ISBC 2017 Form 10-K & 2018 Proxy Statement

43 Performance-Based Equity Awards The June 2015 performance-based stock awards included three key banking industry performance metrics that our Compensation and Benefits Committee and Board believe are accurate indicators of our long-term, multi-year corporate performance. Two of the three performance metrics measure our financial performance relative to our peer compensation comparators (i.e., the seventeen banking companies listed in the Market Comparison section that our Compensation and Benefits Committee utilizes for its annual marketplace research and benchmarking of executive compensation amounts and practices). Our performance on these indicators was measured over a three-year performance period ended December 31, 2017. If all or any portion of these performance-based stock awards are thereby earned by participating executives, the vesting and payout of any earned shares will be 1/3 at the end of the three-year performance period, 1/3 one year thereafter, and 1/3 two years thereafter (resulting in a total performance and vesting period of five years). The Company believes that the five-year total performance and vesting period for performance stock awards is longer and stricter than what is found in similar stock compensation programs among our competitors. The selected performance metrics for the 2015 performance-based stock awards are described in detail below. The performance-based restricted stock that is deemed to have been earned at the conclusion of a three- year performance (i.e., the specific number of shares earned based on Investors’ three-year performance, and thereafter subject to further time-vesting and subsequent distribution to the participating executives) is based on the satisfaction of the following performance metrics: (1) Net Charge-Offs as a Percentage of Average Loans and Leases vs. Peers; (2) Return on Average Tangible Core Equity vs. Pre-Established Board-Approved Strategic Plan; and (3) Total Shareholder Return vs. Peers. The peer group is established by the Compensation and Benefits Committee with input from our independent compensation consultant and is currently comprised of companies with asset sizes ranging from approximately $15.6 billion to $50.3 billion. Subsequent to December 31, 2017, it was determined that the performance criteria were achieved at 70% of target, resulting in 70% of the performance-based stock awards being deemed earned based on the satisfaction of the performance metrics referenced below and converted to time based vesting. As a result, 1/3 of such earned shares vested on February 15, 2018 and 1/3 will vest on each of February 15, 2019 and February 15, 2020, respectively. No dividends were paid with respect to any stock award subject to performance-vesting conditions until the performance conditions were met and vesting occurred, and only on that portion of the stock award that actually vested. Below are a summary of the performance metrics and the achievement of each subsequent to December 31, 2017: • Net Charge-Offs as a Percentage of Average Loans and Leases vs. Peers . Up to 40% of the Performance-Based Restricted Stock can be earned based on the following. Subsequent to December 31, 2017, it was determined that this criterion was met and 40% of shares were earned. If Investors Bancorp’s 3-year average peer percentile is equal to or less than 50 th percentile If Investors Bancorp’s 3-year average peer percentile is 51st percentile to 65 th percentile If Investors Bancorp’s 3-year average peer percentile is 66 th percentile or higher 40% of Shares vest 20% of Shares vest 0% of Shares vest • Return on Average Tangible Core Equity vs. Board-Approved Strategic Plan. 30% of the Performance-Based Restricted Stock can be earned based on the following. Subsequent to December 31, 2017, it was determined that this criterion was met and 30% of shares were earned. If Investors Bancorp’s 3 year average Return on Average Tangible Core Equity is equal to or greater than that projected in the 2014 Strategic Plan If Investors Bancorp’s 3 year average Return on Average Tangible Core Equity is less than that projected in the 2014 Strategic Plan 30% of Shares vest 0% of Shares vest PROXY STATEMENT