Corporate Governance Principles
The Board of Directors (“Board”) of Raymond James Financial, Inc. (the “Company”) has adopted the following principles with respect to the Company’s governance (“Principles”). These Principles will be reviewed regularly by the Corporate Governance and ESG Committee of the Board. The Board may amend the Principles from time to time in light of corporate governance developments.
1. Corporate Mission Statement
Our business is people and their financial well-being.
We are committed to helping individuals, corporations and institutions achieve their unique goals, while also developing and supporting successful professionals, and helping our communities prosper.
2. Corporate Governance at Raymond James
In contrast to many public companies, the Company’s management and employees are significant shareholders, collectively owning a substantial portion of the Company’s common stock. For this reason, the Board believes that the interests of the Company’s management and employees are already strongly aligned with the interests of shareholders. These Principles, adopted by the Board, reflect this important characteristic of the Company.
3. Role and Duties of the Board of Directors
The role of the Board is to oversee management of the Company in its efforts to enhance shareholder value and conduct the Company’s business in accordance with its Mission Statement. In that connection, the Board helps management assess long-range strategies for the Company and evaluates management performance, but does not engage in day-to-day management of the Company’s business. The Board also recognizes that the long-term interests of shareholders are advanced by responsibly addressing the concerns of other interested parties, including clients, associates, the communities which the Company serves and the economy of the state and nation.
The Company’s directors are required under Florida law to discharge their duties in good faith, with the care that an ordinarily prudent person in a like position would exercise under similar circumstances, and in a manner they reasonably believe to be in the best interests of the Company. In discharging their oversight responsibility, members of the Board may reasonably rely on information provided by the Company’s management and employees, as well as its legal counsel, auditors and other professional advisers.
4. Size and Composition of the Board of Directors
Under the Company’s By-laws, the Board consists of no more than 20 persons, with the number of directors to be fixed from time to time by resolution of the Board.
A majority of directors must be “independent” in accordance with the rules of the New York Stock Exchange (“NYSE”). The Board presently believes that the Company’s interests are best served by having representation of the Company’s senior management on the Board.
5. Majority Election of Directors
The Company’s By-laws provide for majority voting in uncontested elections of directors. This means that, in uncontested elections, directors are elected by a majority of the “votes cast,” meaning that the number of shares cast in favor of a nominee exceeds the number of votes cast against the nominee. Each nominee for membership on the Board must tender an irrevocable conditional resignation to the Company, such resignation to be effective only upon (i) the director’s failure to receive the required vote in an uncontested election, and (ii) Board acceptance of such resignation. If any nominee for reelection fails to receive the required vote, the Corporate Governance and ESG Committee will recommend that the Board accept the resignation unless it determines that the best interests of the Company and its shareholders would not be served by doing so. Absent such determination, the Board will accept the resignation no later than 120 days from the certification of the shareholder vote, subject to maintaining compliance with NYSE or SEC rules or regulations. The Board will promptly publicly disclose its decision and the reasons therefor.
6. Selection of Board Nominees
The Corporate Governance and ESG Committee reviews and considers the experience, qualifications and diversity of perspectives, backgrounds and experiences of all potential nominees to the Board. Board members are expected to demonstrate high standards of integrity and character and are also expected to offer important perspectives on some aspect of the Company’s business based on their business experience. Among other requirements, pursuant to the Company’s By-laws, to be eligible as a candidate for election to the Board, a person (i) may not be on the boards of more than three (3) other public companies, and (ii) may not be subject to certain convictions, sanctions, judgments, orders or suspensions imposed by courts or regulatory (including self-regulatory) authorities.
7. Board Tenure
Under our By-laws, directors generally serve terms of one (1) year.
The Board recognizes the value of continuity of directors who have experience with the Company and who have gained over a period of time a level of understanding about the Company and its operations that enables the director to make a significant contribution to the deliberations of the Board without, in the case of non-executive Board members, any ongoing impairment to their independence. Non-executive directors are normally expected to serve no more than twelve (12) years on the Board, however, in the event of extraordinary circumstances, the Board reserves the right to waive the above tenure limitation to allow a director to serve up to three (3) additional annual terms on the Board.
Non-executive directors who hold a particular board or employment position at the time of their appointment are not automatically required to resign from the Board if that position changes during their tenure.
Directors who are officers of the Company should offer their resignation in the event of any significant change in their primary job responsibilities and/or upon termination of their employment with the Company. The Board, with the assistance of the Corporate Governance and ESG Committee, will evaluate whether it should accept the resignation after reviewing whether the individual satisfies the Board’s membership criteria in light of such change.
8. Limitation on Outside Board Membership
Non-executive directors may not serve on the board of directors of more than three (3) other public companies.
9. Compensation of Directors
Members of the Board are compensated for their time and services by cash and equity awards. The compensation level is periodically reviewed by the Corporate Governance and ESG Committee, which makes recommendations to the Board. Such levels are designed to reflect reasonable compensation for the time spent at meetings of the Board and its committees and for other activities required of directors to enable them to effectively discharge their responsibilities.
A director who is also an employee of the Company shall not receive additional compensation for such service as a director.
10. Lead Director
The Board will exercise its discretion in combining or separating the offices of Chairman of the Board and CEO. This determination will be based on the Board’s judgment of the best interests of the Company from time to time. The Board combined the positions of Chairman of the Board and Chief Executive Officer in connection with the transition from our former Executive Chairman’s leadership. The Board has appointed one of its independent directors as lead director (“Lead Director”), whose role is defined in a separate Charter of Lead Director. The Lead Director is generally expected to serve for a renewable term of three (3) years.
11. Board Meetings
Board meetings follow an agenda that is established in advance by the Chairman, CEO and CFO, with input from the Lead Director and from management. Each meeting of the Board provides for time for a joint meeting with members of the Company’s Executive Committee, who constitute the senior management of the Company. Board materials are distributed in advance of each meeting, generally containing financial, strategic and operational summaries from each of the major business units as well as material information relating to agenda items. Members of the Board are expected to attend all Board meetings and meetings of committees on which they serve, to spend the time needed in preparation for such meetings and to meet as frequently as they deem necessary to properly discharge their responsibilities. In addition, directors should stay abreast of the Company’s business and markets. To the fullest extent possible, directors should review agendas and other meeting materials in advance of any Board or committee meeting.
12. Confidentiality of Board and Committee Materials and Other Information
Pursuant to fiduciary duties of loyalty and care and the Company’s applicable policies, each director is required to protect and hold confidential all non-public information obtained by virtue of his or her position as a director, absent the express or implied permission of the Board to disclose such information. Accordingly, no copies of any Board or Committee materials distributed to or prepared by the directors, whether printed or electronic, may be retained by any director after the date of a meeting of the Board or Committee (as applicable) immediately following the meeting for which such materials were originally distributed or prepared . This policy allows the directors to retain Board or Committee materials for a limited period of time in order to facilitate the review and approval of meeting minutes, while the official copy of all Board and Committee materials shall be retained thereafter solely by the Company.
13. Meetings of Non-Executive Directors
In addition to the formal Board meetings, the non-executive directors meet in conjunction with each regularly-scheduled Board meeting. The non-executive Directors also meet regularly with the CEO.
14. Board and Director Evaluation
The Board conducts an annual long-range strategic planning meeting, generally following the Annual Meeting of Shareholders. During these meetings, members of senior management also participate in addressing strategic issues facing the Company, including management succession planning. In addition to consideration of strategic and long-term issues, the Board undertakes a review of its own performance, functions and processes, to determine whether the Board and its committees are functioning effectively and identify areas for improvement.
The Corporate Governance and ESG Committee conducts an annual evaluation of each director’s performance in connection with the nomination of candidates for election to the Board. The Lead Director thereafter discusses the resulting performance feedback in a private meeting with each individual director.
15. Director Orientation and Continuing Education; Access to Employees and Independent Advisers
New directors are provided with an orientation to the Company and a board reference manual containing important background information regarding the Company. Management of the Company encourages all Board members to meet with senior management personnel to learn about the financial, strategic and other long-term issues affecting the Company’s business operations, and provides specific opportunities for new directors to engage in such meetings.
Members of the Board are encouraged to take advantage of educational programs that may assist them in the performance of their duties. The Company will reimburse directors for the reasonable costs of attendance at programs which are approved in advance by the Company.
Members of the Board have at all times full and unrestricted access to members of management and employees of the Company and are encouraged to contact such personnel directly. Any work assignments to employees of the Company, however, must be coordinated in advance with senior management.
The Board and each Board committee shall have full and free access to the Company’s independent advisers and each shall have the power to retain legal, accounting, financial or other advisers as they may deem appropriate at the expense of the Company, without the need to obtain the prior approval of any officer of the Company.
16. Board Committees
The Board has five committees: the Audit Committee, the Risk Committee, the Corporate Governance and ESG Committee, the Compensation and Talent Committee, and the Capital Planning Committee. All members of the Audit Committee, the Risk Committee, the Corporate Governance and ESG Committee, and the Compensation and Talent Committee are independent directors in accordance with the criteria established by the NYSE, and must also satisfy any other qualifications for service on the particular committee pursuant to its charter or applicable law. In addition, the Audit Committee designates at least one of its members as an Audit Committee Financial Expert. Each of the committees (other than the Capital Planning Committee) has a charter defining its mission and role. Members of the committees and committee chairpersons are appointed, and may be removed, by the Board of Directors. Committee chairpersons are generally expected to serve for renewable terms of three (3) years.
17. CEO Compensation and Succession
The Board shall be responsible for identifying potential candidates for, and selecting, the CEO.
The Compensation and Talent Committee establishes standards for CEO performance and determines the compensation of the CEO based on an annual review of his or her performance. The Committee also annually reviews compensation of other senior executives.
The Board is responsible for overseeing succession planning for the Board, senior level executive positions and the CEO, including policies and principles for the selection and performance review of the CEO, as well as policies regarding succession in the event of an emergency or the retirement of the CEO.
18. Ethics Policy
The Company has a comprehensive ethics policy applicable to all employees and to members of the Board, requiring adherence to high ethical standards as well as compliance with all applicable laws, rules and regulations. The Company has also established procedures, under the direction of the Audit Committee, for the confidential and anonymous reporting by employees of concerns regarding accounting, auditing and internal controls matters.
19. Stock Ownership Guidelines
Pursuant to a separate written policy, all members of the Board are expected to acquire at least that number of shares of the Company’s common stock equal to five (5) times their annual cash retainer by the fifth annual meeting of directors after the adoption of the policy or the date they join the Board. Similarly, our Chief Executive Officer is expected to acquire shares equal to seven (7) times his annual salary, and other members of the Company’s Executive Committee at least three (3) times their respective annual salaries, by the fifth anniversary of the later of adoption of the policy or their appointment. In addition, until such ownership levels are achieved, both directors and officers are expected to retain 100% of the net shares of common stock that they acquire through the vesting or exercise of equity awards. All forms of direct and indirect ownership, as well as time-vesting restricted stock and restricted stock unit awards (but not performance vesting awards or options), are counted towards satisfaction of the above requirements. The policy provides that, once compliance has been achieved, later fluctuations in stock price and/or salary are disregarded.
20. Interaction with Institutional Investors, the Press, Customers and Other Constituencies
The Board believes that management speaks for the Company. Each director should therefore refer all inquiries from shareholders, the press, customers or other constituencies to senior management. Upon prior approval by senior management, individual members of the Board may, from time to time, meet with or otherwise communicate to various constituencies that are involved with the Company.
21. Shareholder Communications with the Board
Any interested party may communicate with the Lead Director of our Board or to our non-executive directors as a group by sending written communication to: Raymond James Financial, Inc., 880 Carillon Parkway, St. Petersburg, Florida 33716, Attn: Company Secretary.
These Principles are intended as a component of the flexible framework within which the Board, assisted by its committees, oversees the affairs of the Company. While they should be interpreted in the context of applicable laws, regulations and listing requirements, as well as in the context of the Articles and By-laws, they are not intended to establish by their own force any legally binding obligations.
As approved by the Board of Directors on May 23, 2023