UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Date of Report (Date of Earliest Event Reported):
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February 18, 2011
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Popular, Inc.
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(Exact name of registrant as specified in its charter)
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Puerto Rico
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001-34084
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66-0667416
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(State or other jurisdiction
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(Commission
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(I.R.S. Employer
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of incorporation)
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File Number)
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Identification No.)
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209 Munoz Rivera Ave., Popular Center Building , Hato Rey , Puerto Rico
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00918
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(Address of principal executive offices)
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(Zip Code)
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Registrants telephone number, including area code:
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787-765-9800
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Not Applicable
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Former name or former address, if changed since last report
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any
of the following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of
Certain Officers; Compensatory Arrangements of Certain Officers
Departure of Directors
On February 18, 2011, Mr. Federic V. Salerno informed the Board of Directors of the Corporation
(the Board) of his decision not to stand for reelection as a director for a new three year term
when his term expires at the upcoming 2011 Annual Stockholders Meeting. Mr. Salernos decision
was based on his desire to devote greater time to other professional responsibilities and was not
related to a disagreement with the Corporation over its operations, policies or practices. The
Corporate Governance and Nominating Committee of the Board commenced the process of identifying a
new nominee to replace Mr. Salerno. In connection with Mr. Salernos decision, the Board also voted
to appoint Mr. William J. Teuber as the Corporations lead director effective upon the expiration
of Mr. Salernos term in office.
Designation of Executive Officers For Reporting Purposes
On February 18, 2011, following an assessment of the current responsibilities, functions and
reporting lines of the Corporations officers, the Board adopted a resolution identifying those
officers that it considered to be executive officers for SEC reporting purposes.
As a result of this assessment, the Board identified the following persons as the executive
officers of the Corporation for SEC reporting purposes:
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Richard L. Carrión
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Chairman, President and Chief Executive Officer of the Corporation
and Banco Popular de Puerto Rico
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Jorge A. Junquera
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Senior Executive Vice President and Chief Financial Officer of the
Corporation
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Carlos J. Vázquez
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Executive Vice President of the Corporation and President of
Banco Popular North America
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Ignacio Alvarez
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Executive Vice President and Chief Legal Officer of the Corporation
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Juan Guerrero
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Executive Vice President, Banco Popular de Puerto Rico
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Amílcar Jordán
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Executive Vice President of the Corporation
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Gilberto Monzón
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Executive Vice President, Banco Popular de Puerto Rico
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Eduardo J. Negrón
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Executive Vice President of the Corporation
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Néstor O. Rivera
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Executive Vice President, Banco Popular de Puerto Rico
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Elí Sepúlveda
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Executive Vice President of the Corporation
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Ricardo Toro
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Executive Vice President, Banco Popular de Puerto Rico
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Compensatory Arrangements for Named Executive Officers
On February 18, 2011, the Compensation Committee (the Committee) of the Board approved certain
executive compensation arrangements with respect to its named executive officers (NEOs). The
actions taken were consistent with the requirements of the Interim Final Rule on TARP Standards for
Compensation and Corporate Governance issued by the U.S. Department of the Treasury in June 2009
(the TARP Interim Final Rule). The TARP Interim Final Rule imposes certain restrictions on
compensation paid by the Corporation to its senior executive officers and certain other employees
as a participant in the TARP Capital Purchase Program (CPP).
After careful consideration of compensation trends within the marketplace, and based on input from
its independent consultant (Pearl Meyer & Partners), the Committee determined that the
compensation-related actions for 2011 discussed below are deemed appropriate. The review performed
by the Committees consultant, which included a comparison of executive compensation with the
Corporations peer financial institutions, revealed that total direct compensation of the
Corporations CEO and several NEOs was significantly lower than industry peers. This finding, in
conjunction with the Corporations elimination of certain perquisites and freeze of benefits in its
retirement pension and pre-tax savings plans, had placed these executives in a low competitive
position. Although the Corporations target compensation levels have already been reduced in line
with performance, the Committee approved certain limited changes to its NEO executive compensation
program to balance goals to: 1) ensure compliance with the CPP; 2) provide fair compensation
considering performance and market practice; 3) retain key executives and motivate them to stay
focused on implementing our strategies during this challenging economic environment; and 4) align
the interests of executives with shareholder interests.
Restricted Stock Award
In light of the CPP-related restrictions, the Corporations incentive program for NEOs is solely in
the form of restricted stock, thereby aligning executive performance with the Corporations
long-term profitability and the optimal use of shareholder capital. Consistent with the
requirements of the CPP, the shares will vest (i.e., no longer be subject to forfeiture) on the
second anniversary of the grant date and will be transferable in 25% increments as the Corporation
repays each 25% portion of the aggregate financial assistance received under TARP, or on its
totality upon completion of repayment of the TARP funds. However, in addition to the above CPP
requirements, in order to be transferable the Corporation must also have achieved profitability for
at least one fiscal year. The Committee added profitability as a condition for transferability in
order to enhance the alignment of the Corporations executive compensation with shareholder
interests.
The awards indicated below were determined by the Committee upon consideration of the contributions
of the members of the senior executive team to the execution of critical 2010 improvements in the
Corporations liquidity, capitalization and asset base which have positioned it solidly for future
growth. The Committee also considered the achievement of individual goals within each executives
area of responsibility related to product or technology infrastructure development, improvements in
credit quality, achievement of business reorganization, and managerial and operational process
improvements. The number of shares of restricted stock awarded to each NEO was determined by the
Committee as 50% of 2010 earned base pay (i.e., less than the maximum permissible amount of
one-third of annual compensation under the TARP Interim Final Rule), utilizing the closing price of
the Corporations stock on the grant date of February 18, 2011. The awards are subject to a
clawback provision if they are found to have been based on any materially inaccurate performance
metric criteria.
Base Salary Adjustments
In order to partially address the difference between certain NEOs current total compensation and
the desired level of competitiveness with regard to market pay levels for similar roles, the
Committee approved an increase in cash base salary for Messrs. Junquera, Vázquez, Alvarez and
Jordán ranging between 2% and 6% of current base salary. With regard to Mr. Carrión, after careful
consideration of market pay information and his role and level of responsibilities, including the
role assumed in May 2010 as President of the Corporation, the Committee approved an increase in
cash base salary from $855,835 to $1,400,000. Prior to this change, Mr. Carrións base salary was
at the same level as his 2005 base salary. Upon consideration of the market information provided
by the Committees compensation consultant, the Committee noted that his level of total direct
compensation was significantly below market for similar roles combining Chairman, President and CEO
responsible for oversight of the strategic and operational aspects of the Corporation. With this
adjustment, Mr. Carrións total direct compensation will be positioned at the 30
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percentile of the Corporations peer group of financial institutions.
Set forth in the table below are the compensation amounts by category for the Corporations NEOs
resulting from the above decisions, with base pay adjustments effective beginning with the March 4,
2011 payroll date:
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Number of Shares of
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Restricted Stock
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NEO
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Adjusted Base Salary
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Awarded
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Richard L. Carrión
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Chairman, President and Chief Executive Officer
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$
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1,400,000
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124,371
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Jorge A. Junquera
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Senior Executive Vice President and Chief
Financial Officer
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625,000
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85,960
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Carlos J. Vázquez
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Executive Vice President
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612,000
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76,843
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Ignacio Alvarez *
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Executive Vice President and Chief Legal Officer
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573,000
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42,370
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Amílcar Jordán *
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Executive Vice President
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425,000
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60,755
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* Although neither Mr. Alvarez nor Mr. Jordán were included as NEOs in the Corporations 2010
Proxy Statement, they will be included as NEOs in the 2011 Proxy Statement.
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Eligibility to Participate in the Popular, Inc. Puerto Rico Non-Qualified Deferred Compensation
Plan
The Popular, Inc. Puerto Rico Nonqualified Deferred Compensation Plan (the Plan) was established
in 2008 and allows certain employees of Popular and its affiliates to defer receipt of a portion of
their compensation in excess of the amounts allowed to be deferred under the Popular, Inc. Puerto
Rico Savings and Investment Plan. The Plan is an unfunded plan of deferred compensation for a
select group of management or highly compensated employees intended to be exempt from the
provisions of Parts 2, 3 and 4 Title I, Subtitle B of ERISA. The Plan is not intended to be a tax
qualified retirement plan under Section 1081.01 of the Internal Revenue Code for a New Puerto Rico
nor its predecessor Section 1165 of the Puerto Rico Internal Revenue Code of 1994, as amended.
On February 18, 2011, the Board approved an amendment to the Plan which removed any restrictions on
participation in such Plan, thereby enabling all of the Corporations NEOs to participate in the
Plan.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
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Popular, Inc.
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February 25, 2011
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By:
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/s/ Ileana Gonzalez
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Name: Ileana Gonzalez
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Title: Senior Vice President and Corporate Comptroller
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