This
Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Directors to be used at our Annual Meeting and at any postponements or adjournments
thereof.
INFORMATION ABOUT THE ANNUAL MEETING AND VOTING
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1. Who is entitled to vote? How many votes am I entitled to?
Only
stockholders of record as of the close of business on March 19, 2018 (the "Record Date") may vote at the Annual Meeting. According to EQ Shareowner Services, our transfer agent, there were
125,153,957 shares of common stock outstanding held by approximately 1,806 stockholders as of the Record Date, excluding 1,386,541 shares of unvested time-based restricted stock.
Each
holder of the Company's common stock is entitled to one vote for each share recorded in his or her name on the books of the Company as of the close of business on the Record Date on any matter
submitted to the stockholders for a vote, except that stockholders may vote their shares cumulatively for the election of director nominees if certain conditions are met at the Annual Meeting.
Cumulative voting may only be exercised at the Annual Meeting if: (i) the name of the candidate or candidates for whom such votes would be cast has been placed in nomination prior to the voting
and (ii) at least one stockholder has given advance notice of his or her intention to cumulate his or her votes. If one of the Company's stockholders gives advance notice of the intention to
vote cumulatively, then persons holding the proxies solicited by the Board will exercise his or her cumulative voting rights, at his or her discretion, to vote the shares he or she holds in such a way
as to ensure the election of as many of the Board's nominees as he or she deems possible. As of the date of this Proxy Statement, we have not received written notice from any stockholder of his or her
intention to vote his or her shares cumulatively.
Cumulative
voting provides each stockholder with a number of votes equal to the number of directors to be elected multiplied by the number of shares held by such stockholder, which such stockholder
can then vote in favor of one or more director nominees. For example, if you held 100 shares as of the Record Date, you would be entitled to 1,200 votes which you could then distribute among one or
more director nominees since there are twelve (12) directors to be elected.
2. What different methods can I use to vote?
By Telephone or the Internet
Stockholders can vote their shares via telephone, the internet as instructed in the Notice, or on the enclosed proxy card if you
received a paper copy of the proxy materials. The telephone and internet procedures are designed to authenticate a stockholder's identity, to allow stockholders to vote their shares, and to confirm a
stockholder's instructions have been properly recorded. The telephone and internet voting facilities will close at 11:59 p.m., Eastern Time, on May 13, 2018.
By Mail
Stockholders that receive a paper proxy card may vote by completing, signing and dating their proxy cards and mailing them in the pre-addressed envelopes
that accompany the delivery of paper proxy cards. Proxy cards submitted by mail must be received by us prior to the Annual Meeting. If your shares are held in "street name", you should check with your
bank, broker or other agent and follow the voting procedures required by your bank, broker or other agent to vote your shares.
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In Person
Shares held in your name as the stockholder of record may be voted by you in person at the Annual Meeting. Shares held beneficially in "street name" may
be voted by you in person at the Annual Meeting only if you provide a legal proxy from the bank, broker or other agent that holds your shares giving you the right to vote the shares at the Annual
Meeting.
3. How many shares must be represented at the Annual Meeting to constitute a
"quorum"?
A
majority of the outstanding shares of common stock of the Company must be present at the Annual Meeting, either in person or by proxy, to constitute a quorum. There must be a quorum for the Annual
Meeting to be held. If you return a signed proxy card, you will be counted as being present, even if you abstain from voting. Broker non-votes will also be counted as being present for purposes of
determining a quorum.
4. What is the vote necessary to approve each of the proposals being considered at the Annual
Meeting?
The
election of director nominees proposal requires the affirmative vote of a majority of the votes cast with respect to such director in an uncontested election (meaning the number of shares voted
"for" a nominee must exceed the number of shares voted "against" such nominee). As of the date of this Proxy Statement, none of the director nominees is being contested, but in a contested election
(where the number of director nominees exceeds the number of director nominees to be elected) the standard for election of director nominees is a plurality of the votes cast such that the 12 director
nominees receiving the greatest numbers of votes "for" will be elected as directors without regard to the number of shares voted against such director nominees. The director nominee proposal and the
other proposals being considered at the Annual Meeting are set forth below.
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Proposals
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Votes
Required
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Effect of
Abstentions
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1. Election of Directors
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Majority of votes cast
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No effect
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2. Advisory Vote on Executive Compensation
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Majority of votes cast
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Vote Against
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3. Ratification of the Appointment of Independent Auditors
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Majority of votes cast
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Vote Against
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Broker
non-votes (i.e., proxies from banks, brokers or other nominees indicating that such entities have not received instructions from the beneficial owners or other persons entitled to vote
as to a matter which such bank, broker, or other nominee does not have discretionary power to vote) will be treated as "present" for quorum purposes, but will not have an impact on the vote on any
proposal.
5. If I hold shares of PacWest common stock pursuant to the PacWest 401(k) Plan, will I be able to
vote?
Yes.
You will receive a proxy card for the shares held in your 401(k) plan account which you should return as indicated on the instructions accompanying the proxy card.
6. Why did I receive a Notice of Internet Availability of Proxy Materials instead of paper copies of the proxy
materials?
We
sent our stockholders by mail or e-mail a Notice containing instructions on how to access our proxy materials over the internet and vote online. This Notice is not a proxy card and cannot be used
to vote your shares. If you received a Notice, you will not receive paper copies of the proxy
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materials
unless you request the materials by following the instructions on the Notice or on the website referred to in the Notice.
We
provided some of our stockholders with paper copies of the proxy materials instead of the Notice. If you received paper copies of the Notice or proxy materials, we encourage you to help us save
money and reduce the environmental impact of delivering paper proxy materials to stockholders by signing up to receive all of your future proxy materials electronically as described below under
"How can I receive my proxy
materials electronically in the future?"
.
7. What is the difference between a stockholder of record and a beneficial owner of shares held in "street
name"?
Stockholder of Record.
If your shares are registered directly in your name with our transfer agent, you are considered a stockholder of record with respect to
those shares, and the Notice was sent directly to you by the Company. If you requested printed copies of the proxy materials by mail, you will also receive a proxy card.
Beneficial Owner of Shares Held in Street Name.
If your shares are held in an account at a brokerage firm, bank, broker-dealer or other similar organization, then
you are a beneficial owner of shares held in "street name", and the Notice was forwarded to you by that organization. The organization holding your account is considered the stockholder of record for
purposes of voting at the Annual Meeting. As a beneficial owner, you have the right to instruct that organization how to vote the shares held in your account.
8. Why did I receive more than one Notice or multiple proxy cards?
You
may receive more than one Notice or multiple proxy cards if you hold your shares in different ways (i.e., joint tenancy, in trust or in custodial accounts). You should vote each proxy that
you receive.
9. How can I receive my proxy materials electronically in the future?
To
receive proxy materials electronically by e-mail, follow the instructions described below or in the Notice.
If
you received proxy materials by mail and you would like to sign up to receive these materials electronically in the future, please have your proxy card available and register by going to
www.proxyvote.com
and follow the instructions for
requesting meeting materials, call 1-800-579-1639, or contact your brokerage firm, bank, or other similar organization that holds your shares.
If
you previously agreed to electronic delivery of our proxy materials, but wish to receive paper copies of these materials for the Annual Meeting or for future meetings, please follow the
instructions on the website referred to in the Notice.
10. What do I have to do to vote?
If
your shares are registered in your own name with our transfer agent, you may vote by internet or by telephone as indicated on the proxy card. If you received a paper proxy card, you may also vote
by mail by completing, signing and dating the proxy card and returning it in the enclosed postage-paid envelope.
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If
you mark the proxy card to show how you wish to vote, your shares will be voted as you direct. If you return a signed proxy card but do not mark the proxy card to show how you wish to vote, your
shares will be voted as follows:
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"FOR" the election of each of the director nominees under "
PROPOSAL 1ELECTION OF
DIRECTORS
";
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"FOR" the approval, on an advisory basis (non-binding), of the compensation of the Company's named executive officers under
"
PROPOSAL 2ADVISORY VOTE ON EXECUTIVE COMPENSATION
"; and
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"FOR" the ratification of the appointment of KPMG LLP as the Company's independent auditors for 2018 under
"
PROPOSAL 3RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS
".
11. May I revoke or change my vote?
You
may change or revoke your vote at any time before it is counted at the Annual Meeting by:
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Notifying our Corporate Secretary in writing at 9701 Wilshire Boulevard, Suite 700, Beverly Hills, California, 90212 that you wish to
revoke your proxy;
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Submitting a later-dated proxy card;
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Attending the Annual Meeting and voting in person;
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Calling the toll-free number on the Notice or proxy card not later than 11:59 p.m., Eastern Time, on May 13, 2018 and following
the directions provided; or
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Going to the website listed on the Notice or proxy card, following the instructions provided and submitting your change no later than
11:59 p.m., Eastern Time, on May 13, 2018.
Attending
the Annual Meeting will not automatically revoke your prior proxy. You must comply with one of the methods indicated above in order to revoke your proxy.
If
you hold your shares in "street name", you should receive a proxy card from your bank or brokerage firm asking you how you want to vote your shares. If you do not receive a proxy card, then you
should contact the bank or brokerage firm in whose name your shares are registered and obtain a proxy card from them. Please refer to the information in the materials provided by your bank or
brokerage firm for an explanation of how to vote and how to change or revoke your vote and of the effect of not indicating a vote.
12. How will voting on any other business be conducted?
We
do not know of any business to be considered at the Annual Meeting other than the matters listed in this Proxy Statement. For record holders, if any other business is properly presented at the
Annual Meeting, including any proposal to adjourn or postpone such Annual Meeting, any of the persons named on the proxy card as your designated proxies may vote on such matter in his or her
discretion. If you hold your shares in "street name", please see the materials provided by your bank or brokerage firm for an explanation of how your shares will be voted on any other business.
13. Who pays the cost of soliciting proxies on behalf of the Company?
The
Company pays the cost of preparing, assembling and mailing the proxy materials and soliciting proxies for the Annual Meeting. In addition to the solicitation of proxies by mail, solicitation may
be made by certain directors, officers and employees of the Company or its subsidiaries telephonically, electronically or by other means of communication. These directors, officers and employees
receive
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no
additional compensation for their services. We will reimburse brokers and other nominees for costs incurred by them in mailing proxy materials to beneficial owners in accordance with applicable
rules.
14. How do I get more information about the Company?
The
Notice provides internet instructions on how to access and review the proxy materials including our Annual Report that contains our consolidated financial statements. Our Annual Report includes a
list of exhibits filed with the SEC but does not include the exhibits.
If
you wish to receive copies of the exhibits, please write to the following address:
Investor
Relations
PacWest Bancorp
9701 Wilshire Blvd, Suite 700
Beverly Hills, California 90212
You
may also send your request by e-mail to
investor-relations@pacwestbancorp.com
.
The
Company's Annual Report is included with the proxy materials.
15. What is "householding" and how does it affect me?
Stockholders
of record who have the same address and last name and do not participate in electronic delivery of proxy materials will receive only one copy of the Notice unless we are notified that one
or more of these stockholders wishes to receive individual copies. This "householding" procedure will reduce our printing costs and postage fees.
Stockholders
who participate in householding will continue to receive separate proxy cards. If you are eligible for householding and you and other stockholders of record with whom you share an address
receive multiple copies of the Notice and any accompanying documents, or if you hold Company stock in more than one account, and, in either case, you wish to receive only a single copy of each of
these documents for your household, please contact our transfer agent, EQ
Shareowner Services, P.O. Box 64874, St. Paul, Minnesota 55164-0874 or by telephone at 1-800-468-9716.
If
you participate in householding and wish to receive a separate copy of the Notice and any accompanying documents, or if you do not wish to continue to participate in householding and prefer to
receive separate copies of these documents in the future, please contact EQ Shareowner Services as indicated above.
If
you are a beneficial owner, you can request information about householding from your broker, bank or other holder of record.
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CORPORATE GOVERNANCE
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In this section, you will find:
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Governance
Framework
Board
Committees
Director
Compensation
Director
Nominees
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Governance Framework
The Company is committed to a robust governance framework, and we have adopted the following corporate governance best
practices:
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Directors elected annually
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Board recruitment and refreshment
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Majority vote standard for the election of directors in uncontested elections
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Codified independent lead director role
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Majority independent directors
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Independent key committees
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Annual Board and committee self-assessments
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Annual Board review of senior management succession plans
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Anti-hedging policy
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Active stockholder engagement program
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Stock ownership guidelines for our directors and executive officers
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Clawback provisions for executive incentive compensation
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Double trigger change of control provisions for stock awards
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No tax gross-up payments
Board Leadership Structure
Each year, the Board evaluates the Company's board leadership structure to ensure that it remains an appropriate structure for our Company and stockholders.
Our current structure provides for separate roles of the Chairman of the Board ("Chairman") and Chief Executive Officer ("CEO"), a lead independent director ("Lead Independent Director") and active,
independent directors. We believe this structure provides for open communication between the Board and management and provides the oversight and safeguards necessary to operate our business
successfully.
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Board Leadership Structure
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Chairman of the Board: John M. Eggemeyer, III
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Chief Executive Officer: Matthew P. Wagner
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Lead Independent Director: C. William Hosler
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All Committees chaired by independent directors
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In
Mr. Eggemeyer's role as Chairman, he has responsibility for, among other things:
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chairing meetings of the Company's Board and the annual meeting of stockholders;
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reviewing and approving Board meeting agendas, meeting schedules and information provided to the Board, and ensuring such information is
appropriately disseminated;
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acting as liaison between the non-management members of the Board and management;
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meeting periodically with the CEO for informal discussion concerning major issues involving the Company; and
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providing input to the CNG Committee concerning the performance of the CEO.
In
Mr. Hosler's role as Lead Independent Director, he has considerable authority and responsibility, including the following:
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presiding at all meetings of the Board at which the Chairman is not present, including executive sessions of the independent directors;
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serving as a liaison between the Chairman and the independent directors;
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serving as a member of the Executive Committee (see "Board CommitteesExecutive Committee" below);
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reviewing and approving Board meeting agendas, meeting schedules and information provided to the Board;
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ensuring that matters of concern or of interest to the independent directors are appropriately scheduled for discussion at Board meetings;
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having the authority to call meetings of the independent directors;
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being available for consultation and direct communication with stockholders, as appropriate; and
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performing such other duties as the Chairman or the Board may from time to time delegate or request.
Board Recruitment and Refreshment
The CNG Committee regularly considers the composition of our Board to ensure there is a proper combination of skills and viewpoints. In 2017, the Board
conducted a search to identify new director nominee candidates who would enhance the mix of leadership skills and qualifications on our Board. On May 17, 2017, the Board decreased its size by
one to 12 and filled the vacancy by appointing Mr. Mark T. Yung to serve on the Board until such time as his successor is duly elected and qualified or until his earlier resignation or removal.
During
2017, the Board met 11 times. The independent directors met three times in executive session during 2017, and Mr. Hosler, the Lead Independent Director, presided over these sessions. In
2017, each director (other than Ms. Acker and Mr. Fremder) attended at least 75% of the meetings of the Company's Board (held during the period for which he or she has been a director)
and the committees on which he or she served (held during the period that he or she served).
The
Board's policy regarding director attendance at the Annual Meeting is that directors are encouraged but not required to attend. Five directors attended the 2017 Annual Meeting of Stockholders. The
Company makes appropriate arrangements for directors who choose to attend and reimburses directors for reasonable expenses in connection with his or her attendance.
Independent Director Information
In 2017, independent directors comprised a majority of the Board in accordance with the Company's Guidelines. At least annually, the Board, with the
assistance of the CNG Committee, evaluates director independence based on the Nasdaq listing standards and applicable SEC rules and regulations.
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In
February 2018, the Board affirmatively determined, upon the recommendation of the CNG Committee, that each director nominee, with the exceptions of Messrs. Pieczynski and Wagner, met the
independence requirements of the Nasdaq listing standards and applicable SEC rules and regulations, including the independence requirements for committee membership. In making such determinations, the
Board evaluated banking, commercial, service, familial or other transactions involving each director or immediate family member and their related interests and the Company, if any.
In
identifying and recommending director nominees, the CNG Committee places primary emphasis on the criteria set forth under "Selection of Directors" in our Guidelines, namely: (i) personal
qualities and characteristics, accomplishments and professional reputation; (ii) current knowledge and contacts in the communities in which the Company does business and in the banking industry
or other industries relevant to the Company's business; (iii) ability and willingness to commit adequate time to Board and committee matters; (iv) the skills and personality of director
nominees with those of other directors in creating a Board that is effective, collegial and responsive to the needs of the Company; (v) diversity of viewpoints, backgrounds, experience and
geographical location; and (vi) ability and skill set as well as other relevant experience.
While
the CNG Committee does not set specific, minimum qualifications that a director nominee must meet in order for the CNG Committee to recommend the director nominee to the Board, it believes that
each director nominee should be evaluated based on his or her individual merits taking into account the needs of the Company and the composition of the Board. Through the Board's annual
self-evaluation process, the CNG Committee evaluates the composition of the Board, including whether the diversity of the Board members is appropriate to advise the Company on its risks and
opportunities.
Members
of the CNG Committee may seek input from other members of the Board in identifying possible candidates, and may, at its discretion, engage one or more search firms to assist in the recruitment
of director candidates. The CNG Committee will consider candidates recommended by stockholders against the same criteria as director nominees not proposed by stockholders. Stockholders who wish to
submit director nominees for consideration by the CNG Committee for election at our 2019 Annual Meeting of Stockholders should follow the process detailed in the section entitled "Other
BusinessDirector Nominations" on page 72.
Board Committees
The Board delegates authority to the Risk Committee to oversee specific, risk-related issues while facilitating Board comprehension of the Company's overall
risk tolerance and enterprise-wide risk management activities and effectiveness. The Risk Committee approves and periodically reviews the Company's enterprise-wide risk management policies and
oversees the implementation of the Company's enterprise-wide risk management framework, including the strategies, policies, procedures and systems established by management to identify, assess,
measure and manage the Company's material risk categories, including credit and liquidity risk.
The
Risk Committee assists the Board committees that oversee specific risk-related issues and serves as a resource to management and its committees including, but not limited to, the Enterprise Risk
Management Steering Committee, the Credit Committees, the Model Governance Committee, and the Capital Committee in overseeing risk across the entire Company. The responsibilities of the Risk Committee
include, among other things:
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overseeing management's implementation of an enterprise-wide risk management framework that is commensurate with the Company's structure, risk
profile, complexity, activities and
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including the development and implementation of effective policies, processes, and procedures designed to ensure that risks are properly controlled, quantified and within the Company's risk
appetite and risk tolerance ranges, and periodically reviewing and evaluating such framework, policies, processes and procedures;
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approving and periodically reviewing the Company's enterprise-wide risk management policies;
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at least annually, reviewing and recommending to the Board for approval the Company's annual risk appetite statement and the limits and
tolerance ranges within it;
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reviewing and discussing management's assessment of the Company's aggregate enterprise-wide risk profile and the alignment of the Company's
risk profile with the Company's strategic plan, goals and objectives;
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reviewing reports from management, including the Chief Risk Officer ("CRO"), the Chief Credit Officer ("CCO"), the Chief Financial Officer
("CFO"), and the Capital Committee, and, if appropriate, other Board committees, regarding matters relating to risk management and/or the Company's risk and compliance organization, including those
regarding emerging risks and other selected risk topics and/or enterprise-wide risk issues; and
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overseeing other risk management activities, including internal or external credit review, credit management and administration, allowance for
credit losses, lending compliance, capital planning and stress testing, and operations and systems risk.
The
Company's CRO, CCO, CFO, and Executive Vice President, Manager of Operations and Systems report on a quarterly basis to the Risk Committee, or more frequently as needed, regarding areas within
their supervision that pertain to the Company's risk profile. The Risk Committee also receives reports from the Company's external credit review consultants.
A
copy of our Risk Committee charter, last approved in February 2018, may be obtained on the Company's website at
http://www.pacwestbancorp.com
under the section entitled "Corporate
Governance". During 2017, the Risk Committee met five times.
The ALM Committee monitors the asset and liability strategies of the Company to ensure compliance with all applicable regulatory and reporting requirements
and Company policies. The objective of the Company's ALM policy is: (i) to manage balance sheet and off-balance sheet assets and liabilities in an effort to maximize the spread between interest
earned on our interest-earning assets and interest paid on our interest-bearing liabilities, (ii) to maintain acceptable levels of interest rate risk, and (iii) to ensure that the
Company has the ability to pay liabilities as they come due and fund continued asset growth. The Company's ALM activities are typically discussed monthly by the executive management members
responsible for managing ALM activities. The responsibilities of the ALM Committee include, among other things:
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Reviewing the Asset/Liability Management Policy, the Investment Policy, the Interbank Liability Policy, the Bank Owned Life Insurance Policy,
the Liquidity Management Policy, the Volcker Rule Policy, the Warrant Policy, and the Contingency Funding Policy;
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Reviewing with management investment processes and procedures which focus on the strategic directions of the Company;
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Reviewing the execution of asset/liability management and investment strategies;
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Reviewing the established monitoring and reporting system which focuses on measuring the Company's exposure to interest rate risk and liquidity
position;
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Monitoring performance of the Bank's investment portfolio and strategies; and
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Reviewing and approving changes to Treasury policies and recommending approval by the Board.
A
copy of our ALM Committee charter, last approved in February 2018, may be obtained on the Company's website at
http://www.pacwestbancorp.com
under the section entitled "Corporate Governance". During 2017, the ALM Committee met four times.
The Audit Committee assists the Board in its oversight responsibilities for: (i) the quality and integrity of the Company's financial statements,
(ii) the Company's compliance with legal and regulatory requirements, (iii) the independent auditors' qualifications and independence, (iv) the performance of the independent
auditors and the Company's internal audit function, and (v) in conjunction with the Company's Risk Committee, the Company's risk management functions.
The
responsibilities of the Audit Committee include, among other things:
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With respect to the independent auditors: (i) to be directly responsible for the appointment, compensation, retention and oversight of
the work of the independent auditors (including the resolution of disagreements between management and the independent auditors regarding accounting and financial reporting matters), (ii) to be
directly responsible for the appointment, compensation, retention and oversight of the work of any other registered public accounting firm engaged for the purpose of preparing or issuing an audit
report or to perform audit, review or attestation services, and (iii) to pre-approve, or to adopt appropriate procedures to pre-approve, all audit and non-audit services to be provided by the
independent auditors.
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With respect to the internal audit function: (i) in conjunction with the Company's Chief Audit Executive ("CAE"), to select, engage,
oversee, and retain the Company's internal auditors, and to review and evaluate qualifications, performance and independence of the Managing Partner and other members of the internal audit function
(whether out-sourced or performed in-house), and (ii) to review reports from the internal auditors regarding internal controls and procedures, the Company's financial controls, accounting
system, operational controls and procedures, regulatory and legal compliance and changes to the Company's policy and procedures manuals.
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With respect to accounting principles and policies, financial reporting and internal control over financial reporting: (i) to review
from management, the internal auditors and the independent auditors a timely analysis of significant issues and practices relating to accounting principles and policies, financial reporting and
internal control over financial reporting, and (ii) to review and assess the adequacy of the Company's Related-Party Transactions Policy ("RPT Policy") at least annually and recommend any
changes to the Board and to review and approve all related-party transactions of the Company.
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With respect to reporting and recommendations, to review with management disclosures contained in press releases and financial statement
filings with the SEC.
Management
is responsible for the preparation, presentation and integrity of the Company's financial statements and the effectiveness of internal control over financial reporting. Management is
responsible for maintaining appropriate accounting and financial reporting principles and policies and internal controls and procedures that provide for compliance with accounting standards and
applicable laws and regulations. The independent auditors are responsible for planning and carrying out a proper audit of the Company's annual financial statements, reviewing the Company's quarterly
financial statements prior to the filing of each quarterly report on Form 10-Q, annually reporting on
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the
effectiveness of the Company's internal control over financial reporting and other procedures. Our independent auditors, KPMG LLP, and its team members have extensive, long-term knowledge
of the Company and the banking industry.
The
Board determined that the following nominees to the Audit Committee are financially literate and that each of Messrs. Burke, Carlson, Hosler, Molvar and Yung
1
and
Ms. Lester is qualified as an audit committee financial expert with accounting or related financial management expertise, in each case in accordance with the rules of the SEC and the listing
standards of Nasdaq. For additional information regarding the background and relevant experience of Messrs. Burke, Carlson, Hosler, Molvar, and Yung and Ms. Lester, please see the
biographies of director nominees under the section entitled "Proposal 1: Election of Directors" beginning on page 21. Information regarding the functions performed by the Audit Committee can be
found in the "Audit Committee Report" included in this Proxy Statement and in the Audit Committee charter.
A
copy of our Audit Committee charter, last approved in February 2018, may be obtained on the Company's website at
http://www.pacwestbancorp.com
under the section entitled "Corporate
Governance". During 2017, the Audit Committee met 12 times.
Compensation, Nominating and Governance Committee
The CNG Committee reviews, approves, and makes recommendations to the Board on matters concerning the compensation and benefits, including equity
compensation, of the Company's executive officers, directors, and employees. The CNG Committee is responsible for the creation of compensation principles and processes that are designed to balance
risk and reward in a way that does not encourage unnecessary risk taking by our employees. The CNG Committee also ensures that our compensation programs are competitive and aligned with the long-term
interests of our stockholders. The responsibilities of the CNG Committee include, among other things:
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Reviewing and approving corporate goals and objectives relevant to the compensation of the CEO, evaluating the performance of the CEO in light
of those goals and objectives, and recommending to the Board for determination, the CEO's compensation level based on this evaluation;
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Determining the compensation of all other executive officers of the Company;
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Approving any new equity compensation plan or any material change to an existing plan where stockholder approval is not required, making
recommendations to the Board with respect to the Company's incentive compensation plans and equity-based plans, and the Company's 401(k) plan(s) or other employee benefit plans, overseeing the
activities of the individuals and committees responsible for administering these plans, and discharging any responsibilities imposed on the Committee by any of these plans;
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Approving the annual performance measures, performance targets, performance weights, achievement levels and award opportunities under the
Company's Executive Incentive Plan ("EIC Plan");
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Reviewing, at least annually, all components of compensation of the CEO and executive officers of the Company, including perquisites; and
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With respect to equity based compensation, approving grants of equity based awards to eligible employees.
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1
-
Mr. Yung
will become an Audit Committee member immediately following his election to the Board at the Annual
Meeting.
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The
CNG Committee engages an independent compensation consultant no less than once every three years, when there is a significant change in the Company or when meaningful changes to compensation or
the Company's compensation program are proposed. The CNG Committee reviews both compensation and performance of peer companies as just one among several factors to inform its decision-making process
so it can set total compensation levels commensurate with the Company's performance and strategic initiatives.
In
late 2015 and early 2016, Willis Towers Watson ("WTW") served as the independent compensation consultant to the CNG Committee, and WTW reported directly to the CNG Committee with respect to the
creation of a long-term incentive compensation plan that aligned with stockholder interests. In late 2016 and early 2017, the CNG Committee again engaged WTW to: (i) review the total
compensation of the CEO and (ii) review the application of the long-term incentive program. At the request of the CNG Committee, during each of these engagements, WTW met with members of
management for purposes of gathering information on management proposals and recommendations to be presented to the CNG Committee.
The
CNG Committee assists the Board in promoting the best interests of the Company and its stockholders through the implementation of sound corporate governance principles and practices, which helps
to frame our organization-wide risk management policies, including oversight of the Company's Clawback Policy and Stock Ownership Guidelines. The CRO, the General Counsel and the Executive Vice
President, Human Resources formed a working group to evaluate all incentive-based compensation plans as they pertain to certain groups of employees of the Company. This group regularly reviews Company
performance, our compensation principles and processes, trends, regulatory developments, and other topics. This review confirmed that our incentive compensation plans encourage behavior that is within
the Company's risk tolerance, are compatible with effective controls and risk management, and are supported by strong corporate governance, including a risk and control monitoring process.
For
further information on the Company's processes and procedures for the consideration and determination of director compensation, please see the section entitled "Director Compensation" on
page 22. For further information on the Company's processes and procedures for the consideration and determination of executive compensation, please see the section entitled "Compensation
Discussion and Analysis" beginning on page 32.
A
copy of our CNG Committee charter, last approved in February 2018, may be obtained on the Company's website at
http://www.pacwestbancorp.com
under the section entitled "Corporate
Governance". During 2017, the CNG Committee met six times.
During 2017, the Executive Committee did not meet. The primary purpose of the Executive Committee is to meet when it is impractical for the full Board to meet
and act on behalf of the Board, to the full extent permitted by law. In addition, the Executive Committee is a forum to review other significant matters not addressed by the other Board committees and
to make appropriate recommendations to the Board. The Executive Committee has not met since 2012.
Board's Role in Risk Oversight
We believe that effective risk management is of primary importance to the success of our Company because our business exposes us to credit, interest rate,
liquidity, compliance, strategic, reputational, legal, human resources, capital, operations, information systems and information technology risks. As a result, we have a comprehensive enterprise-wide
risk management process that monitors, evaluates and manages the risks we assume in conducting our activities.
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The
Board is responsible for overseeing the Company's risk management processes and effectively challenging management's strategic initiatives. Our Board's oversight of risk management is managed
through the responsibilities of the following Board standing committees: (i) the Risk Committee, (ii) the ALM Committee, (iii) the Audit Committee, and (iv) the CNG
Committee, and each of these committees is responsible for monitoring risks within their areas of responsibility as well as the Company's risks. Each committee reports to the Board, and the Board has
overall responsibility for ensuring that overall risk awareness and risk management is appropriate. Our Risk Appetite Statement details the policies and procedures for assessing, measuring and
controlling these risks, with key performance indicators tracked quarterly and reported to the Board through a risk dashboard.
The
Board engages in regular risk-management discussions with the CEO; CFO; CCO; CRO; CAE; Executive Vice President, Manager of Operations and Systems; Executive Vice President, Human
Resources; Executive Vice President, General Counsel; and other Company officers as the Board may deem appropriate.
As
a general matter, except for cases where a particular committee may choose to meet in executive session, all Board members are invited (but not required) to attend the regular meetings of all Board
committees. We believe that this open and collaborative structure provides for a more informed Board and also helps the Board understand and monitor the various internal and external risks to which
the Company may be exposed.
Our
Company's management is responsible for day-to-day risk management. Our Internal Audit, Risk Management, Information Technology, Human Resources, Legal, Accounting, Finance and Treasury
departments, among others, monitor Company-wide policies and procedures and the day-to-day risk oversight of the Company. We believe that this approach to risk management adequately addresses the
risks facing the Company.