Pacific Premier Bancorp (PPBI) DEF 14ADefinitive proxy

Our Corporate Governance Policy provides that our Board of Directors must have either a non-executive Chairperson or a lead independent director to ensure independent Board leadership and that the Company is managed for the long-term benefit of its stockholders. Each year, the Board evaluates its leadership structure to ensure that it remains appropriate. Currently, the offices of Chairman of the Board of Directors and CEO are jointly held and the independent directors have elected Mr. Mitchell as our lead independent director.

The Company’s independent directors meet in executive sessions without management at least twice on an annual basis in conjunction with regularly scheduled board meetings. During 2021, the independent directors met eight times in executive sessions without the presence of management.

The Nominating and Governance Committee of the Board, in coordination with the Lead Independent Director and full Board, conducts an annual evaluation of the Board’s performance and effectiveness at the Board, committee, and individual director levels. The Nominating and Governance Committee develops and implements a process for such evaluation and review, which is designed to encourage open and candid feedback on both the effectiveness of the Board as a whole, as well as the effectiveness of each of its members. The scope of assessments includes elements of Board effectiveness, such as Board size, meeting frequency, quality and timing of information provided to the Board, director communication, director skills and qualifications, director independence and Board strategy.

Each year, the Nominating and Governance Committee approves a process to solicit feedback from each director, other than our CEO, regarding our CEO’s performance over the past year. Our Lead Independent Director, in coordination with our Nominating and Governance and Compensation Committees, leads this process.

Succession planning for the CEO and other key executive officer positions is one of the Board's key responsibilities. Typically on an annual basis, the CEO presents a management succession plan to the Nominating and Governance Committee, which reviews and recommends the succession plan to the full Board for approval. The management succession plan describes the process by which the executive management of the Company will continue if the current CEO is unwilling or unable to serve, including an unexpected departure of the CEO. Succession plans for other key executive officers are also addressed.

Individuals may submit communications to any individual director, including our presiding Chairman, our Board as a group, or a specified Board committee or group of directors, including our non-management directors, by sending the communications in writing to the following address: Pacific Premier Bancorp, Inc., 17901 Von Karman Avenue, Suite 1200, Irvine, California 92614. The Company’s Corporate Secretary will sort the Board correspondence to classify it based on the following categories into which it falls: stockholder correspondence, commercial correspondence, regulatory correspondence or customer correspondence. All stockholder correspondence will then be forwarded to the Board members to whom it is directed.

Our Board believes that understanding, identifying and managing risk are essential to our Company’s success. Our entire Board is responsible for overseeing the Company’s risk management processes and regularly discusses the Company’s risk profile and how best to manage the most significant risks the Company faces. Each of the Board committees is engaged in overseeing the Company’s risks as they relate to that committee’s respective areas of oversight, and has the responsibility for ensuring that overall risk awareness and risk management is appropriate. For example, the Compensation Committee engages in periodic risk assessments to review and evaluate risks in relation to our compensation programs. The Board also specifically delegates certain risk oversight functions to the Audit and Enterprise Risk Committees.

The Board oversees, and approves on at least an annual basis, the Company’s Risk Appetite Statement, which sets forth tolerance levels with respect to the amount and types of key risks underlying the Company’s business. These key risk indicator limits and thresholds are measured and reported quarterly to the Board on the Company's risk dashboard. The Enterprise Risk Committee is responsible for recommending changes to the Risk Appetite Statement for approval by the Board, as well as overseeing the Company’s compliance with the statement. Our other Board committees also share responsibility for the Risk Appetite Statement by overseeing and approving applicable risk metrics, including risk limits and thresholds, for each of their relevant areas of responsibility.

With oversight from our Board and its committees, we are focused on, and continually invest in, our risk management and control environment. Our business teams, supported by our risk, compliance, legal, finance and internal audit functions, work together to identify and manage risks applicable to our business, as well as to enhance our control environment. Particular areas of focus include, among other areas, financial reporting, credit, concentrations, data management, privacy, bank regulatory requirements, and as further discussed below, cybersecurity.

Cybersecurity is a major component of our overall risk management approach. The Enterprise Risk Committee, comprised entirely of independent directors, oversees risks related to information security and cybersecurity. Senior leadership updates the Enterprise Risk Committee and Board of Directors on information security at least twice per year. By the very nature of our business, handling sensitive data is a part of daily operations and is taken very seriously by all employees. The threat of cybersecurity attacks is ever changing, becoming more sophisticated by the day, and requires all levels of the organization to be cognizant and aware of these threats at all times. As such, we maintain a comprehensive cybersecurity strategy that includes, but is not limited to: regular employee cybersecurity training and communications; preventative, detective, alerting, and defense in-depth technologies; regular internal and third-party program oversight; incident response program to minimize potential risk to operations and reduce the risk that cyber-attacks would be successful; policies and procedures regularly reviewed and designed with regulatory and industry guidance; a threat intelligence program assessing changes to the threat landscape and the impact to the bank and its vendors; and regular reviews of vendors who maintain sensitive data on behalf of the Bank. Our Board of Directors reviews our information security program at least annually, and our Enterprise Risk Committee receives management updates about information security matters on a quarterly basis.

Climate-related risk is an emerging area of focus for us. This risk includes increased probability of natural disasters that may affect our own facilities or loan collateral in impacted areas, or may increase insurance premiums for us and our clients. Climate risks related to the transition to a low-carbon economy, including the effect of changing regulation and evolving consumer preferences, may also have detrimental impacts on our depositors and borrowers, creating credit, operational, strategic and reputational risks for the Company. Climate-related risks are incorporated in our enterprise-wide Risk and Control Self-Assessment (“RCSA”), which is a process we use to identify, assess, and report on risk exposures and the strength of controls. The RCSA also provides the basis for prioritizing risks and risk mitigation activities across business areas and risk categories. Results of the RCSA are used to drive management action plans and report key risks to executive management, the Nominating and Governance Committee, and the Board.

We encourage all directors to carefully consider the number of other company boards of directors on which they serve, taking into account the time required for board attendance, conflicts of interests, participation, and effectiveness on these boards. Pursuant to our Corporate Governance Policy, no director may serve on more than four (4) total public company boards of directors, including the Board. Directors are asked to report all directorships, including advisory positions, accepted, as well as to notify the Nominating and Governance Committee in advance of accepting any invitation to serve on another public company board.

Our Board of Directors met nine times during 2021 and anticipates holding six regularly-scheduled Board meetings in 2022, and any special meetings that may be necessary or appropriate. Each director attended in person or via teleconference at least 75% of the Board and applicable Board committee meetings during 2021.

We believe our Board has created a sound committee structure designed to help the Board carry out its responsibilities in an effective and efficient manner. While the Board may form from time to time ad hoc or other special purpose committees, there are four (4) standing Board committees: Audit, Compensation, Nominating and Governance and Enterprise Risk.

All chairpersons of our four (4) standing committees are independent and appointed annually by the Board. Each chairperson presides over committee meetings; oversees meeting agendas; serves as liaison between the committee members and the Board, as well as between committee members and management; and works actively and closely with executive and senior management on all committee matters, as appropriate.

Each committee is governed by a charter that is approved by the Board, which sets forth each committee’s purpose and responsibilities. The Board reviews the committees’ charters, and each committee reviews its own charter, on at least an annual basis. The charters of each committee are available on our website, www.ppbi.com under the “Investors” section.

For 2021, the Compensation Committee was comprised of Ms. Studenmund, Ms. Polsky and Ms. Tellez, as well as Messrs. Garrett, and Jones, each of whom was an independent director. None of these individuals is or has been an officer or employee of the Company during the last fiscal year or as of the date of this Proxy Statement, or is serving or has served as a member of the compensation committee of another entity that has an executive officer serving on the Compensation Committee. No executive officer of the Company served as a director of another entity that had an executive officer serving on the Compensation Committee. Finally, no executive officer of the Company served as a member of the compensation committee of another entity that had an executive officer serving as a director of the Company.

We believe diversity has contributed to our success. We do not and will not tolerate discrimination in any form with respect to any aspect of employment. Our current initiatives reflect our ongoing efforts as we continue to foster a diverse, inclusive, and equitable workplace. We believe that diversity of thought, backgrounds and experiences result in better outcomes for all of our stakeholders and empowers our employees to make more meaningful contributions within our Company and communities. As individual employees offer their diverse perspectives and unique input, collaboration and teamwork lead to improved outcomes and innovation that can tangibly influence business results. In addition to valuing every unique viewpoint, we are committed to identifying and remediating inequities in compensation outcomes and promotion opportunities.

Our diversity and inclusion strategy, “Premier Inclusion,” is designed to address diversity and inclusion from specific target areas: Data and Metrics, Recruitment, Training and Education, and Career Development. Each area encompasses different on-going activities to measure the progress of overall diversity and inclusion with the goal of continuous improvement. Success of initiatives and activities are measured across four areas:

In 2021, we conducted an Employee Inclusion Survey across all employees to gather sentiment and perception of our diversity and inclusion efforts. The companywide survey received generally favorable results on a rated scale of “strongly disagree” to “strongly agree.” The rated questions measured employee perception of the Company's valuation across inclusion, diversity, and belonging. The survey results serve as a baseline for understanding how beneficial our efforts to date have been and to uncover insights which will help tailor diversity and inclusion initiatives and interventions within our Premier Inclusion strategy.

As COVID-19 extended into 2021, our priorities continued to be focused on employee safety, engagement, regulatory compliance, and employee support including the following offerings:

We offer a health and well-being program that provides resources supporting health, as well as financial, community, social, emotional, purpose, and career well-being. We also strive to provide each employee with a safe and healthy work environment. Violence and threatening behavior are not permitted. The Company has adopted a formal injury and illness prevention program, which consists of policies governing the safe and efficient conduct of business activities in compliance with local, state, and federal safety and health regulations and standards. The program covers all facilities and operations of the organization and addresses on-site emergencies, injuries and illnesses, and general safety procedures.

We are committed to offering competitive total compensation packages to our employees. We regularly compare compensation and benefits with peer companies and market data, making adjustments as needed to ensure compensation stays competitive. We also offer a wide array of benefits for our employees and their families. For 2021, we expanded both the breadth of employees receiving equity awards and the percentage of total compensation in the form of equity, thus deepening our organization's alignment with stockholder interest with a 60% increase of shares awarded to key staff members for the second consecutive year.

Grants under the 2022 Plan may be made in the form of stock options, restricted stock, restricted stock units (“RSUs”) and stock appreciation rights (“SARs”).

Subject to adjustment as provided in the plan, 5,000,000 shares of common stock are currently authorized for issuance under the 2012 Plan, which is equal to approximately 5.3% of our outstanding shares of common stock as of the Record Date. Stockholders are being asked to authorize an additional 2,000,000 shares for future awards, which would result in an aggregate of 7,000,000 shares of common stock being authorized for issuance, which is equal to approximately 2.1% of our outstanding shares of common stock as of the Record Date. The Compensation Committee will also be permitted to grant awards in substitution of awards of an acquired entity, which will not reduce the shares available for grant under the 2022 Plan.

In the event of any equity restructuring, merger, consolidation or the like such as a stock dividend, stock split, spinoff, rights offering or recapitalization, the Compensation Committee shall cause an equitable adjustment to be made (i) in the number and kind of shares of our common stock that may be delivered under the 2022 Plan and (ii) with respect to outstanding awards, in the number and kind of shares subject to outstanding awards, and the exercise price, grant price or other price of shares subject to outstanding awards.

Eligible participants include all officers, employees, directors, consultants and independent contractors of the Company and our subsidiaries, as determined by the Compensation Committee.

The 2022 Plan may be amended or terminated by our Board of Directors at any time and, subject to limitations under the 2022 Plan, the awards granted under the 2022 Plan may be amended by the Compensation Committee at any time, provided that no such action to the plan or an award may, without a participant's consent, adversely affect any previously granted award.

The 2022 Plan authorizes granting of awards for up to ten years following the date on which the 2022 Plan was most recently approved. The 2022 Plan will remain in effect with respect to outstanding awards until no awards remain outstanding.

The Compensation Committee has the authority in its sole discretion to determine the type or types of awards made under the 2022 Plan. Under the 2022 Plan, no person may receive options or other awards denominated in shares of the Company's common stock relating to more than 400,000 shares (30,000 shares in the case of non-employee directors) of the Company's common stock in the aggregate in any calendar year. The maximum number of Common Shares that may be issued in connection with awards granted under the 2012 Plan that are intended to qualify as incentive stock options under Section 422 of the Code is equal to the number of shares available under the 2022 Plan.

The Compensation Committee is authorized to award restricted stock under the 2022 Plan. Restricted stock is an award that is non-transferable and subject to a substantial risk of forfeiture until vesting conditions, which can be related to continued service or other conditions established by the Compensation Committee, are satisfied. Prior to vesting, holders of restricted stock may receive dividends and voting rights. If the vesting conditions are not satisfied, the participant forfeits the shares.

The Compensation Committee is authorized to award RSUs under the 2022 Plan. The restrictions imposed on units granted under an RSU award shall lapse in accordance with the vesting requirements specified by the Compensation Committee in an applicable RSU agreement, except as provided below. Such vesting requirements may be based on the continued employment of the recipient with the Company for a specified time period or periods, or upon the attainment of specified business goals or measures established by the Compensation Committee in its sole discretion, in either case as set forth in the RSU agreement. A recipient's RSU award will immediately vest upon the recipient's death while in the employ of the Company, the recipient's termination of employment with the Company as a result of disability, or upon the recipient's termination without cause or resignation with good reason within two years of a change in control, in each case except as determined in the sole discretion of the Compensation Committee and set forth in an applicable RSU agreement.

The Compensation Committee may grant incentive stock options (“ISOs”) or nonqualified stock options (“NQSOs”) under the 2022 Plan. The exercise price for each such award will be at least equal to 100% of the fair market value of a share of common stock on the date of grant (110% of fair market value in the case of an ISO granted to a person who owns more than 10% of the voting power of all classes of stock of the Company or any subsidiary). Options will expire at such times and will have such other terms and conditions as the Compensation Committee may determine at the time of grant; provided, however, that no option may be exercisable later than the tenth anniversary of its grant (fifth anniversary in the case of an ISO granted to a person who owns more than 10% of the voting power of all classes of stock of the Company or any subsidiary). The exercise price of options granted under the 2022 Plan generally may be paid in cash or check. The Compensation Committee may, in its discretion, permit a participant to exercise vested and exercisable options by surrendering an amount of common stock already owned by the participant equal to the options' exercise price.

The Compensation Committee is authorized to award SARs under the 2022 Plan. A SAR will represent a right to receive a payment in cash, shares, or a combination thereof, equal to the excess of the fair market value of a specified number of shares on the date the SAR is exercised over an amount which will be no less than the fair market value on the date the SAR was granted (or the option price for SARs granted in tandem with an option). Each SAR agreement will specify the exercise price, the duration of the SAR, the number of shares to which the rights pertain, the form of payment of the SAR upon exercise, whether the SAR is granted in tandem with the grant of a stock option or is freestanding, and such other provisions as the Compensation Committee may determine. SARs will be exercisable at such times and be subject to such restrictions and conditions as the Compensation Committee will approve and be set forth in the award agreement, which need not be the same for each grant or each participant.

In general, no taxable income is realized by a participant upon the grant of an ISO. If shares of common stock are issued to a participant pursuant to the exercise of an ISO, then, generally (i) the participant will not realize ordinary income with respect to the exercise of the option, (ii) upon sale of the underlying

In general, no taxable income is realized by a participant upon the grant of an NQSO. Upon exercise of an NQSO, the participant generally would include in ordinary income at the time of exercise an amount equal to the excess, if any, of the fair market value of the shares at the time of exercise over the exercise price paid for the shares. At the time the participant recognizes ordinary income, the Company generally will be entitled to a compensation deduction in the same amount. In the event of a subsequent sale of shares received upon the exercise of an NQSO, any appreciation after the date on which taxable income is realized by the participant in respect of the option exercise should be taxed as capital gain in an amount equal to the excess of the sales proceeds for the shares over the participant's basis in such shares. The participant's basis in the shares will generally equal the amount paid for the shares plus the amount included in ordinary income by the participant upon exercise of the NQSO.

In general, a participant will not recognize any income upon the grant of restricted stock, unless the participant elects under Section 83(b) of the Code, within thirty days of such grant, to recognize ordinary income in an amount equal to the fair market value of the restricted stock at the time of grant, less any amount paid for the shares. If the election is made, the participant will not be allowed a deduction for amounts subsequently required to be returned to the Company. If the election is not made, the participant will generally recognize ordinary income on the date that the restrictions to which the restricted stock lapse, in an amount equal to the fair market value of such shares on such date, less any amount paid for the shares. At the time the participant recognizes ordinary income, the Company generally will be entitled to a deduction in the same amount. Generally, upon a sale or other disposition of restricted stock with respect to which the participant has recognized ordinary income (i.e., where a Section 83(b) election was previously made or the restrictions were previously removed), the participant will recognize capital gain or loss in an amount equal to the difference between the amount realized on such sale or other disposition and the participant's basis in such shares.

In general, a recipient who is awarded RSUs will not recognize taxable income upon receipt. When a recipient receives payment for an award of RSUs in shares or cash, the fair market value of the shares or the amount of cash received will be taxed to the participant at ordinary income rates. However, if any shares used to pay out RSUs are nontransferable and subject to a substantial risk of forfeiture, the taxable event is deferred until either the restriction on transferability or the risk of forfeiture lapses.

In general, the grant of a SAR will not result in income for the participant or in a tax deduction for the Company. Upon the settlement of a SAR, the participant will recognize ordinary income equal to the aggregate value of the payment received, and the Company generally will be entitled to a tax deduction at such time in the same amount.