DEF 14A 1 d498493ddef14a.htm DEF 14A DEF 14A
Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF

THE SECURITIES EXCHANGE ACT OF 1934

(Amendment No.     )

Filed by the Registrant  

Filed by a Party other than the Registrant  

Check the appropriate box:

 

   Preliminary Proxy Statement
   Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
   Definitive Proxy Statement
   Definitive Additional Materials
   Soliciting Material Pursuant to §240.14a-12

THE BANK OF NEW YORK MELLON CORPORATION

 

(Name of Registrant as Specified in its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

 

  No fee required.
 

Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

 

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Title of each class of securities to which transaction applies:

   

 

  (2)  

Aggregate number of securities to which transaction applies:

 

   

 

  (3)  

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined):

   

 

  (4)  

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Total fee paid:

   

 

  Fee paid previously with preliminary materials.
 

Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

  (1)  

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Table of Contents

LOGO

2018 NOTICE OF ANNUAL MEETING AND PROXY STATEMENT


Table of Contents

Table of Contents

 

LETTER TO STOCKHOLDERS

     Page 1  
  

NOTICE OF ANNUAL MEETING

     Page 2  
  

INTRODUCTION

     Page 3  
  

ITEM 1 – ELECTION OF DIRECTORS

     Page 7  

Resolution

     Page 8  

Nominees

     Page 9  

Corporate Governance and Board Information

     Page 18  

Director Compensation

     Page 31  
  

ITEM 2 – ADVISORY VOTE ON COMPENSATION

     Page 33  

Resolution

     Page 34  

Compensation Discussion and Analysis

     Page 35  

Executive Compensation Tables and Other Compensation Disclosure

     Page 58  
  

ITEM 3 – RATIFICATION OF KPMG LLP

     Page 70  

Resolution

     Page 70  

Report of the Audit Committee

     Page 71  

Services Provided by KPMG LLP

     Page 72  
  

ITEM 4 – STOCKHOLDER PROPOSAL REGARDING WRITTEN CONSENT

     Page 73  

Stockholder Proposal

     Page 73  

Board of Directors’ Response

     Page 74  
  

ITEM 5 –  STOCKHOLDER PROPOSAL REGARDING PROXY
VOTING REVIEW REPORT

     Page 76  

Stockholder Proposal

     Page 76  

Board of Directors’ Response

     Page 77  
  

ADDITIONAL INFORMATION

     Page 78  

Equity Compensation Plans

     Page 79  

Information on Stock Ownership

     Page 80  

Annual Meeting Q&A

     Page 82  

Other Information

     Page 85  

Helpful Resources

     Page 88  
  

ANNEX A: NON-GAAP RECONCILIATION

     Page 89  

 


Table of Contents
    LETTER FROM THE CEO   

 

LOGO

 

 

Dear Fellow Stockholder:

 

On behalf of the Board of Directors, we cordially invite you to our 2018 Annual Meeting of Stockholders to be held on Tuesday, April 10, 2018 at 9 a.m., Eastern time, at 101 Barclay Street, New York, New York 10286.

 

At this year’s Annual Meeting, you will be asked to vote on several items, including the election of directors, our 2017 executive compensation program (the “say-on-pay vote”), and stockholder proposals, if properly presented. Detailed information about the director nominees, including their specific experience and qualifications, begins on page 7. Our Compensation Discussion and Analysis, which explains our continued commitment to pay for performance, alignment with stockholders’ interests and appropriate risk-taking in the context of our 2017 incentive compensation decisions, begins on page 35. We appreciate the opportunity to provide you with these details of your Board’s actions in 2017 and recommendations for 2018. We encourage you to read the proxy statement carefully for more information.

 

Your vote is important to us, and we hope that you will participate in the Annual Meeting, either by attending and voting in person or by voting as promptly as possible through any of the acceptable means described in this proxy statement. Instructions on how to vote begin on page 82. You may also listen to the meeting at https://www.bnymellon.com/us/en/investor-relations/index.jsp.

 

Thank you for your continued support of BNY Mellon, and we look forward to seeing you at the Annual Meeting.

 

Sincerely,

 

LOGO

CHARLES W. SCHARF

Chairman and CEO

 

March 9, 2018

 

 

BNY Mellon     2018 Proxy Statement       1


Table of Contents
    NOTICE OF ANNUAL MEETING   

 

TUESDAY, APRIL 10, 2018

9:00 a.m., Eastern time

101 Barclay Street, New York, New York 10286

Record Date: February 9, 2018

 

 

    AGENDA     BOARD RECOMMENDATION  

 

 

    1. To elect the 12 nominees named in this proxy statement to serve on our Board of Directors until the 2019 annual meeting

  FOR each director nominee

 

 

    2. To provide an advisory vote for approval of the 2017 compensation of our named executives, as disclosed in this proxy statement

  FOR

 

 

    3. To ratify the appointment of KPMG LLP as our independent auditor for 2018

  FOR

 

 

    4. To consider a stockholder proposal regarding written consent, if properly presented

  AGAINST

 

 

    5. To consider a stockholder proposal regarding a proxy voting review report, if properly presented

  AGAINST

We will also act on any other business that is properly raised.

March 9, 2018

By Order of the Board of Directors,

 

 

LOGO

CRAIG T. BEAZER

Corporate Secretary

IT IS IMPORTANT THAT YOU CAREFULLY READ YOUR PROXY STATEMENT AND VOTE.

 

LOGO

  

VIA THE INTERNET

Visit the website listed

on your proxy card

 

  

LOGO

  

BY TELEPHONE

Call the telephone

number listed on

your proxy card

 

     LOGO     

IN PERSON

Attend the annual meeting

(see page 82 for more

information)

 

     LOGO     

BY MAIL

Mail in a completed

proxy card

 

 

 

Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to be held

on April 10, 2018: Our 2018 proxy statement and 2017 Annual Report to stockholders are available

at https://www.bnymellon.com/proxy.

 

 

 

2       BNY Mellon     2018 Proxy Statement


Table of Contents
    INTRODUCTION   

 

The following information is presented to provide context for the operation of our pay program which is discussed in more detail on page 6 of this introduction and throughout our Compensation Discussion and Analysis beginning on page 35 of this proxy statement.

 

2017 Performance Highlights

 

 

Earnings Per Share (“EPS”)    Operating Earnings Per Share (“OEPS”)*

 

LOGO

  

 

LOGO

Strong Multi-Year Total Stockholder Return (“TSR”)    Returned Significant Value to Stockholders

 

LOGO

  

 

LOGO

 

Awards and Recognition

 

 

                 

Investment Services

Collateral Manager of the Year

Global Investor/ISF, 2017

 

Best Global Corporate Trust Service Provider

Global Finance, 2017

 

Best Global Bank for Depositary Receipts

Global Finance, 2017

 

Best Middle-Office Solution and Best Buy-Side Operations Solution

FTF News, 2017

 

Best Managed Accounts Platform

Hedgeweek, 2017

 

Best ETF Fund Accounting and Administration Provider

ETF Innovation Awards, 2017

 

 

Treasury Services

Best Bank for Financial Institutions

Global Finance, 2017

 

Best Global Trade Correspondent Bank

Global Trade Review Magazine, 2017

   

Investment Management

Best Private Bank in the U.S. for Customer Service

Professional Wealth Management/The Banker, 2017

 

Winner, Global Fixed Income — Newton Investment Management

Financial Times, 2017

 

Best Mutual Funds: International Bond —Standish Mellon

Investor’s Business Daily, 2017

 

LDI Manager of the Year — Insight Investment

Financial News, 2017

 

Fixed Income Manager of the Year — Insight Investment

UK Pension Awards, 2017

     

Technology

Top Companies for Women Technologists Leadership Index

Anita Borg Institute, 2017

 

NOVA Award for Innovation in Technology

NICSA, 2017

 

Best Enterprise Data Management Initiative

WatersTechnology, 2017

 

 

Workplace

Top 50 Employers for Women

The Times, 2017

 

100% Corporate Equality Index

Human Rights Campaign, 2018

 

Gender-Equality Index

Bloomberg, 2018

 

 

Corporate Social Responsibility

Dow Jones Sustainability World Index

2017

                 

 

* For a reconciliation and explanation of this non-GAAP measure, see Annex A.

 

 

BNY Mellon     2018 Proxy Statement       3


Table of Contents
    INTRODUCTION   

 

DIRECTOR NOMINEES

Our directors contribute to the strength of our Board through the variety of their experience, diversity, differing perspectives and institutional knowledge.

 

LOGO     

 

 

 

Skills and Expertise

 

 

 

    

 

 

 

LOGO       

Finance

 

 

 

 

 

 

 

 

               LOGO

Leadership

    

 

 

 

LOGO

Technology

 

 

 

 

 

 

 

 

   LOGO

Global

   LOGO

Governance

    

LOGO

Risk

 

 

   LOGO

Financial
Services
Experience

   LOGO

Diversity

 

        COMMITTEE MEMBERSHIPS    

     Name and Occupation(1)

 

 

Director Since

 

  Independent   Audit   Corp. Gov. & Nom.   Corp. Social Resp.   Finance   Human Res. & Comp.   Risk   Technology   Other Current
Public Company
Boards
                     

Steven D. Black(2)

Co-CEO of Bregal Investments

 

  N/A   LOGO                               1
                     

Linda Z. Cook

Managing Director of EIG Global Energy Partners and CEO of Harbour Energy, Ltd.

 

  2016   LOGO       LOGO               LOGO       0
                     

Joseph J. Echevarria

Retired CEO of Deloitte LLP

 

  2015   LOGO (3)   LOGO (4)   LOGO       LOGO               3
                     

Edward P. Garden

Chief Investment Officer and Founding Partner of Trian Fund Management, L.P.

 

  2014   LOGO       LOGO       LOGO   LOGO   LOGO       2
                     

Jeffrey A. Goldstein

CEO, SpringHarbor Financial Group LLC and 
a Senior Advisor, Hellman & Friedman LLC

 

  2014   LOGO               LOGO   LOGO   LOGO       1
                     

John M. Hinshaw

Former EVP and Chief Customer Officer of Hewlett Packard Enterprise Company

 

  2014   LOGO                       LOGO   LOGO   0
                     

Edmund F. “Ted” Kelly

Retired Chairman of Liberty Mutual Group

 

  2004   LOGO                   LOGO   LOGO       0
                     

Jennifer B. Morgan

Executive Board member of SAP and President of SAP Americas and Asia Pacific Japan, Global Customer Operations

 

  2016   LOGO   LOGO                       LOGO   0
                     

Mark A. Nordenberg

Chancellor Emeritus, Chair of the Institute of Politics and Distinguished Service Professor of Law of the University of Pittsburgh

 

  1998   LOGO   LOGO   LOGO   LOGO               LOGO   0
                     

Elizabeth E. Robinson

Retired Global Treasurer of The Goldman Sachs Group, Inc.

 

  2016   LOGO           LOGO   LOGO       LOGO       0
                     

Charles W. Scharf(5)

Chairman & CEO of The Bank of New York Mellon Corporation

 

  2017                                   1
                     

Samuel C. Scott III

Retired Chairman, President & CEO of Ingredion Incorporated

 

  2003   LOGO   LOGO (4)       LOGO       LOGO           2

 

(1) Gerald Hassell retired as our Chairman of the Board effective December 31, 2017. Nicholas M. Donofrio, a member of our Corporate Governance and Nominating, Corporate Social Responsibility and Risk Committees, retired as a director of our company effective September 30, 2017. John A. Luke, Jr., currently a member of our Audit, Corporate Governance and Nominating and Corporate Social Responsibility Committees, is retiring as a director of our company immediately after our Annual Meeting.

 

(2) Steven D. Black is a nominee who does not currently serve on our Board of Directors.

 

(3) Lead Director.

 

(4) Financial expert.

 

(5) Mr. Scharf was appointed as a director of our company effective July 17, 2017 in connection with his appointment as CEO, and became Chairman of the Board effective January 1, 2018.

 

 

4       BNY Mellon     2018 Proxy Statement


Table of Contents
    INTRODUCTION   

 

COMMITTEES

 

Audit

 

    

Finance

 

Chair: Joseph J. Echevarria

 

Members: John A. Luke, Jr., Jennifer B. Morgan, Mark A. Nordenberg, Samuel C. Scott III

 

2017 Meetings: 13

 

Key Responsibilities: Overseeing our registered independent public accountants, internal audit function, and internal controls over financial statements and reports.

    

Chair: Jeffrey A. Goldstein

 

Members: Joseph J. Echevarria, Edward P. Garden, Elizabeth E. Robinson

 

2017 Meetings: 7

 

Key Responsibilities: Monitoring and overseeing our financial resources and strategies; and reviewing forecasts and budgets, net interest revenue plans, investment portfolio activities, capital structure, capital raising and capital distribution initiatives that exceed our Corporate Governance Guidelines thresholds.

 

Corporate Governance and Nominating

 

    

Human Resources and Compensation

 

Chair: Mark A. Nordenberg

 

Members: Linda Z. Cook, Joseph J. Echevarria, Edward P. Garden, John A. Luke, Jr.

 

2017 Meetings: 6

 

Key Responsibilities: Identifying and reviewing potential directors, and reviewing non-employee director compensation; maintaining our Corporate Governance Guidelines; overseeing annual Board and committee evaluations; and reviewing structure, responsibilities and membership of committees.

 

    

Chair: Edward P. Garden

 

Members: Jeffrey A. Goldstein, Edmund F. “Ted” Kelly, Samuel C. Scott III

 

2017 Meetings: 10

 

Key Responsibilities: Overseeing employee compensation and benefits, management development and succession and diversity and inclusion programs; and administering our incentive compensation plans, including equity incentive compensation plans.

 

Corporate Social Responsibility

 

    

Risk

 

Chair: Samuel C. Scott III

 

Members: John A. Luke, Jr., Mark A. Nordenberg, Elizabeth E. Robinson

 

2017 Meetings: 4

 

Key Responsibilities: Promoting culture of exemplary corporate citizenship; overseeing our philanthropy, community involvement, and advocacy; assessing the impact of our businesses, operations and programs from a social responsibility perspective reflecting varied stakeholders’ interests; and overseeing Community Reinvestment Act and Fair Lending compliance.

 

    

Chair: Edmund F. “Ted” Kelly

 

Members: Linda Z. Cook, Edward P. Garden, Jeffrey A Goldstein, John M. Hinshaw, Elizabeth E. Robinson

 

2017 Meetings: 5

 

Key Responsibilities: Approving enterprise-wide risk management practices, our risk appetite statement and our global risk management framework; evaluating risk exposure and tolerance; and reviewing policies and practices regarding risk assessment and risk management.

    

Technology

 

    

Chair: John M. Hinshaw

 

Members: Jennifer B. Morgan, Mark A. Nordenberg

 

2017 Meetings: 5

 

Key Responsibilities: Approving our technology planning and strategy; reviewing significant technology investments; and monitoring technology trends relative to our business strategy.

 

 

 

BNY Mellon       2018 Proxy Statement       5


Table of Contents
    INTRODUCTION   

 

GOVERNANCE AND COMPENSATION

 

    Robust Stockholder Rights   Active, Independent Board   Our Culture

•  No staggered board

 

•  Special meeting of independent directors may be called by our Lead Director

 

•  Special meeting rights for stockholders, individually or in a group, holding 20% of our outstanding common stock

 

•  Proxy access allows stockholders, individually or in a group of up to 20, holding 3% of our outstanding stock for at least 3 years to nominate up to 20% of the Board

 

•  No plurality voting in uncontested director elections (each director must be elected by majority of votes cast)

 

•  No supermajority voting: stockholder actions require only majority of votes cast (not majority of shares present and entitled to vote)

 

•  No “poison pill” (stockholders’ rights plan)

 

•  Active engagement with stakeholders

 

•  Independent board: comprised solely of independent directors, other than our CEO, and meets in regular executive sessions

 

•  Independent Lead Director: annually selected by independent directors, empowered with broad authority

 

•  Board succession and refreshment: led by the Corporate Governance and Nominating Committee recruiting efforts, our Board has added seven independent directors since 2014 and recommended an independent nominee for election at our 2018 Annual Meeting

 

•  Lead Director and Committee Chairman rotation at five-year intervals

 

•  High rate of attendance: average 2017 attendance at Board and committee meetings was 97%

 

•  A substantial portion of director compensation is paid in equity all of which is required to be retained until retirement

 

•  Risk-aware: we protect against excessive risk-taking through multiple lines of defense, including Board oversight

 

•  Honest and accountable: our codes of conduct apply to all employees and directors, providing a framework for ethical conduct

 

•  Innovative and evolving: we encourage directors to participate in continuing education programs, and continue to enhance our integrated learning and development platform for employees through BNY Mellon University (“BKU”)

Awarded 2017 Total Direct Compensation(1)

 

    Named Executives (NEOs)    Salary    Incentive Compensation   Total
Incentive as
% of Target
  Awarded Total
Direct
Compensation(1)
      Cash    PSUs(2)    RSUs(2)    

 

Charles W. Scharf(3)

Chairman & CEO

 

  

 

$572,917

  

 

$1,754,000

  

 

$7,625,000

  

 

$1,754,000

 

 

100%(5)

 

 

$11,705,917(6)

 

Gerald L. Hassell(4)

Former Chairman & CEO

 

  

 

$1,000,000

  

 

$3,500,000

  

 

$—

  

 

$10,500,000

 

 

100%

 

 

$15,000,000

 

Thomas P. (“Todd”) Gibbons

Vice Chairman & CFO

 

  

 

$650,000

  

 

$1,943,100

  

 

$2,914,650

  

 

$1,619,250

 

 

102%

 

 

$7,127,000

 

Brian T. Shea

Former Vice Chairman & CEO of

Investment Services

 

  

 

$650,000

  

 

$1,188,495

  

 

$—

  

 

$2,773,155

 

 

98%

 

 

$4,611,650

 

Mitchell E. Harris

CEO of Investment Management

 

  

 

$650,000

  

 

$2,626,155

  

 

$3,939,232

  

 

$2,188,463

 

 

119%

 

 

$9,403,850

 

Bridget E. Engle

Senior Executive Vice President &

Chief Information Officer

 

  

 

$339,611

  

 

$2,350,000

  

 

$1,175,000

  

 

$1,175,000

 

 

100%

 

 

$5,039,611

 

1 The amounts reported as Awarded Total Direct Compensation differ substantially from the amounts determined under SEC rules as reported for 2017 in the “Total” column of the Summary Compensation Table set forth on page 58. The above table is not a substitute for the Summary Compensation Table.
2 Performance-based restricted stock units (“PSUs”) are generally earned between 0% – 150% based on the achievement of performance metrics over the 2018 – 2020 performance period. 50% of Mr. Scharf’s incentive PSUs were granted upon his commencement of employment and are earned between 0% – 150% based on the achievement of performance metrics over the 2017 – 2019 performance period. Restricted stock units (“RSUs”) generally vest in equal installments over three years.
3 Mr. Scharf was appointed as Chief Executive Officer, effective July 17, 2017, and as Chairman of the Board, effective January 1, 2018.
4 Mr. Hassell stepped down as Chief Executive Officer effective July 17, 2017 and retired as Chairman of the Board effective December 31, 2017.
5 Mr. Scharf’s 2017 incentive compensation was earned at 100% of target, and the cash and RSU components were pro-rated to reflect the time period in 2017 that he was employed by us.
6 Does not include Mr. Scharf’s $7,625,000 award of sign-on PSUs, which were a one-time award granted in connection with his commencement of employment on July 17, 2017.

 

 

6       BNY Mellon     2018 Proxy Statement


Table of Contents
    ITEM 1. ELECTION OF DIRECTORS   

 

Item 1. Election of Directors

 

RESOLUTION

  Page 8  
   

NOMINEES

  Page 9  

Director Qualifications

  Page 15  

Majority Voting Standard

  Page 17  
   

CORPORATE GOVERNANCE AND BOARD INFORMATION

  Page 18  

Our Corporate Governance Practices

  Page 18  

Board Leadership Structure

  Page 21  

Director Independence

  Page 22  

Oversight of Risk

  Page 24  

Board Meetings and Committee Information

  Page 25  

Compensation Consultants to the HRC Committee

  Page 29  

Succession Planning

  Page 30  

Contacting the Board

  Page 30  
   

DIRECTOR COMPENSATION

  Page 31  

 

 

BNY Mellon     2018 Proxy Statement       7


Table of Contents
    ITEM 1. ELECTION OF DIRECTORS       >  Resolution

 

Proposal

We are asking stockholders to elect the 12 nominees named in this proxy statement to serve on the Board of Directors of The Bank of New York Mellon Corporation (the “company,” “BNY Mellon,” “we” or “us”) until the 2019 Annual Meeting of stockholders or until their successors have been duly elected and qualified.

Background

 

• 11 nominees currently serve on our Board of Directors. Mr. Black is a nominee who does not currently serve on our Board of Directors.

 

• 11 nominees are independent, and one nominee serves as the company’s Chairman and Chief Executive Officer.

 

• John A. Luke, Jr., currently a director of our company, will not be standing for reelection at our Annual Meeting.

 

• The Board and the Corporate Governance and Nominating Committee (“CG&N Committee”) have concluded that each of our nominees should be recommended for nomination or re-nomination as a director as described on page 16 after considering, among other things, the nominee’s (1) professional background and experience, (2) senior level policy-making positions, (3) other public company board experience, (4) diversity, (5) intangible attributes, (6) prior BNY Mellon Board experience, and (7) Board attendance and participation, as applicable.

 

• The nominees have skills and expertise in a wide range of areas, including technology, accounting, private equity, financial regulation, financial services, global management, insurance, risk management and legal matters.

 

• The nominees are able to devote the necessary time and effort to BNY Mellon matters.

 
 
 
 
 
 
 

 

The Board of Directors recommends that you vote

“FOR” each of the nominees described below.

 

LOGO

 

 
 
 
 
 
 
 

Voting

We do not know of any reason why any nominee named in this proxy statement would be unable to serve as a director if elected. If any nominee is unable to serve, the shares represented by all valid proxies will be voted for the election of such other person as may be nominated in accordance with our by-laws, as described on page 17. Proxies cannot be voted for a greater number of persons than the number of nominees named in this proxy statement.

Each director will be elected if more votes are cast “for” the director’s election than are cast “against” the director’s election, with abstentions and broker non-votes not being counted as a vote cast either “for” or “against” the director’s election. Pursuant to our Corporate Governance Guidelines, if any incumbent director fails to receive a majority of the votes cast, the director will be required to tender his or her resignation promptly after the certification of the stockholder vote. Our CG&N Committee will promptly consider the tendered resignation and recommend to the Board whether to accept or reject it, or whether other actions should be taken. More information on our voting standard and the CG&N Committee’s consideration of tendered resignations is provided on page 17 below.

 

 

8       BNY Mellon     2018 Proxy Statement


Table of Contents
    ITEM 1. ELECTION OF DIRECTORS       >  Nominees

 

LOGO

 

 

Steven D. Black

 

Age 65

 

Independent Nominee

 

Bregal Investments Co-Chief Executive Officer

 

Committees: None

 

Other Current Public Company Board Service: Nasdaq, Inc.

LOGO

 

 

Linda Z. Cook

 

Age 59

 

Independent Director since 2016

 

Managing Director of EIG Global Energy Partners and CEO of Harbour Energy, Ltd.

 

Retired Executive Committee Member and Director of Royal Dutch Shell plc

 

Committees: Corporate Governance and Nominating, Risk

 

Other Current Public Company Board Service: None

 

 

Mr. Black has been Co-CEO of Bregal Investments, a private equity firm, since September 2012. He was the Vice Chairman of JP Morgan Chase & Co. from March 2010 – February 2011 and a member of the firm’s Operating and Executive Committees. Prior to that position, Mr. Black was the Executive Chairman of JP Morgan Investment Bank from October 2009 – March 2010. Mr. Black served as Co-CEO of JP Morgan Investment Bank from 2004 – 2009. Mr. Black was the Deputy Co-CEO of JP Morgan Investment Bank since 2003. He also served as head of JP Morgan Investment Bank’s Global Equities business since 2000 following a career at Citigroup and its predecessor firms.

 

Skills and Expertise:   

 

LOGO    LOGO    LOGO    LOGO    LOGO    LOGO    LOGO

 

  Expertise in banking, risk management and financial regulation

 

  Leadership in the operations of a large global financial institution

 

  Knowledge of and experience in the company’s businesses

Ms. Cook is a Managing Director and member of the Executive Committee of EIG Global Energy Partners, an investment firm focused on the global energy industry, and CEO of Harbour Energy, Ltd., an energy investment vehicle. Ms. Cook joined EIG in 2014, after spending over 29 years with Royal Dutch Shell at various companies in the U.S., the Netherlands, the United Kingdom and Canada. At her retirement from Royal Dutch Shell, Ms. Cook was a member of the Executive Committee in the Netherlands headquarters and a member of the Board of Directors. Her primary executive responsibility was Shell’s global upstream Natural Gas business in addition to oversight for Shell’s global trading business, Shell Renewable Energy, and Shell’s Downstream R&D and Major Projects organizations. Ms. Cook previously was CEO of Shell Canada Limited, CEO of Shell Gas & Power and Executive VP of Finance, Strategy and HR for Shell’s global Exploration and Production business. Ms. Cook has served as a director of the company since 2016.

Ms. Cook chairs the Board of Directors of Chrysaor Holdings Limited. Ms. Cook has previously served on the Boards of Directors of KBR, Inc., The Boeing Company, Marathon Oil Corporation, Cargill Inc., Royal Dutch Shell plc, Royal Dutch Shell Petroleum Co. NV and Shell Canada Limited. Ms. Cook is also a member of the National Petroleum Council, an advisory committee to the U.S. Secretary of Energy, and the Society of Petroleum Engineers and is a Trustee of the University of Kansas Endowment Association. Ms. Cook earned a Bachelor of Science degree in Petroleum Engineering from the University of Kansas.

 

Skills and Expertise:   

 

LOGO    LOGO    LOGO    LOGO    LOGO

 

  International business operations experience at a senior policy-making level of a large, complex company

 

  Expertise in financing, operating and investing in companies

 

  Extensive service on the boards of several large public companies in regulated industries
 

 

 

LOGO  Finance        

  LOGO  Leadership   LOGO  Technology   LOGO  Global   LOGO  Governance   LOGO  Risk   LOGO  Financial Services Experience   LOGO  Diversity

 

 

BNY Mellon     2018 Proxy Statement       9


Table of Contents
    ITEM 1. ELECTION OF DIRECTORS  >  Nominees

 

 

LOGO

 

 

Joseph J. Echevarria

 

Age 61

 

Independent Director since 2015; Lead Director since 2016

 

Retired CEO of Deloitte LLP

 

Committees: Audit (Chair), Corporate Governance and Nominating, Finance

 

Other Current Public Company Board Service: Pfizer Inc., Unum Group, Xerox Corporation

LOGO

 

 

Edward P. Garden

 

Age 56

 

Independent Director since 2014

 

Chief Investment Officer and Founding Partner of Trian Fund Management, L.P.

 

Committees: Corporate Governance and Nominating, Finance, Human Resources and Compensation (Chair), Risk

 

Other Current Public Company Board Service: General Electric Company, Pentair plc

 

 

Mr. Echevarria served as Chief Executive Officer of Deloitte LLP, a global provider of professional services, from 2011 until his retirement in 2014. Mr. Echevarria previously served in increasingly senior leadership positions during his 36-year career at the firm, including U.S. Managing Partner for Operations, prior to being named Chief Executive Officer. In addition to the public company board service noted above, Mr. Echevarria currently serves as a Trustee of the University of Miami. Mr. Echevarria previously served as Chairman of President Obama’s My Brother’s Keeper Alliance and as a Member of the Private Export Council, the principal national advisory committee on international trade. Mr. Echevarria has served as a director of the company since 2015. Mr. Echevarria earned his bachelor’s degree in business administration from the University of Miami.

 

Skills and Expertise:   

 

LOGO    LOGO    LOGO    LOGO    LOGO    LOGO    LOGO

 

  Leadership of a large, global company

 

  Financial expert, with expertise in accounting, regulatory and compliance issues

 

  Senior level policy-making experience in the field of professional services

Mr. Garden has been Chief Investment Officer and Founding Partner of Trian Fund Management, L.P. (“Trian”), a multi-billion dollar asset management firm specializing in helping companies to optimize operational performance, since 2005. He has served as a director of the company since 2014.

Mr. Garden served as a director of Family Dollar Stores, Inc., a discount retailer, from September 2011 until its acquisition by Dollar Tree, Inc. in July 2015, and as a director of The Wendy’s Company from December 2004 to December 2015. Previously he served as Vice Chairman and a director of Triarc Companies, Inc. from December 2004 through June 2007 and Executive Vice President from August 2003 until December 2004. From 1999 to 2003, Mr. Garden was a managing director of Credit Suisse First Boston, where he served as a senior investment banker in the Financial Sponsors Group. From 1994 to 1999, he was a managing director at BT Alex Brown, where he was a senior member of the Financial Sponsors Group and, prior to that, co-head of Equity Capital Markets. Mr. Garden graduated from Harvard College with a B.A. in Economics.

 

Skills and Expertise:   

 

LOGO    LOGO    LOGO    LOGO    LOGO    LOGO    LOGO

 

  Experience in finance

 

  Expertise in financing, operating and investing in companies

 

  Extensive service on the boards of several large public companies
 

 

 

 

LOGO  Finance        

  LOGO  Leadership   LOGO  Technology   LOGO  Global   LOGO  Governance   LOGO  Risk   LOGO  Financial Services Experience   LOGO  Diversity

 

 

10       BNY Mellon     2018 Proxy Statement


Table of Contents
    ITEM 1. ELECTION OF DIRECTORS  >  Nominees

 

LOGO

 

 

Jeffrey A. Goldstein

 

Age 62

 

Independent Director since 2014

 

Chief Executive Officer, SpringHarbor Financial Group LLC, Senior Advisor, Hellman & Friedman LLC and Former Under Secretary of the Treasury for Domestic Finance

 

Committees: Finance (Chair), Human Resources and Compensation, Risk

 

Other Current Public Company Board Service: Westfield Corporation

LOGO

 

 

John M. Hinshaw

 

Age 47

 

Independent Director since 2014

 

Former Executive Vice President and Chief Customer Officer of Hewlett Packard Enterprise Company

 

Committees: Risk, Technology (Chair)

 

Other Current Public Company Board Service: None

 

 

Mr. Goldstein is the Chief Executive Officer of SpringHarbor Financial Group LLC, a financial services adviser and investor, and a Senior Advisor at Hellman & Friedman LLC, a private equity firm. He was a Managing Director at Hellman & Friedman from 2011 to 2016 and was previously at the firm from 2004 to 2009. He was Under Secretary of the Treasury for Domestic Finance and Counselor to the Secretary of the Treasury from 2009 to 2011. Mr. Goldstein has served as a director of the company since 2014.

Mr. Goldstein worked at James D. Wolfensohn Inc. and successor firms for 15 years. When Wolfensohn & Co. was purchased by Bankers Trust in 1996, he served as co-chairman of BT Wolfensohn and as a member of Bankers Trust’s management committee. In 1999, Mr. Goldstein became a managing director of the World Bank. He also served as its Chief Financial Officer beginning in 2003. In July of 2009, President Barack Obama nominated Mr. Goldstein to be Under Secretary of the Treasury for Domestic Finance. In July 2011, Secretary of the Treasury Timothy F. Geithner awarded Mr. Goldstein with the Alexander Hamilton award, the highest honor for a presidential appointee. Earlier in his career Mr. Goldstein taught economics at Princeton University and worked at the Brookings Institution. In addition to the public company board service noted above, Mr. Goldstein is a member of the Board of Directors of Edelman Financial Services, LLC and on the Advisory Board of Promontory Financial Group, LLC. He also serves on the Board of Trustees of Vassar College. Mr. Goldstein earned a Bachelor of Arts degree from Vassar College and a Master of Arts, Master of Philosophy and a Ph.D. in economics from Yale University.

 

Skills and Expertise:   

 

LOGO    LOGO    LOGO    LOGO    LOGO    LOGO

 

  Experience in private equity

 

  Expertise in the operations of large financial institutions

 

  Experience in financial regulation and banking

Mr. Hinshaw served as Executive Vice President of Hewlett Packard and Hewlett Packard Enterprise from 2011 to 2016, running Technology and Operations and serving as Chief Customer Officer. Mr. Hinshaw has served as a director of the company since 2014.

Prior to joining Hewlett-Packard Company, Mr. Hinshaw served as Vice President and General Manager for Boeing Information Solutions at The Boeing Company. Before that, he served as Boeing’s Chief Information Officer and led their companywide corporate initiative on information management and information security. Mr. Hinshaw also spent 14 years at Verizon Communications where, among several senior roles, he was Senior Vice President and Chief Information Officer of Verizon Wireless, overseeing the IT function of the wireless carrier. Mr. Hinshaw is also a board member of DocuSign, Inc., a provider of electronic signature transaction management, and a member of the Board of Advisors of Saama Technologies, Inc., a big data and advanced analytics solutions company. He also is a member of the Board of Directors, and chairs the STEM Committee, for NAF, an educational non-profit organization. He received a B.B.A. in Computer Information Systems and Decision Support Sciences from James Madison University.

 

Skills and Expertise:   

 

LOGO    LOGO    LOGO    LOGO    LOGO    LOGO

 

  Technology and management expertise

 

  Experience in the operations of large, complex companies

 

  Leadership roles in several different industries
 

 

 

LOGO  Finance        

  LOGO  Leadership   LOGO  Technology   LOGO  Global   LOGO  Governance   LOGO  Risk   LOGO  Financial Services Experience   LOGO  Diversity

 

 

BNY Mellon     2018 Proxy Statement       11


Table of Contents
    ITEM 1. ELECTION OF DIRECTORS  >  Nominees

 

 

LOGO

 

 

Edmund F. “Ted” Kelly

 

Age 72

 

Independent Director of BNY Mellon and predecessor companies since 2004

 

Retired Chairman of Liberty Mutual Group

 

Committees: Human Resources and Compensation, Risk (Chair)

 

Other Current Public Company Board Service: None

LOGO

 

 

Jennifer B. Morgan

 

Age 46

 

Independent Director since 2016

 

Executive Board member of SAP and President of SAP Americas and Asia Pacific Japan, Global Customer Operations

 

Committees: Audit, Technology

 

Other Current Public Company Board Service: None

 

 

Mr. Kelly served as Chairman (from 2000 to 2013), President (from 1992 to 2010) and Chief Executive Officer (from 1998 to 2011) of Liberty Mutual Group, a multi-line insurance company. Mr. Kelly served as a director of Mellon from 2004 to 2007 and has served as a director of the company since 2007.

Mr. Kelly’s experience also includes senior-level management positions at Aetna Life & Casualty Company. Mr. Kelly was a director of Citizens Financial Group Inc., where he served as Chair of the Audit Committee and Chair of the Joint Risk Assessment Committee. Mr. Kelly is also a member of the Board of Trustees of the Boston Symphony Orchestra; a member of the Senior Advisory Council of the New England College of Business and Finance; a member of the Bretton Woods Committee; a past member of the Board of Trustees for Boston College and former President of the Boston Minuteman Council of the Boy Scouts of America. Mr. Kelly received a Bachelor of Arts degree from Queen’s University in Belfast and a Ph.D. from the Massachusetts Institute of Technology.

 

Skills and Expertise:   

 

LOGO    LOGO    LOGO    LOGO    LOGO    LOGO

 

  Leadership of a major global company in a highly regulated industry

 

  Experience in risk management

 

  Senior level policy-making experience in the insurance industry

Ms. Morgan has served as a member of the Executive Board of SAP and President of SAP Americas and Asia Pacific Japan, Global Customer Operations, since 2017. Previously, she was President of SAP North America since 2014. At SAP, Ms. Morgan is responsible for the company’s strategy, revenue and customer success in the Americas and Asia Pacific Japan. Since being named President, she has led SAP’s rapid shift to the cloud in North America while helping customers achieve growth in the digital economy. Ms. Morgan served in a number of leadership roles for SAP since joining the company in 2004, including as head of SAP North America’s public sector organization and president of its Regulated Industries business unit. In these roles, Ms. Morgan was a recognized thought-leader on government and public sector technology innovation, represented SAP to the U.S. Government and testified before Congress on technology and acquisition issues. Earlier in her career, Ms. Morgan served in various management roles at Siebel Systems and Accenture. She has served as a director of the company since 2016.

Ms. Morgan is an executive advisory board member of James Madison University College of Business and a board member of NAF, an educational non-profit organization bringing education, business and community leaders together to transform the high school experience. Ms. Morgan earned a Bachelor of Business Administration degree from James Madison University.

 

Skills and Expertise:   

 

LOGO    LOGO    LOGO    LOGO    LOGO

 

  Leadership and client experience with technology as a business driver

 

  Experience in the operations at large, complex global companies
 

 

 

 

LOGO  Finance        

  LOGO  Leadership   LOGO  Technology   LOGO  Global   LOGO  Governance   LOGO  Risk   LOGO  Financial Services Experience   LOGO  Diversity

 

 

12       BNY Mellon     2018 Proxy Statement


Table of Contents
    ITEM 1. ELECTION OF DIRECTORS  >  Nominees

 

 

LOGO

 

 

Mark A. Nordenberg

 

Age 69

 

Independent Director of BNY Mellon and predecessor companies since 1998

 

Chancellor Emeritus, Chair of the Institute of Politics and Distinguished Service Professor of Law of the University of Pittsburgh

 

Committees: Audit, Corporate Governance and Nominating (Chair), Corporate Social Responsibility, Technology

 

Other Current Public Company Board Service: None

LOGO

 

 

Elizabeth E. Robinson

 

Age 49

 

Independent Director since 2016

 

Retired Global Treasurer of The Goldman Sachs Group, Inc.

 

Committees: Finance, Corporate Social Responsibility, Risk

 

Other Current Public Company Board Service: None

 

 

Mr. Nordenberg served as Chancellor and Chief Executive Officer of the University of Pittsburgh, a major public research university, from 1996 to August 2014. He currently serves as Chancellor Emeritus, Chair of the Institute of Politics and Distinguished Service Professor of Law at the University. Mr. Nordenberg served as a director of Mellon from 1998 to 2007 and has served as a director of the company since 2007.

Mr. Nordenberg joined the University of Pittsburgh’s law faculty in 1977 and served as Dean of the School of Law from 1985 until 1993. Mr. Nordenberg was the interim Provost and Senior Vice Chancellor for Academic Affairs from 1993 to 1994, and interim Chancellor from 1995 to 1996. A specialist in legal process and procedure, including civil litigation, he has published books, articles and reports on this topic, and has served as a member of both the U.S. Advisory Committee on Civil Rules and the Pennsylvania Supreme Court’s Civil Procedural Rules Committee. He is a former director and executive committee member of the Association of American Universities and has served on the boards of national and regional organizations promoting innovation and economic progress. Mr. Nordenberg received his Bachelor of Arts degree from Thiel College and his Juris Doctorate degree from the University of Wisconsin School of Law.

 

Skills and Expertise:   

 

LOGO    LOGO    LOGO    LOGO    LOGO    LOGO

 

  Legal expertise

 

  Leadership of a major research university

 

  Experience in the operations and management of a large institution

Ms. Robinson served as Global Treasurer, Partner and Managing Director of The Goldman Sachs Group, Inc., the global financial services company, from 2005 to 2015. Prior to that, Ms. Robinson served in the Financial Institutions Group within the Investment Banking Division of Goldman Sachs. She has served as a director of the company since 2016.

Ms. Robinson serves on the Board of Directors of Russell Reynolds Associates and is the non-executive Chairman of the Board of Directors of BNY Mellon Government Securities Services Corp. Ms. Robinson is a trustee of Williams College, MASS MoCA and Every Mother Counts and was, until August 2016, a director of Goldman Sachs Bank USA. Ms. Robinson received a Bachelor of Arts degree from Williams College and an M.B.A. from Columbia University.

 

Skills and Expertise:   

 

LOGO    LOGO    LOGO    LOGO    LOGO    LOGO    LOGO

 

  Experience in finance and risk management

 

  Experience in financial regulation and banking

 

  Leadership in the operations of a large global financial institution
 

 

 

 

LOGO  Finance        

  LOGO  Leadership   LOGO  Technology   LOGO  Global   LOGO  Governance   LOGO  Risk   LOGO  Financial Services Experience   LOGO  Diversity

 

 

BNY Mellon     2018 Proxy Statement       13


Table of Contents
    ITEM 1. ELECTION OF DIRECTORS  >  Nominees

 

LOGO

 

 

Charles W. Scharf

 

Age 52

 

Management Director since 2017

 

Chairman and Chief Executive Officer of The Bank of New York Mellon Corporation

 

Committees: None

 

Other Current Public Company Board Service: Microsoft Corporation

LOGO

 

 

Samuel C. Scott III

 

Age 73

 

Independent Director of BNY Mellon and predecessor companies since 2003

 

Retired Chairman, President and Chief Executive Officer of Ingredion Incorporated (formerly Corn Products International, Inc.)

 

Committees: Audit, Corporate Social Responsibility (Chair), Human Resources and Compensation

 

Other Current Public Company Board Service: Abbott Laboratories; Motorola Solutions, Inc. (lead director)

 

 

Mr. Scharf has served as our Chief Executive Officer since July 2017. Mr. Scharf served as the Chief Executive Officer of Visa Inc. from 2012 to 2016. Prior to that, Mr. Scharf served in several senior positions at JPMorgan Chase & Co. (from 2004 to 2011), Bank One Corporation (from 2000 to 2004), and Citigroup Inc. and its predecessors (from 1987 to 2000).

Mr. Scharf is a trustee of Johns Hopkins University and is Chairman of the New York City Ballet. Mr. Scharf received a Bachelor of Arts degree from Johns Hopkins University and an M.B.A. from New York University.

 

Skills and Expertise:   

 

LOGO    LOGO    LOGO    LOGO    LOGO    LOGO    LOGO

 

  Knowledge of the company’s businesses and operations

 

  Experience in banking, risk management and financial regulation

 

  Leadership of a large global financial institution

Prior to his retirement in 2009, Mr. Scott served as Chairman (since 2001), Chief Executive Officer (since 2001) and President and Chief Operating Officer (since 1997) of Corn Products International, Inc., a leading global ingredients solutions provider now known as Ingredion Incorporated. Mr. Scott previously served as President of CPC International’s Corn Refining division from 1995 to 1997 and President of American Corn Refining from 1989 to 1997. In addition to the public company board service noted above, Mr. Scott also serves on the boards of, among others, Chicago Sister Cities, Northwestern Medical Group, the Chicago Urban League, The Chicago Council on Global Affairs and Get IN Chicago. Mr. Scott received both a Bachelor of Science degree and a Master in Business Administration degree from Fairleigh Dickinson University. Mr. Scott served as a director of The Bank of New York from 2003 to 2007 and has served as a director of the company since 2007.

 

Skills and Expertise:   

 

LOGO    LOGO    LOGO    LOGO    LOGO

 

  Senior level policy-making experience in the food industry

 

  Leadership of international company

 

  Financial expert with experience in the operations and management of a large public company
 

 

 

 

LOGO  Finance        

  LOGO  Leadership   LOGO  Technology   LOGO  Global   LOGO  Governance   LOGO  Risk   LOGO  Financial Services Experience   LOGO  Diversity

 

 

14       BNY Mellon     2018 Proxy Statement


Table of Contents
    ITEM 1. ELECTION OF DIRECTORS  >  Nominees

 

Director Qualifications

 

    Steven D. Black*     Linda Z. Cook     Joseph J. Echevarria     Edward P. Garden     Jeffrey A. Goldstein     John M. Hinshaw     Edmund F. “Ted” Kelly     Jennifer B. Morgan     Mark A. Nordenberg     Elizabeth E. Robinson     Charles W. Scharf     Samuel C. Scott III  
                         

Skills and Experience

 

                                                                                               
                         

Finance

 

 

 

LOGO

 

 

 

 

 

 

LOGO

 

 

 

 

 

 

LOGO

 

 

 

 

 

 

LOGO

 

 

 

 

 

 

LOGO

 

 

 

 

 

 

LOGO

 

 

 

 

 

 

LOGO

 

 

 

 

 

 

LOGO

 

 

 

 

 

 

LOGO

 

 

 

 

 

 

LOGO

 

 

 

 

 

 

LOGO

 

 

 

 

 

 

LOGO

 

 

 

                         

Leadership

 

 

 

LOGO

 

 

 

 

 

 

LOGO

 

 

 

 

 

 

LOGO

 

 

 

 

 

 

LOGO

 

 

 

 

 

 

LOGO

 

 

 

 

 

 

LOGO

 

 

 

 

 

 

LOGO

 

 

 

 

 

 

LOGO

 

 

 

 

 

 

LOGO

 

 

 

 

 

 

LOGO

 

 

 

 

 

 

LOGO

 

 

 

 

 

 

LOGO

 

 

 

                         

Technology

 

 

 

 

 

LOGO

 

 

 

 

                 

 

 

 

 

LOGO

 

 

 

 

         

 

 

LOGO

 

 

 

 

 

 

LOGO

 

 

 

 

 

 

LOGO

 

 

 

 

 

 

LOGO

 

 

 

 

 

 

LOGO

 

 

 

 

 

 

LOGO

 

 

 

       
                         

Global

 

 

 

LOGO

 

 

 

 

 

 

LOGO

 

 

 

 

 

 

LOGO

 

 

 

 

 

 

LOGO

 

 

 

 

 

 

LOGO

 

 

 

 

 

 

LOGO

 

 

 

 

 

 

LOGO

 

 

 

 

 

 

LOGO

 

 

 

 

 

 

LOGO

 

 

 

 

 

 

LOGO

 

 

 

 

 

 

LOGO

 

 

 

 

 

 

LOGO

 

 

 

                         

Governance

 

 

 

 

 

LOGO

 

 

 

 

 

 

 

LOGO

 

 

 

 

 

 

LOGO

 

 

 

 

 

 

LOGO

 

 

 

 

 

 

LOGO

 

 

 

 

 

 

LOGO

 

 

 

                 

 

 

LOGO

 

 

 

         

 

 

LOGO

 

 

 

 

 

 

LOGO

 

 

 

                         

Risk

 

 

 

LOGO

 

 

 

         

 

 

LOGO

 

 

 

 

 

 

LOGO

 

 

 

 

 

 

LOGO

 

 

 

 

 

 

LOGO

 

 

 

 

 

 

LOGO

 

 

 

         

 

 

LOGO

 

 

 

 

 

 

LOGO

 

 

 

 

 

 

LOGO

 

 

 

       
                         

Financial Services Experience

 

 

 

LOGO

 

 

 

         

 

 

LOGO

 

 

 

 

 

 

LOGO

 

 

 

 

 

 

LOGO

 

 

 

         

 

 

LOGO

 

 

 

                 

 

 

LOGO

 

 

 

 

 

 

LOGO

 

 

 

       
   

Demographic Background

 

                                                                                               
   

Board Tenure

 

                                                                                               
                         

Years

 

 

 

N/A

 

 

 

 

 

 

1

 

 

 

 

 

 

2

 

 

 

 

 

 

3

 

 

 

 

 

 

3

 

 

 

 

 

 

3

 

 

 

 

 

 

13

 

 

 

 

 

 

1

 

 

 

 

 

 

19

 

 

 

 

 

 

1

 

 

 

 

 

 

1

 

 

 

 

 

 

14

 

 

 

   

Gender

 

                                                                                               
                         

Male

 

 

 

LOGO

 

 

 

         

 

 

LOGO

 

 

 

 

 

 

LOGO

 

 

 

 

 

 

LOGO

 

 

 

 

 

 

LOGO

 

 

 

 

 

 

LOGO

 

 

 

         

 

 

LOGO

 

 

 

         

 

 

LOGO

 

 

 

 

 

 

LOGO

 

 

 

                         

Female

         

 

 

LOGO

 

 

 

                                         

 

 

LOGO

 

 

 

         

 

 

LOGO

 

 

 

               
   

Age

 

                                                                                               
                         

Years old

 

 

 

65

 

 

 

 

 

 

59

 

 

 

 

 

 

61

 

 

 

 

 

 

56

 

 

 

 

 

 

62

 

 

 

 

 

 

47

 

 

 

 

 

 

72

 

 

 

 

 

 

46

 

 

 

 

 

 

69

 

 

 

 

 

 

49

 

 

 

 

 

 

52

 

 

 

 

 

 

73

 

 

 

   

Race/Ethnicity

 

                                                                                               
                         

African American/Black

                                                                                         

 

 

LOGO

 

 

 

                         

White/Caucasian

 

 

 

LOGO

 

 

 

 

 

 

LOGO

 

 

 

         

 

 

LOGO

 

 

 

 

 

 

LOGO

 

 

 

 

 

 

LOGO

 

 

 

 

 

 

LOGO

 

 

 

 

 

 

LOGO

 

 

 

 

 

 

LOGO

 

 

 

 

 

 

LOGO

 

 

 

 

 

 

LOGO

 

 

 

       
                         

Hispanic/Latino

                 

 

 

LOGO

 

 

 

                                                                       

 

* Mr. Black is a nominee who does not currently serve on our Board of Directors.

 

 

BNY Mellon     2018 Proxy Statement       15


Table of Contents
    ITEM 1. ELECTION OF DIRECTORS  >  Nominees

 

 

The CG&N Committee assists the Board in reviewing and identifying individuals qualified to become Board members. The CG&N Committee utilizes Board-approved criteria, set forth in our Corporate Governance Guidelines (see “Helpful Resources” on page 88), in recommending nominees for directors at Annual Meetings and to fill vacancies on the Board. Directors chosen to fill vacancies will hold office for a term expiring at the end of the next Annual Meeting.

In selecting nominees for election as directors, our CG&N Committee considers the following with respect to Board composition:

 

    Professional background and experience. The individual’s specific experience, background and education, including skills as described in the table on the prior page, as well as knowledge essential to the oversight of the company’s businesses.

 

    Senior-level management positions. The individual’s sustained record of substantial accomplishments in senior-level management positions in business, government, education, technology or not-for-profit enterprises.

 

    Judgment and challenge. The individual’s capability of evaluating complex business issues and making sound judgments and constructively challenging management’s recommendations and actions.

 

    Diversity. The individual’s contribution to the diversity of the Board (in all aspects of that term), including differences of viewpoints, professional experience, education, skills and other demographics, such as race, gender, ethnicity and sexual orientation, as well as the variety of attributes that contribute to the Board’s collective strength.

 

    Intangible attributes. The individual’s character and integrity and interpersonal skills to work with other directors on our Board in ways that are effective, collegial and responsive to the needs of the company.

 

    Time. The individual’s willingness and ability to devote the necessary time and effort required for service on our Board.

 

    Independence. The individual’s freedom from conflicts of interest that could interfere with their duties as a director.

 

    Stockholders’ interests. The individual’s strong commitment to the ethical and diligent pursuit of stockholders’ best interests.

The CG&N Committee seeks individuals with leadership experience in a variety of contexts and, from public company leaders, across a variety of industries. The CG&N Committee will evaluate all candidates suggested by other directors or third-party search firms (which the company retains from time to time, including over the past year, to help identify potential candidates) or recommended by a stockholder for nomination as a director in the same manner. For information on recommending a candidate for nomination as a director see “Contacting the Board” on page 30.

The Board and the CG&N Committee have concluded that each of our current Board members should be recommended for re-nomination as a director. In considering whether to recommend re-nomination of a director for election at our Annual Meeting, the Board and the CG&N Committee considered, among other factors:

 

    The criteria for the nomination of directors described above,

 

    Feedback from the annual Board and committee evaluations,

 

    Attendance and preparedness for Board and committee meetings,

 

    Outside board and other affiliations, for actual or perceived conflicts of interest,

 

    The overall contributions to the Board, and

 

    The needs of the company.

Each of the nominees for election as director, other than Mr. Scharf and Mr. Black, was elected as a director at our 2017 Annual Meeting. Mr. Scharf was appointed a director effective July 17, 2017 in connection with his appointment as CEO. Mr. Black is a nominee who does not currently serve on our Board. He was recommended to the CG&N Committee for consideration as a candidate by our CEO. Our Board believes that each of the nominees meet the criteria described above with diversity, depth and breadth of experience that enable them to oversee management of the company as an effective and engaged Board. No director or nominee has a family relationship to any other director, nominee for director or executive officer.

Gerald L. Hassell, who was elected as a director at our 2017 Annual Meeting, retired from the Board effective December 31, 2017. Mr. Hassell’s retirement comes after a 44-year career with the company, including the last 6 years as CEO and Chairman of the Board. The Board is grateful to Mr. Hassell for his innumerable and extensive contributions to the company over the course of his career.

 

 

 

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Nicholas M. Donofrio, who was elected as a director at our 2017 Annual Meeting, retired from the Board effective September 30, 2017, and John A. Luke, Jr., who was elected as a director at our 2017 Annual Meeting, will not be standing for reelection. The Board

is grateful to Messrs. Donofrio and Luke for their dedication and invaluable contributions as directors during their more than 18 years and 22 years, respectively, of service to the company and The Bank of New York. The Board will miss their camaraderie, commitment, insight and perspective.

 

 

Majority Voting Standard

 

 

Under our by-laws, in any uncontested election of directors, each director will be elected if more votes are cast “for” the director’s election than are cast “against” the director’s election, with abstentions and broker non-votes not being counted as a vote cast either “for” or “against” the director’s election. A plurality standard will apply in any contested election of directors, which is an election in which the number of nominees for director exceeds the number of directors to be elected. Pursuant to our Corporate Governance Guidelines, if any incumbent director fails to receive a majority of the votes cast in any uncontested election, the director will be required to tender his or her resignation to the Lead Director (or such other director designated by the Board if the director failing to receive the majority of votes cast is the Lead Director) promptly after the certification of the stockholder vote.

Our CG&N Committee will promptly consider the tendered resignation and recommend to the Board whether to accept or reject it, or whether other actions should be taken. In considering whether to accept or reject the tendered resignation, the CG&N Committee will consider whatever factors its members deem relevant, including any stated reasons for the “against” votes, the length of service and qualifications of the director whose resignation has been tendered, the director’s contributions to the company, and the mix of skills and backgrounds of the Board members. The

Board will act on the CG&N Committee’s recommendation no later than 90 days following the certification of the election in question. In considering the recommendation of the CG&N Committee, the Board will consider the factors considered by the CG&N Committee and such additional information and factors as it deems relevant.

Following the Board’s decision, the company will publicly disclose the Board’s decision in a Current Report on Form 8-K filed with the Securities and Exchange Commission (“SEC”). If the Board does not accept the director’s resignation, it may elect to address the underlying stockholder concerns or to take such other actions as it deems appropriate and in the best interests of the company and its stockholders. A director who tenders his or her resignation pursuant to this provision will not vote on the issue of whether his or her tendered resignation will be accepted or rejected. If the Board accepts an incumbent director’s resignation pursuant to this provision, or if a nominee for director is not elected and the nominee is not an incumbent director, then the Board may fill the resulting vacancy pursuant to our by-laws. If the Board does not accept an incumbent director’s resignation pursuant to this provision, he or she will continue to serve on the Board until the election of his or her successor.

 

 

 

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Our Corporate Governance Practices

We believe that the strength of BNY Mellon’s business reflects the high standards set by our governance structure. It provides guidance in managing the company from the Board of Directors on down for the benefit of all our stakeholders including our investors, clients, employees and communities. Several of our key governance practices are:

 

 

INDEPENDENCE

 

 

 

ü  Our Board is comprised entirely of independent directors (other than our Chief Executive Officer) who regularly meet in executive sessions led by our Lead Director at Board and committee meetings.

 

ü  Our independent Lead Director, selected annually by our independent directors, has broad powers, including the right to call a special meeting of the independent directors, approval of Board meeting agendas, materials and schedules, leading executive sessions and consulting with the Chairman of the Human Resources and Compensation Committee (“HRC Committee”) on CEO performance, compensation and succession.

 

ü  All Board committees are composed entirely of independent directors.

 

 

 

ACTIVE

ENGAGEMENT

 

 

 

ü  We had a high rate of director attendance at Board and committee meetings in 2017, averaging 97%.

 

ü  We actively engage with our stakeholders through multiple initiatives, reaching out to investors representing over 47% of our outstanding common shares as well as proxy advisory firms and other stakeholders.

 

ü  Stockholders and other interested parties can directly contact our Board (see “Helpful Resources” on page 88).

 

 

 

ONGOING

IMPROVEMENTS

 

 

 

ü  Our Corporate Governance Guidelines require that the Corporate Governance and Nominating Committee rotate the Lead Director and committee Chairmen at five-year intervals and consider enhanced director qualifications in connection with director nominations.

 

ü  Our Board and each of our standing committees conduct annual self-evaluations that have resulted in enhancements to Board functioning (see “Evaluation of Board and Committee Effectiveness” on page 19), and in 2017 we added individual interviews to the self-evaluation process. Following engagement with stockholders, in 2017 we continued to enhance our Board and committee self-evaluation process and expand our related disclosure.

 

ü  Our by-laws permit holders in the aggregate of 20% of our outstanding common stock to call a special stockholder meeting.

 

ü  We redesigned our committee structure, for implementation following the Annual Meeting, to refine the allocation of committee responsibilities and to utilize our directors’ time more efficiently.

 

ü  Our Board participates in information sessions during regularly scheduled and special meetings, receiving business, regulatory and other updates from senior management, including risk executives and our General Counsel.

 

 

 

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ROBUST

PROGRAMS

 

 

 

ü  A significant portion of director compensation is paid in deferred stock units, which must be held as long as the director serves on the Board.

 

ü  Our codes of conduct apply to our directors, as well as all of our employees, providing a framework for the highest standards of professional conduct and fostering a culture of honesty and accountability.

 

ü  We continue to enhance our robust director orientation program in which new directors participate in their first six months as a director, and all directors are encouraged to participate in continuing education programs for which expenses are reimbursed.

 

 

 

WHAT WE

DON’T DO

 

 

 

×   No staggered board.

 

×   No “poison pill” (stockholders’ rights plan).

 

×   No supermajority voting. Action by stockholders requires only a majority of the votes cast (not a majority of the shares present and entitled to vote).

 

×   No plurality voting in uncontested director elections. Each director must be elected by a majority of the votes cast.

 

 

Corporate Governance Developments

Based on stockholder engagement, over the last few years our Board has focused on Board refreshment and succession efforts. Since August 2014, nine of our directors have retired or announced their retirement and over that same period our Board has added eight new directors and recommended one new nominee for election at our 2018 Annual Meeting. Each of these new directors has added experience and expertise to our Board, complementing and supplementing the experience and talents of our Board as a whole. Although the CG&N Committee is principally involved in Board succession and recruitment, our entire Board plays a role in recruiting, interviewing and assessing candidates. Our Board’s succession planning is ongoing and will continue to be robust as it seeks to further enhance the diversity of our Board.

Our Board, led by our CG&N Committee, continually seeks to improve our governance structures, and has recently made the following enhancements:

 

    Expanded the Board self-evaluation process to include annual individual director interviews providing directors with an opportunity for candid self-reflection on their personal contributions to the Board.

 

    Enhanced the self-evaluation process by adding an explicit comparison of current-year results to prior-year results to measure improvement and promote long-term accountability.

 

    Redesigned our committee structure to refine the allocation of responsibilities and directors and to more efficiently utilize our directors’ time. Following our Annual Meeting, the Corporate Social
   

Responsibility Committee will be dissolved, and its responsibilities assumed by the CG&N Committee (to be renamed the Corporate Governance, Nominating and Social Responsibility Committee, reflecting our continued commitment to the principles of corporate social responsibility). In addition, the scope of the Finance Committee’s duties will be refined, as certain duties will revert to the Audit Committee.

 

    Enhanced the efficiency of directors’ time by enabling committee meetings to occur simultaneously (where membership permits), thereby creating additional time for robust in-depth discussions without time constraint.

As previously disclosed, consistent with our Board’s succession planning, Mr. Scharf became our new CEO effective July 17, 2017 and our new Chairman effective January 1, 2018 in connection with Mr. Hassell’s retirement, and Mr. Echevarria was elected as our new Lead Director during 2016. In addition to Board refreshment and succession, the CG&N Committee also monitors committee leadership refreshment level with the goal of committee chairs serving in such capacity for no more than 5 consecutive years. Accordingly, our Board elected Mr. Hinshaw as our new Technology Committee chair in 2017. We anticipate the election of a new chair to the (newly re-named) Corporate Governance, Nominating and Social Responsibility Committee in 2018.

Evaluation of Board and Committee Effectiveness

Annually, the Board and each of our standing committees conducts a self-evaluation to continually enhance performance. The Board and management

 

 

 

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then work together to enhance Board and committee effectiveness in light of the results of the self-evaluations.

The CG&N Committee, in consultation with the Lead Director, determines the process, scope and contents of the Board’s annual performance evaluation. Areas of consideration in the Board self-evaluations include director contribution and performance, Board structure and size, Board dynamics, the range of business, professional and other backgrounds of directors necessary to serve the company and the range and type of information provided to the Board by management.

Based on the CG&N Committee’s determination of the evaluation process and scope, each standing committee self-evaluation is conducted in an executive session led by the chairman of the committee. The results of the self-evaluation of each standing committee are reported to the full Board.

As a result of the most recent round of Board and committee self-evaluations, the Board determined to

redesign the committee structure, reallocate directors among committees, have committees meet simultaneously (where membership permits) and set aside additional time for strategy discussions.

Active Stockholder Engagement Program

We conduct extensive governance reviews and investor outreach throughout the year. Management reports regularly to the independent directors to keep them informed of stockholders’ perspectives on a variety of issues, including governance, strategy and performance, and enable them to consider and address

those matters effectively. Although the Board is recommending against Stockholder Proposal 4 for the reasons we describe on page 74, it is committed to understanding stockholder perspectives in this area. The Board will consider this topic in its stockholder engagement outreach following the annual meeting, taking into account the results of the proposal and other stakeholder viewpoints, and has included it as part of its 2018 corporate governance agenda.

 

 

 

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Board Leadership Structure

Our Board has reviewed its current leadership structure — consisting of a combined Chairman and Chief Executive Officer with an independent Lead Director — in light of the Board’s composition, the company’s size, the nature of the company’s business, the regulatory framework under which the company operates, the company’s stockholder base, the company’s peer group and other relevant factors. Our Board has determined that a combined Chairman and Chief Executive Officer position, with an independent Lead Director, continues to be the most appropriate Board leadership structure for the company because it promotes Board effectiveness, provides for continuity of expertise in both business and corporate governance and ensures that the company has a clear public “face”. As described under “Succession Planning” on page 30, to facilitate an orderly transition of duties following Mr. Scharf’s appointment as Chief Executive Officer, Mr. Hassell continued to serve as Chairman of the Board through his retirement, effective December 31, 2017. Mr. Scharf assumed responsibilities as Chairman as of January 1, 2018.

 

 

EFFICIENT AND   

EFFECTIVE ACTION   

 

  

 

A combined Chairman/Chief Executive Officer:

 

•  Is in the best position to be aware of major issues facing the company on a day-to-day and long-term basis, and to identify and bring key risks and developments facing the company to the Board’s attention (in coordination with the Lead Director as part of the agenda-setting process), and

 

•  Eliminates the potential for uncertainty as to who leads the company, providing the company with a single public “face” in dealing with stockholders, employees, regulators, analysts and other constituencies.

 

•  A substantial majority of our peers also utilize a similar board structure with a combined Chairman and Chief Executive Officer, as well as a lead or presiding independent director.

 

  

 

STRONG   

COUNTERBALANCES   

 

  

 

As set forth in our Corporate Governance Guidelines, our Lead Director:

 

•  Reviews and approves, in coordination with the Chairman and Chief Executive Officer, agendas for Board meetings, materials, information and meeting schedules,

 

•  Has the authority to add items to the agenda for any Board meeting,

 

•  Presides at executive sessions of independent directors, which are held at each regular Board and committee meeting,

 

•  Serves as a non-exclusive liaison between the other independent directors and the Chairman/Chief Executive Officer,

 

•  Can call special meetings of the independent directors in his discretion and chairs any meeting of the Board or stockholders at which the Chairman is absent,

 

•  Is available to meet with major stockholders and regulators under appropriate circumstances,

 

•  Consults with the HRC Committee regarding its consideration of Chief Executive Officer compensation,

 

•  In conjunction with the chairman of the HRC Committee, discusses with the Chairman/Chief Executive Officer the Board’s annual evaluation of his performance as Chief Executive Officer,

 

•  Consults with the HRC Committee on Chief Executive Officer succession planning, and

 

•  Consults with the Chairman of the CG&N Committee on the Board’s annual performance evaluation. In practice, our Lead Director is a member of the CG&N Committee, which we believe is a governance best practice.

 

In addition, the powers of the Chairman under our by-laws are limited – other than chairing meetings of the Board and stockholders, the powers conferred on the Chairman (e.g., ability to call special meetings of stockholders or the Board) can also be exercised by the Board or a specified number of directors or, in some cases, the Lead Director, or are administrative in nature (e.g., authority to execute documents on behalf of the company).

 

 

 

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Director Independence

 

Our Board has determined that 11 of our 12 director nominees are independent. Our independent director nominees are Steven D. Black; Linda Z. Cook; Joseph J. Echevarria; Edward P. Garden; Jeffrey A. Goldstein; John M. Hinshaw; Edmund F. “Ted” Kelly; Jennifer B. Morgan; Mark A. Nordenberg; Elizabeth E. Robinson and Samuel C. Scott III. As our Chief Executive Officer, Charles W. Scharf is not independent. The Board has also determined that each of Catherine A. Rein, who did not stand for reelection as a director last year, Mr. Donofrio, who retired effective September 30, 2017, and Mr. Luke, who is not standing for reelection as a director this year, was independent during the period in 2017 in which she or he served as a director. Mr. Hassell, who served as Chairman of the Board until his December 31, 2017 retirement, was not independent due to his role as our Chief Executive Officer through July 17, 2017.

Our Standards of Independence

For a director to be considered independent, our Board must determine that the director does not have any direct or indirect material relationship with us. Our Board has established standards (which are also included in our Corporate Governance Guidelines) based on the specified categories and types of transactions, which conform to, or are more exacting than, the independence requirements of the New York Stock Exchange, or NYSE.

Our Board will also determine that a director is not independent if it finds that the director has material business arrangements with us that would jeopardize that director’s judgment. In making this determination, our Board reviews business arrangements between the company and the director and between the company and any other company for which the director serves as an officer or general partner, or of which the director directly or indirectly owns 10% or more of the equity. Our Board has determined that these arrangements will not be considered material if:

 

    they are of a type that we usually and customarily offer to customers or vendors;

 

    they are on terms substantially similar to those for comparable transactions with other customers or vendors under similar circumstances;

 

    in the event that the arrangements had not been made or were terminated in the normal course of business, it is not reasonably likely that there would be a material adverse effect on the financial
   

condition, results of operations or business of the recipient; or

 

    in the case of personal loans, the loans are subject to and in compliance with Regulation O of the Board of Governors of the Federal Reserve System.

Our Board may also consider other factors as it may deem necessary to arrive at sound determinations as to the independence of each director, and such factors may override the conclusion of independence or non-independence that would be reached simply by reference to the factors listed above.

In determining that Mr. Black and each of the directors, other than Messrs. Hassell and Scharf, is independent, our Board reviewed these standards, the corporate governance rules of the NYSE and the SEC, and the individual circumstances of each director.

The following categories or types of transactions, relationships and arrangements were considered by the Board in determining that a director is independent. None of these transactions, relationships and arrangements rose to the level that would require disclosure under our related party transactions policy described on page 85, and none of the transactions described below were in an amount that exceeded the greater of $1 million or 2% of the other entity’s consolidated gross revenues, which is one of our standards for director independence:

 

    Purchases of goods or services in the ordinary course of business. The company and its subsidiaries purchased goods and services from the following organizations during a period in 2017 when one of our current independent directors served as an executive officer of, or was otherwise employed by, such organization: SAP SE (Ms. Morgan) and the University of Pittsburgh (Mr. Nordenberg). All of these purchases were made in the ordinary course of business. These purchases, when aggregated by seller, did not exceed 0.003% of the seller’s annual revenue for its last reported fiscal year or 0.006% of our annual revenue for 2017.

 

   

Sales of goods or services in the ordinary course of business. The company and its subsidiaries provided various financial services — including asset management services, asset servicing, global markets services, issuer services, treasury services, liquidity investment services or credit services — to the following organizations during a period in 2017 when one of our current independent

 

 

 

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directors served as an executive officer of, or was otherwise employed by, such organization: EIG Global Energy Partners (Ms. Cook); Trian Fund Management, L.P. (Mr. Garden); Hellman & Friedman LLC (Mr. Goldstein); SAP SE (Ms. Morgan) and the University of Pittsburgh (Mr. Nordenberg). All of the services were provided in the ordinary course of our business and at prevailing customer rates and terms. The amount of fees paid to us by each purchaser was less than 0.2% of the purchaser’s annual revenue for its last reported fiscal year and less than 0.012% of our annual revenue for 2017.

 

    Customer relationships. We and our subsidiaries provide ordinary course services, including asset management services, banking services, broker services and credit services, to Mr. Luke, Mr. Nordenberg and Ms. Rein, in each case on terms substantially similar to those offered to other customers in similar circumstances.

 

    Charitable contributions. We made (directly, through our subsidiaries or by the BNY Mellon Foundation or the BNY Mellon Foundation of Southwestern Pennsylvania) charitable contributions to not-for-profit, charitable or tax-exempt organizations for which one of our current or former independent directors served as a director, executive officer or trustee during 2017,
   

namely Messrs. Donofrio, Kelly, Nordenberg and Scott. In 2017, charitable contributions to these organizations totaled approximately $425,000 in the aggregate, and none of these organizations received a contribution greater than $185,000.

 

    Beneficial ownership or voting power. In the ordinary course of our investment management business, we beneficially own or have the power to vote (directly or through our subsidiaries or through funds advised by our subsidiaries) shares of companies for which one of our independent directors served as an executive officer in 2017, namely SAP SE (Ms. Morgan). As of December 31, 2017, we, our subsidiaries or funds advised by our subsidiaries, in the aggregate, owned or had the power to vote 0.023% of the outstanding shares of SAP SE.

Our Board determined that none of the transactions, relationships and arrangements described above constituted a material relationship between the respective director and our company or its subsidiaries for the purpose of the corporate governance rules of the NYSE and SEC and our Corporate Governance Guidelines. As such, our Board determined that these transactions, relationships and arrangements did not affect the independence of such director and did not impair such director’s ability to act in the stockholders’ best interests.

 

 

 

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Oversight of Risk

Successful management of our company requires understanding, identification and management of risk. We oversee risk through multiple lines of defense.

 

  Entity    Primary Responsibilities for Risk Management
   
  Risk Committee,

  consisting entirely of

  independent directors

  

•  Review and approval of the enterprise-wide risk management practices of the company.

 

•  Review and approval of the company’s risk appetite statement on an annual basis, and approval of any material amendment to the statement.

 

•  Review of significant financial and other risk exposures and the steps management has taken to monitor, control and report such exposures.

 

•  Evaluation of risk exposure and tolerance, and approval of Board level limits or exceptions.

 

•  Review and evaluation of the company’s policies and practices with respect to risk assessment and risk management.

 

•  Review, with respect to risk management and compliance, of (1) reports and significant findings of the company’s Risk Management and Compliance department (the “Risk department”) and the Internal Audit department (“Internal Audit”), (2) significant reports from regulatory agencies and management’s responses, and (3) the Risk department’s scope of work and its planned activities.

 

   
  Audit Committee,

  consisting entirely of

  independent directors

  

•  Review and discussion of policies with respect to risk assessment and risk management.

 

•  Oversight responsibility with respect to the integrity of our company’s financial reporting and systems of internal controls regarding finance and accounting, as well as our financial statements.

 

•  Review of the Risk Committee’s annual report summarizing its review of the company’s methods for identifying and managing risks.

 

•  Review of the Risk Committee’s semi-annual reports regarding corporate-wide compliance with laws and regulations.

 

•  Review of any items escalated by the Risk Committee that have significant financial statement impact or require significant financial statement/regulatory disclosures.

 

   
  Management   

•  Chief Risk Officer: Implement an effective risk management framework and daily oversight of risk.

 

•  Internal Audit: Provide reliable and timely information to our Board and management regarding our company’s effectiveness in identifying and appropriately controlling risks.

 

•  Senior Risk Management Committee: Provide a senior focal point within the company to monitor, evaluate and recommend comprehensive policies and solutions to deal with all aspects of risk and to assess the adequacy of any risk remediation plans in our company’s businesses.

 

 

 

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We also encourage robust interactions among the different parties responsible for our risk management. Since the financial crisis emerged in September 2008, the Risk and Audit Committees of our Board have held joint sessions at the beginning of each of their regular meetings to hear reports and discuss key risks affecting our company and our management of these risks.

All independent directors are typically present during joint sessions, because all independent directors are currently members of either our Risk or Audit Committee. In addition, the Risk Committee reviews the appointment, performance and replacement of our Chief Risk Officer, and the Senior Risk Management Committee’s activities, and any significant changes in its key responsibilities must be reported to the Risk Committee. Our company has also formed several risk management sub-committees to identify, assess and manage risks. Each risk management sub-committee reports its activities to the Senior Risk Management Committee and any significant changes in the key responsibilities of any sub-committee, or a change in chairmanship of any sub-committee, must be approved

by our Chief Risk Officer and subsequently reported to the Senior Risk Management Committee.

Our company also has a comprehensive internal risk framework, which facilitates risk oversight by our Risk Committee. Our risk management framework is designed to:

 

    provide that risks are identified, monitored, reported, and priced properly;

 

    define and measure the type and amount of risk the company is willing to take;

 

    communicate the type and amount of risk taken to the appropriate management level;

 

    maintain a risk management organization that is independent of risk-taking activities; and

 

    promote a strong risk management culture that encourages a focus on risk-adjusted performance.

Our primary risk exposures as well as our risk management framework and methodologies are discussed in further detail on pages 65 through 70 in our 2017 Annual Report. See “How We Address Risk and Control” on page 57 below for a discussion of risk assessment as it relates to our compensation program.

 

 

Board Meetings and Committee Information

Board Meetings

Our Corporate Governance Guidelines provide that our directors are expected to attend our Annual Meeting of stockholders and all regular and special meetings of our Board and committees on which they sit. All of our directors then in office attended our 2017 Annual Meeting of stockholders.

Our Board held 15 meetings in 2017. Each incumbent director attended at least 75% of the aggregate number of meetings of our Board and of the committees on which he or she sat, and the average attendance rate was 97%.

Committees and Committee Charters

Our Board has established several standing committees, and each committee makes recommendations to our Board as appropriate and reports periodically to the entire Board. Our committee charters are available on our website (see “Helpful Resources” on page 88).

 

 

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Audit

Committee

 

Independent

13 Meetings in 2017

  

 

  

Joseph J. Echevarria (Chair), John A. Luke, Jr., Jennifer B. Morgan,

Mark A. Nordenberg, Samuel C. Scott III

 

Independent Registered Public Accountant. Our Audit Committee has direct responsibility for the appointment, compensation, annual evaluation, retention and oversight of the work of the registered independent public accountants engaged to prepare an audit report or to perform other audit, review or attestation services for us. The Committee is responsible for the pre-approval of all audit and permitted non-audit services performed by our independent registered public accountants and each year, the Committee recommends that our Board request stockholder ratification of the appointment of the independent registered public accountants.

 

Overseeing Internal Audit Function. The Committee acts on behalf of our Board in monitoring and overseeing the performance of our internal audit function. The Committee reviews the organizational structure, qualifications, independence and performance of Internal Audit and the scope of its planned activities, at least annually. The Committee also approves the appointment of our internal Chief Auditor, who functionally reports directly to the Committee and administratively reports to the CEO, and annually reviews his or her performance and, as appropriate, replaces the Chief Auditor.

 

Internal Controls over Financial Statements and Reports. The Committee oversees the operation of a comprehensive system of internal controls covering the integrity of our financial statements and reports, compliance with laws, regulations and corporate policies. Quarterly, the Committee reviews a report from the company’s Disclosure Committee and reports concerning the status of our annual review of internal control over financial reporting, including (1) information about (a) any significant deficiencies or material weaknesses in the design or operation of internal control over financial reporting that are reasonably likely to adversely affect our ability to record, process, summarize and report financial information and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in our internal control over financial reporting, and (2) management’s responses to any such circumstance. The Committee also oversees our management’s work in preparing our financial statements, which will be audited by our independent registered public accountants.

 

Members and Financial Expert. The Committee consists entirely of directors who meet the independence requirements of listing standards of the NYSE, Rule 10A-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the rules and regulations of the Federal Deposit Insurance Corporation (“FDIC”). All members are financially literate, have accounting or related financial management expertise within the meaning of the NYSE listing standards as interpreted by our Board and are outside directors, independent of management, under the FDIC’s rules and regulations. Our Board has determined that each of Mr. Echevarria and Mr. Scott satisfies the definition of “audit committee financial expert” as set out in the rules and regulations under the Exchange Act, based upon their experience actively supervising a principal accounting or financial officer or public accountant and has “banking and financial management expertise” as set out in the FDIC’s rules and regulations.

 

 

26       BNY Mellon     2018 Proxy Statement


Table of Contents
    ITEM 1. ELECTION OF DIRECTORS  >  Corporate Governance and Board Information

 

 

Corporate Governance and Nominating Committee

 

Independent

6 Meetings in 2017

 

 

 

  

Mark A. Nordenberg (Chair), Linda Z. Cook, Joseph J. Echevarria, Edward P. Garden, John A. Luke, Jr.

 

Corporate Governance Matters. As further described on page 16, our CG&N Committee assists our Board of Directors in reviewing and identifying individuals qualified to become Board members. The Committee periodically considers the size of our Board and recommends changes to the size as warranted and is responsible for developing and recommending to our Board our Corporate Governance Guidelines and proposing changes to these guidelines from time to time as may be appropriate. In addition, the Committee oversees evaluations of our Board and its committees, reviews the structure and responsibilities of the Board’s committees and annually considers committee assignments, recommending changes to those assignments as necessary.

 

Oversight of Director Compensation and Benefits. The Committee reviews non-employee director compensation and benefits on an annual basis and makes recommendations to our Board on appropriate compensation, and is responsible for approving compensation arrangements for non-employee members of the Boards of our significant subsidiaries.

 

Following our Annual Meeting, the Committee will assume the responsibilities currently overseen by our Corporate Social Responsibility Committee and will be renamed the Corporate Governance, Nominating and Social Responsibility Committee, reflecting our continued commitment to the principles of corporate social responsibility.

    

Corporate Social Responsibility Committee

 

Independent

4 Meetings in 2017

 

 

  

Samuel C. Scott III (Chair), John A. Luke, Jr., Mark A. Nordenberg, Elizabeth E. Robinson

 

Our Corporate Social Responsibility Committee’s purpose is to promote a culture that emphasizes and sets high standards for corporate citizenship and to review corporate performance against those standards. The Committee is responsible for providing oversight of the company’s programs regarding strategic philanthropy and employee community involvement, public policy and advocacy, including lobbying and political contributions, environmental management, corporate social responsibility of suppliers, corporate social responsibility governance and reporting and human rights. The Committee also provides oversight for the company’s compliance with the Community Reinvestment Act and Fair Lending laws and considers the impact of the company’s businesses, operations and programs from a social responsibility perspective, taking into account the interests of stockholders, clients, suppliers, employees, communities and regulators.

 

Following our Annual Meeting, the Committee will be dissolved, and its responsibilities assumed by the CG&N Committee (to be renamed the Corporate Governance, Nominating and Social Responsibility Committee, reflecting our continued commitment to the principles of corporate social responsibility). For additional information regarding the company’s commitment to corporate social responsibility and the Committee’s recent initiatives, see “Helpful Resources” on page 88.

    

Finance

Committee

 

Independent

7 Meetings in 2017

 

 

 

  

Jeffrey A. Goldstein (Chair), Joseph J. Echevarria, Edward P. Garden, Elizabeth E. Robinson

 

The Finance Committee assists the Board in fulfilling its responsibilities with respect to the monitoring and oversight of the company’s financial resources and strategies. The Committee’s responsibilities and duties include reviewing: (1) financial forecasts, operating budgets, capital expenditures and expense management programs and progress relative to targets and relative to competitors; (2) plans with regard to net interest revenue, investment portfolio activities and progress relative to such plans and activities; (3) the company’s capital structure, capital raising and capital distributions; and (4) any initiatives, including investments, mergers, acquisitions, and dispositions, that exceed the thresholds in our Corporate Governance Guidelines and, as necessary, making recommendations to the Board regarding those initiatives.

 

 

BNY Mellon       2018 Proxy Statement       27


Table of Contents
    ITEM 1. ELECTION OF DIRECTORS  >  Corporate Governance and Board Information

 

 

Human
Resources and
Compensation
Committee

 

Independent
10 Meetings in 2017

     

Edward P. Garden (Chair), Jeffrey A. Goldstein, Edmund F. “Ted” Kelly,
Samuel C. Scott III

 

Compensation and Benefits. The HRC Committee is generally responsible for overseeing our employee compensation and benefit policies and programs, our management development and succession programs, the development and oversight of a succession plan for the CEO position and our diversity and inclusion programs. The Committee also administers and makes equity and/or cash awards under plans adopted for the benefit of our employees to the extent required or permitted by the terms of these plans, establishes any related performance goals and determines whether and the extent to which these goals have been attained. The Committee also evaluates and approves the total compensation of the CEO and all other executive officers and makes recommendations concerning equity-based plans, which recommendations are subject to the approval of our entire Board. The Committee also oversees certain retirement plans that we sponsor to ensure that: (1) they provide an appropriate level of benefits in a cost-effective manner to meet our needs and objectives in sponsoring such plans; (2) they are properly and efficiently administered in accordance with their terms to avoid unnecessary costs and minimize any potential liabilities to us; (3) our responsibilities as plan sponsor are satisfied; and (4) financial and other information with respect to such plans is properly recorded and reported in accordance with applicable legal requirements.

 

CEO Compensation. The Committee reviews and approves corporate goals and objectives relevant to the compensation of our CEO, his performance in light of those goals and objectives, and determines and approves his compensation on the basis of its evaluation. With respect to the performance evaluation and compensation decisions regarding our CEO, the Committee reports its preliminary conclusions to the other independent directors of our full Board in executive session and solicits their input prior to finalizing the Committee’s decisions.

 

Delegated Authority. The Committee has delegated to our CEO the responsibility for determining equity awards to certain employees, other than himself, who are eligible to receive grants under our Long-Term Incentive Plan (“LTIP”). This delegated authority is subject to certain limitations, including: (1) total aggregate shares represented by plan awards in any calendar year (1,100,000), (2) aggregate shares represented by plan awards that may be granted to any one individual in any calendar year (100,000), and (3) a sub-limit of shares represented by full value awards that may be granted in any calendar year (550,000). In addition, the Committee may delegate limited authority to our CEO to grant awards under the LTIP beyond these limits in connection with specific acquisitions or similar transactions.

 

Management Involvement. Our management provides information and recommendations for the Committee’s decision-making process in connection with the amount and form of executive compensation, except that no member of management will participate in the decision-making process with respect to his or her own compensation. The “Compensation Discussion and Analysis” starting on page 35 discusses the role of our CEO in determining or recommending the amount and form of executive compensation. In addition, we address the role of our management and its independent compensation consultants and the role of the Committee’s independent outside compensation advisor in determining and recommending executive compensation on page 29.

 

 

28       BNY Mellon     2018 Proxy Statement


Table of Contents
    ITEM 1. ELECTION OF DIRECTORS  >  Corporate Governance and Board Information

 

 

Risk Committee

 

Independent
5 Meetings in 2017

     

Edmund F. “Ted” Kelly (Chair), Linda Z. Cook, Edward P. Garden,
Jeffrey A. Goldstein, John M. Hinshaw, Elizabeth E. Robinson

 

See “Oversight of Risk” on page 24 above for a discussion of the Risk Committee’s duties and responsibilities, which include: (1) review and approval of enterprise-wide risk management practices; (2) review and approval of the company’s risk appetite statement; (3) review of significant financial and other risk exposures; (4) evaluation of risk exposure and tolerance; (5) review and evaluation of the company’s policies and practices with respect to risk assessment and risk management; and (6) review, with respect to risk management and compliance, of certain significant reports. Our Board has determined that Mr. Kelly satisfies the independence requirements to serve as Chairman of the Risk Committee set out in the Board of Governors of the Federal Reserve System rules and has experience in identifying, assessing, and managing risk exposures of large, complex financial firms based upon his senior leadership experience of a multi-line insurance company.

     

Technology Committee

 

Independent
5 Meetings in 2017

     

John M. Hinshaw (Chair), Jennifer B. Morgan, Mark A. Nordenberg

 

Technology Planning and Strategy. The Technology Committee is responsible for reviewing and approving the company’s technology planning and strategy, reviewing significant technology investments and expenditures, and monitoring and evaluating existing and future trends in technology that may affect our strategic plans, including monitoring overall industry trends. The Committee receives reports from management concerning the company’s technology and approves related policies or recommends such policies to the Board for approval, as appropriate. The Committee also oversees risks associated with technology.

Compensation Consultants to the HRC Committee

 

The HRC Committee has the sole authority to retain, terminate and approve the fees and other engagement terms of any compensation consultant directly assisting the committee, and may select or receive advice from any compensation consultant only after taking into consideration all factors relevant to the consultant’s independence from management, including the factors set forth in the NYSE’s rules.

The HRC Committee has engaged Compensation Advisory Partners LLC (“CAP”) to serve as its independent compensation consultant since March 2014. As discussed in greater detail in the “Compensation Discussion and Analysis” beginning on page 35 below, throughout the year, CAP assists the committee in its analysis and evaluation of compensation matters relating to our executive officers. CAP reports directly to the committee, attends the in-person and telephonic meetings of the committee, and meets with the committee in executive session without management present. CAP also reviews and provides input on committee meeting materials and advises on other matters considered by the committee.

The HRC Committee annually reviews the independence of its compensation consultant. CAP works with management in executing its services to the committee, but does not provide services to management without pre-approval by the committee Chairman. In addition, CAP maintains, and has provided to the committee, a written policy designed to avoid, and address potential, conflicts of interest.

In 2017, neither CAP nor its affiliates provided any services to the company other than serving as the HRC Committee’s independent compensation consultant. The committee considered the Company’s relationship with CAP, assessed the independence of CAP pursuant to SEC and NYSE rules and concluded that there are no conflicts of interest that would prevent CAP from independently representing the committee.

 

 

 

BNY Mellon       2018 Proxy Statement       29


Table of Contents
    ITEM 1. ELECTION OF DIRECTORS  >  Corporate Governance and Board Information

 

Succession Planning

Succession planning is a priority for the Board and our senior management, with the goal of ensuring a strong pipeline of leaders for the future. The HRC Committee, and ultimately the entire Board, reviews the succession plan for our Chairman and Chief Executive Officer on a regular basis. This plan identifies a “readiness” level and ranking for internal candidates and incorporates the flexibility to define an external hire as a succession option. In 2017 we executed on our established succession plan and transitioned to a new Chairman and Chief Executive Officer. To ensure an orderly transition, this succession was implemented in two phases, with Mr. Scharf assuming responsibilities as Chief Executive Officer and director mid-year and then assuming additional responsibilities as Chairman effective January 1, 2018 upon Mr. Hassell’s retirement. Formal succession planning for the balance of our management Executive Committee members is also a regular process, which includes identifying a rank and readiness level for potential internal candidates and strategically planning for external hires for positions where, for example, capability gaps are identified. The HRC Committee and the Board review the succession plans for all management Executive Committee positions.

Contacting the Board

Interested parties may send communications to our Board or our independent directors or any Board committee through our Lead Director in accordance with the procedures set forth on our website (see “Helpful Resources” on page 88).

Our Corporate Secretary is authorized to open and review any mail or other correspondence received that is addressed to the Board or any individual director unless the item is marked “Confidential” or “Personal.” If so marked and addressed to the Board, it will be delivered unopened to the Lead Director. If so marked and addressed to an individual director, it will be delivered to the addressee unopened. If, upon opening an envelope or package not so marked, the Corporate Secretary determines that it contains a magazine, solicitation or advertisement, the contents may be discarded. Any written communication regarding accounting matters to our Board of Directors are processed in accordance with procedures adopted by the Audit Committee with respect to the receipt, review and processing of, and any response to, such matters.

In addition, all directors are expected to attend each Annual Meeting of stockholders. While our by-laws, consistent with Delaware law, permit stockholder meetings to occur by remote communication, we intend this to be used only in exigent circumstances. Our Board believes that an in-person Annual Meeting provides an important opportunity for stockholders to ask questions.

 

 

30       BNY Mellon     2018 Proxy Statement


Table of Contents
    ITEM 1. ELECTION OF DIRECTORS     >  Director Compensation

 

Our Corporate Governance Guidelines provide that compensation for our independent directors’ services may include annual cash retainers; shares of our common stock; deferred stock units or options on such shares; meeting fees; fees for serving as a committee chair; and fees for serving as a director of one of our subsidiaries. We also reimburse directors for their reasonable out-of-pocket expenses in connection with attendance at Board meetings. In the case of airfare, directors are reimbursed for their travel expenses not exceeding the first-class commercial rate. In addition, corporate aircraft may be used for directors in accordance with the company’s aircraft usage policy. Directors will also be reimbursed for reasonable out-of-pocket expenses (including tuition and registration fees) relating to attendance at seminars and training sessions relevant to their service on the Board and in connection with meetings or conferences which they attend at the company’s request.

Each year, the CG&N Committee is responsible for reviewing and making recommendations to the Board regarding independent director compensation. The CG&N Committee annually reviews independent director compensation to ensure that it is consistent with market practice and aligns our directors’ interests with those of long-term stockholders while not calling into question the directors’ objectivity. In undertaking its review, the CG&N Committee utilizes benchmarking data regarding independent director compensation of the company’s peer group based on public filings with the SEC, as well as survey information analyzing independent director compensation at U.S. public companies.

Based on its review, each year since 2014, the CG&N Committee has recommended, and the Board has approved, an annual equity award with a value of $130,000 for each independent director. The annual equity award is in the form of deferred stock units that vest on the earlier of one year after the date of the award or on the date of the next Annual Meeting of stockholders, and must be held for as long as the director serves on the Board. The units accrue dividends, which are reinvested in additional deferred stock units. For 2017, this award of deferred stock units was granted shortly after the 2017 Annual Meeting for directors elected or re-elected at such meeting and, similarly, for 2018, this award will be granted shortly after the 2018 Annual Meeting for directors elected or re-elected at such meeting.

For 2017, our independent directors received an annual cash retainer of $110,000, payable in quarterly installments in advance. In addition, the chair of the HRC Committee received an annual cash retainer of $25,000, the chairs of the Audit Committee and the Risk Committee each received an annual cash retainer of $30,000, the chairs of all other committees each received an annual cash retainer of $20,000, each member of the Audit Committee and the Risk

Committee received an annual membership fee of $10,000, and our Lead Director received an annual cash retainer of $50,000.

In addition, under our Corporate Governance Guidelines, by the fifth anniversary of their service on the Board, directors are required to own a number of shares of our common stock with a market value of at least five times the annual cash retainer of $110,000. We believe that our independent director compensation is consistent with current market practice, recognizes the critical role that our directors play in effectively managing the company and responding to stockholders, regulators and other key stakeholders, and will assist us in attracting and retaining highly qualified candidates. In the case of Mr. Garden, the CG&N Committee determined that holdings of our securities by Trian shall be deemed to be beneficially owned by Mr. Garden for purposes of this stock ownership requirement, given his relationship with Trian and that he transfers to Trian, or holds for the benefit of Trian, his security holdings.

Our directors are not permitted to hedge, pledge or transfer any of their deferred stock units and are subject to a robust anti-hedging policy as described in further detail under “Compensation Discussion and Analysis — Anti-Hedging Policy” on page 53 below. With the exception of those securities deemed to be beneficially owned by Mr. Garden by virtue of his relationship with Trian, this policy prohibits our directors from engaging in certain transactions involving our securities and requires directors to pre-clear any transaction in company stock or derivative securities with our legal department (including gifts, pledges and other similar transactions).

In the merger we assumed the Deferred Compensation Plan for Non-Employee Directors of The Bank of New York (the “Bank of New York Directors Plan”) and the Mellon Elective Deferred Compensation Plan for Directors (the “Mellon Directors Plan”). Under the Bank of New York Directors Plan, participating legacy The Bank of New York directors continued to defer receipt of all or part of their annual retainer and committee fees earned through 2007. Under the Mellon Directors Plan, participating legacy Mellon directors continued to defer receipt of all or part of their annual retainer and fees earned through 2007. Both plans are nonqualified plans, and neither plan is funded.

Although the Bank of New York Directors Plan and the Mellon Directors Plan continue to exist, all new deferrals of director compensation by any of the independent directors have been made under the Director Deferred Compensation Plan, which was adopted effective as of January 1, 2008. Under this plan, an independent director can direct all or a portion of his or her annual retainer or other fees into either (1) variable funds, credited with gains or losses that mirror market performance of market style funds or (2) the company’s phantom stock.

 

 

 

BNY Mellon       2018 Proxy Statement       31


Table of Contents
    ITEM 1. ELECTION OF DIRECTORS  >  Director Compensation

 

Director Compensation Table

The following table provides information concerning the compensation of each independent director who served in 2017. Messrs. Scharf and Hassell did not receive any compensation for their services as a director. Mr. Garden has advised us that, pursuant to his arrangement with Trian, he transfers to Trian, or holds for the benefit of Trian, all director compensation paid to him.

 

Name

   Fees Earned or
Paid in Cash ($)
   Stock
Awards ($)(3)
   Change in
Pension Value
and Nonqualified
Deferred
Compensation
Earnings(4)
   All Other
Compensation ($)(5)
   Total ($)

Linda Z. Cook

   $130,321    $129,965    $0    $0    $260,286

Nicholas M. Donofrio(1)(2)

   $102,500    $129,965    $0    $1,234    $233,699

Joseph J. Echevarria(2)

   $200,000    $129,965    $0    $0    $329,965

Edward P. Garden

   $145,000    $129,965    $0    $0    $274,965

Jeffrey A. Goldstein(2)

   $140,000    $129,965    $0    $0    $269,965

John M. Hinshaw(2)

   $135,000    $129,965    $0    $0    $264,965

Edmund F. “Ted” Kelly

   $150,000    $129,965    $0    $0    $279,965

John A. Luke, Jr.

   $120,000    $129,965    $0    $0    $249,965

Jennifer B. Morgan(2)

   $131,373    $129,965    $0    $0    $261,338

Mark A. Nordenberg

   $167,200    $129,965    $5,985    $3,381    $306,531

Catherine A. Rein(1)

   $40,556    $0    $0    $2,657    $43,213

Elizabeth E. Robinson

   $120,000    $129,965    $0    $125,000    $374,965

Samuel C. Scott III

   $140,000    $129,965    $0    $675    $270,640

 

(1) Mr. Donofrio retired as a director effective September 30, 2017. Ms. Rein did not stand for reelection as a director at our 2017 Annual Meeting.

 

(2) Elected to defer all or part of cash compensation in the Director Deferred Compensation Plan.

 

(3) Amount shown represents the aggregate grant date fair value computed in accordance with Financial Accounting Standards Board’s Accounting Standards Codification (or “FASB ASC”) 718 Compensation-Stock Compensation for 2,780 deferred stock units granted to each independent director in April 2017, using the valuation methodology for equity awards set forth in note 15 to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2017. As of December 31, 2017, each of Mses. Cook, Morgan and Robinson and Messrs. Echevarria, Garden, Goldstein, Hinshaw, Kelly, Luke, Nordenberg and Scott owned 2,817 unvested deferred stock units. Mr. Donofrio forfeited his 2017 grant of deferred stock units as a result of his retirement in September 2017.

 

(4) The amount disclosed in this column for Mr. Nordenberg represents the sum of the portion of interest accrued (but not currently paid or payable) on deferred compensation above 120% of the applicable federal long-term rate at the maximum rate payable under the Mellon Directors Plan. Under the Mellon Directors Plan, deferred amounts receive earnings based on (i) the declared rate, reflecting the return on the 120-month rolling average of the 10-year T-Note rate enhanced based on years of service and compounded annually, (ii) variable funds, which are credited with gains or losses that “mirror” the market performance of market-style funds or (iii) the company’s phantom stock. The fully enhanced declared rate for 2017 was 3.93%. The present value of Ms. Rein’s accumulated pension benefit under The Bank of New York Retirement Plan for Non-Employee Directors decreased by $2,271. Ms. Rein was the only director serving during 2017 who participated in this plan. Participation in this plan was frozen as to participants and benefit accruals as of May 11, 1999.

 

(5) The amounts disclosed for Messrs. Donofrio and Scott and Ms. Rein reflect the amount of a 5% discount on purchases of phantom stock when dividend equivalents are reinvested under the Bank of New York Directors Plan. The amount disclosed for Mr. Nordenberg reflects the estimated cost of the legacy Mellon Directors’ Charitable Giving Program, which remains in effect for him and certain other legacy Mellon directors. Upon such legacy Mellon director’s death, the company will make an aggregate donation of $250,000 to one or more charitable or educational organizations of the director’s choice. The donations are paid in 10 annual installments to each organization. The amount disclosed for Ms. Robinson reflects compensation paid in connection with her role as Chair of the Board of Directors of BNY Mellon Government Securities Services Corp.

 

 

32       BNY Mellon     2018 Proxy Statement


Table of Contents
    ITEM 2. ADVISORY VOTE ON COMPENSATION     

 

Quick Reference Guide

 

RESOLUTION

  Page 34
 

COMPENSATION DISCUSSION AND ANALYSIS

  Page 35

Introduction

  Page 35

Performance

  Page 37

Compensation of Named Executives

  Page 38

Pay Practices

  Page 50

How We Address Risk and Control

  Page 57

Report of the HRC Committee

  Page 57
 

EXECUTIVE COMPENSATION TABLES AND OTHER COMPENSATION DISCLOSURE

  Page 58

Summary Compensation Table

  Page 58

Grants of Plan-Based Awards

  Page 60

Outstanding Equity Awards at Fiscal Year-End

  Page 61

Option Exercises and Stock Vested

  Page 63

Pension Benefits

  Page 63

Nonqualified Deferred Compensation

  Page 65

Potential Payments upon Termination or Change in Control

  Page 66

Pay Ratio

  Page 69

 

 

BNY Mellon       2018 Proxy Statement       33


Table of Contents
    ITEM 2. ADVISORY VOTE ON COMPENSATION       >  Resolution

 

Proposal

We highly value dialogue and engagement with our stakeholders, including stockholders, employees, clients and the communities we serve, with respect to our executive compensation program. Consistent with that, and in accordance with SEC rules, we are asking our stockholders to approve the following resolution:

RESOLVED, that the stockholders approve the 2017 compensation of the named executive officers, as disclosed in this proxy statement pursuant to Item 402 of Regulation S-K of the Securities and Exchange Commission (including the Compensation Discussion and Analysis, the compensation tables and other narrative executive compensation disclosures).

Background

 

• Since 2009, we have provided our stockholders with the opportunity for an advisory vote on our executive compensation program each year. We have consistently received support for our executive compensation program, with stockholder approval at our 2017, 2016 and 2015 Annual Meetings of 98%, 97% and 95%, respectively.

 

• To ensure that we also have direct stockholder feedback on our executive compensation program and other issues of importance to our investors, we have continued our annual investor outreach process in 2017, reaching out to investors representing over 47% of our outstanding common shares as well as proxy advisory firms and other stakeholders.

 

• Our approach to compensation continues to be designed to directly link pay to performance, recognize both corporate and individual performance, promote long-term stock ownership and balance risk and reward, while taking into consideration stakeholder feedback and market trends and practices to refine our program.

  

 

The Board of Directors recommends that you vote

“FOR” the approval of the 2017 compensation of our named executive officers.

 

LOGO

 

Voting

Your vote on this resolution is advisory. Although the Board is not required to take any action in response, the Board values our stockholders’ opinions. As in prior years, the Board intends to evaluate the results of the 2018 vote carefully when making future decisions regarding the compensation of our named executive officers.

At last year’s Annual Meeting, we provided stockholders with an advisory vote as to how often the company should hold a say-on-pay vote, and 91% of the votes cast voted in favor of an annual vote. Accordingly, we intend to continue to hold an advisory vote each year on our executive compensation program until the next stockholder advisory vote on its frequency, which we expect will occur at our 2022 Annual Meeting.

 

 

34       BNY Mellon     2018 Proxy Statement


Table of Contents
    ITEM 2. ADVISORY VOTE ON COMPENSATION       >  Compensation Discussion & Analysis

 

Introduction

Chairman and CEO Transition and Compensation

Mr. Scharf was appointed CEO of the company effective July 17, 2017 and Chairman effective January 1, 2018. He succeeds Mr. Hassell, who retired as our Chairman effective December 31, 2017 after 44 years of dedicated service to BNY Mellon, including 6 years as CEO and Chairman.

The compensation package for Mr. Scharf was designed to create alignment with our stockholders’ interests, directly link pay to performance and promote long-term stock ownership. His annual target total direct compensation was set by the HRC Committee at $16.5 million for 2017, which considered the competitive market for top tier talent, including peer CEO compensation and our historical CEO compensation. His target incentive opportunity of $15,250,000 was structured in a manner consistent with how we have historically awarded incentive compensation for our CEO (25% in cash, 50% in PSUs and 25% in RSUs).

Recognizing that 2017 was Mr. Scharf’s first year with BNY Mellon, the HRC Committee structured this package to give Mr. Scharf significant stake in the company from day one. Accordingly, Mr. Scharf’s 2017 compensation was delivered in two phases: first, a grant of PSUs and RSUs upon commencement of employment, providing immediate alignment with our stockholders and the management team; and second, payment of the balance of Mr. Scharf’s 2017 incentive award in the ordinary course in February 2018. In addition, subsequent to his appointment as CEO, Mr. Scharf purchased approximately $10 million of shares of our common stock to enhance alignment with our stockholders.

The PSUs granted to Mr. Scharf upon his commencement of employment consisted of two awards, both subject to the same performance metrics as those granted in February 2017 to other executives: a special one-time sign-on award of PSUs, and a pre-grant of 50% of the PSU component of his target incentive compensation. The RSUs awarded to Mr. Scharf upon his commencement of employment were a pre-grant of the RSU component of his target incentive compensation and pro-rated to reflect the time period in 2017 that he was employed by us.

Mr. Scharf received the balance of his 2017 incentive award in February 2018. This consisted of the remaining half of Mr. Scharf’s incentive PSUs (calculated as 50% of the PSU component of his target incentive compensation), earned based on 2018 — 2020 performance, and the entire cash component of his incentive compensation (calculated based on actual 2017 performance and pro-rated to reflect the time period in 2017 he was employed by us).

Mr. Scharf’s 2018 annual target direct compensation was set at $16.5 million, unchanged from 2017, and actual compensation for 2018 will be determined in early 2019 based on established performance criteria.

The following chart shows Mr. Scharf’s actual 2017 total direct compensation. For more information regarding Mr. Scharf’s target direct compensation structure, including target incentive compensation elements, see page 39.

 

LOGO

 

 

BNY Mellon       2018 Proxy Statement       35


Table of Contents
    ITEM 2. ADVISORY VOTE ON COMPENSATION  >  Compensation Discussion & Analysis

 

2017 Program Enhancements

 

Objectives   Enhancement
Focus on growth driven by   earnings and revenue    

•   Eliminated the operating leverage metric, making OEPS the sole performance metric for the corporate component of the 2017 balanced scorecard

 

Strengthen tie between pay   and performance    

•   By eliminating the operating leverage metric (previously earned at 100% or 0%), subjected an incremental 25% of the corporate component earnout to 3:1 upside leverage and 4:1 downside leverage

 

•   Maintained HRC Committee discretion to consider other factors in assessing the strength of the company’s OEPS results, including various relative performance measures

2017 Incentive Award Outcome

 

Considerations   Impact
Objective Metric    

   OEPS: OEPS was 2.6% above budget.

 

Discretionary Factors    

   Relative Performance: Multi-year TSR performance and 1-year EPS growth were generally at median relative to the S&P Financials Index and peers.

 

   Earnings Drivers: OEPS results above budget driven by higher equity market performance and a lower effective tax rate.

 

Corporate Component Payout     

 

 

LOGO

2017 Executive Pay Practice Highlights

 

What we do:    What we don’t do:

ü  Directly link pay to performance

 

ü  Require sustained financial performance to earn full amount of long-term awards

 

ü  Promote long-term stock ownership through deferred equity compensation

 

ü  Balance risk and reward in compensation

 

ü  Use a balanced approach for determining incentives with both corporate and individual goals

 

ü  Balance incentives for short- and long-term performance with a mix of fixed and variable, cash and equity compensation

 

ü  Conduct a robust stakeholder outreach program

  

×  No fixed-term employment agreements

 

×  No single-trigger change-in-control benefits

 

×  No excessive severance benefits

 

×  No excessive perquisites or benefits

 

×  No tax gross-ups

 

×  No hedging or short sales of our stock

 

×  No dividend equivalents paid on unearned incentive PSUs or RSUs

 

 

36       BNY Mellon     2018 Proxy Statement

$7.63 PSUs $7.63 Sign-on PSUs $1.75 Cash $1.75 RSUs BASE SALARY $0.57 DEFERRED EQUITY About 88% of actual 2017 total direct compensation was equity-linked and will be realized on a deferred basis 100% of sign-on compensation was granted in the form of PSUs, establishing alignment with stockholders and management and linking all sign-on compensation to performance Sign-on PSUs and pre-granted incentive PSUs will be earned based on 2017 – 2019 performance to establish alignment with stockholders and management Incentive PSUs granted on the standard schedule will be earned based on 2018 – 2020 performance Incentive RSUs vest on the generally applicable schedule despite being pre-granted INCENTIVE COMPENSATION Cash incentive was pro-rated and 100% subject to performance Incentive RSUs were pro-rated and 100% pre-granted upon commencement of employment to establish alignment with stockholders 50% of incentive PSUs were pre-granted upon commencement of employment to establish alignment with stockholders 100% of incentive compensation (and sign-on PSUs) is subject to clawback


Table of Contents
    ITEM 2. ADVISORY VOTE ON COMPENSATION  >  Compensation Discussion & Analysis

 

Performance

The following information summarizes key highlights of our 2017 performance, including year-over-year growth. For a more detailed discussion of our 2017 performance, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2017 Annual Report to stockholders.

 

 

    2017   2016   Change (%)

EPS

  $3.72   $3.15   18%

OEPS

  $3.57   $3.17   13%

 

EPS    OEPS

 

 

LOGO

  

 

 

LOGO

Strong Multi-Year TSR    Returned Significant Value to Stockholders

 

LOGO

  

 

 

LOGO

 

 

BNY Mellon       2018 Proxy Statement       37

OEPS above budget, resulting in above-target earnout calculation of 107.8% Median multi-year TSR performance and EPS growth relative to S&P Financials Index and peers Corporate component payout reduced by 7.8 percentage points to reflect that equity market performance and lower effective tax rate drove OEPS results 110% 100% 107.8% 107.8% 100% 90%


Table of Contents
    ITEM 2. ADVISORY VOTE ON COMPENSATION  >  Compensation Discussion & Analysis

 

Compensation of Named Executives

2017 Target Direct Compensation Structure

 

 

LOGO

2017 Target Incentive Compensation Elements

 

 

LOGO

 

* Includes both our current CEO, Mr. Scharf, and our former CEO, Mr. Hassell, who stepped down as CEO effective July 17, 2017 and retired as Chairman of the Board effective December 31, 2017. Mr. Hassell’s 2017 incentive award was paid 25% in cash and, in light of his retirement effective December 31. 2017, 75% in RSUs.

 

** Excludes Ms. Engle, whose 2017 target incentive compensation elements were determined in connection with her commencement of employment as 50% cash, 25% PSUs and 25% RSUs.

 

 

38       BNY Mellon     2018 Proxy Statement

PSUs Cash RSUs BASE SALARY About 8% of target total direct compensation Sole fixed source of cash compensation DEFERRED EQUITY Deferred equity is subject to forfeiture based on annual risk assessments Dividend equivalents are paid only at vesting INCENTIVE COMPENSATION About 92% of target total direct compensation Determined at between 0% - 150% of target using a “balanced scorecard” As a condition of funding, subject to a threshold common equity Tier 1 ratio of at least 8.5% 100% of incentive compensation is subject to reduction and clawback CEO* Other NEOs** Cash 25% 30% PSUs 50% 45% RSUs 25% 25%
PSUs are earned between 0% – 150% based on the achievement of performance metrics over a 3-year performance period. RSUs generally vest in equal installments over three years.


Table of Contents
    ITEM 2. ADVISORY VOTE ON COMPENSATION  >  Compensation Discussion & Analysis

 

2017 Annual Target Direct Compensation

In the first quarter of each year, the HRC Committee considers competitive data, executive position and level of responsibility and, for executives other than our CEO, our CEO’s recommendation, and establishes annual target total direct compensation for each executive. Targets are reviewed annually but only adjusted if determined appropriate by the HRC Committee.

For Messrs. Hassell, Gibbons and Harris, target total direct compensation for 2017 remained unchanged compared to the prior year. For Ms. Engle, target total direct compensation was determined in connection with her commencement of employment. For Mr. Shea, target total direct compensation was increased by $1 million to reflect increased responsibilities.

 

  Name

 

  

Salary

 

  

Target Incentive

 

  

Annual Target Total

Direct Compensation

 

Hassell

 

   $1,000,000

 

  

$14,000,000

 

  

$15,000,000

 

Gibbons

 

   $650,000

 

  

$6,350,000

 

  

$7,000,000

 

Shea

 

   $650,000

 

  

$7,350,000

 

  

$8,000,000

 

Harris

 

   $650,000

 

  

$7,350,000

 

  

$8,000,000

 

Engle

 

   $600,000

 

  

$4,700,000

 

  

$5,300,000

 

In the third quarter of 2017, the HRC Committee determined Mr. Scharf’s target total direct compensation for 2017 in connection with his appointment as our CEO effective July 17, 2017. In determining Mr. Scharf’s compensation, the HRC Committee sought input and advice from its independent compensation consultant, Compensation Advisory Partners LLC, on competitive levels of pay for top tier talent, including with respect to our historical CEO compensation and CEO compensation in our peer group, and designed an overall compensation package intended to create alignment with our stockholders, directly link pay to performance and promote long-term stock ownership. Mr. Scharf’s target compensation consists of an annual base salary of $1,250,000 and a target incentive opportunity of $15,250,000, structured in a manner consistent with how we have historically awarded incentive compensation to our CEO (25% in cash, 50% in PSUs and 25% in RSUs). For more information regarding Mr. Scharf’s actual 2017 direct compensation, including the timing of payments, pro-ration of certain incentive compensation components and the grant of sign-on PSUs, see “Chairman and CEO Transition and Compensation” on page 35.

 

  Name

 

  

    Salary    

 

   Target Incentive

 

  

Annual Target Total

  Direct Compensation(1)   

 

     

 

    Cash    

 

  

 

    PSUs    

 

  

 

    RSUs    

 

  

Scharf

 

   $1,250,000  

 

   $3,812,500  

 

   $7,625,000  

 

   $3,812,500  

 

   $16,500,000

 

 

(1) Does not reflect proration of salary and the cash and RSU components of the target incentive and does not include Mr. Scharf’s $7,625,000 award of sign-on PSUs. Sign-on PSUs were a one-time performance-based award granted in connection with Mr. Scharf’s commencement of employment and are not considered a component of his annual target direct compensation.

2017 Incentive Awards

Under our “one decision” incentive structure, total incentive compensation is based on a single incentive award decision based on the balanced scorecard results and then delivered in the form of cash, PSUs and RSUs. One hundred percent of the total incentive award is conditional upon meeting a minimum funding requirement and subject to reduction or elimination based on a risk assessment.

Minimum Funding Requirement

A common equity Tier 1 ratio of at least 8.5% was established as a minimum funding requirement for our incentive compensation. Payment of incentive compensation is conditioned upon our meeting this goal. This threshold funding goal was met, with an estimated common equity Tier 1 ratio of 11.5%* at December 31, 2017, calculated under the Standardized Approach.

 

*  For a reconciliation and explanation of this non-GAAP measure see Annex A.

 

 

BNY Mellon       2018 Proxy Statement       39


Table of Contents
    ITEM 2. ADVISORY VOTE ON COMPENSATION  >  Compensation Discussion & Analysis

 

Balanced Scorecard

We use a “balanced scorecard” approach for our incentive compensation determinations. Our approach is designed to be a comprehensive analysis of corporate and individual performance determined based on quantitative metrics as appropriate, but with considerable discretion by the HRC Committee. Our balanced scorecard provides for the following:

 

    Corporate Component. The corporate component of the balanced scorecard is based on a single set of objective company-wide performance metrics that are designed to drive achievement of near-term business strategies. The HRC Committee establishes the applicable metric or metrics at the start of the performance period and has discretion to consider other factors to obtain a holistic picture of our performance.

 

    Individual Component (including business unit component where applicable). The individual component of the balanced scorecard focuses on individual performance and consists of (1) a business unit goal (as applicable) based on pre-tax income of the specific business unit for which the individual is responsible and (2) an individual modifier to recognize and differentiate individual actions and contributions in final pay decisions.

The HRC Committee determines the corporate component payout and the business unit payout, then applies the individual modifier to increase or decrease the total incentive award by up to ±25%. Finally, the HRC Committee has the discretion to reduce an individual’s corporate component, individual component and/or total incentive award based on an assessment of the individual’s risk profile, as described on page 46. Incentive awards, including the effect of the individual modifier, can range from 0% up to 150% of the individual’s target award.

As illustrated below, incentive awards are paid out in a combination of cash, PSUs (earned between 0% – 150% based on the achievement of performance metrics over a three-year performance period) and RSUs deferred over three years. Percentages in the graphic below reflect Mr. Hassell’s and Mr. Scharf’s target incentive awards. For our other named executives, incentive awards are generally paid 30% in cash, 45% in PSUs and 25% in RSUs. Mr. Hassell’s incentive award was paid 25% in cash and 75% in RSUs in light of his retirement effective December 31, 2017. This treatment is consistent with past practice for other retiring executives, who receive RSUs in lieu of their PSU component. As described below on page 55, in connection with his termination of employment effective December 31, 2017, Mr. Shea’s target incentive award was reduced by 45% and his actual incentive award was paid 30% in cash and 70% in RSUs. Ms. Engle’s incentive award was paid 50% in cash, 25% in PSUs and 25% in RSUs, as determined in connection with her commencement of employment.

 

 

LOGO

 

* In calculating the number of PSUs and RSUs to grant, the HRC Committee divided the value of PSUs and RSUs awarded by $57.23, the average closing price of our common stock on the NYSE for the 15 trading days from January 12, 2018 through February 2, 2018, to mitigate the impact of short-term volatility in our stock price (with the exception of Mr. Scharf’s sign-on PSUs, pre-granted PSUs and pre-granted RSUs, the number of which was determined by dividing the value of PSUs and RSUs awarded by $47.74, the average closing price of our common stock on the NYSE for the 25 trading days from May 12, 2017 through June 16, 2017).

For Messrs. Scharf, Hassell and Gibbons and Ms. Engle, the corporate component weighting was 100%. For Messrs. Shea and Harris, the corporate component and business unit were weighted equally (50% each).

 

 

40       BNY Mellon     2018 Proxy Statement

Individual Target Award Corporate Component Payout Percentage Weighting Business Unit Payout Percentage (if applicable) Weighting Individual Modifier Incentive Award Risk Assessment Cash 25% PSUs 50%* RSUs 25%*


Table of Contents
    ITEM 2. ADVISORY VOTE ON COMPENSATION  >  Compensation Discussion & Analysis

 

Corporate Component

The corporate component metrics are reviewed annually by the HRC Committee to select a measure or set of measures that align with our strategy and are appropriate for measuring annual performance. The same corporate component metrics and goals apply to each named executive officer. In February 2017, the HRC Committee determined to focus management on OEPS to reinforce our focus on driving quality earnings growth, which we believe is the key to ensure both revenue and costs are optimized. As a result, the HRC Committee established OEPS as the sole corporate component metric, weighted 100%, and eliminated adjusted operating leverage (previously weighted 25%) as a corporate component metric. The HRC Committee retains discretion to consider other factors (including, for example, our performance relative to our peers, market conditions and interest rate environment) in determining the earnout within the OEPS earnout range and also in determining the overall corporate component payout.

OEPS. OEPS is defined as reported earnings per share excluding merger and integration, restructuring, litigation expense and other significant, unusual items considered by the HRC Committee in its discretion. Our 2017 OEPS budget was set at $3.48 and, in February 2017, the HRC Committee established the guidelines below for a range of incentive payouts. These guidelines include the intended upside and downside leverage, which is the amount by which each percentage point difference between our budgeted and actual OEPS is magnified to determine the OEPS earnout portion of the corporate component.

 

OEPS

  Percent of Budget ($3.48)   Earnout Range as a
Percent of Target
  Intended Leverage

> $4.18

  > 120%   150%  

$3.48 – $4.18

  100% – 120%   100% – 150%   3:1

$2.96 – $3.48

  85% – 100%   40% – 110%   4:1

< $2.96

  < 85%   0%    

HRC Committee Determinations. Our actual 2017 OEPS was $3.57 and 2.6% above our operating budget, resulting in an earnout range of 100% to 150% per the guidelines shown above. The HRC Committee calculated an earnout of 107.8%, which reflected an earnout of 3 percentage points above target for each percentage point by which actual 2017 OEPS exceeded our operating budget (consistent with our intended leverage shown above).

After determining that the pre-established objective performance metric yielded a corporate component earnout of 107.8%, the HRC Committee then exercised its discretion to review the following factors with respect to our 2017 performance:

 

    Above-budget OEPS results were driven by higher equity market performance and a lower effective tax rate.

 

    TSR results relative to the S&P Financials Index over a 1, 3 and 5-year period were at the 49th, 53rd and 62nd percentiles, respectively, and TSR results relative to peers over a 1, 3 and 5-year period were at the 41st, 41st and 41st percentiles, respectively.

 

    EPS growth results relative to the S&P Financials Index and peers over a 1-year period were at the 62nd and 75th percentiles, respectively, at the time the HRC Committee made its determination (and based on final results with all companies reporting, were at the 56th and 65th percentiles, respectively).

 

 

BNY Mellon       2018 Proxy Statement       41


Table of Contents
    ITEM 2. ADVISORY VOTE ON COMPENSATION  >  Compensation Discussion & Analysis

 

Notwithstanding actual 2017 OEPS results that yielded a corporate component of 107.8% based solely on objective performance metrics, the HRC Committee determined to limit the corporate component payout to 100% to reflect that 2017 earnings were driven by higher equity market performance and a lower effective tax rate.

 

 

Objective Performance Metric

 

 

 

LOGO

 

 

Earnout Based on Objective Performance Metric:

 

 

 

107.8%

 

 

Discretionary Factors

 

 

• OEPS results driven by higher equity market performance and lower effective tax rate

 

• Median multi-year TSR performance relative to the S&P Financials Index and peers

 

• 1-year EPS growth relative to the S&P Financials Index and peers at or above median

 

 

Actual Corporate Component Payout:

 

 

 

100%

 

Individual Component (Business Unit Payout and Individual Modifier)

In February 2017, the HRC Committee approved the pre-tax income goal for each business unit and determined to apply the same payout range guidelines and the same intended leverage ratios as those applicable to the corporate component, as set forth above. The HRC Committee approved and recommended to the Board individual modifier strategic and leadership objectives for Mr. Hassell in February 2017 and for Mr. Scharf in August 2017, and approved individual modifier strategic and leadership objectives for Ms. Engle in August 2017. For our other named executive officers, the HRC Committee approved individual modifier strategic and leadership objectives, which were set by Mr. Hassell after discussion with the HRC Committee, in February 2017. None of the individual strategic and leadership objectives had any specific weighting; the objectives are intended to be used, together with other information the HRC Committee determines relevant, to develop a holistic evaluation of individual performance.

In December 2017, the HRC Committee reviewed and considered each named executive officer’s performance, including considering recommendations and performance summaries from both Mr. Scharf and Mr. Hassell for each of the other named executive officers. In the first quarter of 2018, the HRC Committee evaluated 2017 business unit performance and determined each named executive officer’s individual modifier. For each of Mr. Scharf and Mr. Hassell, the HRC Committee reviewed his performance self-assessment, obtained feedback from each independent director, and finalized its decision after reporting its preliminary evaluation to the other independent directors and soliciting their input. For each of the other named executive officers, the HRC Committee reviewed his or her performance self-assessment, considered the December 2017 feedback from Mr. Scharf and Mr. Hassell, and finalized its decision after soliciting input from the other independent directors.

 

 

42       BNY Mellon     2018 Proxy Statement

2017 OEPS Budget Threshold $2.96 Target $3.48 Maximum $4.18 Potential Earnout (as % of target) 100%–150% Intended Leverage 3:1 2017 OEPS Performance $3.57


Table of Contents
    ITEM 2. ADVISORY VOTE ON COMPENSATION  >  Compensation Discussion & Analysis

 

In determining the individual component for Mr. Scharf, the HRC Committee considered the following key results:

 

    Strategic: met EPS target; achieved smooth transition into CEO and Chairman roles, including quickly developing collaborative relationships with key stakeholders; designed and implemented management process changes and restructured Executive Committee to increase efficiencies and client focus
    Leadership: emphasized culture of growth and innovation; continued enhancing our performance-based culture; advanced our technology and risk management agendas; communicated regularly with employees globally to reinforce cultural and business goals and ensure transparency during transitional period
 

 

Based on the above strategic and leadership results, the HRC Committee approved an individual modifier of 100% for Mr. Scharf.

 

 

LOGO

The HRC Committee then granted Mr. Scharf 25% of his total target incentive award, pro-rated to reflect the time period in 2017 that he was employed by us, in the form of cash. The HRC Committee also granted Mr. Scharf 50% of the PSU component of his target incentive compensation (based on target performance). The remaining 50% of the PSU component of his target incentive award and the entire RSU component of his target incentive award were pre-granted upon his commencement of employment, as described on page 35.

In determining the individual component for Mr. Hassell, the HRC Committee considered the following key results:

 

    Strategic: met EPS target; led evaluation of Asset Management boutiques, and developed and implemented strategic improvement plan; and successfully enhanced risk management with respect to operations, regulatory matters and technology systems
    Leadership: effected a smooth transition of CEO and Chairman roles to Mr. Scharf; continued progress in developing leadership team pipeline; continued enhancing our performance-based culture by refining the structures and processes that reward performance; and demonstrated continuing commitment to providing superior client experience as a business driver
 

 

Based on the above strategic and leadership results, the HRC Committee approved an individual modifier of 100% for Mr. Hassell.

 

 

LOGO

The HRC Committee then granted Mr. Hassell 25% of his total incentive award in the form of cash and, in light of his retirement effective December 31, 2017, 75% in the form of RSUs.

 

 

BNY Mellon       2018 Proxy Statement       43

[100% corporate component payout × 100% weighting] × 100% individual modifier = 100% of target earned [100% corporate component payout × 100% weighting] × 100% individual modifier = 100% of target earned


Table of Contents
    ITEM 2. ADVISORY VOTE ON COMPENSATION  >  Compensation Discussion & Analysis

 

In determining the individual component for Mr. Gibbons, the HRC Committee considered the following key results:

 

    Strategic: met EPS target; initiated numerous use cases to explore potential benefits of fintech innovations and client experience improvements; completed process implementations to enhance enterprise reliability, resiliency and recoverability; implemented strategy and models to maximize risk-adjusted return
    Leadership: advanced achievement of long-term corporate social responsibility goals; demonstrated continued commitment to advancing our diversity and inclusion agenda and developing a more robust leadership team pipeline
 

 

Based on the above strategic and leadership results, the HRC Committee approved an individual modifier of 102% for Mr. Gibbons.

 

 

LOGO

The HRC Committee then granted Mr. Gibbons 30% of his total incentive award in the form of cash, 45% in the form of PSUs and 25% in the form of RSUs.

In determining the individual component for Mr. Shea, the HRC Committee considered the following key results:

 

    Business Unit Payout: Our 2017 budgeted pre-tax income for the investment services business unit was $4.240 billion and, in February 2017, the HRC Committee established the guidelines below:

 

Percent of Budget

($4.240 billion)

  

Payout Range

as a Percent of Target

> 120%

   150%

100% – 120%

   100% – 150%

85% – 100%

   40% – 110%

< 85%

   0%

Our actual achievement was $4.207 billion, representing 99% of budget, resulting in a payout range of 40% to 110%. The HRC Committee determined that a business unit payout percentage of 96% was appropriate.

    Strategic: year-over-year growth in revenue and pre-tax income was below budget; drove improvements to bolster strategic growth; advanced initiatives to improve business line performance; achieved below-plan results on strategic platform investments; underperformed relative to peers with respect to assets under custody/administration and fee growth

 

    Leadership: implemented talent management tools and processes to develop a robust leadership team pipeline; continued to advance our risk management agenda; continued progress towards achieving long-term corporate social responsibility goals
 

 

Based on the above strategic and leadership results, the HRC Committee approved an individual modifier of 100% for Mr. Shea.

 

 

LOGO

The HRC Committee reduced Mr. Shea’s total target incentive award by 45% and then granted him his actual incentive award 30% in the form of cash and 70% in the form of RSUs, as described below on page 55.

 

 

44       BNY Mellon     2018 Proxy Statement

[100% corporate component payout × 50% weighting + 96% business unit payout × 50% weighting] × 100% individual modifier = 98% of target earned


Table of Contents
    ITEM 2. ADVISORY VOTE ON COMPENSATION  >  Compensation Discussion & Analysis

 

In determining the individual component for Mr. Harris, the HRC Committee considered the following key results:

 

    Business Unit Payout: Our 2017 budgeted pre-tax income for the investment management business unit was $1.105 billion and, in February 2017, the HRC Committee established the guidelines below:

 

Percent of Budget

($1.105 billion)

  

Payout Range

as a Percent of Target

> 120%

   150%

100% – 120%

   100% – 150%

85% – 100%

   40% – 110%

< 85%

   0%

Our actual achievement was $1.236 billion, representing 112% of budget, resulting in a payout range of 100% to 150%. The HRC Committee determined that a business unit payout percentage of 116.5% was appropriate.

    Strategic: year-over-year growth in revenue and pre-tax operating income was above budget; outperformed peers in operating income growth; achieved above-target improvement in operating margins, albeit remaining low relative to peers; improved profitability profile of investment management; initiated restructuring of U.S. boutiques to enhance client experience, innovation and performance; evaluated opportunities to improve profitability of current initiatives; led development of improved technology system for Wealth Management

 

    Leadership: accelerated progress in developing a leadership team pipeline; demonstrated continued commitment to advancing our diversity and inclusion agenda; continued to advance our risk management agenda; continued progress towards achieving long-term corporate social responsibility goals
 

 

Based on the above strategic and leadership results, the HRC Committee approved an individual modifier of 110% for Mr. Harris.

 

 

LOGO

The HRC Committee then granted Mr. Harris 30% of his total incentive award in the form of cash, 45% in the form of PSUs and 25% in the form of RSUs.

In determining the individual component for Ms. Engle, the HRC Committee considered the following key results:

 

    Strategic: developed and led implementation of new operating model for Technology; conducted holistic evaluations of our cyber capabilities and Technology to inform our technology agenda; created infrastructure and data center strategies to enhance resiliency and improve cyber capabilities; improved execution and efficacy of digital investment platform
    Leadership: implemented talent management tools and processes to develop a robust leadership team pipeline; demonstrated commitment to advancing our diversity and inclusion agenda; continued to advance our risk management agenda; continued progress towards achieving long-term corporate social responsibility goals; achieved smooth transition into role, including quickly developing collaborative relationships with key stakeholders
 

 

Based on the above strategic and leadership results, the HRC Committee approved an individual modifier of 100% for Ms. Engle.

 

LOGO

The HRC Committee then granted Ms. Engle 50% of her total incentive award in the form of cash, 25% in the form of PSUs and 25% in the form of RSUs.

 

 

BNY Mellon       2018 Proxy Statement       45

[100% corporate component payout × 50% weighting + 116.5% business unit pwayout × 50% weighting] × 110% individual modifier = 119% of target earned
[100% corporate component payout × 100% weighting] × 100% individual modifier = 100% of target earned


Table of Contents
    ITEM 2. ADVISORY VOTE ON COMPENSATION  >  Compensation Discussion & Analysis

 

2017 Incentive Award Payouts

Based on the corporate component and individual component determinations described above, the actual value of incentive compensation awarded to each of our named executives in respect of 2017 was as follows:

 

    

 

Incentive Compensation

 

   Total
Incentive
Compensation
   Total
  Incentive as % of  
Target
     Cash    PSUs    RSUs      

Scharf

   $1,754,000    $7,625,000    $1,754,000    $11,133,000(1)    100%(2)

Hassell

   $3,500,000    $—(3)    $10,500,000    $14,000,000    100%

Gibbons

   $1,943,100    $2,914,650    $1,619,250    $6,477,000    102%

Shea

   $1,188,495    $—(4)    $2,773,155    $3,961,650    98%

Harris

   $2,626,155    $3,939,232    $2,188,463    $8,753,850    119%

Engle

   $2,350,000    $1,175,000    $1,175,000    $4,700,000    100%

 

(1) Does not include Mr. Scharf’s $7,625,000 award of sign-on PSUs, which were a one-time award granted in connection with his commencement of employment on July 17, 2017.

 

(2) Mr. Scharf’s 2017 incentive compensation was earned at 100% of target, and the cash and RSU components were pro-rated to reflect the time period in 2017 that he was employed by us.

 

(3) In connection with his retirement effective December 31, 2017, Mr. Hassell’s incentive award was paid 25% in cash and 75% in RSUs.

 

(4) In connection with his termination of employment effective December 31, 2017, Mr. Shea’s target award was reduced by 45% and his total incentive award was paid 30% in cash and 70% in RSUs, as described below on page 55.

Risk Assessment

We use a risk scorecard to formally connect compensation and appropriate risk-taking. The risk scorecard takes into account liquidity, operational, reputational, market, credit and technology risk categories by measuring:

 

    maintenance of an appropriate compliance program, including adhering to our compliance rules and programs;

 

    protection of the company’s reputation, including reviewing our business practices to ensure that they comply with laws, regulations and policies, and that business decisions are free from actual or perceived conflicts;

 

    management of operational risk, including managing operational losses and maintaining proper controls;

 

    compliance with all applicable credit, market and liquidity risk limits, including understanding and monitoring risks associated with relevant businesses and new client acceptance, as well as appropriately resolving or escalating risk issues to minimize losses; and

 

    meeting Internal Audit expectations, including establishing an appropriate governance culture, achieving acceptable audit results and remediating control issues in a timely manner.

The HRC Committee’s review of the risk scorecard results for each named executive was taken into account by the HRC Committee in determining each of the corporate and individual components of the balanced scorecard. The HRC Committee has the ability to reduce or fully eliminate the incentive award if the risk scorecard result is significantly below expectation. No downward adjustments were made for 2017.

Reduction or Forfeiture in Certain Circumstances

The company may cancel all or any portion of the RSUs and PSUs that constitute a portion of our named executives’ incentive award if, directly or indirectly, the named executive (1) engages, or is discovered to have engaged, in conduct that is materially adverse to the company’s interests during his or her employment, (2) violates certain non-solicitation or non-competition restrictions during his or her employment and for a certain period thereafter, (3) violates any post-termination obligation or duties owed to the company or (4) has received, or may receive, compensation that is required to be forfeited and/or repaid to the company pursuant to applicable regulatory requirements. In addition, in the event that the named executive’s risk scorecard rating is lower than acceptable risk tolerance, any unvested RSUs and PSUs will be subject to review and potential forfeiture, as determined by our HRC Committee.

 

 

46       BNY Mellon     2018 Proxy Statement


Table of Contents
    ITEM 2. ADVISORY VOTE ON COMPENSATION  >  Compensation Discussion & Analysis

 

Outstanding PSUs

As part of our incentive compensation program, we grant PSUs each year based on prior-year performance. We consider PSUs granted during a given year to be part of the prior year’s compensation; for example, we consider the February 2017 PSU grant to be part of 2016 earned compensation. Any earned PSUs cliff vest after the end of three-year performance periods based on continued service with certain exceptions. The PSUs granted in 2015 were earned at 114%, as described below. The PSUs granted in 2016 and 2017 are earned between 0% – 150%, in each case based on the achievement of performance metrics over the applicable three-year performance period. Granting awards annually with overlapping, multi-year performance periods allows the HRC Committee to annually review and update, as appropriate, the structure and performance metrics that we use in our PSU program.

February 2017 PSUs, Sign-On PSUs and Pre-Granted Incentive PSUs

PSUs granted in February 2017, the amounts of which were determined based on 2016 performance as discussed in last year’s proxy statement, are earned based on 2019 OEPS, with the potential of a negative risk modifier should risk-weighted assets (“RWA”) grow at an unacceptable rate. In July 2017, in connection with Mr. Scharf’s appointment as CEO, the HRC Committee granted him a sign-on award of PSUs and 50% of the PSU component of his 2017 incentive compensation as described above in “Chairman and CEO Transition and Compensation” on page 35. These sign-on PSUs and pre-granted incentive PSUs are earned based on the same performance metrics and were granted with generally the same terms as the February 2017 PSUs.

To emphasize our focus on paying for performance, the HRC Committee pre-established two sets of 2019 OEPS targets (one set for a “normalizing” rate scenario, where the daily average Fed target rate is greater than or equal to 125 basis points in 2019, and one set for an alternative “flat” rate scenario):

 

 

2019 OEPS in a “Flat” Rate Scenario

 

  

2019 OEPS in a “Normalizing”

Rate Scenario

 

  

Payout Range

 

> $4.11

 

  

> $4.25

 

  

150%

 

$3.99 – $4.11

 

  

$4.13 – $4.25

 

  

100% – 150%

 

$3.99

 

  

$4.13

 

  

100%

 

$3.87 – $3.99

 

  

$4.01 – $4.13

 

  

50% – 100%

 

< $3.87

 

  

< $4.01

 

  

0%

 

The actual percentage of PSUs that are earned will be determined in the HRC Committee’s discretion within the payout range set forth above. In addition, the percentage may be adjusted downward by a risk-based modifier should risk-weighted assets grow at an unacceptable rate during the three-year performance period as set forth below:

 

 

Compound Annual Growth

Rate of RWA

 

  

Risk-Based Modifier

 

> 11%

 

  

0% – 75%

 

11% – 9%

 

  

75% – 100%

 

< 9%

 

  

100%

 

For 2017, our OEPS was $3.57 and the three-year compound annual growth rate of our RWA was 2.24%.

 

 

BNY Mellon     2018 Proxy Statement       47


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    ITEM 2. ADVISORY VOTE ON COMPENSATION  >  Compensation Discussion & Analysis

 

Our outstanding PSU awards are illustrated below:

 

    2015   2016   2017   2018   2019   2020   2021
             

February  

2015 PSU  

Award  

  Earned at 114% as described below  

cliff vested

in 2018 based on

 continued service 

     
                           
             

February  

2016 PSU  

Award  

   

OEPS, with the potential of a negative risk modifier

should risk-weighted assets grow at an

unacceptable rate

 

cliff vests

in 2019 based on

 continued service 

   
                           
             

February  

2017 PSU  

Award  

     

OEPS, with the potential of a negative risk modifier

should risk-weighted assets grow at an

unacceptable rate

 

cliff vests

in 2020 based on

 continued service 

 
                           
             

February  

2018 PSU  

Award  

       
Average revenue growth and average operating margin
 

cliff vests

in 2021 based on

 continued service 

                           

RWA is generally defined as, for each fiscal year, the simple average of the preceding four quarter-end risk-weighted assets (estimated on a fully phased-in basis in Basel III using, for PSUs granted in 2015, the Advanced Approach, for PSUs granted in 2016, the higher of the Advanced or Standardized Approach, and for PSUs granted in 2017, the Standardized Approach) based on existing assumptions at the commencement of the performance period and as reported in the company’s SEC filings.

February 2015 PSUs

As previously disclosed in our 2016 proxy statement, the PSUs granted in February 2015 were to be earned between 0% – 125% based on 2017 OEPS, with the potential of a negative risk modifier should RWA grow at an unacceptable rate. Consistent with our Investor Day goals, two sets of 2017 OEPS targets were pre-established for these awards (one set for a “normalizing” rate scenario, where interest rates moved a minimum of 100 basis points during the three-year performance period, and an alternative set for a “flat” rate scenario). The HRC Committee applied targets under the “normalizing” rate scenario because interest rates rose 125 basis points during 2015 – 2017. Actual 2017 OEPS was $3.57, resulting in an earnout range of 75% to 125%. The terms of the 2015 PSUs provide that the percentage of the earned award will be determined in the HRC Committee’s discretion. Accordingly, the HRC Committee determined it was appropriate to use a linear interpolation between 75% and 125% (the minimum and maximum of the applicable earnout range) and calculated an earnout of 114%, without making any further discretionary adjustments. The HRC Committee then considered RWA, which for December 2014 – December 2017 had a compound annual growth rate of 2.24%, resulting in no risk modifier being applied based on RWA growth. Accordingly, the February 2015 PSUs were earned at 114%.

February 2018 PSUs

The HRC Committee determined that the 2018 PSUs will be earned based on average revenue growth (as adjusted) and average operating margin (as adjusted) over a three-year period. In connection with establishing the performance metrics for the 2018 PSUs, the HRC Committee considered the fact that OEPS had been used as the primary performance metric for the corporate component of the 2017 balanced scorecard and recognized that use of average revenue growth and average operating margin would introduce complimentary performance metrics that are consistent with the Company’s emphasis on organic growth over market-related factors.

Other Compensation and Benefits Elements

Retirement and Deferred Compensation Plans

After the merger in 2007, we assumed certain existing arrangements affecting the provision of retirement benefits to certain of our named executives, maintaining qualified and non-qualified defined benefit and defined contribution plans in which eligible employees, including our named executives, may participate. Our named executives are eligible to participate in deferred compensation plans, which enable eligible employees to defer the payment of taxes on a portion of their compensation until a later date. To limit pension accruals, we froze all accruals under the Legacy BNY SERP as of December 31, 2014 and under our other U.S. defined benefit pension plans (including the BNY Mellon

 

 

48       BNY Mellon     2018 Proxy Statement


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    ITEM 2. ADVISORY VOTE ON COMPENSATION  >  Compensation Discussion & Analysis

 

Tax-Qualified Retirement Plan and the Legacy BNY Excess Plan) as of June 30, 2015. For a description of these plans and our named executive officers’ participation therein, see “Pension Benefits” and “Nonqualified Deferred Compensation” below.

Perquisites

Our named executives are eligible to participate in company-wide benefit plans. In addition, we provide certain benefits, consistent with market practices, that are reportable under SEC rules as perquisites (see footnotes to the Summary Compensation Table below).

Our policy regarding corporate aircraft usage provides that the CEO should make reasonable use of the company aircraft for security purposes and to make the most efficient use of his time. The HRC Committee receives and reviews an aircraft usage report on a semi-annual basis.

Certain named executives have historically had access to a pool of company cars and drivers for security purposes and to allow for more effective use of travel time. This car and driver perquisite was available during 2017, but has been discontinued for 2018.

Additionally, under our charitable gifts matching program, in 2017 our named executive officers were eligible for an additional match of up to $30,000 above the level of charitable gift matching to which all of our employees are entitled. As of January 1, 2018, our named executive officers are no longer eligible for a charitable gift match.

Lastly, Messrs. Hassell and Gibbons are covered by legacy life insurance plans assumed in the merger.

 

 

BNY Mellon     2018 Proxy Statement       49


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    ITEM 2. ADVISORY VOTE ON COMPENSATION  >  Compensation Discussion & Analysis

 

Pay Practices

Stakeholder Engagement

We believe it is important to consider feedback and input from our stakeholders, including stockholders, employees, clients and the communities we serve.

 

We have consistently received support for our executive compensation program, with stockholder approval at our 2017, 2016 and 2015 Annual Meetings of 98%, 97% and 95%, respectively. We continue to actively engage with our stakeholders throughout the year (including webcasting our Annual Meeting to allow broader stockholder participation).

 

In total, in advance of our 2018 Annual Meeting and as a result of our annual outreach process, we reached out to investors representing over 47% of our outstanding common shares, and we actively engaged

  

 

LOGO

with proxy advisory firms and other stakeholders on governance and performance matters. We further engaged stockholders and analysts at industry conferences, in meetings at our offices or at our stockholders’ offices, through conference calls and at our Investor Day conferences held on October 28, 2014 and March 8, 2018.

Key Compensation Practices

Our 2017 compensation program for the named executives has the following features:

 

Directly link pay to  

performance  

 

•  Incentive compensation is based on balanced scorecard results, including operating performance, and comprises about 92% of target total direct compensation

 

•  Incentive compensation deferred in the form of PSUs comprises 50% of target total incentive compensation for our CEO and generally comprises 45% for other continuing named executives

 

•  Incentive compensation deferred in the form of RSUs comprises 25% of target total incentive compensation for all our continuing named executives

 
Balanced approach   for incentive   compensation    

•  Incentive compensation earned based on a combination of corporate and individual goals, including business unit goals, as applicable

 

•  Corporate component based on OEPS, with the HRC Committee retaining discretion to consider other factors (including performance relative to our peers)

 

•  Business unit goals use quantitative financial measures to establish a payout range

 

•  Individual modifier allows the HRC Committee to recognize and differentiate individual contributions

 

Promote long-term  

stock ownership  

 

•  Deferred equity (PSUs and RSUs) as a percentage of target total incentive compensation: 75% for our CEO and generally 70% for our other continuing named executives

 

•  Earned PSUs cliff vest after the end of a three-year performance period, and RSUs vest in equal installments over three years

 

•  Our CEO must acquire and retain company stock equal to six times base salary, and other named executives must acquire and retain stock equal to four times base salary, plus an additional amount equal to one times base salary to provide a cushion against stock volatility

 
What we don’t do    

•  No single-trigger change-in-control benefits

 

•  No excessive severance benefits

 

•  No excessive perquisites or benefits

 

•  No tax gross-ups

 

•  No hedging or short sales of our stock

 

•  No dividend equivalents paid on unearned incentive PSUs or RSUs

 

•  No stock option grants

 

 

 

50       BNY Mellon     2018 Proxy Statement

98% of stockholders approved our 2017 say-on-pay proposal


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    ITEM 2. ADVISORY VOTE ON COMPENSATION  >  Compensation Discussion & Analysis

 

HRC Committee Role and Process

In 2017, the HRC Committee led the search for, and recruitment of, Mr. Scharf as the successor to Mr. Hassell. In addition to overseeing our succession program, the HRC Committee also oversaw our executive compensation program. In the first quarter of 2017, for each named executive other than Mr. Scharf, the HRC Committee approved base salary levels; established target amounts for the 2017 incentive award to be earned or granted, as applicable, in the first quarter of 2018 based on 2017 performance; and granted the PSU and RSU components of awards earned for 2016 performance.

In setting 2017 compensation targets, the HRC Committee, assisted by its independent compensation consultant, considered a variety of factors over multiple meetings, including our financial performance and data concerning peer companies’ executive compensation programs. Factors were considered holistically, and no one factor had an assigned or specific quantifiable impact on the target compensation levels established by the HRC Committee.

In the third quarter of 2017, in connection with the appointment of Mr. Scharf as CEO, the HRC Committee approved his base salary; established his 2017 target total direct compensation; and granted certain of his equity awards (consisting of the sign-on PSUs, pre-granted incentive PSUs and pre-granted RSUs) to provide immediate alignment with our stockholders and the management team.

During the year, the HRC Committee received regular updates on performance forecasts versus performance goals, regulatory and legislative developments and other relevant matters. In the first quarter of 2018, the HRC Committee evaluated 2017 corporate performance, using a combination of financial and qualitative measures, as well as each named executive’s individual performance to make 2017 incentive compensation determinations as described above. During this period, the HRC Committee also determined the payout for PSUs granted in February 2015 in accordance with the terms of such awards, as described above.

The HRC Committee also provided each continuing named executive with incentive compensation targets for their 2018 incentive award, with the actual award amount to be determined in the first quarter of 2019 based on prior-year performance.

With respect to Mr. Scharf and Mr. Hassell, the HRC Committee reported its preliminary conclusions and compensation decisions, and information on the process used by the HRC Committee, to the other independent members of our Board in executive session and solicited their input prior to finalizing determinations. With respect to our other named executive officers, the HRC Committee also advised and discussed with the other independent directors compensation decisions and the process used by the HRC Committee.

Role of Compensation Consultants

Since February 2014, the HRC Committee has retained Compensation Advisory Partners LLC (“CAP”) as its independent compensation consultant. CAP regularly attends HRC Committee meetings and assists the committee in its analysis and evaluation of compensation matters related to our executive officers. For more information on CAP, see page 29.

 

 

BNY Mellon     2018 Proxy Statement       51


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    ITEM 2. ADVISORY VOTE ON COMPENSATION  >  Compensation Discussion & Analysis

 

Benchmarking

 

Peer Group

 

The HRC Committee and our management use a peer group to provide a basis for assessing relative company performance and to provide a competitive reference for pay levels and practices. In evaluating and selecting companies for inclusion in the peer group, the HRC Committee targets complex financial companies with which we typically compete for executive talent and business. In particular, the HRC Committee selected these companies based on:

 

•  mix of businesses (e.g., asset management, asset servicing and clearing services) and other financial services companies with similar business models that operate in a similar regulatory environment;

 

•  relative size in terms of revenue, market capitalization and assets under management, as well as total assets and net income;

 

•  position as competitors for customers and clients, executive talent and investment capital; and

 

•  global presence.

   BlackRock, Inc.

The Charles Schwab

Corporation

Franklin Resources, Inc.

JPMorgan Chase & Co.

Morgan Stanley

Northern Trust Corporation

The PNC Financial Services

Group, Inc.

Prudential Financial, Inc.

State Street Corporation

U. S. Bancorp

Wells Fargo & Company

The 2017 peer group selected by the HRC Committee was unchanged from 2016.

Compensation Benchmarking

Compensation information is collected from the peer group proxy statements to provide data for the HRC Committee to assess the competitiveness of targeted and actual compensation. Peer group information is also used to analyze market trends and compensation program practices. For certain named executive officers, data relating to the peer group is supplemented with industry data from surveys conducted by national compensation consulting firms and other data to assess the compensation levels and practices in the businesses and markets in which we compete for executive talent. Peer group data and other information provided to the HRC Committee by CAP was used by the HRC Committee as a consideration in setting 2017 target compensation levels for our named executives.

Financial Performance Benchmarking

The peer group is also used to provide the HRC Committee with relative financial performance assessments. The metrics reviewed include revenue growth, EPS growth, operating leverage, return on equity, return on tangible common equity as well as TSR on a one- and three-year basis. This analysis provides additional context for the HRC Committee in their review of compensation outcomes as well as compensation program design. When making annual compensation determinations for prior year performance, the HRC Committee reviews additional relative performance metrics as part of their considerations, as discussed above on pages 41 to 42.

Peer group data reviewed by the HRC Committee was considered holistically, and was used as an input, but not the sole input, of their compensation decisions.

 

 

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    ITEM 2. ADVISORY VOTE ON COMPENSATION  >  Compensation Discussion & Analysis

 

Stock Ownership Guidelines

Under our stock ownership guidelines, each named executive is required to own a number of shares of our common stock with a value equal to a multiple of base salary within five years of becoming a member of our Executive Committee. The officer cannot sell or transfer to a third party any shares until he or she achieves the ownership guideline.

 

 

Stock Ownership

Requirement

 

Stock Retention

Requirement*

   
 
  CEO      

 Must retain shares of our common stock equal 

to six times base salary

 

50% of net after tax shares must be held until

age 60

       
   
 
  Other NEOs      

 Must retain shares of our common stock equal 

to four times base salary

 

50% of net after tax shares must be held for

one year after vesting date

       

 

* Other than with respect to certain awards granted to Ms. Engle in connection with her commencement of employment, applies to shares received from the vesting of RSUs, PSUs, restricted stock and other long-term equity awards granted after appointment to the Executive Committee and that were unvested as of, or granted after, August 2012.

Our CEO is subject to a 6-times base salary, and our other named executives are subject to a 4-times base salary, ownership guideline. All of our named executives are also expected to hold, as an administrative practice, an additional amount of company shares above their guideline amount equal to 1 times base salary to provide a cushion against stock volatility. Ms. Engle has until June 2022, 5 years from commencing employment with the company, to meet the stock ownership and administrative guidelines. All of our other continuing named executives meet the stock ownership and administrative guidelines, including Mr. Scharf, who purchased approximately $10 million of shares of our common stock subsequent to his appointment as CEO. To determine each named executive’s ownership stake we include shares owned directly, shares held in our employee stock purchase and retirement plans and shares held in certain trusts. We include 50% of unvested restricted stock and RSUs that do not have performance conditions or for which the applicable performance conditions have been met. Unearned performance shares, awards that remain subject to performance conditions and stock options are not counted toward compliance with the stock ownership guidelines.

In addition, named executives are subject to a retention requirement relating to shares received from the vesting of RSUs, PSUs, restricted stock and other long-term equity awards that were granted after their respective appointment to the Executive Committee and that were unvested as of, or granted after, August 2012. For the CEO, 50% of the net after-tax shares from these awards must be held until age 60; for other named executive officers, 50% of the net after-tax shares must be held for one year from the vesting date.

Anti-Hedging Policy

Our executive officers, including each named executive officer, and directors are subject to a robust anti-hedging policy which prohibits them from entering into hedging transactions with their company stock and derivative securities relating to BNY Mellon. Prohibited transactions include engaging in short sales of our stock, purchasing our stock on margin and buying or selling any puts, calls or other options involving our securities (other than options granted pursuant to our compensation program). Prior to engaging in any transaction in company stock or derivative securities (including transactions in employee benefit plans, gifts and pledges), our executive officers and directors are required to pre-clear such transaction with our legal department and obtain that department’s affirmative approval to enter into the transaction.

Our anti-hedging policy applies to all securities which our executive officers and directors beneficially own and, with the exception of Trian, any entity for which an executive officer or director is attributed ownership.

 

 

BNY Mellon     2018 Proxy Statement       53


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    ITEM 2. ADVISORY VOTE ON COMPENSATION  >  Compensation Discussion & Analysis

 

Clawback and Recoupment Policy

In addition to forfeiture provisions based on risk outcomes during the vesting period, we have a comprehensive recoupment policy administered by the HRC Committee that applies to equity awards granted to our employees, including the named executive officers. Under the policy, the company may cancel all or any portion of unvested equity awards and require repayment of any shares of common stock (or values thereof) or amounts that were acquired from the award if:

 

    the executive directly or indirectly engages in conduct, or it is discovered that the executive engaged in conduct, that is materially adverse to the interests of the company, including failure to comply with the company’s rules or regulations, fraud or conduct contributing to any financial restatements or irregularities;

 

    during the course of employment, the executive engages in solicitation and/or diversion of customers or employees and/or competition with the company;

 

    following termination of employment with the company for any reason, the executive violates any post-termination obligations or duties owed to the company or any agreement with the company; or

 

    any compensation otherwise payable or paid to the executive is required to be forfeited and/or repaid to the company pursuant to applicable regulatory requirements.

We also have a cash recoupment policy, which provides that the company may claw back some or all of a cash incentive award made to our employees (including named executive officers) if the company determines within three years of the award date that there is a reasonable belief that the employee has engaged in conduct that is materially adverse to the company’s interests (including failing to comply with the company’s rules or regulations or engaging in fraud or other conduct that directly or indirectly causes or contributes to a financial restatement or other irregularity of BNY Mellon during the award performance period). The company may similarly forfeit, reduce or require repayment of a cash incentive award if (1) required by any applicable law, (2) the employee engages in competition with the company during the course of employment, or (3) the employee violates any post-termination obligations or duties owed to the company under any agreement with the company.

The company continues to monitor regulatory requirements as may be applicable to its recoupment policies.

Severance Benefits

Stockholder Approval of Future Senior Officer Severance Arrangements. In July 2010, the Board adopted a policy regarding stockholder approval of future senior officer severance arrangements. The policy provides that the company will not enter into a future severance arrangement with a senior executive that provides for severance benefits (as defined in the policy) in an amount exceeding 2.99 times the sum of annual base salary and target bonus for the year of termination (or, if greater, for the year before the year of termination), unless such arrangement receives stockholder approval.

 

 

54       BNY Mellon     2018 Proxy Statement


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    ITEM 2. ADVISORY VOTE ON COMPENSATION  >  Compensation Discussion & Analysis

 

Executive Severance Plan. The Bank of New York Mellon Corporation Executive Severance Plan (the “Executive Severance Plan”) was adopted in July 2010 and amended in August 2016 and February 2018. Under the Executive Severance Plan, as amended, participants terminated by the company without “cause” after August 11, 2017, will be eligible to receive severance in the amount of 1 times base salary. In addition, for participants terminated by the company without “cause” after August 7, 2016, eligibility for a pro-rata annual bonus for the year of termination is determined on a case by case basis and if awarded, paid at year end after an evaluation of corporate, business unit and individual performance, among other considerations. The following table sets forth the severance benefits available under the Executive Severance Plan, both before and after the HRC Committee’s August 2016 amendment.

 

Reason for Termination

        Severance
Payment
   Bonus    Benefit
Continuation
   Outplacement
Services

By the company without

“cause”

   Original    2 times base salary    Pro-rata annual bonus

for the year of

termination

   Two years    One year
   Revised    Reduced to 1 times

base salary

   Pro-rata annual bonus

paid at year end at the

discretion of

management and the

HRC Committee

   Reduced to
one year
   No change

By the company without

“cause” or by the executive

for “good reason” within two

years following a “change in

control”

   Original    2 times base salary

and 2 times target

annual bonus

   Pro-rata target annual

bonus for the year of

termination

   Two years    One year
   Revised    No change    No change    No change    No change

Executive Severance Plan participants are selected by the HRC Committee and include each of our named executives. To receive benefits under the plan, the participant must sign a release and waiver of claims in favor of the company and agree not to compete against the company, or solicit our customers and employees, for so long as they are receiving benefits under the plan.

We do not provide any severance-related tax gross-ups. If any payment under the Executive Severance Plan would cause a participant to become subject to the excise tax imposed under Section 4999 of the Internal Revenue Code of 1986 (“IRC”), then payments and benefits will be reduced to the amount that would not cause the participant to be subject to the excise tax if such a reduction would put the participant in a better after-tax position than if the participant were to pay the tax. In addition, the amount of payments and benefits payable under the plan will be reduced to the extent necessary to comply with our policy regarding stockholder approval of future senior officer severance arrangements as described above.

Retirement Benefits for Mr. Hassell

Mr. Hassell retired as Chairman effective December 31, 2017 following a 44-year career with the company, including 6 years as our CEO and Chairman. Pursuant to the standard retirement vesting provisions in our LTIP and the applicable award agreements, Mr. Hassell is eligible to vest in his unvested February 2015, February 2016 and February 2017 PSU and RSU awards. At December 31, 2017, and using the same assumptions as used for the Table of Other Potential Payments on page 68, the estimated value of such vesting was $41,445,373. Subsequent to his retirement, Mr. Hassell vested in his February 2015 RSU award and 114% of his February 2015 PSU award based on the company’s actual performance as described above. The number of shares under the February 2016 and February 2017 PSU awards in which Mr. Hassell will vest will be based on the company’s actual performance as determined by the HRC Committee at the end of the applicable performance periods. Mr. Hassell will also have the use of an office and administrative/IT support for 2 years following his retirement.

Separation Benefits for Mr. Shea

Mr. Shea left the company effective December 31, 2017. In connection with his departure, the company determined that he was eligible to receive payments under the Executive Severance Plan for a termination by the company without “cause.” In accordance with the plan, Mr. Shea received a severance payment of $650,000, equal to one times his base salary payable over one year, and benefits continuation and outplacement services for one year. The

 

 

BNY Mellon     2018 Proxy Statement       55


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    ITEM 2. ADVISORY VOTE ON COMPENSATION  >  Compensation Discussion & Analysis

 

HRC Committee also exercised its discretion under the plan to grant Mr. Shea’s 2017 incentive award. The HRC Committee reduced his target incentive award by 45% pursuant to the Executive Severance Plan and determined his actual incentive award would be granted solely in the form of cash and RSUs, based on actual corporate and individual performance. The HRC Committee further exercised its discretion to pay 30% of Mr. Shea’s award in cash and 70% as RSUs, a cash/equity mix consistent with the treatment for similarly situated executives. Because Mr. Shea’s employment concluded at the end of the year, no pro-ration was applied.

Mr. Shea is eligible to vest in his unvested February 2015, February 2016 and February 2017 PSU and RSU awards pursuant to the terms of our LTIP and the applicable award agreements regarding age and eligibility to receive separation pay under the Executive Severance Plan. At December 31, 2017, and using the same assumptions as used for the Table of Other Potential Payments on page 68, the estimated value of such vesting was $12,033,667. Subsequent to his departure, Mr. Shea vested in his February 2015 RSU award and 114% of his February 2015 PSU award based on the company’s actual performance as described above. The number of shares under the February 2016 and February 2017 PSU awards in which Mr. Shea will vest will be based on the company’s actual performance as determined by the HRC Committee at the end of the applicable performance periods.

Tax Considerations

The HRC Committee considers certain tax implications when designing our executive compensation programs and certain specific awards. The HRC Committee considered that Section 162(m) of the IRC generally imposes a $1 million limit on the amount that a public company may deduct for compensation paid to its CEO and the three other most highly compensated officers each year. Prior to the federal tax reform legislation enacted in December 2017, Section 162(m) included an exception to this $1 million limit for “qualifying performance-based” compensation as defined in the IRC. However, the new tax legislation removed this “qualifying performance-based” compensation exception. We generally design our compensation programs so that compensation paid to the named executives can qualify for available income tax deductions. Our incentive awards are granted under our stockholder-approved Executive Incentive Compensation Plan and in 2017, as in prior years, were intended to be “qualifying performance-based” compensation. In that regard, incentive compensation paid to any individual for 2017 could not exceed the sum of $3 million plus 0.5% of our positive pre-tax income from continuing operations, before the impact of the cumulative effect of accounting changes and extraordinary items, as disclosed on our consolidated statement of income for such year included in our Annual Report on Form 10-K.

However, the HRC Committee believes that stockholders’ interests may best be served by offering compensation that is not fully deductible, where appropriate, to attract, retain and motivate talented executives. Accordingly, the HRC Committee has discretion to authorize compensation that does not qualify for income tax deductibility.

 

 

56       BNY Mellon     2018 Proxy Statement

Regular Review of Compensation Plans and Practices + Direct Link Between Pay and Risk-Taking + Comprehensive Recoupment Policy + Incentive Award Funding Condition


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    ITEM 2. ADVISORY VOTE ON COMPENSATION  >  Compensation Discussion & Analysis

 

How We Address Risk and Control

 

 

LOGO

On a regular basis, our Chief Risk Officer and our HRC Committee review the company’s risk appetite, practices and employee compensation plans, including sales incentives, for alignment with sound risk management. Our Chief Risk Officer also met with the HRC Committee to specifically discuss and review our 2017 compensation plans, including the plans in which members of the Executive Committee participate. With respect to employees broadly, we also monitor the company’s compensation plans through a management-level compensation oversight committee that includes our Chief Risk Officer, Chief Human Resources Officer, Chief Financial Officer, General Counsel and the Chief Compliance Officer. This management committee receives regular reports, meets at least on a quarterly basis and reports to the HRC Committee on risk-related compensation issues.

We identify employees who, individually or as a group, are responsible for activities that may expose us to material amounts of risk, using a risk-related performance evaluation program with adjustments determined by a senior management committee responsible for control functions, with such adjustments later reviewed by the HRC Committee. The incentive compensation of identified employees is directly linked to risk-taking either through a “risk scorecard” or through the inclusion of a standard risk goal as part of our performance management process.

With respect to our named executive officers, a common equity Tier 1 ratio of at least 8.5% was established as a minimum funding requirement for our incentive compensation. Our incentive compensation also takes into account a risk assessment for both the company as a whole and for each individual. In addition, all of our named executive officers’ equity awards are subject to 100% forfeiture during, and clawback following, the vesting period and all of their cash incentives are subject to 100% clawback within three years following the award date, in each case based on ongoing risk assessments under our comprehensive recoupment policy.

We are also subject to regulation by various U.S. and international governmental and regulatory agencies with respect to executive compensation matters and the consideration of risk in the context of compensation. Our programs have been designed to comply with these regulations, and the HRC Committee regularly monitors new and proposed regulations as they develop to determine if additional action is required.

Based on the above, we believe that our compensation plans and practices are well-balanced and do not encourage imprudent risk-taking that threatens our company’s value or create risks that are reasonably likely to have a material adverse effect on the company.

Report of the HRC Committee

The HRC Committee has reviewed and discussed the foregoing Compensation Discussion and Analysis with management. On the basis of such review and discussions, the HRC Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the company’s Annual Report on Form 10-K and this proxy statement.

By: The Human Resources and Compensation Committee

 

Edward P. Garden, Chairman    Edmund F. “Ted” Kelly    Samuel C. Scott III
Jeffrey A. Goldstein      

 

 

BNY Mellon     2018 Proxy Statement       57


Table of Contents

    ITEM 2. ADVISORY VOTE ON

    COMPENSATION

 

  >  Executive Compensation Tables and Other

      Compensation Disclosure

 

Summary Compensation Table

The Summary Compensation Table and Grants of Plan-Based Awards Table, on this page 58 and on page 60, are in accordance with SEC rules and do not reflect the manner in which our HRC Committee thinks about and determines compensation. In particular, the SEC rules require that we report equity-based awards for the year that they are granted, even though the equity-based portion of our incentive compensation is awarded for services performed the prior year.

 

Name and

Principal

Position

 

 

Year

 

 

Salary

 

 

Bonus

 

 

Stock

Awards(1)(2)

 

 

Option

Awards

 

 

Non-Equity

Incentive Plan

Compensation

 

 

Change in

Pension

Value and

Nonqualified

Deferred

Compensation
Earnings(3)

 

 

All Other

Compensation(4)

 

 

Total
Compensation

 

Charles W. Scharf(5)

Chairman & Chief

Executive Officer

  2017   $572,917   $—   $14,741,565   $—   $1,754,000   $—   $33,470   $17,101,952
                 

Gerald L. Hassell(6)

Former Chairman & Chief

Executive Officer

  2017   $1,000,000   $—   $13,517,892   $—   $3,500,000   $867,078   $196,263   $19,081,233
  2016   $1,000,000   $—   $13,656,477   $—   $4,326,000   $—   $183,121   $19,165,598
  2015   $1,000,000   $—   $9,889,738   $—   $2,419,200   $—   $173,496   $13,482,434

Thomas P. “Todd”

Gibbons

Vice Chairman & Chief

Financial Officer

  2017   $650,000   $—   $5,722,582   $—   $1,943,100   $360,812   $99,648   $8,776,142
  2016   $650,000   $—   $4,755,929   $—   $2,354,580   $179,290   $84,360   $8,024,159
  2015   $650,000   $—   $3,510,949   $—   $2,426,760   $—   $76,731   $6,664,440

Brian T. Shea(6)

Former Vice Chairman &

CEO of Investment Services

  2017   $650,000   $—   $5,805,897   $—   $1,188,495   $—   $777,398   $8,421,790
  2016   $625,000   $—   $4,812,725   $—   $2,388,870   $—   $114,200   $7,940,795
  2015   $575,000   $—   $3,033,843   $—   $2,459,646   $—   $115,616   $6,184,105

Mitchell E. Harris(5)

CEO of Investment

Management

  2017   $650,000   $—   $4,220,202   $—   $2,626,155   $104,837   $18,900   $7,620,094
  2016   $625,000   $—   $3,713,373   $—   $1,736,438   $74,252   $18,550   $6,167,613

Bridget E. Engle(5)

Senior Executive Vice President &

Chief Information Officer

  2017   $339,611   $—   $7,309,402   $—   $2,350,000   $—   $10,800   $10,009,813
                 
                                   

 

(1) The amounts disclosed in this column include the grant date fair value of RSUs and PSUs granted in 2017, 2016 and 2015. For 2017, the grant date fair values of PSUs were: $12,781,486 for Mr. Scharf; $9,011,928 for Mr. Hassell; $3,678,803 for Mr. Gibbons; $3,732,369 for Mr. Shea; $2,712,974 for Mr. Harris; and $0 for Ms. Engle. At the maximum level of performance, the PSU values would be: $19,172,229 for Mr. Scharf; $13,517,892 for Mr. Hassell; $5,518,205 for Mr. Gibbons; $5,598,554 for Mr. Shea; $4,069,461 for Mr. Harris; and $0 for Ms. Engle.

 

(2) The amounts disclosed in this column are computed in accordance with FASB ASC Topic 718 (“ASC 718”) using the valuation methodology for equity awards set forth in note 15 to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2017.

 

(3) The amount disclosed in this column for 2017 represents the amount of increase in the present value of the executive’s accumulated pension benefit and, for Mr. Harris, also includes $28,589.77 representing the portion of interest accrued on deferred compensation above 120% of the applicable federal long-term rate at the maximum rate payable under the Mellon Elective Deferred Compensation Plan for Senior Officers (see page 66 for additional information about this plan). Present values are determined in accordance with the assumptions used for purposes of measuring our pension obligations under FASB ASC 715 as of December 31, 2017, including a discount rate of 3.97%, with the exception that benefit payments are assumed to commence at the earliest age at which unreduced benefits are payable.

 

 

58       BNY Mellon     2018 Proxy Statement


Table of Contents

    ITEM 2. ADVISORY VOTE ON

  COMPENSATION

 

  >  Executive Compensation Tables and Other

      Compensation Disclosure

 

 

 

 

(4) The items comprising “All Other Compensation” for 2017 are:

 

  Name

 

  

Perquisites
and Other
Personal
Benefits(a)

 

  

Contributions
to Defined
Contribution
Plans(b)

 

  

Insurance
Premiums(c)

 

  

Severance
Payments(d)

 

  

Total

 

Charles W. Scharf

 

   $14,570

 

   $18,900

 

   $—

 

   $—

 

   $33,470

 

Gerald L. Hassell

 

   $177,363

 

   $18,900

 

   $—

 

   $—

 

   $196,263

 

Thomas P. “Todd” Gibbons

 

   $70,648

 

   $18,900

 

   $10,100

 

   $—

 

   $99,648

 

Brian T. Shea

 

   $88,752

 

   $18,900

 

   $—

 

   $669,746

 

   $777,398

 

Mitchell E. Harris

 

   $0

 

   $18,900

 

   $—

 

   $—

 

   $18,900

 

Bridget E. Engle

 

   $0

 

   $10,800

 

   $—

 

   $—

 

   $10,800

 

 

  (a) “Perquisites and Other Personal Benefits” are for Mr. Scharf, use of company aircraft ($14,570); for Mr. Hassell, use of company car and driver ($57,358), use of company aircraft ($90,005) and enhanced charitable gift match ($30,000); for Mr. Gibbons, use of company car and driver ($38,343), use of company aircraft ($14,805) and enhanced charitable gift match ($17,500); and for Mr. Shea, use of company car and driver ($58,752) and enhanced charitable gift match ($30,000).

 

    The amounts disclosed represent aggregate incremental costs as follows: use of the company car and driver determined by the company’s net cost associated with the individual’s personal use of the pool of vehicles and drivers; personal use of corporate aircraft determined by the direct hourly operating cost for use of the aircraft multiplied by the number of hours of personal use; and the enhanced charitable gift match determined by matching contributions to eligible charities made by the company in excess of those provided for other employees under the company’s gift matching programs.

 

    We calculated the direct hourly operating cost for use of the aircraft by adding the total amount spent by us for fuel, maintenance, landing fees, travel and catering associated with the use of corporate aircraft in 2017 and divided this number by the total number of flight hours logged in 2017.

 

  (b) “Contributions to Defined Contribution Plans” consist of matching contributions under our 401(k) plans and non-discretionary company contributions under The Bank of New York Mellon Corporation Defined Contribution IRC Section 401(a)(17) Plan (the “BNY Mellon 401(k) Benefits Restoration Plan”). See “Nonqualified Deferred Compensation” below on page 65 for more details regarding the BNY Mellon 401(k) Benefits Restoration Plan. In addition, for Messrs. Scharf, Hassell, Gibbons, Shea and Harris and Ms. Engle, the amount includes non-discretionary company contributions totaling 2% of base salary under our 401(k) plan.

 

  (c) Represent taxable payments made by us for universal life insurance policies.

 

  (d) Represents the following severance payments payable pursuant to the Executive Severance Plan: one times base salary ($650,000) and one year of benefits continuation (valued at $19,746).

 

(5) Because Mr. Scharf and Ms. Engle were only each a named executive in 2017, no disclosure is included as to Mr. Scharf or Ms. Engle for 2016 and 2015. Because Mr. Harris was only a named executive beginning in 2016, no disclosure is included as to Mr. Harris for 2015.

 

(6) Mr. Hassell stepped down as the company’s CEO effective July 17, 2017, and retired as the Chairman of the Board effective December 31, 2017. Mr. Shea’s employment with the company terminated effective December 31, 2017.

 

 

BNY Mellon     2018 Proxy Statement       59


Table of Contents

    ITEM 2. ADVISORY VOTE ON

    COMPENSATION

 

  >  Executive Compensation Tables and Other

      Compensation Disclosure

 

Grants of Plan-Based Awards

 

           

Estimated Future Payouts
Under Non-Equity Incentive Plan
Awards(1)

 

 

Estimated Future Payouts
Under Equity Incentive Plan
Awards(2)

 

 

All Other
Stock
Awards(3)

 

   

Name

 

 

 Award 

Type

 

 

Grant
Date

 

 

 Threshold 

($)

 

 

 Target 

($)

 

 

 Maximum 

($)

 

 

Threshold
(#)

 

 

Target
(#)

 

 

Maximum
(#)

 

 

Number of
Shares of
Stock or
Units

(#)

 

 

Grant
  Date Fair  

Value of
Stock
Awards
($)(4)

 

Charles W. Scharf

 

  EICP

 

 

 

 

 

  $1,754,000

 

  $2,631,000

 

 

 

 

 

 

 

   

 

  PSUs

 

  7/17/2017

 

 

 

 

 

 

 

 

 

  239,578

 

  359,367

 

    $12,781,486

 

    RSUs

 

  7/17/2017

 

                          36,740

 

  $1,960,079

 

Gerald L. Hassell

 

  EICP

 

 

 

 

 

  $3,500,000

 

  $5,250,000

 

 

 

 

 

 

 

   

 

  PSUs

 

  2/16/2017

 

 

 

 

 

 

 

 

 

  191,458

 

  287,187

 

    $9,011,928

 

    RSUs

 

  2/16/2017

 

                          95,729

 

  $4,505,964

 

Thomas P.
“Todd” Gibbons

 

  EICP

 

 

 

 

 

  $1,905,000

 

  $2,857,500

 

 

 

 

 

 

 

   

 

  PSUs

 

  2/16/2017

 

 

 

 

 

 

 

 

 

  78,156

 

  117,234

 

    $3,678,803

 

  RSUs

 

  2/16/2017

 

                          43,420

 

  $2,043,779

 

Brian T. Shea

 

  EICP

 

 

 

 

 

  $1,212,750

 

  $1,819,125

 

 

 

 

 

 

 

   

 

  PSUs

 

  2/16/2017

 

 

 

 

 

 

 

 

 

  79,294

 

  118,941

 

    $3,732,369

 

    RSUs

 

  2/16/2017

 

                          44,052

 

  $2,073,528

 

Mitchell E. Harris

 

  EICP

 

 

 

 

 

  $2,205,000

 

  $3,307,500

 

 

 

 

 

 

 

   

 

  PSUs

 

  2/16/2017

 

 

 

 

 

 

 

 

 

  57,637

 

  86,456

 

    $2,712,974

 

    RSUs

 

  2/16/2017

 

                          32,021

 

  $1,507,228

 

Bridget E. Engle

 

  EICP

 

 

 

 

 

  $2,350,000

 

  $3,525,000

 

 

 

 

 

 

 

   

 

    RSUs

 

  9/1/2017

 

                          139,679

 

  $7,309,402

 

 

(1) Represents the cash portion of incentive compensation amounts to be paid for performance during 2017 under The Bank of New York Mellon Corporation Executive Incentive Compensation Plan (the “EICP”). There was no threshold payout under this plan for 2017.

 

(2) For each of Messrs. Hassell, Gibbons, Shea and Harris, represents the portion of the named executive’s incentive compensation award granted in the form of PSUs under The Bank of New York Mellon Corporation Long-Term Incentive Plan (the “LTIP”) for performance during 2016. For Mr. Scharf, represents the sign-on grant of PSUs, and the pre-granted PSUs awarded under the LTIP upon commencement of employment in respect of 50% of the PSU component of his incentive compensation award for performance during 2017. In each case, the amounts shown under the Maximum column represent the maximum payout level of 150% of target; there is no threshold payout level. Upon vesting, the PSUs will be paid out in shares of BNY Mellon common stock. PSUs cannot be sold during the period of restriction. During this period, dividend equivalents on the PSUs will be reinvested and paid to the executives at the same time as the underlying shares. These units will be earned between 0% – 150% based on our 2019 OEPS and growth in Risk Weighted Assets from 12/31/2016 to 12/31/2019 with a negative risk modifier should risk-weighted assets grow at an unacceptable rate. The earned units generally will cliff vest after the end of the performance period if the executive remains employed by us. In the event that the named executive’s risk scorecard rating is lower than acceptable risk tolerance, any unvested PSUs will be subject to review and potential forfeiture, as determined by our HRC Committee.

 

(3) For each of Messrs. Hassell, Gibbons, Shea and Harris, represents the portion of the named executive’s incentive compensation award granted in the form of RSUs under the LTIP for performance during 2016. The RSUs generally vest in equal installments over three years. For Mr. Scharf, represents the pre-granted RSUs awarded under the LTIP upon commencement of employment in respect of 100% of the RSU component of his incentive compensation award for performance during 2017 (pro-rated to reflect the time period in 2017 that he was employed by us). Mr. Scharf’s pre-granted RSUs vest in equal annual installments commencing on 2/15/2019. For Ms. Engle, represents 139,679 RSUs granted under the LTIP upon the commencement of her employment. 71,633 of Ms. Engle’s RSUs vested on 02/15/2018 and the remaining RSUs will vest in two tranches of 49,694 RSUs and 18,352 RSUs on 02/15/2019 and 02/15/2020, respectively.

 

(4) The aggregate grant date fair value of awards presented in this column is calculated in accordance with ASC 718.

 

 

60       BNY Mellon     2018 Proxy Statement


Table of Contents

    ITEM 2. ADVISORY VOTE ON

    COMPENSATION

 

  >  Executive Compensation Tables and Other

      Compensation Disclosure

 

Outstanding Equity Awards at Fiscal Year-End

The market value of unvested or unearned awards is calculated based on $53.86 per share, the closing price of our common stock on the NYSE on December 29, 2017.

 

       

Option Awards

 

 

Stock Awards(2)

 

   

Year of
Grant/

 Performance 

Period(1)

 

 

 

Number of Securities
Underlying Unexercised
Options (#)

 

 

Option
Exercise
Price ($)

 

 

Option
Expiration
Date

 

 

Number of

Shares or
Units of
Stock That
Have Not
Vested (#)

 

 

Market
Value of
Shares or
Units of
Stock That
Have Not
Vested ($)

 

 

Equity
Incentive

Plan
Awards:
Number of
Unearned
Shares,
Units
or Other
Rights That
Have Not
Vested (#)

 

 

Equity
Incentive
Plan Awards:
Market or

 Payout Value 
of Unearned
Shares, Units
or Other
Rights That
Have Not
Vested ($)

 

Name

 

   

Exercisable

 

 

Unexercisable

 

           

Charles W. Scharf

 

  2017

 

          36,740

 

  $1,978,816

 

   
    2017-2019

 

                          242,900(3)

 

  $13,082,581

 

Gerald L. Hassell

 

  2011

 

  295,119

 

 

 

  $30.1300

 

  2/23/2021

 

       
  2012

 

  434,412

 

 

 

  $22.0300

 

  2/22/2022

 

       
  2015

 

          43,901

 

  $2,364,508

 

   
  2016

 

          182,546

 

  $9,831,928

 

   
  2017

 

          95,729

 

  $5,155,964

 

   
  2015-2017

 

          142,869(4)

 

  $7,694,925

 

   
  2016-2018

 

              121,336(3)

 

  $6,535,145

 

    2017-2019

 

                          194,905(3)

 

  $10,497,567

 

Thomas P.
“Todd” Gibbons

 

  2011

 

  190,124

 

 

 

  $30.1300

 

  2/23/2021

 

       
  2012

 

  128,432

 

 

 

  $22.0300

 

  2/22/2022

 

       
  2015

 

          11,981

 

  $645,297

 

   
  2016

 

          55,952

 

  $3,013,575

 

   
  2017

 

          43,420

 

  $2,338,601

 

   
  2015-2017

 

          63,696(4)

 

  $3,430,663

 

   
  2016-2018

 

              54,095(3)

 

  $2,913,584

 

    2017-2019

 

                          79,563(3)

 

  $4,285,263

 

Brian T. Shea

 

  2015

 

          10,925