EX-97 10 exhibit97.htm EXHIBIT 97.1 exhibit97
 
 
1
FIRSTBANCORP
COMPENSATION CLAWBACK POLICY
EXHIBIT
 
97.1
Introduction
Purpose
The
 
Compensation
 
&
 
Benefits
 
Committee
 
(the
 
“Committee”)
 
of
 
First
 
BanCorp.
 
(the
 
“Corporation”)
 
believes
 
that
 
it
 
is
 
in
 
the
 
best
interest of
 
the Corporation
 
to reinforce
 
its compensation
 
philosophy by
 
adopting this
 
Compensation
 
Clawback Policy
 
(the “Policy”)
for the adjustment
 
or recovery of Incentive-Based
 
Compensation awards to
 
Executive Officers and
 
other Covered Employees (each
 
as
defined below), In the event of
 
a Restatement (as defined below). In
 
this regard, the Board of Directors of
 
the Corporation has adopted
compensation recovery
 
guidelines as
 
set forth
 
in this
 
Policy.
 
This Policy
 
has been
 
amended and
 
adopted in
 
compliance with
 
Section
10D of the
 
Securities Exchange Act
 
of 1934 (the
 
“Exchange Act”), as amended,
 
and Rule 10D-1
 
promulgated thereunder and
 
Section
303A.14 of the New York
 
Stock Exchange (“NYSE”) Listing Standards Manual.
Applicability
This
 
Policy
 
is
 
applicable
 
to
 
all
 
Incentive-Based
 
Compensation
 
received
 
by
 
Executive
 
Officers
 
and
 
Covered
 
Employees
 
of
 
the
Corporation, including its subsidiaries and affiliates, after the effective
 
date of this Policy.
Definitions
TERM
DEFINITION
Covered
Employee
Any recipient
 
of Incentive-Based
 
Compensation from
 
the Corporation
 
or a
 
subsidiary who
 
is not
an Executive Officer.
Excess
Compensation
Any
 
amount
 
of
 
Incentive-Based
 
Compensation
 
(calculated
 
on
 
a
 
pre-tax
 
basis)
 
received
 
by
 
an
Executive
 
Officer
 
or
 
Covered
 
Employee
 
that
 
exceeds
 
the
 
amount
 
of
 
Incentive-Based
Compensation
 
that
 
otherwise
 
would
 
have
 
been
 
received
 
had
 
it
 
been
 
determined
 
based
 
on
 
the
restated amounts.
Executive Officer
The
 
Corporation’s
 
president, principal
 
financial
 
officer,
 
principal accounting
officer
 
(or
 
if
 
there
 
is
 
no
 
such
 
accounting
 
officer,
 
the
 
controller),
 
any
 
vice-
president
 
of
 
the
 
Corporation
 
in
 
charge
 
of
 
a
 
principal
 
business unit,
 
division,
or function
 
(such
 
as sales,
 
administration,
 
or finance),
 
any other
 
officer
 
who
performs a policy-making
 
function, or any
 
other person who performs
 
similar
policy-making
 
functions
 
for
 
the
 
Corporation
.
 
Executive
 
Officers
 
of
 
the
Corporation
 
or
 
its
 
subsidiaries
 
are
 
deemed
 
Executive
 
Officers
 
of
 
the
Corporation
 
if
 
they
 
perform
 
such
 
policy-making
 
functions.
 
 
2
Financial Reporting
Measure
Incentive-Based
Compensation
Received
Restatement
A
 
measure
 
that
 
is
 
determined
 
and
 
presented
 
in
 
accordance
 
with
 
the
accounting
 
principles
 
used
 
in
 
preparing
 
the
 
Corporation’s
 
financial
statements
 
(including
 
“non-GAAP”
 
financial
 
measures,
 
such
 
as
 
those
appearing
 
in earnings
 
releases or
 
MD&A), and
 
any measure
 
that is
 
derived
wholly
 
or
 
in
 
part
 
from
 
such
 
measure.
 
Examples
 
of
 
Financial
 
Reporting
Measures
 
include
 
measures
 
based
 
on
 
revenues,
 
net
 
income,
 
operating
income, financial ratios, EBITDA,
 
liquidity measures, return measures
 
(such
as return
 
on assets),
 
and
 
profitability
 
of one
 
or more
 
segments.
 
Stock price
and total shareholder return are also Financial Reporting Measures.
Any compensation
 
(whether in
 
the form
 
of cash
 
or equity)
 
granted,
 
earned,
or
 
vested,
 
based
 
wholly
 
or
 
in
 
part
 
upon
 
the
 
attainment
 
of
 
a
 
Financial
Reporting Measure. Incentive-Based Compensation
 
does not include (i) base
salary;
 
(ii)
 
“sign-on”
 
bonuses
 
or
 
other
 
compensation
 
granted
 
solely
 
due
 
to
the commencement
 
of employment with
 
the Corporation;
 
(iii) compensation
exclusively
 
based
 
on
 
completion
 
of
 
a
 
specific
 
period
 
of
 
employment
 
or
service,
 
without
 
any
 
performance
 
condition;
 
or
 
(iv)
 
compensation
 
awarded
based on subjective, non-financial, strategic, or operational measures
 
that are
not Financial Reporting Measures.
 
Incentive-Based
 
Compensation
 
is
 
deemed
 
received
 
in
 
the
 
issuer’s
 
fiscal
period
 
during
 
which
 
the
 
Financial
 
Reporting
 
Measure
 
specified
 
in
 
the
Incentive-Based
 
Compensation
 
award
 
is
 
attained,
 
even
 
if
 
the
 
payment
 
or
grant
 
of
 
the
 
Incentive-Based
 
Compensation
 
occurs
 
after
 
the
 
end
 
of
 
that
period. For example,
 
(i) if the grant
 
of an award is
 
based, either wholly
 
or in
part, on satisfaction
 
of a Financial
 
Reporting Measure performance
 
goal, the
award would be deemed
 
received in the fiscal period
 
when that measure was
satisfied; or (ii) if an equity
 
award vests only upon satisfaction of
 
a Financial
Reporting
 
Measure
 
performance
 
condition,
 
the
 
award
 
would
 
be
 
deemed
received in the fiscal period when it vests.
 
An
 
accounting
 
restatement
 
of the
 
Corporation’s
 
financial
 
statements due
 
to
material
 
noncompliance
 
with
 
any
 
financial
 
reporting
 
requirement
 
under
federal
 
securities laws,
 
regardless of
 
whether
 
misconduct
 
was the
 
cause for
such restatement.
 
Restatements include
 
any required
 
accounting restatement
to correct
 
an error
 
in previously
 
issued
 
financial
 
statements that
 
is material
to the
 
previously issued
 
financial statements
 
(commonly
 
referred to
 
as “Big
R” restatements),
 
or that
 
would result
 
in a material
 
misstatement if
 
the error
were corrected
 
in the current
 
period or
 
left uncorrected
 
in the
 
current period
(commonly referred to as “little r” restatements).
The
 
following
 
retrospective
 
changes
 
to
 
the
 
Corporation’s
 
financial
statements
 
are
 
not
 
considered
 
a
 
Restatement
 
which
 
would
 
require
application
 
of
 
this
 
Policy,
 
among
 
others:
 
(i)
 
application
 
of
 
a
 
change
 
in
accounting principle;
 
(ii) revisions to
 
reportable segment
 
information due
 
to
a change
 
in internal
 
organization; (iii)
 
reclassification due
 
to a
 
discontinued
operation;
 
(iv)
 
application
 
of
 
a
 
change
 
in
 
reporting
 
entity,
 
such
 
as
 
from
 
a
reorganization of
 
entities under common
 
control; and
 
(v) revisions for
 
stock
splits,
 
reverse
 
stock
 
splits,
 
stock
 
dividends
 
or
 
other
 
changes
 
in
 
capital
structure.
References
●
N/A
 
3
Policy
I.
Clawback Period
The
 
Committee
 
will
 
reasonably
 
promptly
 
recover
 
(unless
 
the
 
Committee
 
determines
 
impracticable
 
to
 
do
 
so,
 
after
exercising
 
a
 
normal
 
due
 
process
 
review
 
of
 
all
 
the
 
relevant
 
facts
 
and
 
circumstances
 
as
 
explained
 
below)
 
Excess
Compensation received
 
during the
 
three completed
 
fiscal years
 
preceding the
 
date on
 
which the
 
Corporation is
 
required
to
 
prepare
 
a
 
Restatement
 
(the
 
“Recovery
 
Period”).
 
The
 
“date
 
on
 
which
 
the
 
Corporation
 
is
 
required
 
to
 
prepare
 
a
Restatement”
 
is
 
the
 
earlier
 
of
 
the
 
following:
 
(1)
 
the
 
date
 
upon
 
which
 
the
 
Board
 
of
 
Directors
 
of
 
the
 
Corporation
 
(the
“Board”), a
 
committee of
 
the Board, or
 
the officer
 
or officers
 
of the Corporation
 
authorized to
 
take such action
 
if Board
action is
 
not required,
 
concludes, or
 
reasonably should
 
have concluded,
 
that a
 
Restatement is
 
required; or
 
(2) the
 
date a
court, regulator or other legally authorized body
 
directs the Corporation to prepare a Restatement, in each
 
case regardless
of if or when the restated financial statements are filed.
The
 
Committee
 
may
 
determine
 
impracticable
 
to
 
reasonably
 
promptly
 
recover
 
Excess
 
Compensation
 
after
 
exercising
 
a
normal due
 
process review of
 
all relevant facts
 
and circumstances
 
to the extent
 
that (i) the
 
direct expense
 
paid to a
 
third
party to
 
assist in
 
enforcing the
 
Policy would
 
exceed the
 
amount recovered
 
(under these
 
circumstances,
 
the Corporation
would document
 
its reasonable
 
attempts to
 
recover the
 
Incentive-Based Compensation
 
and provide
 
such documentation
to the
 
NYSE); (ii)
 
recovery would
 
violate home
 
country law
 
that was
 
adopted prior
 
to November
 
28, 2022
 
(under these
circumstances,
 
the Corporation
 
would obtain
 
an opinion
 
of home
 
country counsel
 
and provide
 
it to
 
the NYSE);
 
or (iii)
recovery
 
would
 
likely
 
cause
 
an
 
otherwise
 
tax-qualified
 
retirement
 
plan,
 
under
 
which
 
benefits
 
are
 
broadly
 
available
 
to
employees
 
of
 
the
 
Corporation,
 
to
 
fail
 
to
 
meet
 
the
 
requirements
 
of
 
26
 
U.S.C.
 
401(a)(13)
 
or
 
411(a)
 
and
 
regulations
thereunder.
II.
Repayment
This
 
Policy
 
applies
 
to
 
all
 
Incentive-Based
 
Compensation
 
Received
 
by
 
(1)
 
a
 
person
 
(i)
 
after
 
beginning
 
services
 
as
 
an
Executive
 
Officer
 
and
 
(ii) if
 
that person
 
served
 
as an
 
Executive
 
Officer
 
at any
 
time during
 
the performance
 
period for
such
 
Incentive-Based
 
Compensation
 
and
 
(2)
 
any
 
Covered
 
Employee
 
who
 
the
 
Committee
 
determines
 
was
 
directly
responsible
 
for
 
the
 
Restatement
 
or
 
the
 
Committee
 
determined
 
engaged
 
in
 
intentional
 
fraud
 
or
 
gross
 
misconduct.
 
Any
recoupment of compensation pursuant to this Policy will be
 
in addition to any other remedies that may be available to
 
the
Corporation under applicable law,
 
including termination of employment.
The
 
Corporation
 
will
 
make
 
all
 
reasonable
 
attempts
 
to
 
recover
 
any
 
amounts
 
due
 
under
 
this
 
Policy
 
by
 
way
 
of
 
direct
payment from the
 
Executive Officer or
 
Covered Employee, if applicable,
 
recovery over time,
 
the reduction of future
 
pay
and/or awards,
 
and/or any other
 
method which
 
will provide for
 
recovery within
 
a reasonable
 
manner and
 
without undue
delay.
III.
Administration
This
 
Policy
 
will
 
be
 
enforced
 
in
 
accordance
 
with
 
Section
 
10D
 
of
 
the
 
Exchange
 
Act,
 
and
 
Rule
 
10D-1
 
promulgated
thereunder
 
and Paragraph
 
303A.14 of
 
the Listing
 
Standards Manual
 
of the
 
NYSE. The
 
Committee shall
 
be responsible
for monitoring
 
the application
 
of this
 
Policy,
 
and has
 
the sole
 
authority to
 
construe, interpret
 
and implement
 
this Policy
and
 
make
 
any
 
determinations
 
necessary
 
or
 
advisable
 
in
 
administering
 
this
 
Policy.
 
The
 
Committee
 
may
 
modify,
supplement, rescind or replace all or any portion of this Policy at any time in accordance
 
with applicable law.
IV.
Other Policies and Laws
In the
 
event of
 
any conflict
 
or inconsistency
 
between this
 
Policy and
 
any other
 
policies, plans,
 
or other
 
materials of
 
the
Corporation,
 
this Policy
 
shall govern.
 
However,
 
to the
 
extent another
 
policy,
 
plan, or
 
agreement calls
 
for adjustment
 
or
recovery
 
of an
 
Incentive-Based
 
Compensation
 
award
 
when this
 
Policy would
 
not require
 
such adjustment
 
or recovery,
this
 
Policy
 
will
 
not
 
interfere
 
with
 
application
 
of
 
such
 
other
 
policy,
 
plan,
 
or
 
agreement.
 
The
 
Corporation
 
is
 
prohibited
from indemnifying
 
any Executive
 
Officer or
 
Covered Employee
 
against the
 
loss of
 
erroneously awarded
 
compensation.
This Policy will
 
be amended as
 
necessary to
 
comply with applicable
 
law or any
 
rules or standards
 
adopted by a
 
national
securities exchange
 
on which
 
the Corporation’s
 
securities are
 
listed in.
 
Notwithstanding anything
 
to the
 
contrary in
 
this
Policy,
 
in no
 
event
 
shall the
 
Committee
 
seek any
 
recoupment
 
described
 
in this
 
Policy if,
 
by doing
 
so, the
 
Corporation
would be in violation of any applicable state law enacted on or before November 28,
 
2022.
 
4
V.
Disclosures
Appropriate
 
disclosures
 
and
 
other
 
filings
 
with
 
respect
 
to
 
this
 
Policy
 
will
 
be
 
made
 
in
 
accordance
 
with
 
SEC
 
rules
 
and
applicable NYSE listing standards.
VI.
Acknowledgement by Executive Officers
The
 
Committee,
 
through
 
the
 
Board’s
 
Secretary
 
Office,
 
on
 
an
 
annual
 
basis
 
shall
 
provide
 
notice
 
and
 
seek
acknowledgement
 
of this
 
Policy from
 
each Executive
 
Officer,
 
provided that
 
the failure
 
to provide
 
such notice
 
or obtain
such acknowledgement shall have no impact on the applicability or enforceability
 
of this Policy.
List of Exhibits
●
N/A