Luis E. Cestero

About Luis E. Cestero

Executive Vice President of Banco Popular de Puerto Rico (BPPR) overseeing the Retail and Business Solutions Group since May 2023; previously led BPPR’s Retail Banking Group (2017–2023) and Retail Banking Administration (2009–2017). Age 51. His remit sits at the center of Popular’s multi‑year transformation focused on modernizing customer channels and deploying new digital platforms, against a 2024 backdrop of GAAP net income of $614.2M (up from $541.3M in 2023), adjusted net income of $646.1M (+10% YoY), loan portfolio growth to $37.1B, deposits of $65B, and shares ending 2024 at $94.06 (+15% YoY; outperformed KRX +10%, trailed Nasdaq Bank Index +17%) .

Past Roles

External Roles

No external directorships or roles were disclosed for Mr. Cestero in the 2025 DEF 14A executive officers section .

Fixed Compensation

• Individual base salary, target bonus %, and actual bonus for Mr. Cestero are not disclosed (he was not a Named Executive Officer in 2024) .

Performance Compensation

BPOP’s executive incentive design (applies to NEOs; design framework governs executive equity awards broadly):

• Short‑Term Incentive (STI) structure and weightings (paid in cash; capped at 150% of target) :

  • Corporate performance: 50% total weight (Adjusted after‑tax Net Income 35%; Adjusted after‑tax ROATCE 15%) .
  • Strategic performance (transformation milestones): 25% (common assessment across NEOs) .
  • Individual goals: 25% .
  • Payout curve: Threshold ~50% of target at 85% performance; Stretch ~150% at 115% performance .

• Long‑Term Incentive (LTI) structure (equity) :

  • 50% Performance Shares: 3‑year performance cycle; 50% based on relative TSR vs. U.S. banks with $25–$500B assets; 50% based on absolute 3‑yr average ROATCE; payout 0–150% of target .
  • 50% Time‑vested Restricted Stock: vests pro‑rata 25% annually over four years .

• Recent LTI performance outcome (context for vesting pressure): 2022–2024 cycle vested at 122.19% of target (TSR 76th percentile = 150%; 3‑yr avg ROATCE 11.88% between threshold and target = 94.38%) .

2024 STI framework (program design for executives)

LTI design and vesting

Equity Ownership & Alignment

• Section 16 filings show steady accumulation via dividend reinvestment and plan contributions; no recent open‑market sales observed in retrieved filings.

Ownership history (oldest → newest):

• Ownership as % of outstanding shares (Record Date 69,338,987 shares): ~0.039% (27,053.7 / 69,338,987) .
• Hedging/pledging: Executive officers are prohibited from pledging Popular securities or engaging in hedging/monetization transactions (e.g., collars, swaps) .
• Stock ownership guidelines: CEO 6x salary; other executive officers 3x salary, to be met within five years of designation .

Vesting and selling pressure lens:

• Time‑vested restricted stock vests 25% annually for 4 years; performance shares release after 3‑year cycles—creates predictable vesting events that can drive tax‑related sales windows; pledging and speculative hedging are prohibited, mitigating alignment risk .

Employment Terms

• No individual employment or change‑in‑control (CIC) agreements for NEOs; plan‑level CIC protection is “double‑trigger” (accelerates vesting upon qualifying termination within two years post‑CIC) .
• Puerto Rico Law 80 severance (for PR‑based employees hired before Jan 26, 2017): 2–6 months base plus weeks per service year depending on tenure, if terminated without just cause (Cestero has service dating to at least 2009) .
• Clawback: Compensation Recoupment Policy compliant with SEC Rule 10D‑1 and Nasdaq Listing Rule 5608; applies to cash and equity incentives and can address restatements and misconduct .
• Insider trading policy prohibits trading on MNPI; formal procedures in place (policy included by reference in 10‑K) .

Governance, Peer Benchmarking, Say‑on‑Pay (program context)

• Compensation peer group includes banks such as M&T, Regions, Huntington, KeyCorp, Webster, Western Alliance, among others; peer set reaffirmed in June 2024 .
• 2024 say‑on‑pay support: 95.6% approval in May 2024, indicating broad shareholder endorsement of the program’s pay‑for‑performance design .

Performance Context (Company)

Risk Indicators & Red Flags

• Pledging/hedging: Prohibited for executives (mitigates alignment and forced‑sale risks) .
• Options repricing/tax gross‑ups/special executive severance: Not part of program; no employment or CIC agreements; no tax gross‑ups .
• Related‑party transactions: None disclosed for Mr. Cestero .

Investment Implications

• Alignment: High emphasis on equity with multi‑year TSR and ROATCE metrics, four‑year RSU vesting, clawbacks, and ownership guidelines support long‑term alignment and curb risk taking .
• Retention/selling pressure: Predictable vesting cycles create routine liquidity windows but hedging/pledging prohibitions and clawbacks temper adverse signals; absence of individual golden‑parachute CIC contracts reduces unintended retention distortions, while plan‑level double‑trigger provides baseline protection .
• Skin‑in‑the‑game: ~27.1k shares owned as of 12/31/2024 (~0.039% of SO at record date) is meaningful for an operating EVP and has trended upward via DRIP/plan contributions; no recent open‑market sales observed in retrieved Section 16 reports, a neutral‑to‑positive indicator on selling pressure .
• Execution risk: With accountability for retail and business solutions amid digital transformation, outcomes will be visible through loan growth, deposit mix/costs, and customer experience metrics; 2024 corporate results show growth and modernization traction, but peer‑relative TSR remains a gating factor in PSU payouts over future cycles .