Document

DEF 14A 1 a2022proxy.htm DEF 14A Document

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934


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 14a-6(e)(2))

			Definitive Proxy Statement

			Definitive Additional Materials

			Soliciting Material under §240.14a-12

DISCOVER FINANCIAL SERVICES

(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 all boxes that apply):


			No fee required.

			Fee paid previously with preliminary materials.

			Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11.

2022

Proxy Statement


Vision
To be the leading digital bank and payments partner.

Mission
To help people spend smarter, manage debt better and save more so they achieve a brighter financial future.

									Corporate Values
									Doing the Right Thing
									Innovation
									Simplicity
									Collaboration
									Openness
									Volunteerism
									Enthusiasm
									Respect


						Learn More

						2021 Annual Report*

						https://investorrelations.discover.com/ investor-relations/financials/annual-reports/default.aspx

						*The information in the Annual Report is not incorporated by reference into, and does not form part of, this proxy statement.

Message from our Independent Chairman


			March 25, 2022 Dear Fellow Shareholder, I cordially invite you to attend Discover Financial Services’ 2022 Annual Meeting of Shareholders to be held at 9:00 a.m., Central Time, May 19, 2022. This year's Annual Meeting of Shareholders will again be held virtually. All shareholders of record of our outstanding shares of common stock at the close of business on March 21, 2022, will be entitled to vote at the Annual Meeting. For more information on how to register and attend this year's Annual Meeting of Shareholders, please refer to the Questions and Answers about the Annual Meeting and Voting section which begins on page 61 of the enclosed proxy statement. Your vote is important! Whether or not you plan to attend the Annual Meeting, please read the enclosed proxy statement and vote as soon as possible via the Internet, by telephone or, if you receive a paper Proxy Card or voting instruction form in the mail, by mailing the completed Proxy Card or voting instruction form. Using the Internet or telephone voting systems or mailing your completed Proxy Card will not prevent you from voting at the meeting if you are a shareholder of record and wish to do so. Important information about the matters to be acted upon at the meeting is included in the notice of meeting and proxy statement. Our 2021 Annual Report contains information about our Company and its financial performance. The Company's Corporate Responsibility Report contains information about the Company's efforts to fulfill its responsibility as a good corporate citizen. I am very much looking forward to our 2022 Annual Meeting of Shareholders. Very truly yours,



			Thomas G. Maheras Independent Chairman

			This proxy statement is dated March 25, 2022 and is first being sent or made available to shareholders on or about April 6, 2022.

1 2022 Proxy Statement


Notice of 2022 Annual Meeting of Shareholders

Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting To Be Held on May 19, 2022: Our Proxy Statement and our Annual Report, which includes our Form 10-K for the fiscal year ended December 31, 2021, are available free of charge on our website at: www.discover.com.

You are cordially invited to attend the Annual Meeting via the website below, but whether or not you attend, you are urged to vote. Your prompt action will aid the Company in reducing the expense of proxy solicitation.

Date and Time
May 19, 2022
9:00 a.m., Central Time

Website
www.meetnow.global/M4526G9

Record Date
You are entitled to notice of and to vote at the meeting and at any adjournment or postponement of the meeting if you were a shareholder of record as of the close of business on March 21, 2022.

Items of Business

Board Recommendation

To elect 12 members of the Board of Directors named in the Proxy Statement as nominees, each for a term of one year.

FOR each director nominee

To conduct an advisory, non-binding vote to approve named executive officer compensation.

FOR

To ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for 2022.

FOR

To transact any other business as may properly come before the meeting or any adjournment or postponement of the meeting.

It is important that your shares be represented and voted at the Annual Meeting. You can vote your shares by completing and returning your Proxy Card or by voting on the Internet or by telephone. The only voting securities of the Company are shares of our common stock, $0.01 par value per share (the "Common Stock"), of which there were 282,028,098 shares outstanding as of the Record Date (excluding treasury stock). See the Questions and Answers About the Annual Meeting and Voting section beginning on page 61 for more details.

Advance Voting Methods

Attending the Virtual Annual Meeting

Internet
Go to www.investorvote.com/dfs

Our 2022 Annual Meeting will be a virtual meeting, conducted via live audio webcast only. No physical meeting will be held. If you plan to attend the meeting virtually via the website listed above, please follow the registration instructions as outlined in the Questions and Answers About the Annual Meeting and Voting section beginning on page 61 for more details.

Telephone
Call toll free 1-800-652-VOTE (8683) within the USA, territories & Canada

Mail
Follow the instructions on your proxy card

This booklet contains our Notice of Annual Meeting and 2022 Proxy Statement. Our 2021 Annual Report contains information about our Company and its financial performance. Our Corporate Responsibility Report contains additional information about our Company and actions we have taken to fulfill our responsibilities to a wide variety of stakeholders including our shareholders. Neither our Annual Report nor our Corporate Responsibility Report are a part of our proxy solicitation materials.

By Order of the Board of Directors,

D. Christopher Greene
Vice President, Secretary and Deputy General Counsel
March 25, 2022

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Proxy Highlights

This summary highlights selected information about the matters to be voted on at the Annual Meeting. You should read the entire Proxy Statement before voting. For more complete information regarding the Company’s 2021 performance, please review the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. You are also encouraged to review the Company's Corporate Responsibility Report.

Voting Roadmap


			PROPOSAL 1 Election of Directors Our Board recommends a vote FOR each director nominee			See Page 8 ›

Director Nominees

Committees

Name

Age

Gender

Race/
Ethnicity

Director Since

C&LD

N&G

ROC

JEFFREY S. ARONIN Independent
Chairman and CEO of Paragon Pharmaceutical Capital, LLC and Paragon Biosciences, LLC

Male

White

2007

MARY K. BUSH Independent
Chairman of Bush International, LLC

Female

Black

2007

●

GREGORY C. CASE Independent
CEO of Aon plc

Male

White

2007

●

CANDACE H. DUNCAN Independent
Former Managing Partner
KPMG LLP, Washington D.C. Metropolitan Area

Female

White

2014

JOSEPH F. EAZOR Independent
President and CEO of Clario

Male

White

2016

CYNTHIA A. GLASSMAN Independent
Former Under Secretary for Economic Affairs
U.S. Department of Commerce

Female

White

2009

●

ROGER C. HOCHSCHILD
CEO and President
Discover Financial Services

Male

White

2018

THOMAS G. MAHERAS Independent Chairman
Managing Partner, Tegean Capital Management, LLC
Partner, Iron Park Capital Management, LLC

Male

White

2008

MICHAEL H. MOSKOW Independent
Retired President and CEO
Federal Reserve Bank of Chicago

Male

White

2007

●

DAVID L. RAWLINSON II Independent
President and CEO
Qurate Retail, Inc.

Male

Black

2021

MARK A. THIERER Independent
Managing Partner
AssetBlue Investment Group

Male

White

2013

JENNIFER L. WONG Independent
Chief Operating Officer
Reddit, Inc.

Female

Asian

2019


AC	Audit Committee	●	Chairperson of the Committee
C&LD	Compensation and Leadership Development Committee	¢	Member of the Committee
N&G	Nominating, Governance and Public Responsibility Committee
ROC	Risk Oversight Committee

3 2022 Proxy Statement

Proxy Highlights

DIRECTOR NOMINEE SNAPSHOT

Average Tenure

Average Age

Gender Diversity

Racial and Ethnic Diversity

9 years

62 years

33% Female

25% Non-white

0-5 years

≤ 60 years

Female

Non-white

6-10 years

61-70 years

Male

> 10 years

> 70 years

SKILLS AND EXPERIENCE

All Director nominees exhibit:

As a group, our Director nominees have the following characteristics, skills, and experience:

•Broad and relevant spectrum of experience and expertise

•A reputation for integrity

•Experience in positions with a high degree of responsibility

•Commitment to represent the interests of shareholders

CEO or CFO

Public Board

Financial
Services
Industry

Technology

Finance,
Accounting
and Financial
Reporting

Government/
Regulatory

Risk
Management

Corporate
Governance

International

Marketing

Strategy and
Business
Development

Compensation
and Succession
Planning

Corporate Governance Highlights

The Board believes strong corporate governance is critical to achieving the Company’s long-term goals and maintaining the trust and confidence of investors, employees, customers, regulatory agencies, and other stakeholders. The following are highlights of our Corporate Governance Program:



Board Independence ü All directors are independent except CEO; Board committees are 100% independent ü Non-Executive Board Chairman is independent ü Regular executive sessions of independent directors			Board Performance ü All directors attended at least 80% of meetings of our Board and committees on which they serve ü Diverse Board with mix of skills, tenure and age; 33% of our directors are women and 50% of the Board's committees are chaired by women ü Annual Board, committee and director performance evaluations ü Director education and access to experts


Best Practices ü Risk aware culture overseen by a separate Risk Oversight Committee ü Significant shareholder ownership requirements for Executives and Board ü Longstanding commitment to sustainability			Shareholder Engagement ü Annual election of directors with majority voting standard and no supermajority voting requirements ü Shareholders have proxy access with market standard conditions for director nominations ü All directors attend the annual meeting ü Shareholders have the right to call special meetings at market standard threshold

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Proxy Highlights


			PROPOSAL 2 Advisory Vote to Approve Named Executive Officer Compensation Our Board recommends a vote FOR this Proposal			See Page 25 ›

Performance Highlights

In 2021, the Company’s accomplishments included:


Grew profit before taxes and reserves ("PBTR") significantly at 47% year-over-year driven by strong sales, favorable funding costs and disciplined expense management						Based on net income of $5,449 million, the Company achieved PBTR of $5,651 million(1)
Recorded strong credit performance from disciplined management and favorable macroeconomic conditions						Total net charge-off rate on average loans outstanding of 1.84% was down from the prior year rate of 3.03%
Invested in marketing and digital and analytics capabilities to drive growth and efficiency						Total loans up 4% year-over-year reflecting strong new account growth driven by investments in account acquisition and robust sales volume which was up 28% from the prior year
Enhanced shareholder returns with larger dividends and share repurchases						The Company increased the quarterly dividend to $0.50 per share of common stock and approved a $2.4 billion share repurchase plan in July 2021

Executive Compensation Highlights

The Company's 2021 executive compensation program and compensation decisions were based on the following principles:



Pay-for-Performance Our compensation should reflect financial and non-financial performance over short- and long-term periods at the Company and individual performance levels.	Balanced Compensation Structure We seek to deliver a mix of fixed and variable compensation that aligns the interests of our executive officers with our shareholders and appropriately balances risk and reward.	Market-Competitive Pay Opportunity Our compensation should be competitive relative to our peers and the broader market in order to attract, motivate and retain top executive talent.

____________________

(1) Profit before taxes and reserves ("PBTR") is a non-GAAP financial measure which should be viewed in addition to, not as a substitute for, the Company's reported results. PBTR is derived by adding the change in the allowance for credit losses of $(1,404) million, the change in the liability for expected credit losses on unfunded commitments of $(9) million, and income tax expense of $1,615 million to net income of $5,449 million. The Compensation and Leadership Development Committee believes that PBTR is a critical measure of the core operating performance of the business that increases focus on factors the Company's incentive-eligible employees are most able to directly impact and influence. Please see "Annex A" for a reconciliation of PBTR growth to net income growth calculated in accordance with GAAP.

5 2022 Proxy Statement

Proxy Highlights

(At Risk)

Element

Base Salary

Short-Term Incentive ("STI")

Long-Term Incentive ("LTI")

Highlights

Fixed cash compensation based on scope of responsibility, impact on the organization, expertise, experience, and individual performance.

Annual cash bonus opportunity based on Company financial performance, primarily PBTR, other performance factors, risk and individual performance.

Annual equity award opportunity based on financial performance, other performance factors, risk and individual performance; granted as a mix of PSUs and RSUs with PSU awards determined based on adjusted EPS.

2021 CEO Target Pay Mix

10.1%

20.2%

RSUs 17.4%

PSUs 52.3%

2021 Average of All Other Named Executive Officers ("NEOs") Target Pay Mix

17.4%

26.1%

RSUs 22.6%

PSUs 33.9%

Highlights of our program include:


We Do			We Do Not
ü Pay-for-performance ü Align compensation plans and programs with shareholder interests ü Maintain oversight by an independent Compensation and Leadership Development Committee ü Apply share ownership guidelines to directors and NEOs ü Apply incentive award limits to NEOs ü Include clawback provisions to recover incentive compensation under certain circumstances ü Regularly evaluate risk performance in incentive compensation design and decisions for our NEOs ü Provide balanced change in control benefits with a double trigger and no excise tax gross-ups ü Include non-competition and non-solicitation provisions in our long-term incentive awards ü Limit perquisites			û Maintain employment contracts with our NEOs û Provide special benefit plans to our executives not generally available to other employees û Allow directors and NEOs to hedge or pledge Company securities û Provide single trigger change in control severance arrangements or provide excise tax gross-ups


			PROPOSAL 3 Ratify the Appointment of Deloitte & Touche LLP as Independent Auditors for 2022 Our Board recommends a vote FOR this Proposal			See Page 53 ›

Questions and Answers

Please see the Questions and Answers About the Annual Meeting and Voting section beginning on page 61 for important information about the proxy materials, voting, and the Annual Meeting.

www.discover.com 6

Table of Contents


MESSAGE FROM OUR INDEPENDENT CHAIRMAN	1	Other Arrangements, Policies and Practices Related to Our Executive Compensation Program	42
NOTICE OF 2022 ANNUAL MEETING OF SHAREHOLDERS	2
PROXY HIGHLIGHTS	3	Compensation Committee Report	43
Voting Roadmap	3	20 21 EXECUTIVE COMPENSATION TABLES	44
Corporate Governance Highlights	4	2021 Summary Compensation Table	44
Performance Highlights	5	Grants of Plan-Based Awards for 2021	46
Executive Compensation Highlights	5	Outstanding Equity Awards at 2021 Year-End	47
Questions and Answers	6	Stock Vested for 2021	48
BOARD AND GOVERNANCE MATTERS	8	2021 Pension Benefits	48
Proposal 1 Election of Directors	8	2021 Nonqualified Deferred Compensation	49
Our Director Nominees	9	Potential Payments Upon a Termination or Change in Control	49
CORPORATE GOVERNANCE	15	2021 Pay Ratio	52
Process for Nominating Directors	15	AUDIT MATTERS	53
Information Concerning Nominees for Election as Directors	16	Proposal 3 Ratification of Appointment of Independent Registered Public Accounting Firm	53
Board Roles and Responsibilities	17
Shareholder Engagement	22	Independent Registered Public Accounting Firm Fees	53
Director Compensation	23	Policy Regarding Pre-Approval of Independent Registered Public Accounting Firm Services	54
EXECUTIVE COMPENSATION	25
Proposal 2 Advisory Vote to Approve Named Executive Officer Compensation	25	Audit Committee Report	54
		STOCK OWNERSHIP INFORMATION	56
COMPENSATION DISCUSSION AND ANALYSIS	26	Beneficial Ownership of Company Common Stock	56
Executive Summary	26	OTHER MATTERS	58
Overview of Performance	29	Certain Transactions	58
Governance Matters	29	Other Business	58
Compensation Program and Objectives	31	Shareholder Proposals and Director Nominations for the 2023 Annual Meeting	59
Components of Compensation	33
2021 Decision-Making Process	36	ANNEX A	60
Other Compensation Decision Considerations	41	QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING	61

Except as otherwise indicated or unless the context otherwise requires, “Discover Financial Services,” “Discover,” “DFS,” “we,” “us,” “our,” and “the Company” refer to Discover Financial Services and its subsidiaries.

We own or have rights to use the trademarks, trade names and service marks that we use in conjunction with the operation of our business, including, but not limited to: Discover®, PULSE®, Cashback Bonus®, Discover Cashback Checking®, Discover it®, College Covered®, and Diners Club International®. All other trademarks, trade names and service marks included in this proxy statement are the property of their respective owners.

7 2022 Proxy Statement

Board and Governance Matters



			PROPOSAL 1 Election of Directors The Board of Directors recommends that you vote “FOR” the election of each director nominee. Proxies solicited by our Board will be voted “FOR” the election of each nominee unless otherwise instructed. The Board believes strong corporate governance is critical to achieving the Company’s long-term goals and maintaining the trust and confidence of investors, employees, customers, regulatory agencies, and other stakeholders. The Board oversees the Company’s business and directs its management. The non-employee directors of the Board are not involved in day-to-day operations. Instead, the Board meets periodically with management to review the Company’s executive succession plans, Annual Operating Plan (the “Annual Plan”), multi-year strategic plan and performance against such plans, risks, and business strategies. Directors also consult with management about the Company’s performance outside of formal meetings, which include opportunities for directors to have in-depth conversations with management about particular areas of the business. All of the director nominees set forth below are standing for election at the Annual Meeting. Director nominees stand for election at each annual meeting of shareholders. Each director holds office until his or her successor has been duly elected and qualified or the director’s earlier resignation, death or removal. The nominees below are current directors of the Company, and each such nominee has indicated that he or she will serve if elected. We do not anticipate that any nominee will be unable or unwilling to stand for election, but if that happens, your proxy will be voted for another person nominated by the Board. The Board may also choose to reduce the number of directors to be elected, as permitted by our Bylaws. The experience, qualifications, attributes and skills of each of the Company’s director nominees are set forth below. The Board believes that an effective board consists of a diverse group of individuals who bring a variety of complementary skills and experiences. The Nominating, Governance and Public Responsibility Committee and the Board consider the skills and experiences of the directors in the broader context of the Board’s overall composition, with a view toward constituting a board that has the best skill set and experience to oversee the Company’s business. As indicated below, our directors have a combined wealth of leadership experience derived from extensive service guiding large, complex organizations as executive leaders or board members, and in government. They collectively have substantive knowledge and skills applicable to our business, including in the areas of regulation, public accounting and financial reporting, finance, risk management, business development, technology, marketing, operations, strategic planning, management development and succession, compensation, corporate governance, public policy, international matters, banking, and financial services. The Nominating, Governance and Public Responsibility Committee regularly reviews the composition of the Board and its assessment of the Board’s performance in light of our evolving business requirements to maintain a Board with the appropriate mix of skills and experiences needed for the broad set of challenges that the Company confronts. Annually, the Independent Chairman conducts individual interviews with each director that include topics such as Board and committee performance and effectiveness, leadership of the Board and committees, and the performance of individual directors. The Independent Chairman then reports the results of these interviews to the full Board during its self-evaluation. The full Board evaluates such results and also conducts an evaluation of the Independent Chairman. In addition, each committee annually conducts a self-evaluation.

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Board and Governance Matters

Our Director Nominees


						Jeffrey S. Aronin Independent Biography Mr. Aronin is the founder, chairman and chief executive officer of Paragon Biosciences, a global life science innovator that creates, builds, and funds biology-based companies. Since 2017 under Paragon, Mr. Aronin has established seven portfolio companies—Harmony Biosciences (Nasdaq: HRMY), Castle Creek Biosciences, Emalex Biosciences, Evozyne, Qlarity Imaging, CiRC Biosciences, and Skyline Biosciences—and serves as their chairman of the board. Prior to Paragon, Mr. Aronin was CEO of several global biopharmaceutical companies focused on therapies for people with high unmet medical needs. In addition Mr. Aronin has experience as a chief executive officer leading several global biopharmaceutical companies. His skills include strategy and business development, finance and brand marketing. He brings valuable leadership experience and knowledge in the operations and day-to-day management of a global corporation in a regulated industry. Mr. Aronin also has experience in the structuring and execution of strategic corporate transactions, including mergers and acquisitions.

AGE: 54 RACE/ETHNICITY: White GENDER: Male DIRECTOR SINCE: 2007 OTHER CURRENT PUBLIC COMPANY BOARDS: Harmony Biosciences Holdings, Inc. COMMITTEES: Compensation and Leadership Development


						Mary K. Bush Independent Biography Ms. Bush has served as the chairman of Bush International, LLC, a financial and business strategy advisory firm, since 1991. The firm advises U.S. companies and foreign governments on financial markets, banking and strategic business and economic matters. Ms. Bush was the inaugural head and managing director of the Federal Housing Finance Board, where she established financial policies and oversaw management and safety and soundness for the nation's Federal Home Loan Banks. She also founded and served as the head of the international finance department of Fannie Mae, where she led funding transactions globally, and was appointed by President Reagan as the U.S. Alternate Executive Director of the International Monetary Fund Board. Ms. Bush served on the board of Marriott International, Inc. from 2008 to 2020. In addition Ms. Bush brings extensive leadership experience in banking, international finance, corporate governance and public policy to the Board. Additionally, she brings deep experience in corporate finance and strategy and the operations and regulation of financial services businesses.

AGE: 73 RACE/ETHNICITY: Black GENDER: Female DIRECTOR SINCE: 2007 OTHER CURRENT PUBLIC COMPANY BOARDS: Bloom Energy, ManTech International Corporation, T. Rowe Price Group, Inc. COMMITTEES: Nominating, Governance and Public Responsibility (Chair), Risk Oversight

9 2022 Proxy Statement

Board and Governance Matters


						Gregory C. Case Independent Biography Mr. Case has been chief executive officer of Aon plc, a leading global professional services firm providing advice and solutions in risk, retirement and health, since 2005 and was president from 2005 to 2018. He is also a member of Aon’s board of directors. Prior to joining Aon, Mr. Case was with McKinsey & Company, an international management consulting firm, for 17 years, most recently serving as head of the Financial Services Practice. In addition Mr. Case has approximately 20 years of experience in the insurance and financial services industries, including in the areas of risk management services, insurance and reinsurance brokerage, and through his management consulting and banking experience. He brings valuable leadership experience and knowledge of business operations and the day-to-day management of a large, regulated global financial corporation. His skills include strategy and business development, risk management and people management.

AGE: 59 RACE/ETHNICITY: White GENDER: Male DIRECTOR SINCE: 2007 OTHER CURRENT PUBLIC COMPANY BOARDS: Aon plc COMMITTEES: Compensation and Leadership Development (Chair)


						Candace H. Duncan Independent Biography Ms. Duncan retired from KPMG LLP, a global network of professional firms providing audit, tax and advisory services, in November 2013 where she had been managing partner of the Washington, D.C. metropolitan area since 2009. Ms. Duncan also was on the KPMG LLP board of directors from 2009 to 2013, and served as chair of the board’s nominating committee as well as the partnership and employer of choice committee. Prior thereto, she served in various roles at the firm, including managing partner for audit for the Midatlantic area and audit partner in charge for the Virginia business unit. Ms. Duncan served on the board of FTD Companies, Inc. from 2014 to 2019. In addition Ms. Duncan has experience leading and managing a large accounting firm’s growth priorities across its audit, tax and advisory functions in key markets. She also has a strong financial and accounting background, gained through her many years of experience at KPMG LLP, including her experience as a lead audit partner for major international and domestic companies. She has served clients on a wide range of accounting and operational issues, public securities issuances and strategic corporate transactions. Her thorough knowledge of public company accounting, financial statements and corporate finance is of significant value to the Company.

AGE: 68 RACE/ETHNICITY: White GENDER: Female DIRECTOR SINCE: 2014 OTHER CURRENT PUBLIC COMPANY BOARDS: Teleflex Inc. COMMITTEES: Audit, Nominating, Governance and Public Responsibility

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Board and Governance Matters


						Joseph F. Eazor Independent Biography Mr. Eazor currently serves as the president and chief executive officer of Clario (formerly ERT and Bioclinica), a global data and technology company for clinical trials. Prior to assuming this role in October 2020, he served as president and chief executive officer of Conifer Health Solutions, LLC, a healthcare business solutions organization, from January to August 2020. Mr. Eazor was executive vice president and chief customer officer of computer software company Oracle Corporation, from July 2019 to January 2020, and chief executive officer of Rackspace, a leading managed cloud company, from 2017 to 2019. Mr. Eazor previously served as the president and chief executive officer of EarthLink, Inc., a leading communications and IT services provider, and was a member of EarthLink’s board from 2014 to 2017. From 2011 to 2013, he served as executive vice president and chief operating officer of global sales and customer operations at EMC and prior to that he served in a variety of leadership roles at Hewlett Packard and Electronic Data Systems. Mr. Eazor also served on the board of Commvault, a data protection and information management company, from 2015 to 2018. In addition Mr. Eazor has a proven track record of leading successful global companies. He has extensive experience in international strategy and business development and in technology and IT services. In addition to his corporate roles, Mr. Eazor has management consulting experience from his time as a senior partner with McKinsey & Co. and as a partner and board member of A.T. Kearney, Inc.

AGE: 59 RACE/ETHNICITY: White GENDER: Male DIRECTOR SINCE: 2016 OTHER CURRENT PUBLIC COMPANY BOARDS: None COMMITTEES: Audit


						Cynthia A. Glassman, Ph.D. Independent Biography Dr. Glassman was appointed by President Bush as Under Secretary for Economic Affairs at the U.S. Department of Commerce from 2006 to 2009 and as Commissioner of the U.S. Securities and Exchange Commission from 2002 to 2006, including serving as Acting Chair during the summer of 2005. Dr. Glassman is currently a member of the Dow Jones Special Committee. She held various positions during her 12 years at the Federal Reserve, including as Chief of the Financial Reports Section and an Economist in the Capital Markets Section. She also has more than 15 years of experience in financial services consulting, including as a Principal of Ernst & Young LLP and Managing Director of Furash & Company. Dr. Glassman served on the board of Navigant Consulting, Inc. from 2009 to 2019, and was a Senior Research Scholar at the Institute for Corporate Responsibility at the George Washington University School of Business from 2009 to 2021. In addition Dr. Glassman brings extensive regulatory, corporate governance, risk management, financial services and banking experience to the Board. She holds a Ph.D. in economics and has spent over 45 years in the public and private sectors focusing on financial services regulatory and public policy issues.

AGE: 74 RACE/ETHNICITY: White GENDER: Female DIRECTOR SINCE: 2009 OTHER CURRENT PUBLIC COMPANY BOARDS: None COMMITTEES: Audit (Chair)

11 2022 Proxy Statement

Board and Governance Matters


						Roger C. Hochschild Biography Mr. Hochschild has served as the chief executive officer and president of Discover since October 2018 and served as our president and chief operating officer from 2004 to 2018. He was executive vice president, chief administrative and strategic officer for Morgan Stanley from 2001 to 2004, and was executive vice president, chief marketing officer - Discover from 1998 to 2001, when Discover was a part of Morgan Stanley. In addition Mr. Hochschild's deep understanding of the Company’s business and the financial services industry provides valuable expertise to the Company. He also brings leadership experience in risk management, consumer financial services, information technology and knowledge of operations and the day-to-day management of a global financial corporation, which plays a critical role in board discussions regarding strategic planning and business development for the Company.

AGE: 57 RACE/ETHNICITY: White GENDER: Male DIRECTOR SINCE: 2018 OTHER CURRENT PUBLIC COMPANY BOARDS: Principal Financial Group COMMITTEES: None


						Thomas G. Maheras Independent Chairman Biography Mr. Maheras has been the managing partner of Tegean Capital Management, LLC since 2008, and a partner of Iron Park Capital Management, LLC since 2019, two investment advisory firms based in New York. Prior to that, he was chairman and co-chief executive officer of Citi Markets and Banking, the investment banking division of Citigroup, Inc., where he held roles of increasing responsibility after starting his career as a fixed-income trader at Salomon Brothers. He has served as chairman of the U.S. Treasury Department Borrowing Advisory Committee and as an executive committee member of the Board of Directors of the Securities Industry and Financial Markets Association. In addition Mr. Maheras has extensive risk management, banking and capital markets experience, including 23 years at Citigroup, Inc. where his responsibilities included leading the global capital markets business. He also brings valuable leadership experience and knowledge of operations and the day-to-day management of a global financial services organization. Mr. Maheras’ financial background and banking and financial services experience includes a knowledge of financial statements, corporate finance, accounting and capital markets.

AGE: 59 RACE/ETHNICITY: White GENDER: Male DIRECTOR SINCE: 2008 INDEPENDENT CHAIRMAN SINCE: 2020 OTHER CURRENT PUBLIC COMPANY BOARDS: None COMMITTEES: Risk Oversight

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Board and Governance Matters


						Michael H. Moskow Independent Biography Mr. Moskow is currently Vice Chair and Distinguished Fellow, Global Economy at The Chicago Council on Global Affairs. He retired as president and chief executive officer of the Federal Reserve Bank of Chicago in 2007, where he had served since 1994. Mr. Moskow was a Deputy U.S. Trade Representative, following his appointment by President Bush in 1991, and earlier in his career, held a number of senior positions with the U.S. government, including Undersecretary of Labor at the U.S. Department of Labor, director of the Council on Wage and Price Stability and senior staff economist with the Council of Economic Advisers. Mr. Moskow serves on the board of Flowstone Private Equity Opportunity Fund. He served on the board of CityBase until early 2019 and on the board of Commonwealth Edison Company, a subsidiary of Exelon Corporation, until 2021. In addition Mr. Moskow brings extensive regulatory, risk management, financial services and banking experience to the Board and has extensive knowledge of the economy and financial markets. Through his senior regulatory positions, particularly in the financial services arena, and service on the boards of other financial institutions, he brings a thorough and insightful perspective to a wide range of issues.

AGE: 84 RACE/ETHNICITY: White GENDER: Male DIRECTOR SINCE: 2007 OTHER CURRENT PUBLIC COMPANY BOARDS: None COMMITTEES: Risk Oversight (Chair)


						David L. Rawlinson II Independent Biography Mr. Rawlinson has been the president and chief executive officer of Qurate Retail, Inc., an e-commerce company, since October 2021, and previously served as president and chief executive officer-elect for Qurate Retail, Inc. since August 2021. From February 2020 to August 2021, Mr. Rawlinson served as chief executive officer of NielsenIQ (formerly Nielsen Global Connect), a global data company. From November 2015 until joining Nielsen’s management, he served as president of the Global Online Business at W.W. Grainger, Inc., an industrial supplies company. Mr. Rawlinson joined Grainger in July 2012 and previously served as the vice president of operations for the Global Online Business, and prior to that, vice president, deputy general counsel and corporate secretary of Grainger. Mr. Rawlinson worked for ITT Exelis (formerly ITT Corp.) from 2009 to 2012, most recently as vice president, general counsel and director of corporate responsibility of the Electronic Systems division. Prior to that, he served as a White House Fellow and in appointed positions for both the George W. Bush and Obama administrations. Mr. Rawlinson served on the board of MonotaRO Co., Ltd. from 2014 to 2019 and on the board of Nielsen Holdings plc from 2017 to 2021. In addition Mr. Rawlinson has significant experience in global e-commerce, consumer trends, consumer data, and digital business-to-business operations. In addition to his background in information solutions, Mr. Rawlinson brings deep leadership experience on a global scale and adds another expert perspective to the Board with his track record of success in digital commerce.

AGE: 46 RACE/ETHNICITY: Black GENDER: Male DIRECTOR SINCE: 2021 OTHER CURRENT PUBLIC COMPANY BOARDS: Qurate Retail, Inc. COMMITTEES: Audit

13 2022 Proxy Statement

Board and Governance Matters


						Mark A. Thierer Independent Biography Mr. Thierer currently serves as the managing partner of AssetBlue Investment Group, a position he has held since June 2017. From October 2017 through February 2018, Mr. Thierer also served as the interim chief executive officer of Dentsply Sirona Inc., a manufacturer of dental implants. Mr. Thierer was chief executive officer of OptumRx, a pharmacy care services company, from July 2015 until September 2017. He previously served as chairman and chief executive officer of Catamaran Corporation, one of the nation’s largest pharmacy benefit management companies, from March 2011 until it combined with OptumRx in 2015. In addition Mr. Thierer has experience as a chief executive officer leading a national pharmacy benefit and healthcare information technology solutions company. His skills include strategy and business development, technology, finance and marketing. He brings valuable leadership experience and knowledge of operations and the day-to-day management of a national corporation. Mr. Thierer also has experience in the structuring and execution of strategic corporate transactions, including mergers and acquisitions.

AGE: 62 RACE/ETHNICITY: White GENDER: Male DIRECTOR SINCE: 2013 OTHER CURRENT PUBLIC COMPANY BOARDS: P3 Health Partners, Inc. COMMITTEES: Compensation and Leadership Development, Nominating, Governance and Public Responsibility


						Jennifer L. Wong Independent Biography Ms. Wong has been the chief operating officer of Reddit, Inc., a community and discussion platform, since 2018, where she oversees business strategy and growth, and related teams for the company. She previously served as Time, Inc.'s president of digital and then its chief operating officer from 2016 to 2018, where she led growth strategy and digital business transformation. Prior to that, Ms. Wong held the role of chief business officer from 2011 to 2015 at Popsugar, Inc., a media and technology company, where she led business operations and the company's media and commerce businesses. Earlier in her career, Ms. Wong held several executive management roles at AOL and worked with a range of digital media and technology clients at McKinsey & Company. In addition Ms. Wong has experience building digital products and platforms, and an understanding of digital and social media as an essential marketing tool. In addition to her extensive digital and marketing experience, her skills include business strategy and growth development, risk management, and technology.

AGE: 47 RACE/ETHNICITY: Asian GENDER: Female DIRECTOR SINCE: 2019 OTHER CURRENT PUBLIC COMPANY BOARDS: Group Nine Acquisition Corp. COMMITTEES: Risk Oversight

www.discover.com 14

Corporate Governance

Process for Nominating Directors

Nomination of Directors

The Nominating, Governance and Public Responsibility Committee is responsible for identifying, evaluating, and recommending candidates to the Board. The Nominating, Governance and Public Responsibility Committee may consider director candidates from a wide range of sources, including shareholders, officers, and directors. The Board is responsible for nominating directors for election by the shareholders and filling any vacancies on the Board that may occur.

Shareholder Recommendations for Director Candidates

Fulfilling its responsibility to identify, evaluate, and recommend director candidates, the Nominating, Governance and Public Responsibility Committee accepts shareholder recommendations of director candidates and evaluates such candidates in the same manner as other candidates. The Nominating, Governance and Public Responsibility Committee determines the need for additional or replacement Board members, then identifies and evaluates the director candidate under the Director Qualifications described below based on the information the Nominating, Governance and Public Responsibility Committee receives with the recommendation or which it otherwise possesses, which may be supplemented by certain inquiries. If the Nominating, Governance and Public Responsibility Committee determines, in consultation with other directors, including the Chairman of the Board, that a more comprehensive evaluation is warranted, the Nominating, Governance and Public Responsibility Committee may then obtain additional information about the director candidate’s background and experience, including by means of interviews. The Nominating, Governance and Public Responsibility Committee and the Chairman of the Board will then evaluate the director candidate further, again using the qualification criteria described herein. The Nominating, Governance and Public Responsibility Committee receives input on such director candidates from other directors, including the Chairman of the Board, and recommends director candidates to the full Board for nomination. The Nominating, Governance and Public Responsibility Committee may engage a third party to assist in identifying director candidates or to assist in gathering information regarding a director candidate’s background and experience. If the Nominating, Governance and Public Responsibility Committee engages a third party, the Company pays for these services.

Shareholders who wish to recommend a candidate for the Nominating, Governance and Public Responsibility Committee’s consideration must submit the recommendation in writing in accordance with the Policy Regarding Director Candidates Recommended by Shareholders, available through the investor relations page of our internet site, www.discover.com.

In 2021, there were no director candidates submitted by shareholders. Shareholders may make recommendations at any time, but recommendations for consideration as nominees at the annual meeting of shareholders must be received not less than 120 days before the first anniversary of the date that the proxy statement was released to shareholders in connection with the previous year’s annual meeting.

To submit a candidate for consideration for nomination at the 2023 Annual Meeting of Shareholders, shareholders must submit the recommendation, in writing, by December 7, 2022. The written notice must demonstrate that it is being submitted by a shareholder of record of the Company and include information about each proposed director candidate, including name, age, business address, principal occupation, principal qualifications, and other relevant biographical information. In addition, the shareholder must confirm the candidate’s consent to serve as a director. Shareholders must send recommendations to Discover Financial Services, 2500 Lake Cook Road, Riverwoods, Illinois 60015, Attention: Corporate Secretary, and they will be forwarded to the Nominating, Governance and Public Responsibility Committee.

In addition, shareholders may nominate director candidates by complying with the advance notice or proxy access Bylaw provisions or universal proxy rules (once effective) discussed at the end of this Proxy Statement in the Shareholder Proposals and Director Nominations for the 2023 Annual Meeting section.

Director Qualifications

Our Corporate Governance Policies describe our director qualifications. The Board seeks members who combine a broad and relevant spectrum of experience and expertise with a reputation for integrity. Directors should have experience in positions with a high degree of responsibility and be leaders in the companies or institutions with which they are affiliated. Directors should be selected based upon their potential contributions to the Board and management and their ability to represent the interests of shareholders. Also, the Board will consider the diversity of a candidate’s perspectives, background, and other demographics. Generally, no director is permitted to serve on more than three additional public company boards (in addition to the Company’s Board).

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Corporate Governance

Retirement Age Policy

The Nominating, Governance and Public Responsibility Committee continues to evaluate the composition of the Board and its Committees, including the mix of skills and experience of existing directors, as well as the potential benefits from new and different perspectives and skill sets. The Company’s Corporate Governance Policy reflects the Board’s recognition of the importance of periodic Board refreshment and maintaining an appropriate balance of tenure, diversity, skills, experience and perspectives on the Board. In the first quarter of 2022, the Policy was amended to provide that beginning with the Company’s 2023 annual shareholder meeting, directors will not be eligible for re-election after their 75th birthday and directors who have reached the age of 75 should not expect to be re-nominated for election by the Board. To ensure the appropriate mix of skills and experience is maintained and allow for an orderly transition of leadership on our Board and its Committees, the amended Policy further provides that if more than two directors are impacted by this requirement at any one annual meeting of shareholders, the Board may determine to extend a director’s service until the subsequent annual meeting of shareholders.

Information Concerning Nominees for Election as Directors

Director Independence

Our Board of Directors adopted our Corporate Governance Policies, which contain the director independence guidelines and provide that a majority of the members of the Board and each member of the Audit Committee, the Compensation and Leadership Development Committee (the “Compensation Committee”), the Nominating, Governance and Public Responsibility Committee and the Risk Oversight Committee must consist of directors who are independent. The Board uses these guidelines to assist it in determining whether directors qualify as “independent” pursuant to the guidelines and the requirements set forth in the New York Stock Exchange’s ("NYSE") Corporate Governance Rules (the “Rules”). In each case, the Board broadly considers all relevant facts and circumstances and applies the guidelines and the Rules in determining whether directors qualify as “independent.”

When assessing the independence of Director nominees, the Nominating, Governance and Public Responsibility Committee considers the impact that tenure may have on the independence of certain longer-tenured incumbent Board nominees. The Nominating, Governance and Public Responsibility Committee and the Board determined that the independence of our longer-tenured Directors had not been diminished as these directors continued to thoughtfully challenge and provide reasoned, balanced, and insightful guidance to management. The Board values the perspectives that such directors contribute to Board discussions, having served Discover during periods of various industry and company-specific developments and with different members of management over the years.

Pursuant to our Corporate Governance Policies and the Rules, the Board reviewed the independence of all of our current directors. During this review, the Board considered transactions and relationships between each director or any member of his or her immediate family (or any entity of which a director or an immediate family member is an executive officer, general partner or significant equity holder) and the Company and its subsidiaries and affiliates. The Board also considered whether there were any transactions or relationships between directors or any member of their immediate family and members of the Company’s senior management. The purpose of this review was to determine whether any such relationships or transactions existed that were inconsistent with a determination that the director is independent.

As a result of this review, the Board affirmatively determined that Jeffrey S. Aronin, Mary K. Bush, Gregory C. Case, Candace H. Duncan, Joseph F. Eazor, Cynthia A. Glassman, Thomas G. Maheras, Michael H. Moskow, David L. Rawlinson, Mark A. Thierer, and Jennifer L. Wong are independent of the Company and its management under the standards set forth in the Corporate Governance Policies and the Rules. The Board determined that one of our directors, Roger C. Hochschild, is not independent because of his employment as our Chief Executive Officer and President ("CEO").

In determining that each of the directors other than Mr. Hochschild is independent, the Board considered, among other things, certain relationships, which it determined were immaterial to the directors’ independence. The Board considered that the Company and its subsidiaries in the ordinary course of business have, during the last three years, sold products and services to, and/or purchased products and services from, companies at which some of our directors were officers during 2021. In each case, the amount paid to or received from these companies in each of the last three years did not exceed the greater of $1,000,000 or 2% of that organization’s consolidated gross revenues, the threshold set forth in our Corporate Governance Policies and the Rules. Our Corporate Governance Policies are available through the investor relations page of our internet site, www.discover.com, and in print free of charge to any shareholder who requests a copy.

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Corporate Governance

Board Roles and Responsibilities

Board and Committee Meetings

Our Board held 13 meetings during 2021. Each director attended at least 80% of the total number of meetings of the Board and the standing committees on which such director served that were held while the director was a member. Our Board has established the following standing committees: Audit, Compensation and Leadership Development, Nominating, Governance and Public Responsibility, and Risk Oversight. The membership and function of each committee and the number of meetings held by each committee during 2021 is described below.



AUDIT 17 Meetings in 2021 REPORT: Page 54		MEMBERS Dr. Glassman (Chair) Ms. Duncan Mr. Eazor Mr. Rawlinson
Primary Responsibilities
•Oversee the integrity of our consolidated financial statements, our system of internal control over financial reporting, the management of our exposure to risk, and the qualifications and independence of our independent registered public accounting firm. •Oversee the internal audit function, including the performance of our Chief Audit Executive.	•Sole authority and responsibility to select, determine the compensation of, evaluate the performance of, and, when appropriate, replace our independent registered public accounting firm. •Oversee the Company's compliance with legal and regulatory requirements.



COMPENSATION AND LEADERSHIP DEVELOPMENT 7 Meetings in 2021 REPORT: Page 43		MEMBERS Mr. Case (Chair) Mr. Aronin Mr. Thierer
Primary Responsibilities
•Annually review and approve the corporate goals and objectives relevant to the compensation of the CEO and evaluate his performance in light of these goals. •Determine the compensation of our executive officers and other appropriate officers.	•Oversee risk management associated with our compensation practices. •Oversee our incentive and stock-based compensation plans. •Oversee plans for management development and succession.



NOMINATING, GOVERNANCE AND PUBLIC RESPONSIBILITY 6 Meetings in 2021		MEMBERS Ms. Bush (Chair) Ms. Duncan Mr. Thierer
Primary Responsibilities
•Identify and recommend candidates for election to our Board and each Board committee. •Consider matters of corporate governance and make recommendations or take action. •Oversee our policies, programs, strategies and reporting related to environmental, social and governance matters.	•Oversee the annual evaluation of the members of our Board and its committees, and management. •Recommend director compensation and benefits. •Review annually our Corporate Governance Policies.

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Corporate Governance


RISK OVERSIGHT 8 Meetings in 2021		MEMBERS Mr. Moskow (Chair) Ms. Bush Mr. Maheras Ms. Wong
Primary Responsibilities
•Oversee the enterprise-wide risk management framework, make recommendations to the Board on risk management policies and the Company’s risk appetite and tolerance, oversee risk management governance and policies and perform other functions pursuant to the Federal Reserve’s regulations.	•Oversee the performance of our Chief Risk Officer. •Oversee capital planning and liquidity risk management activities.

Our Board has adopted a written charter for each of the Audit, Compensation and Leadership Development, Nominating, Governance and Public Responsibility and Risk Oversight Committees setting forth the roles and responsibilities of each committee. The committee charters are available through the investor relations page of our internet site, www.discover.com.

All members of the Audit, Compensation and Leadership Development, Nominating, Governance and Public Responsibility, and Risk Oversight Committees satisfy the standards of independence applicable to members of such committees. In addition, the Board has determined that all members of the Audit Committee are financially literate and are “audit committee financial experts” as such term is defined in Item 407(d) of Regulation S-K under the Securities and Exchange Act of 1934 (the "Exchange Act") and have accounting or related financial management expertise.

Board Leadership Structure

The Company has had an independent Chairman separate from the CEO role since 2019. Mr. Thomas G. Maheras currently serves as the Independent Chairman since May 4, 2020.

The Company's Bylaws, as well as the Board of Directors Corporate Governance Policies, provide that the office of the Chairman and the office of the Chief Executive Officer may be, but need not be, held by the same person. The Company has a strong independent Board, with all directors except for Mr. Hochschild having been determined to be independent under NYSE listing standards. Further, as previously noted, all standing committees of the Board are composed solely of independent directors. The Board continues to believe that having an Independent Chairman, separate from the Chief Executive Officer role, is the most appropriate leadership structure at this time. Although the Board believes that this best serves the interests of the Company and its shareholders, the Board retains the flexibility to combine the roles in the future. The Board recognizes its responsibility for the establishment and maintenance of the most effective leadership structure for the Company, taking into account all relevant facts and circumstances. Pursuant to the Board of Directors Corporate Governance Policies, the Board has indicated that it will appoint a Lead Director whenever the position of Chairman is not held by an independent director.

The Independent Chairman:

•presides at all meetings of the Board, and has the authority to call, and will lead, non-employee director sessions and independent director sessions;

•approves Board meeting agenda items and the schedule of Board meetings;

•helps facilitate communication between senior management and the independent directors;

•acts as a mentor to the CEO; and

•participates and provides leadership on CEO performance evaluation, succession planning, and compensation decisions.

Non-Employee Director Meetings

In accordance with our Corporate Governance Policies, the non-employee directors meet regularly in executive sessions without management present. Our Corporate Governance Policies also require that if any non-employee directors are not independent, then the independent directors will meet in a separate independent director session at least once per year. Currently, all non-employee directors are independent. The Independent Chairman presides over executive and independent director sessions.

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Corporate Governance

Environmental, Social, and Governance ("ESG")

Our ESG Mission Statement

Discover is committed to helping build a sustainable and equitable world while demonstrating the highest standards of ethical behavior and corporate governance. We intend to do more to reduce our impact on the environment, advance equity and help people achieve a brighter financial future.

Our Board and senior management have adopted mission statements for each of the three ESG pillars:

•Environmental: We are committed to addressing the global challenges presented by climate change by reducing the environmental impact of our physical operations as we design solutions to build a more sustainable and low carbon future.

•Social: We are committed to promoting a diverse, equitable and inclusive workforce that reflects our communities. We are using job opportunities, supplier spend, charitable contributions, products and more to advance equity and effect social change. Through our support of local communities and diverse suppliers, we work to improve economic mobility and promote financial inclusion.

•Governance: We proudly commit to “Doing the Right Thing” for our employees, our customers and our shareholders. Our Board and management governance structures and risk management policies and processes support this commitment and are designed to promote transparency, accountability and ethical behavior in everything we do.

ESG Governance Framework

The Nominating, Governance and Public Responsibility Committee, in coordination with other committees of the Board, oversees our policies, programs, strategies and reporting related to ESG matters. In 2021, we launched an ESG Committee comprised of executives from across the Company. The ESG Committee developed an ESG strategy and roadmap. In the first quarter of 2022, we named a Chief ESG Officer who will lead our ESG program and have responsibility for executing against our ESG goals and objectives.

Board Role in Risk Oversight

The Board is responsible for approving the Company’s enterprise-wide risk management framework, which is described in the Company’s Enterprise Risk Management Policy and certain additional risk management policies. The Board receives reports of material exceptions to such policies. The Board has also delegated certain of its risk oversight responsibilities to its committees and regularly receives reports from the committees on risk management matters. Additionally, the Board approves the risk appetite and limits, and capital targets and thresholds of the Company. It also appoints the Chief Risk Officer, Chief Compliance Officer, Chief Audit Executive and other risk management function leaders, as appropriate. The Board regularly devotes time during its meetings to review and discuss the most significant risks facing the Company, and management’s responses to those risks. During these discussions, the CEO, the Chief Risk Officer, the General Counsel and/or the Chief Financial Officer present management’s assessment of risks, a description of the most significant risks facing the Company, and any mitigating factors and plans or practices in place to address and monitor those risks. Within these discussions, the Board receives updates from senior executives including the Chief Risk Officer and the Chief Information Security Officer on the risks posed to the Company by cybersecurity threats and the Company's information security program, including the results of tabletop simulations performed by management. In addition to these discussions, the Board receives annual information security training. The Board has also received regular updates on the continued impact of the COVID-19 pandemic on the Company, including credit quality, loan growth and sales volumes, personnel and business continuity plans, and legal and regulatory developments in response to the pandemic.

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Corporate Governance


RISK OVERSIGHT COMMITTEE
The Risk Oversight Committee is responsible for overseeing our risk management policies and the operations of the Company’s enterprise-wide risk management framework, and capital planning and liquidity risk management activities. The Risk Oversight Committee is responsible for, among other things: •approving and periodically reviewing our risk management policies; •overseeing the operation of policies and procedures which establish risk management governance, and risk-control infrastructure; •overseeing the operation of processes and systems for implementing and monitoring compliance with such policies and procedures; •reviewing and making recommendations to the Board, as appropriate, regarding the Company’s risk management framework, key risk management policies and the Company’s risk appetite and tolerance; •receiving and reviewing regular reports from our Chief Risk Officer on current and emerging risks, the status of and changes to risk exposures, policies, procedures and practices, and the steps management has taken to monitor and control risk exposures; •reviewing and approving the Company’s information security program, which seeks to mitigate information security risks, including cybersecurity risks; and •receiving reports regarding compliance with risk appetite limits, risk management policies, procedures and controls. The Risk Oversight Committee shares information with (which it may do through the Chair of the Committee) and meets in joint session with the Audit Committee as necessary or desirable to provide the committees with the information necessary to permit them to fulfill their duties and responsibilities with respect to oversight of risk management matters. For example, at least quarterly, the Risk Oversight and Audit Committees meet in joint session and receive updates from the Chief Information Security Officer on the Company’s information security program, including trends and developments regarding information security risks and threats and the results of tabletop simulations performed by management. The Risk Oversight Committee also authorizes the Company’s Risk Committee, which is comprised of the members of the Company’s Executive Committee and the Discover Bank President. The Chief Risk Officer, a member of the Executive Committee, serves as the Risk Committee chair. The Risk Committee provides a forum for key members of our executive management team to review and discuss credit, market, liquidity, operational, legal and compliance and strategic risks across the Company and for each business unit.


AUDIT COMMITTEE
Our Audit Committee assists the Board in the oversight of, among other things, the integrity of our consolidated financial statements, our compliance with legal and regulatory requirements, our system of internal controls and the qualifications and independence of our independent registered public accounting firm. With respect to compliance matters, our Audit Committee approves our Compliance Policy and reinforces the importance of compliance risk management. The Audit Committee assists the Board in its oversight of the Company’s anti-money laundering program. In addition, the Audit Committee receives reporting on the effectiveness of our Compliance Risk Management Program. Our Audit Committee also, taking into consideration the Board’s allocation of the review of risk among various committees of the Board, receives and reviews reports from the Chief Risk Officer, Chief Compliance Officer and other members of management as the Audit Committee deems appropriate. These reports include a review of the guidelines and policies for assessing and managing the Company’s exposure to risks, the corporation’s major financial risk exposures, and the steps management has taken to monitor and control such exposures. The Audit Committee shares information with (which it may do through the Chair of the Committee) and meets in joint session with the Risk Oversight Committee as necessary or desirable to provide the committees with the information necessary to permit them to fulfill their duties and responsibilities with respect to oversight of risk management matters. The Audit Committee provides oversight of the Company’s internal audit function. The Audit Committee reviews and approves the appointment, replacement and compensation of the Chief Audit Executive and the charter, budget and staffing levels of the Company’s internal audit function. The Audit Committee reviews and approves the rolling twelve month audit plan. The Audit Committee also receives periodic reports from the Chief Audit Executive on the status of the annual audit plan, including significant results and the status of corrective actions. In addition, the Audit Committee provides oversight of the Company's compliance with legal and regulatory requirements. The Audit Committee reviews and approves the budget and staffing levels of the Company's Compliance department, its annual testing plan and the Company's Compliance policy.

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Corporate Governance


COMPENSATION AND LEADERSHIP DEVELOPMENT COMMITTEE
The Compensation Committee is responsible for overseeing risk management associated with the Company’s employee compensation practices. It annually reviews the Company’s compensation plans and practices to assess whether employee plans contain features that might encourage excessive risk-taking that could threaten the value of the Company, are reasonably likely to have a material adverse effect on the Company or could result in a failure to comply with regulatory requirements. The Compensation Committee regularly reviews reports from the Company’s Chief Risk Officer, and meets with the Chief Risk Officer and the Risk Oversight and Audit Committees of the Board of Directors to discuss the annual employee incentive compensation risk assessment and to review outcomes of certain risk events and any impact to compensation decisions. Separately, the Compensation Committee meets with the Company’s Chief Risk Officer to monitor the results of the Company’s incentive compensation program payments for certain employees, including our NEOs. The Compensation Committee also oversees the Company’s succession planning process. On an annual basis, management conducts succession planning for all of the Company’s officer level roles, including our NEOs. Management further identifies critical roles beyond the officer level where there are or may be uniquely strong needs for immediate successors, where restructuring of the role is not likely to be a viable succession plan, and where having the role unfilled for a period of time could create regulatory, risk management or business continuity gaps. Annually, our CEO and Chief Human Resources Officer partner to conduct succession planning for our NEOs and other executives. For each of our NEOs, the role is reviewed to determine options for succession and development needed to increase succession readiness. Consideration is given to external hiring where appropriate. Management then reviews NEO succession plans with the Compensation Committee and the Board.

Code of Ethics and Business Conduct

The Company maintains a Code of Ethics and Business Conduct applicable to all directors, officers and employees, including senior financial officers, and provides a statement of Discover's policies for conducting business legally and ethically. The Code of Ethics and Business Conduct is available without charge through the investor relations page of our internet site, www.discover.com, or by writing to the attention of: Investor Relations, Discover Financial Services, 2500 Lake Cook Road, Riverwoods, Illinois 60015. Any waivers of the provisions of this Code of Ethics and Business Conduct for directors or executive officers may be granted only in exceptional circumstances by the Board, or an authorized committee thereof, and will be promptly disclosed to the Company’s shareholders as may be required under the Securities and Exchange Commission ("SEC") or NYSE rules.

Board and Director Evaluations

In order to monitor and improve its effectiveness, and to solicit and act upon feedback they receive, the Board and its committees annually engage in a formal self-evaluation process. The Nominating, Governance and Public Responsibility Committee begins the process each year by reviewing and approving the self-evaluation process to ensure the independence and integrity of the process. In addition, they consider the substantive topics that will be part of the self-evaluation, which may include how directors feel about board operations, regulatory matters, strategic and financial oversight, oversight of risk management, executive compensation, succession planning, and governance matters, among many other topics. For the past several years, the Nominating, Governance and Public Responsibility Committee has assigned the Independent Chairman with the task of interviewing each director in these areas. The Independent Chairman then reports the findings to the Nominating, Governance and Public Responsibility Committee and full Board to facilitate a discussion of the results.

Each standing committee also conducts its own self-evaluation. They evaluate their performance against the requirements of their charters and other aspects of their responsibilities. The full Board and each committee then discuss the results of their respective self-evaluations, frequently in executive session, highlighting actions to be taken in response to the self-evaluation. Finally, the full Board conducts an evaluation of the Independent Chairman to ensure that he continues to satisfy the Board's obligations and expectations of the role.

Board Education

We provide orientation to new directors to help familiarize them with our industry and lines of business as well as our legal, compliance, regulatory, and risk profile. Similarly, we provide directors joining a new committee orientation on the requirements and responsibilities relevant to that particular committee. Discover also periodically offers educational sessions on a variety of topics throughout the year for all members of the Board, including legal and regulatory training as well as annual information security training. These sessions are designed to allow directors to develop a deeper understanding of a business issue, complex financial product or regulatory requirement. Finally, directors are encouraged to attend additional continuing education opportunities offered by third parties.

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Corporate Governance

Shareholder Engagement

We have long valued the feedback and perspectives of our shareholders and are committed to continued engagement with shareholders. As a result, throughout the year our CEO, CFO, other members of senior management, Investor Relations, and Corporate Governance teams continuously engaged with investors and other stakeholders, including key governance contacts at our larger investors. In 2021, we engaged in direct outreach with shareholders representing approximately half of our outstanding shares. These discussions often focused on one or more of the following areas: company strategy and results, the Company's response to the COVID-19 pandemic, environmental, social and governance matters, board composition, and executive compensation. Additionally, our senior executives engaged with stakeholders at numerous investor and industry conferences throughout the year. The Nominating, Governance and Public Responsibility Committee and the Board receive updates several times a year on shareholder communications and investor feedback and use this feedback to identify issues and concerns that may require action or enhancements to our policies, practices or disclosures. In prior years, as a result of shareholder feedback, the Company, among other things, amended its by-laws to provide shareholders with proxy access on widely adopted terms and annually publishes metrics around gender pay equity, enhanced our disclosure regarding the racial and gender composition of our Board, provided the Company's most recent EEO-1 data in its Corporate Responsibility Report and formalized the Nominating, Governance and Public Responsibility Committee's oversight of environmental, social and governance matters. In the first quarter of 2022, the Board adopted a new mandatory retirement age policy, beginning with the Company's 2023 Annual Meeting of Shareholders, to focus on Board refreshment and composition and amended the Nominating, Governance and Public Responsibility Committee's name to highlight its ESG oversight role.

Special Meetings

Based on the nearly unanimous support by shareholders at the 2019 Annual Meeting of Shareholders, the Board implemented the shareholders right to call a special meeting at the 25% threshold. In engagement with our shareholders since then, including meetings with shareholders representing approximately half of our outstanding shares in 2021, neither management nor the Board has received any feedback to indicate that shareholders were dissatisfied with the Board's implementation of the special meeting right as further evidenced by the fact that no stakeholders have come forward to ask the Board to change the threshold. In the course of engaging with our shareholders we have received explicit feedback that the 15% threshold is too low given the facts and circumstances regarding levels of concentration in the Company's shareholder base. Based on shareholder feedback, our peer's practices and the level of concentration of our shareholder base, the Board continues to believe that the 25% threshold strikes the right balance.

Proxy Access

In 2016, following engagement with various stakeholders, the Board approved amendments to the Company's bylaws to permit a shareholder or group of up to 20 shareholders, owning at least 3% of the outstanding shares of common stock of the Company continuously for at least 3 years to nominate and include in the Company’s proxy materials director nominees constituting up to the greater of two individuals or 20% of the Board.

Majority Voting

Shareholders vote for the election of all of our directors on an annual basis using a majority voting standard, and, through our annual vote on executive compensation, to regularly express their opinion on our compensation programs. Our certificate of incorporation does not include any supermajority voting requirements.

Board Attendance at Annual Shareholder Meeting

The Company’s Corporate Governance Policies state that each director, unless he or she is unable to attend a meeting due to extenuating circumstances, will attend annual meetings of shareholders where all of our shareholders are invited to attend, ask questions and express their views. All of our directors last year attended the 2021 virtual Annual Meeting of Shareholders.

Correspondence to Directors

Shareholders and other stakeholders are welcome to contact any member of our Board by writing to: Discover Financial Services, 2500 Lake Cook Road, Riverwoods, Illinois 60015, Attention: Corporate Secretary. The Board’s Policy Regarding Communications by Shareholders and Other Interested Parties with the Board of Directors is available through the investor relations page of our internet site, www.discover.com. Shareholder and interested party communications received in this manner will be handled in accordance with applicable procedures.

To facilitate engagement, correspondence should include the following information: (i) if the person submitting the communication is a shareholder, a statement of the type and amount of the securities of the Company that the person beneficially owns; (ii) if the person submitting the communication is not a shareholder and is submitting the communication to the non-management directors as an interested party, the nature of the person’s interest in the Company; (iii) any special interest, meaning an interest not in the capacity of a shareholder of the Company, of the person in the subject matter of the communication; and (iv) the address, telephone number and e-mail address, if any, of the person submitting the communication.

www.discover.com 22

Corporate Governance

Director Compensation

Director Compensation and Role of the Nominating, Governance and Public Responsibility Committee

Our Directors’ Compensation Plan was approved by our shareholders in 2011, and provides for annual compensation for our non-employee directors. Directors who also are our employees do not receive any compensation under the Directors’ Compensation Plan. The compensation paid to our non-employee directors is delivered to further advance the interests of the Company and its shareholders by encouraging increased share ownership to promote long-term shareholder value. The Nominating, Governance and Public Responsibility Committee maintains guidelines which recommend that directors hold five times the annual cash retainer in Company stock within five years of appointment to the Board. Ten out of our eleven non-employee directors have met and exceeded the Company's stock ownership guidelines for directors. The remaining director was appointed in 2021 and is on track to meet the ownership guidelines within the timeframe specified in the guidelines.

The Nominating, Governance and Public Responsibility Committee is responsible for reviewing the effectiveness of the non-employee director compensation and benefit programs in supporting the Company’s ability to attract, retain, and motivate qualified directors. The Nominating, Governance and Public Responsibility Committee reviews director compensation at least every other year and considers a variety of factors, including our financial performance, general market conditions, director compensation at companies with which we compete for talent, director responsibilities, and trends in director compensation practices. Any recommendations for changes in director compensation are made to our Board. We did not make any changes to our director’s compensation structure or levels during 2021.

In 2021, the Company paid non-employee directors as follows:

Cash Compensation

Each non-employee director receives the following cash compensation under the Directors’ Compensation Plan for service on our Board and each standing committee of our Board:

• An annual retainer fee of $105,000;

• An Independent Chairman annual retainer of $210,000;

• A committee chair retainer fee of: (i) $30,000 each for the chairpersons of the Audit Committee and Risk Oversight Committee; (ii) $25,000 for the chairperson of the Compensation Committee; and (iii) $20,000 for the chairperson of the Nominating, Governance and Public Responsibility Committee; and

• A non-chair committee membership fee of: (i) $20,000 for each member of each of the Audit Committee and Risk Oversight Committee; (ii) $10,000 for each member of the Compensation Committee; and (iii) $5,000 for each member of the Nominating, Governance and Public Responsibility Committee.

Each non-employee director may elect to defer receipt of his or her cash compensation under the Directors’ Voluntary Nonqualified Deferred Compensation Plan until the director terminates service with the Company. A bookkeeping account is maintained for each participant and interest is credited to the deferred amount based on 120% of the quarterly long-term applicable federal rate in effect.

Stock Compensation

Pursuant to the Directors’ Compensation Plan, we may issue awards of up to a total of 1,000,000 shares of our Common Stock to our non-employee directors. Each non-employee director receives an annual grant of $150,000 in restricted stock units ("RSUs") for service on our Board, beginning with the first annual meeting at which the director is elected to our Board. For those directors joining our Board on a date other than the date of an annual meeting, each director receives a grant of $150,000 in RSUs on the date on which the director becomes a member of our Board, adjusted on a pro-rata basis by multiplying such award by a fraction where the numerator is the number of months between such date and the next annual meeting of shareholders and the denominator is twelve.

The number of RSUs granted is determined by dividing the grant date fair value by our share closing price on the date of grant and converting into a whole number of RSUs. The 2021 RSU grants vest on the earlier of the first anniversary of the date of grant or immediately prior to the first annual meeting of shareholders following the date of grant, subject to the director’s continued service through such date. Unless provided otherwise in the RSU agreement, RSUs granted to each non-employee director will become fully vested before the end of the regular restriction period if (i) such director is terminated due to disability or death or (ii) a change in control occurs. Upon vesting, the RSUs are converted into shares of our Common Stock. RSUs include the right to receive dividend equivalents in the same amount and at the same time as dividends paid to all Discover common shareholders. Each non-employee director may elect to defer the receipt of his or her stock compensation until the director terminates service with the Company. A bookkeeping account is maintained for each participant, which reflects the number of RSUs to which the participant is entitled under the terms of the Directors’ Compensation Plan.

23 2022 Proxy Statement

Corporate Governance

Reimbursements

Directors are reimbursed for reasonable expenses incurred in attending Board, committee and shareholder meetings, including reasonable expenses for travel, meals and lodging.

2021 Non-Employee Director Compensation Table

The table below sets forth cash and stock compensation (including deferred compensation) paid to non-employee directors for their Board service for the year ended December 31, 2021.


Director	Fees Earned or Paid in Cash ($)	Stock Awards ($)(1)	Total ($)
Jeffrey S. Aronin	115,000	150,105	265,105
Mary K. Bush	145,000	150,105	295,105
Gregory C. Case(2)	130,000	150,105	280,105
Candace H. Duncan(2)	130,000	150,105	280,105
Joseph F. Eazor(2)	125,000	150,105	275,105
Cynthia A. Glassman	135,000	150,105	285,105
Thomas G. Maheras	335,000	150,105	485,105
Michael H. Moskow	135,000	150,105	285,105
David L. Rawlinson II(3)	114,583	187,688	302,271
Mark A. Thierer(2)	120,000	150,105	270,105
Jennifer L. Wong(2)	125,000	150,105	275,105

(1)Reflects RSUs granted under the Directors’ Compensation Plan described above. Amounts reflect the grant date fair value of the 2021 RSUs, which were granted on May 5, 2021 for all non-employee directors. These amounts reflect the RSUs’ grant date fair value in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Stock Compensation (“FASB ASC Topic 718”) and may not correspond to the actual value that might be realized by the named individuals. Additional details on accounting for stock-based compensation can be found in Note 2: “Summary of Significant Accounting Policies - Stock-based Compensation” and Note 10: “Stock-Based Compensation Plans” of our consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2021. As of December 31, 2021, each non-employee director held the following number of RSUs, including deferred RSUs: Mr. Aronin - 58,598; Ms. Bush - 53,366; Mr. Case - 73,230; Ms. Duncan - 18,214; Mr. Eazor - 1,291; Dr. Glassman - 1,291; Mr. Maheras - 49,982; Mr. Moskow - 46,281; Mr. Rawlinson - 1,685; Mr. Thierer - 17,331; and Ms. Wong - 6,646.

(2)The amounts listed for these individuals in the “Fees Earned or Paid in Cash” column were deferred under the Directors’ Voluntary Nonqualified Deferred Compensation Plan.

(3)Mr. Rawlinson's fees were pro-rated based on his February 22, 2021 appointment date. In addition, since Mr. Rawlinson joined the Board on February 22, 2021 and received a pro-rata grant of $37,584 for the period commencing on the date he joined the Board and ending on the date immediately prior to the 2021 shareholder meeting, his stock award amount includes the grant date fair value of his pro-rated award.

www.discover.com 24

Executive Compensation



			PROPOSAL 2 Advisory Vote to Approve Named Executive Officer Compensation The Board of Directors recommends a vote “FOR” approval of the NEO compensation as disclosed pursuant to Item 402 of SEC Regulation S-K, including in the "Compensation Discussion and Analysis," the compensation tables, and any related information contained in this Proxy Statement. Proxies solicited by the Board will be voted “FOR” this proposal unless otherwise instructed.

What are shareholders being asked to approve?

Pursuant to SEC rules, we must conduct an advisory, non-binding vote on the compensation of our NEOs at least once every three years. At our 2017 annual meeting, we recommended, and our shareholders overwhelmingly supported an annual frequency for this advisory, non-binding vote. As such, the Board has determined that the Company will continue to hold this advisory, non-binding vote on the compensation of our NEOs each year.

Therefore, we are asking you to approve the compensation of our NEOs as disclosed in the “Compensation Discussion and Analysis” (beginning on page 26), the compensation tables (beginning on page 44), and any related material contained in this Proxy Statement. This proposal, commonly known as a “Say-on-Pay” proposal, gives you, as a shareholder, the opportunity to endorse or not endorse our executive pay program and policies through the following resolution:

“Resolved, that the shareholders approve, on an advisory, non-binding basis, the compensation of our NEOs, as disclosed in the ‘Compensation Discussion and Analysis,’ the compensation tables and any related narrative contained in this Proxy Statement.”

What is the Board’s recommendation on voting on this proposal?

The Board unanimously recommends a vote “FOR” approval of the NEO compensation as disclosed pursuant to Item 402 of SEC Regulation S-K, including in the “Compensation Discussion and Analysis,” the compensation tables, and any related information contained in this Proxy Statement. Proxies solicited by the Board will be voted “FOR” this proposal unless otherwise instructed.

As described in detail in the “Compensation Discussion and Analysis” (beginning on page 26), our compensation program for our NEOs is substantially performance-based and designed to attract, retain and motivate our NEOs, who are critical to our success. The compensation our NEOs earned in 2021 reflected Company performance and remained consistent with our balanced compensation structure and commitment to aligning NEO’s interests with those of our shareholders. The Board continues to believe the compensation program for our NEOs is effective in achieving the desired results.

Is the shareholder advisory vote to approve NEO compensation binding on the Company?

No. Under the SEC rules, your vote is advisory and will not be binding upon the Company or the Board. However, the Compensation Committee values the opinions of our shareholders and will review and consider the voting results when considering future executive compensation arrangements.

How many votes are required to approve this proposal?

This advisory vote requires the affirmative vote of a majority of the shares of Common Stock represented at the Annual Meeting and entitled to vote thereon. You may “abstain” from voting on this proposal. Shares voting “abstain” on this proposal will be counted as present at the Annual Meeting for purposes of this proposal and your abstention will have the effect of a vote against this proposal.

25 2022 Proxy Statement

Compensation Discussion and Analysis

Section Table of Contents


COMPENSATION DISCUSSION AND ANALYSIS			26
Executive Summary			26
202 1 NEOs			26
Compensation Principles			27
Performance Highlights			27
Summary of Chief Executive Officer and All Other NEOs' Compensation			28
Overview of Performance			29
Governance Matters			29
2021 Advisory Vote on NEO Compensation			29
Practices and Policies Supporting Strong Corporate Governance and Compensation Programs			30
Compensation Program and Objectives			31
Pay-for-Performance			31
Balanced Compensation Structure			32
Market-Competitive Pay Opportunity			33
Components of Compensation			33
Base Salary			33
Short-Term Incentive Program			34
Long-Term Incentive Program			35
202 1 Decision-Making Process			36



Factors Affecting Compensation Decisions			36
Overall Company and Business Segment Performance			37
Financial Performance			37
Other Performance Factors			37
Risk Performance			38
Individual Performance			39
Role of NEOs in Compensation Decisions

SEC Form DEF 14A filed by Discover Financial Services