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Section 1: DEF 14A (DEF 14A)


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Two Blue Hill Plaza, Second Floor, Pearl River, NY 10965
(845) 369-8040

Notice of Annual Meeting
of Stockholders


Date and Time:
May 26, 2021
11:00 a.m. Eastern Time


 
Place:
Virtual meeting; please visit
www.virtualshareholdermeeting.com/STL2021

April 14, 2021

To Our Stockholders:

We are pleased to invite you to attend the Annual Meeting of Stockholders of Sterling Bancorp to be held on Wednesday, May 26, 2021 at 11:00 a.m. Eastern Time. This year's meeting will be a virtual meeting of stockholders where stockholders as of the record date of April 5, 2021 are invited to attend.

During 2020, Sterling Bancorp (the "Company") and its primary operating subsidiary, Sterling National Bank ("Bank"), navigated the challenging environment created by the COVID-19 pandemic, which particularly impacted the New York City region where we operate. Protecting our colleagues and our customers was our foremost concern. In a short period of time, we pivoted the organization to allow non-essential colleagues to work remotely and began the process of outfitting our essential frontline colleagues with personal protective equipment.

As the impact of the pandemic strained our economy, we quickly responded and believe the Company's corporate governance and risk management foundation allowed us to operate in an effective and stable manner. The dedication of our colleagues, the resilience of our business model and the high quality of our client relationships, together with advancements made in our digital transformation, allowed us to achieve many milestones in 2020. Central to our values is a commitment to advancing diversity and inclusion within our organization. In 2020, we redoubled our commitment to supporting organizations that share these values and provide much needed support to the communities in which we operate. The milestones achieved during 2020 are highlighted within this Proxy Statement and our publicly disclosed documents, including our 2020 Annual Report on Form 10-K, which was filed on February 26, 2021.

Specific to our environmental sustainability efforts, while our business model does not include production or distribution in a more traditional sense, we examined ways to reduce waste, promote recycling, migrate to the Cloud environment, conserve energy and educate our colleagues and customers about the benefits on the responsible stewardship of our natural resources. During 2021, we will be publishing our first Environmental, Social and Governance Report to showcase the organization's efforts within these areas. The Company's efforts to build on strong governance, social responsibility and environmental conservation initiatives will continue to be a priority for the Company.

Against the backdrop of an incredibly challenging business environment, the Company remained focused on operating a high performing regional bank and executing on our strategic plan, with the goal of delivering sustainable earnings growth that can drive strong stockholder value. We thank our clients for trusting in our high-level of service, our colleagues for their dedication and you, our stockholders, for your loyalty and support of our Company. We look forward to continuing to provide you with the enduring performance you have come to know from Sterling Bancorp.

Sincerely,

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Richard O'Toole
Chairman of the Board of Directors
  Jack L. Kopnisky
President and Chief Executive Officer

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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held On May 26, 2021

 

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Two Blue Hill Plaza, Second Floor,
Pearl River, NY 10965
(845) 369-8040

Notice is hereby given that the annual meeting of stockholders (the "Annual Meeting") of Sterling Bancorp (the "Company," "Sterling," "we," "our" or "us") will be held on Wednesday, May 26, 2021, at 11:00 a.m. Eastern Time. This year's Annual Meeting will be held virtually via live webcast. You will be able to participate in the Annual Meeting, vote, and submit your questions during the meeting by visiting www.virtualshareholdermeeting.com/STL2021. The sixteen digit secure control number has been provided to you either via the enclosed proxy card or on the Notice of Internet Availability of Proxy Material. This secure control number will allow you access to provide your electronic ballot as well as participate in the meeting.

Whether or not you plan to participate in the Annual Meeting, we strongly encourage you to review the details found within the Proxy Statement and submit your proxy. You may vote by telephone, Internet or mail by following the instructions in the Proxy Card.

At the Annual Meeting, we will ask you to consider and vote on these proposals:

         

PROPOSALS FOR CONSIDERATION AND ACTION

PROPOSAL #1:

 

Election of Twelve (12) directors for a one (1) year term until their successors are elected and qualified;

PROPOSAL #2:

 

Amendment to the Sterling Bancorp Amended and Restated 2015 Omnibus Equity and Incentive Plan;

PROPOSAL #3:

 

Approval by advisory (non-binding) vote of the compensation of the named executive officers;

PROPOSAL #4:

 

Ratification of the appointment of Crowe LLP as the independent registered public accounting firm for the year ending December 31, 2021; and

PROPOSAL #5:

 

The transaction of such other business as may properly come before the Annual Meeting or any adjournment or postponement thereof.

IN THE CASE OF PROPOSAL 1, THE BOARD OF DIRECTORS RECOMMENDS VOTING "FOR" EACH NOMINEE. FOR PROPOSALS 2, 3 AND 4, THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE PROPOSALS.

The Proposals as presented are discussed in detail in the proxy statement accompanying this Notice of Annual Meeting of Stockholders ("Notice"). Any action may be taken on the proposals at the Annual Meeting on the date specified above, or on the date or dates of the Annual Meeting if it were required to be adjourned or postponed. Stockholders of record at the close of business on April 5, 2021 are the stockholders entitled to vote at the Annual Meeting, and any adjournments or postponements thereof.


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IMPORTANT DATES

 

April 5, 2021

 

RECORD DATE: You can vote if you were a common stockholder of record on April 5, 2021

 

April 14, 2021

 

PROXY STATEMENT, FORM OF PROXY AND OUR ANNUAL REPORT ON FORM 10-K DISTRIBUTED

 

April 14, 2021

 

NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIALS DISTRIBUTED (the "Notice")


 


The Notice of Internet Availability of Proxy Material contains instructions on how to access an electronic copy of our proxy materials, including our Proxy Statement and our Annual Report on Form 10-K for the year ended December 31, 2020. The Notice also contains instructions on how to request a paper copy of the proxy materials.

 

         

VOTING OPTIONS

Stockholders have three options for submitting their vote before the 2021 Annual Meeting:

GRAPHIC     ONLINE



GRAPHIC   PHONE



GRAPHIC   MAIL
You may cast your vote electronically via the Internet at www.proxyvote.com.
1-800-690-6903


By signing, dating and returning the proxy card via mail to:Vote Processing c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.

THE PROMPT RETURN OF PROXIES OR VOTE BY INTERNET OR
TELEPHONE WILL SAVE THE EXPENSE OF FURTHER REQUESTS FOR PROXIES

Please vote as soon as possible to promptly record your vote, even if you plan to participate in the Annual Meeting via the live webcast.

By Order of the Board of Directors

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June Ann Byrnes
Corporate Secretary
Pearl River, New York,
April 14, 2021


TABLE OF CONTENTS

PROXY STATEMENT

  1

Stockholders Entitled to Vote

  1

Internet Availability of Proxy Materials

  1

Participating in the Annual Meeting

  1

Guide to Voting Matters

  2

Voting Procedures

  3

STRATEGIC HIGHLIGHTS

  4

PROPOSAL I—ELECTION OF DIRECTORS

  6

Director Nominees

  6

Board Diversity, Experience and Tenure

  13

Director Compensation

  14

Transactions with Certain Related Persons

  17

PROPOSAL II—APPROVAL OF AMENDMENT TO THE STERLING BANCORP AMENDED AND RESTATED 2015 OMNIBUS EQUITY AND INCENTIVE PLAN

  18

Key Provisions of the Omnibus Plan

  20

Types of Awards

  22

U.S. Tax Treatment of Options and Awards

  24

PROPOSAL III—NON-BINDING VOTE TO APPROVE EXECUTIVE COMPENSATION

  26

PROPOSAL IV—RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

  27

Audit Fees

  27

Audit Related Fees

  27

Tax-Related Fees

  27

All Other Fees

  27

Audit Committee Report

  28

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, DIRECTORS AND EXECUTIVE OFFICERS

  29

Delinquent Section 16(a) Reports

  31

CERTAIN INFORMATION ABOUT OUR EXECUTIVE OFFICERS

  32

Qualifications and Business Experience

  32

CORPORATE GOVERNANCE AND RELATED MATTERS

  35

Governance and Compensation Highlights

  35

Corporate Governance Best Practices

  35

Board Participation and Committee Compensation

  36

Communications with the Board

  37

Committee Responsibilities

  38

Candidates For Director

  40

Board Leadership Structure and the Board's Role in Risk Oversight

  41

Board Evaluation

  43

COMMITMENT TO SUSTAINABILITY

  44

COMPENSATION DISCUSSION & ANALYSIS

  48

Executive Summary

  48

Our Strategic Accomplishments

  49

Executive Compensation Philosophy, Benchmarking and Components

  49

Highlights of 2020 Compensation Program and Impact of Pandemic

  50

2020 Say-on-Pay Vote

  53

Role of the Compensation Committee

  53

Role of Management

  53

Role of the Compensation Consultant

  54

2020 Peer Group

  54

Executive Compensation Program and Pay Decisions

  56

Base Salary

  56

Annual Cash Incentive Compensation

  56

Target Annual Incentive Opportunities

  57

2020 STI Plan Payouts—Corporate Performance Assessment

  57

STI Plan Payouts—Business Unit and Individual Performance Assessment

  59

Final STI Plan Payouts—2020

  60

Equity Compensation/Long-Term Incentives

  60

Restricted Stock (25% of Target Awards)

  60

Performance Shares (75% of Target Awards)

  60

2020 Long-Term Incentive Grants

  60

2021 Long-Term Incentive Grants

  61

Vesting of Fiscal 2018-2020 Performance Share Awards

  61

Other Matters

  62

Impact of Accounting and Tax on the Form of Compensation

  62

Adjustment or Recovery of Awards

  63

Consideration of Prior Amounts Realized

  63

Stock Ownership Guidelines

  63

Anti-Hedging and Pledging Restriction Policy

  64

Employment Arrangements

  64

Compensation Committee Report

  65

Compensation Committee Interlocks and Insider Participation

  65

Compensation Practice and Risk

  65

Executive Compensation

  66

Summary Compensation Table

  66

Grants of Plan-Based Awards

  67

Stock Awards and Stock Option Grants Outstanding

  68

Options Exercised and Stock Vested

  69

Non-qualified Deferred Compensation for NEOs

  69

Employment-Related Agreements and Potential Payments Upon Termination or Change in Control

  70

Jack Kopnisky

  70

Employment Agreement Terms

  70

Potential Payments Upon Termination or Change in Control

  71

Luis Massiani

  72

Employment Agreement Terms

  72

Potential Payments Upon Termination or Change in Control

  73

Michael E. Finn, Rodney Whitwell and Thomas X. Geisel

  73

Employment Agreement Terms

  73

Potential Payments Upon Termination or Change in Control

  74

Beatrice Ordonez

  75

CEO Pay Ratio

  76

OTHER MATTERS

  77

Principal Holders

  77

Stockholder Proposals

  77

Advance Notice of Business to be Conducted at an Annual Meeting

  77

HOUSEHOLDING OF PROXY STATEMENTS AND ANNUAL REPORTS

  78

MISCELLANEOUS

  78

ANNEX A—STERLING BANCORP AMENDED AND RESTATED 2015 OMNIBUS EQUITY AND INCENTIVE PLAN

  A-1

ANNEX B—GAAP RECONCILIATION

  B-1

Sterling Bancorp - 2021 Proxy Statement     |    i


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PROXY STATEMENT

PROXY STATEMENT

Sterling Bancorp
Two Blue Hill Plaza, Second Floor
Pearl River, NY 10965
(845) 369-8040

ANNUAL MEETING OF STOCKHOLDERS

This Proxy Statement is furnished in connection with the solicitation of proxies on behalf of the Board of Directors (the "Board") of Sterling Bancorp ("Sterling," "we," "our," "us" or the "Company") to be used at the annual meeting of stockholders (the "Annual Meeting"), which will be held on May 26, 2021, at 11:00 a.m. Eastern Time, and all adjournments and postponements of the Annual Meeting. The accompanying Notice of Annual Meeting and this Proxy Statement are first being mailed to stockholders of record on or about April 14, 2021.

Stockholders Entitled to Vote

Holders of record of Sterling's shares of common stock, par value $0.01 per share, as of the close of business on April 5, 2021 (the "Record Date"), are entitled to one (1) vote for each share then held. As of the Record Date, there were 192,567,485 shares of common stock issued and outstanding. The presence in person or by proxy of a majority of the outstanding shares of common stock entitled to vote is necessary to constitute a quorum at the Annual Meeting. Stockholders who log on to our virtual meeting of stockholders with their 16-digit control number are considered present in person.

Holders of Sterling's depositary shares, each representing a 1/40th interest in a share of Sterling's Series A Non-Cumulative Perpetual Preferred Stock, referred to as Depositary Shares, are not entitled to vote at the Annual Meeting.

Internet Availability of Proxy Materials

We are making this Proxy Statement and our Annual Report on Form 10-K for the year ended December 31, 2020, filed on February 26, 2021 (the "2020 Annual Report"), available to our stockholders on our website at www.sterlingbancorp.com.

On or about April 14, 2021 we mailed to our stockholders a Notice of Internet Availability containing instructions on how to access our proxy materials, including this Proxy Statement and our 2020 Annual Report. The Notice of Internet Availability also instructs you on how to access your proxy card in order to vote through the Internet, by telephone or by mail. If you received a Notice of Internet Availability by mail, you will not receive a printed copy of the proxy materials in the mail. Other stockholders, in accordance with their prior requests, have received e-mail notification of how to access our proxy materials and vote via the Internet, or have been mailed paper copies of our proxy materials and proxy card or vote instruction form.

Internet distribution of proxy materials is designed to expedite receipt by stockholders, lower the cost of the Annual Meeting, and conserve natural resources. However, if you received a Notice of Internet Availability by mail and would like to receive a printed copy of our proxy materials, please follow the instructions for requesting such materials contained on the Notice of Internet Availability. If you have previously elected to receive our proxy materials electronically, you will continue to receive these materials via e-mail unless you elect otherwise.

Participating in the Annual Meeting


Sterling will host its Annual Meeting live via the Internet. A summary of the information you need to participate in the Annual Meeting online is provided below:

When?

 

Where?

 

Who?

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11:00 am Eastern Time
Wednesday, May 26, 2021

 
Virtual Meeting
www.virtualshareholdermeeting.com/STL2021

 
Common Stockholders of Record
as of April 5, 2021


Stockholders may vote and submit questions while attending the Annual Meeting on the Internet

Information on how to attend and participate via the Internet is posted at www.virtualshareholdermeeting.com/STL2021

Please have your 16-digit control number to enter the Annual Meeting

Webcast replay of the Annual Meeting will be available for up to one year after the meeting date on the Company's website at www.sterlingbancorp.com

Sterling Bancorp - 2021 Proxy Statement     |    1


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PROXY STATEMENT

Guide to Voting Matters

Stockholders are being asked to vote on the following matters at the Sterling Bancorp (the "Company," "Sterling," "we," "our" or "us") 2021 Annual Meeting:


Proposal
  Our Board's
Recommendation

  Votes Required for Approval
Proposal I. Election of Directors (page 6)

The Board of Directors of the Company (the "Board") believes that the selected twelve (12) director nominees possess the necessary qualifications, skills and experiences to continue to contribute to an effective and well-functioning Board and that, individually and as a whole, the director nominees possess the necessary qualifications to provide effective oversight of the business and quality advice and counsel to the Company's management.

  FOR EACH
DIRECTOR
NOMINEE


 
Plurality of the votes entitled to be cast in the election of directors is required to elect all proposed twelve (12) directors to the Company's Board.

Proposal II. Approval of Amendment to the Sterling Bancorp Amended and Restated 2015 Omnibus Equity and Incentive Plan (page 18)

The Board has amended the Sterling Bancorp Amended and Restated 2015 Omnibus Plan to increase the number of shares reserved for issuance thereunder by 3,500,000 shares (for an aggregate 10,500,000 shares). The Board believes the amendments are in the best interests of our stockholders as they align with the goals set out by the Company's compensation program.


 

FOR

 

Affirmative vote of at least a majority of the votes represented at the Annual Meeting either in person or by proxy is required to approve the amendments to the Amended and Restated 2015 Omnibus Equity and Incentive Plan.

 

 

 

 

 

Proposal III. Advisory Non-binding Vote to Approve the Compensation of the Named Executive Officers ("Say-on-Pay") (page 26)

The Company has designed its compensation program to provide a significant portion of total compensation based on performance relative to short-term and long-term financial goals and to encourage executives to maintain meaningful stock ownership in the Company. The Company seeks a non-binding advisory vote from its stockholders to approve the compensation of its named executive officers as described in the Compensation Discussion and Analysis section beginning on page 48 and the compensation tables section beginning on page 56. The Board and the Compensation Committee will take into account the outcome of the Say-on-Pay advisory vote when considering future executive compensation decisions.


 

FOR

 

Advisory (non-binding) vote; affirmative vote of at least a majority of the votes represented at the Annual Meeting, either in person or by proxy, is required to approve the compensation proposal for the Company's named executive officers.

2     |    Sterling Bancorp - 2021 Proxy Statement


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PROXY STATEMENT

Proposal
  Our Board's
Recommendation

  Votes Required for Approval
Proposal IV. Ratification of the Appointment of Crowe LLP as Independent Registered Public Accounting Firm (page 27)

The Audit Committee of the Board (the "Audit Committee") has appointed Crowe LLP to serve as the Company's independent registered public accounting firm for the year ending December 31, 2021. The Audit Committee and the Board believe that the continued retention of Crowe LLP to serve as the Company's independent registered public accounting firm is in the best interests of the Company and its stockholders. As a matter of good corporate governance, stockholders are being asked to ratify the Audit Committee's selection of the independent registered public accounting firm.

  FOR   Affirmative vote of at least a majority of the votes represented at the Annual Meeting, either in person or by proxy, is required to approve the ratification of Crowe LLP as the Company's independent registered public accounting firm for the year ending December 31, 2021.

Voting Procedures

Stockholders who execute proxies in the form solicited hereby retain the right to revoke them in the manner described below. Unless so revoked, the shares represented by such proxies will be voted at the Annual Meeting and all adjournments and postponements thereof. Proxies solicited on behalf of the Board will be voted in accordance with the directions given. Where no instructions are indicated, validly executed proxies will be voted "FOR" each of the nominees in Proposal I, "FOR" Proposals II, III and IV set forth in this Proxy Statement and in the discretion of the persons appointed as proxies upon the transaction of such other business as may properly come before the Annual Meeting. Other than the matters listed in the attached Notice of Annual Meeting of Stockholders, the Board knows of no additional matters that will be presented for consideration at the Annual Meeting.

Brokers holding shares in street name for clients who are beneficial owners of such shares are prohibited from giving a proxy to vote such clients' shares on "non-routine" matters in the absence of specific instructions from such clients. This is commonly referred to as a "broker non-vote." Your broker is entitled to vote your shares on the "routine" matter of ratification of the selection of Crowe LLP as the Company's independent registered public accounting firm even if you do not provide voting instructions to your broker. Each of the other proposals is considered a "non-routine" matter.

As to the election of directors, the proxy card being provided by the Board enables a stockholder to vote FOR all nominees proposed by the Board, to WITHHOLD authority for all nominees or to vote FOR ALL EXCEPT one or more of the nominees being proposed. Voting for all nominees except those you list on the proxy card is the equivalent of withholding your vote for those directors you have listed. Nominees are elected by a plurality of votes cast. Proxies in which the authority to vote for the nominees being proposed is withheld and broker non-votes will not affect the outcome of the vote.

As to the amendments of the Sterling Bancorp Amended and Restated 2015 Omnibus Plan, a stockholder may vote FOR or AGAINST the proposal or ABSTAIN from voting on the proposal. The affirmative vote of a majority of the votes cast with respect to the proposal is required. Abstentions from voting, as well as broker non-votes, if any, are not treated as votes cast and, therefore, will have no effect on the proposal.

As to the advisory (non-binding) vote of the compensation of the named executive officers (the "Say-on-Pay Vote"), the proxy card being provided by the Board enables a stockholder to vote for the approval of the Company's executive compensation, the compensation tables and narrative discussions of named executive officer compensation in this Proxy Statement. If this proposal receives a majority of the votes cast, then it will be considered approved. Broker non-votes will not affect the outcome of the vote. This vote is advisory and not binding on the Company, the Board or the Compensation Committee of the Board (the "Compensation Committee"). As a result, the Board may decide that it is in the best interests of the Company and its stockholders to maintain the Company's executive compensation, even if it is not approved by stockholders.

Each stockholder, whether or not he, she or it plans to participate in the Annual Meeting via live webcast, is requested to vote electronically via the Internet or by telephone or by signing, dating and returning the proxy card without delay in the postage-paid envelope if provided. Any proxy given by the stockholder may be revoked at any time before it is voted. A proxy may be revoked by filing with the Corporate Secretary of Sterling a written revocation or a duly executed proxy card bearing a later date. Any stockholder present at the Annual Meeting may revoke his, her or its proxy and vote electronically on each matter brought before the Annual Meeting. Stockholders who log on to our virtual meeting of stockholders with their 16-digit control number are considered present in person. Further, abstentions and broker non-votes are counted as present for purposes of determining the presence or absence of a quorum for the transaction of business. However, if you are a stockholder whose shares are not registered in your own name, you will need additional documentation from your record holder in order to vote at the Annual Meeting.

Sterling Bancorp - 2021 Proxy Statement     |    3


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STRATEGIC HIGHLIGHTS

STRATEGIC HIGHLIGHTS

Despite the challenging environment in 2020, we executed on our strategy of operating a high performing regional bank that focuses on serving middle market commercial clients and consumers through a team-based, relationship-oriented single point of contact model. The competencies of our executive leadership team, the implementation of strengthened processes and controls throughout the organization, our robust risk management platform and the resilience of our business model was evident in our full year operating results. Throughout the year, we continuously reinvented the Company to drive results and align incentives to create stockholder value. Financial and strategic highlights for 2020 are detailed below.

Strategic Action
  2020 Results
   
Strength of the
Business Model

 
 

Strategic measures taken in 2019 and during the first quarter of 2020 proved critical to our operating effectiveness.

We successfully navigated through a near zero interest rate environment.

   
Loan and Deposit
Growth

 
 

Commercial loans were $20.0 billion at December 31, 2020. While the economic slow down caused a dampening of loan demand in our core markets, we were nevertheless able to grow our commercial loan book by 5.5% over the prior year.

Core deposits were $21.5 billion at December 31, 2020, an increase of 4.5% over the prior year. During 2020, the Company was proactive in adjusting deposit rates and reducing higher cost funding.

   
Core Competencies    

We leveraged the strength of our existing core competencies to address the needs of our colleagues, clients and the communities we serve.

We focused on key strategies that allowed us to navigate the difficult business environment while proactively managing risk and advancing our strategic initiatives.

   
Strategic
Non-Performing
Loan Portfolio Sales


 
 

Sold non-performing Residential Portfolio of $53.2 million.

Sold small balance Transportation Finance Loans and Leases of $106.2 million.

Payroll Protection Program loans of $461.7 million to a third-party vendor to handle the forgiveness process.

   
Corporate Actions    

Subordinated Notes Debt Offering with a total value of $225 million closed during the fourth quarter of 2020.

Stock Repurchase Program reinstated during the fourth quarter of 2020 with 1.9 million shares repurchased in the quarter and 6.8 million for the full year.

   
Tangible Equity    

Our diversified asset and deposit generation capabilities helped drive continued earnings and capital generation and allowed us to grow tangible capital and tangible book value per common share.

   
Strong Capital Position    

The Company and the Bank remain well-capitalized.

   
Organizational Enhancement    

Luis Massiani promoted to Chief Operating Officer of the Company. Mr. Massiani has provided critical strategic leadership for the Company. In his expanded role will continue to shape the strategic and operational direction of the Bank.

Beatrice Ordonez joined the Company in January, 2021 and transitioned into the role of Chief Financial Officer as of March 1, 2021. Ms. Ordonez has experience in the financial technology industry having worked in relationship-centric, technology driven companies.

   
Sterling National Bank Ranked #50 in Forbes' 2021 List of America's Best Banks    

This list gauges the financial condition of each of America's 100 largest banks and thrifts by assets and is based on a combination of ten key metrics related to growth, profitability, capital adequacy and asset quality. Sterling continues to maintain its high ranking position.

4     |    Sterling Bancorp - 2021 Proxy Statement


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STRATEGIC HIGHLIGHTS


PREPARED FOR MARKET CHALLENGE AND PIVOT TOWARD THE FUTURE

Enhanced
Enterprise Risk and Credit Risk Management

 
 

We continued to strengthen and enhance the Enterprise Risk Management Program in response to the COVID-19 pandemic and the evolving business environment.

We responded to the challenging credit environment by proactively managing credit risk while providing support to borrowers.

   
Advancements in Technology,
Digital Capabilities
and Digital Partnerships


 
 

The Company's continued investment in technology allowed it to pivot to a more digital operating environment.

Future Forward Program was rolled out in 2020 to strengthen our digital foundation and to address the future technology needs of our Company, colleagues and clients.

Enhanced oversight over technology risk, including cyber security risk.

Continued to build out our digital bank capabilities, including the launch of our Banking as a Service program which will allow us to partner with financial technology companies and other non-bank financial institutions to expand opportunities with enhanced services to clients while increasing shareholder value.

   
Single Point of Contact Model    

Expansion of our Single Point of Contact model with a focus on growth in high potential segments.

Focus on an extraordinary sales and service experience for our clients through our expertise and with digital tools.

Restructure of the Financial Center network to provide a dedicated team of Business Banking and Private Banking colleagues focused on acquiring and managing the business and personal financial needs of our Business Banking and Private Banking relationship clients.

Reinforced the delivery of a seamless client experience by strengthening the coordination between the Business Banking and Private Banking and the Financial Center teams and our back office Customer Contact Center.

Sterling Bancorp - 2021 Proxy Statement     |    5


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PROPOSAL I

PROPOSAL I—ELECTION OF DIRECTORS

The Board currently consists of twelve (12) members, each of whom serves a one-year term which will expire May 26, 2021 at our Annual Meeting.

Each director-nominee ("nominee") has agreed to serve if elected. If any nominee is not able to serve, the Board may designate a substitute or reduce the number of directors serving on the Board. Proxies will be voted for the nominees shown below (or if not able to serve, such substitutes as may be designated by the Board). The Board has no reason to believe that any of the nominees will be unable to serve. The nominees will be elected by a plurality of the votes entitled to be cast in the election of directors. A plurality is generally defined as the excess of the votes cast in favor of a nominee over those cast in favor of any other nominee. You may vote for up to the number of nominees named, and the nominees receiving the largest number of "FOR" votes will be elected to the director positions to be filled. Except as indicated herein, there are no arrangements or understandings between any of the nominees and any other person pursuant to which such nominees were selected. See page 45, "Candidates for Director".

The Nominating and Corporate Governance Committee of the Board (the "Nominating and Corporate Governance Committee") has nominated the current twelve (12) existing members of the Board to serve as directors for a one (1) year term until the 2022 annual meeting of stockholders:

John P. Cahill

 

Robert Giambrone

 

James J. Landy

 

Richard O'Toole

Navy E. Djonovic

 

Mona Aboelnaga Kanaan

 

Maureen Mitchell

 

Ralph F. Palleschi

Fernando Ferrer

 

Jack Kopnisky

 

Patricia M. Nazemetz

 

William E. Whiston

 

     
THE BOARD RECOMMENDS A VOTE "FOR" THE ELECTION OF EACH NOMINEE AS DIRECTOR.

*        *        *

Director Nominees

Set forth below are the nominees, their ages and their positions with Sterling, and the length of their directorship. The term for directors currently serving on the Board expires as of May 26, 2021 at our 2021 Annual Meeting. If elected at the 2021 Annual Meeting, each nominee's term will expire at the 2022 annual meeting of stockholders. Depending on when/how each director joined the Company, his or her "length of directorship" may commence prior to any of the following: (i) the closing of the October 2013 merger (the "Provident Merger") of Sterling Bancorp ("Legacy Sterling") with and into Provident New York Bancorp ("Legacy Provident"), whereby Provident Bank ("Legacy Provident Bank") converted into a national bank charter, and Legacy Provident and Legacy Provident Bank (with its name change to Sterling National Bank, the "Bank") adopted the Sterling name; (ii) the June 2015 merger of Hudson Valley Holding Corp. ("Legacy HVB") with and into Sterling Bancorp (the "HVB Merger"); or (iii) the October 2017 merger of Astoria Financial Corporation ("Legacy Astoria") with and into Sterling Bancorp (the "Astoria Merger").

The Company believes that its Board representation ensures oversight of the Company, as well as implementation of its strategic plan and business model. The Nominating and Corporate Governance Committee, on behalf of the entire Board, reviews not only the personal qualities and characteristics in a Board member or potential candidate, but also the individual's diversity of viewpoints, background, skills and experience with respect to accounting and finance, management and leadership, visions and strategy, business operations, business judgment, industry knowledge, knowledge of the community served and corporate governance.

The following discussion includes the business experience for the past five (5) years for each of our nominees, as well as the qualifications that were the basis for the Board determinations that each nominee should serve on the Board.

DIRECTOR INDEPENDENCE

The Board has determined that each of the current Company directors, with the exception of Mr. Kopnisky, is "independent" as defined by the New York Stock Exchange ("NYSE") listing standards and the rules of the Securities and Exchange Commission (the "SEC"). Mr. Kopnisky is not independent due to his position as our CEO. We believe we comply with all applicable requirements of the SEC and NYSE relating to director independence and the composition of the committees of our Board.

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PROPOSAL I

 
 
 
GRAPHIC JACK KOPNISKY
President & CEO, Non-Independent Director

Age: 65

Director since: 2011

Began Board Service with Legacy Provident


Committees:
Executive
Enterprise Risk

CAREER AND EDUCATION HIGHLIGHTS:

SELECTED DIRECTOR QUALIFICATIONS:


 
 
 
GRAPHIC RICHARD O'TOOLE
Chairman, Independent Director

Age: 64

Director since: 2012

Began Board Service with Legacy Provident


Committees:
Executive (Chair)
Compensation
Nominating and Corporate Governance

CAREER AND EDUCATION HIGHLIGHTS:

SELECTED DIRECTOR QUALIFICATIONS:


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PROPOSAL I

 
 
 
GRAPHIC JOHN P. CAHILL
Independent Director

Age: 62

Director since: 2011

Began Board Service with Legacy HVB


Committees:
Nominating & Corporate Governance (Chair)
Compensation
Executive

Other current public company directorships:
Ecoark Holdings, Inc.

CAREER AND EDUCATION HIGHLIGHTS:

SELECTED DIRECTOR QUALIFICATIONS:


 
 
 
GRAPHIC NAVY E. DJONOVIC
Independent Director

Age: 55

Director since: 2010

Began Board Service with Legacy Provident


Committees:
Audit

CAREER AND EDUCATION HIGHLIGHTS:

SELECTED DIRECTOR QUALIFICATIONS:


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PROPOSAL I

 
 
 
GRAPHIC FERNANDO FERRER
Independent Director

Age: 70

Director since: 2002

Began Board Service with Legacy Sterling


Committees:
Nominating and Corporate Governance
Enterprise Risk

CAREER AND EDUCATION HIGHLIGHTS:

SELECTED DIRECTOR QUALIFICATIONS:


 
 
 
GRAPHIC ROBERT GIAMBRONE
Independent Director

Age: 66

Director since: 2015

Began Board Service with Legacy Astoria


Committees:
Audit
Enterprise Risk

CAREER AND EDUCATION HIGHLIGHTS:

SELECTED DIRECTOR QUALIFICATIONS:


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PROPOSAL I

 
 
 
GRAPHIC MONA ABOELNAGA KANAAN
Independent Director

Age: 53

Director since: 2019


Committees:
Audit
Enterprise Risk

CAREER AND EDUCATION HIGHLIGHTS:

SELECTED DIRECTOR QUALIFICATIONS:


 
 
 
GRAPHIC JAMES J. LANDY
Independent Director

Age: 66

Director since: 2000

Began Board Service with Legacy HVB


Committees:
Enterprise Risk

CAREER AND EDUCATION HIGHLIGHTS:

SELECTED DIRECTOR QUALIFICATIONS:


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PROPOSAL I

 
 
 
GRAPHIC MAUREEN MITCHELL
Independent Director

Age: 69

Director since: 2018



Committees:
Compensation
Enterprise Risk
Executive

CAREER AND EDUCATION HIGHLIGHTS:

SELECTED DIRECTOR QUALIFICATIONS:


 
 
 
GRAPHIC PATRICIA M. NAZEMETZ
Independent Director

Age: 71

Director since: 2013

Began Board Service with Legacy Astoria


Committees:
Compensation (Chair)
Nominating and Corporate Governance

Other current public company directorships:
YRC Worldwide Inc.

CAREER AND EDUCATION HIGHLIGHTS:

SELECTED DIRECTOR QUALIFICATIONS:


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PROPOSAL I

 
 
 
GRAPHIC RALPH F. PALLESCHI
Independent Director

Age: 74

Director since: 1996

Began Board Service with Legacy Astoria


Committees:
Compensation
Nominating and Corporate Governance

CAREER AND EDUCATION HIGHLIGHTS:

SELECTED DIRECTOR QUALIFICATIONS:


 
 
 
GRAPHIC WILLIAM E. WHISTON
Independent Director

Age: 67

Director since: 2013

Began Board Service with Legacy HVB


Committees:
Enterprise Risk (Chair)

CAREER AND EDUCATION HIGHLIGHTS:

SELECTED DIRECTOR QUALIFICATIONS:


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PROPOSAL I

BOARD DIVERSITY, EXPERIENCE AND TENURE

Consistent with the Company's Corporate Governance Guidelines, the composition of the board includes a broad range of skills, expertise, industry knowledge and diversity of opinion. Four of our directors are women; and all but one of our Board members are independent under the rules of the NYSE.

GRAPHIC

The Nominating and Corporate Governance Committee maintains, and periodically updates, non-exclusive "Board membership criteria" to assist the Committee in evaluating candidates for the Board. These criteria, and an indication of the criteria satisfied by the nominees, are presented below:

GRAPHIC

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PROPOSAL I

DIRECTOR COMPENSATION

GENERAL

The following discussion outlines the compensation that was earned by non-employee directors during 2020. Directors who are employed by us do not receive additional compensation for their service on the Board.

The Company uses a combination of cash and stock to attract and retain qualified candidates to serve on the Board. Equity compensation provides the opportunity for directors to be compensated based on the Company's total stockholder return and aligns directors' interests with those of the Company's stockholders. The Nominating and Corporate Governance Committee reviews director compensation and benefits annually and makes recommendations to the Board. See the "2020 Director Compensation" table below.

2020 BOARD COMPENSATION

In 2020, the structure of our Board compensation was unchanged from 2018. The Nominating & Corporate Governance Committee reviews the Board's compensation relative to our peer group.

CASH RETAINER

For 2020, directors of the Company received an annual retainer fee of $48,000. Directors also received a fee of $1,500 per Board meeting attended and $1,000 per committee meeting attended. The Chair of each committee received an additional retainer fee for his or her oversight of the committee. The fee structure for the Chair's fees are as follows: the Audit Committee Chair received $20,000; the Compensation and Nominating and Corporate Governance Committee Chairs each received $10,000; and the Executive and Enterprise Risk Committee Chairs each received $7,500. Directors who are also employees of the Company are not eligible to receive any fees for their service as a director.

STOCK AWARDS AND STOCK OPTION GRANTS

For service rendered during 2020, each non-employee director of the Company was granted a restricted stock award valued at $50,000, on December 30, 2020 the award vested upon grant.

2021 BOARD COMPENSATION

The Nominating and Corporate Governance and the Compensation Committees engaged the Company's Compensation Consultant, Compensation Advisory Partners ("CAP"), to perform an evaluation of the Company's Director Compensation program benchmarking the program against the director compensation of our Company's peer group. Based on this study, it was determined that Sterling's current average total director compensation was 17% below the peer median. Results of the study were reviewed by the Nominating and Corporate Governance and Compensation Committees in 2020 and it was jointly determined that, in light of the market conditions in which the Company was operating, any modification to Director Compensation would be addressed at a later time.

During 2021, the Nominating and Corporate Governance and Compensation Committees reviewed an updated Director Compensation program study provided by CAP and determined to increase Director Compensation in 2021 to align with the growth of the Company and director compensation of our peer group. The Director Compensation program for 2021 increases the annual cash retainer to $65,000, eliminates fees for attending Board and Committee meetings and increases the equity award to $70,000 in restricted stock with a one-year vesting period. The fee structure for the Chair of each of the Committes will be as follows: the Audit Committee Chair will receive $30,000; the Compensation Committee Chair will receive $20,000, the Nominating and Corporate Governance Chair will receive $20,000; the Enterprise Risk Committee Chair will receive $20,000; the Executive Committee Chair will receive $10,000 and the Credit Risk Sub-Committee Chair will receive $10,000. The Non-Executive Chair of the Board will receive an additional retainer of $70,000.

The non-employee Directors members received an annual restricted stock award of 3,433 shares valued at approximately $70,000 at the date of the grant based on the Company's stock price as of February 8, 2021. The restricted shares are subject to a one-year vesting requirement.

STERLING NATIONAL BANK DEFERRED DIRECTOR FEE PLAN

Effective January 1, 2016, the Company amended, restated and renamed the 2005 Deferred Director Fee Plan to the Sterling National Bank Deferred Director Fee Plan (the "Deferred Fee Plan"). Pursuant to the Deferred Fee Plan, non-employee directors may elect to defer all or a portion of their Board fees earned during a calendar year. Directors Cahill and Ferrer participated in the Deferred Fee Plan in 2020. Each director may express to the committee appointed to administer the Deferred Fee Plan a preference as to how the

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PROPOSAL I

director's deferral account should be hypothetically invested among the investment options designated by the committee (which may include the Company's common stock).

Under the terms of the Deferred Fee Plan, deferred amounts are credited to a bookkeeping account established in the name of each director. Deferral accounts are generally paid to a director in quarterly installments over five (5) years (unless the director elects, in compliance with Internal Revenue Code Section 409A, payment in a lump sum or payment in installments over a different number of years) commencing as of the earliest of (a) the date elected by the director, (b) the director's attaining age 75, or (c) the director's separation from service. In the event of the director's death, the director's deferral account is paid to the director's designated beneficiary in the same form as it would otherwise have been paid to the director, commencing in the first calendar quarter after death. In the event of a change in control of the Company or the Bank, directors' deferral accounts are required to be paid to directors in the form of a lump sum payment within 60 days after the change in control. A director may request an early distribution from the director's deferral account in the event of hardship within the meaning of Internal Revenue Code Section 409A. Distributions are made in cash, except that to the extent that a director's deferral account is hypothetically invested in shares of Company common stock, in which case the distribution is made in the form of Company common stock (subject to the director being eligible to elect distribution in cash after a change in control).

All obligations arising under the deferred compensation agreements are payable from the Company's general assets; however, the Company may establish a rabbi trust to help ensure that sufficient assets will be available to pay the benefits under the deferred compensation agreements.

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PROPOSAL I

The following table sets forth compensation information with respect to our non-employee directors during 2020.

2020 DIRECTOR COMPENSATION
Name
(a)

Fees Earned or
Paid in Cash
($)
(b)

Stock
Awards
($)
(c)(1)

Change in
Pension Value and
Non-Qualified
Deferred
Compensation
Earnings
($)
(d)

All Other
Compensation
($)
(e)

Total
($)
(f)

John P. Cahill $ 79,750 (2) $ 49,992 $ $ $ 129,742
Navy E. Djonovic 72,000 49,992 121,992
Fernando Ferrer 71,250 (2) 49,992 121,242
Robert Giambrone 74,250 49,992 124,242
Mona Aboelnaga Kanaan 76,250 49,992 126,242
James. J. Landy 76,750 49,992 126,742
Maureen B. Mitchell 71,750 49,992 121,742
Patricia M. Nazemetz 78,750 49,992 128,742
Richard O'Toole 137,250 49,992 187,242
Ralph F. Palleschi 68,250 49,992 118,242
Burt Steinberg 90,250 49,992 140,242
William E. Whiston 76,250 49,992 126,242
(1)
Represents the value of restricted stock awards based on the Company's closing stock price on December 30, 2020 of $17.97.
(2)
Amount includes the contribution to the Deferred Fee Plan pursuant to the terms of such plan.

DIRECTOR OUTSTANDING EQUITY AWARDS AND OPTIONS

The following table sets forth information concerning phantom stock exercisable for Company common stock for each non-employee director outstanding at December 31, 2020, whether granted in 2020 or earlier. There were no unexercised options or unvested restricted stock units held by any non-employee director outstanding at December 31, 2020, whether granted in 2020 or earlier.

 
Stock Awards
Name
(a)

Number of Shares of Phantom Stock
that have not been exercised
(#)
(b)

John P. Cahill 678 (1)
Navy E. Djonovic
Fernando Ferrer
Robert Giambrone
Mona Aboelnaga Kanaan
James. J. Landy
Maureen B. Mitchell
Patricia M. Nazemetz
Richard O'Toole
Ralph F. Palleschi
Burt Steinberg
William E. Whiston
(1)
Grant of phantom stock exercisable immediately upon settlement, pursuant to the terms of the Company's Directors Deferred Compensation Plan.

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PROPOSAL I

Transactions with Certain Related Persons

The Sarbanes-Oxley Act of 2002 generally prohibits loans by the Company to its executive officers and directors. However, the Sarbanes-Oxley Act contains a specific exemption from such prohibition for loans by the Bank to its executive officers and directors in compliance with federal banking regulations, including Regulation O. Federal regulations require that all loans or extensions of credit to executive officers and directors of insured financial institutions must be made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons and must not involve more than the normal risk of repayment or present other unfavorable features. The Bank is therefore generally prohibited from making any new loans or extensions of credit to executive officers and directors at different rates or terms than those offered to the general public. Notwithstanding this rule, federal regulations permit the Bank to make loans to executive officers and directors at reduced interest rates if the loan is made under a benefit program generally available to all other employees and does not give preference to any executive officer or director over any other employee.

Consistent with the Company's Code of Ethics, proposed transactions with related persons must be disclosed to the Company. The Board must approve such transactions with directors or executive officers to the extent required under the Code of Ethics. The director or executive officer is required to disclose all non-privileged information the person has, and thereafter may not partake in any decision-making process. The Board evaluates the transaction, and may approve, reject, or set other conditions in its discretion. To qualify for approval, a transaction must be on the same terms and conditions as would be reasonable if entered into with an unrelated third party. In the case of a proposed transaction with or related to a director, the Board will also consider the effect, if any, the transaction would have on the independence of the director.

A number of our directors and officers and certain business organizations associated with them have been clients of our banking and other subsidiaries. During the year ended December 31, 2020, all extensions of credit to these persons, which were made only by the Bank, have been made in compliance with Regulation O. We have adopted written policies to implement the requirements of Regulation O of the Federal Reserve Board. Regulation O is made applicable to the bank by provisions of the Home Owners' Loan Act and the regulations of the Office of Comptroller of the Currency. Under these policies implemented for the purposes of the Bank, extensions of credit that exceed regulatory thresholds must be approved by the Board of the Bank.

During 2020, there have not been any transactions to which we have been a party, in which the amount involved in the transaction exceeded $120,000, and in which any of our directors, executive officers or holders of more than 5% of our capital stock had or will have a direct or indirect material interest other than equity and other compensation, termination, change in control and other arrangements, which are described in the sections captioned "Executive Compensation—Potential Payments Upon Termination or Change in Control"

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PROPOSAL II

PROPOSAL II—APPROVAL OF AMENDMENT TO THE
STERLING BANCORP AMENDED AND RESTATED
2015 OMNIBUS EQUITY AND INCENTIVE PLAN

Under the Sterling Bancorp Amended and Restated 2015 Omnibus Equity and Incentive Plan (the "Omnibus Plan"), 726,056 shares remain available for future grants as of April 5, 2021. At the Annual Meeting, stockholders will be asked to approve an amendment to the Omnibus Plan in order to increase the number of shares reserved for issuance thereunder by 3,500,000 shares (10,500,000 shares in the aggregate). As of April 5, 2021 there were options outstanding to purchase 262,675 shares of our common stock granted under the Omnibus Plan and our previous equity incentive plans, and 726,056 shares of common stock available for issuance pursuant to awards to be granted under our Omnibus Plan. We are required to obtain stockholder approval of the further amended and restated Omnibus Plan under the rules of the NYSE. This approval is also necessary to permit us to grant incentive stock options ("ISOs") to employees under Section 422 of the Internal Revenue Code, as amended (the "Code"). The further amended and restated Omnibus Plan was approved by the Board on March 31, 2021.

If the further amended and restated Omnibus Plan is approved by our stockholders, the following amendments will be made to the Omnibus Plan: (1) an increase of the shares available for issuance under the Omnibus Plan with the maximum number of shares available for issuance increased to 10,500,000 shares from 7,000,000 shares; and (2) related minor administrative changes.

Our Board believes the amendment to the Omnibus Plan to increase the number of shares reserved thereunder is necessary for the Company to have the ability to grant shares of the Company's common stock in the form of stock options, stock appreciation rights ("SARs"), restricted stock, restricted stock units ("RSUs"), deferred stock, other stock-based awards, performance awards, substitute awards, annual cash incentive awards, and any other stock awards permitted under the Omnibus Plan in order to attract and retain qualified non-employee directors and executive personnel. The increase in shares will help the Company achieve this goal. It is the judgment of the Board that the proposed amendments to the Omnibus Plan are in the best interests of the Company and its stockholders.

This proposal, and the effectiveness of the further amended and restated Omnibus Plan will not affect awards previously granted under the Omnibus Plan or the shares currently reserved for issuance under the Omnibus Plan; however, as indicated above, only 726,056 shares of common stock remain available for grant under the Omnibus Plan as of April 5, 2021. If the further amended and restated Omnibus Plan is approved by our stockholders at the Annual Meeting, our stockholders may suffer further dilution upon the exercise of future awards granted under the Omnibus Plan, to the extent that more shares are authorized for issuance, and are issued, under the further amended and restated Omnibus Plan.

Key Considerations

The Board of Directors anticipates that the 3,500,000 shares being requested under this proposal will be sufficient to grant stock-based incentive compensation to our employees and non-employee directors for three years, assuming historical grant practices, but may vary based on changes in participation and Sterling's stock price. In determining the number of additional shares to request in this amendment, the Board of Directors considered our "Burn Rate"(1) and "Overhang,"(2) which we believe are reasonable and reflective of our responsible approach to equity compensation. The Board of Directors considered the expansion of our equity program in recent years to include 30% of our colleagues. We believe granting equity awards below the executive level strengthens the link between our compensation program and long-term shareholder value and is in the best interest of our shareholders.

 
2018
2019
2020
Average

Stock awards/units granted

813,239 1,544,013 1,652,071

Stock options granted

Total awards granted

813,239 1,544,013 1,652,071

Basic weighted avg. shares outstanding

224,299,488 205,679,874 194,084,358

Burn Rate(1)

0.36 % 0.75 % 0.85 % 0.65 %

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PROPOSAL II

(1)
"Burn rate" is a measure of annual share usage. Our three-year average burn rate is 0.65%, which approximates the median of our 2020 peer group. Burn rate was calculated based on share utilization information for our fiscal years ended December 31, 2018, 2019, and 2020.
(2)
"Overhang" is a measure of potential dilution. As of April 5, 2021, our overhang was 2.2%, which is below the 25th percentile of our 2020 peer group. Overhang was calculated based on share information as of April 5, 2021 as follows:
A Non-vested stock awards/stock units outstanding(3) 3,257,226
B Stock options outstanding(4) 262,675
C Shares remaining available under the 2015 Omnibus Plan 726,056
D Common stock issued and outstanding 192,567,485
Overhang [(A + B + C) / D](2) 2.2 %
(3)
The non-vested stock awards/stock units outstanding on April 5, 2021 had a weighted average grant date fair value of $19.37.
(4)
The stock options outstanding on April 5, 2021 had a weighted average exercise price of $11.41 and a remaining life of 2.60 years.

Including the proposed increase of 3,500,000 shares to the shares available for issuance, our overhang would be 4.0%, which is between the 25th percentile and median relative to our 2020 peer group.

BRIEF SUMMARY OF THE FURTHER AMENDED AND RESTATED OMNIBUS PLAN

Following is a brief description of the Omnibus Plan. The full text of the further amended and restated Omnibus Plan is attached as Annex A to this proxy statement, and the following description is qualified in its entirety by reference to such Annex A.

The Omnibus Plan provides for the granting of stock options, SARs, restricted stock, RSUs, deferred stock, other stock-based awards, performance awards, substitute awards, and annual cash incentive awards to certain employees and non-employee directors of the Company, the Bank, and their subsidiaries. As discussed below, the Omnibus Plan does not permit the repricing of options or SARs or the granting of discounted options or SARs, and does not contain an "evergreen" or similar provision.

The Omnibus Plan includes provisions designed to meet the requirements for deductibility of executive compensation under Section 162(m) of the Code, as modified by the Tax Cuts and Jobs Act of 2017 with respect to "performance-based compensation" paid pursuant to written binding contracts in effect on November 2, 2017 ("Grandfathered Awards"). In addition, it is our intention that all awards granted under the Omnibus Plan are structured in such a way as to comply with Section 409A of the Code or an exception thereto, and the Omnibus Plan is interpreted and administered in a manner as that is consistent with Section 409A.

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PROPOSAL II

KEY PROVISIONS OF THE OMNIBUS PLAN

The Omnibus Plan includes a number of provisions designed to serve stockholders' interests and facilitate effective corporate governance, including the following:

KEY PROVISIONS
Minimum one Year Vesting  

Awards are required to have a vesting, restriction, or performance period of at least one (1) year; provided, however, that awards for up to 5% of the Omnibus Plan's authorized and available shares may be granted without such one (1) year requirement.

No Stock Option Repricing or Exchange  

The Omnibus Plan does not permit the repricing of options or SARs or the exchange of underwater options or SARs for cash or other awards without stockholder approval.

No Tax Gross-Ups  

Awards do not contain tax gross-up provisions.

No Discounted Awards  

Options and SARs are not granted with an exercise price that is lower than the fair market value of the common stock on the date of grant.

No "Evergreen" Provision  

The Omnibus Plan does not contain an "evergreen" or similar provision. The Omnibus Plan fixes the number of shares available for future grants and does not provide for any increase based on increases in the number of outstanding shares of common stock (other than through stock splits or similar events).

"Double-Trigger" Vesting Upon Change in Control  

All awards under the Omnibus Plan vest under a "double-trigger" provision upon a change in control, which requires both a change in control and an employment termination event.

Awards Subject to Clawback  

All awards under the Omnibus Plan are subject to forfeiture, recoupment or other penalties pursuant to the Company's clawback policy.

Deductibility of Awards  

The Omnibus Plan includes provisions to meet the requirements for deductibility of executive compensation under Section 162(m) of the Code for Grandfathered Awards.

Limit on Awards to Any One Non-Employee Director  

The number of shares of common stock that may be granted to any one non-employee director during any calendar year may not exceed 10,000.

Share Counting   The following factors affect the calculation of the number of shares of common stock as to which equity awards may be granted under the Omnibus Plan:

All shares granted under the Omnibus Plan, including stock options and SARs, are counted as using one (1) share available under the Omnibus Plan for every one (1) share delivered under the awards.

Any shares that are subject to equity awards that are not stock options or SARs are counted as using one (1) share available under the Omnibus Plan for every one (1) share delivered under those awards.

Any shares related to awards under the Omnibus Plan that terminate by expiration, forfeiture or that are otherwise settled in cash in lieu of shares will be available again for grant under the Omnibus Plan.

The following shares may not again be made available for grant in respect of awards under the Omnibus Plan: (1) shares tendered by the participant or withheld by the Company in payment of the exercise price of a stock option, or to satisfy any tax withholding obligation with respect to an award; (2) shares subject to a stock-settled SAR that are not issued in connection with its settlement or exercise thereof; (3) shares reacquired by the Company on the open market or otherwise with the cash proceeds from the payment of the exercise price of a stock option; and (4) shares that are not issued upon exercise, settlement, expiration, cancellation, forfeiture of a substitute award or for any other reason.

Administration.    The Omnibus Plan is administered by the Compensation Committee or other committee otherwise appointed by the Board from time to time. The Compensation Committee determines, among other items, the selection of those to be granted awards under the Omnibus Plan out of those eligible for participation and the terms and conditions of any award consistent with the terms and conditions of the Omnibus Plan. The Compensation Committee must consist of two (2) or more members, and each member must:

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Currently, the Compensation Committee is comprised of five (5) independent directors who meet these requirements. The Compensation Committee has the authority to interpret the provisions of the Omnibus Plan, and to make any other determinations it believes necessary or advisable for the administration of the Omnibus Plan. The Compensation Committee may delegate any or all of its authority to administer the Omnibus Plan as it deems appropriate to a subcommittee of one or more of its members.

By resolution, the Compensation Committee may authorize any subcommittee, the Chief Executive Officer or other executive officer of the Company to (1) designate any Executive or lower-level employees to receive awards pursuant to the Omnibus Plan; (2) determine the size of any such awards; or (3) cancel or suspend any awards, provided:

The Omnibus Plan will automatically terminate the day before the tenth (10) year anniversary of its 2015 effective date, unless terminated earlier by the Board.

Overall Limit on Awards under the Further Amended and Restated Omnibus Plan.    Our stockholders adopted the 2015 Omnibus Plan on May 28, 2015 and approved further amendments on May 29, 2019. The amendment to the Omnibus Plan that is the subject of this proposal was approved by the Board on March 31, 2021. The maximum number of shares originally authorized under the 2015 Omnibus Plan was 4,454,318 shares, which was increased by 2,545,682 shares to 7,000,000 shares in 2019. The further amended and restated Omnibus Plan would increase the number of shares available by 3,500,000 shares to 10,500,000 total shares under the Omnibus Plan.

It is intended that the additional shares to be delivered under the Omnibus Plan will be made available from authorized but unissued shares of Company common stock or from treasury shares. Shares awarded will be removed from the share reserve as of the grant date, and will be added back to the share reserve as described under "Share Counting" above. On each grant of a stock option or SAR, each share underlying the award will be counted as one (1) share against this limit. On each grant of any other Omnibus Plan award, each share underlying the award will be counted as one (1) share against this limit.

Eligibility.    The Compensation Committee (or its delegates) selects the individuals who may participate in the Omnibus Plan. Any employee or non-employee director of the Company, the Bank, or any of their subsidiaries, may be eligible to participate. From time to time, the Compensation Committee will determine who will be granted awards and the number of shares granted, subject to the limits described in "Limit on Awards to Any One Non-Employee Director" above.

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PROPOSAL II

TYPES OF AWARDS
Stock Options   Stock options granted under the Omnibus Plan may be non-qualified stock options or ISOs qualifying under Section 422 of the Internal Revenue Code of 1986, as amended. Under the Code, the aggregate fair market value (determined at the grant date) of the stock specific to which ISOs are first exercisable by any individual during any calendar year shall not exceed $100,000. Stock options in excess of this limit are treated as non-qualified stock options. The stock option exercise price may not be less than the fair market value of the stock on the date the stock option is granted, with the exception that for an ISO award granted to an eligible employee who at the time of the grant holds ten percent (10%) or more of the Company's shares, the stock option exercise price may not be less than required by the Code in order to constitute an ISO. The stock option exercise price is payable in cash or, if the grant provides, in common stock or other equity instruments. The Compensation Committee determines the expiration of stock options, although no stock option may be exercisable later than the tenth (10th) anniversary date of the grant or five (5) years after the date of grant if an ISO is granted to an owner of ten percent (10%) or more of the Company's shares. The Compensation Committee determines the terms of each stock option award at the time of grant.
Stock Appreciation Rights   SARs may, but need not, be granted in conjunction with options or other equity awards. The Compensation Committee determines the terms of each SAR at the time of the grant. Any freestanding SAR (that is, a SAR not granted in conjunction with another equity award) may not be granted at less than the fair market value of the stock on the date the SAR is granted and cannot have a term longer than ten (10) years. A tandem SAR may only be granted with an exercise price that is the same as the associated stock option and the expiration or other termination of a tandem SAR must be the same as that of the associated stock option. A SAR, upon exercise, may be paid in Company shares, cash, or a combination as specified in the award agreement. Individuals granted a SAR will not have any dividend equivalents rights.
Stock Awards   The Omnibus Plan provides for the granting of restricted stock, RSUs, deferred stock, performance shares, performance units, and other stock-based awards. As determined by the Compensation Committee, performance awards may include any of the performance measures, or a combination, as stated in the Omnibus Plan attached as Annex A to this proxy statement. Performance goals may be based on the achievement of specified levels of Company performance (or performance of an applicable subsidiary, affiliate or unit of the Company, the Bank, or any combination) according to any of the performance measures stated in the Omnibus Plan's definition of performance goals (though Grandfathered Awards were required to be subject to one or more performance measures). Performance goals may be defined in absolute terms or measured relative to the performance of companies or against a predefined index that the Compensation Committee determines is appropriate, may be based on or otherwise employ comparisons based on internal targets, the past or current performance of other companies and may include or exclude certain extraordinary or non-recurring business events, and may be applied on a consolidated basis or to the Bank, individual business units, divisions or subsidiaries of the Company and the Bank. The performance goals of Grandfathered Awards were required to be set by the Compensation Committee within the first ninety (90) days of the applicable performance period.
Substitute Awards   Substitute awards can be issued under the Omnibus Plan upon the assumption of, or in substitution or exchange for, outstanding equity awards previously granted by a company or other entity in connection with a corporate transaction with the Company, the Bank or any of their subsidiaries, including a merger, combination, consolidation, or acquisition of property or stock. Such substitute awards will not reduce the amount of shares available under the Omnibus Plan.
Annual Incentive Awards   Annual incentive awards are paid only upon the achievement of certain performance goals during an annual performance period and can be in the form of cash payment, stock awards or performance awards.

Termination of Employment or Service.    In the event of a participant's termination of employment or service prior to the relevant vesting date or expiration of restriction period or performance period, the forfeiture provisions of the participant's awards shall be governed by the provisions of the participant's award agreement.

Change in Control ("CIC").    In the event of a CIC, any options and SARs outstanding which are not exercisable and vested, will become fully exercisable and vested upon termination of the employee participant's employment with the Company, the Bank, or any of their subsidiaries, without cause or for good reason during the twenty-four (24) month period ending on the second-year anniversary of a Change in Control (the "Applicable Period"). Upon termination of the employee participant's employment without cause or for good

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PROPOSAL II

reason during the Applicable Period, the restrictions applicable to any restricted stock, RSU or other stock award which are not performance-based will lapse and such restricted stock, RSU or other stock award shall become free of all restrictions, fully vested and transferable. The performance conditions applicable to any performance based at the target level and upon termination of the employee participant's employment without cause or for good reason during the Applicable Period, such performance based awards shall be deemed satisfied at the target level and shall become free of all restrictions and become fully vested and transferable.

Transferability.    Unless otherwise determined by the Compensation Committee, awards granted under the Omnibus Plan may not be transferred except by will or the laws of descent and distribution or, to the extent permitted by the award agreement relating to such award, to the holder's family members, a trust, or a charitable organization designated by the holder, in each case without consideration. During an employee's lifetime, any options or awards may be exercised only by the employee or the employee's legal representative.

Certain Adjustments.    In the event of an equity restructuring that causes the per share value of the Company's shares to change, the Compensation Committee, in order to prevent unintended dilution or enlargement of a participant's rights under the Omnibus Plan, may substitute or adjust, among other things:

A corporate event or transaction (including, but not limited to, a change in the number of shares outstanding or issued or capitalization of the Company) encompasses a merger, consolidation, reorganization, recapitalization, partial or complete liquidation, stock dividend, stock split, spin-off, rights offering or recapitalization through an extraordinary dividend.

Amendment.    The Omnibus Plan requires stockholder approval where an amendment will be contingent upon stockholder approval to the extent required by law or the rules of any stock exchange on which the Company's stock is traded. The Omnibus Plan prohibits, without stockholder approval:

Plan Benefits.    Future benefits under the Omnibus Plan will depend on the Compensation Committee's actions and the fair market value of the shares at various future dates; therefore, it is not possible to determine the future benefits that will be received by directors, executive officers, and others.

On April 5, 2021, the closing sale price of our common stock on the NYSE was $23.18 per share.

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PROPOSAL II

U.S. TAX TREATMENT OF OPTIONS AND AWARDS
ISOs   An ISO results in no taxable income to the optionee or deduction to the Company at the time it is granted or exercised. However, the excess of the fair market value of the shares acquired over the option exercise price is an item of adjustment in computing the alternative minimum taxable income of the optionee. If the optionee holds the stock received as a result of an exercise of an ISO for at least two (2) years from the date of the grant and one (1) year from the date of exercise, then the gain realized on disposition of the stock is treated as a long-term capital gain. If the shares are disposed of prior to the end of this period, however (i.e., a "disqualifying disposition"), then the optionee will include in income, as compensation for the year of the disposition, an amount equal to the excess, if any, of the fair market value of the shares upon exercise of the option over the option exercise price (or, if less, the excess of the amount realized upon disposition over the option exercise price). In that event, the excess, if any, of the sale price over the fair market value on the date of exercise will be a short-term capital gain. In addition, the Company will be entitled to a deduction, in the year of such a disposition, for the amount includible in the optionee's income as compensation. The optionee's basis in the shares acquired upon exercise of an ISO is equal to the option exercise price paid, plus any amount includible in his or her income as a result of a disqualifying disposition.
Non-qualified Stock Options   A non-qualified stock option results in no taxable income to the optionee or deduction to the Company at the time it is granted. An optionee exercising such an option will, at the time of the exercise, realize income from compensation, equal to the fair market value on the date of exercise of the number of new shares received in excess of such number of exchange of shares, which shall be taxable at ordinary income tax rates in the amount of the difference between the then market value of the shares and the option exercise price. Subject to the applicable provisions of the Code, a deduction for federal income tax purposes will be allowable to the Company in the year of exercise in an amount equal to the taxable compensation realized by the optionee.

The optionee's basis in such shares is equal to the sum of the option exercise price plus the amount includible in his or her income as compensation upon exercise. Any gain (or loss) upon subsequent disposition of the shares will be a long-term or short-term gain (or loss), depending upon the holding period of the shares.

If a non-qualified stock option is exercised by tendering previously owned shares of the Company's common stock in payment of the option exercise price, then, instead of the treatment described above, the following will apply: a number of new shares equal to the number of previously owned shares tendered will be considered to have been received in a tax-free exchange; the optionee's basis and holding period for such number of new shares will be equal to the basis and holding period of the previously owned shares exchanged. The optionee will have income from compensation, equal to the fair market value on the date of exercise of the number of new shares received in excess of such number of exchange of shares, which shall be taxable at ordinary income tax rates. The optionee's basis in such excess shares will be equal to the amount of such compensation income; and the holding period in such shares will begin on the date of exercise.

SARs   Generally, the recipient of a SAR will not recognize taxable income at the time the SAR is granted. Upon the exercise of a SAR, if an employee receives the appreciation inherent in the SAR in cash, the cash will be taxed as compensation income to the employee at the time it is received. If an employee receives the appreciation inherent in the SAR in stock, the value of the stock received will be taxed as compensation income to the employee at the time such stock is received.
In general, there will be no federal income tax deduction allowed to the Company upon the grant or termination of SARs. However, upon the exercise of a SAR, the Company will be entitled to a deduction equal to the amount of compensation income the recipient is required to recognize as a result of the exercise.
Restricted Stock/RSU
Awards/Performance
Awards
  In general, no income will be recognized by the recipient of a restricted stock, RSU, or performance award at the time of grant. Generally, at the time the substantial risk of forfeiture no longer exists with respect to such an award of restricted stock, the then fair market value of the stock will constitute ordinary income to the employee. However, if an employee timely makes an election under Section 83(b) of the Code with respect to an award of restricted stock, the value of such stock on the date that it is granted will be taxed as compensation income to the employee. Absent an 83(b) election, RSUs and performance awards are generally taxable as compensation on the date the stock is vested by the employee in an amount equal to the fair market value of the stock on such date. Subject to the applicable provisions of the Code, a deduction for federal income tax purposes will be allowable to the Company in an amount equal to the compensation realized by the employee.

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PROPOSAL II

Equity Compensation Plan Information

The following table presents equity compensation plan information that has been approved by stockholders as of December 31, 2020:

Equity compensation plans approved by stockholders
  Number of Securities
to be Issued Upon
Exercise of
Outstanding
Options, Warrants
and Rights
(a)

  Weighted-
Average
Exercise Price of
Outstanding
Options, Warrants
and Rights(1)
(b)

  Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation
Plans (Excluding
Securities Reflected in
Column (a))
(c)

 

Stock Option Plans

  336,621   $ 11.14   1,811,418  
(1)
Weighted average exercise price represents stock option plans only, since restricted shares have no exercise price.

INTERESTS OF CERTAIN PERSONS

Our executive officers and directors have interests in matters that will be acted upon at the Annual Meeting that may be different from the interests of our stockholders generally. If this proposal is adopted, each of our executive officers and directors will be eligible to receive a portion of their compensation for services in the form of stock option grants, awards of restricted stock or other equity or equity-linked awards. The Board was aware of these interests and took them into account in recommending that the stockholders vote in favor of the proposal to approve the amendment to the Omnibus Plan.

     
​THE BOARD RECOMMENDS THAT YOU VOTE "FOR" THE APPROVAL OF AMENDMENT TO
THE STERLING BANCORP AMENDED AND RESTATED 2015 OMNIBUS EQUITY AND INCENTIVE PLAN.

*        *        *

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PROPOSAL III

PROPOSAL III—NON-BINDING VOTE TO
APPROVE EXECUTIVE COMPENSATION

In accordance with Section 14(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), stockholders are being given the opportunity to vote on an advisory (non-binding) resolution to approve the Company's named executive officer compensation, as described below under "Compensation Discussion and Analysis", and in the compensation tables and narrative discussions of named executive officer ("NEO" or "Named Executive Officer") compensation in this Proxy Statement. Consistent with the voting results at the 2017 Annual Meeting, the Board has determined that an advisory vote to approve executive compensation is conducted annually.

The Board recommends the approval of its executive compensation proposal. The Board believes the Company's compensation programs are grounded on a pay-for-performance culture and are aligned with the long-term interests of our stockholders by rewarding performance against established corporate financial goals, strong executive leadership and superior individual performance. An important component of management's performance requirements is strong risk management oversight, among other things, to ensure that compensation plans do not encourage management to take unnecessary or excessive risks that could threaten the value of the Company. By providing a combination of annual base salary, cash incentives, long-term equity compensation (including performance awards based on the results of the Company) and competitive benefits, our goal is to attract, motivate and retain a qualified and talented team of executives who will help maximize the Company's long-term financial performance, growth and profitability. The Company's NEO compensation program is designed to provide a significant portion of total compensation based on performance relative to short-term and long-term financial goals and to encourage executives to maintain significant stock ownership in the Company. The Compensation Committee regularly reviews the components of each NEO's compensation package and generally targets 50% of the total compensation opportunity to be based on a combination of short-term and long-term performance. We accomplish these objectives through an integrated total compensation program.

This proposal, commonly referred to as a "Say-on-Pay" proposal, gives you, as a stockholder, the opportunity to endorse or not endorse the Company's executive pay program through the following non-binding resolution:

"RESOLVED, that the compensation of Sterling Bancorp's Named Executive Officers, as disclosed in the Proxy Statement pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, the compensation tables and the related narrative disclosures, is hereby approved."

At the Company's 2020 Annual Meeting, 95.8% of the votes cast on the Say-on-Pay proposal were voted in favor of the Company's NEO compensation program. The Board believes that the Company is taking a measured, informed and responsible approach to NEO compensation which incorporates all of the Company's objectives and policies, including, but not limited to, fostering a pay for performance culture that retains executives who perform strongly. The Board and Compensation Committee considered this substantial affirmation as one of many factors in crafting an executive NEO compensation program that largely mirrors the stockholder approved approach and will continue to seek stockholder feedback on our compensation programs.

This is an advisory vote only, and neither the Company nor the Board will be bound to take action based upon the outcome. The Board and the Compensation Committee will consider the vote of the stockholders when considering future executive compensation arrangements.

     
​THE BOARD RECOMMENDS THAT YOU VOTE "FOR" THE APPROVAL OF
THE COMPANY'S EXECUTIVE COMPENSATION PROPOSAL.

*        *        *

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PROPOSAL IV

PROPOSAL IV—RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Audit Committee of our Board (the "Audit Committee") has approved the engagement of Crowe LLP ("Crowe") to be Sterling's independent registered public accounting firm for the year ending December 31, 2021. At the Annual Meeting, stockholders will consider and vote on the ratification of the engagement of Crowe. A representative of Crowe is expected to participate in the Annual Meeting, to respond to appropriate questions and to make a statement if he or she so desires.

In order to ratify the selection of Crowe as the independent registered public accounting firm for 2021, the proposal must receive the affirmative vote of a majority of the votes represented at the Annual Meeting, either in person or by proxy, in favor of such ratification.

Stockholder ratification of the selection of Crowe is not required by the Bylaws or otherwise. However, the Board is submitting the selection of the independent registered public accountant to the stockholders for ratification as a matter of good corporate governance practice. If the stockholders fail to ratify the selection of Crowe, the Audit Committee will reconsider its decision to engage Crowe. Even if the selection is ratified, the Audit Committee may, at its discretion, direct the appointment of a different independent registered public accounting firm at any time during the year if it determines that such change is in the best interests of the Company and its stockholders.

The Audit Committee recommends the ratification of Crowe as the independent registered public accounting firm for the year ending December 31, 2021. Crowe provides deep knowledge of the banking industry and has had a long standing relationship with the Company, serving as the Company's independent registered public accountant since 2007. During this tenure, Crowe has developed a deep understanding of the Company, its operations and risk management practices and has expanded its audit scope to address the Company's acquisitions and organic growth. Crowe has the technical experience, industry knowledge and technology to support the size of the Company and its expansion efforts.

AUDIT, AUDIT RELATED, TAX RELATED AND OTHER FEES

The following table reflects the aggregate fees billed to us by Crowe for professional services rendered by the firm for audit and tax services for the period ended December 31st as defined:

 
  2019
  2020
 

Audit Fees(1)

  $ 1,700,000   $ 1,775,000  

Audit Related Fees(2)

  150,000   183,250  

Tax Related Fees(3)

  346,731   387,028  

All Other Fees(4)

  173,098   150,000  
(1)
Aggregate fees for the audit of our annual financial statements, review of the financial statements included in our Quarterly Reports on Form 10-Q and services that are normally provided by Crowe in connection with statutory and regulatory filings and engagements. Included in the 2020 Audit Fees are fees related to the adoption of the ASC326 Current Expected Credit Losses and the Company's goodwill impairment evaluation.
(2)
Assurance and related services of the audit and review of the financial statements provided in connection with the Company's issuance of subordinated notes and the consent and review of related regulatory filings and capital market offerings that are not already reported in "Audit Fees".
(3)
Services rendered for tax consultations and tax compliance services.
(4)
Internal audit services with respect to regulatory compliance consulting.

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PROPOSAL IV

The Audit Committee pre-approves all auditing services and permitted non-audit services (including the fees and terms thereof) to be performed for us by an independent registered public accounting firm, subject to the de minimis exceptions for non-audit services described in Section 10A(i)(1)(B) of the Exchange Act, which are approved by the Audit Committee prior to the completion of the audit. The Audit Committee pre-approved 100% of the audit related fees, tax fees and all other fees described above during 2019 and 2020, respectively.

     
​THE BOARD RECOMMENDS A VOTE "FOR" THE RATIFICATION OF CROWE AS THE INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM FOR THE YEAR ENDING DECEMBER 31, 2021.

*        *        *

AUDIT COMMITTEE REPORT

The Audit Committee provides oversight of the Company's financial reporting process on behalf of the Board. Management bears primary responsibility for the financial statements and the reporting process, including the system of internal controls and controls over disclosure. The independent registered public accounting firm is responsible for expressing an opinion on the conformity of those audited consolidated financial statements with United States generally accepted accounting principles.

As part of its ongoing activities, the Audit Committee has:

Based on the review and discussions referred to above, the Audit Committee recommended to the Board that the audited consolidated financial statements be included in our Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on February 26, 2021.

This report shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that Sterling specifically incorporates this information by reference, and shall not otherwise be deemed filed under such Acts.

This report has been provided by the Audit Committee:

Burt Steinberg, Chair
Navy E. Djonovic
Robert Giambrone
Mona Aboelnaga Kanaan

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, DIRECTORS AND EXECUTIVE OFFICERS

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS, DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth certain information regarding beneficial ownership of our common stock as of April 5, 2021, by:

    each person, or group of affiliated persons, known to us to beneficially own more than 5% of the outstanding shares of our common stock;

    each of our directors;

    each person who was a NEO; and

    all of our directors and executive officers as a group.

The percentages shown in the following table are based on 192,567,901 shares of common stock outstanding as of April 5, 2021. Beneficial ownership is determined in accordance with the rules of the SEC, and includes voting and investment power with respect to shares. The number of shares beneficially owned by a person includes shares subject to options held by that person that were exercisable as of April 5, 2021, or within 60 days of that date. The shares issuable under those options are treated as if they were outstanding for computing the percentage ownership of the person holding those options, but are not treated as if they were outstanding for the purposes of computing the percentage ownership of any other person. Unless otherwise indicated below, to our knowledge, all persons named in the table have sole voting and investment power with respect to their shares of common stock, except to the extent authority is shared by spouses under applicable law.

The following table sets forth the number of shares of our common stock beneficially owned by the indicated parties. Unless otherwise indicated, the address of each person is c/o Sterling Bancorp, Two Blue Hill Plaza, Second Floor, Pearl River, NY 10965

Name
  Amount and Nature of
Beneficial Ownership

  Percent of
Class

 

Directors

             

John P. Cahill

  29,632 (1) *  

Navy E. Djonovic

    22,782     *  

Fernando Ferrer

  35,355 (2) *  

Robert Giambrone

    20,000 (3)   *  

Mona Aboelnaga Kanaan

  5,869   *  

James J. Landy

    380,656 (4)   *  

Maureen Mitchell

  7,663   *  

Patricia M. Nazemetz

    19,350 (5)   *  

Richard O'Toole

  55,782   *  

Ralph F. Palleschi

    83,579 (6)   *  

Burt Steinberg

  256,421 (7)  

William Whiston

    28,104 (8)   *  

Named Executive Officers

 

 

 


 

 

Jack Kopnisky

    557,848 (9)   *  

Luis Massiani

  233,539 (10) *  

Rodney Whitwell

    72,105     *  

Michael E. Finn

  88,323   *  

Thomas X. Geisel

    28,926     *  

All Directors and Executive Officers as a Group (22 persons)

  2,040,355 (11)(12) *  

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, DIRECTORS AND EXECUTIVE OFFICERS

Name
  Amount and Nature of
Beneficial Ownership

  Percent of
Class

 

BENEFICIAL OWNERS HOLDING MORE THAN 5%

             

The Vanguard Group
100 Vanguard Boulevard, Malvern, PA 19355


 
17,488,214 (13) 9.00 %

BlackRock, Inc,
55 East 52nd Street, New York, New York 10022

    16,036,924 (14)   8.03 %

Wellington Management Group LLP
280 Congress Street, Boston, MA 02210


 
14,530,811 (15) 7.48 %

Dimensional Fund Advisors LP
Building One – 6300 Bee Cave Road, Austin, TX 78746

    10,654,140 (16)   5.05 %
(1)
The shares shown as owned by Mr. Cahill include 2,639 common shares owned indirectly in an Individual Retirement Account and 678 shares of phantom stock.
(2)
The shares shown as owned by Mr. Ferrer include 211 common shares owned indirectly in an Individual Retirement Account.
(3)
The shares shown as owned by Mr. Giambrone include 2,500 common shares owned indirectly in an Individual Retirement Account and 1,575 common shares owned indirectly by his mother.
(4)
The shares shown as owned by Mr. Landy include 15,240 shares held jointly with his spouse and 150,146 common shares owned by his spouse of which he disclaims beneficial ownership.
(5)
The shares shown as owned by Ms. Nazemetz include 11,282 shares held jointly with her spouse.
(6)
The shares shown as owned by Mr. Palleschi include 83,579 common shares indirectly owned by the Ralph F. Palleschi 1998 Family Trust.
(7)
The shares shown as owned by Mr. Steinberg include 233,573 common shares held by trusts, 11,056 shares owned indirectly in an Individual Retirement Account and 10,000 in the name of the Company for which Mr. Steinberg disclaims beneficial ownership.
(8)
The shares shown as owned by Mr. Whiston include 28,104 common shares held jointly with his spouse.
(9)
The shares shown as owned by Mr. Kopnisky include 10,000 common shares owned by his spouse, beneficial ownership of which he disclaims, 4,461 shares owned jointly with his spouse and 54,435 common shares underlying stock options exercisable within 60 days.
(10)
The shares shown as owned by Mr. Massiani include 46,169 common shares underlying stock options exercisable within 60 days.
(11)
Total includes all Executive Officers, including James Blose, Javier Evans, Beatrice Ordonez, and Marissa Weidner
(12)
Board of Director Compensation Structure was modified by the Board of Directors in January 2021. The Amount and Nature of Beneficial Ownership does not include the 3,433 shares of restricted stock options granted as of February 8, 2021 subject to vesting requirements over a one-year period.
(13)
Based upon information contained in the Schedule 13G/A filed by BlackRock Inc. ("BlackRock") with the SEC on February 1, 2021, BlackRock beneficially owned 16,036,924 shares of common stock as of December 31, 2020, with sole voting power over 15,376,048 shares, shared voting power over 0 shares, sole dispositive power over 16,036,924 shares and shared dispositive power over 0 shares.
(14)
Based upon information contained in the Schedule 13G/A filed by The Vanguard Group ("Vanguard") with the SEC on February 10, 2021, Vanguard beneficially owned 17,488,214 shares of common stock as of December 31, 2020, with sole voting power over 0 shares, shared voting power over 132,627 shares, sole dispositive power over 17,189,539 shares and shared dispositive power over 298,675 shares.
(15)
Based upon information contained in the Schedule 13G/A filed by Wellington Management Group LLP ("Wellington") with the SEC on February 4, 2021, Wellington and its subsidiaries beneficially owned 14,530,811 shares of common stock as of December 31, 2020, with sole voting power over 0 shares, shared voting power over 13,450,496 shares, sole dispositive power over 0 shares, shared dispositive power over 14,530,811 shares.
(16)
Based upon information contained in the Schedule 13G filed by Dimensional Fund Advisors LP ("Dimensional Fund") with the SEC on February 16, 2021 , Dimensional Fund and its subsidiaries beneficially owned 10,654,140 shares of common stock as of December 31, 2020, with sole voting power over 10,473,146 shares, shared voting power over 0 shares, sole dispositive power over 10,654,140 shares and shared dispositive power over 0 shares.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, DIRECTORS AND EXECUTIVE OFFICERS

DELINQUENT SECTION 16(a) REPORTS

Our executive officers, directors and beneficial owners of greater than 10% of our outstanding shares of common stock are required to file reports with the SEC disclosing beneficial ownership and changes in beneficial ownership of our common stock. SEC rules require disclosure if an executive officer, director or 10% beneficial owner fails to file these reports on a timely basis. Based on the Company's review of ownership reports required to be filed for 2020, no executive officer, director or 10% beneficial owner of the Company's shares of common stock failed to file ownership reporting on a timely basis, except for the following: (i) Form 4 for Rodney Whitwell for the sale of common stock;(ii) one Form 4 for Rodney Whitwell for the vesting of time based performance share award and the payment of tax liability for the performance share award; (iii) one Form 4 for Robert Giambrone for the purchase of common stock; (iv) one Form 4 for Patricia Nazemetz reflecting the change in form of beneficial ownership for common stock; and (v) one Form 4 for Burt Steinberg reflecting the change in form of beneficial ownership for common stock.

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CERTAIN INFORMATION ABOUT OUR EXECUTIVE OFFICERS

CERTAIN INFORMATION ABOUT OUR
EXECUTIVE OFFICERS

Qualifications and Business Experience

EXECUTIVE OFFICERS

The following provides certain business experience including the past five (5) years with respect to individuals who serve as our executive officers. Information concerning the business experience of Mr. Kopnisky, who serves as our CEO and President, is provided in "Proposal I—Election of Directors" above.

EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS

Name
  Age
  Positions Held With Sterling Bancorp
James Blose   52   General Counsel
Javier Evans   59   Chief Business Operations and Services Officer
Michael E. Finn   56   Chief Risk Officer
Thomas X. Geisel   59   President Corporate Banking
Luis Massiani   44   Chief Operating Officer
Beatrice Ordonez   48   Chief Financial Officer
Marissa Weidner   44   Chief Human Resources Officer
Rodney Whitwell   62   Chief Administrative Officer

 

 
 
GRAPHIC JAMES P. BLOSE, Esq
Executive Vice President and General Counsel
Age: 52

CAREER HIGHLIGHTS:


 
 
GRAPHIC JAVIER EVANS
Executive Vice President and Chief Human Resources Officer
Age: 59

CAREER HIGHLIGHTS:


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CERTAIN INFORMATION ABOUT OUR EXECUTIVE OFFICERS

 
 
GRAPHIC MICHAEL E. FINN
Senior Executive Vice President and Chief Risk Officer
Age: 56

CAREER HIGHLIGHTS:


 
 
GRAPHIC THOMAS X. GEISEL
Senior Executive Vice President and President Corporate Banking
Age: 59

CAREER HIGHLIGHTS:


 
 
GRAPHIC LUIS MASSIANI
Senior Executive Vice President,Chief Operating Officer
Age: 44

CAREER HIGHLIGHTS:


 
 
GRAPHIC BEATRICE ORDONEZ
Executive Vice President and Chief Financial Officer
Age: 48

CAREER HIGHLIGHTS:


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CERTAIN INFORMATION ABOUT OUR EXECUTIVE OFFICERS

 
 
GRAPHIC MARISSA WEIDNER
Chief Human Resources Officer (since February 2021) of the Company and the Bank
Age: 44

CAREER HIGHLIGHTS:


 
 
GRAPHIC RODNEY WHITWELL
Senior Executive Vice President and Chief Administrative Officer
Age: 62

CAREER HIGHLIGHTS:


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CORPORATE GOVERNANCE AND RELATED MATTERS

CORPORATE GOVERNANCE AND RELATED MATTERS

The Board is committed to operating the Company in a manner that is aligned with our stockholders' interests and accomplishing our strategic mission and our corporate goals while maintaining conformity with all laws and regulations applicable to the Company's operations.

GOVERNANCE AND COMPENSATION HIGHLIGHTS

Emphasizing the importance of governance activities, Sterling's Nominating and Corporate Governance Committee renamed the Corporate Governance Guidelines to the Corporate Governance Principles with enhancement to Board Responsibilities, Leadership, Board Member qualifications and selection criteria, including by reference to certain diversity measures. The Corporate Governance Principles, along with other governance documents such as the Code of Ethics and the charters of each of the Audit, Compensation and Nominating and Corporate Governance Committees adopted by the Board are available on the Company's Internet website (www.sterlingbancorp.com) under the heading "Governance Documents." Highlights of each of the Committee's responsibilities are noted below.

CORPORATE GOVERNANCE BEST PRACTICES

Sterling believes its corporate governance practices promote accountability, appropriate risk oversight framework and sound and ethical business practices and are in the best interest of stockholders. Some of these practices include:

MEETINGS AND COMMITTEES OF THE BOARD

The business of the Board is conducted at regular and special meetings of the Board and its committees. In addition, the independent members of the Board meet in executive session periodically. The Chair of the Nominating and Corporate Governance Committee presides over all executive sessions. During 2020, the Board held ten (10) regular meetings and several additional meetings were held with the Directors to provide updated financial and credit information on the Company's standing, not only during the height of the COVID-19 pandemic but throughout the year. No member of the Board or any committee member attended less than 75% of the aggregate number of meetings of committees on which they are a member.

Burt Steinberg served as a director on the Board during 2020. Due to the Company's mandatory Director Retirement Policy, Mr. Steinberg will be retiring from the Board effective as of this Annual Meeting resulting in the nomination of twelve Directors. Mr. Steinberg served as the Chair of the Audit Committee and as a member of the Executive Committee during 2020 until his retirement.

During 2020, the Company and the Bank took all took steps to prioritize for health & safety of our clients and colleagues. Our Board of Directors were critical to the response to the COVID-19 pandemic and provided significant oversight of and feedback on, among other

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CORPORATE GOVERNANCE AND RELATED MATTERS

things, credit and risk exposures, compliance to temporary modifications to state and government regulations and measures taken to address the needs of our colleagues and clients while adhering to national, state and local government guidelines.

BOARD PARTICIPATION AND COMMITTEE COMPOSITION
Board of Directors
  Audit
Committee

  Compensation
Committee

  Nominating &
Corporate
Governance
Committee

  Executive
Committee

  Enterprise
Risk
Committee

  Credit Risk
Subcommittee

John P. Cahill     GRAPHIC   C   GRAPHIC    
Navy E. Djonovic   GRAPHIC                   GRAPHIC
Fernando Ferrer       GRAPHIC     GRAPHIC   GRAPHIC
Mona Aboelnaga Kanaan   GRAPHIC               GRAPHIC   GRAPHIC
Jack Kopnisky         GRAPHIC   GRAPHIC   GRAPHIC
Robert Giambrone   GRAPHIC               GRAPHIC   GRAPHIC
James J. Landy           GRAPHIC   C
Maureen Mitchell       GRAPHIC       GRAPHIC   GRAPHIC    
Patricia M. Nazemetz     C   GRAPHIC      
Richard O'Toole       GRAPHIC   GRAPHIC   C        
Ralph F. Palleschi     GRAPHIC   GRAPHIC      
Burt Steinberg   *                    
William E. Whiston           C   GRAPHIC
No. of Meetings   8   7(1)   3(1)   2   4   4

GRAPHIC   Member

C
Chair
*
Audit Committee Financial Expert
(1)
Includes one Joint meeting of the Compensation and Nominating and Corporate Governance Committees

CODE OF ETHICS

Sterling has adopted a Code of Ethics that is designed to uphold the highest standards of ethics, professionalism, fairness, honesty and respect. The Code of Ethics is applicable to Sterling's directors and employees, including the Company's principal executive officer, principal financial and accounting officer, chief risk officer and all officers performing similar functions. The Code of Ethics addresses conflicts of interest, the treatment of confidential information and compliance with applicable laws, rules and regulations. The Code of Ethics is available on the Company's Internet website at www.sterlingbancorp.com under the headings "Corporate Governance" and "Governance Documents." Amendments to and waivers of the Code, as applicable, are disclosed on the Company's website.

ATTENDANCE AT ANNUAL MEETINGS OF STOCKHOLDERS

Sterling does not have a policy regarding director attendance at Annual Meetings of stockholders. All of our serving directors attended our 2020 Annual Meeting, either in person or by phone.

STOCKHOLDER ENGAGEMENT

The Company values its relationship with its stockholders and proactively seeks to expand its communication and engagement with investors. The Company has benefited from this open dialogue and looks forward to strengthened relationships with investors.

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CORPORATE GOVERNANCE AND RELATED MATTERS

COMMUNICATIONS WITH THE BOARD

All interested parties who wish to contact our Board or an individual director may do so by writing to:

Board of Directors
Sterling Bancorp
Two Blue Hill Plaza, Second Floor, Pearl River, New York 10965
Attention: President and Chief Executive Officer, or Corporate Secretary

The communication should indicate the following:

Communications are reviewed by the Corporate Secretary and are then distributed to the Board or the individual director, as appropriate, depending on the facts and circumstances outlined in the communications received. The President and CEO, however, may directly respond at his discretion. If appropriate, the Corporate Secretary may (1) handle an inquiry directly, or (2) forward a communication for response by another employee of Sterling. A copy of any such communication and response is forwarded to the Board at the next available Board meeting. The Corporate Secretary has the authority not to forward a communication if it is primarily commercial in nature, relates to an improper or irrelevant topic, or is unduly hostile, threatening, illegal or otherwise inappropriate.

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CORPORATE GOVERNANCE AND RELATED MATTERS

COMMITTEE RESPONSIBILITIES

The duties and responsibilities of the Audit Committee, Compensation, Nominating and Corporate Governance, Executive, Enterprise Risk and Credit Risk Sub Committee, are described in the full Committee Charter found on the Company's website.

AUDIT COMMITTEE Members:
Burt Steinberg, Chair
Navy Djonovic
Robert Giambrone
Mona Aboelnaga Kanaan




Mr. Steinberg served as Audit Committee Chair until his retirement effective on the date of this Annual Meeting.

KEY RESPONSIBILITIES:

Audit Committee Financial Expert (as defined under SEC rules and regulations): Mr. Steinberg served as Audit Committee Financial Expert until his retirement at the time of the year's annual Meeting. Ms. Aboelnaga-Kanaan will assume the role of Audit Committee Financial Expert, upon Mr. Steinberg's retirement in May, 2021.

All members are Independent and financially literate (as defined by Rule 10A-3 of the Exchange Act and in accordance with NYSE Listing Standards).


COMPENSATION COMMITTEE Members:
Patricia Nazemetz, Chair
John Cahill
Maureen Mitchell
Richard O'Toole
Ralph F. Palleschi





All Members are Independent

KEY RESPONSIBILITIES:


NOMINATING AND CORPORATE
GOVERNANCE COMMITTEE

Members:
John P. Cahill, Chair
Fernando Ferrer
Patricia M. Nazemetz
Richard O'Toole
Ralph F. Palleschi





All Members are Independent

KEY RESPONSIBILITIES:


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CORPORATE GOVERNANCE AND RELATED MATTERS

EXECUTIVE COMMITTEE Members:
Richard O'Toole, Chair
John P. Cahill
Jack Kopnisky
Maureen Mitchell
Burt Steinberg






Mr. Steinberg served as a member of the Executive Committee until his retirement effective on the date of this Annual Meeting.

KEY RESPONSIBILITIES:


ENTERPRISE RISK COMMITTEE Members:
William E. Whiston, Chair
Fernando Ferrer
Robert Giambrone
Mona Aboelnaga Kanaan




  
Jack Kopnisky
James J. Landy
Maureen Mitchell

KEY RESPONSIBILITIES:


CREDIT RISK SUBCOMMITTEE Members:
James J. Landy, Chair
Navy E. Djonovic
Fernando Ferrer



  
Mona Aboelnaga Kanaan
Jack Kopnisky
William E. Whiston

The Enterprise Risk Committee's Credit Risk Subcommittee performs the following duties and responsibilities:


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CORPORATE GOVERNANCE AND RELATED MATTERS

CANDIDATES FOR DIRECTOR

The Nominating and Corporate Governance Committee identifies nominees by first determining which of the current members of the Board are willing to continue in service. Current members of the Board with skills and experience relevant to the Company and who are willing to continue Board service are considered for re-nomination, balancing the value of continuity of service by existing members of the Board with obtaining a new perspective through new Board members.

If there is a vacancy on the Board because a member of the Board does not wish to continue in service, if a director has reached the mandated retirement age, or if it is determined not to re-nominate a director for re-election, the Nominating and Corporate Governance Committee determines the desired skills and experience of a new nominee, solicits suggestions for director candidates from all Board members, and may engage in other search activities (which activities may be conducted through a sub-committee).

Criteria identified by the Board from time to time include factors relative to the overall composition of the Board and such other factors as the Nominating and Corporate Governance Committee deems appropriate. These factors include a potential candidate's business experience, specific areas of expertise, skills, background and independence consistent with the Company's Corporate Governance Principles and applicable NYSE rules. When identifying nominees to serve as a director, the Nominating and Corporate Governance Committee seeks to create a Board that:

    is strong in its collective knowledge and has a diversity of background;

    possesses skills and experience with respect to accounting and finance, information technology, management and leadership;

    exhibits excellence in vision and strategy, business operations, business judgment, industry knowledge;

    demonstrates knowledge of the communities served;

    has experience in identifying and solving for risks associated with financial institutions; and

    possesses regulatory and corporate governance experience.

All director candidates should possess certain attributes, including integrity and a devotion to ethical behavior, a primary interest in the well-being of Sterling, a capacity for independent judgment, good business acumen, the capacity to protect confidential information, an ability to work as a member of a team and a willingness to evaluate other opinions or points of view. In addition to examining a candidate's qualifications in light of the above attributes, the Nominating and Corporate Governance Committee will consider the following: the overall character of the candidate and any existing or potential conflict of interest; the candidate's willingness to serve and ability to devote the time and effort required; the candidate's record of leadership; and the ability to develop business for Sterling.

The Nominating and Corporate Governance Committee may consider qualified candidates for director suggested by our stockholders. Stockholders can suggest qualified candidates for director by writing to our Corporate Secretary at Two Blue Hill Plaza, Second Floor, Pearl River, NY 10965. The Corporate Secretary must receive a submission not less than ninety (90) days prior to the anniversary date of the mailing of our proxy materials for the preceding year's Annual Meeting. The submission must include the following:

    A statement that the writer is a stockholder and is proposing a candidate for consideration by the Nominating and Corporate Governance Committee;

    The name and address of the stockholder as such information appears on Sterling's books, and the number of shares of Sterling's common stock that are owned beneficially by such stockholder. If the stockholder is not a holder of record, appropriate evidence of the stockholder's ownership will be required;

    The name, address and contact information for the candidate, and the number of shares of common stock of Sterling that are owned by the candidate. If the candidate is not a holder of record, appropriate evidence of the stockholder's ownership will be required;

    A statement of the candidate's business and educational experience;

    Such other information regarding the candidate as would be required to be included in the Company's Proxy Statement pursuant to SEC Regulation 14A;

    A statement detailing any relationship between the candidate and any client, supplier or competitor of the Company or its affiliates;

    Detailed information about any relationship or understanding between the proposing stockholder and the candidate; and

    A statement that the candidate is willing to be considered and willing to serve as a director if nominated and elected.

Submissions that are received and that satisfy the above requirements are forwarded to the Chairman of the Nominating and Corporate Governance Committee for further review and consideration. A nomination submitted by a stockholder for presentation by the stockholder at an Annual Meeting must comply with the procedural and informational requirements described in "Advance Notice of Business to be conducted at an Annual Meeting," found on page 78.

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CORPORATE GOVERNANCE AND RELATED MATTERS

BOARD LEADERSHIP STRUCTURE AND
THE BOARD'S ROLE IN RISK OVERSIGHT

GRAPHIC

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CORPORATE GOVERNANCE AND RELATED MATTERS

The Board and its committees also review policies and guidelines that senior management uses to manage the Company's exposure to risk.

RISK MANAGEMENT AND OVERSIGHT PROGRAM

The Company is organized to promote a strong risk awareness and management culture through the Company's Risk Management and Oversight Program which includes three lines of defense overseen by the Board:

    (1) executive management is responsible for establishing policies, procedures and controls and is accountable for monitoring and enforcing risk for each specialty line of business;

    (2) independent risk management is responsible for setting minimum controls and methodologies to identify and manage risks, to establish overall risk management strategies and policies and to set minimum controls and methodologies to manage risk across lines of business; and

    (3) the Company's internal audit, which periodically assesses the effectiveness of the internal controls. The Audit Committee reviews the effectiveness of systems for internal control, risk management and compliance with financial services legislation and regulation.

INFORMATION SECURITY PROGRAM

Information security is a significant operational risk for financial institutions. This heightened level of risk is forefront for our Board as they are actively engaged in the oversight of our Company's information security risk management and cyber defense programs.

The Enterprise Risk Committee, acting on behalf of the entire Board, oversees the Company's cybersecurity controls and receives material information related to risk management and evolution of the information security program on a quarterly basis. Supporting the depth of the controls with the Information Security Program, the Enterprise Risk Committee reviews audit reports and annual risk assessments performed by third parties to assist in their oversight of the program.

Regular updates from the Enterprise Risk Committee meeting are shared with the Board of Directors and the Board receives periodic briefings and sessions devoted to cybersecurity, digital programs and information security to enhance our directors' literacy on all issues related to information security management.

The Information Security and Technologies Program was developed utilizing guidance from federally developed programs such as those promulgated by the Federal Financial Institutions Examination Council ("FFIEC"), OCC, National Institute of Standards ("NIST") security/governance framework and other guidelines provided by federally developed programs. The Information Security and Technologies Program provides a framework for protecting the Company and the Bank's information assets by:

    Establishing a Company-wide approach to cyber and information security;

    Implementing mechanisms that help identify and prevent the compromise of information security;

    Ensure the integrity and confidentiality of our client's banking data and personal identifiable information entrusted to the Company and the Bank as well as proprietary records and information;

    Protect against any anticipated cyber threats or hazards and minimize the effect of risk or loss to our clients, the Company or the Bank; and

    Continued development and enhancement of controls, processes and systesm to identify and protection our networks, computers, systems and data from unauthorized access.

We continuously develop and enhance controls, processes and systems to identify and protect our networks, computers, systems, and data from attacks or unauthorized access, alteration or destruction of confidential information through our Cyber and Information Security Program. Through these proactive measures, the Company endeavors to respond to potential threats before such threats develop into serious loss scenarios.

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CORPORATE GOVERNANCE AND RELATED MATTERS

BOARD EVALUATION

To promote a high-performance culture, each member of the Board performs an annual self-evaluation, an evaluation of the other directors and of the Board as a whole (including its committees). Each director is expected to participate in the evaluation process. The formal portion of the process is overseen by the Nominating and Corporate Governance Committee and conducted through the Office of the General Counsel. During our evaluation process, directors are presented with a written questionnaire designed to elicit constructive feedback from each director about his or her individual service and the effectiveness of the Board and each committee on which the director serves. Similarly, the Audit, Compensation and Nominating and Corporate Governance Committees perform a self evaluation. Responses collected from the evaluations are reviewed by the Chairman of the Board, Chair of the Nominating and Corporate Governance Committee and General Counsel and strategies are discussed to address any concerns raised by the evaluation process. This feedback is used to improve Board and committee practices, procedures and policies and improve efficiencies and effectiveness.

In addition to the formal evaluation process, discussions occur throughout the year with the Board and committee members. The consistent communication can be seen through the one-on-one discussions held with the Chairman of the Board and/or the Chair of the Nominating and Corporate Governance Committee, as well as through executive sessions conducted at the Board and committee meetings without members of management present.

To ensure the continued effectiveness of the Board and facilitate the appropriate levels of oversight for the Company, the performance of each Director is continually evaluated through the following processes:

GRAPHIC

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COMMITMENT TO SUSTAINABILITY

COMMITMENT TO SUSTAINABILITY

Sterling believes it has a responsibility to serve, support and be transparent with our stakeholders—our colleagues, our clients, and the communities we serve and, as part of this overall mission, is committed to effectively managing environmental, social and governance ("ESG") issues. We believe that our focus on ESG priorities can help drive sustainable business practices that are crucial to our long-term growth. Our core competency is the provision of financial services and solutions to our clients and Sterling is focused on delivering a superior client experience, increasing shareholder value, serving our communities, and creating a workplace where talent and initiative can thrive as encapsulated by our brand promise.

—Above and Beyond is Standard Procedure Here—

In 2020, Sterling continued to build upon and improve its ESG oversight framework, and to further evolve our ESG strategy. Our executive leadership team and Board recognize the importance of these responsibilities, and in 2021 we established an internal committee that is tasked with driving additional progress in initiatives that promote sustainability, diversity, inclusion, equity and further transparency. The Board has formal oversight responsibility for Sterling's sustainability programs and policies through its Nominating and Corporate Governance Committee and reviews our strategy, policies and practices with respect to social responsibility, environmental sustainability, diversity and other social and corporate matters. Our areas of focus include:

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At Sterling, our culture places a very high importance on our colleagues, who go "Above and Beyond" to exceed our client's expectations and achieve our business goals. As a result, we believe that every colleague matters and that every colleague:

We strive to attract and retain the best possible talent to support the growth of the Company. In particular, we are committed to creating and supporting a diverse and inclusive environment.

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COMMITMENT TO SUSTAINABILITY

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Our Colleagues

The health and wellbeing of our colleagues is our top priority and in recognition of this, Sterling aims to provide a competitive benefits, compensation and wellness package.

Our colleagues are provided with tools and resources to help them achieve success in their individual roles.

Through Sterling University, we provide a program to those colleagues suited for leadership roles within the Company. This internal training program exemplifies Sterling's commitment to facilitating the career advancement of our colleagues.

Diversity & Inclusion

Our commitment to Diversity & Inclusion ("D&I") starts with our goal of attracting, retaining and developing a workforce that is diverse in background, knowledge, skill and experience.

We encourage every one of our team members to form deeper relationships with those around them based on mutual respect, dignity and understanding. We believe in the strength of diversity and are committed to supporting colleagues across every identity.

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COMMITMENT TO SUSTAINABILITY

Response to the COVID-19 Pandemic

In 2020, Sterling moved swiftly to respond to the unprecedented challenges faced by our colleagues and clients as a result of the COVID-19 pandemic. Sterling mobilized and enhanced its Sterling Response Team to advance key priorities while implementing a range of measures including:

GRAPHIC

We measure success not only in financial terms, but also in our ongoing support of the communities we serve. Sterling is focused on supporting various organizations through fundraising efforts, educational sponsorship, community development efforts, food drives, and partnerships with local universities.

Community Reinvestment

Sterling National Bank Charitable Foundation

In 2020, we continued to make meaningful contributions to our local communities through the Sterling National Bank Charitable Foundation ("Foundation"). The Foundation supports not-for-profit organizations that share in our vision and values. During 2020, the Foundation:

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COMMITMENT TO SUSTAINABILITY

In addition to providing financial support to a number of organizations in our communities, we encourage and give our Colleagues the opportunity to provide meaningful voluntary service in and support for their communities. During 2020:

Supporting our communities is core to our mission and we will continue to partner with and strengthen our relationships with organizations that share our values.

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We believe that strong governance and oversight is vital and supports the long-term success of Sterling. Our corporate governance program provides a strong foundation for operating our business in a manner that is fair, ethical and responsible. Our Board and its committees help set the tone for our Company and meet regularly to review policies, current regulations and industry best practices. Sterling's leadership is focused on and devotes substantial attention to matters of corporate responsibility, including ESG priorities. As part of our sustainability initiatives, our Nominating and Corporate Governance Committee receives updates from management on ESG initiatives and metrics and provides updates to the Board.

Our risk management teams oversee compliance with applicable laws and regulations and coordinate with subject matter experts throughout the business to identify, monitor and mitigate risk including information security risk management and cyber defense programs. These teams maintain robust testing programs and regularly provide updates to the Board.

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Sterling is devoted to operating its business in a sustainable manner and has undertaken a number of initiatives designed to reduce our impact on the environment and to promote environmentally friendly projects and practices. With a view to increasing efficiency and reducing waste, we are continuing to digitize manual back office and financial center functions. In 2020, we:

We continue to look for opportunities to minimize our environmental impact and to support public and private organizations that advance sustainability initiatives by driving towards a more digital work environment, encouraging remote work practices and making investments to reduce waste at all of our office locations.

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COMPENSATION DISCUSSION & ANALYSIS

COMPENSATION DISCUSSION & ANALYSIS

Executive Summary

INTRODUCTION

This Compensation Discussion & Analysis (this "CD&A") provides detail on the compensation programs for our Chief Executive Officer, Bank President and Chief Financial Officer, and three other most highly compensated executives (collectively, our "NEOs") including the overall objectives of our compensation program, each element of compensation provided, and an explanation of the reasons for the compensation decisions we have made for these individuals with respect to 2020.

Our NEOs for 2020 were:

GRAPHIC
JACK KOPNISKY
Age: 65

Chief Executive Officer

GRAPHIC
LUIS MASSIANI
Age: 44

President of Sterling National Bank,
Chief Operating Officer (since January 2021)
Chief Financial Officer (until March 1, 2021)

GRAPHIC
RODNEY WHITWELL
Age: 62

Chief Administrative Officer

GRAPHIC
MICHAEL E. FINN
Age: 56

Chief Risk Officer

GRAPHIC
THOMAS X. GEISEL
Age: 59

President Corporate Banking

TABLE OF CONTENTS
Executive Summary   48
 
Role of the Compensation Committee   53
 
Role of Management   53
 
Role of the Compensation Consultant   54
 
Executive Compensation Philosophy, Benchmarking and Components   49
 
Executive Compensation Program and Pay Decisions   56
 
Other Matters   62

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COMPENSATION DISCUSSION & ANALYSIS

Our Strategic Accomplishments

Against the backdrop of an exceptionally difficult operating environment in 2020, the resilience of our business model and the high quality of our client relationships allowed us to nevertheless generate strong operating results, including increased operating leverage and substantial growth in tangible capital and tangible book value per common share. We navigated the difficult business climate by leveraging our diverse asset and deposit gathering capabilities to efficiently allocate capital to sectors and verticals that meet our risk-adjusted return requirements.

We prioritized the health and safety of our colleagues and our clients, transitioning many of our workflows to a fully remote environment while maintaining the standards or operational excellence that our clients have come to expect from us. Finally, we prudently navigated an incredibly challenging credit environment by proactively managing our business and exposure. Highlights of the Company's performance during 2020 are noted below. Refer to the Strategic Highlights section found on page 4 for additional information.

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Executive Compensation Philosophy, Benchmarking and Components

Our executive compensation program is designed to align the interests of our executive officers with stockholders by rewarding the achievement of pre-established corporate financial goals, strong executive leadership and superior individual performance. By providing annual cash incentives, long-term equity compensation and a competitive benefits package, our goal is to attract, motivate and retain a qualified and talented team of executives who will help maximize the Company's long-term financial performance, growth, profitability and stockholder value. We also ensure sound risk management by providing a balanced view of performance and long-term stockholder value.

The Company's compensation program provides a significant portion of total compensation based on performance relative to short-term and long-term financial goals and encourages executives to maintain significant stock ownership in the Company. The Compensation Committee reviews at least annually the components of each NEO's compensation package and targets at least 50% of the total compensation opportunity be conditional of achievement of a combination of short-term and long-term performance measures. The Compensation Committee, with the advice from its compensation consultant, regularly assesses the components of the executive compensation program. Periodically, the compensation consultant will conduct a benchmarking study utilizing a peer group of banks of similar asset size, as well as a number of industry survey sources. The purpose of this assessment is to provide market perspective to the Compensation Committee as it sets base salaries and incentive opportunities for the next year. The Compensation Committee believes that periodic monitoring of the Company's programs and pay decisions, as well as that of its industry and peers, enables it to assess the effectiveness of pay decisions and ensure the executive compensation program meets the Company's objectives.

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COMPENSATION DISCUSSION & ANALYSIS

Highlights of 2020 Compensation Program and Impact of Pandemic

The Company's executive compensation program is designed to align total compensation with performance while enabling us to attract, motivate and retain high quality executive management. As a result of a study performed by our previous compensation consultants, Meridian Compensation Partners, LLC, in November 2019, the Compensation Committee approved certain changes to base salary and short-term incentive targets, as well as long-term incentive targets for the CEO and other NEOs, to be effective in 2020. These changes provided a competitive pay structure that better aligned our NEOs' target compensation opportunities with the Company's peer group following recent mergers and related integration and the growth of the Company while providing annual incentive and equity compensation that rewards our NEOs for superior performance.

Additionally, in February 2020, the Committee approved the performance metrics and goals applicable for the 2020 annual incentive plan and the 2020 - 2022 performance share plan. Shortly thereafter, it became apparent that these goals were set without knowing that the interest rate environment would decline and provisioning would increase beyond what was already expected given the economic uncertainty taking hold in March 2020.

The COVID-19 pandemic had an impact on our 2020 performance. As the effects of the pandemic progressed, we took steps to protect our colleagues and clients, including closing branches at times for safety and limiting transactions to drive-thru tellers as well as ensuring barriers and other social distancing measures were provided. We provided colleagues with an additional week of paid time off to allow them time to recover from illness when necessary, modified workplace access to promote social distancing, and had over 1,000 colleagues working remotely. Given the uncertain economic environment, we held a conservative capital position while focusing on providing superior service to our clients while ensuring a safe and healthy working environment for our colleagues.

In light of the effect of the COVID-19 pandemic over the course of 2020, the Compensation Committee met regularly to consider the impact of the pandemic on our financial and strategic performance and impact on our performance plans. At these meetings, the Committee's new independent compensation consultant, Compensation Advisory Partners, LLC ("CAP") provided ongoing updates to help the Committee understand the impact of the pandemic on performance against the pre-established plan, as well as how the Bank's performance compared to its peers. The Committee considered these factors when evaluating whether modifications or other alternatives to the short- and long-term incentive plans were warranted as 2020 progressed.

After lengthy consideration, the Committee approved the adjustments outlined below to the Short Term and Long Term Incentive Plans. The Committee used the existing construct of the Company's incentive compensation plans and practices to recognize solid performance in light of the COVID-19 pandemic and support the retention and motivation of key talent:

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COMPENSATION DISCUSSION & ANALYSIS

After assessing the Company's performance under the adjusted program, the corporate component of the STI was funded at 75% of target and the 2018 - 2020 performance share plan at 75% of target. The Committee approved these outcomes to recognize the Company's strong operating results and achievements in the context of the extraordinary, challenging business climate. The outcome also demonstrates the rigor of performance in our programs and their alignment with our pay for performance philosophy. The chart below summarizes the payouts over time:

 
Payout Factor as
a % of Target
 
2018
2019
2020

STI Corporate Component

100 % 100 % 75 %

Performance Share Awards

150 % 150 % 75 %

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COMPENSATION DISCUSSION & ANALYSIS

2020 TARGET PAY MIX

The charts below for our CEO and our other NEOs illustrate the target compensation established for 2020, consisting of base salary, target annual incentive awards, and target 2020 - 2022 Long Term Incentive Plan ("LTIP") awards consisting of performance shares and restricted stock awards. For 2020, our compensation targets and pay mix were the following:

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The Compensation Committee continued to maintain the following best practices related to our compensation programs and practices related to our NEOs:

Significant focus on performance-based pay

Caps on incentive plan payouts to support appropriate risk management

Stock ownership guidelines

Majority (75%) of our long-term/equity incentives are based on future performance.

No gross-up provisions on excise taxes paid in connection with a change in control in all employment agreements

Clawback policy

 

No material perquisites

Anti-hedging policy

Pledging restriction policy

One year holding period post-vesting for all restricted stock awards

No payment of dividends on performance shares until vesting

Independent compensation consultant

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COMPENSATION DISCUSSION & ANALYSIS

2020 SAY-ON-PAY VOTE

At the Company's 2020 Annual Meeting, stockholders cast an advisory vote regarding the Company's NEO compensation program, or the Say-on-Pay vote, with 95.8% of the votes cast on such proposal voted in favor of the Company's executive compensation program. Given the significant level of support from the Company's stockholders, the Compensation Committee and the Board believe that the Company is taking a measured, informed and responsible approach to NEO compensation which incorporates all of the Company's objectives and policies set forth above including, but not limited to, a pay for performance culture that retains talent and motivates and rewards performance. The Board and the Compensation Committee considered this substantial affirmation as one of many factors in crafting a NEO compensation program that largely mirrors the stockholder approved approach and will continue to seek stockholder feedback on our NEO compensation programs.

Role of the Compensation Committee

The Compensation Committee consists of five (5) members of the Board, each of whom is independent. The Chair of the Compensation Committee reports on material committee actions at Board meetings.

The Compensation Committee reviews all elements of compensation for the Company's NEOs, namely its CEO, CFO and the other three (3) most highly compensated executive officers. Elements of compensation are reviewed individually and in the aggregate, including a review of base salary, annual cash incentives, total cash compensation, long-term incentives and/or equity awards, total direct compensation, benefits and perquisites. In addition, the Compensation Committee reviews the interplay between pay and performance and considers all elements in the aggregate as part of an executive's total compensation package, taking into account our corporate goals and objectives. The Compensation Committee reviews its philosophy and executive compensation practices at least annually.

The Compensation Committee's major duties and responsibilities are the following:

Review overall compensation, benefits and perquisites programs.

Evaluate CEO and other executive officer performance.

Review all aspects of the CEO's pay program including approval of base salary, annual incentives, equity and benefits.

Review all aspects of the pay programs of the executive officers who report to the CEO.

Assess the risks in connection with the compensation program to ensure executives are not encouraged or rewarded for taking excessive risk.

Award annual cash incentive payments to the NEOs in accordance with the terms of the Executive Officer Short-Term Incentive Plan.

 

Review, evaluate and, if applicable, approve incentive, equity and executive benefit plans.

Oversee the Company's compliance with all regulations related to executive compensation.

Review and approve all severance and termination arrangements for executive officers.

Review and approve the CD&A.

Review the overall compensation arrangements in connection with Volcker Rule incentive compensation considerations to confirm the Company is not incentivizing prohibited proprietary trading activities.

The Compensation Committee has the authority to delegate any of its responsibilities to one or more subcommittees consisting of one or more of its members, in its sole discretion.

Role of Management

Although the Compensation Committee makes independent determinations on all matters related to compensation of the NEOs, certain members of management are requested to attend meetings and/or provide input to the Compensation Committee. Input may be sought from the CEO, Chief Human Resources Officer ("CHRO"), CFO, Chief Operating Officer ("COO"), Chief Risk Officer ("CRO"), General Counsel ("GC"), Chief Administrative Officer ("CAO") or others to ensure the Compensation Committee has the information and perspective it requires to carry out its duties.

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The Compensation Committee will:

The CHRO assists the Compensation Committee on the design, administration and operation of the Company's compensation programs. The CHRO may be requested, on the Compensation Committee's behalf, to work with the Compensation Committee's independent consultant to develop proposals for the Compensation Committee's consideration. The Compensation Committee also receives updates from the Company's CRO, CFO and COO, throughout the year as appropriate.

Although executives provide insight, suggestions and recommendations, only Compensation Committee members vote on decisions regarding executive compensation. The Compensation Committee regularly meets in executive session without management.

Role of the Compensation Consultant

The Compensation Committee has the authority to retain a compensation consultant to advise on executive compensation matters. The Compensation Committee also has access to outside legal counsel and other experts as needed. The compensation consultant and other experts serve at the request of the Compensation Committee, which has the power and authority to retain such experts and approve fees and retention terms.

During 2020, the Committee retained Compensation Advisory Partners, LLC ("CAP") to serve as independent compensation consultant and perform the following tasks, among others:

In the event the Company desires to seek CAP's expertise for assistance with other issues not directly related to executive compensation, the Compensation Committee would first approve such activities.

In retaining CAP, the Committee determined that, based on the information presented, CAP was independent and its engagement did not present any conflicts of interest. In making this determination, the Compensation Committee noted:

CAP also determined that it was independent from the Company's executive officers and confirmed this in a written statement delivered to the Chair of the Compensation Committee. Based on the above, the Committee reviewed and concluded that retaining CAP complied with the standards adopted by the SEC and NYSE regarding compensation advisor independence and conflicts of interest.

2020 Peer Group

Our 2020 peer group remained unchanged from 2019, consisting of 23 banks with a median asset size of $32.9 billion compared to Sterling's assets of $29.8 billion and median market cap of $4.3 billion compared to Sterling's market cap of $3.5 billion as of December 31, 2020. The peer group includes banks in the United States, excluding banks located in Hawaii and Puerto Rico, as well as excluding thrifts and banks primarily engaged in providing consumer loans. This peer group served as a benchmark when making 2020 executive and director compensation decisions.

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The Compensation Committee's compensation consultant reviews the Company's peer group on a regular basis to ensure it remains relevant and appropriate given the Company's asset size. We expect to revisit the composition of the peer group for 2022.

2020 and 2021 PEER GROUP
   

Associated Banc-Corp

  BankUnited, Inc.   BOK Financial Corporation

CIT Group

  FNB Corporation   First Citizens BancShares, Inc

First Horizon National Corporation

  Fulton Financial Corporation   Hancock Whitney Corporation

IBERIABANK Corporation

  PAC West Bancorp   People's United Financial, Inc.

Pinnacle Financial Partners, Inc.

  Signature Bank   SVB Financial Group

Synovus Financial Corp.

  Texas Capital Bancshares, Inc.   UMB Financial Corporation

Umpqua Holdings Corporation Inc.

  Valley National Bancorp   Webster Financial Corporation

Western Alliance Bank Corporation

  Wintrust Financial Corporation  
   

Our total compensation program includes the following components:

Component
Objective/Purpose
Base Salary  

Provide competitive base compensation to recognize executives' roles, responsibilities, contributions, experience, leadership and performance. Our salaries generally are targeted to be within the range of market median.

Represent fixed compensation that is the basis for other compensation elements such as incentive pay.

Sufficient to discourage inappropriate risk taking by executives.

Actual salaries and increases reflect an executive's performance, experience and pay level relative to internal and external salary relationships.

Annual Cash Incentive Awards

 

Motivate and reward achievement of specific annual performance goals. We provide competitive compensation when performance goals are achieved and above or below incentive compensation pay when performance is above or below performance, respectively.

Align executives with the Company's strategic plan and critical performance goals. Provide meaningful "pay-at-risk" that is earned each year based on performance. Actual awards vary based on performance.

Encourage teamwork and collaboration across the Company.

Equity Compensation/Long-term Incentives

 

Target long-term incentive opportunities that are competitive with industry practice and norms. Such opportunities reward executives for long-term growth, profitability and creating stockholder value.