DEF 14A: Associated Banc-Corp Outlines Executive Compensation and Governance in Proxy Statement

Associated Banc-Corp's proxy statement details executive compensation, board nominations, and corporate governance matters for the upcoming annual shareholder meeting.

Summary

• Associated Banc-Corp has released its proxy statement for the annual meeting of shareholders to be held on April 30, 2024.
• The document outlines proposals for the election of directors, advisory approval of executive compensation, the frequency of executive compensation votes, and the ratification of the selection of KPMG LLP as the independent registered public accounting firm.
• The proxy statement details the compensation of named executive officers (NEOs), including base salary, short-term incentives, and long-term incentives.
• The Compensation and Benefits Committee aims to align executive compensation with long-term shareholder value creation, provide competitive compensation, and reward performance without encouraging excessive risk-taking.
• The document also discusses related party transactions, sustainability highlights, and the company's approach to risk management and corporate governance.
• The company's 2023 Management Incentive Plan (MIP) was funded at 67% after adjustments for balance sheet repositioning and FDIC assessments.
• Long-term incentive compensation includes performance-based restricted stock units (PRSUs) and time-based restricted stock units (RSUs).
• The proxy statement includes information on stock ownership guidelines for executive officers and directors, as well as security ownership of beneficial owners.
• The Board recommends shareholders vote FOR the election of director nominees, advisory approval of NEO compensation, ONE YEAR for the frequency of NEO compensation votes, and FOR the ratification of KPMG LLP as the independent auditor.

Sentiment

Score: 6

Explanation: The document presents a mixed sentiment. While it highlights positive initiatives and strategic planning, it also acknowledges challenges and adjustments made to compensation plans due to market conditions. The overall tone is professional and transparent, but the results were worse than expected.

Positives

• The company has a robust process for shareholder communication and engagement.
• The company has stock ownership guidelines for executive officers and directors to align their interests with shareholders.
• The company has a clawback policy to recover erroneously awarded compensation.
• The company is committed to sustainability and has outlined five primary topics of interest for ongoing advancement.
• The company has a diverse board with members from various industries and backgrounds.
• The company's executive compensation program is designed to be performance-based and aligned with the interests of shareholders.

Negatives

• The 2023 Management Incentive Plan (MIP) was funded at 67% after adjustments, indicating that the company did not fully achieve its performance goals.
• The company experienced a challenging year for regional banks due to broader macroeconomic uncertainties, including increasing interest rates and bank failures.
• The company incurred a loss on a mortgage portfolio sale and investment securities losses associated with a balance sheet repositioning.

Risks

• The company faces risks related to economic conditions, interest rate fluctuations, and regulatory changes.
• The company faces risks related to cybersecurity and data privacy.
• The company faces risks related to competition for talent.
• The company faces risks related to climate change and environmental sustainability.

Future Outlook

The company aims to continue executing its people-led, digitally enabled strategic plan and refine its executive compensation program to align with shareholders' interests.

Management Comments

• The Compensation and Benefits Committee is pleased to provide highlights of the Company's 2023 performance, demonstrate how our compensation program aligns to that performance, and share how we continue to incorporate feedback from our shareholders.
• Our executive team attacked these challenges head on by immediately enhancing our liquidity position and ensuring capital levels were above our internal targets and well-above regulatory requirements.
• We also drove a 4-year high in digital customer satisfaction by launching 11 major customer-facing digital platform upgrades, while simultaneously improving new consumer household acquisitions, lowering consumer customer attrition and increasing core customer deposits in the second half of 2023, once the instability in the regional banking sector had begun to subside.

Industry Context

The document acknowledges the challenging year for regional banks due to macroeconomic uncertainties and bank failures, highlighting the importance of risk management and strategic planning.

Comparison to Industry Standards

• The company benchmarks executive compensation against a peer group of 21 bank holding companies with similar size and business composition.
• The peer group ranges in asset size from approximately $17.6 billion to approximately $57.3 billion, with a median asset size of approximately $36.5 billion.
• The company also considers broader banking and financial services industry survey data as part of its compensation determinations.
• The company's relative Total Shareholder Return (TSR) is measured against the peer group.
• The company's relative Return on Common Equity Tier 1 (ROCET1) is measured against the peer group over a three-year performance period.

Related Party Transactions

• Certain officers and directors of Associated and its subsidiaries, members of their families, and the companies or firms with which they are affiliated were customers of, and had banking transactions with, Associated's subsidiary bank and/or investment subsidiaries in the ordinary course of business since the beginning of fiscal year 2023.
• Cory L. Nettles, a director of Associated since 2013, is the Founder and Managing Director of Generation Growth Capital, Inc. (Generation Growth Capital), a private equity fund manager.
• In February 2022, Generation Growth Capital leased space in the Associated Bank River Center in Milwaukee, Wisconsin, from Milwaukee Center Management, LLC, a subsidiary of Associated.

Stakeholder Impact

• The proxy statement provides information to shareholders to make informed decisions about the company's governance and executive compensation.
• The company's sustainability initiatives aim to benefit communities and the environment.
• The company's risk management practices aim to protect customers and maintain the company's value.
• The company's executive compensation program aims to attract and retain talented executives to drive long-term shareholder value.

Next Steps

• Shareholders are encouraged to vote on the proposals outlined in the proxy statement.
• The Board and Compensation and Benefits Committee will consider the outcome of the advisory votes when making future decisions.
• The company will continue to engage with shareholders and refine its executive compensation program.
• The company will continue to monitor and manage risks related to economic conditions, cybersecurity, and sustainability.

Key Dates

Keywords

executive compensation, proxy statement, corporate governance, board of directors, shareholder meeting, sustainability, risk management, KPMG, incentive plan, stock ownership