pacw-20230323

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

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 14a6(e)(2))

☒ Definitive Proxy Statement

☐ Definitive Additional Materials

☐ Soliciting Material under §240.14a12

PACWEST BANCORP

(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 paid previously with preliminary materials.

☐ Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a6(i)(1) and 0-11.

Letter from our President and CEO

Dear fellow stockholders,

As you know, recent events have challenged both the banking industry and PacWest. While the banking industry is experiencing volatility in light of these events, we remain a well-diversified, full-service commercial bank serving our customers. For over 20 years, PacWest has been a proven partner to our customers through all economic cycles.

In January 2023, we announced the evolution of our business strategy to reposition PacWest for the future. Since I joined PacWest’s executive team in mid-2022, my focuses have been assessing our strengths, identifying business and operational opportunities, meeting our employees, and building a strategic plan designed to maximize stockholder value. This effort culminated in a sharpened vision for PacWest to build on our deposit-focused community bank business, which we believe will drive improved performance over time.

We have already taken several strategic actions to achieve this, including:

•Exiting non-core products and services, including the Premium Finance and Multi-Family lending groups

•Restructuring our Civic subsidiary

•Focusing on improving our operational efficiency

•Strengthening our core relationship-based commercial bank

We see opportunity for improvement in our results and have created a holistic list of financial performance metrics, called our One Team Goals, where we believe the Company should perform over time. We are committed to making progress on our One Team Goals this year and moving towards consistent, quality, and sustainable earnings.

Our One Team Goals:

•Build capital to CET1 10%+

•Low cost demand deposits equal to 40% of portfolio

•Return on assets of 1.50%

•Efficiency ratio of 45%

•Nonperforming asset ratio less than 50 bps

•Top quartile earnings per share growth

We are committed to delivering for our stockholders, customers and employees. An uncertain economy, stubborn inflation, and significant movement in interest rates present challenges, but we are focused on delivering results.

Thank you for your investment and your support on the proposals in this Proxy Statement.

Sincerely,

Paul W. Taylor
President and CEO

Letter from our Executive Chairman & Lead Director

Dear fellow stockholders,

The first part of 2023 has been an extraordinarily active period for the broader business and for the Board of Directors. Since the failure of Silicon Valley Bank, the Board has met regularly with management to monitor and assess the systemic impact on the banking industry as well as the more specific impact on our business.

But we should not lose sight of the important and ongoing investments that the Board has made in the long-term health of PacWest, namely in succession planning and enhancement of our governance structure in 2022.

In June 2022, we appointed Paul W. Taylor as President, and he became CEO on January 1, 2023. We also named Kevin L. Thompson as Executive Vice President, Chief Financial Officer in 2022. We support the fresh perspectives that Paul and Kevin are bringing to PacWest and their vision for PacWest’s future.

As part of supporting a seamless transition, I (Matt) have assumed the role of Executive Chairman for a one-year term, and our former Chairman (John) has transitioned to the role of independent Lead Director. We believe this structure will provide our stockholders with the right leadership and continuity as PacWest evolves into the future.

Our Board changes include the addition of Stephanie B. Mudick as a director who brings valuable regulatory, risk management, and legal expertise in the financial services industry to the Board.

Robert A. Stine, former Chair of our Compensation, Nominating and Governance Committee, resigned as of year-end 2022, and Daniel B. Platt, another long-standing director, retired from the Board mid-year. We appreciate and thank both of them for their contributions and dedication to PacWest.

We restructured several Board committees to allow for more targeted oversight responsibilities in a number of key areas:

•Split the former Compensation, Nominating and Governance Committee into the Compensation and Human Capital Committee and the Nominating and Governance Committee, with both committees under the leadership of new chairs

•Expanded the Asset/Liability Management Committee into our new Finance Committee with a broader mandate that includes asset/liability, capital, liquidity, contingency funding, and investment management policies, as well as our strategic transactions, investment portfolio, financial risk exposures, and budgeting

We also refreshed the membership of every Board committee.

We continue to look for opportunities to refresh our Board membership with qualifications and diversity in mind.

We expanded our stockholder outreach efforts, contacting holders of 65% of shares and engaging with holders of 46% of shares of our common stock in 2022. We deeply appreciate the time many of you spent providing feedback. These conversations informed deliberations of the relevant committees and the entire Board and gave us valuable perspectives, upon which we took several significant actions.

Thank you for your continued support. We look forward to updating you on our progress.

Matthew P. Wagner John M. Eggemeyer, III

Executive Chairman Lead Director

Table of contents


NOTICE OF 2023 ANNUAL MEETING OF STOCKHOLDERS						1
PACWEST AT A GLANCE						2
PROPOSAL 1—ELECTION OF DIRECTORS						10
OUR DIRECTORS						11
Director independence						17
Board member experience, qualifications and skills						17
Board diversity and inclusion						17
Board refreshment						18
Selection and nomination of director candidates						18
CORPORATE GOVERNANCE MATTERS						19
Board’s role and responsibilities						19
Stockholder outreach and engagement						21
Board structure and processes						24
Board committees						26
Director matters						29
ESG matters						30
Additional corporate governance matters						33
Certain relationships and related party transactions						33
Director compensation						34
Executive officers						36
PROPOSAL 2—ADVISORY VOTE ON EXECUTIVE COMPENSATION						37
LETTER FROM THE COMPENSATION COMMITTEE						38
COMPENSATION DISCUSSION AND ANALYSIS						39
Leadership transitions among Named Executive Officers						39
Executive compensation snapshot						40
Stockholder outreach and our response to the 2022 say on pay vote						41
Executive compensation philosophy and objectives						43
Summary of our executive compensation practices						44
Pay for performance and pay “at-risk”						44
Executive compensation decision-making process						45
2022 peer group						45
Elements of our executive compensation program						46
Other executive compensation practices, policies, and guidelines						55
CEO pay ratio disclosure						56
COMPENSATION COMMITTEE REPORT						57
EXECUTIVE COMPENSATION TABLES						58
Summary compensation table						58
2022 grants of plan-based awards						59
Outstanding equity awards at December 31, 2022						60
2022 stock vested table						61
Potential payments on termination and change in control						61
Pay versus performance table						64
PROPOSAL 3—FREQUENCY OF ADVISORY VOTE ON EXECUTIVE COMPENSATION						67
PROPOSAL 4—RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITOR						68
Audit matters						69
AUDIT COMMITTEE REPORT						70
SECURITY OWNERSHIP						71
VOTING AND OTHER MEETING INFORMATION						73
OTHER BUSINESS						79
Stockholder proposals						79
Director nominations						79
Voluntary electronic delivery of proxy materials						79
Cautionary information and forward looking statements						79
APPENDIX A—CALCULATION OF NON-GAAP FINANCIAL MEASURES						A-1

Notice of 2023 annual meeting of stockholders

You are cordially invited to attend PacWest Bancorp’s (“PacWest,” “we,” or the “Company”) 2023 Annual Meeting of Stockholders (“Annual Meeting”) to be held:

Voting matters

Proposal

Board
recommendation

Page
reference

PROPOSAL 1

Election of Directors. To elect 11 nominees to the Company’s Board of Directors for a one-year term.

FOR
each director
nominee

PROPOSAL 2

Advisory Vote on Executive Compensation. To approve, on a non-binding advisory basis, the compensation of the Company’s named executive officers.

FOR

PROPOSAL 3

Frequency of Advisory Vote on Executive Compensation. To approve, on a non-binding advisory basis, the frequency of future advisory votes on the compensation of the Company’s named executive officers.

1 YEAR

PROPOSAL 4

Ratification of the Appointment of Independent Auditor. To ratify the appointment of KPMG LLP as the Company’s independent auditor for the fiscal year ending December 31, 2023.

FOR

In addition, the Company may transact such other business as may properly come before the Annual Meeting and at any adjournment or postponement of the Annual Meeting.

Voting methods


By internet			Visit www.proxyvote.com
By telephone			Call toll-free 1-800-690-6903
By mail			Sign, date, and mail the enclosed proxy card in the postage-paid envelope provided.
By mobile device			Scan the following QR Code:
In-person			If you plan to attend the Annual Meeting and wish to vote your shares in person, we will provide a ballot at the meeting.

YOUR VOTE IS IMPORTANT. We appreciate you taking the time to vote promptly. You can access proxy materials at www.proxyvote.com. After reading this Proxy Statement, please vote at your earliest convenience by internet, telephone, mobile device, or, if you received printed proxy materials, by signing, dating, and returning your proxy card by mail.

By Order of the Board of Directors,

Angela M.W. Kelley
Executive Vice President, General Counsel and Corporate Secretary
March 23, 2023


Important Notice Regarding Internet Availability of Proxy Materials for the Annual Meeting of Stockholders to be Held on May 2, 2023:
This Proxy Statement, our Annual Report on Form 10-K for the year ended December 31, 2022, and other proxy materials are available at www.pacwestbancorp.com/docs and www.proxyvote.com.
It is anticipated that we will mail our Notice of Internet Availability of Proxy Materials (the “Notice”) to stockholders on or about March 23, 2023.



			PACWEST BANCORP 2023 PROXY STATEMENT			1

PacWest at a glance

PacWest is a bank holding company headquartered in Los Angeles, California, with an executive office in Denver, Colorado, with one wholly-owned banking subsidiary, Pacific Western Bank (the “Bank”). The Bank is a relationship-based community bank focused on providing business banking and treasury management services to small, middle-market, and venture-backed businesses. The Bank offers a broad range of loan and lease and deposit products and services through full-service branches throughout California and in Durham, North Carolina and Denver, Colorado, and loan production offices around the country.

Snapshot*

*As of December 31, 2022

Our history

Since the Company’s founding in 2000, we have embarked on a long-term strategic growth initiative that has delivered results for our stockholders and the communities we serve. Our history reflects both an ability to execute on strategic acquisitions and to grow organically. Today, in assessing new strategic growth opportunities, we follow our disciplined strategic growth principles that an acquisition should add new products, talent, and/or markets as we strive for better not just bigger. Below is a timeline showing the Company’s 31 acquisitions over its history along with its related growth in asset size.



2			PACWEST BANCORP 2023 PROXY STATEMENT

Year at a glance

Over the course of 2022 and early 2023, the Company worked diligently to strengthen capital and liquidity, transition executive and board leadership, respond to stockholder feedback, improve governance practices, and implement Company-wide strategic and financial performance metrics and goals – all to create long-term value for our stockholders. Key announcements and initiatives are summarized below.

March 2022

•Announced Daniel B. Platt, a director since 2003, would not stand for reelection at the 2022 Annual Meeting of Stockholders

April 2022

•Published the 2021 Environmental Social Governance Report

June 2022

•Closed a $513 million preferred stock offering

•Announced the appointment of Paul W. Taylor as President, as part of the CEO succession and transition plan

July 2022

•Announced the sale of $393 million of securities

August 2022

•Announced the appointment of Stephanie B. Mudick to the Company’s Board of Directors (the “Board”)

•Announced the resignation of Robert A. Stine, Chair of the Compensation, Nominating and Governance Committee (the “CNG Committee”) and a director since 2000, effective December 31, 2022

•Restructured our Board committees to allow for more targeted oversight of governance, executive compensation, human capital and financial matters

September 2022

•Closed a $133 million issuance of credit-linked notes

October 2022

•Announced the sale of $440 million of securities

November 2022

•Announced the appointment of Kevin L. Thompson as Chief Financial Officer (“CFO”)

•Announced that, effective January 1, 2023, Mr. Taylor would become President and Chief Executive Officer (“CEO”), Matthew P. Wagner would become Executive Chairman, and John M. Eggemeyer, III would become Lead Director

January 2023

•Announced publicly the concept of One Team and the evolution of the Company’s business strategy: a new strategic plan designed to maximize stockholder value by strengthening our community banking focus, exiting non-core products and services, and improving our operational efficiency

•Announced the sale of $1 billion of securities

•Announced the restructuring of Civic Financial Services (“Civic”)

•Announced the slowing of loan growth to preserve capital and strengthen our balance sheet, including winding down our Premium Finance and Multi-Family lending groups

•Announced our top quartile financial performance goals



			PACWEST BANCORP 2023 PROXY STATEMENT			3

Leadership transitions

In November 2022, we announced the following changes to the Board and executive team:

•Mr. Taylor, then President of the Company and the Bank, was appointed President and Chief Executive Officer of the Company and the Bank, effective January 1, 2023. He will guide the Company through its evolution, bringing over 35 years of experience in the banking industry and having previously served as chief executive officer, president and director of Opus Bank, a publicly-traded California-chartered bank, and Guaranty Bancorp, a publicly-traded financial institution headquartered in Colorado.

•Mr. Wagner, then CEO of the Company and the Bank, assumed the role of Executive Chairman of the Boards of Directors for the Company and the Bank for a one-year term beginning January 1, 2023. In this role, Mr. Wagner will focus on customer relations, technology development, and supporting the leadership transition.

•Mr. Eggemeyer, then Chairman of the Board, transitioned to the role of independent Lead Director, effective January 1, 2023.

•Mr. Thompson joined the Company and was appointed Executive Vice President, Chief Financial Officer, effective November 28, 2022. He will support the execution of the Company’s strategic plan, bringing more than 20 years of experience in finance and more than 15 years in senior finance roles in the banking sector, including as chief financial officer of First Foundation Inc., Opus Bank, Midland States Bancorp, and American Express Centurion Bank.

The evolution of our business strategy

In January 2023, we announced a new strategic plan with a mission to maximize stockholder value by exceeding customer expectations. This plan focuses on strengthening our community bank business, exiting non-core products and services, and improving our operational efficiency.

Specifically, the Company made the decision to wind down operations in our Premium Finance and Multi-Family lending groups in the fourth quarter of 2022. In addition, the Company is restructuring Civic Financial Services, a lending subsidiary, to improve its profitability and risk profile. Further, the Company opportunistically sold $1 billion of available-for-sale securities at a loss in the fourth quarter of 2022 and used the proceeds to pay down Federal Home Loan Bank borrowings. These actions align with our strategy to focus on relationship-based community banking and to improve capital, liquidity, and operational efficiency.

As part of this evolution, we are committed to operating as One Team. We are focused on working towards specific financial performance metrics that we believe are achievable and where the Bank should perform over time. Our One Team goals are:

•Build capital to CET1 10%+

•Low cost demand deposits equal to 40% of portfolio

•Return on assets of 1.50%

•Efficiency ratio of 45%

•Nonperforming asset ratio less than 50 bps

•Top quartile earnings per share growth



4			PACWEST BANCORP 2023 PROXY STATEMENT

2022 performance highlights

Our 2022 performance highlights, including certain financial performance metrics over the last four years, are shown below. Each are qualified by reference to our Annual Report on Form 10-K for the year ended December 31, 2022 (our “2022 Annual Report”). For more complete information regarding our 2022 performance, please review our 2022 Annual Report.


Financial Performance			•Total Loans and Leases, Net of Deferred Fees of $28.6 billion •Record total loans, up 24.7% from 2021 •Net Interest Income of $1.3 billion •Record net interest income (TE), up 16.6% from 2021 •Total Deposits of $33.9 billion •Net Earnings Available to Common Stockholders of $404.3 million •Efficiency Ratio of 51.0%

Strong Credit Quality			•Nonperforming Assets to Loans and Leases Held For Investment and Foreclosed Assets of 0.38% •Net Charge-offs to Average Loans and Leases of 0.02%

Capital Management			•Committed to building CET1 capital to 10%+ •Total Capital Ratio of 13.61%

Value to Our Stockholders			•Diluted Earnings Per Share of $3.37 •Returned $140 million to our stockholders through dividends •Return on Average Tangible Common Equity of 21.04%(1)

(1) For more information regarding the calculation of non-GAAP financial measures included in this section, please refer to “Calculation of non-GAAP financial measures” in Appendix A.



			PACWEST BANCORP 2023 PROXY STATEMENT			5

Corporate governance and environmental, social and governance highlights

The PacWest board of directors

Governance practices

To support our business strategy and provide effective risk management, we are committed to strong corporate governance practices and closely reviewed our governance policies and procedures in 2022 to ensure compliance with laws, rules, and regulations and to stay abreast of governance best practices and stockholder preferences.


Board Practices
•Separate Executive Chairman of the Board and CEO roles with an independent and robust Lead Director role •All independent directors except for CEO and Executive Chairman •Independent directors regularly meet in executive session throughout the year			•Annual Board review of senior leadership succession plan •Annual Board and committee evaluations and self-assessments
Stockholder Rights
•Annual election of directors •Annual “say-on-pay” advisory vote			•Right to act by written consent •Right to call a special meeting of stockholders
Other Governance Best Practices
•Majority vote requirement for the election of directors in uncontested elections •Stock ownership guidelines for all directors and executive officers			•Related Party Transactions Policy •Anti-hedging and anti-pledging policy



6			PACWEST BANCORP 2023 PROXY STATEMENT

2022 governance updates


Completed CEO Succession			•Mr. Taylor named President and CEO •Mr. Wagner, former CEO, transitioned to the role of Executive Chairman of the Boards of Directors for the Company and the Bank for a one-year term •Mr. Eggemeyer, former Chairman of the Board, transitioned to the role of independent Lead Director

Continued our Board Refreshment			•Appointed Ms. Mudick, who brings valuable regulatory, risk management and legal expertise in the financial services industry to the Board •Two long-tenured directors rotated off the Board •Refreshed the membership of all Board committees, resulting in a Compensation and Human Capital Committee (the “Compensation Committee”), with 50% new members, a Nominating and Governance Committee (the “Governance Committee”), with 33% new members, and new chairs of the Compensation and Human Capital, Executive, Nominating and Governance, and Risk Committees

Restructured our Board Committees			•Split the CNG Committee into two separate Board committees: •the Compensation Committee •the Governance Committee •Assigned oversight of executive management succession planning, senior leadership development, human capital resources matters, and Diversity, Equity & Inclusion (“DEI”) initiatives to the Compensation Committee •Assigned overall Environmental, Social and Governance (“ESG”) oversight to the Governance Committee •Expanded the Asset/Liability Management Committee into a Finance Committee with additional oversight responsibilities over capital management, liquidity, stress testing, rates/pricing, dividend management, and budgeting

ESG Highlights			•Published our 2021 Environmental Social Governance Report •Hired a Vice President, Environmental Social & Governance Officer •Completed an ESG materiality assessment •Completed a climate readiness gap assessment and readiness roadmap, in accordance with the U.S. Securities and Exchange Commission’s (“SEC”) proposed rules and the Task Force on Climate-Related Financial Disclosures’ climate standard for commercial banking •Started a Scope 1 and Scope 2 greenhouse gas (“GHG”) emissions baseline •$125M in new solar-investing commitments •Client relationships with 53 companies that align to the United Nations Sustainability Development Goals, totaling $2.1B in average loan commitments and $1.7B in average deposits •Received an “Outstanding” Community Reinvestment Act rating •$3.5M in philanthropic/charitable giving to non-profits



			PACWEST BANCORP 2023 PROXY STATEMENT			7

2022 stockholder engagement

We are committed to engaging with and listening to our stockholders. In 2022, our Corporate Secretary, Chief Financial Officer, and independent Board members conducted extensive engagement with stockholders, paying particular attention to their concerns regarding our executive compensation program, last year’s say on pay vote, and our responsiveness to stockholder feedback.

We have taken meaningful steps to respond to stockholder feedback in 2022 and early 2023. The graphic below shows our 2022 outreach and engagement efforts, based on common stock ownership as of December 31, 2022. In 2022, we reached out to 34 stockholders and engaged with 11 stockholders, including nine of our top ten largest stockholders, for a total of 14 meetings.

Key themes from stockholder engagement


Topic	What We Heard	What We Did
Executive Compensation	Concern with Mr. Wagner’s 2021 retention package	•The newly-constituted Compensation Committee affirms its belief that special awards should be used only in rare circumstances and commits that it will not make additional special one-time awards absent compelling circumstances, when essential, and where our compensation objectives cannot be achieved through the annual compensation program, in order to attract, promote, or retain key talent to drive business results or to support the Company’s critical strategic priorities. The Compensation Committee further undertakes that it will consult with its independent compensation consultant in the event that any special award is contemplated in the future
	Misalignment between pay and performance, and enhancement of performance target rigor	•2022 payouts reflect a focus on rigor and aligning pay and performance: •Company performance on the ROATCE performance metric in the 2022 EIP triggered the applicability of a payout factor adjustment providing for positive enhancement. However, the Compensation Committee declined to increase the ROATCE payout factor, which was a departure from past practice, in light of stockholder concerns regarding rigor of performance targets and the Company’s negative TSR performance during 2022 •The performance-based restricted stock units (“PRSUs”) earned for the 2020-2022 performance period equaled 20% of target •For the 2023 executive compensation program, we reduced target Executive Incentive Plan (“EIP”) opportunity for the CEO, aligned EIP performance metrics with the Company’s strategic priorities, eliminated positive discretion in the EIP, increased the percentage of performance-based equity awards to 60%, increased the performance level required to receive a target (100%) payout for performance-based equity awards to the 60th percentile of peers, and capped relative total shareholder return (“TSR”) metric at 100% payout if cumulative TSR is negative over the performance period
	Insight into the compensation-setting process and how performance targets are determined	•We enhanced disclosure in this Proxy Statement related to the compensation-setting process and the Compensation Committee’s considerations related to the incentive program changes
Board diversity and refreshment	Additional diversity and further refreshment	•The Board appointed Ms. Mudick, who brings regulatory, risk management, and legal expertise in the financial services industry, following the rotation off of two long-tenured directors, further enhancing our Board’s gender diversity with women now representing 36% of the Board •As part of the Board’s commitment to ongoing Board diversity and refreshment, the Governance Committee plans to add one to two directors by the 2024 Annual Meeting of Stockholders, prioritizing business line leadership with profit and loss responsibility, technology-related skill sets, audit-related skill sets, public company board experience, as well as racial, ethnic, and gender diversity



8			PACWEST BANCORP 2023 PROXY STATEMENT


Board responsiveness	Insight into stockholder feedback received, the Board’s involvement, and changes in response thereto	•This Proxy Statement includes a full description of stockholder feedback and changes made in response thereto •Extensive stockholder outreach, with independent directors participating in meetings with nine stockholders representing 45% of outstanding shares of common stock •The Board, the Governance Committee, and other relevant committees review stockholder feedback obtained as part of the engagement effort on a quarterly basis •The Governance Committee recommended, and the Board approved, increasing the ratio of equity awards to cash Board retainers for non-employee directors to 60%/40% in order to more closely align non-employee directors’ interests with stockholders’ interests, effective for awards and payments to be made in May 2023
Governance	Additional information regarding the director evaluation process, cybersecurity, and director skill sets	•Enhanced our director evaluation process this year, and our disclosures regarding director evaluations, cybersecurity, and each director’s experience, qualifications, and skills
ESG	Insight into our ESG efforts	•Provided updates on our 2022 ESG highlights in “PacWest at a glance— Corporate governance and environmental, social and governance highlights” and our ESG governance structure, the results of our ESG materiality assessment, and other updates in “Corporate governance matters — ESG matters” and in our forthcoming 2022 Environmental Social Governance Report
CEO transition and succession planning	Continued disclosures regarding the CEO succession and transition	•Continued to provide timely updates throughout 2022 regarding events related to CEO succession via Form 8-K filings and press releases, and provided additional information in this Proxy Statement



			PACWEST BANCORP 2023 PROXY STATEMENT			9

PROPOSAL 1

Election of directors

The Governance Committee recommended, and the Board approved, 11 director nominees for election to serve as directors of the Company until the completion of the 2024 Annual Meeting of Stockholders and until their successors are duly elected and qualified. All of the following director nominees are current directors:

•Tanya M. Acker

•C. William Hosler

SEC Form DEF 14A filed by PacWest Bancorp