Scott J. Watson
Northwest BancsharesAbout Scott J. Watson
Scott J. Watson is Chief Information Officer of Northwest Bancshares, Inc., employed since February 2019, with a 30-year career in bank information technology and operations. He previously served as SVP/CIO at Cape Cod Five (2016–2019), held operations and systems leadership roles at USAA (2010–2016), and earlier technology leadership positions at Wells Fargo and Wachovia (2007–2010). He holds a Business Administration degree from Kent State University and is a graduate of the CBA Executive Banking School . During 2024, NWBI delivered pay-versus-performance metrics including total shareholder return (TSR) of $108.85 on a $100 initial investment, net income of $100.3 million, and ROAA of 0.70% .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Cape Cod Five | Senior Vice President, Chief Information Officer | 2016–2019 | Led bank IT strategy and platform modernization |
| USAA | Executive Director of Bank Operations; Technical Director of Bank Systems | 2010–2016 | Directed operations and core systems for consumer banking |
| Wells Fargo; Wachovia | Technology leadership roles | 2007–2010 | Technology leadership through integration and platform changes |
Fixed Compensation
| Metric | FY 2023 | FY 2024 |
|---|---|---|
| Base salary ($) | $382,500 | $405,794 |
| Year-over-year adjustment (%) | — | 6% |
| Annual Bonus Design (Management Bonus Plan) | FY 2024 |
|---|---|
| Target bonus (% of base) | 40% |
| Target bonus ($) | $162,318 |
| Actual bonus (% of base) | 40.0% |
| Actual bonus ($) | $162,300 |
| Summary Compensation (as reported) | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| Salary ($) | $367,987 | $379,058 | $401,716 |
| Bonus ($) | $14,719 | $80,153 | — |
| Stock awards ($) | $110,084 | $110,781 | $114,971 |
| Non‑equity incentive ($) | $122,900 | $58,100 | $162,300 |
| Change in pension value ($) | — | $39,193 | $18,977 |
| All other compensation ($) | $22,949 | $22,023 | $19,666 |
| Total ($) | $638,639 | $689,308 | $717,630 |
FY 2024 “All other compensation” detail for Watson: 401(k) match $13,800; company‑paid life insurance premium imputed benefit $2,322; dividends on unvested restricted stock $3,544; total $19,666 .
Performance Compensation
| Annual Bonus Metrics (FY 2024) | Weight | Threshold | Target | Max | Actual adjusted result | % of target | Weighted payout |
|---|---|---|---|---|---|---|---|
| Adjusted ROAA | 40% | 0.74% | 0.87% | 1.10% | 0.92% | 110.90% | 44.36% |
| Adjusted ROAE | 30% | 6.97% | 8.20% | 10.66% | 8.49% | 105.90% | 31.77% |
| Efficiency Ratio (non‑GAAP) | 15% | 67.50% | 65.00% | 60.00% | 64.11% | 108.90% | 16.34% |
| Loan Growth | 15% | 3.23% | 4.62% | 6.00% | (1.39)% | — | — |
- Plan funding initially calculated at 92.47% based on KPI outcomes; Compensation Committee exercised discretion to fund at 100% given loan mix and performance against adjusted net income budget; Watson’s personal multiplier resulted in payout at target (40% of base) .
- Threshold “gate” metrics for any payout: net charge‑offs ≤0.50% and total loan delinquency ≤3.00% .
| Long‑Term Incentive Target (FY 2024) | Base salary | Target (%) | Target value ($) |
|---|---|---|---|
| Scott J. Watson | $393,975 | 35% | $137,891 |
| FY 2024 LTI Grants | PSUs – Target # | PSUs – Target value ($) | RSUs – # | RSUs – Value ($) |
|---|---|---|---|---|
| Scott J. Watson | 6,096 | $68,946 | 6,096 | $68,946 |
- Vesting: RSUs vest in three equal annual installments on the first three anniversaries of the grant date; PSUs vest at the end of a three‑year performance period based on achievement (0–150%) across relative and absolute financial metrics .
| Stock Vested and Option Exercises (FY 2024) | Shares vested (#) | Value realized ($) |
|---|---|---|
| Scott J. Watson | 5,843 | $65,464 |
Equity Ownership & Alignment
| Ownership and Policy | Value |
|---|---|
| Beneficial ownership (shares) | 59,225 |
| Shares outstanding (Feb 18, 2025) | 127,514,858 |
| Ownership as % of outstanding | ~0.046% (calculated from 59,225 / 127,514,858) |
| Shares pledged as collateral | None; pledging prohibited |
| Hedging policy | Hedging prohibited for insiders |
| Stock ownership guideline (NEOs) | 1x annual base salary; all NEOs meet requirements |
| Outstanding Equity Awards (12/31/2024) – Scott J. Watson | Exercisable (#) | Unexercisable (#) | Exercise price ($) | Expiration |
|---|---|---|---|---|
| Stock options (grant expiring 5/22/2029) | 5,349 | 891 | 17.27 | 5/22/2029 |
| Stock options (grant expiring 5/20/2030) | 8,986 | 3,494 | 9.71 | 5/20/2030 |
| Stock options (grant expiring 5/25/2031) | 9,984 | 2,496 | 13.68 | 5/25/2031 |
| Unvested RSAs/RSUs (units; MV $) | 14,380; $189,672 | — | — | — |
| PSU target unearned (units; MV $) | 16,351; $215,670 | — | — | — |
Employment Terms
| Scenario (as of 12/31/2024) | Severance Pay ($) | Bonus Payment ($) | Stock Option Acceleration ($) | RSA Acceleration ($) | RSU Acceleration ($) | PSU Acceleration ($) | Health Care Continuation ($) |
|---|---|---|---|---|---|---|---|
| CIC termination (involuntary without cause or good reason within 24 months) | $1,217,383 | $486,900 | $12,159 | $42,551 | $147,121 | $215,670 | $25,673 |
| Death | $405,794 | $162,300 | $12,159 | $42,551 | $147,121 | $117,977 | — |
| Disability | $40,579 | $162,300 | $12,159 | $42,551 | $147,121 | $117,977 | — |
| Retirement | — | — | — | — | — | — | — |
- CIC agreement: auto‑renews annually; double‑trigger payout requires qualifying termination within 24 months post‑change‑in‑control; multiple equals 3× highest base salary and 3× highest cash bonus paid in prior three years; medical/dental coverage continuation for 36 months; payment timing aligned to Section 409A (lump sum on first day of the seventh month following termination to avoid penalties) .
- Clawback policy: NWBI Clawback Policy adopted in compliance with Nasdaq Rule 10D‑1; applies to incentive‑based compensation upon accounting restatements .
- Deferred compensation: No employee deferred compensation plans existed in 2024 .
- Pension/SERP: Pension credited service 6 years; present value $157,507; not eligible for SERP due to plan soft freeze in 2020 .
Performance & Track Record
| Pay‑Versus‑Performance Indicators | 2020 | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|---|
| TSR – $100 initial investment (Company) | 82.01 | 96.62 | 101.06 | 96.63 | 108.85 |
| TSR – $100 initial investment (Peer group) | 90.81 | 128.28 | 107.54 | 114.99 | 141.59 |
| Net income ($000s) | 74,854 | 154,323 | 133,666 | 134,957 | 100,278 |
| ROAA (%) | 0.58% | 1.08% | 0.94% | 0.95% | 0.70% |
Governance, Say‑on‑Pay, and Committee Oversight
- Say‑on‑Pay support exceeded 96% at the 2024 Annual Meeting; the Board continues to hold annual say‑on‑pay votes .
- “Best practices” disclosures include double‑trigger vesting for equity upon change‑in‑control, robust stock ownership guidelines, clawback policy, prohibition of hedging/pledging, and no tax gross‑ups .
- Compensation Committee engages independent consultant Pearl Meyer; 2024 fees totaled $93,000; Committee responsibilities include approving executive pay structures, equity grants, CIC agreements, and risk‑aware compensation oversight .
Insider Transactions & Selling Pressure
- Reported Form 4 filings for Scott J. Watson include 1/24/2024 and 3/22/2024 (NWBI issuer; Watson reporting) .
- Additional Form 4 filed 3/11/2025 (earliest execution date 3/07/2025) .
- A Form 4 PDF is hosted for Watson on 3/11/2025 .
Compensation Structure Analysis
- Mix: Watson’s LTI opportunity (35% of salary) is materially lower than peers at 60–65% (e.g., CRO and CCO), reflecting narrower enterprise impact while still aligning with shareholder metrics via PSUs/RSUs .
- Annual bonus: KPI‑driven with defined weights and non‑GAAP adjustments; Committee exercised discretion to recognize loan‑mix strategy, funding the plan at 100% despite loan growth shortfall .
- Governance safeguards: No hedging/pledging; clawback in place; double‑trigger equity vesting; no tax gross‑ups; annual say‑on‑pay with strong support .
Equity Ownership & Alignment Red Flags
- Pledging/Hedging: None; prohibited by policy .
- Repricing/modification: Not permitted without shareholder approval .
- Related‑party transactions: Not disclosed for Watson in the DEF 14A sections reviewed.
- Ownership guideline compliance: All NEOs meet requirements .
Investment Implications
- Alignment: Watson’s pay emphasizes KPI‑based annual bonus and balanced PSUs/RSUs vesting; stock ownership policy and prohibition of hedging/pledging strengthen alignment with shareholders .
- Retention and CIC economics: The CIO’s CIC agreement (3× salary+bonus; 36 months benefits) is protective, but double‑trigger and release requirements mitigate immediate payout risk; RSU/PSU acceleration values are modest relative to CEO/CFO, suggesting manageable retention risk and limited forced selling from vesting events .
- Execution risk: Technology and operations expertise from prior roles (USAA, Wells/Wachovia, Cape Cod Five) aligns with NWBI’s stated investments in technology and efficiency; bonus metrics tied to ROAA/ROAE/Efficiency should continue to reinforce operational discipline in a higher‑rate banking environment .
- Trading signals: Recent Form 4 activity exists, but without large open‑market sales indicated here; monitor Form 4s around March anniversary dates given RSU vesting schedules and potential tax Withholding‑type transactions .