A Message from the
Board of Directors
Working closely with Synchrony’s management, the Board of Directors oversees the company’s evolving business operations and strategy, including its environmental, social and governance (ESG) initiatives. In a highly competitive environment, our close working relationship with management helps create long-term value for stockholders, employees and other stakeholders by ensuring the company can quickly address challenges, capitalize on opportunities and maximize efficiency.
One of the most important responsibilities of the Board is ensuring successful leadership transitions. Last year, we oversaw the retirement of longtime Chair Richard Hartnack. We thank Richard for his many contributions to Synchrony since being named founding Chair of the Board of Directors in 2014.
We also managed the successful transition of Brian Doubles to President, CEO and Director; Margaret Keane to Executive Chair; and Jeffrey G. Naylor to Lead Independent Director. These three leaders moved seamlessly into their new roles.
Moreover, the Board and its Nominating and Corporate Governance Committee (NCGC) managed the leadership transition of the Management Development and Compensation Committee (MDCC) from Richard Hartnack to Laurel J. Richie.
Given these changes, the NCGC and the Board made it a top priority to maintain strong board performance. We moved up by one year the hiring of an external consultant to facilitate the annual board self-evaluation during the transition year. The Board intends to return to its established practice of hiring an external consultant every third year.
The Board provides active oversight of the company’s strategic direction and the performance of its business and management. As part of Synchrony’s annual strategic planning process, we conducted an intensive, multiday review of Synchrony’s short-, medium- and long-term strategic plans, considering economic, consumer, technology, healthcare, sustainability and other significant trends, as well as developments in industry and regulatory initiatives.
Our input was then incorporated into the strategic plan and approved at our next meeting. Throughout the year, we provided regular feedback on the progress of the company’s strategic plan as well as deep dives on developments in important areas, such as cybersecurity. In addition, the Board regularly discussed and reviewed feedback from our stockholders and other stakeholders, and we engaged with internal and external experts and advisors to ensure our strategy reflects the latest competitive landscape.
This process supported management’s execution of key strategic imperatives, including:
ORGANIZING FOR GROWTH
As Brian Doubles noted in his shareholder letter, Synchrony organized partner portfolios across five sales platforms to better serve partners, deepen industry focus and enhance customer experiences. The company created a growth organization to scale products, capabilities and services more quickly across these five platforms, and combined the technology and operations teams to fuel digital innovation and drive operational excellence and efficiency.
Synchrony hosted its first investor day for the financial community and all stakeholders. Themes included our diversified business operations and large addressable market opportunity (more than $5 trillion of consumer spend across the many industries we operate in today), as well as our multiproduct suite and digital capabilities. We believe our stakeholders walked away knowing that Synchrony is well positioned to generate sustainable growth, attractive returns and significant capital over the long term.
The Board and the Risk Committee oversee Synchrony’s enterprise-wide risk management program to ensure that all relevant risks, including credit risk, market risk, liquidity risk, operational risk (including compliance risk), strategic risk and reputational risk, are appropriately identified and controlled. For example, we have devoted significant resources and board attention to topics such as information security, including privacy, data security and cybersecurity, the company’s response to the COVID-19 pandemic, and capital planning. We believe the corporate culture and enterprise-wide risk governance framework established by the board and management facilitate an effective risk presence across the company.
OVERSEEING ESG PROGRESS
Since our IPO in 2014, the Board has consistently prioritized environmental, social and governance (ESG) programs. We believe that caring for our business, our customers, our partners, our employees, our communities and the environment creates sustainable, long-term stockholder value while reducing risk. We wholeheartedly agree with stakeholders’ recent focus on ESG matters and have responded through action.
ESG is now a quarterly agenda item for the Nominating and Corporate Governance Committee, including a joint meeting with the Management Development and Compensation Committee to focus on ESG and equity, diversity and inclusion. The MDCC added culture— including ESG factors, such as employee support during the pandemic, pay equity and our new, agile ways of working—as a funding component in the 2021 annual incentive plan, a cash bonus plan offered to approximately 3,500 Synchrony leaders.
The Board managed and provided oversight for the company’s best-in-class ESG policies. These include programs to aid employees during the pandemic, as well as the introduction of a $20 minimum wage for all hourly workers in the U.S. and Puerto Rico. We also continued to oversee other important initiatives, such as the company’s debt-free tuition reimbursement program, ongoing work to ensure pay equity, the new way of working and hybrid work options.
We also provided oversight of progress against Synchrony’s ED&I goals. In 2021, Synchrony increased representation of Black and Hispanic employees at the vice president level and higher in the U.S., and increased the number of female employees in executive-level roles globally. The company launched its Education as an Equalizer program, backed by $50 million over five years, to expand access to higher education and skills training in high-growth fields, and financial literacy for underserved communities and our own workforce.
The company also committed $15 million to venture capital funds led by Black, Latinx and women-led investing partners.
Lastly, our directors delivered on personal commitments to engage on ED&I issues:
Fernando Aguirre helped lead the development and launch of Synchrony’s Latinx Executive Alliance, a coalition of C-suite executives and business leaders from different companies, industries and sectors, dedicated to collectively helping Latinx employees advance in corporate America. He continues as a co-sponsor of the alliance.
In celebration of National Hispanic Heritage Month, Aguirre led a conversation sponsored by the Synchrony Hispanic Network—our internal Hispanic diversity network—on “Why Hispanic Representation Matters,” focusing on the importance of driving Hispanic representation.
William Graylin led a conversation sponsored by Synchrony’s internal Asian Professional Engagement Network on experiences, perspectives and career recommendations.
Laurel J. Richie and Margaret Keane led a town hall on diversity, focusing on women’s empowerment in celebration of International Women’s Day.
Keane participated in a session with the U.S. Chamber of Commerce on how businesses can lead the way to an inclusive recovery, with a specific focus on how to keep women in the workforce. She also engaged the Synchrony team on these topics through our Women’s Network.
It is our privilege to serve all Synchrony stakeholders in building this great company. We are confident in the company’s strategy and pleased with all that was accomplished in 2021.
THANK YOU FOR YOUR CONTINUED SUPPORT AND TRUST.
ARTHUR COVIELLO JR.