CVB Financial Corp.
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No. )

 

 

Filed by the Registrant ☒

Filed by a Party other than the Registrant ☐

Check the appropriate box:

 

Preliminary Proxy Statement

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

Definitive Proxy Statement

Definitive Additional Materials

Soliciting Material under Rule 14a-12

 

CVB FINANCIAL CORP.

(Name of registrant as specified in its charter)

(Name of person(s) filing proxy statement, if other than the registrant)

 

Payment of Filing Fee (Check the appropriate box):

No fee required.

Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11.

Fee paid previously with preliminary materials.

 


 

 

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NOTICE OF 2023 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENT


 

NOTICE OF 2024 ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD WEDNESDAY, MAY 15, 2024

To Our Shareholders:

 

The 2024 annual meeting of shareholders of CVB Financial Corp. will be held at 8:00 a.m. local time at CVB Financial Corp.’s Corporate Headquarters, 701 North Haven Avenue, Ontario, CA 91764, on Wednesday, May 15, 2024.

We will hold our annual meeting in person. In addition, we are planning to provide interested shareholders, members of our Board of Directors and our team members, as a courtesy, the opportunity to listen to our annual meeting by remotely dialing into an audio conference call, which will broadcast the proceedings concurrently. There will be no food or refreshments provided at this meeting.

The live audio call will be held concurrent with our annual meeting (8:00 a.m. PDT on May 15, 2024). To join our conference call facility please dial 1 (833) 630-1956. Questions will be permitted in person and, as a courtesy, when prompted by the moderator for audio participants. A taped replay will be made available approximately one hour after the conclusion of the call and will remain available until 6:00 a.m. PDT on May 22, 2024. To access the replay, please dial 1 (877) 344-7529, passcode 7329017.

Please note that, in order to cast your votes on any matters to be considered at our annual meeting or otherwise to be present at our annual meeting for purposes of California law, you should either (i) vote in advance by internet, telephone or return of your proxy card, or (ii) vote in person by attending the annual meeting at its designated location. Listening to the proceedings by audio conference call will not constitute attendance for legal purposes. We will not have the ability to accept or change any shareholder votes on the audio call.

 

At our annual meeting, we will ask you to act on the following matters:

 

1.

Election of Directors. Elect eight (8) persons to the Board of Directors to serve for a term of one year and until their successors are elected and qualified. The following eight persons are our nominees:

 

 

George A. Borba, Jr.

Jane Olvera Majors

 

 

David A. Brager

Raymond V. O’Brien III

 

 

Stephen A. Del Guercio

Hal W. Oswalt

 

 

Anna Kan

Kimberly Sheehy

 

2.

Advisory Compensation Vote. Approve, on an advisory (non-binding) basis, the compensation of our named executive officers for 2023 (“Say-On-Pay”).

 

3.

Ratification of Appointment of Independent Registered Public Accountants. Ratify the appointment of KPMG LLP as our independent registered public accountants for 2024.

 

4.

Other Business. Transact any other business that properly comes before the meeting.

 

If you were a shareholder of record at the close of business on March 22, 2024, you may vote at the annual meeting or at any postponement or adjournment of the meeting.

 

By Order of the Board of Directors

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Michelle L. Edu

Assistant Vice President and Corporate Secretary

Dated: April 3, 2024

 

Important Notice Regarding the Availability of Proxy Materials for the 2024 Annual Meeting of Shareholders:

This Proxy Statement, our 2023 Annual Report and our Annual Report on Form 10-K for the fiscal year 2023 are available online on the internet at: https://investors.cbbank.com/annual-meeting.

IT IS IMPORTANT THAT ALL SHAREHOLDERS VOTE. WE URGE YOU TO PLEASE VOTE BY INTERNET OR TELEPHONE, OR TO SIGN, DATE AND PROMPTLY RETURN YOUR PROXY CARD IN THE ENCLOSED ENVELOPE, SO THAT YOUR SHARES WILL BE REPRESENTED WHETHER OR NOT YOU ATTEND THE ANNUAL MEETING. IF YOU DO ATTEND THE ANNUAL MEETING IN PERSON, YOU MAY THEN WITHDRAW YOUR PROXY AND VOTE IN PERSON.

IF YOU RECEIVED A PAPER COPY OF THIS PROXY STATEMENT AND A PROXY CARD, PLEASE DO NOT RETURN THE PROXY CARD IF YOU ARE VOTING OVER THE INTERNET OR BY TELEPHONE.

 

 


 

TABLE OF CONTENTS

 

 

 

I.

PROXY STATEMENT SUMMARY AND
GENERAL INFORMATION

1

 

 

Compensation Committee

36

 

 

 

 

Compensation Committee Interlocks and
Insider Participation

36

 

PROXY STATEMENT SUMMARY

2

 

 

 

GENERAL INFORMATION

3

 

 

Certain Relationships and Related Person
Transactions

36

 

Who We Are

3

 

 

 

Core Values

3

 

Policies and Procedures for Approving
Related Person Transactions

36

 

Board Oversight and Structure

3

 

 

 

Our Executive Officers

3

 

Annual Board and Committee Self-Evaluation
Process

37

 

Overview of our Financial and Operating
Performance in 2023

4

 

 

 

Director Compensation

38

 

CVB Financial Corp. Percentile Rank vs.
Peers on Key Performance Indicators

5

 

 

Table on Outside Director Compensation
for 2023

40

 

 

Social Measures

5

 

 

 

 

 

Key Elements of Diversity

8

 

III.

PROPOSAL NO. 2:

 

 

Environmental Measures

13

 

ADVISORY RESOLUTION TO APPROVE
OUR EXECUTIVE COMPENSATION

41

 

Shareholder Engagement

15

 

 

 

Who are the Largest Owners of CVBF Stock?

16

 

 

Compensation Discussion and Analysis –
General Information

42

 

How Much CVBF Stock do our Directors and
Executive Officers Own?

17

 

 

 

2023 Compensation Program Overview

42

 

Delinquent Section 16(a) Reports

18

 

 

Philosophy and Objectives of Our Executive
Compensation Program

44

 

Questions and Answers about the Annual
Meeting and Voting

19

 

 

 

Compensation Clawback Policy

45

 

 

 

 

 

Summary of Components of Executive
Compensation

46

II.

PROPOSAL NO. 1:

 

 

 

ELECTION OF DIRECTORS

22

 

 

Methodologies for Establishing Executive
Compensation

48

 

Voting for Director Nominees

22

 

 

 

Nomination of Director Candidates

22

 

Role of Our Compensation Consultants

49

 

The Nominees

23

 

 

Peer Group Criteria and Composition for 2023

49

 

Director Skills and Experience Matrix

28

 

 

Peer Group Criteria and Composition Table

50

 

Corporate Governance Principles

29

 

 

Compensation Arrangements with our
President and CEO

51

 

Board Risk Oversight

29

 

 

 

Board Nominations of Director Candidates

30

 

 

Discussion of 2023 Named Executive Officers
Compensation Program

53

 

Shareholder Nominations of Director
Candidates and Other Proposals

30

 

 

 

 

Base Salary

53

 

Director Tenure, Age and Diversity

32

 

Annual Performance Incentive Compensation
Plans (Incentive Compensation and Plan-Based Discretionary Bonus Amounts

54

 

Board Diversity Matrix

33

 

 

 

Director Independence

33

 

 

Executive Sessions

33

 

 

Table of 2023 Performance Measures and
Corresponding Bonus Percentages

56

 

Director Stock Ownership Guidelines

33

 

 

 

Policy on Insider Trading, Pledging and
Hedging of Company Equity Securities

34

 

 

Table of 2023 Performance Measures and
Performance Levels Achieved

57

 

Director Attendance at Board Meetings and
Annual Shareholders Meeting

34

 

Table of 2023 Payout Levels by Performance Measure

57

 

Committees of the Board of Directors

34

 

 

Plan-Based Discretionary Bonus Percentages and Amounts

58

 

Audit Committee

34

 

 

 

Nominating and Corporate Governance
Committee

35

 

 

2023 Supplemental Discretionary Bonus Awards

58

 

 

 

Supplemental Discretionary Bonus Amounts and Percentages

59

 

 

 

 

 

 

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page i


 

 

 

Equity-Based Compensation

64

 

 

Potential Payments Upon Termination of
Employment Table

77

 

Equity Incentive Grants to our President
and CEO for 2023

65

 

 

 

 

 

 

CEO Pay Ratio Disclosure

78

 

Equity Incentive Grants to our Other
NEOs for 2023

65

 

 

Pay Versus Performance Disclosures for our CEO and NEOs

79

PRSU Performance Criteria and
Measurement Period

65

 

 

Equity Compensation Plan Information

83

 

 

 

Equity Compensation Plan Table

84

 

Employee Retirement Plans

66

 

 

 

 

 

Employee Health and Welfare Benefits

66

 

IV.

PROPOSAL NO. 3:

 

 

Compensation Committee Report

68

 

 

RATIFICATION OF APPOINTMENT OF
INDEPENDENT PUBLIC ACCOUNTING FIRM

85

 

Summary of Compensation Table

69

 

 

 

All Other Compensation Table

70

 

 

Selection of Independent Auditors

85

 

Grants of Plan-Based Awards for 2023

71

 

 

Principal Auditor’s Fees

85

 

Outstanding Equity Awards at Fiscal Year-
End Table

72

 

 

Audit Committee Oversight

85

 

 

 

Audit Committee Report

86

 

Option Exercises and Restricted Stock Vested
in 2023 Table

73

 

 

Annual Report on Form 10-K

87

 

 

 

Proposals of Shareholders for 2025

87

 

Deferred Compensation

73

 

 

 

 

 

Nonqualified Deferred Compensation Table

74

 

 

 

 

Potential Payments to our Named Executive
Officers Upon Termination or Change in Control

74

 

 

 

 

 

 

 

 

 

 

 

 

 

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page ii


 

 

 

CVB FINANCIAL CORP.

701 North Haven Avenue

Ontario, California 91764

(909) 980-4030

 

PROXY STATEMENT

 

 

This proxy statement contains information about the annual meeting of shareholders of CVB Financial Corp. to be held on Wednesday, May 15, 2024, beginning at 8:00 a.m. local time, at CVB Financial Corp.’s Corporate Headquarters, located at 701 North Haven Avenue, Ontario, CA 91764, and at any postponements or adjournments of the meeting. This proxy statement is being made available to our shareholders on or about April 3, 2024.

CVB Financial Corp. is a bank holding company whose principal subsidiary is Citizens Business Bank. CVB Financial Corp.’s common stock is listed on the Nasdaq Stock Market LLC (“Nasdaq”) and CVB Financial Corp. is therefore subject to Nasdaq’s listing requirements. CVB Financial Corp. is incorporated in the State of California and Citizens Business Bank is a California-chartered bank. CVB Financial Corp. and Citizens Business Bank are sometimes referred to collectively in this proxy statement as the “Company.”

We will hold our annual meeting in person. In addition, we are planning to provide interested shareholders, members of our Board of Directors and our team members with the opportunity, as a courtesy, to listen to our annual meeting by remotely dialing into an audio conference call, which will broadcast the proceedings concurrently and allow for questions and answers.

The live audio call will be held concurrent with our annual meeting (8:00 a.m. PDT on May 15, 2024). To join the conference call facility, please dial 1 (833) 630-1956. Questions will be permitted in person and when prompted by the moderator on the audio call. A taped replay will be made available approximately one hour after the conclusion of the call and will remain available until 6:00 a.m. PDT on May 22, 2024. To access the replay, please dial 1 (877) 344-7529, passcode 7329017.

Please note that, in order to cast your votes on any matters to be considered at our annual meeting or otherwise to be present at our annual meeting for purposes of California law, you should either (i) vote in advance by internet, telephone or return your proxy card, or (ii) vote in person by attending the annual meeting at its designated location. Listening to the meeting by audio conference call will not constitute attendance for legal purposes. We will not have the ability to accept or change any shareholder votes on the audio call.

Note About Forward-Looking Statements

This proxy statement includes estimates, projections, statements relating to our business plans, objectives, and expected operating results that are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements may appear throughout this proxy statement and relate to, among other things, our business, financial performance, prospects, executive compensation program, governance goals and commitments. These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “designed”, “strategy,” “future,” “opportunity,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties that may cause actual results to differ materially. We describe risks and uncertainties that could cause actual results and events to differ materially in the “Risk Factors,” “Quantitative and Qualitative Disclosures about Market Risk,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of our latest Form 10-K and other periodic reports we file with the U.S. Securities and Exchange Commission (“SEC”). Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date they are made. We undertake no obligation to update or revise publicly any forward-looking statements, whether because of new information, future events, or otherwise, except as required by law.

This Proxy Statement includes several website addresses and references to additional materials found on those websites. Those websites and materials are not incorporated by reference herein.

 

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page 1


 

PROXY STATEMENT SUMMARY

 

 

This summary highlights information set forth elsewhere in the proxy statement of CVB Financial Corp. This summary provides an overview and is not intended to contain all the information that you should consider before voting. We encourage you to read the entire proxy statement for more detailed information on each topic prior to casting your vote.

ANNUAL MEETING INFORMATION

 

Meeting:

 

Annual Meeting of Shareholders

Date:

 

Wednesday, May 15, 2024

Time:

 

8:00 a.m. Pacific Daylight Time

Location:

 

CVB Financial Corp. Corporate Headquarters

701 North Haven Avenue

Ontario, CA 91764

Record Date:

 

Close of Business on March 22, 2024

Stock Symbol:

 

CVBF

Exchange:

 

Nasdaq

Common Stock Outstanding as of Record Date:

 

139,684,299

How to Vote Your Shares:

 

Online www.investorvote.com/CVBF

By Phone Call the number at the top or your proxy card

By Mail Complete, sign, date and return your proxy card in the envelope provided

 

Matters To Be Voted Upon:

 

Board

Recommendation:

Proposal 1

 

Election of Directors

 

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FOR each

director nominee

Page 22

Proposal 2

 

Advisory resolution to approve, on a non-binding basis, the compensation of the Company’s named executive officers as disclosed in the accompanying proxy statement

 

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FOR

Page 41

Proposal 3

 

Ratification of the appointment of KPMG LLP as our independent public accounting firm for the year ending December 31, 2024

 

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FOR

Page 85

 

 

NOTICE REGARDING COURTESY AUDIO RECORDING OF THE ANNUAL MEETING VIA TELEPHONE

For your convenience, we are providing shareholders an opportunity to listen to the annual meeting via telephone.

You can access this option by dialing 1 (833) 630-1956 immediately prior to the start time for the annual meeting and asking to be joined into the CVB Financial Corp. conference call.

Shareholders accessing the meeting via telephone will not be able to vote their shares of common stock via telephone during

the annual meeting, nor are such shareholders considered present at the annual meeting for any legal purpose. As a result, if you plan to listen to the annual meeting via telephone, it is important that you vote your proxy prior to the annual meeting.

 

 

 

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page 2


 

GENERAL INFORMATION

Who We Are

CVB Financial Corp. is a bank holding company incorporated in the State of California. Our principal banking subsidiary, Citizens Business Bank, serves the financial needs of small to medium-sized businesses and their owners throughout the State of California. We deliver a comprehensive menu of banking and wealth management products and services through an emphasis on personal service and building long-term relationships with businesses and their owners. We are consistently recognized as a top-performing bank, including being rated by S&P Global Market Intelligence as the #3 Best-Performing U.S. Public Bank in 2023.

Our Five Core Values

We are continuing the work started by our founders in 1974 to build a strong and consistent foundation for our financial services platform. The following are the five core values on which our organization conducts our business.

 

 

 

 

 

 

 

 

 

 

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Financial

Strength

 

Superior

People

 

Customer

Focus

 

Cost-Effective Operation

 

Having

Fun

 

 

 

 

 

 

 

 

 

Board Oversight and Structure

The business and affairs of CVB Financial Corp. and Citizens Business Bank are supervised under the direction of our Board of Directors. The Board of Directors has historically separated the roles of President and Chief Executive Officer, on the one hand, and Chairman of the Board, on the other hand. We believe this structure, together with our other strong corporate governance practices, provide robust independent oversight of management while ensuring clear strategic alignment throughout the Company.

Hal W. Oswalt was elected by our Board of Directors as the Chairman of the Board, effective May 18, 2022. Mr. Oswalt had previously served as a director of CVB Financial Corp. and Citizens Business Bank since 2014 and as Chair of the Board’s Compensation Committee since May 2021. Mr. George Borba, Jr., who has served as a director of CVB Financial Corp. and Citizens Business Bank since 2012, continues to serve as our Vice-Chairman of the Board.

Separate board committees exist at CVB Financial Corp. and Citizens Business Bank, each of which is responsible for supervising various areas of responsibility or risk. The Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee exist at CVB Financial Corp. The Balance Sheet Management Committee, Credit Committee, Risk Management Committee and Trust Services Committee exist at Citizens Business Bank. All of our board committees meet on regular schedules and report to the full Board of Directors.

Our Executive Officers

The Company’s executive officers are:

David A. Brager

 

President and CEO of CVB Financial Corp. and Citizens Business Bank (the “CEO”)

 

 

 

E. Allen Nicholson

 

Executive Vice President and Chief Financial Officer of CVB Financial Corp. and Citizens Business Bank

 

 

 

Yamynn DeAngelis

 

Executive Vice President, Chief Risk Officer of Citizens Business Bank

 

 

 

David F. Farnsworth

 

Executive Vice President, Chief Credit Officer of Citizens Business Bank

 

 

 

David C. Harvey

 

Executive Vice President, Chief Operating Officer of Citizens Business Bank

 

 

 

Richard H. Wohl

 

Executive Vice President, General Counsel of CVB Financial Corp. and Citizens Business Bank

 

 

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Biographical information about each of our executive officers named above and employed by the Company as of December 31, 2023 is contained under Item 1 of our Annual Report on Form 10-K for 2023, a copy of which is being mailed with this proxy statement or, as referenced in the Notice, is available at https://investors.cbbank.com/annual-meeting.

Overview of our Financial and Operating Performance in 2023

 

2023 Net Income

2023 End of Period Assets

2023 End of Period Deposits

2023 End of Period

CET1 Capital Ratio

 

 

 

 

$221.4 million

$16.02 billion

$11.43 billion

14.65%

 

2023 was marked by a set of evident challenges that impacted the U.S. economy and the banking industry specifically. As the year began, interest rates continued to rise sharply, as the Federal Reserve carried on with the campaign it started in 2022 to raise short-term interest rates in order to combat unexpectedly high inflation. Shorter-term interest rates rose more than longer-term interest rates, causing the yield curve to invert in 2022 and to remain inverted at most tenors during 2023, which in turn made lending conditions more challenging for banks. Bank deposit costs increased without a commensurate increase in the returns on bank lending, leading to the compression of net interest margins. In addition, the elevated interest rate environment created significant pressures on bank funding costs, bank liquidity and bank securities and loan portfolio valuations, culminating in the failure of three large U.S. regional banks during March and May 2023. This in turn caused customers to withdraw deposits at many regional banks and smaller financial institutions, resulting in higher alternative funding costs for the affected banks, against a backdrop of weaker demand for loans and deteriorated credit quality due to a slowing economy.

 

Global and geopolitical risks also remained at the forefront of economic concerns during 2023, including notable disruptions in certain markets, such as the energy and shipping markets, stemming from the ongoing Russian invasion of Ukraine and warfare in the Middle East precipitated by the Hamas attack on Israel. Looking closer to the Company’s home market in California, the state ended the year facing a multitude of economic challenges, including a large budget deficit, flat tax revenue, sluggish job growth compared to national averages, with the state’s unemployment rate climbing from 4.2% to 4.8%, and massive unemployment insurance debt. Additionally, commercial real estate values, particularly in the central business district office sector and the retail sector, were negatively impacted by a combination of higher interest rates, maturing commercial real estate loans, and changing commuting and consumer behaviors stemming from the COVID-19 pandemic.

 

On the positive side, prevailing inflation rates abated from a peak of 9.1% in June 2022 to an annualized rate of 3.4% by December 2023, and defying pessimistic forecasts, the U.S. economy did not experience a recession in 2023, but instead, domestic GDP grew at an aggregate annual rate of approximately 2.6%. This in turn was driven by a continuation of record low national unemployment rates, higher than expected consumer spending levels, and strong growth in private investment, particularly in the manufacturing sector. Supply chains and transportation costs that had been disrupted by the COVID-19 pandemic generally healed and normalized, and previously stunted domestic labor force participation levels rebounded. However, as a result of higher than expected gross domestic product and job growth, the Federal Reserve continued to increase short term interest rates through July 2023, and maintained such rates at historically high levels through the end of 2023. The sheer variety and combination of these numerous economic and financial market cross-currents created a challenging environment for banking institutions.

 

We believe that CVB Financial Corp. and Citizens Business Bank performed respectably during 2023, particularly on a relative basis compared to our peers, across a range of financial and credit metrics. Most importantly, the Company maintained its traditionally safe and sound financial position and stable customer franchise in a demanding environment, while achieving the second highest level of earnings in our 49-year history. As a result, over the course of 2023, CVB Financial Corp. continued its enviable record of achieving its 187th consecutive quarter of profitability, and its 137th consecutive quarter of paying our shareholders cash dividends. Additionally, in 2023, S&P Global Market Intelligence ranked CVB Financial Corp. as the #3 Best-Performing U.S. Public Bank, Citizens Business Bank was designated as a “Super Premier” Performing Bank by The Findley Reports, and the Company received a Five-Star Superior rating from BauerFinancial, as well as a continued BBB+ rating from Fitch Ratings.

CVB Financial Corp.’s financial and operational success can also be measured on a relative basis by comparing the Company’s performance to that of a group of peer companies. The Company’s peer group was updated in October 2023 in connection

 

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with the engagement of Pearl Meyer to assist with the Compensation Committee’s annual review of our executive officer compensation. This group of peer companies is described below in the section of this proxy statement on “Peer Group Criteria and Composition for 2023.” As measured by six key metrics which we believe are commonly utilized in evaluating banking entities (ROE, ROA, net interest margin, nonperforming assets excluding restructured loans divided by total assets, efficiency ratio, and noninterest expense divided by average assets), CVB Financial Corp.’s performance for 2023 placed it in the top quartile of our peer group on four of the six measures, all except ROE and net interest margin, and within the third quartile for ROE. For the three-year period from 2021-2023, CVB Financial Corp. likewise attained top (fourth) quartile performance on four of the six measures and third quartile performance on ROE.

CVB Financial Corp. Percentile Rank vs. Peers on Key Performance Indicators

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Source: Standard & Poor’s SNL Financial

 

CVB Financial Corp. achieved annualized shareholder returns for the one-year, three-year and five-year periods ending December 31, 2023 of (-18%), 5%, and 4%, respectively, which places CVB Financial Corp. in the lower to mid quartiles for all three measurement periods relative to its peers.

Our Social Measures

The Company is proud of its numerous initiatives and efforts to improve its performance in the areas of (1) Labor, Health and Safety, (2) Product Safety, Quality and Brand, (3) Stakeholders and Society, and (4) Human Rights. We have summarized many of these initiatives and efforts below, and additional information is set forth in our separate Corporate Responsibility Report for 2022-23, which is posted at www.cbbank.com. Our Board of Directors and senior management are actively engaged with the initiatives described below.

Labor, Health and Safety

Management and Labor Relations

We employed 1,107 associates as of December 31, 2023 which was a 3.3% increase from December 31, 2022. Our workforce is generally drawn from the dozens of communities, throughout the State of California, where we maintain our corporate headquarters, operations center and more than 60 banking centers and trust office locations.

At December 31, 2023, we had approximately 139 positions with the Company designated as “leadership” roles. This represents approximately 13% of our total associate population. The average tenure at the Company among our leadership group at the end of 2023 was greater than 10 years. Over the course of 2023, turnover among our leadership group was only 4.3%, and during the year we promoted one associate and hired seven new associates into our leadership group. In addition, nearly all members of the Company’s leadership group attend a mandatory annual off-site Leadership Conference where our detailed strategies and plans are reviewed and discussed.

 

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Our associates receive a number of important benefits, including profit-sharing contributions to our associate retirement plans, restricted stock and/or stock option grants, generous health and welfare benefits, and special employee programs, including holiday gift cards, an annual holiday party and a college scholarship program for eligible student dependents of our associates. We believe our management and employee relationships are sound and positive.

Training and Development

Recruiting, training and development, and retention of our valued associates are considered vital to the achievement of our business strategies and to the Company’s long-term record of success. With respect to recruiting, we seek qualified candidates through a wide range of channels, including social media campaigns, college campus job fairs, a dedicated internal recruiting staff, referrals from current associates, an internship program, banking industry interest groups and selected outside recruiters where necessary. The Company places a high priority on recruiting a diverse group of associates who bring the benefits of their backgrounds, experiences and perspectives to our business and professional activities. Our Human Resources Department has developed a well-structured orientation program for new associates to help acclimate them to Citizens Business Bank and to enhance their contributions to our long-term success. In addition, in 2023, Citizens Business Bank established a summer internship program, involving 13 college students hired as summer interns in various departments and functional areas at the Bank, as well as a rotational program involving a designated associate trainee.

Citizens Business Bank devotes substantial resources to associate training and development covering a wide range of subject matter area for relevant personnel, such as risk management, compliance, loan underwriting and credit, sales and relationship management, business and consumer financial products, fair lending, anti-harassment and anti-discrimination, workplace safety, and the proper use of various technology applications and safeguards. In 2023, Citizens Business Bank provided more than 200 live and videoconference training sessions for the equivalent of over 10,000 associate training sessions (with many associates attending multiple sessions).

The Company further promotes associate leadership and development through various targeted initiatives, including succession planning for all key management roles, a “top talent” program, and leadership essentials training. These three programs are closely interrelated in practice, as our succession planning program requires managers to identify qualified short-term and long-term successors, managers are regularly asked to identify their best performers and potential new management candidates, and these identified individual associates in turn are chosen to participate in our top talent and leadership essentials training programs, which entail a series of structured learning sessions where the selected associates are provided with the opportunity to enhance their respective skillsets and management capabilities.

Furthermore, consistent with prior years, Citizens Business Bank is presently sponsoring five managers to attend the Pacific Coast Banking School, which is a three-year part-time program providing in-depth and advanced education on financial topics, practical management tools and leadership skills that are considered critical to the business of banking. Additionally, we have created a Citizens Business Bank associate mentor-mentee program, wherein approximately 14 mid-level managers, who are identified as potential future leaders of the organization, are individually paired with a member of the Bank’s senior leadership team for one-on-one mentoring over an ensuing two-year period.

Occupational Health and Safety

The Company is committed to supporting the physical, mental and financial wellness of our associates and their families. We offer a comprehensive set of medical, dental, vision, life and disability insurance and retirement benefits, as well as on-site wellness programs and resources. In addition, Citizens Business Bank’s medical insurance plans include mental health services as an important component of the offered coverage components, and we also provide access to an employee assistance program to support our associates who are dealing with difficult family, substance abuse, mental health or financial issues. As of December 31, 2023, 56% of our associates were enrolled in our medical insurance plans.

In addition, Citizens Business Bank provides a variety of wellness programs and contests for our entire associate population, including programs and contests that focus on health, nutrition and exercise, and approximately 77% of our associates participated in at least one wellness activity during 2023.

Furthermore, Citizens Business Bank makes an annual 401(k) retirement contribution to the accounts of all eligible associates, which may include a significant profit-sharing component. For 2023, our combined 401(k) retirement and profit-sharing contributions amounted to a total of 5% of each eligible associate’s qualifying compensation. In this connection, 93% of our associates also made individual participant contributions to Citizens Business Bank’s 401(k) plan during 2023.

 

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We also seek to be responsive to specific acute situations as well as statutory workplace requirements affecting our associates. For example, starting with the onset of the COVID-19 pandemic in 2020, and continuing through 2023, our Human Resources Department and Corporate Real Estate Department took numerous coordinated actions to promote the health and safety of our associates in the face of the ongoing pandemic. These actions included the creation of a special set-aside program (prior to, and then in addition to, the enactment of state-mandated sick time) where our associates could donate their excess sick time so that it could be utilized by other associates who contracted COVID, encouraging vaccination and booster shots through a program providing for incentive payments to fully vaccinated associates, a monthly payroll credit for vaccinated associates to offset medical insurance premiums otherwise payable under Citizens Business Bank’s health insurance benefit programs, and the implementation of special protocols such as minimum workplace exclusion periods, contact tracing and special workspace sanitation measures, in cases when individual associates reported COVID-19 infections. We have also provided greater flexibility for our associates to work remotely where this could reasonably be arranged consistent with our customer and business expectations and requirements.

As another example, Citizens Business Bank has developed a workplace violence plan and associated protocols, and our Human Resources Department conducts annual training sessions designed to help our associates understand how to protect themselves from potential workplace violence threats or incidents. Starting July 1, 2024, under SB 553, workplace violence prevention plans are mandatory for virtually every employer in California.

In addition, our senior leadership team, with the support of our Board of Directors, continues to develop strategies and actions designed to address key risks posed to the Company by health and safety-related issues. These key risks have at times included (i) associate and workplace health and safety issues resulting from Citizens Business Bank’s need to remain open and available to our customers as an essential business during the COVID-19 pandemic, and (ii) additional cybersecurity and data security risks arising from our implementation of remote work capabilities for a significant number of our associates during the pandemic. Our Board, executive leadership team and associates continue to work together to seek to ensure that Citizens Business Bank and our banking centers remain available to provide a full range of products and services to our customers and communities in the event of potentially disruptive health and safety-related occurrences.

Workforce Diversity and Inclusion

Citizens Business Bank has adopted and implemented a comprehensive Diversity and Inclusion Policy that is designed to guide our investments in the professional recruitment and development of our associates and to foster an inclusive and diverse workplace. Our Diversity and Inclusion Policy in turn is overseen by the Company’s Diversity and Inclusion Committee, which is chaired by our Director of Human Resources and includes our Chief Financial Officer (“CFO”), Chief Operating Officer (“COO”), Chief Risk Officer (“CRO”) and General Counsel. Our Director of Human Resources provides updates on our progress on our diversity initiatives and metrics to the Company’s Board of Directors on a regular basis.

Day-to-day involvement in the Company’s Diversity and Inclusion Program is headed by our Chief Diversity Officer and Associate Engagement Manager. This Officer serves as the Chair of our Company’s Diversity, Engagement and Inclusion Council, which consists of approximately fifteen of our associates who represent diverse elements of our employee base and who participate in planning events and activities intended to support the Company’s diversity, engagement and inclusion initiatives and objectives.

The Company’s Diversity and Inclusion Policy provides a framework that we use to create and strengthen our diversity policies and practices, including our organizational commitment to diversity, positive workforce and employment practices, sound procurement and business practices, and practices to promote transparency of organizational diversity and inclusion. We strive to hire, reward and retain talent by evidencing a strong commitment to equal opportunity. We also monitor progress in enhancing diversity throughout our organization, including by tracking the percentages of our total associates who are female and racially or ethnically diverse.

In February 2024, Citizens Business Bank was pleased to be recognized by Newsweek magazine in its annual study highlighting “American’s Greatest Workplaces for Women 2024.” According to Newsweek, this study involved an assessment of publicly accessible employer data, discussions and interviews with selected HR professionals, and extensive, confidential on-line surveys conducted among women working for U.S. companies that employed more than 500 employees in 2023. Newsweek then rated each company’s performance on a range of relevant metrics, consisting of ten different key performance indicators, developed from the perspective of women in the workforce, including the ratio of women in leadership positions, employee compensation and benefits (including equal pay), non-discriminant hiring, initiatives for women empowerment, corporate culture, working conditions, training and career progression, work-life balance, sustainability and awareness.

 

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Key Elements of Diversity

The following represents key elements of the Company’s diversity with respect to our leadership group and all associates at December 31, 2023:

 

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Compensation and Benefits

Associate compensation is an important factor in connection with our recruitment and retention efforts, and we seek to develop, administer and maintain competitive compensation programs at all levels of our organization. Our Board of Directors oversees associate compensation, as well as the Company’s incentive and benefit plans (including attendant risk associated with the structuring of such compensation plans), through the Board’s Compensation Committee. The Company’s Management Compensation Compliance Committee, which operates under the direction of the Board Compensation Committee, identifies, assesses, and manages exposure to and compliance with applicable compensation laws, regulations, and other related issues. In general, the Management Compensation Compliance Committee is responsible for seeking to ensure the Company has designed and implemented compensation risk management processes that (1) evaluate the nature of inherent risks in our compensation programs; (2) are consistent with the Company’s strategic plans; and (3) foster a culture of risk-awareness and risk-adjusted decision making throughout the Company.

At Citizens Business Bank, all our associates earn base pay and are eligible for incentive compensation awards. For 2023, 93% of our eligible associates earned an incentive bonus and 100% of our eligible associates received contributions to their retirement accounts through our 401(k) and profit-sharing plan. In addition, during 2023, we paid a minimum hourly wage to associates throughout Citizens Business Bank of $18.00 per hour, which exceeds the highest minimum wage required to be paid in any of the locales where our corporate or banking centers are located. We are proud to report that our median employee compensation for 2023 was $85,097.

Furthermore, as noted above, Citizens Business Bank provides comprehensive medical, dental, vision, life and disability insurance and other benefits to our associates. Citizens Business Bank contributes approximately 74% of the cost of employee medical insurance for our lowest-cost health benefit plan.

Employee Engagement and Retention

In view of our significant investments in recruitment and training, we place a high premium on retaining our valued associates and managers, and we have created several programs to recognize and reward associates who distinguish themselves through their performance. Citizens Business Bank provides a Citizens Experience Service Award and Recognition Program that resulted in 708 nominations of associates who were recognized for exemplifying our Five Core Values during the course of 2023. In addition, the Company has a long-held tradition of an annual awards program that recognizes outstanding employment tenure, work commitment and job performance. In 2023, we held our annual awards ceremony at our Company’s holiday party in December, and we publicly recognized 130 associates who earned special tenure-based awards and 38 associates who stood out for their dedication to our high standards of performance. Furthermore, in 2022, Citizens Business Bank started a “Borba Scholarship” program, named for our founder, George Borba, Sr., which awards college scholarships to qualifying college student dependents of our associates. In 2023, we awarded college scholarships to 43 selected college student dependents of our associates, in amounts up to $2,500 per recipient.

 

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Citizens Business Bank has designed specific elements of its associate compensation programs with a view toward improving our employee retention. One key element in this regard is our restricted stock and stock option grant program, which provides equity awards to selected associates that vest over periods typically ranging from three to five years. These equity awards are targeted to associates whose skill sets and performance are considered to be of particular ongoing value to our organization. We also contribute 3% of total compensation to all eligible associates in the Citizens Business Bank 401(k) plan, as well as a separate profit-sharing contribution to the same plan that has traditionally ranged from 1% to 3% of the participating associate’s base salary and bonus, depending on the Company’s achievement of annual profitability goals. Moreover, Citizens Business Bank provides other benefits designed to enhance the well-being and retention of our associates, including a yearly holiday gift card program, our health and wellness programs, and a special annual reward program and trip for our top sales associates.

Citizens Business Bank is committed to enhancing associate engagement as a cornerstone of our organization’s core values of employing superior people with a strong focus on customer satisfaction. Starting in 2022, we commissioned Gallup, Inc., a workplace consulting firm, to conduct an annual survey of all our associates on a wide range of questions designed to quantitatively and qualitatively assess our levels of associate engagement, because we believe there is a strong link between associates who are engaged in their jobs and the achievement of successful business outcomes. The results of this survey, in turn, create a foundation for important dialogue and collaboration between our associates and their managers to foster a culture of engagement and opportunities for professional growth. Over the course of the past year, our Gallup Engagement Index of engaged associates improved significantly, from 46% in 2022 to 53% in 2023, and the percentage of Citizens Business Bank associates who elected to participate in our annual engagement surveys was over 95%.

We believe these retention programs and engagement efforts, in turn, have helped to inform and benefit our overall associate turnover numbers, which have likewise improved from an annualized rate of approximately 27.8% in 2022 to approximately 15.2% in 2023.

Product Safety, Quality and Brand

Ethical Marketing and Communication

It is the policy of Citizens Business Bank to conduct all our marketing and advertising activities in accordance with applicable laws and regulations. This means, among other things, that we strive to ensure that our advertisements fairly represent our products, services, pricing and other terms of doing business, and that our marketing is not misleading or inaccurate and does not contain any material misrepresentations. In addition, our marketing policies provide that Citizens Business Bank will not exclude any identifiable group on a prohibited basis, including gender, race, ethnicity, religion or national origin. All marketing campaigns and materials are overseen by our Marketing Department and, where applicable, are reviewed by our Risk Management Department and our internal legal counsel.

Data Security

We are committed to protecting our customers’ and associates’ personal and financial information, and our Board of Directors and executive management team devote a significant amount of time to monitoring and managing information security and cybersecurity risks, since cybersecurity incidents compromising non-public personal financial information ("NPPI") could produce material adverse effects on the Company’s business, including but not limited to, loss of customers, reputational harm, loss of intellectual property, disruption of key business operations, governmental fines/penalties, and litigation/remediation costs.

Under the direction of our Chief Information Security Officer ("CISO"), Citizens Business Bank maintains a formal information security management program to address known cybersecurity risks. This program leverages industry frameworks and standards with the goal of ensuring appropriate controls are established and regularly assessed for adequacy. Major components of the program include safeguarding customer and associate information, third party vendor oversight, incident response and seeking to ensure business continuity.

Our Board Audit Committee receives regular reports and briefings from our CISO, at least once per quarter or more frequently as circumstances may require, on cybersecurity issues, including on the Company’s risk posture to protect against cybersecurity threats, and on policies that are intended to adequately implement the Company’s information security management program. The CISO and our CRO also periodically inform our Board of Directors about efforts relating to compliance, examinations, risk assessments, results of audits, penetration and vulnerability testing, security breaches or violations, and recommended changes to our information security management program. This periodic reporting includes an

 

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annual review of regulatory requirements relating to cybersecurity, the federal Gramm-Leach Bliley Act, the California Consumer Privacy Act and, starting in 2023, the California Privacy Rights Act.

The Company maintains a cybersecurity insurance policy covering a range of potential scenarios and contingent risks through Resilience Cyber Insurance Solutions (“Resilience”), and the Company’s cybersecurity program has been externally evaluated within the past year by Resilience as well as the Company’s cybersecurity insurance broker, Aon Commercial Risk Solutions. Moreover, starting in 2022, Citizens Business Bank has retained Resilience to assist us in conducting an annual simulation of a major cybersecurity event to test our organization’s readiness program. In addition, Citizens Business Bank’s prudential bank regulators conduct annual cybersecurity and privacy audits. The Company also provides regular training for all associates on information security issues.

Customer and Employee Privacy

We strive to engender customer trust and confidence with respect to our customers’ and our associates’ NPPI, which includes seeking to ensure compliance with the California Consumer Privacy Act and the California Privacy Rights Act. Citizens Business Bank maintains policies and procedures that address information security requirements in connection with our customers, associates, business processes and relevant technology applications. Citizens Business Bank’s Privacy Notice is made available on our corporate website, which outlines our NPPI collection and usage practices, as well as individual privacy rights available to individuals in compliance with applicable federal and state laws.

At this time, Citizens Business Bank does not share personal information with any third parties other than certain vendors that support our core business activities, and our contracts with such parties generally require them to maintain information security standards similar to those employed by our organization. To help prevent unauthorized access and data leaks, our information security policies, procedures and programs seek to ensure that NPPI access is limited to authorized associates who have a specific business need to obtain the applicable information.

Citizens Business Bank conducts annual information security training that is mandatory for all our associates, and we conduct routine internal monitoring to enhance compliance with our privacy policy and procedures. Additionally, we seek to monitor our vendors for their compliance with our established service level agreements and information security practices.

Product Quality and Safety

Citizens Business Bank is primarily a business bank, and our financial products and services are generally targeted to, and are contracted by, small and medium-sized businesses and their owners throughout the State of California. We are a relationship-based financial institution that seeks to build long-term and trusted banking and advisory relationships with our customers, and we operate in a highly competitive market for financial products and services. In addition, our business customers tend to be sophisticated about their business objectives and requirements, particularly regarding their needs for financial products and services. This in turn means that the pricing and terms of Citizens Business Bank’s products and services must be transparent and designed to deliver tangible value.

In addition, financial institutions as a general rule are highly dependent on the confidence of their customers and communities. Citizens Business Bank’s long term track record of stability and customer satisfaction is based on our reputation for integrity. As one example, over 75% of our customer deposit relationships have banked with Citizens Business Bank for three years or more, and we have numerous customer banking relationships that have persisted and grown with Citizens Business Bank for periods of over twenty years.

Furthermore, as a depositary institution with assets exceeding $10 billion, Citizens Business Bank is subject to regular audits and regulatory examinations by our prudential regulators, including the federal Consumer Financial Protection Bureau, and these audits and examinations cover all significant aspects of our business and banking operations, including our adherence to fair lending, marketing, disclosure, vendor management, cybersecurity, customer privacy, complaint management and other relevant policies, procedures and practices.

Stakeholders and Society

Citizens Business Bank strives to positively impact all our stakeholders, including our customers, associates, shareholders, vendors and the communities we serve.

 

 

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Management Policies, Systems and Disclosure

Citizens Business Bank and its holding company operate under the oversight of several prudential bank regulatory agencies. As noted above, these agencies include the California Department of Financial Protection and Innovation, the Federal Deposit Insurance Corporation, the Federal Reserve Board and the federal Consumer Financial Protection Bureau.

In addition, as a public reporting company, the Company is subject, among other laws and regulations, to the Sarbanes-Oxley Act of 2002, which implements a defined framework requiring public companies to publicly report on management’s responsibility for establishing and maintaining an adequate internal control structure and associated control systems, including controls over financial reporting, and to publicly report on the results of management’s assessment of the effectiveness of internal controls over financial reporting. This framework consists of five interrelated components, including a reporting company’s control environment, risk assessment, control activities, information and communication, and monitoring.

Management’s system of financial controls and reporting is, in turn, audited by Citizens Business Bank’s Internal Audit Department, headed by our Chief Audit Executive, and CVB Financial Corp.’s external audit firm, KPMG LLP, both of which report independently and directly to our Board Audit Committee.

Business Ethics and Anti-Corruption

We have adopted a corporate Code of Personal and Business Conduct and Ethics (“Code”) which seeks to address both business and social relationships that may present legal and ethical concerns, and the Code also sets forth our expected standards of conduct to guide the members of our Board of Directors, executives (including our principal executive officer, principal financial officer and principal accounting officer) and other associates. Our associates acknowledge annually that they have read and understood their responsibility to conduct business in accordance with the Code and other provisions of our Associate Handbook, as part and parcel of our efforts to merit and maintain the confidence and trust of our customers, shareholders, regulators and communities.

In addition to the Code described above, the Company has adopted and implemented additional, specific policies regarding (1) any actual or potential conflicts of interest involving the Company’s business and lending activities, including our Conflicts of Interest and federal “Regulation O” policies, (2) prohibitions on any insider trading in the Company’s publicly-listed stock based on material nonpublic information involving the Company, pursuant to our Insider Trading Policy (which is discussed in greater detail below), and (3) an anti-corruption mandate requiring that all directors, officers and employees of the Company comply with the relevant provisions of the U.S. Foreign Corrupt Practices Act (“FCPA”).

The Company’s Conflicts of Interest Policy requires any potential or actual conflict of interest between the Company’s financial or business interests and those of any director, officer or associate to be fully disclosed and notified to the Board’s Audit Committee for discussion and resolution, pursuant to standards outlined in the Policy, including the required recusal of any potentially conflicted directors from discussions or voting on any identified issue. Similarly, the Company has adopted a “Regulation O” Policy, as required by the Federal Reserve Board, that governs any lending or credit relationships between Citizens Business Bank and any director or executive officer of the Company, including the requirement of individualized review and approval of any covered banking transactions pursuant to the specific standards outlined in Regulation O.

The Company has also published and regularly updates an extensive Associate Handbook which, in addition to the policies discussed in the section of this proxy statement on “Labor, Health and Safety” above, prohibits any actions or conduct in violation of relevant anti-corruption prohibitions as reflected in the FCPA. This anti-corruption mandate includes strict anti-bribery prohibitions as well as related accounting and record-keeping compliance provisions, and, wherever applicable, our Associate Handbook provisions cover our directors as well as our officers and associates.

Lobbying and Political Advocacy

Citizens Business Bank as an institution does not make political contributions to any candidates for political office nor to any political action committee supporting a partisan political candidate or organization. Citizens Business Bank is a proud member of the California Bankers Association and the Mid-Size Bank Coalition of America, which are non-partisan organizations that educate and engage policy makers on important policy issues related to the banking industry and provide educational programming, networking opportunities and benchmarking for member banks across a wide range of banking issues.

 

 

 

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Consultation and Engagement with our Communities

We are proud of our extensive activities to engage with and to support the many communities and stakeholders in our geographic footprint, including meeting our defined responsibilities under the Community Reinvestment Act of 1977 (“CRA”). The CRA, among other things, requires Citizens Business Bank to help meet the credit needs of our local communities, including low and moderate income areas where we conduct our banking business, consistent with safety and soundness considerations.

In our most recent CRA examination, our individual ratings in the three primary review areas of lending, investment and community service were “high satisfactory,” “high satisfactory,” and “outstanding,” respectively, with an overall public CRA rating of “satisfactory” (since the overall public ratings designation does not distinguish between “satisfactory and “high satisfactory”). Citizens Business Bank maintains a senior level CRA Investment Committee, and employs a designated CRA Officer at the Vice President level, as well as two Community Development Officers and a CRA data specialist.

In 2023, Citizens Business Bank made $411,486,000 in CRA-qualifying small business loans, $13,546,000 in CRA-qualifying small farm loans, and $278,068,191 in CRA-qualifying community development loans within our designated Assessment Areas. In addition, during 2023, CBB maintained $140,166,657 in CRA-qualifying investments, and CBB made $1,648,000 in charitable donations throughout the State of California. Moreover, also in 2023, our valued associates engaged in approximately 1,648 CRA-qualifying service activities, where they recorded an aggregate of approximately 4,774 hours of community service. Included in CBB’s loans, investments and charitable contributions are significant support for affordable housing, economic development, workforce development, small business loan funds, high speed internet access for historically disadvantaged communities, food bank funding, and many similar initiatives. Citizens Business Bank’s current CRA ratings are publicly available on the web site of the Federal Financial Institutions Examination Council, posted at www.ffiec.gov.

Relevant Business Practices and Accountability

Citizens Business Bank has established a comprehensive program (now known as “CFT” for “combating the financing of terrorism”) intended to comply with the Bank Secrecy Act (“BSA”), which was enacted in order to combat illegal money laundering and the provision of access to the financial system for terrorist actors and activities. This program includes, among other things, risk-based customer due diligence and identification requirements, a monitoring regime designed to reasonably assure compliance with the BSA statute and anti-money laundering (“AML”) regulations, and detailed recordkeeping and reporting mandates, including reporting of suspicious transactions. Citizens Business Bank employs a designated BSA/AML Officer and department responsible for coordinating and monitoring our BSA/AML compliance, and our BSA/AML team provides regular training on such compliance for appropriate Citizens Business Bank personnel, including our Board of Directors. In addition, our compliance with BSA/AML requirements is examined each year by our primary federal and state banking regulators.

Human Rights

Management Policies, Systems and Disclosure

Citizens Business Bank comprehensively records, tracks and seeks to resolve customer and associate complaints through internal reporting systems established, respectively, by our Risk Management Department and our Human Resources Department.

The Company has also established several mechanisms enabling any person, including our associates, to anonymously report any activities that are believed to involve fraud, illegal conduct or financial reporting irregularities. This includes the maintenance of a “whistle-blower hotline” which automatically forwards any reports received to the Chair of our Board Audit Committee, our Chief Audit Executive, our General Counsel and our Head of Human Resources. The Company’s policies specifically forbid retaliation against any associate or person for making such a report.

Ethical Sourcing

The Company’s Diversity and Inclusion Policy also sets forth the Company’s interests in maintaining and broadening diversity among the Company’s vendors and suppliers, including firms that are majority-owned by females and/or members of underrepresented communities. We track our progress in improving our vendor sourcing diversity through the oversight of our Diversity and Inclusion Committee.

 

 

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Community Consultation and Engagement

Citizens Business Bank has established a CRA Community Advisory Group which consists of (i) designated representatives from a variety of community organizations dedicated to providing affordable housing, job opportunities and other important benefits to underserved communities throughout the State of California, as well as (ii) key members of our management team, including our CRO, our CRA Officer, and other senior managers. This Advisory Group meets two to three times per calendar year and provides our organization with valuable guidance and feedback regarding opportunities to better target our efforts to assist low and moderate income census tracts and individuals in the communities where Citizens Business Bank provides banking services.

The Company has published a Corporate Social Responsibility Report for 2023 which is posted on our web site at www.cbbank.com, and we encourage our shareholders and other interested parties to review this Report. This Report highlights, among other things, the positive consultative work and services performed by our associates with a wide variety of community and charitable organizations throughout our geographic footprint. The information contained on our website and the materials available on our website, including our Corporate Social Responsibility Report, are not incorporated by reference into this proxy statement.

Our Environmental Measures

As a closely regulated depositary institution, Citizens Business Bank is committed to reducing the physical impact of our activities on our environment and to enhance the sustainability of our business practices, and we strive to engage in effective sustainability practices as a responsible member of the numerous communities in California where we operate.

With respect to our lending activities, we adhere to detailed underwriting guidelines regarding the industries, businesses and properties that we finance, and, starting in 2022, Citizens Business Bank has offered a targeted clean energy lending program, known as Commercial Property Assessed Clean Energy (“C-PACE”), which is designed to fund environmentally-related commercial property improvements for our prospective and current customers, as further outlined below.

Accordingly, where feasible in view of the nature and scope of our banking business, the Company has undertaken a number of specific initiatives in the areas of (1) Carbon and Climate, (2) Natural Resources and (3) Waste and Toxicity. We have summarized these initiatives below, and additional information is set forth in our separate Corporate Responsibility Report.

Management of Environmental Risks and Opportunities

We are subject to various federal and state statutes and regulations, as well as substantial governmental and regulatory oversight, regarding our management of environmental risks and opportunities.

On March 6, 2024, the SEC adopted final rules that will require most U.S. publicly traded companies, including the Company, to disclose annually how their businesses are assessing, measuring, and managing climate-related risks. The final rules will require a reporting company to disclose, among other things: material climate-related risks; activities to mitigate or adapt to such risks; information about the reporting company's board of directors' oversight of climate-related risks and management’s role in managing material climate-related risks; and information on any climate-related targets or goals that are material to the reporting company's business, results of operations, or financial condition. Further, to facilitate investors' assessment of certain climate-related risks, the final rules require disclosure of Scope 1 greenhouse gas emissions (direct greenhouse gas emissions from sources that are owned or controlled by the reporting company) and/or Scope 2 greenhouse gas emissions (indirect greenhouse gas emissions from the generation of purchased electricity, heat or cooling), on a phased-in basis, starting in 2026, in cases where those emissions are material; the filing of an attestation report covering the required disclosure of such reporting company’s Scope 1 and/or Scope 2 emissions, also on a phased-in basis, starting in 2030; and disclosure of any financial statement effects of severe weather events and other natural conditions including, for example, costs and losses. The Company has been tracking the development of this SEC rule, which was originally proposed in March 2022, and we are participating in discussions about joining a banking industry consortium, which, in turn, has contracted with a national consulting firm, to foster the creation of compliant climate disclosure reporting systems for banking institutions.

On October 7, 2023, the State of California enacted two climate-related reporting statutes, SB 253 and SB 261. SB 253 will require certain corporations and other entities doing business in California with total annual revenues over $1 billion to make public disclosures of their Scope 1 and 2 greenhouse gas emissions, as well as an additional category of Scope 3 greenhouse gas emissions (indirect greenhouse gas emissions not included in Scope 2 emissions which occur in the upstream and downstream activities of the reporting company’s business activities). SB 261 will require certain corporations and other entities

 

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doing business in California with total annual revenues over $500 million to report, on a biennial basis, their “climate-related financial risks” and their efforts to address such risks. Currently, we believe that, under the standards likely to be applied regarding the calculation of an entity’s total annual revenues, the Company will be subject to SB 261 but not SB 253, although this could change prior to the compliance deadline of January 1, 2026. Under SB 261, “climate-related financial risks” are defined to mean material risks of harm to immediate and long-term financial outcomes due to physical and transition risks, including, but not limited to, risks to corporate operations, provision of goods and services, supply chains, employee health and safety, capital and financial investments, institutional investments, financial standing of loan recipients and borrowers, shareholder value, consumer demand, and financial markets and economic health. The legislative findings supporting this statute describe climate change-related impacts as including wildfires, sea level rise, extreme weather events and droughts. The Company intends to comply with the applicable California statutes.

On October 24, 2023, the U.S. federal banking regulators finalized interagency principles for the effective management and supervision of climate-related financial risks (the “Climate Principles”). The Climate Principles are formally targeted at larger banking organizations, with total assets in excess of $100 billion, and are intended to convey consistent supervisory expectations regarding how climate-related financial risks should be managed. More specifically, the Climate Principles are intended to support efforts by larger financial institutions to focus on key aspects of climate-related financial risk management, including through their governance; policies, procedures, and lending limits; strategic planning; risk management; data, risk measurement and reporting; and scenario analysis. Additionally, the Climate Principles describe how climate-related financial risks can be addressed via management of traditional risk areas, including credit, market, liquidity, operational, and legal risks. Although the Climate Principles do not formally apply to Citizens Business Bank at our current asset size, the Climate Principles expressly state that all financial institutions may have “material exposures” to climate-related financial risks, and, accordingly, we believe it is likely that our prudential regulators will expect us to address certain elements of the Climate Principles in connection with their review of specific loans or perceived risks.

Carbon and Climate

During 2023, Citizens Business Bank made or maintained numerous loans designed to support borrowers in financing environmentally sound and sustainable projects that foster a net-zero emissions economy, facilitate adaptation to climate change, or provide other environmental benefits. As one prominent example, during 2023, Citizens Business Bank made or maintained no less than 16 loans, with an aggregate principal balance in excess of $16 million, to finance our customers’ purchase and installation of solar equipment to generate electricity, including solar arrays and panels.

In addition, also in 2023, Citizens Business Bank originated a term loan in the principal amount of $70 million to provide financing for the construction of a customer’s co-generation plant which is designed to replace an older on-site generator and to produce both electricity and heat more efficiently. Moreover, as part of Citizens Business Bank’s dairy and agricultural lending activities, we originated a separate $7 million loan to provide a gas pipeline partnership with working capital, pending the partnership’s receipt of low carbon fuel credits on a biogas facility designed to process and utilize raw methane gas generated by local dairy farms that would otherwise be released into the atmosphere.

With respect to our ongoing lending programs, among other targeted products, Citizens Business Bank offers C-PACE loans for commercial property owners and developers. Commercial property owners and developers can utilize C-PACE loans to fund environmental improvements to reduce their properties’ carbon footprint and energy usage. The C-PACE program enables such owners and developers to improve their properties’ infrastructure, by providing support for lender financing to help advance important public purposes, including greenhouse gas emission reductions, lower water usage, wildfire mitigation and seismic safety. These enhancements are typically focused on resiliency features and clean and efficient energy improvements that are installed in and integrated into the properties themselves.

As noted above, where consistent with the needs of our customers and business imperatives, we have implemented remote work options for associates in a variety of functions and departments, and we believe this in turn has significantly reduced commuting time and automobile use for our affected associates. In addition, we support our associates' use of electric vehicles for their work commutes, and, to this end, we have installed nine electric vehicle chargers at our corporate headquarters in Ontario, California and an additional six chargers at our primary banking operations center in Rancho Cucamonga, California, at no charge to our associates.

As a separate initiative, Citizens Business Bank has replaced conventional lighting, where cost-effective to do so, with more efficient LED lights, at both our corporate headquarters and our separate banking operations center (as well as in the associated parking areas for both facilities). This project has resulted in annual power usage savings of approximately 530,054

 

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kWh. Moreover, when we open a new banking center or remodel an existing center, we typically seek to upgrade the lighting to utilize LED products.

We plan to continue to enhance these important environmental initiatives, including evaluating the feasibility of installing solar panels on the roof of our corporate headquarters and primary banking operations center buildings, in order to further reduce our conventional electricity power usage and costs.

Natural Resources

At the corporate level, Citizens Business Bank has adopted and implemented a company-wide paper recycling program, for at least the past ten years, and in 2023, we recycled approximately 430 tons of paper products. In addition, in 2023, we implemented a company-wide plan to reduce paper use and paper printing in favor of utilizing digital media and storage for document viewing, management and maintenance purposes.

To this end, in 2022, in connection with our core lending and deposit-gathering activities, we commenced bank-wide utilization of a digital imaging and document management system. This digital imaging and document management application has enabled Citizens Business Bank, and our associates engaged in originating and managing our loan and deposit portfolios, to eliminate the need to otherwise generate tens of thousands of paper documents and instead to maintain an essentially paperless lending, credit tracking and customer portfolio management process. Additionally, we have employed this same document imaging system to convert thousands of paper lending and credit files belonging to banks that we have acquired in recent years, including the loan and deposit portfolios of Community Bank (acquired in 2018) and Suncrest Bank (acquired in 2022) to electronic images.

Environmental Waste and Toxicity

Citizens Business Bank finances a wide range of commercial properties within the State of California, including offices, industrial facilities, retail, hospitality, multi-family and mixed-use properties. In such cases, as part of our standard underwriting and credit review process, we typically require an environmental review to determine whether the property has any history or evidence of environmental contamination.

Pursuant to our credit underwriting policies, we take particular care and implement additional reviews and financing hurdles for any proposed loans involving commercial properties that we deem high risk for environmental issues, including gas stations, properties where transformers are present, refineries, dry cleaners, auto dealerships, recycling centers, waste disposal sites, mining, oil and gas production, heavy construction, chemical manufacturing, plastics and rubber products manufacturing, fabricated metal manufacturing, funeral homes, automotive repair, leather, paper and machinery manufacturing, general medical and surgical hospitals, golf courses, exterminating and pest control.

When engaging in commercial property lending, we also typically review the subject property’s operating history and expense profile, including energy and other ongoing operating expenses as well as relevant activities by the occupant or tenants that could affect the property’s environmental integrity or liabilities. Additionally, we normally investigate and consider whether the property is exposed to any significant environmental hazards or events such as flood, sea-level rise, water and electrical usage and/or wildfire risks in accordance with our lending polices.

We do not use significant volumes of packaging or other physical materials in conducting our business activities, either internally or externally with our customers and vendors.

All computer and other electronic equipment that is utilized in our banking business and has reached the end of its useful life or is otherwise no longer functional is disposed of in accordance with applicable laws and regulations, in order to minimize any environmental impacts.

In addition, over the past five years, we have been engaged in a bank-wide initiative to retire and dispose of thousands of dated paper files, with a view towards reducing our overall storage capacity and storage footprint. This initiative also continued during 2023.

Shareholder Engagement

Our Board of Directors and senior executives place a high priority and value on direct engagement with our shareholders and prospective shareholders. Our President and CEO and our Chief Financial Officer, sometimes with the involvement of other executive officers or directors, regularly hold meetings with significant shareholders and/or prospective shareholders at investor

 

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conferences or in our corporate headquarter offices, and these executives also engage in similar discussions with investors via telephone or videoconference facilities, including conducting quarterly public earnings calls. During 2023, excluding our quarterly earnings calls, our senior executives held approximately 120 individual meetings with current or potential investors or their representatives, including eight of our top ten current shareholders. These meetings cover a wide range of topics involving the Company’s strategies, compensation policies and ongoing business activities. Our President and CEO and our Chief Financial Officer communicate the significant topics discussed and any notable concerns raised by our shareholders to our Board of Directors at our regular Board meetings.

Who Are the Largest Owners of CVB Financial Corp.’s Stock?

The following table shows the beneficial ownership of common stock by those entities or persons we know to be the beneficial owners of more than 5% of the outstanding shares of common stock of CVB Financial Corp., based on information those persons have filed with the SEC on Schedule 13G or Schedule 13D, as applicable, and/or such persons' Section 16 filings. “Beneficial ownership” is a technical term broadly defined by the SEC to mean more than ownership in the usual sense. So, for example, you beneficially own CVB Financial Corp.’s common stock not only if you hold it directly, but also if you indirectly, through a relationship, contract or understanding, have, or share, the power to vote or sell the stock, or if you have the right to acquire it within sixty (60) days of the date selected for reference purposes below.

 

 

 

 

 

Common Stock
Beneficially Owned

Name

 

Address

 

Number of
Shares

 

Percent of
Class(1)

 

 

 

 

 

 

 

BlackRock, Inc. (2)

 

50 Hudson Yards
New York, NY 10001

 

19,468,132

 

13.9%

The Vanguard Group (3)

 

100 Vanguard Boulevard
Malvern, PA 19355

 

15,701,547

 

11.1%

The Marital Trust Under the George Borba Family Trust (“Borba Family Trust”); The Borba Children’s Holding Trust (“Borba Children’s Trust”); George Borba and Son Dairy, L.P.; George A. Borba, Jr., individually and as co-trustee (with shared voting and dispositive power) of the Borba Family Trust and Borba Children’s Trust; and Linda B. Gourdikian, individually and as co-trustee (with shared voting and dispositive power) of the Borba Family Trust and the Borba Children’s Trust (collectively, the “Borba Family Group”) (4)

 

14461 Taft Highway
Bakersfield, CA 93311

 

7,624,674

 

5.5%

State Street Corporation(5)

 

State Street Financial Center
1 Congress Street, Suite 1
Boston, MA 02114

 

7,191,721

 

5.2%

 

(1)
The “Percent of Class” calculations in the table were made using (x) the number of shares reported as beneficially owned by the shareholder in the applicable Schedule 13G or Schedule 13D filing, and/or Section 16 filings, and (y) the number of shares of our common stock outstanding on the record date of March 22, 2024, which was 139,684,299.
(2)
This information is based on a Schedule 13G/A filed by BlackRock, Inc. on January 23, 2024. BlackRock, Inc. has sole voting power over 19,155,260 shares and sole dispositive over all 19,468,132 shares. According to its Schedule 13G/A, BlackRock, Inc. holds the shares in the ordinary course of business and various persons have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the shares held by BlackRock, Inc.; and the interest of only one such person in such shares, iShares Core S&P Small-Cap ETF, represents more than 5% of CVB Financial Corp.’s total outstanding shares.
(3)
This information is based on a Schedule 13G/A filed by the Vanguard Group on February 13, 2024. The Vanguard Group has sole voting power over zero shares, shared voting power over 117,307 shares, sole dispositive power over 15,441,478 shares, and shared dispositive power over 260,069 shares. According to its Schedule 13G, the Vanguard Group holds the shares in the ordinary course of business.
(4)
This information is based on a Schedule 13D filed by the Borba Family Group on February 8, 2021, which has not been subsequently amended, and subsequent Section 16 filings that are known to us, and include the following items: (i) 4,599,439 shares owned by the Borba Family Trust, (ii) 2,277,000 shares owned by the Borba Children’s Trust, (iii) 566,710 shares owned by George Borba & Son Dairy, L.P., (iv) 45,752 shares owned by George A. Borba, Jr., individually (which total includes 288 shares held by Mr. Borba as custodian for minor children), (v) 28,547 shares owned by Mr. Borba’s sister, Linda B. Gourdikian, individually, and (vi) 47,625 shares owned by the Gourdikian Family Trust. Mr. Borba and Ms. Gourdikian have disclaimed beneficial ownership of the shares held by each other, the Borba Family Trust and the Borba Children’s Trust, except to the extent of their respective distributable interests in the Borba Children’s Trust. In addition, in computing the percentage of shares beneficially owned, any shares which Mr. Borba, Ms. Gourdikian, George Borba and Son Dairy, L.P., the Borba Family Trust or the Borba Children’s Trust has a right to acquire pursuant to stock options that become exercisable within sixty (60) days after March 22, 2024 are deemed outstanding for the purpose of computing the percentage of common stock beneficially owned by the Borba Family Group, but are not deemed outstanding for the purpose of computing percentages of shares beneficially owned by the other shareholders in this table. Furthermore, any annual grants of restricted shares awarded to Mr. Borba in his capacity as one of CVB Financial Corp.’s outside directors, even if unvested as of the date of this proxy statement, are deemed outstanding both for the purposes of computing the percentage of common

 

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stock beneficially owned by the Borba Family Group and for the purpose of computing total CVB Financial Corp. shares outstanding, because grantees of unvested restricted shares have the right to vote such shares and to receive dividends on such shares prior to vesting, pursuant to CVB Financial Corp.’s 2018 Equity Incentive Plan.
(5)
This information is based on a Schedule 13G filed by State Street Corporation on January 24, 2024. State Street Corporation has sole voting power over zero shares, shared voting power over 806,522 shares, sole dispositive power over zero shares, and shared dispositive power over all 7,191,721 shares. According to its Schedule 13G, State Street Corporation holds the shares in the ordinary course of business.

How Much Stock Do CVB Financial Corp.’s Directors and Executive Officers Own?

The following table shows the beneficial ownership of CVB Financial Corp.’s common stock as of the record date for our annual meeting, which is March 22, 2024, by (i) each of our directors, all eight of whom are also nominees for director, (ii) those persons serving as our named executive officers as of December 31, 2023 and (iii) by all directors and current executive officers as a group.

 

 

 

Common Stock Beneficially Owned

Name

 

Number of Shares(1)

 

Percent of Class(2)

George A. Borba, Jr.(3)
   Vice-Chairman of the Board and Nominee

 

7,548,502

 

5.4%

 

 

 

 

 

David A. Brager
   President and Chief Executive Officer, Director and Nominee

 

166,346

 

*

 

 

 

 

 

Stephen A. Del Guercio
   Director and Nominee

 

46,232

 

*

 

 

 

 

 

Anna Kan(4)
   Director and Nominee

 

35,132

 

*

 

 

 

 

 

Jane Olvera Majors(5)
   Director and Nominee

 

16,749

 

*

 

 

 

 

 

Raymond V. O’Brien III
   Director and Nominee

 

52,232

 

*

 

 

 

 

 

Hal W. Oswalt
   Chairman of the Board and Nominee

 

40,232

 

*

 

 

 

 

 

Kimberly Sheehy
   Director and Nominee

 

11,218

 

*

 

 

 

 

 

David F. Farnsworth
   Executive Vice President, Chief Credit Officer

 

56,374

 

*

 

 

 

 

 

David C. Harvey
   Executive Vice President, Chief Operating Officer

 

100,042

 

*

 

 

 

 

 

E. Allen Nicholson(6)
   Executive Vice President, Chief Financial Officer

 

105,433

 

*

 

 

 

 

 

Richard H. Wohl
   Executive Vice President, General Counsel

 

34,812

 

*

 

 

 

 

 

Current Directors and Executive Officers as a Group(7)
   (13 persons)

 

8,345,014

 

6.0%

 

 

 

 

 

 

(1)
Except as otherwise noted below, each person directly or indirectly has sole or shared voting and investment power (as community property and/or with such person’s spouse) with respect to the shares listed.
(2)
The percentage for each of these persons or group is based upon the total number of shares of CVB Financial Corp.’s common stock outstanding as of our record date of March 22, 2024, which was 139,684,299, plus the shares which the respective individual or group has the right to acquire within sixty (60) days after March 22, 2024, by the exercise of stock options or the vesting of restricted stock units. In computing the percentage of shares beneficially owned by each person or group of persons, any shares which the person (or group) has a right to acquire within sixty (60) days after March 22, 2024 are deemed outstanding for the purpose of computing the percentage of common stock beneficially owned by that person (or group), but are not deemed outstanding for the purpose of computing the percentage of shares beneficially owned by any other person.
(3)
Represents 4,599,439 shares held by the Borba Family Trust; 2,277,000 shares held by the Borba Children’s Trust, of which Mr. Borba is co-trustee (with shared voting and dispositive power) and as to which Mr. Borba disclaims beneficial ownership, except to the extent of his distributable interest in the Borba Children’s Trust; 566,710 shares owned by George Borba & Son Dairy, L.P.; and 45,752 shares which Mr. Borba owns outright or which are subject to time vesting restrictions, of which 288 shares are held by Mr. Borba as custodian for minor children.
(4)
Includes 1,900 shares held by Ms. Kan's spouse as sole and separate property and as to which Ms. Kan disclaims beneficial ownership.
(5)
Includes 1,200 shares held by Ms. Olvera Majors’ spouse as sole and separate property and as to which Ms. Olvera Majors disclaims beneficial ownership.
(6)
Includes 6,000 shares which Mr. Nicholson may acquire within 60 days after March 22, 2024 by the exercise of stock options.
(7)
The total number of directors and executive officers as a group includes one executive officer of the Company who is not a named executive officer. Number of shares includes 6,000 shares which members of the group may acquire within 60 days after the record date of March 23, 2024 by the exercise of stock options or vesting of stock units or restricted shares.

 

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Delinquent Section 16(a) Reports

Section 16(a) of the Securities and Exchange Act of 1934 (the “Exchange Act”) requires our executive officers and directors, and persons who own more than 10% of CVB Financial Corp’s equity securities, to file reports of ownership and changes in ownership with the SEC. The SEC requires our executive officers, directors and greater than 10% shareholders to furnish to us copies of all Section 16(a) forms they file.

Based solely on our review of these reports and of certifications furnished to us, we believe that, during the fiscal year ended December 31, 2023, with one exception, all executive officers, directors and greater than 10% beneficial owners timely complied with all applicable Section 16(a) filing requirements under the Exchange Act. The single exception known to us related to the late filing of a Form 4 relating to the purchase of 1,000 shares of stock of CVB Financial Corp. by the spouse of our director, Anna Kan, on May 24, 2023, and 900 shares of stock by the same individual on June 30, 2023, in a brokerage account holding shares asserted by such spouse to be his sole and separate property.

 

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Questions and Answers About the Annual Meeting and Voting

 

 

What is the Purpose of this Proxy Statement?

The purpose of this proxy statement is to solicit your vote at our 2024 annual meeting of shareholders. This proxy statement summarizes the information you need to know to cast an informed vote at the meeting. The record date for those shareholders entitled to vote at the meeting is March 22, 2024. On the record date there were 139,684,299 shares of our common stock outstanding.

How Can I Access the Proxy Materials?

We follow the SEC’s notice and access rule. On or about our mailing date, we mailed our shareholders who are entitled to vote at the meeting a notice about the Internet availability of the proxy materials (the “Notice”). Along with the proxy statement, we also made available by Internet our 2023 Annual Report and our Annual Report on Form 10-K for our fiscal year ended December 31, 2023. Instructions on how to access the proxy materials over the Internet and to request a paper copy of the proxy materials, if desired, may be found in the Notice. We mailed to shareholders who have previously asked to receive paper copies of the proxy materials, a full set of the proxy materials, instead of the Notice. If you hold your CVB Financial Corp. shares in street name, and currently receive paper copies of our proxy materials, please refer to the information provided by your bank, broker or other holder of record for instructions on how to elect to receive only electronic copies of future proxy statements and annual reports.

How Do I Vote by Proxy?

You can vote by proxy whether or not you attend the annual meeting. Shareholders have a choice of voting over the Internet, by telephone or by using a traditional proxy card. The Board of Directors is soliciting your proxy.

To vote, follow the instructions printed on the Notice.
If you received a full set of proxy materials:

– To vote by Internet, go to www.investorvote.com/CVBF and follow the instructions there. You will need the 15-digit number included on your proxy card.

– To vote by telephone, dial the number listed on your proxy card. You will need the 15-digit number included on your proxy card.

– To vote using the traditional proxy card, please sign and date the enclosed proxy card and return it promptly in the envelope provided.

To reduce our administrative and postage costs, we ask that you vote through the Internet or by telephone, both of which are available 24 hours a day. To ensure that your vote is counted, please remember to submit your vote by 11:59 p.m., Pacific Daylight Time, on May 14, 2024. Voting by proxy will not affect your right to attend the annual meeting and vote in person if you desire to do so.

How Do I Vote in Person?

If you plan to attend the annual meeting and vote in person, we will give you a ballot form when you arrive. However, if your shares are held in the name of your broker, bank or other nominee, you must bring a legal proxy from your broker, bank or other nominee to vote the shares at the meeting.

 

 

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How Will My Proxy Be Voted?

If you properly complete your proxy card and we receive it in time to vote, your “proxy” (one of the individuals named on your proxy card) will vote your shares as you have directed. If we receive an executed proxy card from you, on which you have not made specific choices with respect to the proposals, your proxy will vote your shares as recommended by the Board of Directors as follows:

“For” the election of all eight nominees for director;
“For” the approval of the compensation of our named executive officers, as disclosed in this proxy statement; and
“For” the ratification of the appointment of KPMG LLP as our independent registered public accountants for 2024.

If any other matters are presented, your proxy will vote in accordance with the recommendation of the Board of Directors, or, if no recommendation is given, in the proxy’s own discretion. At the time this proxy statement went to press, we knew of no matters which needed to be acted on at the meeting, other than those discussed in this proxy statement.

How Many Votes Do I Have?

Each share of common stock entitles you to one vote. The proxy card indicates the number of shares of common stock that you own. However, in the election of directors, you are entitled to cumulate your votes if you are present in person at the meeting, the nominee’s(s’) name(s) have properly been placed in nomination, and a shareholder has given notice at the meeting prior to the actual voting of his or her intention to vote his or her shares cumulatively. Cumulative voting allows you to give one or more nominee as many votes as are equal to the number of directors to be elected, multiplied by the number of shares you own, or to distribute your votes in the same fashion between two or more nominees. Our receipt of an executed proxy grants the Board of Directors and proxy holder the discretionary authority to also cumulate votes.

May I Change My Vote After I Have Voted?

Yes. Even if you have submitted your proxy, or cast your vote by telephone or Internet ballot, you may change your vote at any time before the proxy is exercised, if you file with CVB Financial Corp’s Corporate Secretary either a notice of revocation or a duly executed proxy bearing a later date, or properly cast a new vote by telephone or Internet or in person at the meeting. The powers of the proxy holders will be suspended if you attend the meeting in person and so request, although attendance at the meeting will not by itself revoke a previously granted proxy.

What Vote is Required for Each Proposal?

The eight nominees for director who receive the most “FOR” votes will be elected. So, if you do not vote for a particular nominee, or you indicate “WITHHOLD” authority to vote for a particular nominee on your proxy card, your vote will not count either “FOR” or “AGAINST” the nominee.

Proposal 2 regarding our advisory “Say-On-Pay,” and Proposal 3 regarding the ratification of the appointment of our independent auditors each requires the approval of a majority of the shares represented and voting at the meeting, with affirmative votes constituting at least a majority of the required quorum.

Who Are Shareholders of Record Versus Beneficial Owners?

If you are a shareholder of record, CVB Financial Corp. has sent the Notice directly to you.

If your shares are held in street name, you are considered the “beneficial owner” of the shares. Your broker, bank or other holder of record, who is considered the shareholder of record with respect to those shares, should have forwarded the Notice directly to you. As the beneficial owner, you have the right to direct your broker, bank or other holder of record on how to vote your shares by using the voting instructions on the proxy card or in the Notice.

What Constitutes a Quorum?

The presence at the meeting, in person or by proxy, of the holders of a majority of the shares of common stock outstanding on the record date will constitute a quorum, permitting the conduct of business at the meeting. Shares that are voted “FOR,” “AGAINST” or “ABSTAIN” in a matter are treated as being present at the meeting for purposes of establishing the quorum, but only shares voted “FOR” or “AGAINST” are treated as shares “represented and voting” at the annual meeting with respect to such matter.

 

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How Are Broker Non-Votes and Abstentions Treated?

“Broker non-votes” and abstentions are counted as present and entitled to vote for purposes of determining a quorum. A “broker non-vote” occurs when a bank, broker or other holder of record holding shares for a beneficial owner does not vote on a particular proposal because that holder does not have discretionary voting power for that particular item and has not received instructions from the beneficial owner. Under applicable rules, brokers or other nominees may not exercise discretionary voting power on certain matters. Brokers or other nominees have discretionary voting power for Proposal 3 (approval of KPMG LLP as independent auditor), but not for Proposal 1 (election of directors) or Proposal 2 (Say-On-Pay). It is therefore important that you provide instructions to your bank, broker, or other holder of record if your shares are held by a bank, broker, or other holder of record, so that your votes with respect to these proposals are counted.

Abstentions and broker non-votes will have no effect on Proposals 2 or 3 unless there are insufficient votes in favor of the proposals, such that the affirmative votes constitute less than a majority of the required quorum. In such cases, abstentions and broker non-votes will have the same effect as a vote against such proposals.

What Are the Costs of Solicitation of Proxies?

We will bear the costs of this solicitation, including the expense of preparing, assembling, printing and mailing the Notice and any requested paper copies of this proxy statement and the materials used in this solicitation of proxies.

The proxies will be solicited through the mail, and as noted above, shareholders may also vote by the Internet or telephone. Voting by the Internet or telephone is fast, convenient, and your vote is immediately confirmed and tabulated. Most important, by using the Internet or telephone, you help us reduce postage and proxy tabulation costs. Although there is no formal agreement to do so, we may reimburse banks, brokerage houses and other custodians, nominees and fiduciaries for their reasonable expenses in forwarding these proxy materials to their principals. We have retained the services of Georgeson, Inc. to serve as our proxy solicitor in connection with our annual meeting at an estimated cost of approximately $15,000.

 

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page 21


 

PROPOSAL NO. 1

ELECTION OF DIRECTORS

 

Voting for Director Nominees

Plurality Vote Standard. Director nominees are elected by a plurality of votes cast at a meeting of shareholders by the holders of shares entitled to vote in the election.

Voting of Proxies. Unless instructions to the contrary are specified in a proxy properly voted and returned through available channels, the proxies that are received will be voted FOR each of the nominees listed below.

Nomination of Director Candidates

We have nominated for election eight (8) directors, all of whom are presently members of our Board of Directors, to serve until our 2025 annual meeting of shareholders or until their successors have been duly elected and qualified. Each of these persons is also a member of the Board of Directors of our principal subsidiary, Citizens Business Bank. Proxy holders will cast their votes to effect the election of these nominees. If any nominee is unable to serve, your proxy may vote for another nominee proposed by the Board of Directors. Proxies cannot be voted for a greater number of individuals than the number of nominees named.

Each of our Board members was nominated based on the assessment of our Nominating and Corporate Governance Committee and our Board of Directors that the nominees have demonstrated an ability to make meaningful contributions to the oversight of our Company’s business and affairs, have a reputation for honesty and ethical conduct in their personal and professional activities, exhibit independence, experience and sufficient communication and analytical skills, and meet our Board diversity objectives. On an annual basis, the members of our Board of Directors are required to complete detailed questionnaires which assess, among other things, the specific skill sets and qualifications of our directors, and the responses to these questionnaires are in turn reviewed by our Nominating and Corporate Governance Committee.

 

 

 

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Our Board of Directors Recommends a Vote “FOR” All Nominees.

 

 

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page 22


 

The Nominees

Our directors standing for reelection are:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Committee Memberships

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CVBF Board Committees

 

CBB Board Committees

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Name, Current Position

and Occupation

 

Age

Director

Since

Independent

Audit

Compensation

Nominating

& Corporate

Governance

 

Balance

Sheet

Management

Credit

Risk

Trust

Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hal W. Oswalt

Chairman of the Board

 

76

2014

YES

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Chair

Chair

 

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img181424411_14.jpg 

img181424411_14.jpg 

 

 

 

President and CEO,

Oswalt Consulting

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

George A. Borba, Jr.

Vice Chairman of the Board

 

56

2012

YES

 

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img181424411_14.jpg 

 

Chair

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img181424411_14.jpg 

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Partner, George Borba &

Son Dairy, LP; President,

Belonave Dairy; President,

5 Mile Ranch LLC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

David A. Brager

Director

 

56

2020

NO

 

 

 

 

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img181424411_14.jpg 

img181424411_14.jpg 

img181424411_14.jpg 

 

 

 

President and

Chief Executive Officer,

CVB Financial Corp.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stephen A. Del Guercio

Director

 

62

2012

YES

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img181424411_14.jpg 

img181424411_14.jpg 

 

img181424411_14.jpg 

 

Chair

img181424411_14.jpg 

 

 

 

Partner, Demetriou, Del Guercio, Springer & Francis, LLP

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Anna Kan

Director

 

50

2016

YES

img181424411_14.jpg 

img181424411_14.jpg 

img181424411_14.jpg 

 

img181424411_14.jpg 

 

img181424411_14.jpg 

Chair

 

 

 

CEO, Mustard Seed Enterprises

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Jane Olvera Majors

Director

 

55

2021

YES

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img181424411_14.jpg 

img181424411_14.jpg 

 

img181424411_14.jpg 

 

img181424411_14.jpg 

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Founder and President,

JP Marketing

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Raymond V. O’Brien Ill

Director

 

67

2012

YES

img181424411_14.jpg 

img181424411_14.jpg 

img181424411_14.jpg 

 

img181424411_14.jpg 

Chair

img181424411_14.jpg 

img181424411_14.jpg 

 

 

 

CEO, Cal Plate, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Kimberly Sheehy

Director

 

59

2022

YES

Chair

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img181424411_14.jpg 

 

img181424411_14.jpg 

 

img181424411_14.jpg 

img181424411_14.jpg 

 

 

 

Retired Financial Executive

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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page 23


 

All eight of our nominees for our Board of Directors were elected as directors at our 2023 annual meeting of shareholders.

 

 

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Director since: 2012

Age: 56

CVBF Committees:

Compensation

Nominating & Corporate

Governance

CBB Committees:

Balance Sheet Management

(Chair)

Credit

Risk Management

Trust Services

 

 

 

George A. Borba, Jr.

Experience

George A. Borba, Jr. is Vice-Chairman of the Board and has served on our Board since 2012. Mr. Borba, a dairy farmer, became partner in George Borba and Son Dairy in 1990. He is currently President of Belonave Dairy and 5 Mile Ranch LLC, in Bakersfield, California, which together represent one of the larger dairy operations in the State of California. Mr. Borba earned a B.S. in Agricultural Business Management from the California Polytechnic University in San Luis Obispo. He has served on various boards in San Bernardino and Kern Counties and is active in the Bakersfield community. Currently, Mr. Borba serves as a board member of The Open Door Network serving homeless and at-risk families.

Qualifications

Mr. Borba brings to our Board a deep understanding of the dairy and agricultural industries, which are important components of Citizens Business Bank’s loan portfolio, as well as strong connections with the business community in the Central Valley of California, which is a vital region for Citizens Business Bank’s current and potential future growth.

 

 

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Director since: 2020

Age: 56

CVBF Committees:

None

CBB Committees:

Balance Sheet Management

Credit

Risk Management

Trust Services

 

 

 

David A. Brager

Experience

David A. Brager is the President and Chief Executive Officer and a director of CVB Financial Corp. and Citizens Business Bank, having been appointed to these positions in March 2020. From 2010 to 2020, Mr. Brager served as Executive Vice President of Citizens Business Bank’s Sales Division which includes oversight of all business financial centers, customer lending and deposit relationships, marketing, treasury management, international services, government services and bankcard products. Mr. Brager previously served as the Senior Vice President and Regional Manager of Citizens Business Bank’s Central Valley Region, after serving as Manager of the Bank’s Fresno Business Financial Center. Mr. Brager received his B.S. from California State University, Fresno, and graduated from the Pacific Coast Banking School, which is in partnership with the University of Washington Graduate School of Business. He presently also serves as a member of the respective boards of directors of the California Bankers Association and the Pacific Bankers Management Institute, as a member of the advisory board of Oasis Center International, and as a member of the Governance Council of the College and Career Preparatory Academy under the Orange County Office of Education.

Qualifications

Mr. Brager’s qualifications to sit on the Board include his extensive banking, sales, operational and executive leadership experience.

 

 

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page 24


 

 

 

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Director since: 2012

Age: 62

CVBF Committees:

Audit

Compensation

Nominating & Corporate

Governance

CBB Committees:

Balance Sheet Management

Risk Management (Chair)

Trust Services

 

 

 

Stephen A. Del Guercio

Experience

Stephen A. Del Guercio has served on our Board since 2012. Mr. Del Guercio is a partner with the law firm Demetriou, Del Guercio, Springer & Francis, LLP. He was admitted to the California Bar in 1986. His practice areas include real estate and corporate transactional law, serving mid-sized businesses and high net worth individuals. He received his B.A. from the University of Southern California, graduating magna cum laude in 1983, and he received his J.D. from the University of Southern California Law School, graduating Order of the Coif in 1986. Mr. Del Guercio served on the City Council of the City of La Canada Flintridge from 2001 to 2013, including three one-year terms as Mayor. He is also involved with various community and charitable organizations in the greater Pasadena and Los Angeles areas.

Qualifications

Mr. Del Guercio’s qualifications to sit on the Board include his legal and financial experience and his extensive relationships in the business community in the San Gabriel Valley, which is another key region for Citizens Business Bank.

 

 

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Director since: 2016

Age: 50

CVBF Committees:

Audit

Compensation

Nominating & Corporate

Governance

CBB Committees:

Balance Sheet Management

Risk Management

Trust Services (Chair)

 

 

 

Anna Kan

Experience

Anna Kan was appointed as a director of CVB Financial Corp. and Citizens Business Bank in 2016. Ms. Kan is the CEO of Mustard Seed Enterprises, which invests in early stage companies and is an incubator of several entrepreneurial consumer packaged goods ventures. From 2015 to 2021, Ms. Kan served as Chair of the Board of California Manufacturing Technology Consulting (CMTC), the largest Manufacturing Extension Center in the U.S., which in partnership with the U.S. Department of Commerce, is dedicated to serving and promoting U.S. manufacturing. Previously, Ms. Kan served as the President and CEO of privately held Formosa Meat Company (dba Golden Island Jerky) from 1997 to 2013. Under her leadership, the company achieved seventeen consecutive years of growth. In 2013, Ms. Kan negotiated a successful sale of the company to Hillshire Brands. Ms. Kan earned her B.A. degree in communication studies from the University of Iowa and received her Executive Masters of Business Administration from the Kellogg School of Management, Northwestern University.

Qualifications

Ms. Kan’s qualifications to sit on our Board include her organizational and strategic planning expertise in innovation and growth and her knowledge of commercial and industrial lending, family businesses and customer relationship management.

 

 

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page 25


 

 

 

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Director since: 2021

Age: 55

CVBF Committees:

Audit

Compensation

Nominating & Corporate

Governance

CBB Committees:

Balance Sheet Management

Risk Management

Trust Services

 

 

 

Jane Olvera Majors

Experience

Jane Olvera Majors was appointed as a director of CVB Financial Corp. and Citizens Business Bank in 2021. Ms. Majors has specialized in the fields of marketing and communications for over three decades and is the Founder and President of JP Marketing, which is based in Fresno, California and provides clients with competitive insights and tactical communication plans and implementation, particularly for challenged or vulnerable populations. She is also a founding partner of Windsong Productions, a video production company, TMD Innovations, a start-up incubator, and Cultivate Create, a produce marketing agency. Ms. Majors has a B.A. in Speech Communication and a pending thesis for a M.A. in Organizational Communication from California State University, Fresno. Her numerous professional awards include “Silver Award for Industry Contributions” by the Advertising Federation and “Torch Award for Ethics” by The Better Business Bureau. Ms. Majors is a member of the Public Relations Society of America and the Fresno State Bulldogs Alumni Association, and is former Chair of the Institute for Family Business.

Qualifications

Ms. Major’s qualifications to sit on our Board include her extensive experience in providing direction, brand guidance, sales advice and diversity, equity and inclusion-sensitive marketing strategies to a wide variety of organizations to help accelerate their growth and expansion, as well as her strong connections with the business community in the Central Valley of California, which is a key region for Citizens Business Bank.

 

 

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Director since: 2012

Age: 67

CVBF Committees:

Audit

Compensation

Nominating & Corporate

Governance

CBB Committees:

Balance Sheet Management

Credit (Chair)

Risk Management

Trust Services

 

 

 

Raymond V. O’Brien III

Experience

Raymond V. O’Brien III was appointed a director in 2012, and served as our Chairman of the Board from 2014 until May 18, 2022. Mr. O’Brien has an extensive background in both manufacturing and banking. Mr. O’Brien began his professional career in banking in 1979 with Chase Manhattan Bank and moved to 1st Business Bank in 1983. In 1988, he left the banking profession and became CEO and owner of I.L. Walker, a Los Angeles-based manufacturing company. Over the next two-plus decades, Mr. O’Brien owned and led several manufacturing companies. He is currently the Chief Executive Officer and owner of Cal Plate, Inc., based in Artesia, California. Mr. O’Brien was a founding director of American Business Bank in 1997 and served as a director at that institution until 2012. Mr. O’Brien earned his B.B.A. in Finance from the University of Notre Dame in 1979. Mr. O’Brien is an active “49er” member of the Young Presidents’ Organization.

Qualifications

Mr. O’Brien’s qualifications to sit on our Board include his operational and financial expertise gained from the successful operation of a number of business entities, as well as his direct experience as a banker and bank director.

 

 

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page 26


 

 

 

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Director since: 2014

Age: 76

CVBF Committees:

Audit

Compensation (Chair)

Nominating & Corporate

Governance (Chair)

CBB Committees:

Balance Sheet Management

Credit

Risk Management

Trust Services

 

 

 

Hal W. Oswalt

Experience

Hal W. Oswalt has served as Chairman of the Board since May 18, 2022, and was originally appointed as a director of CVB Financial Corp. and Citizens Business Bank in 2014. Mr. Oswalt spent 16 years as a commercial banker in Oklahoma, where he served in the positions of President, CEO and director of several community banks in Oklahoma City and Tulsa. He has extensive experience working in the financial consulting industry where his roles have included serving as Managing Director of Global Consulting for an international IT software and outsourcing provider, as Managing Director of Sheshunoff Consulting Services, President of Brintech, Inc., President of SC+S Risk Management Services and President of Oswalt Consulting. Mr. Oswalt has managed consulting projects throughout the United States, Europe, Asia and Australia. Mr. Oswalt earned a B.S. in Business and a M.B.A. from Oklahoma State University. He is also a graduate of the University of Wisconsin’s Graduate School of Banking.

Qualifications

Mr. Oswalt’s qualifications to sit on our Board include his extensive background in both commercial banking and financial consulting, and his expertise in financial planning, strategic planning, cost management, systems implementation and organizational change management.

 

 

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Director since: 2022

Age: 59

CVBF Committees:

Audit (Chair)

Compensation

Nominating & Corporate

Governance

CBB Committees:

Balance Sheet Management

Risk Management

Trust Services

 

 

 

Kimberly Sheehy

Experience

Kimberly Sheehy was appointed as a director of CVB Financial Corp. and Citizens Business Bank in 2022. Ms. Sheehy is a seasoned financial executive with more than 30 years of experience across the telecommunications, technology, SaaS, data center, software development and REIT industries. Throughout her career as an executive, she held senior leadership positions, including the position of CFO at StackPath from 2015 to 2017, and the position of CFO at CyrusOne from 2012 to 2015, and she worked for 16 years with integrated communications provider Cincinnati Bell, where she rose to the position of Vice President of Finance, Investor Relations and Treasurer from 2007 to 2012. She began her career as a Senior Staff Auditor and Tax Manager with Ernst & Young. Ms. Sheehy currently serves as an independent board member and chair of the respective board audit committees at the following public companies: Evolv Technologies (Nasdaq: EVLV) and Shift Technologies (Nasdaq: SFT), and she previously served on the board of Switch Inc. (NYSE: SWCH) from 2017-2022. She holds a B.S. in Accounting from the University of Cincinnati and is a Certified Public Accountant. In 2013, she was named CFO of the Year by the Dallas Business Journal.

Qualifications

Ms. Sheehy’s qualifications to sit on our Board include her extensive experience and expertise in finance, accounting and tax matters, as well as her work as a director of two leading technology companies.

 

 

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page 27


 

Director Skills and Experience Matrix

 

KNOWLEDGE, SKILLS AND EXPERIENCE

Borba, Jr.

Brager

Del Guercio

Kan

Olvera Majors

O’Brien

Oswalt

Sheehy

Banking/Financial Services

 

·

 

 

 

·

·

 

Credit Management/Underwriting

·

·

 

 

 

·

 

 

Finance/Accounting/Audit

 

·

·

·

·

·

·

·

Governance/Legal

 

 

·

 

 

 

·

 

Human Resources/Compensation/Succession Planning

 

·

 

·

·

·

·

 

Regulatory/Risk Management

 

·

·

 

 

·

·

·

Sales/Marketing

·

·

 

·

·

·

 

 

Strategic Planning

 

·

 

 

·

 

·

 

Technology/Cybersecurity

 

 

 

 

 

 

·

·

Trust/Investment Services

·

 

·

·

 

 

 

 

 

 

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Corporate Governance Principles and Guidelines

Our Board of Directors is committed to good business practices, transparency in financial reporting and strong corporate governance. To that end, the Board of Directors has adopted Corporate Governance Guidelines, which among other things, provide for:

Annual director elections;
At least a majority of independent directors;
Non-executive, independent chair of the Board of Directors;
Audit, compensation and nominating and corporate governance committees consisting solely of independent directors;
Director selection process that includes compliance with all Nasdaq and State of California diversity requirements;
Director stock ownership guidelines;
Periodic executive sessions of non-management directors and Audit Committee directors;
An annual self-evaluation and assessment process for the Board of Directors and its committees;
Ethical conduct of directors;
Prohibitions on unlawful insider trading and restrictions on pledging or hedging Company stock;
Special procedures and limits on related party transactions;
Director access to officers and associates;
Director access to independent advisors;
Periodic review of management’s compensation and succession plans; and
Methodology for anonymous reports of concern to non-employee directors and/or the Audit Committee.

A copy of our Corporate Governance Guidelines is available on our website at www.cbbank.com by clicking the tab “Investors,” “Corporate Overview” and then “Governance Documents.”

 

 

Board Risk Oversight

Our Board of Directors is charged with providing oversight of the Company’s risk management policies and processes.

 

 

The Audit Committee

In accordance with the rules and regulations of Nasdaq, the Audit Committee is primarily responsible for overseeing our financial and internal controls, external and internal audit functions at CVB Financial Corp., and our information security management program under the Company’s Chief Information Security Officer (“CISO”).

The Risk Management Committee

The Risk Management Committee of Citizens Business Bank oversees the Bank’s Risk Management Division under our Chief Risk Officer (“CRO”). The Risk Management Committee is presented with a report on enterprise risk management by management on at least a quarterly basis, and this report is shared and discussed with the full Board of Directors.The Risk Management Division of Citizens Business Bank conducts periodic monitoring of compliance efforts with a special focus on those areas that expose the Bank to compliance, enterprise and governance risk. The purpose of this periodic monitoring is to seek to ensure that Citizens Business Bank’s associates and business practices are adhering to established policies and procedures and regulatory and corporate governance requirements. The CRO notifies the appropriate department head, the Management Compliance Committee, the Risk Management Committee of Citizens Business Bank and the Audit Committee of CVB Financial Corp. of any significant violations noted.

Our Board Committees and Management

Our Board committees meet periodically with various members of management and receive comprehensive reports on risk management, including management’s assessment of risk exposures (such as risks related to liquidity, market and interest rate sensitivity, credit, cybersecurity, fraud, bank operations, trust operations, litigation and regulatory compliance, among others), and the policies and processes in place to monitor and control such risk exposures. From time to time, the Board committees also receive updates between meetings from members of management relating to risk oversight and corporate governance matters.

Additional Risk Oversight

In addition to the Risk Management Committee of Citizens Business Bank and the Audit Committee of CVB Financial Corp., other committees of the Board of CVB Financial Corp. consider the risks within their respective areas of responsibility. For example, the Compensation Committee of CVB Financial Corp. considers the risks that may be implicated by our executive compensation programs, including our Executive Incentive Plan and the associated individual or group performance compensation plans.

For a discussion of the Compensation Committee’s review of CVB Financial Corp.’s executive officer compensation plans and associate incentive plans and the risks associated with these plans, see the section of this proxy statement on “Compensation Governance and Risk Management.”

 

 

 

 

 

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page 29


 

Board Nominations of Director Candidates

Pursuant to Article III, Section 3.3(a) of our Bylaws, the authorized number of directors of the Company has been established as not less than seven (7) or more than thirteen (13), with the exact number within those limits to be set by the Board of Directors by resolution. As of the date of this proxy statement, the number of directors has been set at eight (8) persons.

Our Board of Directors has established a Nominating and Corporate Governance Committee. This Committee assists the Board of Directors in director selection, as well as in review and consideration of developments in corporate governance practices. The Committee also makes recommendations to the Board of Directors regarding our director nominees for each Board of Directors committee, and reviews any director candidates submitted by shareholders. The Nominating and Corporate Governance Committee will consider candidates recommended by shareholder(s) utilizing the same criteria as candidates identified by the Committee itself (see “Shareholder Nominations of Director Candidates and Other Proposals” below).

The Nominating and Corporate Governance Committee is responsible for annually reviewing and evaluating with the Board of Directors the appropriate skills and characteristics required of members of the Board of Directors in the context of the current composition of the Board of Directors and our goals for nominees to the Board of Directors, including nominees who are current members of our Board of Directors.

The Nominating and Corporate Governance Committee has the authority to utilize, and from time to time engages, third party advisors, as appropriate, to assist it in fulfilling its Board of Directors selection function and in enhancing our corporate governance standards. Services provided by third party advisors generally include identifying and assessing potential director candidates meeting criteria established by the Nominating and Corporate Governance Committee, verifying information about the prospective candidate’s credentials, and obtaining a preliminary indication of interest and willingness to serve as a Board member. In 2022, the Committee utilized the executive recruiting firm of Chrisman & Company to help identify candidates to replace one of our retiring directors as Chair of our Board Audit Committee. In 2021, the Committee retained Michele Lando of Skillset Communications as a consultant to assist the Board with respect to performing a directors’ strengths and skills assessment and improving our Board effectiveness (see “Annual Board and Committee Self-Evaluation Process” below), and in 2019, the Committee utilized Pearl Meyer to assist in developing an enhanced Board stock ownership policy (see “Director Stock Ownership Guidelines” below).

The Nominating and Corporate Governance Committee considers the entire makeup of the Board of Directors when making its nominating recommendations to the Board of Directors, including tenure, experience, skillset and diversity considerations. In identifying and evaluating nominees for the Company’s directors, the goals of the Nominating and Corporate Governance Committee include maintaining a strong, experienced and diverse Board of Directors by regularly assessing each director’s business background, current responsibilities, community involvement, independence, commitment to CVB Financial Corp. (including meaningful ownership of our common stock pursuant to our director stock ownership policy for our continuing directors) and time available for service.

The Nominating and Corporate Governance Committee also considers diversity of viewpoints, background, experience (including skills diversity), gender, membership in an underrepresented community and demographics in the selection of nominees. Other important factors the Nominating and Corporate Governance Committee will consider in the selection of nominees include contacts in and knowledge of CVB Financial Corp.’s core industry (banking) and other industries relevant to CVB Financial Corp.’s business, and ability to work together with other members of the Board of Directors. Members of CVB Financial Corp.’s Board also serve on the Board of Directors of Citizens Business Bank. At present, the Company does not have a mandatory director retirement policy.

Shareholder Nominations of Director Candidates and Other Proposals

The policy of the Nominating and Corporate Governance Committee is to consider properly submitted shareholder proposals and nominations for candidates for membership on our Board of Directors pursuant to the Company’s Bylaws. In evaluating director nominees by shareholders, the Nominating and Corporate Governance Committee will look at the same factors described under the heading “Board Nominations of Director Candidates” above that it uses for nominees who come to its attention from current members of the Board of Directors or third party advisors. Recommendations must be submitted in writing to the attention of the Chair of the Nominating and Corporate Governance Committee at the following address:

 

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CVB Financial Corp.

701 North Haven Avenue, Suite 350

Ontario, California 91764

Shareholders should include in such recommendation the following items: (1) the name and address of each proposed director nominee, (2) the principal occupation of each proposed nominee, (3) the number of shares of voting stock of CVB Financial Corp. owned by each proposed nominee and the notifying shareholder, (4) the name and residence address of the notifying shareholder, and (5) a letter from the proposed nominee indicating that such proposed nominee wishes to be considered as a nominee for the CVBF Financial Corp. Board of Directors and will serve as a member of the Board of Directors if elected. In addition, each recommendation must set forth in detail the reasons why the notifying shareholder believes the proposed nominee meets the criteria set forth in the Nominating and Corporate Governance Committee Charter for serving on CVB Financial Corp.’s Board of Directors. This Charter is available on our website at www.cbbank.com by clicking the tab “Investors,” then “Corporate Overview” and then “Governance Documents.”

Our Bylaws permit shareholders to make proposals or to nominate directors for consideration prior to an annual meeting. Pursuant to our Company’s Bylaws, nominations by shareholders of persons for election to our Board of Directors or other proposals must be delivered to the Company’s Corporate Secretary, at the address specified above, no later than the close of business on the ninetieth (90th) day nor earlier than the close of business on the one hundred twentieth (120th) day prior to the anniversary date of the Company’s annual meeting for the preceding year.

If the notice relates to any business (other than the nomination of persons for election as directors) that the shareholder proposes to bring properly before a meeting of shareholders, our Bylaws require that the following items be included: (1) a brief description of the business desired to be brought before the meeting, (2) the text of the proposal or business (including the text of any resolutions proposed for consideration and in the event that such business includes a proposal to amend the Bylaws of the corporation, the language of the proposed amendment), (3) the reasons for conducting such business at the meeting, and (4) any material interest in such business of such shareholder and the beneficial owner, if any, on whose behalf the proposal is made.

If the notice relates to nomination of a director, in order to be deemed to be in proper form under our Bylaws, any such nomination must include, as to each nominee, among other things, (1) all information relating to such persons that is required to be disclosed in connection with solicitations of proxies for the election of directors in accordance with Regulation 14A under the Securities Exchange Act of 1934 (the “Exchange Act”), including information required in response to a director’s questionnaire in a form to be provided by the Company to the nominating shareholder, (2) the nominee’s written consent to being named in the proxy statement and to serving as a director if elected, (3) the number of shares of capital stock in any depositary institution or bank holding company (including the Company) owned by the nominee, and any hedging or similar transactions entered into by the nominee in order to increase or decrease the risks or voting power of such stockholdings, (4) whether the nominee would qualify as an “independent director” or “audit committee financial expert” under applicable law or Nasdaq regulations, (5) certain additional background information concerning the nominee, including any criminal convictions or bankruptcy petitions, (6) any arrangements or understandings between the nominating shareholder and nominee relating to the nomination, and (7) a written statement executed by the nominee acknowledging that, as a director of the Company, such person will owe a fiduciary duty under the California Corporations Code exclusively to the Company and its shareholders.

In addition, pursuant to these same provisions of our Bylaws, the nominating shareholder must provide information concerning (1) the name and address of such shareholder, (2) the number of shares of the Company’s capital stock owned by such shareholder and any derivative position in the Company’s stock held by or on behalf of such shareholder, (3) any other shareholders or beneficial owners known by such shareholder to support the nomination being proposed, and (4) whether such shareholder is prepared to deliver a proxy statement or solicitation in support of the nomination.

Lastly, upon the Company’s request, any nominee proposed by a shareholder must promptly complete and return a director questionnaire to be provided by the Company. If a nominating shareholder will solicit proxies for a nominee or nominees other than the Company’s nominees in accordance with Rule 14a-19 under the Exchange Act, the nominating shareholder’s written nomination must also include: (1) all information required to be provided to the Company by Rule 14a-19; (2) a written undertaking that such shareholder intends to deliver a proxy to holders of shares representing at least 67% of the voting power of the stock entitled to vote generally in the election of directors, in accordance with Rule 14a-19, and that a statement to such effect will be included in such shareholder’s proxy statement; (3) a written undertaking that such shareholder will comply with all requirements of the Exchange Act and the regulations promulgated thereunder, including but not limited to Rule 14a-19,

 

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and (4) each proposed director nominee’s written consent to being named in the Company’s proxy statement for the applicable meeting and the associated proxy.

Director Tenure, Age and Diversity

The distributions of our eight directors, as of the date of this proxy statement, by tenure, age and diversity are set forth in the three pie charts below.

 

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Nasdaq-listed companies, subject to certain exceptions, are required (1) to have at least one director who self-identifies as a female, and (2) to have at least one director who self-identifies as Black or African American, Hispanic or Latinx, Asian, Native American or Alaska Native, Native Hawaiian or Pacific Islander, two or more races or ethnicities, or as LGBTQ+, or (3) to explain why the reporting company does not have at least two directors on its board who self-identify in the categories listed above. In addition, Nasdaq-listed companies are required to provide statistical information about such company’s Board of Directors, in a uniform format, related to each director’s self-identified gender, race, and self-identification as LGBTQ+. Our Board Diversity Matrix is set forth below.

Compliance with Nasdaq rules is subject to phase-in periods of two years to have at least one diverse board member and four years to have at least two diverse board members.

In addition, the State of California has enacted two statutes on the subject of board diversity (SB 826 and AB 979) that purport to apply to all publicly held companies whose principal executive offices are located in California and which are currently the subject of ongoing litigation challenging their state constitutionality. The Company believes that, as of the date of this proxy statement, it is in compliance with the diversity requirements imposed by the Nasdaq listing rules as well as the two State of California statutes noted above, because the Company presently has three female directors and two of these three directors also identify as members of underrepresented communities (Black, African American, Hispanic, Latino, Pacific Islander, Native American, Native Hawaiian or Alaska native, gay, lesbian, bisexual or transgender).

 

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Board Diversity Matrix (as of the Record Date)

 

 

 

 

 

 

 

 

 

 

 

 

 

Board Size:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Number of Directors

 

8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Part I: Gender Identity

 

Male

 

 

Female

 

 

Non-Binary

 

 

Gender
Undisclosed

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of directors based on gender identity

 

5

 

 

3

 

 

0

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Part II: Demographic Background

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

African American or Black

 

0

 

 

0

 

 

0

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Alaskan Native or American Indian

 

0

 

 

0

 

 

0

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asian

 

0

 

 

1

 

 

0

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hispanic or Latinx

 

0

 

 

1

 

 

0

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Native Hawaiian or Pacific Islander

 

0

 

 

0

 

 

0

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

White

 

5

 

 

1

 

 

0

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Two or More Races or Ethnicities

 

0

 

 

0

 

 

0

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LGBTQ+

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Undisclosed

 

0

 

 

 

 

 

 

 

 

 

 

 

 

Director Independence

With the exception of our President and CEO, Mr. Brager, who is the only management member serving on our Board, each of our directors is “independent” within the meaning of the rules and regulations promulgated by Nasdaq, and has been determined to be “independent” by our Nominating and Corporate Governance Committee, with respect to his or her Board service and the committees on which each such director respectively serves. In making such determinations, our Nominating and Corporate Governance Committee evaluates banking, commercial service, familial or other connections and transactions involving each director or immediate family member and his or her related interests, and the Company, if any.

Executive Sessions

Executive sessions of our independent directors are held at least four times a year. The person who presides at these meetings is typically our Chairman of the Board who is also an independent director.

Director Stock Ownership Guidelines

 

 

Director Stock Ownership Guidelines

 

 

3X Annual Retainer

 

 

Our directors are expected to evidence their commitment to CVB Financial Corp. through, among other things, ownership of a meaningful amount of our common stock. In 2019, our Compensation Committee revised its guidelines for stockholdings by our non-employee directors to increase the target ownership level of CVB Financial Corp. common stock, from a dollar value of $100,000 to an amount equal to three times (3x) the annual base retainer provided to our non-employee directors. Because the amount of the annual base retainer for 2023 was $70,000 (see the section of this proxy statement on “Director Compensation”), this means the target stock ownership level for our non-employee directors was $210,000 for our 2023 fiscal year. However, under these same guidelines, new directors are provided with a reasonable period to enable them to accumulate the target amount of stock, including through the annual stock grants that are provided to our directors as part of their compensation for serving on our Board. We believe that all our current directors are in compliance with our new stock ownership policy, except for our newest director, Ms. Kimberly Sheehy, who joined our Board on June 15, 2022. Please see the earlier Table in this proxy statement on “How Much Stock Do CVB Financial Corp.’s Directors and Executive Officers Own?”

 

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Policy on Insider Trading, Pledging and Hedging of Company Equity Securities by Directors, Officers and Employees

The Company has adopted an “Insider Trading Policy” governing transactions in CVB Financial Corp. equity securities by officers, directors, associates and consultants of the Company. In addition to the Policy’s general prohibitions on insider trading in violation of applicable federal law, this Policy contains a more specific set of restrictions which apply to any of our directors, NEOs and certain other officers whom the Company has designated as restricted persons due to their positions with the Company or their access to material non-public information regarding the Company (collectively, “Restricted Persons”). Under this Policy, our Restricted Persons are prohibited from engaging in specified types of transactions involving the Company’s equity securities, including any trading in violation of the federal short-swing profit rules (i.e., purchases and sales within a six-month period), short-selling or buying or selling options (including the trading of puts, calls or other market derivatives). Other forms of hedging or monetization transactions, such as equity swaps, zero-cost collars and forward sale contracts, which would allow the Restricted Person to continue to own the affected CVB Financial Corp. equity security, but without the full risks and rewards of outright ownership, are discouraged under the Policy, because such Restricted Person may no longer have the same incentives as the Company’s other shareholders, and accordingly, any Restricted Person wishing to enter into such a transaction is required to provide a detailed justification and to pre-clear the transaction with our General Counsel. Likewise, the pledge or placement in a margin account of any equity securities of the Company owned by a Restricted Person is discouraged and requires written justification and pre-clearance with our General Counsel. Pre-planned stock trading programs that otherwise satisfy the requirements of Securities and Exchange Commission Rule 10b5-1 and the terms of our Policy, are generally permitted. As of the date of this proxy statement, there are no known Rule 10b5-1 plans in effect for any of the Company’s directors or Section 16 officers. In addition, there are no known outstanding hedged or pledged positions by any Restricted Persons involving equity securities of CVB Financial Corp., and no Rule 10b5-1 plans or hedging or pledging transactions involving CVB Financial Corp. stock by any Restricted Persons have been approved within the prior fiscal year or the current year.

Director Attendance at Board Meetings and Annual Shareholders Meeting

During the 2023 calendar year, CVB Financial Corp.’s Board of Directors held 12 regular monthly meetings and the Board of Directors of Citizens Business Bank held 12 regular meetings.

All of the eight persons who served as director of CVB Financial Corp. and Citizens Business Bank during 2023, and all eight directors of CVB Financial Corp. who are nominated for re-election at the 2024 annual meeting of shareholders, attended at least 75% of the aggregate of (i) the total number of CVB Financial Corp. and Citizens Business Bank Board meetings during 2023 which they were eligible to attend and (ii) the total number of meetings held by all committees of the Board of Directors of CVB Financial Corp. or Citizens Business Bank on which they served during 2023 and which they were eligible to attend.

The Board of Directors encourages all of its members to attend the Company’s annual meeting of shareholders. All of our directors either attended our 2023 annual meeting of shareholders in person or listened in via our conference call facility.

Committees of the Board of Directors

The Board of Directors of CVB Financial Corp. accomplishes much of its work through committees, which undertake work delegated by the Board, make recommendations to the Board for discussion and action, and enhance Board focus and productivity. As set forth previously, the Board of Directors of CVB Financial Corp. has three standing committees: an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee. The Board of Directors of Citizens Business Bank has four standing committees: a Balance Sheet Management Committee; a Credit Committee, a Risk Management Committee and a Trust Services Committee.

Audit Committee

The Audit Committee of the Board of Directors is composed of Kimberly Sheehy (Chair), Stephen A. Del Guercio, Anna Kan, Jane Olvera Majors, Raymond V. O’Brien III, and Hal W. Oswalt. The Audit Committee operates under a written charter, adopted by the Board of Directors, which is available on our website at www.cbbank.com by clicking the tab “Investors,” then “Corporate Overview” and then “Governance Documents.” The Audit Committee is a separately designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Exchange Act. Each of the members of the Audit Committee is "independent" within the meaning of the rules and regulations of Nasdaq.

 

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The purpose of the Audit Committee is to oversee and monitor (i) the integrity of our financial statements and the Company’s systems of internal accounting and financial controls; (ii) our compliance with applicable legal and regulatory requirements; (iii) our independent auditor qualifications and independence; (iv) the performance of our internal audit function and independent auditors; and (v) our information security program. The Board of Directors has determined that Ms. Sheehy is an “audit committee financial expert” within the meaning of the rules and regulations of the SEC and an “independent” director within the meaning of the rules of Nasdaq.

The Audit Committee has the sole authority to appoint or replace the Company’s independent auditors (including oversight of audit partner rotation). The Audit Committee is also directly responsible for the compensation and oversight of the work of the Company’s independent auditors. Our internal audit function, headed by our Chief Audit Executive, our independent auditors and our CISO report directly to the Audit Committee.

Among other things, the Audit Committee prepares the audit committee report for inclusion in our annual proxy statement; reviews and discusses with management and the independent auditors our independent certified audits; reviews and discusses with management and the independent auditors our quarterly and annual financial statements; reviews the adequacy and effectiveness of our disclosure controls and procedures; approves all auditing and permitted non-auditing services performed by our independent auditors; oversees our information security program; reviews any significant findings by our bank regulators and management’s response thereto; establishes procedures to anonymously and confidentially handles any complaints we receive regarding auditing matters and accounting and internal accounting controls; and handles the confidential, anonymous submissions to it by our associates of concerns or questions relating to accounting or auditing matters.

The Audit Committee also has authority to retain independent legal, accounting and other advisors as the Audit Committee deems necessary or appropriate to carry out its duties. During 2023, the Audit Committee held 12 regular monthly meetings, plus three quarterly meetings for the purpose of reviewing and approving our SEC filings and appointing our independent auditing firm.

Nominating and Corporate Governance Committee

The Board of Directors has a Nominating and Corporate Governance Committee consisting of Hal W. Oswalt (Chair), George A. Borba, Jr., Stephen A. Del Guercio, Anna Kan, Jane Olvera Majors, Raymond V. O’Brien III and Kimberly Sheehy. Each of the members of the Nominating and Corporate Governance Committee is independent within the meaning of the rules and regulations of Nasdaq.

As set forth above, the Nominating and Corporate Governance Committee:

Assists the Board of Directors by identifying individuals qualified to become members of the Board of Directors;
Recommends to the Board of Directors the director nominees for our next annual meeting;
Recommends to the Board of Directors the director nominees for each Board committee;
Develops and recommends a set of corporate governance principles applicable to CVB Financial Corp. and Citizens Business Bank; and
Conducts our annual Board, committee and director self-evaluations and self-assessments.

Other specific duties and responsibilities of the Nominating and Corporate Governance Committee include: retaining and terminating any outside search firm to identify director candidates; receiving communications from shareholders regarding any matters of concern regarding corporate governance; and reviewing and reassessing the adequacy of its Charter and its own performance on an annual basis.

The procedures for nominating directors and for making proposals at our annual meeting, other than by the Board of Directors itself, are set forth in CVB Financial Corp.’s Bylaws and discussed above under the respective headings “Board Nominations of Director Candidates” and “Shareholder Nominations of Director Candidates and Other Proposals.” The Charter of the Nominating and Corporate Governance is available on our website at www.cbbank.com by clicking on the tab “Investors,” then “Corporate Overview” and then “Governance Documents.” The Nominating and Corporate Governance Committee held three meetings during 2023.

 

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Compensation Committee

The Compensation Committee of the Board of Directors of CVB Financial Corp. (the “Compensation Committee”) has overall responsibility for overseeing our compensation and employee benefit plans and practices, including our executive compensation plans and our incentive compensation, bonus and equity-based plans. This Committee is composed of Hal W. Oswalt (Chair), George A. Borba, Jr., Stephen A. Del Guercio, Anna Kan, Jane Olvera Majors, Raymond V. O’Brien III and Kimberly Sheehy. Each of the members of the Compensation Committee is independent within the meaning of the rules and regulations of Nasdaq. During 2023, the Compensation Committee held seven regular meetings. The Compensation Committee has a charter which can be found on CVB Financial Corp.’s website at www.cbbank.com by clicking the tab “Investors,” then “Corporate Overview” and then “Governance Documents.”

The Compensation Committee has the responsibility, among other things, of recommending to the Board of Directors the appropriate level of compensation for the Board of Directors, and for determining the total compensation of all executive officers of CVB Financial Corp. and Citizens Business Bank. During 2023, this responsibility included (i) working with the Company’s outside compensation consultants at Pearl Meyer to review and make appropriate adjustments to the Company’s peer group of comparable financial institutions for compensation purposes, (ii) working with Pearl Meyer to benchmark and make appropriate adjustments to the compensation parameters applicable to our named executive officers and certain other members of our senior leadership team, (iii) overseeing the formulation and implementation of the Company’s performance incentive and bonus plans for our senior officers, and (iv) conducting the annual performance evaluation of our President and CEO.

The Compensation Committee may delegate its authority to others within the organization in certain instances as it deems necessary. Our President and CEO, Chief Financial Officer and Human Resources Director participate, when requested to do so, in determining or recommending the amount or form of executive and director compensation (except with respect to their own compensation).

Compensation Committee Interlocks and Insider Participation

None of the directors serving as members of the Compensation Committee during 2023 has ever been an officer or employee of CVB Financial Corp. or any of its subsidiaries. During the last fiscal year, none of our executive officers served on the board of directors or on the compensation committee of any other entity, any officers of which served on either our Board or our Compensation Committee. We do not believe that any current member of our Compensation Committee has a relationship with the Company that would compromise such member’s ability to be independent of management.

Some of the directors and executive officers of CVB Financial Corp. and/or their associates were customers of, and had loans, deposits and commitments with, Citizens Business Bank in the ordinary course of its business during 2023, and we expect such transactions will continue in the future. All of these loans, deposits and commitments were made on substantially the same terms, including interest rates, collateral and repayment terms, as those prevailing at the time for comparable transactions with other persons of similar credit worthiness who were not related to the Company in accordance with the provisions of the Sarbanes-Oxley Act of 2002. In our opinion, these transactions did not involve more than a normal risk of collectability or present other unfavorable features.

Policies and Procedures for Approving Related Person Transactions

CVB Financial Corp. has a Related Party Transaction Policy which prescribes policies and procedures for approving a “Related Party Transaction.” The term “Related Party Transaction” is defined as a transaction or arrangement (or, any series of similar transactions or arrangements) in which CVB Financial Corp. (including any of its subsidiaries) was, is or will be a participant and the amount involved exceeds $120,000, and in which any Related Party had, has or will have a direct or indirect interest. “Related Party” is defined as:

Any person who is, or at any time since the beginning of CVB Financial Corp.’s last fiscal year was, a director or executive officer of CVB Financial Corp. or a nominee to become a director of CVB Financial Corp.;
Any person who is known to be the beneficial owner of more than 5% of any class of CVB Financial Corp.’s voting securities;

 

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Any immediate family member of any of the foregoing persons, who might control or influence such person, or be controlled or influenced by such person, which would normally include any child, stepchild, parent, step-parent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law of the director, executive officer, nominee or more than 5% beneficial owner, and any person (other than a tenant or employee) sharing the household of such director, executive officer, nominee or more than 5% beneficial owner; or
Any firm, corporation or other entity in which any of the forgoing persons is employed or is a general partner or principal or in a similar position or in which such person has a 5% or greater beneficial ownership interest.

The procedures exclude from coverage loans made by Citizens Business Bank if the loan (a) is made in the ordinary course of business, (b) on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable loans with persons not related to the lender, (c) did not involve more than the normal risk of collectability or present other unfavorable features, and (d) is otherwise made pursuant to the Company’s applicable policies and applicable law for extension of credit to Related Persons. In the case of such loans, the procedures set forth in the policies and procedures applicable to such loans shall be followed rather than the procedures set forth in the Related Party Transaction Policy.

The Board of Directors has delegated to the Audit Committee the responsibility of reviewing and approving Related Party Transactions. In evaluating Related Party Transactions, the Audit Committee considers all of the relevant facts and circumstances available to the Audit Committee, including:

The benefits to CVB Financial Corp.;
The impact on a director’s independence in the event the Related Party is a director, an immediate family member of a director or an entity in which a director is a partner, shareholder or executive officer;
The availability of other sources for comparable products or services;
The terms of the transaction; and
The terms available to unrelated third parties or to our associates generally.

No member of the Audit Committee may participate in any review, consideration or approval of any Related Party Transaction with respect to which such member or any of his or her immediate family members or affiliated entities is the Related Party. The Audit Committee or the Chair may approve only those Related Party Transactions that are in, or are not inconsistent with, the best interests of CVB Financial Corp. and its shareholders, as the Audit Committee determines in good faith. The Chair is required to report to the Audit Committee at the next Audit Committee meeting any approvals made pursuant to delegated authority.

In the event CVB Financial Corp.’s President and Chief Executive Officer or Chief Financial Officer becomes aware of a Related Party Transaction that has not been previously approved or previously ratified under the Policy, the following procedures apply: (a) if the transaction is pending or ongoing, it will be submitted to the Audit Committee or the Chair promptly, the Committee or Chair will consider all the relevant facts and circumstances, including those items listed above, and, based on the conclusions reached, the Audit Committee shall evaluate all options, including ratification, amendment or termination of the Related Party Transaction, and (b) if the transaction is completed, the Audit Committee will evaluate the transaction, taking into account the same factors described above, to determine if rescission of the transaction is appropriate, and shall request that the Chief Financial Officer evaluate CVB Financial Corp.’s controls and procedures to ascertain the reason the transaction was not submitted to the Audit Committee for prior approval and whether any changes to these controls and procedures are recommended.

Annual Board and Committee Self-Evaluation Process

On an annual basis, our Board of Directors undertakes to perform a self-evaluation review in order to evaluate the performance and efficient functioning of the Board and its respective committees, and to consider how to improve and optimize our Board and committee composition and structure, including board refreshment, expertise and skill sets, independence and diversity. This self-evaluation process is conducted under the auspices of our Nominating and Corporate Governance Committee.

This review process typically commences with the completion of a detailed self-assessment questionnaire that asks each director to assess whether the Board as a whole, and each holding company committee on which such director serves, demonstrates the appropriate level of effectiveness and understanding regarding its priorities and oversight role, with a view towards ensuring the Company is fulfilling its overall corporate mission and its primary business and risk management

 

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objectives. At the same time, the directors are asked to provide written comments in order to elaborate and provide context for their responses.

The topics encompassed by the self-assessment questionnaire, and the Board’s subsequent deliberations, are both general and specific. At the general level, the questionnaire and review process generally includes questions regarding the independence, structure and functioning of the Board and its committees, as well as questions regarding whether the Board’s membership reflects the appropriate mix of diversity, talents and expertise relative to the Company’s current business and risk management objectives. At the specific level, we believe the questionnaire and review process help the Board evaluate whether it and its committees are adequately fulfilling their specific, required or recommended functions, including corporate governance best practices, setting the appropriate “tone at the top,” overseeing corporate strategy and financial goals, understanding the Company’s risk profile and risk management, monitoring the CEO’s and management’s performance, determining the proper levels of executive compensation and incentive structures, etc.

Each individual director’s responses to the questionnaire are compiled in a manner designed to preserve the respondent’s anonymity, the collective results are shared and reviewed with the Board as a whole, and the Board then determines whether any changes should be discussed and implemented. In recent years, this process has resulted in a number of modifications to director recruitment, committee membership configurations, the information to be included in the Board and committee information packages, the optimal timing of committee meetings and the Board’s agenda-setting procedures.

In addition, at least annually, the Board's Nominating and Corporate Governance Committee discusses potential director retirement timetables, the potential recruiting of new directors and board refreshment. On occasion, this Committee or its Chair may consult with outside recruiting consultants on such matters. Since January 1, 2021, the Board has added two new directors: Ms. Olvera Majors (2021) and Ms. Sheehy (2022).

Director Compensation

Our Board of Directors holds monthly meetings of the full Board, and also meets in various committees on a monthly or quarterly basis, depending upon the committee concerned. Our Chairman and Vice Chairman meet separately on occasion with our Chief Executive Officer, forming the Executive Committee of the Board of Directors.

CVB Financial Corp. uses a combination of cash and stock-based compensation to attract and retain qualified individuals to serve as directors. The most recent review by our Compensation Committee of compensation for our Board of Directors was conducted in September 2019, when the Committee engaged our outside compensation consultant, Pearl Meyer, to perform a study of the key elements of compensation for our Board of Directors relative to our then-current peer group of financial institutions. Based on this review, compensation of our non-employee directors was adjusted to (i) increase the annual cash compensation to be paid to our non-employee directors (other than our Chairman and Vice Chairman of the Board), (ii) increase the annual compensation to be paid to two of our Board Committee Chairs, (iii) change the formula for the amount of annual restricted stock grants to be made to our non-employee directors, and (iv) increase the minimum amount of stock ownership in CVB Financial Corp. to be expected of a non-employee director.

Only non-employee directors are entitled to receive monthly cash compensation for serving on our Board of Directors. Each director who is not the Chair of the Audit Committee, Chair of the Risk Management Committee, Vice Chairman of the Board or Chairman of the Board received a cash payment of $5,833 per month, for an annualized cash total of $70,000, for our 2023 fiscal year. In addition to the foregoing monthly payments, the Chair of our Audit Committee is paid an additional stipend of $20,000 per annum in monthly installments (annualized cash total of $90,000), and the Chair of our Risk Management Committee is paid an additional stipend of $10,000 per annum in monthly installments (annualized cash total of $80,000), in recognition of the heightened responsibilities demanded by those two committee chair positions on our Board. For similar reasons, our Vice Chairman of the Board currently receives compensation of $8,333 monthly, or an annualized total of $100,000, and our Chairman of the Board currently receives compensation of $11,917 per month, or an annualized total of $143,000.

We make annual restricted stock grants to our non-employee directors for a number of shares of restricted stock having a dollar value of $85,000, so that the number of shares awarded annually to each non-employee director is calculated by dividing $85,000 by the per share closing price of the Company’s stock on the grant date, rounded to the nearest whole share.

At its meeting in April 2022, the Compensation Committee decided to change the timing of the annual restricted stock grants to be made to our non-employee directors. These restricted stock grants had historically been made at the Committee’s and

 

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Board’s scheduled meetings in March of each year, but the Committee noted that this created potential timing issues for any directors who would be retiring from service and not seeking re-nomination at the Company’s annual shareholders meeting held in May of each year, because such retiring directors would not be receiving new restricted stock grants for the coming year and thus would effectively experience a shortfall in compensation related to the value of the annual stock grant for the remaining two months of their tenure between March and May.

Accordingly, commencing in 2023, the Committee revised the cycle for the annual stock grants issued to our non-employee directors from March to May of each year, so that such grants are now made immediately following the Company’s annual shareholders meeting in May. As part of enacting this change, the Committee determined, on a one-time basis for 2023 only, to increase the annual stock grant to a dollar value of 14/12 of the standard annual grant value of $85,000, or $99,166.66, in order to account for the additional two months of director service related to the delay from March to May 2023 associated with changing the annual cycle for the timing of our non-employee director restricted stock grants.

As a result, at a meeting of our Compensation Committee on May 17, 2023, each of our non-employee directors was granted 8,257 shares of restricted stock of CVB Financial Corp. for our 2023 fiscal year, which is the rounded whole share total closest to $99,166.66 in stock value divided by the closing price of $12.01 for CVB Financial Corp.’s stock on that day. These 2023 restricted stock grants to our non-employee directors were made pursuant to our 2018 Equity Incentive Plan, and each of the 2023 restricted stock grants to our non-employee directors is scheduled to vest one year from the grant date.

Lastly, starting in 2008, our directors could elect to participate in our 2007 Deferred Compensation Plan for Directors and Certain Specified Officers (“2007 DCP”), which was established for the benefit of our directors and NEOs and certain other executives and employees. Under the 2007 DCP, each director was given the opportunity to defer up to 100% of his or her director fees that are paid in cash, and any independent contractor compensation, for each calendar year in which such Plan was available. Effective January 1, 2021, our directors were provided with the same opportunity to defer up to 100% of cash director fees, and any independent contractor compensation, under an updated CVB Financial Corp. Deferred Compensation Plan adopted in December 2020 (“2020 DCP”), with our 2007 DCP remaining in force only for deferrals made prior to 2021. Each of the 2007 DCP and 2020 DCP provides for participants to make notional investment selections with respect to their deferred compensation, but neither the 2007 DCP nor the 2020 DCP provides for any fixed or minimum yield or return on deferred compensation. Among our current directors, only Raymond V. O’Brien III has elected to participate in the 2007 DCP and the 2020 DCP.

The Compensation Committee intends to conduct periodic reviews of our director compensation using our outside compensation consultants and other available information, because the Committee believes that retention and continuity of board service is important to our success, and because we seek to provide an appropriate blend of cash compensation and equity-based incentives to better align board and shareholder perspectives and interest. Based on the 2019 review of board compensation conducted by Pearl Meyer, and other more recent information available to the Compensation Committee, we believe our compensation for director service is currently in approximately a median to above-median range compared to peer companies.

The following table summarizes the compensation earned or paid to our non-employee directors by the Company during 2023. Compensation paid to our President and CEO, Mr. David A. Brager, is set forth in the Summary Compensation Table below, because our President and CEO is an employee of the Company who does not receive separate compensation for serving on our Board of Directors.

 

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OUTSIDE DIRECTOR COMPENSATION IN 2023

 

 

Fees Earned
or Paid in
Cash

 

Restricted
Stock
Awards

 

Stock
Option
Awards

 

All Other
Comp

 

Total

Name

 

($)(1)

 

($)(2)(3)

 

($)(3)

 

($)(4)

 

($)

 

 

 

 

 

 

 

 

 

 

 

George A. Borba, Jr.

 

100,000

 

99,167

 

-

 

-

 

199,167

(Vice Chairman)

 

 

 

 

 

 

 

 

 

 

Stephen A. Del Guercio

 

80,000

 

99,167

 

-

 

-

 

179,167

Anna Kan

 

70,000

 

99,167

 

-

 

-

 

169,167

Jane Olvera Majors

 

70,000

 

99,167

 

 

 

 

 

169,167

Raymond V. O’Brien III

 

70,000

 

99,167

 

-

 

-

 

169,167

Hal W. Oswalt

 

143,000

 

99,167

 

-

 

-

 

242,167

(Chairman)

 

 

 

 

 

 

 

 

 

 

Kimberly Sheehy

 

90,000

 

99,167

 

-

 

-

 

189,167

 

(1)
As noted above, for 2023, standard cash compensation levels for our outside directors were as follows: (i) base director fees of $70,000, or $5,833 per month; (ii) an additional stipend of $10,000 for the Chair of our Risk Management Committee, for total director fees of $80,000, or $6667 per month; (iii) an additional stipend of $20,000 for the Chair of our Audit Committee, for total director fees of $90,000, or $7500 per month; (iv) total director fees for our Vice-Chairman of $100,000, or $8,333 per month; and (v) total director fees for our Chairman of $143,000, or $11,917 per month.
(2)
As noted above, the value of the restricted stock grants to each of our non-employee directors was set at a value of $99,166.66 for 2023 which was 14/12 of the amount of the previously established annual grant value of $85,000, due to a one-time delay in 2023 as a result of a change in the date of the annual grant to our non-employee directors, from March to May. For 2023, the number of shares awarded to each director was 8,257, which was the number of whole shares equal to the grant value of $99,166.66 divided by the per share closing price of our Company’s stock on the grant date, which was $12.01 on May 17, 2023.
(3)
Pursuant to SEC regulations regarding the valuation of equity awards, each amount under Restricted Stock Awards and Stock Options Awards represents the applicable full grant date fair values of the restricted stock award or stock option award, as applicable, in accordance with FASB ASC Topic 718, excluding the effect for forfeitures. These amounts correspond to our accounting expense and do not correspond to the actual value that will be realized by the director. For information on the valuation assumptions, refer to the Note on “Stock Option Plans and Restricted Stock Awards” in the financial statements filed with our Annual Report on Form 10-K for 2023.
(4)
All other compensation represents the value of reimbursements for occasional expenses incurred from time to time (if any) in connection with a director’s spouse’s attendance at certain business conferences and seminars.

On December 31, 2023, none of our non-employee directors who served as directors during 2023 held options to purchase our common stock. As of December 31, 2023, each of our non-employee directors held 8,257 restricted shares of our common stock which had not yet vested.

Communications with the Board of Directors

Shareholders wishing to contact CVB Financial Corp.’s Board of Directors, including a committee of the Board of Directors, may do so by writing to the following address to the attention of the Board of Directors or a committee of the Board of Directors at:

Board of Directors

CVB Financial Corp.

701 North Haven Avenue, Suite 350

Ontario, California 91764

Confidential communications may be sent through the Internet by logging on to http://www.reportit.net and entering the username: “Citizens” and the password: “Citizens.” All communications sent to the Board of Directors will be communicated to the entire Board of Directors unless the communication is intended only for a specific committee or director. In the case of issues relating to our financial reporting, communications should be directed to the Chair of our Audit Committee who is an independent director. CVB Financial Corp.’s Corporate Secretary keeps a log of all communications sent to the Board of Directors or its committees.

 

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PROPOSAL NO. 2

ADVISORY RESOLUTION TO APPROVE OUR EXECUTIVE COMPENSATION

 

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) requires, among other things, that we permit a non-binding, advisory vote on the compensation of our named executive officers, as described in the Compensation Discussion and Analysis, compensation tables and accompanying narrative discussion contained in this proxy statement.

As described in greater detail below, we seek to closely align the interests of our named executive officers with the interests of our shareholders and the safe and sound management of our Bank. Our compensation practices are designed to encourage and motivate our named executive officers to achieve superior performance on both a short-term and long-term basis, while at the same time avoiding the encouragement of unnecessary or excessive risk-taking.

Accordingly, we ask our shareholders to indicate their support for our compensation practices for our named executive officers and vote for the following resolution:

“RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed pursuant to Item 402 of SEC Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED.”

The vote on this resolution is not intended to address any specific element of compensation, but rather relates to the overall compensation of our named executive officers, as described in this proxy statement in accordance with the compensation disclosure rules of the SEC.

This vote is advisory, which means that the vote on executive compensation is not binding on CVB Financial Corp., our Board of Directors or the Compensation Committee of the Board of Directors. However, the Compensation Committee will take into account the outcome of the vote when considering future executive compensation arrangements. See “Consideration of 2023 Say-on-Pay Results” below. Our next Say-on-Pay vote will occur at the 2024 annual meeting of shareholders.

Your advisory vote will not be construed (i) as overruling a decision by CVB Financial Corp. or the Board of Directors, (ii) to create or imply any change to the fiduciary duties of CVB Financial Corp. or the Board of Directors, (iii) to create or imply any additional fiduciary duties for CVB Financial Corp. or the Board of Directors, or (iv) to restrict or limit the ability of shareholders to make proposals for inclusion in proxy materials related to executive compensation.

Vote Required

The affirmative vote of a majority of the shares represented and voting at the meeting (which shares voting affirmatively also constitute at least a majority of the required quorum) is needed to approve this proposal on a non-binding, advisory basis. Unless instructions to the contrary are specified in a proxy properly voted and returned through available channels, proxies that are received will be voted FOR this proposal.

 

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