UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE
14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE
14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant ☒ Filed by a Party other than the Registrant
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o | Preliminary Proxy Statement |
o | Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e) (2)) |
☒ | Definitive Proxy Statement |
o | Definitive Additional Materials |
o | Soliciting Material Pursuant to §240.14a-12 |
T.
Rowe Price Group, Inc.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
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YOUR VOTE IS IMPORTANT!
Please execute and return the enclosed proxy promptly whether or not you plan to attend the T. Rowe Price Group, Inc., 2019 Annual Meeting of Stockholders.
T. ROWE PRICE
GROUP, INC.
100 EAST PRATT STREET
BALTIMORE, MD 21202
NOTICE OF 2019 ANNUAL MEETING OF STOCKHOLDERS
We will hold the Annual Meeting of Stockholders of T. Rowe Price Group, Inc., at the Company’s offices located at 4435 Painters Mill Road, Owings Mills, Maryland 21117, on Thursday, April 25, 2019, at 10 a.m. At this Annual Meeting, we will ask stockholders to:
1) | elect a Board of nine directors; |
2) | approve, by a non-binding advisory vote, the compensation paid by the Company to its Named Executive Officers; and |
3) | ratify the appointment of KPMG LLP as our independent registered public accounting firm for 2019. |
Stockholders who owned shares of our common stock as of February 22, 2019, are entitled to attend and vote at the Annual Meeting or any adjournments.
BY ORDER OF THE BOARD OF DIRECTORS
David
Oestreicher
Chief Legal Counsel and Corporate Secretary
Baltimore, Maryland
March 14, 2019
This proxy statement is being made available to you in connection with the solicitation of proxies by the T. Rowe Price Group, Inc. (Price Group or the Company) Board of Directors (Board) for the 2019 Annual Meeting of Stockholders (Annual Meeting). The purpose of the Annual Meeting is to:
1) | elect a Board of nine directors; |
2) | approve, by a non-binding advisory vote, the compensation paid by the Company to its Named Executive Officers; and |
3) | ratify the appointment of KPMG LLP as our independent registered public accounting firm for 2019. |
This proxy statement, the proxy card, and our 2018 Annual Report to Stockholders containing our consolidated financial statements and other financial information for the year ended December 31, 2018, form your “Proxy Materials.” We have adopted the Securities and Exchange Commission’s (SEC) “Notice and Access” model of proxy notification, which allows us to furnish proxy materials online, with paper copies available upon request. We sent you a notice on how to obtain your Proxy Materials on March 14, 2019.
Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to Be Held on April 25, 2019
This proxy statement and our 2018 Annual Report to Stockholders may be viewed, downloaded, and printed, at no charge, by accessing the following Internet address: materials.proxyvote.com/74144T.
Stockholders who wish to attend the Annual Meeting in person must follow the instructions on page 3 under the section titled “Do I need to bring anything in order to attend the Annual Meeting?”
Questions and Answers About the Proxy Materials and the Annual Meeting
Why did I receive in the mail a Notice of the Internet Availability of Proxy Materials?
You received in the mail either a notice of the Internet availability of proxy materials or a printed proxy statement and 2018 Annual Report to Stockholders because you owned T. Rowe Price Group, Inc., common stock at the close of business on February 22, 2019, which we refer to as the “Record Date,” and that entitles you to vote at the Annual Meeting. This proxy statement, the proxy card, and our 2018 Annual Report to Stockholders containing our consolidated financial statements and other financial information for the year ended December 31, 2018, constitute the “Proxy Materials.” The Board is soliciting your proxy to vote at the Annual Meeting or at any later meeting if the Annual Meeting is adjourned or postponed for any reason. Your proxy will authorize each of David Oestreicher and Jean-Marc Corredor as proxies to vote on your behalf at the Annual Meeting. By use of a proxy, you can vote whether or not you attend the Annual Meeting.
This proxy statement describes the matters to be acted upon at the Annual Meeting, provides information on those matters, and provides information about Price Group that we must disclose when we solicit your proxy.
Pursuant to rules adopted by the SEC, we have elected to provide access to our Proxy Materials over the Internet. We believe that Internet delivery of our Proxy Materials allows us to provide our stockholders with the information they need, while lowering the costs of delivery and reducing the environmental impact of our Annual Meeting. Accordingly, we are sending a Notice of Internet Availability of Proxy Materials, which we refer to as the “Notice,” to many of our stockholders (including beneficial owners) as of the Record Date. Our stockholders who receive the Notice will have the ability to access the Proxy Materials on a website referred to in the Notice or request to receive a printed set of the Proxy Materials. The Notice contains instructions on how to access the Proxy Materials over the Internet or to request a printed copy. In addition, stockholders may request to receive Proxy Materials in printed form by mail or electronically by email on an ongoing basis by calling Broadridge Financial Solutions, Inc. (Broadridge) at 1-800-579-1639. Please note that you may not vote using the Notice. The Notice identifies the items to be voted on at the Annual Meeting and describes how to vote, but you cannot vote by marking the Notice and returning it.
PROXY STATEMENT 2019 1
Can I view the Proxy Materials on the Internet?
Yes. As described in more detail in response to the prior question, most stockholders will receive the proxy statement online. If you received a paper copy, you can also view these documents on the Internet by accessing our website at troweprice.gcs-web.com/financial-information. The SEC also maintains a website at sec.gov that contains reports, proxy statements, and other information regarding Price Group.
Who is entitled to vote at the Annual Meeting?
Holders of our common stock at the close of business on the Record Date are entitled to vote their shares at the Annual Meeting. As of the Record Date, there were 236,705,942 shares outstanding. Each share outstanding on the Record Date is entitled to one vote on each proposal presented at the Annual Meeting.
What am I voting on, and what are the Board voting recommendations?
Our stockholders will be voting on the following proposals:
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Proposal
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Board Voting
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Election of Directors
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FOR ALL DIRECTOR-NOMINEES
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2
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Advisory Vote on the Compensation Paid to Our Named Executive Officers
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FOR
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3
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Ratification of the Appointment of KPMG LLP as Our Independent Registered Public Accounting Firm for 2019
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FOR
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Can other matters be decided at the Annual Meeting?
At the time this proxy statement went to press, we were not aware of any other matters to be presented at the Annual Meeting. If other matters are properly presented for consideration at the Annual Meeting, the proxy holders appointed by our Board (i.e., David Oestreicher and Jean-Marc Corredor) will have the discretion to vote on those matters in accordance with their best judgment on behalf of stockholders who provide a valid proxy by Internet, by telephone, or by mail.
What is the procedure for voting?
Whether you hold shares directly as the stockholder of record or beneficially in street name, you may vote before the Annual Meeting by granting a proxy to each of David Oestreicher and Jean-Marc Corredor or, for shares you beneficially own, by submitting voting instructions to your broker, bank, or other nominee. Stockholders have a choice of voting by using the Internet, by calling a toll-free telephone number within the United States or Puerto Rico, or by completing a proxy or voting instruction card and mailing it in the postage-paid envelope provided. Please refer to the summary instructions below and carefully follow the instructions included on your Notice; your proxy card; or, for shares you beneficially own, the voting instruction card provided by your broker, bank, or other nominee. The Notice identifies the items to be voted on at the Annual Meeting and provides instructions on how to vote, but you cannot vote by marking the Notice and returning it.
If you hold shares in multiple accounts, you may receive multiple proxy material packages. If you hold shares in multiple accounts, please be sure to vote all of your Price Group shares in each of your accounts in accordance with the voting instructions you receive for each such account.
By Internet or Telephone
■ | You can vote your shares via the Internet at proxyvote.com. |
■ | You can vote your shares by telephone by calling, toll-free 1-800-690-6903. |
Internet and telephone voting facilities for registered stockholders will be available 24 hours a day until 11:59 p.m., eastern daylight time, on April 24, 2019. If you vote your shares on the Internet or by telephone, you do not have to return your proxy card.
Please have your proxy card (or the Notice or the email message you receive with instructions on how to vote) in hand when you go online. You will have an opportunity to confirm your voting selections before your vote is recorded.
The availability of Internet and telephone voting for beneficial owners will depend on the voting processes of your broker, bank, or other nominee. You should follow the voting instructions in the materials that you received from your nominee.
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By Mail
If you’d like to vote by mail, please request a paper proxy card in accordance with the instructions contained in the Notice and then complete, sign, and date the proxy card and return it in the postage-paid envelope provided. If voting instructions are provided, shares represented by the proxy card will be voted in accordance with the voting instructions.
For shares held in street name, please use the voting instruction card provided by your broker, bank, or other nominee and mark, sign, date, and mail it back to your broker, bank, or other nominee in accordance with their instructions.
In Person at the Annual Meeting
All registered stockholders can vote in person at the Annual Meeting. Voting your proxy electronically via the Internet, by telephone, or by mail does not limit your right to vote at the Annual Meeting. You also can choose to be represented by another person at the Annual Meeting by executing a legally valid proxy designating that person to vote on your behalf.
If you are a beneficial owner of shares, you must obtain a legally valid proxy from your broker, bank, or other nominee and present it to the inspectors of election with your ballot to be able to vote at the Annual Meeting. A legal proxy is an authorization from your broker, bank, or other nominee to vote the shares held in the nominee’s name that satisfies Maryland law and the SEC requirements for proxies.
What is the difference between holding shares as a registered stockholder and as a beneficial owner?
If your shares are registered directly in your name with our transfer agent, you are considered the “registered stockholder” (also known as a “record holder”) of those shares. We mail the Notice or Proxy Materials directly to you. Equiniti Trust Company (EQ) serves as the transfer agent and registrar for T. Rowe Price Group, Inc.
If your shares are held in a stock brokerage account or by a bank or other holder of record, you are considered the beneficial owner of shares held in “street name,” and these Proxy Materials or the Notice are being forwarded to you by your broker, bank, or other nominee who is considered the stockholder of record with respect to those shares. As the beneficial owner, you have the right to direct your broker, bank, or other nominee on how to vote your shares, and you also are invited to attend the Annual Meeting.
Because you are not the stockholder of record, however, you may not vote these shares in person at the Annual Meeting unless you bring with you to the Annual Meeting a legally
valid proxy, executed in your favor, from the stockholder of record. Your broker, bank, or other nominee also is obligated to provide you with a voting instruction card for you to use to direct them as to how to vote your shares.
Do I need to bring anything in order to attend the Annual Meeting?
Yes. You must bring documentation that allows us to verify your stock ownership. For “record holders”, this means you must bring a valid, government-issued photographic identification. For stockholders who own their shares in “street name”, you must bring a valid, government-issued photographic identification and a brokerage account statement or letter from your broker, bank, or other nominee reflecting stock ownership. If you do not have valid identification and documentation sufficient to verify your stock ownership, you will not be admitted into the Annual Meeting.
For security reasons, all hand-carried items will be subject to inspection. Cameras, audio and video recorders, communication devices, and similar equipment will not be allowed in the meeting room.
Can I change my proxy vote?
Yes. If you are a registered stockholder, you can change your proxy vote or revoke your proxy the day before the Annual Meeting by:
■ | Authorizing a new vote electronically through the Internet or by telephone. |
■ | Returning a signed proxy card with a later date. |
■ | Delivering a written revocation of your proxy to the chief legal counsel and corporate secretary at T. Rowe Price Group, Inc., 100 East Pratt Street, Mail Code BA-1360, Baltimore, MD 21202. |
In addition, a registered stockholder may change their vote by submitting a written ballot in person at the Annual Meeting.
If you are a beneficial owner of shares, you can submit new voting instructions by contacting your broker, bank, or other nominee. You also can vote in person at the Annual Meeting if you obtain a legal proxy from your bank, broker, or other nominee (the registered stockholder) as described in the answer to the question “What is the procedure for voting?” on page 2.
Your personal attendance at the Annual Meeting does not revoke your proxy. Unless you vote at the Annual Meeting, your last valid proxy prior to or at the Annual Meeting will be used to cast your vote.
PROXY STATEMENT 2019 3
What if I return my proxy card but do not provide voting instructions?
Proxies that are signed and returned but do not contain voting instructions will be voted:
■ | FOR the election of all director-nominees listed in Proposal 1. |
■ | FOR the advisory vote on the compensation paid by the Company to its Named Executive Officers (Proposal 2). |
■ | FOR the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for 2019 (Proposal 3). |
■ | In the best judgment of the named proxy holders if any other matters are properly presented at the Annual Meeting. |
How many shares must be present to hold the Annual Meeting?
In order for us to lawfully conduct business at our Annual Meeting, the presence in person or by proxy of stockholders entitled to cast a majority of all the votes entitled to be cast at the Annual Meeting is required. This is referred to as a quorum. Your shares are counted as present at the Annual Meeting if you attend the Annual Meeting and either vote in person or abstain from voting, or if you properly return a proxy by Internet, by telephone, or by mail in advance of the Annual Meeting and do not revoke the proxy.
Will my shares be voted if I don’t provide my proxy or instruction card?
Registered Stockholders
If your shares are registered in your name, your shares will not be voted unless you provide a proxy by Internet, by telephone, or by mail or vote in person at the Annual Meeting.
Beneficial Owners
If you hold shares through an account with a broker, bank, or other nominee and you do not provide voting instructions, under the NASDAQ Global Select Market rules, your broker may vote your shares on routine matters only. The ratification of the appointment of KPMG (Proposal 3) is considered a routine matter, and your nominee can therefore vote your shares on that proposal even if you do not provide voting instructions. No other proposal is considered a routine matter, and your nominee cannot vote your shares on those proposals unless you provide voting instructions. Votes withheld by brokers, banks, and other nominees in the absence of voting instructions from a beneficial owner are referred to as “broker non-votes.”
Multiple Forms of Ownership
The Company cannot provide a single proxy or instruction card for stockholders who own shares as registered stockholders or beneficial owners. As a result, if your shares are held in multiple types of accounts, you must submit your votes for each type of account in accordance with the instructions you receive for that account.
What is the vote required for each proposal?
For Proposal 1, the votes that stockholders cast “FOR” a director-nominee must exceed the votes that stockholders cast “AGAINST” a director-nominee to approve the election of each director-nominee. Please also see the discussion of our “Majority Voting” provisions within Proposal 1 on page 6. For each of Proposals 2 and 3, the affirmative vote of a majority of the votes cast is required to approve the proposal. Proposal 2 is advisory and non-binding, so the Board will review the voting results on this proposal and take the results into account when making future decisions regarding these matters. “Votes cast” exclude abstentions and broker non-votes.
What is the effect of an abstention?
A stockholder who abstains on some or all matters is considered present for purposes of determining if a quorum is present at the Annual Meeting, but an abstention is not counted as a vote cast. An abstention has no effect on the vote on any other proposal.
What is the effect of a broker non-vote?
If a broker casts a vote on Proposal 3 (ratification of the appointment of KPMG LLP as our independent registered public accounting firm), the vote will be included in determining whether a quorum exists for holding the Annual Meeting. The broker does not have authority to vote on the other proposals absent directions from the beneficial owner.
As a result, if the beneficial owner does not vote on Proposals 1 or 2, so that there is a “broker non-vote” on those items, the broker non-votes do not count as votes cast for those proposals. Thus, a broker non-vote will not impact the following:
■ | our ability to obtain a quorum (unless a broker also does not cast a vote on Proposal 3 as described in the preceding paragraph), |
■ | the outcome with respect to the election of directors (Proposal 1), |
■ | the outcome of the vote on a proposal that requires the affirmative vote of a majority of the votes cast on the proposal (Proposal 2). |
4 T. ROWE PRICE GROUP
Who will count the votes?
Representatives of our proxy tabulator, Broadridge, will tabulate the votes and act as inspectors of election for the Annual Meeting.
Where can I find the voting results of the Annual Meeting?
The preliminary voting results will be announced at the Annual Meeting. The final voting results will be tallied by the inspectors of election and disclosed by the Company in a Current Report on Form 8-K filed with the SEC within four business days following the Annual Meeting.
Is my vote confidential?
Yes. The vote of each stockholder is held in confidence from Price Group’s directors, officers, and employees. We do not know how any person or entity votes unless this information is voluntarily disclosed.
What is “householding” and how does it affect me?
Some banks, brokers, and other nominees engage in the practice of “householding” our Proxy Materials. This means that only one copy of our Proxy Materials may be sent to multiple stockholders in your household unless you request otherwise. We will promptly deliver a separate copy of Proxy Materials to you if you share an address subject to householding. Please contact our chief legal counsel and corporate secretary at 100 East Pratt Street, Mail Code BA-1360, Baltimore, MD 21202, or by telephone at 410-345-2000.
Please contact your bank, broker, or other nominees if you wish to receive individual copies of our Proxy Materials in the future. Please contact your bank, broker, or other nominee or our chief legal counsel and corporate secretary at 100 East Pratt Street, Mail Code BA-1360, Baltimore, MD 21202, or by telephone at 410-345-2000, if members of your household are currently receiving individual copies and you would like to receive a single household copy for future meetings.
Can I choose to receive the proxy statement and the 2018 Annual Report to Stockholders on the Internet instead of receiving them by mail?
Yes. If you are a registered stockholder or beneficial owner, you can elect to receive future annual reports and proxy statements on the Internet only and not receive copies in the mail by visiting proxyvote.com. You will need to have your proxy card (or the Notice or the email message you receive with instructions on how to vote) in hand when you access
the website. Your request for electronic transmission will remain in effect for all future annual reports and proxy statements, unless withdrawn. Withdrawal procedures also are at this website.
If you hold Price Group shares in your own name and received more than one copy of our Proxy Materials at your address and wish to reduce the number of reports you receive and save the Company the cost of producing and mailing these reports, you should contact Price Group’s mailing agent Broadridge, at 1-866-540-7095 to discontinue the mailing of reports on the accounts you select.
At least one account at your address must continue to receive a proxy statement and an annual report, unless you elect to view future annual reports and proxy statements over the Internet. The mailing of dividend checks, dividend reinvestment statements, and special notices will not be affected by your election to discontinue duplicate mailings of proxy statements and annual reports. Registered stockholders may resume the mailing of our Proxy Materials to an account by calling Broadridge at 1-866-540-7095. If you own shares through a broker, bank, or other nominee and received more than one set of our Proxy Materials, please contact the holder of record to eliminate duplicate mailings.
Who pays the cost of this proxy solicitation?
We will pay for the costs of preparing materials for the Annual Meeting and soliciting proxies. We expect that solicitation will occur primarily through the mail, but proxies also may be solicited personally or by telephone, email, letter, or facsimile. To assist in soliciting proxies, we have retained Morrow Sodali LLC, 470 West Avenue, Stamford, CT 06902 for a fee of $7,000, plus reimbursement of out-of-pocket expenses. We ask brokers, banks, and other nominees to forward materials for the Annual Meeting to our beneficial stockholders as of the Record Date, and we will reimburse them for the reasonable out-of-pocket expenses they incur. Directors, officers, and employees of Price Group and our subsidiaries may solicit proxies personally or by other means, but will not receive additional compensation. Stockholders are requested to return their proxies without delay.
Can I find additional information on the Company’s website?
Yes. Although the information contained on our website is not part of the Proxy Materials, you will find information about the Company and our corporate governance practices at troweprice.gcs-web.com/corporate-governance. Our website contains information about our Board, Board committees, Corporate Governance Guidelines, and other matters.
PROXY STATEMENT 2019 5
Proposal
1
Election of Directors
In this proxy statement, nine director nominees are presented pursuant to the recommendation of the Nominating and Corporate Governance Committee. All have been nominated by the Board of Directors to hold office until the next annual meeting of stockholders and until their respective successors are elected and qualify.
RECOMMENDATION OF THE BOARD OF DIRECTORS; VOTE REQUIRED
We recommend that you vote FOR all the director nominees under Proposal 1. All properly executed proxies received in time to be tabulated for the Annual Meeting will be voted FOR the election of the nominees named below unless otherwise specified. Shares held by a bank, broker, or other nominee will not be voted on this Proposal absent specific instruction from you, which means your shares may go unvoted and not affect the outcome if you do not specify a vote. If any director nominee becomes unable or unwilling to serve between now and the Annual Meeting, proxies will be voted FOR the election of a replacement recommended by the Nominating and Corporate Governance Committee and approved by the Board of Directors.
We have adopted a majority voting standard for the election of our directors. Under our current By-Laws, in an uncontested election, a nominee will not be elected unless he or she receives more “FOR” votes than “AGAINST” votes. Under Maryland law, any incumbent director not so elected would continue in office as a “holdover” director until removed or replaced. As a result, the By-Laws also provide that any director who fails to obtain the required vote in an uncontested election must submit his or her resignation to the Board. The Board must decide whether to accept or decline the resignation, or decline the resignation with conditions, taking into consideration the Nominating and Corporate Governance Committee’s recommendation after consideration of all factors deemed relevant, within 90 days after the vote has been certified. Plurality voting will apply to contested elections.
NON-EMPLOYEE DIRECTOR INDEPENDENCE DETERMINATIONS
The Board of Directors has considered the independence of current Board members and nominees not employed by T. Rowe Price and has concluded each such director qualifies as an independent director within the meaning of the applicable rules of the NASDAQ Global Select Market. To our knowledge, there are no family relationships among our directors or executive officers.
In making its determination of independence, the Board applied guidelines that it has adopted concluding that the following relationships should not be considered material relationships that would impair a director’s independence:
■ | relationships where a director or an immediate family member of a director purchases or acquires investment services, investment securities, or similar products and services from the Company or one of its sponsored mutual funds and trusts (Price funds) so long as the relationship is on terms consistent with those generally available to other persons doing business with the Company, its subsidiaries, or its sponsored investment products; and |
■ | relationships where a corporation, partnership, or other entity with respect to which a director or an immediate family member of a director is an officer, director, employee, partner, or member purchases services from the Company, including investment management or defined contribution retirement plan services, on terms consistent with those generally available to other entities doing business with the Company or its subsidiaries. |
The Board believes that this policy sets an appropriate standard for dealing with ordinary course of business relationships that may arise from time to time.
THE NOMINEES AND THEIR QUALIFICATIONS, SKILLS, AND EXPERIENCE
In considering the overall qualifications of our nominees and their contributions to our Board, and in determining our need for additional members of the Board, we seek to create a Board consisting of members with a diverse set of experiences and attributes who will be meaningfully involved in our Board activities and will facilitate a transparent and collaborative atmosphere and culture. Our Board members generally develop a long-term association with the Company, which we believe
6 T. ROWE PRICE GROUP
facilitates a deeper knowledge of our business and its strategies, opportunities, risks, and challenges. At the same time, we periodically look for additions to our Board to enhance our capabilities and bring new perspectives and ideas to our Board. We will consider Board members with diverse capabilities, and we generally look for Board members with capabilities in one or more of the following areas: accounting and financial reporting, financial services and money management, investments, general economics and industry oversight, legal, government affairs and corporate governance, general management, international, marketing and distribution, and technology and facilities management.
Each of our directors provides significant individual attributes important to the overall makeup and functioning of our Board, which are described in the biographical summaries provided below:
The Board of Directors recommends that you vote FOR all of the following nominees:
Mark S. Bartlett Retired Managing Partner Ernst & Young Age 68 |
Mr. Bartlett has been an independent director of Price Group since 2013 and serves as chair of the Audit Committee and as a member of the Executive Compensation and
Management Development Committee. Until retiring in 2012, Mr. Bartlett was a partner at Ernst & Young, serving as managing partner of the firm’s Baltimore office and senior client service partner for the mid-Atlantic region. Mr.
Bartlett began his career at Ernst & Young in 1972 and has extensive experience in financial services, as well as other industries.
Mr. Bartlett received his B.S. from West Virginia University and attended the Executive Program at the Kellogg School of Business at Northwestern University. He also earned the designation of certified public accountant. Mr. Bartlett is a member of the board of directors and chair of the audit committee of both Rexnord Corporation and Williams Scotsman. He is also a member of the nominating and corporate governance committee of Williams Scotsman. He also serves as a member of the board of directors and a member of the audit committee of FTI Consulting, Inc. Mr. Bartlett offers the Board significant accounting and financial reporting experience as well as expertise in the accounting-related rules and regulations of the Securities and Exchange Commission. He has extensive finance knowledge, with a broad range of experience in financing alternatives including the sale of securities, debt offerings, and syndications. |
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Mary K. Bush Chairman Bush International, LLC Age 70 |
Ms. Bush has been an independent director of Price Group since 2012 and serves on the Executive Compensation and Management Development Committee and the Nominating and
Corporate Governance Committee. She has served as the chairman of Bush International, LLC, an advisor to U.S. corporations and foreign governments on international capital markets and strategic business and economic matters, since 1991.
Earlier in her career, she managed global banking and corporate finance relationships at New York money center banks including Citibank, Banker’s Trust, and Chase.
Ms. Bush holds an M.B.A. from the University of Chicago and a B.A. in economics and political science from Fisk University. Ms. Bush is a member of the board of directors, risk oversight committee, and nominating and corporate governance committee of Discover Financial Services; a member of the board of directors, audit and compensation committees, and chair of the retirement plan committee of ManTech International Corporation; a member of the board of directors, audit committee, and compensation committee of Marriott International; and a member of the board of directors and chair of the audit committee for Bloom Energy. Ms. Bush also was a director of the Pioneer Family of Mutual Funds from 1997 to 2012 and UAL Corporation from 2006 to 2010. Ms. Bush brings to our Board extensive financial and governmental affairs experience, her knowledge of corporate governance and financial oversight gained from her membership on the boards of other public companies, knowledge of public policy matters, and her significant experience providing strategic advisory services in the financial and international arenas. |
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PROXY STATEMENT 2019 7
Dr. Freeman A. Hrabowski, III President University of Maryland, Baltimore County Age 68 |
Dr. Hrabowski has been an independent director of Price Group since 2013 and serves on the Audit Committee and Executive Compensation and Management Development Committee.
He has served as president of the University of Maryland, Baltimore County (UMBC), since 1992. His research and publications focus on science and math education, with special emphasis on minority participation and performance. He is also a
leading advocate for greater diversity in higher education. He serves as a consultant to the National Science Foundation, the National Institutes of Health, the National Academies, and universities and school systems nationally.
Dr. Hrabowski holds a Ph.D. in higher education administration and statistics and an M.A. in mathematics from the University of Illinois at Urbana-Champaign. He also holds a B.A. in mathematics from Hampton Institute (now Hampton University). Dr. Hrabowski serves as director and member of the corporate and governance committee of McCormick & Company, Inc. Dr. Hrabowski also served on the board of Constellation Energy Group, Inc., until 2012. Dr. Hrabowski brings to our Board valuable strategic and management leadership experience from his role as president of UMBC, as well as his extensive knowledge and dedication to greater education and workforce development. He also contributes corporate governance oversight from his experience serving as a director on other public-company boards. |
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Robert F. MacLellan Nonexecutive Chairman Northleaf Capital Partners Age 64 |
Mr. MacLellan has been an independent director of Price Group since 2010 and serves as chair of the Executive Compensation and Management Development Committee and a member
of the Audit Committee. Since November 2009, Mr. MacLellan has been the nonexecutive chairman of Northleaf Capital Partners, an independent global private markets fund manager and advisor. From 2003 to November 2009, Mr. MacLellan served as
chief investment officer of TD Bank Financial Group (TDBFG), where he was responsible for overseeing the management of investments for its Employee Pension Fund, The Toronto-Dominion Bank, TD Mutual Funds, and TD Capital Group. Earlier in
his career, Mr. MacLellan was managing director of Lancaster Financial Holdings, a merchant banking group acquired by TDBFG in March 1995. Prior to that, he was vice president and director at McLeod Young Weir Limited (Scotia McLeod) and a
member of the corporate finance department responsible for a large number of corporate underwritings and financial advisory assignments.
Mr. MacLellan holds a B.Comm. from Carleton University and an M.B.A. from Harvard Business School, and is a chartered accountant. From 2012 to 2018, Mr. MacLellan was the chairman of the board of Yellow Media, Inc., a public company based in Montreal, and since May 2018 has been a member of the board of directors and audit committee of Magna International, Inc., a public company based in Aurora, Ontario. Mr. MacLellan brings substantial experience and perspective to the Board with respect to the financial services industry, particularly his expertise with respect to investment-related matters, including those relating to the mutual fund industry and the institutional management of investment funds, based on his tenure as chief investment officer of a major financial institution. He also brings an international perspective to the Board as well as significant accounting and financial reporting experience. |
8 T. ROWE PRICE GROUP
Olympia J. Snowe Chair and Chief Executive Officer Olympia Snowe, LLC Age 72 |
Ms. Snowe has been an independent director of Price Group since June 2013 and serves as chair of the Nominating and Corporate Governance Committee, and serves as a member of
the Executive Compensation and Management Development Committee. She is chair and chief executive officer of Olympia Snowe, LLC, a policy and communications consulting firm, and a member of the board of directors and senior fellow at the
Bipartisan Policy Center. Ms. Snowe served in the U.S. Senate for the State of Maine from 1995 to 2013 and as a member of the U.S. House of Representatives from 1979 to 1995. While in the U.S. Senate, she served as chair and was the ranking
member of the Senate Committee on Small Business and Entrepreneurship, and served on the Senate Finance Committee. She also served as chair of the Subcommittee on Seapower for the Senate Armed Services Committee.
Ms. Snowe earned a B.S. from the University of Maine and has received honorary degrees from many colleges and universities. Ms. Snowe is a member of the board of directors of Synchrony Financial and serves as the chair of its nominating and corporate governance committee and a member of its audit committee, as well as a director on the board of Synchrony Bank and member of its audit committee. Ms. Snowe previously served on the board of directors of Aetna Inc., a diversified health care benefits company, where she was a member of the audit committee and the medical affairs committee from 2014 to 2018. Ms. Snowe brings a broad range of valuable leadership and public policy experience to the Board. She also has extensive experience with complex issues relevant to the Company’s business, including budget and fiscal responsibility, economic, tax and regulatory policy, education, retirement and aging, women’s issues, health care, foreign affairs, and national security. |
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William J. Stromberg President and Chief Executive Officer T. Rowe Price Group, Inc. Age 59 |
Mr. Stromberg is president and chief executive officer (CEO) of the Company and is a member of its Board of Directors. He is the chair of the Company’s Management and
Management Compensation Committees. The Board has announced that Mr. Stromberg will be appointed chair of the Board after the upcoming Annual Meeting. Mr. Stromberg served as the head of equity from 2009 to 2015 and the head of U.S. equity
from 2006 to 2009. He also served as a director of equity research from 1996 to 2006, as a portfolio manager of the Capital Opportunity Fund (2000 to 2007) and the Dividend Growth Fund (1992 to 2000), and as an equity investment analyst
from 1987 to 1992. Prior to joining the firm in 1987, Mr. Stromberg was employed by Westinghouse Defense as a systems engineer.
Mr. Stromberg earned a B.A. from Johns Hopkins University and an M.B.A. from the Tuck School of Business at Dartmouth. Mr. Stromberg has also earned the chartered financial analyst designation. He currently serves on the Johns Hopkins University board of trustees and the Hopkins Whiting School of Engineering advisory council. Mr. Stromberg previously served nine years on the Catholic Charities board of trustees, with two years as board president. Mr. Stromberg brings to the Board insight into the critical investment component of our business based on the leadership roles he has held in the Equity Division of Price Group and his 30-year career with the Company. |
PROXY STATEMENT 2019 9
Richard R. Verma Vice Chairman and Partner The Asia Group Age 50 |
Mr. Verma has been an independent director of Price Group since 2018 and is a member of the Executive Compensation and Management Development Committee and the Audit
Committee.
Mr. Verma is vice chairman and partner at The Asia Group. He previously served as United States ambassador to India from 2014 to 2017. Prior to his service as U.S. ambassador, Mr. Verma joined Steptoe & Johnson LLP, a global law firm, in 1998 and held many roles, including partner and senior counselor from 2011 to 2014. Mr. Verma also served as assistant secretary of state for legislative affairs from 2009 to 2011 and senior national security advisor to the Senate majority leader from 2004 to 2007. Mr. Verma is a U.S. Air Force veteran who, during active duty, served as judge advocate. Mr. Verma holds a B.S. degree in industrial engineering from Lehigh University, an L.L.M. in international law from Georgetown University Law Center, and a J.D. from American University’s Washington College of Law. Mr. Verma brings substantial experience and a global perspective to the Board with respect to public policy, business, foreign and legislative affairs, strategic leadership, and corporate social responsibility. |
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Sandra S. Wijnberg Executive Advisor Aquiline Capital Partners Age 62 |
Ms. Wijnberg has been an independent director of Price Group since 2016 and is a member of the Executive Compensation and Management Development Committee and the Audit
Committee.
Ms. Wijnberg is an executive advisor of Aquiline Capital Partners, a private-equity investment firm specializing in the financial services sector. From 2007 to 2014, she was a partner and chief administrative officer of Aquiline Holdings LLC, a registered investment advisor and the holding company for Aquiline Capital Partners. Previously, Ms. Wijnberg served as the senior vice president and chief financial officer of Marsh & McLennan Companies, Inc., and was treasurer and interim chief financial officer of YUM! Brands, Inc. Prior to that she held financial positions with PepsiCo, Inc., and worked in investment banking at Morgan Stanley. In addition, from 2014 through 2015, Ms. Wijnberg was deputy head of mission for the Office of the Quartet. Ms. Wijnberg currently serves as a member of the board of directors, chair of the audit committee, and a member of the corporate development and technology advisory committee of Automatic Data Processing, Inc. From 2003 to 2016, she served on the board of directors of Tyco International, PLC, and from 2007 to 2009 she served on the board of directors of TE Connectivity, Inc. She is also a director of Seeds of Peace, Spark MicroGrants, and is a trustee of the John Simon Guggenheim Memorial Foundation. Ms. Wijnberg holds a B.A. in English literature from the University of California, Los Angeles, and an M.B.A. from University of Southern California’s Marshall School of Business, for which she is a member of the board of leaders. Ms. Wijnberg brings to our Board a global perspective along with substantial financials sector, corporate finance, and management experience based on her roles at Aquiline Capital Partners, Marsh & McLennan, and YUM! Brands, Inc. |
10 T. ROWE PRICE GROUP
Alan D. Wilson Retired Executive Chairman McCormick & Company, Inc. Age 61 |
Mr. Wilson has been an independent director of Price Group since 2015 and serves as a member of the Nominating and Corporate Governance Committee, the Executive Compensation
and Management Development Committee, and the Executive Committee. He is also the lead independent director of the board. Mr. Wilson retired as executive chairman of McCormick & Company, Inc., in 2017 where he held many executive
management roles, including chairman, president, and chief executive officer.
Mr. Wilson graduated from the University of Tennessee in 1980 with a B.S. in communications. He attended school on a R.O.T.C. scholarship and, following college, served as a U.S. Army captain, with tours in the United States, United Kingdom, and Germany. Mr. Wilson currently serves on the board of directors of Westrock Company and is a member of the nominating and corporate governance committee and the chair of the finance committee. He also chairs the board of visitors of University of Maryland, Baltimore County, and currently serves on the University of Tennessee’s Board of Trustees and the University of Tennessee’s Business School advisory board. Mr. Wilson brings to our Board significant executive management experience, having led a publicly traded, multinational company. He also adds additional perspective to the Board regarding matters relating to general management, strategic leadership, and financial matters. |
THE BOARD OF DIRECTORS AND COMMITTEES
During 2018, the Board of Directors held six meetings and approved one matter via unanimous written consent. Each director attended at least 75% of the combined total number of meetings of the Board and Board committees of which he or she was a member. Consistent with the Company’s Corporate Governance Guidelines, the independent directors met in executive session at each of the Board meetings in 2018. Our Corporate Governance Guidelines provide that all directors are expected to attend the annual meeting of stockholders. All nominees for director submitted to the stockholders for approval at last year’s annual meeting on April 26, 2018, attended that meeting, and we anticipate that all nominees will attend the 2019 Annual Meeting.
Corporate Governance
Our Board of Directors has an Executive Committee, an Audit Committee, an Executive Compensation and Management Development Committee, and a Nominating and Corporate Governance Committee. The Board has also authorized a Management Committee that is made up entirely of senior officers of the Company. The Board has adopted a separate written charter for the Audit Committee, the Executive Compensation and Management Development Committee, and the Nominating and Corporate Governance Committee. Current copies of each charter, our Corporate Governance Guidelines, and our Code of Ethics for Principal Executive and Senior Financial Officers can be found on our website, troweprice.com, by selecting “Investor Relations” and then “Corporate Governance.”
Code of Ethics
Pursuant to rules promulgated under the Sarbanes-Oxley Act, the Board has adopted a Code of Ethics for Principal Executive and Senior Financial Officers. This Code is intended to deter wrongdoing and promote honest and ethical conduct; full, timely, and accurate reporting; compliance with laws; and accountability for adherence to the Code, including internal reporting of Code violations. A copy of the Code of Ethics for Principal Executive and Senior Financial Officers is available on our website. We intend to satisfy the disclosure requirements regarding any amendment to, or waiver from, a provision of the Code of Ethics for Principal Executive and Senior Financial Officers by making disclosures concerning such matters available on the Investor Relations page of our website.
We also have a Code of Ethics and Conduct that is applicable to all employees and directors of the Company. Our Code of Ethics and Conduct prohibits all employees and directors of the Company from (i) any short sales of our common stock, (ii) purchasing options on our common stock, or (iii) entering into any contract or purchasing any instrument designed to hedge or offset any decrease in the market value of our common stock. It is the Company’s policy for all employees to participate annually in continuing education and training relating to the Code of Ethics and Conduct.
Executive Committee
During 2018, Mr. Rogers, Mr. Stromberg, and Anne Marie Whittemore served on the Executive Committee, until Ms. Whittemore’s retirement from the Board on April 26, 2018. Following Ms. Whittemore’s retirement from the Board, Mr. Wilson joined the Executive Committee. The Executive Committee functions between meetings of the Board of Directors
PROXY STATEMENT 2019 11
and possesses the authority to exercise all the powers of the Board except as limited by Maryland law. If the Executive Committee acts on matters requiring formal Board action, those acts are reported to the Board of Directors at its next meeting for ratification. The Executive Committee approved one matter via unanimous written consent during 2018.
Audit Committee
Messrs. Bartlett, MacLellan, and Verma, Dr. Hrabowski, and Ms. Wijnberg serve on the Audit Committee, which met eight times during 2018. The Board of Directors has determined that each of the Audit Committee members meet the independence and financial literacy criteria of the NASDAQ Global Select Market and the Securities and Exchange Commission. The Board also has concluded that Messrs. Bartlett and MacLellan and Ms. Wijnberg meet the criteria for an audit committee financial expert as established by the SEC. Mr. Bartlett is a certified public accountant, was an audit partner at Ernst & Young for 28 years until he left the firm in 2012, and serves as the chair of the audit committee of Rexnord Corporation and Williams Scotsman and as a member of the audit committee of FTI Consulting, Inc. Mr. MacLellan is a chartered accountant, and serves as a member of the audit committee of Magna International, Inc., and was a member of the audit committees for Ace Aviation Holdings, Inc., and Maple Leaf Sports and Entertainment, Ltd. Ms. Wijnberg was the chief financial officer of Marsh & McLennan Companies, Inc., from 2000 to 2006 and interim chief financial officer of YUM! Brands in 1999. She is currently the chair of the audit committee for Automatic Data Processing, Inc., and she served as member and chair of the audit committees of Tyco International and TE Connectivity, respectively.
Audit Committee’s Primary Responsibilities
The primary purpose of the Audit Committee is to assist the Board in fulfilling its oversight responsibilities with respect to: (1) the integrity of our financial statements and other financial information provided to our stockholders; (2) the retention of our independent registered public accounting firm, including oversight of the terms of its engagement and its performance, qualifications, and independence; (3) the performance of our internal audit function, internal controls, and disclosure controls; and (4) the Company’s risk management framework. The Audit Committee also provides an avenue for communication among our internal auditors, financial management, chief risk officer, independent registered public accounting firm, and the Board. The Audit Committee is also responsible for procedures involving the receipt, retention, and treatment of complaints or concerns regarding accounting, internal accounting controls, and auditing matters, including confidential, anonymous employee submissions. The independent registered public accounting firm reports directly to the Audit Committee and is ultimately accountable to this committee and the Board for the audit of our consolidated financial statements. In addition, the head of the Company’s internal audit department also reports directly to the Audit Committee.
Related Person Transaction Oversight
The Audit Committee is responsible under its charter for reviewing related person transactions and any change in, or waiver to, our Code of Ethics for our Principal Executive and Senior Financial Officers. Our Board has adopted a written Policy for the Review and Approval of Transactions with Related Persons. Any transaction that would require disclosure under Item 404(a) of Regulation S-K will not be initiated or materially modified until our Audit Committee has approved such transaction or modification and will not continue past its next contractual termination date unless it is annually reapproved by our Audit Committee. During its deliberations, the Audit Committee must consider all relevant details regarding the transaction including, but not limited to, any role of our employees in arranging the transaction, the potential benefits to our Company, and whether the proposed transaction is competitively bid or otherwise is on terms comparable to those available to an unrelated third party or our employees generally. The Audit Committee approves only those transactions that it determines in good faith to be on terms that are fair to us and comparable to those that could be obtained in an arms-length negotiation with an unrelated third party. Please see the disclosure provided in the section entitled “Certain Relationships and Related Transactions” beginning on page 54.
Risk Management Oversight
The Audit Committee oversees and evaluates our policies with respect to significant risks and exposures faced by the Company and the steps taken to assess, monitor, and manage those risks. The Company’s Risk and Operational Steering Committee (formerly known as the Risk Management Oversight Committee), comprised of senior members of management including our chief risk officer, oversees the Company’s risk management strategy on behalf of the Management Committee. The Risk and Operational Steering Committee develops and maintains the Company’s risk management policies and procedures, and regularly monitors the significant risks inherent to our business, including investment risk, reputational risk, business continuity risk, and operational risk. The chief risk officer, head of internal audit, and officers responsible for financial reporting, legal, and compliance periodically report on these matters to the Audit Committee. Based on these reports, the Audit Committee reports and makes recommendations as necessary to the full Board with respect to managing our overall risk.
The report of the Audit Committee appears on page 53.
12 T. ROWE PRICE GROUP
Executive Compensation and Management Development Committee
All of the non-employee independent directors of the Board serve on the Executive Compensation and Management Development Committee (Compensation Committee), which met six times during 2018. The Board of Directors has determined that each of these members meets the independence criteria of the NASDAQ Global Select Market. The report of the Compensation Committee appears on page 40.
Committee Authority
The Compensation Committee is responsible to the Board, and ultimately to our stockholders, for:
■ | determining the compensation of our president and CEO and other executive officers; |
■ | reviewing and approving general salary and compensation policies for the rest of our senior officers; |
■ | overseeing the administration of our Annual Incentive Compensation Plan (AICP), equity incentive plans, and Employee Stock Purchase Plan; |
■ | assisting management in designing new compensation policies and plans; and |
■ | reviewing and discussing the Compensation Discussion and Analysis contained in this proxy statement and other compensation disclosures with management. |
Delegation Authority
The Compensation Committee has delegated compensation decisions regarding nonexecutive officers, including the establishment of specific salary and incentive compensation levels and certain matters relating to stock-based compensation, to the Management Compensation Committee, a committee comprised of senior leaders of Price Group.
Committee Procedures
Early each year, the Compensation Committee meets with the president and CEO and members of senior management in order to discuss goals and objectives for the coming year, including goals and objectives applicable to the named executive officers (NEOs) listed in our Summary Compensation Table. In addition, the Compensation Committee determines eligibility for the AICP bonus pool and sets forth the maximum percentage that may be paid to each participant. At its meeting in December, the Compensation Committee evaluates executive performance during the year as part of its determination of appropriate incentive compensation awards.
The Compensation Committee awards annual equity incentive grants to employees from stockholder-approved long-term incentive plans as part of the Company’s annual compensation program.
Role of Executive Officers
The Compensation Committee solicits input from the president and CEO and the Management Compensation Committee regarding general compensation policies, including the appropriate level and mix of compensation. The Compensation Committee also consults with the president and CEO regarding the appropriate bonus and salary levels for other executive officers.
Role of Compensation Consultants
Johnson Associates has been the Compensation Committee’s compensation consultant, since 2017. Johnson Associates has no relationship with Price Group other than as the Compensation Committee’s consultant. See the “Role of Independent Compensation Consultant” section of our Compensation Discussion and Analysis for additional details of their role.
Nominating and Corporate Governance Committee
Mses. Snowe and Bush, and Mr. Wilson serve on our Nominating and Corporate Governance Committee, which met on six occasions during 2018. The Board of Directors has determined that all Nominating and Corporate Governance Committee members meet the independence criteria of the NASDAQ Global Select Market. The principal purpose and goal of this committee is to maintain and cultivate the effectiveness of Price Group’s Board of Directors and oversee its governance policies. Among the Nominating and Corporate Governance Committee’s responsibilities are Board and committee composition, director qualifications, orientation and education, and Board evaluations. Members identify, evaluate, and nominate Board candidates; review the compensation of independent directors; and oversee procedures regarding stockholder nominations and other communications to the Board. In addition, they are responsible for monitoring compliance with and recommending any changes to the Company’s Corporate Governance Guidelines. A report on the Nominating and Corporate Governance Committee’s activities begins on page 17 of this proxy statement.
PROXY STATEMENT 2019 13
Management Committee
The Management Committee is responsible for guiding, implementing, and reviewing major policy and operating initiatives of the Company. Mr. Stromberg is the chair of the Management Committee and other senior officers of the Company are also members. The Management Committee reports to the Board on the management and operation of the Company through Mr. Stromberg. As of March 14, 2019, current members of the Management Committee include: Christopher D. Alderson, co-head of global equity; Scott B. David, head of individual and retirement plan services; Cèline S. Dufétel, chief financial officer and treasurer; Nigel K. Faulkner, head of global technology; Robert C.T. Higginbotham, head of global investment management services; Andrew C. McCormick, head of fixed income; David Oestreicher, chief legal counsel and corporate secretary; Sebastien Page, head of global multi-asset; Dorothy C. “Dee” Sawyer, head of human resources; Robert W. Sharps, head of investments and group chief investment officer; and Eric L. Veiel, co-head of global equity. Each of these members brings extensive experience and wisdom to the management and leadership of the Company.
The Nominating and Corporate Governance Committee is responsible for periodically reviewing non-employee director compensation and benefits and recommending changes, if appropriate, to the full Board. Our non-employee director compensation program is designed to accomplish a number of objectives:
■ | Align the interests of our non-employee directors with those of our stockholders; |
■ | Provide competitive compensation for service to the Board by our non-employee directors; |
■ | Maintain appropriate consistency with our approach to compensation for our executive officers and senior employees; and |
■ | Attract and retain a diverse mix of capable and highly qualified directors. |
We provide both cash and equity compensation to our directors and believe that, over time, cash and equity compensation should reflect approximately 40% and 60%, respectively, of the total compensation paid to our directors. The cash compensation component is based primarily on an annual retainer coupled with fees for committee attendance, lead director role, and committee chair roles. The equity compensation component is in the form of full value awards. We believe our total compensation package and compensation structure is comparable to and in line with other major financial service companies.
The Nominating and Corporate Governance Committee periodically reviews and considers competitive market practices. In 2018 there were no changes to the compensation program for our non-employee directors.
Fees and Other Compensation in 2018
All non-employee directors received the following in 2018:
■ | An annual retainer of $100,000 for all non-employee directors; |
■ | A fee of $1,500 for each committee meeting attended; |
■ | A fee of $15,000 for the lead director; |
■ | A fee of $20,000 and $5,000, for the chair of the Audit Committee and each Audit Committee member, respectively; |
■ | A fee of $10,000 for the chair of the Compensation Committee; |
■ | A fee of $10,000 for the chair of the Nominating and Corporate Governance Committee; |
■ | Directors and all U.S. employees of Price Group and its subsidiaries are eligible to have our sponsored T. Rowe Price Foundation match personal gifts up to an annual limit to qualified charitable organizations. For 2018, non-employee directors were eligible to have up to $10,000 matched; |
■ | The reimbursement of reasonable out-of-pocket expenses incurred in connection with their travel to and from, and attendance at each meeting of the Board and its committees and related activities, including director education courses and materials; |
■ | The reimbursement of spousal travel to and from and participation in events held in connection with the annual joint Price Group and Price funds’ boards of directors meeting; and |
14 T. ROWE PRICE GROUP
■ | In addition to the $100,000 annual retainer fee as a non-employee director and the other compensation described above, Mr. Rogers received a fee of $100,000 for his role as the nonexecutive chair of the Board. |
The annual retainer and fees noted above are prorated for the period of time during the calendar year that each director held the position. Pursuant to the Outside Directors Deferred Compensation Plan, non-employee directors can elect to defer payment of their director fees until the next calendar year. Any such election needs to be received prior to the beginning of the year they wish to have their payment deferred. Dr. Hrabowski, Ms. Snowe, and Mr. Wilson elected to have their 2018 director fees deferred to 2019.
Equity-Based Compensation in 2018
Pursuant to the 2017 Non-Employee Director Equity Plan (2017 Director Plan) approved by the stockholders on April 26, 2017, each newly elected Board member is awarded an initial grant in the form, at their election, of restricted shares or restricted stock units (RSUs) having a value on the date of grant of $300,000 that vests one-year after the grant date. In each subsequent year, each non-employee director, except Mr. Rogers, is awarded, at their election, restricted shares or RSUs having a value on the date of grant of $200,000 on the first business day after the Annual Meeting. For Mr. Rogers, the Committee determined that, in light of his already significant stock ownership, they would pay him a cash amount of $200,000 in lieu of participating in the annual equity award provided to other non-employee directors.
Each of the award types vest upon the earliest of the non-employee director’s death or date on which the director becomes totally and permanently disabled, one year after the grant date, or the day before the annual meeting held in the calendar year after the year in which the grant is made, or the date on which a change in control occurs, provided the director continues to be a member of the Board on the applicable date.
Restricted shares entitle the holder to the rights of a stockholder, including voting, dividend, and distribution rights, but are nontransferable until they vest. Vested stock units will be settled in shares of our common stock or cash, in the case of fractional shares, upon a non-employee director’s separation from service. Non-employee directors holding stock units are not entitled to voting, dividend, distribution, or other rights until the corresponding shares of our common stock are issued upon settlement; however, if and when we pay a cash dividend to our common stockholders, we will issue dividend equivalents in the form of additional stock units. Under the 2017 Director Plan, dividends and dividend equivalents payable with respect to unvested restricted shares and unvested stock units will be subject to the same vesting and risks of forfeiture as the restricted shares and stock units to which they are attributable. The 2017 Director Plan includes a provision that accelerates the vesting of all outstanding awards in connection with a change in control of Price Group. Upon a change in control, any outstanding stock units will be settled in cash or shares at the discretion of the Board.
Ownership and Retention Guidelines
Each non-employee director added to the Board in 2015 or 2016 is required to hold shares of our common stock having a value equal to $300,000 within five years of the director’s appointment to the Board and directors added to the Board prior to 2015 have an ownership goal of $225,000 (in each case an amount equal to three (3) times the applicable cash retainer at the time of appointment). Directors who were new to the Board in 2017 or who will join in the future, have an ownership goal of five times the annual cash retainer in effect on the date they join the Board. For purposes of the calculation, unvested restricted shares and outstanding stock units are counted, but unexercised stock options are not. Once this ownership goal is achieved, the number of shares required to be held becomes fixed and must be maintained until the end of the director’s service on the Board. Until the ownership goal is achieved, the director is expected to retain “net gain shares” resulting from the exercise of stock options or vesting of restricted stock granted under the applicable director plan. Net gain shares are the shares remaining after payment of the stock option exercise price and taxes owed with respect to the exercise or vesting event. In addition, net gain shares realized under the applicable director plan after the ownership goal is achieved are expected to be held for two years prior to sale or other transfer, but not beyond the end of the director’s service on the Board. All of our directors, other than Mr. Verma who joined the Board in 2018, have achieved and maintain the ownership goal as of the date of this proxy statement.
PROXY STATEMENT 2019 15
2018 Director Compensation1
The following table sets forth information regarding the compensation earned by, or paid to, directors who served on our Board during 2018. Directors who are also officers of Price Group do not receive separate directors’ fees and have been omitted from this table. Mr. Stromberg and Mr. Bernard appear in our Summary Compensation Table as named executive officers.
Name
|
Fees Earned
or Paid in Cash |
Stock
Awards4,5 |
All Other
Compensation6 |
Total
|
||||||||
Mark S. Bartlett |
$
|
141,000
|
|
$
|
200,105
|
|
$
|
10,000
|
|
$
|
351,105
|
|
Mary K. Bush
|
$
|
118,000
|
|
$
|
237,533
|
|
$
|
10,000
|
|
$
|
365,533
|
|
H. Lawrence Culp, Jr.2
|
$
|
92,333
|
|
$
|
200,105
|
|
$
|
—
|
|
$
|
292,438
|
|
Dr. Freeman A. Hrabowski, III
|
$
|
126,000
|
|
$
|
225,796
|
|
$
|
10,000
|
|
$
|
361,796
|
|
Robert F. MacLellan
|
$
|
136,000
|
|
$
|
214,186
|
|
$
|
10,000
|
|
$
|
360,186
|
|
Brian C. Rogers
|
$
|
400,000
|
|
$
|
—
|
|
$
|
10,000
|
|
$
|
410,000
|
|
Olympia J. Snowe
|
$
|
128,000
|
|
$
|
219,659
|
|
$
|
10,000
|
|
$
|
357,659
|
|
Dwight Taylor3
|
$
|
42,500
|
|
$
|
—
|
|
$
|
—
|
|
$
|
42,500
|
|
Richard R. Verma3
|
$
|
90,750
|
|
$
|
305,662
|
|
$
|
—
|
|
$
|
396,412
|
|
Anne Marie Whittemore3
|
$
|
44,333
|
|
$
|
—
|
|
$
|
—
|
|
$
|
44,333
|
|
Sandra S. Wijnberg
|
$
|
126,000
|
|
$
|
212,836
|
|
$
|
10,000
|
|
$
|
348,836
|
|
Alan D. Wilson
|
$
|
129,250
|
|
$
|
232,882
|
|
$
|
10,000
|
|
$
|
372,132
|
|
1 | Includes only those columns relating to compensation awarded to, earned by, or paid to non-employee directors for their services in 2018. All other columns have been omitted. |
2 | Mr. Culp was paid fees for part of the year until he resigned from the Board in October 2018. The amount in the stock award column represents the grant date fair value of the annual award made in April 2018 that was forfeited under the terms of the grant agreement upon Mr. Culp’s resignation from the Board. |
3 | The fees earned by Mr. Taylor, Mr. Verma, and Ms. Whittemore represent pro-rata amounts for the time they were members of the Board in 2018. |
4 | The following table represents the equity awards granted in 2018 to certain of the non-employee directors named above. In accordance with the 2017 Director Plan, each non-employee director was awarded a grant date value of $200,000, except Mr. Verma who received an award with a grant date value of $300,000 as a newly elected director. The equity value was converted to awards or units, using the closing stock price of our common stock on the date of grant. Fractional shares were rounded up to the nearest whole share. The holders of RSUs also receive dividend equivalents in the form of additional vested stock units on each of the Company’s dividend payment dates. Fractional shares earned as dividend equivalents have been rounded to the nearest whole share. |
Director
|
Grant Date
|
Number of
Restricted Shares |
Number of
Restricted Units |
Grant Date Fair
Value of Stock and Option Awards |
||||||||
Mark S. Bartlett
|
|
4/27/2018
|
|
|
1,755
|
|
|
|
|
$
|
200,105
|
|
Mary K. Bush
|
|
3/29/2018
|
|
|
|
|
|
86
|
|
$
|
9,269
|
|
|
|
4/27/2018
|
|
|
1,755
|
|
|
|
|
$
|
200,105
|
|
|
|
6/29/2018
|
|
|
|
|
|
80
|
|
$
|
9,329
|
|
|
|
9/28/2018
|
|
|
|
|
|
86
|
|
$
|
9,385
|
|
|
|
12/28/2018
|
|
|
|
|
|
103
|
|
$
|
9,445
|
|
H. Lawrence Culp, Jr.
|
|
4/27/2018
|
|
|
1,755
|
|
|
|
|
$
|
200,105
|
|
Dr. Freeman A. Hrabowski, III
|
|
3/29/2018
|
|
|
|
|
|
50
|
|
$
|
5,444
|
|
|
|
4/27/2018
|
|
|
|
|
|
1,755
|
|
$
|
200,105
|
|
|
|
6/29/2018
|
|
|
|
|
|
58
|
|
$
|
6,708
|
|
|
|
9/28/2018
|
|
|
|
|
|
62
|
|
$
|
6,748
|
|
|
|
12/28/2018
|
|
|
|
|
|
74
|
|
$
|
6,791
|
|
Robert F. MacLellan
|
|
3/29/2018
|
|
|
|
|
|
32
|
|
$
|
3,487
|
|
|
|
4/27/2018
|
|
|
1,755
|
|
|
|
|
$
|
200,105
|
|
|
|
6/29/2018
|
|
|
|
|
|
30
|
|
$
|
3,510
|
|
|
|
9/28/2018
|
|
|
|
|
|
32
|
|
$
|
3,531
|
|
|
|
12/28/2018
|
|
|
|
|
|
39
|
|
$
|
3,553
|
|
Olympia J. Snowe
|
|
3/29/2018
|
|
|
|
|
|
36
|
|
$
|
3,924
|
|
|
|
4/27/2018
|
|
|
|
|
|
1,755
|
|
$
|
200,105
|
|
|
|
6/29/2018
|
|
|
|
|
|
45
|
|
$
|
5,178
|
|
|
|
9/28/2018
|
|
|
|
|
|
48
|
|
$
|
5,209
|
|
|
|
12/28/2018
|
|
|
|
|
|
57
|
|
$
|
5,243
|
|
16 T. ROWE PRICE GROUP
Director
|
Grant Date
|
Number of
Restricted Shares |
Number of
Restricted Units |
Grant Date Fair
Value of Stock and Option Awards |
||||||||
Richard R. Verma
|
|
4/27/2018
|
|
|
|
|
|
2,632
|
|
$
|
300,101
|
|
|
|
6/29/2018
|
|
|
|
|
|
16
|
|
$
|
1,842
|
|
|
|
9/28/2018
|
|
|
|
|
|
17
|
|
$
|
1,854
|
|
|
|
12/28/2018
|
|
|
|
|
|
20
|
|
$
|
1,865
|
|
Sandra S. Wijnberg
|
|
3/29/2018
|
|
|
|
|
|
29
|
|
$
|
3,153
|
|
|
|
4/27/2018
|
|
|
1,755
|
|
|
|
|
$
|
200,105
|
|
|
|
6/29/2018
|
|
|
|
|
|
27
|
|
$
|
3,173
|
|
|
|
9/28/2018
|
|
|
|
|
|
29
|
|
$
|
3,192
|
|
|
|
12/28/2018
|
|
|
|
|
|
35
|
|
$
|
3,213
|
|
Alan D. Wilson
|
|
3/29/2018
|
|
|
|
|
|
67
|
|
$
|
7,199
|
|
|
|
4/27/2018
|
|
|
|
|
|
1,755
|
|
$
|
200,105
|
|
|
|
6/29/2018
|
|
|
|
|
|
73
|
|
$
|
8,474
|
|
|
|
9/28/2018
|
|
|
|
|
|
78
|
|
$
|
8,525
|
|
|
|
12/28/2018
|
|
|
|
|
|
94
|
|
$
|
8,579
|
|
5 | The following table represents the aggregate number of equity awards outstanding as of December 31, 2018. The outstanding equity awards held by Mr. Rogers were granted while he was an executive officer of the Company. Mr. Culp’s unexercised option awards expire five years following his resignation from the Board. |
Director
|
Unvested
Stock Awards |
Unvested
Stock Units |
Unexercised
Option Awards |
Total
|
Vested Stock
Units |
||||||||||
Mark S. Bartlett
|
|
1,755
|
|
|
|
|
|
|
|
|
1,755
|
|
|
|
|
Mary K. Bush
|
|
1,755
|
|
|
|
|
|
|
|
|
1,755
|
|
|
13,597
|
|
H. Lawrence Culp, Jr.
|
|
|
|
|
|
|
|
8,700
|
|
|
8,700
|
|
|
|
|
Dr. Freeman A. Hrabowski, III
|
|
|
|
|
1,791
|
|
|
26,008
|
|
|
27,799
|
|
|
7,986
|
|
Robert F. MacLellan
|
|
1,755
|
|
|
|
|
|
42,942
|
|
|
44,697
|
|
|
5,115
|
|
Brian C. Rogers
|
|
|
|
|
4,260
|
|
|
132,462
|
|
|
136,722
|
|
|
|
|
Olympia J. Snowe
|
|
|
|
|
1,791
|
|
|
|
|
|
1,791
|
|
|
5,757
|
|
Richard R. Verma
|
|
|
|
|
2,685
|
|
|
|
|
|
2,685
|
|
|
|
|
Sandra S. Wijnberg
|
|
1,755
|
|
|
|
|
|
|
|
|
1,755
|
|
|
4,625
|
|
Alan D. Wilson
|
|
|
|
|
1,791
|
|
|
|
|
|
1,791
|
|
|
10,560
|
|
6 | Personal gifts matched by our sponsored T. Rowe Price Foundation to qualified charitable organizations. |
Report of the Nominating and Corporate Governance Committee
Our Nominating and Corporate Governance Committee has general oversight responsibility for governance of the Company, including the assessment and recruitment of new director candidates and the evaluation of director and Board performance. We monitor regulatory and other developments in the governance area with a view toward both legal compliance and maintaining governance practices at the Company consistent with what we consider to be best practices. In this regard, we routinely receive written and verbal information relating to best governance practices for institutions such as the Company, including input and reports from members of the Company’s proxy voting group concerning relevant trends and practices. In 2018, we adopted with approval of stockholders certain amendments to our charter that eliminated voting limitations on stockholders holding 15% or more of our outstanding common stock and removed a related super majority voting provision in our charter.
Board Leadership
Chair of the Board of Directors
In April 2017, Mr. Rogers assumed his role as the nonexecutive chair of the Board. Mr. Rogers has indicated he will retire from the Board effective as of the April 2019 Annual Meeting and, accordingly, will step down as our nonexecutive chair. The Board has announced that it will appoint Mr. Stromberg as the chair of the Board in addition to his current role as our president and CEO. By serving in both positions, Mr. Stromberg will be able to draw on his detailed knowledge of the Company to provide leadership to the Board in coordination with the lead independent director. The combined role of chair and CEO reflects our confidence in the leadership of Mr. Stromberg and also ensures that the Company presents its strategy to stockholders, employees and clients with a unified voice from the person most knowledgeable about and responsible for the implementation
PROXY STATEMENT 2019 17
of the strategy. The Board has determined that the appointment of an independent lead director, together with a combined chair and CEO, serve the best interests of the Company and its stockholders at this time. The Board is confident that the duties and responsibilities allocated to its independent lead director, together with its other corporate governance practices and strong independent board, provides appropriate and effective independent oversight of management.
Lead Independent Director
The lead independent director role was created in 2004 and has continually developed since that time. The lead independent director chairs Board meetings at which the chair is not present, approves Board agendas and meeting schedules, and oversees Board materials distributed in advance of Board meetings. The lead independent director also calls meetings of the independent directors, chairs all executive sessions of the independent directors, and acts as liaison between the independent directors and management. The lead independent director is available to the chief legal counsel and corporate secretary to discuss and, as necessary, respond to stockholder communications to the Board.
Mr. Wilson was appointed by our independent directors as Lead Independent Director after the 2018 Annual Meeting and is expected to be reappointed after the Annual Meeting.
Independent Leadership
We believe that a well-empowered lead independent director provides independent leadership to our Board. The Company has a strong independent Board, and following the Annual Meeting, all of the members of the Board other than Mr. Stromberg will be independent under the NASDAQ Global Select Market standards. In addition, this Committee, the Audit Committee, and the Compensation Committee are all composed entirely of independent directors, and our chair and lead independent director, together with these Committees, have significant and meaningful responsibilities designed to foster critical oversight and good governance practices. We believe that our structure is appropriate at this time and serves well the interests of the Company and its stockholders.
Committee Leadership
During 2015, Mr. Bartlett became chair of the Audit Committee, Mr. MacLellan became chair of the Executive Compensation Committee and Ms. Snowe became chair of the Nominating and Corporate Governance Committee. Our Corporate Governance Guidelines provide that periodic rotation of committee membership and chairpersons is desirable, and that chairpersons will generally be considered for change at least every five years. This is not an absolute rule, however, and in some circumstances continued service on a committee or as chair by persons with particular skills may be warranted.
Director Qualifications and the Nominations Process
Director Replenishment and Tenure
Messrs. Rogers and Bernard are stepping down as members of our Board effective as of the 2019 Annual Meeting. They both have been longtime members of our Board and important contributors to the Company as senior executives holding a number of roles at the Company. H. Lawrence Culp, Jr. also resigned as a member of the Board in October 2018 in connection with his appointment as the chief executive officer of General Electric Company. Richard Verma was first elected to our Board at the 2018 Annual Meeting.
A number of our long-tenured directors retired over the last five years. After the 2019 Annual Meeting, the Board will have nine directors, eight of whom are independent. The tenure of our independent directors ranges from one to nine years, with an average tenure of approximately five years. Only three of our directors have a tenure of greater than five years. Given the foregoing, and in light of trends with other boards of directors, during 2018 we increased our mandatory retirement age for directors from 72 years of age to 75 years of age.
We believe that the nominees presented in this proxy statement constitute a Board with an appropriate level and diversity of experience, education, skills, and independence. We routinely assess and monitor the capabilities of our existing directors and whether additional capabilities and independent directors should be added to the Board. In considering the need for additional independent directors, we consider any expected Board departures and retirements and factor succession planning for the Board members into our deliberations, with particular reference to specific skills and capabilities of departing Board members. We are very pleased with our current complement of directors and the varied perspectives they bring to the Board.
This committee supervises the nomination process for directors. We consider the performance, independence, diversity, and other characteristics of our incumbent directors, including their willingness to serve for an additional term, and any change in their employment or other circumstances in considering their renomination each year. In considering diversity, we consider
18 T. ROWE PRICE GROUP
diversity of background and experience as well as ethnic, gender, racial, and other forms of diversity. Although we do not have a formal policy regarding diversity in identifying nominees for a directorship, we monitor the diversity profile of the Board and consider it an important factor relevant to any particular nominee and to the overall composition of our Board.
In the event that a vacancy exists or we decide to increase the size of the Board, we identify, interview and examine, and make recommendations to the Board regarding appropriate candidates. We identify potential candidates principally through suggestions from the Company’s directors and senior management. The chair and CEO and other Board members may also seek candidates through informal discussions with third parties. During 2018, we elected to engage a national search organization to assist us in our identification of potential director candidates with capabilities fitting our required profile for potential Board members. We also consider candidates recommended or suggested by stockholders as described below.
In evaluating potential candidates, we consider independence from management, background, experience, expertise, commitment, diversity, number of other public board and related committee seats held, and potential conflicts of interest, among other factors, and take into account the composition of the Board at the time of the assessment. All candidates for nomination must:
■ | demonstrate unimpeachable character and integrity; |
■ | have sufficient time to carry out their duties; |
■ | have experience at senior levels in areas of expertise helpful to the Company and consistent with the objective of having a diverse and well-rounded Board; and |
■ | have the willingness and commitment to assume the responsibilities required of a director of the Company. |
In addition, candidates expected to serve on the Audit Committee must meet independence and financial literacy qualifications imposed by the NASDAQ Global Select Market and by the SEC and other applicable law. Candidates expected to serve on this committee or the Compensation Committee must meet independence qualifications set out by the NASDAQ Global Select Market, and members of the Compensation Committee must also meet additional independence tests imposed by the NASDAQ Global Select Market. Our evaluations of potential directors include, among other things, an assessment of a candidate’s background and credentials, personal interviews, and discussions with appropriate references. Once we have selected a candidate, we present him or her to the full Board for election if a vacancy occurs or is created by an increase in the size of the Board during the course of the year, or for nomination if the director is to be first elected by stockholders. All directors serve for one-year terms and must stand for reelection annually.
In accordance with the Company’s Corporate Governance Guidelines, the Nominating and Corporate Governance Committee considered Ms. Bush’s membership on four other public company board of directors, and approved her continued service on such public company boards, and renominated her to serve on the Board.
Board Evaluations
In January 2019, we asked all Board members to reply to an anonymous evaluation questionnaire regarding the performance of the Board and its committees during 2018. Feedback from these questionnaires was supplemented by interviews of each independent director by our Lead Independent Director. We discussed the results of the evaluations and interviews at our meeting on February 11, 2019 and provided a full report to the Board. Consistent with past practice, we will implement suggestions and conclusions from the evaluation process during the course of the upcoming year. We plan to continue to conduct evaluations and interviews each year and to periodically modify our procedures to ensure that we receive candid feedback and are responsive to future developments and suggestions from our directors.
Director Orientation and Continuing Education and Development
When a new independent director joins the Board, we provide an orientation program for the purpose of providing the new director with an understanding of the operations and the financial condition of the Company as well as the Board’s expectations for its directors. Each director is expected to maintain the necessary knowledge and information to perform his or her responsibilities as a director. To assist the directors in understanding the Company and its industry and maintaining the level of expertise required for the director, the Company will, from time to time and at least annually, offer Company-sponsored continuing education programs or presentations in addition to briefings during Board meetings relating to the competitive and industry environment and the Company’s goals and strategies.
The Board has joined the National Association of Corporate Directors, which provides resources that help directors strengthen board leadership. Each director is encouraged to participate at least once every three years in continuing education programs for public-company directors sponsored by nationally recognized educational organizations not affiliated with the Company. The cost of all such continuing education is paid for by the Company.
PROXY STATEMENT 2019 19
Stockholder Proposals
We from time to time receive stockholder proposals from our stockholders intended for inclusion in our proxy statement. We typically will work with Company management in reviewing these proposals and determine an appropriate course of action in response, including, where necessary, a statement of our position for or in opposition to the proposal from the stockholder.
Policy With Respect to the Consideration of Director Candidates Recommended or Nominated by Stockholders
Recommendations
A stockholder who wishes to recommend a candidate for the Board should send a letter to the chair of this committee at the Company’s principal executive offices providing (i) information relevant to the candidate’s satisfaction of the criteria described above under “Director Qualifications and the Nominations Process” and (ii) information that would be required for a director nomination under Section 1.11 of the Company’s Amended and Restated By-Laws. The committee will consider and evaluate candidates recommended by stockholders in the same manner it considers candidates from other sources. Acceptance of a recommendation does not imply that the committee will ultimately nominate the recommended candidate.
Proxy Access and Nominations
We have adopted a proxy access right to permit a stockholder, or a group of up to 20 stockholders, owning 3% or more of the Company’s outstanding common stock continuously for at least three years, to nominate and include in the Company’s proxy materials director-nominees constituting up to two individuals or 20% of the Board (whichever is greater), provided that the stockholder(s) and the nominee(s) satisfy the requirements specified in the amended By-Laws. Section 1.13 of Price Group’s Amended and Restated By-Laws sets out the procedures a stockholder must follow to use proxy access. Section 1.11 of Price Group’s Amended and Restated By-Laws sets out the procedures a stockholder must follow in order to nominate a candidate for Board membership outside of the proxy access process. For these requirements, please refer to the Amended and Restated By-Laws as of February 12, 2019, filed with the SEC on February 13, 2019, as Exhibit 3.1 to our Current Report on Form 8-K.
Olympia J.
Snowe, Chair
Mary K. Bush
Alan D. Wilson
20 T. ROWE PRICE GROUP
Security Ownership of Certain Beneficial Owners and Management
Stock Ownership of 5% Beneficial Owners
To our knowledge, these are the following beneficial owners of more than 5% of our outstanding common stock as of February 22, 2019.
Name and Address
|
Amount and Nature of
Beneficial Ownership |
Percent of
Class |
||||
BlackRock, Inc.
|
|
|
|
|
|
|
55 East 52nd Street
|
|
|
|
|
|
|
New York, NY 10055
|
17,275,244 shares1
|
|
7.30
|
%
|
||
|
|
|
|
|
||
State Street Corporation
|
|
|
|
|
||
State Street Financial Center
|
|
|
|
|
||
One Lincoln Street
|
|
|
|
|
||
Boston, MA 02111
|
13,001,392 shares2
|
|
5.49
|
%
|
||
|
|
|
|
|
||
The Vanguard Group
|
|
|
|
|
||
100 Vanguard Boulevard
|
|
|
|
|
||
Malvern, PA 19355
|
21,462,932 shares3
|
|
9.07
|
%
|
1 | Based solely on information contained in a Schedule 13G/A filed with the SEC on February 6, 2019, by BlackRock, Inc. Of the 17,275,244 shares beneficially owned, BlackRock, Inc., has sole power to vote or direct the vote of 15,065,615 shares and sole power to dispose or to direct the disposition of 17,275,244 shares. |
2 | Based solely on information contained in a Schedule 13G filed with the SEC on February 14, 2019, by State Street Corporation. Of the 13,001,392 shares beneficially owned, State Street Corporation has sole power to vote or direct the vote of 0 shares, sole power to dispose or to direct the disposition of 0 shares, shared power to vote or direct the vote of 11,947,718 shares, and shared power to dispose or direct the disposition of 12,998,536 shares. |
3 | Based solely on information contained in a Schedule 13G/A filed with the SEC on February 13, 2019, by The Vanguard Group. Of the 21,462,932 shares beneficially owned, The Vanguard Group has sole power to vote or direct the vote of 295,292 shares, sole power to dispose or to direct the disposition of 21,124,399 shares, shared power to vote or direct the vote of 49,455 shares, and shared power to dispose or to direct the disposition of 338,533 shares. |
Stock Ownership of Management
The following table sets forth information regarding the beneficial ownership of our common stock as of the record date, February 22, 2019, by (i) each director and each nominee for director, (ii) each person named in the Summary Compensation Table, and (iii) all directors and executive officers as a group. Share amounts and percentages shown for each individual or group in the table assume the exercise of all stock options exercisable by such individual or group within 60 days of the record date and the settlement of RSUs that are vested or will vest within 60 days of the record date. Except as otherwise noted, all shares are owned individually with sole voting and dispositive power.
Name of Beneficial Owner
|
Amount of Beneficial
Ownership |
Percent of
Class1 |
||||
Christopher D. Alderson
|
|
440,483
|
2
|
|
|
*
|
Mark S. Bartlett
|
|
20,992
|
3
|
|
|
*
|
Edward C. Bernard
|
|
1,885,842
|
4
|
|
|
*
|
Mary K. Bush
|
|
20,789
|
5
|
|
|
*
|
Céline S. Dufétel
|
|
884
|
|
|
|
*
|
Dr. Freeman A. Hrabowski, III
|
|
62,642
|
6
|
|
|
*
|
Robert F. MacLellan
|
|
55,975
|
7
|
|
|
*
|
Kenneth V. Moreland
|
|
92,103
|
8
|
|
|
*
|
Brian C. Rogers
|
|
2,818,974
|
9
|
|
1.2
|
%
|
Robert W. Sharps
|
|
428,105
|
10
|
|
|
*
|
Olympia J. Snowe
|
|
15,057
|
11
|
|
|
*
|
William J. Stromberg
|
|
1,075,413
|
12
|
|
|
*
|
Richard R. Verma
|
|
—
|
13
|
|
|
*
|
Sandra S. Wijnberg
|
|
9,217
|
14
|
|
|
*
|
Alan D. Wilson
|
|
10,560
|
15
|
|
|
*
|
Directors and All Executive Officers as a Group, excluding the former
CFO (21 persons) |
|
7,320,261
|
16
|
|
3.1
|
%
|
1 | Beneficial ownership of less than 1% is represented by an asterisk (*). |
PROXY STATEMENT 2019 21
2 | Includes 77,596 shares that may be acquired by Mr. Alderson within 60 days upon the exercise of stock options. |
3 | Includes 1,755 unvested restricted stock awards. |
4 | Includes (i) 133,775 shares that may be acquired by Mr. Bernard within 60 days upon the exercise of stock options, (ii) 269,463 shares held in a family trust, (iii) 60,500 shares held by a member of Mr. Bernard’s family, and (iv) 801,210 shares held by trusts for which Mr. Bernard is a trustee and disclaims beneficial ownership. Neither he nor any member of his family has any economic interest in the trusts described in (iv). |
5 | Includes 1,755 unvested restricted stock awards and 13,597 vested stock units that will be settled in shares of the Company’s common stock upon Ms. Bush’s separation from the Board. |
6 | Includes (i) 26,008 shares that may be acquired by Dr. Hrabowski within 60 days upon the exercise of stock options, (ii) 7,986 vested stock units that will be settled in shares of the Company’s common stock upon Dr. Hrabowski’s separation from the Board, and (iii) 28,648 shares held by a member of Dr. Hrabowski’s family. |
7 | Includes (i) 42,942 shares that may be acquired by Mr. MacLellan within 60 days upon the exercise of stock options, (ii) 1,755 unvested restricted stock awards, and (iii) 5,115 vested stock units that will be settled in shares of the Company’s common stock upon Mr. MacLellan’s separation from the Board. |
8 | Includes 7,143 shares that may be acquired by Mr. Moreland within 60 days upon the exercise of stock options. |
9 | Includes (i) 123,238 shares that may be acquired by Mr. Rogers within 60 days upon the exercise of stock options, (ii) 200,000 shares held by a member of Mr. Rogers’ family, and (iii) 225,000 shares held in a family trust in which Mr. Rogers disclaims beneficial ownership. |
10 | Includes 113,415 shares that may be acquired by Mr. Sharps within 60 days upon the exercise of stock options and 2,400 unvested restricted stock awards. |
11 | Includes 5,757 vested stock units that will be settled in shares of the Company’s common stock upon Ms. Snowe’s separation from the Board. |
12 | Includes (i) 111,775 shares that may be acquired by Mr. Stromberg within 60 days upon the exercise of stock options, (ii) 400,000 shares held by a limited liability company in which Mr. Stromberg has an interest, and (iii) 45,000 shares held in a family trust for which Mr. Stromberg disclaims beneficial ownership |
13 | Mr. Verma was elected to the Board at the 2018 Annual Meeting, and does not own any shares of the Company’s common stock. The 2,685 unvested stock units which were granted to Mr. Verma in 2018 will vest following the Annual Meeting. |
14 | Includes 1,755 unvested restricted stock awards and 4,625 vested stock units that will be settled in shares of the Company’s common stock upon Ms. Wijnberg’s separation from the Board. |
15 | Includes 10,560 vested stock units that will be settled in shares of the Company’s common stock upon Mr. Wilson’s separation from the Board. |
16 | Includes (i) 882,267 shares that may be acquired by all directors and executive officers as a group within 60 days upon the exercise of stock options, (ii) 14,742 unvested restricted stock awards held by certain directors and executive officers, (iii) 47,640 stock units held by six of the non-employee directors that are vested and will be settled in shares of the Company’s common stock upon their separation from the Board, and (iv) 2,029,821 shares held by family members, held in family trusts or limited liability companies of certain directors and executive officers, and held by trusts in which certain executive officers are trustees. |
22 T. ROWE PRICE GROUP
Section 16(a) Beneficial Ownership Reporting Compliance
We believe that all filing requirements to comply with Section 16(a) of the Securities Exchange Act were met during the calendar year 2018.
COMPENSATION DISCUSSION AND ANALYSIS
The Compensation Discussion and Analysis (CD&A) provides an overview and analysis of our executive compensation philosophy, addresses the principal elements used to compensate our executive officers and explains how our executive compensation design aligns with the Company’s strategic objectives. We address the 2018 compensation decisions and their rationale for those determinations for our named executive officers (NEOs). This CD&A should be read together with the compensation tables that follow this section. Our NEOs for 2018 are as follows:
Name
|
Title
|
William J. Stromberg
|
President and Chief Executive Officer
|
Céline S. Dufétel1
|
Chief Financial Officer and Treasurer
|
Edward C. Bernard
|
Vice Chairman
|
Robert W. Sharps2
|
Head of Investments and Group Chief Investment Officer
|
Christopher D. Alderson
|
Co-Head of Global Equity
|
Kenneth V. Moreland3
|
Former Chief Financial Officer and Treasurer
|
1 | Effective February 19, 2018, Ms. Dufétel became chief financial officer and treasurer. |
2 | Effective March 1, 2018, Mr. Sharps became the head of investments and group chief investment officer. |
3 | Effective March 1, 2018, Mr. Moreland retired from the Company. |
Our compensation programs recognize and reward performance, with a focus on rewarding the achievements of our NEOs, as measured by a number of factors over the short-term and long-term. Those factors include:
■ | the financial performance and financial stability of Price Group; |
■ | relative investment performance of our investment products; and |
■ | performance of our NEOs against pre-determined corporate and individual goals. |
Our compensation programs are also designed to reward NEOs for their contributions to the Company’s culture, service quality, customer retention, risk management, corporate reputation, and to the quality and collaboration of our associates. A significant portion of NEO compensation is performance-based and includes a material long-term incentive component tied to Company stock performance, thereby ensuring compensation is dependent on the Company’s short-term and longer-term performance.
Overall, we were pleased with our results during 2018. We continued to perform well for our clients while achieving strong financial results for the Company. Below is a summary of results for key measures that the Compensation Committee considers when evaluating NEO performance and making annual and long-term incentive compensation decisions.
PROXY STATEMENT 2019 23
2018 FINANCIAL PERFORMANCE HIGHLIGHTS
■ | Our net revenues and earnings per share have continued to grow significantly over the last five years. Results for 2018 in comparison to the prior two years and 2013 (five years) are as follows: |
|
|
Assets
Under Management (in billions) |
|
Net Revenue (in billions) |
|
Net Operating
Income (in billions) |
|
Operating Margin |
|
Net Income
Attributable to TRPG (in billions) |
|
Diluted
Earnings per Share |
|
Non-GAAP
Diluted Earnings per Share |
|
Cash
Returned to Stockholders (in billions) |
2018 |
|
$962.3 |
|
$5.4 |
|
$2.4 |
|
44% |
|
$1.8 |
|
$7.27 |
|
$7.15 |
|
$1.8 |
|
|
|
|
|
|
|
|
|
||||||||
20171 |
|
$991.1 |
|
$4.9 |
|
$2.1 |
|
43% |
|
$1.5 |
|
$5.97 |
|
$5.43 |
|
$1.0 |
|
|
|
|
|
|
|
|
|
||||||||
20161 |
|
$810.8 |
|
$4.3 |
|
$1.7 |
|
40% |
|
$1.2 |
|
$4.75 |
|
$4.49 |
|
$1.2 |
|
|
|
|
|
|
|
|
|
||||||||
2013 |
|
$692.4 |
|
$3.5 |
|
$1.6 |
|
47% |
|
$1.0 |
|
$3.90 |
|
$3.76 |
|
$.4 |
1 | Certain amounts for 2017 and 2016 have been adjusted to reflect the adoption of new revenue accounting guidance on January 1, 2018. For more information see the notes to the consolidated financial statements in Item 8 of the 2018 Annual Report Form on 10-K. |
■ | Our assets under management (AUM) decreased by $28.8 billion from December 31, 2017, to $962.3 billion as of December 31, 2018, as sharp declines in equity markets near the end of the year outweighed our solid organic growth during 2018. Clients added $13.2 billion, while market depreciation, along with distributions not reinvested, reduced AUM by $42.0 billion. |
■ | The organic AUM growth of 1.3% was driven by diversified inflows across distribution channels and geographies, the strength of our multi-asset franchise, and positive flows into international equity and fixed income. |
■ | Our net revenues increased 10.7% over 2017, as average AUM increased 14.0% over the 2017 period. |
■ | Our overall financial condition remains very strong, as we finished the year with $6.1 billion of stockholders’ equity, $3.0 billion of cash and discretionary investments, and no debt. We also had redeemable seed capital investments in T. Rowe Price investment products of $1.1 billion at December 31, 2018. |
■ | Our strong balance sheet and operating results enabled us to return $1.8 billion, or nearly 100% of 2018 net income, to stockholders through share repurchases and dividends. We increased our annual recurring dividend for the 32nd consecutive year, by 22.8%. We expended $1.1 billion to repurchase 10.8 million shares, or 4.4% of our outstanding common stock, in 2018. Dividends and stock repurchases vary depending upon our financial performance and liquidity, market conditions, and other relevant factors. |
24 T. ROWE PRICE GROUP
2018 STRATEGIC PERFORMANCE HIGHLIGHTS
■ | Strong investment performance and brand awareness are key drivers in attracting and retaining assets—and to our long-term success. The percentage of the Price funds (across primary share classes) that outperformed their comparable Morningstar median on a total return basis and that are in the top Morningstar quartile for the one-, three-, five-, and 10-years ended December 31, 2018, were: |
|
1 year
|
3 years
|
5 years
|
10 years
|
||||||||
Outperformed Morningstar median1
|
|
|
|
|
|
|
|
|
|
|
|
|
All funds
|
|
66
|
%
|
|
75
|
%
|
|
79
|
%
|
|
83
|
%
|
Multi-asset funds
|
|
71
|
%
|
|
96
|
%
|
|
88
|
%
|
|
89
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Top Morningstar quartile1
|
|
|
|
|
|
|
|
|
|
|
|
|
All funds
|
|
31
|
%
|
|
46
|
%
|
|
51
|
%
|
|
54
|
%
|
Multi-asset funds
|
|
38
|
%
|
|
62
|
%
|
|
66
|
%
|
|
79
|
%
|
1 | Source: © 2018 Morningstar, Inc. All rights reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete, or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results. Historically, the firm has disclosed the percentage of U.S. mutual funds (across all share classes) that outperformed their comparable Lipper averages on a total return basis and that are in the top Lipper quartile for the same periods. Investment performance results using the new measures are similar to the Lipper results. |
■ | 86% of our rated U.S. mutual funds’ assets under management ended the quarter with an overall rating of four or five stars from Morningstar. |
■ | The performance of our funds and institutional strategies against benchmarks remains competitive and are very strong over the ten year time period. |
■ | We were very pleased with execution on our strategic initiatives across investment capabilities, products, distribution, and technology, including creating operational efficiency gains. Highlights from the year include: |
■ | We increased our global investment professional staff nearly 7% in 2018 to more than 600, including growth of our multi-asset solutions team and hiring additional investment analysts. |
■ | We continued to expand our product offerings with the launch of several new investment strategies to meet evolving client demands. These include such strategies as Multi-Strategy Total Return, Global Equity Dividend, and Asia Credit Bond. |
■ | We saw a 20% growth in client-facing associates in our U.S. intermediaries channel that supported the expansion of our regional coverage and increasing cash flows from broker-dealers. We continued to broaden and diversify our distribution capabilities through the launch of several sub-funds, share classes, and new vehicles across our international lineups, including Japanese Investment Trust Management Company, U.K Open-ended Investment Company, SICAV, Australian Unit Trusts, and Canadian Pension Pools. |
■ | We broadened efforts in our Maryland Innovation Center to transform our clients’ digital experiences and continued to build our team of data scientists and engineers in our New York Technology Development Center. |
■ | Global investment management and trading operation processes continue to evolve to meet growing complexity. The fund accounting systems transition to BNY Mellon was completed in 2018. |
■ | We achieved compliance with significant regulations that had broad reaching impact on the firm’s operations. |
■ | Our cost optimization efforts achieved savings as planned, enabling reinvestment back into the business. |
■ | We continue to enhance our governance and operating model, with significant changes being made to the Management Committee. Most specifically, Céline S. Dufétel transitioned into the chief financial officer role following Kenneth V. Moreland’s retirement. Additionally, we prepared for Edward C. Bernard’s retirement on December 31, 2018, by realigning his leadership team under the president and CEO. Mr. Bernard will continue in his vice chairman role on the Board through the 2019 Annual Meeting. |
PROXY STATEMENT 2019 25
2018 COMPENSATION DECISIONS FOR OUR CHIEF EXECUTIVE OFFICER AND OTHER NEOs
■ | Fixed base salary composes a small portion of overall compensation, whereas performance-based pay, in annual cash incentives and long-term equity awards, represents the most significant portion. The mix of compensation elements awarded this year to our president and CEO and other continuing NEOs, as illustrated below, reflects our compensation philosophy. |
■ | For 2018, Mr. Stromberg’s total compensation increased 12% over the prior year, with most of the increase being delivered in performance-based RSUs. This increase in total compensation reflects the Compensation Committee’s assessment of Mr. Stromberg’s performance as CEO and aligns with the Company’s achievement of annual and long-term financial and strategic results previously discussed. Considerations were also made when comparing Mr. Stromberg’s pay to his peers in the industry. |
■ | On average, the other NEO’s compensation increased 13.5%. This average excludes Ms. Dufétel, as 2018 was her first year receiving an annual bonus, and Mr. Moreland, due to his retirement. |
■ | The Compensation Committee determined that, beginning in 2019, our Annual Incentive Compensation Plan (AICP) will be funded as a percentage of net operating income, and long-term equity awards to NEOs will consist of 50% time-based RSUs and 50% performance-based RSUs subject to a three-year performance goal. Further details of the changes are described under the Changes to the 2019 AICP and Long-Term Equity Awards section of this CD&A. |
■ | Mr. Moreland retired in March 2018 and did not receive a 2018 bonus or long-term equity award. Mr. Moreland was paid an amount for service he provided during a transition period leading up to his retirement on March 1, 2018. |
26 T. ROWE PRICE GROUP
EXECUTIVE COMPENSATION PRACTICES
At the 2018 Annual Meeting, our stockholders cast a non-binding advisory vote on the compensation of the NEOs. Nearly 96% of the shares voted approved the compensation paid to our NEOs. The Compensation Committee welcomed this feedback and considers this outcome supportive of our approach to executive compensation. The Compensation Committee continues to implement and maintain practices in our compensation programs and related areas that reflect responsible corporate governance and compensation programs. These include:
|
What We Do
|
What We Don’t Do
|
|
|
Include all independent directors on the Compensation Committee.
|
|
Allow executives or independent directors to short-sell the Company stock or hedge to offset a possible decrease in the market value of Company stock held by them.
|
|
|
|
|
|
Impose stock ownership and retention requirements on our independent directors, NEOs, and other select members of senior management.
|
|
Enter into change-in-control agreements with any of our executive officers.
|
|
|
|
|
|
Emphasize variable compensation, including long-term equity incentive compensation.
|
|
Provide excise tax gross-ups.
|
|
|
|
|
|
Award RSUs that are subject to a 12-month objective performance-based earning period and a five-year ratable vesting schedule. In 2019, performance-based RSUs will be
subject to a three-year performance goal.
|
|
Enter into broad-based employment agreements with our United States-based executive officers.
|
|
|
|
|
|
Impose double-trigger vesting on acceleration of awards granted under our 2012 Long-Term Incentive Plan (2012 Incentive Plan) in the event we are acquired or taken over by
another company.
|
|
Pay dividends on unearned performance-based RSUs.
|
|
|
|
|
|
Engage an independent compensation consultant who provides services only to the Compensation Committee and provides no other services to the Company or its management.
|
|
Accelerate the vesting of equity awards on an executive officer’s retirement.
|
|
|
|
|
|
Use a comprehensive risk management program designed to identify, evaluate, and control risks and our compensation and stock ownership programs work within this risk
management framework.
|
|
Permit the repricing or exchange of equity awards in any scenario without stockholder approval.
|
|
|
|
|
|
Have a recoupment policy for both cash and equity incentive compensation in place for executive officers in the event of a material restatement of our financial results
within three years of the original reporting.
|
|
Sponsor any supplemental executive retirement plans or provide significant perquisites and other personal benefits to our executive officers.
|
|
|
|
|
PROXY STATEMENT 2019 27
Executive Compensation Philosophy and Objectives
Our NEO compensation programs are designed to satisfy two core objectives:
■ | attract and retain talented and highly skilled management professionals with deep experience in investments, business leadership and client service; and |
■ | maintain alignment of interests between our management professionals and our stockholders by focusing on long-term corporate performance and value creation, emphasizing appropriate enterprise risk-taking, reinforcing a “client-focused” and collaborative culture, and rewarding associates for the achievement of strategic goals. |
We believe NEO compensation should be straight-forward, goal-oriented, longer-term focused, transparent, and consistent with stockholder interests. In addition, NEO compensation should be linked directly to our overall corporate performance, as well as to our success in achieving our long-term strategic goals.
KEY ELEMENTS OF 2018 NEO COMPENSATION
Our compensation program consists primarily of three elements: base salary, annual cash incentives, and long-term equity awards. Most NEO compensation is performance-based, which aligns pay to Company performance and to their individual performance against goals. There is no pre-established formula for the allocation between cash and non-cash compensation or between short-term and long-term awards. Instead, each year the Compensation Committee determines, at its discretion, the appropriate level and mix of short-term and long-term awards to our NEOs to reward annual performance and to encourage meeting our long-term strategic goals. The key features and purpose of the primary compensation elements are detailed in the table below.
Element
|
Key Features
|
Purpose
|
Salary
|
■ Fixed annual cash amount.
■ Salary paid to our most senior personnel in the U.S. has been capped at $350,000 since 2005. ■ Mr. Alderson’s salary has been capped at £240,000 since January 1, 2017. |
■ Represents a smaller component of total
compensation, so that the substantial majority of NEO compensation is dependent on performance-based annual incentive compensation as well as long-term equity incentives. |
Annual Incentive Compensation Plan (AICP)
|
■ Represents a material portion of the NEO’s
total compensation. ■ Administered by the Compensation Committee. ■ The AICP is part of the Company’s overall bonus pool, in which nearly all employees participate. ■ The AICP represents an aggregate maximum bonus pool available to the NEOs that is based solely on the financial performance of the Company in the current fiscal year. The Compensation Committee annually determines the maximum percentage of the total bonus pool set by the AICP that can be awarded to each NEO. ■ Actual bonus amounts awarded to each NEO are based on the Company’s financial and operating performance relative to annual goals and objectives plus individual performance and contributions of each NEO toward those results. ■ Actual amounts for each NEO are typically significantly less than the maximum amount determined under the plan. |
■ Provides structure for incentive compensation
and, coupled with the use of discretion by the Compensation Committee, aligns cash compensation of the NEOs and other senior management to the annual performance of the Company. ■ Rewards NEOs for achievement of annual Company goals and objectives that are key to our long-term strategy. ■ Provides competitive cash compensation to attract and retain diverse high-quality talent. |
28 T. ROWE PRICE GROUP
Element
|
Key Features
|
Purpose
|
Long-Term Equity Awards
|
■ Represents a material portion of the NEO’s
total compensation. ■ The value of the grant for each NEO is based on the NEO’s relative level of corporate management and functional responsibility, competitive assessment of similar roles within the marketplace, individual performance, and expected future long-term contributions. ■ For 2018, all long-term equity award values granted to NEOs were performance-based RSUs. ■ Grants are awarded at the regularly scheduled December meeting of the Compensation Committee. ■ The performance-based RSUs an NEO can earn can range from 0-100% of the total units granted based on the Company’s operating margin relative to peers. ■ For the 2018 annual grant, earned units will vest at a rate of 20% per year starting in February 2020. |
■ Creates a strong link between NEO realized compensation and stock performance. ■ Provides a significant incentive to our NEOs < |