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") is appointed by the Board of Directors (the "Board") of Discover Financial Services (the "Company") 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 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.
- 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 New York Stock Exchange, (ii) the requirements for a "Non-Employee Director" contained in Rule 16b-3 under the Securities Exchange Act of 1934, as amended, and (iii) the requirements for an "outside director" for purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code") as in effect prior to 2018 with respect to awards intended to be grandfathered under Section 162(m) of the Code.
- The Committee shall hold regular meetings at least twice per year and report to the Board on a regular basis. The Committee may also meet periodically in separate executive sessions, as it deems appropriate.
- 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 have direct access to, and complete and open communication with, management and may obtain advice and assistance from internal legal, accounting or other advisors to assist it. The Committee may, in its sole discretion, retain or obtain the advice of compensation consultants, independent legal counsel, accounting advisors or other advisors ("External Advisors") to assist it, and determine the compensation and retention terms for such External Advisors, and the Company shall be responsible for any costs or expenses so incurred. The Committee shall review the independence of any External Advisor, considering the factors specified by the rules of the New York Stock Exchange, in advance of retaining such External Advisor.
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 required by the rules of the Securities and Exchange Commission. Based on such review and discussion, the Committee shall determine whether to recommend to the Board that the Compensation Discussion and Analysis be included in the Company'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 Company's annual report or proxy statement for the annual meeting of stockholders.
- 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 Section 162(m) of the Code.
- 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 in making its compensation determinations.
- Oversee plans for leadership development including succession planning.
- 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.
- Exercise direct responsibility for, and sole discretion over, the appointment, termination, compensation and oversight of the work of any External Advisor retained by the Committee.
- Review and evaluate annually its performance and report the results to the Board.
- Review and assess annually the adequacy of this charter and, if appropriate, recommend changes to the charter to the Board.
- Have such other authority, duties or responsibilities as may be delegated to the Committee by the Board.
Amended: February 21, 2019