Company: BPOPM
Filing Date: 2025-03-25
Form Type: DEF 14A
Source: 0001140361-25-010189
Chunk: 46

Company: POPULAR, INC.
Filing Date: 2025-03-25
Form: DEF 14A
Chunk 46
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 for the year 2023. Excluding the $9.1 million after-tax impact of the Special Assessment imposed by the FDIC on insured depository institutions to recover losses to the deposit insurance fund in connection with the receivership of several failed banks in 2023 and the $22.9 million adjustment for withholding tax on prior period distributions, the adjusted net income for 2024 was $646.1 million, an increase of 10% compared to the previous year. The variance was mainly driven by higher net interest income, offset in part by a higher provision for credit losses and higher operating expenses. The increase in operating expenses reflects our planned investment in our transformation initiatives, our people and our efforts to expand our capabilities in cybersecurity, risk management, data and technology. For incentive purposes, we use GAAP after-tax adjusted net income, if applicable, as the key financial metric for incentive compensation because we believe it best reflects the underlying performance of our ongoing operations. The Committee’s use of adjusted net income is to ensure that participants are neither rewarded nor penalized for items that are non-recurring, unusual or not indicative of ongoing operations. For incentive purposes, the Committee adjusted the GAAP net income only for the impact of the FDIC Special Assessment. The adjusted net income for incentive purposes of $623.3 million represented 89.67% of the 2024 target of $695.1 million. This level of performance yielded a payout slightly above the 85% threshold on the Corporate Net Income component of the annual cash incentive. As a result, NEOs earned 65.57% of their respective targets for this component. Refer to the GAAP to non-GAAP reconciliation in Appendix A. Return on Average Tangible Common Equity The Committee uses annual after-tax adjusted ROATCE as a performance measure given its increasing focus in our communications with shareholders and due to its incorporation of both earnings and capital management. ROATCE is calculated based on our adjusted earnings for the year divided by our average tangible shareholder’s equity less preferred stock, goodwill, and other intangibles. The 2024 after-tax adjusted ROATCE of 10.00% represented 90.09% of the 2024 target of 11.10%. This level of performance yielded a payout between the 85% performance threshold and target on the ROATCE component of the annual cash incentive. As a result, NEOs earned 66.97% of their respective award targets for this component. Strategic Performance The Strategic Performance component is tied to