WSFS Financial DEF 14A 2016
Documents found in this filing:
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
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Exchange Act of 1934 (Amendment No. )
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Notice of 2016 Annual Meeting of Stockholders
March 30, 2016
The WSFS Financial Corporation (the Company or WSFS) 2016 Annual Meeting of Stockholders will be held on April 28, 2016 beginning at 4:00 p.m. at the Hotel du Pont located at Eleventh and Market Streets in Wilmington, Delaware. Parking validation will be provided for garage or valet parking at the hotel.
At the meeting, stockholders will act on the following matters:
· The election of four directors for a term ending at the 2019 Annual Meeting of Stockholders;
· The ratification of the appointment of KPMG LLP as the independent registered public accounting firm for the fiscal year ending December 31, 2016; and
· Such other matters as may properly come before the meeting or any adjournment thereof.
All stockholders of record holding shares of WSFS Financial Corporation common stock at the close of business on March 1, 2016 are entitled to vote at the meeting. This proxy statement and the enclosed proxy card were mailed to stockholders on or about March 30, 2016.
Your vote is important regardless of how many shares of WSFS common stock you own. Even if you plan to attend the meeting, we urge you to ensure that your shares are represented at the meeting by returning the enclosed proxy card. A return envelope with pre-paid postage is enclosed for your convenience. Mark on your proxy card how you wish your shares to be voted, and please be sure to sign and date your proxy card. Returning your vote by proxy will not prevent you from later voting in person if you do come to the meeting. Please note, however, that if the stockholder of record for your shares is a broker, bank or other nominee and you wish to vote at the meeting, you will need to obtain a proxy issued in your own name from your stockholder of record.
This proxy statement is being furnished in connection with the solicitation of proxies by the Board of Directors of WSFS Financial Corporation (the Company) to be used at the 2016 Annual Meeting of Stockholders which will be held at the Hotel du Pont, Eleventh and Market Streets in Wilmington, Delaware on April 28, 2016 at 4:00 p.m. Directions to the Hotel du Pont are available on its website: www.hoteldupont.com.
What is the purpose of the Annual Meeting?
The Annual Meeting is being held to consider the following proposals: (i) the election of four directors for a term ending at the 2019 annual meeting of stockholders, (ii) the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2016, and (iii) such other matters as may properly come before the meeting or any adjournment thereof.
The Board of Directors is divided into three classes and each class serves for a term of three years. There are four seats on our Board of Directors up for election at the Annual Meeting and the following persons have been nominated by the Board: Eleuthère I. du Pont, Calvert A. Morgan, Jr., Marvin N. Schoenhals and David G. Turner, each of whom currently serves on the Board of Directors. Each has been nominated for a three-year term expiring on the date of our annual meeting of stockholders to be held in 2019. You can find information about all of our current directors and director nominees beginning on page five.
The Board of Directors recommends a vote FOR each of the four nominees for director, and FOR ratification of the appointment of KPMG LLP as our independent registered public accounting firm.
Why are you sending me a proxy card? What am I going to do with it?
To hold the Annual Meeting, we need to have present, in person or by proxy, the holders of a majority of WSFS common stock outstanding as of March 1, 2016, the record date for the Annual Meeting that determines which stockholders will receive notice of the Annual Meeting and be entitled to vote at the Annual Meeting. As of that date, there were 29,626,725 shares of WSFS common stock outstanding. We are providing you with a proxy card so that your shares can be counted as present at the Annual Meeting and can be voted at the meeting even if you do not attend the Annual Meeting in person.
Your shares will be voted in accordance with your instructions you provide on the proxy card to vote either for or to withhold your vote regarding each of the nominees for election as directors; and to vote for, against or abstain on the remaining proposals. If you sign and return the proxy card to us without indicating how you wish to vote, we will vote your shares for each of the nominees, and for ratification of the appointment of KPMG LLP as our independent registered public accounting firm. If you hold your WSFS common stock in street name through a bank or broker, you must direct your bank or broker to vote in accordance with the instructions you have received from your bank or broker. Street name stockholders who wish to vote at the Annual Meeting will need to obtain a voting instruction form from the institution that holds their shares.
For those shares that we have been given a proxy, we will have discretionary authority to vote as we see fit on any procedural matters relating to the conduct of the Annual Meeting. Furthermore, in the event that one or more of our nominees is unable to stand for election as the result of an unexpected occurrence, we may vote shares for which we hold a proxy in favor of anyone we select to be a substitute nominee. Alternatively, we may reduce the size of the Board of Directors to eliminate the vacancy.
If I hold my shares through a broker, will my broker vote my shares without my instructions?
If you fail to instruct your broker how you want your shares voted, your broker may only use discretionary authority to vote your shares on routine matters. The election of directors is not considered a routine matter. As such, your broker cannot vote your shares with respect to this proposal if you do not give instructions.
Why did I receive more than one proxy card?
If you hold your shares of WSFS common stock in more than one account or name, you will receive multiple proxy cards and you must return a proxy card for each account or name in order to vote all of your shares.
Can I revoke my proxy or change my vote?
Yes. If you are a registered holder of WSFS common stock, you can change your vote at any time by completing and returning a new proxy card before the Annual Meeting to WSFS Financial Corporation, Attention: Corporate Secretary, WSFS Bank Center, 500 Delaware Avenue, Wilmington, Delaware 19801, or providing written notice in person at the meeting. If you vote by proxy and then attend the Annual Meeting, you do not need to vote again in person unless you want to change your prior vote. Attending the Annual Meeting will not cancel your proxy unless you vote in person at the Annual Meeting. Please note that if your shares are not registered in your own name, you will need additional documentation from your broker to vote in person at the Annual Meeting.
What constitutes a quorum for the Annual Meeting?
A quorum is necessary to conduct business at the Annual Meeting. We require the presence, whether in person or through the prior submission of a proxy, of the holders of WSFS common stock representing a majority of the shares outstanding and entitled to vote on the record date. Because there were 29,626,725 shares of WSFS common stock issued and outstanding as of the record date, at least 14,813,363 shares must be present or represented by proxy at the Annual Meeting for a quorum to exist.
How many votes does a nominee need in order to be elected?
Directors are elected by plurality vote, meaning that the nominees who receive the greatest number of votes are elected. You may vote for a nominee or you may withhold your vote for a nominee. In a contested election, the number of seats up for election is less than the number of persons nominated. The winning nominees are the ones who receive more votes than the other nominees. In an uncontested election, there are enough seats up for election for all of the nominees, so all will be elected regardless of the number of votes they each receive. In an uncontested election, it is our policy that nominees who receive a number of votes in favor of their election which is less than a majority of total votes cast should promptly offer to resign from the Board of Directors and request the Board of Directors to accept or reject their resignation offer at the discretion of the Board of Directors. The Corporate Governance and Nominating Committee of the Board of Directors will consider resignation offers and make its recommendation to the entire Board of Directors. Our policy provides that the Board of Directors will accept or reject each directors resignation offer within 90 days of the date the resignation offer is submitted to the Board of Directors.
How many votes do I have?
Each share of WSFS common stock is entitled to one vote. We do, however, permit cumulative voting for the election of directors, meaning that because there are three seats up for election, if you own 100 shares, you have 300 votes to distribute among the nominees as you see fit. You can distribute them equally and cast 100 votes for each nominee or you may give more votes to certain nominees, even giving all 300 votes to a single nominee if you wish.
If you give us a proxy to vote your shares at the Annual Meeting, we will distribute your votes among the nominees as we see fit. If you do not want us to use cumulative voting for your shares, you may state that on your proxy card.
How many votes are required to approve the ratification of the independent registered public accounting firm?
The appointment of KPMG LLP as our independent registered public accounting firm must receive a majority of the votes cast on the proposal to be ratified. Abstentions and broker non-votes are treated as present for quorum purposes only and therefore have no effect on the outcome of the proposal.
Will members of management and the Board of Directors be at the Annual Meeting?
Yes. Our practice is that all members of the Board of Directors, director nominees and senior management officers should attend the Annual Meeting and all current directors were present at last years annual meeting. We expect that all directors will attend the Annual Meeting this year.
Can I ask questions at the Annual Meeting?
Yes. We consider the Annual Meeting an opportunity for stockholders to have access to the Board of Directors and senior management in a public forum, and we invite stockholders to submit questions or comments in advance of the Annual Meeting. This is an important part of the process, and we have established a procedure for stockholders to send communications to the Board of Directors as well as to management.
While legal considerations and timing issues may prevent us from answering all questions or addressing all comments, we believe this dialogue is helpful in increasing communication with our stockholders.
At the Annual Meeting, we will attempt to respond to as many of the questions and comments we receive as possible. Any questions, comments, and responses deemed relevant to the larger stockholder base will be posted on our website at www.wsfsbank.com.
The Board of Directors strongly encourages communications from stockholders. Stockholders who wish to send communications to the Board of Directors during the year may do so by writing to the attention of Charles G. Cheleden, Vice Chairman and Lead Director, WSFS Bank Center, 500 Delaware Avenue, Wilmington, Delaware 19801. In addition, all written communications from stockholders received by management are shared with the Board of Directors.
If I have a proposal that I want the stockholders to vote on, how do I get it on the agenda for the Annual Meeting?
The deadline has passed for you to give us notice of a proposal to be brought before the stockholders for a vote at the 2016 Annual Meeting of Stockholders. We expect to hold the 2017 Annual Meeting of Stockholders in April 2017 and to mail our proxy statement during March 2017. To get your proposal on the agenda for the 2017 Annual Meeting of Stockholders, you must give us notice no earlier than November 28, 2016 and no later than December 28, 2016. All notices should be addressed to the attention of the Corporate Secretary, WSFS Financial Corporation, WSFS Bank Center, 500 Delaware Avenue, Wilmington, Delaware 19801. Any such notice must set forth, as to each matter you propose to bring before the meeting: (1) a brief description of the business desired to be brought before the meeting and the reasons for conducting such business at the meeting, (2) your name and address and the name and address of the beneficial owner, if any, on whose behalf the proposal is made, (3) the class and number of shares of our common stock beneficially owned by you and by the beneficial owner, if any, on whose behalf the proposal is made, and (4) any material interest you or such beneficial owner has in the proposal.
Can I obtain copies of the proxy statement and related materials over the Internet?
Yes. Copies of this proxy statement and our Annual Report on Form 10-K (without exhibits) are available on the Internet at www.wsfsbank.com. Stockholders can elect to receive future proxy statements and annual reports over the Internet rather than in printed form. Stockholders of record can make this election either by calling (888) WSFSBANK (or (888) 973-7226), by sending an email to firstname.lastname@example.org, or by following the instructions at: investors.wsfsbank.com. Stockholders may request copies of any exhibits to the Annual Report on Form 10-K through our telephone number and email address as well. If you hold your shares in street name, please refer to the information provided by your broker, bank or other nominee for instructions on how to elect to access future proxy materials over the Internet.
The Board of Directors is divided into three classes and each class serves for a term of three years. Four directors have terms of office that expire at the 2016 Annual Meeting. The Board of Directors has nominated each of these four directors for election to three-year terms expiring at the annual meeting of stockholders to be held in 2019:
· Mr. Eleuthère I. du Pont
· Mr. Calvert A. Morgan, Jr.
· Mr. Marvin N. Schoenhals
· Mr. David G. Turner
The election of each nominee requires the affirmative vote of a plurality of the votes cast, meaning that the nominees who receive the greatest number of votes are elected. Executed proxies received from holders of WSFS common stock will be voted for the election of such nominees unless marked to the contrary. All of the nominees have consented to be named and have indicated their intent to serve if elected. If any nominee becomes unable to serve, which is not anticipated, the proxy will be voted for a substitute nominee to be designated by the Board of Directors or the number of directors will be reduced. Abstentions and broker non-votes will not be counted as either an affirmative vote or a negative vote regarding the election of directors, and therefore, will have no effect on the election of directors.
Biographical information about our directors, director nominees and executive officers is provided below. The listed age of each individual is as of December 31, 2015. Currently, all directors of WSFS also serve as directors of our subsidiary, Wilmington Savings Fund Society, FSB (which we generally refer to as WSFS Bank). Each director was selected to be a member of the Board of Directors based on his or her particular background and expertise. Immediately following the description of the background of each person is a description of the particular experience, skills and qualifications that were instrumental in the determination by the Corporate Governance and Nominating Committee that he or she should serve as a director. For additional information, see Our Director Nomination and Selection Process and Diversity beginning on page twelve.
Eleuthère I. du Pont, 49, has been a director of WSFS Financial Corporation since 2013. His current term expires at the 2016 Annual Meeting of Stockholders. Since 2008, he has been president of The Longwood Foundation, a private foundation principally supporting charitable organizations. He has also been a director of E.I. du Pont de Nemours and Company since 2006 and of Burris Logistics since 2014. In 2007 and 2008, he served as Senior Vice President, Operations and Chief Financial Officer of drugstore.com. Prior to that, Mr. du Pont served as President and Chief Financial Officer of Wawa, Inc. a chain of food markets in the mid-Atlantic region. He received a Bachelor of Science degree in Mechanical Engineering and a Masters in Business Administration from Stanford University. Mr. du Pont brings significant expertise in corporate governance, accounting, finance, operations, retail, information technology and investment management to the Board of Directors.
Calvert A. Morgan, Jr., 67, has been a director of WSFS Financial Corporation since 2004 and Vice Chairman of WSFS Bank since 2006. His current term expires at the 2016 Annual Meeting of Stockholders. He is the retired Chairman, President and Chief Executive Officer of PNC Bank, Delaware. Mr. Morgan joined the Bank of Delaware (predecessor of PNC Bank, Delaware) in 1970. He advanced through various management positions and became President and Chief Operating Officer in 1987. He was elected Chief Executive Officer in 1989 and Chairman in 1990. Mr. Morgan also served as a member of the Management Committee of PNC Financial Services Group, Inc. for several years. He is a longtime member of the Delaware Economic and Financial Advisory Council, which provides budgetary advice to the Governor and General Assembly of the State of Delaware. Mr. Morgan also served as Chairman of the Delaware Business Roundtable. He is a former board member and past Chairman of the Delaware Bankers Association and served on the boards of the United Way of Delaware and the Delaware State Chamber of Commerce. He also serves as a director of Chesapeake Utilities Corporation. Mr. Morgan received his undergraduate degree in business administration from the University of Delaware and is a graduate of the National Commercial Lending School at the University of Oklahoma. Mr. Morgan brings over 40 years of banking experience, trust, finance, risk management, lending and executive leadership expertise to the Board of Directors.
Marvin N. Schoenhals, 68, has been Chairman of WSFS Financial Corporation and WSFS Bank since 1992 and a director since 1990. His current term expires at the 2016 Annual Meeting of Stockholders. From 1990 to 2007 he also served as President and Chief Executive Officer. Mr. Schoenhals was a director of the Federal Home Loan Bank of Pittsburgh from 1997 to 2007, serving as its Chairman from 2005 to 2007. He was a member of the Brandywine Mutual Funds Board of Directors from 1995 to 2006. He currently serves as Chairman of the Board of Burris Logistics, a privately-owned distributer of frozen and dry foods. Mr. Schoenhals is a former trustee and former Chairman of the Delaware Public Policy Institute. He is a former Chairman of the Delaware State Chamber of Commerce and is Chairman of the Sunday Breakfast Mission. Until 2014, Mr. Schoenhals was Chairman of Vision 2015, a Delaware coalition that created and is implementing a plan to improve Delaware public education. Mr. Schoenhals received the Josiah Marvel Cup Award from the Delaware State Chamber of Commerce, presented annually to honor a Delawarean who has made an outstanding contribution to the state, community and society. In 2004, he was inducted into the Delaware Business Leaders Hall of Fame. Mr. Schoenhals received his undergraduate degree in business administration from the University of Michigan and a Master of Business Administration from the University of Pennsylvania Wharton School of Finance and Commerce. Mr. Schoenhals brings almost 40 years of banking experience, finance, risk management, lending and executive management expertise to the Board of Directors.
David G. Turner, 51, has been a director of WSFS Financial Corporation since 2013. His current term expires at the 2016 Annual Meeting of Stockholders. Currently, Mr. Turner serves as Banking Executive, in the IBM Global Business Services Strategy and Analytics Practice, and from 2010 through 2013 Mr. Turner was the Vice President, Partner, Global BAO Leader in the Banking and Financial Markets Division of Global Business Services of IBM. Prior to joining IBM, in 2009, Mr. Turner founded Sovereign Partners Consulting, LLC working with key major banking clients world-wide focusing on strategy and IT consulting. Mr. Turner joined MBNA in 2003 as Senior Executive Vice President and, in the following year, was promoted to Group Executive to create their Research and Development Department. He served in various capacities with MBNA and its successor, Bank of America through 2009 including his role as the Information Management Transformation Executive. Prior to that, Mr. Turner was Executive Vice President and President of the Gateway Companies, San Diego, California. Mr. Turner is Chairman of the Board of Trustees of Delaware State University, former director of the US Chamber of Commerce and an adjunct professor at several universities. He earned his B.S in Computer Science/Mathematics from Delaware State University, a Master of Sciences in MIS from Fairleigh Dickenson University and is an alumnus of the Dartmouth-Amos Tuck Executive MBA Education Program. Mr. Turner brings significant expertise in banking and financial markets with experience in the areas of product development, marketing, sales, analytics, technology, channels and customer experience.
The Board of Directors recommends a vote FOR each of these nominees.
Anat Bird, 64, became a director of WSFS Financial Corporation in 2010. Her current term expires at the 2018 Annual Meeting of Stockholders. Ms. Bird is President and Chief Executive Officer of SCB Forums, LTD which she founded in 1994. Her banking background includes being President and CEO of California Community Bancshares; Executive Vice President of Wells Fargo Bank; Group Head and Executive Vice President of Norwest Bank; Senior Executive Vice President, Chief Operating Officer and Board Member of Roosevelt Financial Group; and Managing Director in charge of Strategic Planning, Product Development and Management, the Balance Sheet Advisory Group of Marine Midland Bank. She also founded the Financial Institutions Consulting Group at BDO Seidman. Ms. Bird has taught Financial Markets and Institutions at the University of California at Davis and MBA courses at Temple University. She has spoken at over 400 national and regional forums in banking and other industries. In addition to her contribution as a columnist for the American Banker, she contributes articles to other leading industry publications. She serves on the board of directors for MidFirst Bank in Oklahoma City, Oklahoma. She also has served on the Boards of Sterling Bank (2002-2011), Sun Bancorp, Inc. (2008-2009), First Indiana Bank (2002-2007) and AmTrust Bank (2008-2009). Ms. Bird received a BA in International Relations and an MA in International Relations and Psychology from Hebrew University in Jerusalem. She also received an MBA in Finance from American University and a Diploma in Corporate Strategic Planning from the University of Pennsylvanias Wharton School of Business. Ms. Bird brings a broad range of banking experience as well as strategic planning, financial and executive management experience to the Board of Directors.
Jennifer W. Davis, 45, has been a director of WSFS Financial Corporation since 2009. Her current term expires at the 2018 Annual Meeting of Stockholders. Ms. Davis is Senior Vice President for Administration and Finance for George Mason University. Her portfolio includes the areas of finance, human resources, accounting, treasury, facilities, public safety and auxiliary services. From 2008 to 2013, she was employed by the University of Delaware as Vice President for Finance and Administration. Previously, Ms. Davis served as Cabinet Secretary-Director of the Office of Management and Budget for the State of Delaware. She also served the State of Delaware as Budget Director, Deputy Secretary of Education and Associate Secretary of Education for policy and administrative services. Ms. Davis earned her undergraduate degree in political science and her Masters degree in policy analysis from Pennsylvania State University. Ms. Davis brings knowledge of human resource issues, as well as finance, risk management and executive leadership expertise to the Board of Directors.
Donald W. Delson, 64, has been a director of WSFS Financial Corporation since 2009. His current term expires at the 2018 Annual Meeting of Stockholders. He was a Senior Advisor for Keefe, Bruyette & Woods, Inc., a New York investment banking firm, from February 2009 to September 2011, when he retired. From 1997 to 2009, he was a Managing Director of the Investment Banking Division, Keefe, Bruyette & Woods, Inc. responsible for mergers and acquisitions and raising capital for banks and thrifts. His past employment also includes being a Managing Director, Investment Banking Division, for Alex. Brown & Sons, Inc. Prior to that, he was an attorney with Morgan Lewis & Bockius in Philadelphia, PA. He is President of the Board of Trustees for the Chester Charter School for the Arts, an ex officio director for The Chester Fund for Education and the Arts, co-publisher of the Swarthmorean, Inc. (a weekly newspaper) and member of the Finance Committee for Crozer Keystone Health System. In addition, he is a director of the Swarthmore Co-op (a food market) and serves as a director of Resource America, Inc. Mr. Delson received his A.B. from Brown University, his Masters in Business Administration from Harvard Business School and his Juris Doctor from the University of Virginia. Mr. Delson brings legal, financial, and executive leadership expertise to the Board of Directors.
Charles G. Cheleden, 72, has been a director of WSFS Financial Corporation since 1990, serving as Vice Chairman since 1992 and Lead Director since 2004. His current term expires at the 2017 Annual Meeting of Stockholders. He is an Attorney at Law with emphasis on estate planning, trusts, estate settlement and elder law. Mr. Cheleden is the former Chairman and President of Liberty Financial Group, Inc. (an ASE Co.) and Liberty Savings Bank, Philadelphia, PA, which were acquired, and former Chairman of Manor College, Jenkintown, PA and Nazareth Hospital, Philadelphia, PA. Mr. Cheleden earned his undergraduate degree from Villanova University and his Juris Doctor from Temple University Law School. Mr. Cheleden brings legal, risk management, financial and executive management expertise to the Board of Directors.
Francis B. Brake, Jr., 52, joined the WSFS Board of Directors in 2014. His current term expires at the 2017 Annual Meeting of Stockholders. Since 2007 he has been President, Chief Marketing Officer and Co-Founder of Epic Research, LLC, a privately-held marketing services firm with principal interests in multiple consumer-facing industries, driving marketing and product innovation in areas such as: travel loyalty, consumer electronics, student lending and small business marketing. From 2000 to 2007 he served as Managing Director and Chief Marketing Officer for Juniper Bank/Barclaycard US. Prior to that, he held various positions at First USA Bank from 1994 to 2000 including Executive Vice President, Marketing. Mr. Brake serves on the Board of Directors of Smarter Agent, LLC, a privately-held technology firm, The Chester Fund for Education and the Arts and is a past director of Barclays Bank Delaware. He received a Bachelor of Arts in Government from The College of William and Mary and a Master of Business Administration from The Darden Graduate School of Business, University of Virginia. Mr. Brake brings well-established expertise in marketing, entrepreneurship, innovation, product development, business partnerships and executive leadership to the Board of Directors.
Mark A. Turner, 52, has been a director of WSFS Financial Corporation since 2007. His current term expires at the 2017 Annual Meeting of Stockholders. He has been President and Chief Executive Officer, WSFS Financial Corporation and WSFS Bank since 2007. Mr. Turner was previously both the Chief Operating Officer and the Chief Financial Officer for WSFS. Prior to joining WSFS, his experience included working at CoreStates Bank and Meridian Bancorp. Mr. Turner started his career at the international professional services firm of KPMG, LLP where he earned his CPA. He received his Bachelors Degree in Accounting and Management from LaSalle University, his MBA from the Wharton School of the University of Pennsylvania and his Masters Degree in Executive Leadership from the University of Nebraska. Mr. Turner has also participated in other meaningful executive development programs, including at National Training Labs; Gallup University, including sessions at Toyota University; The Aspen Institute; the Buckley School for Public Speaking; The Center for Creative Leadership; and UC Berkeley. As a local business person, Mr. Turner believes being active in business, civic and community activities is integral to our business development and community goals. Among others, he currently is Chairman of the Board of the Delaware Business Roundtable, is on the Board of Directors of the Delaware State Chamber of Commerce, serves on the Board of Trustees for Delaware State University, is a member of the Boards of Directors of the Delaware Alliance for Non-Profit Advancement (DANA), Teach For America (TFA), Delaware, and First State Innovation (FSI), and a Trustee for Christiana Care Health System. Beginning in 2016, he also serves on the Federal Advisory Council for the Federal Reserve System, representing the 3rd District. He previously served as Chairman of the Board of the Delaware Bankers Association and March of Dimes, Delaware. Mr. Turner brings many years of banking, finance, accounting, auditing, risk management, strategy, administrative leadership and executive leadership expertise to the Board of Directors.
For information regarding Mark A. Turner, see directly above.
Peggy H. Eddens, 60, has been Executive Vice President, Chief Human Capital Officer for WSFS Bank since 2007. From 2003 to 2007 she was Senior Vice President for Human Resources and Development for NexTier Bank, Butler, PA. Prior to that, she held several positions with Mellon Bank and Citizens Bank. Mrs. Eddens received a Bachelor of Science in Business Administration from Robert Morris University and a Master of Science in Human Resource Management from LaRoche College.
Paul D. Geraghty, Sr., 62, has been Executive Vice President and Chief Wealth Officer of WSFS Financial Corporation and WSFS Bank since 2011. Prior to that, Mr. Geraghty was President and CEO of Harleysville National Corporation from 2007 to 2010 and Executive Vice President of National City Corporation in Cleveland from 2004 to 2007. Mr. Geraghty received a Bachelor of Science in Accounting from Villanova University.
Thomas Kearney, 68, has been Executive Vice President and Chief Risk Officer since 2012. Mr. Kearney is responsible for all risk oversight functions for WSFS Financial Corporation. Mr. Kearney joined the Company in 1998 and previously served as Senior Vice President and Corporate Auditor. Mr. Kearney received a Bachelor of Science in Business Administration (Finance and Accounting) from Drexel University. He holds the professional designations of Certified Bank Auditor (CBA) and Certified Financial Services Auditor (CFSA).
Rodger Levenson, 54, has been Executive Vice President and Chief Financial Officer since 2015. Mr. Levenson was previously Chief Commercial Banking Officer for WSFS Bank since 2006. From 2003 to 2006 Mr. Levenson was Senior Vice President and Manager at Citizens Bank and from 1986 to 2003 he held a number of positions at Wells Fargo (and predecessor organizations). Mr. Levenson received a Bachelor of Business Administration from Temple University and a Masters in Business Administration from Drexel University.
S. James Mazarakis, 58, has been Executive Vice President and Chief Technology Officer for WSFS Bank since 2010. From January 2009 to February 2010 Mr. Mazarakis was a principal in Techvizion, a consulting firm specializing in technology strategies. From that role, he served as our interim Chief Technology Officer from May 2009 to February 2010. From 2005 to 2008, he was Chief Technology Officer for T. Rowe Price Associates and from 2002 to 2005 he was Business Information Officer Shared Services for Capital One Financial Corporation. Mr. Mazarakis received a Bachelor of Science from Rensselaer Polytechnic Institute and a Master of Science in Management of Technology from Polytechnic Institute of New York University.
Richard M. Wright, 63, has been Executive Vice President and Chief Retail Banking Officer for WSFS Bank since 2006. From 2003 to 2006 Mr. Wright was Executive Vice President, Retail Banking and Marketing for DNB First in Downingtown, PA. Mr. Wright received a Bachelor of Arts in Marketing and Economics from California State University, Fullerton and a Masters in Business Administration from the University of Southern California.
Thomas Stevenson, 62, has served as President of the Companys Cash Connect Division since 2003. Mr. Stevenson joined WSFS in 1996 as Executive Vice President and Chief Technology Officer. Prior to joining WSFS, Mr. Stevenson was the Manager of Quality Assurance at Electronic Payment Services. Mr. Stevenson attended Wayne State University and the Banking and Financial Services program at the University of Michigans Graduate School of Business Administration.
This year, for the fourth year in a row, our Chairman of the Board Marvin N. (Skip) Schoenhals and Vice Chairman and Lead Director Charles G. Cheleden addressed stockholders through their letter A View from the Boardroom included in our annual report and available on our website www.wsfsbank.com (select Investor Relations on the menu found under About WSFS and click on Download Library on the right side of our web page, then click on 2015 Annual Report). This letter provides additional insight on corporate governance and key philosophies that guide the Board of Directors oversight of the Company.
Consistent with Nasdaq director independence listing standards, our Board of Directors carefully evaluates any circumstances, transactions or relationships that we believe could have an impact on whether or not the members of our Board of Directors are independent of us and our subsidiaries, including WSFS Bank, and are able to conduct their duties and responsibilities as directors without any personal interests that would interfere or conflict with those duties and responsibilities.
The Board of Directors has determined that other than Mr. Schoenhals and Mark A. Turner, all of our current directors are independent under Nasdaqs director independence listing standards. Mr. Schoenhals is not an independent director because he was one of our executives until November 2009 and was compensated as a consultant until November 2011. More information about the compensation of Mr. Schoenhals can be found on page 50. Mr. Turner is not considered independent because he is one of our executive officers.
The leadership of our Board of Directors is comprised of: (i) our Chairman, (ii) our Vice Chairman and Lead Director and (iii) our President and Chief Executive Officer. We believe this leadership structure is appropriate for us because it ensures independent oversight that draws upon significant experience and institutional knowledge regarding our business, while ensuring the Board makes informed decisions on operational matters.
Marvin N. Schoenhals has been our Chairman of the Board of Directors since 1992. He continues in this role because of his substantial institutional knowledge, leadership qualities, business acumen and standing in the community. Until his retirement in 2009, Mr. Schoenhals was also an executive and full-time Associate (the term we use for our employees).
The responsibilities of the Chairman include:
· Chair of the Board of Directors;
· Recommending committee memberships;
· Assessing effectiveness of Board committees;
· Participating as a member of the Executive Committee and ex-officio non-voting member (as rules dictate) of selected other Board committees;
· Developing new business;
· Community relations/representation;
· Providing advice and counsel to the CEO and Executive Management; and
· Being available, as requested, for consultation and communication with major stockholders.
Charles G. Cheleden has been our Vice Chairman since 1992 and our Lead Director since 2004. He has been designated by our Board of Directors to lead the Board of Directors in fulfilling its duties effectively, efficiently and independent of management.
The responsibilities of the Lead Director include:
· Providing input to the CEO and Chair on preparation of agendas for Board of Directors and committee meetings;
· Ensuring independent directors have adequate opportunity to meet to discuss issues without management present and provide feedback to management;
· Chairing Board of Directors meetings when the Chairman is not in attendance;
· Exercising authority to call meetings of the independent directors; and
· Being available, as requested, for consultation and communication with major stockholders.
Our Chairman and Lead Director are jointly responsible for certain important Board functions as follows:
· Ensuring the Board of Directors works as a cohesive team;
· Ensuring the Board of Directors has adequate resources, especially by way of full, timely and relevant information to support its decision-making;
· Ensuring a process is in place to monitor legislation and best practices which relate to the responsibilities of the Board of Directors;
· Ensuring that new members of the Board of Directors receive adequate orientation about their roles and responsibilities, our organization, business and industry;
· Meeting with members of the Board of Directors to determine their continued commitment to the Board and interest in continuing to serve on the Board;
· Ensuring members of the Board of Directors receive continuing education both from within our organization and from outside sources;
· Encouraging the Board of Directors to refer new business opportunities to the Bank;
· Helping to resolve conflicts;
· Reviewing Board minutes for accuracy;
· Conducting or overseeing Board self-evaluations;
· Regularly assessing the effectiveness of the Board and its committees;
· Ensuring delegated committee functions are carried out and reported to the Board, e.g. CEO performance assessment, CEO and Board succession planning and strategic planning;
· Ensuring some rotation on Board committee assignments, especially Chairs; and
· Ensuring that appropriate committee members have input to the proxy statement relating to their committees.
Mark A. Turner has been our President and Chief Executive Officer since 2007.
The responsibilities of the President and CEO include:
· Having general power over the strategic planning, management and oversight of the administration and operation of the Companys business, and general supervisory power and authority over its policies and affairs;
· Ensuring all orders and resolutions of the Board of Directors and any committee are carried into effect;
· With the Chairman and Lead Director, helping to set Board of Directors agendas and providing input for committee meeting agendas.
Our independent directors meet regularly in executive session. At each meeting of the Board of Directors and its committees in 2015, directors had the opportunity to meet without management present. Typically, the Lead Director (or if absent, another independent director) presides over executive sessions. At least twice each year, these executive sessions include only independent directors.
We believe it is important to have a strong, independent Board of Directors that is accountable to our stockholders. The Corporate Governance and Nominating Committee has the responsibility for identifying qualified individuals as candidates for membership on the Board of Directors. The Board of Directors believes directors should be knowledgeable about the business activities and market areas in which we and our subsidiaries engage. A candidates breadth of knowledge and experience should also enable that person to make a meaningful contribution to the governance of a complex, multi-billion dollar financial institution.
The Corporate Governance and Nominating Committee solicits recommendations from our officers and directors, as well as considers and evaluates any candidates recommended by our stockholders. There is no difference in the manner in which the Corporate Governance and Nominating Committee evaluates persons recommended by officers or directors from those recommended by stockholders. Typically, it has not been our practice to pay fees to any third party to identify potential nominees; however, we do utilize a consultant to assist with evaluating, interviewing and performing reference checks on potential nominees to the Board of Directors. Our consultant, Kaplan & Associates, Inc., receives compensation in the range of $5,000-$30,000 for this service depending on the parameters of the research and the number of nominees to be included. In addition, each year the Board of Directors conducts a robust self-evaluation process to help identify individual and group performance and needs.
In the second half of the last decade we undertook a thoughtful, generational change in the executive leadership of the Bank. At about the same time, the Board of Directors began a similar process of addressing the changing needs and advancing experience of the Board of Directors with the desire to establish a Board of Directors for the future.
After a thorough review of the correlation between the size of a board of directors and its effectiveness, the Board of Directors concluded that smaller boards (while still of ample size and diversity) are generally more effective. The Board of Directors also concluded that a smaller board of directors fits with one of our key strategic advantages, namely, faster, and more entrepreneurial decision-making. Finally, a smaller board of directors also sets the organizational tone for a lower internal cost structure in an industry that is currently challenged by slow economic growth, growing cost burdens, and significant pricing competition.
Since 2011, when the Board of Directors began its board renewal, we have decreased the overall size of the Board of Directors from 15 to ten, while three individuals, with an average age of 49, have joined the Board of Directors. Of the ten Board members, two have tenures over 20 years; one has between 10 and 20 years; four have between 5 and 10 years; and three have newly joined within the last 5 years. It is the intention of the Board of Directors to continue this succession planning process so that we build full and diverse expertise and talents on the Board of Directors for the continued success of WSFS. We believe that one of the most important responsibilities of a well-functioning board of directors is to ensure that it actively plans for and accomplishes its own succession.
The Board of Directors takes a broad and thoughtful view of diversity. The Board strives to achieve diversity among its members that mirrors our current marketplace and our desired markets, and since we have become a larger organization with broader reach, this naturally includes better reflecting US society as a whole. Over the last generation, we have intentionally made strides to include on our Board a representation of different genders, generations, geographies, races, faiths, socio-economic upbringing, career experiences, individual talents, and our own Board tenures. This intentional reflection of our constituencies and refreshment of our Board is necessarily an ongoing process of a growing and changing organization. Our Corporate Governance and Nominating Committee implements this philosophy as part of its nomination process and assesses its implementation during both the nomination process and as part of the Committees self-assessment process.
In addition to directives laid out through the various committee charters, the Board of Directors has adopted a set of principles and guidelines which guide the actions and direction of the Board of Directors. A full copy of the Board Principles and Guidelines are available on the Companys website www.wsfsbank.com (select Investor Relations on the menu found under About WSFS and click on Corporate Governance).
The Board of Directors is committed to being a high-performance board and to providing oversight and accountability for management. The Board of Directors recognizes it must exercise its fiduciary duty to act in the best interest of WSFS and all of its stockholders while also recognizing its responsibilities to the Companys regulators.
Annually, the Board of Directors conducts a self-evaluation to assess the performance of the Board of Directors, evaluating the members of the Board of Directors collectively and the quality of individuals contributions. In most years, this is a self-directed process; however, in 2015 the Board engaged a third-party to enhance the process by providing an outside perspective on the performance of the Board of Directors.
The Board of Directors is responsible for working with management to establish the strategic priorities of the Company. Within the current strategic priorities the Board of Directors must establish the appropriate tone at the top regarding the Companys core principles:
· Operating with the highest ethical values;
· Focusing on performance over the long term;
· Maintaining a culture that encourages actively engaged Associates;
· The truth of the brand, We Stand For Service; and
· Earning the right to remain independent.
To be considered in the Corporate Governance and Nominating Committees selection of nominees for the Board of Directors for the 2017 Annual Meeting of Stockholders, recommendations or other proposals requested by stockholders must be received by us in writing no earlier than December 5, 2016 and no later than January 4, 2017.
As required by our Bylaws, a recommendation must provide the following information for each person the stockholder proposes to recommend as a nominee to the Board: (1) the name and age of such person; (2) any information required to be disclosed in solicitations of proxies with respect to nominees for election of directors by Section 14 of the Exchange Act and related rules and regulations (including the written consent of the person proposed as a director nominee); (3) a description of all direct and indirect compensation, economic interests and other material monetary arrangements during the past three years, and any other material relationships, between or among such stockholder and each recommended nominee, including all information that would be required to be disclosed pursuant to Item 404 of Regulation S-K if the stockholder making the nomination were the registrant for purposes of such rule and the recommended nominee were a director or executive officer of such registrant; (4) a description of all relationships between the proposed nominee and the recommending stockholder, and of any agreements, arrangements and understandings between the recommending stockholder and the recommended nominee regarding the nomination; and (5) a description of all relationships between the recommended nominee and any of the Companys competitors, customers, suppliers, labor unions and any other persons with special interests regarding the Company.
In addition, our Bylaws require such a recommendation to provide specified information with respect to the stockholder recommending a nominee, as well as the beneficial owner, if any, on whose behalf the recommendation for nomination is made. Such information includes, among other things: (1) the name, address and telephone number of such stockholder, and the name, address and telephone number of such beneficial owner; (2)(A) the class or series and number of shares of the Company owned of record by such stockholder and beneficially by such beneficial owner and the time period such shares have been held, (B) any derivative instruments with respect to Company shares owned by such stockholder or beneficial owner, (C) any proxy or similar arrangement pursuant to which such stockholder or beneficial owner has a right to vote any shares of any security of the Company or has granted any such right to any person or persons, (D) any short interest in any security of the Company, and (E) any other information relating to such stockholder and beneficial owner that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for the election of directors in a contested election pursuant to Section 14 of the Exchange Act and related rules and regulations. Such notice must also contain certain representations by the stockholder and beneficial owner, as well as certain other information as provided in the Bylaws.
For additional details regarding the requirements with respect to such notices, please see our Amended and Restated Bylaws which were filed as Exhibit 3.1 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on November 21, 2014.
Our Bylaws require each of our directors to be a stockholder and own a minimum amount of our common stock as determined from time to time in a guideline approved by the Board of Directors. This guideline is designed to encourage our directors to increase and maintain their equity stake in us, and thereby to more closely link their interests with those of our other stockholders.
The Board of Directors has established a guideline that each director own 12,000 shares of vested common stock. Members of the Board of Directors should accumulate the minimum ownership amount within five years after assuming his or her position. In addition, the Board of Directors established a guideline for Executive Management such that the CEO should own 105,000 shares of vested common stock and all Executive Vice Presidents own 30,000 shares of vested common stock, each to be accumulated within five years of assuming his or her executive position.
The Corporate Governance and Nominating Committee of the Board of Directors, as well as the entire Board of Directors annually reviews, evaluates and provides governance comments and advice for our CEO and Executive Management talent and leadership development and succession planning program.
During the year ended December 31, 2015, the Board of Directors held six meetings. All of the directors attended more than 75% of the total of: (a) meetings of the Board of Directors and (b) meetings of the committees on which they served during the year. All directors are required to attend the Annual Meeting except for absences due to causes beyond their reasonable control. All directors were present at last years annual meeting.
In the ordinary course of its business, WSFS Bank makes loans to our directors, officers and Associates. These loans are subject to limitations and restrictions under federal banking laws and regulations and are made on substantially the same terms, including interest rate and collateral, as those prevailing at the time for comparable loans with persons not related to WSFS Bank. These loans do not involve more than the normal risk of collectability or present other unfavorable features to WSFS Bank.
The Board of Directors is responsible for the oversight of the management of our risk exposures to help ensure that the Company is operating within the Board approved risk appetites. The Board of Directors is actively involved in the Strategic Planning process and oversight of our Enterprise Risk Management (ERM) function. Comprehensive discussions regarding our appetite for risk and our risk exposures are held with the Board of Directors and Executive Management. As a result of this involvement, the Board of Directors has concluded that the risk implicit in our strategic plan is appropriate and that expected risks are commensurate with the expected rewards. The Board of Directors oversees and reviews managements implementation of systems to manage these risks. The risk management system is designed to inform the Board of Directors of material risks and create an appropriate enterprise-wide culture of risk awareness.
The ERM function assists management by establishing a unified and strategic approach to identifying and managing current and future risks. ERM helps monitor, measure, manage and report these risks while continually evaluating our risk/reward dynamic. The ERM activities include:
· Conduct an Enterprise Risk Assessment Summary (RAS) in accordance with the Office of the Comptroller of the Currencys RAS matrix and industry best practices;
· Establish Board-approved risk appetite statements and key risk indicators by major risk area;
· Monitor risk metrics (Key Risk Indicators or KRIs) and report to Executive Management and the Board of Directors three times per year;
· Update the RAS three times per year;
· Ensure that stress testing and contingency planning on critical business risks are performed;
· Key involvement with significant new products, services or activities, as well as conduct resolution and lessons learned on major risk events, as needed; and
· Continual learning on emerging risks and risk management best practices.
Each committee of the Board of Directors has a role in risk oversight as described in greater detail below in the description of each committees role and responsibilities.
The Audit Committee is responsible for, among other things, the following:
The Chair of the Audit Committee provides reports to the Board of Directors on these items, as needed. In addition, senior managers from each of our risk areas provide reports, as needed, to the Board of Directors. These areas include: Investments, Accounting, Auditing, Credit, Human Capital Management, Operations and Technology, Trust and Wealth Management and Retail Operations.
The Personnel and Compensation Committee oversees the executive compensation programs, and reviews and approves an annual report on executive compensation and Associate incentive compensation plans prepared by our risk officers. The purpose of this review is to: (1) determine that executive officer compensation plans do not encourage those executive officers to take actions that pose an unnecessary and excessive risk that would threaten our value, and (2) determine that Associate incentive compensation plans do not unnecessarily expose us to risks or encourage the manipulation of reported earnings to enhance the compensation of Associates. The Personnel and Compensation Committee is also responsible for overseeing managements implementation of compensation programs that comply with applicable regulatory guidance and requirements. During 2015, the Personnel and Compensation Committee reviewed these reports prepared by our risk officers and determined that our compensation plans and practices do not create risks that are reasonably likely to have a material adverse effect on us.
There are seven primary committees of the Board of Directors: the Executive Committee, the Corporate Governance and Nominating Committee, the Audit Committee, the Trust Audit Committee, the Personnel and Compensation Committee, the Trust Committee and the Corporate Development Committee.
The following chart shows the current committee membership and the number of meetings each committee held in 2015.
(1) The Trust Committee and Trust Audit Committee are committees of the Bank.
(2) Mr. Schoenhals and Mr. Turner are ex-officio, non-voting members of the Governance and Nominating Committee, Audit Committee, Personnel and Compensation Committee, and Trust Audit Committee.
(3) Mr. Morgan also serves as a member of the Banks Southern Delaware Advisory Board.
The Executive Committee meets as frequently as is necessary and exercises the powers of the Board of Directors between its meetings. Its primary activities have been to review loan applications needing the approval of the Board of Directors, to review summary credit quality reports, and to review and approve for submission to the Board of Directors for its approval the majority of all policies.
Another important role of the Executive Committee is to review and approve transactions with insiders. Under our written policy, the Executive Committee reviews and approves all insider loans or lending relationships. Any loan granted to an insider in excess of $500,000 requires pre-approval by the Board of Directors, with the interested party (if a director) abstaining from participating directly or indirectly in the voting. All loans granted to insiders, regardless of the amount, are reported to the Board of Directors.
Each member of the Corporate Governance and Nominating Committee is independent as defined in the listing standards of the Nasdaq Stock Market. A copy of the Corporate Governance and Nominating Committee Charter as well as our other corporate governance documents can be found on the investor relations page of our website www.wsfsbank.com (select Investor Relations on the menu found under About WSFS and click on Corporate Governance).
The Corporate Governance and Nominating Committees role and responsibilities include the following:
· Periodically review and reassess the adequacy of corporate governance of the Company, review and consider best governance practices, to incorporate into its Principles of Corporate Governance, and recommend any proposed changes to the Board of Directors;
· Seek, identify and interview individuals qualified to become board members for recommendation to the Board of Directors;
· Recommend competencies, skills and experiences desired for new directors and define the job description and expectations for directors, subject to approval of the Board of Directors;
· Authority to retain and terminate any search firm to be used to identify director candidates. The Corporate Governance and Nominating Committee also has authority to obtain advice and assistance from internal or external legal, accounting or other advisors;
· Oversee the proper training and orientation of new directors and continuing education of all directors, as appropriate;
· Recommend to the Board of Directors a slate of director nominees to be presented at the next annual meeting of stockholders;
· Recommend to the Board of Directors, director nominees to fill vacancies on the Board;
· Oversee the election of committee chairs;
· In conjunction with committee chairs, recommend to the Board of Directors director assignments to Board committees;
· Review any proposed changes to Board-related compensation and, upon Corporate Governance and Nominating Committee approval, propose any potential changes to the Board of Directors for its review and approval;
· Annually review its own performance and annually propose a methodology for assessing the performance of other committees and the entire Board of Directors. Such assessments shall be discussed with the full Board of Directors annually;
· Make regular reports to the Board of Directors; and
· Review and reassess the adequacy of the Committee Charter and recommend any proposed changes to the Board of Directors for approval.
Each member of the Audit Committee is independent as defined in the listing standards of the Nasdaq Stock Market and also meets the independence criteria set forth in Rule 10A-3 under the Securities Exchange Act of 1934, as amended. Jennifer W. Davis meets the definition of financial expert for the Audit Committee. For bank regulatory purposes, Anat Bird is also considered a banking and financial expert. A copy of the Audit Committee Charter can be found on the investor relations page of our website www.wsfsbank.com (select Investor Relations on the menu found under About WSFS and click on Corporate Governance).
The Audit Committees rules and responsibilities include the following:
· Oversees the audit program and reviews our consolidated financial statements, including major issues regarding accounting and auditing principles and practices as well as the adequacy of internal controls that could significantly affect our financial statements;
· Reviews the examination reports from federal regulatory agencies as well as reports from the internal auditors and from the independent registered public accounting firm;
· Meets quarterly with the head of the Internal Loan Review Department to review assessments of loan risk ratings and credit administration, as well as the head of the Internal Audit Department, the head of the Compliance Department, and representatives of the independent registered public accounting firm, with and without representatives of management present, to review accounting and auditing matters, and to review financial statements prior to their public release;
· Provides oversight to our regulatory compliance activities and our compliance officer who reports directly to the executive in charge of risk;
· Reviews reports of significant litigation matters;
· Reviews the annual risk assessment and other reports (such as Suspicious Activity Reports, Associate Hotline Reports) issued regarding our risk management activities;
· Meets annually to review our internal control risk analysis and associated internal audit plan;
· Reviews the process for the selection of the Companys lead external audit partner pursuant to the rotation policy (five years) that involves a meeting between the Chair of the Audit Committee and the candidate for the role, as well as discussion with the full Audit Committee and with members of management; and
· Approves the selection of the independent registered public accounting firm and recommends their appointment to the full Board of Directors.
The members of our Audit Committee also serve as members of the Banks Trust Audit Committee which provides oversight of the financial accounting and internal control aspects of our Trust and Wealth management initiatives. The Trust Audit Committee met four times during 2015.
It is the policy of the Audit Committee to approve all audit and non-audit services prior to the engagement of the independent registered public accounting firm to perform any service, subject to the following operating procedures: Each year in connection with the execution of the audit engagement letter, the Audit Committee pre-approves a retainer for additional services that are either audit or audit-related in nature. These additional services may not exceed 5% of the annual audit fee amount. For any additional audit or audit-related services to be provided by the independent registered public accounting firm that were not pre-approved in accordance with this procedure, and for which the fees are expected to not exceed 10% of the annual audit fee, the Chair of the Audit Committee can provide pre-approval of the services. For any additional services where the fees are expected to exceed 10% of the annual audit fee, the pre-approval of the entire Audit Committee is required. In addition, a retainer for tax consulting services is pre-approved by the Audit Committee. Any tax consulting services exceeding the retainer amount are approved in accordance with the above procedure. All fees paid to the independent registered public accounting firm are reported to the Audit Committee in a timely manner.
In connection with the audit of the 2015 financial statements, we entered into engagement letters with KPMG LLP that set the terms by which KPMG performed services for us.
All of the services listed below for 2015 were approved by the Audit Committee prior to the service being rendered as described in the operating procedures above. The Audit Committee has determined that the non-audit services performed during 2015 were compatible with maintaining the independent registered public accounting firms independence.
Audit Fees. The aggregate fees earned by KPMG LLP for professional services rendered for the audit of our consolidated financial statements included in our annual report on Form 10-K and for the review of the consolidated financial statements included in our quarterly reports on Form 10-Q for the fiscal years ended December 31, 2015 and 2014 were $1,276,014 and $997,000 respectively.
Audit Related Fees. The aggregate fees earned by KPMG LLP for audits of the subsidiaries financial statements, due diligence activities on proposed transactions, and research and consultation on financial accounting and reporting matters for the years ended December 31, 2015 and 2014 were $27,000 and $25,000, respectively.
Tax Fees. The aggregate fees earned by KPMG LLP for professional services rendered for tax compliance, tax advice and tax planning for the years ended December 31, 2015 and 2014 were $69,917 and $66,475, respectively.
All Other Fees. There were no fees earned by KPMG LLP for professional services rendered other than those listed under the captions Audit Fees, Audit Related Fees, and Tax Fees for the years ended December 31, 2015 and 2014.
The Audit Committee has prepared the following report for inclusion in this proxy statement:
As part of its ongoing activities, the Audit Committee has:
· Reviewed and discussed with management the Companys audited consolidated financial statements for the fiscal year ended December 31, 2015;
· Discussed with the Companys independent registered public accounting firm the matters required to be discussed under relevant guidance of the Public Company Accounting Oversight Board (PCAOB), including Auditing Standard No.16 Communications with Audit Committees; and
· Received the written disclosures and the letter from the independent registered public accounting firm required by the applicable requirements of the PCAOB regarding the independent registered public accounting firms communications with the Audit Committee concerning independence, and has discussed with the independent registered public accounting firm their independence.
Based on the review and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements be included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015.
The Audit Committee comprised of Anat Bird, Francis B. Brake, Jr., Jennifer W. Davis, David G. Turner and Calvert A. Morgan, Jr., has provided this report.
Our Board of Directors has determined that the members of our Personnel and Compensation Committee are independent as defined by the listing standards of the Nasdaq Stock Market. Also, the members of the Personnel and Compensation Committee each qualify as independent under Rule 10C-1 under the Exchange Act.
A copy of the Personnel and Compensation Committee Charter can be found on the investor relations page of our website www.wsfsbank.com (select Investor Relations on the menu found under About WSFS and click on Corporate Governance).
Under its charter, the Personnel and Compensation Committee has the authority to:
· Approve performance evaluations, salary adjustments, bonuses, stock options, perquisites for any officer other than the CEO and President, and deliberate on and recommend CEO compensation to the Board of Directors. In evaluating and determining CEO compensation, the Personnel and Compensation Committee shall consider the results of the most recent stockholder advisory vote on executive compensation (Say on Pay Vote) required by Section 14A of the Exchange Act. The CEO and President may not be present during voting or deliberations by the Personnel and Compensation Committee on his or her compensation:
· Approve incentive plan design, including criteria, formula computation and calculation of award amounts, such as cash payouts, restricted stock and stock option awards for all officers other than the CEO and President. In reviewing making recommendations regarding or approving incentive compensation plans and equity-based plans, including whether to adopt, amend or terminate any such plans, the Personnel and Compensation Committee shall consider the results of the most recent advisory Say on Pay Vote;
· Review and discuss with management, the Companys Compensation and Discussion and Analysis (CD&A) section and the related executive compensation information to be included in the Companys annual proxy statement or annual report on Form 10-K. Determine whether or not to recommend that the CD&A be included in the Companys annual report on Form 10-K and proxy statement, and produce the Personnel and Compensation Committee report on executive officer compensation which is required to be included in the Companys annual proxy statement in compliance with rules and regulations promulgated by the SEC;
· Approve the adoption, administration and expense of certain Associate benefit plans and programs including 401(k) amendments and technical corrections;
· Retain or obtain advice of compensation consultants, independent legal counsel or other advisors (collectively, compensation advisors) to assist in matters regarding executive and Board-related compensation; and
· Be responsible for the appointment, compensation and oversight of any compensation advisor retained by the Personnel and Compensation Committee. Reasonable compensation (as determined by the Personnel and Compensation Committee) to its compensation advisors will be provided by the Company.
The Personnel and Compensation Committee approves and must recommend to the Board of Directors for final approval:
· Policies and charter, including but not limited to Equal Employment Opportunity and Affirmative Action, Severance and Change of Control, the Management Compensation Policy, the Business (Luxury) Expenditures Policy, and the Personnel and Compensation Charter;
· Board of Directors and management stock ownership and guidelines;
· Compensation Discussion and Analysis (CD&A), compensation risk assessment and Compensation Committee report portions of the proxy statement;
· Any compensation action for the CEO and President (such as salary increases, bonuses, stock grants and perquisites); and
· Any compensation action (such as fees and stock awards) for the Chairman of the Board of Directors.
In addition, the Personnel and Compensation Committee reviews and considers the results of stockholders advisory votes on executive compensation.
No member of our Personnel and Compensation Committee is, or formerly was, an officer or Associate of ours. During 2015, none of our executive officers served on the Personnel and Compensation Committee (or equivalent), or the Board of Directors, of another entity whose executive officer or officers served on our Personnel and Compensation Committee or Board of Directors.
The Trust Committee is a bank committee that is comprised of members of the Board of Directors of the Bank. It provides oversight of our trust and investment activities provided by Christiana Trust, the trust division of the Bank. A copy of the Trust Committee Charter can be found on the investor relations page of our website www.wsfsbank.com (select Investor Relations on the menu found under About WSFS and click on Corporate Governance).
The Trust Committee does the following:
· Oversees Christiana Trust in providing trust administration and investment management services;
· Adopts appropriate policies and procedures to be observed in offering such services;
· Enforces sound risk management practices calculated to minimize risk of loss to WSFS Bank and its customers; and
· Reports to the Board of Directors on the activities of Christiana Trust in the conduct of its business.
The Corporate Development Committee assists the Board of Directors and management in reviewing and assessing potential acquisitions, strategic investments, joint ventures and divestitures. It meets as frequently as necessary. A copy of the Corporate Development Committee Charter can be found on the investor relations page of our website www.wsfsbank.com (select Investor Relations on the menu found under About WSFS and click on Corporate Governance).
As part of its ongoing activities, the Corporate Development Committee does the following:
· Reviews and provides guidance to management and the Board of Directors with respect to transaction strategies;
· Provides advice to management in connection with the identification and evaluation of transactions, and the engagement of counsel and advisors;
· Authorizes management to execute binding and non-binding offers, proposals, letters of intent, definitive agreements and similar offers and documents with respect to proposed transactions. Any such authorization shall be reported to the entire Board of Directors of the Company at no later than the next full Board meeting;
· Provides advice regarding managements due diligence and integration efforts with respect to proposed transactions and review summary due diligence results;
· Causes to be conducted, appropriate periodic evaluations of our recently completed transactions, if and as deemed necessary;
· Provides a report of its meetings and activities to the Board of Directors on a regular basis, and reports regularly to the Board on such issues as it may determine are appropriate; and
· Reviews, and changes as deemed necessary, its charter, from time-to-time, but no less than once a year;
Several years ago, our Board of Directors reviewed the subject of a classified Board of Directors as the result of request from a stockholder. Following considerable discussion by our Governance Committee and full Board of Directors concerning the concept of a declassified Board of Directors and related stockholder rights issues, the Board of Directors determined it is in the best interests of our stockholders to maintain a classified Board of Directors.
With the appropriate policies in place, we believe that a staggered board creates alignment between our Corporate Governance policies and the stated philosophy of managing for the long term benefit of all stockholders.
While we believe that the overarching evaluation of a board and management should be the performance of the Company, we also recognize that our classified board structure can create the appearance of entrenchment on the part of a board and management team. As a result, in the early 1990s, we eliminated our poison pill policy. In addition, in 2007, we adopted the policy that in an uncontested election, directors who receive votes in favor of their election which is less than a majority of total votes cast should promptly offer to resign from the Board of Directors. Another indication of our serious interest regarding this subject is that none of our named executive officers is covered by a formal employment agreement. We have a severance policy that covers some of those executives, but it is relatively conservative in the amounts that potentially would be paid in the event of a change of control. Finally, we do have cumulative voting of shares in the election of directors. In our case, this means that approximately 25% of the ownership can definitely have their voice(s) heard directly at the board table after a director election.
The success of our long term outlook is manifest in that we have generally outperformed our peers over the last generation. We make this claim based upon the total stockholder return performance discussed in the Compensation Discussion and Analysis section of this proxy statement indicating we have outperformed peer metrics and broader indices in three, five, seven and ten year horizons. We are proud of our performance record and believe this record reflects the attention that management and the Board of Directors brings to the subject of creating value for its stockholders. Finally, if there is a need for a stockholder initiated change to the Board of Directors, there is an opportunity to change approximately one-third of the Board of Directors at each election. If those new directors for some reason cannot make the case clear to the old board, then at the next election, stockholders can change another third of the Board of Directors. That would give a majority of the Board of Directors to new representation. We think this kind of change, in much less than a two-year period, appropriately balances stockholders interests in the ability to send a clear signal of a need for change with the need to understand the continuity of the Company.
The Board of Directors endeavors to provide ample access and outreach to stockholders through a number of forums. Stockholders are provided regular updates through press releases and other filings with the Securities and Exchange Commission. The Board of Directors also solicits dialogue and responds to questions from stockholders at the annual meeting. Questions can be asked in person or submitted through email at email@example.com. The Chairman of the Board of Directors and Vice Chairman and Lead Director provide their perspective on selected topics of interest to our stockholders through their View from the Boardroom letter in our annual report. Additionally, the Chairman of the Board periodically attends investor conferences and other roadshows to solicit feedback on corporate governance from institutional stockholders.
KPMG LLP has served as our independent registered public accounting firm since 1994. The Board of Directors has appointed KPMG LLP to continue to be our independent registered public accounting firm for the current fiscal year ending December 31, 2016. The Audit Committee evaluated the selection of KPMG LLP and gave a recommendation to the Board of Directors in favor of KPMG LLP. We are asking the stockholders to ratify the decision of the Board of Directors to appoint KPMG LLP for the 2016 fiscal year.
Representatives of KPMG LLP are expected to be present at the Annual Meeting to respond to appropriate questions and will have the opportunity to make a statement if they desire to do so.
To be ratified, the appointment of KPMG LLP as our independent registered public accounting firm must receive a majority of the votes cast on that proposal. Abstentions and broker non-votes are treated as present for quorum purposes only and therefore have no effect on the outcome of the proposal.
The Board of Directors recommends a vote FOR the ratification of the appointment of KPMG LLP as the independent registered public accounting firm for the fiscal year ending December 31, 2016.
The following Compensation Discussion and Analysis, contains estimates, predictions, opinions, projections and other statements that may be interpreted as forward-looking statements as that phrase is defined in the Private Securities Litigation Reform Act of 1995. Such statements include, without limitation, references to our financial goals, managements plans and objectives for future operations, financial and business trends, business prospects, and managements outlook or expectations for earnings, revenues, expenses, capital levels, liquidity levels, asset quality or other future financial or business performance, strategies or expectations. Such forward-looking statements are based on various assumptions (some of which may be beyond our control) and are subject to risks and uncertainties (which change over time) and other factors which could cause actual results to differ materially from those currently anticipated.
Such risks and uncertainties include, but are not limited to, those related to the economic environment, particularly in the market areas in which we operate, including an increase in unemployment levels; our level of non-performing assets; the volatility of the financial and securities markets, including changes with respect to the market value of financial assets; changes in market interest rates which may increase funding costs and reduce earning asset yields thus reducing margin; increases in benchmark rates would also increase debt service requirements for customers whose terms include a variable interest rate, which may negatively impact the ability of borrowers to pay as contractually obligated; changes in government regulation affecting financial institutions, including the Dodd-Frank Wall Street Reform and Consumer Protection Act and the rules and regulations being issued in accordance with this statute and potential expenses and elevated capital levels associated therewith; possible additional loan losses and impairment of the collectability of loans; possible changes in trade, monetary and fiscal policies, laws and regulations and other activities of governments, agencies, and similar organizations, may have an adverse effect on business; possible rules and regulations issued by the Consumer Financial Protection Bureau or other regulators which might adversely impact our business model or products and services; possible stresses in the real estate markets, including possible continued deterioration in property values that affect the collateral value underlying our real estate loans; our ability to expand into new markets, develop competitive new products and services in a timely manner, and to maintain profit margins in the face of competitive pressures; possible changes in consumer and business spending and saving habits could affect our ability to increase assets and to attract deposits; our ability to effectively manage credit risk, interest rate risk market risk, operational risk, legal risk, liquidity risk, reputational risk, and regulatory and compliance risk; the effects of increased competition from both banks and non-banks; the effects of geopolitical instability and risks such as terrorist attacks; the effects of weather and natural disasters such as floods, droughts, wind, tornados and hurricanes, and the effects of man-made disasters; possible changes in the speed of loan prepayments by our customers and loan origination or sales volumes; possible acceleration of prepayments of mortgage-backed securities due to low interest rates, and the related acceleration of premium amortization on prepayments on mortgage-backed securities due to low interest rates, and the related acceleration of premium amortization on those securities; and the costs associated with resolving any problem loans, litigation and other risks and uncertainties, discussed in documents filed by us with the Securities and Exchange Commission from time to time.
Forward looking statements are as of the date they are made, and we do not undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by or on behalf of us.
Our Personnel and Compensation Committee (the Committee) provides Board of Director oversight and guidance for executive compensation and related benefits. To assist with its responsibilities, the Committee regularly receives reports and recommendations from its independent consultant, ChaseCompGroup, LLC. Our executive compensation program is designed to reflect a pay-for-performance culture and to align the interests of senior management with our stockholders and our long-term success.
Our general compensation philosophy is as follows:
· We strive to be competitive in base pay, taking into consideration salaries of similar positions at comparable banks in our peer group, allowing for exceptions in exceptional circumstances;
· We structure our incentive compensation system to provide rewards for performance that reflects our strategic plan and balances executives focus on both annual goals and our long-term success, without creating undue risk; and
· Our total compensation for expected performance levels is targeted at levels similar to those of our peer group of comparable banks. For exceptional performance, we provide total compensation reflecting that exceptional performance.
Our executive compensation practices support good governance and mitigate excessive risk-taking. Among other things, they:
· Require significant share ownership for senior executives;
· Establish multiple performance metrics under the Management Incentive Program (MIP) which discourage excessive risk-taking by executives by removing incentives that focus on single performance goals which may be a detriment to the Company;
· Balance executives short-term and long-term compensation to discourage short-term risk taking at the expense of long-term results;
· Impose a double-trigger for time based equity awards which do not vest solely upon a change in control, but also require a qualifying termination following a change in control;
· Engage an independent compensation consultant who performs no other work for the Company other than as an advisor on senior leadership compensation matters;
· Include a claw-back policy permitting the Personnel and Compensation Committee to recoup certain incentives paid resulting from fraudulent activity, inaccurate performance criteria or reporting, or financial restatements.
· Have no employment contracts with executives which contain special severance payments such as golden parachutes or multi-year guaranteed bonuses;
· Have no special executive retirement programs;
· Have no gross-up payments to cover personal income or excise taxes that pertain to executive or severance benefits;
· Have no excessive perquisites for executives;
· Allow no hedging, pledging collars, short sales or other derivative transactions involving our Common Stock by our executives;
· Permit no cash buyout, re-pricing or backdating of stock options or restricted shares; and
· Prescribe a minimum vesting period for awards of options and restricted shares of a minimum of four years.
As our goal is to be a high-performing company, we have designed our compensation package toward attracting and retaining quality individuals, and motivating and rewarding them for strong performance.
Our 2015 compensation practices were consistent with our long-term focus which, over the past several years, has produced a positive return to our stockholders and exceeded peer averages. The graph and table which follow show the cumulative total return on our Common Stock over the last five years compared with the cumulative total return of the Dow Jones Total Market Index and the Nasdaq Bank Index over the same period as obtained from Bloomberg L.P. Cumulative total return on our Common Stock or the indices equals the total increase in value since December 31, 2010, assuming reinvestment of all dividends paid into the Common Stock or the index, respectively. The graph and table were prepared assuming $100 was invested on December 31, 2010 in our Common Stock and in each of the indices. There can be no assurance that our future stock performance will be the same or similar to the historical stock performance shown in the graph below. We neither make nor endorse any predictions as to stock performance.
CUMULATIVE TOTAL SHAREHOLDER RETURN
COMPARED WITH PERFORMANCE OF SELECTED INDEXES
December 31, 2010 through December 31, 2015
Consistent with our long-term focus, we set aggressive, measurable goals. We are accountable for achieving those goals as demonstrated in our competitive pay-for-performance philosophy. Our executive incentive compensation plans, which include our MIP, covering our Named Executive Officers (NEOs): (i) focus on performance measures that are important to stockholders, (ii) do not promote inappropriate risk, (iii) use fundamental indicators of our performance, growth and health, and (iv) take into consideration industry peer comparisons. These performance measures are: Return on Average Assets (ROA), Return on Average Tangible Common Equity (ROTCE) and Earnings per Share (EPS) growth. ROTCE is computed by dividing net earnings allocable to common stockholders by the average tangible common stockholders equity. It is a non-GAAP financial measure and may not be comparable to similar non-GAAP financial measures used by other companies. In addition, where appropriate, some individual goals for our executives in our MIP are tied to asset quality. While asset quality is not a formal metric, we believe it is inherently measured in these goals and in our internal policies and governance and in our regulatory exams. The Personnel and Compensation Committee reserves the right to recover (claw-back) any incentives that were paid due to fraudulent activity, inaccurate performance criteria or reporting, or financial restatements.
Based, in part, on input from the Committees compensation consultant, we believe our compensation plans incorporate industry-recognized best practices in compensation and are consistent with our corporate strategy and long-term goals. They include competitive pay-for-performance standards that are scaled based on increased ROA performance and which promote retention. In one plan, Executive Management is increasingly rewarded with restricted stock or options for superior absolute performance, as indicated by reaching annual ROA, ROTCE and EPS targets. Vesting over at least four years means these awards do not inure to the benefit of the NEO immediately, but over an extended period of time. Likewise, the cost of such awards is spread over an extended multi-year period.
Common Stock Split
In March 2015, the Board of Directors adopted an amendment to the Companys Certificate of Incorporation, to increase the number of shares of common stock the Company is authorized to issue from 20,000,000, par value $0.01 to 65,000,000, par value $0.01. This amendment to the Companys Certificate of Incorporation was approved by the Companys stockholders at the 2015 Annual Meeting held on April 30, 2015.
In May 2015, the Company effected a three-for-one stock split in the form of a stock dividend to stockholders of record as of May 4, 2015. All share and per share information has been retroactively adjusted to reflect the stock split.
In 2015 our region continued to see indications of economic stability and recovery. The Personnel and Compensation Committee considered the state of the economy, the competitive environment in our marketplace, the demand for seasoned talent and the retention of our executive leadership team when deciding 2015 executive compensation levels.
We grew both organically and through acquisition in 2015. The bulk of our organic growth in 2015 continued to come from market share gains rather than economic growth. Customers of our larger in-market competitors continue to see the benefits that WSFS has to offer with local decision making and creating stellar service experiences. In the Delaware market, WSFS ranked third in traditional deposit bank market share and continued to gain momentum; among those ranked in the top four (for market share), WSFS was the only bank to show a gain as the other three showed a loss of deposits (based on FDIC data reported as of June 30, 2015).
As the regional marketplace rebounds economically, we continue to have success in strengthening our reputation as the oldest and largest independent community bank and trust company in the Delaware Valley. We were named by Wilmingtons The News Journal as a top-five Top Workplace for the tenth year in a row. Independent survey results indicate our customers continue to score us favorably among the top quintile of the Gallup global database. For the fifth year in a row, we were named the #1 Bank in Delaware as voted by the Readers Choice Survey also administered by The News Journal. We also participated in a survey administered by Philly.com, the results of which earned us Top Workplace recognition for the second consecutive year for that market as well. In 2015, we received several awards and various recognition including, but not limited to the following:
· WSFS Bank ranked no. 1 in Trust Revenue Growth in the state of Delaware by Bank Director magazine. Bank Director also ranked WSFS no. 26 nationally in the same category.
· WSFS Financial Corporation earns the highest ranking among peers in the state of Delaware and #34 in the entire nation according to Bank Director magazines 2015 Bank Performance Scorecard.
· WSFS Mobile Cash was chosen by Networld, the publisher of ATM Marketplace and Mobile Payments Today, as the winner of the Most Innovative ATM Technology Award for 2015.
· WSFS Mobile Cash video was awarded the Gold MarCom award in the Animation Category.
Also WSFS was the cover story for the March 2016 American Banker. The title of the article was A Community Bankers Guide to Surviving the Next 184 Years and featured an in-depth interview with Mark Turner, CEO and President.
In 2015, for the fifth year in a row, we showed significant improvement compared to the prior year. We reported GAAP net income of $53.5 million and an ROA of 1.05%, and, solely for the purpose of our incentive plans, we made a quality of earnings adjustment to our incentive plan metrics which excluded corporate development costs and thus increased our incentive plan ROA to 1.16%, our ROTCE to 13.10% and our EPS growth over 2014 to 14.61%. For a more detailed discussion of our quality of earnings adjustment, see Quality of Earnings Review on page 35.
Compensation considerations for 2015
The components of 2015 executive compensation were base salary, cash incentive and bonus, long-term incentive compensation and benefits. The Personnel and Compensation Committee and management discussed the ongoing risks to our organization with regard to motivating and retaining our executive team. In 2015, the Personnel and Compensation Committee and the Board of Directors approved a MIP modifier as a supplemental feature of the existing 2015 MIP plan, under which the Personnel and Compensation Committee had the authority to make upward or downward adjustments to incentive awards. If the Companys performance in the three Company-wide metrics had a weighted average at or above the peer group 75th percentile, the Personnel and Compensation Committee would increase the executives incentive awards by an additional ten percent of salary. If performance fell below the peer group 50th percentile, the Personnel and Compensation Committee had the latitude to reduce awards by ten percent of salary. Further, under the Companys Management Compensation Policy and separate from the MIP Plan formula, the Personnel and Compensation Committee is given discretion to adjust incentive awards for Management upwards or downwards by 25%. The Committee will reassess the use of the modifier for 2016 to ensure the modifier positions performance-based compensation at an appropriate level commensurate with Company and peer performance.
In addition, although the Company typically conducts an in-depth executive compensation study every three years, the last one being completed in December 2013, the Committee decided to engage the ChaseCompGroup to accelerate the review as of December 2015 given the rebounding economy, significant Company growth, and the competition for experienced leadership talent. As part of this review, management and ChaseCompGroup developed an updated peer group of 21 publicly traded banks in the Mid-Atlantic region with $3-10 billion in assets. In addition, ChaseCompGroup developed an alternate peer group of 24 public banks to evaluate compensation at higher-performing banks (75th percentile) with greater noninterest income. Four key elements of profitability were measured: ROA, ROTC, EPS growth and total stockholder return. The study showed that the Company has sustainable above-median peer group performance and that total compensation for executives at the Company in 2014 was slightly below the market median.
Our 2015 results reflected significantly improved absolute performance reflected in the Companys fourth quarter core and sustainable ROA of 1.24% that exceeded our high-performing goal of a core and sustainable 1.20% ROA in the fourth quarter of 2015. Our executives 2015 compensation reflects these results, and considering the total mix of compensation, we believe 2015 executive compensation is: (1) consistent with our pre-established pay-for-performance plans, (2) reasonable in light of payment levels for companies in our Compensation Peer Group (CPG) and (3) consistent with our 2015 results, both in absolute terms, and in comparison to prior years results and incentives.
During 2015, the Personal and Compensation Committee also reviewed an analysis conducted by our Chief Risk Officer and concluded that our compensation program is balanced and does not encourage imprudent risk taking.
We also evaluate whether our compensation programs reflect the interests of our stockholders through their non-binding vote, which we take into careful consideration for future executive compensation decisions. In 2015, by their advisory (non-binding) vote, 98.7% of voting stockholders approved the compensation of, and compensation arrangement for our executives.
The table below shows our NEOs for 2015.
(1) Mr. Fowles last day of employment with the Company was March 31, 2015
The Personnel and Compensation Committee serves the full Board of Directors by providing oversight and guidance with respect to personnel and compensation policies and practices. Also, the Personnel and Compensation Committee provides oversight to management so that we create and maintain competitive programs which attract, develop, motivate, reward and retain Associates committed to superior performance and the highest professional and ethical standards. The Personnel and Compensation Committee ensures that personnel and compensation policies support our strategic mission and comply with all applicable legal and regulatory requirements. It also reviews and considers the results of stockholders advisory votes on executive compensation. See page 19 for a complete description of the role of the Personnel and Compensation Committee.
Our CEO and our Chief Human Capital Officer provide recommendations for the Personnel and Compensation Committees consideration and manage our compensation programs and policies. Their activities include:
· Assisting the Personnel and Compensation Committee and its independent compensation consultant as requested, with executive compensation reviews, incentive program designs, risk assessments of compensation programs and preparation for meetings;
· Based upon data provided by the Personnel and Compensation Committee, reviewing compensation programs for competitiveness and aligning compensation programs with our strategic goals;
· Recommending changes to compensation programs to the Personnel and Compensation Committee, where appropriate; and
· Recommending pay levels and incentive plan payments for NEOs, except for the CEO.
The CEO excuses himself from all Personnel and Compensation Committee and Board of Director discussions of his compensation level. As a practical matter, he may discuss the formula by which his and other executives incentive compensation is structured, but does not participate in decisions regarding his awards or changes to his own compensation.
Our Board of Directors, Personnel and Compensation Committee and management value the opinions of our stockholders, including their advisory votes regarding the compensation paid to our named executive officers, which are often referred to as Say-on-Pay votes. At our 2011 Annual Meeting, a majority of our stockholders voted, on an advisory basis, in favor of holding Say-on-Pay votes every three years and revisiting this frequency every six years. Our Board of Directors and Personnel and Compensation Committee considered these results, among other factors, and determined that we will follow our stockholders preferred frequency for conducting Say-on-Pay votes. The next required vote on the frequency of advisory Say-on-Pay votes will occur no later than our 2017 annual meeting of stockholders.
Our last advisory Say-on-Pay vote was conducted in 2015 and was approved by 98.7% of the votes cast. Pursuant to our say-on-pay practice, the next advisory Say-on-Pay vote will occur at our 2018 annual meeting of stockholders. Although the advisory Say-on-Pay vote is non-binding, our Personnel and Compensation Committee has considered the outcome of previous votes when making compensation decisions for named executive officers. Our Personnel and Compensation Committee believes that these votes evidence our stockholders support for our approach to executive compensation and took this support into account in deciding not to alter the overall compensation plan and program for 2015. Our Personnel and Compensation Committee will continue to consider the outcome of the Say-on-Pay votes when making future compensation decisions for our named executive officers.
In 2015, the Personnel and Compensation Committee worked with ChaseCompGroup LLC, an independent executive compensation consulting firm specializing in the financial services industry. The Personnel and Compensation Committee engaged them to review our executive compensation program, calculate MIP awards, and test opportunity levels under our short and long term incentive plans. ChaseCompGroup reports directly to the Personnel and Compensation Committee and does not provide any non-compensation related services or products to the Committee nor does it provide any services to us. The Personnel and Compensation Committee has worked with the same consultant, Diana Chase, since 2007 under previous firm names. Over these years the consultant has provided the Personnel and Compensation Committee with advice on market competitive pay for executives and directors. In addition to executive benchmark analyses, ChaseCompGroup has assisted us with the executive annual and long-term incentive programs, compliance and industry best practices. The aggregate amount paid to our independent compensation consultant represented .014% of our total revenue for 2015. In retaining its consultant, the Personnel and Compensation Committee considered the factors set forth in Rule 10-C-1 under the Exchange Act, and determined that there were no conflicts of interest that would preclude the Personnel and Compensation Committees use of the consultant. For example, no member of the Personnel and Compensation Committee or any executive officer has a personal relationship with Diana Chase or any member of the ChaseCompGroup, or a business relationship other than in connection with the services described in this proxy statement. Neither Diana Chase nor the ChaseCompGroup owns WSFS stock.
Approximately every three years, the Personnel and Compensation Committee engages an independent consultant to conduct a formal review of our executive compensation program. As discussed above, a comprehensive review was conducted in late 2015 by the ChaseCompGroup. Prior to the 2015 review, ChaseCompGroup last performed a review in late 2013. The Personnel and Compensation Committee requested this review to assess competitive compensation levels for its executives and the Board of Directors.
When benchmarking compensation the Personnel and Compensation Committee uses a Compensation Peer Group (CPG) that is representative of those companies with whom we compete for talent. By using this peer group, it provides a targeted assessment of the compensation practices for publicly traded peer companies, as we cannot readily obtain compensation data from private companies. The CPG allows us to compare our compensation to other banks that have a similar business model, size and geographic locations and helps us align base compensation, incentives and equity awards with our compensation philosophy.
The banks in our 2015 CPG were updated from those used in the 2014 CPG, although 86% were the same banks. Three new banks (*asterisked below) were added in 2015 to substitute for previous peers that were acquired or outgrew our asset size. The organizations comprising the CPG provided a data set of peers comparable to our size, business model and location and reflected the following:
· Located within MD, NJ, NY, PA, and VA;
· Total assets as of December 31, 2015, were between $3.4 billion and $9.6 billion;
· Median total assets were approximately $6.1 billion, within 9% of our own asset size and consistent with our proforma asset size upon our acquisition of Penn Liberty Bank scheduled for August 2016; and
· Like WSFS, several metropolitan-based and coastal banks.
Listed below are the companies included in our CPG and their total assets as of December 31, 2015.
WSFS had a strong year in 2015 and performed very well relative to our CPG as shown in the table above. Performance is one factor in selecting our CPG as well as market and asset size. While we set our goals for our incentive plans based on our internal budget, we note that our budget and target goals are generally set above the median of our peers on several criteria. In fact, during 2015 we performed at the 63rd percentile of this peer group based on ROA, before adjusting ROA upward for our quality of earnings adjustment. We discuss our performance against our 2015 incentive plan further under the section entitled Measuring Actual Performance and Calculating Incentive Payments on page 37.
In the following section, we describe the elements of our NEO compensation. It includes a discussion of how we determine the amounts for each element, why each element is included in our NEO compensation program and the actual payments resulting from our pay-for-performance incentive programs.
Why We Provide Base Salaries
We offer base salaries to provide a stable source of income to our NEOs. Base salaries also serve as a base amount for the determination of our pay-for-performance programs and serve as a significant tool for recruiting, motivation and retention.
How We Determine Base Salary Amounts
We establish base salaries and assess market competitiveness by comparing our executives qualifications, experience and responsibilities as well as their individual performance and value, to similar positions at peer banks. Additional factors that play a role in setting the final base salary amount for NEOs are as follows:
· Special circumstances related to staffing needs and market situations;
· Levels of compensation provided from other compensation components; and
· Additional responsibilities taken on by the Executives
When determining base salary amounts for a newly hired NEO, we incorporate the following additional factors:
· The prior incumbents salary;
· The successful candidates salary history;
· Any market-based data provided by the external recruiter retained for the search; and
· The salary requirements of other candidates being considered for the position who have a similar level of experience.
Consistent with national market data provided by ChaseCompGroup and in line with our overall company-wide merit pool, four of our NEOs received a 3% merit increase in base salary for 2016. Our Chief Executive Officer, however, received a 5% merit increase which was designed to put him at the 50th percentile of his peer group, which is consistent with our policy to generally pay base salaries at the 50th percentile of the Companys peer group and takes into consideration his experience and expertise. The Board approved NEO base salary increases as indicated below.
Our executives are eligible for an annual award under our MIP. We designed the MIP to reward executives for excellence in performance on key financial metrics determined by the Personnel and Compensation Committee, as well as each executives performance and contribution in his or her area of responsibility. The Personnel and Compensation Committee also retains the discretion to provide special recognition bonuses outside the MIP to take into consideration special performance events or other performance-based circumstances. In 2015, the Personnel and Compensation Committee exercised this discretion and approved recognition bonuses to a few executives, as more fully described in our discussion of the Summary Compensation Table on page 41.
Why We Provide Annual Incentives
Our compensation program includes an annual performance-based award. The objective is to compensate executives based on achievement of Company-wide and individual goals related to building franchise and stockholder value. The award is intended to reward current performance which is also in line with our long-term goals and to motivate the executive to achieve high-performing results.
How We Determine Annual Incentive Amounts
The structure of our annual incentive plan includes: setting Company-wide goals; setting individual performance goals; weighting the goals; providing incentive opportunities to NEOs; and measuring actual performance and calculating incentive awards.
· Setting Company performance goals
Each year the Personnel and Compensation Committee reviews our metrics and establishes Company-wide targets on the chosen metrics. In selecting the metrics, the Personnel and Compensation Committee considers our short-term and long-term business strategy, the current business environment and the interests of stockholders. The following metrics of our performance were chosen for 2015 and, with the exception of a change in 2013 from Return on Equity to Return on Tangible Common Equity, we remained consistent with those selected in the previous several years. They were:
1. Return on assets (ROA)
2. Return on tangible common equity (ROTCE)
3. Earnings per share (EPS) growth
It is a common practice for organizations to review and adjust performance metrics at the onset of a new performance period to ensure they continue to reflect our business strategy and market best practices. This review process helps ensure that company-wide goals used for incentive plans support the Companys overall strategy, accommodate any shifts in strategy from year-to-year or during market changes and learn from past experiences and best practices. Management, working with the ChaseCompGroup, believed it was appropriate and in the best interests of stockholders to maintain the structure of the plan, while modifying the absolute levels of performance for each of these metrics. As discussed in Compensation considerations for 2015 at page 28, in 2015, the Personnel and Compensation Committee and the Board of Directors approved a MIP modifier as a supplemental feature of the existing 2015 MIP plan. If the Companys performance in the three Company-wide metrics had a weighted average at or above the peer group 75th percentile, the Personnel and Compensation Committee had the authority to increase the executives incentive awards by an additional ten percent of salary. If performance fell below the peer group 50th percentile, the Committee had the latitude to reduce awards by ten percent of salary. The Personnel and Compensation Committee also have the ultimate discretion to modify awards downward if some other threshold level is not achieved. Examples of potential events or factors that the Personnel and Compensation Committee may take into account in reducing or eliminating awards include, but are not limited to: downgrading of the Banks CAMELS rating, imposition of regulatory enforcement actions, or excessive non-performing assets.
In addition, as in the past, the Personnel and Compensation Committee reserves the right to recover (claw-back) any incentives that were paid due to fraudulent activity, inaccurate performance criteria or reporting, or financial restatements.
2016 MIP Performance Goals
As with 2015, ROA, ROTCE and EPS Growth, with equal weightings, were established as the metrics to be used in 2016. We believe that other essential goals, such as growth, efficiency and asset quality are adequately represented in these goals and the individual performance goals of each NEO.
Company-wide performance goals for 2016 are shown below. These goals were set after taking into consideration a number of factors, including our 2016 budget, strategic plan and industry performance of high-performing banks. These goals are set at levels consistent with our strategic plan goal of improving our rank as a high-performing bank.
The threshold levels for 2016 are set above expected peer medians and the targets for 2016 are well above expected peer medians. After a thorough review and discussion, the Personnel and Compensation Committee approved the MIP Plan for 2016. However, in 2016 the Personnel and Compensation Committee agreed that the MIP modifier should be revised to allow adjustments for sustained performance above the 75th percentile. This will allow the Personnel and Compensation Committee to adjust awards to ensure our performance based awards are competitive and commensurate with our performance that positions us at upper quartile relative to peers.
NEOs are subject to a claw-back policy under which they would be obligated to forfeit and repay any bonus, award or incentive compensation paid under a benefit plan to the extent that such bonus, award or incentive compensation was due to fraudulent activity or was based on statements of earnings, revenues, gains, the performance metric criteria of a benefit plan or other criteria that were later found to be materially inaccurate by the Personnel and Compensation Committee.
Quality of Earnings Review
We conduct a quality of earnings review which evaluates any unusual, one-time items greater than $2 million, after tax, which impact cash, equity and earnings, and considers them for adjustments for the purposes of calculating earnings for the MIP. Any quality of earnings evaluations are made with a strong bias towards ensuring that management is accountable for reported results. For 2015, our review concluded that $5.5 million ($7.6 million pre-tax equivalent) in corporate development costs, largely related to the acquisition of Alliance Bancorp, Inc., should be excluded from the calculation of earnings for purposes of our MIP. As a result, solely for the purpose of computing MIP awards, all our metrics were adjusted upward. The adjusted ROA was 1.16%, the adjusted ROTCE was 13.1% and the adjusted growth in EPS over 2014 was 14.61%.
In 2014 and 2013 we made significant downward adjustments to MIP earnings. For 2014, we excluded a $6.7 million tax benefit ($10.3 million pre-tax equivalent) related to our reverse mortgage assets and $4.0 million (pre-tax) of corporate development costs from our MIP earnings. For 2013, we excluded from our MIP earnings, a $2.5 million after-tax gain resulting from a reverse mortgage consolidation.
· Setting individual performance goals
At the beginning of the year, each NEO who reports to the CEO develops individual performance goals for the year consistent with the budget and strategic plan, as well as for personal professional growth. These goals are submitted to the CEO for review, amendment and approval. Through an iterative, collaborative effort, these NEOs and the CEO agree to the final individual performance goals. Individual performance goals are tailored to each NEOs function and particular area of responsibility, and may cover a wide variety of performance, including, by way of example, financial performance, customer engagement, operational milestones and other matters.
The MIP measures the performance of the CEO solely on Company-wide goals. However, the Board of Directors also establishes individual performance expectations for the CEO in addition to those associated with the MIP. These performance expectations are established by the Personnel and Compensation Committee after a review, discussion and approval of recommendations submitted by the CEO. The Personnel and Compensation Committee assesses the performance of the NEO as compared to these performance expectations when annual salary adjustments are being considered.
· Weighting the goals
The Personnel and Compensation Committee believes the more senior the rank of the executive, the more responsibility that executive has for Company-wide performance. As a result, for the more senior executives, Company-wide performance measurement criteria play a larger role in determining the amount of incentive awards. Individual and business unit performance goals play a larger role in determining the amount of the incentive award for less senior ranked executives. For 2015, the weighting percentage for the CEO was 100% for Company-wide performance and 0% for individual performance. For 2015, the weighting percentage for each of the EVPs was 75% for Company-wide performance and 25% for individual performance, reflecting his or her role in strategic matters. The weightings for the CEO and EVPs will not change for 2016.
MIP awards are calculated using these percentage allocations. For example, in 2015, the MIP award for Mr. Turner, our CEO, was based entirely on Company-wide financial performance. Although he has individual performance goals, it is the Company-wide metrics that determine his annual incentive (MIP) award. The Personnel and Compensation Committee has discretion to determine the amounts of final award payouts to all our NEOs, with the exception of the CEO, which is at the recommendation of the Personnel and Compensation Committee and at the discretion of the full Board of Directors.
· Providing incentive opportunities to NEOs
The table below shows NEO annual non-equity (cash) incentive opportunities for 2015 under the MIP as a percentage of base salary. When setting MIP goals, the Personnel and Compensation Committee took into consideration the opportunity levels for similar positions within the CPG companies along with our philosophy of linking pay to performance. If we meet our Company-wide performance criteria and/or the NEOs achieve their individual performance criteria, we would provide awards as shown in the table. Levels for Minimum, Target and Stretch for all NEOs in 2015 were unchanged from 2014 levels. The Personnel and Compensation Committee believes the greater the alignment of performance weightings with Company-wide goals, and the more objectivity that exists in plan administration, the more likely it will be that incentive payments will be commensurate with an overall improvement in our performance. Our recent market analysis confirmed that the target earning opportunities, shown below, remain competitive.
Payment of annual incentive awards under the MIP occurs no later than March 15th of the year following the performance period. This timing usually provides ample opportunity for the finalization of year-end performance results as well as maintaining compliance with the short-term deferral exception under Section 409A requirements of the Internal Revenue Code.
The following is a summary of our Management Incentive Plan (MIP) design:
· A proportional approach (interpolation) will be used to calculate incentive payouts for the performance results that fall between threshold, target and stretch levels;
· The Company will conduct a quality of earnings review to consider adjustments from GAAP reported earnings to MIP earnings;
· Award opportunities will be based on specified percentages of base salary for Threshold, Target and Stretch achievement by NEOs; and
· Other elements of the plan design, as described above.
The table below shows our 2015 actual results for the three performance goals used for incentive awards under the 2015 MIP. Our score is calculated by determining the average of scoring for our performance against ROA, ROTCE and earnings per share growth (for 2015, adjusted upward for quality of earnings adjustments) versus pre-established performance targets. A numerical value is interpolated based on a score of 1 for threshold, 2 for target and 3 for stretch. This score is applied to the payout percentages, and a payout is calculated. The individual performance score is calculated similarly.
As the table above shows, for the purposes of the MIP, our Return on Assets was 1.16% in 2015, our Return on Tangible Common Equity was 13.1%, and our growth of Earnings Per Share was 14.6%. Combined, these three metrics resulted in a score 57/100ths of the way between Target and Maximum or Stretch, or at the 73rd percentile of our $2-10 billion performance peer group (PPG) and the 81st percentile of our CPG. The 73rd PPG percentile was below the 75th percentile required to trigger the MIP modifier; therefore, the MIP modifier was not triggered in determining 2015 incentive awards.
Our equity-based compensation plan is the primary method by which we provide long-term incentives to our executives. Pursuant to our 2013 Plan, we offer equity awards as a performance incentive to encourage ownership of our Common Stock by our executives and to further align the interests of management with those of our stockholders. Equity awards also provide value by attracting, motivating and retaining executives and provide appropriate and meaningful rewards to NEOs for our long-term success. Beginning in 2013, and for a period of five years, our CEO will not receive equity awards under the 2013 Plan as further discussed in CEO Equity Incentive Compensation below.
Annual Performance-Based Awards
Our plan was revised effective for grants made in 2015 reflecting our performance goals, which are the same as those detailed in the 2016 MIP Performance Goals section, above. The plan, structured as part of our MIP plan, is designed so that NEOs will have the potential to earn 25%-35%-45% of their salary in equity awards at threshold, target and stretch performance levels for the same three bank-wide goals: ROAA, ROATCE and EPS Growth. Additionally, under this revised plan, one-half of the equity awards will be stock options with four year vesting and a seven year life, and one-half of the equity awards will be restricted stock units with four year vesting. Further, to improve pay-for-performance, NEOs, other than the CEO, will have the opportunity to earn performance-based equity awards. In addition, supplemental equity awards, which in the past have compensated NEOs for, among other things, contribution limitations to qualified retirement plans imposed by the IRS (in lieu of awards), have been eliminated and added to the basic equity plan and awards have been revised to reward for attainment of our performance levels.
In 2015 for 2014 performance, the long-term incentive plan provided EVP-level NEOs with option and restricted stock unit awards at 36.2% of base salary. Option awards are valued using the Black-Scholes valuation model. The total value of the equity awards granted to our NEOs in 2015 for 2014 performance under this plan was $349,323. These awards have a four year vesting schedule. As mentioned previously, beginning in 2013, our CEO will not receive equity awards under the 2013 plan for a period of five years.
In 2013, the Board of Directors recommended, a change to the equity incentive compensation of our CEO by executing a Non-Plan Stock Option Agreement. This plan was overwhelmingly approved by 97.9% of voting stockholders, with 88.5% of eligible stockholders voting on this proposal. Under this agreement, Mr. Turner received a grant of 750,000 stock options with an exercise price equal to 20% above the then market value of our common stock. The stock options issued under the Non-Plan Stock Option Agreement have an exercise price of $16.51 and expire on February 28, 2020. Vesting occurs over a five year period with 40% vesting after the second year and 20% vesting in each of the following three years.
The agreement also provided that Mr. Turner would no longer be eligible for any new equity awards for a five-year period beginning in 2013 (2013 through 2017 fiscal years), including eligibility for significant awards under our existing long-term incentive plan, our Multi Year High-Performance Awards and our supplemental equity award plan designed to make up for our lack of deferred compensation plans through 2014, which are in use at many other peer institutions. If Mr. Turner had continued to be eligible for those plans, we estimate that the value of those awards for the first three year of his ineligibility would have been worth approximately $1,759,000.
The Personnel and Compensation Committee awards equity grants, generally at the February meeting of the Personnel and Compensation Committee. Grants may be recommended during other times of the year for special circumstances, such as the hiring of a new executive, but are subject to Committee approval. The grant date is established when the Personnel and Compensation Committee or other authorized body approves the grant and all key terms have been established.
Our NEOs also participate in an Associate Service Bonus Plan which is offered to all of our Associates. The two primary components of this plan are our ROA and our Customer Engagement Survey score (CE11) administered by the Gallup Organization. Specific payouts are determined by management based on reaching specific ROA and CE11 scores. The following criteria assist in objective accountability and discourage unnecessary and excessive risk-taking or manipulation of earnings:
· An ROA factor is one component of the calculation of incentive payouts. If our ROA is less than 1%, there is no score given for that component of the Associate Service Bonus Plan calculation;
· The CE11 factor is the other component of the calculation of the incentive payout and is determined based upon the results of an independently administered customer engagement survey. This factor is not impacted by our earnings; and
· The incentive payouts are capped at $1,500 per Associate.
The Company paid a $1,000 award per Associate in 2016 for 2015 performance.
401(k) Employer Contribution
We provide a 401(k) program that allows Associates to contribute a portion of their pre-tax earnings towards retirement savings. We offer a Company match to all Associates enrolled in our 401(k) plan as a component of total compensation and to encourage them to participate in the Plan. We match the first 5% of an Associates contribution dollar-for-dollar up to IRS limitations.
Director and Executive Non-Qualified Deferred Compensation Plan
Effective January 2015, a non-qualified deferred compensation plan was offered for our executives and Board of Directors. For executives, this program allows for base compensation to be deferred as well as for deferment of cash awards. For Board Directors, this program allows for retainer and meeting fees to be deferred. It offers pre-tax, voluntary contributions, tax deferred earnings, investment choices and flexible payment options. The plan is solely funded by the participant and there is no matching contribution made by the Company. The plan was reviewed and approved by our Personnel and Compensation Committee and our Board of Directors. The following table provides information relating to deferrals of compensation by our named executive officers under our non-qualified deferred compensation plan.
(1)Amounts in this column are included in the Summary Compensation Table.
(2)Amounts in this column are not included in the Summary Compensation Table.
We provide a Development Allowance to our NEOs which provides up to $27,500 (increased in 2016 from $25,000 since 2011) per year for the CEO and up to $10,000 per year for Executive Vice Presidents.
Allowable expenses under the Development Allowance Policy include items that would improve the executives networking and business development prospects, personal health, time management and general well-being in a way that can reasonably be expected to result in improvements to their productivity as one of our executives. CEO expenditures must be approved by the Chairman of the Board of Directors or the Chair of the Personnel and Compensation Committee. Expenditures by Executive Vice Presidents must be approved by our CEO.
Separate from the above allowance, executives who are recruited from outside our market may be reimbursed for costs associated with their transitional relocation.
Because of our corporate philosophy which emphasizes commitment based on performance, we do not have employment agreements for our NEOs. We have a formal severance policy which provides payments to NEOs if their employment is terminated without cause or under certain conditions following a change of control. Further details concerning Employment Agreements are provided under Potential Payments upon Termination or Change in Control on page 46.
Section 162(m) of the Internal Revenue Code of 1986, as amended (Code Section 162(m)) provides that certain compensation paid in excess of $1 million to the Chief Executive Officer, Chief Financial Officer, or any of the other three most highly compensated executive officers of a public company will not be deductible for federal income tax purposes unless such compensation is paid in accordance with one of the listed exceptions described in Code Section 162(m). However, certain forms of performance-based compensation are excluded from the $1 million deduction limitation, if certain requirements are met. The Personnel and Compensation Committee generally seeks, where feasible and consistent with its overall compensation philosophy and objectives, to structure incentive compensation granted to our executive officers in a manner that is intended to minimize or eliminate the impact of the Section 162 (m) deduction limitation. The deductibility of some types of compensation payments, however, can depend upon numerous factors, including plan design, the timing of the vesting of compensation awards or the exercise of previously granted rights. In addition, tax deductibility is not the sole factor used by the Personnel and Compensation Committee in setting compensation. Corporate objectives may not necessarily align with the requirements for full deductibility under Code Section 162(m). Accordingly, the Personnel and Compensation Committee may grant awards such as time-based restricted stock awards and/or enter into compensation arrangements under which payments are not deductible under Code Section 162(m) if the Personnel and Compensation Committee determines that such non-deductible arrangements are otherwise in the best interests of our stockholders. Also interpretations of, and changes in, applicable tax laws and regulations, as well as other factors beyond our control, also can affect deductibility of certain compensation. As a result of these various factors, and in order that the Personnel and Compensation Committee retains flexibility in awarding compensation, there may be situations when compensation paid will not be tax deductible in accordance with Code Section 162(m).
Sections 280G and 4999 of the Internal Revenue Code of 1986, as amended (Code Sections 280G and 4999) limit our ability to take a tax deduction for certain compensation that could be paid to NEOs resulting from a change in control transaction affecting us. In the event we pay any excess parachute payments as it is defined under Code Section 280G, we would have compensation payments that are not tax deductible and executives would have excise taxes due on the receipt of such excess parachute payments. The Personnel and Compensation Committee considers the adverse tax liabilities imposed by Code Sections 280G and 4999, as well as other competitive factors when it structures certain compensation to our NEOs.
The CEO, the Chief Human Capital Officer, the Chief Risk Officer, and the Personnel and Compensation Committee, with advice from its consultants, have reviewed all compensation components for each NEO, including base salary, incentive compensation, and all of our incentive compensation plans. They have determined that the compensation packages awarded to our NEOs, and others, are consistent with our goals to provide compensation that is competitive with our peers, that drives financial performance without undue risk, and aligns the interests of our NEOs, and others, with those of our stockholders.
Accordingly, we believe our executive and management compensation plans are reasonable, pay-for-performance-based, competitive, not excessive, and do not encourage our executives or any of our Associates to take actions that pose an unnecessary or excessive risk that would threaten the value of the institution and do not unnecessarily expose the institution to risks or encourage the manipulation of reported earnings to enhance the compensation of management.
The following Summary Compensation Table shows the compensation of our Chief Executive Officer, each person who served as our Chief Financial Officer in 2015, and our next three highest paid executive officers in 2015, 2014 and 2013. The increases in cash based awards (i.e., Bonus and Non-equity Incentive Plan Compensation) in 2015 compared to 2014 reflect our significantly improved absolute performance as well as performance in excess of peers. In summary, for 2015, our NEOs received the following components of their compensation:
· A 3% increase in base salary for all EVP-level NEOs, consistent with market data and our company-wide merit pool, and a 5% market increase in base salary for our Chief Wealth Officer to keep his salary aligned with the median of our peer group and take into consideration his experience and expertise.
· Increased cash bonus awards paid in 2016 for 2015 performance reflecting extraordinary performance and assumption of interim leadership roles. The extraordinary performance in 2015 reflects among other things, the following: (i) exceeding an aggressive 2015 budget and ambitious 3-year strategic plan goals, especially ROA; (ii) healthy organic growth in loans and deposits; (iii) strong revenue growth, including margin and fee income improvement; (iv) successful acquisition signings, integration and growth; (v) new innovative products commercialized; and (vi) continued recognition for Top Workplace and #1 Bank in Delaware.
· Increased non-equity incentives paid in 2016 for 2015 performance when compared to incentives paid in 2015 for 2014 performance resulting from strong Company performance. ROA, adjusted for quality of earnings, was 1.16% in 2015; Return on Tangible Common Equity was 13.1%; and our growth of Earnings Per Share was 14.6%. All three of these metrics improved when compared to 2014 and combined these metrics resulted in a score 57/100ths of the way between Target and Maximum or Stretch in 2015 compared to 12/1000ths in 2014.
· Restricted stock awards and stock option awards granted in 2015 for 2014 performance that reflect: (i) a decrease in restricted stock awards reflecting the Multi-Year High Performance Awards granted in 2014 and the elimination of restricted awards granted in lieu of other deferred compensation plans in 2014; (ii) a decrease in option awards reflecting Special Retention and Motivation awards made in 2013, and (iii) elimination of equity awards for our CEO, pursuant to the terms of the Non-Plan award approved by stockholders in 2013.
· Similar levels of other compensation from the prior year, reflecting no substantive change in our plans and policies regarding our development allowance and 401(k) match.
The following discussions and table summarize the compensation of each NEO for the years ended December 31, 2015, 2014 and 2013.
Cash Amounts Paid in 2016 for 2015 Performance
· Included in the disclosure of 2015 Non-Equity Incentive Plan Compensation are cash awards to NEOs in connection with our MIP Plan, based on 2015 performance, as follows: Mr. Turner, $579,050; Mr. Geraghty, $199,876; Mr. Levenson, $236,986; Mr. Mazarakis, $189,048; and Mr. Wright, $221,517. In addition, each NEO received an all-Associate award of $1,000.
· Included in the disclosure of 2015 Bonuses are cash awards of $100,000 to Mr. Turner in recognition of his leading the Company to the extraordinary performance in 2015 as described on page 41 and his extraordinary performance relative to achieving the Companys Path to High Performance goal; $30,000 to Mr. Geraghty in recognition of his assuming the additional role of Pennsylvania Market President in 2015 and his contributions to the Companys extraordinary performance in 2015, most notably strong fee income improvement; $50,000 to Mr. Levenson in recognition of his assuming the additional role of Chief Financial Officer in 2015 and his contributions to the Companys extraordinary performance in 2015, most notably successful acquisition signings, integration and growth; and $8,000 to Mr. Mazarakis and Mr. Wright, respectively, in recognition of their efforts in driving the Company to exceed its high-performing goal of 1.20% core and sustainable ROA for the fourth quarter of 2015.
Equity Awards Granted in 2015 for 2014 Performance
· Included in the disclosure of 2015 Stock Awards is the aggregate grant date fair value of restricted stock units granted in 2015 and earned in 2014 under our Long-Term Incentive Plan as follows: Mr. Geraghty, $53,821; Mr. Levenson, $61,431; Mr. Mazarakis, $50,508; and Mr. Wright, $59,406. Mr. Turner was not eligible for this award as a result of his change in equity compensation.
· Included in the disclosure of 2015 Option Awards is the aggregate grant date fair value of stock options granted in 2015 and earned in 2014 under our Long-Term Incentive Plan as follows: Mr. Geraghty, $53,821; Mr. Levenson, $61,431; Mr. Mazarakis, $50,508; and Mr. Wright, $59,406. Mr. Turner was not eligible for this award as a result of his change in equity compensation.
Equity Awards Granted in 2016 for 2015 Performance
In 2016, we granted restricted stock units and stock options under the MIP and LTI Plan earned in 2015. These awards will be reflected in the Summary Compensation Table for 2016, included in our 2017 proxy statement. The awards were as follows:
· The aggregate grant date fair value of restricted stock units granted in 2016 and earned in 2015 under our Long-Term Incentive Plan was as follows: Mr. Geraghty, $63,629; Mr. Levenson, $71,265, Mr. Mazarakis, $58,580; and Mr. Wright, $68,903. Mr. Turner was not eligible for this award as a result of his change in compensation.
· The aggregate grant date fair value of stock options granted in 2016 and earned in 2015 under our Long-Term Incentive Plan was as follows: Mr. Geraghty, $63,629; Mr. Levenson, $71,265; Mr. Mazarakis, $58,580; and Mr. Wright, $68,903. Mr. Turner was not eligible for this award as a result of his change in equity compensation.
Summary Compensation Table
1 The amounts shown as salaries in this table may be different from the amounts shown in the Base Salary table on page 33 because this table represents the amount actually paid during a year and the Base Salary table represents year-end base salary level.
2 The $100,000 in 2015 represents amounts paid for extraordinary performance relative to leading the Company to the extraordinary performance in 2015 as described at page 41 and achieving the Companys Path to High Performance goal; the $50,000 in 2014 represents amounts paid for role in securing ownership of and ensuring the financial benefits of certain reverse mortgage assets during 2013 and 2014.
3 $100,000 of Other Compensation in 2015 represents amounts paid in 2015 related to Mr. Fowles Separation Agreement and General Release. Mr. Fowles last day of employment with the Company was March 31, 2015. The $50,000 bonus paid in 2014 represents amounts paid for role in securing ownership of and ensuring the financial benefits of certain reverse mortgage assets during 2013 and 2014.
4 Represents bonus paid to Mr. Geraghty in recognition of his assuming the additional role of Pennsylvania Market President in 2015 and his contributions to the Companys extraordinary performance in 2015, most notably strong fee income improvement; and bonus paid to Mr. Levenson in recognition of his assuming the additional role of Chief Financial Officer in 2015 and his contributions to the Companys extraordinary performance in 2015, most notably successful acquisition signings, integration and growth.
5 Represents bonus paid to Mr. Mazarakis and Mr. Wright in recognition of their efforts in driving the Company to exceed its high-performing goal in 2015
6 Represents the aggregate fair value of awards on the date they were granted in accordance with ASC Topic 718. See Note 16 of the Notes to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the assumptions made in calculating the grant date fair value.
7 For Mr. Turner, 2013 compensation includes grant-date fair value award of $3.7 million of Non-Plan Stock Options approved both by the Board and by 97.9% of voting stockholders at our 2013 Annual Meeting of Stockholders in connection with his change in equity incentive compensation. As part of the change in compensation he became ineligible to receive other equity-based awards for a period of five years. To date, the approximate value of those awards, had he been eligible to receive them, would have been $1.76 million.
8 Amounts represent awards to NEOs in connection with our MIP Plan and our All Associate Bonus Plan.
9 All Other Compensation includes dividends related to restricted stock that is not factored into the grant date fair value, contributions made by us into the 401(k) plans of each of our NEOs and a development allowance.
The Personnel and Compensation Committee of the Board, reviewed and approved these 2015 and prior compensation amounts as: consistent with pre-existing plans; overwhelmingly approved by stockholders; pay-for-performance-based; and in alignment with the achievement of the individual goals and the Companys performance, which, for 2015 was 7.4% improvement in our performance on ROA, 1.6% improvement in ROTCE, and 22.7% increase in EPS.
The number of shares granted to executives under our 2013 Incentive Plan is based on a calculation related to the executives base salary and may be adjusted by the Personnel and Compensation Committee. The Personnel and Compensation Committee made awards in 2015 for 2014 performance as summarized in the table below.
The stock option awards have an exercise price of $26.24 which is equal to the closing stock price of WSFS common stock at the grant date. The grants vest equally over four years and expire on the seventh anniversary of the grant date. The Black-Scholes option-pricing model was used to determine the grant-date fair-value of the stock option awards. Other than the CEO, the NEOs received restricted stock unit grants to compensate them for, among other things, the limitations imposed by Internal Revenue Code on highly compensated executives with regard to tax-qualified defined contribution plans, specifically our 401(k) plan. The restricted stock unit grants vest equally over four years. No options were re-priced, nor were any modifications made to any outstanding option during 2015. The following table presents information regarding grants of equity and non-equity plan-based awards to our NEOs during 2015.
Grants of Plan-Based Awards
1 Represents the 2015 award opportunities under the annual incentive component of the MIP. Actual amounts paid for 2015 are included in the Non-Equity Incentive Plan Compensation column of the Summary Compensation Table on page 43.
2 Represents the 2015 award opportunity under the long-term incentive component of the MIP in which there is only a Target level of achievement. Mr. Turner was not eligible for this award in 2015 (see CEO Equity Incentive Compensation on page 38 for more details).
3 See Note 16 of the Notes to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the assumptions made in calculating the grant date fair value of stock and option awards.
The following table shows the number and exercise price of all unexercised options held by NEOs as of December 31, 2015, as well as shares of unvested restricted stock owned by the NEOs. The awards are listed in order of grant date. The shorter option expiration dates of more recent grants are due to a change in our policy of granting options to a five-year or seven-year exercise term, from a former ten-year term. These awards are subject to our claw-back policy affecting our NEOs.
Outstanding Equity Awards at Fiscal Year-End
1 For Mr. Turner, of the 450,000 unvested options expiring on 02/28/20, 150,000 vest on 02/29/16, 150,000 vest on 02/28/17 and 150,000 vest on 02/28/18.
2 For Mr. Geraghty, of the 2,064 unvested options expiring on 02/23/17, 2,064 vest on 02/23/16. Of the 7,794 unvested options expiring on 02/28/18, 3,897 vest on 02/29/16 and 3,897 vest on 02/28/17. Of the 31,500 unvested options expiring on 02/28/20, 10,500 vest on 02/29/16, 10,500 vest on 02/28/17 and 10,500 vest on 02/28/18. Of the 9,531 unvested options expiring on 2/27/2021, 3,177 vest on 2/27/2016, 3,177 vest on 2/27/2017 and 3,177 vest on 2/27/2018. Of the 9,387 unvested options expiring on 2/26/2022, 2,346 vest on 4/15/2016, 2,346 vest on 4/15/2017, 2,346 vest on 4/15/2018 and 2,349 vest on 4/15/2019.
3 For Mr. Levenson, of the 6,672 unvested options expiring on 02/28/18, 3,336 vest on 02/29/16 and 3,336 vest on 02/28/17. Of the 45,000 unvested options expiring on 02/28/20, 15,000 vest on