DEF 14A: Popular Inc. Reveals Director Nominees, Executive Compensation, and Solid 2023 Performance in Proxy Statement

Popular, Inc.'s proxy statement highlights the election of directors, executive compensation details, and the company's solid financial performance in 2023 despite a challenging economic environment.

Summary

• Popular, Inc. invites shareholders to its 2024 Annual Meeting on May 9, 2024, to vote on the election of 13 directors, executive compensation, and the ratification of PricewaterhouseCoopers LLP as the independent auditor.
• In 2023, Popular achieved solid financial results with increases in loans, deposits, and unique customers, despite challenges in the banking industry.
• The company's net income for 2023 was approximately $541.3 million, but adjusted net income was $586.6 million after excluding the FDIC special assessment.
• Popular's stock outperformed the KBW Regional Banking Index and the Nasdaq Bank Index in 2023, closing at $82.07, a 24% increase from the previous year.
• The company is progressing with its multi-year technological and business process transformation, aiming for a 14% return on average tangible common equity (ROATCE) by the end of 2025.
• Popular's total social investment in 2023 amounted to approximately $12 million, supporting communities in Puerto Rico, the mainland United States, and the Virgin Islands.
• The executive compensation program is designed to motivate performance, align executives with shareholder interests, and promote long-term value.
• In 2023, 80% of the CEO's target compensation and 63% of other NEOs' compensation was performance-based.
• The Talent and Compensation Committee approved annual cash incentive payments for 2023 ranging from 85% to 98% of target for the NEOs.
• The company's Board of Directors consists of 13 members, 11 of whom are independent.
• The Board granted a one-year waiver of the Director Retirement Age to renominate Mr. Diercksen, the Boards Lead Independent Director.
• Popular is committed to corporate responsibility and sustainability, focusing on environmental impact reduction, social and economic well-being, and governance best practices.

Sentiment

Score: 7

Explanation: The document presents a balanced view, highlighting both positive achievements and challenges faced by the company. While net income was down, the company showed resilience and growth in key areas.

Positives

• Solid financial performance in 2023 despite a challenging environment.
• Strong loan growth and stable credit quality.
• Tangible book value per share increased by 33%.
• Stock outperformed key banking indices.
• Commitment to social responsibility and sustainability.
• Strong corporate governance practices with an independent board.
• Executive compensation program aligned with shareholder interests.

Negatives

• Net income decreased compared to 2022 due to higher provision for credit losses and operating expenses.
• Net interest margin decreased from 3.68% to 2.98% at Popular Bank.

Risks

• Challenging environment including high interest rates, geopolitical disruptions and uncertainty in the banking industry.
• Potential risks associated with the ongoing technological and business process transformation.
• Climate-related risks and the need to adapt to climate change.
• Cybersecurity and information security risks.

Future Outlook

Popular aims to achieve a 14% return on average tangible common equity (ROATCE) by the end of 2025 through its ongoing transformation initiatives.

Management Comments

• Richard L. Carrin, Chairman of the Board: 'The Board of Directors is proud of the leadership of the management team and the dedication of all our employees, which made these results possible.'
• Ignacio Alvarez, President and Chief Executive Officer: 'With our new corporate purpose in mind, we start 2024 in a strong momentum, with the team energized and looking forward to build on our solid foundation.'

Industry Context

Popular's performance is compared to the KBW Regional Banking Index and the Nasdaq Bank Index, highlighting its outperformance in a challenging environment for the banking industry.

Comparison to Industry Standards

• Popular's stock outperformed the KBW Regional Banking Index (KRX) and the Nasdaq Bank Index, which decreased by 4% and 7% respectively during 2023.
• The document references a peer group of comparable banks for pay and performance comparisons, including BOK Financial Corp, M&T Bank Corporation, and Regions Financial Corporation.
• The document mentions that Popular's Employee Loyalty Score of 84% positions it within the 75th percentile of the Qualtrics global benchmark and above the average benchmark of the financial industry.

Management Changes

Related Party Transactions

• Popular and its subsidiaries contributed approximately $1.15 million to Fundacin Banco Popular, Inc. through the matching of employee contributions.
• Popular also contributed an additional $1.03 million to the BPPR Foundation.
• Popular also provided human and operational resources to support the activities of the BPPR Foundation, which during 2023 amounted to approximately $1.38 million, including maintenance and the amortization of leasehold improvements for the BPPR Foundations headquarters.
• Popular Bank contributed approximately $250,000 to the Popular Foundation through the matching of employee contributions.
• Popular also contributed an additional $172,000 to the Popular Foundation.
• Popular provides human resources to support the activities of the Popular Foundation, which during 2023 amounted to approximately $88,000.
• A daughter of Mr. Alvarez is employed as a Counsel in the Legal Division of the Corporation and received total compensation of approximately $135,000 during fiscal year 2023.
• In September 2022, an entity indirectly owned by Ms. Ferr Rangel and her siblings entered into a one-year contract with BPPR to provide call center services in Puerto Rico to the Customer Contact Center Division of BPPR.
• BPPR has loan transactions with Populars directors and officers, and other Related Persons, and intends to continue such transactions in the ordinary course of its business, on substantially the same terms, including interest rates and collateral, as those prevailing for comparable loan transactions with third parties.

Stakeholder Impact

• The company's performance and strategic initiatives impact shareholders, employees, customers, and communities.
• The company's commitment to social responsibility and sustainability benefits communities and the environment.
• The executive compensation program is designed to align executives' interests with those of shareholders.

Next Steps

• Shareholders are encouraged to vote on the proposals outlined in the proxy statement.
• The company will publish its 2023 Corporate Sustainability Report during the second quarter of 2024.

Key Dates

Keywords

executive compensation, board of directors, corporate governance, financial performance, sustainability, risk management, annual meeting, Popular Inc, loans, deposits, ROATCE