DEF 14A 1 cfg-def14a_20180426.htm DEF 14A cfg-def14a_20180426.htm

 

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

 

Filed by the Registrant                               Filed by a Party other than the Registrant  

Check the appropriate box:

 

 

 

 

 

Preliminary Proxy Statement

 

 

 

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

 

 

 

Definitive Proxy Statement

 

 

 

Definitive Additional Materials

 

 

 

Soliciting Material Pursuant to § 240.14a-12

CITIZENS FINANCIAL GROUP, INC.

(Name of Registrant as Specified In Its Charter)

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

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No fee required.

 

 

 

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Notice of 2018

Annual Meeting

of Stockholders and

Proxy Statement

 

 

 


 

 

LETTER FROM THE CHAIRMAN AND CHIEF EXECUTIVE OFFICER

March 9, 2018

Dear Stockholder,

We recently completed our third year as an independent, publicly traded company and I am pleased to invite you to attend our annual meeting of stockholders to be held on Thursday, April 26, 2018, at 9:00 a.m. Eastern Time, at our headquarters located at One Citizens Plaza, Providence, Rhode Island 02903. You’ll find the matters scheduled for consideration at the meeting described in detail in the following 2018 Notice of Annual Meeting of Stockholders and Proxy Statement. If you owned shares of our stock as of March 2, 2018, we encourage you to vote on these matters.

In order to accommodate those attending, we ask that you please mark your enclosed proxy card to let us know of your plans to attend. Registration and seating will begin at 8:00 a.m. Eastern Time and we will ask you to sign an admittance card and present valid photo identification. If you held your shares in a brokerage account please be sure to bring a copy of a brokerage statement that shows you held shares as of March 2, 2018. If you are the legal representative of a stockholder, please also bring proof thereof.  Cameras and recording devices will not be permitted at the meeting.

We furnish our proxy materials to stockholders on the internet at www.edocumentview.com/CFG in order to provide you with the information you need in an expedited manner while significantly lowering the costs of delivery and reducing the environmental impact of our annual meeting. You will receive a notice with instructions for accessing the proxy materials and voting via the Internet in addition to information about how to obtain paper copies of our proxy materials if you would prefer.

Your vote is important and whether or not you plan to attend the meeting, we encourage you to access electronic voting via the Internet or utilize the automated telephone voting feature as described on your enclosed proxy card, or you may sign, date and return the proxy card in the envelope provided. You may also vote in person if you plan to attend the annual meeting.

On behalf of our board of directors, we thank you for your support of Citizens Financial Group, Inc.

 

Sincerely,

 

 

Bruce Van Saun

Chairman of the Board and Chief

Executive Officer

 

 

 

 


 

 

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD ON APRIL 26, 2018

To the Stockholders of Citizens Financial Group, Inc.:

NOTICE IS HEREBY GIVEN that the annual meeting of stockholders (the “Annual Meeting”) of Citizens Financial Group Inc., a Delaware corporation (the “Company”), will be held on April 26, 2018, at 9:00 a.m. Eastern Time, at the Company’s headquarters located at One Citizens Plaza, Providence, Rhode Island 02903 for the following purposes:

1.

The election of the twelve directors named in the accompanying proxy statement to serve until the 2019 annual meeting or until their successors are duly elected and qualified;

2.

Advisory vote to approve the Company’s executive compensation, commonly referred to as a “say- on-pay” vote;

3.

Ratification of the appointment of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for fiscal year 2018; and

4.

The transaction of such other business as may properly come before the Annual Meeting or any reconvened meeting following any adjournment or postponement thereof.

Stockholders of record at the close of business on March 2, 2018 are entitled to notice of, and to vote at, the Annual Meeting. We are first sending this proxy statement and the enclosed proxy form to stockholders on or about March 16, 2018.

Our board of directors recommends that you vote FOR the election of each of the director nominees named in Proposal No. 1 of the proxy statement, FOR, on an advisory basis, the Company’s executive compensation as described in Proposal No. 2 of the proxy statement, and FOR the ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm as described in Proposal No. 3 of the proxy statement.

For our Annual Meeting, we have elected to use the Internet as the primary means of providing our proxy materials to stockholders. We will send to stockholders of record a Notice of Internet Availability of Proxy Materials (the “Notice”) with instructions for accessing the proxy materials, including our proxy statement and annual report, and for voting via the Internet. The Notice provides the information above and also provides information on how stockholders may obtain paper copies of our proxy materials free of charge. Electronic delivery of our proxy materials significantly reduces our printing and mailing costs and the environmental impact of circulating our proxy materials. The Notice also provides information on how to vote, including how to attend the meeting and vote in person.

i


 

You are cordially invited to attend the Annual Meeting, but whether or not you expect to attend in person, you are urged to mark, date and sign your proxy card and return it by mail or follow the alternative voting procedures described in the Notice or the proxy card.

 

BY ORDER OF THE BOARD OF DIRECTORS

 

Robin S. Elkowitz

Executive Vice President, Deputy

General Counsel and Secretary

 

Stamford, Connecticut

March 9, 2018

Important notice regarding the availability of proxy materials for the Annual Meeting of Stockholders to be held on April 26, 2018:

This notice of the Annual Meeting of Stockholders, the accompanying proxy statement and our 2017 annual report to stockholders will be available at www.edocumentview.com/CFG commencing on or about March 16, 2018.

 

 

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TABLE OF CONTENTS TO PROXY STATEMENT

 

 

PROXY STATEMENT SUMMARY

1

 

-    Transactions with Executive Officers and Directors

28

ANNUAL MEETING INFORMATION

1

 

-    Other

28

MATTERS TO BE VOTED ON AT THE ANNUAL MEETING

1

 

-    Indemnification Agreements

28

HOW TO VOTE

2

 

 

 

BOARD & GOVERNANCE HIGHLIGHTS

2

 

COMPENSATION MATTERS

29

PERFORMANCE HIGHLIGHTS – OUR JOURNEY TO SUSTAINABLE GROWTH

5

 

PROPOSAL 2 – ADVISORY VOTE ON EXECUTIVE

COMPENSATION

29

COMPENSATION HIGHLIGHTS

7

 

COMPENSATION DISCUSSION AND ANALYSIS

30

 

 

 

COMPENSATION COMMITTEE REPORT

42

CORPORATE GOVERNANCE

8

 

EXECUTIVE COMPENSATION

43

PROPOSAL 1 – ELECTION OF DIRECTORS

8

 

TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL

50

Nominees

9

 

COMPENSATION RISK ASSESSMENT

58

BOARD GOVERNANCE & OVERSIGHT

15

 

CEO PAY RATIO

58

-    Corporate Governance Guidelines, Committee Charters and Code of Business Conduct and Ethics

15

 

DIRECTOR COMPENSATION

60

-    Board Composition

15

 

 

 

-   Board Selection and Refreshment

16

 

AUDIT MATTERS

62

-    Director Independence

17

 

PROPOSAL 3 – RATIFICATION OF APPOINTMENT OF OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

62

-    Board Leadership

17

 

AUDIT COMMITTEE REPORT

62

-    Meetings of the Board of Directors and Attendance at the Annual Meeting

19

 

PRE-APPROVAL OF INDEPENDENT AUDITOR SERVICES

63

-    Executive Sessions of Our Non-Management Directors

19

 

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FEES

63

-    Board, Committee and Director Evaluations

19

 

 

 

-    Board Education

19

 

 

 

-    Board’s Role in Risk Oversight

20

 

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

64

-    Committees of the Board

20

 

 

 

-    Compensation Committee Interlocks and Insider Participation

23

 

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

64

-    Talent Management and Succession Planning

23

 

 

 

-    Executive Officers

23

 

INFORMATION FOR STOCKHOLDERS

66

STOCKHOLDER OUTREACH AND ENGAGEMENT

26

 

 

 

-    Stockholder Outreach

26

 

QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND ANNUAL MEETING

66

-    Communications with the Board

26

 

OTHER BUSINESS

71

CORPORATE SOCIAL RESPONSIBILITY

27

 

2019 ANNUAL MEETING AND STOCKHOLDER PROPOSALS

72

-    Community Investment

27

 

ANNUAL REPORT FOR 2017

73

-    Diversity

27

 

HOUSEHOLDING OF ANNUAL DISCLOSURE DOCUMENTS  

74

-    Environmental Sustainability

27

 

 

 

RELATED PERSON TRANSACTIONS

27

 

 

 

-    Policies and Procedures for Related Person Transactions

27

 

 

 

 

 


 

PROXY STATEMENT SUMMARY

 

This summary highlights information contained elsewhere in this proxy statement. This summary does not contain all of the information that you should consider, and you should read the entire proxy statement carefully before voting.

 

2018 ANNUAL MEETING INFORMATION

 

Date and Time:

April 26, 2018, at 9:00 a.m. Eastern Time.

 

Place:

One Citizens Plaza, Providence, Rhode Island 02903.

 

Record Date:

March 2, 2018.

 

Voting:

Holders of common stock are entitled to one vote per share.

 

Admission:

To attend the meeting in person you will need proof of your stock ownership as of the record date and a form of government-issued photo identification.  If you are the legal representative of a stockholder, you must also bring a letter from the stockholder certifying (a) the beneficial ownership you represent and (b) your status as a legal representative.  We will determine in our sole discretion whether the letter presented for admission meets the above requirements.

 

Date of Mailing:

A Notice of Internet Availability of Proxy Materials (the “Notice”) or this proxy statement is first being mailed to stockholders on or about March 16, 2018.

 

MATTERS TO BE VOTED ON AT THE 2018 ANNUAL MEETING

 

PROPOSAL

BOARD VOTE

RECOMMENDATION

REASON FOR VOTE

RECOMMENDATION

PAGE

1.

Elect the following nominees as directors: Bruce Van Saun, Mark Casady, Christine M. Cumming, Anthony Di lorio, William P. Hankowsky, Howard W. Hanna III, Leo I. (“Lee”) Higdon, Charles J. (“Bud”) Koch, Arthur F. Ryan, Shivan S. Subramaniam, Wendy A. Watson and Marita Zuraitis.

 

FOR ALL

Our Board believes that its directors represent an appropriate mix of experience and skills relevant to the size and nature of our business.

8

2.

Approve, on a non-binding, advisory basis, the compensation of the Company’s executive officers named in the 2017 Summary Compensation Table, as disclosed in the Compensation Discussion and Analysis, the compensation tables and accompanying narrative.

 

FOR

Our Board believes the executive compensation closely aligns the interests of our named executive officers and the interests of our stockholders.

29

3.

Ratify the selection of Deloitte & Touche LLP as our independent registered public accounting firm for the 2018 fiscal year.

FOR

Based on its most recent evaluation, the Audit Committee believes it is in the best interests of the Company and its stockholders to retain Deloitte & Touche LLP.

62

 

1


 

HOW TO VOTE

 

Stockholders of record may vote by using the Internet or (if you received a proxy card by mail) by mail as described below.

 

Using the Internet. The address of the website for Internet voting can be found on your proxy card or Notice. Internet voting is available 24 hours a day and will be accessible until 11:59 p.m. Eastern Time on April 25, 2018. Easy-to-follow instructions allow you to vote your shares and confirm that your instructions have been properly recorded.

 

By telephone. Dial the number listed on your proxy card or your voting instruction form. You will need the control number included on your proxy card or voting instruction form.

 

By mail. If you received a proxy card by mail and choose to vote by mail, simply mark your proxy card, date and sign it, and return it in the postage-paid envelope.

 

 

In person. Stockholders also may attend the meeting and vote in person.

 

If you hold shares through a bank or broker, please refer to your proxy card, Notice or other information forwarded by your bank or broker to see which voting options are available to you.

 

The method you use to vote will not limit your right to vote at the Annual Meeting if you decide to attend in person. Written ballots will be passed out to anyone who wants to vote at the Annual Meeting. If you hold your shares in “street name” you must obtain a proxy, executed in your favor, from the holder of record to be able to vote in person at the Annual Meeting.

 

BOARD AND GOVERNANCE HIGHLIGHTS

 

Our board of directors (the “Board”) will consist of not less than 5 nor more than 25 directors, excluding any directors elected by holders of preferred stock pursuant to provisions applicable only in the case of defaults under the terms of our preferred stock. The exact number of directors will be fixed from time to time by resolution of our Board. Citizens Financial Group, Inc. (the “Company” or “we” or “us” or “our”) currently has twelve directors. The terms of office of all directors expire at the Annual Meeting.

 

2


 

The nominees for director all currently serve on our Board and are as follows:

 

Name

Age

Director Since

Occupation

Board Committees

Independent1

Bruce Van Saun

60

2013

Chairman and CEO, Citizens Financial

Executive (Chair)

Equity

No

 

 

 

Group, Inc.

 

 

Mark Casady

57

2014

Retired Chairman and CEO, LPL Financial

Risk

Yes

 

 

 

Holdings, Inc.

 

 

Christine M. Cumming

65

2015

Retired First Vice

Risk

Yes

 

 

 

President and COO, Federal Reserve

 

 

 

 

 

Bank of New York

 

 

Anthony Di Iorio

74

2014

Retired CFO,

Audit

Yes

 

 

 

Deutsche Bank AG

Governance

 

William P. Hankowsky

66

2006

Chairman, President and

Audit

Yes

 

 

 

CEO, Liberty Property Trust

Compensation

 

Howard W. Hanna III

70

2009

Chairman and CEO,

Audit

Yes

 

 

 

Hanna Holdings, Inc.

Governance

 

Leo I. (“Lee”) Higdon

71

2014

Past President,

Audit

Yes

 

 

 

Connecticut College

Compensation

 

Charles J. (“Bud”) Koch

71

2004

Retired Chairman,

President and CEO,

Risk (Chair)

Audit

Yes

 

 

 

Charter One Bank

 

 

Arthur F. Ryan

75

2009

Retired Chairman, CEO and President, Prudential

Financial, Inc.

Compensation (Chair)

Governance

Executive

Yes

Shivan S. Subramaniam

69

2005

Retired Chairman,

FM Global

Governance (Chair)

Risk

Executive

Yes

Wendy A. Watson

69

2010

Former Executive Vice

Audit (Chair)

Yes

 

 

 

President, Global Services, State Street

Compensation

Risk

 

 

 

 

Bank & Trust Company

 

 

Marita Zuraitis

57

2011

Director, President and CEO, The Horace

Risk

Yes

 

 

 

Mann Companies

 

 

 

Additional information about the director nominees can be found beginning on page 9.

 

 

1

Under NYSE and SEC independence standards.


3


 

We believe that our directors represent an appropriate and diverse mix of experience and skills relevant to the size and nature of our business.

 

Board Composition

 

Board Skills and Expertise

CEO experience

CFO experience

Retail Banking

Financial Services Industry

Finance/Capital Management

Risk Management

Compliance/Regulatory

Technology

Data Analytics

Insurance

Real Estate

Academia

 

Board and Governance Key Facts

Size of Board

12

Classified Board

No

Number of Independent Directors

11

Lead Independent Director

Yes

Board meetings held in 2017

10

Majority Voting for Directors

Yes

Director Election Term (years)

1

Tenure Limits

No

Average Director Age

67

Mandatory Retirement Age Policy

Yes

Annual Board & Committee Evaluation

Yes

Executive Sessions of Independent Directors

Yes

Board Orientation & Continuing Education Program

Yes

Limit service on other public company boards

Yes

Stock Ownership Guidelines

Yes

Succession Planning Process

Yes

Stockholder Outreach

Yes

Diversity & Inclusion Program

Yes

Political Contributions Policy

Yes

 

 

 


4


 

PERFORMANCE HIGHLIGHTS – OUR JOURNEY TO SUSTAINABLE GROWTH

Prior to our initial public offering in September 2014 and subsequent separation from The Royal Bank of Scotland Group plc, our performance was well-behind peers and there had been underinvestment in strategic initiatives, technology and talent over a number of years.  With the onboarding of Bruce Van Saun as our chief executive officer in October 2013, we outlined an aggressive turnaround plan focused on investing in infrastructure, products and talent, growing revenue and managing expenses in preparation for and following our initial public offering.

Over the past three years, we have executed well on our turnaround plan and have met or exceeded analyst expectations for 14 consecutive quarters.  In addition, we have built a solid foundation with additional levers available to us for continued performance improvement.  

 

2017 Year-end Strategic Achievements

 

 

IPO-based medium-term targets

 

 

2017 GAAP results

 

 

2017 Underlying results*

 

 

4Q17 GAAP results

 

 

4Q17 Underlying results*

 

 

GAAP improvement since 3Q13

 

 

Underlying improvement since 3Q13*

 

ROTCE*

 

10.0%

 

 

 

12.3%

 

 

 

9.8%

 

 

 

19.9

%

 

 

10.4%

 

 

 

15.6%

 

 

 

6.1%

 

ROTA*

1.0%+

 

 

 

1.2%

 

 

 

0.9%

 

 

 

1.8

%

 

 

1.0%

 

 

 

1.3%

 

 

 

0.4%

 

Efficiency ratio*

~60.0%

 

 

 

60.9%

 

 

 

60.0%

 

 

 

60.5

%

 

 

58.5%

 

 

 

8.0%

 

 

 

10.0%

 

 

Generated net income available to common stockholders of $1.6 billion, up 59% from 2016 and Adjusted/Underlying basis* net income available to common stockholders of $1.3 billion, up 28%

 

Improved ROTCE by 461 basis points from prior year and 219 basis points on an Adjusted/Underlying basis*

 

 

 

 

 

Grew diluted earnings per common share of $3.25 by 65% from 2016 and Adjusted/Underlying basis* diluted earnings per common share of $2.58 by 34%

 

We returned $1.1 billion to common stockholders in 2017, including dividends and share repurchases, up 70% from 2016

 

 

 

 

 

Revenue growth of 9% versus prior year, or 10% on an Adjusted/Underlying basis* with expense growth of just 4%, or 3% on an Adjusted/Underlying basis*

 

Strong CET1 ratio of 11.2% allows for attractive loan growth and continued capital returns to stockholders

 

 

 

 

 

Positive operating leverage helped drive improvement in the efficiency ratio of 293 basis points from prior year and 396 basis points on an Adjusted/Underlying basis*

 

Continued focus on delivering enhanced returns to stockholders through commitment to continuous improvement and positive operating leverage

 

 

 

 

 

 

 

*Key Performance Metrics (KPMs) are used by management to gauge our performance and progress over time in achieving our

strategic and operational goals and also in comparing our performance against our peers. Underlying results, Adjusted results

and Adjusted/Underlying results are considered non-GAAP financial measures and exclude certain notable items, where

applicable. Adjusted, Underlying and Adjusted/Underlying KPMs are considered non-GAAP financial measures. For additional

information on our use of KPMs and non-GAAP financial measures, see pages 41-42 of our 2017 Annual Report on Form 10-K, in

the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—IntroductionKey

Performance Metrics Used by Management and Non-GAAP Financial Measures” and pages 45-50 of our 2017 Annual Report on

Form 10-K, in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of OperationsKey

Performance Metrics, Non-GAAP Financial Measures and Reconciliations” of Part II, Item 7.  See Appendix A to this Proxy

Statement for calculations of KPMs and reconciliations of non-GAAP financial measures used herein.

 

5


 

Beyond Our Financial Performance

 

Since our initial public offering, we have also made significant progress in how we run the Company:

 

 

Exercised strong financial discipline, with a mindset of continuous improvement that has delivered efficiencies to self-fund investments and strategic initiatives to better serve customers and grow revenues.  We have utilized new technologies to deliver more effective service delivery at lower costs.

 

 

Disciplined execution against major growth initiatives with expanded capabilities in key fee income businesses, including Capital & Global Markets, Mortgage, Wealth and Treasury Solutions.

 

 

Strong progress on advancing strategic capabilities using digital technologies and Fintech partnerships to create better experiences for our customers.  

 

Attracting high caliber talent in order to further strengthen the senior leadership team while developing existing leaders and talent.

 

Continued momentum in creating a value-driven, customer centric culture.  Our goal is to achieve a peer leading employee, customer and community experience.  

 

Further progress in building a strong risk management culture, which has resulted in an improved control environment, as well as significant advancements in our regulatory agenda, including effectively remediating and terminating regulatory actions and receipt of a non-objection to our Comprehensive Capital Analysis and Review (CCAR) submission for the third year in a row.  

While we recognize there is much remaining to achieve, these milestones signify meaningful progress toward becoming a top-performing bank.  We believe we have the strategy, vision, capabilities and talent to continue to deliver strong performance that meets rising stockholder expectations.  


6


 

COMPENSATION HIGHLIGHTS

Completion of Evolution from UK-Influenced Compensation Program

We have completed our evolution from a UK-influenced compensation program under our previous ownership by RBS, to a compensation program designed to be consistent with US market and regulatory standards.  This evolution has included the elimination of role-based allowances which rebalanced variable compensation and fixed pay (starting with compensation for the 2016 performance year), the negotiation of a new employment agreement with Mr. Van Saun in May 2016 more closely aligned to US practice, and the vesting of the final installment of converted RBS-granted equity in March 2017.

 

 

Executive Pay Mix Aligned with Stockholder Interests

Our executive pay mix is aligned with stockholder interests by delivering 60%-70% of variable compensation in the form of long-term awards.  Of our long-term awards, 50%-70% are delivered in the form of performance stock units with a three-year performance period (with our CEO and most of our named executive officers receiving 70% of long-term awards in the form of performance stock units).

 

 

 

 

Bonus Funding Determined Based on Balanced Review of Company Performance

The Compensation and Human Resources Committee (the “Compensation Committee”) determines overall bonus funding based on a number of performance factors, including the Company’s financial performance, risk performance, progress against strategic priorities, delivery to stakeholders, performance relative to peers, and funding as a percentage of pre-tax, pre-incentive operating profit.  

 

 

Executive Compensation Decisions Consider Various Performance Dimensions, Including the Consideration of Risk Performance at Various Levels  

 

The Compensation Committee determines executive compensation based on an evaluation of Company, business/function and individual performance, through the use of a scorecard reflecting the following dimensions: financial and overall business performance; risk and control; customer outcomes; strategic initiatives; and development/leadership of employees. Our executives, including our named executive officers, are also subject to an annual risk assessment by our Chief Risk Officer, the results of which are considered by the Compensation Committee when making compensation decisions.    

 

 

Pay Practices Demonstrate Good Governance

We believe our pay practices demonstrate our commitment to good governance, including but not limited to:

Clawback Process:  We have a process whereby events having a material adverse impact on the Company are reviewed for potential impact on compensation.

Incentive Plan Review Process: Our compensation plans are subject to a robust governance process requiring approval for changes by all control partners (including risk, legal, human resources, and finance).  The plans are subject to a risk review by the Compensation Committee on an annual basis, and a risk review by an independent third party every three years.

No Single Trigger Payments: We do not provide for any single trigger severance payments upon a change of control, and do not offer tax gross-ups on executive benefits.

7


 

 

CORPORATE GOVERNANCE

 

PROPOSAL 1 - ELECTION OF DIRECTORS

Our Charter and Bylaws provide that the Board shall consist of not less than 5 nor more than 25 directors, excluding any directors elected by holders of preferred stock pursuant to provisions applicable only in the case of defaults under the terms of our preferred stock. The Board will fix the exact number of directors from time to time and has currently fixed the current number of directors at twelve. At each annual meeting, directors are elected to hold office for a term expiring at the next annual meeting.

The Board has nominated the twelve directors currently serving on the Board for election at the Annual Meeting to serve until the 2019 annual meeting or until their respective successors are duly elected and qualified. If any nominee is unable to serve as a director, the Board by resolution may reduce the number of directors or choose a substitute nominee.  We are not aware of any nominee who will be unable to or will not serve as a director.

Our Bylaws provide for the election of directors by a majority of the votes cast in an uncontested election. This means that the twelve individuals nominated for election to the Board must receive more “FOR” than “AGAINST” votes (among votes properly cast in person, electronically or by proxy) to be elected. Abstentions and broker non-votes are not considered votes cast for the foregoing purpose, and will have no effect on the election of nominees. Proxies cannot be voted for a greater number of persons than the number of nominees named. There is no cumulative voting. If you sign and return the accompanying proxy card, your shares will be voted for the election of the twelve nominees recommended by the Board unless you choose to vote against any of the nominees or abstain from voting. If any nominee for any reason is unable to serve or will not serve, proxies may be voted for such substitute nominee as the proxy holder may determine. If the election of directors is not an uncontested election, directors are elected by a plurality of the votes cast.

Our Bylaws also provide that directors may be removed, with or without cause, by an affirmative vote of shares representing a majority of the outstanding shares then entitled to vote at an election of directors. Any vacancy occurring on our Board and any newly created directorship may be filled only by a vote of a majority of the remaining directors in office.

Biographical information about the nominees for director, including information about their qualifications to serve as a director, is set forth below.

 


8


 

Nominees

 

Bruce Van Saun

 

Mark Casady

 

Chairman and Chief Executive Officer, Citizens Financial Group, Inc.

 

 

Age: 60

Director Since: 2013

Committees: Executive (Chair); Equity

 

 

Retired Chairman and Chief Executive Officer, LPL Financial Holdings, Inc.

 

 

Age: 57

Director Since: 2014

Committees: Risk

Experience, Skills and Qualifications

• Experienced executive in the financial services industry, extensive financial background and service on the boards of other public companies

• Additional role as our Chief Executive Officer brings management’s perspective to Board deliberations and provides valuable information about the status of day-to-day operations

 

 

 

 

 

 

Experience, Skills and Qualifications

• Compliance and risk experience as an executive in the financial services industry and service on the board of governors of Financial Industry Regulatory Authority (FINRA)

• Expertise in the area of wealth management and brokerage including experience as retired Chairman and Chief Executive Officer of LPL Financial Holdings, Inc.

• Knowledge of technology and innovation through his service on the board of Eze Software Group and data management and analysis through his role at Vestigo Ventures

Background

Before joining the Company as Chairman and CEO, Mr. Van Saun served as The Royal Bank of Scotland Group plc Finance Director and was a member of its board of directors from October 2009 to October 2013. From 1997 to 2008, Mr. Van Saun held a number of senior positions with The Bank of New York and later The Bank of New York Mellon, including Vice Chairman and Chief Financial Officer. Earlier in his career, he held senior positions with Deutsche Bank, Wasserstein Perella Group and Kidder Peabody & Co. In all, Mr. Van Saun has more than 30 years of financial services experience. Mr. Van Saun has also served on the boards of directors of our subsidiaries Citizens Bank, N.A. (“CBNA”) and Citizens Bank of Pennsylvania (“CBPA”) since October 2013. Mr. Van Saun joined the board of directors of Moody’s Corporation on March 1, 2016 and serves on the Audit and Governance and Compensation Committees. He also sits on the Federal Advisory Council and is a member of The Clearing House supervisory board, and serves on the boards of Jobs for Massachusetts, the Partnership for Rhode Island, and the National Constitution Center. Previous directorships held by Mr. Van Saun in both the United Kingdom and United States include Lloyds of London (from September 2012 to May 2016), Direct Line Insurance Group plc (from April 2012 to October 2013), WorldPay (Ship Midco Limited) (from July 2011 to September 2013) and ConvergEx Inc. (from May 2007 to October 2013). Mr. Van Saun received a B.S. in Business Administration from Bucknell University in 1979 and an M.B.A. in Finance and General Management from the University of North Carolina in 1983.

Background

Mr. Casady is the retired Chairman and Chief Executive Officer of LPL Financial Holdings Inc (“LPL Financial”).  Mr. Casady retired as LPL Financial CEO in early January 2017 and as non-executive chairman of the board in early March 2017. He joined LPL Financial in May 2002 as Chief Operating Officer, became President in April 2003 and Chairman and Chief Executive Officer in December 2005. During his time there, he guided LPL to become a leading financial services organization that serves independent financial advisors, banks, and credit unions, and provides clearing services to broker/dealers at financial services companies. Before joining LPL Financial in 2002, Mr. Casady was managing director of the mutual fund group for Deutsche Asset Management, Americas - formerly Scudder Investments which he joined in 1994.  Prior to Scudder, he held roles at Concord Financial Group, a start-up funded by Hambrecht & Quist that went public, and started his career at Northern Trust.  Mr. Casady co-founded Vestigo Ventures in 2016 with a focus on financing start -ups in FinTech. He is general partner and chairman of the advisory board. He is also a member of the board of the EZE Software Group and serves as an advisor to Jobcase, Inc. He is a former member of the Financial Industry Regulatory Authority (FINRA) Board of Governors and former Chairman of the Insured Retirement Institute. Mr. Casady has also served on the boards of our subsidiaries CBNA and CBPA since June 2014. Mr. Casady received a B.S. from Indiana University and his M.B.A. from DePaul University.

 

9


 

 

Christine M. Cumming

 

Anthony Di Iorio

 

Retired First Vice President and Chief Operating Officer, Federal Reserve Bank of New York

 

 

Age: 65

Director Since: 2015

Committees: Risk

 

 

Retired Chief Financial Officer, Deutsche Bank AG

 

 

 

Age: 74

Director Since: 2014

Committees: Audit; Nominating & Corporate Governance

Experience, Skills and Qualifications

• Seasoned bank regulatory executive, including as First Vice President and Chief Operating Officer with the Federal Reserve Bank of New York

• Extensive background in risk management, technology, monetary policy and bank supervision

• Experience in crisis management as chair of the Cross-Border Crisis Management Group for the Resolution Steering Group of the G-20’s Financial Stability Board

 

Experience, Skills and Qualifications

• Experienced executive in the financial services industry, including serving as Chief Financial Officer and board member of Deutsche Bank

• Extensive financial and accounting background and service on the boards of other public companies

Background

Until her retirement in June 2015, Ms. Cumming was First Vice President of the Federal Reserve Bank of New York (“FRBNY”), the second ranking officer in the FRBNY, and served as its Chief Operating Officer, as well as an alternate voting member of the Federal Open Market Committee. Prior to holding that position, Ms. Cumming was executive vice president and director of research with responsibility for the Research and Market Analysis Group. Previously, she served as senior vice president responsible for the Bank Analysis and Advisory and Technical Services Functions in the Bank Supervision Group. In 1992, she was appointed vice president and assigned to Domestic Bank Examinations in Bank Supervision. She also was active in the work of the Basel Committee, including as co-chair of the Risk Management Group and chair of the task forces on supervisory matters for the Joint Forum, made up of banking, securities and insurance regulators. From 2011 to April 2015, Ms. Cumming chaired the Cross-Border Crisis Management Group, which coordinated recovery and resolution planning for large, global financial institutions for the Resolution Steering Group of the G-20’s Financial Stability Board. Ms. Cumming joined the FRBNY’s staff in September 1979 as an economist in the International Research Department, and later in the FRBNY’s International Capital Markets staff. Ms. Cumming also serves on the board of American Family Insurance Mutual Holding Company which she joined in February 2016 and teaches part time at Colombia University’s SIPA and Rutgers University. She has also served on the boards of our subsidiaries CBNA and CBPA since October 2015. Ms. Cumming holds both a B.S. and Ph.D in economics from the University of Minnesota.

Background

Mr. Di lorio began his career at Peat Marwick (KPMG) where he worked in the firm’s Financial Institutions Practice in New York and Chicago. After leaving Peat Marwick, he worked for several leading financial institutions, including as Co-controller of Goldman Sachs, Chief Financial Officer of the Capital Markets business of NationsBank (Bank of America), Executive Vice President of Paine Webber and Chief Executive Officer of Paine Webber International. He joined Deutsche Bank in Frankfurt in 2001 and later became Chief Financial Officer and a member of its board of directors and group executive committee. After retiring from Deutsche Bank in 2008, he served as senior adviser to Ernst & Young working with the firm’s financial services partners in the United Kingdom, Europe, the Middle East and Africa. Mr. Di lorio has also served on the boards of directors of our subsidiaries CBNA and CBPA since January 2014 and served as a director on the board of our former affiliate, The Royal Bank of Scotland Group plc from September 2011 to March 2014. Mr. Di Iorio received a Bachelor of Business Administration from lona College and an M.B.A. from Columbia University.

10


 

 

William P. Hankowsky

 

Howard H. Hanna III

 

Chairman, President and Chief Executive Officer, Liberty Property Trust

 

 

Age: 66

Director Since: 2006

Committees: Audit; Compensation

 

 

Chairman and Chief Executive Officer, Hanna Holdings, Inc.

 

 

 

Age: 70

Director Since: 2009

Committees: Audit; Nominating & Corporate Governance

 

Experience, Skills and Qualifications

• Extensive business and management expertise, particularly in the real estate sector as Chief Executive Officer of Liberty Property Trust and as President of the Philadelphia Industrial Development Corporation

• Service on the boards of other public companies and numerous non-profit entities

 

 

Experience, Skills and Qualifications

• Extensive business and management expertise, particularly in the real estate and mortgage origination sectors

• Compliance and regulatory experience serving on the board of directors of the Federal Reserve Bank of Cleveland’s Pittsburgh office

• Service on the boards of numerous non-profit entities and academic institutions

Background

Mr. Hankowsky is the Chairman, President & CEO of Liberty Property Trust. He joined Liberty in January 2001 as Chief Investment Officer and was responsible for refining the company’s corporate strategy and investment process. In 2002, he was named President, and in 2003, was appointed Chief Executive Officer and elected Chairman of Liberty’s board of trustees. Prior to joining Liberty, Mr. Hankowsky served for 11 years as President of the Philadelphia Industrial Development Mr. Hankowsky currently serves on the boards of Aqua America Inc. (since 2004), Delaware River Waterfront Corporation, Greater Philadelphia Chamber of Commerce, Philadelphia Convention and Visitors Bureau, Pennsylvania Academy of the Fine Arts, Philadelphia Shipyard Development Corporation and United Way of Greater Philadelphia and Southern New Jersey. He has also served on the boards of directors of our subsidiaries CBNA and CBPA since November 2006. Mr. Hankowsky received a B.A. in economics from Brown University.

Background

Mr. Hanna is the Chairman and Chief Executive Officer of Hanna Holdings, Inc. He became a sales associate in 1970 and the General Manager of Howard Hanna Real Estate Services in 1974. Mr. Hanna became Chief Operating Officer of Howard Hanna Real Estate Services and its parent company, Hanna Holdings, Inc. when the company incorporated in 1979 and then became President in 1983 and Chief Executive Officer in 1990. Howard Hanna Real Estate Services, Inc. offers mortgage origination products and services in certain geographies and, in this capacity, competes with us in Pennsylvania, Ohio, Michigan, Virginia, West Virginia, North Carolina, New York and Maryland. Mr. Hanna currently serves as the Chair of the Children’s Hospital of Pittsburgh Board of Trustees and is a member of the hospital’s Foundation Board and Finance and Investment Committee. Mr. Hanna also serves on the boards of LaRoche College, the Katz Graduate School of Business Board of Visitors, the University of Pittsburgh, the University of Pittsburgh Medical Center Health System, the Diocese of Pittsburgh Finance Council and the YMCA of Greater Pittsburgh. From 2007 to 2012, he served on the board of directors of the Federal Reserve Bank of Cleveland’s Pittsburgh office. Mr. Hanna has also served on the boards of directors of our subsidiaries CBNA and CBPA since June 2009. Mr. Hanna received a B.S. from John Carroll University in 1969.

 

11


 

 

Leo I. (“Lee”) Higdon

 

Charles J. (“Bud”) Koch

 

Past President, Connecticut College

 

 

 

 

Age: 71

Director Since: 2014

Committees: Audit; Compensation

 

 

Retired Chairman President and Chief Executive Officer, Charter One Bank

 

 

Age: 71

Director Since: 2004

Committees: Risk (Chair); Audit

 

 

Experience, Skills and Qualifications

• Experienced executive in the financial services industry, including serving as Managing Director and Vice Chairman of Salomon Brothers Inc.

• Service on the boards of other public companies, including as non-executive Chairman of Encompass Health Corporation and as lead director of Eaton Vance Corporation

• Experience in academic institutions, including as Past President of Connecticut College, Dean of the Darden Graduate School of Business Administration at the University of Virginia

 

 

Experience, Skills and Qualifications

• Veteran executive in the financial services industry, particularly in the retail banking sector, including position as Chief Executive Officer of Charter One Financial

• Regulatory experience from service on the board of the FHLB of Cincinnati

• Service on the boards of other public companies and academic institutions

Background

From 2006 to 2013, Mr. Higdon was the President of Connecticut College. He serves on the board of directors of Eaton Vance Corporation (since 2000) where he is currently lead director, and Encompass Health Corporation (since 2004) where he is currently the non-executive Chairman. From 2001 to 2006, he was the President of the College of Charleston. Prior to becoming President of the College of Charleston, Mr. Higdon was the President of Babson College and the Dean of the Darden Graduate School of Business Administration at the University of Virginia. Mr. Higdon spent over 20 years at Salomon Brothers Inc, holding various positions, including Managing Director and Vice Chairman. In addition, Mr. Higdon previously served on the boards of directors of Bestfoods, Inc., Chemtura Corporation and Newmont Mining Corporation. Mr. Higdon currently serves on the board of Charleston Symphony Orchestra which he joined in August 2016. He has also served on the boards of our subsidiaries CBNA and CBPA since August 2014. Mr. Higdon received a B.A. in history from Georgetown University and a M.B.A. in Finance from the University of Chicago.

Background

Mr. Koch is the retired Chairman and Chief Executive Officer of Charter One Financial and its subsidiary Charter One Bank (“Charter One”). He served as Charter One’s Chief Executive Officer from 1987 to 2004 and as its Chairman from 1995 to 2004, when the bank was acquired by The Royal Bank of Scotland Group plc. Mr. Koch has served on the boards of directors of our subsidiaries CBNA and CBPA since September 2004. He also served on the board of directors of our former affiliate, The Royal Bank of Scotland Group plc from 2004 until February 2009. Mr. Koch has been a director of Assurant Inc. (AIZ) since August 2005, and is currently a member of the Assurant Finance and Risk Committee which he chaired from 2005 to 2014, as well as a member of its Compensation Committee. He has been a director of the Federal Home Loan Bank (“FHLB”) of Cincinnati since 1990. He was Chairman of the Board of the FHLB of Cincinnati from 2005 to 2006, and currently serves on its Risk, Compensation, and Nomination and Governance Committees. His long tenure on the FHLB of Cincinnati Board has been interrupted twice, for a total of three years, due to term limitations. Mr. Koch serves as a trustee of Case Western Reserve University, and he served as its Chairman of the Board from 2008 to 2012. He is also a past Chairman of the Board of John Carroll University. Mr. Koch is a Graduate of Lehigh University with a B.S. in Industrial Engineering and earned a M.B.A. from Loyola College in Baltimore, Maryland.

12


 

 

Arthur F. Ryan

 

Shivan Subramaniam

 

Retired Chairman, Chief Executive Officer and President, Prudential Financial, Inc.

 

Age: 75

Director Since: 2009

Lead Director

Committees: Compensation (Chair); Nominating & Corporate Governance; Executive

 

 

Retired Chairman, FM Global

 

 

 

Age: 69

Director Since: 2005

Committees: Nominating & Corporate Governance (Chair); Risk; Executive

Experience, Skills and Qualifications

• Veteran executive in the financial services industry, including position as Chief Executive Officer of Prudential Financial, Inc.

• Extensive experience in the retail banking sector as President and Chief Operating Officer of Chase Manhattan Bank

• Service on the boards of other public companies

 

Experience, Skills and Qualifications

• Extensive business and management expertise, including serving as Chairman and Chief Executive Officer of FM Global

• Particularly expertise in the Insurance sector with over 40 years industry experience

• Service on the boards of directors of FM Global, Lifespan Corporation and LSC Communications

Background

Mr. Ryan is the retired Chairman, Chief Executive Officer and President of Prudential Financial, Inc. (“Prudential”) After 13 years at Prudential, he retired as Chief Executive Officer and President in 2007 and he retired as Chairman in May 2008. Prior to joining Prudential in 1994, Mr. Ryan worked at Chase Manhattan Bank (“Chase Manhattan”) for 22 years. He ran Chase Manhattan’s worldwide retail bank between 1984 and 1990 and became President and Chief Operating Officer in 1990. Mr. Ryan has served on the boards of directors of our subsidiaries CBNA and CBPA since April 2009 and also served (from October 2008 to September 2013) as a director on the board of our former affiliate, The Royal Bank of Scotland Group plc. He also has served as a non-executive director of Regeneron Pharmaceuticals, Inc. since January 2003.

Background

Mr. Subramaniam was Chairman of Factory Mutual Insurance Company, a commercial and industrial property insurer from 2002 until December 2017 and also served as President and Chief Executive Officer from 1999 until his retirement at the end of 2014. Previously, Mr. Subramaniam served as Chairman and Chief Executive Officer at Allendale Insurance, a predecessor company of FM Global. Elected president of Allendale in 1992, he held a number of senior-level positions in finance and management after joining the company in 1974. Mr. Subramaniam’s career spans nearly 40 years in the insurance industry. He has served on the board of directors of FM Global since 1999, LSC Communications since October 2016 and Lifespan Corporation since December 2006. He is also a director of the Rhode Island Public Expenditure Council. Mr. Subramaniam has also served on the boards of directors of our subsidiaries CBNA and CBPA since January 2005. Mr. Subramaniam received a bachelor’s degree in mechanical engineering from the Birla Institute of Technology, Pilani, India, and two master’s degrees—one in operations research from the Polytechnic at New York University, and another in management from the Sloan School of Management at the Massachusetts Institute of Technology.

13


 

 

Wendy A. Watson

 

Marita Zuraitis

 

Retired Executive Vice President, Global Services, State Street Bank & Trust Company

 

 

Age: 69

Director Since: 2010

Committees: Audit (Chair); Compensation; Risk

 

 

Director, President and Chief Executive Officer, The Horace Mann Companies

 

 

Age: 57

Director Since: 2011

Committees: Risk

Experience, Skills and Qualifications

• Experienced executive in the financial services industry and extensive financial background, including serving as Executive Vice President, Global Services for State Street Bank & Trust Company

• Fellowship with the National Association of Corporate Directors and credentials as a CPA and Certified Fraud Examiner

• Advanced Professional Director Certification from the American College of Corporate Directors, a public company director education and credentialing organization

 

Experience, Skills and Qualifications

• Seasoned executive in the financial services industry, particularly in the insurance sector as Chief Executive Officer of The Horace Mann Educators Corporation

• Over 30 years of insurance industry experience

• Service on the boards of other companies and academic institutions

Background

Until her retirement in 2009, Ms. Watson was the Executive Vice President, Global Services for State Street Bank & Trust Company which she joined in 2000. Previously, Ms. Watson was with the Canadian Imperial Bank of Commerce where she served as Head of the Global Private Banking and Trust business and President & Chief Executive Officer CIBC Finance. She has also served as Chief Information Officer and as Head of Internal Audit for Confederation Life Insurance Company in Toronto. Ms. Watson began her career in the audit department of Sun Life Assurance Company in Canada. She has served as a director of MD Financial Holdings (CMA Holdings) Canada since 2010, DAS Canada Insurance Company (a subsidiary of Munich Re) since 2010, the Independent Order of the Foresters Life Insurance Company since 2013 and MD Private Trust (a subsidiary of MD Financial Holdings) since 2015. Ms. Watson’s years of board service also include Chair of the board of two of State Street Bank’s multi-national entities—State Street Syntel Private Ltd (India) and State Street Syntel Services Ltd (Mauritius). She currently serves on the Community Service Committee of Boston Children’s Hospital and the Advisory Board of Empathways. Ms. Watson has also served on the boards of directors of our subsidiaries CBNA and CBPA since October 2010. In addition to her corporate directorship roles, Ms. Watson is also currently a member of the Editorial Board of the “Intelligent Outsourcer” Journal and has served as a member of the board of directors of the Women’s College Hospital and the Women’s College Hospital Foundation in Toronto. Ms. Watson is a magna cum laude graduate of McGill University in Montreal with a Bachelor of Commerce degree with majors in Accounting and Law.

Background

Ms. Zuraitis is Director, President and Chief Executive Officer of The Horace Mann Educators Corporation. Prior to joining Horace Mann in May 2013, Ms. Zuraitis served as Executive Vice President and a member of the Executive Leadership Team for The Hanover Insurance Group, Inc. While at The Hanover Insurance Group, Ms. Zuraitis served as President, Property and Casualty Companies, responsible for the personal and commercial lines of operation at Citizens Insurance Company of America, The Hanover Insurance Company and their affiliates, a position she held since 2004. Prior to 2004, she was President and Chief Executive Officer, Commercial Lines for The St. Paul Travelers Companies. Previously, she held underwriting and field management positions with United States Fidelity and Guaranty Company and Aetna Life and Casualty. Ms. Zuraitis has over 30 years of experience in the insurance industry. She has served as a member of the board of trustees for the American Institute for Chartered Property and Casualty Underwriters, and has been a member of the executive and the compensation committees since June 2009. Ms. Zuraitis has also served on the boards of directors of our subsidiaries CBNA and CBPA since May 2011. She is a past Chairperson of the board of trustees for NCCI Holdings, Inc., a provider of workers’ compensation data analytics based in Boca Raton, Florida and a past member of the board of Worcester Academy in Worcester, Massachusetts. Ms. Zuraitis is a graduate of Fairfield University and completed Advanced Executive Education Program at the Wharton School of Business and the Program on Negotiations at Harvard University.

14


 

BOARD GOVERNANCE AND OVERSIGHT

The following sections provide an overview of our board governance structure and processes. Among other topics, we describe how we select directors, how we consider the independence of our directors and key aspects of our Board operations.

Corporate Governance Guidelines, Committee Charters and Code of Business Conduct and Ethics

Our Board has adopted Corporate Governance Guidelines, which set forth a flexible framework within which our Board, assisted by Board committees, directs our affairs. The Corporate Governance Guidelines address, among other things, the composition and functions of the Board, director independence, Board and Board committee evaluations, compensation of directors, management succession and review, Board committees and selection of new directors.

Our Corporate Governance Guidelines are available on the corporate governance section of our investor relations website at www.citizensbank.com/investor-relations.

The charters for each of the Audit, Compensation, Nominating and Corporate Governance, Risk and Executive Committees are also available on the corporate governance section of our investor relations website at www.citizensbank.com/investor-relations.

Our Board has also adopted a Code of Business Conduct and Ethics (the “Code”), which sets forth key guiding principles concerning ethical conduct and is applicable to all of our directors, officers and employees. The Code addresses, among other things, conflicts of interest, protection of confidential information and compliance with laws, rules and regulations, and describes the process by which any concerns about violations should be reported.

The Code is available on the corporate governance section of our investor relations website at www.citizensbank.com/investor-relations. You may also obtain a copy, free of charge, by writing to our Corporate Secretary at 600 Washington Boulevard, Stamford, Connecticut 06901. Any amendments to the Code, or any waivers of its requirements, will be disclosed on our website.

Board Composition

When considering whether directors and director nominees have the experience, qualifications, attributes or skills, taken as a whole, to enable our Board to satisfy its oversight responsibilities effectively in light of our business and structure, our Board focuses primarily on each person’s background and experience.  This includes leadership, character, financial literacy, judgment, independence, age, diversity and key skills. We believe that our directors represent an appropriate and diverse mix of experience and skills relevant to the size and nature of our business.

 

15


 

Board  Skills and Expertise

CEO experience

CFO experience

Retail Banking

Financial Services Industry

Finance/Capital Management

Risk Management

Compliance/Regulatory

Technology

Data Analytics

Insurance

Real Estate

Academia

Board Selection and Refreshment

Our Board has delegated to the Nominating and Corporate Governance Committee the responsibility of reviewing and recommending to the Board nominees for director.

 

Process

 

The Nominating and Corporate Governance Committee evaluates and recommends candidates for Board membership to the Board annually and as vacancies or newly created positions occur.

Upon the recommendation of the Nominating and Corporate Governance Committee, a slate of directors is nominated by the Board and submitted to a stockholder vote annually.

The Nominating and Corporate Governance Committee also recommends individuals for membership on the committees of the Board annually and as vacancies or newly created positions occur.

 

 

 

Considerations

 

The Nominating and Corporate Governance Committee will consider for nomination persons who have demonstrated leadership, have experience or relevant knowledge, time availability and commitment, the highest character, reputation and integrity, the analytical and critical thinking skills, the financial literacy, risk management and other business experience and acumen, the ability to work as a team constructively in a collegial environment and who exhibit independent thought and judgment.

 

 

 

Recommendations

 

In making its recommendations for Board and committee membership, the Nominating and Corporate Governance Committee reviews candidates’ qualifications for membership on the Board or committee (including making a specific determination as to the independence of the candidate) based on the criteria described above and taking into account the enhanced independence, financial literacy and financial and risk management expertise standards that may be required under law, regulation or New York Stock Exchange rules for committee membership purposes.

In recommending the re-nomination of directors to the Board or committee, the Nominating and Corporate Governance Committee evaluates current directors including assessing such directors’ performance and reassessing their independence.

 

 

 

Review

 

The Nominating and Corporate Governance Committee also periodically reviews the composition of the Board and its committees in light of the current challenges and needs of the Board and the Company, and determines whether it may be appropriate to add or remove individuals after considering issues of judgment, diversity, age, skills, background and experience.

 

New candidates may be identified through recommendations from independent directors or members of management, search firms or other sources to serve on the board of directors, and stockholder

16


 

recommendations. Evaluations of prospective candidates typically include a review of the candidate’s background and qualifications by the Nominating and Corporate Governance Committee, interviews with the committee as a whole, one or more members of the committee, or one or more other board members, and discussions within the committee and the full board of directors.

Any stockholder who wishes to recommend a prospective candidate for the board of directors for consideration by the Nominating and Corporate Governance Committee may do so by submitting the name and qualifications of the prospective candidate in writing to the following address: Corporate Secretary, 600 Washington Boulevard, Stamford, Connecticut 06901. Stockholders must propose nominees for consideration by the Nominating and Corporate Governance Committee in accordance with the procedures and other requirements set forth in our Bylaws. See Information for Stockholders—2019 Annual Meeting and Stockholder Proposals.

Director Independence

As a part of its listing standards, the New York Stock Exchange (“NYSE”) has adopted certain criteria that our Board considers when determining director independence. Under the NYSE rules, the Board also broadly considers all other relevant facts and circumstances that bear on the materiality of each director’s relationship with the Company, including the potential for conflicts of interest, when determining director independence. In addition, the Board considers whether the Company or one of its subsidiaries has a lending relationship, deposit relationship, or other banking or commercial relationship with a director, an immediate family member, or an entity with which the director or a family member is affiliated by reason of being a director, an officer or a significant stockholder thereof. Any such relationship must meet the following criteria: (i) it must be in the ordinary course of business and on substantially the same terms as those prevailing at the time for comparable transactions with non-affiliated persons; and (ii) with respect to extensions of credit by the Company or its subsidiaries to such entity: (a) such extensions of credit have been made in compliance with applicable law, including Federal Reserve Regulation O and Section 13(k) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and (b) no event of default has occurred and is continuing beyond any period of cure.

To assist the Board in its determination of director independence, the Nominating and Corporate Governance Committee annually evaluates each prospective and incumbent director using the foregoing standards and such other factors as the Nominating and Corporate Governance Committee deems appropriate, and makes a recommendation to the Board regarding the independence or non- independence of each such person. As a part of this evaluation process, the Nominating and Corporate Governance Committee considers all relevant facts and circumstances and, in particular, the independence requirements of the Securities Exchange Commission (“SEC”) and the NYSE. Banking relationships with the Company or any of its subsidiaries (including deposit, investment, lending, fiduciary) that are conducted in the ordinary course of business on substantially the same terms and conditions as are otherwise available to nonaffiliated customers for comparable transactions are not considered material in determining independence.

We have determined that each of Mr. Casady, Ms. Cumming, Mr. Di lorio, Mr. Hankowsky, Mr. Hanna, Mr. Higdon, Mr. Koch, Mr. Ryan, Mr. Subramaniam, Ms. Watson and Ms. Zuraitis is an independent director within the meaning of the applicable rules of the SEC and NYSE. In addition, we have determined each Committee member meets the independence and expertise requirements within the meaning of the applicable rules of the SEC and NYSE for the Committees on which they serve.  For further information see “Corporate Governance – Board Governance and Oversight – Committees of the Board.

Board Leadership

The Company’s Corporate Governance Guidelines provide that our Chief Executive Officer shall serve as Chairman of the Board, while an independent director shall serve as Lead Director. Given the significant duties designated to our independent Lead Director, the Board’s view is that having a combined Chairman and Chief Executive Officer enables it to (i) provide efficient and effective

17


 

governance and leadership to the Company, (ii) be apprised of current risks and issues that may impact the Company in a timely manner, and (iii) present a single point of leadership to all Company stakeholders. Accordingly, the Board has determined that a combined Chairman and Chief Executive Officer position, with an independent Lead Director, is the most appropriate Board leadership structure for the Company.

The Board reviews its leadership structure periodically in light of the composition of the Board, the needs of the Company and its stockholders, the practices of the Company’s peers, and other factors, and retains its flexibility to allocate the responsibilities of the offices of the Chairman and Chief Executive Officer in any way that is in the best interests of the Company at a given point in time.

The Lead Director is an independent director designated by the Board, based on the recommendation of the Nominating and Corporate Governance Committee.

 

Lead Director Responsibilities

In addition to other duties and responsibilities of the Lead Director set forth in the Corporate Governance Guidelines or our Bylaws, the Lead Director shall:

•    preside at Board and stockholder meetings at which the Chairman is not present, including executive sessions of the independent directors;

•    serve as a liaison between the independent directors and the Chairman and Chief Executive Officer;

•    review and approve, in coordination with the Chairman and Chief Executive Officer, agendas/agenda planners for Board meetings, materials, information and meeting schedules, and have the authority to add items to the agenda for any Board meeting;

•    have the authority to call meetings of the independent directors;

•    be available for consultation and direct communication with major stockholders and regulators upon request;

•    discuss with the Chief Executive Officer, together with the Chair of the Compensation Committee, the results of the Board’s annual evaluation of the Chief Executive Officer’s performance; and

•    perform such other functions as the Board shall direct or request from time to time.

 

 

Currently, Mr. Van Saun serves as our Chairman of the Board and Chief Executive Officer and Mr. Ryan serves as our Lead Director.

Our Corporate Governance Guidelines provide that directors may not be nominated to a new term if they will be age 75 or over at the expiration of his or her current term, unless the Board waives the mandatory retirement age for a specific director.

Mr. Ryan is being nominated for election to the Board at the 2018 Annual Meeting, although he is age 75. Based on the recommendation of the Nominating and Corporate Governance Committee, the Board has waived the mandatory retirement requirement for Mr. Ryan for this year as he is a key Board member, serving as both our independent Lead Director and Chair of the Compensation Committee.  The Board decided to nominate Mr. Ryan for an additional term as director as he is a seasoned financial services executive with over 40 years of management and industry experience.  The Board also believes that, given our relatively short duration as a public company, maintaining the continuity of Mr. Ryan as our Lead Director at this time is in the best interests of the Company.  Should Mr. Ryan be reelected by our stockholders to serve on our Board for an additional term beginning April 26, 2018, we expect that he will not stand for reelection at the April 2019 annual meeting.      

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Meetings of the Board of Directors and Attendance at the Annual Meeting

Our board of directors held ten meetings during fiscal 2017. No member attended fewer than 75% of the Board and committee meetings on which the member sits. In accordance with our Corporate Governance Guidelines, all directors are expected to attend our annual meetings. Ten of our twelve directors attended the annual meeting held April 27, 2017. The 2018 Annual Meeting is the Company’s fourth annual meeting since becoming a public company during fiscal 2014.

Executive Sessions of Our Non-Management Directors

The Company’s non-employee directors, who are all independent, participate in regularly scheduled executive sessions in which management does not participate. Our Lead Director, Mr. Ryan, presides at each executive session.  Interested persons may make their concerns known directly to Mr. Ryan or the non-employee directors as a group by submitting their written correspondence to the Company’s Corporate Secretary located at 600 Washington Boulevard, Stamford, Connecticut 06901. The Corporate Secretary may facilitate such direct communication to the Lead Director or the non-management directors as a group by reviewing, sorting and summarizing such communications.

Board, Committee and Director Evaluations

The Board, led by the Nominating and Corporate Governance Committee, conducts an annual self-evaluation to determine whether it and its Committees are functioning effectively.  Under each Committee’s charter, the Committee evaluates and assesses its performance, skills and resources required to meet its obligations under its charter at least annually.  In addition, directors complete a self-evaluation.  At least every three years, an independent party is used to conduct the Board and Committee evaluations.

 

1.

 

Nominating and Corporate Governance Committee initiates process

 

Topics

 

 

 

 

Subjects considered as part of the evaluation process include:

  Board and Committee Meetings

  Board and Committee Composition and Structure

  Board and Committee Relationship with Management

  Board Oversight Role

  Suggestions for Improvement

2.

 

Evaluations completed and results shared with the Chairman, Lead Director and Nominating and Corporate Governance Committee

 

 

 

 

 

3.

 

Actions plans established to address feedback as appropriate

 

 

 

 

 

4.

 

Board and each Committee review their respective results taking any additional actions as warranted

 

 

Board Education

To assist the Board in discharging its responsibilities, members participate in an annual training and continuing education program which includes both full board training and board committee training.   An annual schedule is developed, with input from the directors, which covers a broad range of topics to enhance and strengthen the skills, knowledge, and competencies of directors, individually and collectively.  The program includes internal and external speakers as well as onsite visits and regular meetings with management.  In addition, directors are encouraged to avail themselves of educational programs offered through recognized independent providers.

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Board’s Role in Risk Oversight

The Board is responsible for oversight of the Company’s internal controls and risk management framework. This oversight generally requires evaluation of management’s systems of internal control, financial reporting and public disclosure, ensuring the accuracy and completeness of financial results, review and approval of the Company’s enterprise-wide risk management governance framework and ensuring that risks to the Company are properly managed. The Board has delegated certain risk oversight duties to the Risk Committee and, with respect to financial controls, the Audit Committee. The Board receives independent reports from each of the Audit Committee and the Risk Committee at each of its meetings.

Under its charter, the Risk Committee is responsible for overseeing the design, implementation and operation of the Company’s enterprise-wide risk management governance framework with respect to funding and liquidity risk, credit risk, market risk, strategic risk, business risk, reputation risk, operational risk, model risk and pension risk. The Risk Committee reviews and, as it deems appropriate, recommends to the Board the design and implementation of the Company’s risk strategy and policy, risk appetite framework and specific risk appetites and limits.

While each committee plays a role in the oversight of risk, it is the Risk Committee which serves as the primary point of contact between the Board and the management-level committees that have responsibility for risk management. See “Corporate Governance—Board Governance and Oversight—Committees of the Board—Risk Committee.

 

Under the oversight of the Risk Committee, the Company operates an enterprise-wide risk management framework which sets standards and provides guidance for the identification, assessment, monitoring, and control of material risks that affect or have the potential to affect the value for our stockholders, customers, and colleagues and the safety and soundness of the Company.  The framework sets forth the risk governance model that operates within the Company and outlines the responsibilities of the Board and its committees, executive officers, colleagues and oversight committees with respect to risk governance, supervision and internal control systems.  

 

We are committed to building and maintaining a strong risk management culture.  We believe having an ethical culture that extends through every layer of the company is foundational to delivering the best possible banking experience for our customers and a great workplace for our colleagues.  To that end, in 2017 we established a Conduct Office, overseen by the Audit Committee, which has oversight responsibility for monitoring the behavior of our colleagues in relation to our Code of Business Conduct and Ethics, Sales Practices, and other key policy considerations on a Company-wide basis.  

Committees of the Board

Our Board has six standing committees. Four of these committees (Audit, Compensation, Nominating and Corporate Governance and Risk) meet on a regular basis. The Executive Committee meets as needed and is composed of our Chairman and Chief Executive Officer, our Lead Director and the Chair of our Nominating and Corporate Governance Committee. The Executive Committee may act on behalf of the Board and reports its actions to the full Board. The Equity Committee is composed of our Chairman and Chief Executive Officer and acts as needed to make equity grants (subject to certain limitations determined by the Compensation Committee) between annual grant cycles, and reports its actions to the Compensation Committee. See Compensation Matters—Compensation Discussion and Analysis—Process for Approval of Equity Grants.” The following table shows the current members of each of the four primary standing committees and the number of meetings held during fiscal 2017.


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Director Audit C&HR N&CG Risk Mark Casady Christine M. Cumming Anthony Di lorio William P. Hankowsky Howard W. Hanna III Leo I. Higdon Charles J. Koch Arthur F. Ryan Shivan S. Subramaniam Wendy A. Watson Marita Zuraitis Current committee member Chair Number of Risk Committee meetings does not reflect 4 meetings held by the Compliance Sub-Committee of the Risk Committee which was established by, and operates, under delegated authority from the Risk Committee

 

Audit Committee

 

 

Members:

Wendy A. Watson (Chair)

Anthony Di lorio

William P. Hankowsky

Howard W. Hanna III

Leo I. Higdon

Charles J. Koch

 

Meetings held in 2017:

15

 

The Audit Committee reviews and, as it deems appropriate, recommends to our Board our internal accounting and financial controls and the accounting principles and auditing practices and procedures to be employed in preparation and review of our financial statements. The Audit Committee is also directly responsible for the appointment, compensation, qualifications, independence, performance and retention of our independent public auditors.

 

Each member of the Audit Committee meets the independence requirements of the NYSE and is financially literate, and each member of the Audit Committee is an independent director under Rule 10A-3 under the Exchange Act. In addition, each member of the Audit Committee is an audit committee financial expert.

 

The Audit Committee charter is available on the corporate governance section of our investor relations website at www.citizensbank.com/investor-relations.

 


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Compensation Committee

 

 

Members:

Arthur F. Ryan (Chair)

William P. Hankowsky

Leo I. Higdon

Wendy A. Watson

 

 

 

Meetings held in 2017:

7

 

The Compensation Committee is responsible for, among other things, reviewing and approving our overall compensation philosophy, determining the compensation of our executive officers and directors, administering our incentive and equity-based compensation plans, and talent and succession planning, as described in further detail in the Compensation Discussion and Analysis.

 

 

Each member of our Compensation Committee meets the independence requirements of the NYSE and Rule 10C-1 of the Exchange Act, is a “non-employee director” under Exchange Act Rule 16b-3, and is an “outside director” under Section 162(m) of the Internal Revenue Code. If, at any time, all directors serving on the Compensation Committee do not meet the “non-employee director” requirements of Exchange Act Rule 16b-3 and “outside director” requirements of Section 162(m) of the Internal Revenue Code, the Compensation Committee will delegate to a special Section 16b-3 and Section 162(m) subcommittee consisting of those Compensation Committee members who meet such requirements the authority to approve grants of equity-based compensation subject to Section 16(b) of the Exchange Act and Section 162(m) of the Internal Revenue Code. Compensation Advisory Partners, LLC provides guidance and advice to the Compensation Committee on compensation-related matters. See Compensation Matters—Compensation Discussion and Analysis—Executive Compensation Governance—Role of Compensation Consultants.

 

The Compensation Committee charter is available on the corporate governance section of our investor relations website at www.citizensbank.com/investor-relations.

 

Nominating and Corporate Governance Committee

 

Members:

Shivan Subramaniam (Chair)

Anthony Di lorio

Howard W. Hanna III

Arthur F. Ryan

 

Meetings held in 2017:

3

 

 

The Nominating and Corporate Governance Committee reviews and, as it deems appropriate, recommends to the Board policies and procedures relating to director and board committee nominations and corporate governance policies. It also oversees the development and implementation of the Board annual training and continuing education program and annual Board self-evaluation process.

 

Each member of the Nominating and Corporate Governance Committee meets the independence requirements of the NYSE.

 

The Nominating and Corporate Governance Committee charter is available on the corporate governance section of our investor relations website at www.citizensbank.com/investor-relations.

 


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Risk Committee

 

 

Members:

Charles J. Koch (Chair)

Mark Casady

Christine M. Cumming

Shivan Subramaniam

Wendy A. Watson

Marita Zuriatis

 

Meetings held in 2017:

8*

 

 

* Number of Risk Committee meetings does not reflect 4 meetings held by the Compliance Sub-Committee of the Risk Committee which was established by and operates under delegated authority from the Risk Committee

 

 

The Risk Committee reviews and, as it deems appropriate, recommends to the Board the design and implementation of our risk strategy and policy, risk appetite framework and specific risk appetites and limits. The Risk Committee also oversees our risk management function, our enterprise risk management governance framework and reviews the due diligence of any proposed strategic transaction. In addition, the Risk Committee oversees the Chief Risk Officer and the internal risk management function of the Company. In carrying out its duties, the Risk Committee is authorized to select, retain, terminate and approve fees and other retention terms of independent legal or other advisors as it deems appropriate, without seeking approval of management or the Board.

 

Each member of the Risk Committee meets the independence requirements of the NYSE. Mr. Koch qualifies as an expert, as required by federal banking regulations, having the experience in identifying, assessing and managing large, complex financial firms’ risk exposures relevant to the Company’s particular risks and commensurate with the Company’s structure, risk profile, complexity, activities and size. As required by the Risk Committee charter, the chair of the committee, Mr. Koch, is also a non-executive director who meets the criteria for independence specified by the Federal Reserve Board’s Enhanced Prudential Standards (12 CFR 252.33(a)(4)(ii)).

 

The Risk Committee charter is available on the corporate governance section of our investor relations website at www.citizensbank.com/investor-relations.

 

Compensation Committee Interlocks and Insider Participation

None of the members of the Compensation Committee who served during 2017 are current or former officers or employees of the Company or any of our subsidiaries. No Company executive officer served on the compensation committee of another entity that employed an executive officer who also served on our Board. No Company executive officer served as a director of an entity that employed an executive officer who also served on our Compensation Committee.

Talent Management and Succession Planning

The Compensation Committee reviews at least annually, in consultation with the Chief Executive Officer, the Company’s talent management and succession plan, including with respect to Chief Executive Officer selection and succession in the event of the incapacitation, retirement or removal of the Chief Executive Officer, and reviews evaluations of, and development plans for, any potential successors to the Chief Executive Officer and other key positions.

Executive Officers

Our executive officers are designated by, and serve at the discretion of, our board of directors. There are no family relationships among any of our directors or executive officers. Our executive officers are as follows:


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Executive Officer

Age

Position

Bruce Van Saun

60

Chairman and Chief Executive Officer

Mary Ellen Baker

59

Executive Vice President and Head of Business Services

Randall J. Black

61

Executive Vice President and Controller

Brad L. Conner

56

Vice Chairman, Consumer Banking

Stephen T. Gannon

65

Executive Vice President, General Counsel and Chief Legal Officer

Malcolm Griggs

57

Executive Vice President and Chief Risk Officer

Donald H. McCree III

56

Vice Chairman, Commercial Banking

John F. Woods

53

Executive Vice President and Chief Financial Officer

 

Bruce Van Saun

Mr. Van Saun’s biography and related information may be found above under Corporate Governance—Election of Directors—Nominees.”

 

Mary Ellen Baker

Mary Ellen Baker is Executive Vice President and Head of Business Services with responsibility for Technology, Information and Corporate Security, Property Services, Vendor Management, Enterprise Information and Change Management. Ms. Baker joined the Company in August 2016 from PNC Financial Services Group, Inc. where she most recently held the title of Executive Vice President of Enterprise Services. She previously worked for Bank of America Corporation as Head of Enterprise Resiliency and Corporate Services and Head of Technology and Operations for the Consumer and Small Business Bank. Throughout her career, Ms. Baker has led numerous strategic projects in the areas of technology and operations, including supply chain, risk management, new technology implementation, and crisis response initiatives.

 

Randall J. Black

Randall J. Black became our Executive Vice President and Controller in April 2016. He is also the controller of our two subsidiary banks.  Prior to joining us, Mr. Black most recently was the Chief Executive Officer reporting to the Claims Administrator for the Deepwater Horizon Economic and Property Damages Settlement, a role he held since 2014. From 2011 through 2013, he served as Managing Director for Citigroup’s Mortgage Division. From 2009 through 2011, he was the Deputy Chief Accountant of the Office of the Comptroller of the Currency. Previously, Mr. Black held senior management positions at several banking institutions, including MBNA America where he served as Chief Accounting Officer and Controller from 1991 through 2005.


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Brad L. Conner

Brad L. Conner is Vice Chairman of our Consumer Banking Division. He is responsible for Retail Banking, Business Banking, Wealth Management, Home Lending Solutions, Auto Finance and Education Finance, as well as the Consumer Phone Bank and online channels. Before joining the Company in 2008, Mr. Conner was President of JP Morgan Chase & Co.’s Home Equity and Mortgage Home Loan Direct business. He previously oversaw the combined home equity business of Chase and Bank One after the companies merged in 2004, and served as Chief Executive Officer of Chase’s Education Finance businesses. Mr. Conner served as a director for the Rhode Island Public Expenditure Council from 2010 through 2012. Since 2009, he has served on the board of trustees of the Dave Thomas Foundation for Adoption, where he has served as treasurer since 2011, and currently serves on its audit committee and committee for institutional advancement. Mr. Conner currently serves on the board of directors of Amgine Technologies (US), Inc. and is Chairman of the Consumer Bankers Association board of directors, where he has served as a board member since 2011. Mr. Conner has a B.A. and M.B.A. from the University of Arkansas.

 

Stephen T. Gannon

Stephen T. Gannon is our Executive Vice President, General Counsel and Chief Legal Officer. Mr. Gannon is responsible for overseeing our legal department, providing strategic leadership to the management of legal risk and overseeing an integrated legal function which includes regulatory relations and government relations. Prior to joining the Company in August 2014, Mr. Gannon was the Executive Vice President and Deputy General Counsel of Capital One Financial Corporation. In his seven years at Capital One Financial Corporation, Mr. Gannon was responsible for advising on litigation and regulatory matters, transactional and product line matters as well as policy affairs and governance and, in January 2014, was appointed to serve as Market President for Central Virginia. Mr. Gannon was previously the General Counsel—Retail Brokerage Group at Wachovia Securities LLC, a partner and head of the securities litigation practice at LeClair Ryan, P.C., as well as a Staff Attorney and Branch Chief at the Securities and Exchange Commission. Mr. Gannon earned an A.B. in History and a J.D. from Georgetown University.


Malcolm Griggs

Malcolm Griggs has been our Executive Vice President and Chief Risk Officer since April 2016. Mr. Griggs joined the Company in December 2014 as Executive Vice President and Chief Credit Officer. He is responsible for all credit, market, regulatory, compliance and operational risk management for the Company. Prior to joining Citizens, Mr. Griggs was head of business risk and controls for the U.S. Consumer and Commercial Banking business at Citigroup. Mr. Griggs has had a wide range of risk management responsibility over his banking career, including senior risk positions at Morgan Stanley Private Bank, Bank of America, Wachovia, and as the first Chief Risk Officer at Fifth Third Bank. He also served on the national Board of Directors of the Risk Management Association, including serving as Chairman. He currently serves on the Rhode Island Public Expenditure Council, Rhode Island Philharmonic Orchestra and RMA Foundation Boards. Mr. Griggs received his undergraduate and law degrees from the University of North Carolina at Chapel Hill.

 

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Donald H. McCree III

Donald H. McCree III is Vice Chairman of our Commercial Banking Division. Prior to joining the Company in August 2015, Mr. McCree served in a number of senior leadership positions over the course of 31 years at JPMorgan Chase & Co. and its predecessor companies. Most recently, Mr. McCree was Head of Corporate Banking and Chief Executive Officer of Global Treasury Services at JPMorgan, where he was responsible for providing relationship banking services to commercial clients as well as treasury and trade finance solutions to small businesses, multinational corporations, financial services firms and government entities worldwide. Prior to becoming Head of Corporate Banking, Mr. McCree’s roles at JPMorgan included Head of Global Credit Markets, North American Co-Head of Fixed Income and Head of Wholesale Risk Management. He also served as Head of Treasury and Corporate Development and was based in London for several years, where he served as European Co-Head of Investment Banking and Head of European and Asian Syndicated Finance. Mr. McCree received his B.A. from the University of Vermont.

 

John F. Woods

John F. Woods joined the Company in February 2017 and assumed the position of Executive Vice President and Chief Financial Officer in March 2017. As Chief Financial Officer, Mr. Woods has responsibility for our Financial Planning and Analysis, Controller, Investor Relations, Strategy and Corporate Development, Treasury and Tax functions as well as for the business line finance groups. Mr. Woods joined the Company from Mitsubishi UFJ Financial Group, Inc. (MUFG), where he served as Chief Financial Officer of the MUFG Americas Holdings Corporation, which operates MUFG Union Bank, since 2013. He previously served as Vice Chairman and Chief Financial Officer for the predecessor company of MUFG Union Bank since December 2009. Prior to that, Mr. Woods was Chief Financial Officer of the Home Lending business at JPMorgan Chase and at Washington Mutual, a predecessor entity. Before that he held senior financial positions at the Federal Home Loan Mortgage Corporation (Freddie Mac), including Chief Financial Officer of the Funding & Investment Division  and Corporate Controller. Mr. Woods began his financial career in 1986 with Arthur Andersen in Washington, D.C., where he rose to partner in the financial and risk consulting group during his 16 years with the firm. Mr. Woods holds a Bachelor of Science degree in Commerce from the University of Virginia at Charlottesville.

 

STOCKHOLDER OUTREACH AND ENGAGEMENT

Stockholder Outreach

Throughout the year we interact and communicate with our stockholders in a number of forums, including quarterly earnings presentations, investor conferences, press releases and SEC filings, the annual report, proxy statement and the annual meeting. On an annual basis, we proactively reach out to our stockholders to solicit feedback on corporate governance and executive compensation. During 2017, we met with seven of our largest stockholders, representing holders of over a quarter of our outstanding common stock. We reviewed with our stockholders the strides we have made toward our goal of becoming a top performing regional bank, executive compensation and corporate governance practices and sought feedback on each of these topics.  Obtaining investor feedback is important to us and feedback received was shared with the Board.

Communications with the Board

Stockholders who wish to contact our Board may send written correspondence, in care of the Corporate Secretary, to Citizens Financial Group, Inc., 600 Washington Boulevard, Stamford, Connecticut 06901. Communications may be addressed to the Lead Director or any alternate director, marked as confidential or otherwise. Communications which are addressed to the Board, an individual director or group of directors will be processed by the Office of the Corporate Secretary.  Communications received that discuss business or other matters relevant to the activities of our Board, as determined by the Corporate Secretary, will be distributed to the addressees either in summary form or by delivering a copy of the communication. With respect to other correspondence received by the

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Company on behalf of one or more directors, the Board has requested that certain items, including the following, not be distributed to directors, because they generally fall into the purview of management, rather than the Board: junk mail and mass mailings, product and services complaints, product and services inquiries, resumes and other forms of job inquiries, solicitations for charitable donations, surveys, business solicitations and advertisements.

 

CORPORATE SOCIAL RESPONSIBILITY

We know that a strong bank sits at the heart of a healthy community. It gives loans to neighbors, invests in local businesses, supports local community initiatives, is responsible toward the environment and generally contributes to the health of the community.  These values drive our performance and support our vision of being a top-performing bank.

 

Community Investment

Community investment is one of our principal values. We strive to contribute to a better quality of life by serving communities across our footprint through employee volunteer efforts, a foundation that funds a range of nonprofit organizations, and through executives who provide board leadership to community organizations.  We have a number of programs to assist those in need so they may receive food and clothing, find affordable housing, develop their skills for better jobs, and expand their financial literacy.  

 

Diversity

We are committed to building a diverse and inclusive organization positioned to support the growth of our colleagues and our communities.  Our Diversity and Inclusion Business Resource Groups have over 1,000 members.  In 2017, 200 business leaders and employees from all levels of the organization attended our first Diversity & Inclusion Conference which focused on how diversity and inclusion drive growth and innovation, helping our customers and colleagues reach their potential.  In 2017, we received recognition for having 25% women on our Board from the organization 20/20 Women on Boards, which has a mission of having 20% women on corporate boards in the U.S. by the year 2020.  

 

Environmental Sustainability

Our Environmental Sustainability program governs how we mitigate our impact on the environment.  We work in partnership with expert vendors to consider industry best practices around energy and environmental sustainability management.  By better managing our energy and other environmental impacts, we are able to translate these financial and operational efficiencies into a more competitive service for our customers. Additionally, by focusing on the reduction of our operational footprint through smaller redesigned branch concepts, our business operations will continue to align with customer trends such as increased mobile banking and a desire for companies to have a smaller physical environmental footprint.

RELATED PERSON TRANSACTIONS

Policies and Procedures for Related Person Transactions

We have adopted a written related person transactions policy pursuant to which our executive officers, directors and significant stockholders, including their immediate family members, are not permitted to enter into a related person transaction with us without the consent of our Nominating and Corporate Governance Committee. Subject to certain transactions excluded from the policy, any request for us to enter into a transaction with an executive officer, director, significant stockholder or any of such persons’ immediate family members, in which the amount involved exceeds $120,000, is required to be presented to our Nominating and Corporate Governance Committee for review, consideration and approval. All of our directors, director nominees, executive officers and significant stockholders are required to report to our Nominating and Corporate Governance Committee any such related person transaction. In approving or rejecting the proposed transaction, our Nominating and Corporate

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Governance Committee will take into account, among other factors it deems appropriate, the commercial reasonableness of the terms, the benefit or perceived benefit, or lack thereof, to the Company, opportunity costs of alternate transactions, the materiality and character of the related person’s direct or indirect interest and the actual or perceived conflict of interest of the related person.

Transactions with Executive Officers and Directors

We provide credit facilities from time to time to certain directors and executive officers and their immediate families, as well as their affiliated companies. These credit facilities (i) complied with our Regulation O policies and procedures, (ii) were made in the ordinary course of business, (iii) were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable loans with persons not related to the lender, and (iv) did not involve more than a normal risk of collectability or did not present other features unfavorable to the Company.

Under supplemental retirement arrangements relating to their prior service to Charter One, which we acquired in 2004, Mr. Charles Koch, a director, as well as his brother, Mr. John Koch, are entitled to receive monthly payments. Mr. Charles Koch and Mr. John Koch received approximately $877,500 and $744,900, respectively, under this arrangement during 2017.

Other

Based solely on Schedule 13G filings made with the SEC, BlackRock, Inc. (“BlackRock”), The Vanguard Group, State Street Corporation and their affiliates are each considered a “Related Person” under our related person transaction policy because they each beneficially owned more than 5% of our outstanding common stock as of December 31, 2017.  See Security Ownership of Certain Beneficial Owners and Management.

Certain of our retirement plans use BlackRock and its affiliates to provide investment management services. In connection with these services, we paid BlackRock approximately $346,950 in fees during 2017. The Nominating and Corporate Governance Committee ratified and approved the relationship with BlackRock in accordance with our policy.

Indemnification Agreements

We entered into indemnification agreements with our directors and executive officers. These agreements require us to indemnify these individuals to the fullest extent permitted by Delaware law against liabilities that may arise by reason of their service to us, and to advance expenses incurred as a result of any proceeding against them as to which they could be indemnified. Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended, may be permitted to directors or executive officers, we have been informed that in the opinion of the SEC such indemnification is against public policy and is therefore unenforceable.

There is currently no pending material litigation or proceeding involving any of our directors and executive officers for which indemnification is sought or which is adverse to the Company.

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COMPENSATION MATTERS

 

PROPOSAL 2 - ADVISORY VOTE ON EXECUTIVE COMPENSATION      

We provide this vote under the federal securities laws (Section 14A of the Securities Exchange Act of 1934) and in recognition of our stockholders’ vote in 2015 recommending that we hold a non-binding, advisory vote on executive compensation each year.  Following that vote, the Board affirmed that recommendation and elected to hold future “say-on-pay” advisory votes on an annual basis, until the next stockholder vote on say-on-pay frequency.      

With this item, stockholders may submit an advisory vote on the compensation of our CEO and other named executive officers listed in the Summary Compensation Table.  We encourage stockholders to review the complete description of our executive compensation programs provided in this proxy statement, including the Compensation Discussion and Analysis and the compensation tables and accompanying narrative, which describe the ways in which we seek to align the interests of our executives with those of our stockholders.

We ask our stockholders to vote on the following resolution at the Annual Meeting.

RESOLVED, that the Company’s stockholders approve, on a non-binding, advisory basis, the compensation of the Company’s executive officers named in the 2017 Summary Compensation Table, as disclosed pursuant to Item 402 of Regulation S-K (which disclosure includes the Compensation Discussion and Analysis, the compensation tables and accompanying narrative).

Although the vote on this proposal is advisory and, therefore, is non-binding, the Compensation Committee will carefully consider the results of this vote when making future compensation decisions.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE COMPANY’S EXECUTIVE COMPENSATION.

 

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COMPENSATION DISCUSSION AND ANALYSIS

Introduction

This Compensation Discussion and Analysis (“CD&A”) describes our executive compensation philosophy and program. In particular, the CD&A and the compensation tables that follow focus on the compensation paid to our named executive officers (“NEOs”) with respect to fiscal year 2017. Our NEOs for 2017 are named below:

 

Name of Executive

 

Position

Bruce Van Saun

 

Chairman and Chief Executive Officer

John Woods

 

Chief Financial Officer

Donald H. McCree III

 

Vice Chairman, Commercial Banking

Brad L. Conner

 

Vice Chairman, Consumer Banking

Stephen T. Gannon

 

General Counsel and Chief Legal Officer

 

 

 

Name of Former Executive

 

Position

John J. Fawcett

 

Interim Chief Financial Officer

 

Alignment of Pay and Performance

As described in this proxy statement in the section titled “Performance Highlights – Our Journey to Sustainable Growth”, the Company has executed well on its turnaround plan since the initial public offering in September 2014.  In order to realize these results, it has been essential for us to effectively retain and motivate highly capable and experienced executive management, and we feel our compensation program has been integral in achieving this goal.

While much remains to be achieved as we continue our journey to becoming a top performing regional bank, we remain diligent in the execution of our strategic plan and our executives continue to lead their teams in maintaining focus on growing and diversifying revenue and practicing disciplined expense management.

Executive Compensation Philosophy & Principles

 

The fundamental principles that guide the design and implementation of compensation programs for our NEOs include:

 

Attract, retain, motivate and reward high-caliber executives to deliver long-term business performance within acceptable risk parameters;

 

 

Provide clear alignment between annual and long-term compensation for executives and the Company’s strategic plans;

 

 

Support a culture where employees recognize the importance of serving customers well and are rewarded for superior performance; and

 

 

Encourage the creation of value over the long-term and align the rewards of executives with returns to stockholders.

 

Significant 2017 Compensation Decisions

Over 96% of the votes cast on the advisory say-on-pay vote conducted at our 2017 annual meeting approved the compensation of our NEOs.  No significant changes were recommended to our executive compensation program as a result of this vote.

Notwithstanding our say-on-pay results in any given year, throughout the year the Compensation Committee’s consultant provides updates regarding executive compensation trends, best practices, and regulatory developments in order to assist the Compensation Committee in determining whether any changes to our executive compensation program should be considered.  Based on this review and

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in response to our businesses needs and market practice, we made the following change to our executive compensation program in 2017:  

Change During 2017

 

Rationale

Amended our executive employment agreements to provide severance in the event of an involuntary termination after a change of control

 

 

    Aligns with market practice

    Puts the Company in a more favorable position to attract senior talent

    Achieves parity among the executive team

    Enhances alignment of management’s interests with those of our stockholders in the event of a potential change of control transaction

Highlights of our Pay Practices

We believe our pay practices demonstrate our commitment to alignment with stockholders’ interests and our dedication to maintaining a compensation program supported by strong corporate governance, as exemplified by the following practices:

What We Do

What We Don’t Do

Pay for performance. A significant portion of our executives’ compensation is awarded in the form of awards that are earned based on Company performance.

No single trigger vesting of equity awards or cash payments. We do not provide for any single trigger vesting of equity awards or severance payments upon a change of control.

Bonus funding dependent on our risk performance.  Our bonus funding is determined based on a number of factors, including but not limited to, the Company’s risk performance.

Prohibition against hedging and pledging. We prohibit employees and directors from hedging or pledging  Company securities.

 

Pay is subject to clawback.  We have a broad-based process through which events having a material adverse impact on the Company are reviewed for potential impact on compensation.

 

No tax gross-ups.  We do not offer tax gross-ups on executive benefits other than in connection with our relocation program, which provides a gross-up to all employees receiving relocation assistance. In addition, we do not provide for excise tax gross-ups upon a change of control.

Robust compensation plan governance.  Our compensation plans are subject to a robust governance process that involves review by control partners (including risk, legal, human resources and finance).  The plans are subject to a risk review by the Compensation Committee on an annual basis, and a risk review by an independent third party every three years.

Dividend equivalents are not paid on unvested units.  Dividend equivalents are accrued but not paid until restricted stock units and performance stock units become vested.

 

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Stock ownership and retention guidelines.  Our executives and directors are subject to stock ownership and retention guidelines (CEO - 5x base salary; other executives - 3x base salary; directors - 4x annual cash retainer).

 

 

Annual say-on-pay vote.  We submit our executive compensation to an annual say-on-pay vote in order to elicit regular feedback from stockholders.

 

 

Stockholder engagement.  We proactively engage with key stockholders in order to elicit their feedback on our corporate governance and compensation practices.

 

 

Independent compensation consultant.  The Compensation Committee engages an independent compensation consultant, who performs work solely for the committee.

 

 

 

Executive Compensation Program Components

The following table summarizes the principal elements of the compensation program that applied to our NEOs for 2017. Each element is described more fully in subsequent sections of the CD&A.  Mr. Fawcett, our Interim Chief Financial Officer until March 2017, was eligible for base salary only.

 

Element of Pay

Objective

Key Characteristics

Base Salary

To attract and retain talented executives who can effectively lead the organization to achieve our strategic objectives.

Base salaries are reviewed annually and are intended to fairly compensate executives for the position held.

Variable Compensation

To support a culture where employees recognize the importance of serving customers well and are rewarded for their individual contributions and our collective success, and to align compensation with stockholders’ interests.

Variable compensation is designed to reward achievement of long-term objectives and annual progress toward those objectives, in a manner that aligns pay with the interests of stockholders and is market competitive.  Variable compensation awards for NEOs are determined based on Company, divisional/functional and individual performance, as discussed below in Executive Compensation Decisions.” Our variable compensation program is designed to discourage inappropriate risk taking by delivering a balanced portfolio of short-term and long-term awards:

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Long-Term Awards

Generally granted in the form of restricted stock units and performance stock units, long-term awards are intended to tie executive pay to the interests of stockholders and to provide a retention incentive for executives.  The value actually realized by the executive varies based on stock price movement and other financial performance factors in the case of performance stock units.  For the 2017 performance year, 60%-70% of variable compensation was delivered to the NEOs in the form of long-term awards, of which between 50%-70% was in the form of performance stock units.

 

Short-Term Awards

The remaining portion of variable pay for the 2017 performance year was delivered in cash.

Other

Benefits

To give executives an opportunity to provide for their retirement and address other specific needs.

Our NEOs are eligible to participate in our Company-sponsored benefit programs, including our broad-based 401(k) plan and employee stock purchase plan, on the same terms and conditions that apply to all of our employees. In addition, we provide certain limited perquisites to our NEOs, which are described in footnote 8 to the 2017 Summary Compensation Table.

Executive Compensation Governance

Role of Compensation Committee

The Compensation Committee is composed solely of independent directors and is responsible for establishing, implementing and monitoring the administration of our executive compensation plans and programs, and approving our executives’ compensation. Among its duties, the Compensation Committee is responsible for determining the compensation of our CEO and, based upon recommendations from the CEO (together with our Chief Human Resources Officer), approving compensation for our other executives. In addition, the Compensation Committee is generally responsible for overseeing our material compensation and benefit plans, recommending to the Board non-employee director compensation, evaluating executive performance, and reviewing talent management and succession plans.

Role of Compensation Consultants  

Compensation Advisory Partners, LLC

The Compensation