BREAD FINANCIAL HOLDINGS, INC.
For the period ended May 19, 2026. Filed Apr 7, 2026.
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May 19, 2026 · Filed Apr 7, 2026
Contents
Compensation Programs
Overview of 2025 NEO Compensation Program Elements
The following is an overview of the 2025 compensation program elements for our NEOs. We use each component of compensation to satisfy one or more of our compensation objectives. The CHCC places a significant portion of the overall target compensation for our executive officers “at risk,” without encouraging excessive or unnecessary risk-taking.
| Form of Payment | PerformancePeriod | PerformanceCriteria | Objectives | For MoreInformation | ||||||
| Base Salary | Cash; Fixed | Ongoing | Alignment of salary with performance is evaluated on an annual basis | • Compensates for day-to-day performance• Attracts, retains and rewards NEOs with competitive fixed pay• Reflects experience and job scope | Page 62 | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| Annual Incentive Compensation (AIC) | Cash; Performance-Based | 1-Year | Based on results of balanced scorecard for the year | • Incentivizes performance on a range of financial and non-financial metrics in the following categories: Stockholder, Customer and Associate• Rewards successful execution of key annual strategic goals | Page 62 | |||||
| Long-Term Equity Incentive Compensation (LTIC) | 60% PBRSUs | 3-Year Cliff Vesting | ROTCE (75% weight)EPS (25% weight)rTSR (+/-10%) | • Aligns incentives with stockholder interests and long-term financial objectives• Focuses our executives on delivering exceptional performance | Page 71 | |||||
| 40% TBRSUs | Vests Ratably Over 3-Year Period | Time-based | • Increases retention• Promotes direct alignment with stockholder interests• Rewards creation of long-term value | Page 71 |
Bread Financial | 2026 Proxy Statement 61
Base Salary
While the majority of our NEOs’ compensation is contingent upon meeting specified performance targets, we pay our NEOs a competitive base salary as fixed compensation for their time, efforts and commitments throughout the year. To aid in attracting and retaining qualified executive officers, the CHCC seeks to keep base salary competitive by considering, among other factors, the nature and responsibility of the position; experience of the individual; market data; internal pay equity; and the other factors set forth under “Compensation Determination Process” below. The CHCC reviews base salaries at least annually.
In January 2025, the CHCC, together with its independent compensation consultant, reviewed the base salaries of our NEOs for fiscal year 2025. The CHCC considered the various factors set forth above, including a competitive assessment of the Company’s executive compensation against the Company’s compensation peer group and other industry data prepared by the independent compensation consultant. Based on these considerations, the CHCC approved the following base salary adjustments for 2025.
BASE SALARY (ANNUALIZED RATE)
| Named Executive Officer | 2025 | 2024 | %Change |
|---|---|---|---|
| Ralph J. Andretta | 1,200,000 | 1,155,000 | 3.9% |
| Perry S. Beberman | 700,000 | 665,000 | 5.3% |
| Allegra S. Driscoll | 643,500 | 625,000 | 3.0% |
| Valerie E. Greer | 700,000 | 665,000 | 5.3% |
| Joseph L. Motes III | 680,000 | 660,000 | 3.0% |
Annual Incentive Compensation
AIC is the annual cash-denominated performance-based component of our executive compensation program designed to provide an incentive to our NEOs and other executive officers to contribute to our annual objectives, including key strategic priorities for the year. The CHCC focuses on matching rewards with results and encourages executive officers to make significant contributions toward our financial results and other objectives by providing a basic reward for reaching threshold expectations, plus an upside for reaching our aspirational goals. Our formulaic AIC program is structured to reflect specific and measurable financial and non-financial goals, which are approved by the CHCC at the beginning of the year and set forth on the Company’s annual balanced scorecard.
When we refer to our "core scorecard," we are referring to the financial and non-financial metrics organized under the Stockholder, Customer and Associate categories. When we refer to our "balanced scorecard" or our "AIC scorecard," we are referring to our core scorecard, as modified by the results of the modifiers selected by the CHCC for 2025.
62 Bread Financial | 2026 Proxy Statement
HOW AIC AWARDS ARE CALCULATED
During fiscal year 2025, each of our NEOs was eligible to earn an AIC award. Each NEO’s target AIC award (Target Award) was expressed as a percentage of his or her base salary, reflecting peer and industry data and practice, internal equity among executive officers, the intended value and mix of target total direct compensation and the other factors set forth under “Compensation Determination Process” below. After the end of the fiscal year, the CHCC determined the amount of each NEO’s AIC award based upon the Company’s achievement against pre-determined goals, as set forth in the Company’s 2025 core scorecard and as modified by the modifiers that were adopted as part of the 2025 AIC program.
Core Scorecard Payout Opportunity. For the 2025 AIC core scorecard, the CHCC established threshold, target and maximum goal levels for each metric, with threshold equating to a payout of 50% of the Target Award, target generally equating to a payout of 100% of the Target Award, and maximum equating to a payout of 200% of the Target Award. As with 2024, the Financial metrics in the core scorecard (i.e., Average Loans, NCLs, PPNR and Operating Leverage) had a target range, rather than a discrete number as the target. Within the target range for the Financial metrics, the low-end of the range equated to a score of 95% of the Target Award and the high-end of the range equated to a score of 105% of the Target Award, with results between the low-end and the high-end of the target range interpolated on a straight line basis. At the time the 2025 scorecard was approved, there was significant macroeconomic uncertainty and it was unclear whether, and to what extent, those conditions would improve or worsen throughout the year. Accordingly, the rationale for using the target range was to avoid unfairly penalizing or rewarding NEOs for macroeconomic volatility that was outside of their control. The payout on the core scorecard is capped at 100% unless the Company scored at least 85% on the Financial metrics, in aggregate.
Results are interpolated for performance (i) between threshold and target (or, in the case of Financial metrics, the low-end of the target range), and (ii) between maximum and target (or, in the case of the Financial metrics, the high-end of the target range).
After the score for each individual metric is determined, it is then multiplied by the weighting assigned to that metric (see “—2025 Balanced Scorecard Targets and Results” below), and the weighted scores for all metrics are added together to determine the total core scorecard result.
Application of Modifiers to Payout Opportunity. The CHCC established two strategic modifiers in 2025, each of which was based on a critical business priority for 2025. Each of these strategic modifiers had the potential to increase the total payout percentage by up to a maximum of 10%. Lastly, as with 2024 scorecard, the CHCC included a Discretionary Consideration Framework (DCF) modifier, which could either increase or decrease the total payout percentage by up to a maximum of +/-10%.
Establishing a maximum payout amount under our AIC plan deters excessive risk-taking, while having an equitable payout amount that can be earned at a defined performance threshold encourages goal attainment. No payout is made for performance below the threshold performance amount.
Bread Financial | 2026 Proxy Statement 63
2025 CORE SCORECARD DESIGN
Our 2025 core scorecard encompassed a selection of both financial and non-financial metrics important to all stakeholders, organized under the Stockholder, Customer and Associate categories. The scorecard consists of rigorous, quantitative performance metrics that were pre-established early in 2025 in these three categories. See “Compensation Determination Process—Target Setting” below for additional detail. The CHCC then reviewed progress against each metric throughout the year and evaluated achievement of the metrics in January 2026. The Financial metrics selected for 2025 were designed to incentivize strong financial results and align our NEOs’ interests with those of our stockholders, while also prioritizing non-financial metrics that create value for our stockholders, including in the areas of risk, audit and controls, customer and brand partner relationships and human capital management. The goals were designed to be challenging and incentivize our NEOs to advance our strategic and operational priorities, in the face of uncertain macroeconomic and regulatory conditions. Beginning in 2024, in response to feedback we received from our stockholders, we increased the weighting of the Stockholder metrics in the core scorecard from 60% to 70%, and we carried this practice forward into the 2025 iteration of the core scorecard.
Below is a description of the core scorecard metrics selected by the CHCC for 2025, along with detail regarding the rationale for each metric’s inclusion in the core scorecard.
| Metric | Measurement of Metric | Why Metric is Important | |
| Stockholder (70%) | Average Loans | Average total amount of our credit card and other loans during 2025, including any loans classified as held-for-sale. | Important indicator of the Company’s growth and ability to win new business, retain existing brand partners and generate new loans and accounts. |
|---|---|---|---|
| NCLs | Total net principal credit losses for 2025. | Focuses management on quality underwriting, credit risk management and successful collection and recovery efforts. | |
| PPNR(1) | PPNR is calculated by increasing/decreasing Income from continuing operations before income taxes by the net provision/release in Provision for credit losses. PPNR is a non-GAAP financial measure and is reconciled to the most directly comparable GAAP measure included in our audited consolidated financial statements in Appendix A. | Measures our results of operations before income taxes, excluding the volatility that can occur within Provision for credit losses. When used in concert with credit-related metrics like NCLs, PPNR provides additional clarity in understanding our results and trends. It is a key measure to track core earnings over time to demonstrate sustainable, profitable growth. Accordingly, PPNR is weighted more heavily than the other Stockholder metrics. | |
| Operating Leverage(1) | The calendar year-over-year percentage change in total revenue net, less the calendar year-over-year percentage change in non-interest expense. | Measures discipline around deployment of resources and expense control in relation to revenue growth, efficiency and value creation. It is an important indicator of profitable growth. | |
| ERM Composite Metric | A composite ERM metric based on: (i) % of Self-Identified Issues; and (ii) Timely Remediation of Issues. | Measures the success of our ERM program in proactively identifying and reporting potential issues impacting our risk tolerances, and efficiently remediating issues. Strong corporate governance and proactive risk management are guiding principles of the Company’s strategy. |
64 Bread Financial | 2026 Proxy Statement
| Metric | Measurement of Metric | Why Metric is Important | |
| Customer (20%) | Performance on Critical SLAs | Measured based on Company’s aggregate level of performance on “Critical” SLAs (and other SLAs that carry financial penalties or termination risk). Measured under contracts with Top 25 brand partners, based on loan balances. | Our industry is highly competitive, and we compete on the level of service we provide our customers. The critical SLAs correlate to stronger customer satisfaction and performance; when we fail to deliver on these standards, we risk financial penalties, our reputation, and ultimately, our ability to retain our brand partner relationships. |
|---|---|---|---|
| Digital Engagement Composite Metric | Composite metric based on:• Active Digital User Rate (ADU): Calculated based on digital users receiving a billing statement, divided by active billing accounts (70% of metric)• Interactive Voice Response System (IVR) Completion Rate: Calculated based on % of calls to IVR that terminate (30% of metric) | Increasing our ADU rate is a key business initiative contributing to higher share-of-wallet, lower cost-to-serve, and our paperless initiatives.Increasing our IVR completion rate is a key business initiative to reduce cost-to-serve and further limit the number of customer inquiries requiring associate assistance. | |
| Application Availability | Application Availability is measured as a percentage, based on seconds of uptime and downtime (excluding planned downtime) within each month. | Application Availability is critical to servicing our customers and brand partners and ensuring our business runs smoothly without disruption. | |
| NPS | To calculate NPS, customers are surveyed “On a scale of 0-10, how likely are you to recommend this company’s product or services to a friend or colleague?” Scores of 0-6 are “Detractors,” scores of 7-8 are “Passives” and scores of 9-10 are “Promoters.” NPS = % Promoters minus % Detractors. | It is crucial that our customers have positive experiences in each of their touch points with us. Our customers (and brand partners) have many options available to them, and if we are unable to provide consistently positive experiences, we may be unable to effectively compete. NPS measures the extent to which our customers are true brand advocates. | |
| Associate (10%) | Associate Experience | Based on the Company’s Annual Associate Survey, this metric measures core aspects of the associate experience, including:• Participation• Senior Leadership• Recognition• Communication• Flexibility/Balance• Enablement | Associate Experience is the foundation for building a culture that drives our business forward. The Associate Experience metric provides a broad measure of the extent to which the factors that drive engagement and a positive associate experience are found in the work environment. |
(1)
At the time of the CHCC’s approval of the 2025 core scorecard, the CHCC pre-approved certain adjustments that impacted the calculation of PPNR and Operating Leverage metrics. These adjustments are discussed below under “2025 Balanced Scorecard Targets and Results” and in Appendix B.
Bread Financial | 2026 Proxy Statement 65
2025 MODIFIERS TO CORE SCORECARD
For 2025, the CHCC approved two strategic modifiers to the core AIC scorecard, which were based on two of the Company’s business-critical focus areas for 2025—namely (i) readiness for the potential merger of our two bank subsidiaries and (ii) the Company’s Operational Excellence initiative. These strategic modifiers were important not only due to their in-year benefit for 2025, but also because of the value they generate on a go-forward basis in terms of revenue growth, operating and regulatory efficiencies and the development of new capabilities. In addition, the CHCC carried forward the DCF modifier for 2025, which was originally introduced in 2024. Additional detail regarding the CHCC’s rationale for choosing each of these modifiers is set forth below:
| Measurement of Metric | Why We Chose this Modifier | |
| Strategic Modifier #1:Bank Merger Readiness(0% to +10%) | Measured on a gradient, with a total impact to AIC results of 0% to +10% | • The Company currently operates through two state-chartered subsidiary banks (Comenity Bank and Comenity Capital Bank), which is a legacy structure that gives rise to certain regulatory complexities and other operational drawbacks.• For 2025, the CHCC, with the support of the Board, adopted this modifier to challenge and incentivize management to develop actionable plans to merge our subsidiary banks.• The bank merger, if executed, is expected to have a number of operational and financial benefits, including a simplified regulatory framework, improved access to the retail deposit funding market, greater flexibility in managing our securitization activities, and other liquidity and capital risk management benefits. |
|---|---|---|
| Strategic Modifier #2:Operational Excellence(0% to +10%) | Measured on a gradient, with a total impact to AIC results of 0% to +10% | • Beginning in 2023, we launched our Operational Excellence initiative, which is an enterprise-wide effort focused on improving the way our Company works, with the goal of driving efficiencies and value creation.• In preparing our Board-approved 2025 budget, the anticipated value from Operational Excellence initiatives was embedded into that budget.• In adopting this modifier, the CHCC sought to challenge and incentivize management to generate even greater efficiencies and value from Operational Excellence initiatives, incremental to those already in the budget.• As noted above, “Operational Excellence” was one of our key focus areas for 2025 and that focus is reflected in the CHCC’s choice of this strategic modifier. |
| DiscretionaryConsiderationFramework (DCF)(-10% to +10%) | Measured on a gradient, with a total impact to AIC results of -10% to +10% | • The DCF modifier provided the full Board with discretion to increase or decrease the scorecard results by up to +/-10%, subject to a pre-established framework for consideration. The framework permitted the full Board to consider significant issues or changes that were not contemplated in the core scorecard, including:• Unforeseen macroeconomic impacts• Technology transformation results• Balance sheet strengthening/weakening• New regulatory issues• Unplanned strategic acquisitions/capabilities• Changes in supervisory ratings |
A description of the factors that the CHCC considered in evaluating the success of each modifier, along with the Company’s final results on the modifiers, is included below under “—2025 Balanced Scorecard Targets and Results.”
66 Bread Financial | 2026 Proxy Statement
Core Scorecard Result +
Modifiers =
142.95% Total Result
2025 BALANCED SCORECARD TARGETS AND RESULTS
Below is detail regarding the threshold, target and maximum performance goals for each metric in our 2025 AIC core scorecard, as well as the Company’s results on each metric, the weighted scoring for each metric, and the final total balanced scorecard result.
All of the targets in the 2025 AIC scorecard were set at levels that exceeded 2024 actual results, with the exception of the ERM Composite Metric and the Performance of Critical SLA Metric, each of which was held constant with the 2024 levels, which levels the CHCC believed were already consistent with market best practices and did not need to be increased. For additional detail regarding the process by which the CHCC sets performance targets, see “Compensation Determination Process—Target Setting” below.
| Measure · Threshold · Target · Maximum · AnnualResults · Score · AssignedScorecardWeight · FinalWeightedScore | ||||||||
|---|---|---|---|---|---|---|---|---|
| Average Loans ($mm)(1) | $17,077 | $18,077 – $18,655 | $19,655 | $17,850 | 84.81% | 10% | 8.48% | |
| NCLs ($mm)(1) | $1,647 | $1,470 – $1,440 | $1,262 | $1,377 | 138.68% | 10% | 13.87% | |
| Stockholder | PPNR ($mm)(1)(2) | $1,739 | $1,897 – $2,079 | $2,237 | $1,937 | 97.16% | 30% | 29.15% |
| (70%) | Operating Leverage(1)(2) | (3.00)% | .07% - 4.66% | 8.00% | 2.11% | 99.44% | 10% | 9.94% |
| ERM Composite Metric | (3) | (3) | (3) | (3) | 81.00% | 10% | 8.10% | |
| Performance on Critical SLAs | 97% | 98% | 99% | 99.86% | 200.00% | 5% | 10.00% | |
| Customer | Digital Engagement Composite | 65.05% | 66.30% | 67.55% | 67.98% | 200.00%/ | 5% | 8.41% |
| (20%) | Metric | (ADU) & | (ADU) & | (ADU) & | (ADU) & | 94% | ||
| 74.96% | 76.88% (IVR) | 78.80% | 76.65% | |||||
| (IVR) · (IVR) · (IVR) | ||||||||
| Application Availability | 99.85% | 99.91% | 99.95% | 99.98% | 200.00% | 5% | 10.00% | |
| NPS | 48.50% | 51.00% | 53.50% | 54.50% | 200.00% | 5% | 10.00% | |
| Associate(10%) | Associate Experience | 75% | 81%-83% | 89% | 82.64% | 100.00% | 10% | 10.00% |
| (1) | Financial metrics use a target zone: low-end of target scores at 95%; high-end of target scores at 105%; results between low- and high-end are interpolated. The Financial metrics, in aggregate, must achieve ≥85% or the core scorecard result is capped at 100% funding. Final result on Financial metrics, in aggregate, was 102.4%. | CoreScorecardResult | 117.95% |
| (2) | Results of PPNR and Operating Leverage were impacted by certain pre-approved adjustments; see Appendix B for a reconciliation of these adjustments. | ||
| (3) | Targets not disclosed for the ERM Composite Metric due to composite nature of the metric and potential sensitivity of the underlying targets. | ||
| Modifiers | ||
|---|---|---|
| Modifier Description | PotentialScore | Score and Impact to AICFunding |
| Bank Merger Readiness | 0-10% | +10.00% |
| Operational Excellence | 0-10% | +10.00% |
| DCF | -10% to +10% | +5.00% |
| Total: 25.00% | ||
Bread Financial | 2026 Proxy Statement 67
Core Scorecard Results and Commentary
As shown above, the Company’s results on the 2025 core scorecard (before applying the modifiers) yielded a payout percentage of 117.95%.
Beginning in 2024, the CHCC incorporated a provision into the AIC program, which provides that the core scorecard result is capped at 100% unless the Company scores at least 85% on the Financial metrics (i.e., Average Loans, NCLs, PPNR and Operating Leverage), in aggregate. With an aggregate score of 102.4% on the Financial metrics, the Company exceeded this threshold and, therefore, payouts were not capped under the core scorecard. Among the Stockholder metrics, Average Loans for 2025 were $17.9 billion, which was between threshold and target, due in part to pressure from an increasing payment rate throughout the year, resulting in a score of 84.81% on that metric. Due in part to our disciplined credit risk management and enhanced product diversification, the Company had a strong result on NCL performance, exceeding the target range and resulting in a score of 138.68% on that metric. PPNR for the year of $1.9 billion was solid and within the target range, resulting in a score of 97.16%. Lastly among the Financial metrics, Operating Leverage was strong in 2025 and near the midpoint of the target range, resulting in a score of 99.44%. The ERM Composite Metric resulted in a score of 81.00%.
Among the Customer metrics, the Company achieved maximum performance on the SLA metric, yielding a score of 200% on that metric. On the Digital Engagement Composite Metric, the Company performed well in 2025, with the ADU rate portion of the metric scoring a perfect 200% and the IVR portion scoring 94%. We were also pleased with the Company’s result on the Application Availability metric, which exceeded expectations at a maximum score of 200%, which we believe was reflective of the enhanced resiliency of the Company’s systems. On the NPS metric, the Company also exceeded the maximum target based on the result of 54.50%, and consequently scoring 200%, demonstrating our continued focus on customer experience.
The Company’s performance on the Associate Experience metric was in the middle of the target range, resulting in a score of 100%, which we believe is reflective of our NEOs’ commitment to promoting a strong associate experience that drives our long-term growth. Additional detail regarding our human capital strategies, as well as our broader sustainability efforts, can be found in the “Sustainable Business Practices” section included elsewhere in this proxy statement.
As referenced above, PPNR and Operating Leverage were impacted by certain adjustments that were approved by the CHCC. When the core scorecard was adopted in early 2025, the CHCC pre-approved certain adjustments, including: (i) unplanned gain/loss from portfolio sales; (ii) unplanned impacts from legacy businesses, including amounts associated with the Company’s former Epsilon and LoyaltyOne segments; and (iii) unplanned debt retirement/issuance costs. For a reconciliation of these adjustments to PPNR and Operating Leverage, please see Appendix B.
68 Bread Financial | 2026 Proxy Statement
Modifier Results and Commentary
With respect to the modifiers, below is a summary of the criteria and outcomes the CHCC and Board considered in evaluating the modifiers, along with the Company’s final results:
| Modifier | Criteria for Measuring Success | Outcome | Score |
|---|---|---|---|
| Strategic Modifier #1: Bank Merger Readiness | • Success measured on a score of 1-5 on the Company’s readiness for the potential merger of its two subsidiary banks within the following 4 key areas:• Project Governance• Gap Assessments• Actions to Close Gaps • Initiation of Early Funding Actions | • Project Governance: 5.0 out of 5.0• Successfully developed project plan, with 18 workstreams and executive-level engagement, oversight and reporting • Gap Assessments: 5.0 out of 5.0• Successfully completed gap assessments that informed bank merger application materials • Actions to Close Gaps: 5.0 out of 5.0• Successfully addressed identified gaps and submitted bank merger application in December 2025 (ahead of schedule) • Early Funding Actions: 5.0 out of 5.0• Treasury and Legal teams completed key steps to ensure that funding benefits of the merger are realized as quickly as possible | +10% |
| Strategic Modifier #2: Operational Excellence | • Success measured on the amount of incremental value (revenue and savings) created by the Company’s 2025 Operational Excellence initiatives, beyond the amounts already embedded within the Company’s 2025 budget• Measured based on both 2025 in-year value and run-rate value in 2026 | • Result on modifier determined by reference to formulaic matrix, with the levels of incremental value achieved through Operational Excellence efforts tied to corresponding scores on modifier• Company generated in-year incremental value (and run-rate value for 2026) that corresponded to a 10% payout on the matrix | +10% |
| DCF Modifier | • In considering the DCF modifier, the Board was authorized to consider significant issues or changes, not contemplated in the scorecard, in the following areas:• Unforeseen macroeconomic impacts• Technology transformation results• Balance sheet strengthening/weakening• New regulatory issues• Unplanned strategic acquisitions/capabilities• Changes in supervisory ratings | • In January 2026, the CHCC and full Board considered the framework for the DCF modifier and the Company’s 2025 results and achievements• Following that review, the CHCC recommended, and the full Board approved, a result of +5% on the DCF modifier• In making this determination, factors the CHCC and the Board considered included: • Success in strengthening and optimizing our balance sheet, including through (i) refinancing senior notes at a significantly lower interest rate and reducing senior note balance, (ii) | +5% |
Bread Financial | 2026 Proxy Statement 69
| Modifier · Criteria for Measuring Success · Outcome · Score | |
|---|---|
| diversifying and optimizing our capital structure through the issuances of subordinated debt and preferred stock, (iii) improving CET 1 capital ratio to 13% and (iv) repurchasing $310 million of common stock (increased from $55 million in 2024) • Significant enhancements to the ERM program, which allowed the Company to reduce open issues to a 3-year low • By virtue of the foregoing accomplishments and others, the Company achieved upgrades in November 2025 from 2 of the 3 leading ratings agencies (and an improved outlook from the 3rd) and experienced strong stock price performance (21% increase during 2025) | |
| TOTAL | +25% |
In aggregate, the Company’s scores on the modifiers increased the total AIC scorecard payout percentage by 25%, which when added to the Company’s score on the core scorecard (117.95%), resulted in a final score of 142.95% on the 2025 AIC balanced scorecard.
70 Bread Financial | 2026 Proxy Statement
SUMMARY OF 2025 PERFORMANCE-BASED AIC PAYMENTS
The following table sets forth a summary of the AIC payments for the 2025 performance year, calculated using the final payout percentage of 142.95% from the 2025 balanced scorecard. These AIC payments are also included in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table below. The target AIC percentages below reflect the following changes for 2025: Mr. Andretta to 200% from 190% in 2024; Mr. Beberman to 165% from 150% in 2024; Ms. Driscoll to 155% from 140% in 2024; Ms. Greer to 165% from 150% from 2024; and Mr. Motes to 155% from 150% in 2024, in each case placing additional emphasis on the performance-based components of our executives' compensation.
| AnnualBaseSalary ($) · x · TargetAIC(%) · = · TargetAIC ($) · x · FinalPayoutPercentage · = · AICPayment($) | |||||
|---|---|---|---|---|---|
| Ralph J. Andretta | 1,200,000 | 200% | 2,400,000 | 142.95% | 3,430,800 |
| Perry S. Beberman | 700,000 | 165% | 1,155,000 | 142.95% | 1,651,073 |
| Allegra S. Driscoll | 643,500 | 155% | 997,425 | 142.95% | 1,425,819 |
| Valerie E. Greer | 700,000 | 165% | 1,155,000 | 142.95% | 1,651,073 |
| Joseph L. Motes III | 680,000 | 155% | 1,054,000 | 142.95% | 1,506,693 |
Long-Term Equity Incentive Compensation
We grant long-term equity incentive awards to align the interests of our NEOs and other senior officers with those of our stockholders and foster a focus on long-term results, as well as to encourage retention. Awards of performance-based LTIC pay out solely upon attainment of a threshold level of pre-determined performance targets.
In determining the target size of LTIC awards, the CHCC generally considers the following factors: (i) the value of total direct compensation for comparable positions at our proxy compensation peer group and other market data; (ii) Company and individual performance against strategic plans; (iii) the number and value of LTIC awards previously granted; (iv) the allocation of overall equity awards attributed to our executive officers relative to all equity awards; and (v) the relative proportion of long-term incentives within the total direct compensation mix.
In 2025, we granted LTIC awards to our senior management and executive officers, including our NEOs, pursuant to our 2024 Omnibus Incentive Plan. Under this plan, the Board of Directors has delegated its authority under such plan to the CHCC, except for purposes of awards to the CEO.
For 2026, the CHCC also revised the grant structure for our non-NEO, senior vice president (SVP) population, which comprises approximately 30 senior leaders who also serve on our enterprise Operating Committee. While this SVP population had previously received 100% of their annual LTIC grants in the form of TBRSUs, for 2026 the CHCC transitioned these grants to a mix of 75% TBRSUs and 25% PBRSUs, with the same terms as the TBRSUs and PBRSUs granted to our NEOs. The purpose of this shift towards PBRSUs was to further incentivize this SVP population to deliver exceptional long-term financial performance and further align their financial objectives with stockholder interests.
Bread Financial | 2026 Proxy Statement 71
2025 LTIC PLAN DESIGN
Under our LTIC plan, our NEOs' long-term equity grants consist of 60% PBRSUs and 40% TBRSUs, the features of which are summarized in the table below.
| Element | Key Metrics | Features |
|---|---|---|
| Performance-Based Restricted Stock Units(60% of Award) | • ROTCE (75% weighting)• EPS (25% weighting)• rTSR (+/-10%) | • 3-year cliff vesting period (2025-2027)• Aligns incentives with stockholder interests and long-term financial objectives• Focuses our executives on delivering exceptional performance |
| Time-Based Restricted Stock Units(40% of Award) | • Vest ratably over 3-year period | • Increases retention• Promotes direct alignment with stockholder interests• Rewards creation of long-term value |
LTIC AWARDS GRANTED DURING 2025
In February 2025, the following LTIC grants were made to our NEOs, with 60% of the total target award in the form of PBRSUs and the remaining 40% in TBRSUs:
| Name | TargetGrantValue ($) | PBRSUsGranted(in shares)(1) | TBRSUsGranted(in shares)(1) |
|---|---|---|---|
| Ralph J. Andretta | 7,000,000 | 67,984 | 45,323 |
| Perry S. Beberman | 1,800,000 | 17,482 | 11,655 |
| Allegra S. Driscoll | 1,200,000 | 11,655 | 7,770 |
| Valerie E. Greer | 1,800,000 | 17,482 | 11,655 |
| Joseph L. Motes III | 1,430,000 | 13,888 | 9,259 |
(1)
The target numbers of RSUs were determined by dividing the total grant value of the award by the 10-day average fair market value of the Company’s common stock on the NYSE for the 10 trading days immediately preceding the date of grant.
2025 PBRSU DESIGN
For 2025, the CHCC re-designed our PBRSU grants to add an EPS performance metric and rTSR modifier. These changes were made in response to feedback received from our stockholders and proxy advisory firms. For 2025, the CHCC also adjusted our primary performance metric from ROE to ROTCE, which aligns more closely with our financial reporting and published long-term targets. Collectively, the CHCC believes that these metrics align executive compensation with the Company’s operating performance, risk appetite, and long-term stockholder returns, while providing for a potential payout adjustment based on our TSR performance against our rTSR Peer Group.
72 Bread Financial | 2026 Proxy Statement
| Metric | Measurement | Reason for Inclusion |
|---|---|---|
| ROTCE(75% weighting) | • ROTCE performance measured based on annual ROTCE results, averaged at end of 3-year period; annual ROTCE targets were determined at time of grant in early 2025 | • ROTCE is a performance metric widely used in the banking industry and among our peers.• Incentivizes management to effectively allocate capital and produce an appropriate return on stockholder’s equity.• The metric aligns with the presentations of our quarterly earnings materials, as well as the medium and long-term targets we announced at our Investor Day in 2024. |
| EPS(25% weighting) | • EPS performance measured over a cumulative 3-year period | • A new metric for 2025, EPS was the most frequently-suggested new metric by our stockholders during our engagement on executive compensation matters.• The inclusion of EPS ensures that the PBRSU payout is consistent with the stockholder experience over the performance period and encourages sustained earnings growth. |
| rTSR(+/-10% modifier) | • rTSR measured over a 3-year period, relative to our rTSR Peer Group | • A new modifier for 2025, rTSR is intended to incentivize performance that results in stockholder returns that are favorable to our peers• The rTSR modifier recognizes factors that affect our industry and peers as a whole, and provides an enhanced tie to the stockholder investment experience |
Of the PBRSUs granted in 2025, 75% of the value of shares granted are subject to an annual ROTCE metric with threshold, target and maximum goals for each of 2025, 2026 and 2027, and 25% of the value of shares granted are subject to a three-year cumulative EPS metric with threshold, target and maximum goals for the period from 2025-2027. For each of these metrics, threshold, target and maximum goals ranging from 50% to 150% achievement are calculated on a scale interpolated between the threshold, target and maximum goal amounts, with a maximum payout of 150% of target.
The annual ROTCE results are averaged at the end of the three-year performance period so that ROTCE results relative to the goals are not disproportionately impacted by unforeseeable market factors outside the NEOs’ control over a multi-year period. This approach provides a performance and retention incentive over the long term with three-year cliff vesting. In the event threshold performance is not achieved in one or more fiscal years, the total payout could be less than 50%, and as low as 0%. To the extent earned, these PBRSUs will vest in February 2028. The CHCC believes the performance targets in our PBRSUs are challenging to achieve, but attainable with the application of significant skill and effort on the part of our executive officers.
Bread Financial | 2026 Proxy Statement 73
For additional detail regarding the process by which the CHCC sets our performance targets, see “Compensation Determination Process—Target Setting” below.
The payout for the PBRSUs will be determined when the full measurement can occur, after December 31, 2027. For all grants, the recipient must be employed by us at the time of vesting to receive the stock, subject to certain exceptions including death, disability and certain qualifying retirements.
rTSR Modifier and Peer Group
The rTSR modifier included in our 2025 PBRSUs may increase or decrease by up to 10% the number of shares earned based on our TSR over the three-year performance period relative to our rTSR Peer Group. In order to smooth potential anomalies of spot pricing, three-year rTSR is calculated based on the average common stock trading prices of the Company and our rTSR Peer Group over the 30 trading days preceding January 1, 2025 and the 30 trading days preceding January 1, 2028.
Our "rTSR Peer Group" includes 21 companies and is set forth below. This group consists of our 2025 compensation peer group below on page 79 (excluding Discover Financial Services, which merged with and into Capital One Financial Corporation), plus six additional consumer finance companies: Affirm Holdings, Inc.; Credit Acceptance Corporation; Enova International, Inc.; FirstCash Holdings, Inc.; Navient Corporation; and SLM Corporation. These additional consumer finance companies were included in our rTSR Peer Group because these companies are likely to have similar sensitivities to us, such as macroeconomic, regulatory, geopolitical and consumer behavioral, which the CHCC believes improves the overall comparability of the rTSR Peer Group for TSR purposes over the three-year performance period.
74 Bread Financial | 2026 Proxy Statement
| • Affirm Holdings, Inc. | • Enova International, Inc. | • LendingTree, Inc. |
|---|---|---|
| • Ally Financial Inc. | • Fifth Third Bancorp | • Navient Corporation |
| • Associated Banc-Corp. | • FirstCash Holdings, Inc. | • OneMain Holdings, Inc. |
| • Capital One Financial Corporation | • Green Dot Corporation | • Regions Financial Corporation |
| • Citizens Financial Group, Inc. | • Huntington Bancshares Incorporated | • SLM Corporation |
| • Comerica Incorporated* | • KeyCorp | • SoFi Technologies, Inc. |
| • Credit Acceptance Corporation | • LendingClub Corporation | • Synchrony Financial |
- On February 2, 2026, Comerica Incorporated merged with and into Fifth Third Bancorp.
Our rTSR Peer Group originally included 21 companies, with TSR performance to be measured at the end of the three-year performance period, along with our TSR, for a total of 22 companies. Depending upon the rank of the Company’s TSR performance relative to these other companies, the rTSR modifier could increase or decrease the number of shares earned by up to 10%. The details of how the modifier impacts the final payout calculations are shown below:
| BFH TSRPerformance vs. Peers (Ordinal-Based Rank) | BFH TSRPerformance vs. Peers (Percentile-Based Rank)* | Modification |
|---|---|---|
| 1 - 4 | 86 to 100 | +10.0% |
| 5 - 7 | 71 to <86 | +7.5% |
| 8 - 9 | 62 to <71 | +5.0% |
| 10 - 11 | 52 to <62 | +2.5% |
| 12 - 15 | 33 to <52 | 0.0% |
| 16 - 17 | 24 to <33 | -2.5% |
| 18 - 19 | 14 to <24 | -5.0% |
| 20 | 10 to <14 | -7.5% |
| 21 - 22 | 0 to <10 | -10.0% |
- Because Comerica Incorporated merged with and into Fifth Third Bancorp, effective February 2, 2026, there are currently only 20 companies in the rTSR Peer Group rather than the original 21. Accordingly, the CHCC will measure performance using the percentile-based rankings shown above, which are equivalent to the original ordinal-based rankings.
PBRSU TARGETS AND RESULTS
In February 2026, the CHCC met to certify 2025 ROE (and, in the case of 2025 PBRSUs, ROTCE) results and determine final payouts under the PBRSUs granted in 2023. The 2025 results, as adjusted, are included in the table below, along with an overview of the targets and results for the PBRSUs granted in each of the past three fiscal years. In response to stockholder feedback, we continue to include the forward-looking targets for 2026 and 2027 in the table below.
The Company’s 2024 adjusted ROE result for the PBRSUs granted in 2024 was 11.5%, which was at the low-end of the 2024 target range. Accordingly, the CHCC determined it was appropriate for the go-forward performance
Bread Financial | 2026 Proxy Statement 75 targets in the 2025 PBRSUs to be set at levels consistent with those in the 2024 PBRSUs, except (i) the 2025 PBRSUs add targets through fiscal year 2027, which are consistent with our published medium and long-term targets, and (ii) the 2025 PBRSU targets were converted from ROE to ROTCE and restated using an assumed 11% TCE/TA ratio (consistent with our current targeted capital stack), rather than the assumed 9% TCE/TA ratio used in our 2024 PBRSUs. In other words, the 2025 PBRSU targets were set at the same or higher levels than the 2024 PBRSU targets, and any appearance of the targets being set at lower levels is due to the conversion from ROE to ROTCE for 2025 and the update to the assumed TCE/TA ratio. The EPS targets in the 2025 PBRSU grants were also developed based on our ROTCE targets and are thus consistent with the medium and long-term targets we announced at our 2024 investor day.
For additional detail regarding the process by which the CHCC sets our performance targets, see “Compensation Determination Process—Target Setting” below.
| FY2023 · FY2024 · FY2025 · FY2026 · FY2027 | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| PBRSUs Granted 3/24/2023 · Min · Target · Max · Min · Target · Max · Min · Target · Max | |||||||||||||||
| ROE Goals | 15% | 19-21% | 25% | 17% | 21%-23% | 27% | 20% | 24-26% | 30% | 2023 Grant FinalAchievement: | |||||
| ROE Result | 18.2% | 25.0% | 30.0% | 121.9% | |||||||||||
| Result as a % of target | 90% | 125.5% | 150.0% | ||||||||||||
| PBRSUs Granted 2/15/2024 | Min | Target | Max | Min | Target | Max | Min | Target | Max | ||||||
| ROE Goals | 6% | 11.5%-14.5% | 18% | 8% | 13%-17% | 22% | 10% | 17%-22% | 29% | ||||||
| ROE Result | 11.5% | 19.1% | |||||||||||||
| Result as a % of target | 100.0% | 121.5% | |||||||||||||
| Results above are ROE; Results below are ROTCE | |||||||||||||||
| PBRSUs Granted 2/18/2025 | Min | Target | Max | Min | Target | Max | Min | Target | Max | ||||||
| ROTCE Goals (75% Weighting) | 6% | 10%-14% | 18% | 8% | 13%-17% | 22% | 10% | 17%-22% | 29% | ||||||
| ROTCE Result | 20.9% | ||||||||||||||
| Result as a % of target | 150.0% | ||||||||||||||
| 3 Year Cumulative EPS Goal (25% Weighting) | $12 | $22-$30 | $37 | ||||||||||||
For 2025, the Company’s unadjusted ROE performance was 15.8% and unadjusted ROTCE performance was 20.4%. When each annual grant of PBRSUs was made, the CHCC pre-approved certain adjustments to the performance results for: (i) provision build/release impacts; (ii) unplanned gain/loss from portfolio sales; (iii) unplanned impacts from legacy businesses, including amounts associated with the Company’s former Epsilon and LoyaltyOne segments; (iv) unplanned debt retirement/issuance costs; (v) unplanned costs due to regulatory changes (e.g., implementation and legal costs); (vi) unplanned material macroeconomic impacts (e.g., stress losses, rapid decline in interest rates, etc.); (vii) impacts due to AIC scorecard results being above our 100% target; and (viii) a normalizing adjustment assuming a constant 9% TCE/TA ratio for 2023 and 2024 PBRSUs, and 11% TCE/TA ratio for 2025 PBRSUs. For a reconciliation of the adjustments made in calculating 2025 performance, please see Appendix B.
FINAL PAYOUT OF PBRSUS GRANTED IN 2023
As described above under “PBRSU Targets and Results,” the PBRSUs awarded to our NEOs in March 2023 completed their three-year performance period at the end of fiscal year 2025. In February 2026, the CHCC determined and certified the Company’s final results of these PBRSUs over the three-year period, which determined the final number of shares earned pursuant to those awards. As illustrated below, based on the annual ROE results for fiscal years 2023, 2024 and 2025, the shares earned on account of these PBRSUs equated to 121.9% of the target award established in March 2023.
76 Bread Financial | 2026 Proxy Statement
| Primary Metric | Threshold(%) | Target(%) | Maximum(%) | Result(%) | ROE Resultas a % of Target |
|---|---|---|---|---|---|
| Fiscal Year 2023 ROE | 15.0% | 19% - 21% | 25.0% | 18.2% | 90.3% |
| Fiscal Year 2024 ROE | 17.0% | 21% - 23% | 27.0% | 25.0% | 125.5% |
| Fiscal Year 2025 ROE | 20.0% | 24% - 26% | 30.0% | 30.0% | 150.0% |
| Average Result | 121.9% | ||||
Based on this final payout result of 121.9%, on February 15, 2026, our NEOs (other than Ms. Driscoll, who joined the Company in January 2024) earned a number of shares equal to 121.9% of the target number of shares subject to each of their respective PBRSU grants awarded in March 2023. Accordingly, Mr. Andretta earned 106,442 shares versus his target of 87,319 shares, Mr. Beberman earned 30,853 shares versus his target of 25,310 shares, Ms. Greer earned 30,853 shares versus her target of 25,310 shares, and Mr. Motes earned 23,719 shares versus his target of 19,457 shares, in each case before giving effect to any shares withheld for federal tax withholding purposes. Each of these awards vested on February 17, 2026.
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.