UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

SCHEDULE 14A

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Exchange Act of 1934

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Raymond James Financial, Inc.

 

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OUR VISION				OUR VALUES
Our vision is to be a financial services firm as unique as the people we serve, transforming lives, businesses and communities through the power of personal relationships and professional advice.						We put clients first. If we do what’s right for our clients, the firm will do well and we’ll all benefit.
						We act with integrity. We put others above self, and what’s right above what’s easy. We believe doing well and doing good aren’t mutually exclusive.
OUR MISSION   Our business is people and their financial well-being.   We are committed to helping individuals, corporations and municipalities achieve their unique goals, while also developing and supporting successful professionals, and helping our communities prosper.						We value independence. We respect autonomy, celebrate individuality and welcome diverse perspectives, while encouraging collaboration and innovation.
						We think long term. We act responsibly, taking a conservative approach that translates into a strong, stable firm for clients, advisors, associates and shareholders.

RAYMOND JAMES FINANCIAL, INC.

880 Carillon Parkway

St. Petersburg, Florida 33716

(727) 567-1000

January 10, 2020

Dear Fellow Shareholder,

I am pleased to invite you to our 2020 Annual Meeting of Shareholders.

Raymond James achieved record results in fiscal year 2019, despite market volatility and a decline in the equity markets in the beginning of the year. We continued our strong retention and recruiting of financial advisors, reaching a record total number of advisors, which in turn supported record results in the Private Client Group, as well as for Raymond James Bank and Asset Management. Meanwhile, strong results for M&A, stronger fixed income brokerage revenues and the tax credit funds business helped temper a difficult environment for equity brokerage revenues.

Entering fiscal 2020 with records for our key revenue drivers, including the number of financial advisors, client assets under administration and net loans at Raymond James Bank, we are well positioned for the year ahead. While lower short-term interest rates and political and economic uncertainties may present significant challenges – and as our industry is continuing to face increased regulatory burdens and pricing competition – we are focused on the long-term, never losing sight of our commitment to putting people first.

Our business is about people and their financial well-being, and we will continue to operate the firm in a way that is consistent with our client-first, people-oriented culture. It is this approach that has set Raymond James apart throughout our history. It has helped us weather uncertainty, and I am confident it will continue to do so for many years to come.

On behalf of the Board of Directors and the management of Raymond James, I extend our appreciation for your continued support.

Yours sincerely,

 

 

Paul C. Reilly

Chairman and Chief Executive Officer

Notice of 2020 Annual Meeting of Shareholders

 

DATE:		Thursday, February 20, 2020
TIME:		4:30 p.m. (local time)
PLACE:		Raymond James Financial Center   Tower 3 Classroom   880 Carillon Parkway   St. Petersburg, Florida
AGENDA:		The following proposals will be voted upon:   1.  To elect twelve (12) director nominees named in the Proxy Statement   2.  To hold an advisory vote on our executive compensation   3.  To approve the Amended and Restated 2012 Stock Incentive Plan   4.  To ratify our independent registered public accounting firm for fiscal 2020   5.  To act on any other business that may properly come before the meeting
RECORD DATE:		December 23, 2019 (“Record Date”)
Who Can Vote:		Shareholders of record on the Record Date
Who Can Attend:		Shareholders desiring to attend the Annual Meeting should review page 66 under Questions & Answers About Voting Your Shares. Directions to the Annual Meeting are available at www.raymondjames.com/investor-relations/news-and-events/shareholders-meeting
Date of Mailing:		We are mailing these proxy materials and the Annual Report to shareholders and participants in our Employee Stock Ownership Plan on or about January 10, 2020

Vote Recommendation:     The Board of Directors recommends a vote “FOR” All Proposals

 

Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to be Held on February 20, 2020:		The Proxy Statement, 2019 Annual Report to Shareholders and the form of proxy card are available online at www.raymondjames.com/investor-relations/ news-and-events/shareholders-meeting

Whether or not you are able to attend in person, please complete, sign and return your proxy card by mail, or vote via the Internet or the toll-free telephone number.

 

		By Order of the Board of Directors,
		Jonathan N. Santelli, Secretary
January 10, 2020

 

 

Table of Contents

 

Letter from  our Chairman and CEO
Notice of 2020 Annual Meeting of Shareholders
Our Company			1
Corporate Governance			1
Item 1. - Election of Directors			1
Our Directors			1
Director Independence			8
Board Structure and Governance Practices			8
Role of the Board			8
Corporate Governance Principles			8
The Board’s Role in Risk Oversight			8
Board Composition			9
Director Qualifications			9
Nominating Process and Succession Planning			9
Nominations by Shareholders			10
Election of Directors			10
Director Tenure			11
Board Leadership Structure			11
Lead Independent Director			11
Code of Ethics and Directors’ Code			12
Engagement with Shareholders			12
Executive Sessions			13
Committee Membership and Meetings			13
Audit and Risk Committee			14
Corporate Governance, Nominating and Compensation Committee			14
Securities Repurchase Committee			15
Securities Offerings Committee			15
Meeting Attendance			15
Management Succession Planning			15
Director Compensation			16
Director Compensation Table for 2019			17
Stock Ownership Policy for Directors and Executive Officers			18
Compensation Matters			19
Compensation Discussion and Analysis			19
Introduction			19
Objectives of our Compensation Program			19
Use of Equity Compensation			19
Performance RSU Vesting Based on ROE			20
Our Compensation Practices			21
Consideration of Prior ‘‘Say-on-Pay’’ Vote			22
Elements of Compensation			23
Fiscal 2019 Company Performance Highlights			23
Use of Compensation Consultants			25
Peer Group Comparisons			25
Changes to our Compensation Practices for 2019			26

 

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2019 Compensation Decisions			26
2019 Compensation Tables			34
Summary Compensation Table for Fiscal 2019			34
All Other Compensation Table for Fiscal 2019			35
Grants of Plan Based Awards for Fiscal 2019			35
Outstanding Equity Awards at Fiscal Year End for 2019			37
Option Exercises and Stock Vested for Fiscal 2019			39
Nonqualified Deferred Compensation for Fiscal 2019			40
Potential Payments Upon Termination or Change in Control for Fiscal 2019			42
2019 CEO Pay Ratio			44
Report of the Corporate Governance, Nominating and Compensation Committee			44
Item 2. - Advisory Vote on Executive Compensation (“Say on Pay”)			45
Relationships and Related Transactions			46
Related Person Transaction Policy			48
Equity Compensation Plan Information			49
Item 3. - Amended and Restated 2012 Incentive Stock Plan			50
Audit Matters			60
Item 4. - Ratify Appointment of Independent Registered Public Accounting Firm			60
Security Ownership Information			62
Security Ownership of Principal Shareholders			62
Stock Ownership Policy			62
Security Ownership of Management			63
Delinquent Section 16(a) Reports			64
Questions and Answers			65
Additional Information			70
Appendix A – Amended and Restated 2012 Stock Incentive Plan			A-1
Appendix B – Reconciliation of Non-GAAP Financial Measures			B-1

 

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Our Company

Raymond James Financial, Inc. is a leading diversified financial services company providing private client group, capital markets, asset management, banking and other services to individuals, corporations and municipalities. Our financial services activities include providing investment management services for retail and institutional clients, the underwriting, distribution, trading and brokerage of equity and debt securities, and the sale of mutual funds and other investment products. We also provide corporate and retail banking and trust services.

Our mission is to help individuals, corporations and municipalities achieve their unique goals, while also developing and supporting successful professionals, and helping our communities prosper.

Our vision is to be a financial services firm as unique as the people we serve, transforming lives, businesses and communities through the power of personal relationships and professional advice.

Among the keys to our success, our emphasis on putting the client first is at the core of our corporate values. We also believe in maintaining a conservative, long-term focus in all our decision making. We believe that this disciplined approach has helped us build a strong, stable financial services firm for our clients, advisors, associates and shareholders.

We are furnishing this Proxy Statement to you in connection with the solicitation of proxies by the Company’s Board of Directors (“Board” or “Board of Directors”) for the Annual Meeting of Shareholders to be held on February 20, 2020 (“Annual Meeting”). In this Proxy Statement, we may refer to Raymond James Financial, Inc. as “Raymond James,” “RJF,” the “company,” “we,” “us” or “our.”

Corporate Governance

Item 1. — Election of Directors

 

		Proposal Snapshot — Item 1. Election of Directors
		What is being voted on: Election to our Board of 12 director nominees.   Board recommendation: After a review of the individual qualifications and experience of each of our director nominees and his or her contributions to our Board, our Board determined unanimously to recommend that shareholders vote FOR all of our director nominees.

Our Directors

The Board has nominated the twelve (12) directors identified below as candidates for election at the Annual Meeting. All nominees are current directors of the company and were unanimously recommended for re-election by the Corporate Governance, Nominating and Compensation Committee (“CGN&C Committee”). (In accordance with our Corporate Governance Principles described below, Shelley G. Broader, who has served on our Board for 12 years, is not standing for re-election at the Annual Meeting.)

The Board has affirmatively determined that the following nine director candidates are independent: Charles G. von Arentschildt, Robert M, Dutkowsky, Jeffrey N. Edwards, Benjamin C. Esty, Anne Gates, Gordon L. Johnson, Roderick C. McGeary, Raj Seshadri and Susan N. Story.

 

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Each candidate has indicated that he or she would serve if elected. We do not anticipate that any nominee would be unable to stand for election, but if that were to happen, the Board may reduce the size of the Board, designate a substitute nominee or leave a vacancy unfilled. If a substitute is designated, proxies voting on the original director candidate will be cast for the substituted candidate.

 

Charles G. von Arentschildt, 59 Non-Executive Director     Director Since: 2015   RJF Committees •  Audit and Risk   Other Public Directorships •  Current: None •  Former (past 5 years): None						KEY EXPERIENCE AND QUALIFICATIONS
						•  Financial services management: Many years of broad financial services management experience •  Derivatives and trading expertise: A wealth of specific knowledge in the derivatives and trading segments of the financial services industry
						CAREER HIGHLIGHTS •  Independent private investor across a variety of asset classes (since 2005) •  Deutsche Bank Securities Inc., a provider of investment banking and security brokerage services •  Chairman of Global Markets, North America (2004 – 2005) •  Chief Executive Officer and Head of Global Markets, North America (2002 – 2004) •  Global Head of Finance, Global Head of Securitization and Global Head of Commodities •  Regional Executive Committee (1998 to 2005) •  Global Markets Management Committee (1997 to 2005) •  Managing Director and Global Head of Metals, Commodities, Morgan Stanley, Inc., a global financial services firm (1992 – 1997)   OTHER PROFESSIONAL EXPERIENCE AND COMMUNITY INVOLVEMENT •  Former member, Gold and Silver Institute •  Former member, New York Mercantile Exchange •  Former Board Member and Treasurer, Boys and Girls Club of Greenwich, Connecticut (2003 – 2008)
Robert M. Dutkowsky, 64 Non-Executive Director     Director Since: 2018   RJF Committees •  Audit and Risk   Other Public Directorships •  Current: Tech Data Corporation; U.S. Foods Holding Corp.; Pitney Bowes •  Former (past 5 years): None						KEY EXPERIENCE AND QUALIFICATIONS
						•  Technology and technology risks: More than 40 years of experience in the information technology industry, including senior executive positions in sales, marketing and channel distribution with leading manufacturers and software publishers •  Corporate governance and leadership: Valuable governance perspectives from substantial senior executive leadership roles and experience as a board member and chairman of several public and private companies
						CAREER HIGHLIGHTS •  Tech Data Corporation, a multinational IT products and services distribution company •  Executive Chairman (2017 – present) •  Chief Executive Officer (2006 – 2018) •  President, Chief Executive Officer, and Chairman, Egenera, Inc., a multinational cloud manager and data center infrastructure automation company (2004 – 2006) •  President, Chief Executive Officer and Chairman, J.D. Edwards & Co., Inc. an enterprise resource planning (ERP) software company (2002 – 2004) •  President, Chief Executive Officer and Chairman, GenRad, Inc., a manufacturer of electronic automatic test equipment and related software (2000 – 2002)   OTHER PROFESSIONAL EXPERIENCE AND COMMUNITY INVOLVEMENT •  Board of Directors, United Way Suncoast •  Board of Directors, Moffitt Research Committee •  Advisory Board, University of South Florida Business School

 

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Jeffrey N. Edwards, 58 Non-Executive Director     Director Since: 2014   RJF Committees •  CGN&C •  Securities Repurchase Committee •  Securities Offerings Committee   Other Public Directorships •  Current: American Water Works Company, Inc. •  Former (past 5 years): None						KEY EXPERIENCE AND QUALIFICATIONS
						•  Financial services industry: More than two decades of capital markets and corporate finance experience at a global financial services firm •  Review and preparation of financial statements: Experience as CFO of large financial services company provides valuable insights to our Board
						CAREER HIGHLIGHTS •  Chief Operating Officer, New Vernon Advisers, LP, a registered investment advisor (2009 – present) •  Merrill Lynch & Co., Inc., a global financial services company •  Vice Chairman (2007 – 2009) •  Chief Financial Officer (2005 – 2007) •  Head of Investment Banking for the Americas (2004 – 2005) •  Head of Global Capital Markets and Financing (2003 – 2005) •  Co-head of Global Equities (2001 – 2003)   OTHER PROFESSIONAL EXPERIENCE AND COMMUNITY INVOLVEMENT •  Director, The NASDAQ Stock Market (2004 – 2006) •  Director, Medusind, Inc., a medical billing company (2012 – 2019)
Benjamin C. Esty, 57 Non-Executive Director     Director Since: 2014   RJF Committees •  Audit and Risk (Chair)   Other Public Directorships •  Current: None •  Former (past 5 years): None						KEY EXPERIENCE AND QUALIFICATIONS
						•  Finance, investment and risk management: Extensive knowledge of finance and deep experience in the mutual fund/investment management business, including evaluation of fund performance, investment strategies, valuation analysis, trading, and risk management •  Financial services industry: Provides valuable insight to the Company’s investment banking, commercial banking, and asset management businesses, as well as its own financing activities •  Executive leadership development: Experience in leadership development assists Board in oversight of management succession
						CAREER HIGHLIGHTS •  Harvard University Graduate School of Business Administration •  Professor of Business Administration (1993 – present) teaching corporate finance, corporate strategy and leadership •  Roy and Elizabeth Simmons Professor of Business Administration (with tenure, 2005 – present) •  Head of the Finance Department (2009 – 2014) •  Founding faculty Chairman, General Management Program (GMP), a comprehensive leadership program for senior executives   OTHER PROFESSIONAL EXPERIENCE AND COMMUNITY INVOLVEMENT •  Director and Chairman of Audit Committee, Harvard Business Publishing, a not-for-profit education company •  Eaton Vance family of mutual funds •  Independent Trustee (2005 – 2013) •  Chairman, Portfolio Management Committee (2008 – 2013) •  Director, Harvard University Employees Credit Union (1995 – 2001) •  Member, Finance Committee •  Finance and Investment Committee, Deaconess Abundant Life Communities, a not-for-profit continuing care retirement community (2017 – present)

 

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Anne Gates, 59 Non-Executive Director     Director Since: 2018   RJF Committees •  Audit and Risk   Other Public Directorships •  Current: The Kroger Company; Tapestry, Inc. •  Former (past 5 years): None						KEY EXPERIENCE AND QUALIFICATIONS
						•  Retail and consumer products insight: Over 25 years’ experience in retail and consumer products industry •  International business and growth markets: Broad business background in finance, marketing, strategy and business development, including growing international businesses
						CAREER HIGHLIGHTS •  President, MGA Entertainment, Inc., a developer, manufacturer and marketer of toy and entertainment products for children (2014 – 2017) •  The Walt Disney Company, a diversified multinational mass media and entertainment conglomerate (1991 – 2012) •  Executive Vice President, Chief Financial Officer—Disney Consumer Products (2000 – 2007, 2009 – 2012) •  Managing Director—Disney Consumer Products Europe and Emerging Markets (2007 – 2009) •  Senior Vice President of Operations, Planning and Analysis (1998 – 2000)   OTHER PROFESSIONAL EXPERIENCE AND COMMUNITY INVOLVEMENT •  Board of Trustees, University of California, Berkley Foundation (2016 – present) •  Board of Directors, Salzburg Global Seminar (2018 – present) •  Board of Visitors, Fu Foundation School of Engineering and Applied Science, Columbia University (2012 – present) •  Board of Directors, CADRE •  Board of Trustees, PBS SoCal
Francis S. Godbold, 76 Director – Vice Chairman     Director Since: 1977   RJF Committees •  Securities Offerings Committee (alternate)   Other Public Directorships •  Current: None •  Former (past 5 years): None						KEY EXPERIENCE AND QUALIFICATIONS
						•  Senior leadership experience: Over 50 years of experience at our company (15 years as President), including managing the company through multiple economic/business cycles; extensive experience acquiring and integrating businesses for the company •  RJ Bank leadership: Active participation in the formation of RJ Bank and service on its board since inception •  Investment management expertise: Broad capital markets transaction experience in both favorable and difficult markets; led the firm’s entry into several new business segments •  Lifelong commitment: An enduring commitment to our company, with significant personal and family stock ownership
						CAREER HIGHLIGHTS •  Raymond James Financial, Inc. •  Vice Chairman (2002 – present) •  Director, Raymond James Bank, N.A. (1994 – present) •  Various senior management positions (1969 – 2002)   OTHER PROFESSIONAL EXPERIENCE AND COMMUNITY INVOLVEMENT •  Trustee Emeritus, Georgia Tech Foundation, Inc. (2011 – present) •  Trustee, Georgia Tech Foundation, Inc. (2003 – 2011)

 

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Thomas A. James, 77 Director – Chairman Emeritus     Director Since: 1970   RJF Committees •  Securities Repurchase Committee •  Securities Offerings Committee   Other Public Directorships •  Current: None •  Former (past 5 years): None						KEY EXPERIENCE AND QUALIFICATIONS
						•  Engaged and motivating leader who embodies our firm’s culture: Former Chairman and Chief Executive Officer of our company, with a unique understanding of our businesses and the financial services industry •  Entrepreneurial mindset: Perspective of an entrepreneur who led the growth of the company founded by his father •  Lifelong commitment: A deep, personal commitment to our company, exemplified by more than 50 years of service •  Shareholder advocate: His large stock ownership position ensures that his interests are strongly aligned with those of our other shareholders
						CAREER HIGHLIGHTS •  Raymond James Financial, Inc. •  Chairman Emeritus (2017 – present) •  Chairman of the Board (1983 – 2017) •  Chief Executive Officer (1970 – 2010)   OTHER PROFESSIONAL EXPERIENCE AND COMMUNITY INVOLVEMENT •  Financial Services Roundtable (2000 – present) •  Chairman (2007) •  Former Chairman, The Florida Council of 100 •  Former Chairman, Securities Industry and Financial Markets Association (SIFMA) •  Certified Financial Planner (1978 – present) •  Member, Board of Trustees, The Salvador Dalí Museum •  Founder, The James Museum of Western and Wildlife Art •  Chairman, Chi Chi Rodriguez Youth Foundation (2006 – present) •  Former Director, International Tennis Hall of Fame
Gordon L. Johnson, 62 Non-Executive Director     Director Since: 2010   RJF Committees •  CGN&C (Chair) •  Director of RJ Bank since 2007   Other Public Directorships •  Current: None •  Former (past 5 years): None						KEY EXPERIENCE AND QUALIFICATIONS
						•  Banking and financial services: Over 23 years of experience with unaffiliated banks •  RJ Bank insights: Ten years as a director of RJ Bank, a significant part of our business •  Entrepreneurial experience: Perspective of an entrepreneur and consumer of business-related financial services
						CAREER HIGHLIGHTS •  President, Highway Safety Devices, Inc., a full service specialty contractor (2004 – present) •  Bank of America, N.A., a multinational investment bank and financial services company •  Various managerial and executive positions (1992 – 2002)   OTHER PROFESSIONAL EXPERIENCE AND COMMUNITY INVOLVEMENT •  Director, Florida Transportation Builders Association (2007 – 2016) •  Director, Santa Fe Healthcare (2008 – 2014)

 

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Roderick C. McGeary, 69 Independent     Director Since: 2015   RJF Committees •  Audit and Risk   Other Public Directorships •  Current: Cisco Systems, Inc.; PACCAR Inc. •  Former (past 5 years): None						KEY EXPERIENCE AND QUALIFICATIONS
						•  Review and preparation of financial statements: Deep accounting and auditing knowledge acquired through many years with public auditing firm •  Leadership and governance: Decades of board and leadership experience involving multiple industries •  Technology and technology risks: Leadership experience with global technology companies
						CAREER HIGHLIGHTS •  Chairman, Tegile Systems, Inc., a manufacturer of flash storage arrays (2010 – 2012) •  BearingPoint, Inc., a multinational management and technology consulting firm •  Chairman (2004 – 2009) •  Interim Chief Executive Officer (2004 – 2005) •  Co-President and Co-Chief Executive Officer (1999 – 2000) •  Chief Executive Officer, Brience, Inc., a provider of software that enables companies to personalize customer experiences through broadband or wireless devices (2000 – 2002) •  Managing Director, KPMG Consulting LLC, a management consulting firm (April – June 2000) •  KPMG LLP, the U.S. member of a global network of professional firms providing audit, tax and advisory services •  Co-Vice Chairman of Consulting (1997 – 1999) •  Audit Partner for various technology clients (1980 – 1988)   OTHER PROFESSIONAL EXPERIENCE AND COMMUNITY INVOLVEMENT •  Certified Public Accountant
Paul C. Reilly, 65 Chairman and Chief Executive Officer     Director Since: 2006   RJF Committees •  Securities Repurchase Committee •  Securities Offerings Committee   Other Public Directorships •  Current: None •  Former (past 5 years): None						KEY EXPERIENCE AND QUALIFICATIONS
						•  Strong leader, with prior public company CEO experience: Prior experience as chief executive officer of two complex, global organizations (one of which was a public company) brings a perspective to the Board beyond the financial services industry •  Auditing and strategic consulting perspective: Background as a CPA and financial services consultant •  Leadership continuity: Previous service on our Board provides continuity with prior senior management
						CAREER HIGHLIGHTS •  Raymond James Financial, Inc. •  Chairman (2017 – present) •  Chief Executive Officer (2010 – present) •  President (2009 – 2010) •  Non-executive Director (2006 – 2009) •  Chair, Audit Committee (2008 – 2009) •  Korn Ferry International, a global organizational consulting firm •  Executive Chairman (2007 – 2009) •  Chairman and Chief Executive Officer (2001 – 2007) •  Chief Executive Officer, KPMG International, a global network of professional firms providing audit, tax and advisory services (1998 – 2001) •  National Managing Partner, Financial Services, KPMG LLP, the U.S. member of a global network of professional firms providing audit, tax and advisory services (1995 – 1998)   OTHER PROFESSIONAL EXPERIENCE AND COMMUNITY INVOLVEMENT •  Member, Board at Large, Securities Industry and Financial Markets Association (SIFMA) •  Member, Board of Directors, American Securities Association •  Former Member, The Florida Council of 100 •  Former Member, Financial Services Roundtable •  Former Director, United Way Suncoast •  Cabinet Member and former Chairman, Tampa Heart Walk and Heart Ball for the American Heart Association •  Member, The University of Notre Dame Business Advisory Council

 

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Raj Seshadri, 54 Non-Executive Director     Director Since: 2019   RJF Committees •  Audit and Risk   Other Public Directorships •  Current: None •  Former (past 5 years): None						KEY EXPERIENCE AND QUALIFICATIONS
						•  Financial services management: Brings to our Board a rare combination of skills and experience from her roles at global brands in marketing, sales, business strategy, asset management, wealth management, and business-to-business partnerships
						CAREER HIGHLIGHTS •  President, U.S. Issuers, Mastercard Incorporated, a global payments and technology company (2016 – present) •  BlackRock, Inc., a global asset manager •  Managing Director, Head of iShares Wealth Advisory (2014 – 2015) •  Managing Director, Global Chief Marketing Officer for iShares (2012 – 2013) •  Citigroup, Inc., a global financial institution •  Managing Director, Head of CitiBusiness for Citibank (2010 – 2012) •  Managing Director, Global Head of Strategy (2008 – 2009) •  Various positions at U.S. Trust Company, a private wealth advisory firm (2006 – 2008), McKinsey & Company, a global strategy consulting firm (1994 – 2006) and AT&T Bell Laboratories, a research and development organization (1992 – 1993)   OTHER PROFESSIONAL EXPERIENCE AND COMMUNITY INVOLVEMENT •  Adjunct Professor, Columbia University Graduate School of Business (2012 – present) •  Trustee, Mount Holyoke College (2017 – present) •  Member, Management Board, Stanford Graduate School of Business (2017 – present) •  Member, Global Board, American India Foundation (2019 – present) •  Member, Advisory Board, SAYA (South Asia Youth Action) (2013 – present) •  David Rockefeller Fellow (2017 – 2018)
Susan N. Story, 59 Lead Independent Director     Director Since: 2008   RJF Committees •  CGN&C •  Securities Repurchase Committee •  Securities Offerings Committee   Other Public Directorships •  Current: American Water Works Company, Inc. (to retire April 1, 2020); Dominion Energy, Inc. •  Former (past 5 years): None						KEY EXPERIENCE AND QUALIFICATIONS
						•  Leadership and strategy: Leadership as CEO of American Water Works Company, Inc., a $22 billion publicly traded company, has given her in-depth experience with addressing national economic challenges and regulatory and legislative issues •  Experience managing highly-regulated industries: Her over five-year tenure as CEO (with prior experience as CFO) of the largest publicly-traded water and wastewater utility in the U.S., operating a highly-regulated utility business in 14 states and market-based businesses in 45 states, together with seven years as CEO of an electric utility in Florida, have provided extensive skills relating to interaction with state and federal regulators and managing complex organizations •  Technology, cyber security and human capital management: Extensive experience developing and implementing technological advances, including artificial intelligence (AI) and machine learning; overseeing critical infrastructure cyber security protocols and working with the Department of Homeland Security, Department of Defense and state FUSION agencies; recruiting, hiring and training an evolving workforce population; and mitigating rising employee healthcare costs through innovative partnerships and programs
						CAREER HIGHLIGHTS •  American Water Works Company, Inc., a U.S. publicly traded water and wastewater utility company (to retire April 1, 2020) •  President, Chief Executive Officer and director since May 2014 •  Chief Financial Officer (2013 – 2014) •  The Southern Company, a transporter and producer of energy •  Chief Executive Officer, Southern Company Services, Inc., Executive Vice President of Southern (2011 – 2013) •  President and Chief Executive Officer, Gulf Power Company, Inc. (2003 – 2010) •  Executive Vice President, Engineering and Construction (2001 – 2003) •  Senior Vice President of Southern Power Company (2001 – 2003)   OTHER PROFESSIONAL EXPERIENCE AND COMMUNITY INVOLVEMENT •  Board of Advisors, H. Lee Moffitt Cancer Center and Research Institute •  Board, United Way of Greater Philadelphia and Southern New Jersey

 

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Director Independence

For a director to be considered independent under New York Stock Exchange (“NYSE”) rules, the Board must affirmatively determine that the director does not have any “material relationship” with the company, either directly or as a partner, shareholder or officer of an organization that has a relationship with the company. A material relationship can include commercial, industrial, banking, consulting, legal, accounting, charitable and family relationships. The Board has affirmatively determined that ten (10) of our current directors (of whom nine (9) are standing for reelection) are “independent” under NYSE and U.S. Securities and Exchange Commission (“SEC”) rules.

Board Structure and Governance Practices

Role of the Board

Raymond James’ business and affairs are managed under the direction of the Board of Directors. The role of the Board is to oversee management of the company in its efforts to enhance shareholder value and conduct the company’s business in accordance with its mission statement. In this vein, the Board’s duties include assisting management to assess long-range strategies for the company and evaluating management performance.

Corporate Governance Principles

The Board has adopted Corporate Governance Principles, which are available in the Investor Relations section of the company’s website at www.raymondjames.com (the “company’s website”). This document describes the principles the Board follows with respect to, among other matters, the Board’s:

 

•   role and duties		•   size and composition
•   director responsibilities		•   leadership structure
•   committees		•   access to officers, employees and advisors
•   director compensation		•   confidentiality
•   annual performance self-evaluation		•   communications with shareholders

The Board’s Role in Risk Oversight

The Board exercises oversight responsibility with respect to management’s responsibilities to assess and manage our key risks, including market, credit, liquidity, funding, operational, compliance, compensation and reputational risk. The Board has delegated aspects of its oversight responsibility to each of the Audit and Risk Committee (“ARC”) and the CGN&C Committee.

The ARC’s role includes oversight of our risk governance structure and the performance of the Chief Risk Officer (“CRO”) and Chief Compliance Officer. The CRO directs our enterprise risk management program, under which we have prepared qualitative “risk appetite” statements that articulate our conservative risk culture. We have also developed tolerance statements and measures that attempt to quantitatively define appropriate adherence to our risk appetite. These statements are reviewed and approved by a risk committee structure designed to address specific aspects of risk (e.g., market, liquidity, credit, operational, etc.), and that is organized under the direction of our Enterprise Risk Management Committee (“ERMC”). The ARC reviews and approves these risk appetite and tolerance statements on at least an annual basis, and it receives periodic reports from the ERMC and the CRO in order to monitor our adherence to them. The ARC exercises oversight responsibility with respect to the company’s Internal Audit Department. In addition, the ARC receives quarterly risk assessments from the ERMC and CRO that identify new and emerging risks, changes to internal controls, and results of assurance activities, which include internal audits, regulatory examinations, and other self-assessment activities. The chair of the ARC discusses the significant aspects of the enterprise risk management program with the full Board at its regular meetings.

 

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The CGN&C Committee’s role is to review management’s evaluation of the relationship between our compensation policies and practices and risks arising for the company, and to take steps to prevent such policies and practices from encouraging unnecessary or excessive risk-taking. The CGN&C Committee also takes any action necessary to help the company comply with rules and regulations relating to compensation programs and their relationship to risk management.

Board Composition

The Board currently consists of thirteen (13) directors. The Board does not consider individual directors to be responsible for particular areas of the Board’s focus or specific categories of issues that may come before it. Rather, the Board seeks to assemble a group of directors that, as a whole, represents a mix of experiences and skills that allows appropriate deliberation on all issues that the Board might be likely to consider.

Director Qualifications

The Board believes there are certain minimum qualifications that each director nominee must satisfy in order to be suitable for a position on the Board, including that such nominee:

 

•   demonstrate high standards of integrity and character		•   offer important perspectives on some aspect of the company’s business based on experience
•   may not be on the boards of more than three (3) other public companies		•   may not be subject to certain convictions or judgments of courts or regulatory authorities

Nominating Process and Succession Planning — Board Commitments

The CGN&C Committee reviews the experience and qualifications of all potential nominees to the Board. In considering director candidates, the CGN&C Committee generally assembles all information regarding a candidate’s background and qualifications, evaluates his or her mix of skills and qualifications and determines the contribution that the candidate could be expected to make to the overall functioning of the Board, giving due consideration to the Board balance of diversity of perspectives, backgrounds and experiences. The CGN&C Committee routinely considers diversity as a part of its deliberations but does not have a formal policy regarding diversity. With respect to current directors, the CGN&C Committee considers the individual’s past participation in, and contributions to, the activities of the Board. The CGN&C Committee recommends director nominees to the Board based on its assessment of overall suitability to serve.

We understand that certain institutional investors and proxy advisory firms may deem Ms. Story overboarded based on her chief executive position and the number of public company boards on which she serves, resulting in concerns that she may face excessive time commitments in fulfilling her duties. The Board has noted that Ms. Story has announced her retirement as CEO and director of American Water Works Company, Inc., effective April 1, 2020. While the Board recognizes that outside board and other commitments could affect a director’s ability to devote sufficient time and attention to board duties, after discussing this issue with Ms. Story our Board has concluded – based on ongoing significant contributions throughout her tenure – that Ms. Story’s existing CEO duties through March 31, 2020 will not limit her ability to devote sufficient time and attention to her duties as Lead Director of the company.

 

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Illustrated below is an overview of the process to identify the desired skills and experience of candidates as well as evaluate potential candidates for the Board.

 

 

Nominations by Shareholders

The CGN&C Committee will consider candidates recommended for nomination to the Board by shareholders under Florida law and our By-laws. Our By-laws contain advance notice and a number of other requirements applicable to any shareholder nomination, including a description of the information that must be included with any such proposal. The manner in which the committee evaluates candidates recommended by shareholders would be generally the same as any other candidate. However, the CGN&C Committee would also consider information concerning any relationship between a shareholder recommending a candidate and the candidate to determine if the candidate can represent the interests of all of the shareholders. The committee would not evaluate a candidate recommended by a shareholder unless, among the other requirements of our By-laws, the shareholder’s proposal contains all of the information necessary to conduct an evaluation. For information regarding shareholder proposal deadlines, please see below under “Additional Information — Shareholder Proposals for the 2021 Annual Meeting.”

Election of Directors

Each director is elected by shareholders at our annual meeting for a term of one (1) year, (subject to extension until a successor is duly elected and qualified and subject to such director’s earlier resignation or removal). Under our By-laws, unless the election is contested, each director nominee must receive a majority vote to be elected. A “majority vote” means that the number of votes cast in favor of a nominee exceeds the number of votes cast against the nominee. In a contested election, directors are elected by a plurality of the votes cast.

In addition, each director nominee must tender an irrevocable conditional resignation to the company, to be effective only upon (i) the director’s failure to receive the required shareholder vote in an uncontested election, and (ii) Board acceptance of such resignation. If any nominee fails to receive the required vote, the CGN&C Committee will recommend that the Board accept the resignation unless it determines that the best interests of the company and its shareholders would not be served by doing so. Absent such determination, the Board will accept the resignation no later than 120 days from the certification of the shareholder vote, subject to maintaining compliance with NYSE or SEC rules. The Board will promptly disclose publicly its decision to accept or reject such resignation and the reasons therefor.

 

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Director Tenure

We believe that non-executive directors (those directors who are not officers or employees of the company) who have longer-term experience with the company have gained a level of familiarity with its operations that enables them to make valuable contributions to Board deliberations. Nevertheless, our Corporate Governance Principles contemplate that directors are normally expected to serve no more than 12 years on the Board. As previously noted, director Shelley G. Broader, who has served for 12 years, is not standing for re-election at the Annual Meeting. The Board reserves the right, in extraordinary circumstances, to waive this limitation to allow a director—if elected by the shareholders—to serve up to three additional one-year terms. In this connection, the Board has determined that the need for continuity of service of the company’s Lead Director Susan Story constitutes a sufficient basis for waiving the above tenure limitation to permit her to serve a further one-year term.

Board Leadership Structure

The Board believes it is in the company’s best interests to periodically evaluate its leadership structure and make a determination regarding whether to separate or combine the roles of Chairman and chief executive officer (“chief executive officer” or “CEO”) based on circumstances at the time of its evaluation. By retaining flexibility to adjust the company’s leadership structure, the Board believes that it is best able to provide for appropriate management and leadership of the company and address any circumstances the company may face. Since 2017, our chief executive officer, Mr. Paul Reilly, has also served as Chairman of the Board. The Board believes that a combined Chairman/chief executive officer structure provides the company with a single leader who communicates the firm’s business and strategy to our shareholders, clients, employees, regulators and the public, promoting accountability for the company’s performance. For these reasons, the Board believes that our existing board leadership structure continues to be the most appropriate one for the company. Nevertheless, the Board may reassess the appropriateness of this structure at any time, including following future changes in Board composition, in management, or in the character of the company’s business and operations.

Lead Independent Director

The Board also believes that independent leadership is important, and it has appointed an independent director, Susan N. Story, who has served as lead director (“Lead Director”) since 2016. Ms. Story’s knowledge of the company’s business and strategy from her years of service as a director, together with her significant executive leadership experience, contribute to her ability to effectively fulfill the role of Lead Director. The Board has structured the role of our Lead Director to strike an appropriate balance to the combined Chairman and CEO role and to fulfill the important requirements of independent leadership on the Board.

 

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The Board has approved a Charter for the Lead Director, which provides that the Lead Director is elected by the independent directors for a renewable term of three years. The charter also sets forth the Lead Director’s specific responsibilities, including to:

 

 

The Charter of the Lead Director, which is available on the company’s website, provides a more detailed description of the role and responsibilities, qualifications, and the procedures for appointment of, the Lead Director.

Code of Ethics and Directors’ Code

As part of our ethics and compliance program, our Board has approved:

 

•

Code of Ethics for Senior Financial Officers (the “Code of Ethics”) which applies to our principal executive officer, principal financial officer, principal accounting officer and persons performing similar functions, and

 

•

Code of Business Conduct and Ethics for Members of the Board of Directors (“Directors’ Code”) that applies to all members of the Board.

Both the Code of Ethics and the Directors’ Code are posted on our company’s website. We intend to satisfy the disclosure requirement regarding any amendment to, or waiver of, the Code of Ethics or the Directors’ Code by posting such information on our website. The company also maintains a reporting hotline (888-686-8351), where employees and individuals outside the company can anonymously submit a complaint or concern regarding compliance with applicable laws, rules or regulations, the Code of Ethics, as well as accounting, auditing, ethical or other concerns.

Engagement with Shareholders

The Board believes that fostering long-term relationships with shareholders and maintaining their trust and goodwill is a top priority for the company. Senior management conducts engagements with key shareholders throughout the year in order to ensure that our management and Board understand and address the issues that are important to our shareholders. These engagements cover a wide range of issues, such as strategy, financial performance, governance and other current matters. In addition to our quarterly earnings releases and related conference calls, we release monthly operating metrics. Our chief executive officer, chief financial officer and our head of investor relations attend several investor conferences each year and also participate in “roadshows” to meet with our investors. In addition, we host an annual Investor Day (typically at our corporate headquarters), at which our senior executives make presentations concerning a wide variety of strategic and financial matters. Our chief financial officer and our head of investor relations also speak with analysts and investors throughout the year. Individual members of our Board may also be involved in appropriate cases. For information on how to contact members of our Board, please see the section below entitled “Additional Information—Communications with the Lead Director and Non-Executive Directors.”

 

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Executive Sessions

The non-executive directors meet in executive session without management at least four times per year during a regularly-scheduled Board meeting. Ms. Susan Story, our Lead Director, presided at the regular executive sessions of the non-executive directors.

Committee Membership and Meetings

The Board has delegated authority to committees to assist in overseeing the management of the company. The members and chair of each committee are appointed and removed by the Board. The committee chairs review and approve agendas for all meetings of their respective committees. The responsibilities of the ARC and the CGN&C Committee are defined in their respective charters, which incorporate the applicable requirements of the SEC and NYSE and are available at the company’s website at www.raymondjames.com/investor-relations/corporate-governance/charters.

The following table identifies the Board’s committees, their respective members, and provides information about meetings during the fiscal year ended September 30, 2019 (“fiscal 2019”).

 

Director		Audit and Risk Committee		Corporate Governance, Nominating and Compensation Committee		Securities Repurchase Committee		Securities Offerings Committee
Charles G. von Arentschildt		M		—		—		—
Shelley G. Broader(1)		M		—		—		—
Robert M. Dutkowsky		M		—		—		—
Jeffrey N. Edwards		—		M		M		M
Benjamin C. Esty		C		—		—		—
Anne Gates		M		—		—		—
Gordon L. Johnson		—		C		—		—
Roderick C. McGeary		M		—		—		—
Susan N. Story		—		M		M		M
Raj Seshadri(2)		M
Thomas A. James		—		—		M		M
Paul C. Reilly		—		—		M		M
Francis S. Godbold		—		—		—		AM
Fiscal 2019 Committee Meetings
Total Committee Meetings		8		5		0		0

 

 

M — Member, C — Chairman, AM — Alternate Member

 

(1)

Not standing for re-election at the 2020 Annual Meeting.

 

(2)

Appointed effective June 1, 2019.

The Board has affirmatively determined that each member of the ARC and the CGN&C Committee is “independent” under NYSE and SEC rules. The Board has further determined that each member of the ARC is “financially literate” and that each of Ms. Gates and Messrs. Esty and McGeary qualifies as an “audit committee financial expert” and has “accounting or related financial management expertise” under applicable NYSE or SEC rules.

 

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Audit and Risk Committee

The ARC’s responsibilities include:

 

•

oversight of the independent auditor, including annually reviewing the independent auditor’s report and evaluating its qualifications, performance and independence

 

•

reviewing and discussing with management and the independent auditor (i) the audited financial statements and related disclosures, (ii) earnings press releases, (iii) critical accounting policies, (iv) internal controls over financial reporting and disclosure controls and procedures, (v) use of non-GAAP financial measures, and (vi) any audit problems

 

•

oversight of the company’s internal audit function

 

•

oversight of management’s responsibilities to manage key risks, including the company’s enterprise risk management program

 

•

oversight of the company’s risk governance structure

 

•

reviewing reports from the chief compliance officer and general counsel

The Audit and Risk Committee charter provides a more detailed description of the role and responsibilities of this committee.

Corporate Governance, Nominating and Compensation Committee

The CGN&C Committee’s responsibilities for compensation matters include:

 

•

annually approving senior management compensation structure

 

•

annually setting criteria for compensating the CEO, evaluating his or her performance and determining the amount of his or her compensation

 

•

reviewing succession planning for senior management, including the CEO

 

•

approving and overseeing the administration of equity-based and other incentive compensation plans

 

•

annually recommending to the Board the amounts of company contributions to employee benefit plans, and

 

•

overseeing administration of other employee benefit plans.

The CGN&C Committee’s responsibilities for nominations and corporate governance include:

 

•

reviewing the qualifications and experience of potential director nominees and recommending them to the Board

 

•

reviewing succession planning for the CEO and other senior management positions

 

•

developing and monitoring compliance with corporate governance policies

 

•

leading the Board and its committees in annual reviews of their performance

 

•

periodically reviewing and assessing our codes of ethics and recommending changes to the Board,

 

•

recommending reasonable director compensation to the Board, and

 

•

exercising sole authority to retain director candidate search firms, including determining their compensation and terms of engagement.

The CGN&C Committee charter provides a more detailed description of the role and responsibilities of this committee.

 

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Securities Repurchase Committee

The Securities Repurchase Committee has authority (as determined by the Board) to approve certain purchases of our stock or notes from time to time. It does not have a separate charter or chairperson.

Securities Offerings Committee

The Securities Offerings Committee has authority (as determined by the Board) to approve the terms of securities offered by the company. It does not have a separate charter or chairperson.

Meeting Attendance

During fiscal 2019, the Board held four meetings (not including committee meetings). Each director nominated for re-election at the Annual Meeting attended one hundred percent (100%) of the aggregate of the total number of meetings held by the Board and the total number of meetings held by all committees of the Board on which he or she served during fiscal 2019. It is the policy of the Board that all directors attend the annual shareholder meeting. All of our directors other than Mr. Robert P. Saltzman (whose term was expiring) and Ms. Raj Seshadri (who did not join the Board until June 2019) attended the February 2019 annual meeting.

Management Succession Planning

The Board believes that effective management succession planning, particularly for the CEO role, is important for the continued success of the company. Among the responsibilities of the CGN&C Committee is the review of succession planning for the CEO and other senior management positions. Consequently, our CEO and chief human resources officer make detailed presentations to the CGN&C Committee and the Board annually on senior management succession plans and individual development plans for identified successors. This information is compiled through an organization-wide process designed to identify potential successors, evaluate the “readiness” of internal candidates and identify situations where the company may need to consider external talent. The Board discusses the development plans of succession candidates, particularly for the CEO role, and monitors such candidates’ progress. High potential leaders are also given exposure to all Board members through formal presentations and informal events, which provide directors with opportunities to personally assess the candidates’ skills and leadership capabilities.

 

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Director Compensation

The CGN&C Committee reviews and determines the compensation paid to non-executive directors at least every three years. We also reimburse each of our non-executive directors for their travel expenses incurred in connection with attendance at Board and committee meetings. Directors who are Raymond James employees (Messrs. Godbold, James and Reilly) do not receive any additional compensation for their services as directors. In determining non-executive director compensation, the committee considers, among other things, the following principles:

 

•

that the compensation should fairly pay for the work, time commitment and effort required from directors of an organization in size and scope of business activities similar to the company, including service on committees,

 

•

that a component of compensation should be designed to align the directors’ interests with the long-term interests of shareholders, and

 

•

that director independence may be impaired if director compensation exceeds customary levels.

As a part of its review, the committee has engaged Pay Governance LLC as a third-party consultant to report on comparable non-executive director compensation practices and levels. No executive officer of the company is involved in determining or recommending non-executive director compensation levels.

The CGN&C Committee recommended, and the Board approved, the annual fees for non-executive directors described in the table below. On February 28, 2019, the Board approved an increase in the Lead Director Fee from $25,000 to $40,000. All annual cash fees are paid in quarterly installments in arrears for the period of service between regularly-scheduled Board meetings. The company does not pay meeting attendance fees.

 

Director Fee Type		Description		Amount
Annual Retainer		Cash retainer		$	100,000
Shares Fee		Restricted stock unit (“RSU”) award vesting on 1st anniversary of grant		$	150,000
Lead Director Fee		Supplemental cash fee for board leadership role		$	40,000
ARC Chair Fee		Supplemental cash fee for committee leadership role		$	60,000
CGN&C Committee Chair Fee		Supplemental cash fee for committee leadership role		$	30,000

We have also entered into indemnification agreements with each of our non-executive directors, which provide for indemnification, to the fullest extent permitted by applicable law, with respect to all expenses and claims that a director incurs in connection with any event or occurrence related to the fact that the director was serving as a director, officer, fiduciary, employee, agent or advisor of Raymond James or any of our affiliates. Pursuant to the agreements, directors may also obtain advancement of certain expenses in connection with indemnified claims. (A copy of the form of indemnification agreement is an exhibit to our Annual Report on Form 10-K, as filed with the SEC.)

We encourage our directors to attend educational programs that assist them in the performance of their duties, and we reimburse reasonable costs of such attendance where approved in advance by the company.

 

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Director Compensation Table for 2019

The following table sets forth the compensation paid to our non-executive directors for services during fiscal 2019.

 

Name(1)		Fees Paid in Cash(2)				Stock Awards(3)				All Other Compensation(4)		Total
Charles G. von Arentschildt		$	100,000			$	149,954			$1,956		$	251,910
Shelley G. Broader		$	100,000			$	149,954			$3,684		$	253,638
Robert M. Dutkowsky(5)		$	89,031			$	212,387	(6)		$       —		$	301,418
Jeffrey N. Edwards		$	100,000			$	149,954			$3,684		$	253,638
Benjamin C. Esty		$	155,000			$	149,954			$3,684		$	308,638
Anne T. Gates		$	100,000			$	149,954			$1,924		$	251,878
Gordon L. Johnson		$	168,500	(7)		$	174,893	(8)		$5,018		$	348,411
Roderick C. McGeary		$	100,000			$	149,954			$1,956		$	251,910
Robert P. Saltzman(9)		$	50,000			$	—			$3,684		$	53,684
Raj Seshadri(10)		$	22,024			$	112,474	(11)		$       —		$	134,498
Susan N. Story		$	132,500			$	149,954			$3,684		$	286,138

 

 

(1)

Mr. Godbold, our Vice Chairman, is an employee who does not receive any additional compensation for services as a director. Please see the section below entitled “Relationships and Related Transactions” for information regarding his compensation as an employee.

 

(2)

Includes the annual retainer and, as applicable, Lead Director and committee chair fees.

 

(3)

The amounts shown in this column represent the aggregate grant date fair value of RSUs granted to our directors who are not Named Executive Officers in fiscal year 2019. With the exception of RSUs awarded to Mr. Dutkowsky and Ms. Seshadri upon their appointment to the Board (see footnotes 6 and 11 below for more information) and Mr. Johnson for service as a director of RJ Bank, the grant date fair value per share of the RSUs granted to each of the directors in fiscal year 2019 under Accounting Standards Codification (ASC) Topic 718 (“ASC Topic 718”) was $83.82. Awards vest on the first anniversary of the grant.

 

(4)

All other compensation represents accrued dividend equivalents on unvested RSUs as of September 30, 2019.

 

(5)

Appointed effective October 4, 2018.

 

(6)

Includes 662 RSUs awarded to Mr. Dutkowsky upon his appointment to the Board. The grant date fair value per share of these RSUs was $94.31.

 

(7)

The fees paid in cash to Mr. Johnson include $46,000 paid to him by RJ Bank for his service as a director.

 

(8)

Includes 302 RSUs awarded to Mr. Johnson for service as a director of RJ Bank. The grant date fair value per share of these RSUs was $82.58.

 

(9)

Mr. Saltzman did not stand for re-election in 2019 and his term ended on February 28, 2019.

 

(10)

Appointed effective June 1, 2019.

 

(11)

Represents 1,362 RSUs awarded to Ms. Seshadri upon her appointment to the Board. The grant date fair value per share of these RSUs was $82.58.

 

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The aggregate number of share awards outstanding, as of September 30, 2019, for each of our non-executive directors was as follows:

 

Name		Restricted Stock Units Outstanding (#)
Charles G. von Arentschildt		1,789
Shelley G. Broader		1,789
Robert M. Dutkowsky		2,451
Jeffrey N. Edwards		1,789
Benjamin C. Esty		1,789
Anne Gates		1,789
Gordon L. Johnson		2,571
Roderick C. McGeary		1,789
Raj Seshadri		1,362
Susan N. Story		1,789

Stock Ownership Policy for Directors and Executive Officers

The Board maintains a Directors and Executive Officers Stock Ownership Policy that stipulates the following ownership levels of shares of our common stock that non-executive directors and executive officers are required to attain within five years of their election or the policy’s most recent adoption / revision (November 21, 2019).

 

Title		Holding requirement		Valuation		What counts?
Non-executive director		5X annual retainer		Average of NYSE closing price during 60 days prior to measurement		•  Shares owned directly or jointly with family members •  Shares owned indirectly •  Unvested time-based restricted stock and RSUs
Chief Executive Officer		7X annual salary
Executive Officers		3X annual salary

An individual’s compliance with the policy is tested annually as of the last trading day of each fiscal year. Until the required ownership level is achieved, each individual must retain 100% of the net shares (after deductions for taxes or option exercise price) obtained through the company’s share incentive plans.

The following table shows, as of September 30, 2019, the progress of our non-executive directors towards meeting the requirements of the policy.

 

Name		Year Service Commenced					Shares of Stock Held (#)					Restricted Stock Units Held (#)					Total Shares Held (#)					Share Ownership Goal Met (1)
Charles G. von Arentschildt				2015					7,159					1,789					8,948			✓
Shelley G. Broader				2008					22,281					1,789					24,070			✓
Robert M. Dutkowsky				2018					—					2,451					2,451			—
Jeffrey N. Edwards				2014					12,281					1,789					14,070			✓
Benjamin C. Esty				2014					11,581					1,789					13,370			✓
Anne Gates				2018					1,617					1,789					3,406			—
Gordon L. Johnson				2010					18,328					2,571					20,899			✓
Roderick C. McGeary				2015					6,621					1,789					8,410			✓
Raj Seshadri				2019					—					1,362					1,362			—
Susan N. Story				2008					25,138					1,789					26,927			✓

 

 

(1)

Based on our current compensation practices, it is anticipated that Mr. Dutkowsky, Ms. Gates and Ms. Seshadri will attain their share ownership goals within the time period prescribed by the policy.

 

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COMPENSATION MATTERS

Compensation Discussion and Analysis

Introduction

This section presents a discussion and analysis of the philosophy and objectives of the CGN&C Committee (“Committee”) in designing and implementing compensation programs for our executive officers. We describe the compensation decisions relating to our chief executive officer, chief financial officer, and our next three most highly-compensated executive officers (collectively, “named executive officers” or “NEOs”), who for 2019 were:

 

Name		Title
Paul C. Reilly		Chairman and Chief Executive Officer
Jeffrey P. Julien		Executive Vice President (EVP) — Finance and Chief Financial Officer (CFO)
James E. Bunn		President — Global Equities and Investment Banking — Raymond James & Associates, Inc.
Scott A. Curtis		President — Private Client Group
Bella Loykhter Allaire		EVP — Technology and Operations — Raymond James & Associates, Inc.

Objectives of our Compensation Program

We compete for talent with other large financial services firms throughout the country, and our ability to sustain or improve our position in this highly competitive environment depends substantially on our ability to continue to attract and retain the most qualified employees. We thus strive to maintain compensation policies that enable us to attract, motivate and retain high-quality executive officers and ensure that their individual interests are aligned with those of our shareholders. Our goal is to reward executive officers for the achievement of near-term and long-term strategic and operational goals, while at the same time avoiding excessive risk-taking. We therefore structure our incentive awards to include vesting, deferred payment, and cancellation and claw-back provisions that protect the company.

Our executive compensation program emphasizes discretionary variable annual performance compensation and long-term incentive compensation, a portion of which will be received by the executive only upon our attainment of specific financial targets. We adjust dollar amounts of annual grants to reward achievement of the company’s financial and strategic objectives. In addition, a portion of long-term incentive compensation serves shareholders’ interests by conditioning vesting upon future performance that executes on the Company’s long-term business strategy. Our NEOs participate on the same basis as other employees in health and welfare, and paid time-off benefits.

Use of Equity Compensation

We deliver a substantial portion of incentive compensation in the form of equity awards — generally RSUs — a portion of which will vest based on future return on equity (“ROE”) performance and are subject to cancellation and claw-back over a multi-year period. The Committee believes that delivering equity aligns employee interests with those of shareholders and helps motivate executives to achieve financial and strategic goals within the bounds of the Company’s risk tolerance levels.

Awards to CEO. The annual bonus for our CEO is delivered 50% in cash and 50% in the form of RSUs. 60% of the portion paid in RSUs will vest on the third anniversary of the grant only if the company attains certain defined

 

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adjusted average after-tax ROE⁽¹⁾ levels over a 3-year measurement period (“performance RSUs”). The remaining 40% of the portion paid in RSUs will vest on the third anniversary of grant.

Awards to Other Executive Officers. Where the annual bonus of one of our other executive officers (including NEOs) exceeds $275,000, a variable portion of the amount over $250,000 is similarly delivered in RSUs. The proportion of bonus delivered in RSUs increases with the size of the bonus. Specifically, for each segment of bonus that falls within the dollar parameters set forth in the following table, the indicated percentage is delivered in RSUs, with the balance delivered in cash:

 

Segment of Annual Bonus		Portion in RSUs					Portion in  Cash
$250,000 – $500,000		10%					90%
$500,001 – $1,000,000		15%					85%
$1,000,001 – $2,000,000		20%					80%
$2,000,001 – $3,000,000		25%					75%
Above $3,000,000		50%					50%

Of the RSUs delivered to such other executive officers, 50% are performance RSUs that will vest on the third anniversary of the grant only if the company attains certain defined ROE levels. The remaining 50% of these RSUs vest on the third anniversary of grant.

Performance RSU Vesting Based on ROE. The Committee has chosen ROE because it believes it is an appropriate indicator of the return the company is delivering on shareholders’ equity, since it reflects both bottom-line profitability and the manner in which the company is managing shareholders’ equity to generate such profitability. The Committee believes that ROE is particularly relevant for the financial services industry in light of the capital-intensive nature of many of our businesses, making it a useful measure of relative performance across many financial services firms. The Committee uses adjusted ROE⁽¹⁾ as presented in our quarterly earnings releases, which excludes certain material items that are not indicative of our core operating results.

The Committee determines the appropriate ROE vesting scale for the grant of each year’s performance RSUs. The performance RSUs will vest — if at all — in an amount that falls between 50% and 150% of the stated target for the award, depending on the company’s ROE for the applicable measurement period. The Committee may adjust the vesting scale for a particular year of grants in order to reflect equity, interest rate and credit market conditions, and to ensure that vesting of these awards remains a challenge but is reasonably attainable considering our Board’s commitment to maintaining conservative capital levels.

  

 

⁽¹⁾ Adjusted ROE is a non-GAAP measure. Please refer to Appendix B for a reconciliation of this measure to the most directly comparable GAAP measure and other required disclosures.

 

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For grants made in respect of fiscal 2019 performance, the Committee determined the following vesting formula (with results to be interpolated as necessary):

 

 

Our Compensation Practices

What We Do

Pay for performance. We award annual variable compensation based on the performance of the company and the individual. The great majority of our executive officers’ compensation is variable and not guaranteed.

Use deferred compensation. Variable compensation for our executive officers also includes a deferred component, in that a portion of annual bonuses (“stock bonus awards”) is delivered in the form of RSUs.

Performance-based equity awards. The vesting of sixty percent (60%) for our CEO, and fifty percent (50%) for our other NEOs, of the RSUs awarded to our executive officers as stock bonus awards is tied to the achievement of defined adjusted ROE⁽¹⁾ levels over a three-year measurement period (“performance vesting”).

Long vesting periods. Both the time-vesting and performance-vesting portions of our stock bonus awards generally vest on a cliff basis three years after the grant date. Both our outstanding legacy stock options and the retention RSUs with which we have replaced them generally vest 60% on the 3^rd anniversary, and 20% on each of the 4^th and 5^th anniversaries, of their grant dates. In addition, each award under our Long-Term Incentive Plan (“LTIP”), a non-qualified retention plan for highly compensated employees, cliff vests at the end of a five-year period.

“Claw-back” policy. We maintain a robust compensation recoupment policy, which permits the company to recover compensation in the event of a financial restatement, inaccurate performance measures, and serious misconduct or materially imprudent judgment that results in material financial or reputational harm to the company.

Stock ownership guidelines. We maintain stock ownership requirements for our executive officers, creating a further link between management interests, company performance and shareholder value. All of our NEOs have reached or exceeded the ownership requirements.

 

⁽¹⁾ Adjusted ROE is a non-GAAP measure. Please refer to Appendix B for a reconciliation of this measure to the most directly comparable GAAP measure and other required disclosures.

 

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“Double triggers.” Our award agreements for RSUs generally maintain the requirement of “double triggers” on the accelerated vesting of awards in the event of a change in control, meaning that an executive must actually be terminated following the change in control before vesting will be accelerated.

Limited perquisites. We provide very limited perquisites that provide a demonstrable benefit to the company’s business.

What We Don’t Do

No long-term employment agreements. Our executive officers, including our CEO and other NEOs, are employed by us on an “at will” basis and do not have any special arrangements for severance payments following termination.

No dividends on unearned performance-based awards. We do not pay dividends or dividend equivalents on performance-based awards during the vesting period. Rather, dividends are deferred and paid only based on performance achieved, with no premiums.

No “gross ups.” We do not generally provide excise tax “gross ups,” other than in the case of certain relocation expenses, consistent with our relocation policy.

No pledging by insiders. The company maintains a policy under which our directors and executive officers are prohibited from pledging our common stock, subject to any exception granted for a non-margin pledge upon special application.

No short selling or hedging by insiders. Our directors and executive officers are generally prohibited from engaging in short sales, transacting in publicly traded or private options and engaging in hedging or monetization transactions with respect to our common stock.

No option re-pricing. Our equity incentive plans contain certain provisions prohibiting option re-pricing absent approval of our shareholders.

No option backdating or “spring-loading.” We do not backdate options or grant options retroactively. In addition, we do not coordinate grants of options so that they are made before announcement of favorable information, or after announcement of unfavorable information. Options for our stock are granted at fair market value on a fixed date or event, with all required approvals obtained in advance of or on the actual grant date.

Consideration of Prior “Say on Pay” Vote

We hold an advisory vote of our shareholders on executive compensation annually. At the 2019 annual shareholders meeting, 96.46% of the votes cast were in favor of the advisory proposal to approve our NEOs’ compensation (the “Say-on-Pay” proposal). We believe that the 2019 vote approving the Say-on-Pay proposal conveyed our shareholders’ strong support of the Committee’s decisions and our existing executive compensation programs. Based on this feedback, the Committee determined to continue our current compensation practices as described herein.

 

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Elements of Compensation

The Committee utilizes the following balanced mix of compensation elements for executive officers, with total compensation weighted heavily towards variable elements that reward longer-term performance.

 

Type		Pay Element & Purpose				How Amount Is  Determined
				Base Salary - Provides base level of pay		➣		Internal and external market factors
						➣		Reviewed annually, with adjustments - if any - effective at beginning of calendar year
				Annual Bonus - Cash Provides competitive incentive opportunity		➣		Based on company’s annual financial results and progress against strategic objectives
						➣		Funded from a pool not exceeding 6% of consolidated pre-tax income, with no individual bonus exceeding 3%
						➣		For CEO, bonus is delivered 50% in cash and 50% in equity awards
						➣		For other NEOs, a variable portion of bonus is delivered in equity awards
				Annual Bonus - Equity Aligns executive with shareholder interests		➣		For CEO, 50% of bonus delivered in RSUs, with 60% of RSUs performance-vesting and 40% time-vesting
				Encourages retention by vesting at end of 3-year period		➣		For other NEOs, a variable portion of bonus is delivered in RSUs, with equity proportion increasing with size of bonus
						➣		For other NEOs, 50% of RSUs vest on 3rd anniversary of grant, and remaining 50% vest on 3rd anniversary of grant conditional on company performance
				Performance vesting awards depend on company’s achievement of ROE thresholds, thus further aligning executive with long-term shareholder interests		➣		Performance vesting requires company to attain defined adjusted (non-GAAP) average after-tax return on equity levels over a three-year vesting period (“ROE”)
						➣		Depending on ROE achieved, performance vesting RSUs may vest from 0% to 150% of stated target amount
				Retention Awards - RSUs Aligns executive with shareholder interests		➣		Annual time-vesting RSU grants to executives are driven by retention needs
				Encourages retention by longer vesting period		➣		Vests 60% on 3rd anniversary, and 20% on each of 4th and 5th anniversaries of grant
				Retirement Plan Contributions - Profit Sharing, ESOP and LTIP align executive with shareholder interests since contributions are based on company financial results
		☐		Profit Sharing Plan		➣		Contributions to Profit Sharing, ESOP and LTIP determined annually based on company performance
		☐		Employee Stock Ownership Plan (ESOP)		➣		Profit Sharing and ESOP are qualified retirement plans covering all associates
		☐		Long Term Incentive Plan (LTIP) - encourages retention by vesting at end of five-year period		➣		LTIP is a non-qualified retention plan for highly compensated employees which relates to earnings in excess of qualified plan compensation limits
		☐		401(k) Plan - facilitates tax-advantaged retirement savings		➣		Modest matching of employee contributions into 401(k) Plan

Fiscal 2019 Company Performance Highlights

Strategic Execution. The firm successfully executed several strategic initiatives during fiscal 2019. In the Private Client Group segment, fiscal 2019 was a very strong year for financial advisor recruiting, and retention of advisors remained excellent. In the Capital Markets segment, we continued to make significant investments to expand and strengthen our M&A platform, both in the U.S. and Europe including the acquisition of Silver Lane Advisors, which has extensive expertise and relationships in the asset and wealth management sectors. The Asset Management segment continued to benefit from increased utilization of fee-based accounts by our Private Client Group clients and

 

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purchased the remaining 55% of ClariVest Asset Management. Raymond James Bank continued to utilize its lending solutions to better serve clients in the Private Client Group and Capital Markets segments while maintaining strong credit metrics. Finally, we continued investing in technology and our risk management infrastructure to strengthen our relationships with our advisors and clients and to remain compliant with regulatory requirements. Most importantly, we successfully implemented these strategic initiatives while maintaining our unique, client-focused culture.

Financial Performance. Our company generated strong financial results in fiscal 2019. We achieved record annual net revenues of $7.74 billion and record net income of $1.03 billion, or $7.17 per diluted share. On a non-GAAP basis, adjusted net income was $1.07 billion, ⁽¹⁾ or $7.40 per diluted share. ⁽¹⁾ Our other financial accomplishments during the year included:

 

•

Net revenues increased 6% and earnings per diluted share increased 25% compared to fiscal 2018,

 

•

Adjusted earnings per diluted share of $7.40(1) increased 14% compared to adjusted diluted earnings per share of $6.47(1) in fiscal 2018,

 

•

Our ROE for the fiscal year was 16.2%, or 16.7%(1) on an adjusted basis, which is very strong particularly given our prudent capital position throughout fiscal 2019,

 

•

Repurchased 9.83 million common shares for $752 million, at an average price of approximately $76.50 per share under the Board’s repurchase authorization, and

 

•

The ratio of the firm’s total capital to risk-weighted assets remained above 20% throughout the year, well above regulatory requirements.

 

 

    

The firm’s solid performance in fiscal 2019 was driven by record annual net revenues for all four of our core segment and record pre-tax income in our Private Client Group segment, Asset Management segment and Raymond James Bank.

 

•

Private Client Group — Record net revenues of $5.36 billion increased 5% and record pre-tax income of $579 million increased 1% over fiscal 2018. Record net revenues were driven by strong growth in assets in fee-based accounts, a significant net increase in the number of financial advisors to a record of more than 8,000, and the benefit derived from higher short-term interest rates. Private Client Group assets under administration ended the fiscal year at a record $798.4 billion, representing 6% growth over September 30, 2018.

 

⁽¹⁾ Adjusted net income, adjusted earnings per diluted share, and adjusted ROE are non-GAAP measures. Please refer to Appendix B for reconciliations of these measures to the most directly comparable GAAP measures and other required disclosures.

 

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•

Capital Markets — Record net revenues of $1.08 billion increased 12% and pre-tax income of $110 million increased 21% over fiscal 2018, respectively. Results in the Capital Markets segment were helped by strong investment banking revenues of $564 million, which were up 21% over fiscal 2018. Additionally, increased rate volatility during the second half of the year helped boost fixed income results, while equity brokerage revenues declined due to continued structural and cyclical factors.

 

•

Asset Management — Record net revenues of $691 million increased 6% and record pre-tax income of $253 million increased 8% over fiscal 2018. Record net revenues were driven by growth in financial assets under management, which grew 2% to $143.1 billion at the end of the fiscal year. The annual growth in financial assets under management was attributable to strong net inflows in fee-based accounts in the Private Client Group and equity market appreciation, which more than offset net outflows for Carillon Tower Advisers.

 

•

Raymond James Bank — Record net revenues of $846 million increased 16% and record pre-tax income of $515 million increased 5% over fiscal 2018. Record results were driven by robust loan growth with a focus on lending to clients of the Private Client Group and Capital Markets segments. Net loans at Raymond James Bank finished the year at a record $20.9 billion, reflecting 7% growth for the year. The increase in short-term interest rates helped the Bank’s net interest margin increase by 10 basis points to 3.32% in fiscal 2019 from 3.22% in fiscal 2018. Credit metrics remained strong throughout the year with nonperforming assets of 0.18% of total assets and criticized loans of 1.36% of total loans.

Use of Compensation Consultants

In making compensation decisions, the Committee considers numerous factors of company and individual performance, as well as market data regarding compensation levels for comparable industry positions. The Committee does not attempt to rank or assign relative weight to any particular factor, however. The Committee does not rely on any factor as a substitute for its own judgment, but rather applies its independent discretion to consider them in their entirety. Although the Committee did not “benchmark” compensation against a peer group, it did engage an outside compensation consultant, Pay Governance LLC, to provide market data in connection with its 2019 compensation determinations for executive officers, including our NEOs. The Committee uses such data as a reference to assist it in maintaining a general awareness of industry compensation standards and trends. The market data does not formulaically determine the Committee’s compensation decisions for any particular executive officer, however. Similarly, the Committee does not target a particular percentile of any peer group with respect to total pay packages or any individual component of pay.

Peer Group Comparisons

For 2019, the Committee used the following peer groups for the indicated NEOs:

 

Peer Group for Mr. Reilly — Chairman and CEO, and Mr. Julien,* — CFO
Affiliated Managers Group		Invesco Ltd.		State Street Corp.
Ameriprise Financial Inc.		Jefferies Financial Group		Stifel Financial Corp.
Charles Schwab Corp.		Lazard Ltd.		T. Rowe Price Group Inc.
E*TRADE Financial Corp.		Legg Mason, Inc.		TD Ameritrade Holding Corp.
Edward Jones		LPL Financial Holdings Inc.
Franklin Resources Inc.		Northern Trust Corp.

 

 

*

Peer group used for Mr. Julien excluded T. Rowe Price Group, Inc.

 

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Peer Group for Mr. Bunn
Head of Investment Banking Role		Head of Equities Role
Jefferies		KeyCorp.
JMP Securities		Cowen and Company
Moelis & Company Group LP		JMP Securities
Nomura Securities		Leerink Partners
Robert W. Baird & Co.		Nomura Securities
William Blair & Company		Piper Jaffray
		SunTrust Bank
		William Blair & Company

 

Peer Group for Mr. Curtis — President — Private Client Group
Bank of America Merrill Lynch*		Morgan Stanley*		TD Securities
Comerica		PNC Bank		U.S. Bancorp
E-Trade		Regions Financial Corporation		UBS Wealth Management US*
Fifth Third Bank		Robert W. Baird & Co.		Wells Fargo Bank*
Franklin Templeton Investments		SunTrust Banks
LPL Financial Services		Synovus Financial

 

 

*

Compared Head of Brokerage role

 

Peer Group for Ms. Loykhter Allaire — EVP Technology and Operations
Branch Banking & Trust Co.		Franklin Templeton		SunTrust Bank
Citizens Financial Group		Invesco Ltd.		TD Ameritrade Holding Corp.
Comerica		Legg Mason & Co.		William Blair & Company
Fidelity Investments		LPL Financial Services
Fifth Third Bank		Royal Bank of Canada

Changes to our Compensation Practices for 2019

We made no significant changes to our compensation practices for 2019.

2019 Compensation Decisions

In November 2019, our chairman and chief executive officer, Mr. Reilly, evaluated the performance of the company and the individual performance of each executive officer, including the NEOs, against previously-determined individual goals. Mr. Reilly made recommendations to the Committee as to the amounts of annual bonus and retention RSUs to be awarded each executive officer (other than himself). The Committee reviewed and discussed such recommendations, as well as market data provided by its compensation consultant. The Committee evaluated the performance of Mr. Reilly and each of our other NEOs in light of all the above information. It then reviewed such information with the other non-executive directors and approved the compensation described below.

 

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Target Compensation for 2019

The Committee sets annual compensation targets for our executive officers. The 2019 compensation targets were based upon historical compensation, financial industry surveys and fiscal 2019 budget projections. In setting these targets, the Committee also stipulated that annual bonuses would be funded from a pool equal to 6% of consolidated pre-tax income, with no individual bonus to exceed 3% of such measure.

Individual Performance for 2019

Set forth below is a summary of the material accomplishments of each NEO for fiscal 2019, grouped by the areas of focus determined by the Committee at the beginning of the fiscal year, which the Committee considered in exercising its discretion to award compensation for 2019. The Committee awarded each named executive officer the bonus and other compensation in the amounts indicated.

Paul C. Reilly, Chairman and CEO

2019 Contributions include:

 

•

Provided strong leadership that resulted in achieving record revenue and pre-tax income

•

Delivered strong ROE result

•

Solid performance versus market peers

•

Outpaced Financial Advisor recruiting and retention results

•

Solid progress on the continuing build out of the firm’s Compliance and Supervision functions

•

Continued to invest in the development of key leaders for strong succession planning and executed several leadership changes during the year

•

Strong leadership of the firm’s diversity and inclusion strategy and initiatives

Compensation: The Committee approved an annual bonus for 2019 of $11,750,000.

Jeffrey P. Julien, Executive Vice President, Finance and CFO

2019 Contributions include:

 

•

Supported the company in achieving record net revenues of $7.74 billion, record pre-tax income of $1.375 million, return on equity of 16.2%, and an adjusted return on equity of 16.7%(1)

 

•

As its Chairman, led Raymond James Bank to asset growth of 11% and record bank net revenues and pre-tax income, all while maintaining strong credit discipline

 

•

Oversaw the firm’s share repurchase program, which resulted in returning approximately $945 million to shareholders through a combination of dividends and share repurchases

 

•

Successfully prepared his successor as he plans to step down as CFO in December 2019

Compensation: Mr. Reilly recommended, and the Committee approved, an annual bonus for 2019 of $2,950,000.

James E. Bunn, President of Global Equities and Investment Banking

2019 Contributions include:

 

•

Led Global Equities and Investment Banking business unit to record annual net-revenues, including record Investment Banking revenues

 

•

Responsible for significant growth in Investment Banking revenues, including record M&A results

 

•

Maintained cost discipline within the Equity Research business

 

•

Actively pursued attractive acquisition opportunities to strengthen the firm’s investment banking franchise; acquired Silver Lane, an investment banking boutique focused on the wealth and asset management industry

 

•

Successfully sold the operations related to research, sales and trading of European equities

Compensation: Mr. Reilly recommended, and the Committee approved, an annual bonus for 2019 of $4,300,000.

 

⁽¹⁾ Adjusted net income, adjusted earnings per diluted share, and adjusted ROE are non-GAAP measures. Please refer to Appendix B for reconciliations of these measures to the most directly comparable GAAP measures and other required disclosures.

 

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Scott A. Curtis, President, Private Client Group (PCG)

2019 Contributions include:

 

•

Led the domestic PCG business to achieve record net revenues and pre-tax income

 

•

Achieved record levels of assets under administration and assets in fee-based accounts

 

•

Strong advisor recruiting and retention leading to a record number of financial advisors

 

•

Solid progress on enhancing the firm’s Compliance and Supervision infrastructure

 

•

Successful mentoring and transition of his successor for independent contractor division

Compensation: Mr. Reilly recommended, and the Committee approved, an annual bonus for 2019 of $2,550,000.

Bella Loykhter Allaire, Executive Vice President of Technology and Operations

2019 Contributions include:

 

•

Led Technology and Operations organizations to have a significant positive impact on the firm’s ability to recruit and retain financial advisors by providing the tools and services required to serve their clients

 

•

Successfully led a significant agenda to provide best-in-industry solutions and service levels while maintaining strong cost discipline

 

•

Implemented a new change management process to increase awareness and adoption of new or changing technology solutions

Compensation: Mr. Reilly recommended, and the Committee approved, an annual bonus for 2019 of $2,750,000.

The following charts present the mix of compensation elements actually received for 2019 performance by our CEO and our other named executive officers (average) (excluding retirement plan contributions):

Components of Total Direct Compensation — 2019 Actual

 

 

CEO		Other NEOs - Average

 

 

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Annual Direct Compensation for 2019

After assessing the company’s financial and strategic performance for fiscal 2019 and evaluating the individual performance of our NEOs, the Committee exercised its discretion to award annual direct compensation for 2019 as set forth in the following table.

This Annual Direct Compensation Table differs from the Summary Compensation Table (“SCT”) on page 34 required by SEC rules, and is not a substitute for the SCT. There are two main differences:

 

•

We grant annual bonuses (cash and equity components) after our fiscal year has ended. Equity awards granted in fiscal 2020 to reward fiscal 2019 performance are therefore shown as 2019 compensation in this Annual Direct Compensation Table. The SCT, however, reports equity awards in the year they are granted, irrespective of the year they were earned.

 

•

The SCT contains a column reporting “All Other Compensation,” which amounts are not part of the Committee’s compensation determinations and are thus not shown in this Annual Direct Compensation Table.

 

						Annual Direct Compensation
										Incentive Compensation
Name and Principal Position		Year				Salary				Cash Bonus				Time Vesting Stock Bonus Awards(1)(2)				Performance Vesting Stock Bonus Awards(1)(2)(3)				Time Vesting Stock Retention Awards(2)(4)				Total
Paul C. Reilly			2019			$	500,000			$	5,875,040			$	2,349,984			$	3,524,976	(5)		$	1,101,875			$	13,351,875
Chairman and Chief			2018			$	500,000			$	5,500,043			$	2,199,983			$	3,299,974	(6)		$	953,375			$	12,453,375
Executive Officer			2017			$	486,250			$	5,700,056			$	1,900,015			$	1,899,929	(7)		$	1,103,750			$	11,090,000
Jeffrey P. Julien			2019			$	300,000			$	2,412,554			$	268,723			$	268,723	(5)		$	443,570	(8)		$	3,693,570
Executive VP, Finance and			2018			$	295,000			$	2,262,508			$	243,746			$	243,746	(6)		$	381,350			$	3,426,350
Chief Financial Officer			2017			$	280,000			$	2,000,070			$	199,965			$	199,965	(7)		$	441,500			$	3,121,500
James E. Bunn			2019			$	300,000			$	3,100,074			$	599,963			$	599,963	(5)		$	440,750			$	5,040,750
President			2018			$	281,250			$	2,825,052			$	462,474			$	462,474	(6)		$	381,350			$	4,412,600
Global Equities and Investment Banking — RJA
Scott A. Curtis President Private Client Group			2019			$	300,000			$	2,112,563			$	218,764			$	218,673	(5)		$	440,750			$	3,290,750
Bella Loykhter Allaire Executive VP Technology and Operations — RJA			2019			$	300,000			$	2,262,513			$	243,789			$	243,698	(5)		$	440,750			$	3,490,750

 

 

(1)

Other than with respect to Mr. Reilly’s 2018 and 2019 bonuses, represents the applicable portion of any annual bonus that exceeds $275,000 for each NEO that is delivered in the form of RSUs. The proportion delivered in RSUs varies with the size of the annual bonus according to the formula presented on page 20 hereof. Of Mr. Reilly’s 2018 and 2019 total bonuses, 50% was delivered in cash and 50% in RSUs. Of the RSUs, 40% were subject to time-vesting and 60% were subject to performance vesting. Each RSU vests, if at all, on the third anniversary of the grant date.

 

(2)

Each RSU represents a contingent right to receive (i) one share of common stock and (ii) non-preferential dividend equivalents equal to the sum of any dividends on the shares of common stock underlying the RSU that were actually paid during the vesting period.

 

(3)

Represents the aggregate number of RSUs delivered as annual bonus, computed as described in footnote (1) to this table. RSUs reported in this column vest, if at all, contingent upon the company achieving certain defined adjusted ROE levels over a 3-year measurement period, in accordance with the formula presented in footnote (20) to the Outstanding Equity Awards at Fiscal Year End for 2019 table. See footnote 9 below.

 

(4)

Stock retention awards delivered in the form of RSUs. Other than with respect to Mr. Julien’s 2019 stock retention award, the RSUs vest 60% on the third, and 20% on each of the fourth and fifth anniversaries of the grant date.

 

 

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(5)

RSUs granted in fiscal 2020 vest contingent upon the company achieving adjusted ROE over a vesting period consisting of fiscal years 2020 - 2022, as explained in footnote (3) above. The following amounts represent the maximum value at the grant date of the RSUs granted in fiscal year 2020 for fiscal year 2019 performance: Mr. Reilly $5,287,464, Mr. Julien $403,085, Mr. Bunn $899,945, Mr. Curtis $328,010, and Ms. Loykhter Allaire $365,547.

 

(6)

RSUs granted in fiscal year 2019 vest contingent upon the Company achieving adjusted ROE over a vesting period consisting of fiscal years 2019 - 2021, as explained in footnote (3) above. The following amounts represent the maximum value at the grant date of the RSUs granted in fiscal year 2019 for fiscal year 2018 performance: Mr. Reilly $4,949,961, Mr. Julien $365,619 and Mr. Bunn $693,711.

 

(7)

RSUs granted in fiscal year 2018 vest contingent upon the Company achieving adjusted ROE over a vesting period consisting of fiscal years 2018 - 2020, as explained in footnote (3) above. The following amounts represent the maximum value at the grant date of the RSUs granted in fiscal year 2018 for fiscal year 2017 performance: Mr. Reilly $2,849,894 and Mr. Julien $299,948.

 

(8)

Mr. Julien’s 2019 stock retention award includes 2,000 RSUs that vest 100% on the third anniversary of the grant date and 3,000 RSUs that vest 60% on the third, and 20% on each of the fourth and fifth anniversaries of the grant date.

 

(9)

Adjusted ROE is a non-GAAP measure. Please refer to Appendix B for a reconciliation of this measure to the most directly comparable GAAP measure and other required disclosures.

Alignment of CEO Compensation with Total Shareholder Return. The following graph shows the total return on $100 invested in the company’s stock on September 30, 2014, compared to total annual direct compensation of our CEO for each year represented. We believe this demonstrates that our CEO’s total compensation is highly correlated to total shareholder return over these time periods. (As previously disclosed, in making its 2015 compensation decisions, the Committee approved an upward adjustment to better align CEO compensation with the Corporate Peers group.)

 

 

Hedging Policy

The company maintains a written Insider Trading Policy (“Policy”) that is designed to prohibit company personnel from violating insider trading laws and prevent even the appearance of improper conduct. The Policy applies to directors, officers, employees and other associates of the company, together with certain of their family members and controlled entities (“Covered Persons”). The Policy imposes the following restrictions on trading in securities issued by the company (including our common stock), whether or not the Covered Person is aware of material nonpublic information concerning the company.

Directors and Executive Officers. Under the Policy, members of the Company’s Board and its executive officers (the “Pre-Clearance Group”) may not, in connection with our securities:

 

•

engage in transactions in publicly traded or private options or other derivative securities

 

•

hold such securities in a margin account unless such securities have been exempted from any security interest of the broker

 

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•

pledge such securities as collateral for a loan, unless the person (i) has demonstrated the financial capacity to repay the loan without selling any pledged securities, and (ii) has submitted in advance a written approval request to the Legal Department, or

 

•

utilize standing orders for longer than one business day (other than employee stock option limit orders or approved Rule 10b5-1trading plans).

All Covered Persons. In addition, no Covered Person (including the Pre-Clearance Group) may, in connection with our securities:

 

•

engage in short sales

 

•

transact in publicly traded or private options; except that non-Pre-Clearance Group members may sell covered call options, and/or buy protective put options in non-speculative, bona fide transactions against an existing, non-restricted long position (with certain exceptions)

 

•

enter into, modify or cancel a standing order when subject to a trading “blackout”

 

•

allow any financial advisor to purchase or sell such securities within a discretionary account, or

 

•

engage in hedging or monetization transactions.

The Policy permits Covered Persons to request limited exceptions to these restrictions from time to time from the Legal Department.

Compensation Recoupment Policy

The company maintains a Compensation Recoupment Policy that is intended to reduce potential risks associated with our compensation plans, and thus better align the long-term interests of our NEOs and our shareholders. The policy contains three triggers that could result in “claw-back” of compensation: (i) instances of financial statement restatement, (ii) discovery of a materially inaccurate performance measure that resulted in inappropriate award or vesting of incentive compensation, and (iii) serious misconduct or materially imprudent judgment that caused the company material financial or reputational harm. (Incentive compensation is defined to include any compensation other than base salary, and it thus includes cash, shares of stock, restricted shares, RSUs and stock options.) The third trigger gives the Committee authority to require forfeiture of the employee’s unvested incentive compensation awards and/or reimbursement of the most recently-received annual bonus. It applies to all executive officers and to any other employee whose annual incentive compensation exceeds 50% of total annual compensation, with the exception of Private Client Group financial advisors and branch managers.

Compensation and Risk

The Board, with the assistance of the Committee, has evaluated our compensation policies and practices for all employees. Specifically:

 

➣

At the direction of the Committee, an independent compensation consultant partners with our Enterprise Risk Management and Human Resources functions to conduct an independent assessment of the material incentive compensation plans across the organization every other year.

 

➣

This process begins with an objective evaluation of job functions, assessing the level of risk influence across six specific categories: credit, liquidity, market, operational, legal & compliance and reputational.

 

➣

Incentive plans for job functions that were identified as having the potential to expose the company to the highest level of risk are further reviewed across a consistent framework to identify potential operational plan risks of the incentive design.

 

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➣

The incentive design evaluation focuses on key elements of the plan design, including: (i) performance measures, (ii) funding, (iii) performance period and pay mix, (iv) goal setting, (v) leverage, and (vi) controls and processes.

 

➣

In alternating years, Human Resources conducts a high level updating review with a focus on:

 

•

Any material changes to executive and associate incentive plans

 

•

Adoption of any new incentive plans or inclusion of new roles therein

 

•

Review of any acquired company compensation plans and roles.

The most recent bi-annual review noted that our practices of requiring deferral of a portion of bonus amounts into a mix of time- and — in the case of executive officers — performance-vesting equity awards, our robust share ownership guidelines, our compensation recoupment policy and our prohibition on hedging by executives all serve to further mitigate risk in our compensation plans.

The review concluded that none of the company’s incentive plans were likely to motivate behavior that would result in a material adverse impact to the company. The potential risks identified through the process were determined to be effectively mitigated through established risk controls, leadership oversight, and our culture of proactive risk management.

After reviewing an update to the above review, our Board has concluded that our compensation policies in general, and our incentive programs in particular, remain well aligned with the interests of our shareholders and do not create risks that are reasonably likely to result in a material adverse effect on the company.

Annual Compensation Framework & Process

Pay-Setting Process. Following recommendation by our chairman and CEO, the Committee sets performance priorities at the beginning of each fiscal year to guide its evaluation of company and individual executive officer performance throughout the year. These performance priorities are a directional assessment and their attainment or non-attainment does not correspond to any specific compensation decision or amount of compensation. At such time, the Committee also stipulates that annual bonuses will be funded from a pool not to exceed 6% of consolidated pre-tax income, with no individual bonus to exceed 3% of such measure.

Following completion of a fiscal year, our chairman and CEO reviews the performance of the company and evaluates the individual performance of each executive officer, including the NEOs, against previously-determined individual goals. Our CEO then makes recommendations to the Committee as to the respective amounts of annual bonus and retention RSUs to be awarded to each NEO (other than himself). Similarly, the Committee (in the absence of the CEO) reviews the performance of the CEO and determines the appropriate amounts of his annual bonus and retention RSU grants. In the course of its deliberations, the Committee also discusses these recommendations with the other non-executive directors.

To inform its use of discretion in determining compensation, the Committee evaluates both company and individual performance. The Committee does not utilize formulaic financial performance goals or targets, and performance metrics are not assigned any specific weighting for purposes of determining the compensation awarded to the CEO or other NEOs. Since market conditions — and the macroeconomic environment — strongly affect the financial services industry and can change dramatically during the course of a year, the Committee assesses financial performance at the end of the year in light of the most recent facts and circumstances. No single financial or performance metric controls compensation decisions. Rather, such data are used to help the Committee better understand company and individual performance. After evaluating the performance of our CEO and each of our other NEOs for the relevant fiscal year, the Committee applies its discretion to determine the compensation for each.

 

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Income Deduction Limitations under Section 162(m). Section 162(m) of the Internal Revenue Code (“§162(m)”) generally sets a limit of $1 million on the amount of compensation that the company may deduct for federal income tax purposes in any given year with respect to the compensation of “covered employees,” which currently includes our principal executive officer, our principal financial officer and the three most highly compensated executive officers (as well as individuals in these categories in certain prior years). Historically, compensation that qualified as “performance-based compensation” under §162(m) could be excluded from this $1 million limit. This exception was repealed effective for taxable years beginning after 2017, with certain transition relief. The Committee’s general intent prior to repeal was to structure our executive compensation programs so that some payments could qualify as “performance-based compensation.” However, the Committee may have decided from time to time to grant compensation that would not qualify as “performance-based compensation” if appropriate to achieve the objectives of the company’s compensation program. The Committee continues to believe that the tax deduction limitation should not be permitted to compromise its ability to design and maintain executive compensation arrangements that will attract and retain the executive talent to compete successfully. Accordingly, achieving the desired flexibility in the design and delivery of compensation may result in compensation that, in certain cases, is not deductible for federal income tax purposes, and it is possible that awards intended to qualify as “performance-based compensation” under the transition relief may not so qualify.

Based on the factors discussed under “2019 Compensation Decisions” above, in fiscal 2019 the company paid, and in fiscal 2020 the Committee expects the Company to pay, certain NEOs compensation, including a base salary, annual bonus and retention RSUs that, in the aggregate, exceeds $1 million in value. The Committee believes that this compensation is necessary in order to maintain the competitiveness of the total compensation package and, as a result, has determined that it is appropriate, regardless of whether certain amounts of such compensation are ultimately deductible for federal income tax purposes.

 

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2019 COMPENSATION TABLES

Summary Compensation Table for Fiscal 2019

The following table sets forth information about compensation earned by our named executive officers during fiscal 2017, 2018 and 2019 in accordance with SEC rules. The information presented below may be different from compensation information presented in this Proxy Statement under the caption “Compensation Discussion and Analysis,” since that section describes compensation decisions made with respect to the indicated fiscal year, regardless of when the compensation was actually paid or granted. For a more detailed explanation of the differences between the presentation in the Compensation Discussion and Analysis and the table below, please see the note on page 29.

 

Name		Year				Salary				Bonus(1)				Stock Awards(2)				All Other Compensation(3)				Total
Paul C. Reilly			2019			$	500,000			$	5,875,040			$	6,453,332	(4)		$	262,022			$	13,090,394
Chairman and CEO			2018			$	500,000			$	5,500,043			$	4,903,694			$	219,906			$	11,123,643
			2017			$	486,250			$	5,700,056			$	3,394,366			$	187,575			$	9,768,247
Jeffrey P. Julien			2019			$	300,000			$	2,412,554			$	868,842	(5)		$	114,831			$	3,696,227
EVP, Finance and Chief Financial Officer			2018			$	295,000			$	2,262,508			$	841,430			$	141,690			$	3,540,628
			2017			$	280,000			$	2,000,070			$	672,146			$	138,932			$	3,091,148
James E. Bunn			2019			$	300,000			$	3,100,074			$	1,306,298	(6)		$	115,385			$	4,821,757
President, Global Equities and Investment Banking—RJA			2018			$	281,250			$	2,825,052			$	1,484,167			$	153,176			$	4,743,645
Scott A. Curtis			2019			$	300,000			$	2,112,563			$	781,320	(7)		$	125,363			$	3,319,246
President, Private Client Group
Bella Loykhter Allaire			2019			$	300,000			$	2,262,513			$	831,278	(8)		$	317,148			$	3,710,939
EVP, Technology and Operations—RJA

 

 

(1)

The amounts disclosed in the Bonus column represent the annual cash bonus, as described in the CD&A, awarded to the NEOs.

 

(2)

The amounts shown in the Stock Awards column represent the grant date fair value of equity awards granted to the NEOs in the fiscal year shown. For a description of the assumptions used in calculating the fair value of equity awards under ASC Topic 718, see Note 2 to our financial statements in our Form 10-K report for the year ended September 30, 2019. For more information, see the Grants of Plan Based Awards for Fiscal 2019 table below.

 

(3)

See the All Other Compensation table below for a breakdown of these amounts.

 

(4)

Includes 41,608 RSUs that vest over time and 43,662 RSUs that are performance vesting awards. The maximum value at the grant date of the performance vesting RSUs for Mr. Reilly is $4,949,961.

 

(5)

Includes 8,225 RSUs that vest over time and 3,225 RSUs that are performance vesting awards. The maximum value at the grant date of the performance vesting RSUs for Mr. Julien is $365,619.

 

(6)

Includes 11,119 RSUs that vest over time and 6,119 RSUs that are performance vesting awards. The maximum value at the grant date of the performance vesting RSUs for Mr. Bunn is $693,711.

 

(7)

Includes 7,646 RSUs that vest over time and 2,646 RSUs that are performance vesting awards. The maximum value at the grant date of the performance vesting RSUs for Mr. Curtis is $299,978.

 

(8)

Includes 7,977 RSUs that vest over time and 2,976 RSUs that are performance vesting awards. The maximum value at the grant date of the performance vesting RSUs for Ms. Loykhter Allaire is $337,389.

 

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