Executive Compensation Program Overview
The BOK Financial executive compensation program is designed to attract and retain executives whose judgment, leadership abilities and special efforts result in successful operations for the Company and an increase in shareholder value. Various components of the program work together to:
▪Reward sustained above peer banks' performance
▪Encourage both individual performance and teamwork
▪Link compensation to operational and strategic results
▪Align executive interests with shareholder interests
▪Discourage inappropriate risk taking
▪Keep BOK Financial compensation competitive with peer banks
▪Create long-term commitment to the Company
The BOK Financial executive compensation program includes:
▪Salary
▪Executive Incentive Compensation (annual and long-term)
▪401(k) Plan
The Compensation Committee (the "Committee") has responsibility for establishing, implementing and approving the Company’s general compensation philosophy with regard to the senior executive officers who participate in the Company’s Executive Incentive Plan (referred to as the “Executive Incentive Plan” or the “Plan”). The Committee receives guidance from the Chief Executive Officer (the “CEO”), who assists in evaluating employee performance, recommending business performance targets and objectives and suggesting salary levels and awards for executives (other than himself).
Throughout this proxy statement, the Company's CEO, Chief Financial Officer (the "CFO"), and the three most highly compensated executive officers other than the CEO and CFO who were serving as executive officers at the end of the last completed fiscal year are referred to as the “named executives” or the “named executive officers”.
2021 Executive Compensation Summary
During 2021, the Executive Compensation Committee planned for the retirement of CEO Steve Bradshaw, who had assumed the CEO position in 2014 after having served in numerous roles since joining BOK Financial in 1991. Stacy Kymes, who was serving as Executive Vice President – Corporate Banking, was promoted to Chief Operating Officer, a new position for the organization, at the beginning of 2021. Upon the announcement of Mr. Bradshaw’s retirement, Mr. Kymes was appointed to the CEO position effective January 1, 2022. With Mr. Kymes’ promotion to CEO, other executive leadership roles in corporate and regional banking were transitioned. The Executive Committee focused on approving consistent yet competitive compensation for all executives assuming new positions, including Mr. Kymes.
No material changes were made to the methodologies, criteria and formulas previously established to compensate executive management as they remained viable and effective. However, responding to the effects of the pandemic in 2020, the Committee did determine that 100% of the strategic objectives for all named executives had been achieved in 2020 due to executive management’s successful handling of operational and employee matters during the pandemic, and such objectives differing from the original strategic objectives outlined for each executive at the beginning of 2020. Strategic objective attainment accounts for 20% of executive payout for annual incentive bonus as more fully describe on page 38. While the Committee foresees
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no material changes to methodologies, criteria and formulas established to compensate executive management, the Committee will continue to evaluate executive compensation outcomes to ensure outcomes remain consistent with the Committee's objectives for the executive compensation program.
The Committee received reports that BOK Financial was continuing to enhance benefits to support the broader employee population during the pandemic and be responsive to competitive labor pressures. BOK Financial raised the organization’s minimum wage for several job families, enhanced health care benefits including additional contributions to Health Savings Accounts for employees making less than a certain annual wage, and provided opportunities to access a variety of flexible and convenient health and wellness programs, including telehealth offerings for all employees.
The Company continued its focus on diversity and inclusion in 2021. The Company has a Diversity & Inclusion Council led by the CEO and includes other members of the executive leadership team. The Company joined the "CEO Action for Diversity and Inclusion" pledge. This pledge outlines the Company's commitment to cultivating a trusting environment where all ideas are welcomed, and employees feel comfortable and empowered to have discussions about diversity and inclusion. For more discussion on diversity and inclusion and human capital measurements and programs see page 3 of the Company's Annual Report on Form 10-K.
In 2021, the Committee considered the results of the advisory vote by shareholders on the “say-on-pay” proposal presented to shareholders at the May 4, 2021 annual meeting. At the 2021 Annual Meeting, there was significant support by shareholders for the compensation program offered to the Company’s named executive officers. Accordingly, the Committee made no direct changes to the Company’s executive compensation program as a result of the say-on-pay vote. The Company’s executive compensation program continued to focus on pay for performance, aligning executives' interests with those of the Company’s shareholders, achieving a balance between annual and long-term incentives and monitoring incentive plans, and the creation of incentives, so as not to create an excessive amount of risk.
Promoting Long-Term Growth and Discouraging Excessive Risk Taking
Review and Oversight of Risk
In 2010, the Office of the Comptroller of the Currency, the Federal Reserve Board of Governors and other regulatory agencies issued Interagency Guidance on Sound Incentive Compensation Policies (the “Compensation Guidance”). In response, Company management formed a review committee consisting of senior and executive leaders from human resources, audit, risk management, accounting, finance, legal, compliance and the various business lines (the “Incentive Risk Review Committee”). The Incentive Risk Review Committee undertook review of all the compensation plans of the Company in accordance with the Compensation Guidance. The Compensation Guidance required the Company to assess the balance of risk and reward in all compensation plans, the effectiveness of controls and risk management and the effectiveness of corporate governance, including Board of Director oversight. The Incentive Risk Review Committee reported to the Committee that the Company plans had a satisfactory balance of risk and reward and that controls, risk management and corporate governance were adequate. The Incentive Risk Review Committee reviews all new plans and any material changes to existing plans in accordance with the Compensation Guidance to continually assess the balance of risk and reward in the Company’s compensation plans. The Incentive Risk Review Committee reports the results of this review to the Committee on an annual basis.
Significant Equity Ownership
The stock ownership guidelines for executive management were reviewed and revised by the Committee in December 2014 from a fixed-share guideline to a multiple of base salary guideline. The purpose of the ownership guidelines is to encourage executive investment in the enterprise and to align the interest of executive management with those of long-term Company shareholders. Under the revised guidelines, each named executive is encouraged to retain ownership of shares equaling the following amount of his base salary:
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| | | | | |
| Executive Name | Multiple of Base Salary |
| Steven G. Bradshaw | 6 X base salary |
| Steven E. Nell | 5 X base salary |
| Stacy C. Kymes | 4 X base salary |
| Scott B. Grauer | 4 X base salary |
| Norman P. Bagwell | 4 X base salary |
Stacy C. Kymes, as our new CEO as of January 1, 2022, will be encouraged to retain ownership of Company shares equal to at least six times his base salary.
All five named executives currently meet the annual guidelines. The Executive Stock Ownership Guidelines calculate stock ownership using a first quarter, 90-day average. The 90-day average per share price for the first quarter of 2021 was $84.79. The Committee reviews compliance with the Executive Stock Ownership Guidelines annually. Unvested service shares, performance shares, and stock options do not count towards ownership. For a further accounting of Company named executive equity ownership see the beneficial ownership table on page 7. Base salary may be found in the Summary Compensation Table on page 44.
Shareholder and President and Chief Executive Officer Emphasis on Long-Term Success
George B. Kaiser, the largest shareholder of the Company and Chairman of the Company's Board, and Stacy C. Kymes, our President and CEO as of January 1, 2022, emphasize a long-term approach to management, reducing pressure on executives to realize short-term gains to the detriment of overall long-term success. Our immediately prior President and CEO, Steven G. Bradshaw, who retired at the end of 2021, also concurred in the emphasis on a long-term approach to management.
Recoupment of Incentive Compensation
Under the Plan, in the event incorrect financial information or results were used as a basis for calculation of incentive compensation under the Plan, our Board of Directors may direct remedial action including the forfeiture of unpaid incentive compensation and/or the restitution of paid incentive compensation. Our Board of Directors may require forfeiture or restitution from any executive who is accountable for the incorrect financial information or results, as well as any executive who erroneously benefits from the incorrect financial information or results.
Evaluating Executive Compensation Relative to Peer and Overall Earnings Performance
By basing the Executive Incentive Plan on peer bank comparison, the Company avoids penalizing executives for general industry and economic downturns and encourages executives to produce the best possible results in good and bad economic times. All the named executives receive a percentage of their annual incentive compensation based on the per share earnings growth (“EPS Growth”) of the Company compared to peer banks’ EPS Growth. In 2021, Bradshaw was eligible to receive 80% of his annual incentive based on EPS Growth, Nell - 60%, Bagwell - 40%, Kymes - 40% and Grauer - 40%, as more fully described under “Annual Incentive Bonus” on page 37. A portion of long-term target compensation, as more fully described under “Long Term Incentive Compensation” on page 39, is based on comparison to the peer bank median and is paid in restricted stock and restricted stock units (hypothetical Company common stock units), a majority of which, by the terms of the Plan, are performance based. In 2021, Bradshaw's LTI was 100% performance-based, while the other NEOs LTI was 70% performance based and 30% service-based. The Committee’s goal has always been to provide competitive remuneration to executives to enable the Company to hire and retain top talent. The Committee has reviewed previous years’ earnings per share performance relative to the peer banks and compensation paid to named executives relative to compensation paid to persons in similar positions at the peer banks.
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Factors Used for Establishing Executive Compensation
The following is an explanation of the primary data, metrics and criteria used by the Committee to determine compensation as more fully described in "Components of Compensation" below:
Earnings Per Share Growth Compared to Peers
•EPS Growth is a component of the annual and long term incentive under the Executive Incentive Plan.
•The Committee views EPS Growth as an important variable used in public markets to measure profitability and determine the Company’s stock price and, thus, shareholder value.
Business Performance
•"Business Performance" is determined by comparing the two-year average actual financial contribution of a business unit of the Company to its planned performance. Business Performance targets are established using standard Company methodologies and approved annually by the Committee.
•Linking compensation to Business Performance motivates executives to achieve superior results in their particular business units, contributing to Company-wide profitability.
Strategic Objectives
•At the beginning of each year, the President and CEO meets with each of the named executives and other executives of the Company to establish individual strategic objectives ("Strategic Objectives").
•Strategic Objectives focus the executive team on expanding organizational capabilities, optimizing business models, and managing risk.
•Progress is discussed with each named executive and the other executives periodically throughout the year.
Peer Group Compensation Data
•The Company’s internal compensation group completes an annual peer review of executive compensation using publicly available information, including proxy statements.
•The Committee uses this information to assist in setting base salary and to establish annual and long-term compensation targets in accordance with the Plan.
•The Committee annually updates the peer group of bank holding companies in accordance with the following guidelines that were updated in 2021:
•The peer banks will include only publicly-traded, SEC registered, United States bank holding companies (BHCs) with assets ranging from $16.5 billion smaller to $16.5 billion larger than BOKF, per the most recently filed quarterly earnings report, Quarterly Report on Form 10-Q or Annual Report on Form 10-K.
•The peer group size will not be less than 14 nor greater than 24 banks. If asset range causes a group of less than 14 peer banks, the next BHC, greater or smaller in asset size, will be included in the peer bank group.
•The Committee uses the peer bank group for determining comparable executive compensation and relative EPS Growth.
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The Committee determined the "Peers" for the period ending December 31, 2021:
| | | | | |
| Financial Institution |
| Associated Banc-Corp | Prosperity Bancshares, Inc. |
| BankUnited, Inc. | Sterling Bancorp |
CIT Group Inc.(1) | Synovus Financial Corp |
| Commerce Bancshares, Inc. | TCF Financial Corporation(1) |
| Cullen/Frost Bankers, Inc. | Texas Capital Bancshares, Inc. |
| East West Bancorp, Inc. | UMB Financial Corporation |
| F.N.B. Corporation | Umpqua Holdings Corporation |
| First Citizens Bancshares, Inc. | Valley National Bancorp |
| Hancock Whitney Corporation | Webster Financial Corporation |
| People's United Financial, Inc. | Western Alliance Bancorporation |
| Pinnacle Financial Partners, Inc. | Wintrust Financial Corporation |
(1) CIT Group Inc. and TCF Financial Corporation data were used to establish 2021 compensation, but were not included in the calculation of EPS performance due to their acquisitions by other organizations during 2021 and early 2022.
Peer groups used to establish trailing average earnings per share growth is found in our previous proxy statement filings.
Components of Executive Compensation
Comparable Executive Position
For purposes of determining salary and setting targets for both annual and long-term incentive, each named executive’s position is compared to the Peers' executive positions, based upon information reported in shareholder proxy statements or third party compensation survey data (for 2021, we utilized peer data from the McLagan survey of top executives), as follows (each a “Comparable Executive Position”): the Company’s CEO is compared against the chief executive officers of the Peers; the CFO is compared against the chief financial officers of the Peers; and the named executive officers, other than the CEO and CFO (i.e., Bagwell, Grauer, and Kymes), are compared against the highest paid positions of our Peers, excluding the chief executive officer and the chief financial officer.
Salary
In determining base salary of named executives, the Committee is directed by the Plan to compare the median base salary of each named executive to that of the Comparable Executive Position from shareholder proxy statements of the Peers. Adjustments to base salary of a named executive may occur based upon a named executive’s experience, scope and scale of position, performance history and effectiveness in building organizational capabilities. For 2021, the BOK Financial base salary for each of the named executives compared to the median of his Peer was as follows:
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| | | | | |
| Executive Name | BOKF Base Pay Compared to Peer
Median for Comparable Executive Position |
| Steven G. Bradshaw | 106% |
| Steven E. Nell | 108% |
Stacy C. Kymes1 | 115% |
| Scott B. Grauer | 97% |
| Norman P. Bagwell | 99% |
| |
| |
(1) This calculation uses Mr. Kymes' base pay upon his promotion to Chief Operating Officer, which became effective March 1, 2021.
Executive Incentive Compensation
The Executive Incentive Plan allows the named executives, and certain executives that report directly to, or are designated by, the CEO, to earn (1) an annual cash incentive, which has historically been paid in the first quarter of the year following that to which the service relates, and (2) long-term incentive, which may be paid through the award of stock options, service-based or performance-based restricted stock or restricted stock units (hypothetical Company common stock units), or a combination of the foregoing as determined by the Committee. For 2021, the Committee elected to award long-term incentive in the form of restricted shares and restricted stock units. No annual cash incentive for any one named executive in any year may exceed $2,000,000. No more than 60,000 shares may be issued to a single named executive in any one year. Share-based compensation is awarded based on the closing stock price on the second Friday in January, and is granted on the date on which the Committee approves long-term incentive targets, typically at the February Committee meeting.
Annual Incentive Bonus
The “Annual Incentive Bonus” is determined as follows:
(i)The target Annual Incentive Bonus for each named executive is determined annually by the Committee and is a percentage of base salary. The Committee reviews the median Annual Incentive Bonus for named executives’ Comparable Executive Position and adjusts the target Annual Incentive Bonus based upon factors determined by the Committee such as years in the position, responsibilities and performance (the “Annual Incentive Target”). A named executive is eligible to receive 200% of his Annual Incentive Target if the Company’s earnings per share for the performance period equals or exceeds $1.00 per share. The Committee may decrease the payout of the Annual Incentive Bonus based upon Earnings per Share Performance (described below) and Business Performance (described below) or such other factors as determined by the Committee.
(ii)“Earnings Per Share Performance” is the percentile ranking of the Company after (a) calculating the two-year average earnings per share growth (“Average Growth”) for each Peer and for the Company and (b) ranking the Company’s Average Growth compared to the Peer's Average Growth, starting with the highest Average Growth and ending with the lowest Average Growth. A named executive shall earn that portion of his or her Annual Incentive Bonus based upon Earnings Per Share Performance (an “EPS Bonus”) using a linear interpolation pursuant to which 0% of the EPS Bonus shall be earned if the Earnings Per Share Performance is below the 30th percentile, 33% of the EPS Bonus shall be earned if the Earnings Per Share Performance is at the 30th percentile, 100% of the EPS Bonus shall be earned if the Earnings Per Share Performance is at the 50th percentile, and 200% of the EPS Bonus shall be earned if the Earnings Per share Performance is at the 80th percentile or above, as illustrated in the following matrix:
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(iii)A named executive shall earn that portion of his Annual Incentive Bonus based upon Business Performance (the “Business Performance Bonus”) using a linear interpolation pursuant to which 0% of the Business Performance Bonus shall be earned if Business Performance is below 80%, 33% of the Business Performance Bonus shall be earned if 80% of Business Performance is achieved, 100% of the Business Performance Bonus shall be earned if 100% of Business Performance is achieved, and 200% of the Business Performance Bonus shall be earned if 120% or more of Business Performance is achieved as illustrated in the following matrix:
(iv)Each named executive is eligible to receive 20% of his Annual Incentive Bonus based on the Strategic Objective goal achievement. The Strategic Objectives are established by the Chief Executive Officer and were reviewed and approved by the Committee on February 23, 2021 for service performed in 2021. Strategic Objectives recognize the importance of focus by each named executive on expanding organizational capabilities, optimizing business models, and managing risk.
(v)For 2021, the Annual Incentive Targets and payouts for the named executives are as follows:
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Annual Incentive Bonus Factors |
| Executive Name | Target Award % of Base | BOKF EPS Growth(1) | Business Performance(2) | Strategic Objectives | Final Payouts (4) |
| Weight | Payout (%) (1) | Weight | Payout (%) | Weight | Achieved (%)(3) | ($) | % of Base |
| Steven G. Bradshaw | 100% | 80% | 109% | —% | —% | 20% | 110% | $1,154,764 | 109% |
| Steven E. Nell | 75% | 60% | 109% | 20% | 167% | 20% | 100% | $489,431 | 89% |
Stacy C. Kymes5 | 90% | 40% | 109% | 40% | 152% | 20% | 100% | $698,618 | 112% |
| Scott B. Grauer | 75% | 40% | 109% | 40% | 200% | 20% | 110% | $578,230 | 109% |
| Norman P. Bagwell | 90% | 40% | 109% | 40% | 157% | 20% | 100% | $550,674 | 114% |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
(1) For 2021, BOKF Earnings per Share performance percentile rank was 52.60% based on the 2020 peer group, resulting in a 108.67% payout.
(2) Nell's Business Performance is based on overall Company performance; Kymes' Business Performance is based on the Specialty Banking business unit performance; Grauer's Business Performance is based on the Wealth Management business unit performance; and Bagwell's Business Performance is based on the Regional Banking unit performance. Targets are established annually by standard Company methodologies.
(3) At the February 22, 2022 Compensation Committee meeting, Kymes, as current CEO, presented his detailed assessments of the executives' performance against the strategic objectives established by the Committee, and the Committee approved those achievement percentages. Bradshaw assisted Kymes with the assessments presented to the Committee. Bradshaw and Kymes' achievement percentages were determined by the Committee on that date.
(4) Final payouts were approved by the Committee on February 22, 2022.
(5) Mr. Kymes Annual Incentive Payout and the resulting percent of base were calculated using his Chief Operating Officer salary, which became effective March 1, 2021.
Long Term Incentive Compensation
“Long Term Incentive Compensation” is determined as follows:
(i) The Long Term Incentive Compensation target amount for each Comparable Executive Position at each Peer is calculated based upon such Peer's latest proxy statements (the “Peer Long Term Incentive Compensation Amount”).
(ii) The Long Term Incentive Compensation awarded to each named executive is based upon the median of all the Peer Long Term Incentive Compensation Amounts corresponding to such Plan participant’s Comparable Executive Position, adjusted by the Committee using such factors as years in the position, responsibilities, and performance. The amounts paid to the Executives as restricted stock awards may be found in column (e) of the Summary Compensation Table on page 44.
(iii) For 2021, the named executives were awarded the following percentage of Long Term Incentive Compensation:
| | | | | | | | | | | |
| Executive Name | 2021 LTI Target
(as a % of base) | Performance-Based
(as a % of target) | Service-Based
(as a % of target) |
| Steven G. Bradshaw | 210% | 100% | - |
| Steven E. Nell | 115% | 70% | 30% |
Stacy C. Kymes1 | 115% | 70% | 30% |
| Scott B. Grauer | 110% | 70% | 30% |
| Norman P. Bagwell | 105% | 70% | 30% |
| | | |
| | | |
(1) Due to the timing of the award, Mr. Kymes' LTI award was 115% of his base salary prior to his promotion to Chief Operating Officer.
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Long Term Incentive Compensation is paid through the award of service-based restricted stock, performance-based restricted stock, or a combination of service-based and performance-based restricted stock, as determined by the Committee annually prior to March 15 of the applicable year. Service-based and performance-based restricted stock and restricted stock units (hypothetical Company common stock units) are issued pursuant to, and subject to the additional terms of (including restrictions and forfeiture), the BOK Financial Corporation 2009 Omnibus Incentive Plan (the “Omnibus Plan”). Performance-based restricted stock and units vest once earned as described in paragraph (ii) below and generally may not be transferred by the named executive until two years after vesting. Service-based restricted stock and units vest once earned as described in paragraph (iv) below, and generally may not be transferred by the named executive until two years after vesting.
(i)“Long Term Incentive EPS Performance” is the percentile ranking of the Company after (a) calculating the trailing three-year period earnings per share growth (determined as of the second anniversary of the end of the year in respect of which the performance-based restricted stocks were awarded) (the “Three Year EPS Average Growth”) for each Peer and for the Company and (b) ranking the Company’s Three Year EPS Average Growth compared to the Peers’ Three Year EPS Growth Average, starting with the highest Three Year EPS Average Growth and ending with the lowest Three Year EPS Average Growth.
(ii)Each annual award of performance-based restricted stocks or units are reviewed for performance as of the second year-end anniversary of the year in respect of which the performance-based restricted stocks were awarded (the “Reviewed Restricted Stocks”). A named executive shall earn Reviewed Restricted Stocks using a linear interpolation pursuant to which 0% of the Reviewed Restricted Stocks shall be earned if the Long Term Incentive EPS Performance is below the 30th percentile, 33% of the Reviewed Restricted Stocks shall be earned if the Long Term Incentive EPS Performance is at the 30th percentile, 100% of the Reviewed Restricted Stocks shall be earned if the Long Term Incentive EPS Performance is at the 50th percentile, and 200% of the Reviewed Restricted Stocks shall be earned if the Long Term Incentive EPS Performance is at the 80th percentile or above as illustrated in the following matrix:
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(iii)In the event that the Long Term Incentive EPS Performance is such that performance exceeds the target grant (e.g. 120% of target), the named executive receives an additional grant of performance-based restricted stock that equals the difference between the number of performance-based restricted stock that was granted at target and that which was earned pursuant to the immediately preceding paragraph (ii) (e.g. 20%) (the “Shares Exceeding Target”). The vesting and transfer restrictions on the Shares Exceeding Target shall be equal in duration to the Reviewed Restricted Stock. In the event that the Long Term Incentive EPS Performance is such that performance does not exceed the target grant, the named executive shall forfeit the performance-based restricted stock received in accordance with the preceding paragraph (ii) but not earned by the named executive.
(iv)To the extent the Company’s earnings per share for the year in which service-based restricted stock or units are granted (the “Service-Based Performance Year”) does not equal or exceed $1.00 per share (adjusted for stock dividends or distributions, recapitalizations, merger, consolidation, exchange of shares, stock splits or the like), the named executive shall forfeit all the service-based restricted stock granted to him in such Service-Based Performance Year on or before March 15 of the year following the Service-Based Performance Year. To the extent the Company’s earnings per share for the year following the grant of service-based restricted stock equal or exceed $1.00 per share (adjusted for stock dividends or distributions, recapitalizations, merger, consolidation, exchange of shares, stock splits or the like), the named executive retains all the service-based restricted stock granted to him or her the previous year and such shares shall be earned and vest three years following the second Friday in January of the year in which such shares were granted.
401(k) Plan
Executives may contribute to the BOKF 401(k) Plan. Employee contributions are matched by the Company up to 6% of base compensation based on years of service and subject to 401(k) Plan limits. Named executives may direct the investments of their accounts in a variety of options, including BOK Financial common stock.
Perquisites and Other Personal Benefits
Other than participation in the plans and programs described above, benefits which are very immaterial in nature and disclosed in footnote 4 to the Summary Compensation Table on page 44 and benefits which are provided to employees generally such as health and dental insurance, the Company does not provide perquisites or other personal benefits to named executive officers.
Compensation Philosophy and Objectives
The BOK Financial executive compensation program has many objectives, all of which are designed to enhance Company value. Because no single type of compensation award or performance criteria could achieve all objectives, several types of compensation performance criteria and awards are used to achieve the maximum benefit from executive compensation.
There is no pre-established policy or target for allocating executive compensation between cash and equity, long-term and short-term. Rather, the Committee considers its varied objectives, personal performance, Company performance and data regarding peer bank compensation to establish the appropriate level and mix of incentive compensation. The Committee has generally chosen not to consider the benefits to named executives from previously awarded compensation other than to establish a baseline for future compensation.
Company executive compensation objectives include:
Sustained, Above Peer Performance - BOK Financial rewards sustained above peer performance through the Executive Incentive Plan which uses comparative EPS Growth as a metric.
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Individual Performance and Teamwork - Annual incentive compensation promotes individual performance with a percentage of annual incentive compensation being based on Business Performance (except for the CEO) and a percentage being based on EPS Growth, with potential downward adjustments for failure to meet individual performance goals. Long-term compensation, which is awarded entirely as equity, promotes teamwork by aligning all executives’ interests with the success of the Company as a whole.
Link Compensation to Operational Results - By using EPS Growth and Business Performance as the metrics for performance, both annual and long-term compensation are directly tied to financial performance of the Company. The Committee also considers the financial success of the Company when determining salary.
Competition with Peer Banks - To attract and retain superior executives, BOK Financial strives to provide levels of compensation comparable to competitor banks. The Committee considers peer compensation data when establishing salary and incentive compensation targets.
Align Executive Interests with Shareholder Interests - While BOK Financial does not have a specific policy or target for determining the allocation between equity and cash awards, the Company does promote equity ownership to align executive interests with shareholder interests. All long-term executive compensation is paid in restricted stock. Stock ownership guidelines as described on page 33 require executives to retain Company stock.
Change of Control and Termination Benefits
The Company has a limited number of change of control benefits for executive officers. If an executive, or any employee of the Company, is terminated within one year after a “change of control” (as defined in footnote 3 on page 49), and such termination is other than “for cause” (as defined in footnote 4 on page 50), then all unvested performance shares and stock options he or she has been granted vest. Stock options must then be exercised within 90 days of the change of control.
Executive officers receive the same severance benefits as other Company employees which are based upon the amount of time a person has been employed by the Company. The named executives are entitled to receive additional severance pursuant to their employment agreements as more fully described in Potential Payments upon Termination found on page 49. The Company believes that the severance and termination payments help recruit and retain senior executives by protecting them in the event their positions are adversely impacted by an unexpected change in circumstance and are consistent with those offered by competitors.
Equity Grant Policy
In 2019, the equity grant date (the "Grant Date") became the date on which the Committee approves long-term incentive targets, typically at the February Committee meeting. There is no program or policy to coordinate the granting of equity with the release of material non-public information.
Tax and Accounting Considerations
Section 409A of the Internal Revenue Code
If an executive is entitled to nonqualified deferred compensation benefits that are subject to Section 409A of the Internal Revenue Code, and such benefits do not comply with Section 409A, then the benefits are taxable in the first year they are not subject to substantial risk of forfeiture. In such case, the Service Provider is subject to regular federal income tax, interest and an additional federal income tax of 20% of the benefit included in the income. The Company believes all deferred compensation benefits currently comply with 409A.
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Committee Report
The Committee meets as often as necessary to perform its duties and responsibilities. The Committee held three meetings during fiscal year 2021. The Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management. Based upon such review, the related discussions and such other matters deemed relevant and appropriate by the Committee, the Committee has recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement and delivered to shareholders.
COMPENSATION COMMITTEE
Joseph W. Craft III (Chairman)
Chester E. Cadieux, III
David F. Griffin
George B. Kaiser
Steven J. Malcolm
E.C. Richards
Claudia San Pedro
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EXECUTIVE COMPENSATION TABLES
Summary Compensation Table
The following table provides summary information concerning the compensation of the named executive officers for the past three fiscal years.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Executive Name and
Principal Position | Year | Salary | Bonus | Stock Awards(1) | Option Award | Non-Equity Incentive Plan Compensation(2) | Change in Pension Value & Nonqualified Deferred Compensation Earnings(3) | All Other Compensation(4) | Total |
| (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) |
Steven G. Bradshaw President & Chief Executive Officer | 2021 | $ | 1,060,000 | | $ | — | | $ | 2,226,026 | | $ | — | | $ | 1,154,764 | | $ | 55,794 | | $ | 273,744 | | $ | 4,770,328 | |
| 2020 | $ | 1,050,000 | | $ | — | | $ | 2,226,004 | | $ | — | | $ | 1,842,916 | | $ | — | | $ | 421,438 | | $ | 5,540,358 | |
| 2019 | $ | 1,000,000 | | $ | — | | $ | 1,999,965 | | $ | — | | $ | 743,400 | | $ | 29,712 | | $ | 45,294 | | $ | 3,818,371 | |
Steven E. Nell
Executive Vice President Chief Financial Officer | 2021 | $ | 550,000 | | $ | — | | $ | 632,528 | | $ | — | | $ | 489,431 | | $ | 4,108 | | $ | 82,766 | | $ | 1,758,833 | |
| 2020 | $ | 548,333 | | $ | — | | $ | 632,580 | | $ | — | | $ | 664,727 | | $ | 5,059 | | $ | 98,813 | | $ | 1,949,512 | |
| 2019 | $ | 538,375 | | $ | — | | $ | 621,008 | | $ | — | | $ | 334,854 | | $ | 4,906 | | $ | 37,987 | | $ | 1,537,130 | |
Stacy C. Kymes
Executive Vice President- Chief Operating Officer
| 2021 | $ | 609,167 | | $ | — | | $ | 609,464 | | $ | — | | $ | 698,618 | | $ | 1,864 | | $ | 77,807 | | $ | 1,996,920 | |
| 2020 | $ | 525,000 | | $ | — | | $ | 609,487 | | $ | — | | $ | 672,920 | | $ | 1,913 | | $ | 91,443 | | $ | 1,900,763 | |
| 2019 | $ | 493,058 | | $ | — | | $ | 575,050 | | $ | — | | $ | 414,930 | | $ | 1,854 | | $ | 42,737 | | $ | 1,527,629 | |
Scott B. Grauer
Executive Vice President-Wealth Management; Chief Executive Officer of BOK Financial Securities, Inc.
| 2021 | $ | 543,703 | | $ | — | | $ | 582,985 | | $ | — | | $ | 578,230 | | $ | 4,817 | | $ | 81,036 | | $ | 1,790,771 | |
| 2020 | $ | 539,889 | | $ | — | | $ | 582,972 | | $ | — | | $ | 653,265 | | $ | 4,942 | | $ | 95,296 | | $ | 1,876,364 | |
| 2019 | $ | 531,723 | | $ | — | | $ | 567,610 | | $ | — | | $ | 332,562 | | $ | 4,793 | | $ | 46,056 | | $ | 1,482,744 | |
Norman P. Bagwell
Executive Vice President- Regional Banks; Chief Executive Officer of Bank of Texas | 2021 | $ | 485,000 | | $ | — | | $ | 509,239 | | $ | — | | $ | 550,674 | | $ | — | | $ | 64,606 | | $ | 1,609,519 | |
| 2020 | $ | 482,500 | | $ | — | | $ | 509,246 | | $ | — | | $ | 560,990 | | $ | — | | $ | 76,801 | | $ | 1,629,537 | |
| 2019 | $ | 467,715 | | $ | — | | $ | 493,443 | | $ | — | | $ | 342,940 | | $ | — | | $ | 32,781 | | $ | 1,336,879 | |
(1)The amounts in column (e) are the grant date fair value of the non-vested stock. Bradshaw was issued restricted stock awards in 2021 and 2020, and restricted stock units in 2019; Nell was issued restricted stock awards in 2021, and restricted stock units in 2020 and 2019; Kymes, Grauer, and Bagwell were issued restricted stock awards in all years.
(2)The amounts in column (g) reflect the annual cash awards made pursuant to the Executive Incentive Plan, which is discussed in further detail on page 36 under the heading “Components of Executive Compensation.” Incentive amounts are paid at a targeted percentile of our Peers.
(3)The amounts in column (h) include (i) the actuarial increase in the present value of the named executive officer’s benefits under the Company pension plan using a discount rate defined in the Pension Plan and (ii) Nonqualified Deferred Compensation Earnings further described in column (d) of the Nonqualified Deferred Compensation Table on page 48. Executives who did not have the ability to defer income or who chose not to defer income are not required to disclose investment income on the Summary Compensation Table. In 2020, Bradshaw had net losses of $17,344 from his pension and non-qualified deferred compensation accounts.
(4)The amounts in column (i) for 2021 are derived from: Company matching contributions to the 401(k) Thrift Plan as follows: Bradshaw, $34,800; Nell, $34,800; Kymes, $34,800; Grauer, $34,800; and Bagwell, $26,100; executive life insurance benefits as follows: Bradshaw, $4,401; Nell, $3,255; Kymes, $1,456; Grauer, $2,611; and Bagwell, $3,255; a Champion Health corporate members wellness benefit for named executive officers and spouses as follows: Bradshaw, $2,775; Nell, $1,800; Kymes, $2,775; and Grauer, $2,775; dividend equivalents paid on the distribution of 2018 performance shares as follows: Bradshaw, $210,205; Nell, $42,911; Kymes, $38,776; Grauer, $40,850; and Bagwell, $35,251; and a retirement gift for Bradshaw in the amount of $21,563.
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2021 Pay Ratio Disclosure
For purposes of calculating the 2021 ratio of the median annual total compensation of all Company employees to the total annual compensation of the Company’s Chief Executive Officer, the Company included in its calculation of compensation: base salary, commissions, annual bonus amounts, stock-based compensation, and other incentive payments (including sign-on bonuses). The Company used December 31, 2021 as its measurement date. On December 31, 2021, the Company had 4,718 employees nationwide, excluding the Chief Executive Officer. Compensation amounts were annualized for any employee who had less than a full year of service during 2021. Total 2021 compensation for Steven G. Bradshaw, the Company’s Chief Executive Officer, was determined to be $4,770,327 and was approximately 56 times the median annual compensation of all Company employees (excluding the Chief Executive Officer) of $85,320.
Options Exercised and Stock Vested
The following table provides certain information concerning the exercise of stock options and the vesting of shares by the named executive officers during fiscal year 2021:
| | | | | | | | | | | | | | |
| | Option Awards | Stock Awards |
| (a) | (b) | (c) | (d) | (e) |
| Executive Name | Number of Shares Acquired
on Exercise
(#) | Value Realized
on Exercise
($) | Number of Shares Acquired
on Vesting
(#) | Value Realized
on Vesting
($) |
| Steven G. Bradshaw | 3,624 | | $ | 41,233 | | 32,439 | | $ | 2,921,781 | |
| Steven E. Nell | 8,774 | | $ | 346,383 | | 8,449 | | $ | 738,383 | |
| Stacy C. Kymes | — | | $ | — | | 7,635 | | $ | 667,245 | |
| Scott B. Grauer | — | | $ | — | | 8,043 | | $ | 702,904 | |
| Norman P. Bagwell | — | | $ | — | | 6,941 | | $ | 606,593 | |
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Grants of Plan-Based Awards
The following table provides certain information with respect to (i) non-equity annual incentive awards made pursuant to the Executive Incentive Plan and (ii) the options, service and performance shares awarded as long-term compensation pursuant to the Executive Incentive Plan.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Estimated Future Payouts Under Non-Equity Incentive Plan Awards | Estimated Future Payouts Under Equity Incentive Plan Awards | |
| (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | (k) | (l) |
| Executive Name | Grant Date (m/dd/yy) | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | All Other Stock Awards: Number of Shares of Stock or Units (#) | All Other Option Awards: Number of Securities Under-lying Options (#) | Exercise or Base Price of Option Award ($/sh) | Grant Date Fair Value of Stock and Option Awards(6) ($) |
| Steven G. Bradshaw | (1) | $ | 279,840 | | $ | 848,000 | | $ | 1,696,000 | | | | | | | | |
(2) | | $ | 212,000 | | $ | 254,400 | | | | | | | | |
2/23/2021(6) | | | | 9,682 | | 29,340 | | 58,680 | | | | | $ | 2,226,026 | |
| Steven E. Nell | (1) | $ | 81,675 | | $ | 247,500 | | $ | 495,000 | | | | | | | | |
(2) | | $ | 82,500 | | $ | 99,000 | | | | | | | | |
(3) | $ | 27,225 | | $ | 82,500 | | $ | 165,000 | | | | | | | | |
2/23/2021(4) | | | | 1,926 | | 5,836 | | 11,672 | | | | | $ | 442,777 | |
2/23/2021(5) | | | | | | | 2,501 | | | | $ | 189,751 | |
| Stacy C. Kymes | (1) | $ | 74,250 | | $ | 225,000 | | $ | 450,000 | | | | | | | | |
(2) | | $ | 112,500 | | $ | 135,000 | | | | | | | | |
(3) | $ | 74,250 | | $ | 225,000 | | $ | 450,000 | | | | | | | | |
2/23/2021(4) | | | | 1,856 | | 5,623 | | 11,246 | | | | | $ | 426,617 | |
2/23/2021(5) | | | | | | | 2,410 | | | | $ | 182,847 | |
| Scott B. Grauer | (1) | $ | 52,470 | | $ | 159,000 | | $ | 318,000 | | | | | | | | |
(2) | | $ | 79,500 | | $ | 95,400 | | | | | | | | |
(3) | $ | 52,470 | | $ | 159,000 | | $ | 318,000 | | | | | | | | |
2/23/2021(4) | | | | 1,775 | | 5,379 | | 10,758 | | | | | $ | 408,105 | |
2/23/2021(5) | | | | | | | 2,305 | | | | $ | 174,880 | |
| Norman P. Bagwell | (1) | $ | 57,618 | | $ | 174,600 | | $ | 349,200 | | | | | | | | |
(2) | | $ | 87,300 | | $ | 104,760 | | | | | | | | |
(3) | $ | 57,618 | | $ | 174,600 | | $ | 349,200 | | | | | | | | |
2/23/2021(4) | | | | 1,550 | | 4,698 | | 9,396 | | | | | $ | 356,437 | |
2/23/2021(5) | | | | | | | 2,014 | | | | $ | 152,802 | |
(1)Bradshaw receives 80%, Nell receives 60%, and Grauer, Kymes, and Bagwell receive 40% of their annual incentive based on EPS Growth. Annual incentive cash awards were finalized and approved by the Committee on February 22, 2022 and are provided in column (g) of the “Summary Compensation Table” on page 44 herein. For final target achievement and payout, see the Annual Incentive Bonus Factors chart on page 39. The total annual incentive cannot exceed $2,000,000 for any participant per the Executive Incentive Plan.
(2)Represents annual incentive targets for achievement of Strategic Objectives established by the Committee on February 23, 2021 for service performed in 2021. The named executives were eligible to receive 20% of their annual incentive based on Strategic Objective goal achievement which may range from zero to 120%.
(3) Represents annual incentive targets for Business Performance Bonus established by the Committee on February 23, 2021 for service performed in 2021. Nell receives 20% of his annual incentive based on overall Company performance. Kymes, Grauer, and Bagwell each receive 40% of their annual incentive based on business unit performance.
(4) Represents performance shares granted as long-term incentive pursuant to the Executive Incentive Plan. Performance shares vest when earned and are subject to a two year hold requirement, followed by stock ownership guidelines as further described in “Compensation Discussion and Analysis” on page 33 herein.
BOK Financial Corporation | 46
(5) Represents service shares granted as long-term incentive pursuant to the Executive Incentive Plan. Service shares vest on the third anniversary of the second Friday in January of the year in which the service shares were issued and are subject to a two year hold requirement, followed by stock ownership guidelines as further described in “Compensation Discussion and Analysis” on page 33 herein.
(6) Amounts reported in column (l) represent the grant-date fair value of non-vested stock awarded. The Company’s policy regarding the valuation of stock compensation is included on page 93 of the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 23, 2022.
Outstanding Equity Awards at Fiscal Year-End
The following table includes stock options and performance shares outstanding as of December 31, 2021.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Option Awards | Stock Awards |
| (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) |
| Executive Name | Number of Securities Underlying Unexercised Options Exercisable (#) | Number of Securities Underlying Unexercised Options Unexercisable (#) | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options
(#) | Option Exercise Price
($) | Option Expiration Date
(m/dd/yy) | Number of Shares or Units of Stock That Have Not Vested (#)(1) | Market Value of Shares or Units of Stock That Have Not Vested ($)(2) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(3) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(2) |
| Steven G. Bradshaw | | | | | | | | | |
| | | | | | | 81,172 | | 8,562,834 | |
| Total | — | | — | | | | | — | | $ | — | | 81,172 | | $ | 8,562,834 | |
| Steven E. Nell | | | | | | | | | |
| | | | | 7,124 | | 751,511 | | | |
| | | | | | | 16,622 | | $ | 1,753,455 | |
| — | | — | | | | | 7,124 | | $ | 751,511 | | 16,622 | | $ | 1,753,455 | |
| Stacy C. Kymes | | | | | | | | | |
| | | | | 6,774 | $ | 714,589 | | | |
| | | | | | | 15,805 | $ | 1,667,269 | |
| Total | — | | — | | | | | 6,774 | | $ | 714,589 | | 15,805 | | $ | 1,667,269 | |
| Scott B. Grauer | | | | | | | | | |
| | | | | 6,547 | | $ | 690,643 | | | |
| | | | | | | 15,277 | | $ | 1,611,571 | |
| Total | — | | — | | | | | 6,547 | | $ | 690,643 | | 15,277 | | $ | 1,611,571 | |
| Norman P. Bagwell | | | | | | | | | |
| | | | | 5,710 | $ | 602,348 | | | |
| | | | | | | 13,323 | $ | 1,405,443 | |
| Total | — | | — | | | | | 5,710 | | $ | 602,348 | | 13,323 | | $ | 1,405,443 | |
(1)Column (g) represents service shares which are not subject to adjustment based upon the three year performance period, but which have not yet completed the vesting period. Service shares vest pursuant to the Executive Incentive Plan. Shares may not be sold unless certain stock ownership guidelines are met as described in “Compensation Discussion and Analysis” on page 33.
(2)Market value of performance shares is based on the closing price of BOK Financial common stock of $105.49 (as reported on NASDAQ as of December 31, 2021).
(3)Column (i) represents performance shares granted as long-term incentive pursuant to the Executive Incentive Plan the amount of which remains subject to adjustment based on EPS Growth over a three year performance period as further described in Compensation Discussion and Analysis on page 40. Performance shares vest pursuant to the Executive Incentive Plan. Shares may not be sold unless certain stock ownership guidelines are met as described in “Compensation Discussion and Analysis.”
BOK Financial Corporation | 47
Pension Benefits
The normal retirement age under the BOK Financial Pension Plan (the Plan) is age 65. At that time, a participant may receive a lump sum equal to his or her account balance. In lieu of a lump sum payment, the participant may elect to receive an annuity payment from the Plan based on different optional forms of payments defined in the Plan. Active participants also have the option to withdraw from the Plan at age 62.
The following table shows the present value of accumulated benefits in the Plan for the named executive officers:
| | | | | | | | | | | | | | |
| (a) | (b) | (c) | (d) | (e) |
Executive Name(1) | Plan Name | Number of Years Credited Service(2) | Present Value of Accumulated Benefit | Payments During Last Fiscal Year |
| Steven E. Nell | BOKF Pension Plan | 14 | $ | — | | $ | 157,488 | |
| Stacy C. Kymes | BOKF Pension Plan | 9 | $ | 59,852 | | $ | — | |
| Scott B. Grauer | BOKF Pension Plan | 15 | $ | 154,663 | | $ | — | |
(1)Bradshaw and Bagwell are named executives but are not listed, as they do not participate in the BOKF Pension Plan.
(2)Named executives are credited with the number of years employed by the Company since the Pension Plan’s inception in 1987 (through December 31, 2005 when the number of years of credited service was frozen).
Nonqualified Deferred Compensation
Pursuant to an individual Deferred Compensation Agreement, Bradshaw was permitted, until December 31, 2004, to defer certain compensation. In response to IRS guidance, Mr. Bradshaw's Deferred Compensation Agreement was amended in December 2004 to preclude the deferral of future compensation and subsequently terminated. In 2018, BOKF amended its non-qualified deferred compensation program to allow executives to defer portions of their compensation, beginning with the 2019 equity award, which vested in early 2022. Several members of the executive team have elected to participate in the program each of the last three years.
The following table describes the current balance of deferral accounts:
| | | | | | | | | | | | | | | | | |
Executive Name(1) | Executive Contributions
in Last FY
($) | Registrant Contributions in Last FY
($) | Aggregate Earnings in Last FY(2) ($) | Aggregate Withdrawals/
Distributions
($) | Aggregate Balance at
Last FYE
($) |
| (a) | (b) | (c) | (d) | (e) | (f) |
| Steven G. Bradshaw | $ | — | | $ | — | | $ | 55,794 | | $ | — | | $ | 370,310 | |
(1)Bradshaw is the only named executive to have a deferral account balance as of December 31, 2021.
(2)Mr. Bradshaw's earnings include gains or losses reported on investments in distressed asset and venture capital funds, and interest earned on uninvested cash accrued at BOKF’s money market deposit rates as well as dividends paid and changes in fair value of the Company's common stock.
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Potential Payments Upon Termination
The following table shows potential payments to the named executive officers under existing contracts, agreements, plans or arrangements for various scenarios, assuming a December 31, 2021 termination date. Each of the named executive officers is subject to an employment agreement.
| | | | | | | | | | | | | | |
Executive Name(1) | Compensation Component | Termination without Cause(2) | Termination without Cause Following a Change of Control(3) | Termination for Cause(4) |
| Steven G. Bradshaw | Salary/Severance | $ | 1,793,565 | | $ | 2,120,000 | | $ | — | |
| Unvested Restricted Stock | $ | 5,840,559 | | $ | 5,840,559 | | $ | — | |
| Unvested Restricted Units | $ | 2,722,275 | | $ | 2,722,275 | | $ | — | |
Other (5) | $ | 3,000 | | $ | 3,000 | | $ | 3,000 | |
| TOTAL | | $ | 10,359,399 | | $ | 10,685,834 | | $ | 3,000 | |
| Steven E. Nell | Salary/Severance | $ | 930,621 | | $ | 1,100,000 | | $ | — | |
| Unvested Restricted Stock | $ | 879,470 | | $ | 879,470 | | $ | — | |
| Unvested Restricted Units | $ | 1,625,495 | | $ | 1,625,495 | | $ | — | |
Other (5) | $ | 3,000 | | $ | 3,000 | | $ | 3,000 | |
| TOTAL | | $ | 3,438,587 | | $ | 3,607,966 | | $ | 3,000 | |
| Stacy C. Kymes | Salary/Severance | $ | 1,057,533 | | $ | 1,250,000 | | $ | — | |
| Unvested Restricted Stock | $ | 2,381,859 | | $ | 2,381,859 | | $ | — | |
| Unvested Restricted Units | $ | — | | $ | — | | $ | — | |
Other (5) | $ | 3,000 | | $ | 3,000 | | $ | 3,000 | |
| TOTAL | | $ | 3,442,392 | | $ | 3,634,859 | | $ | 3,000 | |
| Scott B. Grauer | Salary/Severance | $ | 896,782 | | $ | 1,060,000 | | $ | — | |
| Unvested Restricted Stock | $ | 2,302,214 | | $ | 2,302,214 | | $ | — | |
| Unvested Restricted Units | $ | — | | $ | — | | $ | — | |
Other (5) | $ | 3,000 | | $ | 3,000 | | $ | 3,000 | |
| TOTAL | | $ | 3,201,996 | | $ | 3,365,214 | | $ | 3,000 | |
| Norman P. Bagwell | Salary/Severance | $ | 820,635 | | $ | 970,000 | | $ | — | |
| Unvested Restricted Stock | $ | 2,007,791 | | $ | 2,007,791 | | $ | — | |
| Unvested Restricted Units | $ | — | | $ | — | | $ | — | |
Other (5) | $ | 3,000 | | $ | 3,000 | | $ | 3,000 | |
| TOTAL | | $ | 2,831,426 | | $ | 2,980,791 | | $ | 3,000 | |
(1)Executive payments upon termination do not include payments of deferred compensation which, if applicable, are described on page 48. The table assumes (i) that the executive has been paid all amounts owed through the date of termination, (ii) the closing price of BOK Financial common stock of $105.49 (as reported on NASDAQ as of December 31, 2021); and (iii) salary, unvested restricted stock, and unvested restricted unit information as of December 31, 2021. Except as expressly provided herein or amounts owed up through the date of termination, Executive does not receive any additional payments in the event of voluntary termination, early retirement (prior to age 65), retirement (age 65 or older), involuntary for cause termination, change of control, or upon death or disability.
(2)When the executive’s employment is terminated without cause, he shall receive standard severance pay in effect at the time of termination, and in addition, an amount equal to the executive’s then annual salary payable in one lump sum payment. The executive shall be entitled to receive pension, thrift, medical insurance, disability insurance plans benefits and other fringe benefits accrued through, but not beyond the date of termination, and shall be entitled to receive pay for vacation in accordance with the Company’s existing policy. Restricted stock and restricted units held by the executive shall continue to be held by the executive but shall remain subject to all applicable restrictions.
(3)When the executive’s employment is terminated without cause following a change of control, he shall receive a lump sum payment in an amount equal to two times executive’s then Annual Salary at the time of termination in lieu of standard and enhanced severance amounts. “Change of Control” occurs when either (i) George B. Kaiser, affiliates of George B. Kaiser, George B. Kaiser Foundation, George Kaiser Family Foundation, and/or members of the family of George B. Kaiser collectively cease to own more shares of the voting capital stock of BOK Financial than any other shareholder (or group of shareholders acting in concert to control BOK Financial to the exclusion of George B. Kaiser, affiliates of George B. Kaiser, George B. Kaiser Foundation, George Kaiser Family Foundation, and/or members of the family of George B. Kaiser), or (ii) BOK Financial shall cease to own directly and indirectly more than fifty percent (50%) of the voting capital stock of BOKF, NA.
BOK Financial Corporation | 49
(4)Termination of executive "for cause" would generally be termination for (i) failure to substantially perform his duties, (ii) committing any act which is intended to injure BOK Financial or its affiliates, (iii) charged, indicted or convicted of any criminal act or act involving moral turpitude, (iv) committing any dishonest or fraudulent act which is material to BOKF or its affiliates, including reputation or (v) refusing to obey orders of the CEO unless such instructions would require executive to commit an illegal act, could subject executive to personal liability, would require executive to violate the terms of his agreement or are inconsistent with recognized ethical standards or inconsistent with the duties of an officer of the bank.
(5)For a period of two years following any termination for cause, and for a period of one year following any termination for any reason other than cause, the executive is prohibited from directly or indirectly contacting or soliciting, in any manner, individuals or entities who were at any time during the term of the executive’s employment agreement clients of BOKF, NA or any of its affiliates, for the purpose of providing banking, trust, investment, or other services provided by BOKF, NA or any of its affiliates, or contacting or soliciting employees of BOKF, NA or any affiliates of BOK, NA to seek employment with any person or entity except BOKF, NA and its affiliates. In exchange, the executive shall receive $3,000 in arrears for each year the non-solicitation agreement is in effect.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE PRACTICES
BOK Financial is committed to being a responsible and good corporate citizen as we recognize that progress and growth for everyone in our communities is beneficial to our communities, our customers, our employees, our business, our shareholders and our other stakeholders. In our business operations, one of our goals is to make the communities where we operate a better place to live and work. As an employer, we value diversity, promote inclusion and foster career growth for all of our team members. Environmental, social and governance (“ESG”) practices help to drive our Company goals and values, and we have made it a top priority to implement ESG policies and procedures at BOK Financial.
We have developed an ESG Steering Committee that is composed of leaders from across our Company. The ESG Steering Committee analyzes ESG issues and develops ESG policies and practices. Our ESG Steering Committee also prepares an annual ESG Report (the “ESG Report”) that is reviewed and approved by our Audit Committee.
Environmental
Our Company and employees are committed to making a positive impact every day, and we know that being a good steward of natural resources is an essential part of being a good corporate citizen and improving the future of those we serve. We have taken many measures to reduce our environmental impact, including the following:
•Implemented utility use with smart technology;
•Instituted recycling programs for paper and waste;
•Use filtered water to reduce water waste;
•Implemented digital business strategies to reduce paper usage, postage and other support functions that impact the environment; and
•Use virtual collaboration tools to reduce employee travel and commutes.
Social
Community and Clients
Actively advancing the communities we serve is core to who BOK Financial is as a company. This benefit to the communities in which we operate emanates itself through affordable housing investments, community development loans and other Company products and services.
Our social efforts focus on community services supporting low- to moderate-income ("LMI") individuals, promoting economic development, and revitalizing or stabilizing LMI geographies. We provide volunteers, serve on boards and give financial support to a variety of organizations that serve the most vulnerable
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citizens in our communities by addressing such issues as basic needs, education and economic development.
In 2021, our Company sharpened its focus and accelerated resources to underserved minority communities by supporting nonprofit organizations providing programs to help close the gaps in four key areas: income inequality, workforce development, education and mentoring, and social justice inequities. As part of the focus, the Company and BOKF Foundation will provide a combined $430,000 to six nonprofit organizations in Tulsa and Dallas over two years
Also in 2021, the Tulsa, Oklahoma community commemorated the centennial anniversary of the Tulsa Race Massacre. BOK Financial was an active partner in the 10-day remembrance, joining with the BOKF Foundation to commit more than $250,000 in support of the Greenwood Rising: Black Wall Street history center as well as events and activities such as Economic Empowerment Day. The interactive conference created a focal point for the national conversation about the racial wealth gap and inequality in access to capital.
Volunteerism is an important component of our community support, with many of our employees participating on boards and conducting financial education training and more to help improve the communities we serve. The Company supports those efforts by providing each employee eight hours of paid volunteer time annually to support causes or organizations that are making a difference in the community, building key relationships and strategic partnerships that help drive our success. This commitment to volunteerism is led from the top of the Company, with members of the executive leadership team serving on the boards of 20 different community organizations.
BOK Financial earned an outstanding rating in its most recent Community Reinvestment Act (CRA) exam. The Company maintains a strong CRA program by:
•Tracking lending opportunities in our communities and working with government, business and our non-profit partners;
•Reviewing lending distribution quarterly;
•Annually (or as needed) reviewing assessment area boundaries;
•Establishing and communicating goals for CRA performance;
•Measuring the Company against our peers;
•Considering CRA implications for opening and closing retail bank offices;
•Investing in our communities; and
•Partnering and volunteering with non-profits and organizations that impact LMI individuals and communities.
Employees
Recruiting: BOK Financial is focused on ensuring a rich pool of diverse candidates for open roles. Our recruiting organization is fully AIRS Certified and held accountable to monthly outreach efforts to diverse organizations, including HBCUs (Historically Black Colleges and Universities). We identify, participate in and sponsor recruitment events focused on diversity, including those for individuals with disabilities, LGBTQ+, veterans and more. We work with leading organizations and institutions—including Circa, Divergence Academy, Hispanic chambers of commerce, women’s professional networks and others—that promote and support the development of talent from underrepresented groups.
The Company’s early career program—the Accelerated Career Track (ACT)—attracts high caliber college graduates, assists with their transition from college to professional working life, and jump-starts their career with BOK Financial. With an increased
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emphasis on recruiting from HBCUs and smaller institutions, we have significantly improved the diversity of recent ACT and intern classes over the past five years.
Development: We always strive to recognize and raise up talent within our workforce to help ensure employees at all levels experience meaningful career journeys. We provide learning opportunities that allow employees to deepen their understanding of diverse skills, opinions and knowledge. We also offer a variety of mentoring and leadership development opportunities for all employees to gain exposure to leaders and develop both personally and professionally.
Diversity: Recognizing, respecting and leveraging diversity is central to our Company. We view this approach not only as a good business practice but simply as the right thing to do for all employers. The Company’s CEO-led Diversity & Inclusion Council was launched in early 2019, helping to bring into focus the considerable efforts already occurring across the Company. By the end of 2020, all managers at BOK Financial were assigned training on recognizing and mitigating unconscious bias. In 2021, the Company broadened our definition of diversity and inclusion to look beyond race, ethnicity, and gender to reflect the value of all diverse perspectives.
Recent
Recognition: In 2020, BOK Financial joined the CEO Action Pledge for Diversity and Inclusion, the largest CEO-driven business commitment to advancing diversity and inclusion in the workplace.
The Company also became one of the first employers to take the Mayor’s Pay Equity Pledge, a voluntary employer-led initiative created in participation with the Mayor’s Commission on the Status of Women with a goal of closing the gender pay gap in Tulsa.
BOK Financial was recognized as a 2020 Top Inclusive Workplace by Mosaic, the Tulsa Regional Chamber’s diversity business council.
In 2021, the Company was recognized by DiversityInc® as one of the nation’s top 20 regional companies for diversity and inclusion.
Supply Chain
Another focal point of our social awareness and policies is to ensure we have an inclusive supply chain comprised of diverse vendors, representing minorities, women, veterans, LGBTQ and small businesses. Our goal is to support diverse businesses and promote innovation, creating economic impact by uplifting the communities where those businesses are located through job creation, increased wages and tax revenues. We are continuously working towards a goal of increasing our spend with small businesses and minority owned vendors and suppliers.
Governance
“Be known for unwavering integrity” is a core value of BOK Financial and is central to how we mitigate and manage risk. Our corporate ethics and governance reflect the Company’s focus on accountability and drive our three-part vision of valuing our employees, customers, and communities we serve. Our governance structure, thoughtful policies and active engagement with our employees underscore our commitment to this principal. We keep ethics and governance in focus through regular training and attestations of our employees. Our employees are annually trained on and attest to the Company’s Standards of Conduct. In addition, we annually train our employees on compliance management
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requirements, BSA/AML (Bank Secrecy Act/Anti-Money Laundering) processes, physical security, risk culture and internal controls, risk reporting and awareness, and information security awareness. Annually, our directors attest to and the Audit Committee approves the Code of Ethics. Further, we have the following policies and practices to ensure that our Company’s ethics are adhered to: Standards of Conduct, Whistleblower Policy, Anti-Money Laundering Policy, Data Privacy and Security, and Customer Privacy.
The Company’s 22-member Board of Directors is a diverse group of strong leaders with executive experience that aligns with our organization’s business strategy. Summary biographies for our board members and senior management can be found beginning on pages 10 and 28, respectively, of this Proxy Statement. Our Board of Directors oversees the Company’s overall strategic and reputational risks and regularly reviews the Company’s credit, liquidity and operations, as well as the risks associated with each. Committees of our Board of Directors focus on specific areas, including:
•Audit Committee: Oversees the Company’s accounting and financial reporting, internal controls, and compliance with legal and regulatory requirements. The Audit Committee is also responsible for reviewing the Company’s Environmental, Social and Governance Report.
•Credit Committee: Oversees the Company’s credit portfolio and credit-related policies.
•Risk Committee: Oversees the Company’s enterprise-wide risk management programs including capital planning, liquidity, operations risk and cybersecurity.
•Compensation Committee: Oversees the Company’s compensation policies and programs.
We also comply with a systematic risk management program. The Company’s Chief Risk Officer is responsible for enterprise-wide risk management, information security and ensuring the Company’s compliance with government regulations. Annually, the Executive Leadership Team defines a strategic plan and establishes growth priorities that are consistent with the Company’s purpose, values, core competencies and risk appetite. The strategic plan is cascaded to all employees and business units, and functional and employee goals are managed to the overall strategic plan. Every employee is accountable for speaking up and escalating concerns to management regarding compliance with regulation, policy, proscribed process or ethical standards. In addition, the Risk Committee of the Board of Directors meets regularly with key risk management personnel and the Audit Committee receives regular reports from the Company’s independent auditor.
Cybersecurity
BOK Financial is committed to safeguarding Company and client information with a stringent program encompassing policies, processes, procedures, and organizational structures that are continuously monitored, reviewed and improved upon. The Company’s Chief Information Security Officer (CISO) provides quarterly updates to the Company’s management-level Risk Council and Risk Committee of the Board of Directors on the Company’s cybersecurity program, policies and controls; efforts to improve security; and responses to cybersecurity events. The Company’s cybersecurity program implements security controls aligned with ISO 27001:2013 standard and the National Institute of Standards and Technology (NIST) Cybersecurity Framework.
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RELATED PARTY TRANSACTION REVIEW AND APPROVAL POLICY
The Company has a written related party transaction policy, approved by the Audit Committee, which requires that all related party transactions reportable pursuant to SEC regulation S-K, Item 404(a) must be submitted to the Chief Financial Officer (“CFO”) for review. The Audit Committee conducts appropriate review and oversight of non-credit related party transactions for potential conflict of interest situations in accordance with NASDAQ Rule 5630(a), and the Credit Committee reviews and oversees related party credit transactions.
The related-party transaction must be intended for the benefit of the Company and made on terms no less favorable than those terms for unrelated persons. The CFO must also consider whether the transaction is occurring at arm’s length and the impact of the related party transaction on financial statement accounting and disclosure.
If the CFO determines that the transaction would be material, he must present the details and his conclusion to the Chairman of the Audit Committee. The Chairman of the Audit Committee will submit the related party transaction to the Audit Committee for approval based upon the same criteria as considered by the CFO, in addition to such criteria as may be deemed relevant by the members.
The Company annually requires each of its directors and executive officers to complete a directors’ and officers’ questionnaire that elicits information about related person transactions. The Company’s Office of General Counsel reviews all transactions disclosed in the officer and director questionnaires and discusses any transactions not previously identified with the CFO and verifies compliance with independence requirements under NASDAQ Rule 5605.
CERTAIN TRANSACTIONS
Certain principal shareholders, directors of the Company and their associates were customers of and had loan transactions with BOK Financial or its subsidiaries during 2021. All such loans (i) were made in the ordinary course of business, (ii) were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable loans with persons not related to the Company, and (iii) did not involve more than the normal risk of collectability or present other unfavorable features.
The Company does not have any practices or policies regarding hedging and such transactions are generally permitted.
Certain related parties are customers of the Company for services other than loans, including consumer banking, corporate banking, risk management, wealth management, brokerage and trading, or fiduciary/trust services. The Company engages in transactions with related parties in the ordinary course of business and in compliance with applicable regulation.
BOKF, NA leases office space in the Copper Oaks and Lewis Center facilities located in Tulsa, Oklahoma, which are owned by Mr. Kaiser and affiliates. Lease payments for both facilities totaled approximately $957 thousand in 2021.
QuikTrip Corporation has entered into a fee sharing agreement with TransFund, BOKF’s automated teller machine ("ATM") network (“TransFund”), respecting transactions completed at TransFund ATMs placed in QuikTrip locations. In 2021, the Company paid QuikTrip approximately $10.4 million pursuant to this agreement. Mr. Cadieux and related interests have entered into interest rate derivative contracts with the Company. As of December 31, 2021, the total fair value of these contracts was an unrealized loss of $51,231 from the perspective of Mr. Cadieux and his related parties. Mr. Cadieux, a BOK Financial director, is Chief Executive Officer, Chairman, and a significant shareholder of QuikTrip Corporation.
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In August 2021, Griffin Communications, LLC entered into additional interest rate hedges with the Company. On December 31, 2021, the total fair value of these and previously executed interest rate hedges was an unrealized gain of $445 thousand from Griffin Communication, LLC's perspective. David Griffin is President and Chief Executive Officer of Griffin Communications, LLC.
BOK Financial Securities, Inc., a subsidiary of the Company is participating as an underwriter in a proposed initial public offering by Excelerate Energy, Inc. George B. Kaiser, a director of the Company and Chairman of the Board of the Company, owns a controlling interest in Excelerate Energy, Inc. The approximate dollar value of the transaction to the Company is $250,000.
DELINQUENT SECTION 16(a) REPORTS
Based upon a review of the filings with the Securities and Exchange Commission and written representations that no other reports were required, we believe that all of our directors, executive officers, and owners of more than ten percent of our common shares, complied during fiscal year 2021 with the reporting requirements of Section 16(a) of the Securities Exchange Act of 1934 with the exception of (1) one late report relating of 7,500 shares sold by Mr. Bangert.