Provided this election is made before the beginning of the year, the director’s plan account will be credited with a dollar amount equivalent to the annual equity retainer and automatically invested in a notional Company stock fund.
Deferrals are credited with earnings based on the performance of certain investment funds selected by the participant. The plan does not pay above-market or preferential earnings on amounts deferred. Deferrals invested in the notional Company stock fund are payable in shares of Navient Common Stock. All other deferrals are payable in cash (in a single lump sum or in installments at the election of the director) upon termination of the director’s service on the Board (except for hardship withdrawals in limited circumstances). As noted below, Ms. Escobedo Cabral, Mr. Diefenderfer, Ms. Thompson, Ms. Unger and Mr. Williams each elected to defer all or a portion of his/her 2017 compensation under the Director Deferred Compensation Plan.
The tables below present information regarding the compensation and stock awards that we have paid or granted to the non-employee directors for the year ended December 31, 2017.
Compensation and Personnel Committee Report
The following report shall not be deemed incorporated by reference in any filing under the federal securities laws by virtue of any general incorporation of this proxy statement by reference and shall not otherwise be treated as filed under the federal securities laws.
The Compensation and Personnel Committee of the Board of Directors has reviewed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K and discussed it with the Company’s management, and based on its review and discussions with management, the Compensation and Personnel Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017, and this proxy statement.
Compensation and Personnel Committee
Linda A. Mills, Chair
Jane J. Thompson, Vice Chair
Katherine A. Lehman
Barry L. Williams
Compensation Discussion and Analysis
Introduction
This Compensation Discussion and Analysis (“CD&A”) provides information regarding our executive compensation guiding principles, the elements of our executive compensation program, the factors that were considered in making compensation decisions for our “named executive officers” or “NEOs” in 2017, and how we have modified our programs to meet Navient’s needs in the future.
Navient’s Compensation and Personnel Committee (the “Compensation Committee” or simply the “Committee”) is responsible for establishing our executive compensation program, including the program’s underlying philosophy, objectives and related policies. The Committee is composed of Ms. Mills (Chair), Ms. Thompson (Vice Chair), Ms. Lehman and Mr. Williams. Until his retirement in May 2017, Mr. Munitz also served as a member of the Committee. Ms. Thompson assumed the role of Vice Chair in February 2018.
This CD&A presents information for the following Navient NEOs:
|
•
|
Jack Remondi, President and Chief Executive Officer
|
|
•
|
Christian Lown, Chief Financial Officer
|
|
•
|
Somsak Chivavibul, Former Chief Financial Officer
|
|
•
|
John Kane, Group President, Business Processing Solutions
|
|
•
|
Jeff Whorley, Group President, Asset Management and Servicing
|
|
•
|
Tim Hynes, Executive Vice President, Consumer Lending
|
|
•
|
Mark Heleen, Chief Legal Officer and Secretary
|
Mr. Chivavibul served as the Company’s Chief Financial Officer until March 27, 2017, when Christian Lown assumed that role. Mr. Chivavibul then became the Company’s Chief Decision Management Officer, and he continued in that role until his departure from the Company on February 28, 2018. Mr. Hynes served as the Company’s Chief Risk & Compliance Officer until June 19, 2017, when he assumed his current role overseeing the Company’s new consumer lending division.
Executive Summary
Navient’s executive compensation program emphasizes the link between pay and performance, aligning the compensation of our executives with the interests of our shareholders. This section summarizes Navient’s performance in 2017 and the impact of that performance on the compensation paid to our NEOs.
Navient’s 2017 results highlight the Company’s ability to acquire significant student loan portfolios, while reducing private education loan charge-offs to their lowest levels in over 10 years. Navient’s 2017 acquisitions of Earnest, a leading financial technology and education finance company, and Duncan Solutions, a transportation revenue management company, are examples of our forward-thinking strategy for anticipating customer needs in the digital age. The Company also continued to deliver growth in our non-education fee revenues in 2017, building for the future success of the business, and succeeded in resolving certain short-term financing challenges in 2017 by retiring or repurchasing $1.5 billion in senior secured debt. Our NEOs also met or exceeded individual cost containment goals established for 2017.
The chart below illustrates our key accomplishments in 2017 and the link between those accomplishments and our executive compensation program:
Business Objectives:
|
|
Key Accomplishments in 2017:
|
|
Link with Executive
Compensation Program:
|
Provide Consistent Returns to Shareholders
|
|
Returned $616 million to our shareholders through dividends and share repurchases
Improved our operating efficiency
|
|
Key Performance Measures:
·
“Core Basis” EPS
·
Reduce Expenses
·
Improve Profitability
Equity Awards:
·
Align NEO Compensation with Shareholder Value
|
Improve Performance of Our Private Education Loan Portfolio
|
|
Private education loan charge-offs decreased by 14% from 2016, resulting in the lowest level of charge-offs in over 10 years
|
|
Key Performance Measures:
·
Private Education Loan Gross Defaults
·
“Core Basis” EPS
|
Grow Non-Education Fee Revenue
|
|
Fee revenue from our non-education businesses increased 21% from 2016
|
|
Key Performance Measure:
·
Revenue From Growth Businesses
·
Fee Income
|
Make Significant Loan Acquisitions
|
|
Acquired $10 billion in educational loans, including $1.2 billion that were private education refinance loans, which add to our consistent and predictable cash flows
|
|
Key Performance Measures:
·
Net Student Loan Cash Flows
·
Pursue Opportunistic Loan Portfolio Acquisitions
|
Successfully Manage Our Liquidity Needs
|
|
Issued $5.7 billion in FFELP loan asset-backed securities or “ABS”, $662 million in private education loan ABS and $1.6 billion in unsecured debt
Retired or repurchased $1.5 billion of senior secured debt
|
|
Key Performance Measures:
·
“Core Basis” EPS
Equity Awards:
·
Align NEO Compensation with Shareholder Value
|
Compensation Programs That Drive Performance:
Our executive compensation program balances annual and long-term performance measures, including a mix of financial, operational and strategic goals that promote effective management of our FFELP loan portfolio, improvements in our private education loan portfolio and non-education fee revenues, and profitable growth in our business services segment. Individual performance goals—including cost containment goals in 2017—also are established for each of our NEOs.
Our annual incentive plan—known as the Management Incentive Plan—is designed to drive short-term performance by focusing on key performance measures that align with our business objectives. For 2017, these performance measures included (i) EPS on a “Core Earnings” basis, (ii) revenue from growth businesses, (iii) fee income, and (iv) private education loan defaults. The Management Incentive Plan is described in greater detail beginning on page 52.
The following chart summarizes Navient’s performance in 2017, as measured under our annual incentive program.
Performance Metric
|
|
2017 Target
|
|
|
2017 Performance
|
|
|
Payout Factor
|
|
Earnings Per Share on a “Core Earnings” Basis
|
|
$
|
1.82
|
|
|
$
|
1.79
|
|
|
|
90.0
|
%
|
Revenue from Growth Businesses (millions)
|
|
$
|
240
|
|
|
$
|
226
|
|
|
|
79.4
|
%
|
Private Education Loan Gross Defaults (millions)
|
|
$
|
546
|
|
|
$
|
553
|
|
|
|
89.7
|
%
|
Fee Income (millions)
|
|
$
|
725
|
|
|
$
|
783
|
|
|
|
150.0
|
%
|
Our 2017 performance resulted in near-target payments under the 2017 Management Incentive Plan, with each of our NEOs receiving 96.3% of their target annual incentive for 2017.
Our long-term incentive program is designed to drive longer-term performance and shareholder value by delivering a significant portion of NEO compensation through equity awards. As in prior years, 50% of the equity awards granted to our NEOs in 2017 were delivered in the form of performance stock units (“PSUs”) that vest based on the Company’s cumulative performance over a three-year performance period. In general, the PSUs granted in 2017 may vest based on a combination of (i) aggregate cash flows from student loans (net of secured borrowings); (ii) cumulative revenue from growth businesses; and (iii) certain strategic objectives focused on a limited number of critical, non-formulaic goals over the next three years. Our 2017 long-term incentive program is described in greater detail beginning on page 53.
Fiscal year 2017 marked the final year of a three-year performance period associated with PSUs granted to our executive team in early 2015. These long-term equity awards were designed to vest at the end of 2017, with a potential payout ranging from 0% to 130% of the target award, based on the Company’s “cumulative core net income” for the three-year performance period. Because the Company failed to meet the threshold performance level established for these PSUs, the awards were forfeited, resulting in no payout to our executive team.
CEO Realizable Pay:
Our pay-for-performance approach is highlighted in the following chart, which shows the alignment between the Company’s performance (as measured by cumulative total shareholder return (“TSR”)) and the annual Realizable Pay (as defined below) of our CEO over the past three fiscal years.
The Committee believes that analysis of Realizable Pay allows a more complete understanding of the pay-for-performance relationship than sole reliance on amounts shown in the Summary Compensation Table, which reflects the grant date value of various equity awards. For example, the table below compares the components of Mr. Remondi’s Realizable Pay for 2017 and 2016. The realizable value of PSUs granted in early 2015 is zero, as these PSUs were subsequently forfeited based on 2015-2017 performance.
|
Year
|
|
Base Salary
($)
|
|
|
Annual Incentive
Compensation
($)
|
|
|
PSUs
($)
|
|
|
RSUs
($)
|
|
|
Stock Options
($)
|
|
|
Total
($)
|
|
CEO Realizable Pay
|
2017
|
|
|
1,000,000
|
|
|
|
1,444,500
|
|
|
|
0
|
|
|
|
1,032,553
|
|
|
|
0
|
|
|
|
3,477,053
|
|
2016
|
|
|
1,000,000
|
|
|
|
1,666,500
|
|
|
|
-
|
|
|
|
2,067,157
|
|
|
|
5,527,226
|
|
|
|
10,260,883
|
|
Realizable Pay
for each of the applicable fiscal years is the sum of base salary paid, annual incentive award earned, the year-end value of RSUs and stock options granted under the Company’s long-term incentive program in that year, and the value of any PSUs that vested during that fiscal year. Stock awards are valued as the end of each fiscal year and include the “in-the-money” value of stock options, RSUs and PSUs. Because the Company typically grants RSUs and stock options in February each year, the year-end value of these equity awards may be significantly greater or less than the grant-date value depending on whether the price of our common stock has increased or decreased by the end of the year. For example, the year-end value of stock options and RSUs granted in early 2016 was substantially greater than the value of these awards upon grant, as the price of our common stock increased between the February 2016 grant date and December 31, 2016. PSUs typically vest based on cumulative performance over three fiscal years. As noted above, for example, PSUs granted in early 2015 were designed to vest at the end of 2017 based on cumulative performance over the 2015-2017 fiscal years, but the value at the end of the fiscal 2017 was zero as none of the PSUs were earned.
Cumulative TSR
assumes a base investment of $100 at May 1, 2014—the date Navient began trading as an independent company following its separation from SLM Corporation—and reinvestment of dividends through December 31, 2017.
Navient’s Compensation Philosophy and Objectives
We provide each of our NEOs with a compensation package that is tied to performance and aligned with the interests of our shareholders. The Compensation Committee utilizes the following guiding principles to design, implement, and monitor our executive compensation program:
|
•
|
Align Compensation with Shareholder Interests
. For 2017, 84% of the total direct compensation opportunity provided to our CEO was at-risk and aligned with shareholder value, including incentive awards that are dependent upon the attainment of specific performance objectives, the value of Navient’s Common Stock or both. This feature of our executive compensation program is highlighted in the charts below.
|
|
•
|
Pay for Performance
. As illustrated above, more than 50% of the total compensation paid to our NEOs is delivered through annual incentives and PSUs that are earned based on achievement of enterprise-wide goals that impact shareholder value.
|
|
•
|
Reward Annual Performance
. The annual incentive award component of our NEOs’ total compensation is designed to reward achievement of key annual goals that are aligned with the Company’s annual business plan, and conversely to be lower or zero in periods in which those key annual goals are only partially achieved or not achieved at all.
|
|
•
|
Reward Long-term Growth
. The total compensation paid to our NEOs is weighted toward long-term equity-based incentives. These awards link pay to sustained performance and shareholder value creation.
|
|
•
|
Retention of Top Executives
. Our NEOs have base salaries and benefits that are competitive, which permit Navient to attract, motivate and retain executives who can drive and lead our success.
|
The compensation package we provide to our NEOs is designed to be competitive when compared to companies that compete with us for executive talent. In setting the compensation opportunity for our NEOs, we generally target the median total direct compensation provided to similarly-situated executives by our peer group companies.
We also believe that strong governance practices and policies are aligned with shareholder interests. Our policies prohibit hedging, pledging or short-sales of any Company stock held by our NEOs and provide for the clawback of compensation in certain situations. See “Other Arrangements, Policies and Practices Related to Our Executive Compensation Programs” below.
How Compensation Decisions Are Made
In establishing competitive total compensation packages for our NEOs, the Compensation Committee relies on market data to analyze the executive compensation packages offered by Navient’s peer group companies, which are described below. While the Committee generally targets the median total compensation opportunity provided by our peer group companies to similarly-situated executives, market data is only one of several factors considered in establishing the compensation
opportunity levels of our NEOs. Past pay practices and internal employee pay equity, as well as the skills and experience that each NEO brings to Navient, are all important factors considered by the Committee. Navient’s annual strategic business plan also factors heavily in determining certain elements of total compensation, such as our Annual Incentive and Long-term Incentive Programs. These programs are described in more detail below.
Role of the Compensation Consultant.
The Compensation Committee is advised by its Compensation Consultant. See “Compensation Consultant and Independence” for more information on the Compensation Consultant’s role as an independent advisor to the Compensation Committee.
Use of Peer Groups.
Navient seeks to provide its senior executives with competitive compensation relative to a peer group of companies. The Compensation Committee reviews the composition of the peer group annually with the assistance of the Compensation Consultant, making adjustments as needed to address changes in Navient’s business or changes in the peer group companies due to mergers or other transactions.
Based on the Compensation Committee’s review, the peer group for 2017 was changed to better highlight Navient’s three “best fit” core competency categories: customer account management, asset and risk management, and high-volume operations. Peer companies with asset sizes similar to Navient were selected in each of these categories. The Compensation Committee believes that asset size is the most relevant comparator when identifying other companies of similar size and complexity. The resulting peer group, which the Committee used as context when setting target pay levels at the start of 2017, consists of the following companies:
2017 Navient Peer Group
Company
|
|
Total
Assets
(1)
|
|
|
Net
Income
(2)
|
|
|
Market
Cap
(1)
|
|
Customer Account Management
|
|
|
|
|
|
|
|
|
|
Alliance Data Systems Corporation
|
|
$
|
30,685
|
|
|
$
|
789
|
|
|
$
|
14,004
|
|
Automatic Data Processing, Inc.
(3)
|
|
|
44,546
|
|
|
|
1,733
|
|
|
|
51,973
|
|
DST Systems, Inc.
|
|
|
2,938
|
|
|
|
452
|
|
|
|
3,738
|
|
Total System Services, Inc.
|
|
|
6,332
|
|
|
|
586
|
|
|
|
14,540
|
|
The Western Union Company
|
|
|
9,231
|
|
|
|
(557
|
)
|
|
|
8,731
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset and Risk Management
|
|
|
|
|
|
|
|
|
|
|
|
|
The Charles Schwab Corporation
|
|
|
243,274
|
|
|
|
2,354
|
|
|
|
68,865
|
|
Comerica Incorporated
|
|
|
71,567
|
|
|
|
743
|
|
|
|
15,098
|
|
Fifth Third Bancorp
|
|
|
142,193
|
|
|
|
2,194
|
|
|
|
21,407
|
|
Lincoln National Corporation
|
|
|
281,763
|
|
|
|
2,079
|
|
|
|
16,821
|
|
Voya Financial, Inc.
|
|
|
222,532
|
|
|
|
(2,992
|
)
|
|
|
8,892
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
High Volume Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
Discover Financial Services
|
|
|
100,087
|
|
|
|
2,099
|
|
|
|
27,951
|
|
Fiserv, Inc.
|
|
|
10,289
|
|
|
|
1,246
|
|
|
|
27,327
|
|
Global Payments Inc.
|
|
|
12,998
|
|
|
|
468
|
|
|
|
15,952
|
|
Paychex, Inc.
(4)
|
|
|
7,685
|
|
|
|
817
|
|
|
|
24,453
|
|
Wordplay, Inc.
(5)
|
|
|
8,667
|
|
|
|
130
|
|
|
|
11,955
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25
th
Percentile
|
|
|
8,949
|
|
|
|
460
|
|
|
|
12,980
|
|
Median
|
|
|
30,685
|
|
|
|
789
|
|
|
|
15,952
|
|
75
th
Percentile
|
|
|
121,140
|
|
|
|
1,906
|
|
|
|
25,890
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Navient Corporation
|
|
|
114,991
|
|
|
|
292
|
|
|
|
3,503
|
|
Rank
|
|
5 of 16
|
|
|
13 of 16
|
|
|
16 of 16
|
|
Percentile
|
|
|
73
|
|
|
|
17
|
|
|
|
0
|
|
(1)
|
Total assets and market capitalization as of each company’s most-recent fiscal year end except for Automatic Data Processing, Inc. and Paychex, Inc. Please see footnotes (4) and (5) for more information.
|
(2)
|
Financial results (in millions in accordance with GAAP) for each company’s most-recently-ended fiscal year, as reflected in each company’s Annual Report on Form 10-K filed with the SEC. Except as otherwise noted below, each company’s most-recent fiscal year ended December 31, 2017.
|
(3)
|
Automatic Data Processing’s most recent fiscal year end is June 30, 2017. Market capitalization reflects common shares outstanding at December 31, 2017, multiplied by the per share closing price of the company’s common stock on December 29, 2017, the last trading date of the year.
|
(4)
|
Paychex’s most recent fiscal year end is May 31, 2017. Market capitalization reflects common shares outstanding at November 30, 2017, multiplied by the per share closing price of the company’s common stock on December 29, 2017, the last trading date of the year.
|
(5)
|
The company was formerly known as Vantiv, Inc. and changed its name to Worldpay, Inc. after it acquired Worldpay Group plc in January, 2018.
|
Consideration of Say-on-Pay Vote Results.
At our most recent annual meeting of shareholders, held on May 25, 2017, the Company conducted an advisory vote to approve its executive compensation for the fiscal year ended December 31, 2016. Shareholders expressed support for the compensation of our NEOs, with approximately 97.1% of the votes present in person or represented by proxy at the meeting and entitled to vote on the matter cast to approve our 2016 executive compensation. The Committee took into account the results of this advisory vote when making compensation decisions for 2017.
In 2015, the Company conducted an advisory vote on the frequency of future advisory votes to approve its executive compensation. Our shareholders indicated their preference for future advisory votes to be held annually. Consistent with the shareholders’ vote on this matter, the Board adopted a policy providing for annual advisory votes to approve the Company’s executive compensation.
2017 Executive Compensation Program
Primary Elements of Compensation.
The compensation program for our NEOs consists of three primary elements:
Compensation Element
|
Objective
|
Type of Compensation
|
Base Salary
|
To provide a base level of cash compensation consistent with the executive’s level of responsibility.
|
Fixed cash compensation. Reviewed annually and adjusted as appropriate.
|
|
|
|
Annual Incentives
|
To encourage and reward our NEOs for achieving annual corporate and individual performance goals.
|
Variable compensation. Performance-based. Payable in cash.
|
|
|
|
Long-term Incentives
|
To motivate and retain senior executives by aligning their interests with those of shareholders through sustained performance and growth.
|
Multi-year variable compensation. Generally payable in performance stock units (“PSUs”) and/or restricted stock units (“RSUs”), in addition to stock options. PSUs are subject to performance vesting based on cumulative three-year performance, with each award being settled in stock at the end of the performance period to the extent that goals are met. RSUs and stock options are subject to time-based vesting, with each award vesting in 1/3 increments over a three-year period. For 2017, total long-term incentive value was provided 50% in PSUs, 30% in RSUs, and 20% in stock options.
|
The Compensation Committee makes decisions regarding each primary element of compensation described above.
In addition to the three primary compensation elements discussed above, our NEOs have an opportunity to participate in the Navient Deferred Compensation Plan for retirement planning purposes. The Deferred Compensation Plan offers a variety of investment choices, none of which represents an “above-market return.” We also provide our NEOs with the same standard health, welfare and retirement benefits provided to our employees, as well as limited perquisites. Each of our NEOs also participates in severance plans for our senior executives.
Total Direct Compensation Mix.
These primary compensation elements—Base Salary, Annual Incentives and Long-term Incentives—together form Total Direct Compensation for each of our NEOs.
Consistent with Navient’s pay-for-performance culture, a substantial portion of the 2017 Total Direct Compensation of our NEOs was at-risk and dependent upon the attainment of specific performance objectives, as well as the value of Navient’s Common Stock. The charts below provide the at-risk percentages of the 2017 Total Direct Compensation of our NEOs and the percentage of their compensation that is at-risk, with Annual Incentives and PSUs shown at target levels of performance.
Base Salary.
The Compensation Committee reviews base salary levels for the NEOs on an annual basis, but may make changes less frequently. Based on a market analysis of the 2017 Navient peer group, the Compensation Committee (in consultation with the other independent members of the Board) determined that Mr. Remondi’s 2017 base salary should remain unchanged at $1,000,000, consistent with peer group benchmarking.
The 2017 base salaries of Messrs. Chivavibul, Kane, Whorley, Hynes and Heleen were established by the Compensation Committee, taking into account recommendations made by Mr. Remondi, as well as a review of benchmarking data from the 2017 Navient peer group. Based on their performance—including performance relative to individual cost containment goals established for 2017 that were met or exceeded—and the benchmarking data, the Committee concluded that an increase in base salary was warranted. Mr. Hynes and Mr. Heleen received a larger increase due to a change in their responsibilities. Mr. Lown’s base salary was determined by the Committee by reference to benchmarking data and other factors when he was recruited to join the Company in early 2017. In the case of each NEO, including the CEO, the Committee reached its final determinations in consultation with the Compensation Consultant
The following chart lists the base salary for each of our NEOs as of December 31, 2016, and December 31, 2017, respectively.
Navient NEOs
|
|
2016 Base
Salary
|
|
|
2017 Base
Salary
|
|
Mr. Remondi
|
|
$
|
1,000,000
|
|
|
$
|
1,000,000
|
|
Mr. Lown
*
|
|
|
—
|
|
|
|
400,000
|
|
Mr. Chivavibul
|
|
|
380,000
|
|
|
|
390,000
|
|
Mr. Kane
|
|
|
450,000
|
|
|
|
460,000
|
|
Mr. Whorley
|
|
|
450,000
|
|
|
|
460,000
|
|
Mr. Hynes
|
|
|
370,000
|
|
|
|
385,000
|
|
Mr. Heleen
|
|
|
370,000
|
|
|
|
385,000
|
|
*Mr. Lown joined the Company in March 2017, and was not a Named Executive Officer of the Company during 2016.
Annual Incentive Awards: The 2017 Management Incentive Plan.
As part of Navient’s annual strategic planning process, management developed an operating plan for the Company’s 2017 fiscal year. The Compensation Committee and management then discussed specific corporate performance goals for Navient to be set forth in a 2017 annual incentive program—known as the Management Incentive Plan (“MIP”)—with the express purpose of focusing executives on achieving the operating plan.
For 2017, the Committee decided to continue its focus on “Core Earnings” per share
4
as a key financial metric, which incorporates performance relative to capital management and is aligned with the focus of investors. Three other financial metrics were carried forward from the 2016 MIP—revenue from growth businesses, private loan gross defaults and fee income. The first of these metrics stresses the importance of strategic growth, with specific revenue goals for those businesses that the Company has targeted for growth. Gross loan defaults is a key metric used by our investors and others to measure the performance of our loan portfolios. Incorporating this metric into our annual incentive plan helps drive our efforts to minimize loan defaults, which helps our investors as well as our student loan customers. Fee income emphasizes the continuing importance of our fee-based businesses, which generate income through loan servicing, asset recovery and other business processing activities. Lastly, the Committee eliminated the metric introduced in 2016 for strategic debt financing proceeds, which had been designed to focus management on certain short-term financing challenges experienced in 2016 and earlier years. The Company was successful in meeting those challenges in 2016, thereby eliminating the need to retain this performance metric.
In addition to establishing a performance target for each of the performance metrics referenced above, the Committee assigned a weight to each performance metric. The weight assigned to “Core Earnings” per share (40%) remained unchanged from 2016. For 2017, the Committee determined that more emphasis should be placed on revenue from growth businesses, increasing the weight of this performance metric from 15% in 2016 to 25% in 2017. Additionally, the weights assigned to private loan gross defaults and fee income increased from 15% to 20% and from 10% to 15%, respectively. The Committee also established a scale of “payout factors” to assess the Company’s performance relative to target. As noted in the chart below, the payout factors range from 50% based on a threshold level of performance, to 150% based on a maximum level of performance, with performance below threshold resulting in a payout factor of 0%.
The chart below sets forth the weight, target, and payout factors for each performance metric:
2017
Performance Metric
|
|
Weight
|
|
Below Performance
Threshold
(Payout Factor = 0%)
|
|
Performance
Threshold
(Payout Factor = 50%)
|
|
|
Performance
Target
(Payout Factor = 100%)
|
|
Performance
Maximum
(Payout Factor= 150%)
|
Earnings Per Share on a “Core Earnings” Basis
(1)
|
|
|
40
|
%
|
<$1.67
|
|
$
|
1.67
|
|
|
$
|
1.82
|
|
>= $2.01
|
Revenue from Growth Businesses (millions)
(2)
|
|
|
25
|
%
|
<$206
|
|
$
|
206
|
|
|
$
|
240
|
|
>= $262
|
Private Education Loan Gross Defaults (millions)
(3)
|
|
|
20
|
%
|
>$579
|
|
$
|
579
|
|
|
$
|
546
|
|
<= $520
|
Fee Income (millions)
|
|
|
15
|
%
|
<$685
|
|
$
|
685
|
|
|
$
|
725
|
|
>= $755
|
(1)
|
Excludes any regulatory remediation charges.
|
(2)
|
Revenue from non-federal-loan-related businesses.
|
(3)
|
Based on pre-established adjustment guidelines, and in order to remain consistent with the MIP goals, 2017 results were adjusted to exclude defaults from a large loan portfolio acquired in mid-2017, as well as the estimated reduction in loan defaults resulting from borrowers being placed in disaster forbearance status following major hurricanes in 2017.
|
For each metric, the Committee established a payout curve for performance between threshold-target and target-maximum. When determining MIP payouts, the Committee may also consider each NEO’s performance against individual goals.
The chart below sets forth (i) each performance metric, (ii) the performance target approved by the Compensation Committee for each metric, (iii) the 2017 actual performance of the Company for each metric, (iv) the payout factor for each metric based on the Company’s level of achievement relative to target, (v) the relative weighting of each performance metric, and (vi) the performance score attributable to each metric, as well as the overall performance score.
4
“Core Earnings” per share is a non-GAAP financial measure that does not represent a comprehensive basis of accounting. For more information on the definition of Core Earnings and for a reconciliation of non-GAAP financial measures with GAAP results, please refer to the discussion included in Item 7 of our 2017 Annual Report filed on Form 10-K on February 26, 2018, or refer to the Investor Relations section of our website located at http://www.navient.com/about/investors/.
2017 Performance Metric
(i)
|
|
Performance
Target
(ii)
|
|
|
2017 Actual
Performance
(iii)
|
|
|
Payout
Factor
(iv)
|
|
|
Weighting
(v)
|
|
|
Performance
Score
(vi)
|
|
Earnings Per Share on a “Core Earnings” Basis
|
|
$
|
1.82
|
|
|
$
|
1.79
|
|
|
|
90.0
|
%
|
|
|
40
|
%
|
|
|
36.0
|
%
|
Revenue from Growth Businesses (millions)
|
|
$
|
240
|
|
|
$
|
226
|
|
|
|
79.4
|
%
|
|
|
25
|
%
|
|
|
19.9
|
%
|
Private Education Loan Gross Defaults (millions)
|
|
$
|
546
|
|
|
$
|
553
|
|
|
|
89.7
|
%
|
|
|
20
|
%
|
|
|
17.9
|
%
|
Fee Income (millions)
|
|
$
|
725
|
|
|
$
|
783
|
|
|
|
150.0
|
%
|
|
|
15
|
%
|
|
|
22.5
|
%
|
Overall Performance Score
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
96.3
|
%
|
These performance results were reviewed and certified by the Compensation Committee in January 2018. Annual incentive awards for 2017 were based solely on the overall performance score and paid in cash in February 2018. The 2017 incentive award amount for each of the NEOs under the 2017 MIP is set forth in the following table.
Navient NEOs
|
|
Target % of
Base Salary
|
|
|
2017 Target Incentive
Amount ($)
|
|
|
Overall
Performance
Score
|
|
|
2017 MIP Incentive Award
Amount ($)
|
|
Mr. Remondi
|
|
|
150
|
%
|
|
|
1,500,000
|
|
|
|
96.3
|
%
|
|
|
1,444,500
|
|
M. Lown
|
|
|
150
|
%
|
|
|
600,000
|
|
|
|
96.3
|
%
|
|
|
577,800
|
|
Mr. Chivavibul
|
|
|
150
|
%
|
|
|
585,000
|
|
|
|
96.3
|
%
|
|
|
563,355
|
|
Mr. Kane
|
|
|
150
|
%
|
|
|
690,000
|
|
|
|
96.3
|
%
|
|
|
664,470
|
|
Mr. Whorley
|
|
|
150
|
%
|
|
|
690,000
|
|
|
|
96.3
|
%
|
|
|
664,470
|
|
Mr. Hynes
|
|
|
150
|
%
|
|
|
577,500
|
|
|
|
96.3
|
%
|
|
|
556,133
|
|
Mr. Heleen
|
|
|
150
|
%
|
|
|
577,500
|
|
|
|
96.3
|
%
|
|
|
556,133
|
|
Long-term Incentive Program.
Based upon the recommendation of the Chief Executive Officer and on a market analysis of the 2017 Navient peer group performed by the Committee’s independent consultant, the Compensation Committee approved 2017 long-term incentive awards for our NEOs in early 2017 in the following amounts: Mr. Remondi ($4,000,000); Mr. Chivavibul ($900,000); Mr. Kane ($1,450,000); Mr. Whorley ($1,350,000); Mr. Hynes ($1,000,000); and Mr. Heleen ($750,000). In general, these award levels represent a modest increase over 2016, which the Committee determined were warranted by the executive team’s continued strong performance in the face of an increasingly challenging regulatory, rating agency and financial environment.
Mr. Lown received a one-time inducement equity award of $1,000,000 when he joined the Company in March 2017. Mr. Lown also is eligible to receive a one-time deferred signing bonus of $1,400,000, less applicable withholding taxes (“Deferred Signing Bonus”), to compensate him for a portion of the long-term equity and deferred compensation with his former employer that he forfeited by joining Navient. This Deferred Signing Bonus, will be payable in cash in two equal installments on the first and second anniversaries of his start date with the Company, March 17, 2017, provided he remains employed by the Company on each such date.
With the exception of Mr. Lown, the 2017 long-term incentive awards were delivered as 50% in PSUs, 30% in RSUs, and 20% in stock options. Mr. Lown’s one-time inducement equity award was delivered entirely in RSUs. In future years, Mr. Lown’s annual equity awards will be delivered in the same mix of awards as other NEOs. The chart below details the 2017 long-term incentive awards for our NEOs:
Navient NEOs
|
|
Performance Stock Units
(1)
(#)
|
|
|
Restricted Stock Units
(2)
(#)
|
|
|
Stock Options
(3)
(#)
|
|
|
Total Award
Value
(4)
($)
|
|
Mr. Remondi
|
|
|
129,198
|
|
|
|
77,519
|
|
|
|
297,397
|
|
|
|
4,000,000
|
|
Mr. Lown
|
|
|
-
|
|
|
|
71,428
|
|
|
|
-
|
|
|
|
1,000,000
|
|
Mr. Chivavibul
|
|
|
29,069
|
|
|
|
17,441
|
|
|
|
66,914
|
|
|
|
900,000
|
|
Mr. Kane
|
|
|
46,834
|
|
|
|
28,100
|
|
|
|
107,806
|
|
|
|
1,450,000
|
|
Mr. Whorley
|
|
|
43,604
|
|
|
|
26,162
|
|
|
|
100,371
|
|
|
|
1,350,000
|
|
Mr. Hynes
|
|
|
32,299
|
|
|
|
19,379
|
|
|
|
74,349
|
|
|
|
1,000,000
|
|
Mr. Heleen
|
|
|
24,224
|
|
|
|
14,534
|
|
|
|
55,762
|
|
|
|
750,000
|
|
(1)
|
This column represents the target PSUs granted to each of the NEOs on February 6, 2017, with the target number of PSUs equal to 50% of the 2017 long-term incentive award amount approved by the Compensation Committee divided by the closing price of Navient Common Stock on the grant
|
date. Each PSU is subject to performance-based vesting over a three-year performance period beginning on January 1, 2017, and ending on December 31, 2019. The vesting provisions of these PSUs are described below.
(2)
|
This column represents the RSUs granted to each of the NEOs on February 6, 2017, with the number of RSUs equal to 30% of the 2017 long-term incentive award amount approved by the Compensation Committee divided by the closing price of Navient Common Stock on the grant date. These RSUs are scheduled to vest in one-third increments on each of the first, second and third anniversaries of the grant date, subject to certain terms and conditions.
|
(3)
|
This column represents the stock options granted to each of the NEOs on February 6, 2017, with the number of stock options determined using 20% of the 2017 long-term incentive award amount approved by the Compensation Committee and the Black-Scholes option value (which incorporates the closing price of Navient Common Stock on the grant date). These stock options are scheduled to vest in one-third increments on each of the first, second and third anniversaries of the grant date, subject to certain terms and conditions.
|
(4)
|
Total award value differs slightly from the grant date fair value, as reflected in the “Summary Compensation Table” and “Grants of Plan-Based Awards” table, as the number of units/options is rounded down to the nearest whole unit or option to avoid the issuance of fractional units or shares.
|
The Compensation Committee determined that PSUs should continue to have the most weight (50%) in the mix of long-term incentive vehicles to strongly align executive pay with the Company’s long-term performance. The mix of RSUs and stock options remained the same as the 2016 long-term incentives, with RSUs were given slightly more weight (30%) than stock options (20%).
For 2017, the Committee kept the PSU structure adopted in 2016, which aligns with the Company’s objectives for cash flow, revenue from growth businesses, and achievement of strategic objectives. These PSUs vest based on performance over the three-year period from 2017 to 2019. The performance metrics, weightings and potential for PSU vesting as a percentage of the target number of PSUs are shown in the chart below:
Performance Metric
|
Weight
|
Percentage of PSUs Vesting
(1)
|
0%
|
50%
|
100%
|
150%
|
Net Student Loan Cash Flows
(2)
|
50%
|
Less than
$6.75 billion
|
$6.75 billion
|
$7.85 billion
|
$9.25 billion
or greater
|
Cumulative Revenue from Growth Businesses
(3)
|
30%
|
Less than
$770 million
|
$770 million
|
$995 million
|
$1.27 billion
or greater
|
Strategic Objectives
|
20%
|
·
Build strong relationships with state and federal regulators
·
Pursue opportunistic loan portfolio acquisitions
·
Significantly reduce expenses
·
Improve profitability of key business lines
|
(1)
|
For points between each performance level, the vesting percentages will be interpolated. That is, vesting will be interpolated between threshold performance (50% vesting) and target performance (100% vesting), as well as between target performance and maximum performance (150% vesting).
|
(2)
|
Aggregate cash flows net of secured borrowings from all student loans (including private credit refinance loans) realized for the fiscal years 2017, 2018 and 2019, including student loan cash flows realized from new acquisitions, but excluding the impact of cash flows for fiscal years beyond 2019 that are accelerated through securitizing or pledging unencumbered student loans, or through loan sales.
|
(3)
|
That portion of the Company’s aggregate revenue for fiscal years 2017-19 from non-federal-loan-related businesses, including revenue from private credit refinance loans.
|
The Compensation Committee selected each of these performance metrics with specific business objectives in mind. Aggregate cash flows from student loans (net of secured borrowings) realized for the fiscal years 2017, 2018 and 2019 represent a critical driver of shareholder value, and thus are given the most weight. Strong cash flow performance supports our shareholder dividends, share repurchases, debt repayments and strategic investments in future growth areas. Cumulative revenue from growth businesses is a measure of our success in realizing our long-range business plans and our ability to incorporate new growth businesses into our portfolio to balance our maturing portfolio of FFELP loans. Finally, strategic objectives are focused on a limited number of critical, non-formulaic goals over the next three years.
With regard to the performance targets established for each metric, the Compensation Committee believes that these targets are set at challenging levels in light of the uncertain regulatory, rating agency and financial environment the Company
faces. The Committee believes that these environmental factors increase the degree of difficulty that management faces in achieving the long-term growth and performance goals of the Company.
2015-17 PSUs.
Fiscal year 2017 marked the final year of a three-year performance period associated with PSUs granted to our executive team in early 2015. These long-term equity awards were designed to vest at the end of 2017, with a potential payout ranging from 0% to 130% of the target award, based on the Company’s “cumulative core net income” for the three-year performance period. Because the Company failed to meet the threshold performance level established for these PSUs, the awards were forfeited, resulting in no payout to our executive team.
Deferred Compensation.
We provide our NEOs with the opportunity to defer a portion of their compensation on a tax-deferred basis under the Navient Deferred Compensation Plan (the “Deferred Compensation Plan”).
The Deferred Compensation Plan is designed to provide all of our senior employees, including our NEOs, with the opportunity to save for retirement and other personal expenses on a tax-favored basis. Each participating employee may elect to defer a portion of his or her eligible compensation under the Deferred Compensation Plan, and amounts deferred are credited to bookkeeping accounts along with Company matching contributions designed to encourage employee participation. Amounts in each participant’s account are indexed to one or more investment alternatives chosen by each participant from a range of market-based alternatives. The Deferred Compensation Plan does not pay above-market or preferential earnings on compensation deferred under or contributed to the plan. Additional details for our NEOs can be found below under the “Non-Qualified Deferred Compensation” table.
Health, Welfare and Retirement Benefits.
Our NEOs are eligible to participate in the same broad-based employee benefit programs that we offer to our other employees, such as group health benefits and tax-qualified retirement benefits.
Perquisites.
Perquisites are limited and are not a significant portion of our compensation program. Our policy is to allow limited personal use of the company’s aircraft by our NEOs. To the extent an NEO uses Navient’s private aircraft for personal travel, the NEO must reimburse Navient for the variable flight costs of such personal use. These reimbursements exceed the requirements of the Internal Revenue Code. In 2017, we did not provide relocation allowances to our NEOs. We provided transportation allowances to our CEO as described in the Summary Compensation Table.
Prior to 2018, the Compensation Committee approved annual physicals for our senior executives, including our NEOs. Consistent with a market trend to limit perquisites, the executive physical program was eliminated effective January 1, 2018.
Severance Benefits.
Navient has adopted an executive severance plan and a change in control severance plan, which are described in greater detail under the heading “Arrangements with Named Executive Officers” below. We generally utilize plans (as opposed to individual agreements) to provide severance and change in control payments and benefits for several reasons. First, a “plan” approach provides us with the flexibility to change the terms of severance benefits from time to time. In addition, this approach is more transparent, both internally and externally, which eliminates the need to negotiate severance or other employment separation benefits on a case-by-case basis and assures each of the executives that his or her severance benefits are comparable to those of other executives with similar levels of responsibility and tenure.
Under the executive severance plan, our NEOs are eligible for severance payments in the event of an involuntary termination of employment without “cause.” In addition, they are eligible for “double trigger” severance payments under the change in control severance plan in the event of an involuntary termination of employment without “cause” or a termination of employment with “good reason” in connection with a change in control of Navient. All plan participants, including our NEOs, are entitled to certain limited “single trigger” benefits upon a change in control, including equity acceleration, only when equity awards are not honored, assumed, or replaced by a successor employer of Navient. Such equity acceleration provides NEOs with the benefit of these outstanding awards granted in prior years. They also may be able to exercise the awards and possibly participate in the change in control transaction for the consideration received.
Other Arrangements, Policies and Practices Related to Our Executive Compensation Program
Share Ownership Guidelines.
Navient has adopted share ownership guidelines applicable to its senior executives, including our NEOs. These ownership guidelines, which are expected to be achieved over a five-year period, are as follows:
|
•
|
Chief Executive Officer — Lesser of 1 million shares or $5 million in value
|
|
•
|
Executive Vice President — Lesser of 200,000 shares or $1 million in value
|
|
•
|
Senior Vice President — Lesser of 70,000 shares or $350,000 in value
|
The guidelines encourage continued ownership of a significant amount of Navient’s Common stock acquired through equity awards and help align the interests of our senior executives with the interests of our shareholders. A senior executive must hold Navient Common Stock acquired through equity grants until the applicable thresholds are met, and a senior executive will not be eligible to receive equity grants if he or she sells this stock (whether before or after such guidelines are met), if such sale would result in a decrease below the thresholds established by the guidelines.
The following shares and share units count towards the ownership guidelines: shares held in brokerage accounts; vested shares credited to deferred compensation accounts; shares credited to qualified retirement plan accounts; vested performance stock and PSUs; restricted stock and RSUs that vest solely upon the passage of time, on an after-tax basis, and vested stock options, to the extent that they are “in-the-money” on an after-tax basis.
All of Navient’s NEOs are in compliance with the share ownership guidelines as of the date of this proxy statement either through their stock ownership levels or due to the five-year initial period not being finished.
Hedging/Pledging Prohibition.
Navient policy prohibits directors and senior management from engaging in hedging, pledging and certain other transactions involving Navient Common Stock. See “Director Compensation” above for additional details.
Policy on Rule 10b5-1 Trading Plans.
The Company has a policy governing the use by directors and executive officers of pre-established trading plans for sales of our Common Stock. See “Director Compensation” above for additional details.
Clawback.
Awards made to senior officers, including our NEOs, under the Navient Corporation 2014 Omnibus Incentive Plan (as amended and restated) are subject to clawback in the event of a material misstatement of Navient’s financial results and other qualifying events. Navient enhanced its clawback policy in 2017 following an extensive review and consideration of the Company’s then-existing clawback policy by the Compensation Committee. The enhanced clawback policy grants the Board discretion to recoup incentive compensation both in the event of a financial restatement and in the case of the executive’s misconduct involving a material violation of Navient policy or commission of fraud or other misconduct involving Navient. Following engagement with its shareholders, the Board further enhanced the clawback policy in March 2018 to add a clawback trigger in the event of misconduct committed by persons under a senior officer’s supervision.
Navient Compensation Committee Process for Approving Long-term Awards.
The Compensation Committee approves long-term awards on an annual basis at a regularly scheduled committee meeting. The Committee has delegated authority to a sub-committee consisting of the Compensation Committee Chair and the CEO (the “Sub-Committee”) to approve long-term awards for new employees and promotions below the executive officer level. These awards generally are effective on the day on which the Sub-Committee approves the awards. The Compensation Committee approves any awards to newly-hired or promoted executive officers. The grant date for these awards generally is the applicable meeting date of the Committee at which the awards are approved. Under the terms of the Navient Corporation 2014 Omnibus Incentive Plan, as amended and restated, stock options are required to be priced at the closing market price of Navient’s Common Stock on the Nasdaq on the date of grant.
Tax Deductibility of Compensation Over $1 Million.
Section 162(m) of the Internal Revenue Code (“Section 162(m)”) can potentially disallow a federal income tax deduction for compensation over $1 million paid to certain NEOs. Prior to federal tax reform enacted in late 2017, the Section 162(m) limitations applied to the chief executive officer and the three other highest-paid NEOs (excluding the chief financial officer) who were serving as of the last day of Navient’s fiscal year (“covered employees”), subject to a “performance-based compensation” exception for compensation paid pursuant to shareholder-approved plans. Although much of the compensation opportunity in our executive compensation program is performance-based and (prior to 2018) generally deductible for U.S. federal income tax purposes, the Compensation Committee retains the flexibility to award compensation to the NEOs that is not deductible for U.S. federal income tax purposes.
With regard to our 2017 annual incentive program—known as the Management Incentive Plan (“MIP”)—special rules apply for executives subject to Section 162(m). The Committee established a separate performance target applicable only to these executives. This “162(m) performance target” for 2017 required that the Company achieve positive Core Net Income for the year. If this target is achieved, each executive subject to Section 162(m) becomes eligible to receive an incentive payment based on the maximum applicable award (i.e., 150%). However, the Committee retained “negative discretion” to reduce the executive’s incentive payment using the same criteria established for all other MIP participants who are not subject to Section 162(m). This approach allows the 2017 MIP to operate in the same manner for all participants, regardless of whether they are subject to Section 162(m).
The Committee also established a separate 162(m) performance target for PSUs granted in connection with our 2017 long-term incentive program. This 162(m) performance target requires that the Company achieve positive Cumulative Core Net Income for the three-year performance period. If this target is achieved, each executive subject to Section 162(m) becomes eligible for the maximum level of vesting available (i.e., 150%). However, the Committee retained “negative discretion” to reduce the level of vesting using the same criteria established for all other PSU recipients who are not subject to Section 162(m).
The Tax Cut and Jobs Act of 2017 includes special grandfathering rules intended to preserve the performance-based compensation exception under Section 162(m) for certain plans and arrangements in effect as of November 2, 2017 (“Grandfathered Plans”), provided that those plans are not materially modified thereafter. Subject to forthcoming guidance from the U.S. Department of the Treasury regarding the scope of these rules, our ability to deduct executive compensation payments made under Grandfathered Plans to certain of our NEOs in 2018 and beyond may be limited under Section 162(m).
Summary Compensation Table
The table below summarizes compensation paid, awarded to or earned by each of our named executive officers (“NEOs”) for the fiscal years ended December 31, 2017, December 31, 2016, and December 31, 2015.
NAME AND
PRINCIPAL
POSITION
(1)
|
YEAR
|
|
SALARY
($)
|
|
|
BONUS
($)
|
|
|
STOCK
A
WARDS
(2)
($)
|
|
|
OPTION
A
WARDS
(2)
($)
|
|
|
NON-EQUITY
I
NCENTIVE
P
LAN
C
OMPENSATION
(3)
($)
|
|
|
CHANGE IN
PENSION
VALUE
AND
NONQUALIFIED
DEFERRED
COMPENSATION
EARNINGS
(4)
($)
|
|
|
ALL OTHER
COMPENSATION
(5)
($)
|
|
|
TOTAL
($)
|
|
Jack Remondi
|
2017
|
|
|
1,000,000
|
|
|
|
0
|
|
|
|
3,199,979
|
|
|
|
799,997
|
|
|
|
1,444,500
|
|
|
-
|
|
|
|
12,260
|
|
|
|
6,456,736
|
|
President and Chief
|
2016
|
|
|
1,000,000
|
|
|
|
0
|
|
|
|
3,079,980
|
|
|
|
769,999
|
|
|
|
1,666,500
|
|
|
-
|
|
|
|
43,431
|
|
|
|
6,559,910
|
|
Executive Officer
|
2015
|
|
|
1,000,000
|
|
|
|
0
|
|
|
|
2,449,978
|
|
|
|
1,050,000
|
|
|
|
735,000
|
|
|
-
|
|
|
|
39,930
|
|
|
|
5,274,908
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Christian Lown
|
2017
|
|
|
292,310
|
|
|
|
0
|
|
|
|
999,992
|
|
|
|
0
|
|
|
|
577,800
|
|
|
-
|
|
|
|
3,000
|
|
|
|
1,873,102
|
|
Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Somsak Chivavibul
|
2017
|
|
|
388,461
|
|
|
|
0
|
|
|
|
719,974
|
|
|
|
179,998
|
|
|
|
563,355
|
|
|
-
|
|
|
|
38,499
|
|
|
|
1,890,287
|
|
Former Chief
|
2016
|
|
|
379,999
|
|
|
|
0
|
|
|
|
791,985
|
|
|
|
197,999
|
|
|
|
633,270
|
|
|
-
|
|
|
|
33,249
|
|
|
|
2,036,502
|
|
Financial Officer
|
2015
|
|
|
378,846
|
|
|
|
0
|
|
|
|
629,993
|
|
|
|
269,998
|
|
|
|
242,820
|
|
|
-
|
|
|
|
33,077
|
|
|
|
1,554,734
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John Kane
|
2017
|
|
|
458,461
|
|
|
|
0
|
|
|
|
1,159,978
|
|
|
|
289,998
|
|
|
|
664,470
|
|
|
-
|
|
|
|
40,327
|
|
|
|
2,613,234
|
|
Group President,
|
2016
|
|
|
449,999
|
|
|
|
0
|
|
|
|
1,055,993
|
|
|
|
263,999
|
|
|
|
749,925
|
|
|
-
|
|
|
|
38,249
|
|
|
|
2,558,165
|
|
Business Processing
|
2015
|
|
|
448,076
|
|
|
|
0
|
|
|
|
822,483
|
|
|
|
352,499
|
|
|
|
330,750
|
|
|
-
|
|
|
|
38,249
|
|
|
|
1,992,057
|
|
Solutions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeff Whorley
|
2017
|
|
|
458,461
|
|
|
|
0
|
|
|
|
1,079,976
|
|
|
|
269,997
|
|
|
|
664,470
|
|
|
-
|
|
|
|
13,499
|
|
|
|
2,486,403
|
|
Group President,
|
2016
|
|
|
449,999
|
|
|
|
0
|
|
|
|
1,055,993
|
|
|
|
263,999
|
|
|
|
749,925
|
|
|
-
|
|
|
|
13,249
|
|
|
|
2,533,165
|
|
Asset Management and Servicing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tim Hynes
|
2017
|
|
|
382,703
|
|
|
|
0
|
|
|
|
799,974
|
|
|
|
199,998
|
|
|
|
556,133
|
|
|
-
|
|
|
|
13,500
|
|
|
|
1,952,308
|
|
EVP, Consumer
|
2016
|
|
|
370,000
|
|
|
|
0
|
|
|
|
703,995
|
|
|
|
175,999
|
|
|
|
616,605
|
|
|
-
|
|
|
|
13,249
|
|
|
|
1,879,848
|
|
Lending
|
2015
|
|
|
368,269
|
|
|
|
0
|
|
|
|
507,476
|
|
|
|
217,499
|
|
|
|
271,950
|
|
|
-
|
|
|
|
13,249
|
|
|
|
1,378,443
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark Heleen
|
2017
|
|
|
382,692
|
|
|
|
0
|
|
|
|
599,973
|
|
|
|
149,999
|
|
|
|
556,133
|
|
|
-
|
|
|
|
19,498
|
|
|
|
1,708,295
|
|
Chief Legal Officer
|
2016
|
|
|
370,000
|
|
|
|
0
|
|
|
|
483,997
|
|
|
|
120,999
|
|
|
|
616,605
|
|
|
-
|
|
|
|
19,232
|
|
|
|
1,610,833
|
|
and Secretary
|
2015
|
|
|
369,357
|
|
|
|
0
|
|
|
|
384,980
|
|
|
|
164,998
|
|
|
|
271,950
|
|
|
-
|
|
|
|
19,220
|
|
|
|
1,210,505
|
|
(1)
|
Reflects the position held by each NEO as of December 31, 2017. Mr. Chivavibul served as Chief Financial Officer of Navient until March 27, 2017, when Mr. Lown joined the Company and assumed the role of Chief Financial Officer. Mr. Lown was not an NEO in either 2015 or 2016. Mr. Chivavibul became the Company’s Chief Decision Management Officer on March 27, 2017, and he continued in that role until his departure from the Company on February 28, 2018. Mr. Whorley joined Navient in June 2015 as Group President, Asset Management and Servicing. He was not a NEO in 2015. Mr. Hynes served as the Company’s Chief Risk & Compliance Officer until June 19, 2017, when he assumed his current role overseeing the Company’s new consumer lending division.
|
(2)
|
Amounts shown are the grant date fair values of the various awards granted during 2015, 2016 and 2017 computed in accordance with the Financial Accounting Standards Board’s (FASB) Accounting Standards Codification (ASC) Topic 718. Additional details on accounting for stock-based compensation can be found in “Note 2—Significant Accounting Policies” and “Note 11—Stock-Based Compensation Plans and Arrangements” to the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K.
|
Performance stock units (“PSUs”) granted in 2015, 2016 and 2017 are shown at their grant date fair values for each of these years. PSUs granted in 2015 were set to vest after a three-year performance period (2015-2017), with the potential payout ranging from 0% to 130% of the target award based on the Company’s “cumulative core net income” for such performance period combined with an additional vesting modifier based on “strategic growth cumulative core net income” that can increase or decrease the payout by an additional 20%. The number of units and payout value reported is based on achieving threshold performance goals. Because the Company failed to meet the threshold performance level established for these PSUs, the awards were forfeited, resulting in no payout to our NEOs.
(3)
|
Annual incentive awards were paid to NEOs under the Management Incentive Plan in cash.
|
(4)
|
Navient’s non-qualified deferred compensation plan does not provide for above-market or preferential earnings on compensation deferred under the plan.
|
(5)
|
For 2017, the components of “All Other Compensation” were as follows:
|
NAME
|
|
EMPLOYER
CONTRIBUTIONS
TO DEFINED
CONTRIBUTION
PLANS
(A)
($)
|
|
|
TRANSPORTATION
ALLOWANCE
(B)
($)
|
|
|
ANNUAL PHYSICAL
EXAMINATION
(C)
($)
|
|
|
TOTAL
($)
|
|
Remondi
|
|
|
6,692
|
|
|
|
1,118
|
|
|
|
4,450
|
|
|
|
12,260
|
|
Lown
|
|
|
0
|
|
|
|
0
|
|
|
|
3,000
|
|
|
|
3,000
|
|
Chivavibul
|
|
|
38,499
|
|
|
|
0
|
|
|
|
0
|
|
|
|
38,499
|
|
Kane
|
|
|
38,500
|
|
|
|
0
|
|
|
|
1,827
|
|
|
|
40,327
|
|
Whorley
|
|
|
13,499
|
|
|
|
0
|
|
|
|
0
|
|
|
|
13,499
|
|
Hynes
|
|
|
13,500
|
|
|
|
0
|
|
|
|
0
|
|
|
|
13,500
|
|
Heleen
|
|
|
13,500
|
|
|
|
0
|
|
|
|
5,998
|
|
|
|
19,498
|
|
|
(A)
|
Amounts credited to Navient’s tax-qualified defined contribution plan and non-qualified deferred compensation plan.
|
|
(B)
|
Automobile allowance benefit calculated based on the annual lease method.
|
|
(C)
|
Senior executives, including our NEOs, were eligible to receive an annual executive physical examination in 2017. Messrs. Chivavibul, Whorley, and Hynes did not utilize this allowance in 2017. The executive physical program was eliminated effective January 1, 2018.
|
Grants of Plan-Based Awards
NAME
|
GRANT DATE
|
|
ESTIMATED FUTURE PAYOUTS UNDER
NON-EQUITY INCENTIVE PLAN
AWARDS
(1)
|
|
|
ESTIMATED FUTURE PAYOUTS
UNDER EQUITY INCENTIVE PLAN
AWARDS
(2)
|
|
|
ALL OTHER
STOCK
AWARDS:
NUMBER OF
SHARES OF
STOCK OR
UNITS
(3)
(#)
|
|
|
ALL OTHER
OPTION
AWARDS:
NUMBER OF
SECURITIES
UNDERLYING
OPTIONS
(4)
(#)
|
|
|
EXERCISE
OR BASE
PRICE OF
OPTION
AWARDS
($/SHARE)
|
|
|
GRANT DATE
FAIR VALUE
OF STOCK
AND OPTION
AWARDS
(5)
($)
|
|
Threshold
($)
|
|
|
Target
($)
|
|
|
Maximum
($)
|
Threshold
(#)
|
|
|
Target
(#)
|
|
|
Maximum
(#)
|
Remondi
|
Management
Incentive Plan
|
|
|
-
|
|
|
|
1,500,000
|
|
|
|
2,250,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/6/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
64,599
|
|
|
|
129,198
|
|
|
|
193,797
|
|
|
|
|
|
|
|
|
|
|
|
|
1,999,985
|
|
|
2/6/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
77,519
|
|
|
|
|
|
|
|
|
|
1,199,994
|
|
|
2/6/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
297,397
|
|
|
|
15.48
|
|
|
|
799,997
|
|
Lown
|
Management
Incentive Plan
|
|
|
-
|
|
|
|
600,000
|
|
|
|
900,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/27/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
71,428
|
|
|
|
|
|
|
|
|
|
|
|
999,992
|
|
Chivavibul
|
Management
Incentive Plan
|
|
|
-
|
|
|
|
585,000
|
|
|
|
877,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/6/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,534
|
|
|
|
29,069
|
|
|
|
43,603
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
449,988
|
|
|
2/6/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,441
|
|
|
|
|
|
|
|
|
|
|
|
269,986
|
|
|
2/6/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
66,914
|
|
|
|
15.48
|
|
|
|
179,998
|
|
Kane
|
Management
Incentive Plan
|
|
|
-
|
|
|
|
690,000
|
|
|
|
1,035,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/6/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,417
|
|
|
|
46,834
|
|
|
|
70,251
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
724,990
|
|
|
2/6/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,100
|
|
|
|
|
|
|
|
|
|
|
|
434,988
|
|
|
2/6/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
107,806
|
|
|
|
15.48
|
|
|
|
289,998
|
|
Whorley
|
Management
Incentive Plan
|
|
|
-
|
|
|
|
690,000
|
|
|
|
1,035,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/6/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,802
|
|
|
|
43,604
|
|
|
|
65,406
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
674,989
|
|
|
2/6/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,162
|
|
|
|
|
|
|
|
|
|
|
|
404,987
|
|
|
2/6/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,371
|
|
|
|
15.48
|
|
|
|
269,997
|
|
Hynes
|
Management
Incentive Plan
|
|
|
-
|
|
|
|
577,500
|
|
|
|
866,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/6/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,149
|
|
|
|
32,299
|
|
|
|
48,448
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
499,988
|
|
|
2/6/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,379
|
|
|
|
|
|
|
|
|
|
|
|
299,986
|
|
|
2/6/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
74,349
|
|
|
|
15.48
|
|
|
|
199,998
|
|
Heleen
|
Management
Incentive Plan
|
|
|
-
|
|
|
|
577,500
|
|
|
|
866,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/6/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,112
|
|
|
|
24,224
|
|
|
|
36,336
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
374,987
|
|
|
2/6/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,534
|
|
|
|
|
|
|
|
|
|
|
|
224,986
|
|
|
2/6/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
55,762
|
|
|
|
15.48
|
|
|
|
149,999
|
|
(1)
|
Represents the possible total payouts for each Navient Named Executive Officer (“NEO”) under the Navient 2017 Management Incentive Plan (“MIP”). The actual amounts earned under the 2017 MIP and paid in February 2018 are set forth below.
|
|
|
Target
2017 MIP Payout ($)
|
|
|
Actual 2017
MIP Payout ($)
|
|
Mr. Remondi
|
|
|
1,500,000
|
|
|
|
1,444,500
|
|
Mr. Lown
|
|
|
600,000
|
|
|
|
577,800
|
|
Mr. Chivavibul
|
|
|
585,000
|
|
|
|
563,355
|
|
Mr. Kane
|
|
|
690,000
|
|
|
|
664,470
|
|
Mr. Whorley
|
|
|
690,000
|
|
|
|
664,470
|
|
Mr. Hynes
|
|
|
577,500
|
|
|
|
556,133
|
|
Mr. Heleen
|
|
|
577,500
|
|
|
|
556,133
|
|
(2)
|
Represents the range of performance stock units (“PSUs”), granted on February 6, 2017, that may vest based on various performance metrics for the three-year performance period from January 1, 2017, through December 31, 2019. See “Long-term Incentive Program” in the Compensation Discussion and Analysis above for additional details regarding the performance metrics associated with these PSUs.
|
(3)
|
Stock awards granted on February 6, 2017, to Messrs. Remondi, Chivavibul, Kane, Whorley, Hynes and Heleen represent restricted stock units (“RSUs”) that have vested or will vest and convert into shares of Common Stock in one-third increments on February 6, 2018, February 6, 2019 and February 6, 2020. Stock awards granted on March 27, 2017, to Mr. Lown represent RSUs that have vested or will vest and convert into shares of Common Stock in one-third increments on March 27, 2018, March 27, 2019 and March 27, 2020.
|
(4)
|
Navient stock options granted on February 6, 2017 to NEOs have vested or will vest in one-third increments on February 6, 2018, February 6, 2019 and February 6, 2020.
|
(5)
|
Amounts disclosed for awards granted in 2017 represent the grant date fair value computed in accordance with FASB ASC Topic 718. Additional details on accounting for stock-based compensation can found in “Note 2—Significant Accounting Policies” and “Note 11—Stock-Based Compensation Plans and Arrangements” to the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K.
|
Outstanding Equity Awards at Fiscal Year End
The table below sets forth information regarding Navient equity awards that were outstanding as of December 31, 2017.
|
|
|
OPTION AWARDS
|
|
|
STOCK AWARDS
|
|
NAME
|
GRANT
DATE
(1)
|
|
NUMBER OF
SECURITIES
UNDERLYING
UNEXERCISED
OPTIONS
EXERCISABLE
(#)
|
|
|
NUMBER OF
SECURITIES
UNDERLYING
UNEXERCISED
OPTIONS
UNEXERCISABLE
(2)
(#)
|
|
|
OPTION
EXERCISE
PRICE
($)
|
|
|
OPTION
EXPIRATION
DATE
|
|
|
NUMBER
OF
SHARES
OR UNITS
OF
STOCK
THAT
HAVE
NOT
VESTED
(3)
(#)
|
|
|
MARKET
VALUE OF
SHARES OR
UNITS OF
STOCK
THAT HAVE
NOT
VESTED
(4)
($)
|
|
|
EQUITY
INCENTIVE
PLAN
AWARDS:
NUMBER OF
UNEARNED
SHARES,
UNITS OR
OTHER
RIGHTS
THAT
HAVE NOT
VESTED
(5)
(#)
|
|
|
EQUITY
INCENTIVE
PLAN
AWARDS:
MARKET OR
PAYOUT
VALUE OF
UNEARNED
SHARES,
UNITS, OR
OTHER
RIGHTS
THAT HAVE
NOT
VESTED
(4)(5)
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Remondi
|
1/8/2008
|
|
|
2,000,000
|
|
|
|
-
|
|
|
|
11.0960
|
|
|
1/8/2018
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
1/8/2009
|
|
|
1,000,000
|
|
|
|
-
|
|
|
|
6.5230
|
|
|
1/8/2019
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
1/27/2011
|
|
|
80,000
|
|
|
|
-
|
|
|
|
9.3771
|
|
|
1/27/2021
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
2/7/2013
|
|
|
256,107
|
|
|
|
-
|
|
|
|
11.4873
|
|
|
2/7/2018
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
5/1/2014
|
|
|
509,461
|
|
|
|
-
|
|
|
|
17.0000
|
|
|
5/1/2019
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
2/18/2015
|
|
|
312,500
|
|
|
|
156,250
|
|
|
|
21.6500
|
|
|
2/18/2020
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
2/3/2016
|
|
|
254,125
|
|
|
|
508,251
|
|
|
|
9.1800
|
|
|
2/3/2021
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
2/6/2017
|
|
|
-
|
|
|
|
297,397
|
|
|
|
15.4800
|
|
|
2/6/2022
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
2/18/2015
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
12,319
|
|
|
|
164,089
|
|
|
|
-
|
|
|
|
-
|
|
2/18/2015
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
46,196
|
|
|
|
615,330
|
|
2/3/2016
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
91,932
|
|
|
|
1,224,534
|
|
|
|
-
|
|
|
|
-
|
|
2/3/2016
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
229,828
|
|
|
|
3,061,308
|
|
2/6/2017
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
81,032
|
|
|
|
1,079,346
|
|
|
|
-
|
|
|
|
-
|
|
2/6/2017
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
135,054
|
|
|
|
1,798,919
|
|
Lown
|
3/27/2017
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
73,877
|
|
|
|
984,041
|
|
|
|
-
|
|
|
|
-
|
|
Chivavibul
|
1/27/2011
|
|
|
40,000
|
|
|
|
-
|
|
|
|
9.3771
|
|
|
1/27/2021
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
2/7/2013
|
|
|
43,663
|
|
|
|
-
|
|
|
|
11.4873
|
|
|
2/7/2018
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
5/1/2014
|
|
|
109,170
|
|
|
|
-
|
|
|
|
17.0000
|
|
|
5/1/2019
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
2/18/2015
|
|
|
80,357
|
|
|
|
40,178
|
|
|
|
21.6500
|
|
|
2/18/2020
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
2/3/2016
|
|
|
65,346
|
|
|
|
130,693
|
|
|
|
9.1800
|
|
|
2/3/2021
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
2/6/2017
|
|
|
-
|
|
|
|
66,914
|
|
|
|
15.4800
|
|
|
2/6/2022
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
2/18/2015
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,168
|
|
|
|
42,197
|
|
|
|
-
|
|
|
|
-
|
|
2/18/2015
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
11,879
|
|
|
|
158,228
|
|
2/3/2016
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
23,639
|
|
|
|
314,871
|
|
|
|
-
|
|
|
|
-
|
|
2/3/2016
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
59,098
|
|
|
|
787,185
|
|
2/6/2017
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
18,231
|
|
|
|
242,836
|
|
|
|
-
|
|
|
|
-
|
|
2/6/2017
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
30,386
|
|
|
|
404,741
|
|
Kane
|
1/27/2011
|
|
|
13,333
|
|
|
|
-
|
|
|
|
9.3771
|
|
|
1/27/2021
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
5/1/2014
|
|
|
145,560
|
|
|
|
-
|
|
|
|
17.0000
|
|
|
5/1/2019
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
2/18/2015
|
|
|
104,911
|
|
|
|
52,455
|
|
|
|
21.6500
|
|
|
2/18/2020
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
2/3/2016
|
|
|
87,128
|
|
|
|
174,258
|
|
|
|
9.1800
|
|
|
2/3/2021
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
2/6/2017
|
|
|
-
|
|
|
|
107,806
|
|
|
|
15.4800
|
|
|
2/6/2022
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
2/18/2015
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,135
|
|
|
|
55,078
|
|
|
|
-
|
|
|
|
-
|
|
2/18/2015
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
15,508
|
|
|
|
206,566
|
|
2/3/2016
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
31,519
|
|
|
|
419,833
|
|
|
|
-
|
|
|
|
-
|
|
2/3/2016
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
78,798
|
|
|
|
1,049,589
|
|
2/6/2017
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
29,373
|
|
|
|
391,248
|
|
|
|
-
|
|
|
|
-
|
|
2/6/2017
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
48,956
|
|
|
|
652,093
|
|
Whorley
|
6/1/2015
|
|
|
101,523
|
|
|
|
50,761
|
|
|
|
19.3400
|
|
|
6/1/2020
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
2/3/2016
|
|
|
87,128
|
|
|
|
174,258
|
|
|
|
9.1800
|
|
|
2/3/2021
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
2/6/2017
|
|
|
-
|
|
|
|
100,371
|
|
|
|
15.4800
|
|
|
2/6/2022
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
6/1/2015
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
5,864
|
|
|
|
78,108
|
|
|
|
-
|
|
|
|
-
|
|
2/3/2016
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
31,519
|
|
|
|
419,833
|
|
|
|
-
|
|
|
|
-
|
|
2/3/2016
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
78,798
|
|
|
|
1,049,589
|
|
2/6/2017
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
27,347
|
|
|
|
364,262
|
|
|
|
-
|
|
|
|
-
|
|
2/6/2017
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
45,580
|
|
|
|
607,125
|
|
|
OPTION AWARDS
|
|
|
STOCK AWARDS
|
|
|
|
|
NAME
|
GRANT
DATE
(1)
|
|
NUMBER OF
SECURITIES
UNDERLYING
UNEXERCISED
OPTIONS
EXERCISABLE
(#)
|
|
|
NUMBER OF
SECURITIES
UNDERLYING
UNEXERCISED
OPTIONS
UNEXERCISABLE
(2)
(#)
|
|
|
OPTION
EXERCISE
PRICE
($)
|
|
|
OPTION
EXPIRATION
DATE
|
|
|
NUMBER
OF
SHARES
OR UNITS
OF
STOCK
THAT
HAVE
NOT
VESTED
(3)
(#)
|
|
|
MARKET
VALUE OF
SHARES OR
UNITS OF
STOCK
THAT HAVE
NOT
VESTED
(4)
($)
|
|
|
EQUITY
INCENTIVE
PLAN
AWARDS:
NUMBER OF
UNEARNED
SHARES,
UNITS OR
OTHER
RIGHTS
THAT
HAVE NOT
VESTED
(5)
(#)
|
|
|
EQUITY
INCENTIVE
PLAN
AWARDS:
MARKET OR
PAYOUT
VALUE OF
UNEARNED
SHARES,
UNITS, OR
OTHER
RIGHTS
THAT HAVE
NOT
VESTED
(4)(5)
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hynes
|
5/13/2008
|
|
|
100,000
|
|
|
|
-
|
|
|
|
13.9310
|
|
|
5/13/2018
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
1/28/2010
|
|
|
50,000
|
|
|
|
-
|
|
|
|
6.6127
|
|
|
1/28/2020
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
1/27/2011
|
|
|
40,000
|
|
|
|
-
|
|
|
|
9.3771
|
|
|
1/27/2021
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
2/7/2013
|
|
|
42,572
|
|
|
|
-
|
|
|
|
11.4873
|
|
|
2/7/2018
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
5/1/2014
|
|
|
87,336
|
|
|
|
-
|
|
|
|
17.0000
|
|
|
5/1/2019
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
2/18/2015
|
|
|
64,732
|
|
|
|
32,366
|
|
|
|
21.6500
|
|
|
2/18/2020
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
2/3/2016
|
|
|
58,085
|
|
|
|
116,172
|
|
|
|
9.1800
|
|
|
2/3/2021
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
2/6/2017
|
|
|
-
|
|
|
|
74,349
|
|
|
|
15.4800
|
|
|
2/6/2022
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
2/18/2015
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,551
|
|
|
|
33,979
|
|
|
|
-
|
|
|
|
-
|
|
|
2/18/2015
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
9,568
|
|
|
|
127,445
|
|
|
2/3/2016
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
21,013
|
|
|
|
279,893
|
|
|
|
-
|
|
|
|
-
|
|
|
2/3/2016
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
52,532
|
|
|
|
699,726
|
|
|
2/6/2017
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
20,257
|
|
|
|
269,823
|
|
|
|
-
|
|
|
|
-
|
|
|
2/6/2017
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
33,763
|
|
|
|
449,723
|
|
Heleen
|
6/10/2014
|
|
|
36,879
|
|
|
|
-
|
|
|
|
16.8000
|
|
|
6/10/2019
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
2/18/2015
|
|
|
49,107
|
|
|
|
24,553
|
|
|
|
21.6500
|
|
|
2/18/2020
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
2/3/2016
|
|
|
-
|
|
|
|
79,868
|
|
|
|
9.1800
|
|
|
2/3/2021
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
2/6/2017
|
|
|
-
|
|
|
|
55,762
|
|
|
|
15.4800
|
|
|
2/6/2022
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
2/18/2015
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,936
|
|
|
|
25,787
|
|
|
|
-
|
|
|
|
-
|
|
|
2/18/2015
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
7,259
|
|
|
|
96,689
|
|
|
2/3/2016
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
14,447
|
|
|
|
192,434
|
|
|
|
-
|
|
|
|
-
|
|
|
2/3/2016
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
36,116
|
|
|
|
481,065
|
|
|
2/6/2017
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
15,192
|
|
|
|
202,357
|
|
|
|
-
|
|
|
|
-
|
|
|
2/6/2017
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
25,322
|
|
|
|
337,289
|
|
(1)
|
Navient was spun-off from the company now known as SLM Corporation (“SLM”) and became an independent public company effective April 30, 2014. Immediately prior to the Spin-Off, each of our NEOs (other than Messrs. Lown, Whorley and Heleen) was employed by the company previously known as SLM Corporation (“Former SLM”). Former SLM equity awards outstanding on April 30, 2014, were adjusted and converted into Navient awards and SLM awards. In general, the adjusted and converted equity awards are subject to substantially the same terms and conditions as the original Former SLM equity awards, including the original vesting schedule. The continuous service of each NEO with Former SLM (pre-Spin-Off) and Navient (post-Spin-Off) has been taken into account for vesting purposes. Additional details regarding the adjustment and conversion of Former SLM equity awards can be found in Navient’s Registration Statement filed on Form 10 with the SEC on April 10, 2014. This table reflects only Navient equity awards that were outstanding as of December 31, 2017.
|
(2)
|
Stock options granted in 2015 to Mr. Whorley have vested or will vest in one-third increments on each of June 1, 2016, June 1, 2017, and June 1, 2018. Stock options granted in 2015 to other NEOs vested in one-third increments on each of February 18, 2016, February 18, 2017, and February 18, 2018. Stock options granted in 2016 have vested or will vest in one-third increments on February 3, 2017, February 3, 2018 and February 3, 2019. Stock options granted in 2017 have vested or will vest in one-third increments on February 6, 2018, February 6, 2019, and February 6, 2020.
|
(3)
|
Restricted stock units (“RSUs”) granted in 2015 to Mr. Whorley have vested or will vest and be converted into shares of Common Stock in one-third increments on each of June 1, 2016, June 1, 2017 and June 1, 2018. RSUs granted in 2015 to other NEOs vested and converted into shares of Common Stock in one-third increments on each of February 18, 2016, February 18, 2017, and February 18, 2018. RSUs granted in 2016 have vested or will vest in one-third increments on February 3, 2017, February 3, 2018 and February 3, 2019. RSUs granted in 2017 to NEOs other than Mr. Lown have vested or will vest in one-third increments on February 6, 2018, February 6, 2019 and February 6, 2020. RSUs granted in 2017 to Mr. Lown have vested or will vest in one-third increments on March 27, 2018, March 27, 2019 and March 27, 2020.
|
|
Amounts include all accrued and unvested whole share dividend equivalent units (“DEUs”) that vest only to the extent and at the same time the underlying award on which they are issued vest.
|
(4)
|
Market value of shares or units is calculated based on the closing market price of $13.32 for Navient Common Stock on December 29, 2017.
|
(5)
|
Performance stock units (“PSUs”) granted in 2015 were set to vest after a three-year performance period (2015-2017), with the potential payout ranging from 0% to 130% of the target award based on the Company’s “cumulative core net income” for such performance period combined with an additional vesting modifier based on “strategic growth cumulative core net income” that can increase or decrease the payout by an additional 20%. The number of units and payout value reported is based on achieving threshold performance goals. Because the Company failed to meet the threshold performance level established for these PSUs, the awards were forfeited, resulting in no payout to our NEOs.
|
PSUs granted in 2016 will vest after a three-year performance period (2016-2018), with the potential payout ranging from 0% to 150% of the target award based on a combination of (i) aggregate cash flows from student loans (net of secured borrowings) over the performance period; (ii) cumulative revenue from growth businesses over the performance period; and (iii) the attainment of certain strategic objectives intended to highlight a limited number of critical, non-formulaic goals that management is focusing on over the three-year period. Assuming the Company meets or exceeds these performance levels, the PSUs will vest on the second business day after the Company files its annual report on Form 10-K for the fiscal year 2018 with the SEC, and in no event later than March 15, 2019. Amounts include all accrued and unvested whole share DEUs that vest only to the extent and at the same time that the underlying award on which they are issued vest. The number of units and payout value reported is based on achieving target performance goals.
PSUs granted in 2017 will vest after a three-year performance period (2017-2019), with the potential payout ranging from 0% to 150% of the target award based on a combination of (i) aggregate cash flows from student loans (net of secured borrowings) over the performance period; (ii) cumulative revenue from growth businesses over the performance period; and (iii) the attainment of certain strategic objectives intended to highlight a limited number of critical, non-formulaic goals that management is focusing on over the three-year period. Assuming the Company meets or exceeds these performance levels, the PSUs will vest on the second business day after the Company files its annual report on Form 10-K for the fiscal year 2019 with the SEC, and in no event later than March 15, 2020. Amounts include all accrued and unvested whole share DEUs that vest only to the extent and at the same time that the underlying award on which they are issued vest. The number of units and payout value reported is based on achieving target performance goals. See “Long-term Incentive Program” in the Compensation Discussion and Analysis above for additional details regarding the performance metrics associated with these PSUs.
Option Exercises and Stock Vested
|
|
Option Awards
|
|
|
Stock Awards
|
|
NAME
|
|
NUMBER OF SHARES
ACQUIRED
ON EXERCISE
(1)
(#)
|
|
|
VALUE REALIZED
ON EXERCISE
(2)
($)
|
|
|
NUMBER OF SHARES
ACQUIRED ON
VESTING
(3)
(#)
|
|
|
VALUE REALIZED ON
VESTING
(4)
($)
|
|
Remondi
|
|
|
173,210
|
|
|
|
830,403
|
|
|
|
118,090
|
|
|
|
1,828,750
|
|
Lown
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Chivavibul
|
|
|
0
|
|
|
|
0
|
|
|
|
26,789
|
|
|
|
414,677
|
|
Kane
|
|
|
54,579
|
|
|
|
191,719
|
|
|
|
35,486
|
|
|
|
549,260
|
|
Whorley
|
|
|
0
|
|
|
|
0
|
|
|
|
20,747
|
|
|
|
316,493
|
|
Hynes
|
|
|
0
|
|
|
|
0
|
|
|
|
22,727
|
|
|
|
351,859
|
|
Heleen
|
|
|
39,933
|
|
|
|
249,980
|
|
|
|
12,575
|
|
|
|
193,851
|
|
(1)
|
Mr. Remondi exercised 173,210 net-settled stock options on January 30, 2017, with a strike price of $10.2558 and a market price of $15.05, and received 35,760 net shares. Mr. Kane exercised 54,579 net-settled stock options on September 26, 2017, with a strike price of $11.4873 and a market price of $15.00, and received 6,415 net shares. Mr. Heleen exercised 39,933 net-settled stock options on February 9, 2017, with a strike price of $9.18 and a market price of $15.44, and received 10,575 net shares.
|
(2)
|
The value realized upon exercise is the number of net-settled stock options exercised multiplied by the difference between the market price of Navient Common Stock at exercise and the strike price on the net-settled options.
|
(3)
|
Represents shares acquired upon the vesting of restricted stock units (“RSUs”), the associated dividend equivalent units (“DEUs”) and any fractional share settlement. PSUs granted to our executive team in early 2015 were designed to vest at the end of 2017, with a potential payout ranging from 0% to 130% of the target award, based on the Company’s “cumulative core net income” over a three-year performance period. Because the Company failed to meet the threshold performance level established for these PSUs, the awards were forfeited, resulting in no payout to our executive team.
|
(4)
|
The value realized on vesting is the number of shares vested multiplied by the closing market price of Navient Common Stock on the vesting date.
|
The Company has no tax-qualified pension plans and no non-qualified supplemental pension plans.
Non-Qualified Deferred Compensation
Under the Navient Corporation Deferred Compensation Plan (the “Deferred Compensation Plan”), eligible employees, including our NEOs, may elect to defer up to 80 percent of their annual cash-based compensation. Each year, an employee who has completed one year of service generally is eligible to receive a Company contribution in an amount equal to the greater of: (i) five percent (5%) of the participant’s annual “eligible compensation,” or (ii) five percent (5%) of the participant’s annual deferral amount; provided, however, that the Company contribution for a given year will not exceed the participant’s annual deferral amount. For this purpose, “eligible compensation” is the employee’s annual cash-based compensation in excess of the annual compensation limit applicable to tax-qualified retirement plans, up to a maximum of $500,000.
All participant deferrals and Company contributions are credited to bookkeeping accounts. Amounts in each participant’s account are indexed to one or more investment alternatives chosen by the participant from a range of market-based alternatives. The Deferred Compensation Plan does not pay above-market or preferential earnings. Participants elect the time and form of payment of their accounts. Accounts generally are paid no sooner than the first day of the seventh month following the participant’s termination of employment, although certain in-service distributions are permitted. Immediate distributions upon the death or disability of the participant also are permitted. Accounts generally may be distributed either in a single lump sum or in up to ten (10) annual installments.
The following table provides information regarding contributions and earnings under the Deferred Compensation Plan in 2017, as well as year-end account balances, for each of our NEOs.
NAME
|
|
EXECUTIVE
CONTRIBUTIONS IN
2017
($)
|
|
|
REGISTRANT
CONTRIBUTIONS IN
2017
(1)
($)
|
|
|
AGGREGATE
EARNINGS IN 2017
($)
|
|
|
AGGREGATE
WITHDRAWALS /
DISTRIBUTIONS IN
2017
($)
|
|
|
AGGREGATE
BALANCE AT
12/31/2017
($)
|
|
Remondi
|
|
|
0
|
|
|
|
0
|
|
|
|
237,026
|
|
|
|
0
|
|
|
|
1,006,018
|
|
Lown
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Chivavibul
|
|
|
25,000
|
|
|
|
25,000
|
|
|
|
37,143
|
|
|
|
0
|
|
|
|
365,922
|
|
Kane
|
|
|
25,000
|
|
|
|
25,000
|
|
|
|
38,382
|
|
|
|
0
|
|
|
|
335,485
|
|
Whorley
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Hynes
|
|
|
0
|
|
|
|
0
|
|
|
|
40,987
|
|
|
|
0
|
|
|
|
246,504
|
|
Heleen
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
(1)
|
Registrant Contributions listed here are included under the heading “Employer Contributions to Defined Contribution Plans” in Footnote 7 to the Summary Compensation Table.
|
Arrangements with Named Executive Officers
Navient has not entered into an employment agreement with any of its NEOs. However, our NEOs participate in the company’s severance plans for senior officers, and each of our NEOs is entitled to certain severance payments pursuant to the terms and conditions of those plans, which are described below.
Executive Severance Plan
Under Navient’s Executive Severance Plan for Senior Officers, eligible officers will receive a lump sum cash payment equal to (i) a multiple of base salary and an average annual incentive award (determined over the last 24 months), plus (ii) pro-rated target annual incentive award for the year of termination, upon the following events: (a) resignation from employment for good reason (as defined in the plan); (b) the Company’s decision to terminate an eligible officer’s employment for any reason other than for cause (as defined in the plan), death or disability; or (c) upon mutual agreement of the Company and the eligible officer. The multiplier for each eligible officer position is as follows: CEO-2; Executive Vice President-1. Under the plan, in no event will a severance payment exceed a multiple of three times an officer’s base salary and annual incentive award.
In addition to the cash severance payment, eligible officers will receive subsidized medical benefits and outplacement services for 18 months (24 months for the CEO). Treatment of outstanding equity awards upon severance is governed by the terms of the applicable equity award agreement and not the severance plan.
As noted earlier, Mr. Lown is eligible to receive a one-time deferred signing bonus of $1,400,000, less applicable withholding taxes (“Deferred Signing Bonus”), to compensate him for a portion of the long-term equity and deferred compensation with his former employer that he forfeited by joining Navient. This Deferred Signing Bonus, if any, will be payable in cash in two equal installments on the first and second anniversaries of his start date with the Company, March 17, 2017, provided he remains employed by the Company on each such date. If prior to the Deferred Signing Bonus being paid in full, either (x) his employment is terminated by the company without “Cause” (as that term is defined in Navient’s Executive Severance Plan for Senior Officers), or (y) his employment terminates due to death or disability, then any unpaid amount will be paid in an immediate lump sum.
Change in Control Severance Plan
Under Navient’s Change in Control Severance Plan for Senior Officers, if a termination of employment for reasons defined in the plan occurs within 24 months following a change in control of the Company, the participant is entitled to receive a lump sum cash payment equal to two times the sum of his or her base salary and average annual incentive award (based on the prior two years). A participant will also be entitled to receive a pro-rated portion of his or her target annual incentive award for the year in which the termination occurs, as well as continuation of medical benefits for a two-year period. Under the plan, outstanding equity awards become vested and non-forfeitable in connection with a change in control only if (i) the participant’s employment is terminated, or (ii) the acquiring or surviving entity does not assume the equity awards. The plan does not allow for tax gross-ups.
Potential Payments upon Termination or Change in Control
The tables below reflect the amount of compensation that would have been payable to each of our NEOs who were employed as executive officers of Navient on December 31, 2017, under various scenarios including if such individual’s employment had terminated and/or a change in control had occurred on December 31, 2017, given the individual’s compensation and service levels as of December 31, 2017, and based on Navient’s closing stock price of $13.32 per share on December 29, 2017, the last trading date of the year. The amounts disclosed in the tables below are in addition to: (i) compensation and benefits available prior to the occurrence of a termination of employment, such as vested stock options, and (ii) compensation and benefits available generally to all employees, such as distributions under Navient’s defined contribution retirement program, disability plans and accrued vacation pay.
The following severance arrangements were effective for our NEOs who were employed as executive officers of Navient on December 31, 2017: (i) the Navient Corporation Executive Severance Plan for Senior Officers, (ii) the Navient Corporation Change in Control Severance Plan for Senior Officers, as amended and restated, and (iii) the Navient Corporation 2014 Omnibus Incentive Plan, as amended and restated.
Change in Control Without Termination
Name
|
|
Equity
Vesting
(1)
($)
|
|
|
Cash
Severance
($)
|
|
|
Medical
Insurance /
Outplacement
($)
|
|
|
Total
($)
|
|
Remondi
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Lown
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Chivavibul
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Kane
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Whorley
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Hynes
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Heleen
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
(1)
|
Under the Change in Control Severance Plan for Senior Officers, outstanding equity awards become vested and non-forfeitable in connection with a change in control only if (i) the participant’s employment is terminated, or (ii) the acquiring or surviving entity does not assume the equity awards. For purposes of this table, we have assumed that neither of these conditions is satisfied.
|
Change in Control and (i) Termination without Cause, or (ii) Termination for Good Reason
Name
|
|
Equity
Vesting
(2)
($)
|
|
|
Cash
Severance
($)
|
|
|
Medical
Insurance /
Outplacement
(3)
($)
|
|
|
Total
($)
|
|
Remondi
|
|
|
10,663,031
|
|
|
|
6,611,000
|
|
|
|
29,281
|
|
|
|
17,303,312
|
|
Lown
(4)
|
|
|
984,041
|
|
|
|
4,044,400
|
|
|
|
29,281
|
|
|
|
5,057,722
|
|
Chivavibul
|
|
|
2,649,358
|
|
|
|
2,561,625
|
|
|
|
29,178
|
|
|
|
5,240,161
|
|
Kane
|
|
|
3,702,417
|
|
|
|
3,024,395
|
|
|
|
16,068
|
|
|
|
6,742,880
|
|
Whorley
|
|
|
3,240,346
|
|
|
|
3,024,395
|
|
|
|
18,224
|
|
|
|
6,282,965
|
|
Hynes
|
|
|
2,469,002
|
|
|
|
2,520,238
|
|
|
|
29,281
|
|
|
|
5,018,521
|
|
Heleen
|
|
|
1,762,966
|
|
|
|
2,520,238
|
|
|
|
29,281
|
|
|
|
4,312,485
|
|
(2)
|
For stock and stock unit awards, the amounts shown reflect the closing market price of Navient Common Stock on December 29, 2017 ($13.32). For stock options where the December 29, 2017 closing market price of Navient Common Stock was higher than the option exercise price, the amounts reflect the intrinsic value of the options as if they had been exercised on December 29, 2017.
|
(3)
|
Includes Navient’s estimated portion of the cost of health care benefits for 24 months.
|
(4)
|
Includes payment of a one-time deferred signing bonus of $1,400,000. See footnote 11 below.
|
Termination without Cause or Termination for Good Reason
Name
|
|
Equity
Vesting
(5)
($)
|
|
|
Cash
Severance
($)
|
|
|
Medical
Insurance /
Outplacement
(6)
($)
|
|
|
Total
($)
|
|
Remondi
|
|
-
|
|
|
|
6,611,000
|
|
|
|
44,281
|
|
|
|
6,655,281
|
|
Lown
(7)
|
|
-
|
|
|
|
2,640,750
|
|
|
|
36,961
|
|
|
|
2,677,711
|
|
Chivavibul
|
|
-
|
|
|
|
1,573,312
|
|
|
|
36,884
|
|
|
|
1,610,196
|
|
Kane
|
|
-
|
|
|
|
1,857,197
|
|
|
|
27,051
|
|
|
|
1,884,248
|
|
Whorley
|
|
-
|
|
|
|
1,857,197
|
|
|
|
28,668
|
|
|
|
1,885,865
|
|
Hynes
|
|
-
|
|
|
|
1,548,869
|
|
|
|
36,961
|
|
|
|
1,585,830
|
|
Heleen
|
|
-
|
|
|
|
1,548,869
|
|
|
|
36,961
|
|
|
|
1,585,830
|
|
(5)
|
By their terms, outstanding Navient equity awards generally continue to vest pursuant to the vesting schedule set forth in each applicable award agreement as if the NEO remains employed by Navient through the pre-established vesting date.
|
(6)
|
As President and Chief Executive Officer of Navient, Mr. Remondi is entitled to Navient’s estimated portion of the cost of health care benefits for a period of 24 months plus $15,000 of outplacement services. Amounts for Messrs. Lown, Chivavibul, Kane, Whorley, Hynes and Heleen include Navient’s estimated portion of the cost of health care benefits for 18 months, plus $15,000 of outplacement services.
|
(7)
|
Includes payment of a one-time deferred signing bonus of $1,400,000. See footnote 11 below.
|
Termination for Cause
Name
|
|
Equity
Vesting
(8)
($)
|
|
|
Cash
Severance
($)
|
|
|
Medical
Insurance /
Outplacement
($)
|
|
|
Total
($)
|
|
Remondi
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Lown
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Chivavibul
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Kane
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Whorley
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Hynes
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Heleen
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
(8)
|
Vested and unvested equity awards are forfeited upon Termination for Cause (as defined in the Navient Corporation 2014 Omnibus Incentive Plan, as amended and restated).
|
Termination upon Retirement
Name
|
|
Equity
Vesting
(9)
($)
|
|
|
Cash
Severance
($)
|
|
|
Medical
Insurance /
Outplacement
($)
|
|
|
Total
($)
|
|
Remondi
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Lown
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Chivavibul
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Kane
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Whorley
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Hynes
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Heleen
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
(9)
|
As of December 31, 2017, Messrs. Remondi and Chivavibul were eligible for retirement vesting of their outstanding equity awards. Outstanding equity awards generally continue to vest pursuant to the vesting schedule set forth in each applicable award agreement as if the NEO remains employed by Navient through the pre-established vesting date, provided that the NEO satisfies certain age and/or service conditions set forth in each company’s retirement policy. For equity awards originally granted by Former SLM prior to 2013, the award recipient must be age 60 or older upon retirement, or the award recipient must have attained a combination of age and years of service totaling at least 70 years, to be eligible for retirement vesting. For equity awards originally granted by Former SLM in 2013 or 2014, and for all Navient equity awards, the award recipient must be age 65 or older upon retirement, or the award recipient must have attained a combination of age and years of service totaling at least 75 years, to be eligible for retirement vesting. Service with both Former SLM and Navient is counted for these purposes.
|
Termination by Death or Disability
Name
|
|
Equity
Vesting
(10)
($)
|
|
|
Cash
Severance
($)
|
|
|
Medical
Insurance /
Outplacement
($)
|
|
|
Total
($)
|
|
Remondi
|
|
|
10,663,031
|
|
|
|
-
|
|
|
|
-
|
|
|
|
10,663,031
|
|
Lown
(11)
|
|
|
984,041
|
|
|
|
1,400,000
|
|
|
|
-
|
|
|
|
2,384,041
|
|
Chivavibul
|
|
|
2,649,358
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,649,358
|
|
Kane
|
|
|
3,702,417
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,702,417
|
|
Whorley
|
|
|
3,240,346
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,240,346
|
|
Hynes
|
|
|
2,469,002
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,469,002
|
|
Heleen
|
|
|
1,762,966
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,762,966
|
|
(10)
|
The vesting of all outstanding equity awards will accelerate upon termination of employment due to death or disability. For stock and stock unit awards, the amounts shown reflect the closing market price of Navient Common Stock on December 29, 2017 ($13.32). For stock options where the December 29, 2017, closing market price of Navient Common Stock was higher than the option exercise price, the amounts reflect the intrinsic value of the options as if they had been exercised on December 29, 2017.
|
(11)
|
Mr. Lown is eligible to receive a one-time deferred signing bonus of $1,400,000 (“Deferred Signing Bonus”), to compensate him for a portion of the long-term equity and deferred compensation with his former employer that he forfeited by joining Navient. This Deferred Signing Bonus, if any, will be payable in cash in two equal installments on the first and second anniversaries of his start date with the Company, March 17, 2017, provided he remains employed by the company on each such date. If prior to the Deferred Signing Bonus being paid in full, either (x) his employment is terminated by the company without “Cause” (as that term is defined in Navient’s Executive Severance Plan for Senior Officers), or (y) his employment terminates due to death or disability, then any unpaid amount will be paid in an immediate lump sum.
|
Actual Payments upon Termination
Each of our NEOs remained employed by Navient as an executive officer on December 31, 2017.
Pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), the SEC adopted a rule requiring annual disclosure of: (i) the annual total compensation of the median employee identified by Navient (as described below), (ii) the annual total compensation of Navient’s principal executive officer (“PEO”), and (iii) the estimated ratio of these two amounts. Navient’s 2017 fiscal year is the first year for which this disclosure is required.
To identify our median employee, we reviewed the annual compensation of all full-time, part-time, seasonal and temporary employees of Navient and its affiliated companies (other than companies acquired in 2017) as of December 31, 2017. As permitted under SEC rules, we treated an employee’s 2017 “annual compensation” for this purpose as equal to the sum of his or her gross income, as reported on payroll records, plus all employer contributions to Navient’s qualified retirement plan made on the employee’s behalf. In identifying the median employee, we excluded the PEO and approximately 170 individuals who were employed by Earnest LLC and approximately 180 individuals who were employed by Duncan Solutions, Inc. on December 31, 2017, as Navient acquired these companies in 2017. As of December 31, 2017, Navient and its affiliated companies (including Duncan Solutions, Inc. and Earnest LLC) had approximately 6,700 employees, all of whom reside in the United States or a U.S. territory.
Navient’s PEO is Mr. Remondi. His annual total compensation for 2017 was $6,456,736, as reflected in the Summary Compensation Table. The 2017 annual total compensation of the median employee identified by Navient, calculated in accordance with SEC rules regarding the Summary Compensation Table, was $43,865. Accordingly, Navient’s estimated 2017 pay ratio was 1 to 147.
SEC rules for identifying the median employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices. As a result, the pay ratio reported by other companies may not be comparable to the Navient pay ratio reported above, as other companies have different employee populations and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios. In addition, the median employee’s annual total compensation is unique to that individual and therefore is not an indicator of the annual total compensation of any other individual or group of employees.
Proposal 4 — Student Loan Risk Management
The following shareholder proposal has been submitted to the Company for action at the meeting by the AFL-CIO, on behalf of the AFL-CIO Reserve Fund, 815 Sixteenth Street, N.W., Washington, D.C. 2006, a beneficial owner of 165 shares of the Company’s stock and by Employees’ Retirement System of Rhode Island, State House – Room 102, Providence, Rhode Island 02903, a beneficial owner of 6,768 shares of the Company’s stock. The affirmative vote of a majority of the shares voted at the meeting is required for approval of the shareholder proposal. The text of the proposal and the proponent’s supporting statement is as follows:
Whereas there are more than 44 million borrowers with an estimated $1.3 trillion in student loan debt in the United States;
Whereas $137.4 billion in government-held or government-backed student loans is severely delinquent or in default;
Whereas Navient Corporation (“Navient”) services and manages more than $300 billion in federal and private student loans for approximately 12 million borrowers;
Whereas the U.S. Department of Education reports that the number of borrowers not making payments on their federal student loans within three years of leaving college has risen to 11.5%;
Whereas more than a million borrowers with Direct Loans at Navient have defaulted on student loans; and
Whereas, increased defaults create additional financial hardships for Navient customers, which may negatively impact the company and shareholders;
Now, therefore be it
RESOLVED, that the shareholders request the Board of Directors (the “Board”) issue a report to investors (at reasonable cost, excluding proprietary information, and within a reasonable time) on the governance measures Navient has implemented to more effectively monitor and manage financial and reputational risks related to the student loan crisis in the United States, including whether Navient has assigned responsibility for such monitoring to the Board or one or more Board committees or has revised senior executive compensation metrics or policies.
Supporting Statement:
The student loan crisis is a growing social problem in the United States. A representative of the U.S. Department of Education (DOE) recently characterized the student loan system as “a mess” and added that “income driven repayment plans are confusing.”
1
Earlier this year, the Consumer Financial Protection Bureau (CFPB) reported a trend of triple digit increases in complaints related to student loan servicing as compared to similar periods, with complaints increasing in nearly every state.
2
Previously, the Government Accountability Office found that the DOE lacked a minimum set of standards loan servicers to provide effective customer service [
sic
]; even as the DOE encouraged federal student loan servicers to adopt “high touch loan servicing” for borrowers at high risk of default.
3
Board’s Statement in Opposition to Shareholder Proposal
The Proposal requests that the Company prepare a special report “on the governance measures Navient has implemented to more effectively monitor and manage financial and reputational risks related to the student loan crisis in the United States, including whether Navient has assigned responsibility for such monitoring to the Board or one or more Board committees or has revised senior executive compensation metrics or policies.” The Board has reviewed the proposal and does not believe that it is in the best interests of Navient or its shareholders, as described below.
1
https://www.reuters.com/investigates/special-report/usa-studentloans/
2
https://www.forbes.com/sites/johnwasik/2017/05/26/why-trumps-education-plan-will-make-student-debt-crisis-worse/#470c1a4721c
3
https://cleaver.house.gov/media-center/press-releases/congressmen-cleaver-and-bishop-call-for-gao-investigation-of-federal
Navient is committed to responsibly operating our business, a central element of which is identifying, monitoring, and managing financial and reputational risks, the subject matter of the Proposal. Risk management is among the most important duties of the Board and its committees, which set risk management philosophy, tolerance and parameters; establish procedures for assessing risk; and oversee risk management across the enterprise. As we have communicated for several years, the Board and the Audit Committee have responsibility for monitoring these risks.
To do so, we employ a Board-approved Risk Appetite Framework which defines the most significant risks to our business and provides a process for evaluating, quantifying and monitoring those risks across nine domains: credit, market, funding and liquidity, compliance, legal, operational, reputational/political, governance and strategy. Our Enterprise Risk Committee, composed of key members of management, monitors the Company’s performance against those approved risk limits and thresholds. Management and staff throughout our business operate according to it. Moreover, risk management is already a key factor in executive compensation throughout our business.
We are committed to disclosure and transparency concerning risk and regularly report on it. For example, both our 2017 proxy statement and this proxy statement include a detailed discussion entitled “The Board of Directors’ Role in Risk Oversight,” which explains our multi-layered approach to risk, including among other things the respective roles of the Board, the Audit Committee, the Finance and Operations Committee, the Nominations and Governance Committee and the Executive Committee. In addition, the charters for the Board and each committee are available on our website. We believe that our proxy statements, annual and quarterly reports, investor presentations and other information available on our website do a thorough job of summarizing how we manage risk, going well beyond merely complying with the law to provide shareholders with detailed, useful and appropriate information in this important area.
Navient agrees that the success of student loan borrowers is a very important topic for individuals and our economy. We remain committed to assisting all borrowers, including those who struggle to repay their loans, and support our student loan customers by regularly communicating, offering information on repayment options and continually enhancing our tools and assistance. We are proud that the borrowers whose loans we service are 37 percent less likely to default than their peers serviced elsewhere. Contact is key: when we make contact with a struggling federal student loan borrower, 9 times out of 10 we can find a way to keep that borrower out of default.
However, we disagree with the fundamental premise of the proposal. It is important to note that, as reported in more detail elsewhere in our disclosures, the vast majority of student loans are owned or guaranteed by the federal government, not Navient. As a result, the financial risks related to student loans, such as those attendant to borrower default, fall most heavily on the federal government, and not on our business. Moreover, the federal government, not Navient, sets federal student loan policy, including loan amounts, interest rates, and rules for various repayment options. Our review of complaints within the CFPB complaint portal bears this out, with the vast majority not being complaints about Navient servicing errors but rather complaints or questions by individuals about the terms, conditions and eligibility rules of their federal loans or their repayment options. Even though we do not bear the largest share of financial risk, nor do we set the policy or terms of the loans, we have a long and positive track record of supporting borrowers to successfully manage their loans. We work hard to continually enhance our student loan servicing program, engage with borrowers, regulators and other stakeholders, and advocate for innovative solutions, all within the federal regulatory framework. For example, we have advocated for the federal student loan program to provide better upfront resources to students before they borrow and for simplifying repayment options.
Lastly, the risks to our business are most appropriately managed by the Board and management, and not by shareholders. Devoting time and resources to creating a report that would substantially duplicate existing disclosures, and that would circumvent our existing risk reporting methodologies, is not a responsible use of our resources. Moreover, we do not believe that the report would cause us to modify our disciplined approach to risk management. The cost, both in dollars and employee time, of preparing the report would be better spent on growing our business.
The Board of Directors unanimously recommends a vote “AGAINST” this proposal for the reasons discussed above. Proxies solicited by the Board of Directors will be voted “AGAINST” this proposal unless a shareholder indicates otherwise in the proxy.