PROXY SUMMARY		4
CORPORATE GOVERNANCE		10
Item 1–Election of Directors		16
Committees of the Board of Directors		25
Board of Directors’ Leadership Structure and Role in Risk Oversight		28
Attendance at Meetings		30
Meetings of Non-Management and Independent Directors		30
Communications With the Board of Directors		30
Code of Conduct		31
Governance Principles		31
Management Development and Compensation Committee Interlocks and Insider Participation		31
COMPENSATION MATTERS		32
Item 2–Advisory Vote to Approve Named Executive Officer Compensation		32
Management		32
Compensation Discussion and Analysis		34
Compensation Philosophy		39
2020 Executive Compensation		50
Independent Directors’ Compensation		59
Item 3–Advisory Vote on Frequency of Say-on-Pay Vote		62

AUDIT MATTERS		63
Independent Auditor		63
Item 4–Ratification of Selection of KPMG LLP as Independent Registered Public Accounting Firm of the Company for 2021		64
Audit Committee Report		64
BENEFICIAL OWNERSHIP		65
Related Person Transactions		67
FREQUENTLY ASKED QUESTIONS ABOUT THE ANNUAL MEETING		68
Voting Information		68
Proxy Solicitation and Document Request Information		70
Information About Attending the 2021 Annual Meeting		70
ADDITIONAL INFORMATION		71
Other Business		71
Annual Report and Company Information		71
Stockholder Proposals for the 2022 Annual Meeting		71
Important Notice Regarding Internet Availability of Proxy Materials for the 2021 Annual Meeting to be held on May 20, 2021		71

2020 PERFORMANCE   2020 marked a year of unprecedented challenges. The COVID-19 pandemic impacted the economy, Synchrony’s business, as well as our partners, customers and employees. Despite the challenges, Synchrony took quick and decisive action and delivered strong results. We moved to keep our employees safe through work from home arrangements and enhanced our employee benefits and wellness programs, provided relief for our customers and reprioritized resources and work streams. We also took actions to manage our costs and re-direct the business to the new realities. We transformed how we work and reduced our physical site footprint, implemented a temporary freeze on hiring and promotions as well as travel and expense restrictions, insourced certain work at a lower cost, and reduced or eliminated other work.   Our goal was to successfully manage through the short-term environment, while preparing the Company for a post-pandemic return to strong growth and long-term value creation.   We kept focused on our commitment to executing our commercial strategies which resulted in several key successes:   • Renewed 41 key relationships   • Signed 25 new partnerships   • Launched promising new programs with Verizon and Venmo, as well as within our Payment Solutions and CareCredit businesses.   • Significantly enhanced our digital initiatives and shifted resources to focus on transforming digital capabilities in response to the pandemic, such as digital collections and our efforts to enable consumers to apply for credit in store or pay merchants contactless.   • Expanded human capital initiatives at all levels including care for employees in response to the pandemic and executing on our diversity and inclusion (D&I) initiatives.   We accomplished all these commercial strategy successes while maintaining strong relative performance against our direct peers*, ranking first in 2020 efficiency ratio**, second in 2020 return on equity and second in 5-year loan receivables growth. Our Total Shareholder Return (TSR) ranked second among direct peers as we maintained profitability in all four quarters over the past year. During 2020, the Company also operated with a strong balance sheet including liquid assets as a percentage of total assets were 19.1%, CET 1 Capital Ratio was 15.9%, and our allowance coverage ratio rose to 12.5%. All of the above accomplishments are signs of a healthy business that we believe is poised to grow in a post-pandemic rebound.   FISCAL YEAR 2020 FINANCIAL PERFORMANCE HIGHLIGHTS   • $1.4 billion Net Earnings   • $2.27 Diluted Earnings Per Share   • Returned $1.5 billion in capital to common stockholders in the form of share repurchases and dividends   • Industry leading Efficiency Ratio of 36.3%   *  Direct peers include American Express Company, Capital One Financial Corporation and Discover Financial Services.   **  For Synchrony, Efficiency Ratio represents (i) other expense, divided by (ii) net interest income, after retailer share arrangements, plus other income.						STRONG NET EARNINGS   $1.4B     $2.27   DILUTED EARNINGS PER SHARE     RETURNED CAPITAL TO STOCKHOLDERS   $1.5B

BOARD OVERSIGHT OF COVID-19

Since March 2020, the Board and its committees have engaged with management on the Company’s response to the COVID-19 pandemic. The Board kept informed through regular updates on the impact of the pandemic, including matters relating to employees, operations, financial performance, partners, and related legal and regulatory matters. The Board reviewed a detailed and comprehensive risk management dashboard with weekly updates on topics including employees, credit metrics, operational metrics, information systems, and financial performance. The Board added special virtual Board and Board committee meetings where, for example, the Risk Committee oversaw and monitored cyber risks of work from home; the MDCC actively engaged its independent consultant on the impact of the pandemic on compensation programs; and the Technology Committee engaged with management on the tools required to continue innovating in a work from home setting.

BOARD’S ROLE IN STRATEGY

As part of the Company’s regular, annual strategic planning process, the Board and management developed a strategic plan focusing on growing the core and diversifying the business. Once the pandemic hit at the end of first quarter 2020, the Board took action immediately, scheduling special Board meetings, as well as special committee meetings, and engaging with management to assess strategic risks and opportunities to position Synchrony for success in the post-COVID-19 world. Through a series of meetings, the Board oversaw and supported management’s adoption of new strategic business priorities, as discussed above.

Looking ahead, the Company remains focused on improving all aspects of the customer experience, starting with a quick, seamless account opening

process all the way through account self-servicing features. We plan to continue to invest heavily in digital innovations to develop new products and services that drive deeper customer relationships.

BOARD REFRESHMENT

The Nominating and Corporate Governance Committee routinely assesses the composition of our Board to ensure that we have the right mix of skills and experience to maximize our Board’s potential and align our Board’s strengths with our strategic direction. To this end, the Board appointed Bill Parker as a new independent director in July 2020. Mr. Parker has significant executive experience in the financial services industry, specifically as the former chief risk officer of U.S. Bancorp, and has significant executive experience and expertise spanning leadership, risk management, and credit. During his tenure with U.S. Bancorp, Mr. Parker helped lead the bank through the 2008 financial crisis as chief credit officer with a focus on credit policy and navigated the bank through the subsequent regulatory reforms as chief risk officer.

BOARD COMMITMENT TO DIVERSITY AND ENVIRONMENTAL, SOCIAL AND GOVERNANCE MATTERS

Since our IPO, the Board has consistently believed that sustainable, long-term stockholder value creation requires caring for our business, our customers, our partners, our employees, our communities, and the environment. The pandemic underscores the importance of Board engagement on all environmental, social and governance matters (ESG), including D&I. We believe diversity makes our business stronger, more innovative and more successful. We have strong hiring practices for women, minorities, veterans, the LGBTQ community and people with disabilities. We promote this inclusive culture by sponsoring eight

 

different employee D&I Networks. We also have one of the most diverse board of directors of any financial services company or commercial bank in the Fortune 200 based on 2020 proxy statement disclosures. Our Board includes seven directors (out of 12) who are women and/or minorities, as well as cognitive diversity with expertise in consumer banking, credit cards, retail, technology, cyber security, risk management, marketing, government affairs, healthcare and accounting.

The Board also supported in elevating attention to social injustice and racial equity. For example:

 

•

Mr. Aguirre led an all-employee event on the role diversity plays in business and the steps Synchrony is taking to ensure diverse talent is represented at all levels of the organization.

 

•

Synchrony held an all-employee town hall with Mr. Alves and Ms. Richie where employees had the opportunity to engage directly on D&I in the workplace.

 

•

Directors participated in our annual two-day Diversity Experience, attended by 2,500 employees virtually.

 

•

Mr. Aguirre and Ms. Keane discussed board diversity at the Women Corporate Directors 2020 Americas Institute conference.

 

•

Mr. Alves and Ms. Keane co-authored an op-ed in Fortune about the need for companies to lead on D&I matters during this time.

Corporate and social responsibility demonstrates the kind of company we are and reflects how we build and maintain trust and credibility with our stakeholders, including our customers, partners, employees and stockholders. You can read more about our ESG efforts in our ESG report at www.synchrony.com.

BOARD OVERSIGHT OF CYBER SECURITY AND TECHNOLOGY

The protection and security of financial and personal information of our consumers is one of the Company’s highest priorities. To that end, we have an extensive cyber security governance framework in place. The Board and its Risk Committee receive regular reports on cyber security and oversee a comprehensive information security program that includes administrative, technical and physical safeguards and provides an appropriate level of protection to maintain the confidentiality, integrity, and availability of our Company’s and our

customers’ information. This includes protecting against any known or evolving threats to the security or integrity of customer records and information, and against unauthorized access to or use of customer records or information. Our information security program is continuously adapting to an evolving landscape of emerging threats and available technology, and we have developed a security strategy and implemented multiple layers of controls embedded throughout our technology environment that establish multiple control points between threats and our assets. We evaluate the effectiveness of the key security controls through ongoing assessment and measurement. When the Company’s employees shifted to working remotely due to the pandemic, this cyber security governance framework set the foundation for the Risk Committee to engage seamlessly with management and actively oversee and monitor the cyber risks of work from home.

A key part of our strategic focus is the continued development of innovative, efficient, and flexible technology to deliver products and services that meet the needs of our partners and enables us to operate our business efficiently. The integration of our technology with our partners is at the core of our value proposition, enabling us to help our partners anticipate and deliver the experiences and tools consumers want, while reducing fraud and enhancing customer service. Recognizing the importance of technology and innovation to our future success, the Company’s Technology Committee provides regular updates to the full Board on industry developments and best practices. The Chair of the Technology Committee is Art Coviello, a leader in the technology industry and former Executive Vice President of EMC Corporation and Executive Chairman of RSA Security, Inc.

STOCKHOLDER ENGAGEMENT

We continue to value our stockholders’ perspectives on our strategy and governance practices. We believe that maintaining a dialogue with our stockholders allows us to better understand and respond to their perspectives on matters of importance to them. In 2020, we engaged with representatives of a majority of our outstanding shares on a variety of topics, including our growth plans, business strategy, board composition, compensation practices and ESG issues.

 

 

    

 

    

CORPORATE GOVERNANCE PRACTICES

OUR GOVERNANCE HIGHLIGHTS INCLUDE:

 

 

BOARD LEADERSHIP STRUCTURE

Since our IPO, we have chosen to elect a Chair of the Board separate from our CEO. The separation of roles has allowed our Chair to focus on the organization and effectiveness of the Board. At the same time, it has allowed our CEO to focus on executing our strategy and managing our operations, performance and risks.

As previously announced, on April 1, 2021 as part of a planned succession process, the following events occurred:

 

•

Richard Hartnack retired as non-Executive Chair;

 

•

Margaret Keane transitioned roles from CEO to Executive Chair;

 

•

Brian Doubles succeeded Ms. Keane as CEO and, was appointed to the Board; and

 

•

Jeffrey Naylor was appointed Lead Independent Director of the Board.

The Board thoroughly evaluated its leadership structure in the period leading up to the Company’s CEO transition. The Board believes that Ms. Keane, as the former CEO and a long-time executive in the business, is best situated to serve as Chair at this time because her deep understanding of our operations, our people and our strategic plan, along with her strong leadership skills, make her uniquely qualified to provide the continuity needed to ensure a smooth transition of the CEO role, especially in the volatile and uncertain environment created by the COVID-19 pandemic.

The roles of Chair and CEO continue to be separate at the Company. The Board believes that the separation is in the best interests of the Company’s stockholders because it allows the Chair to focus on the organization and effectiveness of the Board and allows the CEO to focus on executing the Company’s strategy and managing its operations, performance and risk.

The Board believes that the Lead Independent Director brings to the Board experience, oversight, and expertise from outside the Company that will allow him to provide strong independent oversight of management. The responsibilities and authority of the Lead Independent Director include:

 

 

For these reasons, and after considering the perspectives of the independent directors, the views of our significant stockholders, and benchmarking and performance data, the Board determined that this leadership structure is in the best interests of stockholders at this time because it strikes an appropriate balance; with a former CEO serving as Chair, there is unified leadership and continuity, while the Lead Independent Director will hold management accountable for our continued success.

 

    

 

    

While the Board has determined that this leadership structure is best for the Company and its stockholders at this time, the Board will continue to monitor its effectiveness and appropriateness.

BOARD OF DIRECTORS

We believe that our directors possess the highest personal and professional ethics, deep industry knowledge and expertise, and are committed to representing the long-term interests of our stockholders. We deliberately and thoughtfully formed an independent Board with diverse perspectives and experiences, which we believe is critical to effective corporate governance and to achieving our strategic goals. Today, 10 of the 12 directors on our Board are independent, four of the directors are women and four of the directors are minorities. The composition of the Board reflects distinct and varied professional experience and cognitive diversity.

EXPERIENCE

 

 

BOARD QUALIFICATIONS

 

NAME		AGE		DIRECTOR SINCE		INDEPENDENT		COMMITTEE MEMBERSHIP
Margaret M. Keane Executive Chair of the Board; Former President and CEO of Synchrony Financial		61		2014				Technology
Brian D. Doubles President and CEO of Synchrony Financial		45		2021
Fernando Aguirre Former Chairman, President and CEO of Chiquita Brands International, Inc.		63		2019				Management Development and Compensation; Nominating and Corporate Governance
Paget L. Alves Former Chief Sales Officer of Sprint Corporation		66		2015				Audit; Technology
Arthur W. Coviello, Jr. Former Executive Vice President of EMC Corporation; Former Executive Chairman of RSA Security, Inc.		67		2015				Risk; Technology (Chair)
William W. Graylin Chairman and CEO of OV Loop, Inc.; Chairman and CEO of Indigo Technologies, Inc.; Former Global Co-General Manager of Samsung Pay, Samsung Electronics America, Inc.		52		2015				Risk; Technology
Roy A. Guthrie Former CEO of Renovate America, Inc.; Former Executive Vice President and Chief Financial Officer of Discover Financial Services, Inc.		67		2014				Risk (Chair)
Jeffrey G. Naylor Lead Independent Director of the Board; Former CFO and Chief Administrative Officer of the TJX Companies, Inc.		62		2014				Audit (Chair); Management Development and Compensation
P.W. “Bill” Parker Former Vice Chairman and Chief Risk Officer of U.S. Bancorp		64		2020				Nominating and Corporate Governance; Risk
Laurel J. Richie Former President of the Women’s National Basketball Association LLC		62		2015				Management Development and Compensation (Chair); Nominating and Corporate Governance
Olympia J. Snowe Chairman and CEO of Olympia Snowe, LLC; U.S. Senator from 1995–2013 and Member of U.S. House of Representatives from 1979–1995		74		2015				Audit; Nominating and Corporate Governance (Chair)
Ellen M. Zane Former President and CEO of Tufts Medical Center and Tufts Children’s Hospital		69		2019				Audit; Management Development and Compensation

 

    

 

 ITEM 1—ELECTION OF DIRECTORS

The Board currently consists of 12 directors: our Executive Chair of the Board, Margaret M. Keane, our President and CEO, Brian D. Doubles, and 10 directors who are “independent” under the listing standards of the New York Stock Exchange (“NYSE”) and our own independence standards set forth in our Governance Principles. The independent directors are Fernando Aguirre, Paget L. Alves, Arthur W. Coviello, Jr., William W. Graylin, Roy A. Guthrie, Jeffrey G. Naylor, Bill Parker, Laurel J. Richie, Senator Olympia J. Snowe and Ellen M. Zane (together, the “Independent Directors”). Under our Bylaws, our directors will be elected annually by a majority vote in uncontested elections. As discussed under “Committees of the Board of Directors” below, our Nominating and Corporate Governance Committee is responsible for recommending to our Board, for its approval, the director nominees to be presented for stockholder approval at each annual meeting.

NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS

Each of the 12 director nominees listed below is currently a director of the Company.

The following biographies describe the business experience of each director nominee. Following the biographical information for each director nominee, we have listed specific qualifications that the Board considered in determining whether to recommend that the director be nominated for election at the Annual Meeting.

If elected, each of the director nominees is expected to serve for a term of one year or until their successors are duly elected and qualified. The Board expects that each of the nominees will be available for election as a director. However, if by reason of an unexpected occurrence one or more of the nominees is not available for election, the persons named in the form of proxy have advised that they will vote for such substitute nominees as the Board may nominate.

 

 

Name and present position, if any, with the Company

Age, period served as a director and other business experience

 

 

    

 

    

 

Mr. Coviello, 67, has been a director since November 2015 and was a non-voting Board observer from July 2015 to November 2015. He has also been a member of the Board of Directors of the Bank since January 2017. Since 2015 he has been an independent cyber security consultant. He served as Executive Vice President of EMC Corporation, an IT infrastructure company, and Executive Chairman of RSA Security, Inc. (“RSA”), the Security Division of EMC Corporation and a provider of security, risk and compliance solutions, from 2011 to 2015, after serving as Executive Vice President and President of RSA from 2006 to 2011. Prior thereto, Mr. Coviello held various executive positions at RSA, including President and CEO from 2000 to 2006, and President from 1999 to 2000. Prior to RSA, he had extensive financial and operating management expertise in several technology companies. Mr. Coviello currently serves on the boards of directors of Tenable Holdings, Inc., a provider of Cyber Exposure solutions, which is a discipline for managing and measuring cyber security risk; FireEye, a publicly traded cybersecurity company which develops cyber security solutions to help organizations protect against advanced persistent threats (APTs), malware, and other cyber-attacks; Epiphany Technology Acquisition Corp., a special purpose acquisition company focused on the technology industry; and four private companies, ZeroNorth, a software and infrastructure security company that is the security industry’s first provider of orchestrated risk management; Capsule8, a security software platform for Linux, containers and micro-services; SecZetta, a provider of identity management software for governing and managing third party risk; and Bugcrowd, Inc., which uses tens of thousands of independent researchers to assist its customers in finding security vulnerabilities in their software. Mr. Coviello previously served on the boards of directors of EnerNOC, Inc., Gigamon, Inc., AtHoc, RSA, Sana Security, Inc. and Cylance, Inc. He received a B.B.A. in Accounting from the University of Massachusetts.

We believe that Mr. Coviello should serve as a member of the Board due to his leadership experience, including as CEO of a publicly-traded company, his extensive financial expertise and accounting background and his considerable experience in technology and cyber security.

Mr. Graylin, 52, has been a director since November 2015 and was a non-voting Board observer from July 2015 to November 2015. He has been Chairman and CEO of OV Loop, Inc., a Connected Commerce platform company with Unified Credential Manager & Commerce Messaging to help people and businesses better interact & transact, since 2018. He is also Chairman and CEO of Indigo Technologies, Inc., a provider of breakthrough Robotic Wheels for Ultra-Efficient & Smooth Electric Vehicles. Prior thereto, Mr. Graylin was Global Co-General Manager of Samsung Pay, the mobile payment platform of Samsung Electronics America, Inc., from February 2015 to April 2018. From 2012 to 2015, he was Founder and CEO of LoopPay, Inc., a mobile payment company; from 2007 to 2012, he was Founder and CEO of Roam Data, Inc., a developer of mobile point of sale software; from 2002 to 2007, he was Founder, Chairman and CEO of Way Systems, Inc.; and from 2000 to 2001, he was Founder and CEO of Entitlenet, Inc. Mr. Graylin served in the United States Navy as a Nuclear Submarine Officer from 1992 to 1998. He currently serves on the boards of directors of several privately held high-tech startups including: People Power, Inc., an IoT (internet of things) services company managed by artificial intelligence for home automation, security and senior care; Feelter, Inc., crowd-sourced trusted reviews to improve eCommerce conversions; and Global Unites, a non-profit organization training and equipping youths on conflict transformation and reconciliation in 15 countries. In addition, Mr. Graylin is a Connection Science Fellow with MIT’s Media Lab. He received a B.S. in Electrical Engineering and Computer Science and a B.A. in Chinese Linguistics and Literature from the University of Washington; an M.B.A. from the Sloan School of Management, Massachusetts Institute of Technology; and an M.S. in Electrical Engineering and Computer Science from Massachusetts Institute of Technology.

We believe that Mr. Graylin should serve as a member of the Board due to his executive management and leadership experience, and his extensive background as an entrepreneur and innovator in technology.

 

 

 

Name and present position, if any, with the Company

Age, period served as a director and other business experience

 

 

    

 

    

 

Name and present position, if any, with the Company

Age, period served as a director and other business experience

 

 

 

Name and present position, if any, with the Company

Age, period served as a director and other business experience

 

 

    

 

    

 

 

COMMITTEES OF THE BOARD OF DIRECTORS

The standing committees of the Board consist of the Audit Committee, the Nominating and Corporate Governance Committee, the MDCC, the Risk Committee, and the Technology Committee. The duties and responsibilities of these standing committees are set forth below. The Board may also establish various other committees to assist it in its responsibilities. Our Board has adopted charters for each of its standing committees. Copies of the committees’ charters are available on our website at http://investors.synchronyfinancial.com under “Corporate Governance.” Each of the standing committees reports to the Board as it deems appropriate and as the Board requests.

 

COMMITTEES		MEMBERS		PRIMARY RESPONSIBILITIES		# OF MEETINGS         IN 2020
Audit		Mr. Naylor (Chair)		•  Selecting, evaluating, compensating and overseeing the independent registered public accounting firm		12
		Mr. Alves   Senator Snowe		•  Receiving reports from our internal audit, risk management and independent liquidity review functions on the results of risk management reviews and assessments, including the Company’s internal control system over operational and regulatory controls and of the adequacy of the processes for controlling the Company’s activities and managing its risk
		Ms. Zane		•  Reviewing the audit plan, changes in the audit plan, the nature, timing, scope and results of the audit, and any audit problems or difficulties and management’s response
				•  Overseeing our financial reporting activities, including our annual report, and accounting standards and principles followed (including any significant changes in such standards and principles)
				•  Reviewing and discussing with management and the independent auditor, as appropriate, the effectiveness of the Company’s internal control over financial reporting and the Company’s disclosure controls and procedures
				•  Reviewing our major financial risk exposures, the Company’s risk assessment and risk management practices and the guidelines, policies and processes for risk assessment and risk management
				•  In conjunction with the Risk Committee, overseeing our risk guidelines and policies relating to financial statements, financial systems, financial reporting processes, compliance and auditing, and allowance for credit losses
				•  Approving audit and non-audit services provided by the independent registered public accounting firm
				•  Meeting with management and the independent registered public accounting firm to review and discuss our financial statements, any critical audit matters (CAMs) and other matters required to be reviewed under applicable legal, regulatory or NYSE requirements
				•  Establishing and overseeing procedures for the receipt, retention and treatment of complaints regarding accounting, internal accounting controls and auditing matters
				•  Approving the appointment of, evaluating and, when appropriate, approving the replacement of the Chief Audit Executive
				•  Overseeing our internal audit function, including reviewing its organization, performance and audit findings, and reviewing our disclosure and internal controls
				•  Overseeing the Company’s compliance with legal, ethical and regulatory requirements (other than those assigned to other committees of the Board) and related processes and programs

 

    

 

    

COMMITTEES		MEMBERS		PRIMARY RESPONSIBILITIES		# OF MEETINGS         IN 2020
Nominating and Corporate Governance		Senator Snowe (Chair)   Mr. Aguirre   Mr. Parker   Ms. Richie		•  Developing, and recommending to our Board for approval, qualifications for director candidates, taking into account applicable regulatory or legal requirements regarding experience, expertise or other qualifications for service on certain of our Board’s committees, as well as candidates’ ability to contribute to the diversity of the Board		6
				•  Considering potential director nominees properly recommended by the Company’s stockholders, leading the search for other individuals qualified to become members of the Board, recommending to our Board for approval the director nominees to be presented for stockholder approval at the annual meeting, and recommending to the Board nominations for any vacancies that may arise on the Board prior to the annual meeting
				•  Reviewing and making recommendations to our Board with respect to the Board’s leadership structure and the size and composition of the Board and the Board committees
				•  Developing and annually reviewing our corporate governance principles, including guidelines for determining the independence of directors
				•  Annually reviewing director compensation and benefits
				•  Developing and recommending to the Board for its approval an annual self-evaluation process of the Board and the Board’s committees and overseeing the annual self-evaluation of our Board and its committees
				•  Reviewing and, if appropriate, approving or ratifying any “transaction” between the Company and a “related person” required to be disclosed under Securities and Exchange Commission (“SEC”) rules and annually reviewing the use and effectiveness of such policy
				•  Reviewing our policies and procedures with respect to political spending
				•  Reviewing actions in furtherance of our corporate, environmental and social responsibility
				•  Reviewing and resolving any conflicts of interest involving directors or executive officers
				•  Overseeing the risks, if any, related to our corporate governance structure and practices
				•  Identifying and discussing with management the risks, if any, related to our environmental and social responsibility actions and public policy initiatives
COMMITTEES		MEMBERS		PRIMARY RESPONSIBILITIES		# OF MEETINGS IN 2020
Management Development and Compensation		Ms. Richie (Chair)   Mr. Aguirre   Mr. Naylor   Ms. Zane		•  Assisting our Board in developing and evaluating potential candidates for executive positions, including the CEO, and overseeing our management resources, structure, succession planning, development and selection process		7
				•  Evaluating the CEO’s performance and approving and, where required, recommending for approval by the independent members of our Board, the CEO’s annual compensation, including salary, bonus and equity and non-equity incentive compensation
				•  Evaluating the performance of other senior executives and approving and, where required, recommending for approval by our Board, each senior executive’s annual compensation, including salary, bonus and equity and non-equity incentive compensation, in each case, based on initial recommendations from the CEO
				•  Reviewing and overseeing incentive compensation arrangements with a view to appropriately balancing risk and financial results in a manner that does not encourage employees to expose us or any of our subsidiaries to imprudent risks, and are consistent with safety and soundness, and reviewing (with input from our Chief Risk Officer (“CRO”) and the CRO of the Bank) the relationship among risk management policies and practices, corporate strategies and senior executive compensation
				•  Reviewing and overseeing equity incentive plans and other stock-based plans

 

COMMITTEES		MEMBERS		PRIMARY RESPONSIBILITIES		# OF MEETINGS         IN 2020
Risk		Mr. Guthrie (Chair)   Mr. Coviello   Mr. Graylin   Mr. Parker		•  Assisting our Board in its oversight of our enterprise-wide risk management framework, including as it relates to credit, investment, market, liquidity, operational (including cyber security), compliance and strategic risks		7
				•  Reviewing and, at least annually, approving our risk governance framework, and our risk assessment and risk management practices, guidelines and policies, including significant policies that management uses to manage credit and investment, market, liquidity, operational, compliance and strategic risks
				•  Reviewing and, at least annually, recommending to our Board for approval, our enterprise-wide risk appetite, including our liquidity risk tolerance, and reviewing and approving our strategy relating to managing key risks and other policies on the establishment of risk limits as well as the guidelines and policies for monitoring and mitigating such risks
				•  Meeting separately, at least quarterly, with our CRO and the Bank’s CRO to discuss the Company’s risk assessment and risk management practices and related guidelines and policies
				•  Receiving periodic reports from management on the metrics used to measure, monitor and manage known and emerging risks, including management’s view on acceptable and appropriate levels of exposure
				•  Receiving reports from our internal audit, risk management and independent liquidity review functions on the results of risk management reviews and assessments, including the Company’s internal control system over operational and regulatory controls and of the adequacy of the processes for controlling the Company’s activities and managing its risk
				•  Reviewing and approving, at least annually, the Company’s enterprise-wide capital and liquidity framework (including our contingency funding plan) for addressing liquidity needs during liquidity stress events
				•  Reviewing, at least quarterly, in coordination with the Bank’s Risk Committee, the Company’s allowance for credit losses methodology, liquidity, risk appetite, regulatory capital and ratios, and internal capital adequacy assessment processes and our annual capital plan and the Bank’s resolution plan
				•  Reviewing, at least quarterly, information provided by senior management to determine whether we are operating within our established risk appetite
				•  Reviewing the status of financial services regulatory examinations
				•  Reviewing the independence, authority and effectiveness of our risk management function and independent liquidity review function
				•  Approving the appointment of, evaluating and, when appropriate, approving the replacement of the CRO
				•  Reviewing the disclosure regarding risk contained in our annual and quarterly reports filed with the SEC
COMMITTEES		MEMBERS		PRIMARY RESPONSIBILITIES		# OF MEETINGS IN 2020
Technology		Mr. Coviello (Chair)   Mr. Alves   Mr. Graylin   Ms. Keane		•  Reviewing and making recommendations to the Board on major strategies and other subjects relating to technology		5
				•  Reviewing the Company’s approach to technology-related innovation, including the Company’s competitive position and relevant trends in technology and innovation
				•  Reviewing the technology development process to assure ongoing business growth
				•  Providing a forum for dialogue on existing and emerging technologies which present opportunities or threats to the Company’s strategic agenda

 

    

 

    

 

The Board believes that the Lead Independent Director brings to the Board experience, oversight, and expertise from outside the Company that will allow him to provide strong independent oversight of management. The responsibilities and authority of the Lead Independent Director include:

 

•

presiding at all Board meetings at which the Chair is not present, including executive sessions of the independent directors;

 

•

authorization to call meetings of the independent directors;

 

•

serving as a liaison between the Chair and the independent directors;

 

•

setting the agendas for and leading executive sessions for the independent directors;

 

•

facilitating discussion among the independent directors on key issues and concerns outside of Board meetings;

 

•

briefing the CEO on matters arising in executive sessions and serving as a conduit to the CEO of views, concerns, and issues of the independent directors;

 

•

approving information sent to the Board, including the quality, quantity, appropriateness and timeliness of such information;

 

•

along with the Board, monitoring and providing input on the CEO’s performance;

 

•

approving meeting agendas for the Board;

 

•

approving meeting schedules to assure there is sufficient time for discussion of all agenda items;

 

•

authorization to retain outside advisors and consultants who report directly to the Board on Board-wide issues; and

 

•

ensuring that he be available, if requested by stockholders, when appropriate, for consultation and direct communication.

For these reasons, and after considering the perspectives of the independent directors, the views of our significant stockholders, and benchmarking and performance data, the Board determined that this leadership structure is in the best interests of stockholders at this time because it strikes an appropriate balance; with a former CEO serving as Chair, there is unified leadership and continuity, while the Lead Independent Director will hold management accountable for our continued success.

While the Board has determined that this leadership structure is best for the Company and its stockholders at this time, the Board will continue to monitor its effectiveness and appropriateness.

BOARD OF DIRECTORS’

ROLE IN RISK OVERSIGHT

We manage enterprise risk using an integrated framework that includes Board-level oversight, administration by a group of cross-functional management committees, and day-to-day implementation by a dedicated risk management team led by the CRO. The Board (with input from the Risk Committee) is responsible for approving the Company’s enterprise-wide risk appetite statement and framework, as well as certain other risk management policies, and oversees the Company’s strategic plan and enterprise-wide risk management program.

The Board regularly devotes time during its meetings to review and discuss the most significant risks facing the Company and management’s responses to those risks. During these discussions, the President and CEO, the CFO, the CRO, the General Counsel and other members of senior management present management’s assessment of risks, a description of the most significant risks facing the Company and any mitigating factors and plans or practices in place to address and monitor those risks. The Board has also delegated certain of its risk oversight responsibilities to its committees.

The Risk Committee of the Board has responsibility for the oversight of the risk management program, and the three other board committees have other oversight roles with respect to risk management within their respective oversight areas. Several management committees and subcommittees have important roles and responsibilities in administering the risk management program. This committee-focused governance structure provides a forum through which risk expertise is applied cross-functionally to all major decisions, including development of policies, processes and controls used by the CRO and risk management team to execute our risk management philosophy. The enterprise risk management philosophy is to ensure that all relevant risks are appropriately identified, measured, monitored and controlled. The approach in executing this philosophy focuses on leveraging risk expertise to drive enterprise risk management using a strong governance framework structure, a comprehensive enterprise risk assessment program and an effective risk appetite framework.

Responsibility for risk management flows to individuals and entities throughout our Company, including the Board, various Board and management committees and senior management. The corporate culture and values, in conjunction with the risk management accountability incorporated into the integrated Enterprise Risk Government Framework, which includes a

 

    

governance structure and three distinct “Lines of Defense” (as further described below), has facilitated, and will continue to facilitate, the evolution of an effective risk management presence across the Company.

The “First Line of Defense” is comprised of the business areas whose day-to-day activities involve decision-making and associated risk taking for the Company. As the business owner, the first line is responsible for identifying, assessing, managing and controlling that risk, and for mitigating our overall risk exposure. The first line formulates strategy and operates within the risk appetite and risk governance framework. The “Second Line of Defense,” also known as the independent risk management organization, provides oversight of first line risk taking and management. The second line assists in determining risk capacity, risk appetite, and the strategies, policies and structure for managing risks. The second line owns the risk governance framework. The “Third Line of Defense” is comprised of Internal Audit. The third line provides independent and objective assurance to senior management and to the Board and Audit Committee that first and second line risk management and internal control systems and its governance processes are well-designed and working as intended.

ATTENDANCE AT MEETINGS

It is our policy that each director is expected to dedicate sufficient time to the performance of his or her duties as a director, including by attending meetings of the stockholders, and meetings of the Board and Board committees of which he or she is a member.

In 2020, the Board held 13 meetings, including regularly scheduled and special meetings. All directors attended at least 75% of the aggregate of (i) the total number of meetings of the Board (held during the period for which he or she has been a director); and (ii) the total number of meetings held by all committees on which he or she served (during the periods for which he or she has served). All directors attended the 2020 Annual Meeting of Stockholders.

 

MEETINGS OF NON-MANAGEMENT AND INDEPENDENT DIRECTORS

In accordance with our Governance Principles, at the conclusion of every Board meeting, the independent directors have an executive session without any non-independent directors present. The Lead Independent Director of the Board, Mr. Naylor, presides at executive sessions. During executive sessions, the independent directors have complete access to Company personnel as they may request.

COMMUNICATIONS WITH THE BOARD OF DIRECTORS

Stockholders and any interested parties who would like to communicate with the Board or its committees may do so by writing to them via the Company’s Corporate Secretary by email at corporate. secretary@synchronyfinancial.com or by mail at Synchrony Financial, 777 Long Ridge Road, Stamford, Connecticut 06902 or by leaving a voicemail message at (800) 275-3301.

All communications directed to the Board, the Lead Independent Director of the Board or any other members of the Board are initially reviewed by the Company’s Ombuds Leader. Any communications that allege or report fiscal improprieties or complaints about internal accounting controls or other accounting or auditing matters are immediately forwarded to the Chair of the Audit Committee, the General Counsel and the Chief Audit Executive, and after consultation with the Chair of the Audit Committee, may be sent to the other members of the Audit Committee. Any communications that raise legal, ethical or compliance concerns about the Company’s policies or practices are immediately forwarded to the General Counsel and the Chief Compliance Officer. The Lead Independent Director of the Board is advised promptly of any such communication that alleges misconduct on the part of the Company’s management or raises legal, ethical or compliance concerns about the Company’s policies or practices and that the General Counsel or the Chief Compliance Officer believes may be credible, and after consultation with the Lead Independent Director of the Board, such communication may be reported to the other members of the Board or to a committee of the Board.

 

 

    

 

COMPENSATION MATTERS

    

COMPENSATION DISCUSSION AND ANALYSIS   2020 PERFORMANCE
2020 marked a year of unprecedented challenges. The COVID-19 pandemic impacted the economy, Synchrony’s business, as well as our partners, customers and employees. Despite the challenges, Synchrony took quick and decisive action and delivered strong results. We moved to keep our employees safe through work from home arrangements and enhanced our employee benefits and wellness programs, provided relief for our customers and reprioritized resources and work streams. We also took actions to manage our costs and re-direct the business to the new realities. We transformed how we work and reduced our physical site footprint, implemented a temporary freeze on hiring and promotions as well as travel and expense restrictions, insourced certain work at a lower cost, and reduced or eliminated other work.		STRONG NET EARNINGS   $1.4B
Our goal was to successfully manage through the short-term environment, while preparing the Company for a post-pandemic return to strong growth and long-term value creation.   We kept focused on our commitment to executing our commercial strategies which resulted in several key successes:   • Renewed 41 key relationships   • Signed 25 new partnerships   • Launched promising new programs with Verizon and Venmo, as well as within our Payment Solutions and CareCredit businesses.   • Significantly enhanced our digital initiatives and shifted resources to focus on transforming digital capabilities in response to the pandemic, such as digital collections and our efforts to enable consumers to apply for credit in store or pay merchants contactless.		$2.27 DILUTED EARNINGS PER SHARE
• Expanded human capital initiatives at all levels including care for employees in response to the pandemic and executing on our diversity and inclusion (D&I) initiatives.   We accomplished all these commercial strategy successes while maintaining strong relative performance against our direct peers*, ranking first in 2020 efficiency ratio**, second in 2020 return on equity and second in 5-year loan receivables growth. Our Total Shareholder Return (TSR) ranked second among direct peers as we maintained profitability in all four quarters over the past year. During 2020, the Company also operated with a strong balance sheet including liquid assets as a percentage of total assets were 19.1%, CET 1 Capital Ratio was 15.9%, and our allowance coverage ratio rose to 12.5%. All of the above accomplishments are signs of a healthy business that we believe is poised to grow in a post-pandemic rebound.		RETURNED CAPITAL TO STOCKHOLDERS $1.5B
FISCAL YEAR 2020 FINANCIAL PERFORMANCE HIGHLIGHTS   • $1.4 billion Net Earnings   • $2.27 Diluted Earnings Per Share   • Returned $1.5 billion in capital to common stockholders in the form of share repurchases and dividends   • Industry leading Efficiency Ratio of 36.3%   * Direct peers include American Express Company, Capital One Financial Corporation and Discover Financial Services.   ** For Synchrony, Efficiency Ratio represents (i) other expense, divided by (ii) net interest income, after retailer share arrangements, plus other income.

 

The charts below highlight our 5-year receivables growth, 2020 return on equity and 2020 efficiency ratio performance against our direct peers during the 5-year or one-year period ending December 31, 2020. These are key metrics we believe reflect our overall performance and fundamental strengths.

 

The chart below shows our one-year total stockholder return (TSR), which ranks second against our direct peers.

 

 

    

 

    

BUSINESS AND STRATEGIC UPDATES

We believe the relative performance results shown above are a result of our decisive re-prioritizing of strategic actions we took when the pandemic hit in March 2020. Management acted quickly to change how we operate the business and where we allocate capital and resources. After reviewing strategic and other challenges presented by the COVID-19 pandemic, including the impact to our employees and the economy, we evaluated ways to respond to the pandemic’s impact on the Company’s financial performance and to set the foundation for stronger growth post-pandemic. As a result, management, with the input of the Management Development and Compensation Committee (“MDCC” or “Committee”) and the Board of Directors (the “Board”), refocused the organization on the three key areas: our COVID-19 response; our updated strategic priorities; and cost management. Significant accomplishments in 2020 under each area are listed in the chart below and details of our refocused objectives and associated accomplishments are provided later in the CD&A:

 

COVID-19 RESPONSE				STRATEGIC BUSINESS   PRIORITIES				COST MANAGEMENT
• Moved Employees to Work from Home   • Enhanced Employee Benefits and Created New Wellness Programs   • Implemented Pandemic Safety Protocols   • Maintained Customer Service Levels   • Maintained Rigor in Risk & Compliance Requirements   • Provided Partner Support and Customer Relief				• Launched Venmo & Verizon Programs   • Maintained Strong Balance Sheet through Capital and Liquidity Efficiency   • Expanded Hospital Network   • Added Point-of-Sale Capabilities   • Added New Programs including Walgreens   • Renewed Current Programs including Sam’s Club and Mattress Firm   • Added Digital Collections Capabilities   • Supported Growth with Credit Transformation   • Drove D&I Progress				• Actions taken to realize future overall cost reductions of $210 million+ in 2021   • Implemented Hiring Freeze   • Updated Site/Real Estate Strategy   • Leveraged IT Efficiencies   • Restructured Functional and Operational Departments   • Maintained Profitability in all 4 Quarters of 2020

Management took these actions to ensure the continued engagement and motivation of the key talent needed to execute on our long-term strategy and make us stronger and more competitive after the pandemic.

While we refocused the organization on these new objectives in response to COVID-19, we continued to execute on key components of our commercial strategy in 2020:

 

•

Remained focused on investing in our digital and mobile capabilities, bringing to market new features, channels and experiences for our customers and enhancing our existing digital design and user experience including purchase and servicing accounts. These investments drove growth in our existing programs, including by supporting our partners as they adapt to the rapidly evolving environment resulting from the COVID-19 pandemic, and were critical to securing renewals and winning new programs such as Venmo and Verizon.

 

•

In Retail Card, continued to diversify our portfolio by adding promising new partners, including Verizon, and launching the first-ever Venmo Credit Card.

 

•

In Payment Solutions, continued to enhance our Synchrony-branded networks. The Synchrony HOME credit card is accepted at hundreds of thousands of home-related retail locations nationwide, including both partner locations and retailers outside of our program network. The Synchrony Car Care network, which comprises merchants selling automotive parts, repair services and tires, covers more than 1,000,000 locations across the United States. We also renewed our strategic partnership with Mattress Firm.

 

•

In CareCredit, continued to work on broader acceptance and further expansion of the network, launching partnerships with three new health systems; acquiring Allegro Credit, a leading provider of point-of-sale consumer financing for audiology products and dental services; extending Pets Best’s relationship with Progressive; and, in January 2021, announcing a new program agreement with Walgreens to become the issuer of the first co-branded credit card program for a national health retailer in the United States.

 

OUR NAMED EXECUTIVE OFFICERS

The executive officers whose compensation we discuss in this CD&A and whom we refer to as our named executive officers (“NEOs”) for 2020 are Margaret M. Keane, Executive Chair (and former CEO); Brian D. Doubles, President and CEO (and former President); Brian J. Wenzel, Sr., Executive Vice President, CFO; Neeraj Mehta, former Executive Vice President, CEO—Payment Solutions and Chief Commercial Officer; and Thomas M. Quindlen, Executive Vice President and CEO—Retail Card.

On January 11, 2021, as part of a planned succession process, the Board of the Company approved the following events, each effective April 1, 2021:

 

•

Margaret Keane, 61, transitioned roles from CEO to Executive Chair of the Board.

 

•

Brian Doubles, 45, succeeded Ms. Keane to become President and CEO, and joined the Board as a director.

Ms. Keane was appointed Synchrony’s President and CEO in 2014 and has served as a director since 2013. Ms. Keane previously served as President and CEO of the North American retail finance business of GE from 2011 to 2014. Mr. Doubles was Synchrony’s President from May 2019 until April 2021. He previously served as Synchrony’s Executive Vice President and CFO from 2014 to 2019 and as CFO of GE’s North American retail finance business from 2009 to 2014.

MIX OF PAY

A majority of our NEOs’ compensation is performance-based and therefore at risk. The only fixed compensation paid is base salary, which represents approximately 9% of the CEO’s total direct compensation and no more than 22% of the other NEOs’ total direct compensation as shown below in the 2020 mix of direct pay charts for our CEO and CFO:

 

Below we illustrate the pay trend of our CEO pay from 2017 through 2020 which reflects our consideration of both

market pay levels and performance.

 

 

    

 

    

2020 SAY-ON-PAY ADVISORY VOTE AND STAKEHOLDER ENGAGEMENT ON EXECUTIVE COMPENSATION

At our 2020 annual meeting of stockholders, our investors supported the compensation for our named executive officers with more than 91% of the votes approving the advisory say-on-pay item. Our MDCC considers the results of our say-on-pay advisory vote as part of its review of our overall compensation programs and policies. In 2020, we continued our regular engagement with stakeholders regarding our compensation program. In some cases, Richard Hartnack, former Chair of the Board and Chair of the MDCC, participated in the meetings with stockholders, and feedback received was regularly shared and discussed with our full Board and the MDCC. We also engaged with proxy advisory firms and sought regulatory perspectives.

BEST PRACTICE COMPENSATION PROGRAMS AND POLICIES

The MDCC has implemented the following measures as part of our executive compensation programs:

 

 

 

    

 

    

 

CONSUMER FINANCE		DATA PROCESSING		COMMERCIAL BANKS
Ally Financial Inc.		Alliance Data Systems Corporation		Citizens Financial Group, Inc.
American Express Company		Fidelity National Information Services, Inc.		Fifth Third Bancorp
Capital One Financial Corporation		Fiserv, Inc.		Huntington Bancshares Incorporated
Discover Financial Services		Global Payments Inc.		KeyCorp
		Mastercard Incorporated		M&T Bank Corporation
		PayPal Holdings, Inc.		Regions Financial Corporation.
		Visa Inc.

 

2020 COMPENSATION ELEMENTS

The following summarizes the compensation elements used for 2020 to reward and retain our NEOs.

With the onset of the pandemic, the Committee met several times during the year to discuss the impact of the shifting economic, business, and social conditions that began in early March of 2020. At each of the May, July, September, special October, December and January 2021 meetings, the Committee spent significant time assessing incentives and original goals approved by the MDCC, executive holding power, employee engagement, the Company’s response to the pandemic and social unrest, and new strategic priorities among other things. With the assistance of insight from the Committee’s independent advisor on external market reaction balanced with the strategic priorities of the Company, the Committee carefully and thoroughly considered Synchrony’s performance when determining pay decisions for 2020.

BASE SALARY

Base salaries for our NEOs depend on several factors, including the size, scope and impact of their role, market data, leadership skills, length of service and individual performance and contributions.

The MDCC reviews base salaries and benchmark data provided by the MDCC’s independent compensation consultant. During 2020, the MDCC determined to keep base salaries flat for all NEOs other than Mr. Wenzel. In spite of tough business conditions, the Committee felt it necessary and appropriate to continue transitioning Mr. Wenzel’s pay from well below market toward market norms as he gained experience as CFO based on his continued growth and performance in the role. Mr. Wenzel’s annual base salary was increased from $650,000 to $700,000.

ANNUAL INCENTIVE

Annual incentive awards to our NEOs (and approximately 3,500 other employees) are made pursuant to Synchrony’s Annual Incentive Plan (“AIP”) with metric weightings and specific goals for threshold, target and maximum payout levels set in January or February. In January 2020, prior to the onset of the pandemic, the MDCC approved a set of metrics based on the Company operating plan and market conditions at that time. Target incentive opportunities are based on market practices for an officer’s role balanced against internal importance of the role.

Performance measures for 2020 that were approved at the January meeting – before the pandemic surfaced in the US – were based on three weighted quantitative metrics outlined below. These metrics promoted a balanced focus on profit, growth, risk and expenses:

 

•

Net Earnings (50% weighting)—align the interests of executives with the interests of stockholders;

 

•

Average Receivables Growth (25% weighting)—focus executives on expanding the business to drive future net earnings; and

 

•

Efficiency Ratio (25% weighting)—drive cost discipline.

In 2020, the MDCC increased the weight of Net Earnings in our annual cash incentive awards under Synchrony’s Annual Incentive Plan to 50% (from 45% in 2018 and 1/3 in 2017).

The MDCC established minimum, target and maximum performance levels based on Synchrony’s business plan and financial and economic outlook at that time including assumptions about our business (e.g. consumer spending) and partners (e.g. retail companies) that changed radically once the pandemic essentially shut down the economy. Additionally, our goals considered (i) historical performance for Synchrony and our peers, (ii) achieving our pre-pandemic operating plan and/or (iii) beating prior year performance after reflecting accounting or other governance changes.

The original Annual Incentive Plan metrics, weights, goals, approved at the January 2020 MDCC meeting are shown below:

 

				GOALS						ASSOCIATED PAYOUT
METRIC		WEIGHT		MIN		TARGET		MAX		MIN		TARGET		MAX
Net Earnings		50%		$1.9B		$2.2B		$2.6B		50%		100%		200%
Average Receivables Growth		25%		4%		5.5%		7.75%		50%		100%		200%
Efficiency Ratio		25%		33.5%		32.5%		31%		50%		100%		200%

 

    

 

    

 

 

    

 

    

 

2018-2020 LONG-TERM PERFORMANCE AWARDS (PSUS) PAYOUTS

In 2018, the MDCC granted performance-based, long-term Performance Share Units (PSUs) that vested based on financial performance over the 2018–2020 performance period. The metrics used during the 3-year cycle were chosen to balance executives’ focus on profitability, returning capital to investors, and growing the Company. Target payouts set for the 2018–2020 performance period required 9% growth of EPS over the period which was above historical peer growth levels at that time and 18% return on equity which was top quartile of historical peer performance at that time.

The charts below show (i) the performance over the last three years against goals approved at the beginning of the period and (ii) overall negative adjustment to GAAP that neutralized the impact of (a) income from conveyance of the Walmart portfolio, (b) impact of CECL which was unknown at the time goals were set, and (c) the impact of other onetime items including restructuring savings and new deals. The Committee did not make any adjustments to final payout calculations for the negative impact of COVID-19 on Synchrony during the last year of the 3-year cycle:

2018–2020 PERFORMANCE

 

				GOALS						ASSOCIATED PAYOUT						CALCULATION
METRIC		WEIGHT		MIN		TARGET		MAX		MIN		TARGET		MAX		2020 PERFORMANCE		PAYOUT
Cumulative EPS		50%		$9.41		$11.21		$13.22		50%		100%		150%		$11.09		48.4%
Return on Assets		50%		15%		18%		21%		50%		100%		150%		17.9%		49.4%
														Weighted Average:				97.8%

ADJUSTMENTS TO GAAP

 

METRIC		GAAP		ADJUSTMENTS		ADJUSTED NON-GAAP
Cumulative EPS		$11.57		($.48)		$11.09
Return on Equity		18.6%		(0.7%)		17.9%

PERFORMANCE EVALUATIONS FOR OUR NAMED EXECUTIVE OFFICERS FOR 2020

At the beginning of 2020, the Board approved with Ms. Keane’s input, specific objectives that they believed should be achieved for our Company to be successful. These objectives included both quantitative financial measures and qualitative factors, including strategic, operational and risk management considerations, as well as Ms. Keane’s individual performance and contributions, that create long-term shareholder value. Shortly after the pandemic began in 2020, the MDCC agreed on a refocused framework for goals that would address the economic and business impact of the pandemic on Synchrony. The MDCC evaluated Ms. Keane’s 2020 performance against this framework as well as actual financial performance relative to peers to determine her incentive compensation awards. The amount of her incentive compensation was ultimately approved by the MDCC, based on their discretion and judgment. Ms. Keane did not participate in the determination of her compensation.

Each of our other NEOs’ 2020 performance was also evaluated and measured against the refocused framework. The amount of their incentive compensation was ultimately approved by the MDCC, based on the Company’s performance against the refocused framework and based on the MDCC’s discretion and judgment. None of our NEOs participated in the determination of their compensation.

 

    

 

    

 

 

    

 

aligning our executive team with our stockholders. Based on our closing stock price on March 1, 2021 of $40.00, our NEOs had the following ownership base-salary multiples:

 

ANTI-HEDGING AND ANTI-PLEDGING RESTRICTIONS

Our Code of Conduct, which applies to all of our employees (including officers) and directors, includes anti-hedging provisions that prohibit all employees and directors from engaging in transactions in derivatives of or short-selling of Synchrony securities, including buying and writing options. We also maintain an anti-pledging policy that prohibits employees and directors from pledging activity in Synchrony securities.

CLAWBACK POLICY

In 2018, the MDCC expanded the existing clawback policy beyond conduct detrimental to the Company, to include “no fault” financial restatements for all of our named executive officers. Under the revised policy, in the event that the Company is required to prepare an accounting restatement due to material noncompliance of the Company with any financial reporting requirement under the securities laws, the Company will take action to recover from any current or former executive officer who received any annual or long-term incentive compensation paid, awarded, or granted during the three-year period preceding the date on which the Company is required to prepare an accounting restatement, based on the erroneous data, in excess of what would have been paid to the executive officer under the accounting restatement.

Additionally, under the Company’s policy, if it is determined that an employee at or above a designated executive grade under the Company’s compensation structure has engaged in conduct detrimental to the Company, the Bank or any of the Company’s other subsidiaries, the MDCC or, in the case of a Bank employee, the Bank’s Development and Compensation Committee, may take a range of actions to remedy the misconduct, prevent its recurrence, and impose such discipline as would be appropriate. Discipline may vary depending on the facts and circumstances, and may include, without limitation, (a) termination of employment, (b) initiating an action for breach of fiduciary duty, (c) reducing, cancelling or seeking reimbursement of any paid or awarded compensation, and (d) if the conduct resulted in a material inaccuracy in the Company’s financial statements or performance metrics that affects the executive’s compensation, seeking reimbursement of any portion of incentive compensation paid or awarded to the executive that is greater than what would have been paid or awarded if calculated based on the accurate financial statements or performance metrics. If it is determined that an executive engaged in fraudulent misconduct, the MDCC or, in the case of a Bank employee, the Bank’s Development and Compensation Committee, will seek such reimbursement. These remedies would be in addition to, and not in lieu of, any actions imposed by law enforcement agencies, regulators or other authorities, or as otherwise required by any agreement with a stock exchange on which the Company’s securities are listed.

COMPENSATION AND RISK

2020 RISK REVIEW PROCESS

Synchrony’s risk management culture is strongly supported by a thorough risk review process that focuses on whether the risks we take are within our risk appetite framework. In 2020, working cross-functionally, our CEO and senior executives from our risk and human resource teams identified the individuals considered to be Material Risk Takers (“MRTs”) or Material Risk Controllers (“MRCs”). These individuals were required to have annual goals and objectives specifically tied to risk and compliance standards. As part of the annual process, our Control Function Leaders, our CEO, our Audit Committee, MDCC and Risk Committee conducted assessments on MRTs and MRCs, which took into consideration MRT/MRC behavior in relation to their annual goals and objectives as well as any

 

 

    

    

 

adverse risk outcomes during the year. These assessments are included in each MRT/MRC’s annual performance evaluation. By conducting these risk review processes as well as maintaining full transparency on all of our risk management policies and procedures, we believe that we have been able to discourage inappropriate risk taking.

REVIEW OF INCENTIVE COMPENSATION TO NEOS RELATED TO RISK MANAGEMENT

In 2020, the MDCC reviewed the relationship between our risk management policies and practices and the incentive compensation provided to our NEOs to confirm that their incentive compensation appropriately balances risk and reward and determined that our compensation policies and practices are not reasonably likely to have a material adverse effect on our Company. The MDCC met with the CRO to discuss the annual risk assessment conducted with respect to incentive compensation plans in which all employees (including the NEOs) participate, including whether these arrangements had any features that might encourage excessive risk taking that could threaten the value of the Company. The CRO also discussed the risk mitigation factors reviewed in the annual risk assessment, including the balance between financial and non-financial measures as well as the short-term and long-term oriented measures. The MDCC also continues to monitor a separate, ongoing risk assessment by senior management of our broader employee compensation practices consistent with the federal banking regulators’ guidance on sound incentive compensation policies.

RISK REVIEW OF INCENTIVE PLANS

Each year, we conduct a risk analysis on each of our incentive plans using a risk analysis tool. This analysis covered 100% of our incentive eligible population and allowed us to gauge the degree to which our plans contribute to excessive risk taking. The tool looks at six assessment categories (incentive design, strategic alignment/goal setting, pay opportunity, process, monitoring and administration) for each plan and assigns a rating score based on results. All of our incentive plans were rated such that they conform to or exceed key standards for risk management. Additionally, all incentive plans are reviewed each year and approved by our Chief Risk and Chief Human Resource Officers.

We also conduct a risk analysis of third-party incentive plans at our clients and vendors related to our credit products. This assessment also covers design, strategic alignment/goal setting, pay opportunity, process, monitoring and administration. Each of the third-party incentive plans reviewed were rated such that they exceed risk management standards.

ROLE OF INDEPENDENT

COMPENSATION CONSULTANT

Under its charter, the MDCC has the authority to retain such compensation consultants, outside counsel and other advisors as the MDCC may deem appropriate in its sole discretion. In 2020, the MDCC engaged Meridian to provide advice regarding market pay levels, strong pay practices and other executive compensation matters. Meridian also provided advice to the Nominating and Corporate Governance Committee regarding director compensation. Meridian does not provide any other services to the MDCC or to Synchrony. The MDCC has determined that Meridian is independent and does not have any conflicts of interest.

COMPENSATION

COMMITTEE REPORT

The MDCC of the Board of Directors of Synchrony have reviewed and discussed the Compensation Discussion and Analysis with Synchrony’s management, and based on our review and discussions with management, we recommend to Synchrony’s Board of Directors that this Compensation Discussion and Analysis be included in this proxy statement.

Respectfully submitted by the MDCC of the Board.

Laurel J. Richie, Chair

Fernando Aguirre

Jeffrey G. Naylor

Ellen M. Zane

 

 

    

 

    

2020 EXECUTIVE COMPENSATION

The following table contains 2020 compensation information for our NEOs.

2020 SUMMARY COMPENSATION TABLE

 

NAME		YEAR				SALARY				BONUS(1)				STOCK     AWARDS(2)				OPTION     AWARDS(3)				NON- EQUITY INCENTIVE PLAN COMP. (1)				ALL OTHER   COMP. (4)				TOTAL
Margaret			2020				$1,175,000				$2,232,500				$9,000,048				$0				$0				$532,965				$12,940,513
Keane			2019				$1,175,000				$0				$8,000,027				$0				$2,451,000				$543,281				$12,169,308
			2018				$1,175,000				$0				$6,800,052				$1,200,023				$2,681,400				$592,663				12,449,138
Brian			2020				$800,000				$1,140,000				$3,000,035				$0				$0				$241,676				$5,181,711
Doubles			2019				$766,575				$0				$2,400,088				$0				$1,251,600				$198,117				$4,616,381
			2018				$750,000				$0				$1,700,038				$300,006				$855,800				$262,794				$3,868,638
Tom			2020				$850,000				$807,500				$2,300,035				$0				$0				$286,984				$4,244,519
Quindlen			2019				$850,000				$0				$1,397,825				$0				$886,600				$266,319				$3,400,744
			2018				$850,000				$0				$1,182,503				$215,347				$941,300				$281,976				$3,471,126
Neeraj			2020				$735,000				$698,300				$2,200,018				$0				$0				$203,748				$3,837,066
Mehta			2019				$735,000				$0				$1,566,844				$0				$766,600				$226,793				$3,295,237
			2018				$735,000				$0				$1,245,204				$293,646				$827,200				$237,802				$3,338,852
Brian			2020				$653,005				$665,000				$1,800,039				$0				$0				$146,334				$3,264,378
Wenzel			2019				$526,329				$0				$1,285,061				$0				$678,000				$101,632				$2,591,022

(1) Amounts shown under “Bonus” for 2020 reflect incentive paid under refocused framework in 2020; amounts shown in 2019 and 2018 under “Non-Equity Incentive Plan Awards” reflect incentive paid under the Annual Incentive Plan metrics for those respective years.

(2) For 2020, these amounts include the grant date fair value of three-year PSUs based on the probable outcome of the performance conditions: Ms. Keane ($4,950,026); Mr. Doubles ($1,650,028); Mr. Quindlen ($1,265,006); Mr. Mehta ($1,210,007) and Mr. Wenzel ($990,011). The value of these awards, assuming that the highest level of performance conditions will be achieved, are as follows: Ms. Keane ($7,425,039); Mr. Doubles ($2,475,042); Mr. Quindlen ($1,897,509), Mr. Mehta ($1,815,010); and Mr. Wenzel ($1,485,016).

(3) This column represents the aggregate grant date fair value of stock options. Synchrony measures the fair value of each stock option the date of grant using a Black-Scholes option pricing model. Synchrony did not grant any stock options in 2020.

(4) See the “— 2020 All Other Compensation Table” for additional information about All Other Compensation paid in 2020.