DEF 14A 1 lendingclub_def14a.htm DEFINITIVE PROXY STATEMENT lendingclub_def14a

 

 

  

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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LendingClub Corporation

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595 Market Street, Suite 200
San Francisco, California 94105

 

NOTICE OF 2021 ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD ON JUNE 1, 2021

To Our Stockholders:

NOTICE IS HEREBY GIVEN that the 2021 Annual Meeting of Stockholders of LendingClub Corporation (the “Company,” “LendingClub,” “we,” “us” and “our”) will be held on June 1, 2021 at 11:00 a.m. Pacific Time via the Internet at www.virtualshareholdermeeting.com/LC2021 (the “Annual Meeting”). There is no physical location for the Annual Meeting.

At the Annual Meeting, you will be asked to:

1.Elect Allan Landon, Timothy Mayopoulos and Patricia McCord as Class I directors, each of whom is currently serving on our Board of Directors, to serve until the 2024 Annual Meeting of Stockholders and until his or her successor has been elected and qualified or his or her earlier death, resignation or removal;

2.Approve, on a non-binding advisory basis, the compensation of our named executive officers as disclosed in this Proxy Statement;

3.Ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2021;

4.Approve a management proposal to amend the Company’s Restated Certificate of Incorporation to phase in the declassification of our Board of Directors; and

5.Approve a management proposal to amend the Company’s Restated Certificate of Incorporation to add a federal forum selection provision.

The foregoing items of business are more fully described in the Proxy Statement accompanying this Notice.

Only stockholders of record at the close of business on April 8, 2021 are entitled to notice of, and to vote at, the Annual Meeting or any adjournment or postponement thereof.

By Order of the Board of Directors,

Brandon Pace

Chief Administrative Officer and Corporate Secretary

San Francisco, California

April 20, 2021

Whether or not you expect to participate in the Annual Meeting, please vote via the Internet, by phone, or complete,
date, sign and promptly return the accompanying proxy in the enclosed postage-paid envelope (if applicable) so that
your shares may be represented at the
Annual Meeting.

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OF STOCKHOLDERS TO BE HELD ON JUNE 1, 2021: THIS PROXY STATEMENT, PROXY, AND
THE ANNUAL REPORT ARE AVAILABLE
AT WWW.PROXYVOTE.COM

Dear Stockholders,

LendingClub was founded in 2006 to transform the banking industry by leveraging technology, data science and a marketplace model. We started by bringing a traditional credit product, the installment loan, into the digital age and became the leading provider of unsecured personal loans in the United States. On February 1, 2021, we completed a major milestone in our progression as a Company with the acquisition of Radius Bancorp, Inc.

With the acquisition, we combined the complementary strengths of our digital lending capabilities with an award-winning digital bank, and with our marketplace banking capabilities we believe we are well positioned to deliver consistent and sustained multiyear growth. We expect to be better able to serve our more than 3 million customers with banking services that leverage our data, technology, marketing and brand strengths; and are excited about the opportunity to create a category-defining digital banking experience that will create value for our customers and dramatically enhance the resiliency and earnings trajectory of our business.

As we look to 2021 with optimism propelled by the Radius acquisition and the improving public health landscape, we remain cognizant of the pandemic-related challenges that had to be surmounted by both our business and our customers in 2020. A top priority for the Company is keeping our employees safe and secure, and to that end we were an early adopter of working from home, and are grounding our return to office strategy in public health guidance in combination with the needs of our employees. For our borrowers impacted by COVID-19, in 2020 we increased our customer support capacity and added a number of new payment and hardship plans, which dramatically helped borrowers preserve their financial health in a difficult economic and credit environment and helped demonstrate the resiliency of our asset class.

The Board and management are also keenly focused on increasing stockholder value by positioning the Company to better serve our members and deliver sustainable growth. Our vision to re-imagine banking for our customers is now well underway with the acquisition of Radius and evolution into a marketplace bank. We are working to integrate the Radius business and position the Company strategically and financially to best serve our various stakeholders. With the improving economy and acquisition of Radius, we are poised to accelerate growth in loan volume with our cycle-tested underwriting model and help even more customers on their journey to improved financial health.

The Company also continues to solicit and be responsive to stockholder feedback. In 2020 and 2021 we extensively reformulated our performance-based equity program by extending performance periods, increasing the allocation of total equity towards performance-based equity, more heavily weighting TSR-based awards, increasing the rigor of the target TSR achievement goal, and reducing the maximum payout level. In 2020 we also re-examined our executive compensation peer group and made adjustments that increased the allocation of banks within our peer group and significantly reduced the median market capitalization of the selected peers. We believe these changes are directly responsive to the most common and pertinent feedback expressed during recent stockholder outreach efforts.

In 2021, we added three new directors to our Board. Allan Landon and Erin Selleck bring deep banking experience and Thomas Casey, our CFO, brings unique expertise and insight into the financial services sector and the operations of our Company. We will continue to look for opportunities to add directors of diverse backgrounds and experiences to the Board. We believe in the merits of a declassified board and have again submitted a proposal this year to phase out our current classified board structure. We have also added a proposal to add a federal forum selection provision to our Certificate of Incorporation. This provision will allow the Company to consolidate and more efficiently manage procedural aspects of securities litigation, which we believe is in the best interest of the Company and its stockholders.

As a Company, diversity and inclusion are core to our corporate culture and we insist upon a safe and welcoming workplace for all of our employees. In 2020, we established a Racial Justice Plan that addresses our internal and external practices and promotes racial equity through our product offerings. This plan includes expanded diversity and inclusion goals and support programs.  We offer anti-racism, inclusive hiring and breaking-bias trainings, and have programs specifically designed to provide females and under-represented individuals with leadership tools and growth opportunities. We remain committed to enhancing our efforts with respect to diversity and inclusion.

Finally, as disclosed earlier this year, Simon Williams is departing the Board as of the 2021 Annual Meeting and Dan Ciporin and Ken Denman departed earlier this year in connection with the acquisition of Radius. Simon, Dan and Ken have been superb board members and we thank them for their many contributions to LendingClub.

We are strong believers in the opportunity ahead of us to re-imagine banking for millions of Americans. We are focused on capitalizing on this opportunity and creating value for our stockholders, as well as our customers, employees and communities. On behalf of the Board, thank you for your investment in LendingClub. We are grateful for your support and wish you and your family the very best for 2021.

Sincerely,

Scott Sanborn, Chief Executive Officer and member of the Board

John C. (Hans) Morris, Independent Chairman of the Board

TABLE OF CONTENTS

Proxy Summary

1

Board of Directors and Corporate Governance

11

LendingClub Board

11

Board Committees

13

Business Conduct and Ethics Policy

16

Information Regarding Our Directors

16

Director Compensation

20

Executive Officers

22

Executive Compensation

23

Compensation Discussion and Analysis

23

Compensation Tables

40

Employment Agreements

45

Potential Payments Upon Termination or Change In Control

46

Securities Authorized For Issuance Under Equity Compensation Plans

48

Report of the Compensation Committee

49

Security Ownership of Certain Beneficial Owners and Management

50

Related Party Transactions

52

Report of the Audit Committee

53

Section 16(a) Beneficial Ownership Reporting Compliance

54

Communications with the LendingClub Board

55

Proposal One: Election of Directors

56

Proposal Two: Advisory Vote on Executive Compensation

57

Proposal Three: Ratification of Appointment of Independent Registered Public Accounting Firm

58

Proposal Four: Declassification of the Board

59

Proposal Five: Federal Forum Selection Provision

61

Questions and Answers about the Proxy Materials and the Annual Meeting

62

Other Business

68

Annex I

69

Annex II

70

LENDINGCLUB CORPORATION | 1

2021 PROXY STATEMENT | PROXY SUMMARY

PROXY SUMMARY

April 20, 2021

Overview of Voting Items

Proposal

Board Recommendation

Page

Proposal One: Election of Class I directors

For each nominee

56

Proposal Two: Advisory vote to approve the compensation of our named executive officers

For

57

Proposal Three: Ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the 2021 fiscal year

For

58

Proposal Four: Management proposal to amend the Company’s Restated Certificate of Incorporation to phase in the declassification of the Board of Directors

For

59

Proposal Five: Management proposal to amend the Company’s Restated Certificate of Incorporation to add a federal forum selection provision

For

61

The Notice, Proxy Statement, form of proxy and Annual Report (as such terms defined in this Proxy Statement) will be first distributed and made available to stockholders on or about April 20, 2021.

Who We Are

LendingClub Corporation (“LendingClub”, the “Company”, “we”, “us”, “our”) was founded in 2006 to transform the banking industry by leveraging technology, data science and a marketplace model. We started by bringing a traditional credit product, the installment loan, into the digital age and became the largest provider of unsecured personal loans in the United States.

On February 1, 2021, LendingClub completed the acquisition of Radius Bancorp, Inc. (“Radius”), whereby LendingClub became a bank holding company and formed LendingClub Bank, National Association (“LendingClub Bank”) as its wholly-owned subsidiary, through which we now operate the vast majority of our business. With the acquisition, we combined the complementary strengths of the Company’s digital lending capabilities with an award-winning digital bank. LendingClub’s customers, or our “members”, can gain access to a broader range of financial products and services designed to help them digitally manage their lending, spending and savings.

Since we launched, more than 3 million individuals have become members, and thereby joined the Club, to help reach their financial goals. With the capabilities Radius possesses, the Company intends to further its mission to empower our members on their path to financial health and enhance consumer engagement by offering a broader range of products and services aimed at supporting our members and further improving their financial lives. In addition to serving our members, the acquisition of Radius enables us to offer products and services to commercial customers, as well as to continue to serve the broad range of institutional investors for our unsecured personal loans and auto loans, and for our patient and education finance loans. Investors provide capital to enable the funding of loans in exchange for earning competitive risk adjusted returns. Our marketplace enables efficient credit decisioning, pricing, servicing and support operations.

To execute on our vision, grow the business responsibly and create value for our stockholders, it is critical that we have a sophisticated, dedicated and committed management team, overseen by an independent board with substantial and relevant expertise.

Our Competitive Advantage 

We anticipate that the strategic and financial benefits of the Radius acquisition will include:

Increased resiliency with access to stable, low-cost deposit funding replacing higher-cost and more volatile third-party warehouse funding;

Increased and more stable revenue driven by increased net interest income from loans held for investment;

Expense benefits by capturing the fees that were historically paid to our third-party issuing banks; and

Ability to attract new members and deepen relationships with existing members through the addition of banking services that leverage LendingClub’s data, technology, marketing and brand strengths.

LENDINGCLUB CORPORATION | 2

2021 PROXY STATEMENT | PROXY SUMMARY

LendingClub Bank offers key business model and competitive advantages over both traditional banks and fintech marketplaces, which include:

Data analytics that drive a superior customer experience and underwriting results. We serve members across the credit spectrum and have facilitated more than $60 billion of loans to over 3 million members since the Company was founded. Our interactions with members have allowed us to capture billions of cells of performance and behavioral data across thousands of attributes, which we use to continually refine our pricing and underwriting algorithms. By leveraging vast amounts of data and continually refining our underwriting models, we believe we are able to assess credit risk more effectively compared to traditional scoring models, allowing us to generate savings for members and also enabling us to approve more members for loans. In addition, we believe our access to data and robust marketing analytics promote efficiency when we generate and convert demand, driving lower customer acquisition costs.

Strong customer loyalty and engagement. Our efficient marketplace model enables us to generate savings for a broad range of borrowers across the credit spectrum by matching them with the lowest available cost of funding provided by our platform investors. Our scalable technology platform, customer service culture and effective use of data and analytics enable us to efficiently originate loans. Our high net promoter score reflects the strong affinity our members have for our brand. With the acquisition of Radius, we are able to offer additional banking services designed to deliver even more savings, driving increased customer loyalty and engagement.

Operating and funding efficiency. With LendingClub Bank as the originating bank, we save on fees that we historically paid third-party issuing banks. With access to low-cost deposits and by retaining a portion of our loan originations for investment, we expect to generate an attractive stream of recurring revenue. In addition to improving our loan-level economics, we expect our banking capabilities will also substantially increase the resiliency of our business with access to more stable deposit funding.

With respect to investors, we primarily compete with other investment vehicles and asset classes, such as equities, bonds and short-term fixed income securities. LendingClub’s key competitive advantages include:

Portfolio diversification. Unsecured personal and auto loans can offer duration, geographic and/or asset diversification to investors.

Generating competitive risk-adjusted returns. The data analytics and underwriting results of our marketplace platform enable us to generate competitive risk-adjusted returns for investors. We believe that the risk-adjusted returns generated by our loans compare favorably to alternative investment options.

Becoming a Bank Enabled by Key Management Decisions in 2020 

Radius Acquisition

In February 2020, we entered into a merger agreement to acquire Radius and thereby acquire its subsidiary Radius Bank, a leading online bank with a national footprint and an extensible, modular technology infrastructure that delivers an award-winning mobile banking experience. We expected that the acquisition would take 12 to 15 months from the date the merger agreement was signed to receive regulatory approval and close. Through the leadership of our Board of Directors (“Board”) and executive team, and the diligent work of our employees, we completed the acquisition of Radius on February 1, 2021.

Shanda Exchange

Banking regulations impose a number of limitations and requirements on certain larger stockholders of banking institutions. In connection with the execution of the merger agreement and in order to facilitate compliance with these banking regulations, on February 18, 2020, we entered into an exchange agreement with our largest stockholder, Shanda Asset Management Holdings Limited and its affiliates (collectively, “Shanda”), pursuant to which Shanda exchanged all of the 19,562,881 common shares it beneficially owned for (i) 195,628 newly issued shares of LendingClub Mandatorily Convertible Non-Voting Preferred Stock, Series A (“Series A Preferred Stock”), that are mandatorily convertible in certain circumstances when owned by a person other than Shanda into 19,562,800 shares of LendingClub common stock and (ii) a one-time cash payment of approximately $50 million. LendingClub Series A Preferred Stock is substantially the same as LendingClub common stock except as to voting rights and that it therefore constitutes non-voting securities of LendingClub for bank regulatory purposes.

LENDINGCLUB CORPORATION | 3

2021 PROXY STATEMENT | PROXY SUMMARY

Temporary Bank Charter Protection Plan

To protect the Company’s bank charter initiative and prevent the closing of the Radius acquisition from being delayed or disrupted by the accumulation of ownership in LendingClub securities in excess of the parameters set forth in the banking regulations, the Board adopted a Temporary Bank Charter Protection Plan, also known as a stockholder rights agreement. The plan was specifically intended and narrowly constructed to deter stock positions in excess of certain thresholds set forth by the Federal Reserve under the Bank Holding Company Act. Specifically, it provides for the dilution of any person or group of persons who acquire either (i) 25% or more equity interest in LendingClub or (ii) 10% percent or more of any class of LendingClub’s voting securities.

In connection with the completion of the acquisition of Radius, the Temporary Bank Charter Protection Plan automatically expired on February 1, 2021.

2020 Strategic Priorities

The key strategic priorities of the Company in 2020 included:

Execution of the Radius acquisition

In February 2020, we entered into an agreement to acquire Radius Bank, an award-winning digital bank that provides a variety of accounts and services to meet the banking needs of consumers and businesses nationwide

We expect that the transaction will enable us to create a category-defining experience for our members and dramatically enhance the resilience and earnings trajectory of our business

The Company applied for necessary regulatory approvals, remained engaged with the banking regulators throughout the approval process and prepared the foundation to integrate the Radius business

The acquisition closed on February 1, 2021

Proactive capital, expense and liquidity management

The Company reduced its expense base to reflect reduced origination volume due to COVID-19

Expanded the LCX platform to allow loans to trade pre-issuance at off par prices without the use of our balance sheet

Increased cash position of the Company while significantly paying down warehouse lines and revolving debt to prepare for and facilitate the Radius acquisition

Reduced compensation Company-wide, with the CEO and the Board taking a 30% reduction in base pay

Prudently navigate COVID-19 environment

Undertook a number of measures to preserve platform returns, including adjustments to underwriting and income verification, resulting in loan performance at or above historical averages

Launched new deferment programs to aid borrowers through a challenging economic environment, which dramatically helped borrowers preserve their financial health

Kept employees safe by adopting work-from-home policies in response to COVID-19

Deliberate and measured restart of origination volume growth from its Q2 2020 low point to ensure balance between platform supply and demand

Social and Environmental Responsibility  

LendingClub’s mission is to help improve the financial health of our members and empower them to regain control over their finances. We periodically solicit feedback from our borrowers and perform/review studies to measure our performance against those objectives. Recently, our borrowers told us that approximately 80% of personal loans received through LendingClub’s platform are used for refinancing or consolidating credit card debt. They also told us that we improved their financial health by reducing the APR on their debt by approximately 4 percentage points on average while providing a responsible paydown plan. Researchers from the Philadelphia Federal Reserve have found that “consumers pay smaller spreads on loans from LendingClub than from credit card borrowing”, which is supported by our data that indicates savings of nearly $1,000 on average over the term of a personal loan from LendingClub Bank.

Further, we strive to lend to those underserved by traditional banks. For example, our small business lending program has seen 5x the representation of minority-owned businesses, and 4x the representation of women-owned businesses, compared to conventional bank lending. This program is operated in close partnership with the nonprofit community development financial institution Accion Opportunity

LENDINGCLUB CORPORATION | 4

2021 PROXY STATEMENT | PROXY SUMMARY

Fund. We believe that our small business lending activities have helped create or sustain over 100,000 jobs. With respect to our personal loans, the researchers from the Federal Reserve have found that “LendingClub’s consumer lending activities have penetrated areas that may be underserved by traditional banks, such as in highly concentrated markets and in areas that have fewer bank branches per capita.”

Diversity and inclusion are core to our corporate culture. In 2020, we established a Racial Justice Plan that addresses our internal and external practices and promotes racial equity through our product offerings. This plan includes expanded diversity and inclusion goals and support programs. We offer anti-racism, inclusive hiring and breaking bias trainings. Further, we have executive-sponsored programs specifically designed to provide females and under-represented individuals with leadership tools and growth opportunities. We also treat diversity as an important consideration when making hiring decisions and appointments to our Board, and promote policies and regulations that prevent and/or address discrimination; including with respect to the use of artificial intelligence and fair and responsible lending to communities of color. We are committed to continuing to undertake measures to enhance our efforts with respect to diversity and inclusion. As of December 31, 2020, our workforce was 42% female and 49% non-white.

We also aim to do our part in conserving the environment, from emphasizing sustainable or re-usable products in the construction and use of our office spaces, to leasing LEED certified buildings in San Francisco. LendingClub believes in the merits of evaluating and progressing across multiple dimensions of social and environmental responsibility, and looks forward to sharing updates and additional details as available in the future.

Stockholder Engagement & Responsiveness

Our Board believes it is important to maintain an open dialogue with stockholders to understand their views on the Company, its strategy and its governance and compensation practices. Our Board values feedback received from stockholders, and we have a history of making governance and compensation enhancements in response to investor input.

Stockholder Outreach Efforts

The Company engages with stockholders regularly and conducted multiple engagement efforts in 2020 and 2021. These outreach efforts included soliciting feedback on our compensation and governance practices from many of the governance departments of our largest institutional stockholders. Consistent with prior years, members of our management team participated in these conversations and stockholders were also offered the opportunity to speak with a member of our Board. In the Winter of 2020/2021, we reached out to the governance groups of stockholders representing, in aggregate, an estimated 45% of the economic interest (i.e., including derivative positions) in our then outstanding shares and were able to meet with the governance groups of stockholders representing approximately 17% of our shares then outstanding. In addition to these conversations, we maintain ongoing dialogue with many of our investors through our investor relations program. In total, between the filing of our 2020 proxy statement and this 2021 proxy statement, we had conversations with stockholders holding, in aggregate, an estimated 61% of the economic interest in our outstanding shares.

Overall, a majority of the stockholders engaged expressed support for the Company’s compensation and governance practices, including efforts to de-classify the Board. In particular, stockholders appreciated the evolution of the Company’s programs and practices, including the adjustments made to the Company’s 2020 performance-based restricted stock unit (“PBRSU”) program. Further, the stockholders recognized the unique challenges COVID-19 presented to the Company’s business, the broader economy and the related necessity for companies to adjust compensation programs in 2020 accordingly. Finally, stockholders the Company engaged with appreciated the highly competitive environment in the San Francisco Bay Area, the transformational impact of the acquisition of Radius on the Company’s business, the need to support the successful execution and integration of the Radius transaction and business, and the importance of promoting retention among the executive team as the Company transitions to a regulated banking institution.

Moreover, during discussions with stockholders regarding the supermajority vote provision, a number of stockholders expressed their support for delaying an amendment to remove the provision until such time as the Company’s stockholder base is less concentrated and stabilizes following the acquisition of Radius. Accordingly, the Board has determined to not put forth an amendment to remove the provision in 2021. The Board is committed to continuing to solicit stockholder feedback on this matter and will re-evaluate the merits of including it as a proposal in the Company’s 2022 proxy statement.

LENDINGCLUB CORPORATION | 5

2021 PROXY STATEMENT | PROXY SUMMARY

As summarized below, the Board has a demonstrated history of making meaningful changes to our governance and compensation practices in response to feedback received from our stockholders. The Board looks forward to continuing its dialogue with stockholders.

2020 Board Actions in Response to Stockholder Feedback

Our Compensation Committee takes stockholder feedback seriously and undertook a comprehensive review of our entire executive compensation program, which included conducting a robust review of the Company’s compensation practices, peer and market trends, and soliciting feedback from the Company’s stockholders. In response to the Company’s review and feedback, our Compensation Committee implemented a number of changes to our executive compensation practices and policies in 2020. Reflecting the Company’s responsiveness to stockholder feedback, we received a favorable outcome for our 2020 say-on-pay proposal with approximately 96% of our voting stockholders supporting the proposal.

LENDINGCLUB CORPORATION | 6

2021 PROXY STATEMENT | PROXY SUMMARY

2021 Board Actions in Response to Stockholder Feedback

As described above under “Stockholder Outreach Efforts”, the Company values continued discussions with and feedback from our stockholders. Although the feedback provided in 2020/2021 was more limited than in the prior year, reflecting the positive reception to the changes in 2020 outlined above, the Board approved enhancements to our executive compensation and governance practices in 2021. The key points of feedback and changes we made to our compensation and governance practices in 2021 include:

What We Heard in 2020/2021

What We Did in 2021

Board Declassification

Stockholders continue to support Board efforts to declassify director elections

For the fourth consecutive year, the Board is recommending the phase-out of our classified Board at this year’s Annual Meeting

A similar proposal was recommended by the Board at the three prior annual meetings

Despite active solicitation efforts by the Company and the support of many of our stockholders, the proposal has not yet received the requisite level of support to pass

Supermajority Vote Requirement

Some stockholders would prefer that we eliminate the supermajority vote requirement to amend our governing documents

Stockholders also recognize LendingClub’s unique circumstances, including our concentrated stockholder base 

Our Board is committed to eliminating the supermajority vote provision in the future, and will put forth an amendment to remove it as soon as is practicable, and no later than 2023

Our stockholder base is evolving in light of the Company’s acquisition of Radius and becoming a regulated financial institution, but still remains fairly concentrated, and accordingly under a majority vote standard, bylaw and charter amendments could pass with the support of a small number of stockholders, potentially to the detriment of other long-term stockholders

Multiple significant stockholders supported waiting to eliminate the supermajority vote provision and supported the Company’s efforts to monitor and be mindful of the interests of minority stockholders and to defer putting forth an amendment to remove the supermajority vote provision until the changes in the composition of the Company’s stockholder base has stabilized and becomes less concentrated

Total Stockholder Return (“TSR”) Weighting

Stockholders appreciate the alignment between the interests of executives and stockholders, and would like the Company to continue to evolve and enhance that alignment 

We are increasing the weight of the TSR metric for 2021 PBRSUs from 35% to 100% (i.e., the awards are entirely TSR based)

LENDINGCLUB CORPORATION | 7

2021 PROXY STATEMENT | PROXY SUMMARY

Response to COVID-19

Consistent with prior practice, the Compensation Committee held a number of meetings in Q1 2020 to, among other things, discuss the Company’s 2020 executive compensation program, including the 2020 annual incentive program and 2020 PBRSU program. During these discussions in Q1 2020, the Compensation Committee considered, but did not approve either a 2020 annual incentive plan or 2020 PBRSU program because of the onset and impact of COVID-19. In the first half of 2020, the Compensation Committee (and the full Board) held a number of meetings during which the impact of COVID-19 on the Company’s business and broader economy was considered, and the following actions relating to compensation were taken.

Element

Adjustment

Headcount Reductions

In April 2020, the Company implemented a restructuring plan which included a reduction in workforce of approximately 460 employees

In connection with the restructuring plan the Company terminated positions across the Company, including the position previously held by Steven Allocca, one of our NEOs, and accordingly his final day of employment with the Company was on May 12, 2020

Base Salary Reductions

In connection with the April 2020 restructuring plan, the Company implemented salary reductions across various job grades, which included a 30% salary reduction for our CEO and a 25% salary reduction for our other NEOs

The base cash retainer non-employee directors received for serving on the Board was reduced by 30%

These reductions to employee and Board compensation were reverted on January 1, 2021

2020 PBRSU Program

The 2020 PBRSU program was implemented largely as expected and disclosed in the Company’s 2020 proxy statement

The Compensation Committee decided to utilize Adjusted EBITDA as a metric in-lieu of Adjusted Net Income, given the material impact of COVID-19 to the Company’s 2020 profitability

2020 Annual Incentive Program 

Historically the Company has utilized revenue and Adjusted EBITDA as the metrics under its annual incentive program (i.e., corporate bonus program) and set target performance at the high-end of publicly disclosed guidance

In 2020, the Company withdrew guidance due to the impact of COVID-19 on its business and the broader economy

In light of the extensive and adverse impact of the COVID-19, the Compensation Committee approved a 2020 corporate bonus program that contained qualitative metrics designed to measure progress against a broad array of initiatives and priorities and quantitative metrics specifically tailored to the facilitation and execution of the Radius acquisition, which was one of the Company’s key strategic priorities

Prudent Equity Utilization 

In light of the adverse impact of COVID-19 on the Company’s business and stock price, the Compensation Committee deemed it prudent and consistent with stockholder interests to reduce the overall utilization of equity awards and thereby reduce the resulting compensation expense and dilution

The Compensation Committee reduced the target size of 2021 time-based restricted stock unit awards company-wide (including for our NEOs) by 25% and made a corresponding reduction in the total vesting schedule of 1 year (such that the awards now vest over a 3-year period). This change was designed to balance retention and reflect typical employee tenure, while also having the effect of reducing overall equity utilization in the Company’s compensation programs.

Additionally, in 2021 employees (other than Company executives, including the NEOs) were provided the opportunity to elect to receive a portion of their 2021 restricted stock unit award in the form of a cash award. This program was designed to enable employees to individualize their compensation to fit their particular needs and preferences, while also having the effect of reducing overall equity utilization in the Company’s compensation programs.

LENDINGCLUB CORPORATION | 8

2021 PROXY STATEMENT | PROXY SUMMARY

Executive Compensation Aligned with Corporate Results and Pay for Performance 

We believe that our compensation approach supports our objective of focusing on “at risk” compensation, reflecting an opportunity for financial upside based on company and individual performance and reduced or no payouts when we do not meet our performance goals. Our emphasis on equity awards provides a direct link between stockholder interests and the interests of our executive officers, thereby motivating our executive officers to focus on increasing our value over the long term. Below is a summary of our executive compensation program. We began granting PBRSUs to our CEO in 2017 and have since expanded the program to our entire executive team. In response to stockholder feedback, in 2020 and 2021 we significantly enhanced our PBRSU program, as described in the “Stockholder Engagement & Responsiveness” section above.

2020 Executive Compensation Program

Element

Form

Description

Performance Link

Base Salary

Cash

Salaries are competitive and appropriate based on the size of the Company, the industry in which we operate, and the complexity of our business, and represent the only element of our compensation program that is not “at risk”

Target Annual
Cash Bonus

Cash

Cash bonuses motivate our executive officers to achieve pre-defined annual financial and operational goals that support our long-term business strategy

Liquidity and expense management (75%) and closing Radius acquisition (25%), with no payouts if threshold performance not met; final amounts may be adjusted to reflect individual performance

Target
Equity-Based Compensation

RSUs

Long-term equity aligns compensation with stockholders’ long-term interests

Stock price performance over a four-year vesting period

PBRSUs

PBRSUs earned only if rigorous performance thresholds are met, with target and maximum amounts subject to stretch goals

PBRSU achievement targets based on pre-determined relative TSR (35%) measured over three years and Adjusted EBITDA (65%) goals measured over two years

One year of additional time-based vesting on earned portion of Adjusted EBITDA awards further aligns executives’ interests with those of long-term stockholders’

Note that the table above reflects the structure of the executive compensation program in effect for fiscal year 2020. As summarized above in the “Board Actions in Response to Stockholder Feedback” section, and as detailed further in the “Compensation Discussion and Analysis” section below, we have made certain adjustments to our compensation structure for 2021.

The Compensation Committee retains an independent compensation consultant and does not provide for the following executive compensation practices:

Single-trigger acceleration;

Any “gross-up” payments, other than with respect to imputed income in connection with a relocation;

Excessive perquisites or other personal benefits for our executive officers, other than in exceptional circumstances;

Repricing of stock options without stockholder approval; or

Hedging or short sales of our common stock by our executive officers.

Pay Outcomes Demonstrate Strong Alignment between Pay and Performance

Our orientation towards “at risk” compensation provides a direct link between stockholder interests and the interests of our executive officers and is intended to result in a reduction from target compensation in the event our performance goals are not met. The below graphic shows the composition of our CEO’s compensation and the percent that is considered “at-risk”, demonstrating strong alignment in our compensation structure between pay and performance.

LENDINGCLUB CORPORATION | 9

2021 PROXY STATEMENT | PROXY SUMMARY

Board Composition after 2021 Stockholder Meeting 

The Board maintains a robust refreshment process and has long been focused on ensuring that the skills and experiences of the Board align with the Company’s evolving business. In the past three years, the Board has appointed four new members, all of whom bring relevant skills to our Board. The information in the table and graphs below describes the composition of our Board and Board committees.

Continuing Directors

Susan Athey

Thomas Casey
Chief Financial Officer

Allan Landon

Timothy Mayopoulos

Patricia McCord

John C. (Hans) Morris

Independent Chairman

Scott Sanborn
Chief Executive Officer

Erin Selleck

Michael Zeisser

Age

50

58

73

62

67

62

51

64

56

Director Since

2018

2021

2021

2016

2017

2013

2016

2021

2019

Independent

Committee Membership Following 2021 Annual Meeting of Stockholders

Audit

Chair

Compensation

Chair

Credit Risk and Finance 

Chair

Nominating and Corporate Governance

Chair

Operational Risk 

Chair

Skills & Experience

Consumer Banking

Consumer Internet

Financial Markets 

Legal / Regulatory

LENDINGCLUB CORPORATION | 10

2021 PROXY STATEMENT | PROXY SUMMARY

Continuing Directors

Susan Athey

Thomas Casey
Chief Financial Officer

Allan Landon

Timothy Mayopoulos

Patricia McCord

John C. (Hans) Morris

Independent Chairman

Scott Sanborn
Chief Executive Officer

Erin Selleck

Michael Zeisser

Marketing / PR

Compensation / Employee Matters

Public Board Experience

Risk Management

Technology / Product

Board Diversity

Balanced Tenure

Safe Harbor Statement

Some of the statements in this Proxy Statement, including statements regarding our ability to effectuate and the effectiveness of company strategy, the design of our compensation programs, company performance, and the ability to realize certain financial and strategic benefits from the acquisition of Radius are “forward-looking statements.” The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “outlook,” “plan,” “predict,” “project,” “will,” “would” and similar expressions may identify forward-looking statements, although not all forward-looking statements contain these identifying words. Factors that could cause actual results to differ materially from those contemplated by these forward-looking statements include the impact of global economic, political, market, health and social events or conditions, including the impact of the coronavirus, and those factors set forth in the section titled “Risk Factors” in our most recent Annual Report on Form 10-K, as filed with the Securities and Exchange Commission (the “SEC”), as well as our subsequent reports on Form 10-Q and 10-K each as filed with the SEC. We may not actually achieve the plans, intentions or expectations disclosed in forward-looking statements, and you should not place undue reliance on forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in forward-looking statements. We do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

LENDINGCLUB CORPORATION | 11

2021 PROXY STATEMENT | BOARD OF DIRECTORS AND CORPORATE GOVERNANCE

BOARD OF DIRECTORS AND CORPORATE GOVERNANCE

LendingClub Board

Our Board oversees the strategy and overall business affairs of the Company. A key principle of our Company is maintaining the highest level of trust with customers, regulators, stockholders and employees. We have an active and engaged Board that is committed to fulfilling its fiduciary duties to our Company and stockholders and helping us continue to earn the trust of our stakeholders. Currently all members of our Board also serve on the Board of our banking subsidiary, LendingClub Bank, and therefore are entrusted with monitoring and ensuring the safety and soundness of our banking operations as required by applicable banking regulations. Our Board is also responsible, in conjunction and consultation with the Compensation Committee, for periodically reviewing the performance of our CEO and for providing oversight of talent development and retention.

Our Board currently has ten members and will reduce to nine members after the 2021 Annual Meeting of Stockholders with the departure of Mr. Williams, but the Board may establish a different number of authorized directors from time to time by resolution. Eight of our directors are independent within the meaning of the listing standards of the New York Stock Exchange (“NYSE”). Our Board is currently divided into three staggered classes of directors. At each annual meeting of stockholders, a class of directors is elected for a three-year term to succeed the same class whose term is then expiring. Our Board has proposed to phase out the classified board structure subject to stockholder approval of Proposal Four of this Proxy Statement at the Annual Meeting. If that proposal passes, our Board will phase into a structure in which all directors will be up for election each year to serve a term ending at the next annual meeting of stockholders.

Our Class I directors standing for re-election, if elected, will continue to serve as directors until the 2024 Annual Meeting of Stockholders and until his or her successor has been elected and qualified, or until his or her earlier death, resignation or removal.

Stockholder Outreach

The Company engages with stockholders regularly and conducted multiple engagement efforts in 2020 and 2021. These outreach efforts included soliciting feedback on our compensation and governance practices from many of the governance departments of our largest institutional stockholders. Consistent with prior years, members of our management team participated in these conversations and stockholders were also offered the opportunity to speak with a member of our Board of Directors. In the Winter of 2020/2021, we reached out to the governance groups of stockholders representing, in aggregate, an estimated 45% of the economic interest (i.e., including derivative positions) in our then outstanding shares and were able to meet with the governance groups of stockholders representing approximately 17%. of our shares then outstanding. In addition to these conversations, we maintain ongoing dialogue with many of our investors through our investor relations program. In total, between the filings of our 2020 proxy statement and this 2021 proxy statement, we had conversations with stockholders holding, in aggregate, an estimated 61% of the economic interest in our outstanding shares.

Overall, a majority of the stockholders engaged expressed support for the Company’s compensation and governance practices, including efforts to de-classify the Board. In particular, stockholders appreciated the evolution of the Company’s programs and practices, including the adjustments made to the Company’s 2020 PBRSU program. Further the stockholders recognized the unique challenges COVID-19 presented to the Company’s business, the broader economy and the related necessity for companies to adjust compensation programs in 2020 accordingly. Finally, stockholders the Company engaged with appreciated the highly competitive environment in the San Francisco Bay Area, the transformational impact of the acquisition of Radius on the Company’s business, the need to support the successful execution and integration of the Radius transaction and business, and the importance of promoting retention among the executive team as the Company transitions to a regulated banking institution.

Moreover, during discussions with stockholders regarding the supermajority vote provision, a number of stockholders expressed their support for delaying an amendment to remove the provision until such time as the Company’s stockholder base is less concentrated and stabilizes following the acquisition of Radius. Accordingly, the Board has determined to not put forth an amendment to remove the provision in 2021. The Board is committed to continuing to solicit stockholder feedback on this matter and will re-evaluate the merits of including it as a proposal in the Company’s 2022 proxy statement.

For more information regarding actions taken by our Board in response to stockholder feedback in recent years, as well as the meaningful actions taken in 2020 and 2021, please see the section titled “Stockholder Engagement and Responsiveness” beginning on page 4. The Board looks forward to continuing its open dialogue with stockholders.

LENDINGCLUB CORPORATION | 12

2021 PROXY STATEMENT | BOARD OF DIRECTORS AND CORPORATE GOVERNANCE

Board Leadership

John C. (Hans) Morris serves as the independent Chairman of our Board.

While our Corporate Governance Guidelines do not require the separation of offices of the Chairperson of the Board and the Chief Executive, the Board believes an independent Chairperson reinforces the independence of our Board as a whole and results in an effective balancing of responsibilities, experience and independent perspective that meets the current corporate governance needs and oversight responsibilities of our Board. We believe this structure provides consistent and effective oversight of our management and is optimal for us and our stockholders.

In selecting Mr. Morris as the independent Chairman, the Board considered his strong and relevant experience in financial services technology and the financial services industry, ability to provide effective leadership and facilitate open dialogue, and ability to devote sufficient time and attention to the position.

Board Role in Risk Oversight

Management is responsible for assessing and managing risk, subject to Board oversight directly and through its committees. The oversight responsibility of the Board and its committees is informed by reports from our management team, including our Chief Risk Officer and an internal audit team, that are designed to provide visibility to the Board about the identification and assessment of key risks and our risk mitigation strategies. In addition, the Board has requested and has been receiving regular updates from management regarding the Company’s response to the coronavirus pandemic and its impacts on the Company and its customers, employees and other stakeholders, and the efforts to mitigate these impacts.

The Board has delegated to the Operational Risk Committee and Credit Risk and Finance Committee (each comprised of independent directors) primary responsibility for the oversight of risk management. The Operational Risk Committee is primarily focused on reputational, legal, compliance and operational risk. The Credit Risk and Finance Committee is primarily focused on credit, market, interest rate and liquidity risk. In accordance with their charters, the Operational Risk Committee and Credit Risk and Finance Committee (collectively, the “Risk Committees”) assist our Board in its oversight of our key risks, including credit, technology and security, strategic, legal, regulatory (other than related to our financial reporting), compliance and operational risks, as well as the guidelines, policies and processes for monitoring and mitigating such risks. The Operational Risk Committee periodically meets with members of the Company’s information technology department to assess information security risks (including cybersecurity risks) and to evaluate the status of the Company’s cybersecurity efforts, which include a broad range of tools and training initiatives that are designed to work together to protect the data and systems used in the Company’s business. The Company has also established Management Risk Committees to oversee our enterprise risk management program and provide a central oversight function to identify, measure, monitor, evaluate and escalate key risks (including cybersecurity risk) for oversight at the Board level.

The other standing Board committees oversee risks associated with their respective areas of responsibility. For example, our Audit Committee has the responsibility for overseeing the integrity of our financial reporting, including related policies and procedures, compliance with legal and regulatory requirements affecting financial reporting, and overseeing our internal audit function. Our Nominating and Corporate Governance Committee seeks to ensure that our Board is properly constituted to meet its statutory, fiduciary and corporate governance oversight obligations, and evaluates risk arising from governance matters. Our Compensation Committee evaluates risks arising from our compensation policies and practices, as more fully described in “Executive Compensation – Compensation Discussion and Analysis – Compensation Risk Assessment.”

Director Independence

Under the rules of the NYSE, independent directors must comprise a majority of a listed company’s Board. In addition, the rules of the NYSE require that, subject to specified exceptions, each member of a listed company’s audit, compensation and nominating and corporate governance committees be independent. Under the rules of the NYSE, a director will only qualify as an “independent director” if, among other things, in the opinion of that company’s Board, that person does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.

Our Board has reviewed its composition, the composition of its committees and the independence of each director. Based upon information provided by each director concerning his or her background, employment and affiliations, including family relationships, our Board has determined that Susan Athey, Allan Landon, Timothy Mayopoulos, Patricia McCord, John C. (Hans) Morris, Erin Selleck, Simon Williams and Michael Zeisser, representing eight of our ten directors (and all of our non-employee directors), do not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director and that each of these directors is “independent” as that term is defined under the listing requirements and rules of the NYSE.

LENDINGCLUB CORPORATION | 13

2021 PROXY STATEMENT | BOARD OF DIRECTORS AND CORPORATE GOVERNANCE

In making this determination, our Board considered the current and prior relationships that each non-employee director has with our Company and all other facts and circumstances our Board deemed relevant in determining their independence, including the beneficial ownership of our capital stock by each non-employee director.

Meetings and Attendance

In 2020, the Board held 12 meetings (including regularly scheduled and special meetings) and acted by unanimous written consent 4 times. Each director attended at least 75% of the aggregate of (i) the total number of meetings of our Board held during the period for which he or she has been a director and (ii) the total number of meetings held by all committees of our Board on which he or she served during the periods that he or she served.

Typically, in conjunction with the regularly scheduled meetings of the Board, the independent directors also meet in executive sessions outside the presence of management. The independent Chairman of our Board, among other responsibilities, presides over such meetings.

Although we do not have a formal policy regarding annual meeting attendance by members of our Board, we encourage our directors to attend. All directors attended our 2020 Annual Meeting of Stockholders.

Board Committees

Our Board has established an Audit Committee, a Compensation Committee, a Credit Risk and Finance Committee, a Nominating and Corporate Governance Committee and an Operational Risk Committee. The current composition and responsibilities of each of the committees of our Board are described below. Members will serve on these committees until their resignation or until otherwise determined by our Board. Each of these committees has a written charter, which, along with our Corporate Governance Guidelines, are available on our website at http://ir.lendingclub.com under the heading “Corporate Governance.”

Director

Audit
Committee

Compensation Committee

Credit Risk and Finance Committee

Nominating and Corporate Governance Committee

Operational
Risk Committee

Susan Athey

Chair

Allan Landon

Timothy Mayopoulos

Chair

Patricia McCord

John C. (Hans) Morris

Chair

Erin Selleck

Simon Williams

Chair

Michael Zeisser

Chair

Audit Committee

The members of our Audit Committee are Allan Landon, Timothy Mayopoulos, Erin Selleck and Simon Williams (chair). All of the members of our Audit Committee meet the requirements for financial literacy under the applicable rules and regulations of the SEC and the NYSE. Our Board has determined that Mr. Williams and Mr. Landon are each an Audit Committee financial expert as defined under the applicable rules of the SEC and has the requisite financial sophistication as defined under the applicable rules and regulations of the NYSE. While other members of our Audit Committee may have the expertise to be designated an audit committee financial expert, the Board made a specific finding only as it relates to Mr. Williams and Mr. Landon.

In addition, Audit Committee members must also satisfy the independence criteria set forth in Rule 10A-3 under the Exchange Act. In order to be considered independent for purposes of Rule 10A-3, a member of an Audit Committee of a listed company may not, other than in his or her capacity as a member of the Audit Committee, the Board or any other committee of the Board (i) accept, directly or indirectly, any consulting, advisory or other compensatory fee from the listed company or any of its subsidiaries or (ii) be an affiliated person of the listed company or any of its subsidiaries.

LENDINGCLUB CORPORATION | 14

2021 PROXY STATEMENT | BOARD OF DIRECTORS AND CORPORATE GOVERNANCE

All of the members of our Audit Committee are independent directors as defined under the applicable rules and regulations of the SEC and the NYSE.

Our Audit Committee oversees financial risk exposures, including monitoring the integrity of our consolidated financial statements, internal controls over financial reporting, our internal audit function and the independence of our independent registered public accounting firm. Our Audit Committee receives internal control-related assessments and reviews and discusses our annual and quarterly consolidated financial statements with management. In fulfilling its oversight responsibilities with respect to compliance matters affecting financial reporting, our Audit Committee meets at least quarterly with management, our internal audit department, our independent registered public accounting firm, our internal legal counsel and compliance department to discuss risks related to our financial risk exposures.

During 2020, our Audit Committee held 9 meetings.

Compensation Committee

The members of our Compensation Committee are Allan Landon, Patricia McCord and Michael Zeisser (chair). All of the members of our Compensation Committee are independent under the applicable rules and regulations of the SEC and the NYSE.

Our Compensation Committee oversees our executive officer and director compensation arrangements, plans, policies and programs and administers our cash-based and equity-based compensation plans and arrangements for employees generally. From time to time and as it deems appropriate, our Compensation Committee may delegate its authority to subcommittees and, with respect to non-executive officer compensation, to our officers.

During 2020, our Compensation Committee held 8 meetings and acted by unanimous written consent 6 times.

Credit Risk and Finance Committee

The members of our Credit Risk and Finance Committee are Allan Landon, John C. (Hans) Morris (chair), Erin Selleck and Simon Williams.

Our Credit Risk and Finance Committee was formed in February 2021 and assists our Board in its oversight of our key risks, including credit, market, interest rate and liquidity risk, as well as the guidelines, policies and processes for monitoring and mitigating such risks. The Credit Risk and Finance Committee assists the Board in monitoring the Company’s risk management system, including ensuring that it is commensurate with the Company’s size, complexity and risk profile.

Because the Credit Risk and Finance Committee was formed in 2021, it did not meet or act by unanimous written consent in 2020.

Nominating and Corporate Governance Committee

The members of our Nominating and Corporate Governance Committee are Susan Athey (chair), Patricia McCord, John C. (Hans) Morris and Michael Zeisser. All of the members of our Nominating and Corporate Governance Committee are independent under the applicable rules and regulations of the NYSE.

Our Nominating and Corporate Governance Committee seeks to ensure that our Board is properly constituted to meet its statutory, fiduciary and corporate governance oversight. Our Nominating and Corporate Governance Committee will advise our Board on corporate governance matters and board performance matters, including making recommendations regarding director nominations and new appointments, the structure and composition of our Board and Board committees and developing, recommending and monitoring compliance with corporate governance guidelines and policies and our code of conduct and ethics.

During 2020, our Nominating and Corporate Governance Committee held 4 meetings and acted by unanimous written consent 1 time.

Operational Risk Committee

The members of our Operational Risk Committee (formerly our Risk Committee) are Susan Athey, Timothy Mayopoulos (chair) and Erin Selleck. Our Operational Risk Committee assists our Board in its oversight of our key risks, including technology and security (including cybersecurity risk), strategic, legal, regulatory (other than related to our financial statements), compliance and operational risks, as well as the guidelines, policies and processes for monitoring and mitigating such risks.

During 2020, our Operational Risk Committee held 4 meetings and acted by unanimous written consent 2 times.

LENDINGCLUB CORPORATION | 15

2021 PROXY STATEMENT | BOARD OF DIRECTORS AND CORPORATE GOVERNANCE

Director Skills and Experience

Our nominees and continuing directors provide a balanced mix of skills and attributes to best oversee our business. Although the Board currently believes that its members have the necessary skills and expertise, the Board regularly monitors the evolution of the Company and the fintech industry and as part of its refreshment process evaluates its ability to continue to provide necessary skills and experience.

Continuing Directors

Susan Athey

Thomas Casey

Chief Financial Officer

Allan Landon

Timothy Mayopoulos

Patricia McCord

John C. (Hans) Morris

Independent Chairman

Scott Sanborn

Chief Executive Officer

Erin Selleck

Michael Zeisser

Skills & Experience

Consumer Banking

Consumer Internet

Financial Markets 

Legal / Regulatory

Marketing / PR

Compensation / Employee Matters

Public Board Experience

Risk Management

Technology / Product

Additional Governance Measures

Clawback Policy. In September 2017, the Board adopted an Incentive Recoupment Policy (the “Clawback Policy”), which was enhanced in December 2019. The Clawback Policy provides the Board the right to recoup certain executive incentive compensation in the event of an accounting restatement of the Company’s consolidated financial statements resulting from material non-compliance with any financial reporting requirements under the securities laws. Incentive compensation that may be subject to the Clawback Policy includes any compensation that is granted, earned or vested based wholly or in part upon the attainment of any financial reporting measure. In December 2019, the Clawback Policy was enhanced to align with best practices by covering instances of management fraud or misconduct that result in significant reputational harm unrelated to a financial restatement.

Stock Ownership Guidelines. The Compensation Committee adopted stock ownership guidelines in December 2017 and enhanced the guidelines in December 2019. Under the guidelines, the CEO should hold equity with a value of six times base salary; the CFO should hold equity with a value of three times base salary; and all other Section 16 executives should hold equity with a value of two times base salary. Executives are permitted five years from the later of the adoption of the enhanced guidelines or the date of hiring to meet the holding requirements. Prior to meeting the holding requirements, such executives are not permitted to sell more than fifty percent of the after-tax value from any equity vesting event. All executives are in compliance with this policy, and either meet the suggested ownership levels currently or have additional time to accumulate equity to meet the ownership levels.

Hedging and Pledging Policy. The Company’s insider trading policy prohibits directors, officers, and other employees from engaging in transactions in publicly-traded options (such as puts and calls) and other derivative securities relating to our common stock. This policy prohibits short sales and extends to cover any hedging or similar transaction designed to decrease the risks associated with holding our securities. In addition, our officers and directors are prohibited from pledging any of our securities as collateral for a loan and from holding any of our securities in a margin account.

LENDINGCLUB CORPORATION | 16

2021 PROXY STATEMENT | BOARD OF DIRECTORS AND CORPORATE GOVERNANCE

Option Repricing Policy. Although the Company has discontinued the use of stock options, a number of stock options remain outstanding and certain of such stock options have per share exercise prices in excess of the current per share price of the Company’s common stock. Although the Company has no intention to reprice these outstanding underwater stock options, in response to stockholder feedback to migrate the Company’s compensation and governance policies to best practices, in December 2019, the Company amended its stock plans to require a stockholder vote to approve repricing any outstanding stock option.

Gross Up and Minimum Vesting Period Policies: In December 2019 the Company adopted a number of policies intended to be responsive to stockholder feedback encouraging the Company to evolve certain compensation related policies to more closely align with best practices. In addition to those described above, the Company adopted: (i) a policy requiring that all new hire employee equity awards have a minimum vesting cliff of at least 1-year, subject to certain limited exceptions, and (ii) a policy prohibiting tax gross-ups for Section 16 executives, other than for imputed income in connection with a relocation.

Business Conduct and Ethics Policy

Our Board adopted a business conduct and ethics policy that applies to all of our employees, officers and directors, including our CEO, CFO and our other executive officers. The full text of the business conduct and ethics policy is posted on the investor relations section of our website at http://ir.lendingclub.com under the heading “Corporate Governance.” We intend to disclose future amendments to certain provisions of our business conduct and ethics policy, or waivers of provisions contained therein, on our website or in public filings.

Compensation Committee Interlocks and Insider Participation

None of the members of our Compensation Committee are or have at any time during the past fiscal year been one of our officers or employees. None of our executive officers currently serve or in the past fiscal year have served as a member of the Board or Compensation Committee of any entity that has one or more executive officers serving on our Board or our Compensation Committee.

Information Regarding Our Directors

The following table sets forth the names, ages and certain other information for each of the directors with terms expiring at the Annual Meeting (who are also nominees for election as a director at the Annual Meeting) and for each of the continuing members of our Board:

Director Nominees

Class

Age

Position

Director Since

Current Term Expires

Expiration of Term for Which Nominated

Allan Landon(1)(2)(3) 

I

73

Director

2021

2021

2024

Timothy Mayopoulos(1)(5) 

I

62

Director

2016

2021

2024

Patricia McCord(2)(4) 

I

67

Director

2017

2021

2024

Continuing Directors

Susan Athey(4)(5) 

II

50

Director

2018

2022

Thomas Casey

III

58

CFO and Director

2021

2023

John C. (Hans) Morris(3)(4) 

II

62

Director

2013

2022

Scott Sanborn

III

51

CEO and Director

2016

2023

Erin Selleck(1)(3)(5) 

II

64

Director

2021

2022

Michael Zeisser(2)(4) 

III

56

Director

2019

2023

  

(1)Member of the Audit Committee

(2)Member of the Compensation Committee

(3)Member of the Credit Risk and Finance Committee

(4)Member of the Nominating and Corporate Governance Committee

(5)Member of the Operational Risk Committee

LENDINGCLUB CORPORATION | 17

2021 PROXY STATEMENT | BOARD OF DIRECTORS AND CORPORATE GOVERNANCE

Note that under Proposal Four of this Proxy Statement, the Company is proposing to amend its Restated Certificate of Incorporation to provide that any director elected to the Board after the date of the Annual Meeting be elected for a term expiring at the next annual meeting of stockholders.

Nominees for Director

Allan Landon joined our Board in February 2021. Since 2011, Mr. Landon has served as Assistant Dean and Adjunct Professor at David Eccles School of Business, University of Utah. His teachings cover business leadership and banking courses and help develop experiential learning programs. He also directs the Utah Center for Financial Services. From July 2011 to July 2018, Mr. Landon was Operating Partner at Community BanCapital and CBC Management GP, an Investment Management company. From 2004 to 2010, Mr. Landon served as Chairman and Chief Executive Officer of Bank of Hawaii. Before joining Bank of Hawaii, Mr. Landon was the Chief Financial Officer of First American Bank. Earlier Mr. Landon was a partner with Ernst & Young, serving public and privately-owned community, regional banks and other financial institutions. Mr. Landon is a member of the Boards of Directors of State Farm Mutual Automobile Insurance and Whistic, Inc. Mr. Landon holds a B.S. from Iowa State University. Mr. Landon was chosen to serve on our Board because of his extensive experience in the banking and financial services industry.

Timothy J. Mayopoulos joined our Board in August 2016. Since January 2019, Mr. Mayopoulos has been President of Blend Labs, Inc., a privately held enterprise software company making consumer lending simpler, faster and safer. From 2012 to 2018, Mr. Mayopoulos served as President and Chief Executive Officer of Fannie Mae, one of the largest providers of mortgage credit in the United States. Mr. Mayopoulos joined Fannie Mae in 2009 in the wake of the financial crisis. He initially served as Fannie Mae’s General Counsel, and in 2010 was named Chief Administrative Officer. He was promoted to CEO in June 2012, and, in that role, led the company’s support of the U.S. housing market and its efforts to create a better housing finance system for the future. Before joining Fannie Mae, Mr. Mayopoulos was General Counsel of Bank of America, held senior management positions at Donaldson, Lufkin & Jenrette, Credit Suisse First Boston and Deutsche Bank, and practiced law at Davis Polk & Wardwell. Mr. Mayopoulos is a member of the Boards of Directors of Blend Labs, Inc., Science Applications International Corporation (SAIC) and Valon Technologies, Inc. He is a graduate of Cornell University and the New York University School of Law. Mr. Mayopoulos was chosen to serve on our Board because of his extensive experience in the financial, legal and regulatory sectors.

Patricia McCord joined our Board in December 2017. Ms. McCord served as Chief Talent Officer of Netflix, Inc. from 1998 to 2012. Prior to Netflix, Ms. McCord was Human Resources Director at Pure Atria from 1994 through 1997 where she managed all human resources functions and directed all management development programs. Ms. McCord was a Human Resources Manager at Borland from 1992 through 1994 and Diversity Programs Manager at Sun Microsystems from 1988 through 1992. Ms. McCord was chosen to serve on our Board because of her extensive human resources and development programs experience.

Continuing Directors

Susan Athey joined our Board in March 2018. Since 2013, Ms. Athey has served as The Economics of Technology Professor at Stanford Graduate School of Business. Her research and teaching cover the economics of the internet and digital marketplaces, marketplace design, auctions, platform businesses, online advertising, the news media, financial technology, big data, and statistical methods for causal inference. From 2006 to 2012, Ms. Athey taught in the economics department at Harvard University. In 2007, Ms. Athey received the John Bates Clark Medal. Ms. Athey was elected to the National Academy of Science in 2012 and to the American Academy of Arts and Sciences in 2008. Ms. Athey also serves on the board of directors of Expedia Group, Inc. and several privately held companies. Ms. Athey received her bachelor’s degree from Duke University in economics, computer science, and mathematics and her Ph.D. in economics from Stanford University. She also holds an honorary doctorate from Duke University. Ms. Athey was chosen to serve on our Board because of her extensive experience with marketplace design, platform strategy, big data, and financial technology.

Thomas Casey has served as our Chief Financial Officer since September 2016 and joined our Board in February 2021. Mr. Casey was previously the Executive Vice President and Chief Financial Officer at Acelity L.P. Inc., a medical device company, from November 2014 to August 2016 and was responsible for the entire range of financial functions, including financial accounting, reporting, and planning and analysis. From 2009 to July 2013, Mr. Casey was Executive Vice President and Chief Financial Officer for Clear Channel Outdoor, Inc., an advertising company. He has also served as Executive Vice President and Chief Financial Officer of Washington Mutual, Inc., Vice President of General Electric Company and Senior Vice President and Chief Financial Officer of GE Financial Assurance. Mr. Casey holds a B.S. degree in accounting from King’s College in Wilkes-Barre, PA. Mr. Casey was chosen as a member of our Board because of the perspective he brings as Chief Financial Officer and his experience with and knowledge of our Company and the banking industry.

LENDINGCLUB CORPORATION | 18

2021 PROXY STATEMENT | BOARD OF DIRECTORS AND CORPORATE GOVERNANCE

John C. (Hans) Morris joined our Board in February 2013. Mr. Morris is the managing partner of Nyca Partners, a venture capital company focused on fintech established in 2014. From January 2010 until January 2014, he served as a managing director and special advisor at General Atlantic, a growth equity firm. Mr. Morris was previously President of Visa, Inc. from 2007 to 2009. Prior to Visa, Mr. Morris spent 27 years at Citigroup, Inc., a banking and financial services company, and its predecessor companies in various leadership positions, with his final position as Chief Financial Officer and Head of Finance, Technology and Operations for Citi Markets and Banking. Mr. Morris also serves on the board of directors of six privately held companies. Mr. Morris holds a B.A. in government from Dartmouth College. Mr. Morris was chosen to serve on our Board because of his extensive experience in the banking and financial services industry and his financial expertise.

Scott Sanborn has served as our Chief Executive Officer since June 2016. Mr. Sanborn previously served as our President from April 2016 to May 2017, Chief Operating and Marketing Officer from April 2013 to March 2016 and Chief Marketing Officer from May 2010 to March 2013. From November 2008 to February 2010, Mr. Sanborn served as the Chief Marketing and Revenue Officer for eHealthInsurance, an e-commerce company. Mr. Sanborn holds a B.A. from Tufts University. Mr. Sanborn has significant executive and leadership experience and has been a driver of our strategy and growth for nearly 10 years and instrumental in transforming the Company from a small privately held company to a publicly traded company and industry leader. Mr. Sanborn was chosen as a member of our Board because of the perspective he brings as Chief Executive Officer and his experience with and knowledge of our Company and the fintech industry.

Erin Selleck joined our board in February 2021. Prior to her retirement in 2014, Ms. Selleck served as Senior Executive Vice President and Treasurer for MUFG Union Bank, a key subsidiary of Japan’s Mitsubishi UFJ Financial Group (MUFG), one of the world’s largest financial organizations. Her accomplishments at Union Bank include successfully guiding the bank through the 2008 financial crisis, growing the bank’s balance sheet, and navigating an increasingly challenging economic and regulatory environment in the banking industry. Before joining Union Bank, Ms. Selleck served as Vice President and Manager in Corporate Treasury at Bank of America. Ms. Selleck served on the board of Broadway Financial Corp/Broadway Federal Bank from 2015 until March 2021. Ms. Selleck holds a B.A. in Arts and an M.B.A. from University of California at Berkeley. Ms. Selleck was chosen to serve on our Board because of her extensive experience in the banking and financial services industry.

Michael Zeisser has been a member of our Board since September 2019. Mr. Zeisser currently serves as the Managing Partner of FMZ Ventures, a growth equity investment fund focused on experienced economy and marketplace ecosystems. From 2013 to April 2018, Mr. Zeisser served in a number of capacities for the Alibaba Group, most recently as Chairman, U.S. Investments where he led Alibaba’s strategic investments outside of Asia. From 2003 to 2013, Mr. Zeisser served as Senior Vice President of Liberty Interactive Corporation, where he led investments in digital media, online gaming, and commerce. Prior to joining Liberty Media, Mr. Zeisser was a partner at McKinsey & Company. Mr. Zeisser also serves on the board of directors of several privately held companies. Previously, Mr. Zeisser served on the board of directors of Shutterfly, Trip Advisor, IAC, TIME Inc. and XO Group. Mr. Zeisser graduated from the University of Strasbourg, France and the J.L. Kellogg Graduate School of Management at Northwestern University. Mr. Zeisser was chosen to serve on our Board because of his extensive experience in corporate development, strategy and consumer marketplaces.

Considerations in Evaluating Director Nominees

In its evaluation of director candidates, our Nominating and Corporate Governance Committee considers the current size and composition of our Board and the needs of our Board and the respective committees of our Board. Some of the qualifications that our Nominating and Corporate Governance Committee considers include business experience, diversity characteristics (including gender, race and ethnic background) and the skills set forth in the director skills matrix on page 15.

Exceptional candidates who do not meet all of the above criteria may still be considered. Director candidates must have sufficient time available in the judgment of our Nominating and Corporate Governance Committee to perform all board of director and committee responsibilities. Members of our Board are expected to prepare for, attend, and participate in all board of director and applicable committee meetings. Other than the foregoing, there are no stated minimum criteria for director nominees, although our Nominating and Corporate Governance Committee may also consider such other factors as it may deem, from time to time, are in our stockholders’ best interests.

LENDINGCLUB CORPORATION | 19

2021 PROXY STATEMENT | BOARD OF DIRECTORS AND CORPORATE GOVERNANCE

Our Nominating and Corporate Governance Committee does not have a formal policy with respect to diversity; however, it considers diversity characteristics in identifying director nominees, including personal characteristics such as race and gender, as well as diversity in the experience and skills that contribute to the Board’s performance of its responsibilities in the oversight of our Company. Additionally, in its efforts to recruit members of the Board, the Nominating and Corporate Governance Committee will specifically direct any individuals or search firms assisting with recruitment to seek out potential candidates with diversity characteristics, including gender and racial diversity, to ensure that the Nominating and Corporate Governance Committee has considered a full array of qualified candidates. In making determinations regarding nominations of directors, our Nominating and Corporate Governance Committee also considers these and other factors as it oversees the annual board of director and committee evaluations. After completing its review and evaluation of director candidates, our Nominating and Corporate Governance Committee recommends to our full Board the director nominees for election.

Our Nominating and Corporate Governance Committee uses a variety of methods for identifying and evaluating director nominees. Candidates may come to its attention through current members of our Board, professional search firms (which locate qualified candidates that meet the Nominating and Corporate Governance Committee’s criteria), stockholders or other persons. The Board does not distinguish between nominees recommended by stockholders and other nominees. However, stockholders desiring to nominate a director candidate at the Annual Meeting must comply with certain procedures. A stockholder of record can nominate a candidate for election to the Board by complying with the procedures in Article I, Section 1.11 of our bylaws. Any eligible stockholder who wishes to submit a nomination should review the requirements in the bylaws on nominations by stockholders. Any nomination should be sent in writing to the Secretary, LendingClub Corporation, 595 Market Street, Suite 200, San Francisco, California 94105. Submissions must include the full name of the proposed nominee, complete biographical information, a description of the proposed nominee’s qualifications as a director, other information specified in our bylaws and a representation that the nominating stockholder is a beneficial or record holder of our stock. Any such submission must be accompanied by the written consent of the proposed nominee to be named as a nominee and to serve as a director if elected, along with an irrevocable resignation, contingent (i) on that nominee not receiving the required vote for election, and (ii) acceptance of that resignation by the Board in accordance with policies and procedures adopted by the Board for such purposes. All candidates are evaluated under the same process which is conducted by our Nominating and Corporate Governance Committee, and may be considered at any point during the year. Stockholders otherwise may recommend persons for the Board to consider for nomination. If any materials are provided by a stockholder in connection with the nomination or recommendation of a director candidate, such materials are forwarded to the Nominating and Corporate Governance Committee.

All proposals of stockholders that are intended to be presented by such stockholder at an annual meeting of Stockholders must be in writing and notice must be delivered to the Secretary at our principal executive offices no later than the close of business on the 75th day nor earlier than the close of business on the 105th day prior to the first anniversary of the preceding year’s annual meeting.

LENDINGCLUB CORPORATION | 20

2021 PROXY STATEMENT | DIRECTOR COMPENSATION

Director Compensation

Our non-employee director compensation program is described below. In addition, from time to time, we reimburse certain of our non-employee directors for reasonable travel and other expenses incurred in connection with attending our board and committee meetings. Mr. Sanborn, our Chief Executive Officer, and Mr. Casey, our Chief Financial Officer, receive no compensation for their service as directors. Our non-employee directors do not receive perquisites.

Equity Compensation

Each new non-employee member of our Board receives an equity award of RSUs in connection with his or her initial election or appointment to our Board having a grant date fair value equal to $250,000 that vests over four years, with $1,000 of the award vesting immediately to satisfy stock ownership requirements set forth by the federal banking regulations, 1/4th of the award vesting after one year and an additional 1/16th vesting each quarter thereafter (an “Initial Director Award”). Each continuing non-employee member of our Board receives on the date of our annual meeting of stockholders an equity award of RSUs having a grant date fair value of $150,000 that vests quarterly over one year (the “Annual Director Award”). Directors are not eligible to receive an Annual Director Award if they received an Initial Director Award in the same calendar year. In addition, our 2014 Equity Incentive Plan includes a cap on the size of equity awards that can be granted to a non-employee director in any calendar year.

Cash Compensation

Each non-employee director receives the annual cash retainers listed below based on their board and committee service. Committee chairpersons do not receive the committee member retainer in addition to the chairperson retainer.

Board and Committee Service

2020 Cash Retainer
Amounts
(1) 

All Non-Employee Directors

$28,000/year

Non-Executive Board Chairman

$25,000/year

Audit Committee Chairperson

$25,000/year

Compensation Committee and Risk Committee Chairperson

$17,500/year

Nominating and Corporate Governance Chairperson

$10,000/year

Audit Committee Member

$12,500/year

Compensation Committee and Risk Committee Member

$8,000/year

Nominating and Corporate Governance Member

$5,000/year

  

(1)Reflects a $12,000 reduction in connection with COVID-19. The cash retainer amount for all non-employee directors reverted back to $40,000 as of January 1, 2021.

Cash retainers are generally paid after services are rendered instead of paid in advance. Specifically, non-employee directors typically receive a cash payment in June for services performed from January to June and a cash payment in December for services performed from July to December.

Director Stock Ownership Guidelines

Our director stock ownership guidelines provide that each non-employee director hold an equity stake (i.e., shares and/or equity awards) in our Company equal to at least $300,000 in value, within three years from the date of appointment or election to our Board. Compliance with these guidelines will be considered by our Nominating and Corporate Governance Committee when making recommendations to the Board regarding whether to nominate directors for re-election.

All of our non-employee director nominees and non-employee continuing directors are in compliance with this policy, and either meet the suggested ownership levels currently or have additional time to accumulate equity to meet the ownership levels.

COVID-19 Related Reductions to Director Compensation

In response to the effect of COVID-19 on the Company’s business, the base cash retainer non-employee directors received for 2020 service on the Board was reduced by 30% from $40,000 to $28,000. The cash retainer amount for all non-employee directors reverted back to $40,000 as of January 1, 2021.

LENDINGCLUB CORPORATION | 21

2021 PROXY STATEMENT | DIRECTOR COMPENSATION

2020 Director Compensation

The following table provides information regarding the total compensation paid or awarded in 2020 to each of our non-employee directors who served during 2020. Mr. Sanborn received no compensation for his 2020 service on our Board because he is an employee director.

Director

Fees Earned
or Paid in
Cash ($)
(1) 

Option
Awards ($)

Stock
Awards ($)
(2)(3) 

Total ($)

Susan Athey

48,500

150,003

198,503

Daniel Ciporin

53,500

150,003

203,503

Kenneth Denman

48,500

150,003

198,503

Timothy Mayopoulos

50,500

150,003

200,503

Patricia McCord

41,000

150,003

191,003

John C. (Hans) Morris

75,500

150,003

225,503

Simon Williams(4) 

61,000

150,003

211,003

Michael Zeisser

41,000

150,003

191,003

  

(1)Reflects amounts paid in 2020. With the exception of Mr. Williams who requested that he continue to be paid under the pre-payment cadence, cash retainers are now paid after services are rendered instead of paid in advance (as described above).

(2)Amounts reflect the aggregate grant date fair value of the RSUs granted in 2020, without regard to forfeitures, computed in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718, Compensation – Stock Compensation. Assumptions used in the calculation of this amount are included in “Note 16. Employee Incentive and Retirement Plans” to the Consolidated Financial Statements included in our Annual Report. This amount does not reflect the actual economic value realized by each director.

(3)Represents an Annual Director Award having a value of $150,000 (rounded up to the nearest whole RSU) for continuing non-employee directors.

(4)Includes $36,500 for prepayment of a portion of 2021 service on the Board.

Options and RSUs Held

The following table sets forth the aggregate number of options and RSUs held as of December 31, 2020 by each individual who served as a non-employee director during 2020:

As of December 31, 2020

Director

Total Options Held

Total RSUs Held

Susan Athey

12,976

Daniel Ciporin(1) 

12,976

Kenneth Denman(1) 

15,129

Timothy Mayopoulos

12,976

Patricia McCord

12,976

John C. (Hans) Morris

252,758

12,976

Simon Williams

64,000

12,976

Michael Zeisser

24,669

  

(1)Each of Messrs. Ciporin and Denman resigned from the Board and all Committees of the Board on February 1, 2021. In connection with their resignations, the Board accelerated the vesting of RSUs held by each of Messrs. Ciporin and Denman that would otherwise have vested in February 2021, which resulted in the acceleration of 6,488 RSUs held by Mr. Ciporin and 7,206 RSUs held by Mr. Denman.

LENDINGCLUB CORPORATION | 22

2021 PROXY STATEMENT | EXECUTIVE OFFICERS

EXECUTIVE OFFICERS

Executive Officers

The following table identifies certain information about our current executive officers. Each executive officer serves at the discretion of our Board and holds office until his or her successor is duly appointed or until his or her earlier resignation or removal. There are no family relationships among any of our directors or executive officers.

Name

Age

Position

Scott Sanborn

51

Chief Executive Officer

Thomas Casey

58

Chief Financial Officer

Annie Armstrong

43

Chief Risk Officer

Valerie Kay

54

Chief Capital Officer

Bahman Koohestani

59

Chief Technology Officer

Ronnie Momen

53

Chief Consumer Banking Officer

Brandon Pace

48

Chief Administrative Officer and Corporate Secretary

For biographical information regarding Mr. Sanborn and Mr. Casey, please refer to the section titled “Information Regarding Our Directors” above.

Annie Armstrong has served as our Chief Risk Officer since March 2020. From September 2018 to March 2020, Ms. Armstrong served as Global Head of Financial Risk at Uber Technologies, Inc. From October 2007 to September 2018, Ms. Armstrong served in various capacities at KPMG, including as Partner, FinTech Practice Leader from September 2015 to September 2018. Ms. Armstrong holds a B.S. degree in Integrated Science and Technology from James Madison University.

Valerie Kay has served as our Chief Capital Officer since July 2018. Ms. Kay previously served as our Senior Vice President of our Investor Group from September 2016 to June 2018. From 1996 to August 2016, Ms. Kay served in various positions at Morgan Stanley, including the last 12 years as a Managing Director in Global Capital Markets. Ms. Kay holds a B.A. in economics from Vassar College.

Bahman Koohestani has served as our Chief Technology Officer since May 2018. From December 2014 to May 2018, Mr. Koohestani served as Chief Technology Officer of Thomson Reuters/Clarivate Analytics. From August 2010 to May 2014, Mr. Koohestani served as Executive Vice President and Chief Technology Officer of NexTag. Prior to joining NexTag, Mr. Koohestani served in executive roles at various leading technology and fintech companies, including PayPal, Inc. and Orbitz Worldwide, Inc. Mr. Koohestani holds a B.Sc. in computer science from York University.

Ronnie Momen has served as our Chief Consumer Banking Officer since November 2020. From July 2018 to November 2020, Mr. Momen served as our Chief Lending Officer. From September 2017 to March 2018, Mr. Momen served as Chief Credit Officer of GreenSky, Inc. From November 2015 to September 2017, Mr. Momen served as Executive Vice President, Head of Credit Risk, Consumer Credit Solutions at Wells Fargo & Company. From 1998 to September 2015, Mr. Momen served in various positions at HSBC Holdings, including the last three years as Executive Vice President, Americas Head of Risk for Retail Banking & Wealth Management. Mr. Momen holds a B.A. in engineering and management science from the University of Cambridge.

Brandon Pace has served as our Chief Administrative Officer and Corporate Secretary since November 2020. From March 2019 to November 2020, Mr. Pace served as our General Counsel and Corporate Secretary. Mr. Pace previously served as our Interim General Counsel from December 2018 to February 2019 and Senior Vice President of Legal from December 2016 to November 2018. From April 2010 to December 2016, Mr. Pace served in various legal positions at eBay, Inc., which for many years owned what is now PayPal Holdings, Inc., most recently as Vice President, Deputy General Counsel. Prior to joining eBay, Inc., Mr. Pace spent years in private practice at a number of international law firms representing technology companies. Mr. Pace holds a B.A. in history from Brigham Young University and a J.D. from George Washington University.

LENDINGCLUB CORPORATION | 23

2021 PROXY STATEMENT | EXECUTIVE COMPENSATION – COMPENSATION DISCUSSION AND ANALYSIS

EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

Overview

This section describes our executive compensation philosophy, objectives and design, our compensation-setting process, our executive compensation components and the decisions made in 2020 for our named executive officers (“NEOs”), who were the following executive officers during 2020:

Scott Sanborn, our Chief Executive Officer;

Thomas Casey, our Chief Financial Officer;

Annie Armstrong, our Chief Risk Officer;

Bahman Koohestani, our Chief Technology Officer;

Ronnie Momen, our Chief Consumer Banking Officer; and

Steven Allocca, our former President.

The compensation provided to our NEOs for 2020 is set forth in detail in the Summary Compensation Table and other tables and the accompanying footnotes, and the narrative in this section.

Executive Summary

LendingClub was founded in 2006 to transform the banking industry by leveraging technology, data science and a marketplace model. We started by bringing a traditional credit product, the installment loan, into the digital age and became the largest provider of unsecured personal loans in the United States.

On February 1, 2021, LendingClub completed the acquisition of Radius, whereby LendingClub became a bank holding company and formed LendingClub Bank as its wholly-owned subsidiary, through which we now operate the vast majority of our business. With the acquisition, we combined the complementary strengths of the Company’s digital lending capabilities with an award-winning digital bank. LendingClub’s customers, or our “members”, can gain access to a broader range of financial products and services designed to help them digitally manage their lending, spending and savings.

Since launching, more than 3 million individuals have become members, and thereby joined the Club, to help reach their financial goals. With the capabilities Radius possesses, the Company intends to enhance consumer engagement by offering a broader range of products and services aimed at supporting our members and further improving their financial health. In addition to serving our members, the acquisition of Radius enables us to offer products and services to commercial customers, as well as to continue to serve the broad range of institutional investors for our unsecured personal loans and auto loans, and for our patient and education finance loans. Investors provide capital to enable the funding of loans in exchange for earning competitive risk adjusted returns. Our marketplace enables efficient credit decisioning, pricing, servicing and support operations.

To execute on our vision, grow the business responsibly and create value for our stockholders, it is critical that we have a sophisticated, dedicated and committed management team, overseen by an independent board with substantial and relevant expertise.

LENDINGCLUB CORPORATION | 24

2021 PROXY STATEMENT | EXECUTIVE COMPENSATION – COMPENSATION DISCUSSION AND ANALYSIS

2020 Stockholder Engagement Regarding Compensation Matters

The Company engages with stockholders regularly and conducted multiple engagement efforts in 2020 and 2021. These outreach efforts included soliciting feedback on our compensation practices from many of the governance departments of our largest institutional stockholders. Consistent with prior years, members of our management team participated in these conversations and stockholders were also offered the opportunity to speak with a member of our Board of Directors. In the Winter of 2020/2021, we reached out to the governance groups of stockholders representing, in aggregate, an estimated 45% of the economic interest (i.e., including derivative positions) in our then outstanding shares and were able to meet with the governance groups of stockholders representing approximately 17% of our shares then outstanding. In addition to these conversations, we maintain ongoing dialogue with many of our investors through our investor relations program. In total, between the filings of our 2020 proxy statement and this 2021 proxy statement, we had conversations with stockholders holding, in aggregate, an estimated 61% of the economic interest in our outstanding shares.

Overall, a majority of the stockholders engaged expressed support for the Company’s compensation practices. In particular, stockholders appreciated the evolution of the Company’s programs and practices, including the adjustments made to the Company’s 2020 PBRSU program. Further the stockholders recognized the unique challenges COVID-19 presented to the Company’s business, the broader economy and the related necessity for companies to adjust compensation programs in 2020 accordingly. Finally, stockholders the Company engaged with appreciated the highly competitive environment in the San Francisco Bay Area, the transformational impact of the acquisition of Radius on the Company’s business, the need to support the successful execution and integration of the Radius transaction and business, and the importance of promoting retention among the executive team as the Company transitions to a regulated banking institution.

Our Board believes it is important to maintain an open dialogue with stockholders to understand their views on the Company, its strategy and its governance and compensation practices. Our Board has made a number of recent changes to the Company’s compensation practices and policies in response to stockholder feedback, including the following:

2020 Board Actions in Response to Stockholder Feedback

After a thorough review of its compensation practices and robust discussions with stockholders, the Board approved a number of meaningful changes to the Company’s 2020 executive compensation program, as well as further enhancements to our governance practices.

What We Heard in 2019

What We Did in 2020

PBRSU Performance Metrics

That metrics for our PBRSU program be distinct from those in our annual bonus plan

We implemented distinct metrics for our PBRSU program and annual bonus plan

PBRSU Performance Period

That our PBRSUs have a longer performance period

We lengthened the performance period for PBRSUs

Performance period for TSR based awards increased from one year to three years

Performance period for Adjusted EBITDA based awards increases from one year to two years with an additional 1-year time-based vesting period

TSR Goal Rigor and Weighting

That TSR-based awards require above median performance and greater weighting towards TSR based awards

Performance required for target payout of TSR-based awards increased from 50th percentile to 55th percentile

We increased the weight of the TSR metric for 2020 PBRSUs from 25% to 35%

LENDINGCLUB CORPORATION | 25

2021 PROXY STATEMENT | EXECUTIVE COMPENSATION – COMPENSATION DISCUSSION AND ANALYSIS

What We Heard in 2019

What We Did in 2020

PBRSU Weighting

That our equity-based awards be more performance based

We increased the weight of PBRSUs in our equity mix

Our CEO’s equity awards are now 55% PBRSUs, up from 50%

Other NEO equity awards are now 30% PBRSUs, up from 25%

Compensation Setting

Interest in discussing our pay setting practices given our evolving business and market environment

We enhanced the clarity of our 2020 proxy statement disclosure regarding our compensation programs and how performance results have impacted earned compensation levels

Our 2020 PBRSU program reduced the maximum achievement by 75 percentage points from 200% to 125%

We conducted a comprehensive peer review and made revisions to our peer group, with the composition of the peer group favoring banks and reflecting a material reduction in median market capitalization

Compensation Governance Provisions

That we improve certain compensation governance practices

We made adjustments to our existing policies and plans, including:

Expanding our clawback policy to cover reputational harm

Increasing our stock ownership guidelines

Amended our stock plans to require a stockholder vote for any option repricing

We also adopted a number of new policies, including:

A policy prohibiting tax gross-ups for executives, with limited exceptions

A policy requiring all new hire employee equity awards have a minimum vesting cliff of at least 1-year, with limited exceptions

2021 Board Actions in Response to Stockholder Feedback

The Company values continued discussions with and feedback from our stockholders. Although the feedback provided in 2020/2021 was substantially more limited (reflecting the positive reception to the changes in 2020 outlined above), the Board approved certain enhancements to our executive compensation and governance practices in 2021. The key points of feedback and changes we made to our compensation and governance practices in 2021 include:

What We Heard in 2020/2021

What We Did in 2021

Board Declassification

Stockholders continue to support Board efforts to declassify director elections

For the fourth consecutive year, the Board is recommending the phase out of our classified Board at this year’s Annual Meeting

A similar proposal was recommended by the Board at the three prior annual meetings

Despite active solicitation efforts by the Company and the support of many of our stockholders, the proposal has not yet received the requisite level of support to pass

LENDINGCLUB CORPORATION | 26

2021 PROXY STATEMENT | EXECUTIVE COMPENSATION – COMPENSATION DISCUSSION AND ANALYSIS

What We Heard in 2020/2021

What We Did in 2021

Supermajority Vote Requirement

Some stockholders would prefer that we eliminate the supermajority vote requirement to amend our governing documents

Stockholders also recognize LendingClub’s unique circumstances, including our concentrated stockholder base 

Our Board is committed to eliminating the supermajority vote provision in the future, and will put forth an amendment to remove it as soon as is practicable, and no later than 2023

Our stockholder base is evolving in light of the Company’s acquisition of Radius and becoming a regulated financial institution, but still remains fairly concentrated, and accordingly under a majority vote standard, bylaw and charter amendments could pass with the support of a small number of stockholders, potentially to the detriment of other long-term stockholders

Multiple significant stockholders supported waiting to eliminate the supermajority vote provision and supported the Company’s efforts to monitor and be mindful of the interests of minority stockholders and to defer putting forth an amendment to remove the supermajority vote provision until the changes in the composition of the Company’s stockholder base stabilized and became less concentrated

TSR Weighting

Stockholders appreciate the alignment between the interests of executives and stockholders, and would like the Company to continue to evolve and enhance that alignment 

We are increasing the weight of the TSR metric for 2021 PBRSUs from 35% to 100% (i.e., the awards are entirely TSR based)

Impact of COVID-19 to Executive Compensation Programs

Consistent with prior practice, the Compensation Committee held a number of meetings in Q1 2020 to, among other things, discuss the Company’s 2020 executive compensation program, including the 2020 annual bonus program and 2020 PBRSU program. Many of these discussions and potential program changes the Compensation Committee considered were in part motivated by and responsive to feedback received from the Company’s stockholders in 2019. These discussions and meetings were held without the benefit of being able to consider the substantial impact of COVID-19 on our business and the broader economy. In response to COVID-19, the Company implemented the following compensation related adjustments.

Element

Adjustment

Headcount Reductions

In April 2020, the Company implemented a restructuring plan which included a reduction in workforce of approximately 460 employees

In connection with the restructuring plan the Company terminated positions across the Company, including the position previously held by Steven Allocca, one of our NEOs, and accordingly his final day of employment with the Company was on May 12, 2020

Base Salary Reductions

In connection with the April 2020 restructuring plan, the Company implemented salary reductions across various job grades, which included a 30% salary reduction for our CEO and a 25% salary reduction for our other NEOs

These reductions to employee compensation were reverted on January 1, 2021

2020 PBRSU Program

The 2020 PBRSU program was implemented largely as expected and disclosed in the Company’s 2020 proxy statement

The Compensation Committee decided to utilize Adjusted EBITDA as a metric in-lieu of Adjusted Net Income, given the material impact of COVID-19 to the Company’s 2020 profitability as further described below

LENDINGCLUB CORPORATION | 27

2021 PROXY STATEMENT | EXECUTIVE COMPENSATION – COMPENSATION DISCUSSION AND ANALYSIS

Element

Adjustment

2020 Annual Incentive Program 

Historically the Company has utilized revenue and Adjusted EBITDA as the metrics under its annual incentive program (i.e., corporate bonus program) and set target performance at the high-end of publicly disclosed guidance

In 2020, the Company withdrew guidance due to the impact of COVID-19 on its business and the broader economy

In light of the extensive and adverse impact of the COVID-19, the Compensation Committee approved a 2020 corporate bonus program that contained qualitative metrics designed to measure progress against a broad array of initiatives and priorities and quantitative metrics specifically tailored to the facilitation and execution of the Radius acquisition, which was one of the Company’s key strategic priorities

Prudent Equity Utilization 

In light of the adverse impact of COVID-19 on the Company’s business and stock price, the Compensation Committee deemed it prudent and consistent with stockholder feedback to reduce the overall utilization of equity awards and thereby reduce the resulting compensation expense and dilution

The Compensation Committee reduced the target size of 2021 time-based restricted stock unit awards company-wide (including for our NEOs) by 25% and made a corresponding reduction in the total vesting schedule of 1 year (such that the awards now vest over a 3-year period). This change was designed to balance retention and reflect typical employee tenure, while also having the effect of reducing overall equity utilization in the Company’s compensation programs.

Additionally, in 2021 employees (other than Company executives, including the NEOs) were provided the opportunity to elect to receive a portion of their 2021 restricted stock unit award in the form of a cash award. This program was designed to enable employees to individualize their compensation to fit their particular needs and preferences, while also having the effect of reducing overall equity utilization in the Company’s’ compensation programs.

Executive Compensation Aligned with Corporate Results

We believe that our compensation approach supports our objective of focusing on “at risk” compensation, reflecting an opportunity for financial upside based on company and individual performance and no or reduced payouts when we do not meet our performance goals. Our emphasis on equity awards provides a direct link between stockholder interests and the interests of our executive officers, thereby motivating our executive officers to focus on increasing our value over the long term. Below is a summary of our 2020 executive compensation program. We began granting PBRSUs to our CEO in 2017 and have since expanded the program to our entire executive team. In response to stockholder feedback, in 2020 and 2021 we significantly enhanced our PBRSU program, as described in the “Stockholder Engagement & Responsiveness” section above.

2020 Executive Compensation Program

Element

Form

Description

Performance Link

Base Salary

Cash

Salaries are competitive and appropriate based on the size of the Company, the industry in which we operate, and the complexity of our business, and represent the only element of our compensation program that is not “at risk”

Target Annual

Cash Bonus

Cash

Cash bonuses motivate our executive officers to achieve pre-defined annual financial and operational goals that support our long-term business strategy

Liquidity and expense management (75%) and closing Radius acquisition (25%), with no payouts if threshold performance not met; final amounts may be adjusted to reflect individual performance

LENDINGCLUB CORPORATION | 28

2021 PROXY STATEMENT | EXECUTIVE COMPENSATION – COMPENSATION DISCUSSION AND ANALYSIS

Element

Form

Description

Performance Link

Target

Equity-Based Compensation

RSUs

Long-term equity aligns compensation with stockholders’ long-term interests

Stock price performance over a four-year vesting period

PBRSUs

PBRSUs earned only if rigorous performance thresholds are met, with target and maximum amounts subject to stretch goals

PBRSU achievement targets based on pre-determined relative TSR (35%) measured over three years and Adjusted EBITDA (65%) goals measured over two years

One year of additional time-based vesting on earned portion of Adjusted EBITDA awards further aligns executives’ interests with those of long-term stockholders’

Pay Outcomes Demonstrate Strong Alignment between Pay and Performance

Our orientation towards “at risk” compensation provides a direct link between stockholder interests and the interests of our executive officers and is intended to result in a reduction from target compensation in the event our performance goals are not met. The below graphic shows the composition of our CEO’s compensation and the percent that is considered “at-risk”, demonstrating strong alignment in our compensation structure between pay and performance.

Compensation Philosophy and Principles

To achieve our mission to create an online marketplace for consumer credit, we must hire and retain a highly talented team of professionals with deep experience in technology and financial services to quickly build new products, bolster our investor base and engage our customers. We also expect our executive team to possess and demonstrate exceptional leadership, innovative thinking and prudent risk management. We are also operating in a highly competitive market for talent and our compensation program must be designed to retain our top talent in the face of well-funded, aggressive competitors for talent.

In developing our compensation program, the Compensation Committee reviews market trends and compensation practices with the assistance of its third-party compensation consultant. FW Cook has been retained by the Compensation Committee to assist the Compensation Committee and management to assess and calibrate our executive pay levels and relative mix of cash and equity compensation relative to public company market norms. The Compensation Committee evaluates our executive compensation program at least annually and more frequently if circumstances change related to our business objectives and the competitive environment for talent.

Central to our compensation philosophy is to incentivize and reward the achievement of strategic and financial goals of the Company, which we believe in turn should correlate to an increase in stockholder value over the longer term. To that end, we believe that competitive compensation packages include a combination of base salaries, annual cash bonus opportunities and long-term incentive opportunities in the form of equity awards that are earned over a multi-year period. We approach the design and implementation of our executive compensation program with emphasis on the following principles:

recruit and retain an exceptional executive team;

incentivize and reward the achievement of strategic and financial goals of the Company, with an emphasis on long-term goals;

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2021 PROXY STATEMENT | EXECUTIVE COMPENSATION – COMPENSATION DISCUSSION AND ANALYSIS

utilize compensation elements that are directly linked to achievement of corporate objectives, stockholder value creation and individual performance; and

align the interests of our executives with those of our stockholders.

Compensation-Setting Process

Role of Management. The Compensation Committee looks to our CEO to make preliminary recommendations regarding compensation for our executive officers other than himself because of his daily involvement with our executive team. As to the CEO, the Compensation Committee works closely with the Committee’s independent compensation consultant, our Chief People Officer and our legal department to gather data on competitive market practices and to evaluate potential modifications to our compensation program. No executive officer participates directly in the final deliberations or determinations regarding his or her own compensation package.

Role of Our Compensation Committee. Our Compensation Committee oversees all aspects of our compensation program for executive officers, including base salaries, annual cash bonus opportunities and payouts under our annual bonus plan, and the size and design (including the achievement of performance objectives where applicable) of equity awards. The Compensation Committee is also responsible for determining the compensation for our CEO and making recommendations to the Board regarding non-employee director compensation. During 2020, our Compensation Committee held 8 meetings and acted by unanimous written consent 6 times, reflecting the time and attention allocated by the Compensation Committee in evaluating and adjusting the Company’s executive compensation program in light of stockholder feedback and COVID-19.

Compensation Governance. Our Compensation Committee seeks to ensure sound executive compensation practices to adhere to our pay-for-performance philosophy while appropriately managing risk, supporting retention and aligning our compensation with the creation of long-term value for our stockholders. During 2020, our Compensation Committee:

was comprised solely of independent directors under the NYSE listing standards;

conducted an annual review and approved our compensation strategy; and

retained discretion on annual bonus payouts and certain other compensation arrangements to enable it to respond to unforeseen events and adjust compensation as appropriate.

Role of Compensation Consultant. During 2020, FW Cook provided the following services:

advised on our non-employee director compensation policies and market practices among publicly-traded companies; and

advised on our executive compensation policies and market practices among publicly-traded companies.

FW Cook did not provide any services to us other than the services described above. In December 2020, the Compensation Committee assessed the independence of FW Cook pursuant to SEC and NYSE rules and concluded that no conflict of interest exists that would prevent FW Cook from independently advising the Compensation Committee.

Use of Comparative Market Data

We aim to compensate our executive officers at levels that are commensurate with the levels of compensation for executives in similar positions at a group of peer companies set forth below, with whom we compete for hiring and retaining executive talent. The Compensation Committee uses comparative market data to understand current market levels, trends and practices.

In early Fall 2020 our Compensation Committee selected our current compensation peer group. Although locating comparable companies in size, scope and ambition has been challenging given the Company’s unique strategy and business model, the Compensation Committee decided to focus its selection among companies in the banking, financial and technology sectors. The Compensation Committee considered public companies whose business is based in the United States and whose shares are listed on a national securities exchange in the United States, because compensation practices vary widely internationally. Further the Compensation Committee considered the revenue, net income and market capitalization of these companies, with a particular focus on companies with significant operations in the San Francisco Bay Area to reflect local conditions and demand for talent. In our final selection, our Compensation Committee believed it appropriate to select peer companies with financial metrics both above and below our own. We also considered the comparability of our business model, organizational complexities, and operating history.

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Based on this assessment, in 2020, our Compensation Committee decided to use the following peer group of companies:

A10 Networks, Inc.

Meta Financial Group, Inc.

Avaya Holdings Corp.

MobileIron, Inc.

Axos Financial, Inc.

Pacific Mercantile Banccorp

Banc of California, Inc.

Pacific Premier Bancorp, Inc.

Blucora, Inc.

PRA Group, Inc.

Enova International, Inc.

The Bancorp, Inc.

Green Dot Corporation

TriCo Bancshares

Hope Bancorp, Inc.

TriState Capital Holdings, Inc.

When reviewing and updating the peer group in 2020, the Compensation Committee decided in particular to add a number of companies in the banking industry to better reflect our business after the then pending acquisition of Radius. Accordingly, the allocation of banks within our peer group increased from 4 companies or 25% of the peer group to 8 companies or 50% of the peer group. The Compensation Committee continued to include companies in the finance non-bank and technology industries to better reflect the scope of our business model and the breadth of companies with whom we compete with for talent. The allocation of peer companies among bank, finance-non-bank and technology industries is as follows:

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When selecting our peer group, the Compensation Committee factored market capitalization and financial profile into the selection process in response to stockholder feedback provided during our 2019 stockholder outreach effort. Overall the Compensation Committee was able to retain a peer group that appropriately reflects our position at the intersection of traditional banks, finance non-banks and technology companies, while reducing the median market capitalization of the peer group at the time of selection from approximately $1.8 billion to approximately $820 million. Below is a summary of the changes to our peer group.

Our Compensation Committee is committed to conducting periodic reviews of our peer group, typically once every other year, and expects to conduct a full review of our peer group in 2022. For 2020 compensation decisions, the Compensation Committee utilized the 2018 peer group as the 2020 peer group had not been selected at the time of such decisions.

The Compensation Committee seeks to compensate our executive officers at a level that would allow us to successfully retain the best possible talent to manage and grow our business and drive productivity and efficiency. In setting executive compensation the Compensation Committee periodically assesses how compensation for our executive officers compares against those of our peer group. Our weighting of cash and equity, including our allocation towards equity and between RSUs and PBRSUs, was discussed with and supported by our stockholders.

In addition to considering this data, in making compensation decisions, the Compensation Committee also considered the scope of responsibility of each executive officer, our current practice of maintaining appropriate differentiation between the cash packages of our executive officers, as well as the CEO’s and Compensation Committee’s assessment of each executive officer’s performance and impact on the organization. The Compensation Committee believes that the level of target compensation provided to our NEOs was necessary to attract the exceptional talent required to lead the Company, especially through the transformation to a regulated banking institution and in the highly competitive San Francisco Bay Area labor market.

Role of Stockholder Advisory Vote on Executive Compensation

At our 2020 Annual Meeting of Stockholders, we held a non-binding advisory vote on the compensation of our NEOs, commonly referred to as a “say-on-pay” vote. Approximately 96% of the votes cast by stockholders, excluding abstentions and broker non-votes, were voted in favor of our say-on-pay proposal. In addition, as discussed in the section entitled “2020 Stockholder Engagement Regarding Compensation Matters” above on page 24, in the Winter of 2020/2021 we met with several significant stockholders to understand their perspectives on our current executive compensation program. Our Compensation Committee is appreciative of the 2020 say-on-pay vote outcome, and considered the result and the feedback from investors in evolving our executive compensation program in 2021. The Compensation Committee will consider the outcome of future say-on-pay votes as we evolve our executive compensation philosophy, objectives and design.

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Executive Compensation Elements

Elements of Executive Compensation. Our 2020 NEO compensation packages include:

base salary;

annual cash bonus opportunity; and

equity-based compensation in the form of RSUs and PBRSUs.

We believe that our compensation mix supports our objective of focusing on “at-risk” compensation having significant financial upside based on stockholder return and both Company and individual performance. We expect to continue to emphasize equity awards because of the direct link that equity compensation provides between stockholder interests and the interests of our executive officers, thereby motivating our executive officers to focus on increasing value over the long term.

Base Salary. We believe that competitive base salaries are a necessary element of overall compensation in order to attract and retain highly qualified executive officers. While we believe that compensation for the executive team should be weighted towards long-term equity compensation, we recognize the need to broadly align salaries with our peers and the companies we compete with for talent. As we have grown and recruited new executive officers for key roles, we have made competitive adjustments. We believe that the base salaries we offer are appropriate for a publicly traded company based in the San Francisco Bay Area and given the sophistication and complexity of our business.

Name

2020 Annualized Base Salary
(Pre-COVID)

2020 Annualized Base Salary
(Post-COVID)
(1) 

Scott Sanborn 

$500,000

$350,000

Thomas Casey 

$425,000

$318,750

Annie Armstrong

$335,000

$251,250

Bahman Koohestani 

$375,000

$281,250

Ronnie Momen 

$365,000

$273,750

Steven Allocca(2) 

$450,000

n/a

  

(1)Reflects a 30% reduction in the base salary of our CEO, Scott Sanborn, and a 25% reduction in the base salaries of our other NEOs (other than Mr. Allocca), each in connection with COVID-19. The salary reductions were implemented in April 2020 and lapsed in January 2021.

(2)Mr. Allocca’s employment with the Company terminated in May 2020, and therefore he did not have a reduced base salary in connection with COVID-19.

The Compensation Committee reviews base salaries on at least an annual basis and may adjust them from time to time, if needed, to reflect changes in market conditions, or other factors. In 2020, Mr. Momen received a base salary increase of $15,000 to reflect his increasing contributions. In 2021, Mr. Momen received a further increase of $30,000 to his base salary to reflect his promotion earlier in the year to and his expanded responsibilities. None of our other NEOs received an adjustment to base salary in 2020 or have thus far received an adjustment in 2021.

Annual Cash Bonuses. We typically use cash bonuses to motivate our executive officers, including NEOs, to achieve our annual financial and operational goals. Historically the Company has utilized revenue and Adjusted EBITDA as the performance objectives and set target performance at the high end of the Company’s publicly announced guidance. In response to COVID-19’s effect on the business and related uncertainty with respect to the scope of the pandemic and its effects, the Company withdrew guidance in 2020 before the Compensation Committee had approved the annual bonus program. Accordingly, given the circumstances resulting from COVID-19 and the shifting Company priorities as a result, the Compensation Committee approved a 2020 corporate bonus program that contained: (i) qualitative metrics designed to measure progress against a broad array of initiatives and priorities and (ii) quantitative metrics specifically tailored to the facilitation and execution of the Radius acquisition, which was one of the Company’s key strategic priorities. The funding of the Company wide annual bonus program is based on the achievement of the quantitative and qualitative metrics and then ultimately subject to the discretion of the Compensation Committee. Actual NEO bonuses reflect funding of the bonus program, and any discretionary modification based on individual achievement during the year.

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Quantitative Metrics. In 2020, our Compensation Committee selected 2020 exit liquidity and second-half 2020 overhead expenses as the two quantitative measures used to determine the funding of the annual bonus program for 2020. These measures were selected as each was necessary for positioning the Company financially to successfully manage the impacts of COVID-19, execute on the acquisition of Radius and capitalize the resulting banking subsidiary, which were the Company’s key strategic priorities. Each of these measures was weighted equally and combined they account for 75% of the funding of the bonus pool. The funding of the remaining 25% of the bonus program was tied to the closing of the Radius acquisition and accordingly the bonus program was to be funded by an additional 2,500 basis points (i.e., 25%) if the Company closed the Radius acquisition before the payout of the 2020 corporate bonuses. Our Compensation Committee believed that the achievement of the performance metrics would require excellent leadership, effective management and a clear focus on driving and achieving results during a period of uncertainty. The following charts detail the quantitative metrics in the 2020 annual cash bonus program, as well as actual achievement.

2020 Annual Cash Bonus Program – Financial Metrics*

Measure /
Weighting

Minimum
Performance

Target
Performance

Maximum
Performance

Actual
Performance

% of Target
Achieved

FY’20 Exit Liquidity (50%)

$340 million

$350 million

$360 million

$525 million

37.5%

2H Overhead Expenses (50%)

$94 million

$89 million

$84 million

$82 million

37.5%

Payout Percentage

25%

50%

75%

75%

*Straight-line interpolation for achievement between minimum and maximum, with program funding at 0% in the event
of below
minimum performance.

2020 Annual Cash Bonus Program – Radius Acquisition

Measure

Target
Performance

Actual
Performance

% of Target
Achieved

Radius Acquisition 

Close Before Payout of Bonuses

Close
February 1, 2021
(Pre-Payout)

25%

Payout Percentage

25%

25%

Qualitative Metrics. Given the unique quantitative metrics used in our 2020 annual cash bonus program, the Compensation Committee also adopted a set of qualitative metrics that were intended to measure broader company performance and be used to inform whether upward or downward discretion by the Compensation Committee was warranted. The qualitative metrics are detailed below, and as noted the Compensation Committee determined that each of the metrics was achieved.

1.

Execute Against Bank Charter Initiative

File draft application(s),complete exam(s), remediate any findings

Mobilize workforce to prepare and execute against integration plans

Maintain sufficient capital to purchase Radius and fund bank

Establish closing date for Radius acquisition

3.

Innovate Investor Products and Protect Investor Returns

Create new return forecasting methodology

Maintain positive platform returns

Obtain at least $800m in H2 2020 platform volume

Create new and/or expanded channels for investors

 

2.

Advance Borrower Systems and Infrastructure

Implement borrower related systems

Develop and implement hardship and payment plans

Implement new credit decisioning platform/model

Maintain service levels

4.

Position Company for Future Growth

Re-size fixed expense base and enhance vendor efficiency

Re-establish growth without relying on Company balance sheet

Develop and test products intended to deliver more stable returns

Adjust compensation plan to drive retention of key employees

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2021 PROXY STATEMENT | EXECUTIVE COMPENSATION – COMPENSATION DISCUSSION AND ANALYSIS

Individual Performance Measures. We expect a high level of performance from each of our executive officers in carrying out his or her respective responsibilities and each executive officer is evaluated based on his or her overall performance. Our CEO evaluates each executive officer’s individual performance (other than his own) and compensation level and, for purposes of determining annual cash bonus payouts, makes a recommendation to our Compensation Committee. The Compensation Committee ultimately determines the individual performance for all NEOs. The impact of individual performance on an individual NEO’s bonus amount modifies the amount otherwise payable based on actual corporate achievement. The maximum upward discretionary adjustment is 50% for a total of 150% of the target amount; however, there is no limitation on the downward discretionary adjustment (i.e., the Compensation Committee retains the discretion to pay an individual NEO zero bonus regardless of corporate achievement).

For 2020, the NEOs showed extraordinary leadership in navigating a challenging economic environment, stabilizing the business from the effects of COVID-19, protecting platform investor returns, positioning the Company for future growth and executing against the acquisition of Radius.

Annual Cash Bonuses for the 2020 Performance Period

In early 2021, our Compensation Committee reviewed our actual performance for the year ended December 31, 2020 against the pre-determined goals set forth in the Annual Cash Bonus Program and described above. The Compensation Committee determined that we achieved 100%, applied no discretion upwards or downwards to the overall funding of the program and funded our bonus program at 100% of target.

2020 Annual Cash Bonus Program

Measure 

Actual
Performance

Discretion
Applied

Actual
Funding

Financial Metrics

75%

No

75%

Radius Acquisition 

25%

No

25%

Qualitative Metrics 

Achieved

No

n/a

Funding

100%

100%

Based on performance against the pre-defined metrics described above and in recognition of their significant individual contributions in furthering the Company’s performance and execution of the Radius acquisition, all of our NEOs received a payment under the annual incentive plan at the actual corporate funding level of 100% (i.e., the Compensation Committee did not apply any discretion (upwards or downwards) on the individual bonus payments to our NEOs based on their individual performance).

The following table sets forth the 2020 annual cash bonuses paid in the first quarter of 2021 to each of our NEOs, other than Mr. Allocca who was not eligible to receive a 2020 annual cash bonus because his employment terminated prior to the payment date for the 2020 bonus program:

Name

Eligible
Salary ($)

Bonus
Target (%)

Bonus
Target ($)

Bonus
Achievement (%)

Total Bonus
Payout ($)

Scott Sanborn 

500,000

100

500,000

100

500,000

Thomas Casey 

425,000

75

318,750

100

318,750

Annie Armstrong

217,750

65

173,007

100

173,007

Bahman Koohestani 

375,000

65

243,750

100

243,750

Ronnie Momen 

356,000

65

237,250

100

237,250

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Equity Compensation

Typically, most of our executive officers’ target total direct compensation is delivered through equity awards. This approach aligns our executive team’s contributions with our stockholders’ long-term interests, attracts executives of the highest caliber and retains them for the long term. In granting annual equity awards, the Compensation Committee considers, among other things, the executive officer’s cash compensation, the need to create a meaningful opportunity for reward predicated on the creation of long-term stockholder value, our financial results, an evaluation of the expected and actual performance of each executive officer, his or her individual contributions and responsibilities and market conditions.

2020 Equity Awards

Restricted Stock Units

Based on guidance from our internal research and FW Cook with respect to the practices of our peer group, and the recommendations of Mr. Sanborn (who did not participate in discussions regarding his own equity compensation), on the individual performance of each of the NEOs, the Compensation Committee granted equity awards as part of our Company-wide annual equity program, in the form of RSUs and PBRSUs (discussed in more detail below), to each of our NEOs. On February 26, 2020, the Compensation Committee granted 215,931 RSUs to Mr. Sanborn, 201,536 RSUs to Mr. Casey, 184,741 RSUs to Mr. Allocca, 100,768 RSUs to Mr. Koohestani and 107,486 RSUs to Mr. Momen. The RSUs vest over four years, with 1/16th of the RSUs vesting on May 25, 2020, and an additional 1/16th of the RSUs vesting each quarter thereafter, subject to continued service through each vesting date.

In connection with her hiring as Chief Risk Officer in 2020, on May 26, 2020, the Compensation Committee granted 380,435 RSUs to Ms. Armstrong. The RSUs vest over four years, with 1/4th of the RSUs vesting on May 25, 2021, and an additional 1/16th of the RSUs vesting each quarter thereafter, subject to continued service through each vesting date. The RSUs granted to Ms. Armstrong were intended to recognize the critical role Ms. Armstrong is expected to have in the future success of the Company and were made in light of the competitive recruiting environment and significant unvested equity that she forfeited to join the Company.

With respect to Mr. Casey, his RSUs granted in 2020 provide for an additional year of vesting following a termination of service, subject to certain criteria, including a minimum number of years of age and service with the Company and certain transition assistance.

Performance-Based Restricted Stock Units

2019-2021 Program Design

In our conversations with stockholders this past year, many expressed support for the structure of our 2020 PBRSU program, particularly for multi-year performance periods. In response to stockholder feedback, in 2021 the Committee increased alignment with the Company’s stockholders by weighting 2021 PBRSUs to be entirely in the form of total stockholder return (“TSR”) based awards. The below graphic illustrates the evolution of our PBRSU program from 2019 to 2021.

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2019 PBRSU Design

2020 PBRSU Design

2021 PBRSU Design

Overall Weight

CEO: 50% of equity

NEOs: 25% of equity

CEO: 55% of equity

NEOs: 30% of equity

CEO: 55% of equity

NEOs: 30% of equity

Metrics &
Weights

25% Relative TSR, with target payout requiring 50th percentile performance

35% Relative TSR, with target payout requiring 55th percentile performance

100% Relative TSR, with target payout requiring 55th percentile performance

75% Profitable Growth (Revenue & EBIT