UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
PROXY
STATEMENT PURSUANT TO SECTION 14(a) OF
THE SECURITIES EXCHANGE ACT OF 1934
(Amendment No. )
Filed by the Registrant
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Filed by a Party other than the
Registrant
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Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to §240.14a-12
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THE BANK OF NEW YORK MELLON CORPORATION
(Name of
Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act
Rule 0-11
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
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Form, Schedule or Registration Statement No.:
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Table of
Contents
March 10, 2017
Dear Fellow Stockholder:
On behalf of the Board of
Directors, we cordially invite you to our 2017 Annual Meeting of Stockholders to be held on Tuesday, April 11, 2017 at 9 a.m., Eastern time, at 101 Barclay Street, New York, New York 10286.
At this years Annual Meeting, you will be asked to vote on several items, including the election of directors, our 2016 executive compensation program (the
say-on-pay
vote), the frequency with which we should conduct a
say-on-pay
vote and
a stockholder proposal, if properly presented. Detailed information about the director nominees, including their specific experience and qualifications, begins on page 7. Our Compensation Discussion and Analysis, which explains our continued
commitment to pay for performance, alignment with stockholders interests and appropriate risk-taking in the context of our 2016 incentive compensation decisions, begins on page 35. A summary of why we are seeking stockholder input on
say-on-pay
vote frequency is on page 72. We appreciate the opportunity to provide you with these details of your Boards actions in 2016 and recommendations for 2017. We
encourage you to read the proxy statement carefully for more information.
Your vote is important to us
, and we hope that you will participate in
the Annual Meeting, either by attending and voting in person or by voting as promptly as possible through any of the acceptable means described in this proxy statement. Instructions on how to vote begin on page 82. You may also listen to the meeting
at https://www.bnymellon.com/us/en/investor-relations/index.jsp.
Thank you for your continued support of BNY Mellon, and we look forward to seeing you
at the Annual Meeting.
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Sincerely,
Gerald L. Hassell
Chairman
and CEO
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BNY Mellon
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2017 Proxy Statement
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1
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TUESDAY, APRIL 11, 2017
9:00 a.m., Eastern time
101 Barclay Street, New York, New York 10286
Record Date: February 10, 2017
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AGENDA
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BOARD
RECOMMENDATION
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1.
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To elect the 13 nominees named in this proxy statement to serve on our Board of Directors until the 2018 annual meeting
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FOR
each director nominee
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2.
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To provide an advisory vote for approval of the 2016 compensation of our named executives, as disclosed in this proxy statement
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FOR
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3.
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To provide an advisory vote recommending the frequency with which we conduct a
say-on-pay
vote
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FOR
a vote
EVERY
year
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4.
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To ratify the appointment of KPMG LLP as our independent auditor for 2017
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FOR
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5.
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To consider a stockholder proposal regarding a proxy voting review report, if properly presented
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AGAINST
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We will also act on any other business that is properly raised.
March 10, 2017
By Order of the Board of Directors,
Craig T. Beazer
Corporate Secretary
IT IS IMPORTANT THAT YOU CAREFULLY READ
YOUR PROXY STATEMENT AND VOTE.
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VIA THE INTERNET
Visit the website
listed on your proxy card
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BY TELEPHONE
Call the telephone number listed on your proxy card
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IN PERSON
Attend the annual meeting (see page 82 for more information)
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BY MAIL
Mail in a completed
proxy card
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Important Notice Regarding the
Availability of Proxy Materials for the Stockholder Meeting to be held
on April 11, 2017: Our 2017 proxy statement and 2016 Annual Report to stockholders are available
at www.envisionreports.com/bk.
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2
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BNY Mellon
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2017 Proxy Statement
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The following information is presented to provide context for the operation of our pay program which is discussed in
more detail on page 6 of this introduction and throughout our Compensation Discussion and Analysis beginning on page 35 of this proxy statement.
2016 Performance Highlights
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Operating EPS*
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Adjusted
Pre-Tax
Operating Margin*
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Adjusted Noninterest
Expense*
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Adjusted Return on Tangible
Common Equity*
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Progressing Towards Achieving Our Three-Year Financial Goals
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p
15%**
2-year
operating
EPS*
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p
2%**
2-year
adjusted
revenue*
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p
21%
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2-year
adjusted return
on tangible
common equity*
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Adjusted pre-tax operating margin up 449 basis points to 33%*
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Awards and Recognition
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Investment Services
Tri-Party
Agent of the Year
Global Investor/ISF
, 2016
Custodian of the Year and Most Innovative Project of the Year
Risk.net
,
2016
Best Global Corporate Trust Service Provider
Global Finance
,
2016
Treasury Services
Best Treasury and Cash Management Providers
Global Finance
, 2016
Markets
Best Foreign Exchange Providers
Global Finance,
2016
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Investment Management
Top U.S. Private Bank
Family Wealth Report,
2016
Equity Manager of the Year Newton Investment
Management
UK Pensions
,
2016
LDI Manager of the Year Insight Investment
Financial News
,
2016
Fixed Income Manager of the Year Insight Investment
Financial News
, 2016
Corporate Social Responsibility
Dow Jones Sustainability World Index
2016
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Technology
Digital Edge 25 Award
2016
Top Companies for Women
Technologists Leadership Index
Anita Borg Institute
, 2016
Workplace
Best Places to Interview
Glassdoor
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2016
Financial Services Gender-Equality Index
Bloomberg
,
2016
100% Corporate Equality Index
Human Rights
Campaign
, 2017
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*
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Operating EPS, adjusted
pre-tax
operating margin, adjusted noninterest expense, adjusted return on tangible common equity and adjusted
revenue are
non-GAAP
measures. For a reconciliation and explanation of these
non-GAAP
measures, see Annex A. On a comparable GAAP basis, for 2015 and 2016 respectively,
EPS was $2.71 and $3.15,
pre-tax
operating margin was 28% and 31%, noninterest expense (in millions) was $10,799 and $10,523, return on equity was 8.6% and 9.6% and revenue (in millions) was $15,194 and
$15,237
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**
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Values reflect cumulative 2015-2016 performance. On a comparable GAAP basis, EPS increased 21%, revenue decreased 1%, return on equity increased 280 basis points and
pre-tax
operating margin increased 830 basis points.
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BNY Mellon
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2017 Proxy Statement
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3
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DIRECTOR NOMINEES
Our directors contribute to the strength of our Board through the variety of their experience, diversity, differing perspectives and
institutional knowledge.
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COMMITTEE MEMBERSHIPS
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Name
(1)
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Occupation
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Independent
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Audit
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Corp. Gov. & Nom.
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Corp. Social Resp.
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Finance
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Human Res. & Comp.
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Risk
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Technology
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Other Current
Public Company
Board Service
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Linda Z.
Cook
Age 58, Director since 2016
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Managing Director of EIG Global Energy Partners and CEO of Harbour Energy, Ltd.
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0
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Nicholas M.
Donofrio
Age 71, Director since 1999
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Retired EVP, Innovation & Technology of IBM Corporation
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C
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Joseph J.
Echevarria
Age 60, Director since 2015
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Retired CEO of Deloitte LLP
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(2)
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C
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3
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Edward P.
Garden
Age 55, Director since 2014
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Chief Investment Officer and a founding partner of Trian Fund Management, L.P.
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C
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Jeffrey A.
Goldstein
Age 61, Director since 2014
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Senior Advisor, Hellman & Friedman LLC
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C
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1
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Gerald L.
Hassell
Age 65, Director since 1998
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Chairman & CEO of The Bank of New York Mellon Corporation
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John M.
Hinshaw
Age 46, Director since 2014
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Former EVP and Chief Customer Officer of Hewlett Packard Enterprise Company
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0
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Edmund F.
Ted Kelly
Age 71, Director since 2004
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Retired Chairman of Liberty Mutual Group
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C
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1
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John A. Luke,
Jr.
Age 68, Director since 1996
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Non-Executive
Chairman of WestRock Company
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3
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Jennifer B.
Morgan
Age 45, Director since 2016
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President of SAP North America
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Mark A.
Nordenberg
Age 68, Director since 1998
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Chancellor Emeritus, Chair of the Institute of Politics and Distinguished Service Professor of Law of the University of Pittsburgh
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C
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0
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Elizabeth E.
Robinson
Age 48, Director since 2016
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Retired Global Treasurer of The Goldman Sachs Group, Inc.
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Samuel C.
Scott III
Age 72, Director since 2003
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Retired Chairman, President & CEO of Ingredion Incorporated
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C
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2
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(1)
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Catherine A. Rein, a member of our Audit and Corporate Governance and Nominating Committees, is retiring as a director of our company immediately after our Annual Meeting.
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4
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BNY Mellon
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2017 Proxy Statement
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COMMITTEES
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Audit
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Finance
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Chair:
Joseph J.
Echevarria
Members:
John A. Luke, Jr., Jennifer B. Morgan, Mark A. Nordenberg, Catherine A. Rein, Samuel C. Scott III
2016 Meetings:
13
Key Responsibilities:
Overseeing our registered independent public accountants, internal
audit function, and internal controls over financial statements and reports.
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Chair:
Jeffrey A.
Goldstein
Members:
Joseph J. Echevarria, Edward P. Garden, Elizabeth E. Robinson
2016 Meetings:
6
Key Responsibilities:
Monitoring and overseeing our financial resources and strategies; and reviewing forecasts and budgets, net interest revenue plans, investment portfolio activities, capital structure,
capital raising and capital distribution initiatives that exceed our Corporate Governance Guidelines thresholds.
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Corporate Governance and Nominating
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Human Resources and Compensation
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Chair:
Mark A.
Nordenberg
Members:
Linda Z. Cook, Nicholas M. Donofrio, Edward P. Garden, John A. Luke, Jr., Catherine A. Rein
2016 Meetings:
9
Key Responsibilities:
Identifying and reviewing potential directors, and reviewing
non-employee
director compensation; maintaining our Corporate Governance Guidelines; overseeing annual Board and committee evaluations; and reviewing structure, responsibilities and membership of
committees.
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Chair:
Edward P.
Garden
Members:
Jeffrey A. Goldstein, Edmund F. Ted Kelly, Samuel C. Scott III
2016 Meetings:
6
Key Responsibilities:
Overseeing employee compensation and benefits, management
development and succession and diversity and inclusion programs; and administering our incentive compensation plans, including equity incentive compensation plans.
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Corporate Social Responsibility
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Risk
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Chair:
Samuel C. Scott
III
Members:
Nicholas M. Donofrio, Joseph J. Echevarria, Mark A. Nordenberg
2016 Meetings:
3
Key Responsibilities:
Promoting culture of exemplary corporate citizenship; overseeing our philanthropy, community involvement, and advocacy; assessing the impact of our businesses, operations and programs
from a social responsibility perspective reflecting varied stakeholders interests; and overseeing Community Reinvestment Act and Fair Lending compliance.
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Chair:
Edmund F. Ted Kelly
Members:
Linda Z. Cook, Nicholas M. Donofrio, Edward P. Garden, Jeffrey A Goldstein, John M. Hinshaw, Elizabeth E. Robinson
2016 Meetings:
5
Key Responsibilities:
Approving enterprise-wide risk management practices, our risk
appetite statement and our global risk management framework; evaluating risk exposure and tolerance; and reviewing policies and practices regarding risk assessment and risk management.
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Technology
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Chair:
Nicholas M.
Donofrio
Members:
John M. Hinshaw, Jennifer B. Morgan, Mark A. Nordenberg
2016 Meetings:
8
Key Responsibilities:
Approving our technology planning and strategy; reviewing significant technology investments; and monitoring technology trends relative to our business strategy.
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BNY Mellon
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2017 Proxy Statement
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5
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GOVERNANCE AND COMPENSATION
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Robust Stockholder
Rights
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Active, Independent Board
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Our Culture
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No staggered board
Special meeting
rights
for stockholders, individually or in a group, holding 20% of our outstanding common stock
Proxy access
allowing stockholders, individually or in a group of up to 20, holding 3%
of our outstanding stock for at least 3 years to nominate up to 20% of the Board
No plurality voting
in uncontested director elections (each director must be elected by majority of votes cast)
No supermajority
voting:
stockholder actions require only majority of votes cast (not majority of shares present and entitled to vote)
No poison pill (stockholders rights plan)
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Continued, active engagement
with our stakeholders
Independent board:
our Board is comprised solely of independent directors other than
our CEO and meets in regular executive sessions
Independent Lead Director:
selected by our independent directors and empowered with broad authority
Board succession and
refreshment:
our Board, led by the Corporate Governance and Nominating Committee recruiting efforts, added three new independent directors in 2016
Lead Director and Committee Chairman rotation:
our Lead Director and committee
chairmen are required to rotate at five-year intervals
High rate of attendance:
average 2016 attendance at Board and committee meetings was 93%
A substantial portion of director compensation is paid in
equity that is retained until
retirement
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Risk-aware:
we protect against excessive risk-taking through multiple lines of
defense, including Board oversight
Honest and accountable:
our codes of conduct apply to all employees and directors to
provide a framework for ethical conduct
Innovative and evolving:
we encourage directors to participate in continuing education
programs, and have continued to enhance our integrated learning and development platform for employees through BNY Mellon University (BKU)
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Awarded 2016 Total Direct Compensation
(1)
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Named
Executives
(2)
(NEOs)
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Salary
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Incentive Compensation
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Total
Incentive
as % of
Target
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Awarded Total
Direct
Compensation
(1)
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Cash
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RSUs
(3)
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PSUs
(3)
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Gerald L.
Hassell
Chairman & CEO
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$1,000,000
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$4,326,000
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$4,326,000
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$8,652,000
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124%
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$18,304,000
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Thomas P.
(Todd) Gibbons
Vice Chairman & CFO
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$650,000
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$2,354,580
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$1,962,150
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$3,531,870
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124%
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$8,498,600
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Brian T.
Shea
Vice Chairman & CEO of
Investment Services
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$650,000
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$2,388,870
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$1,990,725
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$3,583,305
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125%
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$8,612,900
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Karen B.
Peetz
President
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$650,000
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$1,353,938
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$3,159,187
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$0
(4)
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104%
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$5,163,125
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Mitchell E.
Harris
CEO of Investment Management
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$650,000
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$1,736,438
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$1,447,031
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$2,604,656
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79%
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$6,438,125
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1
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The amounts reported as Awarded Total Direct Compensation differ substantially from the amounts determined under SEC rules as reported for 2016 in the Total column of
the Summary Compensation Table set forth on page 60. The above table is not a substitute for the Summary Compensation Table.
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2
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Our NEOs for 2016 also include Curtis Y. Arledge, former Vice Chairman and CEO of Investment Management. Mr. Arledges employment with the company terminated effective
March 23, 2016.
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3
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Restricted stock units (RSUs) vest in equal installments over three years. Performance-based restricted stock units (PSUs) are earned between 0
150% based on the achievement of performance metrics over the 2017 2019 performance period.
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4
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Ms. Peetzs incentive award was paid in cash and RSUs in light of her retirement on December 31, 2016.
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BNY Mellon
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2017 Proxy Statement
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ITEM 1. ELECTION OF DIRECTORS
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Item 1. Election of
Directors
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BNY Mellon
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2017 Proxy Statement
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7
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ITEM 1. ELECTION OF DIRECTORS
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>
Resolution
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Proposal
We are asking stockholders to elect
the 13 nominees named in this proxy statement to serve on the Board of Directors of The Bank of New York Mellon Corporation (the company, BNY Mellon, we or us) until the 2018 Annual Meeting of
stockholders or until their successors have been duly elected and qualified.
Background
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Each nominee currently serves on our Board of
Directors.
12
nominees are currently independent directors and one nominee serves as the companys Chairman and Chief Executive Officer.
Catherine A. Rein, currently a director of our company, will not be standing for reelection
at our Annual Meeting.
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The Board and the Corporate Governance and Nominating Committee
(CG&N Committee) have concluded that each of our nominees should be recommended for
re-nomination
as a director as described on page 16 after considering, among other things, the nominees
(1) professional background and experience, (2) senior level policy-making positions, (3) other public company board experience, (4) diversity, (5) intangible attributes, (6) prior BNY Mellon Board experience, and
(7) Board attendance and participation.
The nominees have skills and expertise in a wide range of areas, including technology,
accounting, private equity, financial regulation, financial services, global management, insurance, risk management and legal matters.
The nominees are able to devote the necessary time and effort to BNY Mellon
matters.
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Voting
We do
not know of any reason why any nominee named in this proxy statement would be unable to serve as a director if elected. If any nominee is unable to serve, the shares represented by all valid proxies will be voted for the election of such other
person as may be nominated in accordance with our
by-laws,
as described on page 17. Proxies cannot be voted for a greater number of persons than the number of nominees named in this proxy statement.
Each director will be elected if more votes are cast for the directors election than are cast against the directors
election, with abstentions and broker
non-votes
not being counted as a vote cast either for or against the directors election. Pursuant to our Corporate Governance Guidelines, if
any incumbent director fails to receive a majority of the votes cast, the director will be required to tender his or her resignation promptly after the certification of the stockholder vote. Our CG&N Committee will promptly consider the tendered
resignation and recommend to the Board whether to accept or reject it, or whether other actions should be taken. More information on our voting standard and the CG&N Committees consideration of tendered resignations is provided on page 17
below.
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2017 Proxy Statement
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ITEM 1. ELECTION OF DIRECTORS
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>
Nominees
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Linda Z. Cook
Age 58
Independent Director since 2016
Managing Director
of EIG Global Energy Partners and CEO of Harbour Energy, Ltd.
Retired Executive
Committee Member and Director of Royal Dutch Shell plc
Committees:
Corporate
Governance and Nominating, Risk
Other Current Public Company Board
Service:
None
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Nicholas M. Donofrio
Age 71
Independent Director of BNY Mellon and predecessor companies since 1999
Retired Executive Vice President, Innovation and Technology of IBM Corporation
Committees:
Corporate Governance and Nominating, Corporate Social Responsibility, Risk, Technology (Chairman)
Other Current Public Company Board Service:
Advanced Micro Devices, Inc.; Delphi Automotive PLC
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Ms. Cook is a Managing Director and member of the Executive Committee of EIG Global Energy Partners, an
investment firm focused on the global energy industry, and CEO of Harbour Energy, Ltd., an energy investment vehicle. Ms. Cook joined EIG in 2014, after spending over 29 years with Royal Dutch Shell at various companies in the U.S., the
Netherlands, the United Kingdom and Canada. At her retirement from Royal Dutch Shell, Ms. Cook was a member of the Executive Committee in the Netherlands headquarters and a member of the Board of Directors. Her primary executive responsibility
was Shells global upstream Natural Gas business in addition to oversight for Shells global trading business, Shell Renewable Energy, and Shells Downstream R&D and Major Projects organizations. Ms. Cook previously was CEO
of Shell Canada Limited, CEO of Shell Gas & Power and Executive VP of Finance, Strategy and HR for Shells global Exploration and Production businesses.
Ms. Cook has previously served on the Boards of Directors of KBR, Inc., The Boeing Company, Marathon Oil Corporation, Cargill Inc., Royal Dutch Shell plc, Royal Dutch Shell Petroleum Co. NV and Shell Canada
Limited. Ms. Cook is also a member of the National Petroleum Council, an advisory committee to the U.S. Secretary of Energy, and the Society of Petroleum Engineers and is a Trustee of the University of Kansas Endowment Association.
Ms. Cook earned a Bachelor of Science degree in Petroleum Engineering from the University of Kansas.
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International business operations experience at a senior policy-making level of a large, complex company
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Expertise in financing, operating and investing in companies
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Extensive service on the boards of several large public companies in regulated industries
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Mr. Donofrio served as Executive Vice President, Innovation and Technology of International Business Machines
(IBM) Corporation, a developer, manufacturer and provider of advanced information technologies and services, from 2005 until his retirement in 2008. Mr. Donofrio previously served as Senior Vice President, Technology and
Manufacturing of IBM Corporation from 1997 to 2005 and spent a total of 44 years as an employee of IBM Corporation. In addition to the public company board service noted above, Mr. Donofrio currently serves as a director of Liberty Mutual
Group. He previously served as a director of The Bank of New York Company, Inc. (The Bank of New York) from 1999 to 2007 and has served as a director of the company since 2007.
Mr. Donofrio holds seven technology patents and is a member of numerous technical and science honor societies. Mr. Donofrio serves as a director of the National Association of Corporate Directors, is a
Trustee Emeritus of the New York Hall of Science, is a director of Sproxil, Inc. and OBrien & Gere, is on the board of advisors of StarVest Partners, L.P. and Ultra Capital, LLC and is a member of the Board of Trustees of Syracuse
University. Mr. Donofrio earned a Bachelor of Science degree from Rensselaer Polytechnic Institute and a Master of Science degree from Syracuse University.
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Expertise in technology issues
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Senior level policy-making experience in the field of engineering
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Teaching and training in the area of innovation
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BNY Mellon
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2017 Proxy Statement
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ITEM 1. ELECTION OF DIRECTORS
> Nominees
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Joseph J. Echevarria
Age 60
Independent Director since 2015; Lead Director since 2016
Retired CEO of Deloitte LLP
Committees:
Audit (Chairman), Corporate Social Responsibility, Finance
Other
Current Public Company Board Service:
Pfizer Inc.; Unum Group; Xerox Corporation
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Edward P. Garden
Age 55
Independent Director since 2014
Chief Investment
Officer and a founding partner of Trian Fund Management, L.P.
Committees:
Corporate Governance and Nominating, Finance, Human Resources and Compensation (Chairman), Risk
Other Current Public Company Board Service:
Pentair plc
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Mr. Echevarria served as Chief Executive Officer of Deloitte LLP, a global provider of professional services,
from 2011 until his retirement in 2014. Mr. Echevarria previously served in increasingly senior leadership positions during his
36-year
career at the firm, including U.S. Managing Partner for Operations,
prior to being named Chief Executive Officer. In addition to the public company board service noted above, Mr. Echevarria currently serves as a Trustee of the University of Miami and a Member of the Private Export Council, the principal
national advisory committee on international trade. He also serves as the Chair Emeritus of former President Obamas My Brothers Keeper Alliance. Mr. Echevarria has served as a director of the company since 2015. Mr. Echevarria
earned his bachelors degree in business administration from the University of Miami.
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Leadership of a large, global company
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Financial expert, with expertise in accounting, regulatory and compliance issues
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Senior level policy-making experience in the field of professional services
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Mr. Garden has been Chief Investment Officer and a founding partner of Trian Fund Management, L.P.
(Trian), a multi-billion dollar alternative investment management firm, since November 2005. He has served as a director of the company since 2014.
Mr. Garden served as a director of Family Dollar Stores, Inc., a discount retailer, from September 2011 until its acquisition by Dollar Tree, Inc. in July 2015, and as a director of The Wendys Company
from December 2004 to December 2015. Previously he served as Vice Chairman and a director of Triarc Companies, Inc. from December 2004 through June 2007 and Executive Vice President from August 2003 until December 2004. From 1999 to 2003,
Mr. Garden was a managing director of Credit Suisse First Boston, where he served as a senior investment banker in the Financial Sponsors Group. From 1994 to 1999, he was a managing director at BT Alex Brown, where he was a senior member of the
Financial Sponsors Group and, prior to that,
co-head
of Equity Capital Markets. Mr. Garden graduated from Harvard College with a B.A. in Economics.
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Expertise in financing, operating and investing in companies
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Extensive service on the boards of several large public companies
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2017 Proxy Statement
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ITEM 1. ELECTION OF DIRECTORS
> Nominees
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Jeffrey A. Goldstein
Age 61
Independent Director since 2014
Senior Advisor,
Hellman & Friedman LLC and Former Under Secretary of the Treasury for Domestic Finance
Committees:
Finance (Chairman), Human Resources and Compensation, Risk
Other Current Public Company Board Service:
Westfield Corporation
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Gerald L. Hassell
Age 65
Management Director of BNY Mellon and predecessor companies since 1998
Chairman and Chief Executive Officer of The Bank of New York Mellon Corporation
Committees:
None
Other Current
Public Company Board Service:
Comcast Corporation
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Mr. Goldstein is a Senior Advisor at Hellman & Friedman LLC, a private equity firm. He was a Managing
Director at Hellman & Friedman from 2011 to 2016 and was previously at the firm from 2004 to 2009. He was Under Secretary of the Treasury for Domestic Finance and Counselor to the Secretary of the Treasury from 2009 to 2011.
Mr. Goldstein has served as a director of the company since 2014.
Mr. Goldstein worked at James D. Wolfensohn Inc. and successor firms for 15
years. When Wolfensohn & Co. was purchased by Bankers Trust in 1996, he served as
co-chairman
of BT Wolfensohn and as a member of Bankers Trusts management committee. In 1999, Mr. Goldstein
became a managing director of the World Bank. He also served as its Chief Financial Officer beginning in 2003. In July of 2009, President Barack Obama nominated Mr. Goldstein to be Under Secretary of the Treasury for Domestic Finance. In July
2011, Secretary of the Treasury Timothy F. Geithner awarded Mr. Goldstein with the Alexander Hamilton award, the highest honor for a presidential appointee. Earlier in his career Mr. Goldstein taught economics at Princeton University and
worked at the Brookings Institution. In addition to the public company board service noted above, Mr. Goldstein is a member of the Board of Directors of Edelman Financial Services, LLC and on the Advisory Board of Promontory Financial Group,
LLC. He also serves on the Board of Trustees of Vassar College. Mr. Goldstein earned a Bachelor of Arts degree from Vassar College and a Master of Arts, Master of Philosophy and a Ph.D. in economics from Yale University.
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Experience in private equity
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Expertise in the operations of large financial institutions
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Experience in financial regulation and banking
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Mr. Hassell has served as our Chief Executive Officer since 2011 and served as our President since the merger of
The Bank of New York and Mellon Financial Corporation (Mellon) in 2007 (the merger) through 2012. Prior to the merger, Mr. Hassell served as President of The Bank of New York from 1998 to 2007. He served as a director of
The Bank of New York from 1998 to 2007 and has served as a director of the company since 2007. Since joining The Bank of New Yorks Management Development Program more than three decades ago, Mr. Hassell has held a number of key leadership
positions within the company in securities servicing, corporate banking, credit, strategic planning and administration services.
In addition to the
public company board service noted above, Mr. Hassell is also a director of the Lincoln Center for the Performing Arts, Vice Chair of Big Brothers/Big Sisters of New York and a member of the Board of Visitors of Columbia University Medical
Center. Mr. Hassell holds a Bachelor of Arts degree from Duke University and a Master in Business Administration degree from the New York University Stern School of Business.
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Knowledge of the companys businesses and operations
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Participation in financial services industry associations
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Experience in the financial services industry
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BNY Mellon
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2017 Proxy Statement
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ITEM 1. ELECTION OF DIRECTORS
> Nominees
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John M. Hinshaw
Age 46
Independent Director since 2014
Former Executive
Vice President and Chief Customer Officer of Hewlett Packard Enterprise Company
Committees:
Risk, Technology
Other Current Public Company Board Service:
None
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Edmund F. Ted Kelly
Age 71
Independent Director of BNY Mellon and predecessor companies since 2004
Retired Chairman of Liberty Mutual Group
Committees:
Human Resources and Compensation, Risk (Chairman)
Other Current Public Company Board Service:
None
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Mr. Hinshaw served as Executive Vice President of Hewlett Packard and Hewlett Packard Enterprise from 2011 to
2016, running Technology and Operations and serving as Chief Customer Officer. Mr. Hinshaw has served as a director of the company since 2014.
Prior to joining Hewlett-Packard Company, Mr. Hinshaw served as Vice President and General Manager for Boeing Information Solutions at The Boeing Company.
Before that, he served as Boeings Chief Information Officer and led their companywide corporate initiative on information management and information security. Mr. Hinshaw also spent 14 years at Verizon Communications where, among several
senior roles, he was Senior Vice President and Chief Information Officer of Verizon Wireless, overseeing the IT function of the wireless carrier. Mr. Hinshaw is also a board member of DocuSign, Inc., a provider of electronic signature
transaction management, and NAF, an educational
non-profit
organization. He received a B.B.A. in Computer Information Systems and Decision Support Sciences from James Madison University.
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Technology and management expertise
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Experience in the operations of large, complex companies
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Leadership roles in several different industries
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Mr. Kelly served as Chairman (from 2000 to 2013), President (from 1992 to 2010) and Chief Executive Officer
(from 1998 to 2011) of Liberty Mutual Group, a multi-line insurance company. Mr. Kelly served as a director of Mellon from 2004 to 2007 and has served as a director of the company since 2007.
Mr. Kellys experience also includes senior-level management positions at Aetna Life & Casualty Company. Mr. Kelly was a director of
Citizens Financial Group Inc., where he served as Chair of the Audit Committee and Chair of the Joint Risk Assessment Committee. Mr. Kelly is also a member of the Board of Trustees of the Boston Symphony Orchestra; a member of the Senior
Advisory Council of the New England College of Business and Finance; a member of the Bretton Woods Committee; a past member of the Board of Trustees for Boston College and former President of the Boston Minuteman Council of the Boy Scouts of
America. Mr. Kelly received a Bachelor of Arts degree from Queens University in Belfast and a Ph.D. from the Massachusetts Institute of Technology.
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Leadership of a large public company in a highly regulated industry
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Experience in risk management
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Senior level policy-making experience in the insurance industry
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2017 Proxy Statement
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ITEM 1. ELECTION OF DIRECTORS
> Nominees
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John A. Luke, Jr.
Age 68
Independent Director of BNY Mellon and predecessor companies since 1996
Non-Executive
Chairman of WestRock Company
Committees:
Audit, Corporate Governance and Nominating
Other Current Public Company Board Service:
The Timken Company; WestRock Company; Dominion Midstream Partners, LP
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Jennifer B. Morgan
Age 45
Independent Director since 2016
President of SAP
North America
Committees:
Audit, Technology
Other Current Public Company Board Service:
None
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Mr. Luke has served as
non-executive
Chairman of WestRock Company, a
global paper and packaging company, since July 2015 when it was formed by the merger of Rock-Tenn Company and MeadWestvaco Corporation. Mr. Luke previously served as Chairman and Chief Executive Officer of MeadWestvaco Corporation from 2002 to
July 2015. Mr. Luke served as a director of The Bank of New York from 1996 to 2007 and has served as a director of the company since 2007.
In
addition to the public company board service noted above, Mr. Luke is also a director of FM Global and a former director and chairman of the National Association of Manufacturers and the American Forest & Paper Association. He is a
trustee of the American Enterprise Institute for Public Policy Research, serves on the boards of the US China and India Business Councils and is a former member of the Presidents Export Council. Mr. Luke is also a trustee of the Colonial
Williamsburg Foundation and the Virginia Museum of Fine Arts, and is Rector and a member of the Board of Visitors of Virginia Commonwealth University. Mr. Luke served as an officer with the U.S. Air Force in Southeast Asia during the Vietnam
conflict. He earned a Bachelor of Arts degree from Lawrence University and a Master in Business Administration degree from The Wharton School of Business at the University of Pennsylvania.
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Leadership of a large public company
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Experience managing finance, operations and marketing of an international business
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Senior level policy-making experience in the manufacturing industry
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Ms. Morgan has served as President of SAP North America since 2014, where she is responsible for the
companys strategy, revenue and customer success in the U.S. and Canada. Since being named President, she has led SAPs rapid shift to the cloud in North America while helping customers achieve growth in the digital economy.
Ms. Morgan served in a number of leadership roles for SAP since joining the company in 2004, including as head of SAP North Americas public sector organization and president of its Regulated Industries business unit. In these roles,
Ms. Morgan was a recognized thought-leader on government and public sector technology innovation, represented SAP to the U.S. Government and testified before Congress on technology and acquisition issues. Earlier in her career, Ms. Morgan
served in various management roles at Siebel Systems and Accenture.
Ms. Morgan is an executive advisory board member of James Madison University
College of Business and a board member of NAF, an educational
non-profit
organization bringing education, business and community leaders together to transform the high school experience, and GENYOUth, an
organization dedicated to improving the health and wellness of the next generation of young leaders. Ms. Morgan earned a Bachelor of Business Administration degree from James Madison University.
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Leadership and client experience with technology as a business driver
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Experience in the operations at large, complex global companies
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BNY Mellon
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2017 Proxy Statement
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13
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ITEM 1. ELECTION OF DIRECTORS
> Nominees
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Mark A. Nordenberg
Age 68
Independent Director of BNY Mellon and predecessor companies since 1998
Chancellor Emeritus, Chair of the Institute of Politics and Distinguished Service Professor of Law of the University of Pittsburgh
Committees:
Audit, Corporate Governance and Nominating (Chairman), Corporate Social Responsibility, Technology
Other Current Public Company Board Service:
None
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Elizabeth E. Robinson
Age 48
Independent Director since 2016
Retired Global
Treasurer of The Goldman Sachs Group, Inc.
Committees:
Finance,
Risk
Other Current Public Company Board Service:
None
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Mr. Nordenberg served as Chancellor and Chief Executive Officer of the University of Pittsburgh, a major public
research university, from 1996 to August 2014. He currently serves as Chancellor Emeritus, Chair of the Institute of Politics and Distinguished Service Professor of Law at the University. Mr. Nordenberg served as a director of Mellon from 1998
to 2007 and has served as a director of the company since 2007.
Mr. Nordenberg joined the University of Pittsburghs law faculty in 1977 and
served as Dean of the School of Law from 1985 until 1993. Mr. Nordenberg was the interim Provost and Senior Vice Chancellor for Academic Affairs from 1993 to 1994, and interim Chancellor from 1995 to 1996. A specialist in legal process and
procedure, including civil litigation, he has published books, articles and reports on this topic, and has served as a member of both the U.S. Advisory Committee on Civil Rules and the Pennsylvania Supreme Courts Civil Procedural Rules
Committee. He is a former director and executive committee member of the Association of American Universities and has served on the boards of national and regional organizations promoting innovation and economic progress. Mr. Nordenberg
received his Bachelor of Arts degree from Thiel College and his Juris Doctorate degree from the University of Wisconsin School of Law.
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Leadership of a major research university
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Experience in the operations and management of a large institution
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Ms. Robinson served as Global Treasurer, Partner and Managing Director of The Goldman Sachs Group, Inc., the
global financial services company, from 2005 to 2015. Prior to that, Ms. Robinson served in the Financial Institutions Group within the Investment Banking Division of Goldman Sachs.
Ms. Robinson is a trustee of Williams College and MASS MoCA and was, until August 2016, a director of Goldman Sachs Bank USA. Ms. Robinson received a Bachelor of Arts degree from Williams College and an
M.B.A. from Columbia University.
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Experience in finance and risk management
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Experience in financial regulation and banking
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Leadership in the operations of a large global financial institution
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BNY Mellon
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2017 Proxy Statement
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ITEM 1. ELECTION OF DIRECTORS
> Nominees
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Samuel C. Scott III
Age 72
Independent Director of BNY Mellon and predecessor companies since 2003
Retired Chairman, President and Chief Executive Officer of Ingredion Incorporated (formerly Corn Products International, Inc.)
Committees:
Audit, Corporate Social Responsibility (Chairman), Human Resources and Compensation
Other Current Public Company Board Service:
Abbott Laboratories; Motorola Solutions,
Inc. (lead director)
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Prior to his retirement in 2009, Mr. Scott served as Chairman (since 2001), Chief Executive Officer (since 2001)
and President and Chief Operating Officer (since 1997) of Corn Products International, Inc., a leading global ingredients solutions provider now known as Ingredion Incorporated. Mr. Scott previously served as President of CPC
Internationals Corn Refining division from 1995 to 1997 and President of American Corn Refining from 1989 to 1997. In addition to the public company board service noted above, Mr. Scott also serves on the boards of, among others, Chicago
Sister Cities, Northwestern Medical Group, the Chicago Urban League, The Chicago Council on Global Affairs and Get IN Chicago. Mr. Scott received both a Bachelor of Science degree and a Master in Business Administration degree from Fairleigh
Dickinson University. Mr. Scott served as a director of The Bank of New York from 2003 to 2007 and has served as a director of the company since 2007.
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Senior level policy-making experience in the food industry
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Leadership of international company
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Experience in the operations and management of a large public company
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BNY Mellon
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2017 Proxy Statement
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15
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ITEM 1. ELECTION OF DIRECTORS
> Nominees
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Director Qualifications
The CG&N Committee assists the Board in reviewing and identifying individuals qualified to become Board members.
The CG&N Committee utilizes Board-approved criteria, set forth in our Corporate Governance Guidelines (see Helpful Resources on page 88), in recommending nominees for directors at Annual Meetings and to fill vacancies on the
Board. Directors chosen to fill vacancies will hold office for a term expiring at the end of the next Annual Meeting.
In selecting nominees for election
as directors, our CG&N Committee considers the following with respect to Board composition:
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Professional background and experience
. The individuals specific experience, background and education, including skills and knowledge essential to
the oversight of the companys businesses.
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Senior-level management positions
. The individuals sustained record of substantial accomplishments in senior-level management positions in business,
government, education, technology or
not-for-profit
enterprises.
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Judgment and Challenge
. The individuals capability of evaluating complex business issues and making sound judgments and constructively challenging
managements recommendations and actions.
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Diversity
. The individuals contribution to the diversity of the Board (in all aspects of that term), including viewpoints, professional experience,
education, skills and other individual qualities such as race, gender and ethnicity, and the variety of attributes that contribute to the Boards collective strength.
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Intangible attributes
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The individuals character and integrity and interpersonal skills to work with other directors on our Board in ways
that are effective, collegial and responsive to the needs of the company.
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Time
. The individuals willingness and ability to devote the necessary time and effort required for service on our Board.
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Independence
. The individuals freedom from conflicts of interest that could interfere with their duties as a director.
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Stockholders interests
. The individuals strong commitment to the ethical and diligent pursuit of stockholders best interests.
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The CG&N Committee seeks individuals with leadership experience in a variety of contexts and, among public company leaders, across
a variety of industries. The CG&N Committee will evaluate all candidates suggested by other directors or third-party search firms (which the
company retains from time to time, including over the past year, to help identify potential candidates) or recommended by a stockholder for nomination as a director in the same manner. For
information on recommending a candidate for nomination as a director see Contacting the Board on page 30.
The Board and the CG&N
Committee have concluded that each of our current Board members should be recommended for
re-nomination
as a director. In considering whether to recommend
re-nomination
of a director for election at our Annual Meeting, the Board and the CG&N Committee considered, among other factors:
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The
criteria for the nomination of directors
described above,
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Feedback from the annual Board and committee evaluations
,
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Attendance and preparedness
for Board and committee meetings,
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Outside board and other affiliations
, for actual or perceived conflicts of interest,
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The
overall contributions to the Board
, and
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The
needs of the company
.
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Each of the
nominees for election as director, other than Mses. Cook, Morgan and Robinson, was elected as a director at our 2016 Annual Meeting. Ms. Robinson was appointed a director effective October 3, 2016 and was recommended to the CG&N
Committee for consideration as a candidate after members of management who had become acquainted with her through her work with The Goldman Sachs Group, Inc. learned of her impending retirement. Each of Mses. Cook and Morgan was appointed a director
effective December 1, 2016; they were recommended to the CG&N Committee for consideration as a candidate by a third-party search firm and a director, respectively. Our Board believes that each of the nominees meet the criteria described
above with diversity and depth and breadth of experience that enable them to oversee management of the company as an effective and engaged Board. No director has a family relationship to any other director, nominee for director or executive officer.
Catherine A. Rein, who was elected as a director at our 2016 Annual Meeting, will not be standing for reelection. The Board is grateful to Ms. Rein for
her invaluable contributions as a director during her more than 35 years of service to the company and The Bank of New York. The Board will miss the camaraderie, commitment, insight and perspective of Ms. Rein.
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BNY Mellon
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2017 Proxy Statement
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ITEM 1. ELECTION OF DIRECTORS
> Nominees
|
Majority Voting Standard
Under our
by-laws,
in any uncontested election of directors, each director
will be elected if more votes are cast for the directors election than are cast against the directors election, with abstentions and broker
non-votes
not being counted as a
vote cast either for or against the directors election. A plurality standard will apply in any contested election of directors, which is an election in which the number of nominees for director exceeds the number of
directors to be elected. Pursuant to our Corporate Governance Guidelines, if any incumbent director fails to receive a majority of the votes cast in any uncontested election, the director will be required to tender his or her resignation to the Lead
Director (or such other director designated by the Board if the director failing to receive the majority of votes cast is the Lead Director) promptly after the certification of the stockholder vote.
Our CG&N Committee will promptly consider the tendered resignation and recommend to the Board whether to accept or reject it, or whether other actions should be
taken. In considering whether to accept or reject the tendered resignation, the CG&N Committee will consider whatever factors its members deem relevant, including any stated reasons for the against votes, the length of service and
qualifications of the director whose resignation has been tendered, the directors contributions to the company, and the mix of skills and
backgrounds of the Board members. The Board will act on the CG&N Committees recommendation no later than 90 days following the certification of the election in question. In considering
the recommendation of the CG&N Committee, the Board will consider the factors considered by the CG&N Committee and such additional information and factors as it deems relevant.
Following the Boards decision, the company will publicly disclose the Boards decision in a Current Report on Form
8-K
filed with the Securities and Exchange
Commission (SEC). If the Board does not accept the directors resignation, it may elect to address the underlying stockholder concerns or to take such other actions as it deems appropriate and in the best interests of the company
and its stockholders. A director who tenders his or her resignation pursuant to this provision will not vote on the issue of whether his or her tendered resignation will be accepted or rejected. If the Board accepts an incumbent directors
resignation pursuant to this provision, or if a nominee for director is not elected and the nominee is not an incumbent director, then the Board may fill the resulting vacancy pursuant to our
by-laws.
If the
Board does not accept an incumbent directors resignation pursuant to this provision, he or she will continue to serve on the Board until the election of his or her successor.
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BNY Mellon
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2017 Proxy Statement
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17
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ITEM 1. ELECTION OF DIRECTORS
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>
Corporate Governance and Board Information
|
Our Corporate Governance Practices
We believe that the strength of BNY Mellons business is a direct reflection of the high standards set by our governance structure. It provides guidance in
managing the company from the Board of Directors on down for the benefit of all our stakeholders including our investors, clients, employees and communities. Our key governance practices are described below.
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Independence
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Our Board is comprised of all independent directors, other than our Chief Executive Officer, and
our independent directors meet in
executive sessions
led by our Lead Director at each regularly scheduled Board and committee meeting.
Reflecting our Boards focus on refreshment, in 2016 our Board added three new diverse
directors.
Our
independent Lead Director
is selected annually by our independent directors and has broad powers, including approval of Board meeting agendas, materials and schedules, leading executive sessions and consulting with the Chairman of the Human
Resources and Compensation Committee (HRC Committee) on CEO performance, compensation and succession.
Our standing committees are composed entirely of
independent directors
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Active
Engagement
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We had a
high rate of director attendance
at Board and committee meetings in 2016, averaging
93%.
We have
continued to
actively engage with our stakeholders
through multiple initiatives, inviting feedback from investors representing about 45% of our outstanding shares and reaching investors representing almost 30% of our outstanding shares, as
well as with proxy advisory firms and other stakeholders.
Our Board publicly
endorsed the Shareholder-Director Exchange (SDX) Protocol
as a guide to support effective engagement between stockholders and directors.
Stockholders and other
interested parties can
directly contact our Board
(see Helpful Resources on page 88).
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Ongoing Improvements
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Our Corporate Governance Guidelines require that the Corporate Governance and Nominating Committee
rotate the Lead Director and committee Chairmen
at five-year intervals and
consider enhanced
director qualifications
in connection with director nominations.
Following engagement with
stockholders, in 2015 we adopted
proxy
access
and further refined our proxy disclosures regarding executive compensation and the annual Board self-evaluation process and resulting enhancements.
Our
by-laws
permit holders in the aggregate of 20% of our outstanding common stock to
call a special stockholder
meeting
.
Our Board and each of our standing committees conduct annual
self-evaluations
that have
resulted in enhancements to the Board (see Evaluation of Board and Committee Effectiveness on page 19).
Our Board participates in
information sessions
during regularly scheduled and special
meetings, during which they receive business, regulatory and other updates from senior management, risk executives and our General Counsel.
Directors are encouraged to participate in
continuing education
programs and our company
reimburses directors for such expenses.
We amended our Corporate Governance Guidelines to refine the Lead Director duties and responsibilities
and
limit
any director who also serves as an executive officer of a publicly traded company to service on the board of one other public company in addition to our Board.
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2017 Proxy Statement
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ITEM 1. ELECTION OF DIRECTORS
> Corporate Governance and Board Information
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Robust
Programs
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A significant portion of director compensation is paid in
deferred stock units
, which must be held
as long as the director serves on the Board.
We have adopted
codes of conduct
applicable to our directors, as well as all of our employees, to
provide a framework for the highest standards of professional conduct and to foster a culture of honesty and accountability.
We have enhanced our thorough and robust
director orientation program
in which new directors
participate in their first six months as a director.
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What We
Dont Do
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No staggered board.
No poison pill
(stockholders rights plan).
No supermajority voting.
Action by stockholders requires only a majority of the votes cast (not a
majority of the shares present and entitled to vote).
No plurality voting
in uncontested director elections. Each director must be elected by a majority of the votes cast.
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Corporate Governance Developments
Based on stockholder engagement, over the last few years our Board has been focused on Board refreshment and has redoubled its succession efforts accordingly. In 2016, our Board added three new diverse directors.
Since August 2014, six of our directors have retired or announced their retirement and our Board has added seven new directors over that same period. Each of these new directors has added experience and unparalleled expertise to our Board,
complementing and supplementing the experience and talents of our Board as a whole. Although the CG&N Committee is principally involved in Board succession and recruitment, our entire Board plays a role in recruiting, interviewing and assessing
candidates. Our Boards succession planning is ongoing and will continue to be robust as it seeks to further enhance the diversity of our Board while balancing necessary continuity.
Our Board, led by our CG&N Committee, also continually seeks to improve our governance structures, and has recently made the following enhancements:
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to ensure our directors have sufficient time to devote to BNY Mellon matters, amended our Corporate Governance Guidelines such that any director who also serves
as an executive officer of a publicly traded company can only serve on the board of one other publicly traded company in addition to our Board,
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amended our Corporate Governance Guidelines to clarify the role of the Lead Director, in connection with our chief executive officers compensation,
succession planning and the Boards annual performance evaluation,
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amended our Corporate Governance Guidelines to require rotation of the Lead Director at a five-year interval,
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amended our Corporate Governance Guidelines to reflect areas of consideration in the annual Board self-evaluation, and
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eliminated the Executive Committee, in recognition of the ability to convene the Board in exigent circumstances.
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As previously disclosed, during 2016 our Board elected Mr. Echevarria as our new Lead Director, consistent with our Boards succession planning. In
addition, our Board elected new chairs to the CG&N, Corporate Social Responsibility and Human Resources and Compensation Committees in 2016. We anticipate the election of a new chair to the Technology Committee in 2017.
Evaluation of Board and Committee Effectiveness
Annually, the Board and each of our standing committees conducts a self-evaluation to continually enhance performance. The Board and management then work together to enhance Board and committee effectiveness in
light of the results of the self-evaluations.
The CG&N Committee, in consultation with the Lead Director, will determine the process, scope and
contents of the Boards annual performance evaluation. Areas of consideration in the Board self-evaluations include director contribution and performance, Board structure and size, Board dynamics, the range of business, professional and other
backgrounds of directors necessary to serve the company and the range and type of information provided to the Board by management.
Based on the CG&N
Committees determination of the evaluation process and scope, each standing committee self-evaluation is conducted in an executive session led by the chairman of the committee. The results of the self-evaluation of each standing committee are
reported to the full Board.
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BNY Mellon
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2017 Proxy Statement
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19
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ITEM 1. ELECTION OF DIRECTORS
> Corporate Governance and Board Information
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As a result of the most recent round of Board and committee self-evaluations, the Board determined to refine
committee reporting to the Board to convey matters discussed and actions taken. The Board also decided that all directors should have access to materials for all committees as a good governance practice. Finally, the directors suggested enhancements
to the new director orientation program which have been implemented, including additional
one-on-one
sessions with our executive officers.
Active Stockholder Engagement Program
We
conduct extensive governance reviews and investor outreach throughout the year, and our Board has formally endorsed the SDX Protocol which offers guidance to public company boards and stockholders on when
engagement is appropriate, and how to make these engagements valuable and effective. Our independent directors engage in outreach discussions along with management to ensure that both management
and our Board are aware of and consider stockholders perspectives on a variety of issues, including governance, strategy and performance, and address those matters effectively. For example, our implementation of proxy access was informed by
the discussions among directors, management and stockholders with respect to certain provisions. Additionally, following feedback from stockholders regarding our annual Board and committee self-evaluation process, we have refined our proxy statement
to include discussion regarding this important process and subsequent actions to continuously enhance Board and committee function.
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2017 Proxy Statement
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ITEM 1. ELECTION OF DIRECTORS
> Corporate Governance and Board Information
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Board Leadership Structure
Our Board has reviewed its current leadership structure which consists of a combined Chairman and Chief Executive Officer with an independent Lead Director in light of the
Boards composition, the companys size, the nature of the companys business, the regulatory framework under which the company operates, the companys stockholder base, the companys peer group and other relevant factors.
Our Board has determined that a combined Chairman and Chief Executive Officer position, with an independent Lead Director, continues to be the most appropriate Board leadership structure for the company and promotes Board effectiveness.
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Efficient and
Effective Action
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A combined Chairman/Chief Executive Officer:
Is in the
best position to be aware of major issues
facing the company on a
day-to-day
and long-term basis, and to identify and bring key risks and developments facing the company to the Boards attention (in coordination with the Lead Director
as part of the agenda-setting process), and
Eliminates the potential for uncertainty as to who leads the company, providing the company with
a
single public face
in dealing with stockholders, employees, regulators, analysts and other constituencies.
A substantial majority of our peers also utilize a similar board structure with a combined Chairman and
Chief Executive Officer, as well as a lead or presiding independent director.
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Strong Counterbalances
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As set forth in our Corporate Governance Guidelines, our Lead Director:
Reviews and approves
, in coordination with the Chairman and Chief Executive Officer, agendas for
Board meetings, materials, information and meeting schedules,
Has the authority to add items to the agenda for any Board meeting,
Presides at executive sessions
of independent directors, which are held at each regular Board and
committee meeting,
Serves
as a
non-exclusive
liaison between the other independent directors
and the Chairman/Chief Executive Officer,
Can
call meetings of the independent directors
in his discretion and chairs any meeting of the
Board or stockholders at which the Chairman is absent,
Is available to
meet with major stockholders and regulators
under appropriate circumstances,
Consults with the HRC Committee regarding its
consideration of Chief Executive Officer
compensation
,
In
conjunction with the chairman of the HRC Committee, discusses with the Chairman/Chief Executive Officer the Boards
annual evaluation of his performance as Chief Executive Officer
,
Consults with the HRC Committee
on
Chief Executive Officer succession planning
, and
Consults with the Chairman of the CG&N Committee on the Boards annual performance evaluation.
In addition, the powers of the Chairman under our
by-laws
are limited other than chairing meetings of the
Board and stockholders, the powers conferred on the Chairman (
e.g
., ability to call special meetings of stockholders or the Board) can also be exercised by the Board or a specified number of directors or, in some cases, the Lead Director, or
are administrative in nature (
e.g
., authority to execute documents on behalf of the company).
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BNY Mellon
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2017 Proxy Statement
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21
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ITEM 1. ELECTION OF DIRECTORS
> Corporate Governance and Board Information
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Director Independence
Our Board has determined that 12 of our 13 director nominees are independent. Our independent director nominees are
Linda Z. Cook; Nicholas M. Donofrio; Joseph J. Echevarria; Edward P. Garden; Jeffrey A. Goldstein; John M. Hinshaw; Edmund F. Ted Kelly; John A. Luke, Jr.; Jennifer B. Morgan; Mark A. Nordenberg; Elizabeth E. Robinson and Samuel C. Scott
III. As our Chairman and Chief Executive Officer, Gerald L. Hassell is not independent. The Board has also determined that each of Mr. Kogan and Dr. Richardson, who did not stand for reelection as a director last year, Mr. von Schack,
who resigned effective following our 2016 Annual Meeting, and Ms. Rein, who is not standing for reelection as a director this year, was independent during the period in 2016 in which he or she served as a director.
Our Standards of Independence
For a director
to be considered independent, our Board must determine that the director does not have any direct or indirect material relationship with us. Our Board has established standards (which are also included in our Corporate Governance Guidelines) based
on the specified categories and types of transactions, which conform to, or are more exacting than, the independence requirements of the New York Stock Exchange, or NYSE.
Our Board will also determine that a director is not independent if it finds that the director has material business arrangements with us that would jeopardize that directors judgment. In making this
determination, our Board reviews business arrangements between the company and the director and between the company and any other company for which the director serves as an officer or general partner, or of which the director directly or indirectly
owns 10% or more of the equity. Our Board has determined that these arrangements will not be considered material if:
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they are of a type that we usually and customarily offer to customers or vendors;
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they are on terms substantially similar to those for comparable transactions with other customers or vendors under similar circumstances;
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in the event that the arrangements had not been made or were terminated in the normal course of business, it is not reasonably likely that there would be a
material adverse effect on the financial condition, results of operations or business of the recipient; or
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in the case of personal loans, the loans are subject to and in compliance with Regulation O of the Board of Governors of the Federal Reserve System.
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Our Board may also consider other factors as it may deem necessary to arrive at sound determinations as to the
independence of each director, and such factors may override the conclusion of independence or
non-independence
that would be reached simply by reference to the factors listed above.
In determining that each of the directors, other than Mr. Hassell, is independent, our Board reviewed these standards, the corporate governance rules of the
NYSE and the SEC, and the individual circumstances of each director.
The following categories or types of transactions, relationships and arrangements
were considered by the Board in determining that a director is independent. None of these transactions, relationships and arrangements rose to the level that would require disclosure under our related party transactions policy described on page 85,
and none of the transactions described below were in an amount that exceeded the greater of $1 million or 2% of the other entitys consolidated gross revenues, which is one of our standards for director independence:
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Purchases of goods or services in the ordinary course of business
. The company and its subsidiaries purchased goods and services from the following
organizations during a period in 2016 when one of our current independent directors served as an executive officer of, or was otherwise employed by, such organization: Hewlett Packard Enterprise Company (Mr. Hinshaw), SAP SE (Ms. Morgan)
and the University of Pittsburgh (Mr. Nordenberg). All of these purchases were made in the ordinary course of business. These purchases, when aggregated by seller, did not exceed 0.06% of the sellers annual revenue for its last reported
fiscal year or 0.17% of our annual revenue for 2016.
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Sales of goods or services in the ordinary course of business
. The company and its subsidiaries provided various financial
services including asset management services, asset servicing, global markets services, issuer services, treasury services, leasing, liquidity investment services or credit services to the following organizations
during a period in 2016 when one of our current independent directors served as an executive officer of, or was otherwise employed by, such organization: EIG Global Energy Partners (Ms. Cook); Trian Fund Management, L.P. (Mr. Garden);
Hellman & Friedman LLC (Mr. Goldstein); Hewlett Packard Enterprise Company (Mr. Hinshaw) and the University of Pittsburgh (Mr. Nordenberg). All of the
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ITEM 1. ELECTION OF DIRECTORS
> Corporate Governance and Board Information
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services were provided in the ordinary course of our business and at prevailing customer rates and terms. The amount of fees paid to us by each purchaser was less than 0.2% of the
purchasers annual revenue for its last reported fiscal year and less than 0.01% of our annual revenue for 2016.
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Customer relationships
.
We and our subsidiaries provide ordinary course services, including asset management services, banking services,
broker services and credit services, to Messrs. Luke, Nordenberg and Richardson and Ms. Rein, in each case on terms substantially similar to those offered to other customers in similar circumstances.
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Charitable contributions
. We made (directly, through our subsidiaries or by the BNY Mellon Foundation or the BNY Mellon Foundation of Southwestern
Pennsylvania) charitable contributions to
not-for-profit,
charitable or
tax-exempt
organizations for which one of our current or
former independent directors served as a director, executive officer or trustee during 2016, namely Messrs. Donofrio, Echevarria, Goldstein, Nordenberg, Scott and von Schack. In 2016, charitable contributions to these organizations totaled
approximately $700,000 in the aggregate, and none of these organizations received a contribution greater than $170,000.
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Beneficial ownership or voting power
. In the ordinary course of our investment management business, we beneficially own or have the power to vote
(directly or through our subsidiaries or through funds advised by our subsidiaries) shares of companies for which one of our independent directors served as an executive officer in 2016, namely Hewlett Packard Enterprise Company (Mr. Hinshaw)
and SAP SE (Ms. Morgan). As of December 31, 2016, we, our subsidiaries or funds advised by our subsidiaries, in the aggregate, owned or had the power to vote less than 1.01% of the outstanding shares of Hewlett Packard Enterprise Company
and depositary receipts representing less than 0.03% of the outstanding shares of SAP SE.
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Our Board determined that none of the
transactions, relationships and arrangements described above constituted a material relationship between the respective director and our company or its subsidiaries for the purpose of the corporate governance rules of the NYSE and SEC and our
Corporate Governance Guidelines. As such, our Board determined that these transactions, relationships and arrangements did not affect the independence of such director and did not impair such directors ability to act in the stockholders
best interests.
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BNY Mellon
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2017 Proxy Statement
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ITEM 1. ELECTION OF DIRECTORS
> Corporate Governance and Board Information
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Oversight of Risk
Successful management of our company requires understanding, identification and management of risk. We oversee risk through multiple lines of defense.
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Entity
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Primary Responsibilities for Risk
Management
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Risk Committee,
consisting entirely of
independent directors
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Review and approval of the enterprise-wide risk management practices of the company.
Review and approval of the companys
risk appetite statement on an annual basis, and approval of any material amendment to the statement.
Review of significant financial and other risk exposures and the steps management has taken to monitor,
control and report such exposures.
Evaluation of risk exposure and tolerance, and approval of Board level limits or exceptions.
Review and evaluation of the
companys policies and practices with respect to risk assessment and risk management.
Review, with respect to risk management and compliance, of (1) reports and significant findings of the
companys Risk Management and Compliance department (the Risk department) and the Internal Audit department (Internal Audit), (2) significant reports from regulatory agencies and managements responses, and
(3) the Risk departments scope of work and its planned activities.
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Audit Committee,
consisting entirely of
independent directors
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Review and discussion of policies with respect to risk assessment and risk management.
Oversight responsibility with respect to
the integrity of our companys financial reporting and systems of internal controls regarding finance and accounting, as well as our financial statements.
Review of the Risk Committees annual report summarizing its review of the companys methods for
identifying and managing risks.
Review of the Risk Committees semi-annual reports regarding corporate-wide compliance with laws and
regulations.
Review of any
items escalated by the Risk Committee that have significant financial statement impact or require significant financial statement/regulatory disclosures.
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Management
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Chief Risk Officer: Implement an effective risk management framework and daily oversight of risk.
Internal Audit: Provide reliable and
timely information to our Board and management regarding our companys effectiveness in identifying and appropriately controlling risks.
Senior Risk Management Committee: Provide a senior focal point within the company to monitor, evaluate and
recommend comprehensive policies and solutions to deal with all aspects of risk and to assess the adequacy of any risk remediation plans in our companys businesses.
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ITEM 1. ELECTION OF DIRECTORS
> Corporate Governance and Board Information
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We also encourage robust interactions among the different parties responsible for our risk management. Since the
financial crisis emerged in September 2008, the Risk and Audit Committees of our Board have held joint sessions at the beginning of each of their regular meetings to hear reports and discuss key risks affecting our company and our management of
these risks.
All independent directors are typically present during joint sessions, because all independent directors are currently members of either
our Risk or Audit Committee. In addition, the Risk Committee reviews the appointment, performance and replacement of our Chief Risk Officer, and the Senior Risk Management Committees activities, and any significant changes in its key
responsibilities, must be reported to the Risk Committee. Our company has also formed several risk management
sub-committees
to identify, assess and manage risks. Each risk management
sub-committee
reports its activities to the Senior Risk Management Committee and any significant changes in the key responsibilities of any
sub-committee,
or a change in
chairmanship of any
sub-committee,
must be approved by our Chief Risk Officer and subsequently reported to the Senior Risk Management Committee.
Our company also has a comprehensive internal risk framework, which facilitates risk oversight by our Risk Committee.
Our risk management framework is designed to:
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provide that risks are identified, monitored, reported, and priced properly;
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define and measure the type and amount of risk the company is willing to take;
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communicate the type and amount of risk taken to the appropriate management level;
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maintain a risk management organization that is independent of risk-taking activities; and
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promote a strong risk management culture that encourages a focus on risk-adjusted performance.
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Our primary risk exposures as well as our risk management framework and methodologies are discussed in further detail on pages 65 through 70 in our 2016 Annual
Report. See How We Address Risk and Control on page 59 below for a discussion of risk assessment as it relates to our compensation program.
Board Meetings and Committee Information
Board Meetings
Our Corporate Governance Guidelines provide that our directors are expected to
attend our Annual Meeting of stockholders and all regular and special meetings of our Board and committees on which they sit. All of our directors then in office attended our 2016 Annual Meeting of stockholders.
Our Board held 14 meetings in 2016. Each incumbent director attended at least 75% of the aggregate number of meetings of our Board and of the committees on which he
or she sat, and the average attendance rate was 93%.
Committees and Committee Charters
Our Board has established several standing committees, and each committee makes recommendations to our Board as appropriate and reports periodically to the entire
Board. Our committee charters are available on our website (see Helpful Resources on page 88).
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ITEM 1. ELECTION OF DIRECTORS
> Corporate Governance and Board Information
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Audit
Committee
Independent 13 Meetings in 2016
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Joseph J. Echevarria (Chair), John A. Luke, Jr., Jennifer B. Morgan,
Mark A. Nordenberg, Catherine A. Rein, Samuel C.
Scott III
Independent Registered Public Accountant.
Our Audit Committee
has direct responsibility for the appointment, compensation, annual evaluation, retention and oversight of the work of the registered independent public accountants engaged to prepare an audit report or to perform other audit, review or attestation
services for us. The Committee is responsible for the
pre-approval
of all audit and permitted
non-audit
services performed by our independent registered public
accountants and each year, the Committee recommends that our Board request stockholder ratification of the appointment of the independent registered public accountants.
Overseeing Internal Audit Function.
The Committee acts on behalf of our Board in monitoring and overseeing the performance of our internal audit function.
The Committee reviews the organizational structure, qualifications, independence and performance of Internal Audit and the scope of its planned activities, at least annually. The Committee also approves the appointment of our internal Chief Auditor,
who functionally reports directly to the Committee and administratively reports to the CEO, and annually reviews his or her performance and, as appropriate, replaces the Chief Auditor.
Internal Controls over Financial Statements and Reports.
The Committee oversees the
operation of a comprehensive system of internal controls covering the integrity of our financial statements and reports, compliance with laws, regulations and corporate policies. Quarterly, the Committee reviews a report from the companys
Disclosure Committee and reports concerning the status of our annual review of internal control over financial reporting, including (1) information about (a) any significant deficiencies or material weaknesses in the design or operation of
internal control over financial reporting that are reasonably likely to adversely affect our ability to record, process, summarize and report financial information and (b) any fraud, whether or not material, that involves management or other
employees who have a significant role in our internal control over financial reporting, and (2) managements responses to any such circumstance. The Committee also oversees our managements work in preparing our financial statements,
which will be audited by our independent registered public accountants.
Members
and Financial Expert.
The Committee consists entirely of directors who meet the independence requirements of listing standards of the NYSE, Rule
10A-3
under the Securities Exchange Act of 1934, as amended
(the Exchange Act) and the rules and regulations of the Federal Deposit Insurance Corporation (FDIC). All members are financially literate, have accounting or related financial management expertise within the meaning of the
NYSE listing standards as interpreted by our Board and are outside directors, independent of management, under the FDICs rules and regulations. Our Board has determined that each of Mr. Echevarria and Mr. Scott satisfies the definition of
audit committee financial expert as set out in the rules and regulations under the Exchange Act, based upon their experience actively supervising a principal accounting or financial officer or public accountant and has banking and
financial management expertise as set out in the FDICs rules and regulations.
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ITEM 1. ELECTION OF DIRECTORS
> Corporate Governance and Board Information
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Corporate Governance and Nominating Committee
Independent
9 Meetings in 2016
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Mark A. Nordenberg (Chair), Linda Z. Cook, Nicholas M. Donofrio,
Edward P. Garden, John A. Luke, Jr., Catherine A.
Rein,
Corporate Governance Matters
. As further described on page 16, our
CG&N Committee assists our Board of Directors in reviewing and identifying individuals qualified to become Board members. The Committee periodically considers the size of our Board and recommends changes to the size as warranted and is
responsible for developing and recommending to our Board our Corporate Governance Guidelines and proposing changes to these guidelines from time to time as may be appropriate. In addition, the Committee oversees evaluations of our Board and its
committees, reviews the structure and responsibilities of the Boards committees and annually considers committee assignments, recommending changes to those assignments as necessary.
Oversight of Director Compensation and Benefits
. The Committee reviews
non-employee
director compensation and benefits on an annual basis and makes recommendations to our Board on appropriate compensation, and is responsible for approving compensation arrangements for
non-employee
members of the Boards of our significant subsidiaries.
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Corporate Social Responsibility Committee
Independent
3 Meetings in 2016
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Samuel C. Scott III (Chair), Nicholas M. Donofrio, Joseph J. Echevarria,
Mark A. Nordenberg
Our Corporate Social Responsibility Committees purpose is to promote a culture that
emphasizes and sets high standards for corporate citizenship and to review corporate performance against those standards. The Committee is responsible for providing oversight of the companys programs regarding strategic philanthropy and
employee community involvement, public policy and advocacy, including lobbying and political contributions, environmental management, corporate social responsibility of suppliers, corporate social responsibility governance and reporting and human
rights. The Committee also provides oversight for the companys compliance with the Community Reinvestment Act and Fair Lending laws and considers the impact of the companys businesses, operations and programs from a social responsibility
perspective, taking into account the interests of stockholders, clients, suppliers, employees, communities and regulators.
For additional information regarding the companys commitment to corporate social responsibility and the Committees recent initiatives, see Helpful Resources on page 88.
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Finance
Committee
Independent
6 Meetings in 2016
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Jeffrey A. Goldstein (Chair), Joseph J. Echevarria, Edward P. Garden,
Elizabeth E. Robinson
The Finance Committee assists the Board in fulfilling its responsibilities with respect to the
monitoring and oversight of the companys financial resources and strategies. The Committees responsibilities and duties include reviewing: (1) financial forecasts, operating budgets, capital expenditures and expense management
programs and progress relative to targets and relative to competitors; (2) plans with regard to net interest revenue, investment portfolio activities and progress relative to such plans and activities; (3) the companys capital
structure, capital raising and capital distributions; and (4) any initiatives, including investments, mergers, acquisitions, and dispositions, that exceed the thresholds in our Corporate Governance Guidelines and, as necessary, making
recommendations to the Board regarding those initiatives.
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BNY Mellon
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2017 Proxy Statement
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ITEM 1. ELECTION OF DIRECTORS
> Corporate Governance and Board Information
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Human Resources and Compensation Committee
Independent
6 Meetings in 2016
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Edward P. Garden (Chair), Jeffrey A. Goldstein, Edmund F. Ted Kelly,
Samuel C. Scott III
Compensation and Benefits.
The HRC Committee is generally responsible for overseeing our
employee compensation and benefit policies and programs, our management development and succession programs, the development and oversight of a succession plan for the CEO position and our diversity and inclusion programs. The Committee also
administers and makes equity and/or cash awards under plans adopted for the benefit of our employees to the extent required or permitted by the terms of these plans, establishes any related performance goals and determines whether and the extent to
which these goals have been attained. The Committee also evaluates and approves the total compensation of the CEO and all other executive officers and makes recommendations concerning equity-based plans, which recommendations are subject to the
approval of our entire Board. The Committee also oversees certain retirement plans that we sponsor to ensure that: (1) they provide an appropriate level of benefits in a cost-effective manner to meet our needs and objectives in sponsoring such
plans; (2) they are properly and efficiently administered in accordance with their terms to avoid unnecessary costs and minimize any potential liabilities to us; (3) our responsibilities as plan sponsor are satisfied; and
(4) financial and other information with respect to such plans is properly recorded and reported in accordance with applicable legal requirements.
CEO Compensation.
The Committee reviews and approves corporate goals and objectives relevant to the compensation of our CEO, his performance in light of
those goals and objectives, and determines and approves his compensation on the basis of its evaluation. With respect to the performance evaluation and compensation decisions regarding our CEO, the Committee reports its preliminary conclusions to
the other independent directors of our full Board in executive session and solicits their input prior to finalizing the Committees decisions.
Delegated Authority.
The Committee has delegated to our CEO the responsibility for determining equity awards to certain employees, other than himself, who
are eligible to receive grants under our Long-Term Incentive Plan (LTIP). This delegated authority is subject to certain limitations, including: (1) total aggregate shares represented by plan awards in any calendar year (1,100,000),
(2) aggregate shares represented by plan awards that may be granted to any one individual in any calendar year (100,000), and (3) a
sub-limit
of shares represented by full value awards that may be granted
in any calendar year (550,000). In addition, the Committee may delegate limited authority to our CEO to grant awards under the LTIP beyond these limits in connection with specific acquisitions or similar transactions.
Management Involvement.
Our management provides information and recommendations for the
Committees decision-making process in connection with the amount and form of executive compensation, except that no member of management will participate in the decision-making process with respect to his or her own compensation. The
Compensation Discussion and Analysis starting on page 35 discusses the role of our CEO in determining or recommending the amount and form of executive compensation. In addition, we address the role of our management and its independent
compensation consultants and the role of the Committees independent outside compensation advisor in determining and recommending executive compensation on page 29.
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28
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BNY Mellon
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2017 Proxy Statement
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ITEM 1. ELECTION OF DIRECTORS
> Corporate Governance and Board Information
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Risk Committee
Independent 5 Meetings in 2016
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Edmund F. Ted Kelly (Chair), Linda Z. Cook, Nicholas M. Donofrio,
Edward P. Garden, Jeffrey A. Goldstein,
John M. Hinshaw, Elizabeth E. Robinson
See Oversight of Risk on page
24 above for a discussion of the Risk Committees duties and responsibilities, which include: (1) review and approval of enterprise-wide risk management practices; (2) review and approval of the companys risk appetite statement;
(3) review of significant financial and other risk exposures; (4) evaluation of risk exposure and tolerance; (5) review and evaluation of the companys policies and practices with respect to risk assessment and risk management;
and (6) review, with respect to risk management and compliance, of certain significant reports. Our Board has determined that Mr. Kelly satisfies the independence requirements to serve as Chairman of the Risk Committee set out in the Board
of Governors of the Federal Reserve System rules and has experience in identifying, assessing, and managing risk exposures of large, complex financial firms based upon his senior leadership experience of a multi-line insurance
company.
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Technology Committee
Independent
8 Meetings in 2016
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Nicholas M. Donofrio (Chair), John M. Hinshaw, Jennifer B. Morgan,
Mark A. Nordenberg
Technology Planning and Strategy.
The Technology Committee is responsible for reviewing
and approving the companys technology planning and strategy, reviewing significant technology investments and expenditures, and monitoring and evaluating existing and future trends in technology that may affect our strategic plans, including
monitoring overall industry trends. The Committee receives reports from management concerning the companys technology and approves related policies or recommends such policies to the Board for approval, as appropriate. The Committee also
oversees risks associated with technology.
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Compensation Consultants to the HRC Committee
The HRC Committee has the sole authority to retain, terminate and approve the fees and other engagement terms of any
compensation consultant directly assisting the committee, and may select or receive advice from any compensation consultant only after taking into consideration all factors relevant to the consultants independence from management, including
the factors set forth in the NYSEs rules.
The HRC Committee has engaged Compensation Advisory Partners LLC (CAP) to serve as its
independent compensation consultant since March 2014. As discussed in greater detail in the Compensation Discussion and Analysis beginning on page 35 below, throughout the year, CAP assists the committee in its analysis and evaluation of
compensation matters relating to our executive officers. CAP reports directly to the committee, attends the
in-person
and telephonic meetings of the committee, and meets with the committee in executive session
without management present. CAP also reviews and provides input on committee meeting materials and advises on other matters considered by the committee.
The HRC Committee annually reviews the independence of its compensation consultant. CAP works with management in
executing its services to the committee, but does not provide services to management without
pre-approval
by the committee Chairman. In addition, CAP maintains, and has provided to the committee, a written
policy designed to avoid, and address potential, conflicts of interest.
In 2016, neither CAP nor its affiliates provided any services to the company
other than serving as the HRC Committees independent compensation consultant. The committee considered the Companys relationship with CAP, assessed the independence of CAP pursuant to SEC and NYSE rules and concluded that there are no
conflicts of interest that would prevent CAP from independently representing the committee.
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BNY Mellon
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2017 Proxy Statement
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29
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ITEM 1. ELECTION OF DIRECTORS
> Corporate Governance and Board Information
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Succession Planning
We have succession plans and processes in place for our Chairman and Chief Executive Officer, each of our Vice Chairmen and the team of approximately 700 global senior leaders. Our senior management succession
planning process is an organization-wide practice designed to proactively identify, develop and retain the leadership talent that is critical for future business success.
The succession plan for our Chairman and Chief Executive Officer is reviewed regularly by the HRC Committee and the other independent directors. The plan identifies a readiness level and ranking for
each internal candidate and also incorporates the flexibility to define an external hire as a succession option. Formal succession planning for the rest of our senior leaders is also a regular process, which also includes identifying a rank and
readiness level for each potential internal candidate and also strategically planning for external hires for positions where, for example, gaps are identified. The HRC Committee and the Board review the succession plans for all management Executive
Committee positions.
Contacting the Board
Interested parties may send communications to our Board or our independent directors or any Board committee through our Lead Director in accordance with the procedures set forth on our website (see Helpful
Resources on page 88).
Our Corporate Secretary is authorized to open and review any mail or other correspondence received that is addressed to
the Board or any individual director unless the item is marked Confidential or Personal. If so marked and addressed to the Board, it will be delivered unopened to the Lead Director. If so marked and addressed to an individual
director, it will be delivered to the addressee unopened. If, upon opening an envelope or package not so marked, the Corporate Secretary determines that it contains a magazine, solicitation or advertisement, the contents may be discarded. Any
written communication regarding accounting matters to our Board of Directors are processed in accordance with procedures adopted by the Audit Committee with respect to the receipt, review and processing of, and any response to, such matters.
In addition, all directors are expected to attend each Annual Meeting of stockholders. While our
by-laws,
consistent with Delaware law, permit stockholder meetings to occur by remote communication, we intend this to be used only in exigent circumstances. Our Board believes that an
in-person
Annual Meeting provides
an important opportunity for stockholders to ask questions.
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30
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BNY Mellon
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2017 Proxy Statement
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ITEM 1. ELECTION OF DIRECTORS
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>
Director Compensation
|
Our Corporate Governance Guidelines provide that compensation for our independent directors services may
include annual cash retainers; shares of our common stock; deferred stock units or options on such shares; meeting fees; fees for serving as a committee chair; and fees for serving as a director of one of our subsidiaries. We also reimburse
directors for their reasonable
out-of-pocket
expenses in connection with attendance at Board meetings. In the case of airfare, directors are reimbursed for their travel
expenses not exceeding the first-class commercial rate. In addition, corporate aircraft and charter aircraft may be used for directors in accordance with the companys aircraft usage policy. Directors will also be reimbursed for reasonable
out-of-pocket
expenses (including tuition and registration fees) relating to attendance at seminars and training sessions relevant to their service on the Board and in
connection with meetings or conferences which they attend at the companys request.
Each year, the CG&N Committee is responsible for reviewing
and making recommendations to the Board regarding independent director compensation. The CG&N Committee annually reviews independent director compensation to ensure that it is consistent with market practice and aligns our directors
interests with those of long-term stockholders while not calling into question the directors objectivity. In undertaking its review, the CG&N Committee utilizes benchmarking data regarding independent director compensation of the
companys peer group based on public filings with the SEC, as well as survey information analyzing independent director compensation at U.S. public companies.
Based on its review, each year since 2014, the CG&N Committee has recommended, and the Board has approved, an annual equity award with a value of $130,000 for each independent director. The annual equity award
is in the form of deferred stock units that vest on the earlier of one year after the date of the award or on the date of the next Annual Meeting of stockholders, and must be held for as long as the director serves on the Board. The units accrue
dividends, which are reinvested in additional deferred stock units. For 2016, this award of deferred stock units was granted shortly after the 2016 Annual Meeting for directors elected or
re-elected
at such
meeting and, similarly, for 2017, this award will be granted shortly after the 2017 Annual Meeting for directors elected or
re-elected
at such meeting.
For 2016, our independent directors received an annual cash retainer of $110,000, payable in quarterly installments in advance. In addition, the chair of the HRC Committee received an annual cash retainer of
$25,000, the chairs of the Audit Committee and the Risk Committee each received an annual cash retainer of $30,000, the chairs of all other committees each received an annual cash retainer of $20,000, each member of the
Audit Committee and the Risk Committee received an annual membership fee of $10,000, and our Lead Director received an annual cash retainer of $50,000.
In addition, under our Corporate Governance Guidelines, by the fifth anniversary of their service on the Board, directors are required to own a number of shares of
our common stock with a market value of at least five times the annual cash retainer of $110,000. We believe that our independent director compensation is consistent with current market practice, recognizes the critical role that our directors play
in effectively managing the company and responding to stockholders, regulators and other key stakeholders, and will assist us in attracting and retaining highly qualified candidates. In the case of Mr. Garden, the CG&N Committee determined
that holdings of our securities by Trian (other than hedged or pledged securities) shall be deemed to be beneficially owned by Mr. Garden for purposes of this stock ownership requirement, given his relationship with Trian and that he transfers
to Trian, or holds for the benefit of Trian, his security holdings.
Our directors are not permitted to hedge, pledge or transfer any of their deferred
stock units and are subject a robust anti-hedging policy as described in further detail under Compensation Discussion and Analysis Anti-Hedging Policy on page 55 below. With the exception of those securities deemed to be
beneficially owned by Mr. Garden by virtue of his relationship with Trian, this policy prohibits our directors from engaging in certain transactions involving our securities and requires directors to
pre-clear
any transaction in company stock or derivative securities with our legal department (including gifts, pledges and other similar transactions).
In the merger we assumed the Deferred Compensation Plan for
Non-Employee
Directors of The Bank of New York (the Bank of New York Directors Plan) and the Mellon
Elective Deferred Compensation Plan for Directors (the Mellon Directors Plan). Under the Bank of New York Directors Plan, participating legacy The Bank of New York directors continued to defer receipt of all or part of their annual
retainer and committee fees earned through 2007. Under the Mellon Directors Plan, participating legacy Mellon directors continued to defer receipt of all or part of their annual retainer and fees earned through 2007. Both plans are nonqualified
plans, and neither plan is funded.
Although the Bank of New York Directors Plan and the Mellon Directors Plan continue to exist, all new deferrals of
director compensation by any of the independent directors have been made under the Director Deferred Compensation Plan, which was adopted effective as of January 1, 2008. Under this plan, an independent director can direct all or a portion of
his or her annual retainer or other fees into either (1) variable funds, credited with gains or losses that mirror market performance of market style funds or (2) the companys phantom stock.
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BNY Mellon
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2017 Proxy Statement
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31
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ITEM 1. ELECTION OF DIRECTORS
> Director Compensation
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Director Compensation Table
The following
table provides information concerning the compensation of each independent director who served in 2016. Mr. Hassell did not receive any compensation for his service as a director. Mr. Garden has advised us that, pursuant to his arrangement
with Trian, he transfers to Trian, or holds for the benefit of Trian, all director compensation paid to him.
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Name
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Fees Earned or
Paid in Cash($)
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Stock
Awards ($)
(4)
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Change in
Pension
Value
and Nonqualified
Deferred
Compensation
Earnings
(5)
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All Other
Compensation($)
(6)
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Total ($)
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Linda Z. Cook
(1)
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$10,321
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$
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$
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$
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$10,321
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Nicholas M. Donofrio
(2)
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$149,000
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$129,996
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$
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$1,014
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$280,010
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Joseph J. Echevarria
(2)
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$196,500
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$129,996
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$
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$
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$326,496
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Edward P. Garden
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|
$138,750
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$129,996
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$
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$
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$268,746
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Jeffrey A. Goldstein
(2)
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$140,000
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|
$129,996
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|
$
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|
$
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$269,996
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John M. Hinshaw
(2)
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$134,000
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|
$129,996
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|
$
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|
$
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$263,996
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Edmund F. Ted Kelly
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$155,400
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$129,996
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$
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|
$
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$285,396
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Richard J. Kogan
(3)
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$37,500
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$
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$
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$
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$37,500
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John A. Luke, Jr.
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|
$120,000
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|
$129,996
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$
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|
$
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$249,996
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Jennifer B. Morgan
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|
$10,321
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|
$
|
|
$
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|
$
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$10,321
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Mark A. Nordenberg
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|
$143,600
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$129,996
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|
$4,483
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$3,785
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$281,864
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Catherine A. Rein
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$120,000
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$129,996
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|
$
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$2,184
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$252,180
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Elizabeth E. Robinson
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$30,019
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|
$
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|
$
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|
$
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$30,019
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William C. Richardson
(3)
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$44,150
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|
$
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$
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$477
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$44,627
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Samuel C. Scott III
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|
$141,250
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$129,996
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|
$
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$554
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$271,800
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Wesley W. von Schack
(2)(3)
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$64,000
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$
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|
$51,744
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|
$5,673
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|
$121,417
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(1)
|
Each of Mses. Cook and Morgan was appointed as a director effective December 1, 2016. Ms. Robinson was appointed as a director effective October 3, 2016.
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(2)
|
Elected to defer all or part of cash compensation in the Director Deferred Compensation Plan.
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(3)
|
Mr. Kogan and Dr. Richardson did not stand for
re-election
as a director at our 2016 Annual Meeting. Mr. von Schack
resigned effective following our 2016 Annual Meeting.
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(4)
|
Amount shown represents the aggregate grant date fair value computed in accordance with Financial Accounting Standards Boards Accounting Standards Codification (or
FASB ASC) 718 Compensation-Stock Compensation for 3,166 deferred stock units granted to each independent director in April 2016, using the valuation methodology for equity awards set forth in note 15 to the consolidated financial
statements in our Annual Report on Form
10-K
for the year ended December 31, 2016. As of December 31, 2016, each of Messrs. Donofrio, Echevarria, Garden, Goldstein, Hinshaw, Kelly, Luke, Nordenberg
and Scott and Ms. Rein owned 3,208 unvested deferred stock units.
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(5)
|
The amounts disclosed in this column for Messrs. Nordenberg and Mr. von Schack represent the sum of the portion of interest accrued (but not currently paid or payable) on
deferred compensation above 120% of the applicable federal long-term rate at the maximum rate payable under the Mellon Directors Plan. Under the Mellon Directors Plan, deferred amounts receive earnings based on (i) the declared rate, reflecting
the return on the
120-month
rolling average of the
10-year
T-Note
rate enhanced based on years of service and compounded
annually, (ii) variable funds, which are credited with gains or losses that mirror the market performance of market-style funds or (iii) the companys phantom stock. The fully enhanced declared rate for 2016 was 4.31%. The
present value of Ms. Reins accumulated pension benefit under The Bank of New York Retirement Plan for
Non-Employee
Directors decreased by $5,640. Ms. Rein is the only current director who
participates in this plan. Participation in this plan was frozen as to participants and benefit accruals as of May 11, 1999.
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(6)
|
The amounts disclosed for Messrs. Donofrio, Richards and Scott and Ms. Rein reflect the amount of a 5% discount on purchases of phantom stock when dividend equivalents are
reinvested under the Bank of New York Directors Plan. The amounts disclosed for Messrs. Nordenberg and von Schack reflect the estimated cost of the legacy Mellon Directors Charitable Giving Program, which remains in effect for them and certain
other legacy Mellon directors. Upon such legacy Mellon directors death, the company will make an aggregate donation of $250,000 to one or more charitable or educational organizations of the directors choice. The donations are paid in 10
annual installments to each organization.
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32
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BNY Mellon
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2017 Proxy Statement
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ITEM 2. ADVISORY VOTE ON COMPENSATION
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Quick Reference Guide
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BNY Mellon
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2017 Proxy Statement
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33
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ITEM 2. ADVISORY VOTE ON COMPENSATION
|
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>
Resolution
|
Proposal
We highly value dialogue and
engagement with our stakeholders, including stockholders, employees, clients and the communities we serve, with respect to our executive compensation program. Consistent with that, and in accordance with SEC rules, we are asking stockholders to
approve the following resolution:
RESOLVED, that the stockholders approve the 2016 compensation of the named executive
officers, as disclosed in this proxy statement pursuant to Item 402 of Regulation
S-K
of the Securities and Exchange Commission (including the Compensation Discussion and Analysis, the compensation tables
and other narrative executive compensation disclosures).
Background
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|
Since our 2009 Annual Meeting, we have provided stockholders with an advisory
vote on our executive compensation program each year. We have consistently received strong support for our executive compensation program, with over 97% stockholder approval of our 2015 executive compensation at last years Annual
Meeting, and over 95% approval of our 2014 executive compensation and over 93% approval of our 2013 executive compensation at prior Annual Meetings.
In order to ensure that we have investor feedback, we have continued our annual investor outreach
process in 2016, resulting in our having conversations with investors representing almost 30% of our outstanding shares as well as with proxy advisory firms and other stakeholders.
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|
Our approach to compensation continues to be designed to directly link pay to performance, balance
corporate and individual performance, promote long-term stock ownership and balance risk and reward, while taking into consideration market trends and practices as well as stakeholder feedback to refine our program.
|
Voting
Your
vote on this resolution is an advisory vote. Although the Board is not required to take any action in response to the stockholder vote, the Board values our stockholders opinions. As in prior years, the Board intends to evaluate the results of
the 2017 vote carefully when making future decisions regarding the compensation of our named executive officers. At our 2011 Annual Meeting, we provided stockholders with an advisory vote with respect to how often the company should hold a
say-on-pay
vote, and 86% of the votes cast voted in favor of holding such a vote annually. Consistent with the voting results, we have held an advisory vote each year on
our executive compensation program. At our 2017 Annual Meeting, in addition to this advisory vote on 2016 compensation, we will hold an advisory vote on
say-on-pay
vote
frequency. For information regarding the advisory vote on
say-on-pay
vote frequency, see Item 3, on page 72 below.
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34
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BNY Mellon
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2017 Proxy Statement
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ITEM 2. ADVISORY VOTE ON COMPENSATION
|
|
> Compensation Discussion & Analysis
|
Introduction
Organization and Key Considerations
|
|
|
Performance
(see pages
38 to 39)
|
|
Our 2016 performance builds on our 2015 results with strong expense controls and
stockholder-friendly capital allocation leading to double-digit EPS growth, and in addition, we have
shown continued progress towards
the three-year performance goals we set at our Investor Day in October 2014
11%
year-over-year growth in operating EPS
with 2016 OEPS at $3.17, 2% above our operating plan of $3.10
Adjusted Return on Tangible Common Equity remained strong
at 21%*
Adjusted
Revenue increased 1% year-over-year
(to $15.2 billion, below our operating plan*)
Adjusted noninterest expense $282
million better than our operating plan
and lower than 2015*
274 basis points of
adjusted operating leverage
in 2016,
exceeding the target
by 174
basis points
Adjusted
pre-tax
operating margin
increased to 33% (vs. 31% in 2015)*
Relative stock returns were strong
, with both
3-
and
5-year
TSR outperforming the median of our peer group and the S&P 500 Financials Index
Returned
$3.2
billion to stockholders
, with $2.4 billion in common stock repurchases and $778 million in dividends
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|
|
Compensation
of Named Executives
(see pages
40 to 51)
|
|
Introduced a one decision model for 2016 incentive compensation
determinations, rather than having two separate decisions for annual and long-term components, in order to: (1) better align compensation with current year performance, (2) increase upside and downside program leverage and
(3) simplify the program to enhance employee understanding of performance objectives
Shifted the mix of deferred incentive compensation components to increase PSUs, emphasizing
performance-based equity over time-vesting equity and
promoting long-term alignment with our stockholders
In calculating the incentive for our CEO and other NEOs, the HRC Committee recognized our
strong
overall 2016 operating performance
, but exercised its discretion to take into account that a key metric, revenue growth, was below operating plan
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|
Pay
Practices
(see pages
52 to 58)
|
|
Directly link pay to performance
Use a balanced approach for
determining incentives and promote long-term stock ownership
Reflect good corporate governance and practices (
e.g.
, no tax
gross-ups
and no hedging)
Obtain regular feedback from
stockholders on governance and performance matters through annual outreach process
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How We Address Risk and Control
(see page 59)
|
|
Review of our risk appetite, practices and employee compensation
plans and outcomes
,
including sales incentives, by our Chief Risk Officer and the HRC Committee (1) for alignment with sound risk management and (2) to directly link pay to appropriate risk-taking and regulatory
compliance
Comprehensive recoupment policy
that subjects all equity incentives to 100% forfeiture
during, and clawback following, the vesting period; all cash incentives are subject to 100% clawback within three years following the award date
Achievement of common equity Tier 1 ratio
on a fully
phased-in
basis of at least 8.5% calculated under the Advanced Approach as a condition for funding incentives
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*
|
For a reconciliation and explanation of these
non-GAAP
measures, as well as information on the calculation of operating earnings per share
and adjusted operating leverage for compensation purposes, see Annex A.
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BNY Mellon
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2017 Proxy Statement
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35
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|
ITEM 2. ADVISORY VOTE ON COMPENSATION
> Compensation Discussion & Analysis
|
Progress Towards Our Investor Day Goals
|
|
|
|
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|
Investor Day Goals
Operating Basis:
2015
2017
1
|
|
2-Year Progress Towards
Our
3-Year
Goals
|
|
|
Flat Rate
Scenario
2
|
|
Normalizing
Rate Scenario
3
|
|
2015 2016
Performance
4
|
Adjusted Revenue Growth
|
|
3.5 4.5%
|
|
6 8%
|
|
2%
|
Operating EPS Growth
|
|
7 9%
|
|
12 15%
|
|
15%
|
Adjusted Return on Tangible Common
Equity
|
|
17 19%
|
|
20 22%
|
|
21%
|
1
|
Compounded annual growth rate for 2015-2017, as announced on October 28, 2014.
|
2
|
Assumes (A) flat rate scenario NIM of
95-100
bps, (B) operating margin of
28-30%
and (C) no deterioration in volatility, volume and short-term interest rates.
|
3
|
Assumes (A) normalizing rate scenario NIM of
125-150
bps and (B) operating margin of
30-32%.
|
4
|
For a reconciliation and explanation of these
non-GAAP
measures, see Annex A. For 2015, adjusted revenue growth was 2%, operating EPS
growth was 19% and adjusted return on tangible common equity was 21%. For 2016, adjusted revenue growth was 1%, operating EPS growth was 11% and adjusted return on tangible common equity was 21%.
|
2016 Program Outcomes
|
|
|
Corporate
Component Determination
|
|
CEO Incentive Award
Payout
|
Operating EPS and
adjusted operating leverage above plan
Strong multi-year TSR performance relative to peers and the S&P Financials Index
Strong relative EPS growth compared
to peers
Disciplined
expense management
Revenue above prior year but below plan
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|
|
* See pages 44 through 45 for further information regarding the CEOs 2016 incentive award
determination.
|
2016 Program Enhancements
|
|
|
Objectives
|
|
Enhancement
|
Strengthen
tie between
pay
and
performance
|
|
Implemented
a one decision model for incentive compensation determinations, basing 100% of incentive compensation on our balanced scorecard a comprehensive analysis of corporate and individual performance
One decision model
(1) better aligns compensation with current year performance, (2) increases upside and downside program leverage and (3) simplifies the program to enhance employee understanding of performance objectives
Shifted the mix of deferred
incentive compensation components to increase PSUs, emphasizing performance-based equity over time-vesting equity
|
|
|
|
Limit
executive
severance
benefits
|
|
Amended
Executive Severance Plan to reduce maximum severance eligibility from 2 times to 1 times base salary
|
|
|
|
|
|
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36
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BNY Mellon
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2017 Proxy Statement
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|
|
ITEM 2. ADVISORY VOTE ON COMPENSATION
> Compensation Discussion & Analysis
|
CEO Total Direct Compensation
1
1
|
Total Direct Compensation reflects salary and incentive compensation for the applicable year. Totals may not foot due to rounding.
|
2
|
Target and award determinations reflect salary rate for the year and incentive compensation which is awarded after
year-end
for
performance during the year.
|
3
|
SEC Reporting reflects salary, stock awards and
non-equity
incentive plan compensation reported in the Summary Compensation Table set
forth on page 60 (and for 2013, reported in the Summary Compensation Table set forth in last years proxy statement). SEC Reporting does not reflect how our HRC Committee sets targets and determines awards, largely due to the timing
requirements for reporting equity-based pay and our previously disclosed 2013
pay-for-performance
enhancements.
|
4
|
Percentages represent incentive awarded as a percentage of target.
|
2016 Executive Pay Practice Highlights
|
|
|
|
|
What we
do:
|
|
What we dont
do:
|
|
|
|
|
|
Directly link pay to performance
Require sustained financial performance to earn full amount of long-term awards
Promote long-term stock ownership through deferred equity compensation
Balance risk and reward in compensation
Use a balanced approach for determining incentives with both corporate and individual goals
Balance incentives for short- and long-term performance with a mix of fixed and variable, cash and equity compensation
Conduct a robust stockholder outreach program
|
|
Do not use employment agreements
No excessive or single-trigger
change-in-control
or other severance benefits
No excessive perquisites or benefits
No tax
gross-ups
No hedging or short sales of our stock
No dividend equivalents paid on unearned PSUs or RSUs
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BNY Mellon
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2017 Proxy Statement
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|
37
|
|
|
ITEM 2. ADVISORY VOTE ON COMPENSATION
> Compensation Discussion & Analysis
|
Performance
Our operating earnings per share (OEPS) was $3.17, representing a year-over-year increase of 11% and a 2% increase above our operating plan of $3.10. Combined with our strong OEPS growth last year,
compounded OEPS growth for the
two-year
period from 2015 through 2016 was 15%, which is on track to meet our three-year Investor Day Goals. OEPS reflects GAAP EPS (earnings per diluted common share) as
adjusted for significant items, including M&I, litigation and restructuring charges (recovery) in excess of plan. Our GAAP EPS increased year-over-year by 16% from $2.71 to $3.15, which is 5% above our GAAP plan of $2.99, representing a GAAP EPS
growth rate at the 93
rd
percentile relative to our peers.
Our Return on Tangible Common Equity remained strong at 21%*, up 70 basis points year-over-year. Accordingly, our Return on Tangible Common Equity for the
two-year
period from 2015 through 2016 was also 21%*, which is on track to meet our three-year Investor Day Goals. Our continued focus on implementing expense controls resulted in a year-over-year decrease in
expenses of 2%* on an adjusted basis, and our compensation to revenue ratio decreased to 37.6% as compared to 38.4% in 2015.
Although 2016 adjusted
revenue of $15.2 billion* was below our operating plan of $15.5 billion, it represented a year-over-year increase of 1% and, when coupled with our strong operating expense controls, resulted in net operating income of $3.45 billion* (7% higher
than 2015 net operating income and 3% above our operating plan). Our adjusted revenue growth for the
two-year
period from 2015 through 2016 was 2%.
In 2016, we achieved industry leading operating margins, and our adjusted
pre-tax
operating margin increased to 33%* (from 31% in 2015). Additionally, we attained positive
adjusted operating leverage of 274 basis points.
|
|
|
Operating EPS
|
|
Adjusted Pre-Tax Operating Margin*
|
|
|
|
|
|
Adjusted Noninterest Expense
($ in millions)*
|
|
Adjusted Return on Tangible
Common Equity*
|
|
|
|
*
|
For a reconciliation and explanation of these
non-GAAP
measures, as well as information on the calculation of OEPS and adjusted operating
leverage for compensation purposes, see Annex A.
|
|
|
|
|
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|
38
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BNY Mellon
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2017 Proxy Statement
|
|
|
ITEM 2. ADVISORY VOTE ON COMPENSATION
> Compensation Discussion & Analysis
|
In 2016, we executed on our capital plan and returned nearly $3.2 billion to our stockholders in the form of common dividends and
share repurchases. We distributed $778 million of common stock dividends to our stockholders in 2016 and also repurchased 5.4% of outstanding common shares for approximately $2.4 billion in 2016. We have repurchased 20% of common shares
over the last five years and our 2016 dividend distributions and share repurchases resulted in a combined payout ratio of about 93%, one of the highest payout ratios in our peer group.
Although our total shareholder return (TSR) was below the median relative to our peer group and the S&P Financials Index as a whole for
2016 (25
th
and 48
th
percentiles, respectively), our TSR has outperformed the median of our peer group and the S&P Financials Index over both a
three-year period (61
st
and 59
th
percentiles, respectively) and a five-year period (72
nd
and
69
th
percentiles, respectively).
We continue to maintain our strong capital position and further strengthen our balance sheet, remaining a safe and trusted business partner to our clients. Our
estimated common equity Tier 1 ratio, calculated under the the Advanced Approach on a fully-phased in basis, was 9.7%* at December 31, 2016, exceeding the fully
phased-in
requirements plus applicable
buffers of 8.5%.
Our strategic priorities for 2017 are designed to leverage our scale and expertise while delivering innovative strategic solutions with
strong upside potential. The 2017 strategic priorities include: enhancing the client experience; driving profitable revenue growth; executing our business improvement processes to increase productivity and effectiveness while controlling expenses;
being a strong, trusted counterparty by maintaining our safety and soundness,
low-risk
profile and strong liquidity and capital positions; generating and effectively deploying excess capital; and attracting,
developing and retaining top talent. We believe that by executing on these priorities, we will ensure that we are making appropriate investments in our business to sustain long-term growth and value creation for our clients and stockholders.
We are also focused on improving the performance of our investment management business in 2017. In 2016, our investment management business achieved
below-plan returns. To improve our performance and drive profitable revenue growth for 2017, we are focused on improving our investment performance, optimizing our distribution and infrastructure, repositioning certain products and developing new
ones that are better aligned with evolving market conditions and curtailing initiatives that are not core to our strategic priorities. Our disciplined execution against these areas of focus is helping drive near-term performance, positioning us to
attract new asset flows and drive improved margins.
|
|
|
Strong Multi-Year TSR Relative to Peers
|
|
Returned Significant Value to Stockholders
|
|
|
|
*
|
For a reconciliation and explanation of this
non-GAAP
measure see Annex A.
|
|
|
|
|
|
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|
BNY Mellon
|
|
|
|
2017 Proxy Statement
|
|
39
|
|
|
ITEM 2. ADVISORY VOTE ON COMPENSATION
> Compensation Discussion & Analysis
|
Compensation of Named Executives
2016 Target Total Direct Compensation Structure*
2016 Target Incentive Compensation Elements*
*
|
Excludes Curtis Y. Arledge, former Vice Chairman and CEO of Investment Management, whose employment with the company terminated effective March 23, 2016. Because
compensation determinations for Mr. Arledge were made in connection with his departure, he is not included in this discussion. Mr. Arledges compensation is described below in Separation Benefits for Mr. Arledge on
page 57.
|
|
|
|
|
|
|
|
40
|
|
BNY Mellon
|
|
|
|
2017 Proxy Statement
|
|
|
ITEM 2. ADVISORY VOTE ON COMPENSATION
> Compensation Discussion & Analysis
|
2016 Incentive Compensation Determinations
The following table shows the HRC Committees determinations of the form and amount of 2016 compensation awarded to our named executive
officers, as well as corresponding 2014 and 2015 information. The amounts reported in the table differ substantially as reported for 2016 in the Summary Compensation Table set forth on page 60.
Pursuant to SEC rules, the Summary Compensation Table is required to include for a particular year only those equity-based awards granted
during
that year,
rather than awards granted
after
year-end,
even if awarded for services in that year.
We consider the PSU
and RSU awards granted during February of a given year to be part of the prior years compensation. For example, we consider PSU and RSU awards granted in February 2016 to be part of 2015 compensation. The following table depicts the manner in
which the HRC Committee has considered named executive officer compensation determinations:
NEO Compensation Determinations
(1)(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
Year
|
|
Direct Compensation
|
|
Total
Direct
Compensation
|
|
Incentive
Awarded
as a Percentage of
Target
|
|
|
Salary
|
|
Cash
Incentive
|
|
Deferred Equity
|
|
|
|
|
|
|
RSU
Incentive
|
|
PSU
Incentive
|
|
|
Gerald L. Hassell
Chairman &
CEO
|
|
2016
|
|
$1.0
|
|
$4.3
|
|
$4.3
|
|
$8.7
|
|
$18.3
|
|
124%
|
|
2015
|
|
$1.0
|
|
$2.4
|
|
$9.7
|
|
$4.1
|
|
$17.2
|
|
135%
|
|
2014
|
|
$1.0
|
|
$1.2
|
|
$5.0
|
|
$4.5
|
|
$11.7
|
|
89%
|
Thomas
P.
(Todd)
Gibbons
Vice Chairman & CFO
|
|
2016
|
|
$0.7
|
|
$2.4
|
|
$2.0
|
|
$3.5
|
|
$8.5
|
|
124%
|
|
2015
|
|
$0.7
|
|
$2.4
|
|
$3.0
|
|
$1.8
|
|
$7.9
|
|
135%
|
|
2014
|
|
$0.7
|
|
$1.8
|
|
$1.4
|
|
$2.0
|
|
$5.8
|
|
97%
|
Brian T. Shea
Vice Chairman & CEO
of
Investment Services
|
|
2016
|
|
$0.7
|
|
$2.4
|
|
$2.0
|
|
$3.6
|
|
$8.6
|
|
125%
|
|
2015
|
|
$0.6
|
|
$2.5
|
|
$3.0
|
|
$1.9
|
|
$7.9
|
|
136%
|
Karen B. Peetz
(3)
President
|
|
2016
|
|
$0.7
|
|
$1.4
|
|
$3.2
|
|
$0
|
|
$5.2
|
|
104%
|
|
2015
|
|
$0.7
|
|
$1.6
|
|
$2.0
|
|
$1.3
|
|
$5.6
|
|
114%
|
|
2014
|
|
$0.7
|
|
$1.7
|
|
$1.3
|
|
$2.0
|
|
$5.7
|
|
94%
|
Mitchell E. Harris
CEO of Investment Management
|
|
2016
|
|
$0.7
|
|
$1.7
|
|
$1.4
|
|
$2.6
|
|
$6.4
|
|
79%
|
|
|
|
|
|
|
|
|
|
|
1 Dollar amounts shown in millions. Totals may not foot due to rounding.
2 Our named
executives also include Curtis Y. Arledge, former Vice Chairman and CEO of Investment Management. Mr. Arledges employment with the company terminated effective March 23, 2016. Because his compensation was determined in connection
with his departure, he is not included in this table; his compensation is described below in Separation Benefits for Mr. Arledge on page 57.
|
|
Blue shading represents incentive
determined by balanced scorecard results, reflecting the change to a one decision model in 2016 to (1) better align compensation with current year performance, (2) increase upside and downside program leverage and (3) simplify the
program to enhance employee understanding of performance objectives
|
|
|
|
|
|
|
3 As previously disclosed, Ms. Peetz retired
effective December 31, 2016. In recognition of the fact that Ms. Peetz is no longer able to influence our
go-forward
performance, the HRC Committee determined to award the deferred equity portion of
her 2016 incentive award solely in the form of RSUs (rather than a combination of RSUs and PSUs).
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|
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|
BNY Mellon
|
|
|
|
2017 Proxy Statement
|
|
41
|
|
|
ITEM 2. ADVISORY VOTE ON COMPENSATION
> Compensation Discussion & Analysis
|
2016 Target Compensation
|
|
|
|
|
|
|
Name
|
|
Salary
|
|
Target Incentive
|
|
Total Target
Direct Compensation
|
Hassell
|
|
$1,000,000
|
|
$14,000,000
|
|
$15,000,000
|
Gibbons
|
|
$650,000
|
|
$6,350,000
|
|
$7,000,000
|
Shea
|
|
$650,000
|
|
$6,350,000
|
|
$7,000,000
|
Peetz
|
|
$650,000
|
|
$4,350,000
|
|
$5,000,000
|
Harris
|
|
$650,000
|
|
$7,350,000
|
|
$8,000,000
|
In the first quarter of each year, the HRC Committee considers competitive data, executive position and level of responsibility and,
for executives other than our CEO, our CEOs recommendation, and establishes annual target total direct compensation for each executive. Targets are reviewed annually but only adjusted if determined appropriate by the HRC Committee.
As disclosed last year, after having remained unchanged since 2012, 2016 target incentive compensation was increased for Mr. Hassell by $2 million to
position his total target direct compensation in line with that of our peers. Additionally, for 2016, compared to the prior year, total target direct compensation was increased for each of Messrs. Gibbons and Shea by $1 million (including, for
Mr. Shea, a salary increase from $600,000 to $650,000), in each case, to better align with their current responsibilities. Total target direct compensation was increased for Mr. Harris by $900,000 (including a salary increase from $600,000
to $650,000) in connection with his promotion to CEO of Investment Management.
2016 Incentive Awards
Starting with our 2016 compensation program, our HRC Committee determined to move to a one decision incentive structure to (1) better align
compensation with current year performance, (2) increase upside and downside program leverage and (3) simplify the program to enhance employee understanding of performance objectives. Under the one decision structure, total
incentive compensation is based on a single incentive award decision based on the balanced scorecard results and then delivered in the form of cash, PSUs and RSUs, rather than two separate incentive award decisions one for annual
incentive, delivered in the form of cash and RSUs, and one for long-term incentive, delivered in the form of PSUs. One hundred percent of the total incentive award is conditional upon meeting a minimum funding requirement and subject to reduction or
elimination based on a risk assessment.
Minimum Funding Requirement
A common equity Tier 1 ratio of at least 8.5% on a fully
phased-in
basis was established as a minimum funding requirement for our incentive compensation, with such percentage
equal to the regulatory threshold ratio for a
well-capitalized
bank to which we expect to be held on a fully
phased-in
basis, including estimated buffers.
Payment of incentive compensation is conditioned upon our meeting this goal. This threshold funding goal was met, with an estimated common equity Tier 1 ratio of
9.7%
*
at December 31, 2016, calculated under the Advanced Approach on a
fully
phased-in
basis.
Balanced Scorecard
We have used a balanced scorecard approach for our incentive compensation determinations since 2009 and have adapted it for our one decision 2016 incentive compensation determinations. Our
approach is designed to be a comprehensive analysis of corporate and individual performance determined in the discretion of the HRC Committee. Our balanced scorecard provides for the following:
|
|
Corporate Component.
The corporate component of the balanced scorecard is based on a single set of objective company-wide performance metrics that are
designed to drive achievement of near-term business strategies. The HRC Committee establishes the applicable metrics at the start of the performance period and has discretion to consider other factors to obtain a holistic picture of our performance.
|
*
|
For a reconciliation and explanation of this
non-GAAP
measure, see Annex A.
|
|
|
|
|
|
|
|
42
|
|
BNY Mellon
|
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|
|
2017 Proxy Statement
|
|
|
ITEM 2. ADVISORY VOTE ON COMPENSATION
> Compensation Discussion & Analysis
|
|
|
Individual Component.
The individual component of the balanced scorecard focuses on individual performance and consists of (1) a business unit goal
(as applicable) based on
pre-tax
income of the specific business unit for which the individual is responsible and (2) an individual modifier to recognize and differentiate individual actions and
contributions in final pay decisions.
|
The HRC Committee determines the corporate component payout and the business unit payout, then
applies the individual modifier to increase or decrease the total incentive award by up to ±25%. Finally, the HRC Committee has the discretion to reduce an individuals corporate component, individual component and/or total incentive
award based on an assessment of the individuals risk profile. Incentive awards, including the effect of the individual modifier, can range from 0% up to 150% of the individuals target award.
As illustrated below, incentive awards are paid out in a combination of cash, PSUs earned between 0 150% based on the achievement of performance
metrics over a three-year performance period and RSUs deferred over three years. In calculating the number of PSUs and RSUs to grant, the HRC Committee divided the value of PSUs and RSUs awarded by $45.19, the average closing price of our common
stock on the NYSE for the 15 trading days from January 13, 2017 through February 3, 2017, to mitigate the impact of short-term volatility in our stock price.
*
|
Percentages reflect incentive award payment to our CEO. For our other named executives, incentive awards are generally paid 30% in cash, 45% in PSUs and 25% in RSUs. As described
below, Ms. Peetzs incentive award was paid 30% in cash and 70% in RSUs in light of her retirement on December 31, 2016.
|
For Messrs. Hassell and Gibbons, the corporate component weighting was 100% due to their roles as the Companys CEO and CFO, respectively. For Ms. Peetz,
the corporate component and business unit were weighted 75% and 25%, respectively, due to her role as the Companys President as well as the sizable impact her role has on the investment services business. For Messrs. Shea and Harris, the
corporate component and business unit were weighted equally (50% each) due to their roles as the head of our investment services and investment management businesses, respectively.
|
|
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|
BNY Mellon
|
|
|
|
2017 Proxy Statement
|
|
43
|
|
|
ITEM 2. ADVISORY VOTE ON COMPENSATION
> Compensation Discussion & Analysis
|
Corporate Component Payout
The
corporate component metrics are reviewed annually to select measures that align with our strategy and are appropriate for measuring annual performance. The same corporate component metrics and goals apply to each named executive officer. In February
2016, the HRC Committee determined to focus management on OEPS and adjusted operating leverage, weighted 75% and 25% respectively. The HRC Committee retains the discretion to consider other factors (including our performance relative to
our peers, market conditions and interest rate environment) in assessing the strength of the Companys OEPS and adjusted operating leverage achievements and also retains the discretion to determine the overall corporate component payout.
|
|
OEPS (weighted 75%).
OEPS is defined as reported earnings per share excluding merger and integration, restructuring, litigation expense and other
significant, unusual items added or subtracted at the HRC Committees discretion. Our 2016 OEPS budget was set at $3.10 and, in February 2016, the HRC Committee established the guidelines below for a range of incentive payouts. These guidelines
include the intended upside and downside leverage, which is the amount by which each percentage point difference between our budgeted and actual OEPS is magnified to determine the OEPS earnout portion of the corporate component.
|
|
|
|
|
|
|
|
OEPS
|
|
Percent of Budget
($3.10)
|
|
Earnout Range as
a
Percent of Target
|
|
Intended Leverage
|
>$
3.72
|
|
>120%
|
|
150%
|
|
|
$3.10 $3.72
|
|
100% 120%
|
|
100% 150%
|
|
3:1
|
$2.64 $3.10
|
|
85% 100%
|
|
40% 110%
|
|
4:1
|
<$2.64
|
|
<85%
|
|
0%
|
|
|
|
|
Adjusted Operating Leverage (weighted 25%).
Adjusted operating leverage is defined as the percentage change in operating revenue growth less operating
expense growth for the same period (with revenue and expense items calculated on the same basis as the calculations for OEPS). In February 2016, the HRC Committee determined that the adjusted operating leverage portion of the corporate
component would be earned at 100% if adjusted operating leverage is equal to, or more than, 100 basis points and at 0% if it is less than 100 basis points. There is no upside leverage associated with this metric, as the adjusted operating leverage
portion cannot be earned above 100%.
|
|
|
|
Adjusted Operating Leverage
|
|
Earnout as a Percent of Target
|
³
100 bps
|
|
100%
|
<100
bps
|
|
0%
|
HRC Committee Determinations.
Our actual 2016 OEPS was $3.17 and 2.3% above our operating budget, resulting in an earnout
range of 100% to 150% for the OEPS portion of the corporate component per the guidelines shown above. The HRC Committee determined that an earnout of 106.9% in respect of the OEPS portion of the corporate component was appropriate, which
reflected an earnout of 3 percentage points above target for each percentage point by which actual 2016 OEPS exceeded our operating budget (consistent with our intended leverage shown above).
For 2016, our adjusted operating leverage was 274 basis points, which exceeded the 100 basis point target described above. The adjusted operating leverage portion of the corporate component was therefore earned at
100%.
The OEPS earnout of 106.9%, weighted 75% of the total corporate component payout, and the adjusted operating leverage earnout of 100%, weighted
25% of the total corporate component payout, yielded a corporate component payout of 105.2%, based solely on the objective performance metrics. The HRC Committee then exercised its discretion to review the following factors with respect to our 2016
performance:
|
|
TSR results relative to peers over a 1, 3 and
5-year
period were at the 25
th
, 61
st
and
72
nd
percentiles, respectively. When compared to the S&P Financials Index,
our relative TSR results were directionally similar, ranking at the 48
th
,
59
th
and 69
th
percentiles over a 1, 3 and
5-year
period, respectively.
|
|
|
EPS growth results relative to peers were at the 92
nd
percentile (at the time the HRC Committee made its determination, which excluded Prudential Financial, Inc.).
|
|
|
Expenses were under control, decreasing by 3% compared to 2015.
|
|
|
Adjusted revenue grew 1% over the prior year, below plan by 1.8 percentage points.
|
|
|
|
|
|
|
|
44
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|
BNY Mellon
|
|
|
|
2017 Proxy Statement
|
|
|
ITEM 2. ADVISORY VOTE ON COMPENSATION
> Compensation Discussion & Analysis
|
Notwithstanding our strong multi-year TSR and EPS growth performance relative to peers and our disciplined expense management, management
recommended and the HRC Committee agreed to limit the corporate component payout to 103% to reflect our below-plan revenue and the Companys emphasis on quality growth based on earnings and revenue.
Individual Component (Business Unit Payout and Individual Modifier)
In February 2016, the HRC Committee approved the
pre-tax
income goal for each business unit and determined to apply similar
payout range guidelines and the same intended leverage ratios as those applicable to the OEPS portion of the corporate component, as set forth above. At that time, the HRC Committee also approved individual modifier strategic and leadership
objectives for our CEO, after discussion with the other independent directors, and for our other named executive officers, which were set by our CEO after discussion with the HRC Committee. None of the individual strategic and leadership objectives
had any specific weighting; the objectives are intended to be used, together with other information the HRC Committee determines relevant, to develop a holistic evaluation of individual performance.
In the first quarter of 2017, the HRC Committee evaluated 2016 business unit performance and determined each named executive officers individual modifier. For
Mr. Hassell, the HRC Committee reviewed his performance self-assessment, obtained feedback from each independent director, and finalized its decision after reporting its preliminary evaluation to the other independent directors and soliciting
their input. For each of the other named executive officers, the HRC Committee reviewed his or her performance self-assessment, considered Mr. Hassells recommendation and summary of performance, and finalized its decision after soliciting
input from the other independent directors.
|
|
|
|
|
|
|
BNY Mellon
|
|
|
|
2017 Proxy Statement
|
|
45
|
Payout Based on Objective Performance Metrics: 105.2% Discretionary Factors Strong
multi-year TSR performance relative to peers and the S&P Financials index Strong relative EPS growth compared to peers Disciplined expense management Revenue above prior year but below plan Actual Corporate Component Payout: 103%
|
|
ITEM 2. ADVISORY VOTE ON COMPENSATION
> Compensation Discussion & Analysis
|
In determining the individual component for Mr. Hassell, the HRC Committee considered the following key results:
|
|
Strategic:
met or exceeded key financial metric targets; developed and executed corporate strategies to achieve our Investor Day Goals; evaluated and
developed strategic vision for investment services and investment management businesses and successfully led risk management initiatives
|
|
|
Leadership:
continued to enhance our performance- based culture; continued to build a robust and diverse leadership team and succession pipeline and
assisted in building a robust and diverse Board; made a number of strategic and diverse hires and demonstrated commitment to providing superior client experience as a driver of new business
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Based on the above strategic and leadership
results, the HRC Committee approved an individual modifier of 120% for Mr. Hassell.
The HRC Committee then granted Mr. Hassell 25% of his total incentive award in the form of cash, 50% in the form of PSUs
and 25% in the form of RSUs.
In determining the individual component for Mr. Gibbons, the HRC Committee considered the
following key results:
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|
Strategic:
achieved targets for key components of our operating plan; implemented process to assist business partners deliver
run-rate
improvements; assisted in the strategic review and restructuring of several businesses and executed use cases to explore benefits of potential fintech innovations
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Leadership:
drove initiatives to increase employee engagement in support of company-wide performance initiatives; advanced our diversity and inclusion
agenda and continued to evolve business line financial reporting and analysis and risk management initiatives
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Based on the above strategic and leadership
results, the HRC Committee approved an individual modifier of 120% for Mr. Gibbons.
The HRC Committee then granted Mr. Gibbons 30% of his total incentive award in the form of cash, 45% in the form of PSUs
and 25% in the form of RSUs.
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46
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BNY Mellon
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2017 Proxy Statement
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ITEM 2. ADVISORY VOTE ON COMPENSATION
> Compensation Discussion & Analysis
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In determining the individual component for Mr. Shea, the HRC Committee considered the following key results:
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Business Unit Payout:
Our 2016 budgeted
pre-tax
income for the investment services business unit was
$3.790 billion and, in February 2016, the HRC Committee established the guidelines below:
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Percent of Budget
($3.790 billion)
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Payout Range
as a Percent of Target
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<85%
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0%
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85% 100%
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40% 100%
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100% 120%
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85% 150%
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>120%
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150%
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Our actual achievement was $3.933 billion, representing 104% of budget, resulting in a payout range of
85% to 150%. The HRC Committee determined that a business unit payout percentage of 106% was appropriate.
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Strategic:
exceeded business improvement process target; executed multiple strategic investment initiatives and drove improvements to bolster growth;
sustained business line performance; significantly advanced technology platforms and agenda and completed a number of major systems conversions
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Leadership:
implemented talent management tools and processes to support company-wide development initiatives; advanced our diversity and inclusion
agenda; advanced our risk management agenda and attracted and developed key leaders for several businesses
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Based on the above strategic and leadership
results, the HRC Committee approved an individual modifier of 120% for Mr. Shea.
The HRC Committee then granted Mr. Shea 30% of his total incentive award in the form of cash, 45% in the form of PSUs and
25% in the form of RSUs.
In determining the individual component for Ms. Peetz, the HRC Committee considered the following key
results:
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Business Unit Payout:
as described above, the HRC Committee determined that a business unit payout percentage of 106% was appropriate for the investment
services business unit
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Strategic:
improved competitive positioning relative to peers through development of change initiative and training program and enhanced communications
with employees and clients; transformed treasury services team to position group for innovation and successfully oversaw critical regulatory deliverables
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Leadership:
drove initiatives to increase employee engagement in support of company-wide performance initiatives; advanced our diversity and inclusion
agenda and outperformed relative to peers with respect to corporate social responsibility
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Based on the above strategic and leadership
results, the HRC Committee approved an individual modifier of 100% for Ms. Peetz.
The HRC Committee then granted Ms. Peetz 30% of her total incentive award in the form of cash and 70% in the form of RSUs.
The HRC Committee determined not to grant Ms. Peetz any PSUs because she retired on December 31, 2016 and consequently will not impact our performance going forward.
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BNY Mellon
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2017 Proxy Statement
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47
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ITEM 2. ADVISORY VOTE ON COMPENSATION
> Compensation Discussion & Analysis
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In determining the individual component for Mr. Harris, the HRC Committee considered the following key results:
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Business Unit Payout:
Our 2016 budgeted
pre-tax
income for the investment management business unit was
$1.156 billion and, in February 2016, the HRC Committee established the guidelines below:
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Percent of Budget
($1.156 billion)
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Payout Range
as a Percent of Target
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<85%
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0%
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85% 100%
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40% 100%
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100% 120%
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85% 150%
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>120%
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150%
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Our actual achievement was $1.053 billion, representing 91% of budget, resulting in a payout range of
40% to 100%. The HRC Committee determined that a business unit payout percentage of 72% was appropriate.
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achieved net margin growth in a margin contraction environment; created investment performance standards for boutique investment capabilities; exceeded target
for customer contacts; restructured and/or shut down a number of underperforming businesses and reduced structural costs
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achieved below-plan returns on strategic initiatives and underperformed relative to peers with respect to revenue growth and growth of assets under management
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Leadership:
realigned senior leadership team; implemented talent management tools and processes to support company-wide development initiatives and
advanced our diversity and inclusion agenda
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Based on the above strategic and leadership results, the HRC Committee approved an individual modifier of 90% for
Mr. Harris.
The HRC Committee then granted Mr. Harris 30% of his total incentive award in the form of cash, 45% in the form of PSUs and
25% in the form of RSUs.
Risk Assessment
We
adopted the use of a risk scorecard in 2011 to formally connect compensation and risk-taking. The risk scorecard takes into account liquidity, operational, reputational, market, credit and technology risk categories by measuring:
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maintenance of an adequate compliance program, including adhering to our compliance rules and programs;
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protection of the companys reputation, including reviewing our business practices to ensure that they comply with laws, regulations and policies, and
that business decisions are free from actual or perceived conflicts;
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management of operational risk, including managing operational losses and maintaining proper controls;
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compliance with all applicable credit, market and liquidity risk limits, including understanding and monitoring risks associated with relevant businesses and new
client acceptance, as well as appropriately resolving or escalating risk issues to minimize losses; and
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meeting Internal Audit expectations, including establishing an appropriate governance culture, achieving acceptable audit results and remediating control issues
in a timely manner.
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The HRC Committees review of the risk scorecard results for each named executive was taken into account by
the HRC Committee in determining each of the corporate and individual components of the balanced scorecard. The HRC Committee has the ability to reduce or fully eliminate the incentive award if the risk scorecard result is significantly below
expectation. No downward adjustments were made for 2016.
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48
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BNY Mellon
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2017 Proxy Statement
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ITEM 2. ADVISORY VOTE ON COMPENSATION
> Compensation Discussion & Analysis
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Reduction or Forfeiture in Certain Circumstances
The company may cancel all or any portion of the RSUs and PSUs that constitute a portion of our named executives incentive award if, directly or indirectly, the named executive (1) engages, or is
discovered to have engaged, in conduct that is materially adverse to the companys interests during his or her employment, (2) violates certain
non-solicitation
or
non-competition
restrictions during his or her employment and for a certain period thereafter, (3) violates any post-termination obligation or duties owed to the company or (4) has received, or may
receive, compensation that is required to be forfeited and/or repaid to the company pursuant to applicable regulatory requirements. In addition, in the event that the named executives risk scorecard rating is lower than acceptable risk
tolerance, any unvested RSUs and PSUs will be subject to review and potential forfeiture, as determined by our HRC Committee.
Outstanding PSUs
In 2013, we reintroduced
PSUs as part of our incentive compensation program. The PSUs are granted each year based on prior-year performance. We consider PSUs granted during a given year to be part of the prior years compensation; for example, we consider the February
2016 PSU grant to be part of 2015 earned compensation. Any earned PSUs cliff vest after the end of three-year performance periods based on continued service with certain exceptions. The PSUs granted in 2014 and 2015 are earned between
0 125% and the PSUs granted in 2016 are earned based between 0 150%, in each case based on the achievement of performance metrics. Granting awards annually with overlapping, multi-year performance periods allows the
HRC Committee to annually review and update, as appropriate, the structure and performance metrics that we use in our PSU program.
February 2016
PSUs
As discussed in last years proxy statement, in February 2016, the HRC Committee granted PSUs to each of our then-current named executives
based on target values, as adjusted based on prior-year risk scorecard results and strategic milestones. The February 2016 PSUs are earned based on 2018 OEPS, with the potential of a negative risk modifier should risk-weighted assets
(RWA) grow at an unacceptable rate.
In particular, to emphasize our focus on pay for performance, the HRC Committee
pre-established
two sets of 2018 OEPS targets (one set for a normalizing scenario, where the daily average Fed target rate is greater than or equal to 100 basis points in 2018, and one set for an
alternative flat scenario):
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2018 OEPS in a Flat
Rate Scenario
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2018 OEPS in
a Normalizing
Rate Scenario
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Payout Range
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> $3.57
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> $3.92
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150%
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$3.47
$3.57
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$3.78 $3.92
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100% 150%
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$3.47
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$3.78
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100%
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$3.37
$3.47
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$3.63 $3.78
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50% 100%
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< $3.37
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< $3.63
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0%
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The actual percentage of PSUs that are earned will be determined in the HRC Committees discretion within the
payout range set forth above. In addition, the percentage may be adjusted downward by a risk-based modifier should risk-weighted assets grow at an unacceptable rate during the three-year performance period as set forth below:
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Compound Annual Growth
Rate of RWA
|
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Risk-Based
Modifier
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> 11%
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0% 75%
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11%
9%
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75% 100%
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< 9%
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100%
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For 2016, our OEPS was $3.17 and the
one-year
growth rate of our RWA was 0.43%.
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BNY Mellon
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2017 Proxy Statement
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49
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ITEM 2. ADVISORY VOTE ON COMPENSATION
> Compensation Discussion & Analysis
|
Our outstanding PSU awards are illustrated below:
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2014
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2015
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2016
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2017
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2018
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2019
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February
2014 PSU
Award
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Earned at 67%
based on RRWA
of 1.57% against
a target of 2.0%
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Earned at 87%
based on RRWA
of 1.83% against
a target of 2.0%
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Earned at 99%
based on RRWA
of 1.98% against
a target of 2.0%
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cliff vested
in 2017
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February
2015 PSU
Award
|
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OEPS, with the potential of a
negative risk modifier
should risk-weighted assets grow
at an unacceptable rate
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cliff vests
in 2018 based on
continued service
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February
2016 PSU
Award
|
|
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OEPS, with the potential of a
negative risk
modifier
should risk-weighted assets grow
at an unacceptable rate
|
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cliff vests
in 2019 based on
continued service
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February
2017 PSU
Award
|
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OEPS, with the potential of a
negative risk modifier
should risk-weighted assets grow
at an
unacceptable rate
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cliff vests
in 2020 based on
continued service
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For the February 2014 PSU award, PSUs were earned in separate tranches over each year of the performance period based on return on
risk-weighted assets (RRWA). RRWA was generally defined as net income available to common stockholders, adjusted for capital charges on acquisitions as incurred, divided by the simple average of quarter-end risk-weighted assets
(estimated per a fully phased-in Basel III, based on assumptions and approaches existing at the commencement of the performance period as reported in our reports on
Forms 10-Q
and
10-K).
For awards beginning in February 2015, RWA is generally defined as, for each fiscal year, the simple average of the preceding four quarter-end risk-weighted assets (estimated on a fully phased-in basis in
Basel III using, for PSUs granted in 2015, the Advanced Approach, for PSUs granted in 2016, the higher of the Advanced or Standardized Approach and for PSUs granted in 2017, the Standardized Approach) based on existing assumptions at the
commencement of the performance period and as reported in the companys SEC filings.
Other Compensation and Benefits Elements
Retirement and Deferred Compensation Plans
After the merger in 2007, we assumed certain existing arrangements affecting the provision of retirement benefits to our named executives, maintaining qualified and
non-qualified
defined benefit and defined contribution plans in which eligible employees, including our named executives, may participate. Our named executives are eligible to participate in deferred
compensation plans, which enable eligible employees to defer the payment of taxes on a portion of their compensation until a later date. To limit pension accruals, we froze all accruals under the Legacy BNY SERP as of December 31, 2014 and
under our other U.S. defined benefit pension plans (including the BNY Mellon
Tax-Qualified
Retirement Plan and the Legacy BNY Excess Plan) as of June 30, 2015. For a description of these plans and our
named executive officers participation therein, see Pension Benefits and Nonqualified Deferred Compensation below.
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50
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BNY Mellon
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2017 Proxy Statement
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ITEM 2. ADVISORY VOTE ON COMPENSATION
> Compensation Discussion & Analysis
|
Perquisites
Our named executives
are eligible to participate in company-wide benefit plans. In addition, we provide certain benefits, consistent with market practices, that are reportable under SEC rules as perquisites (see footnotes to the Summary Compensation Table below). The
following perquisites were provided in 2016 and are substantially unchanged from 2015:
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Car and Driver
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Each named executive has access to a pool of company cars and drivers for security purposes and to allow for more effective use of travel time.
The pool is also available for use by our other executives.
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Personal Use of
Corporate Aircraft
|
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Company aircraft are intended to be used by employees, directors and authorized guests primarily for business purposes. Our policy provides that
the CEO should make prudent use of the company aircraft for security purposes and to make the most efficient use of his time. The HRC Committee receives an aircraft usage report on a semi-annual basis.
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Charitable Gifts
Match
|
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We maintain a matching gift program for gifts to eligible charities. All of our employees are eligible to participate in the matching gift
program, and our named executives are eligible for an additional match of up to $30,000.
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In addition to the perquisites described above, certain named executive officers are covered by legacy life insurance plans assumed
in the merger.
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BNY Mellon
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2017 Proxy Statement
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51
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ITEM 2. ADVISORY VOTE ON COMPENSATION
> Compensation Discussion & Analysis
|
Pay Practices
Stakeholder Engagement
In determining our governance practices, we believe it is important to
consider feedback and input from our stakeholders, including stockholders, employees, clients and the communities we serve.
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We have consistently received strong support for our executive compensation program, with over 97% stockholder approval of the
say-on-pay
proposal at our 2016 Annual Meeting, over 95% approval at our 2015 Annual Meeting and over 93% approval at our 2014 Annual Meeting. We continue to
actively engage with our stakeholders throughout the year (including webcasting our Annual Meeting to allow broader stockholder participation).
In total, in advance of our 2017 Annual Meeting and as a result of our annual outreach process, we invited feedback from investors representing about 45% of our
outstanding shares and reached investors representing
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almost 30% of our outstanding shares, and we actively engaged with proxy advisory firms and other stakeholders on governance and
performance matters. We further engaged stockholders and analysts at industry conferences, in meetings at our offices or at our stockholders offices, through conference calls and at our Investor Day conference held on October 28, 2014. We
also regularly engage in direct meetings with local leaders and advocacy groups in our communities as well as with our employees.
Changes for 2017
We are focused on driving
quality growth based on earnings and revenue, which we believe is the key to sustainable progress. Having achieved industry leading operating margins, we want to ensure that we are making appropriate investments in our businesses to sustain
long-term growth and value creation for our clients and stockholders. Although we are still committed to maintaining our culture of expense control, our HRC Committee eliminated operating leverage from the corporate component of the balanced
scorecard to make OEPS the primary performance metric for 2017. In addition to reinforcing our focus on topline growth, this adjustment to the corporate component more closely ties pay to performance by increasing the upside and downside leverage of
our compensation program. Under our balanced scorecard for prior years, adjusted operating leverage, weighted 25% of the overall corporate component, was earned at either 100% or 0%, but was not itself subject to upside or downside adjustment. By
eliminating the operating leverage component and increasing the weighting of the OEPS component, an incremental 25% of the corporate component is now subject to upward adjustment (in the case of above-target performance) and downward adjustment (in
the case of below-target performance). The HRC Committee retains discretion to determine the corporate component payout and to consider other factors (including performance relative to our peers) in assessing the strength of the Companys OEPS
results.
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52
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BNY Mellon
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2017 Proxy Statement
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ITEM 2. ADVISORY VOTE ON COMPENSATION
> Compensation Discussion & Analysis
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Key Compensation Practices
To further our commitment to good corporate governance practices and mitigation of inappropriate risk-taking, our 2016 compensation program for the named executives has the following features:
|
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|
Directly link pay to
performance
|
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Incentive compensation is based on balanced scorecard results and comprises 91%
of target total direct compensation
Incentive compensation deferred in the form of PSUs comprises 50% of target total incentive compensation
for our CEO and 45% for other continuing named executives
Incentive compensation deferred in the form of RSUs comprises 25% of target total incentive compensation for all our continuing named executives
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|
Balanced approach for incentive
compensation
|
|
Incentive compensation earned based on a combination of corporate and individual
goals
Corporate component
based on OEPS (weighted 75%) and operating leverage (weighted 25%)
Business unit goals use quantitative financial measures to establish a payout range
Individual modifier allows the HRC Committee to recognize and differentiate individual
contributions
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Promote long-term
stock ownership
|
|
Deferred equity (PSUs and RSUs) as a percentage of total incentive compensation: 75%
for our CEO and 70% for our other named executives
Earned PSUs cliff vest after the end of a three-year performance period, and RSUs vest in equal installments over three years
Our CEO must acquire and retain
company stock equal to six times base salary, and other named executives must acquire and retain stock equal to four times base salary, plus an additional amount equal to one times base salary to provide a cushion against stock
volatility
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What we dont do
|
|
No excessive or single-trigger
change-in-control
or other severance benefits
No tax
gross-ups
No hedging or short sales of our
stock
No stock option
grants
|
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|
HRC Committee Role and Process
In the first quarter of 2016, for each named executive, the HRC Committee approved base salary levels; established target amounts for the 2016 incentive award to be earned or granted, as applicable, in the
first quarter of 2017 based on 2016 performance; and granted PSUs based on targets established in 2015, following consideration and adjustment based on prior-year risk scorecard results and strategic milestones.
In setting 2016 compensation targets, the HRC Committee, assisted by its independent compensation consultant, considered a variety of factors over multiple
meetings, including our financial performance and data concerning peer companies executive compensation programs. Factors were considered holistically, and no one factor had an assigned or specific quantifiable impact on the target
compensation levels established by the HRC Committee.
During the year, the HRC Committee received regular updates on performance forecasts versus
performance goals, regulatory and legislative developments and other relevant matters. In the first quarter of 2017, the HRC Committee evaluated 2016 corporate performance, using a combination of financial and qualitative measures, as well as each
named executives individual performance to make 2016 incentive compensation determinations under the one decision model as described above.
The HRC Committee also provided each named executive with incentive compensation targets for their 2017 incentive award, with the actual award amount to be determined in the first quarter of 2018 based on
prior-year performance.
With respect to our CEO, the HRC Committee reports its preliminary conclusions and compensation decisions, and information on
the process used by the HRC Committee, to the other independent members of our Board in executive session and solicits their input prior to finalizing determinations. With respect to our other named executive officers, the HRC Committee also advises
and discusses with the other independent directors compensation decisions and the process used by the HRC Committee.
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BNY Mellon
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2017 Proxy Statement
|
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53
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ITEM 2. ADVISORY VOTE ON COMPENSATION
> Compensation Discussion & Analysis
|
Role of Compensation Consultants
Since February 2014, the HRC Committee has retained Compensation Advisory Partners LLC, which we refer to as CAP, as its independent compensation consultant. CAP regularly attends HRC Committee meetings
and assists the committee in its analysis and evaluation of compensation matters related to our executive officers. For more information on CAP, see page 29.
Benchmarking
|
|
|
Peer Group
The HRC Committee and our management use a peer group to provide a basis for assessing relative company performance and to provide a competitive reference for pay levels and practices. In evaluating and selecting
companies for inclusion in the peer group, the HRC Committee targets complex financial companies with which we typically compete for executive talent and business. In particular, the HRC Committee selected these companies based on:
mix of
businesses (
e.g.
, asset management, asset servicing and clearing services) and other financial services companies with similar business models that operate in a similar regulatory environment;
relative size in terms of revenue, market capitalization and assets under
management, as well as total assets and net income;
position as competitors for customers and clients, executive talent and investment capital; and
global
presence.
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The 2016 peer group selected by the HRC Committee was unchanged from 2015.
Compensation Benchmarking
Compensation information is collected from the peer group proxy statements to
provide data for the HRC Committee to assess the competitiveness of targeted and actual compensation. Peer group information is also used to analyze market trends and compensation program practices. For certain named executive officers, data
relating to the peer group is supplemented with industry data from surveys conducted by national compensation consulting firms and other data to assess the compensation levels and practices in the businesses and markets in which we compete for
executive talent. Peer group data and other information provided to the HRC Committee by CAP was used by the HRC Committee as a consideration in setting 2016 target compensation levels for our named executives.
Financial Performance Benchmarking
The peer group is also
used to provide the HRC Committee with relative financial performance assessments. The metrics reviewed include revenue growth, EPS growth, operating leverage, return on equity, return on tangible common equity as well as TSR on a
one-
and three-year basis. This analysis provides additional context for the HRC Committee in their review of compensation outcomes as well as compensation program design. When making annual compensation
determinations for prior year performance, the HRC Committee reviews additional relative performance metrics as part of their considerations, as discussed above on pages 44 to 45.
Peer group data reviewed by the HRC Committee was considered holistically, and was used as an input, but not the sole input, of their compensation decisions.
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54
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BNY Mellon
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2017 Proxy Statement
|
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ITEM 2. ADVISORY VOTE ON COMPENSATION
> Compensation Discussion & Analysis
|
Stock Ownership Guidelines
Under our stock ownership guidelines, each named executive is required to own a number of shares of our common stock with a value equal to a multiple of base salary within five years of becoming a member of
our Executive Committee. The officer cannot sell or transfer to a third party any shares until he or she achieves the ownership guideline.
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Stock Ownership
Requirement
|
|
Stock Retention
Requirement*
|
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|
CEO
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|
|
Must retain shares of our common stock equal
to six times base salary
|
|
50% of net after tax shares must be held until age 60
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Other NEOs
|
|
|
Must retain shares of our common stock equal
to four times base salary
|
|
50% of net after tax shares must be held for one year after vesting date
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*
|
Applies to shares received from the vesting of RSUs, PSUs, restricted stock and other long-term equity awards granted after appointment to the Executive Committee and that were
unvested as of August 2012.
|
Our CEO is subject to a
6-times
base salary, and our other named
executives are subject to a
4-times
base salary, ownership guideline. All of our ongoing named executives are also expected to hold, as an administrative practice, an additional amount of company shares above
their guideline amount equal to 1 times base salary to provide a cushion against stock volatility. All of our ongoing named executives meet the stock ownership and administrative guidelines. To determine their ownership stake we include shares owned
directly, shares held in our employee stock purchase and retirement plans and shares held in certain trusts. We include 50% of unvested restricted stock and RSUs that do not have performance conditions or for which the applicable performance
conditions have been met. Unearned performance shares, awards that remain subject to performance conditions and stock options are not counted toward compliance with the stock ownership guidelines.
In addition, named executives are subject to a retention requirement relating to shares received from the vesting of RSUs, PSUs, restricted stock and other
long-term equity awards that were granted after their respective appointment to the Executive Committee and that were unvested as of August 2012. For the CEO, 50% of the net
after-tax
shares from these awards
must be held until age 60; for other named executive officers, 50% of the net
after-tax
shares must be held for one year from the vesting date.
Anti-Hedging Policy
Our executive officers, including each named executive officer, and
directors are subject to a robust anti-hedging policy which prohibits them from entering into hedging transactions with their company stock and derivative securities relating to BNY Mellon. Prohibited transactions include engaging in short sales of
our stock, purchasing our stock on margin and buying or selling any puts, calls or other options involving our securities (other than options granted pursuant to our compensation program). Prior to engaging in any transaction in company stock or
derivative securities (including transactions in employee benefit plans, gifts and pledges), our executive officers and directors are required to
pre-clear
such transaction with our legal department and obtain
that departments affirmative approval to enter into the transaction.
Our anti-hedging policy applies to all securities which our executive
officers and directors beneficially own and, with the exception of Trian, any entity for which an executive officer or director is attributed ownership.
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2017 Proxy Statement
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ITEM 2. ADVISORY VOTE ON COMPENSATION
> Compensation Discussion & Analysis
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Clawback and Recoupment Policy
In addition to forfeiture provisions based on risk outcomes during the vesting period, we have a comprehensive recoupment policy administered by the HRC Committee that applies to equity awards granted to our
executives, including the named executive officers. Under the policy, the company may cancel all or any portion of unvested equity awards made after the policy was adopted and require repayment of any shares of common stock (or values thereof) or
amounts that were acquired from the award if:
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the executive directly or indirectly engages in conduct, or it is discovered that the executive engaged in conduct, that is materially adverse to the interests
of the company, including failure to comply with the companys rules or regulations, fraud or conduct contributing to any financial restatements or irregularities;
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during the course of employment, the executive engages in solicitation and/or diversion of customers or employees and/or competition with the company;
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following termination of employment with the company for any reason, the executive violates any post-termination obligations or duties owed to the company or any
agreement with the company; or
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any compensation otherwise payable or paid to the executive is required to be forfeited and/or repaid to the company pursuant to applicable regulatory
requirements.
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In addition, we have a cash recoupment policy, which provides that the company may claw back some or all of a cash
incentive award within three years of the award date if, during the award performance period, the employee (including each of the named executives) is found to have engaged in fraud or to have directly or indirectly contributed to a financial
restatement or other irregularity. The company continues to monitor regulatory requirements as may be applicable to its recoupment policies.
Severance Benefits
Stockholder Approval of Future Senior Officer Severance
Arrangements.
In July 2010, the Board adopted a policy regarding stockholder approval of future senior officer severance arrangements. The policy provides that the company will not enter into a future severance arrangement with a senior
executive that provides for severance benefits (as defined in the policy) in an amount exceeding 2.99 times the sum of annual base salary and target bonus for the year of termination (or, if greater, for the year before the year of termination),
unless such arrangement receives stockholder approval.
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2017 Proxy Statement
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ITEM 2. ADVISORY VOTE ON COMPENSATION
> Compensation Discussion & Analysis
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Executive Severance Plan.
In July 2010, we adopted The Bank of New York Mellon Corporation Executive Severance Plan (the
Executive Severance Plan). In August 2016, the HRC Committee reviewed the Executive Severance Plan in light of competitive market data and determined it was appropriate to amend the plan to bring the severance benefits available
thereunder more in line with those offered by peer institutions. Accordingly, participants terminated by the company without cause after August 11, 2017, will be eligible to receive severance in the amount of 1 times base salary. In
addition, for participants terminated by the company without cause after August 7, 2016, eligibility for a
pro-rata
annual bonus for the year of termination is determined on a case by case
basis and if awarded, paid at year end after an evaluation of corporate, business unit and individual performance, among other considerations. The following table sets forth the severance benefits available under the Executive Severance Plan, both
before and after the HRC Committees August 2016 amendment.
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Reason for
Termination
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Severance
Payment
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Bonus
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Benefit
Continuation
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Outplacement
Services
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By
the company without cause
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Original
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2 times base salary
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Pro-rata annual
bonus for the year of
termination
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Two years
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One year
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Revised
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Reduced to 1 times base salary
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Pro-rata annual
bonus paid at year
end at the discretion
of management and
the HRC Committee
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Reduced to
one year
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No change
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By the company without cause or by the executive for
good reason within two years following a change in control
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Original
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2 times base salary
and 2 times target
annual
bonus
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Pro-rata target annual
bonus for the year
of
termination
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Two years
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One year
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Revised
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No change
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No change
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No change
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No change
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Executive Severance Plan participants are selected by the HRC Committee and include each of our named executives. To receive
benefits under the plan, the participant must sign a release and waiver of claims in favor of the company and agree not to solicit our customers and employees for one year.
We do not provide any severance-related tax
gross-ups.
If any payment under the Executive Severance Plan would cause a participant to become subject to the excise tax imposed
under Section 4999 of the Internal Revenue Code of 1986 (IRC), then payments and benefits will be reduced to the amount that would not cause the participant to be subject to the excise tax if such a reduction would put the
participant in a better
after-tax
position than if the participant were to pay the tax. In addition, the amount of payments and benefits payable under the plan will be reduced to the extent necessary to comply
with our policy regarding stockholder approval of future senior officer severance arrangements as described above.
Separation Benefits for Mr. Arledge
Mr. Arledges employment with the company terminated effective March 23, 2016. In connection with his termination, the company determined that he was
eligible to receive payments under the Executive Severance Plan for a termination by the company without cause. In accordance with the plan, Mr. Arledge received a severance payment of $1,300,000 equal to two times his base salary
payable over two years; a 2016 incentive award
pro-rated
for the portion of the year during which he was employed by us, with such benefit determined by the companys actual performance during such
period; benefits continuation for two years; and outplacement services for one year.
In determining the 2016 incentive for Mr. Arledge, the HRC
Committee awarded him an individual modifier of 100%. Combined with the corporate component payout of 103% (weighted 50%) and the business unit payout for the investment management business of 72% (weighted 50%), the total incentive compensation
awarded to Mr. Arledge was 88% of target. Mr. Arledge had a target of $13,350,000 and his award was
pro-rated
for the portion of the year during which he was employed by us, resulting in an incentive
award of $1,456,964. 30% of Mr. Arledges incentive compensation was paid in cash and 70% was deferred in the form of RSUs, which vest in equal installments over three years.
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2017 Proxy Statement
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ITEM 2. ADVISORY VOTE ON COMPENSATION
> Compensation Discussion & Analysis
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Additionally, as a result of his departure prior to the completion of the applicable performance periods, Mr. Arledge vested in a
pro-rated portion of the 2016 tranche of his February 2014 PSU awards and is eligible to vest in a pro-rated portion of his unvested February 2015 and 2016 PSU awards. Accordingly, Mr. Arledge vested in 9,055 shares under the 2016 tranche of the
February 2014 PSU awards and the number of shares under the February 2015 and February 2016 PSU awards in which Mr. Arledge will vest will be based on the companys actual performance as determined by the HRC Committee at the end of the
applicable performance periods, and pro-rated to reflect the portion of each such performance period during which he was employed by us.
Tax Considerations
The HRC Committee
considers certain tax implications when designing our executive compensation programs and certain specific awards. The HRC Committee considered that Section 162(m) of the IRC generally imposes a $1 million limit on the amount that a public
company may deduct for compensation paid to its CEO and the three other most highly compensated officers each year. This limitation does not apply to qualifying performance-based compensation as defined in the IRC. We generally design
our compensation programs so that compensation paid to the named executives can qualify for available income tax deductions. Our incentive awards are granted under our stockholder-approved Executive Incentive Compensation Plan and intended to be
qualifying performance-based compensation. In that regard, incentive compensation paid to any individual for the calendar year cannot exceed the sum of $3 million plus 0.5% of our positive
pre-tax
income from continuing operations, before the impact of the cumulative effect of accounting changes and extraordinary items, as disclosed on our consolidated statement of income for such year included
in our Annual Report on Form
10-K.
However, the HRC Committee believes that stockholders interests may
best be served by offering compensation that is not fully deductible, where appropriate, to attract, retain and motivate talented executives. Accordingly, the HRC Committee has discretion to authorize compensation that does not qualify for
income tax deductibility.
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2017 Proxy Statement
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ITEM 2. ADVISORY VOTE ON COMPENSATION
> Compensation Discussion & Analysis
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How We Address Risk and Control
On a regular basis, our Chief Risk Officer and our HRC Committee review the companys risk appetite, practices and employee
compensation plans, including sales incentives, for alignment with sound risk management. Our Chief Risk Officer also met with the HRC Committee to specifically discuss and review our 2016 compensation plans, including the plans in which members of
the Executive Committee participate. With respect to employees broadly, we also monitor the companys compensation plans through a management-level compensation oversight committee that includes our Chief Risk Officer, Chief Human Resources
Officer, Chief Financial Officer and the Risk Management and Compliance Chief Administrative Officer. The committee receives regular reports, meets at least on a quarterly basis and reports to the HRC Committee on risk-related compensation issues.
We identify employees who, individually or as a group, are responsible for activities that may expose us to material amounts of risk, using a
risk-related performance evaluation program with adjustments determined by a senior management committee responsible for control functions, with such adjustments later reviewed by the HRC Committee. The incentive compensation of identified employees
is directly linked to risk-taking either through a risk scorecard or through the inclusion of a standard risk goal as part of our performance management process.
With respect to our named executive officers, a common equity Tier 1 ratio of at least 8.5% on a fully
phased-in
basis calculated under the Advanced Approach was established
as a minimum funding requirement for our incentive compensation, with such percentage being equal to the regulatory threshold ratio to which we expect to be held on a fully
phased-in
basis, including estimated
buffers. Our incentive compensation also takes into account a risk assessment for both the company as a whole and for each individual. In addition, all of our named executive officers equity awards are subject to 100% forfeiture during, and
clawback following, the vesting period and all of their cash incentives are subject to 100% clawback within three years following the award date, in each case based on ongoing risk assessments under our comprehensive recoupment policy.
We are also subject to regulation by various U.S. and international governmental and regulatory agencies with respect to executive compensation matters and the
consideration of risk in the context of compensation. Our programs have been designed to comply with these regulations, and the HRC Committee regularly monitors new and proposed regulations as they develop to determine if additional action is
required.
Based on the above, we believe that our compensation plans and practices are well-balanced and do not encourage imprudent risk-taking that
threatens our companys value or create risks that are reasonably likely to have a material adverse effect on the company.
Report of the HRC Committee
The HRC Committee has reviewed and discussed the foregoing Compensation Discussion and Analysis with management. On
the basis of such review and discussions, the HRC Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the companys Annual Report on Form
10-K
and
this proxy statement.
By: The Human Resources and Compensation Committee
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Edward P. Garden, Chairman
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Edmund F. Ted Kelly
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Samuel C. Scott III
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Jeffrey A. Goldstein
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BNY Mellon
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2017 Proxy Statement
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59
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ITEM 2. ADVISORY VOTE ON COMPENSATION
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>
Executive Compensation Tables
|
Summary Compensation Table
The Summary Compensation Table and Grants of Plan-Based Awards Table, on this page 60 and on page 62, are in accordance with SEC rules and do not reflect the manner
in which our HRC Committee thinks about and determines compensation. In particular, the SEC rules require that we report equity-based awards for the year that they are granted, even though the equity-based portion of our incentive compensation is
awarded for services performed the prior year and our long-term equity incentives are awarded after adjustment for performance during the prior year.
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Name and
Principal
Position
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Year
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|
Salary
|
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Bonus
|
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Stock
Awards
(1)(2)
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Option
Awards
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Non-Equity
Incentive Plan
Compensation
|
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Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
(3)
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All
Other
Compensation
(4)
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|
Total
Compensation
|
Gerald L. Hassell
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|
2016
|
|
$1,000,000
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|
$
|
|
$13,656,477
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|
$
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|
$4,326,000
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|
$
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|
$183,121
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|
$19,165,598
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Chairman & Chief Executive Officer
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|
2015
|
|
$1,000,000
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|
$
|
|
$9,889,738
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|
$
|
|
$2,419,200
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|
$
|
|
$173,496
|
|
$13,482,434
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|
2014
|
|
$1,000,000
|
|
$
|
|
$7,750,031
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|
$
|
|
$1,244,640
|
|
$1,509,388
|
|
$155,469
|
|
$11,659,528
|
Thomas P. Todd Gibbons
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|
2016
|
|
$650,000
|
|
$
|
|
$4,755,929
|
|
$
|
|
$2,354,580
|
|
$179,290
|
|
$84,360
|
|
$8,024,159
|
Vice Chairman & Chief Financial Officer
|
|
2015
|
|
$650,000
|
|
$
|
|
$3,510,949
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|
$
|
|
$2,426,760
|
|
$
|
|
$76,731
|
|
$6,664,440
|
|
2014
|
|
$650,000
|
|
$
|
|
$2,982,659
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|
$
|
|
$1,808,471
|
|
$978,123
|
|
$78,460
|
|
$6,497,713
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Brian T. Shea
(5)
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|
2016
|
|
$625,000
|
|
$
|
|
$4,812,725
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|
$
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|
$2,388,870
|
|
$
|
|
$114,200
|
|
$7,940,795
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Vice Chairman & CEO of Investment Services
|
|
2015
|
|
$575,000
|
|
$
|
|
$3,033,843
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|
$
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|
$2,459,646
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|
$
|
|
$115,616
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|
$6,184,105
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Karen B. Peetz
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2016
|
|
$650,000
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|
$
|
|
$3,280,346
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|
$
|
|
$1,353,938
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|
$
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|
$48,550
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|
$5,332,834
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President
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|
2015
|
|
$650,000
|
|
$
|
|
$3,439,089
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|
$
|
|
$1,647,726
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|
$39,595
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|
$43,000
|
|
$5,819,410
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|
2014
|
|
$650,000
|
|
$
|
|
$2,907,106
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|
$
|
|
$1,716,826
|
|
$233,014
|
|
$26,012
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|
$5,532,958
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Mitchell E. Harris
(5)
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|
2016
|
|
$625,000
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|
$
|
|
$3,713,373
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|
$
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|
$1,736,438
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|
$74,252
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|
$18,550
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$6,167,613
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CEO of Investment Management
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Curtis Y. Arledge
(6)
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2016
|
|
$162,500
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|
$
|
|
$7,230,894
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|
$
|
|
$437,089
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$
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|
$1,398,747
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|
$9,229,230
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Former Vice Chairman & CEO of Investment Management
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|
2015
|
|
$650,000
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|
$
|
|
$8,082,755
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|
$
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|
$3,364,200
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$
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|
$121,592
|
|
$12,218,547
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2014
|
|
$650,000
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|
$
|
|
$7,544,542
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|
$
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$3,647,534
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$
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$95,396
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|
$11,937,472
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(1)
|
The amounts disclosed in this column include the grant date fair value of RSUs and PSUs granted in 2016, 2015 and 2014. For 2016, the grant date fair values of PSUs were:
$4,091,945 for Mr. Hassell; $1,824,324 for Mr. Gibbons; $1,841,370 for Mr. Shea; $1,289,825 for Ms. Peetz; $1,734,624 for Mr. Harris; and $3,166,824 for Mr. Arledge. At the maximum level of performance, the PSU values
would be: $6,137,917 for Mr. Hassell; $2,736,486 for Mr. Gibbons; $2,762,055 for Mr. Shea; $1,934,738 for Ms. Peetz; $2,601,936 for Mr. Harris; and $4,750,235 for Mr. Arledge.
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(2)
|
The amounts disclosed in these columns are computed in accordance with FASB ASC Topic 718 (ASC 718) using the valuation methodology for equity awards set forth in
note 15 to the consolidated financial statements in our Annual Report on Form
10-K
for the year ended December 31, 2016.
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(3)
|
The amount disclosed in this column for 2016 represents the amount of increase in the present value of the executives accumulated pension benefit and, for Mr. Harris,
also includes $21,341 representing the portion of interest accrued on deferred compensation above 120% of the applicable federal long-term rate at the maximum rate payable under the Mellon Elective Deferred Compensation Plan for Senior Officers (see
page 68 for additional information about this plan). Present values are determined in accordance with the assumptions used for purposes of measuring our pension obligations under FASB ASC 715 as of December 31, 2016, including a discount rate
of 4.35%, with the exception that benefit payments are assumed to commence at the earliest age at which unreduced benefits are payable. The increase in present value of accumulated benefit for Mr. Hassell is negative $212,805 (this negative
amount is not reflected in the amount disclosed above for Mr. Hassell). The increase in present value of accumulated benefit for Ms. Peetz is negative $7,717 (this negative amount is not reflected in the amount disclosed above for
Ms. Peetz).
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60
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BNY Mellon
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2017 Proxy Statement
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ITEM 2. ADVISORY VOTE ON COMPENSATION
> Executive Compensation Tables
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(4)
|
The items comprising All Other Compensation for 2016 are:
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Name
|
|
Perquisites
and Other
Personal
Benefits
(a)
|
|
Contributions
to Defined
Contribution
Plans
(b)
|
|
Insurance
Premiums
(c)
|
|
Severance
Payments
(d)
|
|
Total
|
Gerald L. Hassell
|
|
$149,921
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$18,550
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$14,650
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$
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|
$183,121
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Thomas P. Todd Gibbons
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|
$55,710
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|
$18,550
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|
$10,100
|
|
$
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|
$84,360
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Brian T. Shea
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|
$95,650
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$18,550
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|
$
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|
$
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|
$114,200
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Karen B. Peetz
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|
$30,000
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|
$18,550
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|
$
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|
$
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|
$48,550
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Mitchell E. Harris
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|
$
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|
$18,550
|
|
$
|
|
$
|
|
$18,550
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Curtis Y. Arledge
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|
$56,177
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|
$8,125
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|
$
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|
$1,334,445
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|
$1,398,747
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(a)
|
Perquisites and Other Personal Benefits are for Mr. Hassell, use of company car and driver ($53,237), use of company aircraft ($66,684) and enhanced charitable
gift match ($30,000); for Mr. Gibbons, use of company car and driver ($42,597), use of company aircraft ($8,061) and enhanced charitable gift match ($5,052); for Mr. Shea, use of company car and driver ($65,650) and enhanced charitable
gift match ($30,000); for Ms. Peetz, enhanced charitable gift match ($30,000); and for Mr. Arledge, use of company car and driver ($26,177) and enhanced charitable gift match ($30,000).
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The amounts disclosed represent aggregate incremental costs as follows: use of the company car and driver determined by the companys net cost associated with the
individuals personal use of the pool of vehicles and drivers; personal use of corporate aircraft determined by the direct hourly operating cost for use of the aircraft multiplied by the number of hours of personal use; and the enhanced
charitable gift match determined by matching contributions to eligible charities made by the company in excess of those provided for other employees under the companys gift matching programs. We calculated the direct hourly operating cost for
use of the aircraft by adding the total amount spent by us for fuel, maintenance, landing fees, travel and catering associated with the use of corporate aircraft in 2016 and divided this number by the total number of flight hours logged in 2016.
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|
(b)
|
Contributions to Defined Contribution Plans consist of matching contributions under our 401(k) plans and
non-discretionary
company contributions under The Bank of New York Mellon Corporation Defined Contribution IRC Section 401(a)(17) Plan (the BNY Mellon 401(k) Benefits Restoration Plan). See Nonqualified Deferred Compensation below on page 67
for more details regarding the BNY Mellon 401(k) Benefits Restoration Plan. In addition, for Messrs. Hassell, Gibbons, Shea and Harris and Ms. Peetz, the amount includes
non-discretionary
company
contributions totaling 2% of base salary under our 401(k) plan.
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|
(c)
|
Represent taxable payments made by us for universal life insurance policies.
|
|
(d)
|
Represents the following severance payments made by us pursuant to the Executive Severance Plan: two times base salary ($1,300,000) and two years of benefits continuation (valued
at $34,445).
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(5)
|
Because Mr. Shea was only a named executive in 2016 and 2015, no disclosure is included as to Mr. Shea for 2014. Because Mr. Harris was only a named executive in
2016, no disclosure is included as to Mr. Harris for 2015 or 2014.
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(6)
|
Mr. Arledges employment with BNY Mellon terminated on March 23, 2016.
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BNY Mellon
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2017 Proxy Statement
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61
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|
ITEM 2. ADVISORY VOTE ON COMPENSATION
> Executive Compensation Tables
|
Grants of Plan-Based Awards
|
|
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|
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Estimated Possible Payouts
Under
Non-Equity
Incentive Plan
Awards
(1)
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|
|
Estimated Possible Payouts Under
Equity Incentive Plan Awards
(2)
|
|
Name
|
|
Award
Type
|
|
Grant
Date
|
|
|
Date HRC
Committee
took
Action to
Grant
Award
|
|
|
Threshold
($)
|
|
|
Target
($)
|
|
|
Maximum
($)
|
|
|
Threshold
(#)
|
|
|
Target
(#)
|
|
|
Maximum
(#)
|
|
|
Grant
Date Fair
Value of
Stock
Awards
($)
(3)
|
|
Gerald L. Hassell
|
|
EICP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$14,000,000
|
|
|
|
$21,000,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PSUs
|
|
|
2/19/2016
|
|
|
|
2/19/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
117,147
|
|
|
|
175,721
|
|
|
|
$4,091,945
|
|
Thomas P. Todd Gibbons
|
|
EICP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$6,350,000
|
|
|
|
$9,525,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PSUs
|
|
|
2/19/2016
|
|
|
|
2/19/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
52,228
|
|
|
|
78,342
|
|
|
|
$1,824,324
|
|
Brian T. Shea
|
|
EICP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$6,350,000
|
|
|
|
$9,525,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PSUs
|
|
|
2/19/2016
|
|
|
|
2/19/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
52,716
|
|
|
|
79,074
|
|
|
|
$1,841,370
|
|
Karen B. Peetz
|
|
EICP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$4,350,000
|
|
|
|
$6,525,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PSUs
|
|
|
2/19/2016
|
|
|
|
2/19/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36,926
|
|
|
|
55,389
|
|
|
|
$1,289,825
|
|
Mitchell E. Harris
|
|
EICP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$7,350,000
|
|
|
|
$11,025,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PSUs
|
|
|
2/19/2016
|
|
|
|
2/19/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
49,660
|
|
|
|
74,490
|
|
|
|
$1,734,624
|
|
Curtis Y. Arledge
|
|
EICP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$13,350,000
|
|
|
|
$20,025,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PSUs
|
|
|
2/19/2016
|
|
|
|
2/19/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
90,662
|
|
|
|
135,993
|
|
|
|
$3,166,824
|
|
(1)
|
Represents incentive compensation amounts to be paid for performance during 2016 under The Bank of New York Mellon Corporation Executive Incentive Compensation Plan (the
EICP). Amounts earned under the EICP in 2017 (for 2016 performance) were made 25% in the form of cash, 50% in the form of PSUs and 25% in the form of RSUs for Mr. Hassell; 30% in the form of cash and 70% in the form of RSUs for Ms. Peetz
and Mr. Arledge; and 30% in the form of cash, 45% in the form of PSUs and 25% in the form of RSUs for our other named executives. There was no threshold payout under this plan for 2016.
|
|
The table above does not reflect the RSUs that were granted on February 19, 2016 with respect to each named executives 2015 annual incentive award, which was made 20%
in the form of cash and 80% in the form of RSUs for Mr. Hassell and 45% in the form of cash and 55% in the form of RSUs for our other named executives. The RSUs vest in equal installments over three years. In the event that the named
executives risk scorecard rating is lower than acceptable risk tolerance, any unvested RSUs will be subject to review and potential forfeiture, as determined by our HRC Committee. The 2015 annual incentive award was previously reported in the
2015 Grants of Plan-Based Awards Table.
|
(2)
|
Represents the portion of the named executives incentive compensation award granted in the form of PSUs under The Bank of New York Mellon Corporation Long-Term Incentive
Plan. The amounts shown under the Maximum column represent the maximum payout level of 150% of target; there is no threshold payout level. Upon vesting, the PSUs will be paid out in shares of BNY Mellon common stock. PSUs cannot be sold during the
period of restriction. During this period, dividend equivalents on the PSUs will be reinvested and paid to the executives at the same time as the underlying shares. These units will be earned between 0 150% based on our 2018 OEPS and growth
in Risk Weighted Assets from 12/31/2015 to 12/31/2018 with a negative risk modifier should risk-weighted assets grow at an unacceptable rate. The earned units generally will cliff vest after the end of the performance period if the executive remains
employed by us. In the event that the named executives risk scorecard rating is lower than acceptable risk tolerance, any unvested PSUs will be subject to review and potential forfeiture, as determined by our HRC Committee.
|
(3)
|
The aggregate grant date fair value of awards presented in this column is calculated in accordance with ASC 718.
|
|
|
|
|
|
|
|
62
|
|
BNY Mellon
|
|
|
|
2017 Proxy Statement
|
|
|
ITEM 2. ADVISORY VOTE ON COMPENSATION
> Executive Compensation Tables
|
Outstanding Equity Awards at Fiscal
Year-End
The market value of unvested or unearned awards is calculated based on $47.38 per share, the closing price of our common stock on the NYSE on
December 30, 2016.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option
Awards
|
|
Stock
Awards
(2)
|
|
|
|
|
Number of Securities
Underlying Unexercised
Options (#)
|
|
Option
Exercise
Price ($)
|
|
Option
Expiration
Date
|
|
Number of
Shares or
Units of
Stock That
Have Not
Vested (#)
|
|
Market
Value
of
Shares or
Units of
Stock That
Have Not
Vested ($)
|
|
Equity
Incentive Plan
Awards:
Number of
Unearned
Shares, Units
or Other
Rights That
Have Not
Vested (#)
|
|
Equity
Incentive
Plan Awards:
Market or
Payout Value
of Unearned
Shares, Units
or Other
Rights That
Have Not
Vested
($)
|
Name
|
|
Year of
Grant/
Performance
Period
(1)
|
|
Exercisable
|
|
Unexercisable
|
|
|
|
|
|
|
Gerald L. Hassell
|
|
2008
|
|
380,916
|
|
|
|
$42.3100
|
|
3/10/2018
|
|
|
|
|
|
|
|
|
|
|
2010
|
|
319,803
|
|
|
|
$30.2500
|
|
3/15/2020
|
|
|
|
|
|
|
|
|
|
|
2011
|
|
295,119
|
|
|
|
$30.1300
|
|
2/23/2021
|
|
|
|
|
|
|
|
|
|
|
2012
|
|
434,412
|
|
|
|
$22.0300
|
|
2/22/2022
|
|
|
|
|
|
|
|
|
|
|
2014
|
|
|
|
|
|
|
|
|
|
46,732
|
|
$2,214,162
|
|
|
|
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
87,804
|
|
$4,160,154
|
|
|
|
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
273,820
|
|
$12,973,592
|
|
|
|
|
|
|
2014-2016
|
|
|
|
|
|
|
|
|
|
96,635
(3)
|
|
$4,578,559
|
|
|
|
|
|
|
2015-2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
123,175
(4)
|
|
$5,836,028
|
|
|
2016-2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
119,190
(4)
|
|
$5,647,226
|
Thomas P. Todd Gibbons
|
|
2008
|
|
184,380
|
|
|
|
$42.3100
|
|
3/10/2018
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
38,152
|
|
|
|
$34.6300
|
|
7/21/2018
|
|
|
|
|
|
|
|
|
|
|
2011
|
|
190,124
|
|
|
|
$30.1300
|
|
2/23/2021
|
|
|
|
|
|
|
|
|
|
|
2012
|
|
128,432
|
|
|
|
$22.0300
|
|
2/22/2022
|
|
|
|
|
|
|
|
|
|
|
2014
|
|
|
|
|
|
|
|
|
|
15,774
|
|
$747,372
|
|
|
|
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
23,963
|
|
$1,135,367
|
|
|
|
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
83,928
|
|
$3,976,509
|
|
|
|
|
|
|
2014-2016
|
|
|
|
|
|
|
|
|
|
43,083
(3)
|
|
$2,041,261
|
|
|
|
|
|
|
2015-2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
54,915
(4)
|
|
$2,601,890
|
|
|
2016-2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
53,139
(4)
|
|
$2,517,720
|
Brian T. Shea
|
|
2011
|
|
119,182
|
|
|
|
$30.1300
|
|
2/23/21
|
|
|
|
|
|
|
|
|
|
|
2012
|
|
80,494
|
|
|
|
$22.0300
|
|
2/22/22
|
|
|
|
|
|
|
|
|
|
|
2014
|
|
|
|
|
|
|
|
|
|
13,106
|
|
$620,962
|
|
|
|
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
21,851
|
|
$1,035,300
|
|
|
|
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
85,066
|
|
$4,030,427
|
|
|
|
|
|
|
2014-2016
|
|
|
|
|
|
|
|
|
|
39,418
(3)
|
|
$1,867,645
|
|
|
|
|
|
|
2015-2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
45,677
(4)
|
|
$2,164,164
|
|
|
2016-2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
53,635
(4)
|
|
$2,541,244
|
Karen B. Peetz
|
|
2014
|
|
|
|
|
|
|
|
|
|
14,965
|
|
$709,042
|
|
|
|
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
22,748
|
|
$1,077,800
|
|
|
|
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
56,986
|
|
$2,699,997
|
|
|
|
|
|
|
2014-2016
|
|
|
|
|
|
|
|
|
|
43,083
(3)
|
|
$2,041,261
|
|
|
|
|
|
|
2015-2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
54,915
(4)
|
|
$2,601,890
|
|
|
2016-2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37,570
(4)
|
|
$1,780,067
|
|
|
|
|
|
|
|
BNY Mellon
|
|
|
|
2017 Proxy Statement
|
|
63
|
|
|
ITEM 2. ADVISORY VOTE ON COMPENSATION
> Executive Compensation Tables
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option
Awards
|
|
Stock
Awards
(2)
|
|
|
|
|
Number of Securities
Underlying Unexercised
Options (#)
|
|
Option
Exercise
Price ($)
|
|
Option
Expiration
Date
|
|
Number of
Shares or
Units of
Stock That
Have Not
Vested (#)
|
|
Market
Value
of
Shares or
Units of
Stock That
Have Not
Vested ($)
|
|
Equity
Incentive Plan
Awards:
Number of
Unearned
Shares, Units
or Other
Rights That
Have Not
Vested (#)
|
|
Equity
Incentive
Plan Awards:
Market or
Payout Value
of Unearned
Shares, Units
or Other
Rights That
Have Not
Vested
($)
|
Name
|
|
Year of
Grant/
Performance
Period
(1)
|
|
Exercisable
|
|
Unexercisable
|
|
|
|
|
|
|
Mitchell E. Harris
|
|
2012
|
|
31,621
|
|
|
|
$22.0300
|
|
2/22/2022
|
|
|
|
|
|
|
|
|
|
|
2014
|
|
|
|
|
|
|
|
|
|
19,695
|
|
$933,149
|
|
|
|
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
27,934
|
|
$1,323,513
|
|
|
|
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
56,649
|
|
$2,684,030
|
|
|
|
|
|
|
2014-2016
|
|
|
|
|
|
|
|
|
|
52,344
(3)
|
|
$2,480,041
|
|
|
|
|
|
|
2015-2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
66,720
(4)
|
|
$3,161,192
|
|
|
2016-2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,526
(4)
|
|
$2,393,926
|
Curtis Y. Arledge
|
|
2014
|
|
|
|
|
|
|
|
|
|
40,452
|
|
$1,916,616
|
|
|
|
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
48,332
|
|
$2,289,970
|
|
|
|
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
116,349
|
|
$5,512,616
|
|
|
|
|
|
|
2014-2016
|
|
|
|
|
|
|
|
|
|
74,979
(3)
|
|
$3,552,486
|
|
|
|
|
|
|
2015-2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
56,013
(4)
|
|
$2,653,903
|
|
|
2016-2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,986
(4)
|
|
$330,985
|
(1)
|
Refers to the year of grant for stock options and RSUs, and to the performance period for PSUs.
|
(2)
|
RSUs vest in accordance with the following schedule:
|
|
|
|
Year of Grant
|
|
|
2014
|
|
1/3 vest per year over a three-year period; the remaining unvested RSUs vested on
2/19/2017
|
2015
|
|
1/3 vest per year over a three-year period; the remaining unvested RSUs vested 1/2 on 2/20/2017
and vest 1/2 on 2/20/2018
|
2016
|
|
1/3 vest per year over a three-year period; the remaining unvested RSUs vested 1/3 on 2/19/2017
and vest 1/3 on 2/19/2018 and 1/3 on 2/19/2019
|
|
PSUs are earned and vest in accordance with the following schedule:
|
|
|
|
Year of Grant
|
|
|
2014
|
|
1/3 earned per year over the three-year performance period, between 0 125% of target based
on our return on risk-weighted assets during each year; earned PSUs cliff vested at the end of the performance period (on 2/19/2017)
|
2015
|
|
Earned, between 0 125% of target, based on our OEPS growth over the three-year performance
period with a negative risk modifier should risk-weighted assets grow at an unacceptable rate; earned PSUs cliff vest at the end of the performance period (on 2/20/2018)
|
2016
|
|
Earned, between 0 150% of target, based on our 2018 OEPS and growth in Risk Weighted
Assets from 12/31/2015 to 12/31/2018 with a negative risk modifier should risk-weighted assets grow at an unacceptable rate; earned PSUs cliff vest at the end of the performance period (on 2/19/2019)
|
(3)
|
Includes accrued dividends on all tranches for the PSUs granted in 2014, which were earned based on performance as of December 31, 2016 but remained subject to ongoing
time-vesting conditions.
|
(4)
|
Includes accrued dividends on the unearned portion of the PSUs granted in 2015 and 2016, assuming target performance.
|
|
|
|
|
|
|
|
64
|
|
BNY Mellon
|
|
|
|
2017 Proxy Statement
|
|
|
ITEM 2. ADVISORY VOTE ON COMPENSATION
> Executive Compensation Tables
|
Option Exercises and Stock Vested
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
Name
|
|
Number
of
Shares Acquired
on Exercise(#)
|
|
Value Realized
on Exercise
($)
|
|
Number of
Shares Acquired
on Vesting(#)
|
|
Value Realized
on Vesting ($)
|
Gerald L. Hassell
|
|
784,818
|
|
$3,295,081
|
|
245,279
|
|
$8,567,612
|
Thomas P. Todd
Gibbons
|
|
514,557
|
|
$6,336,932
|
|
99,218
|
|
$3,465,687
|
Brian T. Shea
|
|
|
|
$
|
|
82,846
|
|
$2,893,811
|
Karen B. Peetz
|
|
244,865
|
|
$1,789,394
|
|
96,048
|
|
$3,354,958
|
Mitchell E. Harris
|
|
|
|
$
|
|
122,920
|
|
$4,293,578
|
Curtis Y. Arledge
|
|
864,077
|
|
$13,093,308
|
|
248,274
|
|
$8,672,215
|
Pension Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Plan
Name
(1)
|
|
Number
of Years
Credited
Service (#)
|
|
Present
Value of
Accumulated
Benefit
($)
(2)
|
|
|
Payments
During Last
Fiscal Year
($)
|
|
Gerald L. Hassell
|
|
BNY Mellon
Tax-Qualified
Retirement Plan
|
|
38.75
|
|
$
|
1,601,620
|
|
|
$
|
|
|
|
|
Legacy BNY Excess Plan
|
|
38.75
|
|
$
|
4,274,731
|
|
|
$
|
|
|
|
|
Legacy BNY SERP
|
|
38.25
|
|
$
|
11,395,364
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas P. Todd Gibbons
|
|
BNY Mellon
Tax-Qualified
Retirement Plan
|
|
28.08
|
|
$
|
1,272,484
|
|
|
$
|
|
|
|
|
Legacy BNY Excess Plan
|
|
28.08
|
|
$
|
2,029,410
|
|
|
$
|
|
|
|
|
Legacy BNY SERP
|
|
27.58
|
|
$
|
3,483,706
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Karen B. Peetz
|
|
BNY Mellon
Tax-Qualified
Retirement Plan
|
|
16.25
|
|
$
|
677,557
|
|
|
$
|
|
|
|
|
Legacy BNY Excess Plan
|
|
16.25
|
|
$
|
459,497
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mitchell E. Harris
|
|
BNY Mellon
Tax-Qualified
Retirement Plan
|
|
10.75
|
|
$
|
346,728
|
|
|
$
|
|
|
|
|
Legacy Mellon IRC Section 401(a)(17) Plan
|
|
10.75
|
|
$
|
508,173
|
|
|
$
|
|
|
(1)
|
Benefit accruals under the Legacy BNY SERP were frozen as of December 31, 2014, and benefit accruals under the Legacy BNY Excess Plan and the BNY Mellon
Tax-Qualified
Retirement Plan were frozen as of June 30, 2015.
|
(2)
|
The present values shown above are based on benefits earned as of December 31, 2016 under the terms of the various plans as summarized below. Present values are determined
in accordance with the assumptions used for purposes of measuring our pension obligations under FASB ASC 715 as of December 31, 2016, including a discount rate of 4.35%, with the exception that benefit payments are assumed to commence at the
earliest age at which unreduced benefits are payable.
|
|
|
|
|
|
|
|
BNY Mellon
|
|
|
|
2017 Proxy Statement
|
|
65
|
|
|
ITEM 2. ADVISORY VOTE ON COMPENSATION
> Executive Compensation Tables
|
BNY Mellon Retirement Plans
The BNY Mellon
Tax-Qualified
Retirement Plan was previously amended effective
January 1, 2009, to change the benefit formula for participants under age 50 as of December 31, 2008 and for new participants to a cash balance formula for service earned on and after January 1, 2009. Plan participants who were age 50
or older as of December 31, 2008 continued to earn benefits through June 30, 2015 under the provisions of the legacy plan in which they participated as of that date. Because each of Messrs. Hassell and Gibbons and Ms. Peetz were all
over age 50 as of December 31, 2008, they continued to earn benefits under the provisions of the legacy plans in which they participate.
Because
Messrs. Hassell and Gibbons and Ms. Peetz have attained at least age 55, they are each eligible for immediate retirement under the BNY Mellon
Tax-Qualified
Retirement Plan and the Legacy BNY Excess Plan.
Unreduced benefits are payable under these plans at age 60, or at age 57 with 20 years of service. Messrs. Hassell and Gibbons and Ms. Peetz are currently entitled to unreduced benefits from these plans. Since Mr. Hassell is over age 60,
he is also entitled to an unreduced benefit from the Legacy BNY SERP. Messrs. Shea, Harris and Arledge do not participate in any plan that provides for specified payments and benefits (other than defined contribution plans) and accordingly, are not
included in the Pension Benefits table above.
BNY Mellon
Tax-Qualified
Retirement
Plan
Legacy BNY Provisions
.
The Legacy BNY
Tax-Qualified
Retirement Plan (the Legacy BNY Plan) formula is a
career average pay formula subject to IRC limits on eligible pay for determining benefits. Benefits are based on eligible base pay (maximum of $265,000 in 2016). Employees who participated in the Legacy BNY Plan prior to January 1, 2006 may
choose between a monthly benefit and a lump sum at retirement, while other participants will receive monthly benefits at retirement.
Legacy BNY
Excess Plan
.
This plan is an unfunded nonqualified plan designed to provide the same benefit to Legacy BNY employees as under the BNY Mellon
Tax-Qualified
Retirement Plan to the extent their benefits are limited under such plan as a result of IRC limits on accrued benefits and eligible base pay.
Benefits are paid in a lump sum.
Legacy BNY SERP
.
The Legacy BNY SERP is an unfunded nonqualified plan that provides benefits
according to a benefit formula similar to that of the BNY Mellon
Tax-Qualified
Retirement Plan benefit formula but includes an annual bonus (capped at 100% of base salary after 2005) for senior executives who
were selected to participate in this plan by The Bank of New Yorks board of directors prior to July 8, 2003. Benefits are paid in a lump sum. Participants are entitled to benefits in this plan only if they terminate service on or after
age 60.
All of these plans are closed to new participants and were frozen as of December 31, 2014 for the Legacy BNY SERP and as of June 30,
2015 for the BNY Mellon
Tax-Qualified
Retirement Plan and the Legacy BNY Excess Plan. Beginning with 2006, all of the plans generally provided benefits under a career average pay formula, rather than the final
average pay formula under which benefits were based prior to 2006. From January 1, 2006 through the applicable date on which the plan was frozen, benefits accrued for all three plans were equal to 1% (increased to 1.1% effective January 1,
2009 and with respect to the BNY Mellon
Tax-Qualified
Retirement Plan and the Legacy BNY Excess Plan, decreased to 0.9%, effective January 1, 2011) of eligible pay earned after 2005. Benefits accrued
before 2006 were based on a final average pay formula and service as of December 31, 2005 using a five-year average period for the BNY Mellon
Tax-Qualified
Retirement Plan and the Legacy BNY Excess Plan
and a three-year average period for the Legacy BNY SERP. Prior to the applicable date on which each plan was frozen, the benefit accrued prior to 2006 was indexed at a rate of 1% per year. Accrued benefits under each of the plans were provided
solely for service at The Bank of New York or with us.
|
|
|
|
|
|
|
66
|
|
BNY Mellon
|
|
|
|
2017 Proxy Statement
|
|
|
ITEM 2. ADVISORY VOTE ON COMPENSATION
> Executive Compensation Tables
|
Nonqualified Deferred Compensation
The following table provides information with respect to each defined contribution or other plan that provides for nonqualified deferred compensation in which the
named executives participate. For 2016, each of our named executives participated in the BNY Mellon 401(k) Benefits Restoration Plan, and Mr. Harris participated in the BNY Mellon Deferred Compensation Plan and the Mellon Elective Deferred
Compensation Plan for Senior Officers. Each of these plans is described below.
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Executive
Contributions
in Fiscal Year
2016
|
|
Registrant
Contributions
in Fiscal Year
2016
(1)
|
|
Aggregate
Earnings
in Fiscal
Year
2016
|
|
Aggregate
Withdrawals/
Distributions
|
|
Aggregate
Balance at End
of Fiscal Year
2016
|
Gerald L. Hassell
|
|
$
|
|
$14,700
|
|
$1,135
|
|
$
|
|
$25,835
|
Thomas P. Todd Gibbons
|
|
$
|
|
$7,700
|
|
$764
|
|
$
|
|
$14,964
|
Brian T. Shea
|
|
$
|
|
$7,200
|
|
$1,439
|
|
$
|
|
$28,949
|
Karen B. Peetz
|
|
$
|
|
$7,700
|
|
$3
|
|
$
|
|
$14,203
|
Mitchell E. Harris
(2)
|
|
$
|
|
$7,200
|
|
$129,303
|
|
$252,988
|
|
$2,993,714
|
Curtis Y. Arledge
|
|
$
|
|
$
|
|
$2,230
|
|
$41,723
|
|
$
(3)
|
(1)
|
These amounts represent contributions under the BNY Mellon 401(k) Benefits Restoration Plan and are included in the All Other Compensation column of the Summary Compensation
Table on page 60.
|
(2)
|
Amounts for Mr. Harris reflect aggregate balances and earnings in the BNY Mellon 401(k) Benefits Restoration Plan, the BNY Mellon Deferred Compensation Plan, and the Mellon
Elective Deferred Compensation Plan for Senior Officers. Mr. Harris received a distribution of $252,988 pursuant to his election to receive his balance in the BNY Mellon Deferred Compensation Plan in 5 annual installments.
|
(3)
|
Mr. Arledge received a distribution of his balance in the BNY Mellon 401(K) Benefits Restoration Plan as a result of the termination of his employment.
|
BNY Mellon Nonqualified Deferred Compensation Plans
BNY Mellon 401(k) Benefits Restoration Plan
.
The BNY Mellon 401(k) Benefits Restoration Plan is
a nonqualified plan designed for the purpose of providing deferred compensation on an unfunded basis for eligible employees. The deferred compensation provided under the BNY Mellon 401(k) Benefits Restoration Plan is intended to supplement the
benefit provided under the BNY Mellon 401(k) Savings Plan, our 401(k) Plan, for employees not accruing benefits in our defined benefit pension plans where the employees retirement contributions under the 401(k) Plan are limited due to the
maximums imposed on qualified plans by Section 401(a)(17) of the Internal Revenue Code (the IRC). Pursuant to the BNY Mellon 401(k) Benefits Restoration Plan, we set up a notional account that is credited with an amount, if
any, of
non-discretionary
company contributions that would have been credited to each eligible employees 401(k) Plan account absent those tax limitations, including for prior years in which the BNY
Mellon 401(k) Benefits Restoration Plan was not yet in effect. The amounts credited to the notional accounts generally vest after three years of service, as defined and calculated under the 401(k) Plan. As of December 31, 2016, all of our named
executives participate in the BNY Mellon 401(k) Benefits Restoration Plan.
BNY Mellon Deferred Compensation Plan
. The BNY Mellon Deferred Compensation Plan permits eligible
employees, including our named executives, to defer receipt of cash bonus/incentive amounts above the Social Security wage base (which was $118,500 in 2016) until a later date while employed, upon retirement or after retirement not to exceed age 70.
Changes are permitted to the payment election once annually; however, they must comply with the regulations contained in The American Jobs Creation Act of 2004. Deferred compensation may be paid in a lump sum or annual payments over 2 to 15 years.
If an executive terminates employment prior to age 55, his benefit is paid in a lump sum shortly after termination. Investment alternatives, based on a selection of variable rate options, must be selected when the executive makes a deferral election
and may be changed each quarter for future deferrals. Previously deferred amounts may generally be reallocated among the investment options at the beginning of each quarter. The plan is a nonqualified unfunded plan. As of December 31, 2016,
Mr. Harris is the only named executive that participates in the plan.
|
|
|
|
|
|
|
BNY Mellon
|
|
|
|
2017 Proxy Statement
|
|
67
|
|
|
ITEM 2. ADVISORY VOTE ON COMPENSATION
> Executive Compensation Tables
|
Mellon Elective Deferred Compensation Plan for Senior Officers
. The Mellon Elective Deferred
Compensation Plan for Senior Officers is a nonqualified, unfunded plan that permitted executives, including Mr. Harris, to defer receipt of earned salary and cash bonus/incentive amounts above the Social Security wage base until a later date
while employed, upon retirement or after retirement not to exceed age 70. Deferred compensation may be paid in a lump sum or annual payments over 2 to 15 years. If an executive terminates
employment prior to age 55, his benefit is paid in a lump sum shortly after termination. The executive may allocate his deferrals to receive earnings based on multiple variable rates or a
declared rate (for 2016, 4.31%). Previously deferred amounts allocated to the declared rate must remain in the declared rate. Although the plan is unfunded, funds have been set aside in an irrevocable grantor trust for the purpose of paying benefits
under the plan to participants.
Potential Payments upon Termination or Change in Control
The following discussion summarizes any arrangements, agreements and policies of the company relating to potential
payments upon termination or change in control.
Retirement Benefits
As shown in the Pension Benefits and the Nonqualified Deferred Compensation Tables above, we provide qualified and
non-qualified
pension retirement benefits and qualified and
non-qualified
defined contribution retirement benefits (with the specific plans varying depending on when participation began).
In addition, we provide accelerated or continued vesting of equity awards for participants who are eligible for retirement, with the eligibility dependent on the individuals age and length of service and the
terms of the applicable plan and award agreements. At December 31, 2016 and using the same assumptions as used for the Table of Other Potential Payments below, our named executives were eligible to receive
accelerated or continued vesting of stock awards in the following amounts: for Mr. Hassell, $35,708,927; for Mr. Gibbons, $8,900,269; for Mr. Shea,
$8,478,092; and for Mr. Harris, $13,055,365. Mr. Arledge was not retirement-eligible when his employment with BNY Mellon terminated on March 23, 2016. Ms. Peetz is not included above because her employment with us terminated due
to her retirement on December 31, 2016. Accelerated or continued vesting is not provided on termination by the company for cause.
Other Potential Payments upon Termination or Change in Control
Change in Control and Severance Arrangements.
Since 2010, our Board has implemented a Policy Regarding Stockholder Approval of Future Senior Officer Severance Arrangements. The policy
provides that the company will not enter into a future severance arrangement with a senior executive that provides for severance benefits (as
defined in the policy) in an amount exceeding 2.99 times the sum of the senior executives annual base salary and target bonus for the year of termination (or, if greater, for the year
before the year of termination), unless such arrangement receives approval of the stockholders of the company.
Under the Executive Severance Plan, if
an eligible participant is terminated by the company without cause (as defined in the plan), the participant is eligible to receive a severance payment equal to two times (if terminated after August 11, 2017, one times) the
participants base salary for the year of termination (or, if greater, for the year before the year of termination), benefit continuation for two years (if terminated after August 11, 2017, one year) and outplacement services for one year.
The participant is also eligible for a
pro-rata
annual bonus for the year of termination in the Companys sole discretion. If a participants employment is terminated by the company without cause or
if the participant terminates his or her employment for good reason (as defined in the plan) within two years following a change in control (as defined in the plan), then instead of receiving the benefits described above, the
participant is eligible to receive a severance payment equal to two times the sum of the participants base salary and target annual bonus for the year of termination (or, if greater, for the year before the year of termination), a
pro-rata
target annual bonus for the year of termination, benefit continuation for two years and outplacement services for one year. The payments and benefits under the plan are subject to the participant signing a
release and waiver of claims in favor of the company and agreeing not to solicit our customers and employees for one year. If any payment under the plan would cause a participant to become subject to the excise tax imposed under Section 4999 of
the IRC, then payments and benefits will be reduced to the amount that would not cause the participant to be subject to the excise tax if such a reduction would put the participant in a better after tax position than if the participant were to pay
the tax.
|
|
|
|
|
|
|
68
|
|
BNY Mellon
|
|
|
|
2017 Proxy Statement
|
|
|
ITEM 2. ADVISORY VOTE ON COMPENSATION
> Executive Compensation Tables
|
Payments and benefits that are payable under the plan will be reduced to the extent that the amount of such payments
or benefits would exceed the amount permitted to be paid under the companys Policy Regarding Stockholder Approval of Future Senior Officer Severance Arrangements and such amounts are not approved by the companys stockholders
in accordance with the policy.
Unvested Equity Awards.
Equity awards granted to our named executives through December 31, 2016 were
granted under The Bank of New York Mellon Corporation Long-Term Incentive Plan, as applicable. Each award is evidenced by an award agreement that sets forth the terms and conditions of the award and the effect of any termination event or a change in
control on unvested equity awards. Accordingly, the effect of a termination event or change in control on outstanding equity awards varies by executive officer and type of award.
Table of Other Potential Payments.
The following table is based on the following:
|
|
The termination event listed in the table is assumed to be effective as of December 31, 2016.
|
|
|
The value of our common stock of $47.38 per share is based on the closing price of our common stock on the NYSE on December 30, 2016, the last trading day
in 2016.
|
|
|
The amounts shown in the table include the estimated potential payments and benefits that are payable as a result of the triggering event and do not include any
pension, deferred compensation, or option/stock award vesting that would be earned on retirement as described above. We have only included amounts by which a named executives retirement benefit is enhanced by the triggering event, or
additional option/stock awards that vest on the triggering event that would not vest on retirement alone. See Retirement Benefits on page 68 above for information on the acceleration or continued vesting of equity awards upon retirement.
|
|
|
The designation of an event as a termination in connection with a change of control is dependent upon the termination being either an involuntary termination by
the company without cause or a termination by the named executive for good reason.
|
|
|
Cash Compensation includes payments of salary, bonus, severance or death benefit amounts payable in the applicable scenario.
|
The actual amounts that would be payable in these circumstances can only be determined at the time of the executives separation,
would include payments or benefits already earned or vested and may differ from the amounts set forth in the tables below. In some cases a release may be required before amounts would be payable. Although we may not have any contractual obligation
to make a cash payment or provide other benefits to any named executive in the event of his or her death or upon the occurrence of any other event, a cash payment may be made or other benefit may be provided in our discretion. The incremental
benefits that would be payable upon certain types of termination of employment as they pertain to the named executives are described below.
Mr. Arledge is not included in the table below because his employment with us terminated in 2016; see Separation Benefits for Mr. Arledge on
page 57 for information on payments he received in connection with his termination. Mr. Arledge also will continue to vest in the stock awards disclosed in Outstanding Equity Awards at Fiscal
Year-End
on page 63 in accordance with the applicable award agreements.
Ms. Peetz is not included in
the table below because her employment with us terminated due to her retirement on December 31, 2016. Ms. Peetz did not receive severance in connection with her retirement. She will continue to vest in the stock awards disclosed in
Grants of Plan-Based Awards on page 62 and Outstanding Equity Awards at Fiscal
Year-End
on page 63 in accordance with the applicable award agreements.
|
|
|
|
|
|
|
BNY Mellon
|
|
|
|
2017 Proxy Statement
|
|
69
|
|
|
ITEM 2. ADVISORY VOTE ON COMPENSATION
> Executive Compensation Tables
|
|
|
|
|
|
|
|
|
|
|
|
Named
Executive Officer
|
|
By Company
Without Cause
|
|
Termination in
Connection with
Change of Control
|
|
|
Death
|
|
Gerald L. Hassell
|
|
|
|
|
|
|
|
|
|
|
Cash Severance
(1)
|
|
$2,000,000
|
|
|
$16,000,000
|
|
|
|
$
|
|
Pro-rated
Bonus
(1)
|
|
$8,652,000
|
|
|
$7,000,000
|
|
|
|
$
|
|
Health and Welfare Benefits
|
|
$11,110
|
|
|
$11,110
|
|
|
|
$
|
|
Additional Retirement Benefits
(2)
|
|
$
|
|
|
$
|
|
|
|
$
|
|
Additional Stock Award Vesting
(3)
|
|
$
|
|
|
$
|
|
|
|
$
|
|
Tax
Gross-Up
|
|
$
|
|
|
$
|
|
|
|
$
|
|
TOTAL
|
|
$10,663,110
|
|
|
$23,011,110
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas P.
Todd Gibbons
|
|
|
|
|
|
|
|
|
|
|
Cash Severance
(1)
|
|
$1,300,000
|
|
|
$8,285,000
|
|
|
|
$
|
|
Pro-rated
Bonus
(1)
|
|
$4,316,730
|
|
|
$3,492,500
|
|
|
|
$
|
|
Health and Welfare Benefits
|
|
$575
|
|
|
$575
|
|
|
|
$
|
|
Additional Retirement Benefits
(2)
|
|
$
|
|
|
$
|
|
|
|
$3,576,509
|
|
Additional Stock Award Vesting
(3)
|
|
$4,203,931
|
|
|
$4,203,931
|
|
|
|
$4,203,931
|
|
Tax
Gross-Up
|
|
$
|
|
|
$
|
|
|
|
$
|
|
TOTAL
|
|
$9,821,236
|
|
|
$15,982,006
|
|
|
|
$7,780,440
|
|
|
|
|
|
|
|
|
|
|
|
|
Brian T.
Shea
|
|
|
|
|
|
|
|
|
|
|
Cash Severance
(1)
|
|
$1,300,000
|
|
|
$8,285,000
|
|
|
|
$
|
|
Pro-rated
Bonus
(1)
|
|
$4,379,595
|
|
|
$3,492,500
|
|
|
|
$
|
|
Health and Welfare Benefits
|
|
$17,140
|
|
|
$17,140
|
|
|
|
$
|
|
Additional Retirement Benefits
(2)
|
|
$
|
|
|
$
|
|
|
|
$
|
|
Additional Stock Award Vesting
(3)
|
|
$3,860,409
|
|
|
$3,860,409
|
|
|
|
$3,860,409
|
|
Tax
Gross-Up
|
|
$
|
|
|
$
|
|
|
|
$
|
|
TOTAL
|
|
$9,557,144
|
|
|
$15,655,049
|
|
|
|
$3,860,409
|
|
|
|
|
|
|
|
|
|
|
|
|
Mitchell E. Harris
|
|
|
|
|
|
|
|
|
|
|
Cash Severance
(1)
|
|
$1,300,000
|
|
|
$9,385,000
|
|
|
|
$
|
|
Pro-rated
Bonus
(1)
|
|
$3,183,469
|
|
|
$4,042,500
|
|
|
|
$
|
|
Health and Welfare Benefits
|
|
$10,503
|
|
|
$10,503
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|
|
|
$
|
|
Additional Retirement Benefits
(2)
|
|
$
|
|
|
$
|
|
|
|
$
|
|
Additional Stock Award Vesting
(3)
|
|
$
|
|
|
$
|
|
|
|
$
|
|
Tax
Gross-Up
|
|
$
|
|
|
$
|
|
|
|
$
|
|
TOTAL
|
|
$4,493,972
|
|
|
$13,438,003
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|
|
|
$
|
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(1)
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Amounts shown assume that no named executive received payment from any displacement program, supplemental unemployment plan or other separation benefit other than the executive
severance plan. Amounts have been calculated in accordance with the terms of the applicable agreements. For terminations by the company without cause, amounts will be paid in installments over a
two-year
period following termination. For terminations in connection with a change of control, amounts will be paid in a lump sum.
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(2)
|
Amounts shown include amounts that would be payable automatically in a lump sum distribution upon death. For benefits that would not be payable automatically in
a lump sum, the amount included is the present value based on the assumptions used for purposes of measuring pension obligations under FASB ASC 715 (formerly SFAS No. 87) as of December 31, 2016, including a discount rate of 4.35%. Amounts
shown include only the amount by which a named executives retirement benefit is
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70
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2017 Proxy Statement
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ITEM 2. ADVISORY VOTE ON COMPENSATION
> Executive Compensation Tables
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enhanced as a result of termination, pursuant to, where applicable, required notices given after the existence of a right to payment. Information relating to the present value, whether the
amounts are paid in a lump sum or on an annual basis and the duration of each named executives accumulated retirement benefit can be found in Pension Benefits on page 65 above.
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(3)
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The value of Additional Stock Award Vesting represents the value at December 31, 2016 of all shares of restricted stock, restricted stock units (along with cash dividends
accrued on the restricted stock units), and earned PSUs (along with dividend equivalents on the PSUs) that on that date were subject to service-based restrictions, which restrictions lapse on or after certain terminations of employment, including
following a change of control, to the extent such restrictions would not lapse on retirement alone. Information relating to the vesting of stock awards on retirement can be found in Retirement Benefits on page 68 above.
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BNY Mellon
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2017 Proxy Statement
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71
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ITEM 3. ADVISORY VOTE ON
SAY-ON-PAY VOTE FREQUENCY
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>
Resolution
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Proposal
We are asking stockholders to vote
in favor of advising the company to conduct a
say-on-pay
vote every year, at each Annual Meeting of stockholders.
Background
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Under Exchange Act rules, at least once every six years we must hold an
advisory vote on whether to present to stockholders an advisory vote on executive compensation every year, every two years or every three years.
We held our first
say-on-pay
vote frequency advisory vote in 2011. At the 2011 Annual Meeting, the Board recommended the option of holding an annual
say-on-pay
vote, and 86% of the votes cast voted in favor of holding such a vote annually.
Our Board values continuing, constructive feedback from our stockholders on executive
compensation and other important corporate governance topics. An annual vote fosters communication between our stockholders, the Board and the HRC Committee and offers a strong mechanism for stockholders to provide ongoing input on executive
compensation as well as the companys compensation practices and policies. The Board believes that an annual vote has provided, and will continue to provide, valuable feedback on executive compensation. The Board further believes that an annual
vote makes the most sense for the company because the HRC Committee evaluates and determines the compensation of our named executives on an annual basis.
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Voting
Unlike the other proposals included on the proxy card, you have four choices as to how to vote on this proposal. You may cast your vote on your preferred voting
frequency by choosing the option of one year, two years or three years or abstain from voting when you vote in response to this proposal. The option of one year, two years or three years that receives the greatest number of votes will be deemed to
have received the recommendation of the stockholders.
Your vote on this resolution is an advisory vote. Although the Board is not required to take any
action in response to the stockholder vote, the Board values our stockholders opinions. As in prior years, the Board intends to consider the results of the 2017 vote carefully when making future decisions regarding how often the company should
conduct a stockholder advisory vote on executive compensation.
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ITEM 4. RATIFICATION OF KPMG LLP
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>
Resolution
|
Proposal
We are asking stockholders to
ratify the Audit Committees appointment of KPMG LLP as our independent registered public accountants for the year ending December 31, 2017.
Background
KPMG LLP or its predecessors have served as our independent registered public
accounting firm since the merger in 2007 and previously served as the independent registered public accountant of Mellon since 1972. The Audit Committee and the Board believe that the continued retention of KPMG LLP to serve as independent
registered public accounting firm for the 2017 fiscal year is in the best interests of the company and its stockholders.
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Our Audit Committee has direct responsibility:
For the appointment, compensation, retention and oversight of the work of our independent
registered public accountants engaged to prepare an audit report or to perform other audit, review or attestation services for us.
To negotiate and approve the audit engagement fees and terms associated with the retention of
KPMG LLP.
To
annually evaluate and, as appropriate, replace KPMG LLP as our independent registered public accountant and discuss with management the timing and process for implementing the mandatory rotation of the lead engagement partner.
We expect that representatives of KPMG LLP will be present at the Annual Meeting to respond to
appropriate questions, and they will have the opportunity to make a statement if they desire.
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Voting
Adoption of this proposal requires the affirmative vote of a majority of the votes cast on the proposal at the Annual Meeting by the holders of our common stock
voting in person or by proxy. Unless contrary instructions are given, shares represented by proxies solicited by the Board will be voted for the ratification of the selection of KPMG LLP as our independent registered public accountants
for the year ending December 31, 2017.
If the selection of KPMG LLP is not ratified by our stockholders, the Audit Committee will reconsider the
matter. If selection of KPMG LLP is ratified, the Audit Committee in its discretion may still direct the appointment of a different independent registered public accountant at any time during the year if it determines that such a change is in our
best interests.
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BNY Mellon
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2017 Proxy Statement
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73
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ITEM 4. RATIFICATION OF KPMG LLP
|
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>
Report of The Audit Committee
|
On behalf of our Board of Directors, the Audit Committee oversees the operation of a comprehensive system of internal controls with respect to the integrity of our
financial statements and reports, compliance with laws, regulations and corporate policies and the qualifications, performance and independence of our independent registered public accounting firm. The committees function is one of oversight,
since management is responsible for preparing our financial statements, and our independent registered public accountants are responsible for auditing those statements.
Accordingly, the committee has reviewed and discussed with management the audited financial statements for the year ended December 31, 2016 and managements assessment of internal control over financial
reporting as of December 31, 2016. KPMG LLP issued its unqualified report on our financial statements and the operating effectiveness of our internal control over financial reporting.
The committee has also discussed with KPMG LLP the matters required to be discussed in accordance with Public Company Accounting Oversight Board Auditing Standard, Communications with Audit Committees. The
committee has also received the written disclosures and the letter from KPMG LLP required by applicable requirements of the Public Company Accounting Oversight Board, which we refer to as the PCAOB, regarding the independent
accountants communications with the Audit Committee concerning auditor independence, and has conducted a discussion with KPMG LLP regarding its independence. The committee has determined that KPMG LLPs provision of
non-audit
services is compatible with its independence.
Based on these reviews and discussions, the committee
recommended to the Board of Directors that our audited financial statements for the year ended December 31, 2016 be included in our 2016 Annual Report on Form
10-K.
By: The Audit Committee
Joseph J. Echevarria, Chair
John A. Luke, Jr.
Jennifer B. Morgan
Mark A. Nordenberg
Catherine A. Rein
Samuel C. Scott III
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2017 Proxy Statement
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ITEM 4. RATIFICATION OF KPMG LLP
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>
Services Provided by KPMG LLP
|
Audit Fees, Audit-Related Fees, Tax Fees and All Other Fees
We have been advised by KPMG LLP that it is an independent public accounting firm registered with the PCAOB and that it complies with the auditing, quality control and independence standards and rules of the PCAOB
and the SEC. The appointment of KPMG LLP as our independent registered public accounting firm for the 2016 fiscal year was ratified at our 2016 Annual Meeting. The following table reflects the fees earned by KPMG LLP for services provided to us for
2016 and 2015:
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Description of Fees
|
|
Amount of Fees Paid
to KPMG LLP for 2016
|
|
Amount of Fees Paid
to KPMG LLP for 2015
|
Audit Fees
(1)
|
|
$19,125,000
|
|
$17,304,000
|
Audit-Related Fees
(2)
|
|
$17,458,000
|
|
$15,810,000
|
Tax Fees
(3)
|
|
$2,990,000
|
|
$1,860,000
|
All Other Fees
(4)
|
|
$68,000
|
|
$643,000
|
Total
|
|
$39,641,000
|
|
$35,617,000
|
(1)
|
Includes fees for professional services rendered for the audit of our annual financial statements for the fiscal year (including services relating to the audit of internal
control over financial reporting under the Sarbanes-Oxley Act of 2002) and for reviews of the financial statements included in our quarterly reports on Form
10-Q
and for other services that only our
independent registered public accountant can reasonably provide.
|
(2)
|
Includes fees for services that were reasonably related to performance of the audit of the annual financial statements for the fiscal year, other than Audit Fees, such as service
organization reports (under Statement on Standards for Attestation Engagements (or SSAE) 16), employee benefit plan audits and internal control reviews.
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(3)
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Includes fees for tax return preparation and tax planning.
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(4)
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Includes fees for regulatory and other advisory services.
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Other Services Provided by KPMG LLP
KPMG LLP also provided services to entities associated with us that were
charged directly to those entities and accordingly were not included in the amounts disclosed in the table above. These amounts included $11.6 million for 2016 and $13.0 million for 2015 for the audits and tax compliance services for
mutual funds, collective funds and other funds advised by us. Also excluded from the amounts disclosed in the table above are fees billed by KPMG LLP to joint ventures or equity method investments in which we have an interest of 50% or less.
Pre-Approval
Policy
Our Audit Committee has established
pre-approval
policies and procedures applicable to all services provided by our independent registered public accountants. In accordance
with SEC rules, our
pre-approval
policy has two different approaches to
pre-approving
audit and permitted
non-audit
services
performed by our independent registered public accountants. Proposed services may be
pre-approved
pursuant to policies and procedures established by the Audit Committee that are detailed as to a particular
class of service without consideration by the Audit Committee of the specific
case-by-case
services to be performed (class
pre-approval).
If a class of service has not received class
pre-approval,
the service will require specific
pre-approval
by
the Audit Committee before it is provided by our independent registered public accountants (specific
pre-approval).
A list of services that has received class
pre-approval
from our Audit Committee (or its delegate) is attached to our Audit and Permitted
Non-Audit
Services
Pre-Approval
Policy. A copy of our Audit and Permitted
Non-Audit
Services
Pre-Approval
Policy is available on our website (see Helpful Resources on page 88). For 2016,
all of the fees associated with the independent registered public accounting firm services were
pre-approved
by the Audit Committee.
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BNY Mellon
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2017 Proxy Statement
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75
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ITEM 5. STOCKHOLDER PROPOSAL REGARDING PROXY VOTING REVIEW REPORT
|
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>
Stockholder Proposal
|
Proposal and Background
The Daniel L.
Altschuler 1986 Trust, 160 Riverside Drive, Apt. 9B, New York, NY 10024, the beneficial owner of 754 shares of our common stock, has given notice that it intends to introduce the following resolution at the Annual Meeting. In accordance with the
applicable proxy regulations, the text of the proponents proposal and supporting statement, for which we accept no responsibility, are set forth immediately below:
PROXY VOTING REVIEW BY BANK OF NEW YORK MELLON
Whereas: Bank of New York Mellon (Bank) is a
respected global leader in the financial services industry and rightly proud of its good governance, positive social and environmental programs and services to clients.
For example, in 2015 the Bank announced it would make available a wide range of environmental, social and governance (ESG) data and insight to its depository bank clients, the first bank to offer this
service to issuers, noting the growing momentum from investors and companies to more carefully consider the implications of ESG factors.
In a public
statement before the Paris Climate conference, Bank of New York Mellon President Karen Peetz stated Businesses, in partnership with governments,
non-governmental
organizations and others, have an
important role to play in shaping a
low-carbon
future. Taking strategic action to mitigate climate change is good for our clients, our investors, our people and our world.
Bank of New York Mellon and its subsidiaries invest money on behalf of their clients and as part of their fiduciary duty are responsible for recommending votes or
voting proxies in their portfolios. Proxy voting is one of the principal ways investors can communicate with companies.
The Banks unit that
provides guidance on voting proxies rightly focuses on their clients economic interests in giving voting advice and voting proxies and actively votes on numerous governance reforms.
Yet the proxy voting record of the Banks investment subsidiaries, guided by the Banks recommendation and publicly reported in official
N-PX
forms, demonstrates a
consistent vote against virtually all environmental resolutions, even when there is a strong business and economic case supporting the resolution.
Many
shareholder resolutions on the topic of climate change simply ask for more disclosure or goals to reduce greenhouse gas. Funds managed by Bank of New York Mellon subsidiaries voted against virtually all these resolutions. In contrast funds managed
by investment firms such as Goldman Sachs, Wells Fargo, Morgan Stanley, and Alliance Bernstein supported the majority of these resolutions and investors like State Street and TIAA voted in favor of a significant percentage of resolutions on climate.
These incongruities pose a reputational risk to the company and given the severe impacts of climate change, including significant risks to investors and
the economy, there is risk to BNY Mellon and its clients if its proxy voting practices ignore climate change.
We believe Bank of New York Mellon should
review and report on its proxy voting policies and record compared to the Banks public statements on climate change.
Resolved:
Shareowners
request that the Board of Directors issue a report on proxy voting and climate change to shareholders prepared at reasonable cost and omitting proprietary information.
This assessment and report would review proxy votes appearing inconsistent with the companys climate change positions and scientific consensus, and provide explanations of the incongruence. The report can
also review future steps to enhance congruency between climate policies and proxy voting.
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ITEM 5. STOCKHOLDER PROPOSAL REGARDING PROXY VOTING REVIEW REPORT
|
|
>
Board of Directors Response
|
Voting
Adoption of this proposal requires the affirmative vote of a majority of the votes cast on the proposal at the Annual Meeting by the holders of our common stock voting in person or by proxy. Unless contrary
instructions are given, shares represented by proxies solicited by the Board will be voted against the stockholder proposal regarding an independent chair.
Board of Directors Response
|
|
|
After careful consideration of this proposal, we have concluded that it is not in the best interests of our stockholders. We therefore recommend
that you vote AGAINST this proposal for the following reasons:
The proposal
erroneously conflates BNY Mellons position on climate change with the separate proxy voting practices of our subsidiaries that act as investment advisers.
The Board must act in what it believes to be the best interests of the company and
our stockholders, including appropriately addressing issues related to climate change. In this regard, we note that BNY Mellons commitment to carbon reduction has earned the company recognition as a leader in efforts and actions to combat
climate
|
|
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change. The company was carbon neutral in 2015 and 2016 and has a strategy in place to remain carbon neutral in 2017. The companys efforts to mitigate climate change have
been widely recognized, earning us a place on CDPs Climate A List for four consecutive years, inclusion in the FTSE4Good Index for four consecutive years and inclusion in the Dow Jones Sustainability World Index for three consecutive years. We
have also earned the top ranking among our peers from Bloomberg for environmental, social and governance (ESG) disclosure.
|
As an entirely separate matter, our investment adviser subsidiaries (Member Firms) have a responsibility to act in the
best interests of their clients when voting proxies on behalf of those clients. That includes making their own determinations as to how to vote on environmental proposals. The stockholder proposals recommendation that the Board intervene in
oversight of the Member Firms proxy voting would increase the companys involvement in Member Firms proxy voting in a manner that is both significant and contrary to their obligations. If implemented, the stockholder proposal would
elevate the social objectives of BNY Mellon over the obligation of the Member Firms to vote proxies based on a consideration of their clients best interests.
Our
Member Firms proxy voting records reflects a thoughtful,
case-by-case
approach consistent with their fiduciary
duties.
For many of our Member Firms, proxy voting is assisted and guided by our Proxy Voting and Governance Committee, which has established voting guidelines designed to maximize the economic value of Member Firms clients
securities. Under these voting guidelines, environmental proposals are reviewed on a
case-by-case
basis, with proxy votes generally cast for stockholder-sponsored
environmental proposals when the proposal reasonably can be expected to enhance long-term stockholder value and when management fails to respond meaningfully to the proposal. Given that our publicly disclosed voting guidelines already
articulate voting policies with respect to environmental proposals and that our proxy voting record is already publicly filed with the SEC, the Board believes that no benefit would be realized from the resources that would be spent to analyze each
voting decision made by our Member Firms and determine whether it was consistent with BNY Mellons own internal position on climate change.
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2017 Proxy Statement
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2017 Proxy Statement
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ADDITIONAL INFORMATION
|
|
>
Equity Compensation Plans
|
The following table shows information relating to the number of shares authorized for issuance under our equity compensation plans as of December 31, 2016.
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Plan Category
|
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Number of securities
to be issued upon exercise
of outstanding
options,
warrants and rights
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|
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Weighted average
exercise price of
outstanding options,
warrants and
rights
|
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Number of securities
remaining available for
future issuance
under
equity compensation
plans (excluding
securities reflected in
second column)
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Equity compensation plans
|
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Approved by stockholders
|
|
|
39,318,682
|
(1)
|
|
|
$34.13
|
|
|
|
40,345,454
|
(2)
|
Not approved by stockholders
|
|
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109,414
|
(3)
|
|
|
$36.28
|
|
|
|
|
|
Total
|
|
|
39,428,096
|
(4)
|
|
|
$34.14
|
(5)
|
|
|
40,345,454
|
|
(1)
|
Includes 31,455,866 and 4,414,418 shares of common stock that may be issued pursuant to outstanding options, RSUs, PSUs and escrowed dividends awarded under The Bank of New York
Mellon Corporation Long-Term Incentive Plan and the Mellon Long-Term Profit Incentive Plan (2004), respectively; 8,398 shares of common stock that may be issued pursuant to outstanding director deferred share units under the Mellon Director Equity
Plan (2006); 3,426,764 shares of common stock that may be issued pursuant to outstanding stock-based awards under the legacy Bank of New York Long-Term Incentive Plans; and 13,236 shares of common stock that may be issued pursuant to outstanding
stock options under The Bank of New York Mellon Corporation Employee Stock Purchase Plan. The number of shares of common stock that may be issued pursuant to outstanding unearned PSUs reflects the target payout. At maximum payout, the number of
shares would increase by 214,867. For additional information about how PSUs are earned, see Compensation Discussion and Analysis Compensation of Named Executives Outstanding PSUs on page 49 above.
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(2)
|
Includes 6,062,041 shares of common stock that remain available for issuance under The Bank of New York Mellon Corporation Employee Stock Purchase Plan and 34,283,413 shares of
common stock that remain available for issuance under The Bank of New York Mellon Corporation Long-Term Incentive Plan, 19,569,848 of which may be granted as restricted stock or RSUs (or other full value awards), and any full-value awards from the
remaining 14,713,565 shares will continue to be counted as 2.75 shares against such remaining shares.
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(3)
|
Includes 4,000 shares of common stock that may be issued pursuant to options outstanding under the Mellon Stock Option Plan for Affiliate Boards of Directors. The Mellon Stock
Option Plan for Affiliate Boards of Directors, which we assumed in the merger and refer to as the Affiliate Board Plan, provided for grants of stock options to the
non-employee
members of affiliate
boards who were not also members of Mellons Board of Directors. No grants were available to Mellon employees under these plans. The timing, amounts, recipients and other terms of the option grants were determined by the terms of the option
plans for Mellons Board of Directors and no person or committee had discretion over these grants. The exercise price of the options is equal to the fair market value of Mellons common stock on the grant date. All options have a term of
10 years from the regular date of grant and become exercisable one year from the regular grant date. Directors elected during the service year were granted options on a pro rata basis to those granted to the directors at the start of the service
year. No further grants are being made under the Affiliate Board Plan, although the practice was continued through 2009 by issuing grants under The Bank of New York Mellon Corporation Long-Term Incentive Plan.
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|
Also includes shares of common stock that may be issued pursuant to deferrals under the Bank of New York Directors Plan, which is described in further detail in Director
Compensation on page 31 above.
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(4)
|
The weighted average term for the expiration of outstanding stock options under our equity compensation plans is 2.8 years.
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(5)
|
This weighted-average exercise price relates only to the options described in footnote 1. Shares underlying RSUs, PSUs and deferred share units are deliverable without the
payment of any consideration, and therefore these awards have not been taken into account in calculating the weighted-average exercise price.
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79
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ADDITIONAL INFORMATION
|
|
>
Information on Stock Ownership
|
Beneficial Ownership of Shares by Holders of
More Than 5% of Outstanding Stock
As of February 10, 2017, we had 1,035,635,254 shares of common stock
outstanding. Based on filings made under Section 13(d) and 13(g) of the Exchange Act reporting ownership of shares and percent of class as of December 31, 2016, as of February 10, 2017, the only persons known by us to be beneficial owners of
more than 5% of our common stock were as follows:
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Name and Address of Beneficial Owner
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Shares of Common Stock
Beneficially Owned
|
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Percent of Class
|
The Vanguard
Group
(1)
100 Vanguard Blvd.
Malvern, PA 19355
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|
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64,443,569
|
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6.09
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%
|
BlackRock,
Inc.
(2)
55 East 52nd Street
New York, NY 10055
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|
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59,139,269
|
|
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5.6
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%
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T. Rowe Price
Associates, Inc.
(3)
100 E. Pratt Street
Baltimore, MD 21202
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|
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58,289,964
|
|
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5.5
|
%
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(1)
|
Based on a review of the Schedule 13G filed on February 10, 2017 by The Vanguard Group. The Schedule 13G discloses that The Vanguard Group had sole voting power as to
1,670,876 shares, shared voting power as to 191,839 shares, sole dispositive power as to 62.589.046 shares and shared dispositive power as to 1,854,523 shares.
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(2)
|
Based on a review of the Schedule 13G filed on January 30, 2017 by BlackRock, Inc. The Schedule 13G discloses that BlackRock, Inc. had sole voting power as to 49,367,660
shares, shared voting power as to 35,150 shares, sole dispositive power as to 59,104,119 shares and shared dispositive power as to 35,150 shares.
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(3)
|
Based on a review of the Schedule 13G filed on February 6, 2017 by T. Rowe Price Associates, Inc. The Schedule 13G discloses that T. Rowe Price Associates, Inc. had sole
voting power as to 17,993,482 shares and sole dispositive power as to 58,208,764 shares.
|
We and our affiliates engage in ordinary course
brokerage, asset management or other transactions or arrangements with, and may provide ordinary course financial services to, holders of 5% or more of our outstanding common stock, including asset servicing, clearing, issuer services, treasury
services, global markets, broker-dealer, liquidity investment and credit services. These transactions are negotiated on an
arms-length
basis and contain terms and conditions that are substantially
similar to those offered to other customers under similar circumstances.
Beneficial Ownership of Shares by
Directors
and Executive Officers
The table below sets forth the number of shares of our common stock beneficially owned as of the close of business on February 10, 2017 by each director, each individual included in the Summary
Compensation Table on page 60 above and our current directors and executive officers as a group, based on information furnished by each person. Except as otherwise indicated, sole voting and sole investment power with respect to the shares
shown in the table below are held either by the individual alone or by the individual together with his or her immediate family. Each of our directors and executive officers is subject to our robust anti-hedging policy, which is described above
under Compensation Discussion and Analysis Anti-Hedging Policy on page 55.
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Beneficial Owners
|
|
Shares of Common Stock
Beneficially Owned
(1)(2)
|
Curtis Y. Arledge
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|
|
|
270,464
|
|
Linda Z. Cook
|
|
|
|
0
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|
Nicholas M. Donofrio
|
|
|
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64,842
|
|
Joseph J. Echevarria
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|
|
|
15,372
|
|
Edward P. Garden
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|
|
|
32,372,709
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(3)
|
Thomas P. Todd Gibbons
|
|
|
|
931,773
|
(4)
|
Jeffrey A. Goldstein
|
|
|
|
20,332
|
|
Mitchell E. Harris
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|
|
|
198,077
|
|
|
|
|
|
|
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80
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BNY Mellon
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2017 Proxy Statement
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ADDITIONAL INFORMATION
> Information on Stock Ownership
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Beneficial Owners
|
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Shares of Common Stock
Beneficially Owned
(1)(2)
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Gerald L. Hassell
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|
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2,523,873
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(5)
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John M. Hinshaw
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|
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14,145
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Edmund F. Ted Kelley
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|
|
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45,807
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John A. Luke, Jr.
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|
|
|
63,932
|
|
Jennifer B. Morgan
|
|
|
|
416
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|
Mark A. Nordenberg
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|
|
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42,892
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|
Karen B. Peetz
|
|
|
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157,229
|
|
Catherine A. Rein
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|
|
|
134,374
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|
Elizabeth E. Robinson
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|
|
|
0
|
|
Samuel C. Scott III
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|
|
|
55,836
|
|
Brian T. Shea
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|
|
|
268,091
|
|
All current directors and executive officers,
as a group (22 persons)
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|
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37,084,202
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(1)
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On February 10, 2017, none of the individuals named in the above table beneficially owned more than 1% of our outstanding shares of common stock, other than Mr. Garden,
who may be deemed to hold approximately 3.1% of our outstanding shares as a result of his affiliation with Trian (see footnote 3 below). Including shares held by Trian, all current directors and executive officers as a group beneficially owned
approximately 3.6% of our outstanding stock on February 10, 2017.
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(2)
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Includes the following amounts of common stock which the indicated individuals and group have the right to acquire under our equity plans and deferred compensation plans within
60 days of February 10, 2017: Mr. Arledge, 168,732; Mr. Donofrio, 18,153; Mr. Echevarria, 15,372; Mr. Garden, 6,380; Mr. Gibbons, 622,987; Mr. Goldstein, 20,332; Mr. Harris, 102,403; Mr. Hassell, 1,670,853;
Mr. Hinshaw, 638; Mr. Kelly, 41,373; Mr. Luke, 36,230; Mr. Nordenberg, 41,373; Ms. Peetz, 71,503; Ms. Rein, 33,399; Mr. Scott, 51,874; Mr. Shea, 77,268; and current directors and executive officers as a group,
2,862,621.
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Also includes the following additional number of RSUs, deferred share units and phantom stock: Mr. Arledge, 101,732; Mr. Donofrio, 46,688; Mr. Gibbons, 67,933;
Mr. Harris, 51,733; Mr. Hassell, 226,447; Mr. Hinshaw, 13,507; Ms. Morgan, 416; Ms. Peetz, 49,363; Ms. Rein, 64,452; Mr. Shea, 67,635; and current directors and executive officers as a group, 677,305. These
individuals do not have voting or investment power with respect to the underlying shares, nor the right to acquire the underlying shares within 60 days of February 10, 2017.
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(3)
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Includes 32,366,329 shares owned by the Trian Entities (as defined below). Trian, an institutional investment manager, serves as the management company for Trian Partners, L.P.,
Trian Partners Master Fund, L.P., Trian Partners Master Fund (ERISA), L.P., Trian Partners Parallel Fund I, L.P., Trian Partners Strategic Investment Fund II, L.P., Trian Partners Strategic Investment Fund-A, L.P., Trian Partners Strategic
Investment Fund-D, L.P., Trian Partners Strategic Investment Fund-N, L.P., Trian Partners Fund (Sub)-G, L.P., Trian Partners Strategic Fund-G II, L.P., Trian Partners Strategic Fund-G III, L.P., Trian Partners Strategic Fund-K, L.P. and Trian SPV
(SUB) IX, L.P. (collectively, the Trian Entities) and as such determines the investment and voting decisions of the Trian Entities with respect to the shares of the company held by them. None of such shares are held directly by Mr.
Garden. Of such shares, approximately 28.8 million shares are currently held in the ordinary course of business with other investment securities owned by the Trian Entities in co-mingled margin accounts with a prime broker, which prime broker may,
from time to time, extend margin credit to certain Trian Entities, subject to applicable federal margin regulations, stock exchange rules and credit policies. Mr. Garden is a member of Trian Fund Management GP, LLC, which is the general partner of
Trian, and therefore is in a position to determine the investment and voting decisions made by Trian on behalf of the Trian Entities. Accordingly, Mr. Garden may be deemed to indirectly beneficially own (as that term is defined in Rule 13d-3 under
the Exchange Act) the shares owned by the Trian Entities. Mr. Garden disclaims beneficial ownership of such shares for all other purposes.
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(4)
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Includes 29,217 shares held by Mr. Gibbons children.
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(5)
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Includes 56,604 shares held by Mr. Hassells spouse, as to which Mr. Hassell disclaims beneficial ownership. Also includes 44,280 shares over which
Mr. Hassell exercises investment discretion held in trusts.
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Section 16(a) Beneficial
Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our directors and executive officers and any beneficial owner of more than
10% of any class of our equity securities to file with the SEC initial reports of beneficial ownership and reports of changes in ownership of any of our securities. These reports are made on documents referred to as Forms 3, 4 and 5. Our directors
and executive officers must also provide us with copies of these reports. We have reviewed the copies of the reports that we have received and written representations from the individuals required to file the reports. Based on this review, we
believe that during 2016 each of our directors and executive officers timely complied with applicable reporting requirements for transactions in our equity securities.
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BNY Mellon
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2017 Proxy Statement
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81
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ADDITIONAL INFORMATION
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>
Annual Meeting Q&A
|
The Board of Directors is soliciting your proxy for our 2017 Annual Meeting of stockholders and any adjournment of the meeting, for the purposes set forth in the
Notice of Annual Meeting.
Q: Who Can Attend The Annual Meeting? How Do I Attend?
A:
|
Only stockholders as of the record date have a right to attend the Annual Meeting. If you plan to attend the Annual Meeting in person, we ask that you also complete and return
the reservation form attached to the end of this proxy statement. In order to be admitted to the annual meeting, you will need to present a government-issued photo identification (such as a drivers license or passport) and, if you are not a
record holder on the companys books, evidence of ownership of our common stock as of the record date (such as a brokerage account statement). If you are representing an entity that is a stockholder, you must also present
documentation showing your authority to attend and act on behalf of the entity (such as a power of attorney, written proxy to vote or letter of authorization on the entitys letterhead). We reserve the right to limit the number of
representatives for any entity that may be admitted to the meeting.
No cameras, recording equipment, large bags or packages will be permitted in the Annual Meeting. The use of cell phones, smart phones, tablets and other personal communication
devices for any reason during the Annual Meeting is strictly prohibited.
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Q: Who Can Vote At The Annual Meeting?
A:
|
Only stockholders of record of our common stock at the close of business on February 10, 2017 (the record date) may vote at the Annual Meeting. On the record
date, we had 1,035,635,254 shares of common stock outstanding. You are entitled to one vote for each share of common stock that you owned on the record date. The shares of common stock held in our treasury will not be voted. Your vote is
important. Whether or not you plan to attend the Annual Meeting, we encourage you to vote your shares promptly.
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Q: What
Is A Proxy?
A:
|
Your proxy gives us authority to vote your shares and tells us how to vote your shares at the Annual Meeting or any adjournment. Three of our employees, who are called
proxies or proxy holders and are named on the proxy card, will vote your shares at the Annual Meeting according to the instructions you give on the proxy card or by telephone or over the Internet.
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Q: How Do I Vote? What Are The Different Ways I Can Vote My Shares?
A:
|
If you are a stockholder of record (that is, you hold your shares of our common stock in your own name), you may vote your shares by using any of the following
methods. Depending on how you hold your shares, you may receive more than one proxy card.
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In Person at the Annual Meeting
If you are a registered stockholder or hold a proxy from a registered stockholder (and meet other requirements as described in Who Can Attend the Annual
Meeting? How Do I Attend? on this page 82), you may attend the Annual Meeting and vote in person by obtaining and submitting a ballot that will be provided at the meeting.
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By Submitting a Proxy by Mail
To submit a proxy by mail, complete, sign, date and return the proxy card in the postage-paid envelope provided to you.
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By Submitting a Proxy by Telephone
To submit a proxy by telephone, call the toll-free telephone number listed on the proxy card. The telephone voting procedures, as set forth on the proxy card, are
designed to authenticate your identity, to allow you to provide your voting instructions and to confirm that your instructions have been properly recorded. If you vote by telephone, you should not return your proxy card.
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By Submitting a Proxy by Internet
To submit a proxy by internet, use the internet site listed on the proxy card. The internet voting procedures, as set forth on the proxy card, are designed to
authenticate your identity, to allow you to provide your voting instructions and to confirm that your instructions have been properly recorded. If you vote by internet, you should not return your proxy card.
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82
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BNY Mellon
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2017 Proxy Statement
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ADDITIONAL INFORMATION
>
Annual Meeting Q&A
|
Q:
|
What If I Am A Beneficial Owner?
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A:
|
If you are a beneficial owner, also known as a street name holder (that is, you hold your shares of our common stock through a broker, bank or other
nominee), you will receive voting instructions (including, if your broker, bank or other nominee elects to do so, instructions on how to vote your shares by telephone or over the Internet) from the record holder, and you must follow those
instructions to have your shares voted at the Annual Meeting.
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Q:
|
If I Vote By Proxy, How Will My Shares Be Voted? What If I Submit A Proxy Without Indicating How To Vote My Shares?
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A:
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If you vote by proxy through mail, telephone or over the Internet, your shares will be voted in accordance with your instructions. If you sign, date and return your proxy card
without indicating how you want to vote your shares, the proxy holders will vote your shares in accordance with the following recommendations of the Board of Directors:
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Proposal 1
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FOR
the election of each nominee for
director.
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Proposal 2
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FOR
the advisory resolution to approve the 2016 compensation of our named
executives.
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Proposal 3
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FOR
the advisory resolution to conduct a
say-on-pay
vote
every
year at the annual meeting of stockholders.
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Proposal 4
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FOR
the ratification of the appointment of KPMG LLP as our independent registered public
accounting firm for the fiscal year ending December 31, 2017.
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Proposal 5
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AGAINST
the stockholder proposal regarding a proxy voting review report.
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In addition, if other matters are properly presented for voting at the Annual Meeting, the proxy holders are also authorized to vote on such matters as they shall determine in
their sole discretion. As of the date of this proxy statement, we have not received notice of any other matters that may be properly presented for voting at the Annual Meeting.
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Q:
|
What If I Want To Revoke My Proxy?
|
A:
|
You may revoke your proxy at any time before it is voted at the Annual Meeting by:
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delivering a written notice of revocation to our Corporate Secretary at 225 Liberty Street, New York, NY 10286;
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submitting another signed proxy card with a later date;
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submitting another proxy by telephone or over the Internet at a later date; or
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attending the Annual Meeting and voting in person.
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A:
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A quorum is the minimum number of shares required to conduct business at the Annual Meeting. Under our
by-laws,
to have a quorum, a
majority of the outstanding shares of stock entitled to vote at the Annual Meeting must be represented in person or by proxy at the meeting. Abstentions and broker
non-votes
(as defined below) are counted as
present for determining the presence of a quorum. Inspectors of election appointed for the Annual Meeting will tabulate all votes cast in person or by proxy at the Annual Meeting. In the event a quorum is not present at the Annual Meeting, we expect
that the Annual Meeting will be adjourned or postponed to solicit additional proxies.
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Q:
|
What Vote Is Required For Approval Of A Proposal At The Annual Meeting?
|
A:
|
Our
by-laws
provide for a majority vote standard in an uncontested election of directors, such as this years election. Accordingly,
each of the 13 nominees for director will be elected if more votes are cast for a directors election than are cast against such directors election, as discussed further under Majority Voting Standard
on page 17 above. All other matters to be voted on at the Annual Meeting require the favorable vote of a majority of the votes cast on the applicable matter at the meeting, in person or by proxy, for approval.
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Abstentions and broker
non-votes
are not treated as votes cast, will not have the effect of a vote for or against a proposal or for or
against a directors election, and will not be counted in determining the number of votes required for approval or election.
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BNY Mellon
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2017 Proxy Statement
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83
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ADDITIONAL INFORMATION
>
Annual Meeting Q&A
|
Q:
|
What If I Hold My Shares Through A Broker?
|
A:
|
If your shares are held through a broker, the broker will ask you how you want your shares to be voted. If you give the broker instructions, your shares will be voted as you
direct. If you do not give instructions, one of two things can happen, depending on the type of proposal. For the ratification of the auditor (Proposal 4), the broker may vote your shares in its discretion. For all other proposals, the broker may
not vote your shares at all if you do not give instructions (this is referred to as a broker
non-vote).
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84
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2017 Proxy Statement
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ADDITIONAL INFORMATION
|
|
>
Other Information
|
Stockholder Proposals for 2018 Annual Meeting
Stockholder proposals intended to be included in our proxy statement and voted on at our 2018 Annual Meeting of stockholders (other than proxy access nominations) must be received at our offices at 225 Liberty
Street, New York, NY 10286, Attention: Corporate Secretary, on or before November 10, 2017. Stockholders who wish to submit a proxy access nomination for inclusion in our proxy statement in connection with our 2018 Annual Meeting of
Stockholders may do so by submitting a nomination in compliance with the procedures and along with the other information required by our
by-laws
to 225 Liberty Street, New York, NY 10286, Attention: Corporate
Secretary, no earlier than October 11, 2017 and no later than November 10, 2017. Applicable SEC rules and regulations and the provisions of our
by-laws
govern the submission, and our consideration,
of stockholder proposals or proxy access candidates for inclusion in the 2018 Annual Meeting proxy statement and form of proxy.
Pursuant to our
by-laws,
in order for any business not included in the notice of meeting for the 2018 Annual Meeting to be brought before the meeting by a stockholder entitled to vote at the meeting (including nominations of
candidates for director), the stockholder must give timely written notice of that business to our Corporate Secretary. To be timely, the notice must not be received any earlier than November 10, 2017 (at least 120 days prior to March 10,
2018), nor any later than December 10, 2017 (90 days prior to March 10, 2018). The notice also must contain the information required by our
by-laws.
The foregoing
by-law
provisions do not affect a stockholders ability to request inclusion of a proposal in our proxy statement within the procedures and deadlines set forth in Rule
14a-8
of the SECs proxy rules and referred to in the paragraph above. A proxy may confer discretionary authority to vote on any matter at a meeting if we do not receive notice of the matter within the
timeframes described above. A copy of our
by-laws
is available upon request to: The Bank of New York Mellon Corporation, 225 Liberty Street, New York, NY 10286, Attention: Corporate Secretary. The officer
presiding at the meeting may exclude matters that are not properly presented in accordance with these requirements.
Corporate Governance Guidelines and Codes of Conduct
Our Board of Directors has adopted Corporate Governance Guidelines covering, among other
things, the duties and responsibilities and independence of our directors. The Corporate Governance Guidelines cover a number of other matters, including the Boards role in overseeing executive compensation, compensation and expenses for
independent directors, communications between stockholders and directors, the role of our Lead Director, and Board committee structures and assignments.
Our Board of Directors also has adopted a Code of Conduct, which applies to all of our employees, to provide a framework to maintain the highest standards of
professional conduct for the company, and a Code of Conduct for directors of the company to provide guidance to our directors to help them recognize and deal with ethical issues, provide mechanisms to report possible unethical conduct and foster a
culture of honesty and accountability.
Our Corporate Governance Guidelines, Code of Conduct and Directors Code of Conduct are available on our
website (see Helpful Resources on page 90). We intend to disclose any amendments to, or waivers from, our Code of Conduct or our Directors Code of Conduct for executive officers and directors, respectively, by posting such
information on our website.
Business Relationships and Related Party Transactions Policy
The Board has adopted a policy on related party transactions (our related party transactions policy) which was reviewed by the CG&N Committee. Our
related party transactions policy provides that the CG&N Committee, or another Board committee consisting solely of independent directors, must approve any transaction(s) in which we or any of our subsidiaries was, is or will be a participant
and where the amount involved exceeds $120,000, and in which any related person had, has or will have a direct or indirect material interest, such transactions constituting disclosable related party transactions under SEC rules. A
related person includes directors, nominees for director, executive officers, greater than 5% beneficial owners, members of such persons immediate families and any firm, corporation or other entity in which any of the foregoing
persons is employed as a general partner or principal or in a similar position or in which such person and all other related persons has a 10% or greater beneficial interest. Consistent with SEC rules, our related party transactions policy provides
that certain transactions, including employment relationships and ordinary
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BNY Mellon
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2017 Proxy Statement
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85
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ADDITIONAL INFORMATION
>
Other Information
|
course
non-preferential
transactions, entered into with a related person, are not considered to be related party transactions and are not required to be
disclosed or approved by the CG&N Committee. In 2016, there were no related party transactions that required CG&N Committee approval or disclosure in this proxy statement.
In the ordinary course of business, we periodically have, and expect to continue to have, banking and other transactions, including asset management services, banking services, broker services and credit services,
with related persons. Any loans to related persons, and any transactions involving financial products and services provided by the company to such persons and entities, are made in the ordinary course of business, on substantially the same terms,
including interest rates and collateral (where applicable), as those prevailing at the time for comparable transactions with persons and entities not related to the company, and do not involve more than the normal risk of collectability or present
other unfavorable features.
Our related party transactions policy provides that the CG&N Committee may recommend to our Board from time to time
adoption of resolutions
pre-approving
certain types or categories of transactions that the CG&N Committee determines in good faith are in, or are not inconsistent with, our best interests and the best
interests of our stockholders. The Board has adopted a resolution
pre-approving
transactions that involve the sale or other provision of products and services (not subject to Regulation O or other specific
regulatory requirements) by our company or its subsidiaries to directors and members of their immediate family, director-related companies, executive officers and members of their immediate family and beneficial owners of more than 5% of our common
stock in the ordinary course and on terms generally offered in transactions with
non-related
persons. Transactions subject to Regulation O or other specific regulatory requirements are approved as required in
such regulations.
Under the related party transactions policy, in making its determination to approve a disclosable related party transaction, the
CG&N Committee may take into consideration all relevant facts and circumstances available to it, including but not limited to:
|
|
the related persons relationship to us and interest in the transaction;
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the material facts of the transaction, including the amount involved;
|
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the benefits to us of the transaction;
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the availability from other sources of comparable products or services; and
|
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an assessment of whether the transaction is on terms that are comparable to the terms available to or from an unrelated third party or to employees generally.
|
The CG&N Committee also may consider the impact on a directors independence in the event the related person is a director,
an immediate family member of a director or a director-related company.
Under the related party transactions policy, no member of the CG&N Committee
may participate in the review, consideration, approval or ratification of any disclosable related party transaction with respect to which such member or any of his or her immediate family members or director-related company is the related person.
The CG&N Committee may approve only those disclosable related party transactions that are in, or are not inconsistent with, our best interests and the best interests of our stockholders, as the CG&N Committee determines in good faith.
Under the related party transactions policy, if a disclosable related party transaction is identified after it is already ongoing or completed, it must
be submitted to the CG&N Committee promptly for ratification, applying the standards described above. In this circumstance, the CG&N Committee will evaluate all options available, including ratification, amendment, termination or rescission
of the transaction.
Our related party transactions policy does not limit or affect the application of our other policies applicable to our directors,
executive officers and other related persons, including our Codes of Conduct.
How Our Board Solicits
Proxies; Expenses of Solicitation
We will pay all costs of soliciting proxies. We have retained Georgeson Inc. to assist with the solicitation of
proxies for a fee of approximately $17,500, plus reimbursement of reasonable
out-of-pocket
expenses. In addition, we have agreed to pay Computershare a fee of
approximately $45,000 in connection with project management and technical services relating to the distribution of this proxy statement and the Annual Report to employees and former employees participating in employee benefit and stock option
programs. In addition, we may use our officers and employees, at no additional compensation, to solicit proxies either personally or by telephone, Internet, letter or facsimile.
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BNY Mellon
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2017 Proxy Statement
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ADDITIONAL INFORMATION
>
Other Information
|
Householding
To reduce the expense of delivering duplicate proxy materials to our stockholders, we are relying on SEC rules that permit us to deliver only one proxy statement to
multiple stockholders who share an address unless we receive contrary instructions from any stockholder at that address. This practice, known as householding, reduces duplicate mailings, saves printing and postage costs as well as
natural resources and will not affect dividend check mailings. If you wish to receive a separate copy of the Annual Report or proxy statement, or if you wish to receive separate copies of future Annual Reports or proxy statements, please contact our
transfer agent, Computershare, by phone at
1-800-729-9606
(U.S.) or
1-201-680-6651
(International) or by mail at Computershare, P.O. Box 30170, College Station, TX 77842. We will deliver the requested documents promptly upon your
request.
If you and other stockholders of record with whom you share an address currently receive multiple copies of annual reports or proxy statements,
or if you hold our stock in more than one account and, in either case, you wish to receive only a single copy of the Annual Report or proxy statement, please contact our transfer agent, Computershare, with the names in which all accounts are
registered and the name of the account for which you wish to receive mailings.
Other Business
As of the date of this proxy statement, we do not know of any other matters that may be presented for action at the meeting. Should any other
business properly come before the meeting, the persons named on the enclosed proxy will, as stated therein, have discretionary authority to vote the shares represented by such proxy in accordance with their best judgment.
March 10, 2017
By Order of the Board of Directors,
Craig T. Beazer
Corporate Secretary
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BNY Mellon
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2017 Proxy Statement
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87
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ADDITIONAL INFORMATION
|
|
>
Helpful Resources
|
Annual Meeting
|
|
|
|
|
2017 Proxy Statement
|
|
http://www.envisionreports.com/bk
|
|
|
2016 Annual Meeting
Voting Results
|
|
https://www.bnymellon.com/us/en/investor-relations/annual-meeting-voting-results-2016.jsp
|
Corporate Governance
|
|
|
|
|
By-laws
|
|
https://www.bnymellon.com/_global-assets/pdf/corporate-governance/the-bank-of-
new-york-mellon-corporation-amended-and-restated-by-laws.pdf
|
|
|
Committee Charters
|
|
https://www.bnymellon.com/us/en/investor-relations/index.jsp
|
|
|
Corporate Governance Guidelines
|
|
https://www.bnymellon.com/us/en/investor-relations/index.jsp
|
|
|
Contacting the Board
|
|
https://www.bnymellon.com/us/en/investor-relations/index.jsp
|
|
|
Code of Conduct
|
|
https://www.bnymellon.com/ethics/codeofconduct.pdf
|
|
|
Directors Code of Conduct
|
|
https://www.bnymellon.com/governance/directorscodeofconduct.pdf
|
|
|
Audit and Permitted
Non-Audit
Services
Pre-Approval
Policy
|
|
https://www.bnymellon.com/governance/auditpolicy.pdf
|
The Bank of New York Mellon Corporation
|
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Corporate Website
|
|
https://www.bnymellon.com
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|
|
2016 Annual Report
|
|
https://www.bnymellon.com/us/en/investor-relations/annual-report-2016.jsp
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|
|
SEC Filings
|
|
http://phx.corporate-ir.net/phoenix.zhtml?c=87345&p=irol-sec
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|
|
Corporate Social
Responsibility Report
|
|
https://www.bnymellon.com/csr
|
|
|
Frequently Asked Questions
|
|
https://www.bnymellon.com/us/en/investor-relations/frequently-asked-questions.jsp
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|
|
Company Profile
|
|
https://www.bnymellon.com/us/en/who-we-are/index.jsp
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Our Leadership
|
|
https://www.bnymellon.com/us/en/who-we-are/leadership/index.jsp
|
|
|
Earnings Press Releases
|
|
https://www.bnymellon.com/us/en/investor-relations/index.jsp
|
|
|
Credit Ratings
|
|
https://www.bnymellon.com/us/en/investor-relations/index.jsp
|
|
|
|
|
|
|
|
88
|
|
BNY Mellon
|
|
|
|
2017 Proxy Statement
|
|
|
|
|
|
|
|
|
|
|
ANNEX A: NON-GAAP
RECONCILIATION
|
|
|
The following table reconciles our net income and
diluted earnings per common share. These measures exclude the effects of certain items, as specified in the table. We believe that these measures are useful to investors because they permit a focus on
period-to-period
comparisons, which relate to the ability of BNY Mellon to enhance revenues and limit expenses in circumstances where such matters are within BNY Mellons control.
Reconciliation of net income and diluted EPS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
Diluted EPS
|
|
|
|
|
(in millions, except per common share amounts)
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
|
Inc
|
|
Net income applicable to common stockholders of The Bank of New York Mellon Corporation
GAAP
|
|
$
|
3,425
|
|
|
$
|
3,053
|
|
|
$
|
3.15
|
|
|
$
|
2.71
|
|
|
|
|
|
Add: Net impact of merger and integration
(M&I), litigation and restructuring charges
|
|
|
33
|
|
|
|
56
|
|
|
|
0.03
|
|
|
|
0.05
|
|
|
|
|
|
Net (recovery) impairment charge related to Sentinel Management Group,
Inc. (Sentinel)
after-tax
|
|
|
(8
|
)
|
|
|
106
|
|
|
|
(0.01
|
)
|
|
|
0.09
|
|
|
|
|
|
Net income applicable to common stockholders of The Bank of New York
Mellon
Corporation Non-GAAP
|
|
$
|
3,450
|
|
|
$
|
3,215
|
|
|
$
|
3.17
|
|
|
$
|
2.85
|
|
|
|
11%
|
|
The following table presents the reconciliation of our estimated fully
phased-in
common
equity Tier 1 (CET1) ratio under the Advanced Approach. We believe that the CET1 ratio on a fully
phased-in
basis is a measure of capital strength that provides useful information to investors,
supplementing the capital ratios which are, or were, required by regulatory authorities.
Estimated transitional and fully
phased-in
CET1 ratio
|
|
|
|
|
|
|
Dec. 31, 2016
|
(dollars in millions)
|
|
Transitional
(GAAP)
(a)
|
|
Fully
phased-in
(Non-GAAP)
|
Common stockholders equity
|
|
$35,794
|
|
$35,269
|
Goodwill and intangible assets
|
|
(17,314)
|
|
(18,312)
|
Net pension fund assets
|
|
(55)
|
|
(90)
|
Equity method investments
|
|
(313)
|
|
(344)
|
Deferred tax assets
|
|
(19)
|
|
(32)
|
Other
|
|
0
|
|
(1)
|
Total CETI
|
|
$18,093
|
|
$16,490
|
|
Risk-weighted assets Advanced
Approach
|
|
$170,495
|
|
$169,227
|
CET1 ratio
|
|
10.6%
|
|
9.7%
|
(a)
|
Reflects transitional adjustments to CET1 required in 2016 under the U.S. capital rules.
|
|
|
|
|
|
|
|
BNY Mellon
|
|
|
|
2017 Proxy Statement
|
|
89
|
|
|
|
|
|
|
|
|
|
|
ANNEX A: NON-GAAP
RECONCILIATION
|
|
|
The following table presents the reconciliation of
the
pre-tax
operating margin ratio. This measure excludes the effects of certain items, as specified in the table. We believe that this measure is useful to investors because it permits a focus on
period-to-period
comparisons, which relates to the ability of BNY Mellon to enhance revenues and limit expenses in circumstances where such matters are within BNY
Mellons control.
Reconciliation of income before income taxes
pre-tax
operating margin
|
|
|
|
|
|
|
|
|
(dollars in millions)
|
|
2016
|
|
|
2015
|
|
Income before income taxes
GAAP
|
|
$
|
4,725
|
|
|
$
|
4,235
|
|
Less: Net income attributable to
noncontrolling interests of consolidated investment management funds
|
|
|
10
|
|
|
|
68
|
|
Add: Amortization of intangible
assets
|
|
|
237
|
|
|
|
261
|
|
M&I, litigation and restructuring
charges
|
|
|
49
|
|
|
|
85
|
|
(Recovery) impairment related to
Sentinel
|
|
|
(13
|
)
|
|
|
170
|
|
Income before income taxes, as adjusted
Non-GAAP
(a)
|
|
$
|
4,988
|
|
|
$
|
4,683
|
|
|
|
|
|
|
|
|
|
|
Fee and other revenue GAAP
|
|
$
|
12,073
|
|
|
$
|
12,082
|
|
Income from consolidated investment management
funds GAAP
|
|
|
26
|
|
|
|
86
|
|
Net interest revenue GAAP
|
|
|
3,138
|
|
|
|
3,026
|
|
Total revenue GAAP
|
|
|
15,237
|
|
|
|
15,194
|
|
Less: Net income attributable to noncontrolling
interests of consolidated investment management funds
|
|
|
10
|
|
|
|
68
|
|
Total revenue, as adjusted
Non-GAAP
(a)
|
|
$
|
15,227
|
|
|
$
|
15,126
|
|
|
|
|
|
|
|
|
|
|
Pre-tax
operating margin
(b)
|
|
|
31
|
%
|
|
|
28
|
%
(c)
|
Pre-tax
operating margin
Non-GAAP
(a)(b)
|
|
|
33
|
%
|
|
|
31
|
%
(c)
|
(a)
|
Non-GAAP
information for all periods presented excludes the net income attributable to noncontrolling interests of
consolidated investment management funds, amortization of intangible assets and M&I, litigation and restructuring charges.
|
(b)
|
Income before taxes divided by total revenue.
|
(c)
|
Our GAAP earnings include
tax-advantaged
investments such as low income housing, renewable energy, bank-owned life
insurance and
tax-exempt
securities. The benefits of these investments are primarily reflected in tax expense. If reported on a
tax-equivalent
basis, these investments
would increase revenue and income before taxes by $317 million for 2016 and $242 million for 2015 and would increase our
pre-tax
operating margin by approximately 1.4% for 2016 and 1.1% for 2015.
|
|
|
|
|
|
|
|
90
|
|
BNY Mellon
|
|
|
|
2017 Proxy Statement
|
|
|
|
|
|
|
|
|
|
|
ANNEX A: NON-GAAP RECONCILIATION
|
|
|
The following table presents the reconciliation of
operating leverage, noninterest expense and revenue. These measures exclude the effects of certain items, as specified in the table. We believe that these measures are useful to investors because they permit a focus on
period-to-period
comparisons, which relate to the ability of BNY Mellon to enhance revenues and limit expenses in circumstances where such matters are within BNY
Mellons control.
Pre-tax
operating leverage, noninterest expense and revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
(dollars in millions)
|
|
2016
|
|
|
2015
|
|
|
2016 vs.
2015
|
|
Total revenue GAAP
|
|
$
|
15,237
|
|
|
$
|
15,194
|
|
|
|
0.28
|
%
|
Less: Net income attributable to
noncontrolling interests of consolidated investment management funds
|
|
|
10
|
|
|
|
68
|
|
|
|
|
|
Total revenue, as adjusted
Non-GAAP
|
|
$
|
15,227
|
|
|
$
|
15,126
|
|
|
|
0.67
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total noninterest expense
GAAP
|
|
$
|
10,523
|
|
|
$
|
10,799
|
|
|
|
|
|
Less: Amortization of intangible
assets
|
|
|
237
|
|
|
|
261
|
|
|
|
|
|
M&I, litigation and restructuring
charges
|
|
|
49
|
|
|
|
85
|
|
|
|
|
|
Total noninterest expense, as adjusted
Non-GAAP
|
|
$
|
10,237
|
|
|
$
|
10,453
|
|
|
|
(2.07
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating leverage GAAP
(a)
|
|
|
|
|
|
|
|
|
|
|
284 bps
|
|
Adjusted operating leverage, as adjusted
Non-GAAP
(a)(b)
|
|
|
|
|
|
|
|
|
|
|
274 bps
|
|
(a)
|
Operating leverage is the rate of increase (decrease) in total revenue less the rate of increase (decrease) in total noninterest expense.
|
(b)
|
Non-GAAP
operating leverage for all periods presented excludes the net income attributable to noncontrolling interests
of consolidated investment management funds, amortization of intangible assets and M&I, litigation and restructuring charges.
|
|
|
|
|
|
|
|
BNY Mellon
|
|
|
|
2017 Proxy Statement
|
|
91
|
|
|
|
|
|
|
|
|
|
|
ANNEX A: NON-GAAP RECONCILIATION
|
|
|
The following table presents the reconciliation of
the returns on common equity and tangible common equity. The tangible common equity ratio includes changes in investment securities valuations which are reflected in total stockholders equity. In addition, this ratio is expressed as a
percentage of the actual book value of assets, as opposed to a percentage of a risk-based reduced value established in accordance with regulatory requirements, although BNY Mellon in its reconciliation has excluded certain assets which are given a
zero percent risk-weighting for regulatory purposes and the assets of consolidated investment management funds to which BNY Mellon has limited economic exposure. Further, we believe that the return on tangible common equity measure is a useful
additional measure for investors because it presents a measure of those assets that can generate income.
Return on common equity and tangible common
equity
|
|
|
|
|
|
|
|
|
(dollars in millions)
|
|
2016
|
|
|
2015
|
|
Net income applicable to common stockholders of The Bank of New York Mellon
Corporation GAAP
|
|
$
|
3,425
|
|
|
$
|
3,053
|
|
Add: Amortization of intangible
assets
|
|
|
237
|
|
|
|
261
|
|
Less: Tax impact of amortization of intangible assets
|
|
|
81
|
|
|
|
89
|
|
Adjusted net income applicable to common stockholders of The Bank of
New York Mellon Corporation
Non-GAAP
|
|
$
|
3,581
|
|
|
$
|
3,225
|
|
Add: M&I, litigation and restructuring
charges
|
|
|
49
|
|
|
|
85
|
|
(Recovery) impairment charge related to
Sentinel
|
|
|
(13
|
)
|
|
|
170
|
|
Less: Tax impact of M&I, litigation and
restructuring charges
|
|
|
16
|
|
|
|
29
|
|
Tax impact of (recovery) impairment charge
related to Sentinel
|
|
|
(5
|
)
|
|
|
64
|
|
Adjusted net income applicable to common stockholders of The Bank of New York Mellon Corporation, as
adjusted
Non-GAAP
(a)
|
|
$
|
3,606
|
|
|
$
|
3,387
|
|
|
|
|
|
|
|
|
|
|
Average common stockholders
equity
|
|
$
|
35,504
|
|
|
$
|
35,564
|
|
Less: Average goodwill
|
|
|
17,497
|
|
|
|
17,731
|
|
Average intangible assets
|
|
|
3,737
|
|
|
|
3,992
|
|
Add: Deferred tax liability tax
deductible goodwill
(b)
|
|
|
1,497
|
|
|
|
1,401
|
|
Deferred tax liability intangible
assets
(b)
|
|
|
1,105
|
|
|
|
1,148
|
|
Average tangible common stockholders equity
Non-GAAP
|
|
$
|
(18,632
|
)
|
|
$
|
16,390
|
|
|
|
|
|
|
|
|
|
|
Return on common equity
GAAP
|
|
|
9.6
|
%
|
|
|
8.6
|
%
|
Adjusted return on common equity
Non-GAAP
(a)
|
|
|
10.2
|
%
|
|
|
9.5
|
%
|
Return on tangible common equity
Non-GAAP
|
|
|
21.2
|
%
|
|
|
19.7
|
%
|
Adjusted return on tangible common equity
Non-GAAP
(a)
|
|
|
21.4
|
%
|
|
|
20.7
|
%
|
(a)
|
Non-GAAP
information for all periods presented excludes the amortization of intangible assets and M&I, litigation
and restructuring charges.
Non-GAAP
information also excludes the (recovery) impairment charge related to the Sentinel loan.
|
(b)
|
Deferred tax liabilities are based on fully
phased-in
Basel III rules.
|
|
|
|
|
|
|
|
92
|
|
BNY Mellon
|
|
|
|
2017 Proxy Statement
|
Corporate Social Responsibility
Invested in Market Integrity
Stable,
well-functioning markets help communities around the world grow and thrive. As a major global financial institution, we have a critical role to play in contributing to market integrity. We continually innovate to make our business stronger, more
efficient and more responsible.
Invested in Our People
A company is as good as its people. Among our global workforce, over 50,000 strong, are some of the sharpest minds and most innovative professionals in the investment industry. We start with a diverse and inclusive
range of individuals and then invest in their talents to their fullest potential.
Invested in Our World
Invested in the world means to be invested in our individual communities all around the world. With our vast global scope and operations in over 100 markets, BNY
Mellon is an integral part of many communities. Our commitment to human rights, the environment and overall community well-being is an essential part of who we are and how we do business.
|
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|
Cut here
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|
Reservation Form for The Bank of New York Mellon Corporation Annual Meeting of Stockholders
Stockholders who expect to attend the Annual Meeting at 9:00 a.m. on April 11, 2017 at 101 Barclay Street in New York, NY should complete this form and return
it to the Office of the Corporate Secretary, The Bank of New York Mellon Corporation, 225 Liberty Street, New York, NY 10286. Admission cards will be provided at the
check-in
desk at the meeting (please be
prepared to show proof of identification).
Stockholders holding stock in brokerage accounts will need to bring a copy of a brokerage statement reflecting The Bank of New York Mellon Corporation stock ownership as of the record date, which is
February 10, 2017.
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Name:
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(Please Print)
|
Address:
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|
(Please Print)
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|
BNY Mellon
|
|
|
|
2017 Proxy Statement
|
|
93
|
The Bank of New York Mellon Corporation
225 Liberty Street
New York, NY 10286
+1 212 495 1784
www.bnymellon.com
Electronic Voting Instructions
Available 24 hours a day, 7 days a week!
Instead of mailing
your proxy, you may choose one of the voting methods outlined below to vote your proxy.
VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR.
Proxies submitted by the Internet or telephone must be received by 8:30 AM Eastern Time, on April 11, 2017.
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|
Vote by Internet
Go to
www.envisionreports.com/BK
Or scan the QR code with your
smartphone
Follow the steps
outlined on the secure website
|
Vote by telephone
|
|
|
Call toll free
1-800-652-VOTE
(8683) within the USA, US territories & Canada on a
touch tone telephone
|
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Follow the instructions provided by the recorded message
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Using a
black ink
pen, mark your votes with an
X
as shown in this example. Please do not write outside the designated areas.
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☒
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q
IF YOU HAVE NOT VOTED VIA THE INTERNET
OR
TELEPHONE, FOLD ALONG THE
PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
q
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Where a vote is not specified, the proxies will vote shares represented by this Proxy FOR all nominees for director, FOR Proxy
Item 2, FOR 1 year on Proxy Item 3, FOR Proxy Item 4, and AGAINST Proxy Item 5, and will vote in their discretion on such other matters that may properly come before the meeting and at any adjournment of such meeting.
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+
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A
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|
The Board of Directors recommends a vote FOR all nominees for director, FOR Proxy Item 2, FOR 1 year on Proxy Item 3, FOR Proxy Item 4, and AGAINST Proxy Item 5.
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1. Election of Directors:
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For
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Against
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Abstain
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For
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Against
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Abstain
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For
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Against
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Abstain
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1.1 - Linda Z. Cook
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☐
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☐
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☐
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1.2 - Nicholas M. Donofrio
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☐
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☐
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☐
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1.3 - Joseph J. Echevarria
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☐
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☐
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☐
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1.4 - Edward P. Garden
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☐
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☐
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☐
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1.5 - Jeffrey A. Goldstein
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☐
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☐
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☐
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1.6 - Gerald L. Hassell
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☐
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☐
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☐
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1.7 - John M. Hinshaw
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☐
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☐
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☐
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1.8 - Edmund F. Kelly
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☐
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☐
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☐
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1.9 - John A. Luke, Jr.
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☐
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☐
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☐
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1.10 - Jennifer B. Morgan
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☐
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☐
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☐
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1.11 - Mark A. Nordenberg
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☐
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☐
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☐
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1.12 - Elizabeth E. Robinson
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☐
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☐
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☐
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1.13 - Samuel C. Scott III
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☐
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☐
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For
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Against
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Abstain
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1 Year
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2 Years
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3 Years
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Abstain
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2. Advisory resolution to approve the 2016 compensation of our named executive
officers.
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☐
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☐
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☐
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3. Proposal to recommend, by
non-binding
vote, the frequency of stockholder advisory vote on executive compensation.
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For
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Against
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Abstain
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4. Ratification of KPMG LLP as our independent auditor for 2017.
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5. Stockholder proposal regarding a proxy voting review report.
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B
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Authorized Signatures This section must be completed for your vote to be counted. Date and Sign Below
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Note: Please sign as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such.
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Date (mm/dd/yyyy) Please print date below.
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Signature 1 Please keep signature within the box.
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Signature 2 Please keep signature within the box.
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Important notice regarding the Internet
availability of proxy materials for the Annual Meeting of Shareholders.
The Proxy Statement and the 2016 Annual Report to Stockholders are available at: www.envisionreports.com/BK.
q
IF YOU HAVE NOT VOTED VIA THE INTERNET
OR
TELEPHONE, FOLD ALONG
THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
q
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Proxy THE BANK OF NEW YORK MELLON CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD
OF DIRECTORS OF THE CORPORATION
The undersigned hereby appoints Craig T. Beazer, Bennett E. Josselsohn and Richard M. Pearlman or any of them, each
with full power of substitution, as attorneys and proxies of the undersigned to vote all The Bank of New York Mellon Corporation Common Stock which the undersigned is entitled to vote at the Annual Meeting of Shareholders of the Corporation to be
held on Tuesday, April 11, 2017, at 9:00 a.m., 101 Barclay Street, New York, New York, 10286 and at any adjournment of such meeting, as fully and effectually as the undersigned could do if personally present, and hereby revokes all previous
proxies for said meeting.
Where a vote is not specified, the proxies will vote the shares represented by this Proxy FOR the election of all nominees for director, FOR Proxy Item 2, FOR 1 year on Proxy Item 3, FOR Proxy Item 4, and AGAINST Proxy
Item 5, and will vote in their discretion on such other matters that may properly come before the meeting and at any adjournment of such meeting.
This Proxy is solicited on behalf of the Board of Directors of the Corporation, and may be revoked prior to its exercise.
The Board of Directors recommends
votes FOR the election of all nominees for director, FOR Proxy Item 2, FOR 1 year on Proxy Item 3, FOR Proxy Item 4, and AGAINST Proxy Item 5.
(Continued and to be marked, dated and signed, on the other side)
Change of Address
Please print new address below.
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∎
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IF VOTING BY MAIL, YOU
MUST
COMPLETE SECTIONS A - C ON BOTH SIDES OF THIS CARD.
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