EX-97.1 12 d52551dex971.htm EX-97.1
1
EXHIBIT 97.1
COMPENSATION RECOUPMENT POLICY
Responsible Unit: Our People Corporate Services
Data Classification Level: 4 - Public
Adoption Date: June 23, 2023
2
COMPENSATION RECOUPMENT POLICY
I.
POLICY PURPOSE
Popular,
Inc. (the “Corporation
”) has adopted
this Compensation
Recoupment Policy
(this “Policy”)
to provide
for the recovery
or “clawback” of
excess Incentive-Based Compensation
earned by current or
former Executive
Officers of the Corporation in the event of a required Restatement and to provide for
the recovery or “clawback”
of
Covered
Awards
earned
by
current
or
former
Covered
Employees
of
the
Corporation
in
the
event
of
Misconduct (each, as defined under Section II of this Policy).
This Policy is
intended to comply
with the requirements
of Rule 10D-1
of the Securities
Exchange Act of
1934
and
the Nasdaq
Stock Market
(“Nasdaq”)
Listing Rule
5608
(the “Listing
Standard”).
To
the extent
that any
provision in this Policy is ambiguous as to
its compliance with the Listing Standard or to the
extent any provision
in
this
Policy
must
be
modified
to
comply
with
the
Listing
Standard,
such
provision
will
be
read,
or
will
be
modified, as
the case
may be,
in such
a manner
so that
all applicable
provisions under
this Policy
comply with
the Listing Standard.
II.
DEFINITIONS
Unless the context otherwise requires, the following definitions apply for
purposes of this Policy:
“Board” means the Board of Directors of the Corporation.
“Committee”
means the Talent and
Compensation Committee of the Board.
“Covered Award
”
means any annual or long-term
cash, equity or equity-based incentive
or bonus compensation
paid, provided or awarded to any Covered Employee.
“Covered Employee” means
an Executive Officer
and any other employee
who is designated
by the Committee
as a Covered Employee for purposes of this Policy,
as determined from time to time.
“Executive Officer”
means the
Corporation’s
president, principal
financial officer,
principal accounting
officer
(or if there is no such
principal accounting officer, the controller), any vice president of the Corporation in charge
of a principal business unit, division, or function (such
as sales, administration, or finance), any other officer who
performs a
policy-making
function, or
any other
person who
performs similar
policy-making
functions for
the
Corporation.
Executive
officers
of
the
Corporation’s
subsidiaries
are
deemed
Executive
Officers
of
the
Corporation
if
they
perform
such
policy-making
functions
for
the
Corporation.
Policy-making
function
is not
intended
to include
policy-making
functions
that are
not significant.
Identification of
an Executive
Officer
for
purposes of this
Policy will include
at a minimum
executive officers
identified pursuant
to 17 CFR
229.401(b).
For purposes of
this Policy,
Executive Officers
are those persons
designated by the
Board as the
policy-making
officers of the Corporation for purposes of Section 16 of the Securities Exchange
Act of 1934 from time to time.
“Financial Reporting
Measures” means
any of
the following: (i)
measures that
are determined
and presented
in
accordance
with
the
accounting
principles
used
in
preparing
the
Corporation’s
financial
statements,
and
any
measures that are derived wholly or in part from such measures, (ii) stock price and (iii) TSR (as defined below).
A Financial Reporting
Measure need not be
presented within the
Corporation’s
financial statements or
included
in a filing with the SEC.
“Incentive-Based Compensation”
means any compensation
that is granted,
earned, or vested
based wholly or
in
part upon the
attainment of a
Financial Reporting Measure.
Examples of compensation that
is not Incentive-Based
Compensation under this Policy
include, but are not limited to: (i)
salaries (a salary increase earned
wholly or in
part based on
the attainment of a
Financial Reporting Measure
is subject to a
recovery); (ii) bonuses
paid solely
at
the
discretion
of
the
Committee
or
the
Board
that
are
not
paid
from
a
“bonus
pool”
that
is
determined
by
satisfying a Financial Reporting Measure performance goal; (iii) bonuses paid solely upon
satisfying one or more
3
subjective
standards
(e.g.,
demonstrated
leadership)
and/or completion
of a
specified
employment
period; (iv)
non-equity
incentive
plan
awards
earned
solely
upon
satisfying
one
or
more
strategic
measures
(e.g.,
consummating
a
merger
or
divestiture),
or
operational
measures
(e.g.,
opening
a
specified
number
of
offices,
completion of
a project,
increase in
market share);
and (v)
equity awards
for which
the grant
is not
contingent
upon
achieving
any
Financial
Reporting
Measure
performance
goal
and
vesting
is
contingent
solely
upon
completion of a specified employment period and/or attaining one or
more nonfinancial reporting measures.
“Misconduct” means (A)
the Covered Person’s
willful violation of federal,
state or local law,
rule or regulation,
in
either
case,
that
causes material
financial
or reputational
harm
to the
Corporation
or
any
of its
affiliates
or
subsidiaries; (B) the material breach by the Covered Person of any written policy
of the Corporation or covenant
between the Corporation
and the Covered Person;
(C) the Covered Person’s
willful or reckless disclosure
of the
Corporation’s
confidential
information
or trade
secrets;
or
(D)
the
Covered
Person’s
commission
of
an
act
of
fraud, dishonesty
or recklessness in
the performance
of the Covered
Person’s
duties, which
is not in
good faith
and which
subjects the
Corporation or
its affiliates
or subsidiaries
to excessive
risk, financial loss
or materially
disrupts, damages, impairs or interferes with the business of the Corporation
and its affiliates or subsidiaries.
“SEC” means the Securities and Exchange Commission.
“TSR” means total shareholder return.
III.
RECOUPMENT IN THE EVENT OF RESTATEMENT
A.
POLICY WITH RESPECT TO RECOUPMENT DUE TO
RESTATEMENT
The
Corporation
shall
recover
reasonably
promptly
the
amount
of
erroneously
awarded
Incentive-Based
Compensation in
the event that
the Corporation
is required to
prepare an accounting
restatement due to
the
material
noncompliance
of
the
Corporation
with
any
financial
reporting
requirement
under
the
securities
laws,
including
any
required
accounting
restatement
to
correct
an
error
in
previously
issued
financial
statements that
is material
to the
previously
issued financial
statements, or
that would
result in
a material
misstatement
if
the
error
were
corrected
in
the
current
period
or
left
uncorrected
in
the
current
period
(a
“Restatement”). Examples
of changes
to the
Corporation’s
financial statements
that do
not represent
error
corrections and will not trigger the application of
this Policy include, but are not limited to: (i) retrospective
application of a change in accounting principle; (ii) retrospective revision to reportable segment information
due to a change in the structure
of an issuer’s internal organization;
(iii) retrospective reclassification due to
a
discontinued
operation;
(iv)
retrospective
application
of
a
change
in
reporting
entity,
such
as
from
a
reorganization
of
entities
under
common
control;
(v)
retrospective
adjustment
to
provisional
amounts
in
connection with
a prior business
combination; and
(vi) retrospective
revision for
stock splits, reverse
stock
splits, stock dividends or other changes in capital structure.
The Corporation shall recover
erroneously awarded Incentive-Based
Compensation in compliance
with this
Policy, except to
the extent provided under Section III.E. of this Policy.
B.
SCOPE OF APPLICATION
1.
Persons Covered
and Recovery
Period.
Recoupment under
this Section
III applies
to all
Incentive-Based
Compensation received by a person:
●
after beginning service as an Executive Officer,
●
who served as an Executive
Officer at any time during the
performance period for that Incentive-Based
Compensation,
4
●
while the Corporation has a class of securities listed on Nasdaq, and
●
in the case of a Restatement, during the
three completed fiscal years immediately preceding the date that
the Corporation is required to prepare a Restatement (the “Recovery
Period”).
Notwithstanding
this
look-back
requirement,
the
Corporation
is
only
required
to
apply
this
Policy
to
Incentive-Based Compensation received on or after October 2, 2023.
For purposes of this Policy, Incentive-Based Compensation shall be deemed
“received” in the Corporation’s
fiscal period
during which
the Financial
Reporting Measure
(as defined
herein) specified
in the
Incentive-
Based Compensation
award is attained,
even if
the payment or
grant of
the Incentive-Based
Compensation
occurs after the end of that period.
2.
Transition Period.
In addition
to the
Recovery Period,
in the case
of a Restatement,
this Policy
applies to
any
transition
period
(that
results
from
a
change
in
the
Corporation’s
fiscal
year)
within
or
immediately
following
the Recovery
Period (a
“Transition
Period”), provided
that a
Transition
Period between
the last
day of the
Corporation’s previous
fiscal year end
and the first day
of the Corporation’s
new fiscal year that
comprises a period of nine to 12 months will be deemed a completed fiscal year.
3.
Determining Recovery
Period.
For purposes
of determining
the relevant
Recovery Period
in the
case of
a
Restatement, the date that the Corporation is required to prepare the Restatement
is the earlier to occur of:
●
the date the Board, a
committee of the Board, or the officer
or officers of the
Corporation authorized to
take such
action if
Board action
is not
required, concludes,
or reasonably
should have
concluded, that
the Corporation is required to prepare a Restatement, and
●
the
date
a
court,
regulator,
or
other
legally
authorized
body
directs
the
Corporation
to
prepare
a
Restatement.
For
clarity,
the
Corporation’s
obligation
to
recover
erroneously
awarded
Incentive-Based
Compensation
under this Policy is not dependent on if or when a Restatement is filed.
C.
AMOUNT SUBJECT TO RECOVERY
1.
Recoverable Amount - Restatement.
The amount of Incentive-Based Compensation subject
to recovery
under this Policy in the case of a Restatement is the amount
of Incentive-Based Compensation received
that exceeds the amount of Incentive-Based Compensation that otherwise
would have been received had
it been determined based on the restated amounts, computed without regard
to any taxes paid.
2.
Covered Compensation
Based on
Stock Price
or TSR.
For Incentive-Based
Compensation
based on
stock
price
or
TSR, where
the
amount
of
erroneously
awarded
Incentive-Based
Compensation
is not
subject to
mathematical
recalculation
directly from
the information
in a
Restatement, the
recoverable
amount
shall
be
determined
by
the
Committee
based
on
a
reasonable
estimate
of
the
effect
of
the
Restatement on the stock price or TSR upon which the Incentive-Based Compensation was received.
In
such
event,
the
Corporation
shall
maintain
documentation
of
the
determination
of
that
reasonable
estimate and provide such documentation to Nasdaq.
D.
METHOD OF RECOVERY
Without
limiting
anything
in
this
Section
III,
the
Committee
will
have
discretion
in
determining
how
to
accomplish recovery
of erroneously
awarded Incentive-Based
Compensation under
this Policy in
the event of
a
Restatement, recognizing that different means of recovery
may be appropriate in different circumstances.
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E.
EXCEPTIONS
The Corporation shall recover erroneously awarded Incentive-Based Compensation
in compliance with this
Policy except to the extent that the conditions set out below are met and
the Committee has made a
determination that recovery would be impracticable:
1.
Direct Expense Exceeds Recoverable Amount.
The direct expense paid to a third party to assist in
enforcing this Policy would exceed the amount to be recovered; provided, however,
that before concluding
it would be impracticable to recover any amount of erroneously awarded Incentive
-Based Compensation
based on expense of enforcement, the Corporation shall make a reasonable
attempt to recover such
erroneously awarded Incentive-Based Compensation, document such
reasonable attempt(s) to recover, and
provide that documentation to Nasdaq.
2.
Recovery from Certain Tax
-Qualified Retirement Plans.
Recovery would likely cause an otherwise tax-
qualified retirement plan, under which benefits are broadly available to employees
of the Corporation, to
fail to meet the requirements of 26 U.S.C. 401(a)(13) or 26 U.S.C. 411(a)
and regulations thereunder.
F.
PROHIBITION AGAINST INDEMNIFICATION
Notwithstanding the
terms of any
indemnification arrangement
or insurance policy
with any individual
covered
by this Policy, the Corporation shall not indemnify any Executive Officer or former
Executive Officer against the
loss
of
erroneously
awarded
Incentive-Based
Compensation.
In
addition,
the
Corporation
may
not
pay
or
reimburse an
Executive Officer
for premiums
for a
third-party insurance
policy to
fund any
potential recovery
obligations under this Policy.
G.
DISCLOSURE
The Corporation shall file all disclosures with respect to recoveries of Incentive
-Based Compensation under this
Policy in accordance with the requirements of the U.S. Federal securities laws, including
the disclosure required
by the applicable SEC filings.
IV.
RECOUPMENT IN EVENT OF MISCONDUCT
A.
POLICY WITH RESPECT TO RECOUPMENT DUE TO
MISCONDUCT
If
the
Committee
determines,
in
its
sole
discretion,
that
an
act
or
omission
by
a
Covered
Employee
that
constitutes
Misconduct
has
occurred,
the
Committee
may
determine
that
the
Corporation
recover
all
or
any
portion of (A) any
outstanding and unpaid or
unsettled Covered Award (whether or not vested) that
was awarded
to a
Covered Employee
and (B)
any Covered
Award
that was
paid to
or received
by a
Covered Employee,
in
each case, during the
12 month period
preceding the date
of the Misconduct,
or the date
the Corporation becomes
aware of such Misconduct, as determined by the Committee in its sole discretion.
Notwithstanding anything herein to the
contrary, the Committee retains the sole
discretion to determine whether,
and to
what extent,
to enforce
such recoupment,
repayment or
forfeiture upon
consideration of
each situation
based on
its individual
facts and
circumstances and
may make
determinations that
are not
uniform among
the
Covered Employees.
B.
SCOPE OF APLICATION
Recoupment under this Section IV applies to all Covered Awards
received by a Covered Employee:
●
after beginning service as a Covered Employee; and
6
●
who served as a Covered Employee at any time during the performance period for that
Covered
Award.
V.
ADMINISTRATION
The Committee shall oversee compliance with this Policy and
perform the obligations assigned thereto under this
Policy. Any determinations of the Committee will be final, binding
and conclusive and need not be uniform with
respect to each individual covered by this Policy.
Our
People
Corporate
Services
Division
is
responsible
for
carrying
out
this
Policy
and
administering
any
recoupments
thereunder,
subject to
Committee oversight.
Our People
Corporate
Services Division
shall notify
the Chief Legal Officer and the Comptroller of any recoupments
made under this Policy.
The Comptroller Division shall promptly notify the Our People Corporate Services Division and the Chief Legal
Officer of any Restatement.
Subject to Section IX, the Committee
may amend this Policy from
time to time and may terminate
this Policy at
any time,
in each case
in its sole
discretion and
in accordance
with the
Nasdaq Listing
Standard and
applicable
law.
VI.
EFFECTIVENESS; OTHER RECOUPMENT RIGHTS
This Policy shall be effective as of October 2, 2023.
Any right of recoupment under this Policy is in addition to,
and not
in lieu
of, any
other remedies
or rights
of recoupment
that may
be available
to the
Corporation and
its
subsidiaries and affiliates under applicable law or pursuant to the terms of any similar policy or similar provision
in any employment agreement, equity award agreement or similar agreement.
VII.
NON-COMPLIANCE NOTIFICATIONS
Any violation
of this Policy
must be reported
immediately to the
Corporation’s
Chief Legal Officer.
Violations
may
also
be
reported
to
the
Corporation’s
Corporate
Ethics
Officer
or
anonymously
through
EthicsPoint
at
www.popular.com/ethicspoint
-en
(English),
www.popular.com/ethicspoint
(Spanish),
or
by
calling
-866-737-
6813 from Puerto
Rico, the United
States or the
U.S. Virgin
Islands; 1-833-416-6777
from Puerto
Rico; 1-833-
439-1392
from
the
British
Virgin
Islands;
01-800-519-0915
from
Colombia
and
0-800-032-0441
from
Costa
Rica.
VIII.
SANCTIONS
Failure by
the Corporation
to comply with
the disclosure
and recovery
provisions of
this Policy
with respect to
Incentive-Based Compensation
may subject
the Corporation
to delisting
from Nasdaq
and SEC penalties.
Non-
compliance with this Policy by
any officer or employee may subject
the officer or employee to
disciplinary action
by the Corporation, up to and including termination for
cause. Non-compliance may also constitute violations of
law subject to investigation, and in some cases may carry civil or criminal prosecution
and sanctions.
IX.
REVIEW OF POLICY
The Our People Corporate Services division, in consultation with the Chief Legal Officer of the Corporation will
review this Policy on an annual basis and recommend such revisions or amendments, if any, to the Committee as
deemed necessary or
appropriate. The Committee
shall review and
approve any revisions
to this
Policy and submit
it to the Board for ratification, annually.