Our Business Practices
We adhere to the highest standards of corporate governance and ethical conduct. We believe that accountability, transparency and good decision-making support our business, serve our customers and create value for our shareholders.
Compensation and Leadership Development Committee Charter
The Compensation and Leadership Development Committee (the "Committee") of Discover Financial Services (the "Parent") and Discover Bank (the "Bank," and together with the Parent, the "Company") is a committee of both boards of directors (collectively, the "Board") appointed to discharge the Board's responsibilities relating to compensation of the Company's executive officers, to produce an annual report on executive compensation for inclusion in the Company's annual proxy statement, to oversee plans for leadership development, and to exercise and perform the authority, duties and responsibilities set forth in this charter.
- The Committee shall be comprised of at least three (3) Board members nominated by the Nominating, Governance and Public Responsibility Committee and appointed by the Board. Committee members shall serve at the pleasure of the Board and for such term as the Board determines. The Board shall designate one Committee member as the Committee's chair (the "Chair").
- Each Committee member shall have no material relationship with the Company and shall otherwise satisfy (i) the independence requirements of the Company set forth in the Company's Corporate Governance Policies and the rules of the New York Stock Exchange ("NYSE"), (ii) the requirements for a "Non-Employee Director" contained in Rule 16b-3 under the Securities Exchange Act of 1934, as amended, and (iii) any other applicable law or regulation. Determinations of qualifications, including independence, shall be made by the Nominating, Governance and Public Responsibility Committee, using its business judgment.
- The Committee shall hold regular meetings at least twice per year and report to the Board on a regular basis. In the absence of the Chair at any meeting of the Committee, the members of the Committee may designate one of its members to serve as the Chair of the meeting. Meetings shall include any participants the Committee deems appropriate, consistent with the maintenance of the confidentiality of compensation discussions, and shall be of sufficient duration and scheduled at such times as the Committee deems appropriate to discharge properly its responsibilities.
- The Committee may also meet periodically in separate executive sessions, as it deems appropriate.
- The Committee shall make periodic reports to the Board summarizing the matters reviewed and actions taken at each Committee meeting and make available to the Board minutes of all meetings.
- The Committee may form and delegate to one or more subcommittees all or any portion of the Committee's authority, duties and responsibilities, and may establish such rules as it determines necessary or appropriate to conduct its business. The Committee shall report on any such delegation to the full Board.
- The Committee shall have direct access to, and have complete and open communication with, management and may obtain advice and assistance from internal legal or other advisors. The Committee may retain independent legal, compensation consultants or other advisors ("External Advisors") as it determines appropriate to assist it in fulfilling its responsibilities, without seeking approval of management or the Board. The Committee shall be directly responsible for the appointment, termination, compensation (including related expenses), management, and oversight of the work of External Advisors. In advance of retaining an External Advisor, the Committee shall review the independence of that External Advisor, considering the factors specified by the rules of the NYSE, including: (i) the provision of other services to the Company by the entity that employs the External Advisor; (ii) the amount of fees (as a percentage of the total revenue) the entity that employs the External Advisor receives from the Company; (iii) the policies and procedures of the entity that employs the External Advisor that are designed to prevent possible or actual conflicts of interest; (iv) any business or personal relationship of the External Advisor with any member of the Committee; (v) any stock of the Parent owned by the External Advisor; and (vi) any business or personal relationship of the External Advisor or the entity employing the External Advisor with an executive officer of the Company.
- The Company shall provide for appropriate funding, as determined by the Committee, for the payment of: (i) ordinary administrative expenses of the Committee that are necessary or appropriate in carrying out its duties and responsibilities; and (ii) compensation to the External Advisors retained by the Committee.
- The Committee shall review and evaluate annually its performance and report the results to the Board. The Committee shall review and assess annually the adequacy of this charter and, if appropriate, recommend changes to the Board for approval.
- The Committee shall document and maintain records of its proceedings.
- Except as set forth herein, the Committee is governed by the same rules regarding meetings (including meetings in person or by telephone or other similar communications equipment), action without meetings, notice, waiver of notice, and quorum and voting requirements as are applicable to the Board.
Authority, Duties and Responsibilities
The Committee shall:
- Review and approve corporate goals and objectives relevant to the compensation of the Chief Executive Officer, evaluate his or her performance in light of those goals and objectives, and determine his or her compensation level based on that evaluation. In determining the long-term incentive component of Chief Executive Officer compensation, the Committee should consider the Company's performance and relative shareholder returns, the value of similar incentive awards to counterparts at comparable companies, the awards given to the Chief Executive Officer in past years and such other factors as the Committee considers appropriate.
- Review and discuss with the Company's management the Compensation Discussion and Analysis ("CD&A") and other related disclosures required by the rules of the Securities and Exchange Commission, including Item 407(e)(4) of Regulation S-K. Based on such review and discussion, the Committee shall determine whether to recommend to the Board that the CD&A be included in the Parent's annual report or proxy statement for the annual meeting of stockholders. The Committee shall provide, over the names of the members of the Committee, the required Committee report for the Parent's annual report or proxy statement for the annual meeting of stockholders.
- Review any stockholder proposal relating to executive compensation matters or other matters under the Committee's purview and management's proposed responses thereto.
- Oversee the Company's policies on structuring compensation programs for executive officers, including stock ownership guidelines and share retention requirements, analysis of tax deductibility, and, as and when required, establish performance goals and certify that performance goals have been attained for purposes of making awards under incentive plans applicable to executive officers of the Company.
- Review and approve any employment agreement, new hire award or new hire payment proposed to be made with or to a proposed or current executive officer.
- Review and approve any severance, change-in-control or similar termination agreement, award or payment proposed to be made with or to any current or former executive officer.
- As it determines appropriate, approve, or make recommendations to the Board regarding, (i) non-CEO executive officer (and such other officers as the Committee determines appropriate) compensation, (ii) incentive compensation plans and (iii) equity-based plans.
- Review the Company's compensation policies and practices to ensure that these policies and practices do not encourage excessive risk taking, including obtaining input from the Chief Risk Officer, and taking into account risk outcomes and the safety and soundness of the Parent and the Bank in making its compensation determinations.
- Review the results of any advisory stockholder votes on executive compensation and consider whether to recommend adjustments to the Company's executive compensation policies and practices in light of such votes.
- Review and provide oversight, as necessary, to policies and their related administration with respect to the recovery or "clawback" of any erroneously awarded incentive based compensation paid to any of the Company's executive officers.
- Oversee plans for leadership development including succession planning, and talent retention, including with respect to the Company's commitment to diversity, equity and inclusion.
- Administer and amend, as it determines appropriate, any present or future incentive compensation plan, equity-based plan or employee benefit plan providing that it shall be administered or amended by the Board or the Committee. The Committee is also authorized to exercise and perform any power, authority, discretion or duty of the Board or the Committee that any such plan provides shall be exercised or performed by the Board or the Committee, including without limitation to (i) issue or grant equity-based awards pursuant to such plan, (ii) authorize or reserve shares of common stock for issuance thereunder and (iii) make any such anti-dilution adjustments thereunder as the Committee may determine necessary or equitable to reflect any stock split of the Company's common stock or similar events.
- Create and amend, as it determines appropriate, any trusts related to any present or future incentive compensation plan, equity-based plan or employee benefit plan providing that it shall be administered or amended by the Board or the Committee. The Committee is also authorized to exercise and perform any power, authority, discretion or duty of the Board or the Committee that any such trust provides shall be exercised or performed by the Board or the Committee.
- Have such other authority, duties and responsibilities as may be delegated to the Committee by the Board.
The Committee's authority, duties and responsibilities are discharged through evaluating reports given to the Committee and presentations made to the Committee by management, and by other persons or organizations the Committee deems appropriate.
As Amended: May 11, 2023