David Smith Jr.
NORTHERN TRUSTAbout David H. B. Smith, Jr.
David H. B. Smith, Jr. is an independent director of Northern Trust Corporation, serving since 2010 and age 58. He chairs the Capital Governance Committee and sits on the Audit and Executive Committees. Smith’s background includes senior regulatory leadership at the SEC’s Division of Investment Management and ongoing policy/legal leadership as EVP & General Counsel at the Mutual Fund Directors Forum; he is also a director at Illinois Tool Works Inc. since 2009. The Board notes his beneficiary interest in a trust holding a significant amount of Northern Trust stock aligns his interests with other stockholders.
Past Roles
| Organization | Role | Tenure | Committees/Impact |
|---|---|---|---|
| U.S. Securities and Exchange Commission (Division of Investment Management) | Associate Director | 2001–2005 | Regulatory leadership; oversight of investment management policy |
External Roles
| Organization | Role | Tenure | Committees/Impact |
|---|---|---|---|
| Mutual Fund Directors Forum | Executive Vice President, Policy & Legal Affairs and General Counsel | Since 2005 | Policy and governance expertise for investment company directors |
| Illinois Tool Works Inc. | Director | Since 2009 | Public company board experience (current directorship) |
Board Governance
- Independence: The Board determined Smith and all current directors (other than the CEO) are independent under SEC and NASDAQ standards.
- Attendance and engagement: The Board held 17 meetings in 2024; all incumbent directors attended at least 75% of Board/committee meetings, and all directors attended the April 16, 2024 Annual Meeting. Independent directors held 14 executive sessions in 2024.
- Lead Director structure: Independent Lead Director with robust responsibilities; independent directors and committees (except Executive) composed solely of independent directors.
| Committee | Role | 2024 Meetings | Key Responsibilities |
|---|---|---|---|
| Capital Governance | Chair | 7 | Oversight of capital management, CCAR stress testing, annual capital plan and actions, regulatory capital ratios/levels, resolution planning; all members independent. |
| Audit | Member (Audit Committee Financial Expert) | 9 | Integrity of financial statements and earnings releases, compliance with accounting/legal/regulatory requirements, auditor independence/qualifications, performance of internal audit and public accountants; all members independent. |
| Executive | Member | 0 | Empowered to act between Board meetings and direct resolution/recovery plans upon triggering events; did not meet in 2024. |
Fixed Compensation
- Oversight and design: Non-employee director compensation reviewed by the Human Capital and Compensation Committee with an independent consultant using peer group data; cash and RSU mix.
- 2024 fee schedule (cash unless noted):
| Compensation Component | 2024 Amount |
|---|---|
| Annual Cash Retainer | $110,000 |
| Annual Committee Chair Retainer | $25,000 |
| Annual Committee Retainer (Audit/Business Risk/Capital Governance; including Chair) | $10,000 |
| Annual Lead Director Retainer | $42,500 |
| Annual Subcommittee Chair Retainer | $25,000 |
| Cybersecurity Risk Oversight Subcommittee Retainer (including Chair) | $10,000 |
- Smith’s 2024 cash fees: $155,000 total. Footnotes do not list him among directors who elected stock units in lieu of cash, indicating cash receipt.
| Director | Fees Earned/Paid in Cash (2024) | Source |
|---|---|---|
| David H. B. Smith, Jr. | $155,000 | Director Compensation Table |
Performance Compensation
- Annual RSU grant (non-employee directors): $145,000 grant value; granted April 2024; vests April 22, 2025 (2025 Annual Meeting). Dividend equivalents follow underlying unit vesting/forfeiture provisions.
- Unvested RSUs held as of Dec 31, 2024: 1,822 stock units per serving non-employee director (except Dhandapani at 1,607 due to May 2024 commencement).
| Metric | Design | 2024/2025 Detail |
|---|---|---|
| Annual RSU Grant | Time-based vesting | $145,000 grant; vests Apr 22, 2025; one share per unit at vest, deferral optional. |
| Unvested RSUs (as of 12/31/2024) | Count | 1,822 units held by each serving non-employee director (Smith included). |
| Dividends on deferred stock units | Treatment | Post-1/1/2018 deferrals convert dividends into additional stock units; pre-2018 paid to cash account with interest. |
No director performance metrics (e.g., TSR, ROE hurdles) apply to non-employee director RSUs; awards are time-based only.
Other Directorships & Interlocks
| Company | Role | Tenure | Potential Interlock/Notes |
|---|---|---|---|
| Illinois Tool Works Inc. | Director | Since 2009 | No specific related-party transactions disclosed with ITW; Northern Trust provides ordinary-course financial services to (most) directors/affiliates on market terms, deemed immaterial and not affecting independence. |
Expertise & Qualifications
- Regulatory and legal expertise: SEC Division of Investment Management leadership and MFDF policy/legal governance expertise.
- Capital governance: Chair of Capital Governance Committee overseeing CCAR, capital planning, regulatory capital and resolution plans.
- Financial oversight: Audit Committee member designated an “audit committee financial expert.”
- Alignment: Beneficiary interest in a trust holding significant Northern Trust shares aligns director/shareholder interests.
Equity Ownership
| Holder | Shares Owned | Exercisable Options | Total Beneficial Ownership | % of Class | Notes |
|---|---|---|---|---|---|
| David H. B. Smith, Jr. | 80,812 | — | 80,812 | <1% | Includes 1,704 shares held in a trust sharing voting/investment power with one other individual; excludes 1,069,700 shares in trusts where voting/investment power is shared with three or more other individuals; he is beneficiary of a trust holding 1,069,200 of the excluded shares. |
| Unvested RSUs (Director award) | 1,822 units | N/A | N/A | N/A | 2024 award outstanding at year-end; vests April 22, 2025. |
- Ownership guidelines: By 5th anniversary of election, non-employee directors must hold 5x the annual cash retainer; as of Dec 31, 2024, all non-employee directors met/exceeded guidelines.
- Hedging/pledging: Prohibited under Securities Transactions Policy (no short selling, margining, pledging/hypothecating, options/derivatives on NTRS stock, or hedging).
Governance Assessment
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Strengths
- Independent status with deep regulatory and capital oversight experience; designated audit committee financial expert.
- Active governance roles: Chair of Capital Governance; member of Audit and Executive; committees met regularly (Audit 9x; Capital Governance 7x).
- Solid alignment: Material personal beneficiary interest in trust holdings and compliance with stringent ownership guidelines; hedging/pledging prohibited.
- Engagement: Board and independent directors recorded robust meeting cadence and executive sessions; broad shareholder outreach (~50% of outstanding shares).
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Potential conflicts/monitoring points
- Ordinary-course Northern Trust financial services provided to most directors or affiliates (including Smith), but Board concluded immaterial and not affecting independence. Continue monitoring for any changes in scope/materiality.
- Trust-related interests: While alignment-positive, the scale of excluded trust holdings (beneficiary interest in 1,069,200 shares) warrants ongoing transparency to ensure no governance complications; current disclosure is clear.
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Compensation and incentives
- Director pay structure is balanced (cash + time-based RSUs), free of performance hurdles or options, mitigating risk-taking incentives; 2024 cash fees $155,000 and RSU grant $144,958 for Smith (total $299,958).
- Deferral mechanisms support long-term alignment; dividends on post-2018 deferrals convert into additional stock units.
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RED FLAGS
- No director-specific related-party transactions or pledging/hedging issues disclosed for Smith.