UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 12, 2018
T. Rowe Price Group, Inc.
(Exact name of registrant as specified in its charter)
Maryland | 000-32191 | 52-2264646 |
(State of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
100 East Pratt Street, Baltimore, Maryland 21202
(Address of principal executive offices) | (Zip Code) |
Registrant's telephone number, including area code: (410) 345-2000
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12-2 of this chapter).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
SECTION 5 - CORPORATE GOVERANCE AND MANAGEMENT.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
(b) On February 14, 2018, T. Rowe Price Group, Inc. (the “Company”) announced that Edward C. Bernard, Vice Chairman, will retire from the Company on December 31, 2018, after 30 years of service. Mr. Bernard will stand for re-election to a final one-year term on the Board of Directors of the Company (the “Board”) at the Company’s upcoming April 2018 Annual Meeting of Stockholders. If re-elected, Mr. Bernard will not stand for re-election to the Board during the April 2019 Annual Meeting of Stockholders.
(e) The Annual Incentive Compensation Pool for our senior executive officers previously in place (the “Prior Plan”) terminated, by its terms, as a result of the repeal of Section 162(m) of the Internal Revenue Code of 1986, as amended, by the U.S. tax reform bill originally known as the Tax Cuts and Jobs Act of 2017. In response, the Executive Compensation and Management Development Committee (the “Committee”) of the Board approved a new 2018 Annual Incentive Compensation Pool (the “2018 AICP”) on February 12, 2018. The 2018 AICP is substantially the same as the Prior Plan and was adopted by the Committee to provide continuity in 2018 of incentive compensation arrangements for the officers.
Similar to the Prior Plan, the 2018 AICP establishes a cash incentive pool (the “Incentive Pool”) equal to a percentage of the Company’s adjusted earnings, as defined in the 2018 AICP. For each fiscal year, the Committee will determine the officers who will participate in the 2018 AICP and the maximum percentage of the Incentive Pool each executive officer has a right to receive for that fiscal year. At the end of the fiscal year, the Committee will determine the total Incentive Pool available for awards and the actual award each officer will receive. For 2018, the Committee approved the named executive officers that would participate in the 2018 AICP and the maximum percentage of the Incentive Pool each officer would be eligible to receive as follows:
Participant | Maximum Percentage |
William J. Stromberg | 10% |
Christopher D. Alderson | 9% |
Edward C. Bernard | 9% |
Robert W. Sharps | 10% |
Consistent with prior years, the Committee expects that the actual awards to the officers will be less than the maximum amounts allocated to each officer.
A copy of the 2018 AICP is attached hereto as Exhibit 10.1 and is incorporated herein by reference.
SECTION 9 - FINANCIAL STATEMENTS AND EXHIBITS.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
T. Rowe Price Group, Inc.
By: /s/ Kenneth V. Moreland
Kenneth V. Moreland
Vice President, Chief Financial Officer and Treasurer
Date: February 16, 2018
T. ROWE PRICE GROUP, INC.
2018 ANNUAL INCENTIVE COMPENSATION POOL
FOR EXECUTIVE OFFICERS
SECTION 1
Purpose
The purpose of the T. Rowe Price Group, Inc. 2018 Annual Incentive Compensation Pool for Executive Officers is to attract and retain executives and to motivate those executives to promote the profitability and growth of T. Rowe Price Group, Inc. (the “Company”), by permitting the Company to make annual incentive compensation awards based on the Company’s performance to select Executive Officers.
SECTION 2
Definitions
“Award” will mean the Award for a Participant finally determined by the Committee under Section 4(c).
“Maximum Award” will mean the maximum percentage of the Incentive Pool granted to a Participant by the Committee for a Performance Period. The Maximum Award granted to any Participant for a Performance Period may not exceed 35% of the Incentive Pool.
“Board” will mean the Board of Directors of the Company, or any successor thereto.
“Committee” will mean the Executive Compensation and Management Development Committee of the Board.
“Exchange Act” will mean the Securities Exchange Act of 1934, as amended.
“Executive Officer” will mean any employee of the Company who is designated as an Executive Officer under Item 402 of Regulation S-K of the Securities Act of 1933, as amended.
“Incentive Pool” will mean an amount equal to 6% of the first $50,000,000 of our annual Income before Income Taxes and Minority Interests for the applicable year, as reflected in our audited consolidated statement of income ("adjusted earnings"), plus 8% of our adjusted earnings in excess of $50,000,000. Notwithstanding the foregoing, "adjusted earnings" will be calculated without regard to (i) any gains or losses classified as "discontinued operations," and any other unusual or nonrecurring gains or losses, (ii) charges relating to goodwill, and (iii) the cumulative effect of changes in accounting policy (which include changes in accounting principles generally accepted in the United States) adopted by us. In each instance, the foregoing adjustments must be recognized in accordance with accounting principles generally accepted in the United States and must appear on the face of our consolidated statement of income for such year.
“Participant” will mean, for each Performance Period, each Executive Officer who has been selected by the Committee to participate in the Plan.
“Performance Period” will mean the Company’s fiscal year.
“Plan” will mean this T. Rowe Price Group, Inc. Annual Incentive Compensation Pool, as amended from time to time.
SECTION 3
Administration
The Committee will administer the Plan and will have full and exclusive authority to interpret the Plan, to establish rules and regulations relating to the operation of the Plan, to select Participants in the Plan, to determine the amounts of any Awards and to make all determinations and take all other actions necessary or appropriate for the proper administration of the Plan. The Committee’s interpretation of the Plan, and all actions taken within the scope of its authority, will be final and binding on the Company, its stockholders and Participants, Executives, former Executives and their respective successors and assigns. No member of the Committee will be eligible to participate in the Plan.
SECTION 4
Determination of Awards
(a) Prior to the beginning of each Performance Period, or at such later time as the Committee may determine, the Committee will in its sole discretion designate in writing the Executive Officers who will participate in the Plan for that Performance Period and the Maximum Award that each Participant will be eligible to receive. The actual Award granted to a Participant may be less than the Maximum Award permitted for the Performance Period and may be subject to such other limitations as may be established by the Committee in its sole and absolute discretion.
(b) Following the end of each Performance Period, and before any payments are made under the Plan, the Committee will certify in writing (i) the amount of the Incentive Pool, if any, for the Performance Period and (ii) the amount of the Maximum Awards provided for in Section 4(a). Notwithstanding the foregoing, the Committee in its sole discretion may prior to the end of a Performance Period (x) perform the certification described in Section 4(b)(i) based on preliminary financial results for the Performance Period and (y) determine the amount of any Awards as described in Section 4(b)(ii); provided, however, that the certification of the amount of the Incentive Pool and any Maximum Awards prior to the end of a Performance Period does not exempt the Committee from performing the post-Performance Period certification otherwise described in this Section 4(b).
(c) Following the certification required by paragraph (b) of this Section, the Committee may determine to grant to any Participant an Award that may not exceed the Maximum Award determined in accordance with Section 4(a). The Committee in its sole discretion may reduce or eliminate the Award granted to any Participant under Section 4(a) based on factors determined by the Committee, including but not limited to, performance against qualitative and quantitative goals, which may be pre-established, and the Participant’s individual performance.
SECTION 5
Payment of Awards
Each Participant will be eligible to receive, as soon as practicable after the amount of such Participant’s Award for a Performance Period has been determined under Section 4(b), but in no event later than two and one-half months after the end of the Performance Period to which the Award relates, payment of the Award in cash. Notwithstanding the foregoing, no more than [INSERT LIMITATION (e.g., one-half, two-thirds, 75%)] of the Award may be paid to a Participant prior to the end of the Performance Period. If a Participant’s employment with the Company terminates prior to the conclusion of a Performance Period, the Committee may determine, in its discretion, an amount, if any, to be paid to the Participant in connection with the Participant’s period of employment. Payment of any Award may be deferred to any then existing deferred compensation plan in accordance with a written election by the Participant pursuant to procedures established by the Committee.
SECTION 6
Amendments
The Committee may amend the Plan at any time and from time to time, provided that no such amendment that would require the consent of the stockholders of the Company pursuant to the NASDAQ listing rules or the Exchange Act, or any other applicable law, rule or regulation, will be effective without such consent. No amendment which adversely affects a Participant’s rights to, or interest in, an Award granted prior to the date of the amendment will be effective unless the Participant has agreed thereto in writing.
SECTION 7
Termination
The Committee may terminate this Plan at any time but in no event will the termination of the Plan adversely affect the rights of any Participant to a previously granted Award without the Participant’s written consent.
SECTION 8
Other Provisions
(a) No Executive Officer or other person will have any claim or right to be granted an Award under this Plan until such Award is actually granted. Neither the establishment of this Plan, nor any action taken hereunder, will be construed as giving any Executive Officer any right to be retained in the employ of the Company. Nothing contained in this Plan will limit the ability of the Company to make payments or awards to Executive Officers under any other plan, agreement, or arrangement.
(b) The rights and benefits of a Participant hereunder are personal to the Participant and, except for payments made following a Participant’s death, will not be subject to any voluntary or involuntary alienation, assignment, pledge, transfer, encumbrance, attachment, garnishment or other disposition.
(c) Awards under this Plan will not constitute compensation for the purpose of determining participation or benefits under any other plan of the Company unless specifically included as compensation in that plan.
(d) The Company will have the right to deduct from Awards any taxes or other amounts required to be withheld by law.
(e) Nothing contained in the Plan will be construed to prevent the Company or any of its subsidiaries from taking any corporate action which is deemed by it to be appropriate or in its best interest, whether or not such action would have an adverse effect on any awards made under the Plan and nothing in the Plan will be deemed to limit or restrict the ability of the Company or any of its subsidiaries from establishing any compensation plan or arrangement, or making any payment, or granting any award to any Executive Officer. No employee, beneficiary or other person will have any claim against the Company or any of its subsidiaries as a result of any such action.
(f) All questions pertaining to the construction, regulation, validity and effect of the provisions of the Plan will be determined in accordance with the laws of the State of Maryland without regard to principles of conflict of laws.
(g) No member of the Committee or the Board, and no officer, employee or agent of the Company will be liable for any act or action hereunder, whether of commission or omission, taken by any other member, or by any officer, agent, or employee, or, except in circumstances involving bad faith, for anything done or omitted to be done in the administration of the Plan.
SECTION 9
Effective Date
The Plan will be effective as of January 1, 2018 and will continue until terminated by the Committee.
NEWS RELEASE
T. ROWE PRICE VICE CHAIRMAN ED BERNARD TO RETIRE IN
DECEMBER 2018; ROB SHARPS NAMED HEAD OF INVESTMENTS AS
OF MARCH 1, 2018
Baltimore: February 14, 2018
NEWS
T. Rowe Price Group (NASDAQ-GS: TROW) announced today that Edward C. Bernard, vice chairman, will
retire from the company on December 31, 2018, after 30 years of service with the firm. He will stand for re-
election to a final one-year term on the T. Rowe Price Board of Directors at the firm’s upcoming April 2018
annual meeting of stockholders.
The firm also announced that Rob Sharps, co-head of Global Equity and group chief investment officer (CIO),
has been named head of Investments, effective March 1, 2018. He will oversee all investments activity of the firm
and remain group CIO, continuing to report to Bill Stromberg, president and CEO. With Mr. Sharps’ appointment,
Eric Veiel, head of U.S. Equity, will assume the added responsibility of co-head of Global Equity, partnering with
Chris Alderson, currently head of International Equity and co-head of Global Equity.
QUOTES
William J. Stromberg, President and CEO, T. Rowe Price
On Ed Bernard:
“Ed’s contributions to our success over the last three decades have been significant and instrumental to the
growth of the firm and the enhancement of our capabilities, reach, and reputation.”
“Ed also has led our Fund boards and their advocacy on behalf of our clients with distinction for more than 10
years. He models our values, collaborative approach, and commitment to making T. Rowe Price a diverse and
inclusive place to do great work.”
“Ed remains a highly respected and trusted advocate for our industry and the clients it serves, and is respected
by leaders inside and outside of the firm for his thoughtful counsel during times of challenge and success.”
On Rob Sharps:
“As a 20-year veteran of the firm and former long-time portfolio manager of our U.S. Large-Cap Growth Equity
Strategy, Rob is an astute investor who has become increasingly immersed in all areas of Investments.”
“This expanded role for Rob is well-deserved and recognizes his strong leadership over the past year as co-head
of Global Equity and group CIO, as well as his many prior years as one of our top investors.”
“Rob’s highly effective coordination of the CIO team has enabled us to more broadly showcase our thought
leadership across asset classes and bring it to bear in service to our clients.”
Edward C. Bernard, Vice Chairman, T. Rowe Price
“It’s been a privilege to spend the bulk of my career at a firm that is so principled and effective in helping our
clients secure their financial futures. The firm’s capabilities are as strong as ever, and I’m confident that our
clients, associates, and stockholders will continue to be well served in the years ahead.”
BACKGROUND ON ED BERNARD
Mr. Bernard is currently vice chairman of the Board of Directors of T. Rowe Price. He joined T. Rowe Price as a
marketing manager, advertising and promotion, for the firm’s Individual Investors business in 1988 and was
named a vice president in 1989. Mr. Bernard became a director of T. Rowe Price Group in 1999, and joined the
Management Committee in 2000. In 2006, he assumed responsibility for all of the firm’s distribution, marketing,
client service, technology, and communications activities, and was named vice chairman in 2007. Mr. Bernard
has served as chairman of the Board of all sponsored T. Rowe Price mutual funds in the U.S. – which represent
more than 60% of the firm’s assets under management – since 2006.He also is chair of T. Rowe Price
Investment Services and CEO of T. Rowe Price International, Ltd., the firm’s UK-based investment manager. Mr.
Bernard earned his B.A. from Brown University and an M.B.A. in international finance from New York University.
He served as chairman of the Board of Governors of the Investment Company Institute from 2009-2011, leading
that organization’s important efforts in the wake of the global financial crisis.
BACKGROUND ON ROB SHARPS
Mr. Sharps is currently co-head of Global Equity and group chief investment officer. He serves on the firm's
Management Committee, International Equity Steering Committee, U.S. Equity Steering Committee, Fixed
Income Steering Committee, Asset Allocation Committee, and Product Strategy Committee. Mr. Sharps has 22
years of investment experience, 20 of which have been with T. Rowe Price. He was the lead portfolio manager
for the U.S. Large-Cap Growth Equity Strategy from October 2001 through December 2016 and during his
portfolio management tenure, T. Rowe Price was twice named Large-Cap Growth Equity Manager of the Year by
Institutional Investor magazine. Mr. Sharps joined the firm in 1997 as an analyst specializing in financial services
stocks, including banks, asset managers, and securities brokers. He earned a B.S., summa cum laude, in
accounting from Towson University and an M.B.A. in finance from The Wharton School, University of
Pennsylvania. He also has earned the Chartered Financial Analyst designation.
BACKGROUND ON ERIC VEIEL
Mr. Veiel is currently head of U.S. Equity, chair of the U.S. Equity Steering Committee, and a member of the
Management Committee. He also serves on the firm’s Multi-Asset Steering, Product Strategy, and Proxy
committees. He was previously co-director of Equity Research for North America and co-portfolio manager of the
U.S. Structured Research Equity Strategy. From 2010 to 2014, Mr. Veiel was the portfolio manager of the
Financial Services Equity Strategy and Financial Services Sector team leader. He has 18 years of investment
experience, 12 of which have been with T. Rowe Price. Mr. Veiel earned a B.B.A., magna cum laude, in finance
from James Madison University and an M.B.A., with concentrations in finance and accounting, from Washington
University, John M. Olin School of Business. He also has earned the Chartered Financial Analyst designation.
ABOUT T. ROWE PRICE
Founded in 1937, Baltimore-based T. Rowe Price Group, Inc. (troweprice.com), is a global investment
management organization with $1.05 trillion in assets under management as of January 31, 2018. The
organization provides a broad array of mutual funds, subadvisory services, and separate account management
for individual and institutional investors, retirement plans, and financial intermediaries. The company also offers
sophisticated investment planning and guidance tools. T. Rowe Price’s disciplined, risk-aware investment
approach focuses on diversification, style consistency, and fundamental research.
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T. ROWE PRICE CONTACTS
Public Relations
Brian Lewbart
410-345-2242
brian_lewbart@troweprice.com
Investor Relations
Teresa Whitaker
410-345-6586
teresa_whitaker@troweprice.com