SCHEDULE 14A INFORMATION

Proxy Statement Pursuant To Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.     )

Filed by the Registrant    ☒

Filed by a Party other than the Registrant    ☐

Check the appropriate box:

 

☐		Preliminary Proxy Statement		☐		Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
☒		Definitive Proxy Statement
☐		Definitive Additional Materials
☐		Soliciting Material Pursuant to Section 240.14a-12

STATE STREET 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):

 

☒

No fee required.

 

☐

Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

 

(1)

Title of each class of securities to which transaction applies:

 

      

 

 

(2)

Aggregate number of securities to which transaction applies:

 

 

 

(3)

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

 

 

 

(4)

Proposed maximum aggregate value of transaction:

 

 

 

(5)

Total fee paid:

 

 

 

☐

Fee paid previously with preliminary materials.

 

☐

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.

 

(1)

Amount Previously Paid:

 

 

(2)

Form, Schedule or Registration Statement No.:

 

 

(3)

Filing Party:

 

 

(4)

Date Filed:

 

 

Joseph L. Hooley

Chairman and Chief Executive Officer

Kennett F. Burnes

Lead Director

April 5, 2018

Dear Shareholder:

We cordially invite you to attend the 2018 annual meeting of shareholders of State Street Corporation. The meeting will be held at One Lincoln Street, 36^th Floor, Boston, Massachusetts, on May 16, 2018, at 9:00 a.m. Eastern Time. The proxy statement and annual meeting provide an important opportunity for us to communicate with you as shareholders, and for you to communicate with us, on important topics such as our performance, corporate governance, the effectiveness of the Board of Directors and executive compensation. Details regarding admission to the meeting and the business to be conducted are more fully described in the accompanying notice of annual meeting and proxy statement. Whether or not you plan to attend the meeting, please carefully review the enclosed proxy statement and then cast your vote. We urge you to vote regardless of the number of shares you hold. To be sure that your vote will be received in time, please cast your vote by your choice of available means at your earliest convenience. Your vote is very important to us.

In 2017, we celebrated our 225^th anniversary—225 years since John Hancock signed into existence State Street’s earliest ancestor. Since that time, a lot has changed at State Street. We became the custodian for the first mutual fund, created the world’s first exchange traded fund, placed the Fearless Girl statue in the middle of New York’s financial district and expanded across countries and continents. What has remained constant is our ability to change and evolve to stay ahead of our clients’ needs and industry demands, and that is what defines our way ahead.

In our most recent year, we achieved our financial targets and continued to generate strong shareholder returns. Revenue, fee revenue, earnings per share and return on average common equity all exceeded 2016 results. Our financial results reflect increased demand from clients, continued strength across our asset management and servicing businesses and prudent expense management, as well as growing global equity markets and rising interest rates. In addition to our positive financial performance, we continued to make substantial progress against our four strategic priorities of strengthening our foundation, delivering highly valued services and solutions to our clients, engaging our people and driving our strategy.

We look forward to seeing you at the annual meeting. Your continued interest in State Street is very much appreciated.

 

Sincerely,

 

PLEASE NOTE: If you plan to attend the meeting, please allow time for registration and security clearance. You will be asked to present valid picture identification acceptable to our security personnel, such as a driver’s license or passport. If your State Street shares are held in “street name” through a broker, bank or other nominee, you should also bring proof of beneficial ownership (for further details, see “Meeting Admission” in the attached Notice of State Street Corporation 2018 Annual Meeting of Shareholders). For security purposes, you and your bags are subject to search prior to your admittance to the meeting, and no cameras, recording equipment, mobile phones or other electronic devices, large bags or packages are permitted in the meeting. Public fee-based parking is available at State Street’s headquarters at One Lincoln Street (entrance from Kingston Street). Other public fee-based parking near One Lincoln Street is available at the Hyatt Hotel (entrance from Avenue de LaFayette). South Station is the closest MBTA station to One Lincoln Street.

State Street Corporation

One Lincoln Street

Boston, MA 02111-2900

NOTICE OF STATE STREET CORPORATION 2018 ANNUAL MEETING OF SHAREHOLDERS

 

Date		May 16, 2018
Time		9:00 a.m., Eastern Time
Place		One Lincoln Street, 36th Floor, Boston, Massachusetts
Purpose		1.		To elect 12 directors
		2.		To approve an advisory proposal on executive compensation
		3.		To amend the Articles of Organization to implement a majority voting standard for specified corporate actions
		4.		To ratify the selection of Ernst & Young LLP as State Street’s independent registered public accounting firm for the year ending December 31, 2018
		5.		To act upon such other business as may properly come before the meeting and any adjournments thereof
Record Date		The directors have fixed the close of business on March 9, 2018, as the record date for determining shareholders entitled to notice of and to vote at the meeting.
Meeting Admission		If you plan to attend the meeting, please allow time for registration and security clearance. You will be asked to present valid picture identification acceptable to our security personnel, such as a driver’s license or passport. If your State Street shares are held in “street name” through a broker, bank or other nominee, your name does not appear on our list of shareholders, and these proxy materials are being forwarded to you by your broker, bank or other nominee. If you hold in “street name” and wish to attend the annual meeting, in addition to a valid form of picture identification, you will be required to present a letter or account statement showing that you were a beneficial owner of our shares on the record date. For security purposes, you and your bags are subject to search prior to your admittance to the meeting. In addition, cameras, recording equipment, mobile phones or other electronic devices, large bags or packages will not be permitted in the meeting.
Voting by Proxy		Please submit a proxy card or, for shares held in “street name,” voting instruction form, as soon as possible, so your shares can be voted at the meeting. You may submit your proxy card or voting instruction form by mail. If you are a registered shareholder, you may also vote electronically by telephone or over the Internet by following the instructions included with your proxy card or notice of Internet availability of proxy materials. If your shares are held in “street name,” you will receive instructions for the voting of your shares from your broker, bank or other nominee, which may permit telephone or Internet voting. Follow the instructions on the voting instruction form or notice of Internet availability of proxy materials that you receive from your broker, bank or other nominee to ensure that your shares are properly voted at the annual meeting.

 

April 5, 2018

STATE STREET CORPORATION

One Lincoln Street, Boston, Massachusetts 02111

 

 

 

i

 

ii

 

iii

 

iv

 

v

TABLE OF CONTENTS

 

SUMMARY INFORMATION		i
CORPORATE GOVERNANCE AT STATE STREET		1
Governance Guidelines and Independence		1
Standards of Conduct		2
Composition of the Board and Director Selection Process		2
Board Leadership Structure		4
Meetings of the Board of Directors and Annual Shareholder Meeting		5
Committees of the Board of Directors		5
Non-Employee Director Compensation		8
Related Person Transactions		10
ITEM 1 – ELECTION OF DIRECTORS		12
EXECUTIVE COMPENSATION		25
Compensation Discussion and Analysis		25
Compensation Committee Report		48
Alignment of Incentive Compensation and Risk		49
Summary Compensation Table		51
CEO Pay Ratio Disclosure		53
2017 Grants of Plan-Based Awards		54
Outstanding Equity Awards at Fiscal Year-End 2017		56
2017 Option Exercises and Stock Vested		57
2017 Pension Benefits		58
2017 Nonqualified Deferred Compensation		60
Potential Payments upon Termination or Change of Control as of December 31, 2017		62
ITEM 2 – APPROVAL OF ADVISORY PROPOSAL ON EXECUTIVE COMPENSATION		69
ITEM  3 – AMENDMENT TO ARTICLES OF ORGANIZATION TO IMPLEMENT A MAJORITY VOTING STANDARD FOR SPECIFIED CORPORATE ACTIONS		70
EXAMINING AND AUDIT COMMITTEE MATTERS		71
Examining and Audit Committee Pre-Approval Policies and Procedures		71
Audit and Non-Audit Fees		71
Report of the Examining and Audit Committee		71
ITEM  4 – RATIFICATION OF THE SELECTION OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM		73
GENERAL INFORMATION ABOUT THE ANNUAL MEETING		74
Questions and Answers About Voting		74
Other Matters		77
Proposals and Nominations by Shareholders		77
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT		78
Section 16(a) Beneficial Ownership Reporting Compliance		79
APPENDIX A: EXCERPT FROM STATE STREET’S CORPORATE GOVERNANCE GUIDELINES		A-1
APPENDIX B: PROPOSED AMENDMENT AND RESTATEMENT OF ARTICLE 6 OF STATE STREET ARTICLES OF ORGANIZATION		B-1

 

vi

		2018 NOTICE OF MEETING AND PROXY STATEMENT

 

 

 

 

CORPORATE GOVERNANCE AT STATE STREET

State Street is a financial holding company whose principal subsidiary is State Street Bank and Trust Company, or State Street Bank or the Bank. State Street and the Bank are each organized under the laws of the Commonwealth of Massachusetts. In accordance with Massachusetts law and State Street’s by-laws, our Board of Directors has responsibility for overseeing the conduct of our business. Our Board is committed to strong corporate governance practices and is intent on maintaining State Street’s reputation for quality, integrity and high ethical standards.

Governance Guidelines and Independence

State Street’s Board of Directors, in its role of overseeing the conduct of our business, is guided by our Corporate Governance Guidelines, or the Guidelines. Among other things, the Guidelines describe the role of the Board of Directors, its responsibilities and functions, the director qualification and selection process and the role of the Lead Director. The Guidelines also contain categorical standards for determining director independence under New York Stock Exchange, or NYSE, listing standards. In general, a director would not be independent under these standards if the director (and in certain circumstances, a member of the director’s immediate family) has, or in the past three years had, specified relationships or affiliations with State Street, its external or internal auditors or other companies that do business with State Street (including employment by State Street, receipt of a specified level of direct compensation from State Street—other than director fees—and compensation committee interlocks). The categorical standards also provide specified relationships that, by themselves, would not impair independence. The portion of the Guidelines addressing director independence is attached as Appendix A to this proxy statement. The full Guidelines are available under the “Corporate Governance” section in the “For Our Investors” section of our website at www.statestreet.com. In addition to the Guidelines, the charters for each principal committee of the Board are also available in the same location on our website. Except as may be specifically incorporated by reference in this proxy statement, information on our website is not part of this proxy statement.

 

Pursuant to the Guidelines, the Board undertook a review of director independence in early 2018. State Street, as a global financial institution and one of the largest providers of financial services to institutional investors, conducts business with many organizations throughout the world. Our directors or their immediate family members may have relationships or affiliations with some of these organizations. As provided in the Guidelines, the purpose of the director independence review was to determine whether any relationship or transaction was inconsistent with a determination that the director was independent. As a result of this review, the Board, after review and recommendation by the Nominating and Corporate Governance Committee, determined that all of our non-management directors meet the categorical standards for independence under the Guidelines, have no material relationship with State Street (other than the role of director) and satisfy the qualifications for independence under listing standards of the NYSE. The Board had previously determined in 2017 that Ronald L. Skates and Thomas J. Wilson, who served on the Board

 

STATE STREET CORPORATION    1

Corporate Governance (continued)		2018 NOTICE OF MEETING AND PROXY STATEMENT

 

 

 

 

during 2017, were independent. In making the independence determinations in 2018, the Board considered that the below identified individuals, or their respective family members, have the following relationships or arrangements that are deemed to be immaterial under the categorical standards for independence included in the Guidelines:

 

•

commercial or charitable relationships with an entity for which the State Street director or family member serves as a non-employee director, and with respect to which the director was uninvolved in negotiating such relationship (Mses. Hill and Mathew and Messrs. Burnes, de Saint-Aignan and Freda)

 

•

commercial relationships with an entity for which the State Street director or family member serves as an employee, consultant or executive officer where the director does not receive any special benefits from the transaction and the annual payments to or from the entity are equal to or less than the greater of $1 million or 2% of the consolidated gross annual revenues of the other entity during the most recent completed fiscal year (Ms. Hill and Messrs. Freda and Meaney)

In 2017, none of these commercial or charitable relationships with affiliated entities involved amounts paid or received by State Street exceeding 1.7% of State Street’s annual gross revenue or the greater of $1  million or 0.6% of the affiliated entity’s annual gross revenue.

Standards of Conduct

We have a Standard of Conduct for Directors, which together with the Standard of Conduct for Employees, promotes ethical conduct and the avoidance of conflicts of interest in conducting our business. We also have a Code of Ethics for Senior Financial Officers (including the Chief Executive Officer), as required by the Sarbanes-Oxley Act and SEC rules. Each of these documents is available under the “Corporate Governance” section in the “For Our Investors” section of our website at www.statestreet.com. Only our Board may grant a waiver for directors, senior financial officers or executive officers from a provision of the Standard of Conduct for Directors, the Standard of Conduct for Employees or the Code of Ethics for Senior Financial Officers, and any waivers will be posted under the “Corporate Governance” section in the “For Our Investors” section of our website at www.statestreet.com.

Composition of the Board and Director Selection Process

In connection with nominating directors for election each year and evaluating the need for new director candidates as appropriate, including skill sets, diversity, specific business background and global or international experience, the Nominating and Corporate Governance Committee, with input from the entire Board and management, focuses on the Board’s capabilities and functioning as a whole.

 

On an annual basis, the Nominating and Corporate Governance Committee assesses each director’s contributions to the overall effectiveness of the Board. The Committee also evaluates the experience, qualifications and attributes of each director and

 

2    STATE STREET CORPORATION

Corporate Governance (continued)		2018 NOTICE OF MEETING AND PROXY STATEMENT

 

 

 

 

recommends to the Board the director nominees that should stand for election at the next annual meeting. Based on this evaluation, the Board believes that individually each of the nominees has had substantial achievement in his or her personal and professional pursuits and has talents, experience and integrity that will contribute to the best interests of State Street and to long-term shareholder value, and the nominees as a group possess the skill sets, specific business background and global or international experience that the Board desires. The director nominee biographies set forth in this proxy statement under the heading “Item 1—Election of Directors” indicate each nominee’s qualifications, skills, experience and attributes that led the Board to conclude he or she should serve as a director of State Street.

In carrying out its responsibility to find the best qualified candidates for directors, the Nominating and Corporate Governance Committee will consider proposals for nominees from a number of sources, including recommendations from shareholders submitted upon written notice to the Chair of the Nominating and Corporate Governance Committee, c/o the Office of the Secretary of State Street Corporation, One Lincoln Street, Boston, Massachusetts 02111 (facsimile number (617) 664-8209). The Committee seeks to identify individuals qualified to become directors, consistent with the above criteria used by the Board for director candidates.

By following the procedures set forth under “General Information About the Annual Meeting—Proposals and Nominations by Shareholders,” shareholders also have the right under our by-laws to directly nominate director candidates and, in certain circumstances, to have their nominees included in State Street’s proxy statement.

The Nominating and Corporate Governance Committee’s process for identifying and evaluating candidates includes actively seeking to identify qualified individuals by reviewing lists of possible candidates and considering proposals from a number of sources, such as members of the Board, members of management, employees, shareholders and industry contacts. The Committee’s charter grants it the authority to retain search firms to assist in conducting this search. Upon identifying a possible candidate, from whatever source, the Committee makes an initial evaluation as to whether the individual would qualify under the criteria used by the Board for director candidates. A candidate who passes the initial evaluation is then further evaluated through a process which may include obtaining and examining the individual’s resume, speaking with the person who has recommended the individual, speaking with others who may be familiar with the individual, interviews by members of the Board and the Nominating and Corporate Governance Committee with the individual, discussion at the Committee level of the individual’s possible contribution to State Street and, if appropriate, voting on the individual as a candidate. The Committee evaluates possible nominees for director without regard to whether an individual is recommended by a shareholder or otherwise.

Ms. Sara Mathew and Mr. William L. Meaney are first-time nominees for election as directors by shareholders at this annual meeting. Ms. Mathew and Mr. Meaney were first identified by a third-party search firm that was retained to identify potential director candidates. At the request of the Nominating and Corporate Governance Committee, the search firm first discussed with the members of the Committee the priority characteristics of a new director candidate, in light of the preferred individual and Board qualities described above. The search firm developed preliminary criteria for a director candidate and reviewed them with members of the Committee. The search firm identified potential candidates that met the criteria and submitted a list of potential candidates for consideration. The Committee met to discuss and prioritize the list of candidates and subsequently reviewed this process and the resulting list with the Lead Director and the Board. After a preliminary check to determine potential conflicts was performed, the search firm was asked to approach the candidates to determine their interest and availability to serve on the Board. The search firm gave the Committee a list of candidates who were interested, and the Chairman of the Board, Chair of the Nominating and Corporate Governance Committee and members of the Committee and Board personally interviewed them. The Board is nominating Ms. Mathew and Mr. Meaney as they meet several of the criteria identified by the Board for new directors, including, but not limited to, Ms. Mathew’s valuable experience in corporate strategy, technology and finance, with a particular emphasis on internal controls and processes, and Mr. Meaney’s broad, global background in leading both domestic and international companies combined with his understanding and practical knowledge of business transformation. Both the Nominating and Corporate Governance Committee and the Board of Directors believes that Ms. Mathew and Mr. Meaney have the background and requisite experience to make significant contributions on many levels to State Street through their continued service as directors. Both nominees were deemed independent by the Board under the Corporate Governance Guidelines.

Annual Board and Committee Evaluations

On an annual basis, the Board of Directors and each committee conducts an annual self-evaluation of its performance and effectiveness. Directors complete a questionnaire evaluating the Board and each committee they serve on, specifically focusing on areas of potential improvement. The overall performance of the Board—including its contributions to the Company—and a

 

STATE STREET CORPORATION    3

Corporate Governance (continued)		2018 NOTICE OF MEETING AND PROXY STATEMENT

 

 

 

 

compilation of director responses is reviewed and discussed by the Nominating and Corporate Governance Committee and the Board. Similarly, the performance of each committee, along with specific committee member responses, is reviewed and discussed by the respective committee. The Nominating and Corporate Governance Committee further assesses whether each of the Examining and Audit Committee, Executive Compensation Committee, Risk Committee, Nominating and Corporate Governance Committee and Technology Committee has a functioning self-evaluation process and reports its findings to the Board.

Diversity

State Street does not have a formal policy with respect to diversity but, taken as a whole, strives to have a Board that reflects the diversity (in terms of a number of characteristics including gender, race, national origin, age and tenure on the Board) of State Street’s key stakeholders and of the various communities in which we operate. Presently, the Nominating and Corporate Governance Committee and the Board believe the composition of the Board, which currently reflects a range of personal and professional backgrounds, experiences and other characteristics, is reflective of this diversity. As noted above, the Nominating and Corporate Governance Committee includes diversity as a consideration in making its recommendations for nominees for director. The Committee, however, does not assign specific weight to the various factors it considers and no particular criterion is a prerequisite for nomination.

Board Leadership Structure

State Street has adopted a leadership structure that includes an independent Lead Director of the Board. This position is currently held by Kennett F. Burnes. Mr. Burnes was elected Lead Director to serve a one-year term as the presiding director of the independent directors of the Board (all directors, except for Mr. Hooley) in May 2017. Mr. Burnes has served in this capacity for eight annual terms. On November 7, 2017, State Street announced that Joseph L. Hooley will retire as Chief Executive Officer by the end of 2018 and will remain as a director and Chairman of the Board of Directors throughout 2019. Ronald P. O’Hanley will succeed Mr. Hooley as State Street’s Chief Executive Officer upon Mr. Hooley’s retirement.

Our Guidelines provide that any director who reaches the age of 75 will retire from the Board by the end of his or her then current term. The Board waived this requirement for our Lead Director, Mr. Burnes, who turned 75 in February 2018, so that he may continue, if re-elected, as Lead Director until the 2019 annual meeting. The Board took this action to maintain continuity in the Lead Director position during the Company’s CEO transition described above.

 

Mr. Hooley, as State Street’s Chairman of the Board, presides at all meetings of the Board at which he is present. The Chairman works with the independent Lead Director in setting Board agendas and coordinating other Board activities. The Nominating and Corporate Governance Committee coordinates the annual Lead Director nomination and election process. The Committee conducts a review of the current Lead Director by soliciting feedback from members of the Board, and based upon the review, recommends that the Board of Directors elect a member of the Board as its Lead Director to serve for a one-year term. The Board of Directors believes that Mr. Hooley’s role as Chairman and Mr. Burnes’ role as Lead Director is the most effective leadership

 

4    STATE STREET CORPORATION

Corporate Governance (continued)		2018 NOTICE OF MEETING AND PROXY STATEMENT

 

 

 

 

structure for State Street at this time and is in the best interests of the Board, State Street and its shareholders. Among the factors considered by the Board in determining that this leadership structure continues to be the most appropriate are:

 

•

as our Chief Executive Officer, and with his extensive work history in different roles at State Street, Mr. Hooley is more familiar with our business and strategy than an independent, non-management Chairman would be, and is thus better positioned to focus our Board’s agenda on the key issues facing State Street

 

•

a single Chairman and Chief Executive Officer provides strong, consistent and accountable leadership for State Street, without risking overlap or conflict of roles

 

•

oversight of State Street is the responsibility of our Board as a whole, and this responsibility can be properly discharged without an independent Chairman

 

•

the Chairman and our Lead Director work together to play a strong and active role in the oversight of State Street’s leadership

Communication with the Board of Directors

Shareholders and interested parties who wish to contact the Board of Directors or the Lead Director should address correspondence to the Lead Director in care of the Secretary. The Secretary will review and forward correspondence to the Lead Director or appropriate person or persons for response.

Lead Director of State Street Corporation

c/o Office of the Secretary

One Lincoln Street

Boston, MA 02111

In addition, State Street has established a procedure for communicating directly with the Lead Director, by utilizing a third-party independent provider, regarding concerns about State Street or its conduct, including complaints about accounting, internal accounting controls or auditing matters. An interested party who wishes to contact the Lead Director may use any of the following methods, which are also described on State Street’s website at www.statestreet.com:

 

From within the United States and Canada:		The Network/NAVEX		www.tnwinc.com/webreport
1-888-736-9833 (toll-free)		ATTN: State Street
		333 Research Court
		Norcross, GA 30092 USA

For country-specific phone numbers, please visit www.statestreet.com.

The Lead Director may forward to the Examining and Audit Committee, or to another appropriate group or department, for appropriate review, any concerns the Lead Director receives. The Lead Director periodically reports to the independent directors as a group regarding concerns received.

Meetings of the Board of Directors and Annual Shareholder Meeting

During 2017, the Board of Directors held 12 meetings, and each of the incumbent directors attended at least 75 percent of the total of all meetings of the Board and committees on which such director served for the period during which the director served. Although State Street does not have a formal policy regarding attendance of directors at the annual meeting, all directors are encouraged to attend. Each of the 9 directors on the Board at the time of our 2017 annual meeting attended the meeting.

Committees of the Board of Directors

The Board of Directors has the following principal committees to assist it in carrying out its responsibilities, and each operates under a written charter, a copy of which is available under the “Corporate Governance” section in the “For Our Investors” section of our website at www.statestreet.com. The charter for each committee, which establishes its roles and responsibilities and governs its procedures, is annually reviewed and approved by the Board.

 

STATE STREET CORPORATION    5

Corporate Governance (continued)		2018 NOTICE OF MEETING AND PROXY STATEMENT

 

 

 

 

Examining and Audit Committee

 

 

		Primary Responsibilities:   •    Responsible for the appointment (including qualifications, performance, independence and periodic consideration of retaining a different firm), compensation, retention, evaluation and oversight of the work of State Street’s independent registered public accounting firm, including sole authority for the establishment of pre-approval policies and procedures for all audit engagements and any non-audit engagements   •    Discusses with the independent auditor critical accounting policies and practices, alternative treatments of financial information, the effect of regulatory and accounting initiatives and other relevant matters   •    Oversees the operation of our system of internal controls covering the integrity of our consolidated financial statements and reports; compliance with laws, regulations, corporate policies; and the performance of corporate audit   •    Reviews the effectiveness of State Street’s compliance program and conducts an annual performance evaluation of the General Auditor and of the Chief Compliance Officer

Independence: All members meet the independence requirements of the listing standards of the NYSE and the rules and regulations of the SEC.

Executive Committee

 

 

		Primary Responsibilities:   •    Authorized to exercise all the powers of the Board of Directors, except as otherwise limited by the laws of the Commonwealth of Massachusetts or the Committee’s charter   •    Reviews, approves and acts on matters on behalf of the Board of Directors at times when it is not practical to convene a meeting of the Board to address such matters   •    Depending on meeting activities, if any, periodically reports to the Board

 

6    STATE STREET CORPORATION

Corporate Governance (continued)		2018 NOTICE OF MEETING AND PROXY STATEMENT

 

 

 

 

Executive Compensation Committee

 

 

		Primary Responsibilities:   •   Oversees the operation of all compensation plans, policies and programs in which executive officers participate and certain other incentive, retirement, welfare and equity plans in which all other employees participate   •   Oversees the alignment of our incentive compensation arrangements with the safety and soundness of State Street, including the integration of risk management objectives, related policies, arrangements and control processes, consistent with applicable regulatory rules and guidance   •   Acting together with the other independent directors, annually reviews and approves corporate goals and objectives relevant to the Chief Executive Officer’s compensation; evaluates the Chief Executive Officer’s performance; and reviews, determines and approves, in consultation with the other independent directors, the Chief Executive Officer’s compensation level   •   Reviews, evaluates and approves the total compensation of all executive officers   •   Approves the terms and conditions of employment and any changes thereto, including any restrictive provisions, severance arrangements and special arrangements or benefits, of any executive officer   •   Adopts equity grant guidelines in connection with its overall responsibility for all equity plans and monitors stock ownership of executive officers   •   Appoints and oversees compensation consultants and other advisors retained by the Committee

Independence: All members meet the independence requirements of the listing standards of the NYSE and the rules and regulations of the SEC.

Nominating and Corporate Governance Committee

 

 

		Primary Responsibilities:   •   Assists the Board with respect to issues and policies affecting our governance practices, including succession planning, identifying and recommending director nominees, recommending the membership of each committee and leading the Board in its annual review of the Board’s performance   •   Reviews and approves State Street’s related person transactions, reviews the amount and form of director compensation and reviews reports on regulatory, political and lobbying activities of State Street

Independence: All members meet the independence requirements of the listing standards of the NYSE and the rules and regulations of the SEC.

 

STATE STREET CORPORATION    7

Corporate Governance (continued)		2018 NOTICE OF MEETING AND PROXY STATEMENT

 

 

 

 

Risk Committee

 

 

		Primary Responsibilities:   •    Oversees the operation of our global risk management framework, including the risk management policies for our operations   •     Reviews the management of all risk applicable to our operations, including credit, market, interest rate, liquidity, operational and business risks, as well as compliance and reputational risk   •    Oversees our strategic capital governance principles and controls, monitors capital adequacy in relation to risk and discharges the duties and obligations of the Board under applicable Basel, Comprehensive Capital Analysis and Review, Comprehensive Liquidity Assessment and Review and resolution and recovery planning requirements   •    Conducts an annual performance evaluation of the Chief Risk Officer

Technology Committee

 

 

		Primary Responsibilities:   •    Assists the Board in the oversight of State Street’s technology, including the use of technology in global operations and business activities, and our technology strategies   •    Advises the Board on technology related risks, including cyber and information security risks

Non-Employee Director Compensation

General

The Nominating and Corporate Governance Committee annually reviews the form and amount of non-employee director compensation and makes a related recommendation to the Board. Mr. Hooley is the only director who is also one of our employees, and the determination of his compensation is described under the heading “Executive Compensation—Compensation Discussion and Analysis.” Mr. Hooley receives no additional compensation for his service as a director. In conducting its review, the Committee has access to compensation consultants and other resources it deems appropriate, including peer group data. The Committee uses the same peer group the Compensation Committee uses for executive compensation generally and, like the Compensation Committee, used the services of Meridian Compensation Partners for 2017. For information on State Street’s peer group and compensation consultant, see “Executive Compensation—Compensation Discussion and Analysis—Other Elements of Our Process.”

Each year, our compensation consultant assists in preparing a review of director compensation within the peer group. The Committee did not treat peer group data as definitive when determining non-employee director compensation. Rather, it referenced peer group compensation as well as trends in director compensation generally, within the industry and for select globally systemically important banks, and formed its own perspective on compensation for our non-employee directors. In 2017, the Committee made its recommendation to the Board, which, following the May 2017 annual meeting of shareholders, approved director compensation for all non-employee directors effective through the 2018 annual meeting of shareholders.

 

8    STATE STREET CORPORATION

Corporate Governance (continued)		2018 NOTICE OF MEETING AND PROXY STATEMENT

 

 

 

 

Compensation

For the period between each annual meeting of shareholders, non-employee directors receive the following compensation:

 

Compensation Component		Value ($)				Vehicle(1)
Annual Retainer(2)			$  75,000			Cash or shares of State Street common stock
Annual Equity Award(2)			150,000			Shares of State Street common stock
Board and Committee Meeting Fee(3)			1,500			Cash
Additional Lead Director Retainer			150,000			Cash or shares of State Street common stock
Examining and Audit Committee and Risk Committee Chair Retainers			25,000			Cash or shares of State Street common stock
Executive Compensation Committee Chair Retainer			20,000			Cash or shares of State Street common stock
Nominating and Corporate Governance Committee and Technology Committee Chair Retainers			15,000			Cash or shares of State Street common stock
Examining and Audit Committee and Risk Committee Member Retainers			15,000			Cash or shares of State Street common stock

(1)

All awards made in shares of State Street common stock are granted based upon the closing price of our common stock on the NYSE on the date of the annual meeting that begins the period, rounded up to the nearest whole share, unless otherwise noted. Under the 2017 Stock Incentive Plan, with limited exceptions, the total value of all compensation components to a non-employee director cannot exceed $1.5 million in a calendar year.

(2)

The annual retainer and annual equity award are prorated for any non-employee director joining the Board after the annual meeting that begins the period, with awards made in shares of State Street common stock granted based on the closing price of our common stock on the NYSE on the date of election, rounded up to the nearest whole share.

(3)

Non-employee directors receive meeting fees of $1,500, payable in cash, for each Board and committee meeting attended, including meetings of a State Street affiliate, together with reimbursement of expenses incurred as a result of Board service. The Lead Director does not receive any committee meeting fees, but does receive Board meeting fees and reimbursement of expenses for Board service.

Pursuant to State Street’s Deferred Compensation Plan for Directors, non-employee directors may elect to defer the receipt of 0% or 100% of their (1) retainers, (2) meeting fees or (3) annual equity grant award. Non-employee directors also may elect to receive their retainers in cash or shares of common stock. Non-employee directors who elect to defer the cash payment of their retainers or meeting fees may choose from four notional investment fund returns for such deferred cash. Deferrals of common stock are adjusted to reflect the hypothetical reinvestment in additional shares of common stock for any dividends or distributions on State Street common stock. Deferred amounts will be paid (a) as elected by the non-employee director, on either the date of their termination of service on the Board or on the earlier of such termination and a future date specified, and (b) in the form elected by the non-employee director as either a lump sum or in installments over a two- to five-year period.

Director Stock Ownership Guidelines

Under our stock ownership guidelines, all non-employee directors are required to maintain a target level of stock ownership equal to 5 times the annual equity award of $150,000 for a total of $750,000. There is a five-year phase-in period to achieve compliance with the guidelines. Non-employee directors must hold all net shares received until the full (not pro-rated) target ownership level is achieved. For purposes of these stock ownership guidelines, the value of shares owned is based on the closing price of our common stock on the NYSE on the date that we use for the beneficial ownership table under the heading “Security Ownership of Certain Beneficial Owners and Management—Management.” Non-employee directors are credited with all shares they beneficially own for purposes of the beneficial ownership table which includes all shares awarded as director compensation, whether immediate or deferred. Non-employee directors are expected to attain the ownership level ratably over the phase-in period.

 

STATE STREET CORPORATION    9

Corporate Governance (continued)		2018 NOTICE OF MEETING AND PROXY STATEMENT

 

 

 

 

As of March 1, 2018, each of our non-employee directors then on the Board, except for Ms. Dugle and Mr. O’Sullivan, exceeded the full level of ownership under these guidelines. Ms. Dugle and Mr. O’Sullivan exceeded the pro-rated expected level of ownership, and therefore, the holding requirement applies only to them during the phase-in period.

2017 Director Compensation

 

Name(1)		Fees Earned or Paid in Cash ($)				Stock Awards(2) ($)				All Other Compensation(3) ($)				Total ($)
(a)		(b)				(c)				(g)				(h)
Kennett F. Burnes			$243,000				$150,062				$35,627			$	428,689
Patrick de Saint-Aignan			169,500				150,062				35,627				355,189
Lynn A. Dugle			157,500				150,062				25,289				332,851
Amelia C. Fawcett			164,500				150,062				19,406				333,968
William C. Freda			178,000				150,062				35,406				363,468
Linda A. Hill			118,500				150,062				16,520				285,082
Sean O’Sullivan			114,000				150,062				—				264,062
Richard P. Sergel			170,000				150,062				13,015				333,077
Ronald L. Skates(4)			31,500				—				16,476				47,976
Gregory L. Summe			135,000				150,062				15,406				300,468
Thomas J. Wilson(4)			19,500				—				—				19,500

 

(1)	Mr. Meaney and Ms. Mathew did not join the Board until March 29, 2018 and are therefore not reflected in the 2017 Director Compensation table.

(2)

For the May 2017-April 2018 Board year, each non-employee director, other than Messrs. Skates and Wilson, received 1,880 shares of State Street common stock valued at $150,062 on the date of grant for the annual equity award. All of these shares were valued based on the closing price of our common stock on the NYSE on May 17, 2017 of $79.82. Stock awards to non-employee directors vest immediately, and there were no unvested non-employee director stock awards as of December 31, 2017.

(3)

Perquisites that Messrs. Burnes, de Saint-Aignan, Freda, Sergel, Skates and Summe as well as Dame Amelia and Mses. Dugle and Hill received in 2017 include: director life insurance coverage and business travel accident insurance paid for by State Street ($627 for Messrs. Burnes, de Saint-Aignan and Sergel; $406 for Messrs. Freda and Summe, Dame Amelia and Ms. Hill; $289 for Ms. Dugle; and $261 for Mr. Skates). Donations by non-employee directors to approved charities are eligible for a Company match of up to $35,000 per calendar year under the State Street matching gift program. Matching charitable contributions made on behalf of the non-employee directors were: $35,000 for Messrs. Burnes, de Saint-Aignan and Freda; $25,000 for Ms. Dugle; $19,000 for Dame Amelia; $16,114 for Ms. Hill; $15,000 for Mr. Summe; and $12,388 for Mr. Sergel. Perquisites for Mr. Skates also include retirement gifts of $16,215 in recognition of his 15 years of service as a member of the Board. The amount of perquisites and other personal benefits for Messrs. O’Sullivan and Wilson have not been itemized because the total did not exceed $10,000.

(4)	Messrs. Skates and Wilson retired from the Board in May 2017. Amounts reported in the “Fees Earned or Paid in Cash” column reflect Board and committee meeting fees earned in 2017 while Messrs. Skates and Wilson were still serving as directors.

Related Person Transactions

The Board has adopted a written policy and procedures for the review of any transaction, arrangement or relationship in which State Street is a participant, the amount involved exceeds $120,000 and one of our executive officers, directors or 5% shareholders (or their immediate family members), who we refer to as “related persons,” has a direct or indirect material interest. A related person proposing to enter into such a transaction, arrangement or relationship must report the proposed related-person transaction to State Street’s Chief Legal Officer. The policy calls for the proposed related-person transaction to be reviewed and, if deemed appropriate, approved by the Nominating and Corporate Governance Committee. A related-person transaction reviewed under the policy will be considered approved or ratified if it is authorized by the Nominating and Corporate Governance Committee (or the Committee Chair) after full disclosure of the related person’s interest in the transaction. Whenever practicable, the reporting, review and approval will occur prior to the transaction. If advance review is not practicable or was otherwise not obtained, the Committee will review and, if deemed appropriate, ratify the related-person transaction. The policy also permits the Chair of the Committee to review and, if deemed appropriate, approve proposed related-person transactions that arise between Committee meetings, in which case they will be reported to the full Committee at its next meeting. Any ongoing related-person transactions are reviewed annually.

 

10    STATE STREET CORPORATION

Corporate Governance (continued)		2018 NOTICE OF MEETING AND PROXY STATEMENT

 

 

 

 

The Nominating and Corporate Governance Committee may approve or ratify the related-person transaction only if the Committee determines that, under all of the circumstances, the transaction is in, or is not inconsistent with, State Street’s best interests. The Committee may, in its sole discretion, impose such conditions as it deems appropriate on State Street or the related person in connection with approval of the related-person transaction.

In addition to the transactions that are excluded by the instructions to the SEC’s related-person transaction disclosure rule, the Board has determined that the following transactions do not create a material direct or indirect interest on behalf of related persons and, therefore, are not related-person transactions for purposes of this policy:

 

•

interests arising solely from the related person’s position as an executive officer, employee or consultant of another entity (whether or not the person is also a director of such entity) that is a party to the transaction, where (1) the related person and his or her immediate family members do not receive any special benefits as a result of the transaction and (2) the annual amount involved in the transaction equals less than the greater of $1 million or 2% of the consolidated gross revenues of the other entity that is a party to the transaction during that entity’s last completed fiscal year or

 

•

a transaction that involves discretionary charitable contributions from State Street to a tax-exempt organization where a related person is a director, trustee, employee or executive officer, provided the related person and his or her immediate family members do not receive any special benefits as a result of the transaction, and further provided that, where a related person is an executive officer of the tax-exempt organization, the amount of the discretionary charitable contributions in any completed year in the last 3 fiscal years is not more than the greater of $1 million, or 2% of that organization’s consolidated gross revenues in the last completed fiscal year of that organization (in applying this test, State Street’s automatic matching of director or employee charitable contributions to a charitable organization will not be included in the amount of State Street’s discretionary contributions)

On March 27, 2017, State Street entered into a series of definitive agreements with DST Systems, Inc., or DST, and its affiliates providing for, among other things, the acquisition by affiliates of DST of State Street’s interests in the parties’ joint ventures, Boston Financial Data Services, Inc., or BFDS, and International Financial Data Services Limited, or IFDS Ltd. BFDS provides shareholder recordkeeping, intermediary and investor services and regulatory compliance solutions to financial services clients in the United States, and IFDS Ltd. is an investor and policy holder administrative services and technology provider to the collective funds, insurance and retirement industries. State Street exchanged its interest in BFDS for approximately 2 million shares of State Street common stock, valued at approximately $158 million. State Street sold its interest in IFDS Ltd. and related assets for cash consideration of approximately $175 million. Stephen C. Hooley, President and Chief Executive Officer of DST, is the brother of Joseph L. Hooley, Chairman and Chief Executive Officer of State Street. Due to the change in ownership of BFDS, in accordance with the terms of the BFDS deferred compensation plan, on June 22, 2017, Mr. Joseph L. Hooley received a distribution from BFDS of his full account balance under the BFDS deferred compensation plan (approximately $2.9 million). Mr. Hooley’s participation in the plan resulted from his previously disclosed employment at BFDS, which ended in 2000. Each of these transactions was approved by State Street’s Nominating and Corporate Governance Committee in accordance with our Related Person Transaction Policy.

Based on information provided by the directors and executive officers, and obtained by the legal department, no other related-person transactions were required to be reported in this proxy statement under applicable SEC regulations. In addition, neither State Street nor the Bank had extended a personal loan or extension of credit to any of its directors or executive officers.

 

STATE STREET CORPORATION    11

2018 NOTICE OF MEETING AND PROXY STATEMENT

 

ITEM 1 – ELECTION OF DIRECTORS

 

Each director elected at the 2018 annual meeting will serve until the next annual meeting of shareholders, except as otherwise provided in State Street’s by-laws. Of the 12 director nominees, 11 are non-management and 1 serves as the Chief Executive Officer of State Street. All of the non-management directors are independent, as determined by the Board in its opinion, under the applicable definition in the NYSE listing standards and the State Street Corporate Governance Guidelines.

Pursuant to State Street’s by-laws, on March 29, 2018, the Board fixed the number of directors at 12. Unless contrary instructions are given, shares represented by proxies solicited by the Board of Directors will be voted for the election of the 12 nominees listed below. We have no reason to believe that any nominee will be unavailable for election at the annual meeting. In the event that one or more nominees is unexpectedly not available to serve, proxies may be voted for another person nominated as a substitute by the Board or the Board may reduce the number of directors to be elected at the annual meeting. Information relating to each nominee for election as director is described below, including:

• age and period of service as a director of State Street

• business experience during at least the past five years (including directorships at other public companies)

• community activities

• other experience, qualifications, attributes or skills that led the Board to conclude the director should serve as a director of State Street

The Board of Directors recommends that shareholders approve each director nominee for election based upon the qualifications and attributes discussed below. See “Corporate Governance at State Street—Composition of the Board and Director Selection Process” for a further discussion of the Board’s process and reasons for nominating these candidates.

 

12    STATE STREET CORPORATION

Item 1 (continued)		2018 NOTICE OF MEETING AND PROXY STATEMENT

 

 

 

 

 

Career Highlights

 

•

Retired Chairman, President and Chief Executive Officer, Cabot Corporation, an NYSE-listed manufacturer of specialty chemicals and performance materials (2001 to 2008); President (1995 to 2008)

 

•

Former Director, Watts Water Technologies, Inc., an NYSE-listed supplier of products for use in the water quality, water safety, water flow control and water conservation markets (2009 to 2015)

Qualifications and Attributes

Mr. Burnes’ significant experience in leading a global organization, with facilities and operations in approximately 20 countries, brings to State Street’s Board a focus on developing new products and new businesses in diverse, international environments. Prior to joining Cabot Corporation in 1987, he was a partner at the Boston-based law firm of Choate, Hall & Stewart where he practiced corporate and business law for nearly 20 years. Mr. Burnes obtained experience in evaluating complex legal issues that arise in the types of material transactions boards of directors are called on to consider, including mergers and acquisitions and financing transactions. Mr. Burnes serves as a trustee for the Dana Farber Cancer Institute, a director for More Than Words and chairman of the board of trustees at the New England Conservatory and the Schepens Eye Research Institute. Mr. Burnes holds both an LL.B. and B.A. degree from Harvard University.

 

STATE STREET CORPORATION    13

Item 1 (continued)		2018 NOTICE OF MEETING AND PROXY STATEMENT

 

 

 

 

 

Career Highlights

 

•

Retired Managing Director and Advisory Director, Morgan Stanley, an NYSE-listed global financial services company (1974 to 2007); firm-wide head of the company’s risk management function (1995 to 2002)

 

•

Director, Edaris Health, Inc., a private healthcare information technology company (2007 to present) (2007 to 2016 as Forerun, prior to name change to Edaris Health, Inc.; 2016 to present as Edaris Health, Inc.); member of the Compensation Committee

 

•

Member of Supervisory Board, BH PHARMA, a private generic drug development company (2015 to present)

 

•

Former Director, Allied World Assurance Company Holdings AG, a former NYSE-listed specialty insurance and reinsurance company acquired by Fairfax Financial Holdings in 2017 (2008 to 2017); member of the Enterprise Risk Committee (Chairman), Compensation Committee, Audit Committee and Investment Committee

 

•

Former Director, Bank of China Limited, (2006 to 2008); member of the Audit Committee (Chairman), the Risk Policy Committee and the Personnel and Remuneration Committee

 

•

Former Director, Non-Executive Chairman, European Kyoto Fund (2008 to 2012)

Qualifications and Attributes

Mr. de Saint-Aignan’s extensive experience in risk management, corporate finance, capital markets and firm management brings to the Board a sophisticated understanding of risk, particularly with respect to the implementation of risk and monitoring programs within a global financial services organization. Mr. de Saint-Aignan’s service on the board of directors and committees of several other companies gives him additional perspective on global management and governance. A dual citizen of the United States and France, he was honored with Risk Magazine’s Lifetime Achievement Award in 2004. Mr. de Saint-Aignan holds his B.B.A. degree from the Ecole des Hautes Etudes Commerciales and an M.B.A. from Harvard University.

 

14    STATE STREET CORPORATION

Item 1 (continued)		2018 NOTICE OF MEETING AND PROXY STATEMENT

 

 

 

 

 

Career Highlights

 

•

Chief Executive Officer and Chairman, Engility Holdings, Inc., an NYSE-listed engineering and technology consulting company (2018 to present); Chief Executive Officer and Director (2016 to 2018); Director (2014 to 2018) (2014 to 2015 as TASC, prior to acquisition by Engility Holdings, Inc.; 2015 to 2018 as Engility Holdings, Inc.)

 

•

Former Corporate Vice President and President, Intelligence, Information and Services, Raytheon Company, an NYSE-listed defense contractor and electronics manufacturer (2004 to 2015); Vice President, Engineering, Technology and Quality, Network Centric Systems (2004 to 2009); Vice President, Support Engineering and Six Sigma (1997 to 1999)

 

•

Former Vice President, Product, Systems Software Division, ADC Telecommunications, Inc., a former Nasdaq-listed communications company acquired in 2010 by Tyco Electronics (2002 to 2004); General Manager, Cable Systems Division (1999 to 2002)

 

•

Former Vice President, Quality & Support Engineering, Texas Instruments, Inc., a Nasdaq-listed electronics manufacturer (1982 to 1997)

Qualifications and Attributes

As the Chief Executive Officer and Chairman of Engility Holdings, a leading provider of integrated solutions and services for the U.S. government, Department of Defense, federal civilian agencies and international customers, Ms. Dugle brings to the Board valuable experience in leading the development of large businesses with a focus on information, technology and security matters. Her understanding of information and technology matters provides the Board with perspective as State Street continues to transform and digitize products and services. Prior to her role at Engility, Ms. Dugle was the president of Intelligence, Information and Services at Raytheon where she was responsible for the company’s advanced cyber solutions, cyber security services and information-based solutions. She also served as vice president of engineering, technology and quality for the former Network Centric Systems business at Raytheon and was responsible for the strategic direction, leadership and operations of the engineering, technology and quality functions. Prior to Raytheon, Ms. Dugle held executive positions at ADC Telecommunication with responsibility for leading teams across Europe, Middle East and Africa and the Asia-Pacific region. She holds B.S. and B.B.A. degrees from Purdue University and an M.B.A. in international business from the University of Texas at Dallas.

 

STATE STREET CORPORATION    15

Item 1 (continued)		2018 NOTICE OF MEETING AND PROXY STATEMENT

 

 

 

 

Career Highlights

 

•

Deputy Chairman, Kinnevik AB, a long-term oriented investment company (2013 to present); Non-Executive Director (2011 to present); member of Remuneration Committee (Chair) and Governance, Risk and Compliance Committee (Chair)

 

•

Chairman, Standards Board for Alternative Investments (2011 to present) (2011 to 2017 as Hedge Fund Standards Board; 2017 to present as Standards Board for Alternative Investments) (U.K.), a global standard-setting body for the alternative investment industry

 

•

Non-Executive Director, HM Treasury, the British Government’s Economic & Finance Ministry (2012 to present)

 

•

Former Non-Executive Director, Millicom International Cellular S.A., an international telecommunications and media company (2014 to 2016); member of the Remuneration Committee (Chair) and Compliance and Business Practices Committee

 

•

Former Non-Executive Chairman, Guardian Media Group plc, a privately held diversified multimedia business in London (2009 to 2013); Non-Executive Director (2007 to 2013)

 

•

Former Vice Chairman and Chief Operating Officer of European Operations, Morgan Stanley, an NYSE-listed global financial services company (2002 to 2006) and Morgan Stanley International Limited, London (2006 to 2007); Vice President (1990 to 1992); Executive Director (1992 to 1996); Managing Director and Chief Administrative Officer for European Operations (1996 to 2002); Senior Adviser (2006 to 2007)

Qualifications and Attributes

Dame Amelia Fawcett, a dual American and British citizen, has many years of extensive and diverse financial services experience. At Morgan Stanley, she served in many roles including Vice Chairman and Chief Operating officer of Morgan Stanley International and had responsibility for development and implementation of the company’s business strategy (including business integration), as well as oversight of the company’s operational risk functions, infrastructure support and corporate affairs. Prior to joining Morgan Stanley, she was an attorney at the New York-based law firm of Sullivan & Cromwell, practicing primarily in the areas of corporate and banking law in both New York and Paris. Her service on both the Court of Directors of the Bank of England (the Board of the British Central Bank) and the British Treasury (the latter a position she still holds) provided her with valuable experience with the complex regulatory and compliance frameworks of the financial industry. Dame Amelia was awarded a CBE (Commander of the Order of the British Empire) and a DBE (Dame Commander of the Order of the British Empire) by the Queen, in both instances for services to the finance industry. In addition, in 2004, she received His Royal Highness The Prince of Wales’s Ambassador Award recognizing responsible business activities that have a positive impact on society and the environment. Dame Amelia’s public policy experience and experience in the European banking markets provide a valuable international financial markets perspective to State Street. She formerly has served, or currently serves, in the capacity as chairman of the American Friends of the National Portrait Gallery, deputy chairman of the National Portrait Gallery, chairman of The Prince of Wales’s Charitable Foundation, deputy chairman and governor of the London Business School (current), a commissioner of the U.S.-U.K. Fulbright Commission and a trustee of Project Hope (current). Dame Amelia received a B.A. degree from Wellesley College and a J.D. degree from the University of Virginia.

 

16    STATE STREET CORPORATION

Item 1 (continued)		2018 NOTICE OF MEETING AND PROXY STATEMENT

 

 

 

 

Career Highlights

 

•

Retired Senior Partner and Vice Chairman, Deloitte, LLP, a global professional services firm (2011 to 2014); Managing Partner of Client Initiatives (2007 to 2011); member of U.S. Executive Committee

 

•

Former Director, Deloitte Touche Tohmatsu Limited (2007 to 2013); member of Risk Committee (Chairman) (2011 to 2013) and Audit Committee (Chairman) (2008 to 2011)

 

•

Director, Guardian Life Insurance Company, a mutual life insurance company (2014 to present)

 

•

Chairman, Hamilton Insurance Group, a global insurance and reinsurance company (2014 to present) (Director 2014 to 2017; Chairman 2017 to present)

Qualifications and Attributes

As senior partner and vice chairman of Deloitte, LLP, Mr. Freda served Deloitte’s most significant clients and maintained key relationships, acting as a strategic liaison to the marketplace as well as to professional and community organizations. Mr. Freda joined Deloitte in 1974 and built a distinguished record of service during his 40-year career, having served on a wide range of multinational engagements for many of Deloitte’s largest and most strategic clients. Mr. Freda brings to the Board key insight and perspective on risk management, international expansion and client relationships gained through his extensive experience interacting with audit committees, boards of directors and senior management. He serves as a trustee of Bentley University. Previously, Mr. Freda has served as the chairman of Catholic Community Services, the United Way of Essex and West Hudson and the AICPA Insurance Companies Committee and was a U.S. Representative to the International Accounting Standards Committee’s Insurance Steering Committee. Mr. Freda received his B.S. in accounting from Bentley University.

 

STATE STREET CORPORATION    17

Item 1 (continued)		2018 NOTICE OF MEETING AND PROXY STATEMENT

 

 

 

 

Career Highlights

 

•

Wallace Brett Donham Professor of Business Administration, Harvard Business School (1984 to present); former Faculty Chair, Leadership Initiative, High Potentials Leadership Program and Organizational Behavior Unit

 

•

Director, Harvard Business Publishing

 

•

Former Director, Eaton Corporation, an NYSE-listed power management company providing energy-efficient solutions that manage electrical, hydraulic, and mechanical power (1994-2017) (1994 to 2012 as Cooper Industries, Inc., prior to merger with Eaton Corporation; 2012 to 2017 as Eaton Corporation); member of the Governance Committee and Compensation and Organization Committee

Qualifications and Attributes

Ms. Hill is the author of several books and articles focusing on the principles and qualifications for effective leadership and management. Through her research, consulting and academic perspectives, affiliation with Harvard Business School and experience as a public company director, Ms. Hill brings to the Board an effective understanding of market and competitive trends in executive talent development, leading innovation, corporate governance matters and implementation of global strategies. She is an active member in her community, serving as trustee to the Global Citizens Initiative and The Art Center College of Design, and is a special representative to the board of trustees of Bryn Mawr College. Ms. Hill is a former trustee of The Rockefeller Foundation and the Nelson Mandela Children’s Fund U.S.A. She received an A.B. degree in psychology from Bryn Mawr College, an M.A. in educational psychology from the University of Chicago and a Ph.D. in behavioral sciences from the University of Chicago and completed her post-doctoral research fellowship at the Harvard Business School.

 

18    STATE STREET CORPORATION

Item 1 (continued)		2018 NOTICE OF MEETING AND PROXY STATEMENT

 

 

 

 

Career Highlights

 

•

State Street Corporation, Chairman (2011 to present); Chief Executive Officer (2010 to present); President and Chief Operating Officer (2008 to 2014)

 

•

Former President and Chief Executive Officer, Boston Financial Data Services (1990 to 2000)

 

•

Former President and Chief Executive Officer, National Financial Data Services (1988 to 1990)

Qualifications and Attributes

Mr. Hooley joined State Street in 1986 and currently serves as Chairman and Chief Executive Officer. He served as President and Chief Operating Officer from April 2008 to December 2014. From 2002 to April 2008, Mr. Hooley served as Executive Vice President and head of Investor Services and, in 2006, was appointed Vice Chairman and Global Head of Investment Servicing and Investment Research and Trading. Mr. Hooley was elected to serve on the Board of Directors in October 2009, and he was appointed Chairman of the Board in January 2011. His leadership experience and core understanding of State Street’s full range of services brings to the Board a detailed, innovative and thorough perspective on State Street’s key operations, strategic initiatives and client relationships globally. Mr. Hooley serves as a member of the board of directors of the Federal Reserve Bank of Boston and a member of the Financial Services Forum in Washington D.C. He is a director on the board of Boys & Girls Clubs of Boston, the President’s Council of the Massachusetts General Hospital and the Massachusetts Competitive Partnership and is a trustee of the board of Boston College. He received his B.S. degree from Boston College.

 

STATE STREET CORPORATION    19

Item 1 (continued)		2018 NOTICE OF MEETING AND PROXY STATEMENT

 

 

 

 

Career Highlights

 

•

Retired Chairman and Chief Executive Officer, Dun & Bradstreet Corporation, an NYSE-listed international commercial data and analytics provider (2010 to 2013); President and Chief Operating Officer (2007 to 2009); Chief Financial Officer (2001 to 2007)

 

•

Director, Shire Plc, a NASDAQ-listed FTSE 25 biopharmaceutical company (2015 to present); member of Audit, Compliance and Risk Committee (Chair) and Nomination and Governance Committee

 

•

Director, Federal Home Loan Mortgage Company, a government-sponsored firm operating in the secondary residential mortgage market (2013 to present); member of Audit Committee (Chair), Executive Committee and Nominating and Governance Committee

 

•

Director, Campbell Soup Company, an NYSE-listed consumer food producer (2005 to present); member of Audit Committee (Chair) and Finance and Corporate Development Committee

 

•

Former Director, Avon Products, an NYSE-listed beauty, household and personal care products manufacturer (2014 to 2016)

 

•

Former Vice President of Finance, ASEAN, Australasia and India, Procter and Gamble Company, an NYSE-listed international manufacturer of consumer goods (2000 to 2001); Controller and Chief Financial Officer, Baby-Care and Paper Products (1998 to 2000); other various positions through her 18-year tenure

Qualifications and Attributes

In her prior role as chairman and chief executive officer of Dun and Bradstreet Corporation, Ms. Mathew led the company’s transformation from a data collection business into an innovative provider of data analytics and insights provider. Prior to her role as chairman and chief executive officer, she served as president and chief operating officer, overseeing the company’s consumer segments, and chief financial officer where she initiated and managed the redesign of the company’s accounting processes and controls. Before joining Dun and Bradstreet Corporation, Ms. Mathew held various positions at Procter and Gamble Company within finance, accounting, investor relations and brand management. Her deep background in finance, technology, corporate strategy and operations, combined with her experiences leading and overseeing a diverse assortment of international consumer-focused companies and transformational initiatives, allows Ms. Mathew to provide a unique, innovative and global perspective to State Street. Ms. Mathew received a B.S. degree in physics, mathematics and chemistry from the University of Madras, India and a M.B.A degree in finance and marketing from Xavier University.

 

20    STATE STREET CORPORATION

Item 1 (continued)		2018 NOTICE OF MEETING AND PROXY STATEMENT

 

 

 

 

Career Highlights

 

•

President, Chief Executive Officer and Director, Iron Mountain, Inc., an NYSE-listed information management and data backup and recovery company (2013 to present)

 

•

Director, Qantas Airways, an Australian Securities Exchange-listed airline (2012 to present); member of the Safety, Health, Environment and Security Committee and the Remuneration Committee

 

•

Former Chief Executive Officer, Zuellig Group, a privately owned long-term holding company based in Hong Kong (2004 to 2012)

Qualifications and Attributes

Mr. Meaney, a citizen of the United States, Switzerland and Ireland, has extensive domestic and international business experience across both established and emerging markets. As the president and chief executive officer of Iron Mountain, he has continued to lead the company as it evolves and expands its secure storage and digital transformation offerings. Before joining Iron Mountain, Mr. Meaney was the chief executive officer of Zuellig Group, where he was responsible for a diverse portfolio of Asia Pacific businesses that spanned a variety of heavily regulated and consumer based industries, including health care, agriculture, pharmaceuticals and materials handling. He has held several senior positions throughout the airline industry, including chief commercial officer of Swiss International Airlines and executive vice president of South African Airways, founded and managed his own consulting firm and served as an operations officer with the U.S. Central Intelligence Agency. Mr. Meaney provides State Street’s Board with an acute global viewpoint on corporate strategy and business expansion founded upon his background in leading and developing large U.S. and international companies. Mr. Meaney is a member of both the FM Global advisory board and President’s Council of Massachusetts General Hospital and is a trustee of Rensselaer Polytechnic Institute and a former trustee of Carnegie Mellon University. He holds a B.S. degree from Rensselaer Polytechnic Institute and an M.B.A. from Carnegie Mellon University.

 

STATE STREET CORPORATION    21

Item 1 (continued)		2018 NOTICE OF MEETING AND PROXY STATEMENT

 

 

 

 

Career Highlights

 

•

Retired Group Managing Director and Group Chief Operating Officer (2011 to 2014), HSBC Holdings, plc., an NYSE-listed banking and financial services organization; Executive Director and Chief Technology and Services Officer, HSBC Bank plc. (2007-2010); other various positions throughout his 34-year tenure.

Qualifications and Attributes

As the Group Managing Director and Group Chief Operating Officer of HSBC Holdings, plc., Mr. O’Sullivan led the bank’s global operations and information technology functions, with worldwide responsibilities for business transformation, organizational restructuring and operational effectiveness. Prior to assuming the role of Group Managing Director and Group Chief Operating Officer, Mr. O’Sullivan held various positions throughout HSBC in the U.S., Canada and Europe. His long tenure at HSBC provided him with valuable experience with the operational and technology challenges faced by a large, global financial institution as well as the management of overall company effectiveness and efficiency, including development of a global approach to expense management and operational risk management. Mr. O’Sullivan is a member of the Information Technology Advisory Committee at the University of British Columbia and a former trustee of the York University Foundation. He is a dual citizen of Canada and the U.K. and received a B.A. degree from the Ivey School of Business at Western University.

 

22    STATE STREET CORPORATION

Item 1 (continued)		2018 NOTICE OF MEETING AND PROXY STATEMENT

 

 

 

 

Career Highlights

 

•

Retired President and Chief Executive Officer, North American Electric Reliability Corporation, NERC, a self-regulatory organization for the bulk electricity system in North America (2005 to 2009)

 

•

Director, Emera, Inc., a Toronto Stock Exchange-listed energy and services company (2010 to present)

 

•

Former President and Chief Executive Officer, New England Electric System (and its successor company, National Grid USA), an NYSE-listed electric utility (1998 to 2004)

Qualifications and Attributes

Mr. Sergel’s responsibilities as chief executive officer of the North American Electric Reliability Corporation included imposing statutory responsibility and regulating the industry through adoption and enforcement of standards and practices. To do so, he led NERC to establish the first set of legally enforceable standards for the U.S. bulk power system. Prior to joining NERC, he spent 25 years with the New England Electric System, where he oversaw the merger with National Grid in 2000. His extensive practical and technical expertise in navigating the energy market through regulatory change and major transactions offers the Board important perspective on the evolving financial services industry and regulatory environment. Mr. Sergel served in the United States Air Force reserve from 1973 to 1979 and has served as a director of Jobs for Massachusetts and the Greater Boston Chamber of Commerce. He is a former trustee of the Merrimack Valley United Way and the Worcester Art Museum, prior chairman of the Consortium for Energy Efficiency and was a member of the Audit Committee for the Town of Wellesley, Massachusetts. Mr. Sergel received a B.S. degree from Florida State University, an M.S. from North Carolina State University and an M.B.A. from the University of Miami.

 

STATE STREET CORPORATION    23

Item 1 (continued)		2018 NOTICE OF MEETING AND PROXY STATEMENT

 

 

 

 

Career Highlights

 

•

Managing Partner and Founder, Glen Capital Partners, LLC, an alternative asset investment fund (2013 to present)

 

•

Former Managing Director and Vice Chairman of Global Buyout, Carlyle Group, a Nasdaq-listed global asset manager (2009 to 2014)

 

•

Former Chairman, Chief Executive Officer and President, PerkinElmer Corp, an NYSE-listed developer and producer of life science equipment and services (1998-2009)

 

•

Director, NXP Semiconductors, a Nasdaq-listed semiconductor manufacturer (2010 to present) (Director, 2010 to 2015 and Chairman, 2013 to 2015 as Freescale Semiconductor, Inc., prior to its acquisition by NXP Semiconductors in 2015; 2015 to present as NXP Semiconductors)

 

•

Former Director, LMI Aerospace, a Nasdaq-listed designer and provider of aerospace structures (2014 to 2017)

 

•

Former Director, Automatic Data Processing, Inc., a Nasdaq-listed provider of business outsourcing solutions (2007 to 2014)

Qualifications and Attributes

Mr. Summe has extensive management experience leading large and complex corporate organizations in evolving environments. While vice chairman of Carlyle Group, he was responsible for buyout funds in financial services, infrastructure, Japan, the Middle East and African markets and served on the firm’s operating and investment committees. His experience in private equity has afforded him a deepened exposure to understanding varied business models, practices, strategies and environments and assessing value in varied international regions. During his tenure as chairman and chief executive officer at PerkinElmer, Mr. Summe led the company’s transformation from a diversified defense contractor to a technology leader in health sciences. Prior to joining PerkinElmer, Mr. Summe held leadership positions at AlliedSignal (now Honeywell), General Electric and McKinsey & Co. Mr. Summe holds B.S. and M.S. degrees in electrical engineering from the University of Kentucky and the University of Cincinnati, and an M.B.A. with distinction from the Wharton School of the University of Pennsylvania. He is also in the Engineering Hall of Distinction at the University of Kentucky.

 

24    STATE STREET CORPORATION

2018 NOTICE OF MEETING AND PROXY STATEMENT

 

EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

 

In this compensation discussion and analysis, or CD&A, we describe our approach to executive compensation, including philosophy, design, process and risk alignment. We also describe 2017 compensation decisions for the following named executive officers, who we refer to as our NEOs.

 

•

Joseph L. Hooley — Chairman and Chief Executive Officer

 

•

Eric W. Aboaf — Executive Vice President and Chief Financial Officer

 

•

Ronald P. O’Hanley — President and Chief Operating Officer

 

•

Andrew Erickson — Executive Vice President and Head of State Street Global Services

 

•

Cyrus Taraporevala — President and Chief Executive Officer of State Street Global Advisors (SSGA)

 

•

Michael W. Bell — Former Executive Vice President and Chief Financial Officer

In this CD&A, references to the Compensation Committee, or to the Committee, are references to the Executive Compensation Committee of our Board of Directors.

CD&A Table of Contents

 

		Page
Executive Summary			25
Shareholder Outreach and “Say-on-Pay”			30
Compensation Committee Process Concerning Risk Alignment			30
Compensation Philosophy			31
Compensation Design Elements			32
2017 Compensation Decisions			33
Other Elements of Our Process			43
Other Elements of Compensation			45
Executive Equity Ownership Guidelines, Practices and Policies			47
Tax Deductibility of Executive Compensation			48

 

 

STATE STREET CORPORATION    25

Executive Compensation (continued)		2018 NOTICE OF MEETING AND PROXY STATEMENT

 

 

 

 

 

26    STATE STREET CORPORATION

Executive Compensation (continued)		2018 NOTICE OF MEETING AND PROXY STATEMENT

 

 

 

 

 

STATE STREET CORPORATION    27

Executive Compensation (continued)		2018 NOTICE OF MEETING AND PROXY STATEMENT

 

 

 

 

 

28    STATE STREET CORPORATION

Executive Compensation (continued)		2018 NOTICE OF MEETING AND PROXY STATEMENT

 

 

 

 

 

STATE STREET CORPORATION    29

Executive Compensation (continued)		2018 NOTICE OF MEETING AND PROXY STATEMENT

 

 

 

 

Shareholder Outreach and “Say-on-Pay”

In reviewing compensation design and governance practices, the Compensation Committee considers market practice and regulatory guidance, as well as other factors, including shareholder feedback. The Committee receives feedback from our shareholders through two primary channels:

 

•

Shareholder Outreach. We engage our largest shareholders to understand their specific perspectives on our compensation and governance programs. For 2017, we held discussions with shareholders representing more than 30% of our outstanding common stock

 

•

“Say-on-Pay.” At our annual shareholder meeting, we ask our shareholders to approve a non-binding advisory proposal on executive compensation. At our 2017 annual meeting, our shareholders approved that proposal with over 96% of the votes cast

Based on the results of our “say-on-pay” vote and shareholder outreach, the Committee believes that our shareholders support our overall executive compensation program. For the 2017 compensation year, we therefore continued many of the elements of our existing compensation program, such as maintaining a high level of equity and deferral for incentive compensation awards to our NEOs, as well as emphasizing pay for performance and alignment with shareholder interests.

Compensation Committee Process Concerning Risk Alignment

For 2017, we continued our focus on aligning incentive compensation with appropriate risk management principles. We provide incentives designed not to encourage unnecessary or excessive risk-taking and have established additional process controls and oversight. These features include:

 

•

Compensation Committee Interaction and Overlap with Risk Committee. The Compensation Committee regularly communicates with the Risk Committee of our Board of Directors to integrate the Risk Committee’s input into compensation decisions. The Chair of the Risk Committee also serves on the Compensation Committee

 

30    STATE STREET CORPORATION

Executive Compensation (continued)		2018 NOTICE OF MEETING AND PROXY STATEMENT

 

 

 

 

•

Corporate Risk Summary Review. The Compensation Committee periodically reviews a corporate risk summary, prepared by the Chief Risk Officer, evaluating firm-wide risk in several categories

 

•

Annual Compensation Risk Review. The Compensation Committee annually reviews a presentation by the Chief Risk Officer and the Chief Human Resources Officer evaluating our compensation programs and covering:

 

—

the alignment of State Street’s compensation plans with its safety and soundness

 

—

the activities of a multi-disciplinary control function committee created by management to formally review and assess incentive compensation arrangements throughout the organization

 

—

the identification of executives and other individuals whose roles or activities may expose State Street to material amounts of risk (referred to as “material risk-takers”)

 

—

the mechanisms in place for monitoring risk performance and, where appropriate, implementing risk-based adjustments to incentive compensation

 

•

Risk-Based Adjustments to Incentive Compensation. We use a two-pronged process for risk-based adjustments to incentive compensation awards for material risk-takers. This process involves, as appropriate, both: (1) adjustments at the time awards are made (so-called “ex ante” adjustments) and (2) adjustments after the awards are made (so-called “ex post” adjustments) through possible recoupment of incentive compensation that has already been awarded via forfeiture (before vesting and delivery) or clawback (after vesting and delivery). For more information, see the discussion under “Other Elements of Compensation—Recourse Mechanisms” below

 

•

Emphasis on Deferral and Equity-Based Compensation. We maintain significant levels of deferred compensation and equity-based compensation for our executives. Combined, these elements align an executive’s compensation with the risks and performance results experienced by our shareholders. The high level of deferral places a significant amount of compensation at risk for possible forfeiture or other downward adjustments in specified circumstances

For a further discussion of the risk alignment of our compensation practices, see below under the heading “Alignment of Incentive Compensation and Risk.”

Compensation Philosophy

State Street’s compensation program for NEOs and other executive officers aims to:

 

•

attract, retain and motivate superior executives

 

•

reward those executives for meeting or exceeding annual and long-term financial and strategic objectives

 

•

drive long-term shareholder value and financial stability

 

•

provide equal pay for work of equal value

 

•

achieve the preceding goals in a manner aligned with sound risk management and our corporate values

 

STATE STREET CORPORATION    31

Executive Compensation (continued)		2018 NOTICE OF MEETING AND PROXY STATEMENT

 

 

 

 

Compensation Design Elements

Elements of Compensation. Key elements of our total compensation program for our NEOs for 2017 are described below.

 

Element		Description		Considerations and Rationale		Clawback,   Forfeiture   and   Ex Ante   Mechanisms(1)
Salary
Base Salary		•   Fixed annual cash amount •   Paid periodically throughout the year		•   Compensates employees throughout the year for day-to-day responsibilities		—
Annual Incentive Compensation
Cash Incentive   (non-deferred)		•   Variable cash amount •   Paid as part of annual incentive compensation		•   Provides a limited, immediately paid incentive opportunity based on annual performance		✓
Deferred Value   Awards (DVAs)(2)		•   DVAs are units representing a notional invest ment in a money market fund •   Upon vesting, notional units are paid in cash •   Vest ratably in 16 quarterly installments begin ning in May 2018 •   Number of actual units awarded is increased to provide an estimated annual return of approximately 3% over the deferral period		•   Subject to time vesting requirements •   Retains benefits of deferral for a portion of cash-based incentive compensation •   Cash-based DVAs mitigate the dilutive effects of deferred equity compensation		✓
Long-Term Incentive Compensation
Performance -   Based   Restricted Stock   Units (RSUs)		•   Equity-based compensation •   The number of RSUs ultimately earned for awards based on 2017 performance are based on State Street’s average annual GAAP ROE performance over the three-year performance period 2018-2020, subject to adjustment for pre-established, objectively determinable factors(3) •   GAAP ROE performance target is 13%; RSUs are earned under the following schedule:     •   RSUs ultimately earned “cliff” vest in one installment in February 2021		•   Subject to performance-based vesting to align with long-term performance •   ROE is an important financial performance metric that is monitored closely in our industry •   NEW for 2017 ROE threshold for receiving any of the shares awarded increased from 5% to 8%, with threshold payout rate increasing from 40% to 50% •   NEW for 2017 ROE performance target increased from 11% to 13% •   NEW for 2017 ROE performance required for maximum payout increased to 18% (from 15%). Each award has a maximum payout of 150% (increased from 140%) of the initial number of RSUs awarded which, combined with other design features, results in a risk-balanced incentive for performance above the target •   Equity-based compensation directly reflects the rewards and risks shared by our NEOs and our shareholders		✓
Deferred Stock   Awards (DSAs)		•   Equity-based compensation •   Vest ratably in four annual installments beginning in February 2019		•   Subject to time vesting requirements •   Equity-based compensation directly reflects the rewards and risks shared by our NEOs and our shareholders		✓

 

(1)	For more information, see the discussion under “Other Elements of Compensation—Recourse Mechanisms” below.

(2)

For 2017, Mr. Taraporevala participated in an arrangement referred to as the SSGA Long Term Incentive Plan (SSGA LTIP) based on his role prior to his appointment as President and Chief Executive Officer of SSGA in November 2017. Granting of awards, vesting and payment terms under the SSGA LTIP mirror the terms of the DVAs granted

 

32    STATE STREET CORPORATION

Executive Compensation (continued)		2018 NOTICE OF MEETING AND PROXY STATEMENT

 

 

 

 

to our other current NEOs. The one material difference is that participants choose among three notional investment options under the SSGA LTIP, including a money market option, which Mr. Taraporevala selected. The money market notional investment is increased to approximate a total annual return target of 3% over the deferral period in the same manner as under the DVA terms.

(3)

Early in each compensation year, the Compensation Committee identifies specific types of objectively determinable factors that could affect performance measures during the year and which will be excluded from the performance measure calculation. Factors that result in an adjustment to the calculation of performance measures include: acquisitions, dispositions and similar transactions and related securities issuances and expenses; changes in accounting principles, tax or banking law or regulations; litigation or regulatory settlements arising from events that occurred prior to the performance period; and restructuring charges and expenses. However, the Committee retains the power to exercise negative discretion, as it deems appropriate, to reduce the actual payouts under performance awards as a result of any of these factors.

Restrictive Covenants. Each of our deferred incentive compensation awards includes restrictive covenants applicable to our NEOs. Beginning with awards granted for 2015 performance, we added provisions concerning non-competition to the non-solicitation, confidentiality and non-disparagement provisions included historically in these awards.

2017 Compensation Decisions

Total Compensation Approach

The Compensation Committee evaluates individual compensation for our NEOs and other executive officers by looking at total compensation, consisting of base salary and incentive compensation.

Base Salary. Base salary is a fixed annual cash amount and is a relatively small portion of total compensation for the NEOs. 2017 annual base salary rates for the NEOs, other than Mr. Erickson, remained unchanged from their levels in 2016. Effective April 1, 2017, Mr. Erickson received an increase of $46,727 to his 2016 salary in recognition of his June 2016 appointment as Head of Investment Servicing, Americas and relative internal and external salary levels. Mr. Erickson was appointed to his current role, Head of State Street Global Services, effective in November 2017, but received no further increase to his salary at that time. Mr. Erickson’s base salary is paid in Hong Kong Dollars (HK$) rather than U.S. Dollars (US$). Base salary displayed in this CD&A for Mr. Erickson is converted from HK$ to US$ using the December 29, 2017 exchange rate of 1 HK$ to 0.127948 US$.

Incentive Compensation. Incentive compensation is a variable amount, comprising both equity-based elements, awarded as a long-term incentive, and cash-based elements, awarded as an annual incentive both in immediate and deferred cash. The Committee believes a significant amount of incentive compensation should take the form of both deferred awards and equity awards. Therefore, to emphasize long-term performance, a high percentage of each NEO’s total incentive compensation is delivered as an equity-based long-term incentive and a portion of the annual incentive is deferred.

By paying a significant portion of our NEOs’ compensation in equity and by requiring vesting of that component over multiple years, the Committee creates an incentive structure where both the rewards and risks of share ownership are shared by our executives and shareholders.

Individual Compensation Targets. For 2017, the Compensation Committee established compensation targets for each current NEO’s annual and long-term incentive. These targets were based upon an assessment of the executive’s role and responsibilities at State Street and relevant competitive and market factors, as well as internal equity.

 

•

Annual Incentive. The annual incentive is composed of non-deferred cash and DVAs (and SSGA LTIP awards in lieu of DVAs for Mr. Taraporevala), and is designed to reflect the executive’s performance for the year, including on a strategic, financial and risk management basis. Therefore, the actual annual incentive can vary from target year to year based on State Street’s and the executive’s performance. The final annual incentive award can range between 0% and 200% of target to reflect performance. 2017 annual incentive awards (granted in February 2018) for our current NEOs ranged from 125% to 158% of target.

 

•

Long-Term Incentive. The long-term incentive is composed of performance-based RSUs and DSAs and is designed to reflect State Street’s long-term performance trend, as well as the core responsibilities associated with the executive’s role over time. Therefore, the actual long-term incentive awarded is expected to be consistent from year to year, absent a change in (1) State Street’s long-term performance trend, (2) the executive’s responsibilities or (3) market compensation practices. Absent any of these changes, the long-term incentive may still vary within a range of 80% to 120% of the target based on an assessment of actions or behaviors that affect the NEOs’ long-term value to State Street. These behaviors may include prioritizing cross-organization initiatives in support of State Street’s business strategy, serving as an ethical role model, enhancing a culture of compliance and prudent risk-taking and ensuring that management practices, such as diversity and inclusion and employee engagement initiatives, are in place to deliver the required talent pipeline, as well as other considerations deemed appropriate by the Committee. The Committee emphasizes different behaviors from year to year in making long-term incentive decisions

 

STATE STREET CORPORATION    33

Executive Compensation (continued)		2018 NOTICE OF MEETING AND PROXY STATEMENT

 

 

 

 

relative to each NEO’s target. For 2017, the Committee emphasized factors such as diversity and inclusion, talent development and employee engagement. 2017 long-term incentive awards (granted in February 2018) for our current NEOs ranged from 95% to 100% of target.

NEW for 2017 In determining NEO long-term incentive grants for 2017 performance, the Compensation Committee formalized its assessment of actions and behaviors (as described above) to include factors such as diversity and inclusion, talent development and employee engagement.

The Committee establishes annual and long-term incentive compensation targets for NEOs as well as members of State Street’s Management Committee at the beginning of each year. The 2017 annual and long-term incentive compensation targets established for each of our NEOs, other than Mr. Bell, are listed in the following chart:

 

Name(1)		Base Salary Rate				Target Incentive Compensation(2)												Target Total Compensation
						Annual				Long-Term				Total
Joseph L. Hooley		$	1,000,000			$	3,000,000			$	10,000,000			$	13,000,000			$	14,000,000
Eric W. Aboaf(3)			700,000				1,700,000				3,100,000				4,800,000				5,500,000
Ronald P. O’Hanley			800,000				2,900,000				5,300,000				8,200,000				9,000,000
Andrew Erickson(3)			446,539				1,050,000				2,000,000				3,050,000				3,496,539
Cyrus Taraporevala(3)(4)			400,000				1,600,000				1,600,000				3,200,000				3,600,000

 

(1)	Mr. Bell ceased serving as our Chief Financial Officer in March 2017 as part of a planned transition. The Committee therefore did not establish incentive compensation targets for his 2017 performance.

(2)	The Committee retains the ability to deviate from the annual and long-term incentive targets (higher or lower), their designed purposes or the form of compensation delivered as it deems appropriate based on performance or other factors or circumstances.

(3)

The award granted to Mr. Aboaf in connection with his hiring and the promotion awards granted to Messrs. Aboaf, Erickson and Taraporevala described under “2017 Compensation Decisions—Individual Compensation Decisions” were not considered in setting annual and long-term incentive targets and are therefore excluded from this table.

(4)

Mr. Taraporevala was not a member of State Street’s Management Committee when 2017 incentive compensation targets were set by the Compensation Committee. His targets were set by Messrs. O’Hanley and Hooley in March 2017, based upon considerations consistent with those used by the Compensation Committee in setting targets for each member of the Management Committee.

 

34    STATE STREET CORPORATION

Executive Compensation (continued)		2018 NOTICE OF MEETING AND PROXY STATEMENT

 

 

 

 

Compensation Assessment Framework

For each NEO, the Compensation Committee determines the appropriate level of total compensation for the year. This determination is based on a subjective evaluation of many factors, including corporate performance, individual performance and market, regulatory and shareholder considerations. In evaluating these factors and making 2017 compensation decisions for the current NEOs, the Committee used the following framework:

 

Performance assessed under this framework drives incentive compensation determinations relative to each NEO’s targets, particularly for the annual incentive. The Committee balances corporate and individual results to reach final total compensation decisions. In doing so, the Committee may consider additional factors or give greater or less weight to specific notable factors.

Corporate Performance

 

Framework Evaluation. As referenced above, the corporate performance framework uses a structured evaluation of three discrete and multi-factor scorecards, which contain both quantitative and qualitative metrics and cover:

 

•

financial performance

 

•

performance against strategic objectives

 

•

risk management performance, including the risk management performance of significant individual business lines and functions

The Compensation Committee received financial, strategic objectives and risk management performance scorecard updates in July and December 2017. The Compensation Committee also received an additional interim financial performance scorecard update in September 2017, as well as the final 2017 financial, strategic objectives and risk management scorecards in early 2018. The Committee’s overall evaluation of corporate performance, balancing positive and negative performance outcomes in each of these scorecards, is a primary driver of incentive compensation decisions for our NEOs.

In 2017, we achieved strong financial results while advancing our digital strategy, developing new solutions to support our clients, positioning State Street for continued growth and demonstrating our ongoing commitment to risk excellence. Our results reflect strength across our asset servicing and asset management businesses, increased client demand for our products and services and disciplined expense control. Strong global equity markets and rising interest rates also created a favorable environment for revenue growth.

 

STATE STREET CORPORATION    35

Executive Compensation (continued)		2018 NOTICE OF MEETING AND PROXY STATEMENT

 

A brief description of each of the three performance scorecards follows:

 

Performance Scorecard		Key Areas Reviewed		2017 Performance Highlights				2017 Committee Evaluation
Financial Performance		•   Revenue •   EPS •   ROE •   TSR		•  Overall revenue as well as total fee revenue and net interest revenue increased from 2016 on both a GAAP and operating (non-GAAP) basis(1); EPS and ROE also increased from 2016 on both a GAAP and operating basis •  Selected 2017 GAAP-basis performance metrics, compared to the median of our 12-firm compensation peer group.(2) Results as follows:				Above Expectations
				2017 Performance Metric		12-Firm Compensation Peer Group(2)
				Revenue growth		Top quartile
				EPS growth		Above median
				ROE		Above median
				TSR (1-Year)		Top quartile
Strategic Objectives   Performance		•   Strengthen our foundation •   Deliver highly valued services and solutions to our clients •   Engage our people •   Drive our strategy		•   Grew our asset servicing and asset management businesses, including increasing year-end AUCA by 15% to $33.12 trillion and AUM by 13% to $2.78 trillion, each compared to year-end 2016 •   Made major strides in the implementation of State Street Beacon, our multi-year strategy to digitize our business, deliver significant value and innovation for our clients and lower expenses across the organization, including •    delivered industry-leading improvements in speed of service and transparency for our clients •    Achieved ~$150 million of net pre-tax program savings target for 2017, ~$10 million more than projected, supported by strong global equity markets •   Developed new solutions to meet our clients’ needs, including launching •    a suite of 15 ultra-low-cost SPDR® Portfolio ETFs that provide investors access to a wide range of equity and fixed income asset classes •    ESGXSM, an analytics tool designed to identify and highlight potential sources of environmental, social and governance risk that may be overlooked by traditional financial analysis •   Continued to advance risk excellence as a top organizational priority, making considerable progress in strengthening our controls and operating environment and reinforcing a strong culture				Above Expectations
Risk Management   Performance		•   Financial risk •   Non-financial risk •   Business unit risks •   Capital/stress testing •   Regulatory posture		•   Performance across top risk exposures was in line with the firm’s risk tolerance •   Continued achievement against expectations for the firm’s risk excellence initiatives aimed at strengthening the risk and control framework •   Completed the Federal Reserve’s 2017 CCAR process without the Federal Reserve objecting to our 2017 capital plan •   The Federal Reserve and FDIC reported that they did not identify any shortcomings or deficiencies in State Street’s 2017 Resolution Plan				At Expectations
Overall Performance		•   Financial performance •   Strategic objectives performance •   Risk management performance		•   Reflects an overall assessment of all three summaries of corporate performance				Above Expectations

 

(1)	See “Other Elements of our Process—Non-GAAP Information” below for an explanation of our operating (non-GAAP) basis financial presentation.

(2)	Our 12-firm compensation peer group is described below under the heading, “Other Elements of Our Process—Peer Group and Benchmarking.”

 

36    STATE STREET CORPORATION

Executive Compensation (continued)		2018 NOTICE OF MEETING AND PROXY STATEMENT

 

 

 

 

Individual Compensation Decisions

 

 

In addition to State Street’s overall performance described above, the Committee also considered each NEO’s individual performance in determining the current NEO’s total compensation. Accordingly, the Committee reviewed performance scorecards derived from our corporate performance goals and tailored to each current NEO in the following areas: strategic, financial, risk management, and leadership and talent. Performance highlights and 2017 total compensation decisions are described in the table below.⁽¹⁾

 

Joseph L. Hooley
2017 Performance Highlights
Strategic		Financial		Risk Excellence		Leadership & Talent
•  Advanced our multi-year Digital Strategy   —  Launched the next phase of our technology transformation initiative —  Achieved operating efficiencies through automation, process redesign and global workforce strategy —  Delivered improved speed of service and transparency to clients   •  Strengthened the core business   —  Restructured service delivery and operations organizations to better meet clients’ strategic needs —  Won key outsourcing mandates and increased year-end AUCA 15% from 2016 year-end to $33.12 trillion, supported by strong global equity markets   •  Invested in differentiated capabilities and growth   —  Added new data and analytics capabilities to support our clients’ risk and portfolio management needs —  Delivered innovative new ETFs and increased year-end AUM 13% from 2016 year-end to $2.78 trillion, supported by strong global equity markets		•  Delivered 1-Year TSR of 27.83% to investors   —  Returned ~$2 billion to shareholders through dividends and share repurchases   •  Exceeded financial targets(2)   —  Increased EPS on both a GAAP and operating (non-GAAP) basis —  Grew revenue on both a GAAP and operating basis —  Increased ROE on both a GAAP and operating basis —  Maintained a strong capital position, improving Common Equity Tier 1 Risk-Based Capital and Tier 1 Risk-Based Capital ratios   •  Accelerated Beacon savings   —  Achieved ~$150 million in 2017 net pre-tax savings		•  Strengthened risk excellence with improvements in controls, culture and governance   —  Strengthened business controls and put programs in place to methodically address risk management priorities —  Executed an enterprise-wide management training program to elevate professional challenge —  Redesigned our conduct standards framework and governance   •  Maintained focus on meeting regulatory expectations   —  Completed the Federal Reserve’s 2017 CCAR process without the Federal Reserve objecting to our 2017 capital plan —  The Federal Reserve and FDIC reported that they did not identify any shortcomings or deficiencies in our 2017 Resolution Plan		•  Strengthened our workforce and leadership team   —  Increased diversity, internal mobility, and professional development across the workforce —  Executed on leadership succession plan —  Expanded the Management Committee to enrich perspective and diversity   •  Transformed talent management   —  Redesigned our employee performance management processes —  Implemented new Human Capital Management platform as a basis for introducing new talent management capabilities

2017 Compensation
•  Mr. Hooley was awarded total compensation of $15,750,000 for 2017, up from $13,500,000 in 2016, which includes annual incentives at 158% of target and long-term incentives at 100% of target. Overall incentive compensation was awarded at 113% of target

 

(1)	Mr. Bell ceased serving as our Chief Financial Officer in March 2017 and did not receive incentive compensation for 2017 performance.

(2)	Compared to year-end 2016, as appropriate. See “Other Elements of our Process—Non-GAAP Information” below for an explanation of our operating (non-GAAP) basis financial presentation.

 

STATE STREET CORPORATION    37

Executive Compensation (continued)		2018 NOTICE OF MEETING AND PROXY STATEMENT

 

 

 

 

Eric W. Aboaf
2017 Performance Highlights
As Chief Financial Officer, Mr. Aboaf drove strong corporate financial results and a more effective Finance function.   •  Delivered 1-Year TSR of 27.83%, including returning ~$2 billion to shareholders through common stock purchases and dividends   •  Exceeded corporate financial targets, increasing revenue, EPS and ROE on both a GAAP and operating (non-GAAP)(1) basis from year-end 2016, while maintaining a strong capital position   •  Actively intervened to maintain expense discipline, including achieving ~$150 million in 2017 net pre-tax savings through the Beacon initiative   •  Implemented effective liability pricing actions to improve net interest margin (NIM)   •  Delivered on regulatory commitments   •  Supported culture of risk excellence with particular focus on regulatory risk management   •  Realigned Finance’s global operating model to drive efficiency and effectiveness   •  Effectively progressed talent development, employee engagement and diversity initiatives in the Finance function
2017 Compensation
•  Mr. Aboaf was hired in December 2016 to succeed Mr. Bell as Chief Financial Officer and was appointed to the role on February 28, 2017   •  The Committee granted an award to Mr. Aboaf in connection with his hiring, awarded in the first quarter of 2017 and designed to compensate for the loss of 2016 incentive compensation from Mr. Aboaf’s prior employer. This award was granted in a combination of non-deferred cash, DSAs and performance-based RSUs, on the same terms and vesting in the same manner as 2016 incentive compensation awards made to our other NEOs in February 2017. The award was granted as follows:   •  $892,500 in non-deferred cash; •  $663,000 in DSAs; and •  $994,500 in performance-based RSUs   •  The Committee also granted a promotion award valued at $2,000,000 to Mr. Aboaf in February 2018 in recognition of the additional responsibilities he assumed, in support of the implementation of our leadership transition announced in November 2017. This award was granted entirely in the form of performance-based RSUs, which vest in the same manner as 2017 incentive compensation awards made to our other current NEOs in February 2018   •  Mr. Aboaf was awarded total compensation of $6,367,000 for 2017, excluding the award made in connection with his hiring and the promotion award noted above. This total includes annual incentives at 151% of target and long-term incentives at 100% of target. Overall incentive compensation was awarded at 118% of target   •  Note on 2018 Compensation – In connection with the expansion of Mr. Aboaf’s role to include responsibility for our Global Strategy function noted above, the Committee increased his target total compensation for 2018 from $5,500,000 to $6,500,000

 

(1)	See “Other Elements of our Process—Non-GAAP Information” below for an explanation of our operating (non-GAAP) basis financial presentation.

 

38    STATE STREET CORPORATION

Executive Compensation (continued)		2018 NOTICE OF MEETING AND PROXY STATEMENT

 

 

 

 

Ronald P. O’Hanley
2017 Performance Highlights   As Chief Executive Officer of SSGA, Mr. O’Hanley delivered strong financial results, innovative new products and improved marketing   •  Improved revenue and margin through focused investments and expense discipline   •  Expanded ETF business with the launch of low cost ETFs and innovative new products   •  Raised market profile with Fearless Girl and SSGA’s leadership in strong corporate governance   •  Achieved accretion and full integration of the 2016 GE Asset Management acquisition ahead of plan   •  Launched Office of the CIO business, securing key client wins in 2017   •  Executed leadership succession plan with the appointment of Mr. Taraporevala to President and Chief Executive Officer of SSGA in November 2017   •  Supported culture of risk excellence, delivering results with appropriate focus on risks and controls, in particular regarding development of State Street’s 2017 resolution plan   •  Executed on key talent development and employee engagement initiatives, with continued focus needed to enhance the diversity of our workforce in SSGA
2017 Compensation
•  Mr. O’Hanley was awarded total compensation of $9,779,000 for 2017, up from $8,670,000 in 2016, which includes annual incentives at 136% of target and long-term incentives at 95% of target. Overall incentive compensation was awarded at 110% of target   •  Note on 2018 Compensation – In connection with Mr. O’Hanley’s promotion described above under “Executive Summary—2017 Leadership Succession,” the Committee increased his target total compensation for 2018 from $9,000,000 to $10,500,000

 

STATE STREET CORPORATION    39

Executive Compensation (continued)		2018 NOTICE OF MEETING AND PROXY STATEMENT

 

 

 

 

Andrew Erickson
2017 Performance Highlights   As Head of Investor Services Americas, Mr. Erickson attracted significant new business, improved quality of service for existing clients and prudently managed expenses   •  Achieved transformational sales wins, while leading his peers in efficiency improvements   •  Developed enhanced reporting to improve service levels and relationship coverage for State Street’s clients and optimize internal processes   •  Strengthened control environment within function with an active focus on risk excellence   •  Continued to improve employee engagement, reducing unplanned turnover and increasing internal mobility while championing professional challenge initiatives. However, additional focus needed to further enhance the diversity of our workforce in Investor Services Americas
2017 Compensation
•  Mr. Erickson was appointed Head of State Street Global Services effective in November 2017. Prior to his appointment, he served as Executive Vice President and Head of Investment Servicing, Americas   •  The Committee also granted a promotion award valued at $4,000,000 to Mr. Erickson in November 2017 in recognition of his promotion and role in the implementation of our leadership transition announced in November 2017. This award, granted entirely in the form of performance-based RSUs, was originally granted with a GAAP ROE performance target of 12%, an increase from 11% for 2016 and 2015 awards reflecting evolving market conditions and increased visibility into the effects of new regulatory standards. However, in February 2018 Mr. Erickson agreed to modify the award to increase the ROE target to 13% to reflect the expected effects of the U.S. tax legislation enacted in December 2017 and to align with the terms of the 2017 awards made to our other current NEOs in February 2018   •  Mr. Erickson was awarded total compensation of $3,937,539 for 2017, excluding the promotion award noted above, which includes annual incentives at 142% of target and long-term incentives at 100% of target. Overall incentive compensation was awarded at 114% of target   •  Note on 2018 Compensation – In connection with Mr. Erickson’s promotion to Head of State Street Global Services noted above, the Committee increased his target total compensation for 2018 from approximately $3,500,000 to $5,000,000, which includes an approved base salary increase, effective in April 2018, from $446,539 to $500,000(1)

 

(1)	The Committee set Mr. Erickson’s 2018 target total compensation and base salary increase in HK$ at 39,060,000 HK$ and 3,910,000 HK$, respectively. US$ values quoted are approximate and based on the December 29, 2017 exchange rate of 1 HK$ to 0.127948 US$.

 

40    STATE STREET CORPORATION

Executive Compensation (continued)		2018 NOTICE OF MEETING AND PROXY STATEMENT

 

 

 

 

Cyrus Taraporevala
2017 Performance Highlights   As Head of the Global Institutional Group at SSGA, oversaw a remodeling of Institutional distribution, successful price competitiveness and product innovation efforts and improved marketing for our SSGA and SPDR® brands   •  Defined a more effective Institutional distribution strategy and operating model   •  Improved revenue and achieved accretion for the 2016 GE Asset Management acquisition ahead of plan   •  Successfully launched expanded investment capabilities, while rationalizing and repricing existing product ranges   •  With Mr. O’Hanley, improved our market profile with Fearless Girl and SSGA’s leadership in strong corporate governance   •  Executed talent plan, including widespread skills upgrades within the global institutional group organization   •  Maintained critical focus on risk management activities through close partnerships with Compliance and Audit functions
2017 Compensation
•  Mr. Taraporevala was appointed President and CEO of SSGA effective November 2017. Prior to his appointment, he served as Executive Vice President and Head of the Global Institutional Group at SSGA. As a result, his 2017 compensation reflects the compensation program applicable to SSGA Executive Vice Presidents. This program was substantially similar to the compensation program for the other current NEOs, except for the following:   •  He received a lower percentage of his long-term incentive in performance-based RSUs (20% instead of 60%), with the remainder of his long-term incentive composed of DSAs;   •  He received deferred cash-based incentive compensation in the form of SSGA LTIP awards, discussed under “Compensation Design Elements,” above, rather than DVAs   •  The Committee also granted a promotion award valued at $4,000,000 to Mr. Taraporevala in November 2017 in recognition of his promotion and role in the implementation of our leadership transition announced in November 2017. This award, granted entirely in the form of performance-based RSUs, was originally granted with a GAAP ROE performance target of 12%, an increase from 11% for 2016 and 2015 awards reflecting evolving market conditions and increased visibility into the effects of new regulatory standards. However, in February 2018 Mr. Taraporevala agreed to modify the award to increase the ROE target to 13% to reflect the expected effects of the U.S. tax legislation enacted in December 2017 and to align with the terms of the 2017 awards made to our other current NEOs in February 2018   •  Mr. Taraporevala was awarded total compensation of $4,000,000 for 2017, excluding the promotion award noted above, which includes annual incentives at 125% of target and long-term incentives at 100% of target. Overall incentive compensation was awarded at 113% of target   •  Note on 2018 Compensation – In connection with Mr. Taraporevala’s promotion to President and CEO of SSGA noted above, the Committee increased his target total compensation for 2018 from $3,600,000 to $5,000,000, which includes an approved base salary increase, effective in April 2018, from $400,000 to $450,000

 

STATE STREET CORPORATION    41

Executive Compensation (continued)		2018 NOTICE OF MEETING AND PROXY STATEMENT

 

 

 

 

Additional Factors and Individual Compensation Decisions

 

In addition to the corporate and individual performance factors summarized above, the Committee also took into account market compensation competitiveness in finalizing its compensation decisions.

The Compensation Committee’s 2017 total compensation decisions for the current NEOs relative to their targets are presented in the table below.

 

		Annual Incentive								Long-Term Incentive
Named Executive   Officer(1)			•  Reflects performance specific to the relevant year and designed  to vary from target year to year								•  Designed to promote long-term  performance and leadership behaviors and expected to be relatively consistent year to year
		Target				Actual				Target				Actual
Joseph L. Hooley			$3,000,000				$4,750,000				$10,000,000				$10,000,000
Eric W. Aboaf(2)			1,700,000				2,567,000				3,100,000				3,100,000
Ronald P. O’Hanley			2,900,000				3,944,000				5,300,000				5,035,000
Andrew Erickson(2)			1,050,000				1,491,000				2,000,000				2,000,000
Cyrus Taraporevala(2)			1,600,000				2,000,000				1,600,000				1,600,000

 

(1)	Mr. Bell ceased serving as our Chief Financial Officer in March 2017 and did not receive any incentive awards for 2017 performance.

(2)

The award granted to Mr. Aboaf in connection with his hiring and the promotion awards granted to Messrs. Aboaf, Erickson and Taraporevala described under “2017 Compensation Decisions—Individual Compensation Decisions” were not considered in setting annual and long-term incentive targets and are therefore excluded from this table.

The Compensation Committee’s 2017 total compensation decisions for the current NEOs are presented in the table below. The table below is intended to help shareholders understand the process and philosophy the Committee used in calculating current NEO compensation for 2017 performance. Note (1) to the table below describes the relationship between the amounts reported in the table below and those amounts reported in the Summary Compensation Table (as required by SEC rules) and related tables beginning on page 51. While the table below summarizes how the Committee views annual compensation, it is not a substitute for the tables and disclosures required by the SEC’s rules.

 

Named Executive   Officer		Year				Annual Base Salary				Annual Incentive Awards								Long-Term Incentive Awards								Total Compensation
										Non-Deferred Cash				DVAs/SSGA LTIP				Performance- Based RSUs				DSAs
Joseph L. Hooley			2017			$	1,000,000			$	3,087,500			$	1,662,500			$	6,000,000			$	4,000,000			$	15,750,000
			2016				1,000,000				625,000				1,875,000				6,000,000				4,000,000				13,500,000
			2015				1,000,000				—				—				5,400,000				3,600,000				10,000,000
Eric W. Aboaf			2017				700,000				1,103,810				1,463,190				1,860,000				1,240,000				6,367,000
Ronald P. O’Hanley			2017				800,000				1,695,920				2,248,080				3,021,000				2,014,000				9,779,000
			2016				800,000				393,500				2,176,500				3,180,000				2,120,000				8,670,000
Andrew Erickson			2017				446,539				641,130				849,870				1,200,000				800,000				3,937,539
Cyrus Taraporevala			2017				400,000				600,000				1,400,000				320,000				1,280,000				4,000,000

 

(1)	The compensation described in the table above, which summarizes how the Committee evaluates annual total compensation, differs from the compensation described in the Summary Compensation Table beginning on page 51 in the following respects:

—

Annual Base Salary. The table above reflects the year-end annual base salary rate applicable for each current NEO. Column (c) in the Summary Compensation Table presents the amount of base salary actually earned by each NEO during the relevant year.

 

42    STATE STREET CORPORATION