CVB Financial : 2024 Proxy Statement
CVBF
NOTICE OF 2024 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD WEDNESDAY, MAY 15, 2024
To Our Shareholders:
The 2024 annual meeting of shareholders of CVB Financial Corp. will be held at 8:00 a.m. local time at CVB Financial Corp.'s Corporate Headquarters, 701 North Haven Avenue, Ontario, CA 91764, on Wednesday, May 15, 2024.
We will hold our annual meeting in person. In addition, we are planning to provide interested shareholders, members of our Board of Directors and our team members, as a courtesy, the opportunity to listen to our annual meeting by remotely dialing into an audio conference call, which will broadcast the proceedings concurrently. There will be no food or refreshments provided at this meeting.
The live audio call will be held concurrent with our annual meeting (8:00 a.m. PDT on May 15, 2024). To join our conference call facility please dial 1 (833) 630-1956. Questions will be permitted in person and, as a courtesy, when prompted by the moderator for audio participants. A taped replay will be made available approximately one hour after the conclusion of the call and will remain available until 6:00 a.m. PDT on May 22, 2024. To access the replay, please dial 1 (877) 344-7529, passcode 7329017.
Please note that, in order to cast your votes on any matters to be considered at our annual meeting or otherwise to be present at our annual meeting for purposes of California law, you should either (i) vote in advance by internet, telephone or return of your proxy card, or (ii) vote in person by attending the annual meeting at its designated location. Listening to the proceedings by audio conference call will not constitute attendance for legal purposes. We will not have the ability to accept or change any shareholder votes on the audio call.
By Order of the Board of DirectorsMichelle L. Edu
Assistant Vice President and Corporate Secretary
Dated: April 3, 2024
At our annual meeting, we will ask you to act on the following matters:
1. Election of Directors. Elect eight (8) persons to the Board of Directors to serve for a term of one year and until their successors are elected and qualified. The following eight persons are our nominees:
George A. Borba, Jr. David A. Brager Stephen A. Del Guercio Anna Kan
Jane Olvera Majors Raymond V. O'Brien III Hal W. Oswalt Kimberly Sheehy
2. Advisory Compensation Vote. Approve, on an advisory (non-binding) basis, the compensation of our named executive officers for 2023 ("Say-On-Pay").
3. Ratification Registeredof Appointment of Independent Public Accountants. Ratify the
appointment of KPMG LLP as our independent registered public accountants for 2024.
4. Other Business. Transact any other business that properly comes before the meeting.
If you were a shareholder of record at the close of business on March 22, 2024, you may vote at the annual meeting or at any postponement or adjournment of the meeting.
Important Notice Regarding the Availability of Proxy Materials for the 2024 Annual Meeting of Shareholders:
This Proxy Statement, our 2023 Annual Report and our Annual Report on Form 10-K for the fiscal year 2023 are available online on the internet at:https://investors.cbbank.com/annual-meeting.
IT IS IMPORTANT THAT ALL SHAREHOLDERS VOTE. WE URGE YOU TO PLEASE VOTE BY INTERNET OR TELEPHONE, OR TO SIGN, DATE AND PROMPTLY RETURN YOUR PROXY CARD IN THE ENCLOSED ENVELOPE, SO THAT YOUR SHARES WILL BE REPRESENTED WHETHER OR NOT YOU ATTEND THE ANNUAL MEETING. IF YOU DO ATTEND THE ANNUAL MEETING
IN PERSON, YOU MAY THEN WITHDRAW YOUR PROXY AND VOTE IN PERSON.
IF YOU RECEIVED A PAPER COPY OF THIS PROXY STATEMENT AND A PROXY CARD, PLEASE DO NOT RETURN THE
PROXY CARD IF YOU ARE VOTING OVER THE INTERNET OR BY TELEPHONE.
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TABLE OF CONTENTS
I.PROXY STATEMENT SUMMARY AND
GENERAL INFORMATION ................... 1
PROXY STATEMENT SUMMARY. . . . . . . . . . . . . 2
GENERALINFORMATION................... 3
WhoWeAre............................... 3
Core Values. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Board Oversight and Structure. . . . . . . . . . . . . . . . 3
OurExecutiveOfficers....................... 3Overview of our Financial and Operating
Performancein2023........................ 4
CVB Financial Corp. Percentile Rank vs.
Peers on Key Performance Indicators . . . . . . . 5
SocialMeasures ............................ 5
Key Elements of Diversity . . . . . . . . . . . . . . . . . 8
EnvironmentalMeasures ..................... 13
ShareholderEngagement .................... 16
Who are the Largest Owners of CVBF Stock? . . . . 16 How Much CVBF Stock do our Directors and
ExecutiveOfficersOwn? ..................... 17
Delinquent Section 16(a) Reports . . . . . . . . . . . . . . 18 Questions and Answers about the Annual Meeting
andVoting ................................. 19
II. PROPOSAL NO. 1:
ELECTION OF DIRECTORS . . . . . . . . . . . . . . . . . . 22
Voting for Director Nominees . . . . . . . . . . . . . . . . . . 22
Nomination of Director Candidates . . . . . . . . . . . . . 22
TheNominees .............................. 23
Director Skills and Experience Matrix . . . . . . . . . . . 28
Corporate Governance Principles . . . . . . . . . . . . . . 29
BoardRiskOversight ........................ 29
Board Nominations of Director Candidates . . . . . . 30 Shareholder Nominations of Director Candidates
andOtherProposals ......................... 30
Director Tenure, Age and Diversity . . . . . . . . . . . . . 32
Board Diversity Matrix . . . . . . . . . . . . . . . . . . . . 33
Director Independence . . . . . . . . . . . . . . . . . . . . . . . 33
ExecutiveSessions ......................... 33
Director Stock Ownership Guidelines . . . . . . . . . . . 33 Policy on Insider Trading, Pledging and Hedging
of Company Equity Securities . . . . . . . . . . . . . . . . . 34 Director Attendance at Board Meetings and
Annual Shareholders Meeting . . . . . . . . . . . . . . . . . 34
Committees of the Board of Directors . . . . . . . . . . . 34
AuditCommittee ............................ 34 Nominating and Corporate Governance
Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
CompensationCommittee .................... 36 Compensation Committee Interlocks and Insider
Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 Certain Relationships and Related Person
Transactions ............................... 36 Policies and Procedures for Approving Related
PersonTransactions ......................... 36 Annual Board and Committee Self-Evaluation
Process ................................... 37
Director Compensation . . . . . . . . . . . . . . . . . . . . . . . 38
Table on Outside Director Compensation for
2023 .................................. 40
III. PROPOSAL NO. 2:
ADVISORY RESOLUTION TO APPROVE OUR
EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . 41 Compensation Discussion and Analysis - General
Information ................................ 42
2023 Compensation Program Overview . . . . . . . . . 42 Philosophy and Objectives of Our Executive
CompensationProgram ...................... 44
Compensation Clawback Policy . . . . . . . . . . . . . . . 45 Summary of Components of Executive
Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 Methodologies for Establishing Executive
Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Role of Our Compensation Consultants . . . . . . . . . 49
Peer Group Criteria and Composition for 2023 . . . . 49
Peer Group Criteria and Composition
Table ................................. 50
Compensation Arrangements with our President
andCEO .................................. 51 Discussion of 2023 Named Executive Officers
CompensationProgram ...................... 53
Base Salary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 Annual Performance Incentive Compensation
Plans (Incentive Compensation and Plan-Based
Discretionary Bonus Amounts . . . . . . . . . . . . . . . . . 54
Table of 2023 Performance Measures and
Corresponding Bonus Percentages . . . . . . . . . 56 Table of 2023 Performance Measures and
Performance Levels Achieved . . . . . . . . . . . . . 57 Table of 2023 Payout Levels by Performance
Measure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Plan-Based Discretionary Bonus Percentages
andAmounts ........................... 58
2023 Supplemental Discretionary Bonus
Awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58 Supplemental Discretionary Bonus Amounts and
Percentages ............................... 59
Equity-Based Compensation . . . . . . . . . . . . . . . . . . 64
Equity Incentive Grants to our President and
CEO for 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 Equity Incentive Grants to our Other NEOs
for2023 ............................... 65 PRSU Performance Criteria and
MeasurementPeriod ..................... 65
Employee Retirement Plans . . . . . . . . . . . . . . . . . . 66
Employee Health and Welfare Benefits ......... 66
Compensation Committee Report . . . . . . . . . . . . . . 68
Summary of Compensation Table . . . . . . . . . . . . . . 69
All Other Compensation Table . . . . . . . . . . . . . 70
Grants of Plan-Based Awards for 2023 ......... 71 Outstanding Equity Awards at Fiscal Year- End
Table ..................................... 72 Option Exercises and Restricted Stock Vested in
2023Table ................................ 73
Deferred Compensation . . . . . . . . . . . . . . . . . . . . . . 73
Nonqualified Deferred Compensation
Table ................................. 74
Potential Payments to our Named Executive
Officers Upon Termination or Change in
Control .................................... 74 Potential Payments Upon Termination of
EmploymentTable .......................... 77
CEOPayRatioDisclosure .................... 78 Pay Versus Performance Disclosures for our CEO
andNEOs ................................. 79
Equity Compensation Plan Information . . . . . . . . . . 83
Equity Compensation Plan Table . . . . . . . . . . 84
IV. PROPOSAL NO. 3:
RATIFICATION OF APPOINTMENT OF
INDEPENDENT PUBLIC ACCOUNTING FIRM .. 85
Selection of Independent Auditors . . . . . . . . . . . . . 85
PrincipalAuditor'sFees ...................... 85
Audit Committee Oversight . . . . . . . . . . . . . . . . . . . 85
AuditCommitteeReport ...................... 86
AnnualReportonForm10-K .................. 87
Proposals of Shareholders for 2025 . . . . . . . . . . . . 87
CVB FINANCIAL CORP. 701 North Haven Avenue Ontario, California 91764
(909) 980-4030
PROXY STATEMENT
This proxy statement contains information about the annual meeting of shareholders of CVB Financial Corp. to be held on Wednesday, May 15, 2024, beginning at 8:00 a.m. local time, at CVB Financial Corp.'s Corporate Headquarters, located at 701 North Haven Avenue, Ontario, CA 91764, and at any postponements or adjournments of the meeting. This proxy statement is being made available to our shareholders on or about April 3, 2024.
CVB Financial Corp. is a bank holding company whose principal subsidiary is Citizens Business Bank. CVB Financial Corp.'s common stock is listed on the Nasdaq Stock Market LLC ("Nasdaq") and CVB Financial Corp. is therefore subject to Nasdaq's listing requirements. CVB Financial Corp. is incorporated in the State of California and Citizens Business Bank is a California-chartered bank. CVB Financial Corp. and Citizens Business Bank are sometimes referred to collectively in this proxy statement as the "Company."
We will hold our annual meeting in person. In addition, we are planning to provide interested shareholders, members of our Board of Directors and our team members with the opportunity, as a courtesy, to listen to our annual meeting by remotely dialing into an audio conference call, which will broadcast the proceedings concurrently and allow for questions and answers.
The live audio call will be held concurrent with our annual meeting (8:00 a.m. PDT on May 15, 2024). To join the conference call facility, please dial 1 (833) 630-1956. Questions will be permitted in person and when prompted by the moderator on the audio call. A taped replay will be made available approximately one hour after the conclusion of the call and will remain available until 6:00 a.m. PDT on May 22, 2024. To access the replay, please dial 1 (877) 344-7529, passcode 7329017.
Please note that, in order to cast your votes on any matters to be considered at our annual meeting or otherwise to be present at our annual meeting for purposes of California law, you should either (i) vote in advance by internet, telephone or return your proxy card, or (ii) vote in person by attending the annual meeting at its designated location. Listening to the meeting by audio conference call will not constitute attendance for legal purposes. We will not have the ability to accept or change any shareholder votes on the audio call.
Note About Forward-Looking Statements
This proxy statement includes estimates, projections, statements relating to our business plans, objectives, and expected operating results that are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements may appear throughout this proxy statement and relate to, among other things, our business, financial performance, prospects, executive compensation program, governance goals and commitments. These forward-looking statements generally are identified by the words "believe," "project," "expect," "anticipate," "estimate," "intend," "designed", "strategy," "future," "opportunity," "plan," "may," "should," "will," "would," "will be," "will continue," "will likely result," and similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties that may cause actual results to differ materially. We describe risks and uncertainties that could cause actual results and events to differ materially in the "Risk Factors," "Quantitative and Qualitative Disclosures about Market Risk," and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of our latest Form 10-K and other periodic reports we file with the U.S. Securities and Exchange Commission ("SEC"). Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date they are made. We undertake no obligation to update or revise publicly any forward-looking statements, whether because of new information, future events, or otherwise, except as required by law.
This Proxy Statement includes several website addresses and references to additional materials found on those websites. Those websites and materials are not incorporated by reference herein.
PROXY STATEMENT SUMMARY
This summary highlights information set forth elsewhere in the proxy statement of CVB Financial Corp. This summary provides an overview and is not intended to contain all the information that you should consider before voting. We encourage you to read the entire proxy statement for more detailed information on each topic prior to casting your vote.
ANNUAL MEETING INFORMATION
Meeting:
Annual Meeting of Shareholders
Date:
Wednesday, May 15, 2024
Time:
8:00 a.m. Pacific Daylight Time
Location:
CVB Financial Corp. Corporate Headquarters
701 North Haven Avenue
Ontario, CA 91764
Record Date:
Close of Business on March 22, 2024
Stock Symbol:
CVBF
Exchange:
Nasdaq
Common Stock Outstanding
139,684,299
as of Record Date:
How to Vote Your Shares:
Onlinewww.investorvote.com/CVBF
By Phone Call the number at the top or your proxy card
By Mail Complete, sign, date and return your proxy card in the envelope provided
Board
Matters To Be Voted Upon:
Recommendation:
Proposal 1
Election of Directors
FOR each
director nominee
Page 22
Proposal 2
Advisory resolution to approve, on a non-binding basis, the compensation of the Company's named executive officers as disclosed in the accompanying proxy statement
FOR
Page 41
Proposal 3
Ratification of the appointment of KPMG LLP as our independent public accounting firm for the year ending December 31, 2024
FOR
Page 85
NOTICE REGARDING COURTESY AUDIO RECORDING OF THE ANNUAL MEETING VIA TELEPHONE
For your convenience, we are providing shareholders an opportunity to listen to the annual meeting via telephone.
You can access this option by dialing 1 (833) 630-1956 immediately prior to the start time for the annual meeting and asking to be joined into the CVB Financial Corp. conference call.
Shareholders accessing the meeting via telephone will not be able to vote their shares of common stock via telephone during the annual meeting, nor are such shareholders considered present at the annual meeting for any legal purpose. As a result, if you plan to listen to the annual meeting via telephone, it is important that you vote your proxy prior to the annual meeting.
GENERAL INFORMATION
Who We Are
CVB Financial Corp. is a bank holding company incorporated in the State of California. Our principal banking subsidiary, Citizens Business Bank, serves the financial needs of small to medium-sized businesses and their owners throughout the State of California. We deliver a comprehensive menu of banking and wealth management products and services through an emphasis on personal service and building long-term relationships with businesses and their owners. We are consistently recognized as a top-performing bank, including being rated by S&P Global Market Intelligence as the #3 Best-Performing U.S. Public Bank in 2023.
Our Five Core Values
We are continuing the work started by our founders in 1974 to build a strong and consistent foundation for our financial services platform. The following are the five core values on which our organization conducts our business.
Board Oversight and Structure
The business and affairs of CVB Financial Corp. and Citizens Business Bank are supervised under the direction of our Board of Directors. The Board of Directors has historically separated the roles of President and Chief Executive Officer, on the one hand, and Chairman of the Board, on the other hand. We believe this structure, together with our other strong corporate governance practices, provide robust independent oversight of management while ensuring clear strategic alignment throughout the Company.
Hal W. Oswalt was elected by our Board of Directors as the Chairman of the Board, effective May 18, 2022. Mr. Oswalt had previously served as a director of CVB Financial Corp. and Citizens Business Bank since 2014 and as Chair of the Board's Compensation Committee since May 2021. Mr. George Borba, Jr., who has served as a director of CVB Financial Corp. and Citizens Business Bank since 2012, continues to serve as our Vice-Chairman of the Board.
Separate board committees exist at CVB Financial Corp. and Citizens Business Bank, each of which is responsible for supervising various areas of responsibility or risk. The Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee exist at CVB Financial Corp. The Balance Sheet Management Committee, Credit Committee, Risk Management Committee and Trust Services Committee exist at Citizens Business Bank. All of our board committees meet on regular schedules and report to the full Board of Directors.
Our Executive Officers
The Company's executive officers are:
David A. Brager
President and CEO of CVB Financial Corp. and Citizens Business Bank (the "CEO")
E. Allen Nicholson
Executive Vice President and Chief Financial Officer of CVB Financial Corp. and
Citizens Business Bank
Yamynn DeAngelis
Executive Vice President, Chief Risk Officer of Citizens Business Bank
David F. Farnsworth
Executive Vice President, Chief Credit Officer of Citizens Business Bank
David C. Harvey
Executive Vice President, Chief Operating Officer of Citizens Business Bank
Richard H. Wohl
Executive Vice President, General Counsel of CVB Financial Corp. and Citizens
Business Bank
Biographical information about each of our executive officers named above and employed by the Company as of December 31, 2023 is contained under Item 1 of our Annual Report on Form 10-K for 2023, a copy of which is being mailed with this proxy statement or, as referenced in the Notice, is available athttps://investors.cbbank.com/annual-meeting.
Overview of our Financial and Operating Performance in 2023
2023 Net Income
2023 End of Period Assets
2023 End of Period Deposits
2023 End of Period
CET1 Capital Ratio
$221.4 million
$16.02 billion
$11.43 billion
14.65%
2023 was marked by a set of evident challenges that impacted the U.S. economy and the banking industry specifically. As the year began, interest rates continued to rise sharply, as the Federal Reserve carried on with the campaign it started in 2022 to raise short-term interest rates in order to combat unexpectedly high inflation. Shorter-term interest rates rose more than longer-term interest rates, causing the yield curve to invert in 2022 and to remain inverted at most tenors during 2023, which in turn made lending conditions more challenging for banks. Bank deposit costs increased without a commensurate increase in the returns on bank lending, leading to the compression of net interest margins. In addition, the elevated interest rate environment created significant pressures on bank funding costs, bank liquidity and bank securities and loan portfolio valuations, culminating in the failure of three large U.S. regional banks during March and May 2023. This in turn caused customers to withdraw deposits at many regional banks and smaller financial institutions, resulting in higher alternative funding costs for the affected banks, against a backdrop of weaker demand for loans and deteriorated credit quality due to a slowing economy.
Global and geopolitical risks also remained at the forefront of economic concerns during 2023, including notable disruptions in certain markets, such as the energy and shipping markets, stemming from the ongoing Russian invasion of Ukraine and warfare in the Middle East precipitated by the Hamas attack on Israel. Looking closer to the Company's home market in California, the state ended the year facing a multitude of economic challenges, including a large budget deficit, flat tax revenue, sluggish job growth compared to national averages, with the state's unemployment rate climbing from 4.2% to 4.8%, and massive unemployment insurance debt. Additionally, commercial real estate values, particularly in the central business district office sector and the retail sector, were negatively impacted by a combination of higher interest rates, maturing commercial real estate loans, and changing commuting and consumer behaviors stemming from the COVID-19 pandemic.
On the positive side, prevailing inflation rates abated from a peak of 9.1% in June 2022 to an annualized rate of 3.4% by December 2023, and defying pessimistic forecasts, the U.S. economy did not experience a recession in 2023, but instead, domestic GDP grew at an aggregate annual rate of approximately 2.6%. This in turn was driven by a continuation of record low national unemployment rates, higher than expected consumer spending levels, and strong growth in private investment, particularly in the manufacturing sector. Supply chains and transportation costs that had been disrupted by the COVID-19 pandemic generally healed and normalized, and previously stunted domestic labor force participation levels rebounded. However, as a result of higher than expected gross domestic product and job growth, the Federal Reserve continued to increase short term interest rates through July 2023, and maintained such rates at historically high levels through the end of 2023. The sheer variety and combination of these numerous economic and financial market cross-currents created a challenging environment for banking institutions.
We believe that CVB Financial Corp. and Citizens Business Bank performed respectably during 2023, particularly on a relative basis compared to our peers, across a range of financial and credit metrics. Most importantly, the Company maintained its traditionally safe and sound financial position and stable customer franchise in a demanding environment, while achieving the second highest level of earnings in our 49-year history. As a result, over the course of 2023, CVB Financial Corp. continued its enviable record of achieving its 187th consecutive quarter of profitability, and its 137th consecutive quarter of paying our shareholders cash dividends. Additionally, in 2023, S&P Global Market Intelligence ranked CVB Financial Corp. as the #3 Best-Performing U.S. Public Bank, Citizens Business Bank was designated as a "Super Premier" Performing Bank by The Findley Reports, and the Company received a Five-Star Superior rating from BauerFinancial, as well as a continued BBB+ rating from Fitch Ratings.
CVB Financial Corp.'s financial and operational success can also be measured on a relative basis by comparing the Company's performance to that of a group of peer companies. The Company's peer group was updated in October 2023
Disclaimer
CVB Financial Corporation published this content on 01 April 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 01 April 2024 19:23:02 UTC.