesting is based upon the occurrence of a future event or determined based upon the achievement of certain performance metrics. We also believe that a significant portion should be variable, meaning that the level of compensation will be increased or decreased based on the achievement of certain performance metrics or the performance of

our stock.

 

The total amount of compensation each executive could receive with respect to a fiscal year is variable based on our performance, which motivates our executives to achieve performance goals and create value for our stockholders. The annual incentive bonus rewards are earned by our NEOs for the achievement of short-term performance goals and how well we perform relative to the industry and our peers. The amount paid is tied to the level of achieved performance, with higher payout levels reflecting superior performance. The long-term performance-based, equity-based awards reward our executives for achieving long-term performance goals and increasing stockholder value.

 

As reflected in the charts that follow, 84% of our CEO’s target total 2020 compensation was variable or “at risk,” and an average of 77% of our CFO and the Bank President and 59% of our other NEOs’ total 2020 compensation was variable or “at risk.”

 

 

 image

 

39 

 

HOW EXECUTIVE COMPENSATION DECISIONS ARE MADE

 

Compensation decisions are made by our Compensation Committee, considering input from management, the Committee’s independent compensation consultant, Willis Towers Watson, or WTW, and considering compensation practices of a peer group of similarly-sized companies in our industry. The role of each in our executive compensation program is described below.

 

 

COMPENSATION COMMITTEE

Composed of only independent directors under NASDAQ rules.

Makes all determinations with respect to executive compensation program, with approval from Board where required (including for approval of CEO pay).

Annually reviews executive compensation policies and practices.

Determines whether proposed goals or structure of awards might have inadvertent effect of encouraging excessive risk or other undesirable behavior.

Reviews independence and potential conflict of interest of advisors under applicable NASDAQ listing standards and SEC rules on an annual basis.


 

image

 

 

image

   

 

image

 

 

Compensation Consultant*

 

 

Management

   

 

 Peer Group

 


 

Willis Towers Watson, an independent consulting firm specializing in compensation program design and evaluation with significant experience in the financial services industry, retained since 2017.

Assists the Compensation Committee in designing and evaluating our compensation program for NEOs.

 

 

 


 

Provides recommendations to the Compensation Committee with respect to executive compensation design.

Updates Compensation Committee on Company performance.

Reviews performance of senior executives, other than the CEO.

 

 


 

Consists of a group of publicly traded banks of similar size, taking into account total revenue, total asset size, market capitalization, return on assets, loan and deposit growth and total stockholder return.

Developed with the assistance of WTW.

Reviewed and updated annually.

 

 

 

 

 

 


 


 

 


 


 

 

*In 2020, based on its review and information provided by WTW regarding the provision of services, fees, policies and procedures, the presence of any conflicts of interest, ownership of the Company’s stock, and other relevant factors, the Compensation Committee concluded that engaging WTW raised no conflicts of interest concerns, and WTW was deemed to be independent for purposes of its services as an advisor to the Compensation Committee.

 

40 

 

2020 Peer Group

 

The Compensation Committee, with Willis Towers Watson’s assistance, reviewed and updated our Peer Group in 2020, which is presented below, to reflect the significant growth of the Company during the year due to the acquisition of Opus, which nearly doubled the consolidated assets of the Company. The Company ranks in the 56th percentile of the revised Peer Group on the basis of total assets, the 40th percentile on the basis of revenue, and the 48th percentile on the basis of market capitalization.

 

2020 PEER GROUP

     

Bank OZK*

 

Hilltop Holdings, Inc.

BankUnited, Inc.*

 

Hope Bancorp, Inc.*

Banner Corporation

 

Independent Bank Group, Inc.

Berkshire Hills Bancorp

 

International Bancshares Corporation

Cadence Bancorporation*

 

PacWest Bancorp*

Cathay General Bancorp*

 

Pinnacle Financial Partners, Inc.*

Columbia Banking System, Inc.*

 

Prosperity Bancshares, Inc.*

Community Bank System, Inc.*

 

Texas Capital Bancshares, Inc. *

Cullen/Frost Bankers, Inc.*

 

Umpqua Holdings Corporation*

CVB Financial Corp.*

 

Valley National Bancorp*

Glacier Bancorp, Inc.*

 

Western Alliance Bancorporation*

Great Western Bancorp, Inc

 

Wintrust Financial Corporation*

     

 

*Also a member of KRX Index composite.

 

41 

 

STOCKHOLDER OUTREACH AND “SAY-ON-PAY”

 

We provide our stockholders the ability to annually cast their advisory vote on the compensation of our NEOs. In 2020, we received an 81.4% affirmative vote for “say on pay”, after receiving a 94.7% affirmative vote in 2019. While this level of support shows an endorsement of our NEO compensation practices and governance features, we noted the reduction in support from 2019 to 2020 and enhanced our stockholder engagement efforts to better understand feedback and identify if there were specific concerns we could better address as we evaluate and enhance our NEO compensation program.

 

During 2020 we continued to review our NEO compensation plan design and governance practices with a view towards making advisable changes to the plan design and governance practices, as well as the composition of our peer group, in anticipation of 2021 NEO compensation decisions.

 

Based in part on our stockholder outreach initiatives over the past few years, we have taken certain actions to make sure our NEO compensation program more closely aligns our performance to stockholder interests, including implementing “double trigger” accelerated vesting provisions for our equity incentive awards and adopting and implementing an incentive compensation “clawback” policy, as well as extending our common stock ownership requirements to all of our NEOs. We have received mostly positive feedback with respect to our executive compensation program, particularly with respect to these recent changes.

 

During the course of 2020, we engaged directly with our top institutional stockholders, representing in the aggregate approximately 55% of our outstanding shares of common stock (as of September 30, 2020), on a range of topics related to long-term stockholder value, including our ESG initiatives and executive compensation matters. The table below summarizes the feedback we received from these stockholders.

 

FEEDBACK THEMES

 

ACTIONS IMPLEMENTED

Readability of executive compensation disclosure.

 

We enhanced our compensation disclosure in this CD&A to improve clarity of our compensation programs.

 

 

 

Transparency of annual discretionary cash incentive bonuses paid to two NEOs.

 

We transitioned these two NEOs to our formula-based annual incentive bonus program, which is described in this Proxy Statement.

 

 

 

Linkage between performance and earned incentive compensation.

 

We continuously evaluate the pay-for-performance elements of our compensation program to determine whether compensation properly reflects our performance on a standalone basis and in the market.

 

In 2020, due to the impact of CECL as well as the Opus acquisition, the Compensation Committee took particular care to ensure that our compensation program was properly aligned with our performance, on a standalone basis as well as in the market. Please see the discussion under Annual Cash Incentive Program on page 44.

 

We intend to continue this open discussion regarding our compensation program and will continue to take our stockholder feedback into consideration when making compensation decisions.

 

42 

 

ELEMENTS OF EXECUTIVE COMPENSATION PROGRAM

 

We analyze and adjust the various elements of our executive compensation program annually in an effort to ensure that each element is designed in a way that is consistent with the program principles described above. The purpose and key characteristics of each element of our executive compensation program is summarized below.

 

Portion of CEO Targeted Direct Compensation

Portion of Other NEO Average Targeted Direct Compensation

 

Purpose and Key Features

Base Salary

 

 

image

 

 

image

Purpose: Attraction and Retention of Key Executives.

Provides a fixed level of compensation for performing essential job functions.

Level of base salary reflects each NEO’s level of responsibility, leadership, tenure, qualifications, and the competitive marketplace for executive talent in our industry.

Reviewed annually and adjusted, if appropriate.

Annual Cash Incentive Award

 image

 

image

 

Purpose: Attraction and Retention of Key Executives / Linkage to Achieving Short-Term Business Goals.

Motivates NEOs to achieve our short-term business objectives while providing flexibility to respond to opportunities and market conditions.

2020 performance goals under the formula-based annual incentive include diluted earnings per share (weighted 40%), average loan growth (weighted 20%), average core deposit growth (weighted 20%), and satisfactory risk management (weighted 20%).*

Compares performance to industry benchmark to determine final annual cash incentive award.

Annual cash incentive awards are capped at 200% of target levels.

Long-Term Incentives

 

 

 

 

Purpose: Alignment with Stockholder Interests / Linkage to Achieve Long-Term Business Goals / Attraction and Retention of Key Executives.

Motivates NEOs to achieve our long-term business objectives by tying incentive to long-term metrics and tying value of incentive to value of stock.

50% in the form of Restricted Stock Awards (RSAs) and 50% in the form of Restricted Stock Units (RSUs).**

RSAs vest based on time, 1/3 on each anniversary of the date of grant.**

RSUs vest based on the achievement of performance goals at the end of a 3-year performance period.

RSU performance goals are based 50% on rTSR percentile compared to the KRX, 25% on average ROAA percentile compared to the KRX, and 25% on average ROATCE percentile compared to the KRX.

Payout on the third anniversary of the date of grant ranging between 0% and 200% of a target award.

Other Benefits

 

 

Purpose: Attraction and Retention of Key Executives.

Qualified retirement plan, health and welfare plans, and minimal perquisites.

Non-qualified supplemental retirement plan for our CEO and the Bank’s President.

 

*For 2020, the Compensation Committee adopted a modified discretionary approach. Please see the discussion under Annual Cash Incentive Program on page 44.


**For 2020 only, Mr. Karr and Mr. Rice received only RSAs with time-based vesting over a 5-year period. For 2021, all NEO’s received long-term incentive awards comprised of 50% RSAs and 50% performance-based RSUs.

 

43 

 

Base Salary

 

The Compensation Committee considers base salary levels as part of its process of ensuring that each NEO’s overall compensation package is competitive, including annual and long-term incentives, the target amount of which is generally based on a percentage or multiple of base salary. The base salary of each of our NEOs is within 6% of the 50th percentile of base salaries of our peers. The following table provides information regarding base salaries for our NEOs serving at year-end of each of 2019 and 2020:

 

ANNUAL BASE SALARY

Name

2019

2020

% Change

Steven R. Gardner

$800,000

$800,000

0.00%

Edward E. Wilcox

$500,000

$500,000

0.00%

Ronald J. Nicolas, Jr.

$475,000

$475,000

0.00%

Michael S. Karr

$350,000

$355,000

1.43%

Thomas E. Rice

$365,000

$370,000

1.37%


Annual Cash Incentive Program

 

We use a formula-based annual cash incentive program to provide each NEO with a strong incentive to execute our business plan for the year. Our formula- based annual cash incentive program: