Ensure strong corporate governance oversight including an effective risk management framework to support a growing organization.
Corporate Governance Practices to Support a Growing Organization
Bridgewater continues to build-out and enhance its corporate governance practices following the initial public offering in 2018 and strong growth trajectory over the past few years. By making incremental investments in our enterprise risk management program, preparing for our first say-on-pay proposal in 2024, and implementing board oversight of our ESG program, we are creating a scalable corporate governance framework to support our organization for years to come.
Board of Directors
As of December 31, 2021, we had 10 directors on our Board, including eight independent directors. The Board provides oversight of our business and monitors the performance of our management teams through three standing committees: 1) Audit Committee, 2) Compensation Committee, and 3) Nominating and ESG Committee, all of which include only independent directors.
Because of our joint Chairman/Chief Executive Officer role, the Board felt it was prudent to appoint a lead independent director. In 2020, David B. Juran was appointed to serve in this role and fulfil the duties outlined in our Corporate Governance Guidelines. With a strong lead independent director, Board committees composed only of independent directors, and the efficiencies achieved in having the roles of Chairman and Chief Executive Officer combined, the Board feels the appropriate structure is in place to ensure we meet the expectations of our shareholders.
More information on our Board of Directors and committees can be found here.
The Nominating and ESG Committee regularly assesses the diversity of the board, including tenure, gender, ethnicity, skills and perspective. The Board is composed of directors with a mix of tenure, with longer serving directors providing important experience and institutional knowledge and newer directors providing fresh perspective to deliberations. The average tenure of our non-employee directors is 8.6 years with 50% having been on the Board fewer than five years.
The Board recognizes the importance of director diversity by gender and ethnicity and the positive impact this can have in terms of the perspectives and counsel the Board provides to management. As of December 31, 2021, 20% of the Board identified as women or ethnic minorities.
We compensate our executives through a combination of base salary, annual bonus, equity awards, earnings credited under our Deferred Incentive Plan, and other benefits including perquisites. Notable attributes of our executive compensation program include the following:
What We Do
What We Don't Do
Independent compensation consultant retained by and reports to the Compensation Committee.
No hedging of stock
Actively developing new performance-based incentive program with targeted implementation in 2023
No excessive perquisites
Minimum restricted stock vesting period of one year for employee participants
No “single trigger” severance upon a change-in-control
No encouraging excessive risk-taking
No tax gross-ups in employment agreements
In November 2020, the Board developed and adopted stock ownership and retention guidelines for non-employee directors as another way to align the long-term interests of directors with those of our shareholders. Within five years of the effective date of the policy or their election to the Board, directors are expected to own shares of common stock equal to or greater than four times the annual cash retainer of each director.
As an “emerging growth company” under the JOBS Act of 2012, Bridgewater is not required to include a Say-on-Pay proposal for shareholder vote until 2024. In preparation, we are in the process of working with our compensation consultant, Pearl Meyer, to review and evaluate our current executive compensation practices.
Corporate Governance Policies
Corporate Governance Guidelines
The Board adopted Corporate Governance Guidelines that govern all aspects of the Board including membership, leadership, nominations and criteria, term limits, expectations, board meetings, committees and independence.
Code of Business Conduct and Ethics
Our Code of Business Conduct and Ethics provides the ethical expectations we have for all officers, directors and employees every day. This policy covers the following:
- Honest and Ethical Conduct
- Conflicts of Interest
- Employees with Disabilities
- Harassment- and Violence-Free Workplace
- Privacy of Employee Information
Other Corporate Governance Policies
- Insider Trading Policy – prevents illegal insider trading of Bridgewater securities during certain blackout periods or while in possession of material, non-public information.
- Related Party Transaction Policy – provides oversight of potential transactions between Bridgewater and related persons, including directors and executive officers.
- Whistleblower Hotline – anonymous channel for employees to submit reports relating to potential violations of Bridgewater’s Code of Business Conduct and Ethics.
Enterprise Risk Management (ERM)
Philosophy and Framework
Our risk management philosophy is to manage and mitigate dynamic risks while enhancing shareholder value, being responsive to clients, and delivering simple solutions in unconventional ways. In 2021, we continued to make key investments in the scalability of our enterprise risk framework to support our strong growth trajectory.
Our current ERM framework has benefited significantly from the recent addition of our Chief Risk Officer, Joe Birkholz, who has taken key steps to advance the program in preparation for continued growth. This includes the following:
- Continuing to scale a risk framework aligned with superior asset growth
- Enhanced a comprehensive Risk Appetite Statement to bring efficiencies to governance and oversight structures
- Leveraging technology to enhance processes and controls
- Reinforcing operational and financial resilience through all three lines of defense
- Continuing to make investments to bolster vendor/third-party risk management program
We are also focused on being well-positioned to proactively identify and mitigate emerging risks. With an enhanced enterprise-wide Risk Appetite Statement and the recruitment of highly skilled risk professionals, we are actively identifying, monitoring, measuring and managing risk across the organization. Additionally, Bridgewater is well positioned for regulatory and market changes through proactive capital management and continued investments in Current Expected Credit Losses (CECL) prep, London Inter-Bank Offered Rate (LIBOR) transition and Sarbanes-Oxley (SOX) implementation. Our strong and consistent credit underwriting, along with segment expertise, are hallmarks of how we proactively manage credit risk. We take great pride in our risk management culture driven by robust team member engagement throughout the organization.
Bridgewater’s full Board of Directors oversees enterprise risk management with each Board committee assuming a different and important role in overseeing the management of the risks we face. The management-level Enterprise Risk Management Committee (ERMC), which consists of our Strategic Leadership Team and other select functional leaders, is responsible for implementing and reporting to the Board regarding critical and emerging risks, our enterprise risk profile and risk management processes. The ERMC reports to both the full Board of Directors and the Audit Committee at least quarterly. We believe this division of risk management responsibilities presents a consistent, systemic and effective approach for identifying, managing and mitigating risks.
We provide ongoing, robust training programs to ensure team members across all three lines of defense know how to identify and mitigate potential issues. All team members are required to complete regular annual training on topics including various topics such as bank security; Bank Bribery Act; Community Reinvestment Act; harassment; cyber security and data privacy; and identity theft to name a few. In addition, Bridgewater hosts an annual Training Day in which all team members receive annual regulatory compliance, Bank Secrecy Act (BSA) and Anti-Money Laundering (AML) training, as well as other training specific to their role.
Bridgewater has a robust BSA/AML program in place to monitor and report suspicious activity while following customer identification and other regulatory guidelines. Our program undergoes annual testing by an independent third party.
Information and Data Security
We recognize that one of the most impactful emerging risks in our industry is cybersecurity. As a result, we have developed a proactive approach to identifying and addressing information and data security risks. Key attributes of this approach include the following:
- Investment in enhanced infrastructure and security protocols
- Partnership with industry-leading service providers to aid in monitoring
- Effective risk culture and awareness model with ongoing training initiatives
All team members are required to complete an annual information security training course. In addition, social engineering training and education is conducted throughout the year.
The ERMC provides an update on information and data security to the Board at least quarterly, with emerging issues being addressed more frequently as needed. Our Information Security program undergoes external audits on an annual basis.