COMPENSATION DISCUSSION ANDCOMPENSATION DISCUSSION & ANALYSIS |
Corporate Rating
Benefit | | Type | | Benefit Provided | | Further Information | Pension Plan (broad-based) | | Tax-qualified defined benefit (retirement) | | Participants earned a defined retirement benefit dependent mainly on salary level (up to IRS limits) and tenure. The incomeplan was closed to new hires after August 31, 2007; the benefit was frozen at year-end 2012. Of the 2020 NEOs, only Mr. Jordan participates. | | Pension benefit information for the NEOs, along with other plan information, is provided under Pension Plans beginning on page 103. Any change in pension value for the NEOs is included in column (h) of the Summary Compensation Table on page 94 and efficiency factors each were developedthe related note on page 96. | Pension Restoration Plan | | Nonqualified defined benefit (retirement) | | Provides a restorative benefit to pension plan participants. The two plans work together as if the IRS limits did not exist. | | Restoration benefits and value changes are included with those of the pension plan; see the row above. | Health & Welfare programs (broad-based) | | Cafeteria benefit program | | Associates may elect annually to participate in several programs such as health and dental insurance, vision, dependent care, etc. We provide target-level rewardsan allowance for achieving budget,this purpose based on salary, tenure, and superior rewardscertain wellness incentives, subject to IRS limits. A participant may elect to use any leftover allowance for exceeding budget,the savings plan. | | The amounts of these broad-based benefits for the NEOs are not reported in 2017. The specific goals and drivers, relativeother tables or charts of this proxy statement, except that any savings plan contributions made by the company are reported as part of the match amounts. See the Savings Plan row above. | Survivor Benefit Plan | | Death benefit | | Provides a benefit of 2.5 times base salary if death occurs during active service, which is reduced to budget,1.0 times salary if death occurs following departure due to disability or retirement. This executive benefit substitutes for a broad-based survivor benefit. | | Cost amounts for the NEOs are included in column (i) of the Summary Compensation Table on page 94, with additional information provided in the two tables that follow. table captioned All Other Compensation (Col (i)) for 2020 on page 96 and its explanatory notes. | Executive disability program | | Disability benefit | | The automatic adjustmentsexecutive benefit cap is $25,000 per month. An executive may elect to the financial performance numbers that were usedpurchase, with personal funds, an additional disability benefit of up to $5,000 per month. This executive benefit substitutes for a broad-based survivor benefit. | | Cost amounts for the 2% pre-tax earnings maximum mentioned above also were used for these two factors.CalculationNEOs are included in column (i) of the income factor was set up to be quantitative, without discretionary input from the Committee. For results at or worse than budget, the efficiency factor likewise was set up in a traditional performance grid. For efficiency results better than budget, however, the Committee wanted to retain full discretionary control over the impact of that factor upon the final bonus.
The two factors were weighted 75% and 25%, respectively. The Committee wanted efficiency outcomes to have a specific and meaningful impactSummary Compensation Table on bonuses, while continuing to emphasize the critical and overall importance of earnings to the company and our shareholders. Specific drivers of the income factor and the efficiency factor are presentedpage 94, with additional information provided in the next two grid tables.
table captioned 2017 Income FactorAll Other Compensation (Col (i)) for 2020 Grid (75% Wtg) on page 96 and its explanatory notes. |
Adj’d 2017 Pre- Tax Earnings | Percent of Budget | Income Factor* | $444 million & above | 110% & above | 110% to max of 150% | $404-444 million | 100% - 110% | 100% - 110% | $404 million (budget) | 100% | 100% | $364-404 million | 90% - 100% | 90% - 100% | $303-363 million | 75% - 90% | 75% - 90% | $202-362 million | 50% - 75% | 50% - 75% | Below $202 million | below 50% | 0% |
* Income Factor was interpolated within each row.
2017 Efficiency Factor Grid (25% Wtg)Adj’d 2017 Non- Interest Expense (ex Fixed Income) | Percent of Budget | Efficiency Factor* | Below $700 million | Below 100%* | max of 150%* | $700 million (budget) | 100% | 100% | $700-714 million | 100% - 102% | 90% - 100% | $714-728 million | 102% - 104% | 75% - 90% | Above $728 million | Above 104% | 0% |
* | Efficiency Factor was interpolated within each row. If performance had been better than budget, the Committee would have determined the Efficiency Factor using discretion. | 2021 PROXY STATEMENT | 90 |
COMPENSATION DISCUSSION AND ANALYSIS |
Subjective Corporate Rating Adjustments
In 2017 the sum of the income and efficiency factors was subject to several potential subjective adjustments, leading ultimately to the final corporate rating. Overall, the subjective adjustments could have resulted in a change of up to 25%, plus or minus. Potential adjustment categories in 2017 were:
• | Balanced scorecard results | | | • | Risk management results | | | • | Quality of earnings assessment | | | • | Contributions to non-strategic results | | | • | Other adjustments, as determined by the CommitteeCOMPENSATION DISCUSSION & ANALYSIS |
The balanced scorecard process ranked
Benefit | | Type | | Benefit Provided | | Further Information | | | | | | | | Other | | Misc. | | We provide items customary in our company among Peer Banks on eighteenindustry, including financial measures. The scorecard process used quantitative financial measurescounseling, an executive charitable gift match program, executive home security, limited usage of corporate aircraft, and peer rankings, but was not used in a quantitative manner to determine a specific numerical rating. Instead, the Committee considered the scorecard results in a subjective manner.The risk management factor was intended to be used if unusual or exceptional events occurred that tested our level of preparedness, or if events occurred that reflected well or poorly upon our risk management functions.
Under “quality of earnings” the Committee intended, among other things, to take account of unusual shortfalls or windfalls in revenues associated with interest rate movements during the year relative to budgetary expectations.
Our non-strategic segment encompasses several businesses which have been largely discontinued and are being wound down over many years. This segment often has contributed significant expenses to our operating results, and occasionally significant items of income, during the past several years. Although the income and efficiency factors
exclude these impacts, the Committee retained the ability to adjust bonuses up or down depending upon the Committee’s subjective assessment of how these legacy businesses are managed to mitigate long-term impacts on the company.
All points in this process were subject to further adjustment up or down by the Committee.
Actual corporate adjustments made using this framework are discussed under “2017 MIP Bonus Outcomes” below.
Individual Rating
In addition to the corporate rating, each NEO’s individual rating could directly impact final bonus results. Each individual rating was to be based on the Committee’s subjective assessment of personal plan results and any other individual factors the Committee chose to consider. Individual ratings could range from 0% to 150%.
In 2017, the CEO’s personal plan included six major performance areas: strategic, financial (structural improvements and revenue growth), customer, shareholder value, employees, and risk management & credit quality. These areas had no particular weighting and were not applied in a quantitative manner except that risk management could affect up to 20 percentage points of the MIP individual rating. Each NEO’s personal plan substantially overlapped the CEO’s and also was related to operations managed by that NEO.
Actual individual rating impacts are discussed under “2017 MIP Bonus Outcomes” immediately below.
2017 MIP Bonus Outcomes
The outcomes of the MIP bonus processexecutive wellness.
| | Cost amounts for the NEOs other than Mr. Kisber are summarizedincluded in column (i) of the Summary Compensation Table on page 94, with additional information provided in the following table.
2017 MIP Bonus Outcomes
NEO | | | Income Factor | | Efficiency Factor | | Overall Impact of Adjustments | | Corporate Rating | | Individual Rating | | Bonus Target ($) | | Final Bonus ($) | Mr. Jordan | | | 75 | % | | | 25 | % | | | 0 | % | | | 100 | % | | | 100 | % | | | 1,225,000 | | | | 1,225,000 | | Mr. Losch | | | 75 | % | | | 25 | % | | | 0 | % | | | 100 | % | | | 111 | % | | | 475,000 | | | | 525,000 | | Mr. Popwell | | | 75 | % | | | 25 | % | | | 0 | % | | | 100 | % | | | 115 | % | | | 500,000 | | | | 575,000 | | Mr. Tuggle | | | 75 | % | | | 25 | % | | | 0 | % | | | 100 | % | | | 100 | % | | | 427,500 | | | | 427,500 | |
Pre-tax earningstable captioned All Other Compensation (Col (i)) for 2017, after all required adjustments were made, totaled about $391 million. The most significant required adjustment excluded certain expenses for the Capital Bank merger. Adjusted pre-tax earnings resulted in an overall maximum bonus per person
of $4 million (the plan maximum). Much smaller specific positive2020 on page 96 and negative additional quantitative adjustments were made, the two largest of which were to exclude certain charitable contributions motivated in part by tax reform and certain life insurance gains. The net effect wasits explanatory notes.
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Change in Control (CIC) Benefits The financial services industry experiences periods of significant consolidation separated by periods of modest activity. Merger activity abated substantially following the last recession, but (excluding the four largest U.S. banks) resumed several years ago. Although this industry pattern has created substantial business opportunities for us and others, it also has created substantial personal uncertainties for associates. Our CIC severance agreements and CIC plan features were put in place a number of years ago in response to these uncertainties. We have CIC severance agreements with Messrs. Jordan and Losch. These are not employment agreements. They provide significant benefits if employment is terminated in connection with a CIC event, but otherwise provide no employment protection. Additional information about these contracts is provided under the caption CIC Severance Agreements beginning on page 107 of this proxy statement. The primary objective of our CIC severance agreements is to allow us to compete for executive talent during normal times, mitigating the personal risk that a CIC would present. If a CIC situation arises, the agreements also provide an incentive for our executive team to remain with the company, focused on corporate objectives, during the pursuit, closing, and transition periods that accompany CIC transactions in our industry. The merger of equals was a CIC transaction under our executive CIC severance agreements, as well as under legacy IBERIA’s similar agreements. Mr. Jordan and Mr. Losch signed letter agreements with us waiving their right to treat the IBERIA transaction and related events as a benefit trigger under their CIC severance agreements. Each of the NEOs from legacy IBERIA also signed letter agreements confirming the benefits under their legacy agreements with IBERIA. Additional information about the letter agreements is provided under the captions Compensation-Related Changes Driven by the MOE and Agreements related to IBERIA Merger beginning on pages 73 and 108. In 2021, our Board of Directors adopted a new Executive Change in Control Severance Plan (the “CIC Plan”). We have stopped offering new individual CIC severance agreements, and have begun offering participation in the CIC Plan instead, to selected executives. Each legacy CIC severance agreement will remain in place unless the executive is invited to participate in the CIC Plan and agrees to switch. Several legacy First Horizon CIC agreements remain in place, but fewer now than before the merger of equals. As a result, we expect to have fewer CIC program participants overall than the two legacy companies had collectively, and we expect the CIC Plan to supplant the agreements by attrition. The CIC Plan offers benefits similar to the individual agreements described above, and is used for the same purposes: to allow us to compete for executive talent during normal times, and to provide an incentive for our executive team to remain with the company, focused on corporate objectives, during the pursuit, closing, and transition periods that accompany CIC transactions. Messrs. Brown and Restel became participants in the CIC Plan in 2021. Additional information about the CIC Plan is provided under the caption CIC Severance Plan beginning on page 107 of this proxy statement. Under many of our programs a CIC event can cause awards or benefits to vest, be paid, or be calculated and paid at target payout levels. The main objective of these features is to allow us to offer competitive compensation packages in an industry where robust periods of consolidation occur. Like our CIC severance agreements, these program features have a double trigger, which means that vesting or payment is accelerated only when a CIC event occurs resulting in termination of employment.
| 2021 PROXY STATEMENT | 91 |
COMPENSATION DISCUSSION AND ANALYSIS |
increase pre-tax earnings to $401 million, which was slightly below budget and resulted in an income factor that rounded to 75%. Non-interest expense, excluding our fixed income segment and after all required adjustments, totaled $699 million in 2017. That was slightly better than budget and resulted in an efficiency factor that rounded to 25%
COMPENSATION DISCUSSION & ANALYSIS |
Other Practices Stock Ownership Guidelines Under our stock ownership guidelines, all NEOs and directors are required to retain 50% of the net after-tax shares received from stock awards. The retention level increases to 75% if the person fails to meet certain minimum stock ownership levels. For each person, the retention requirement applies during the rest of their career with us, although executives who reach age 55 are permitted to sell shares held at least three years to diversify ahead of retirement. Supportive of the guidelines, a separate policy prohibits hedging our stock. The CEO’s minimum ownership level under the guidelines is six times cash salary, as is the Executive Chairman’s minimum. The minimum levels for the other named executives are two or three times their respective cash salaries, depending upon position. For this purpose, shares owned outright, restricted stock, RSUs paid in shares, and shares held in tax-deferred plans are counted, while PSUs, stock options, and RSUs paid in cash are not counted. We intend for the combined emphasis on corporate performance in setting executive compensation and meaningful stock retention to strongly link the interests of our executives with those of our shareholders. Guideline ownership levels are assessed annually, in the third quarter. In the 2020 assessment, all NEOs exceeded guideline ownership levels and all complied with the retention requirement.
Clawback Policy & Practices Performance compensation under the MIP, ECP, any successor plan, or otherwise that is paid based on erroneous financial data is recoverable under our Compensation Recovery Policy if the recipient caused the error or is responsible for the data’s accuracy. Additional clawback provisions apply to most types of stock awards if certain misconduct occurs, such as fraud or solicitation; grant or payment of an award is based on erroneous financial data; or if employment is terminated for cause. The look-back period for recovery generally is two years after vesting.
Use of Compensation Consultants Before the merger of equals closed, the Committee continued its engagement of an independent consulting firm, Frederic W. Cook & Co., Inc. (“FW Cook”), to provide analysis and advice on all executive compensation-related matters (including assessment of peer groups, competitive market data, pay mix, and compensation design). Among other things, FW Cook assisted the Committee in its reviews of compensation program actions recommended by management early in 2020. After the merger of equals closed, the newly constituted Committee engaged Meridian Compensation Partners, LLC (“Meridian”), to provide analysis and advice on all executive and director compensation-related matters, including peer group development, market benchmarking, trends and best practices, and incentive program design. Among other things, Meridian assisted the Committee in its reviews of compensation program actions recommended by management in July 2020 and in early 2021. Key engagement items for one or both of the two consultant firms, depending on timing, were: The
· | Review and discuss written Committee determined that no subjective adjustmentsmaterials in preparation for meetings | | | · | Confer with the Committee chair and management regarding compensation matters, both ordinary and in relation to the corporate rating be made in 2017. Although many aspectsmerger of our operating results were outstanding, short-term impacts were significant to our bottom line results. On balance, since the most impactful events of 2017 are expected to have long-term, rather than short-term, benefits,equals transaction | | | · | Regularly meet with the Committee decided to refrain from any subjective adjustments to the corporate rating for this year. Accordingly, the final corporate rating was 100% (75% plus 25%).Although(Meridian)
| | | · | Provide observations on current external trends and developments | | | · | Advise the Committee believes our CEO has done an outstanding job, it determined to make no individual adjustment to Mr. Jordan’s 2017 bonus. In significant part, this inaction reflects a difficulty of having a single-year bonus structure when the most important event of 2017, the Capital Bank merger, will take several years to prove itself.For bonuses paid to Messrs. Losch and Popwell, the Committee made positive individual adjustments of about 11% and 15%, respectively. The Committee determined that both NEOs performed exceptionally well in 2017 overall, especially in connection with the Capital Bank integration planning and, for Mr. Popwell, our bank’s excellent performance before considering the merger.
MIP Bonus for FTN Executive
Mr. Kisber is the president of our fixed income business unit (FTN Financial). His bonus for 2017 was earnedregarding executive programs under the MIP, but was driven by the overall incentive pool created under the FTN Financial Incentive Compensation Plan to provide a compensation opportunity consistent with that of competitors in that industry. The incentive pool generally is funded as a specified percentage of divisional net profits, as defined, plus an additional percentage if net profits exceed a specified return on expense.
The structure of Mr. Kisber’s pay package has not changed in many years. His compensation
elements for any given year are paid or grantedduringthat yearECP and the next.
For 2017, Mr. Kisber’s package generally was 15% of the incentive pool, subject to possible reduction approved by the Committee, and subject to a $6 million overall cap on on the package. Early in 2018, the fixed income pool for 2017 was to be determined and the Committee was to determine Mr. Kisber’s final percentage and dollar amount. That final dollar amount was to be allocated and paid, until the final amount was exhausted, in the following order:
• | Salary, paid during 2017: the first $0.6 million | •
| Cash MIP, bonus, to be paid in 2018: the next $2.5 million | • | Regular annual stock awards, to be granted in 2018: the next $1.9 million | • | Special MIP-driven RSUs (18-month vesting period, settled in cash), to be granted in 2018: the last $1.0 million. |
The first $0.5 million of regular stock awards were to be granted as RSUs, and any remainder (up to $1.4 million) were to be granted 60% in PSUs and 40% in stock options. The Committee retained the discretion under the MIP to reduce any calculated bonus amount for Mr. Kisber, but made no reduction for 2017.successor plan
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Mr. Kisber’s 2016 package resulted in the grant to him of several stock awards early in 2017. Those grants, for 2016, appear as grants madeduring 2017 in various tables under “Recent Compensation” beginning on page 66.
In the chart which follows, Mr. Kisber’s potential compensation package for each of the years 2014 through 2017 (far left column) is compared to his actual compensation earned for each of those years, without regard to which year payment or grant occurred. The total value earned has varied over these years, reflecting significant variability in the earnings of our fixed income segment. All dollar values of awards are measured at grant using values assigned by the Committee, as discussed in the “Stock Awards” section beginning on page 59. PSU values granted are shown at 100% of target; actual vesting of PSUs will depends upon company performance relative to applicable PSU performance goals.
| 2021 PROXY STATEMENT | 92 |
COMPENSATION DISCUSSION AND ANALYSIS |
Mr. Kisber Potential vs Actual Pay Package 2014-2017
($ in thousands)
Our fixed income segment’s contribution to our pretax earnings in 2017, after deducting all compensation, was $24 million. Mr. Kisber’s earned package for 2017 was $2,999,000. Net of salary, his calculated package would have resulted in a cash bonus of $2,399,000 and no stock awards. Although Mr. Kisber’s cash bonus is paid | | under our executive MIP, it is funded from our fixed income managers’ bonus pool. In order to increase funds available for manager bonuses from that pool, Mr. Kisber asked the Committee to reduce his 2017 bonus by $300,000. The Committee agreed, and his final bonus for 2017 was $2,099,000, as shown in the chart. | | | | Stock Awards | | | | | | Overview | | | | | | In 2017, the CEO’s annual stock award mix was one-half PSUs, with RSUs and options comprising one-quarter each. For other NEOs except Mr. Kisber, the more heavily weighted component consisted of RSUs. The Committee believes that these mixes provide appropriate incentives to our NEOs to focus on performance goals and to remain with our company. | | The dollar amounts and mix of awards granted in 2017 to the NEOs are illustrated in the following table. Dollar amounts are shown using values assigned by the Committee. PSU values are shown at target levels. Further information about each award type is provided in the remainder of this discussion. |
COMPENSATION DISCUSSION ANDCOMPENSATION DISCUSSION & ANALYSIS |
2017 Annual Stock Award Grant Mix
($ in thousands)
* | Mr. Kisber’s “potential” column illustrates the maximum potential for annual stock award grants in early 2018 based on 2017 performance, excluding the potential for a special type of RSUs which are treated as part of his MIP bonus. Mr. Kisber’s “actual” column shows the awards he actually received early in 2017, which were based on 2016 performance. See “MIP Bonus—MIP Bonus for FTN Executive” above, and “Stock Awards—Fixed Income Award Practices” and “2017 Grants of Plan-Based Awards” below, for additional information. |
Restricted Stock Units· | Advise the Committee regarding current peer and market practices related to annual incentive, long-term incentive, and change in control plans and programs (Meridian) | | | · | Assist the Committee in preparing for shareholder outreach and engagement |
The Committee determined that both FW Cook and Meridian are independent and have no other relationships with the Company or management. Additional information concerning our use of compensation consultants appears under the caption The Compensation Committee—Use of Consultants beginning on page 31.
Role of Management in Compensation Decisions Management administers our compensation plans, monitors compensation programs used by other companies, and considers whether new or amended compensation programs are needed to maintain the competitiveness of our executive compensation packages. Management provides information and presents recommendations to the Committee for approval. The CEO provides recommendations to the Committee related to executives reporting to him. No member of management, including the CEO, is a participant in the meeting(s) where his/her pay is discussed. The Committee regularly meets in executive session without management.
Tax Deductibility In 2017 and earlier years, section 162(m) of the U.S. Internal Revenue Code generally disallowed a tax deduction to public companies for compensation exceeding $1 million paid during the year to the CEO and the three other highest-paid executive officers at year-end (excluding the Chief Financial Officer). Certain performance-based compensation was not, however, subject to the deduction limit. The Committee considered these tax implications in making compensation decisions. Although deductibility was an important consideration, competitive and other factors also were important. As a result, although a substantial majority of NEO compensation was designed to be “performance-based” each year, a portion was not. That portion varied from year to year. In 2017 Congress repealed the performance-based exception, applicable starting with 2018’s awards. As a result, section 162(m) has not played a significant role in structuring executive compensation awards since 2017. Transition provisions apply to qualifying awards that were outstanding when repeal occurred. Deductibility generally is preserved if those awards run their course as granted. When dealing with outstanding awards, the Committee considers preservation of deductibility as one factor, among many, consistent with the objectives of the program in question and our business needs.
Compensation Committee Report The Compensation Committee Report is located on page 33 of this proxy statement under the caption The Compensation Committee. | 2021 PROXY STATEMENT | 93 |
Recent Compensation This Recent Compensation section provides detailed information about the compensation paid to our NEOs in 2020. This section should be read in conjunction with the immediately preceding Compensation Discussion & Analysis section. Summary Compensation & Award Grant Tables Summary Compensation Table The amounts shown in the Summary Compensation Table include all compensation earned by our NEOs for 2020, including amounts deferred by those persons, for all services rendered in all capacities to us and our subsidiaries. Compensation amounts from the past two years are also included. Additional compensation information is provided in the remainder of this section. No NEO who served as a director was separately compensated as a director.
Summary Compensation Table (a) | | (b) | | (c) | | (d) | | (e) | | (f) | | (g) | | (h) | | (i) | | (j) | | Name and Principal Position | | Year | | Salary** ($) | �� | Bonus ($) | | Stock Awards*** ($) | | Option Awards ($) | | Non-Equity Incentive Plan Compen- sation ($) | | Change in Pension Value & NonQualified Deferred Compensation Earnings ($) | | All Other Compen- sation ($) | | Total ($) | | D.B. Jordan | | 2020 | | | 1,037,538 | | | | — | | | | 2,000,000 | | | | 292,327 | | | | 1,236,000 | | | | 893,748 | | | | 120,575 | | | | 5,580,188 | | President & CEO | | 2019 | | | 900,000 | | | | — | | | | 1,800,000 | | | | 314,360 | | | | 1,500,000 | | | | 921,334 | | | | 115,350 | | | | 5,551,044 | | | | 2018 | | | 896,827 | | | | — | | | | 1,687,490 | | | | 468,249 | | | | 1,171,800 | | | | — | | | | 120,931 | | | | 4,345,297 | | W.C. Losch III | | 2020 | | | 626,538 | | | | — | | | | 577,500 | | | | 112,544 | | | | 540,000 | | | | — | | | | 57,093 | | | | 1,913,675 | | SEVP & Chief | | 2019 | | | 500,000 | | | | — | | | | 1,721,059 | | | | 122,252 | | | | 575,000 | | | | — | | | | 70,461 | | | | 2,988,772 | | Financial Officer | | 2018 | | | 496,827 | | | | — | | | | 524,983 | | | | 145,677 | | | | 450,000 | | | | — | | | | 70,408 | | | | 1,687,894 | | D.G. Byrd * Executive Chairman of the Board | | 2020 | | | 552,885 | | | | — | | | | — | | | | — | | | | 1,140,000 | | | | — | | | | 23,148,573 | | | | 24,841,458 | | M.J. Brown * President—Banking | | 2020 | | | 337,535 | | | | — | | | | — | | | | — | | | | 560,000 | | | | — | | | | 10,668,026 | | | | 11,565,561 | | A.J. Restel * SEVP & Chief Operating Officer | | 2020 | | | 326,000 | | | | — | | | | — | | | | — | | | | 540,000 | | | | — | | | | 8,770,954 | | | | 9,636,954 | |
Regular RSUs
* | | Messrs. Byrd, Brown, and Restel joined First Horizon on July 1, 2020, when First Horizon’s merger with IBERIA was completed. Compensation granted or paid by IBERIA before the merger closing is not included in this table. Specifically: salary is shown since July 1; no stock awards were granted by First Horizon to NEOsthese executives in 2020 after the merger closed; but non-equity incentive compensation (plan-based cash bonus) is included for the entire year, since First Horizon paid bonus for both halves of the year after the merger closed. All Other Compensation generally includes only amounts paid after closing; included in that total are change in control benefits under agreements with IBERIA that were vested and deferred after the merger closed. | ** | | For Messrs. Jordan and Losch, 2020 included 27 pay periods rather than the usual 26, inflating total salary paid by about 4% for the full year. | *** | | Mr. Losch received a special award of restricted stock in 2019 shortly after the IBERIA merger agreement was announced. That restricted stock award will vest in March three years after granton July 1, 2021, and would have forfeited if the NEO remains employed with the company through the vesting date. Theymerger had failed to close. The NEOs who were executives of IBERIA pre-merger received similar awards granted by IBERIA. These awards are settled in shares. Dividends accrue during the vesting period and are paid in cash at vesting.Stock Options
NEO stock optionabbreviated as “IB RS” awards in 2017 vest in equal installments in Marchthis proxy statement.
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| 2021 PROXY STATEMENT | 94 |
Explanations of certain columns follow: Col (c) Salary. Annual cash salary is shown. Col (d) Bonus. Column (g) shows the annual bonus awards for each year under our shareholder-approved bonus plan, to the extent earned. Column (d) reports discretionary off-plan bonuses, if any. No NEO received a Col (d) bonus for any of the years shown. Cols (e)-(f) Accounting Values. Columns (e) and (f) show the grant date fair value of the awards using the accounting method applicable to our financial statements. The accounting valuation method makes assumptions about growth and volatility of our stock value, expected duration in the case of options, vesting, forfeiture, future company performance, and other matters. A discussion of those assumptions appears in note 19 to the financial statements in our 2020 annual report on Form 10-K. Actual future events may be substantially inconsistent with the assumptions. Accordingly, the actual values realized by an award holder are likely to differ substantially from these accounting values. Col (e) Stock Awards. Column (e) includes the accounting values of RSU, PSU, and IB RS awards granted during each year. These do not represent amounts paid or earned; they are the values attributed to awards under applicable accounting rules. As noted under the table, the IB RS awards were granted as part of the IBERIA merger transaction. For additional information, see First Horizon, Re-Defined beginning on page 70. Col (e) Regular PSUs. PSUs are performance based, using a three-year performance period. Eventual payout may be higher or lower than the accounting values used in column (e) and may be zero. PSUs also have a service-vesting requirement and a mandatory two year deferral period after vesting. Generally, PSU performance depends upon our adjusted core-segment ROE ranking relative to certain peer banks during the performance period. The 2020 PSUs also have a total shareholder return (TSR) modifier, also measured against peers. Each year, a percentage of PSUs (37.5% to 187.5%) will vest if threshold or higher performance goals are achieved during the performance period and if the holder remains employed with the company through the vesting date. PSUs settle with shares rather than cash. In column (e) PSU amounts are shown at their original accounting values assigned at grant. Those accounting values are less than the possible payouts if all performance conditions are maximally achieved. The following table provides a summary of the maximum payouts of the PSU awards for each NEO, based on our stock values on the respective grant dates. For the CEO, the weighting of PSUs in 2019 increased from 50% of total equity awards to 60%, with RSUs falling from 25% to 20%. For Mr. Losch, the weighting of PSUs in all three years was 50% of total equity awards, and the weighting of RSUs was 25%. Maximum Dollar Values* of PSUs (Based on Share Price at Grant Date) | | | | | | | | | | | | Name | | 2018 | | | 2019 | | | 2020 | | Mr. Jordan | | $ | 1,687,495 | | | $ | 2,754,805 | | | $ | 3,129,359 | | Mr. Losch | | | 524,991 | | | | 714,197 | | | | 803,179 | | Mr. Byrd | | | — | | | | — | | | | — | | Mr. Brown | | | — | | | | — | | | | — | | Mr. Restel | | | — | | | | — | | | | — | |
* | Maximum dollar values for 2018 PSUs = 150% of target unit levels, using grant date fair value. Maximum dollar value of 2019 & 2020 PSUs = 187.5% of target unit levels. Actual maximum values will depend upon our actual stock price when paid. |
Col (e) Regular RSUs. The annual equity award package includes RSUs which vest in three years and settle in shares. Col (e)-(f) Retention Awards. On occasion special retention awards are made to selected individuals. No ordinary retention awards were granted by First Horizon to the NEOs in 2018-20. Mr. Losch received an IB RS award in 2019, as explained above. Col (f) Stock Options. Column (f) includes the accounting values of stock options granted. Col (g) Annual Plan-based Cash Bonus Awards. This column shows the annual plan-based bonus earned for each year. For 2018 and 2019, bonuses were based upon achievement in the following areas: pre-set levels of adjusted annual pre-tax earnings; execution of personal plan goals; individual contribution to risk management, quality of earnings, and objectives for our non-strategic business segment; and the results of a balanced scorecard process ranking us among selected peer banks on a matrix of balance sheet, capital, expense, earnings, and other measures. For the second half of 2020, bonuses were based on similar criteria, using pre-provision net revenue instead of pre-tax earnings. For the first half of 2020, bonuses were set up in a manner similar to earlier years, but the COVID pandemic, and management’s responses to it, made the budget-driven grids useless as tools to measure management achievement. Also, in 2021 RSUs were granted to the NEOs in lieu of a portion of 2020 plan-based bonuses; Col. (g) reports only the
| 2021 PROXY STATEMENT | 95 |
cash paid. See Annual Cash Incentive beginning on page 81 for details related to 2020. Col (h) Pension & Deferred Compensation. Column (h) includes changes in defined benefit pension actuarial values, which are the aggregate increase during the year in actuarial value of both pension plans (qualified and restoration). Our pension plans were closed to new associates in 2007; among the NEOs, only Mr. Jordan participates. Pension benefits were frozen in 2012. Incremental changes in actuarial pension values occur after 2012 mainly due to changes in discount rates used, mortality tables, and life expectancy due to the passage of time. No above-market earnings on deferred compensation were accrued during the year for any of the named executives. Col (i) All Other. Elements of “All Other Compensation” for 2020 consist of the following: All Other Compensation (Col (i)) for 2020 | | (i)(a) | | (i)(b) | | (i)(c) | | (i)(d) | | (i)(e) | Name | | Perqs. & Other Personal Bens. $ | | 401(k) & Savings Res. Match $ | | Life Insur. Prems. $ | | Tax Reimb. $ | | Cash CIC & Integration $ | Mr. Jordan | | | 49,531 | | | | 62,252 | | | | 8,792 | | | | — | | | | — | | Mr. Losch | | | 11,976 | | | | 37,592 | | | | 7,525 | | | | — | | | | — | | Mr. Byrd | | | 22,164 | | | | 17,100 | | | | 180 | | | | 7,379,867 | | | | 15,729,262 | | Mr. Brown | | | 9,274 | | | | 11,412 | | | | 122 | | | | 3,549,892 | | | | 7,097,327 | | Mr. Restel | | | 5,336 | | | | 5,838 | | | | 108 | | | | 2,993,654 | | | | 5,766,018 | |
Explanations of certain columns in the Col (i) table follow: Col (i)(a) “Perquisites and Other Personal Benefits” includes the following types of benefits: Flexible Dollars, Financial Counseling, Disability Insurance, Charitable Match, Aircraft Usage, Club, Auto, and Security. Benefits are valued at the incremental cost to us. “Flexible Dollars” represents our contribution to our broad-based benefits plan, a qualified cafeteria-type benefit plan. “Financial Counseling” represents payments for the preparation of income tax returns and related financial counseling. “Disability Insurance” represents insurance premiums with respect to our disability program. “Charitable Match” includes gifts made by First Horizon Foundation to match qualifying gifts made by an executive under our executive gift match program. “Aircraft Usage” represents imputed income to the executives when spouses accompany them on business trips using non-commercial aircraft, or direct incremental cost to us when the executive uses such aircraft for non-business trips. We estimate direct incremental cost of aircraft usage based on average operating cost (which includes direct costs such as fuel, maintenance, and landing fees) per flight hour or, in the case of chartered aircraft, based on the cost of the charter. This column also includes imputed taxable income from our company-wide wellness program, and (for Mr. Jordan) the cost of participating in the Mayo Clinic Executive Health Program. The Board of Directors requires Mr. Jordan to participate in the Mayo program. The remaining types of benefits apply only to the NEOs who joined us in July from IBERIA, and reflect continuations of IBERIA’s practices. “Club” includes dues and other expenses associated with social or recreational club membership. “Auto” represents an automobile allowance. “Security” includes security alarm expenses. These benefits were provided by IBERIA through closing, and were continued by First Horizon only for a transition period following the merger, except for Mr. Byrd, who is entitled to receive them for a longer period in accordance with our agreement with him. See Daryl Byrd Letter Agreements beginning on page 108 for additional information. Col (i)(b) “401(k) Match” represents our matching contribution to our 401(k) savings plan and to the related savings restoration plan. Any flexible benefits plan contributions to the savings plan are included in column (i)(b). Col(i)(c) “Life Insurance Premiums” represents supplemental life insurance premiums. Under our survivor benefits plan a benefit of 2.5 times annual base salary is paid upon the participant’s death prior to retirement, or one times final salary upon death after retirement. Col (i)(d) “Tax Reimb.” represents income and other taxes levied on former IBERIA NEOs which we reimbursed. Reimbursed taxes primarily related to change in control benefits associated with legacy IBERIA’s contracts with each executive, which benefits primarily included a cash benefit (see col. (i)(e)) and acceleration of stock awards. Reimbursement also included taxes on certain perquisites, which was a legacy IBERIA practice continued by First Horizon for a transition period following the merger, except for Mr. Byrd, who is entitled to receive this benefit for a longer period in accordance with our agreement with him. See Daryl Byrd Letter Agreements beginning on page 108 for additional information. Col (i)(e) “Cash CIC and Integration” represents a cash benefit which was contractually promised to these executives by IBERIA before the merger, and which was triggered by the closing of the merger, because the merger created a “change in control” event for purposes of the benefit. In each case, the benefit fully vested at closing, but payment has been deferred.
| 2021 PROXY STATEMENT | 96 |
2020 Grants of Plan-Based Awards The following table provides information about the bonus opportunity established for, and the grants of PSUs, stock options, and RSUs during, 2020. In this table each plan-based bonus opportunity is considered a “Non-Equity Incentive Plan Award,” PSUs are considered to be “Equity Incentive Plan Awards,” while RSUs and restricted stock awards are considered to be “All Other Stock Awards.” In the table each row represents a separate award grant; a column for a row is blank if it does not apply to the type of award listed in that row or if the dollar amount is zero. Uniquely for 2020, the annual plan-based bonus opportunity was split into two half-year awards, designated PB-1 and PB-2 in the table. We expect the 2021 plan-based bonuses to return to the more typical full-year award practice.
Awards Granted in 2020 (a) | | | | (b) | | (c) | | | (d) | | | (e) | | | (f) | | | (g) | | | (h) | | | (i) | | | (j) | | | (k) | | | (l) | | | | | | | | Estimated Possible Payouts under Non-Equity Incentive Plan Awards** | | Estimated Future Payouts under Equity Incentive Plan Awards | | All Other Stock Awards: Number of Shares of Stock | | All Other Option Awards: Number of Securities Underlying | | Exercise Price of Option | | Grant Date Fair Value of Stock and Option | Name | | Award* | | Grant Date | | Threshold ($) | | Target ($) | | Maximum ($) | | Threshold (#) | | Target (#) | | Maximum (#) | | or Units (#) | | Options (#) | | Awards ($/sh) | | Awards ($) | Mr. Jordan | | PB-1 | | 2-19 | | | 350,000 | | | | 700,000 | | | | 1,050,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | NA | | | | PB-2 | | 7-27 | | | 386,250 | | | | 772,500 | | | | 1,158,750 | | | | | | | | | | | | | | | | | | | | | | | | | | | | NA | | | | Opt | | 2-19 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 125,786 | | | | 15.90 | | | | 292,327 | | | | PSU | | 2-19 | | | | | | | | | | | | | | | 39,363 | | | | 104,968 | | | | 196,815 | | | | | | | | | | | | | | | | 1,499,993 | | | | RSU | | 2-19 | | | | | | | | | | | | | | | | | | | | | | | | | | | 31,446 | | | | | | | | | | | | 499,991 | | Mr. Losch | | PB-1 | | 2-19 | | | 137,500 | | | | 275,000 | | | | 412,500 | | | | | | | | | | | | | | | | | | | | | | | | | | | | NA | | | | PB-2 | | 7-27 | | | 168,750 | | | | 337,500 | | | | 506,250 | | | | | | | | | | | | | | | | | | | | | | | | | | | | NA | | | | Opt | | 2-19 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 48,427 | | | | 15.90 | | | | 112,544 | | | | PSU | | 2-19 | | | | | | | | | | | | | | | 10,102 | | | | 26,941 | | | | 50,514 | | | | | | | | | | | | | | | | 384,987 | | | | RSU | | 2-19 | | | | | | | | | | | | | | | | | | | | | | | | | | | 12,106 | | | | | | | | | | | | 192,485 | | Mr. Byrd | | PB-1 | | 7-27 | | | NA | | | | NA | | | | 628,188 | | | | | | | | | | | | | | | | | | | | | | | | | | | | NA | | | | PB-2 | | 7-27 | | | 356,500 | | | | 713,000 | | | | 1,069,500 | | | | | | | | | | | | | | | | | | | | | | | | | | | | NA | | Mr. Brown | | PB-1 | | 7-27 | | | NA | | | | NA | | | | 267,686 | | | | | | | | | | | | | | | | | | | | | | | | | | | | NA | | | | PB-2 | | 7-27 | | | 175,000 | | | | 350,000 | | | | 525,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | NA | | Mr. Restel | | PB-1 | | 7-27 | | | NA | | | | NA | | | | 250,325 | | | | | | | | | | | | | | | | | | | | | | | | | | | | NA | | | | PB-2 | | 7-27 | | | 168,750 | | | | 337,500 | | | | 506,250 | | | | | | | | | | | | | | | | | | | | | | | | | | | | NA | |
* | | NEOs who were executives of IBERIA prior to the closing of the first four years following grant ifmerger of equals in July received annual equity awards earlier in the NEO remains employed withyear as part of IBERIA’s ordinary practice, but did not receive any further equity awards from First Horizon after the company throughmerger closed. | ** | | Plan-based bonus awards for 2020 were split into two half-year programs, noted as PB-1 and PB-2 in this table. For NEOs joining us from legacy IBERIA, the vesting dates. There is no accrual of cash dividendsfirst-half bonus was determined in July as a single amount, shown in the table in the maximum column. See the note to columns (c)-(e) below, and Annual Cash Bonus beginning on options. Each option has a seven-year term and is priced at market at the time of grant. Options will achieve value only to the extent market value on the exercise date exceeds the option price fixed on the grant date.A stock option provides a retention incentive over its vesting period directly linked to our stock price growth. Options inherently align compensation with the interests of shareholders.page 81, for additional information.
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Explanations of certain columns follow: Col (b). An award is effective for legal and accounting purposes on its grant date. For each award shown, the Compensation Committee took final action to grant each award on that date. Cols (c)-(e) Plan-based Bonus Opportunities. The Committee established performance criteria and set target amounts early in 2020 for MIP bonus opportunities for Messrs. Jordan and Losch. Details about the opportunities, their goals, and their limitations are discussed in Annual Cash Incentive beginning on page 81. In July, after the merger of equals closed, the Committee recognized that the COVID pandemic and the merger had rendered the original bonus goals obsolete for the executives from both legacy companies. The Committee split the bonus year into two halves, determined corporate performance for the first half to be 95% of the targets set by each legacy board committee based largely on subjective analysis, and established new target amounts and goals for the second half of 2020. Details are discussed in Annual Cash Incentive beginning on page 81. The information in columns (c)-(e) shows bonus opportunities. Information concerning bonuses actually
| 2021 PROXY STATEMENT | 97 |
earned for 2020 is shown in column (g) of the Summary Compensation Table and in Annual Cash Incentive, beginning on pages 94 and 81, respectively. Cols (f)-(h) Stock Incentives. The performance requirements for the 2020 PSU awards are discussed in the notes for column (e) of the Summary Compensation Table above. Performance below the threshold level will result in 0% payout. Performance above threshold will result in payouts ranging from 37.5% (col (f)) to 100% (col (g)) to 187.5% (col (h)) of target levels. See Performance Stock Units 2017 PSUs
Consistent with competitive practice, the Committee makes annual grants of performance equity awards with a three-year performance period. The financial goals established at the beginning of each performance period are company-wide in focus and are uniform for all executives. Grants are made annually, so financial results in any given year can affect three outstanding awards. The Committee sets performance goals each year based on the company’s objectives at that time, and may change the types and amounts of awards compared to prior years based on desired managerial focus, competitive pressures, and other factors.
Payout of 2017 PSUs will be based on goal achievement as shown in the following chart. Adjusted ROE of our core business segments, averaged over the three-year period 2017-19, will be ranked against the average ROE results of those banks that, at the end of the performance period, comprise the KBW Regional Bank Index (ticker symbol KRX). Payout can range from 50% to 150% of the target amount granted, or payout
COMPENSATION DISCUSSION AND ANALYSIS |
can be zero if performance falls below the 50% threshold. Dividends accrue until payment but are paid only to the extent the underlying units vest. Performance will be determined in 2020 but payment will be deferred until 2022.
Only whole-year ROE results count in the rankings. The adjustments to our ROE are the same as the required adjustments associated with the 2% maximum under the 2017 MIP bonus opportunity, discussed above under “Ordinary MIP Bonus” starting on page 55. The required adjustments are similar to, but not the same as, the notable item adjustments presented in Appendix C.
The KRX banks currently are fifty U.S. regional banks, a wider range of institutions than those in our Peer Bank group used for other purposes. For PSU awards, the Committee believes that an independently-selected group of competitors like the KRX banks provides a larger, more stable group against which to measure our performance over a three-year period. This rank structure was continued from recent years primarily because the use of a relative-rank goal rather than an absolute measure should provide a better reflection of our results versus competitors. It was chosen in part because of the volatile environment for us and our industry. The awards should self-adapt to industry events that will unfold over a three-year time horizon and cannot be predicted in advance.
Most Recent PSU Performance
As discussed above, PSUs perform based on our ROE performance ranked against KRX peers. Peer data for a given year is not fully available until the following March. The most recent PSUs with final performance determined were granted in 2014 with a 2014-16 performance period, vesting in 2017. Our adjusted ROE over those three performance years ranked in the top half of the KRX peers. The following table shows the payout of the 2014 PSUs in relation to TSR and our stock price.
2014 PSU Statistics | | | PSU Payout (% of Target) | | 113% | TSR over PSU Lifetime | | 158% | FHN Stock Price at Grant | | $11.77/share | FHN Stock Price at Vesting | | $17.63/share |
Fixed Income Award Practices
The overall amount of annual stock awards granted to Mr. Kisber, the head of our fixed income business, is impacted by the previous year’s results. See “MIP Bonus—MIP Bonus for FTN Executive” starting on page 58 above.
2016 CEO Retention Award
In February 2016 the Committee approved a special retention award for our CEO. The award consists of 155,238 seven-year stock units and 411,747 late-vesting stock options.
The units have a 7-year service vesting and financial performance period. The units’ performance goal is met if the TSR value of a share of our stock during the seven-year period is at least $11.63/share, which is slightly higher than market value on the grant date.
The stock options were granted at-market with service vesting in 2020, 2021, and 2022, or four, five, and six years after grant. The options expire in 2023, seven years after grant.
The Committee wanted this award to have substantial retention value as well as a strong linkage to shareholder value. The entire award continues to be at-risk for the market performance of our common stock during its seven-year duration. In making this award the Committee wanted to close a gap it perceived in the competitiveness of Mr. Jordan’s target compensation and the retention value of his outstanding awards. The Committee believes that Mr. Jordan’s leadership and experience have been critical to our company’s recent successes and will remain crucial in the years to come.
2012 CEO Retention Award
In May 2012 the Committee granted our CEO a special performance-based retention award. The award consisted of PSUs covering $3 million of stock (valued at grant) with a highly challenging goal. The award would have vested if our stock price had achieved $20/share for 60 consecutive trading days before the fifth anniversary of grant, or if the TSR value of a share of our stock measured at the end of those five years had been at least $20/share. Our stock value at grant was
COMPENSATION DISCUSSION AND ANALYSIS |
$9.22 per share, so to achieve either of those alternative goals our stock value had to more than double in five years.
At the time of grant the Committee considered those goals to be appropriately challenging. The low interest rate and subdued economic environments, along with continued drag from our exited “non-strategic” businesses, created substantial challenges to achieving the kind of sustained stock value growth necessary to meet either of the goals.
TSR value for this award was measured using a starting value ($9.22, our stock price at grant), a
closing value ($18.41, our average stock price at the end of the award’s term), and an assumed reinvestment of actual dividends since grant.
The performance period ended on May 7, 2017. Although our stock price early in 2017 was above $20, in the end neither goal was met and the award forfeited. The final TSR value for this award was $19.88. Although an investment in our shares would have increased in value by 216% during the PSU’s lifetime, final TSR was twelve cents below what was needed for payout.
CEO Multi-Year Cash Bonus
In October 2017 the Compensation Committee approved a special cash bonus for our CEO, Bryan Jordan, of $5.5 million. Committee members discussed the bonus with the entire Board of Directors in executive session. By making this award the Committee, and the entire Board, recognized and rewarded our CEO for the extraordinary overall performance our company has achieved over the past six years. That performance has resulted in exceptional wealth creation for each shareholder who owned our stock before 2012 and still owns it today.
The bonus was discretionary. The Committee assessed our long-term performance qualitatively, but also took into account quantitative performance measures. The section captioned “First Horizon Transformation Since 2007,” beginning on page 44, outlines major events since the recession. For this bonus, the Committee focused on the period after the financial crisis ended. Six years ago, at the end of 2011, our company was in stable condition but with significant headwinds and turbulence, impeding efforts to grow our business, our earnings prospects, and our stock value. At that time, we had been out of the TARP program for a year; loan growth and interest margins were low; and we had significant potential liability exposures from discontinued businesses dealing with mortgages, much larger than those of our peers. Our stock value had declined each of the previous two years (by over one-third, in total), reflecting the market’s judgment that our prospects were unclear and our risks were high. For similar reasons, it was difficult to engage in serious pursuit of strategic acquisitions.
Our management team’s focus then, as now, was to control what could be controlled while resolving the legacy issues as optimally as possible. The
focus on controllable items resulted in several key, broad initiatives:
• | grow loan and deposit relationships by emphasizing, with all employees, the importance of superior customer service; | | | • | grow loans and defend margins by penetrating and developing higher-profit market niches, which we call our specialty lending areas; | | | • | exercise discipline in making acquisitions in terms of price, business “fit,” and post-closing execution; | | | • | create a culture which seeks always to spend less while maintaining service and profitability levels, and to spend more only when revenue prospects warrant; and | | | • | manage the entire enterprise using metrics which focus on returns in relation to invested capital and risk, so that capital-inefficient activities, and those with risk-reward imbalances, are curtailed while efficient activities with acceptable risk are nurtured. |
Starting before 2011, but especially since then, these and similar initiatives have been transformational. Loans and deposits in our regional banking segment have grown significantly and steadily, more than offsetting significant run-off of legacy business in the non-strategic segment. Although total expenses have been volatile, controllable expenses, especially those in the banking segment, have been cut while earnings have grown. Not all controllable expenses are down—costs associated with driving higher revenues or efficiencies are up in many cases, but only after management assesses the ability of those costs to more than pay for themselves. The steady and still-compounding successes in these and other areas:
allowed our Board to raise our common dividend per share four times, from 4 cents annually in
COMPENSATION DISCUSSION AND ANALYSIS |
| 2012 to 36 cents annually in 2017 (48 cents in 2018); | | | • | resulted in our stock price increasing from $8.00 per share at year-end 2011 to $19.29 per share on October 20, 2017, the last trading day before the Committee meeting; | | | • | for an investor who owned 1,000 shares in 2011 with dividends reinvested, grew that investment from $8,000 to more than $21,000; and | | | • | positioned us to pursue seriously and then successfully close our merger in 2017 with Capital Bank Financial. |
The Committee also considered the forfeiture of the 2012 special PSUs, discussed above. In the Committee’s view, under Mr. Jordan’s leadership the company and its shareholders obtained an extraordinary gain in share value. That gain fell just short of the aggressive goal established in that award. Because that award forfeited, the Committee felt that Mr. Jordan’s exceptional performance, directly benefiting all shareholders, was not properly being recognized and rewarded.
Deferral, Retirement, and Other Benefits
Benefits other than Change in Control
We provide retirement and other post-employment benefits that we believe are customary in our industry. We provide them to remain competitive in retaining and recruiting talent. The table below summarizes the major types of benefits provided to
NEOs. Many of these benefits are broad-based and so available to most or all full-time employees, and many others are available generally to employees whose compensation levels exceed certain thresholds, regardless of officer status.
Deferral, Retirement, and Other Benefits Summary
Benefit | | Type | | Benefit Provided | | Further Information | | | | | | | | Savings Plan (broad-based) | | Tax-qualified defined contribution (retirement savings) | | Participants may defer a portion of salary into a fully funded tax-advantaged savings account, up to IRS dollar limits. We provide a 100% match on the first 6% of salary deferred. | | Match amounts for the NEOs are included in column (i) of the Summary Compensation Table on page 67, with additional information provided in the table captioned “All Other Compensation (Col (i)) for 2017” on page 69 and its explanatory notes. | Savings Restoration Plan | | Non-qualified deferral | | Provides a restorative benefit to savings plan participants whose compensation exceeds IRS limits, as if the savings plan were not subject to those limits. | | Restoration match amounts for the NEOs are included with savings plan match amounts; see the row above. Match amount and withdrawal information is provided under “Non- Qualified Deferred Compensation Plans” beginning on page 76. |
COMPENSATION DISCUSSION AND ANALYSIS |
Benefit | | Type | | Benefit Provided | | Further Information | | | | | | | | Deferred Compensation Plan | | Non-qualified deferral | | Participants may defer payment of a portion of salary, bonus, and other cash compensation. Taxation is deferred until paid. There is no company match. The plan pays at-market returns indexed to the performance of certain mutual funds selected by the participant. We hedge this obligation by purchasing those funds. | | Deferral and withdrawal information for the NEOs, along with other plan information, is provided under “Non-Qualified Deferred Compensation Plans” beginning on page 76. | Pension Plan (broad-based) | | Tax-qualified defined benefit (retirement) | | Participants earned a defined retirement benefit dependent mainly on salary level (up to IRS limits) and tenure. The plan was closed to new hires after August 31, 2007; the benefit was frozen at year-end 2012. | | Pension benefit information for the NEOs, along with other plan information, is provided under “Pension Plans” beginning on page 75. Any change in pension value for the NEOs is included in column (h) of the Summary Compensation Table on page 67 and the related notes on page 68. | Pension Restoration Plan | | Non-qualified defined benefit (retirement) | | Provides a restorative benefit to pension plan participants. The two plans work together as if the IRS limits did not exist. | | Restoration benefits and value changes are included with those of the pension plan; see the row above. | Health & Welfare programs (broad-based) | | Cafeteria benefit program | | Employees may elect annually to participate in several programs such as health and dental insurance, vision, dependent care, etc. We provide an allowance for this purpose based on salary, tenure, and certain wellness incentives, subject to IRS limits. A participant may elect to use any leftover allowance for the savings plan. | | The amounts of these broad-based benefits for the NEOs are not reported in other tables or charts of this proxy statement, except that any savings plan contributions made by the company are reported as part of the match amounts. See the “Savings Plan” row above. | Survivor Benefit Plan | | Death benefit | | Provides a benefit of 2.5 times base salary if death occurs during active service, which is reduced to 1.0 times salary if death occurs following departure due to disability or retirement. This executive benefit substitutes for a broad-based survivor benefit. | | Cost amounts for the NEOs are included in column (i) of the Summary Compensation Table on page 67, with additional information provided in the table captioned “All Other Compensation (Col (i)) for 2017” on page 69 and its explanatory notes. |
COMPENSATION DISCUSSION AND ANALYSIS |
Benefit | | Type | | Benefit Provided | | Further Information | Executive disability program | | Disability benefit | | The executive benefit cap is $25,000 per month. An executive may elect to purchase, with personal funds, an additional disability benefit of up to $5,000 per month. This executive benefit substitutes for a broad-based survivor benefit. | | Cost amounts for the NEOs are included in column (i) of the Summary Compensation Table on page 67, with additional information provided in the table captioned “All Other Compensation (Col (i)) for 2017” on page 69 and its explanatory notes. | Other Perquisites | | Misc. | | We provide a limited range of other executive perquisites that are customary in our industry, including financial counseling, imputed income for certain usage of corporate aircraft (for spousal attendance at business events), and executive wellness. | | Cost amounts for the NEOs are included in column (i) of the Summary Compensation Table on page 67, with additional information provided in the table captioned “All Other Compensation (Col (i)) for 2017” on page 69 and its explanatory notes. |
Change in Control (CIC) Benefits
The financial services industry experiences periods of significant consolidation separated by periods of modest activity. Merger activity abated substantially following the last recession, but (excluding the four largest U.S. banks) resumed several years ago. Although this industry pattern has created substantial business opportunities for us and others, it also has created substantial personal uncertainties for employees. Our CIC severance agreements and CIC plan features were put in place a number of years ago in response to these uncertainties.
We have CIC severance agreements with each NEO. These are not employment agreements. They provide significant benefits if employment is terminated in connection with a CIC event, but otherwise provide no employment protection. Additional information about these contracts is provided under the caption “CIC Severance Agreements” in the “Change in Control” section beginning on page 78 of this proxy statement.
The primary objectives of our CIC severance agreements are to allow us to compete for executive talent during normal times, mitigating the personal risk that a CIC would present. If a CIC situation were to arise, the agreements also provide an incentive for our executive team to remain with the company, focused on corporate objectives, during the pursuit, closing, and transition periods that accompany CIC transactions in our industry.
Under many of our programs a CIC event can cause awards or benefits to vest, be paid, or be calculated and paid at target payout levels. The main objective of these features is to allow us to offer competitive compensation packages in an industry where robust periods of consolidation occur. Like our CIC severance agreements, these program features have a double trigger, which means that vesting or payment is accelerated only when a CIC event occurs resulting in termination of employment.
Compensation Committee Report
The Compensation Committee Report is located on page 21 of this proxy statement under the caption “The Compensation Committee.”
Recent Compensation
This Recent Compensation section provides detailed information about the compensation paid to our named executive officers in 2017. This section should be read in conjunction with the immediately preceding Compensation Discussion and Analysis section.
2017 Direct Compensation Actually Paid
A comprehensive Summary Compensation Table, along with detailed footnotes and commentary, is presented in the next several sections. To provide context for that information, the following chart shows direct compensation amounts actually paid in 2017 to our named executive officers, except that the 2017 MIP bonus (which was paid early in
2018) is included rather than any earlier bonus. Direct compensation components include salary, bonus paid, and stock awards vested. For this purpose, amounts are considered “paid” if they were paid or deferred on a fully-vested basis. All amounts are shown before reduction for withholding taxes and other payroll deductions.
2017 Direct Compensation Actually Paid
($ in millions)
Key details regarding the segments in this chart follow:
• | MIP Bonus. Each annual bonus award under the MIP for 2017 was paid in cash early in 2018. | | | • | Stock Awards Vested. Awards vested in 2017 consisted of performance stock units (PSUs), restricted stock shares (RS), RSUs, and stock options. Values are based on the market price of our stock on the vesting date. Stock options are valued based on the “spread” at vesting, which |
| is the difference between market price at that time and the option price; any negative spreads at vesting are ignored. | | | • | Multi-Year Bonus for CEO. In 2017 we paid our CEO a special cash bonus for exceptional performance since 2011. Because this was an unusual event Mr. Jordan’s direct compensation is shown with and without that bonus included.See “CEO Multi-Year Cash Bonus” beginning on page 62 for additional information. |
Summary Compensation & Award Grant Tables
Summary Compensation Table
The amounts shown in the Summary Compensation Table include all compensation earned for 2017, including amounts deferred by those persons for all services rendered in all capacities to us and our subsidiaries. Compensation amounts from the past two years
are also included. Additional compensation information is provided in the remainder of this section. No named executive officer who served as a director was separately compensated as a director.
Summary Compensation Table 2015-2017
(a) | | (b) | | | (c) | | | (d) | | | (e) | | | (f) | | | (g) | | | (h) | | | (i) | | | (j) | | Name and Principal Position | | Year | | | Salary ($) | | Bonus* ($) | | Stock Awards ($) | | Option Awards ($) | | Non-Equity Incentive Plan Compensation ($) | | Change in Pension** Value & NonQualified Deferred Compensation Earnings ($) | | All Other Compensation ($) | | Total ($) | | D.B. Jordan | | | 2017 | | | $ | 875,000 | | | $ | 5,500,000 | | | $ | 1,640,822 | | | $ | 520,273 | | | $ | 1,225,000 | | | $ | 479,791 | | | $ | 92,879 | | | $ | 10,333,765 | | Chairman, | | | 2016 | | | | 868,654 | | | | — | | | | 2,736,995 | | | | 1,768,560 | | | | 1,323,000 | | | | 225,014 | | | | 88,227 | | | | 7,010,450 | | President, & CEO | | | 2015 | | | | 815,000 | | | | — | | | | 1,144,893 | | | | 429,016 | | | | 1,155,000 | | | | — | | | | 81,582 | | | | 3,625,491 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | W.C. Losch | | | 2017 | | | $ | 475,000 | | | | — | | | $ | 498,769 | | | $ | 158,164 | | | $ | 525,000 | | | $ | — | | | $ | 43,885 | | | $ | 1,700,818 | | EVP & CFO | | | 2016 | | | | 468,654 | | | | — | | | | 498,804 | | | | 168,685 | | | | 513,000 | | | | — | | | | 42,329 | | | | 1,691,472 | | | | | 2015 | | | | 425,000 | | | | — | | | | 604,276 | | | | 167,247 | | | | 425,000 | | | | — | | | | 41,382 | | | | 1,662,905 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | M.E. Kisber | | | 2017 | | | $ | 600,000 | | | | — | | | $ | 954,879 | | | $ | 288,449 | | | $ | 2,099,000 | | | $ | 121,354 | | | $ | 49,632 | | | $ | 4,113,314 | | President– | | | 2016 | | | | 600,000 | | | | — | | | | 352,992 | | | | — | | | | 2,500,000 | | | | 65,990 | | | | 50,347 | | | | 3,569,329 | | FTN Financial | | | 2015 | | | | 600,000 | | | | — | | | | — | | | | — | | | | 2,500,000 | | | | — | | | | 48,917 | | | | 3,148,917 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | D.T. Popwell | | | 2017 | | | $ | 500,000 | | | | — | | | $ | 525,026 | | | $ | 166,484 | | | $ | 575,000 | | | $ | 86,332 | | | $ | 62,223 | | | $ | 1,915,065 | | President– | | | 2016 | | | | 493,654 | | | | — | | | | 525,050 | | | | 177,563 | | | | 540,000 | | | | 49,306 | | | | 59,959 | | | | 1,845,532 | | Banking | | | 2015 | | | | 450,000 | | | | — | | | | 672,517 | | | | 177,086 | | | | 450,000 | | | | — | | | | 53,853 | | | | 1,803,456 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | C.T. Tuggle | | | 2017 | | | $ | 475,000 | | | | — | | | $ | 391,882 | | | $ | 124,269 | | | $ | 427,500 | | | $ | 82,935 | | | $ | 41,172 | | | $ | 1,542,758 | | EVP & General | | | 2016 | | | | 475,000 | | | | — | | | | 391,905 | | | | 132,539 | | | | 461,700 | | | | 9,750 | | | | 40,883 | | | | 1,511,777 | | Counsel | | | 2015 | | | | 475,000 | | | | — | | | | 391,896 | | | | 146,868 | | | | 427,500 | | | | — | | | | 38,343 | | | | 1,479,607 | |
* | | In October 2017 Mr. Jordan received a special cash bonus in recognition of outstanding performance over the past six years. See “CEO Multi-Year Cash Bonus” beginning on page 62. | | | | ** | | In this column negative values are ignored rather than netted. For Messrs. Jordan, Kisber, and Popwell, actual pension value changes for 2015 were negative: ($39,521), ($28,213), and ($21,405), respectively. |
Explanations of certain columns follow:
Col (c) Salary. Annual cash salary is shown.
Col (d) Bonus. Column (g) shows the annual MIP bonus awards earned. Mr. Jordan was paid a discretionary special bonus in October 2017 to recognize outstanding performance over the past six years, as discussed in “CEO Multi-Year Cash Bonus” beginning on page 62.
Cols (e)-(f) Accounting Values. Columns (e) and (f) show the grant date fair value of the awards using the accounting method applicable to our financial statements. The accounting valuation method makes assumptions about growth and
volatility of our stock value, expected duration in the case of options, vesting, forfeiture, future company performance, and other matters. A discussion of those assumptions appears in note 19 to our 2017 annual report to shareholders. Actual future events may be substantially inconsistent with the assumptions. Accordingly, the actual values realized by an award holder are likely to differ substantially from these accounting values.
Col (e) Stock Awards. Column (e) includes the accounting values of RSU, PSU, and retention RS awards granted during each year. These do not represent amounts paid or earned; they are
the values attributed to awards under applicable accounting rules.
Col (e) Regular PSUs. PSUs are performance-based, using a three-year performance period. Eventual payout may be higher or lower than the accounting values used in column (e), and may be zero. PSUs also have a service-vesting requirement. PSUs granted after 2014 also have a mandatory two-year deferral period after vesting. Generally, PSU performance depends upon our adjusted core-segment ROE ranking relative to certain peer banks during the performance period. Each year, a percentage of PSUs (50% to 150%) will vest if threshold or higher performance goals are achieved during the performance period and if the holder remains employed with the company through the vesting date. PSUs settle with shares rather than cash. In column (e) PSU amounts are shown at their original accounting values assigned at grant. Those accounting values are less than the possible payouts if all performance conditions are maximally achieved. The following table provides a summary of the maximum payouts of the PSU awards for each named executive, based on our stock values on the respective grant dates.
Maximum Dollar Values* of PSUs
(Based on Share Price at Grant Date)
Name | | | 2015 | | | | 2016 | | | | 2017 | | Mr. Jordan | | $ | 1,144,996 | | | $ | 1,641,213 | | | $ | 1,640,956 | | Mr. Losch | | | 223,186 | | | | 249,465 | | | | 249,427 | | Mr. Kisber | | | — | | | | — | | | | 682,322 | | Mr. Popwell | | | 236,306 | | | | 262,584 | | | | 262,554 | | Mr. Tuggle | | | 195,993 | | | | 196,000 | | | | 195,964 | |
* | Maximum dollar values = 150% of target unit levels for all years presented valued at grant date fair value. Actual maximum values depend upon our actual stock price when paid. |
Col (e) Regular RSUs. Since 2014 the annual equity award package has included RSUs which vest in three years and settle in shares.
Col (e)-(f) Retention Awards. On occasion special retention awards are made to selected individuals.
In 2015, retention RS awards were granted to Messrs. Losch and Popwell. They vest five years after grant.
In 2016, retention stock units (col (e)) and stock options (col (f)) were granted to Mr. Jordan. The stock units have a seven-year service-vesting and performance period. The option price was set at our market price on the grant date. The retention options have a seven-year term and vest in equal parts four, five, and six years after grant.
Col (f) Stock Options. Column (f) includes the accounting values of stock options granted.
Col (g) Annual MIP Bonus Awards. This column shows the annual bonus earned for each year under our MIP. For all three years, MIP bonuses (except for Mr. Kisber) were based upon achievement in the following areas: pre-set levels of adjusted annual pre-tax earnings (core-segment earnings for 2015, consolidated for 2016 and 2017); execution of personal plan goals; and individual contribution to risk management, quality of earnings, and objectives for our non-strategic business segment; and the results of a balanced scorecard process ranking us among selected peer banks on a matrix of balance sheet, capital, expense, earnings, and other measures. Mr. Kisber’s bonuses were based on the net profits of our FTN Financial division, of which he is the President. For any given year, FTN net profits also drove stock awards granted to Mr. Kisber the following year.
Col (h) Pension & Deferred Compensation.Column (h) includes changes in defined benefit pension actuarial values, which are the aggregate increase during the year in actuarial value of both pension plans (qualified and restoration). Our pension plans were closed to new employees in 2007. Mr. Losch does not participate. Pension benefits were frozen in 2012. Incremental changes in actuarial pension values occur after 2012 mainly due to changes in discount rates used, changes in mortality tables, and changes to life expectancy due to the passage of time. No above-market earnings on deferred compensation were accrued during the year for any of the named executives.
Col (i) All Other Compensation. Elements of “All Other Compensation” for 2017 consist of the following:
All Other Compensation (Col (i)) for 2017
(i)(a) | | (i)(b) | | (i)(c) | | (i)(d) | | | Name | | Perquisites & Other Personal Benefits | | 401(k) Match | | Life Insurance Premiums | | Total Col (i) | Mr. Jordan | | $ | 31,533 | | | $ | 52,500 | | | $ | 8,846 | | | $ | 92,879 | | Mr. Losch | | | 9,820 | | | | 28,500 | | | | 5,565 | | | | 43,885 | | Mr. Kisber | | | 6,120 | | | | 36,000 | | | | 7,512 | | | | 49,632 | | Mr. Popwell | | | 26,271 | | | | 30,000 | | | | 5,952 | | | | 62,223 | | Mr. Tuggle | | | 23,307 | | | | 12,300 | | | | 5,565 | | | | 41,172 | |
Explanations of certain columns in the Col (i) table follow:
Col (i)(b) “Perquisites and Other Personal Benefits” includes the following types of benefits: Flexible Dollars; Financial Counseling; Disability Insurance; and Aircraft Usage. Benefits are valued at the incremental cost to us. “Flexible Dollars” represents our contribution to our broad-based benefits plan, a qualified cafeteria-type benefit plan. “Financial Counseling” represents payments for the preparation of income tax returns and related financial counseling. “Disability Insurance” represents insurance premiums with respect to our disability program. “Aircraft Usage” represents imputed income to the executives when their spouses accompany them on a business trip using non-commercial aircraft. This column also includes
imputed taxable income from our company-wide wellness program, and (for Mr. Jordan) the cost of participating in the Mayo Clinic Executive Health Program. The Board of Directors requires Mr. Jordan to participate in the Mayo program.
Col (i)(c) “401(k) Match” represents our matching contribution to our 401(k) savings plan and to the related savings restoration plan. Any flexible benefits plan contributions to the savings plan are included in column (i)(b).
Col(i)(d) “Life Insurance Premiums” represents supplemental life insurance premiums. Under our survivor benefits plan a benefit of 2.5 times annual base salary is paid upon the participant’s death prior to retirement, or one times final salary upon death after retirement.
2017 Grants of Plan-Based Awards
The following table provides information about the MIP bonus opportunity established for, and the grants of PSUs, stock options, RSUs, and retention awards during, 2017. In this table the MIP bonus opportunity is considered a “Non-Equity Incentive Plan Award,” PSUs are considered to be
“Equity Incentive Plan Awards,” while RSUs are considered to be “All Other Stock Awards.” In the table each row represents a separate award grant; a column for a row is blank if it does not apply to the type of award listed in that row or if the dollar amount is $0.
Awards Granted in 2017
(a) | | | | (b) | | (c) | | | (d) | | | (e) | | | (f) | | | (g) | | | (h) | | | (i) | | (j) | | (k) | | (l) | | | | | | | Estimated Possible Payouts under Non-Equity Incentive Plan Awards | | | Estimated Future Payouts under Equity Incentive Plan Awards | | All Other Stock Awards: Number of Shares of Stock | | All Other Option Awards: Number of Securities Underlying | | Exercise Price of Option | | Grant Date Fair Value of Stock | Name | | Award | | Grant Date | | Threshold ($) | | | Target ($) | | | Maximum ($) | | | Threshold (#) | | Target (#) | | Maximum (#) | | or Units (#) | | Options (#) | | Awards ($/sh) | | and Option Awards($) | Mr. Jordan | | MIP | | 2-10 | | | $612,500 | | | $ | 1,225,000 | | | $ | 1,837,500 | | | | | | | | | | | | | | | | | | | | | | | | | | | | NA | | | | Opt | | 2-10 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 110,871 | | | | $19.73 | | | $ | 520,273 | | | | PSU | | 2-10 | | | | | | | | | | | | | | | 32,044 | | | | 64,087 | | | | 96,131 | | | | | | | | | | | | | | | | 1,093,965 | | | | RSU | | 2-10 | | | | | | | | | | | | | | | | | | | | | | | | | | | 27,717 | | | | | | | | | | | | 546,856 | | Mr. Losch | | MIP | | 2-10 | | | $237,500 | | | $ | 475,000 | | | $ | 712,500 | | | | | | | | | | | | | | | | | | | | | | | | | | | | NA | | | | Opt | | 2-10 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 33,705 | | | | $19.73 | | | $ | 158,164 | | | | PSU | | 2-10 | | | | | | | | | | | | | | | 4,871 | | | | 9,741 | | | | 14,612 | | | | | | | | | | | | | | | | 166,279 | | | | RSU | | 2-10 | | | | | | | | | | | | | | | | | | | | | | | | | | | 16,852 | | | | | | | | | | | | 332,490 | | Mr. Kisber | | MIP | | 2-10 | | | NA | | | | NA | | | $ | 3,500,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | NA | | | | Opt | | 2-10 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 61,469 | | | | $19.73 | | | $ | 288,449 | | | | PSU | | 2-10 | | | | | | | | | | | | | | | 13,324 | | | | 26,648 | | | | 39,972 | | | | | | | | | | | | | | | | 454,881 | | | | RSU | | 2-10 | | | | | | | | | | | | | | | | | | | | | | | | | | | 25,342 | | | | | | | | | | | | 499,998 | | Mr. Popwell | | MIP | | 2-10 | | | $250,000 | | | $ | 500,000 | | | $ | 750,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | NA | | | | Opt | | 2-10 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 35,478 | | | | $19.73 | | | $ | 166,484 | | | | PSU | | 2-10 | | | | | | | | | | | | | | | 5,127 | | | | 10,254 | | | | 15,381 | | | | | | | | | | | | | | | | 175,036 | | | | RSU | | 2-10 | | | | | | | | | | | | | | | | | | | | | | | | | | | 17,739 | | | | | | | | | | | | 349,990 | | Mr. Tuggle | | MIP | | 2-10 | | | $213,750 | | | $ | 427,500 | | | $ | 641,250 | | | | | | | | | | | | | | | | | | | | | | | | | | | | NA | | | | Opt | | 2-10 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 26,482 | | | | $19.73 | | | $ | 124,269 | | | | PSU | | 2-10 | | | | | | | | | | | | | | | 3,827 | | | | 7,653 | | | | 11,480 | | | | | | | | | | | | | | | | 130,637 | | | | RSU | | 2-10 | | | | | | | | | | | | | | | | | | | | | | | | | | | 13,241 | | | | | | | | | | | | 261,245 | |
Explanations of certain columns follow:
Col (b). An award is effective for legal and accounting purposes on its grant date. For each award shown, the Compensation Committee took final action to grant each award on that date.
Cols (c)-(e) MIP Bonus Opportunities.The Committee established performance criteria and set target amounts early in 2017 for MIP bonus opportunities. Details about the opportunities, their goals, and their limitations are discussed in “Annual MIP Bonus” beginning on page 55.
Mr. Kisber’s compensation package, including annual MIP bonus, is based on a percentage of net profits generated by the FTN Financial fixed income division, without any threshold or target levels. The Compensation Committee established an overall maximum of $6 million for Mr. Kisber’s 2017 package, payable in this order if earned: first, $600,000 of salary; second, $2.5 million of MIP cash bonus; third, $1.9 million of regular annual stock awards (RSUs, PSUs, and options) to be granted in 2018; and fourth, $1 million in cash-paid MIP-driven RSUs, also to be granted in 2018. His entire MIP bonus opportunity was, therefore, $3.5 million. Correspondingly, all stock awards granted to Mr. Kisber in 2017, whether or not connected to the MIP, relate back to FTN Financial’s net profits in 2016.
The information in columns (c)-(e) shows 2017 MIP bonus opportunities. Information concerning MIP bonuses actually earned for 2017 is shown in column (g) of the Summary Compensation Table and under the caption “Annual MIP Bonus” beginning on pages 67 and 55, respectively.
Cols (f)-(h) Stock Incentives. The performance requirements for the 2017 PSU awards are discussed in the notes for column (e) of the Summary Compensation Table above. Performance below the threshold level will result in 0% payout. Performance above threshold will result in payouts ranging from 50% (col (f)) to 100% (col (g)) to 150% (col (h)) of target levels. See “Performance Stock Units” beginning on page 6087 for additional information. The 20172020 PSUs will vest on May 12, 20202023 if threshold performance is achieved, but payment will be deferred for two years.
Also included in these columns is Mr. Jordan’s special retention stock units. These have a performance goal based on total shareholder return for a seven-year performance period. If the performance goal and the seven-year service requirements are met, payout is 100%; if not, payout is zero. There are no lesser or greater payment levels for varying degrees of performance.
Col (i) Other Stock Awards. Column (i) includesshows regular annual RSUs granted in 2017.2020.
Cols (j)-(k) Stock Options.Column (j) shows the number of shares granted under options to the named executivesNEOs in 2017,2020, and column (k) shows the exercise price per share of those options. The exercise price was the market price of our stock on the grant date. Mr. Jordan received two option grants, a regular annual award and a special retention award, which are shown in separate rows in the table. For additional information regarding option awards, see the discussion of column (f) of the Summary Compensation Table beginning on page 6794 of this proxy statement. Col (l) Grant date fair values.Column (l) reflects the accounting value of the awards shown in columns (g), (i) and (j). Our stock price on the grant date, February 10, 2017,19, 2020, was $19.73$15.90 per share.share, before the severe market impacts from the COVID pandemic. For stock options, the grant date fair value is based on the Black Scholes value on the grant date, which was $4.6926$2.324 per share. For additional information see the discussion of columns (e) and (f) of the Summary Compensation Table beginning on page 67.94.
Supplemental Disclosures for Summary Compensation and Grant Tables For information about the rationale behind, sizing of, and other aspects concerningof the major compensation elements, see “OverviewOverview of Direct Compensation Components,” “Relative Sizing & Mix,” Total Incentive Opportunities and “Salary”Mix, and Salary beginning on pages 49, 53,77, 81, and 55,80, respectively. The vesting and expiration schedules of equity-based awards granted in 20172020 are as follows: •· | Regular stock options vest in equal parts on March 2 of the first four years after grant and expire on March 2 seven years after grant. | | | •· | PSUs vest on May 12 three years after grant if goals are achieved at the 50%37.5% payout level or greater. | | | •· | RSUs vest on March 2 three years after grant. |
Vesting information related to all equity awards held by the named executivesNEOs at year-end appears under the heading “Outstanding EquityOutstanding Stock Awards at Fiscal Year-End”Year-End beginning on page 72,99, especially in the notes to the table in that section. For all awards, vesting will or may be accelerated or pro-rated in the cases of death, disability, retirement, and qualifying termination after a change in control. For performance awards, service-vesting may be waived, but performance goals generally are not waived, following retirement, and awards may be pro-rated. Additional information concerning the acceleration features of awards is set forth under the caption “ChangeChange in Control (CIC) Arrangements”Arrangements on page 78.106. Dividends or dividend equivalents accrue at normal declared rates on stock awards other than options. Accrued dividends and equivalents are paid at vesting or forfeit if the award is forfeited. The Compensation Committee has approved a mandatory tax withholding feature under which vested shares are automatically withheld in an amount necessary to cover minimum required withholding taxes. A supplemental feature allows the holder to elect withholding at the maximum tax rate instead. Options have no mandatory or supplemental tax feature. Under our Equity Compensation Plan we do not re-use, in new grants, shares withheld to cover taxes. The Compensation Committee generally has the power to impose deferral of payment as a term or condition of an award. The 20172020 PSUs have a . mandatory two-year payment deferral after vesting.
| 2021 PROXY STATEMENT | 98 |
Outstanding Stock Awards at Fiscal Year-End The following table provides information about stock options, all types of restricted stock and stock units, and all performance stock awards (at target levels) held at December 31, 20172020 by the named executive officers.
Outstanding Equity Awards at Fiscal Year-End 20172020 (a) | | (b) | | (c) | | (d) | | (e) | | (f) | | (g) | | (h) | | (i) | | (j) | | (b) | | (c) | | (d) | | (e) | | (f) | | (g) | | (h) | | (i) | | (j) | | | Option Awards | | Stock Awards | | Option Awards | | Stock Awards | Name | | Number of Securities Underlying Unexercised Options(#) Exercisable | | Number of Securities Underlying Unexercised Options(#) Unexercisable | | Equity Incentive Plan Awards: Number of Securities Underlying Unearned Options(#) | | Option Exercise Price ($/sh) | | Option Expiration Date | | Number of Shares or Units of Stock Held that Have Not Vested(#) | | Market Value of Shares or Units of Stock that Have Not Vested($) | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights that Have Not Vested(#) | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights that Have Not Vested($) | | Number of Securities Underlying Unexercised Options (#) Exercisable | | Number of Securities Underlying Unexercised Options (#) Unexercisable | | Equity Incentive Plan Awards: Number of Securities Underlying Unearned Options (#) | | Option Exercise Price ($/sh) | | Option Expiration Date | | Number of Shares or Units of Stock Held that Have Not Vested (#) | | Market Value of Shares or Units of Stock that Have Not Vested ($) | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights that Have Not Vested (#) | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights that Have Not Vested ($) | Mr. Jordan | | | 185,434 | | | | — | | | | — | | | $ | 10.82 | | | 2/12/2020 | | | | | | | | | | | | | | | | | | | 119,456 | | | | — | | | | — | | | | 11.77 | | | | 2/12/2021 | | | | | | | | | | | | | | | | | | | | | | 106,880 | | | — | | | — | | | 14.28 | | | 3/2/2022 | | | | | | | | | | | | | | | | | 188,253 | | — | | — | | 11.62 | | 3/2/2023 | | | | | | | | | | | | | 89,592 | | | | 29,864 | | | | — | | | | 11.77 | | | 2/12/2021 | | | | | | | | | | | | | | | | | | 137,249 | | | 274,498 | | | — | | | 11.62 | | | 3/2/2023 | | | | | | | | | | | | | | | | | 53,440 | | | | 53,440 | | | | — | | | | 14.28 | | | 3/2/2022 | | | | | | | | | | | | | | | | | 83,153 | | 27,718 | | — | | 19.73 | | 3/2/2024 | | | | | | | | | | | | | 47,063 | | | | 141,190 | | | | — | | | | 11.62 | | | 3/2/2023 | | | | | | | | | | | | | | | | | | 60,192 | | | 60,193 | | | — | | | 18.69 | | | 3/2/2025 | | | | | | | | | | | | | | | | | — | | | | 411,747 | | | | — | | | | 11.62 | | | 3/2/2023 | | | | | | | | | | | | | | | | | 29,163 | | 87,492 | | — | | 15.43 | | 3/2/2026 | | | | | | | | | | | | | — | | | | 110,871 | | | | | | | | 19.73 | | | 3/2/2024 | | | | | | | | | | | | | | | | | | — | | | 125,786 | | | — | | | 15.90 | | | 3/2/2027 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 101,500 | | | $ | 2,028,985 | | | | 396,659 | | | $ | 7,929,213 | | | | | | | | | | | | | 90,705 | | 1,157,396 | | 425,431 | | 5,428,500 | | Mr. Losch | | | 62,846 | | | | — | | | | — | | | | 10.82 | | | 2/12/2020 | | | | | | | | | | | | | | | | | | 41,666 | | | — | | | — | | | 14.28 | | | 3/2/2022 | | | | | | | | | | | | | | | | | 33,852 | | | | 11,284 | | | | — | | | | 11.77 | | | 2/12/2021 | | | | | | | | | | | | | | | | | 57,228 | | — | | — | | 11.62 | | 3/2/2023 | | | | | | | | | | | | | 20,832 | | | | 20,834 | | | | — | | | | 14.28 | | | 3/2/2022 | | | | | | | | | | | | | | | | | | 25,278 | | | 8,427 | | | — | | | 19.73 | | | 3/2/2024 | | | | | | | | | | | | | | | | | 14,307 | | | | 42,921 | | | | — | | | | 11.62 | | | 3/2/2023 | | | | | | | | | | | | | | | | | 18,726 | | 18,727 | | — | | 18.69 | | 3/2/2025 | | | | | | | | | | | | | — | | | | 33,705 | | | | — | | | | 19.73 | | | 3/2/2024 | | | | | | | | | | | | | | | | | | 11,342 | | | 34,024 | | | — | | | 15.43 | | | 3/2/2026 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 77,363 | | | $ | 1,546,486 | | | | 39,410 | | | $ | 787,806 | | | — | | 48,427 | | — | | 15.90 | | 3/2/2027 | | | | | | | | | | Mr. Kisber | | | 7,846 | | | | — | | | | — | | | | 36.09 | | | 7/1/2018 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 106,870 | | | 1,363,661 | | | 73,406 | | | 936,661 | | Mr. Byrd | | | 108,113 | | — | | — | | 12.14 | | 3/10/2021 | | | | | | | | | | | | | 10,312 | | | | — | | | | — | | | | 27.46 | | | 7/1/2019 | | | | | | | | | | | | | | | | | | 155,328 | | | — | | | — | | | 11.42 | | | 2/22/2022 | | | | | | | | | | | | | | | | | 221,811 | | | | — | | | | — | | | | 10.82 | | | 2/12/2020 | | | | | | | | | | | | | | | | | 51,853 | | — | | — | | 11.43 | | 2/19/2023 | | | | | | | | | | | | | 86,661 | | | | 28,887 | | | | — | | | | 11.77 | | | 2/12/2021 | | | | | | | | | | | | | | | | | | 67,338 | | | — | | | — | | | 14.27 | | | 2/17/2024 | | | | | | | | | | | | | | | | | 8,513 | | | | — | | | | — | | | | 23.49 | | | 7/2/2021 | | | | | | | | | | | | | | | | | 73,068 | | — | | — | | 13.65 | | 2/20/2025 | | | | | | | | | | | | | 3,156 | | | | — | | | | — | | | | 15.84 | | | 7/1/2022 | | | | | | | | | | | | | | | | | | 121,406 | | | — | | | — | | | 10.33 | | | 2/18/2026 | | | | | | | | | | | | | | | | | — | | | | 61,469 | | | | — | | | | 19.73 | | | 3/2/2024 | | | | | | | | | | | | | | | | | 50,914 | | — | | — | | 18.68 | | 2/15/2027 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 55,720 | | | $ | 1,113,843 | | | | 26,648 | | | $ | 532,694 | | | | 59,472 | | | — | | | — | | | 17.94 | | | 2/22/2028 | | | | | | | | | | | | | | Mr. Popwell | | | 66,543 | | | | — | | | | — | | | $ | 10.82 | | | 2/12/2020 | | | | | | | | | | | | | | | | | | | | 76,103 | | — | | — | | 15.35 | | 1/11/2029 | | | | | | | | | | | | | | — | | | 83,497 | | | — | | | 16.01 | | | 1/9/2030 | | | | | | | | | | | | | | | | | | | | | | | | | | | 441,630 | �� | | 5,635,199 | | 0 | | 0 | | Mr. Brown | | | | 36,616 | | | — | | | — | | | 12.14 | | | 3/10/2021 | | | | | | | | | | | | | | | | | 35,842 | | | | 11,948 | | | | — | | | | 11.77 | | | 2/12/2021 | | | | | | | | | | | | | | | | | 61,892 | | — | | — | | 11.42 | | 2/22/2022 | | | | | | | | | | | | | 22,058 | | | | 22,059 | | | | — | | | | 14.28 | | | 3/2/2022 | | | | | | | | | | | | | | | | | | 20,278 | | | — | | | — | | | 11.43 | | | 2/19/2023 | | | | | | | | | | | | | | | | | 15,060 | | | | 45,180 | | | | — | | | | 11.62 | | | 3/2/2023 | | | | | | | | | | | | | | | | | 23,437 | | — | | — | | 14.27 | | 2/17/2024 | | | | | | | | | | | | | — | | | | 35,478 | | | | — | | | | 19.73 | | | 3/2/2024 | | | | | | | | | | | | | | | | | | 25,431 | | | — | | | — | | | 13.65 | | | 2/20/2025 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 83,922 | | | $ | 1,677,601 | | | | 41,560 | | | $ | 830,784 | | | 41,571 | | — | | — | | 10.33 | | 2/18/2026 | | | | | | | | | | Mr. Tuggle | | | 52,680 | | | | — | | | | — | | | $ | 10.82 | | | 2/12/2020 | | | | | | | | | | | | | | | | | | | | 28,754 | | | | 9,585 | | | | — | | | | 11.77 | | | 2/12/2021 | | | | | | | | | | | | | | | | | | 16,163 | | | — | | | — | | | 18.68 | | | 2/15/2027 | | | | | | | | | | | | | | | | | 18,294 | | | | 18,295 | | | | — | | | | 14.28 | | | 3/2/2022 | | | | | | | | | | | | | | | | | 19,630 | | — | | — | | 17.94 | | 2/22/2028 | | | | | | | | | | | | | 11,241 | | | | 33,724 | | | | — | | | | 11.62 | | | 3/2/2023 | | | | | | | | | | | | | | | | | 25,124 | | — | | — | | 15.35 | | 1/11/2029 | | | | | | | | | | | | | — | | | | 26,482 | | | | — | | | | 19.73 | | | 3/2/2024 | | | | | | | | | | | | | | | | | | — | | | 26,256 | | | — | | | 16.01 | | | 1/9/2030 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 54,017 | | | $ | 1,079,800 | | | | 32,103 | | | $ | 641,739 | | | | | | | | | | | | | 128,558 | | 1,640,400 | | 0 | | 0 | |
| 2021 PROXY STATEMENT | 99 |
(a) | | (b) | | (c) | | (d) | | (e) | | (f) | | (g) | | (h) | | (i) | | (j) | | | Option Awards | | Stock Awards | Name | | Number of Securities Underlying Unexercised Options (#) Exercisable | | Number of Securities Underlying Unexercised Options (#) Unexercisable | | Equity Incentive Plan Awards: Number of Securities Underlying Unearned Options (#) | | Option Exercise Price ($/sh) | | Option Expiration Date | | Number of Shares or Units of Stock Held that Have Not Vested (#) | | Market Value of Shares or Units of Stock that Have Not Vested ($) | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights that Have Not Vested (#) | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights that Have Not Vested ($) | Mr. Restel | | | 45,843 | | | | — | | | | — | | | | 11.42 | | | | 2/22/2022 | | | | | | | | | | | | | | | | | | | | | 15,626 | | | | — | | | | — | | | | 11.43 | | | | 2/19/2023 | | | | | | | | | | | | | | | | | | | | | 17,400 | | | | — | | | | — | | | | 14.27 | | | | 2/17/2024 | | | | | | | | | | | | | | | | | | | | | 18,880 | | | | — | | | | — | | | | 13.65 | | | | 2/20/2025 | | | | | | | | | | | | | | | | | | | | | 32,009 | | | | — | | | | — | | | | 10.33 | | | | 2/18/2026 | | | | | | | | | | | | | | | | | | | | | 12,445 | | | | — | | | | — | | | | 18.68 | | | | 2/15/2027 | | | | | | | | | | | | | | | | | | | | | 1,251 | | | | — | | | | — | | | | 16.89 | | | | 3/28/2027 | | | | | | | | | | | | | | | | | | | | | 17,367 | | | | — | | | | — | | | | 17.94 | | | | 2/22/2028 | | | | | | | | | | | | | | | | | | | | | 22,227 | | | | — | | | | — | | | | 15.35 | | | | 1/11/2029 | | | | | | | | | | | | | | | | | | | | | — | | | | 24,551 | | | | — | | | | 16.01 | | | | 1/9/2030 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 122,662 | | | | 1,565,167 | | | | 0 | | | | 0 | |
Explanations of certain columns in the table follow: Col (c) Unvested Options. Column (c) reports unvested stock options. A special retention award to the CEO in 2016 included stock options, one-third of which had vested by year-end. The vesting dates of options reported in column (c) are:
Stock Options Unvested at Year-End 2017 Grant Date | | Vesting Date | | Mr. Jordan | | Mr. Losch | | Mr. Kisber | | Mr. Popwell | | Mr. Tuggle | | Vesting Date | | Mr. Jordan | | Mr. Losch | | Mr. Byrd | | Mr. Brown | | Mr. Restel | 2/12/2014 | | 2/12/2018 | | 29,864 | | 11,284 | | 28,887 | | 11,948 | | 9,585 | | 2/12/2015 | | 3/2/2018 | | 26,720 | | 10,417 | | — | | 11,029 | | 9,147 | | | | 3/2/2019 | | 26,720 | | 10,417 | | — | | 11,030 | | 9,148 | | 2/11/2016 | | 3/2/2018 | | 47,063 | | 14,307 | | — | | 15,060 | | 11,241 | | (regular) | | 3/2/2019 | | 47,063 | | 14,307 | | — | | 15,060 | | 11,241 | | | | 3/2/2020 | | 47,064 | | 14,307 | | — | | 15,060 | | 11,242 | | 2/11/2016 | | 3/2/2020 | | 137,249 | | — | | — | | — | | — | | 3/2/2021 | | | 137,249 | | | | — | | | | — | | | | — | | | | — | | (retention) | | 3/2/2021 | | 137,249 | | — | | — | | — | | — | | 3/2/2022 | | | 137,249 | | | | — | | | | — | | | | — | | | | — | | 2/10/2017 | | | 3/2/2021 | | | 27,718 | | | | 8,427 | | | | — | | | | — | | | | — | | 2/8/2018 | | | 3/2/2021 | | | 30,096 | | | | 9,363 | | | | — | | | | — | | | | — | | | | 3/2/2022 | | 137,249 | | — | | — | | — | | — | | 3/2/2022 | | | 30,097 | | | | 9,364 | | | | — | | | | — | | | | — | | 2/10/2017 | | 3/2/2018 | | 27,717 | | 8,426 | | 15,367 | | 8,869 | | 6,620 | | 2/11/2019 | | | 3/2/2021 | | | 29,164 | | | | 11,341 | | | | — | | | | — | | | | — | | | | | 3/2/2022 | | | 29,164 | | | | 11,342 | | | | — | | | | — | | | | — | | | | | 3/2/2023 | | | 29,164 | | | | 11,342 | | | | — | | | | — | | | | — | | 2/19/2020 | | | 3/2/2021 | | | 31,446 | | | | 12,106 | | | | — | | | | — | | | | — | | | | 3/2/2019 | | 27,718 | | 8,426 | | 15,367 | | 8,869 | | 6,620 | | 3/2/2022 | | | 31,446 | | | | 12,107 | | | | — | | | | — | | | | — | | | | 3/2/2020 | | 27,718 | | 8,426 | | 15,367 | | 8,870 | | 6,621 | | 3/2/2023 | | | 31,447 | | | | 12,107 | | | | — | | | | — | | | | — | | | | 3/2/2021 | | 27,718 | | 8,427 | | 15,368 | | 8,870 | | 6,621 | | 3/2/2024 | | | 31,447 | | | | 12,107 | | | | — | | | | — | | | | — | | 1/9/2020 | | | 1/9/2021 | | | — | | | | — | | | | 27,835 | | | | 8,751 | | | | 8,182 | | | | | 1/9/2022 | | | — | | | | — | | | | 27,829 | | | | 8,755 | | | | 8,187 | | | | | 1/9/2023 | | | — | | | | — | | | | 27,833 | | | | 8,750 | | | | 8,182 | |
Col (g) Unvested Non-Performance Shares & Units. Column (g) includes unvested RSUs and RS,restricted stock, specifically regular annual RSUs and special retention RS awards.“closing incentive” awards connected with the IBERIA merger. The vesting dates of those awards are shown in the following table:
| 2021 PROXY STATEMENT | 100 |
RS & RSU Awards Unvested at Year-End 2017 Grant | | Award | | Vesting | | | | | | | | | | | Date | | Type | | Date | | Mr. Jordan | | Mr. Losch | | Mr. Kisber | | Mr. Popwell | | Mr. Tuggle | 2/12/2015 | | RSU | | 3/2/2018 | | 26,720 | | 20,833 | | — | | 22,058 | | 18,294 | 2/12/2015 | | Ret RS | | 3/2/2020 | | — | | 11,064 | | — | | 14,005 | | — | 2/11/2016 | | RSU | | 3/2/2019 | | 47,063 | | 28,614 | | 30,378 | | 30,120 | | 22,482 | 2/10/2017 | | RSU | | 3/2/2020 | | 27,717 | | 16,852 | | 25,342 | | 17,739 | | 13,241 |
Grant Date | | Award Type | | Vesting Dates | | Mr. Jordan | | Mr. Losch | | Mr. Byrd | | Mr. Brown | | Mr. Restel | 2/08/2018 | | RSU | | 3/2/2021 | | | 30,096 | | | | 9,363 | | | | — | | | | — | | | | — | | 2/11/2019 | | RSU | | 3/2/2022 | | | 29,163 | | | | 11,341 | | | | — | | | | — | | | | — | | 2/19/2020 | | RSU | | 3/2/2023 | | | 31,446 | | | | 12,106 | | | | — | | | | — | | | | — | | 1/9/2020 | | RS | | 1/9/2021 | | | — | | | | — | | | | 47,422 | | | | 14,913 | | | | 13,945 | | | | | | 1/9/2022 | | | — | | | | — | | | | 47,416 | | | | 14,911 | | | | 13,944 | | | | | | 1/9/2023 | | | — | | | | — | | | | 47,421 | | | | 14,911 | | | | 13,945 | | 11/17/2019 | | IB RS | | 1/1/2021 | | | — | | | | — | | | | 299,371 | | | | — | | | | — | | 11/17/2019 | | IB RS | | 7/1/2021 | | | — | | | | — | | | | — | | | | 83,823 | | | | 80,829 | | 11/25/2019 | | IB RS | | 7/1/2021 | | | — | | | | 74,060 | | | | — | | | | — | | | | — | |
Col (i) Performance Equity Awards. Column (i) reports PSU awards, and a special retention stock unit award, granted from 20152016 through 20172020, all of which are outstanding at year-end. The performance periods and target numbers of units for those awards are shown below. The performance period for the 2015regular 2018 PSU awards has ended, but performance (relative to peers) cannot be determined until all peer companies have reported 20172020 earnings. Awards are reported in units at target levels. In all but one case,For the 2019 and 2020 PSUs, the maximum is 187.5% of target. For the 2018 PSUs, the maximum is 150% of target. For the special retention award in 2016, the maximum is 100%. That is a special incentive/retention; that award for the CEO. It pays if the total shareholder return value of a share of stock is at least $11.63 on the seventh anniversary of grant. The special award requires continuous employment with the company during the performance period.
Performance Equity Awards Unvested at Year-End 2017 (Stock Units at Target Level) Grant | | Performance | | | | | | | | | | | Date | | Period | | Mr. Jordan | | Mr. Losch | | Mr. Kisber | | Mr. Popwell | | Mr. Tuggle | 2/12/2015 | | 2015-17 | | 63,242 | | 12,327 | | — | | 13,052 | | 10,825 | 2/11/2016 | | 2016-18 | | 114,092 | | 17,342 | | — | | 18,254 | | 13,625 | 2/11/2016* | | 2/2016-2/2023 | | 155,238 | | — | | — | | — | | — | 2/10/2017 | | 2017-19 | | 64,087 | | 9,741 | | 26,648 | | 10,254 | | 7,653 |
Grant Date | | Performance Period | | Mr. Jordan | | Mr. Losch | | Mr. Byrd** | | Mr. Brown** | | Mr. Restel** | 2/11/2016* | | 2/2016-2/2023 | | | 155,238 | | | | — | | | | — | | | | — | | | | — | | 2/08/2018 | | 2018-20 | | | 70,006 | | | | 21,779 | | | | — | | | | — | | | | — | | 2/11/2019 | | 2019-21 | | | 95,219 | | | | 24,686 | | | | — | | | | — | | | | — | | 2/19/2020 | | 2020-22 | | | 104,968 | | | | 26,941 | | | | — | | | | — | | | | — | |
* | | Special CEO retention award in 2016 pays all-or-none rather than on a scale. | ** | | For NEOs who were executives of IBERIA prior to the merger, all previously-granted performance awards vested at closing. |
Cols (h) & (j) Values. Columns (h) and (j) reflect year-end market values ($19.99/12.76/share) of the awards reported in columns (g) and (i), respectively, with no discount for risk of forfeiture or time delay until vesting. The values reported are not based on financial accounting methods.
Options Exercised and Stock Vested The following table shows stock options exercised by the named officersNEOs along with other stock awards that vested during 2017.2020. The value realized on exercise of options is the pre-tax difference between the market value on the exercise date and the (lower) option price, multiplied by the number of options exercised. Option awards have no dividend feature. The legacy First Horizon stock awards consist of regular RSUs and PSUs granted in 2014,2017, all of which are paid in stock. Legacy IBERIA stock awards consist of restricted stock and performance units, granted over several years; the units were denominated in IBERIA shares but were paid in stock.First Horizon shares after applying the merger’s exchange ratio of 4.584. The dollar values shown for the stock awards are based on market prices of our stock on the respective vesting dates plus accrued cash dividend equivalents, before withholding taxes.
Options Exercised and Stock Awards Vested During 2017 | (a) | | (b) | | (c) | | (d) | | (e) | | | Option Awards | | Stock Awards | Name | | Number of Shares Acquired on Exercise(#) | | Value Realized on Exercise($) | | Number of Shares Acquired or Units Paid on Vesting(#) | | Value Realized on Vesting($) | Mr. Jordan | | — | | — | | 97,057 | | $1,786,074 | Mr. Losch | | 48,607 | | $328,941 | | 35,260 | | 678,277 | Mr. Kisber | | — | | — | | 48,746 | | 859,392 | Mr. Popwell | | — | | — | | 37,336 | | 731,457 | Mr. Tuggle | | — | | — | | 29,950 | | 576,133 |
| 2021 PROXY STATEMENT | 101 |
POST-EMPLOYMENTRECENT COMPENSATION |
Options Exercised and Stock Awards Vested During 2020 (a) | | (b) | | (c) | | (d) | | (e) | | | Option Awards | | Stock Awards | Name | | Number of Shares Acquired on Exercise (#) | | Value Realized on Exercise ($) | | Number of Shares Acquired or Units Paid on Vesting (#) | | Value Realized on Vesting ($) | Mr. Jordan | | | 185,434 | | | | 1,068,823 | | | | 96,227 | | | | 1,119,494 | | Mr. Losch | | | 45,136 | | | | 34,755 | | | | 41,270 | | | | 571,797 | | Mr. Byrd* | | | — | | | | — | | | | 255,719 | | | | 4,043,782 | | Mr. Brown* | | | 11,493 | | | | 143,813 | | | | 84,126 | | | | 1,316,499 | | Mr. Restel* | | | 16,111 | | | | 11,379 | | | | 74,130 | | | | 1,147,280 | |
* | Legacy IBERIA option and stock awards that were granted before November 3, 2019 all vested on July 1, 2020, when the merger of equals closed. |
The legacy First Horizon PSUs that vested in 2020 have not been paid. Those PSUs were granted with a mandatory two-year deferral period and will be paid on May 12, 2022. Of the Stock Award amounts shown in the table, the portions associated with PSUs or IBERIA performance units are: Jordan, 66,759 shares and $535,407; Losch, 10,147 shares and $81,379; Byrd, 181,756 shares and $1,708,122; Brown, 60,004 shares and $563,917; and Restel, 53,073 shares and $498,780. For the legacy First Horizon PSUs, the actual dollar values of the shares paid will depend on our stock value when deferral ends in 2022.
| 2021 PROXY STATEMENT | 102 |
POST-EMPLOYMENT COMPENSATION |
Post-Employment Compensation Overview & Common Terms We offer programs providing benefits after retirement and for certain other terminations. Other programs have features that enhance, accelerate, reduce, shorten, or forfeit benefits if employment terminates in various ways. Those programs and features are discussed in this section. Common terms used in the post-employment termscontext include: •· | Discharge or Resignation. A termination of employment by First Horizon or by the executive, respectively, other than for disability or retirement. |
| | •· | Disability. A permanent inability to work. |
• | | · | Retirement. A termination of employment after meeting certain age and service requirements specified in the applicable program. Some programs specify early and normal retirement requirements; others specify only normal retirement or make no provision for retirement. | | | •· | Change in Control, or CICCIC.. A corporate change in control of First Horizon as defined in the program. The definition used in active programs is discussed in “CIC Definition”CIC Definition on page 78.106. |
Pension Plans We operate two defined benefit retirement plans: a broad-based tax-qualified pension plan and an unfunded non-qualifiednonqualified pension restoration plan limited to employeesassociates for whom the qualified benefit is limited by tax law. The restoration plan extends the benefit beyond that tax law limit. The two plans effectively provide a single pension benefit. The plans were closed to new hires in 2007, and benefits were frozen at year-end 2012. Credited service years do not increase after 2012, and changes in compensation are ignored. Pension benefits are based on average compensation for the highest 60 consecutive months of the last 120 months of service prior to 2013, length of service prior to 2013, and social security benefits. Covered compensation includes cash salary reportable to the IRS plus pre-tax contributions under the savings plan and employee contributions under the flexible benefits plan, and excludes bonuses, commissions, other deferred compensation, and incentives. A “normal” pension benefit provides a monthly payment to the employeeassociate for life beginning at retirement at age 65. Participants under age 65 who are at least age 55 with 15 years of service may retire early with a reduced pension benefit. The reduction varies based on age at retirement. Similarly, a delay in retirement will increase benefits. A participant may make other elections which change the benefit. Those include a spousal benefit election, a minimum (certain) payment term, and a lump sum benefit (restoration plan only). Married participants often choose a qualified joint and survivor annuity with a surviving spouse receiving 50 percent of the participant’s benefit. The following table shows estimated normal retirement benefits under the pension plans as of December 31, 2017.2020. Mr. Losch does not participateJordan is the only NEO who participates in thesethe pension plans. Pension Benefits at Year-End 2017 2020 (a) | | (b) | | (c) | | (d) | | | (e) | | | | | Number of | | Present | | | | | | | | Years of | | Value of | | | Payments | | | Years of | | Credited | | Accumulated | | Value of | During Last | Name | | Plan | | Service (#) | | Benefit ($) | | | Fiscal Year ($) | | | Credited | Accumulated | Last Fiscal | Name | Plan | Service (#) | Benefit ($) | | Year ($) | Mr. Jordan | | Qualified | | 6 yrs | | $286,332 | | 382,773 | — | | Restoration | | 6 yrs | | 856,035 | | | — | | | | | | | | | | | Mr. Kisber | | Qualified | | 20 yrs | | $947,911 | | | — | | Restoration | | NA | | NA | | | NA | | | | | | | | | | | Mr. Popwell | | Qualified | | 6 yrs | | $306,726 | | | — | | Restoration | | 6 yrs | | 399,873 | | | — | | | | | | | | | | | Mr. Tuggle | | Qualified | | 9 yrs | | $580,141 | | | — | | Restoration | | 9 yrs | | 980,820 | | 1,181,102 | — |
Explanations of certain columns follow: Col (c). This column shows full years of credited service, unchanged since 2012. Col (d). Column (d) reflects the actuarial present value of each named executive’sNEO’s accumulated benefit, computed as of the same pension plan measurement date used for financial statement reporting purposes with respect to 20172020 except that retirement age is assumed to be the normal retirement age of 65. Column (d) amounts were calculated by the pension plan actuary using the projected unit credit cost method. This method
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recognizes cost in an increasing pattern as a participant approaches retirement. The 20172020 discount rates are 3.76%2.63% for the pension plan and 3.59%2.24% for the pension restoration plan and reflect the expected average term until settlement of each of these plans. The assumptions on which the
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amounts presented in the table are based are discussed in note 18 to our financial statements. Col (e). No pension benefit amounts were paid during 20172020 to any named executive officer.NEO.
Non-QualifiedNonqualified Deferred Compensation Plans
We provide several plans allowinga traditional deferral plan for executives, not qualified under tax rules, which allows executives to defer receipt and taxation of cash salary and bonus. Deferred amounts are credited to accounts and earnings accrue according to the provisions of eachthe plan. Participants have some discretion regarding the length of the deferral period, the investment criteria upon which earnings are based, and whether payout will be lump sum or an annuity. A commonly selected deferral period lasts until employment terminates. These Our qualified savings deferral plan allows an associate to make contributions of salary into a plan account, subject to limits imposed by tax laws. We provide a 100% match under the qualified savings plan for the first 6% of salary each eligible participant (having at least one year of service) elects to defer into the plan. We have adopted a nonqualified savings restoration plan for those associates, including executives, whose base salary exceeds the tax limits imposed on the qualified savings plan. The restoration plan provides a nonqualified vehicle for employees to participate in a savings plan beyond the tax law limits. Unlike the qualified plan, the restoration plan is unfunded. The restoration plan offers many of the same investment options as the qualified plan, but our stock is not among those. Our nonqualified plans are unfunded:unfunded, meaning that no trust holds funds inor investments for any of the accounts which legally areother than, in certain cases, a rabbi trust that our management cannot access but that our creditors could access in case of our bankruptcy. Legally, each plan account is an unsecured debt we owe participants. In all plans eachthe participant. Each account is fully vested and non-forfeitable. Except for the timing of payments, plan accounts are not reduced or enhanced by termination of employment, change in control, or other event.
The qualified plan allows an employee to make contributions of salary into a plan account, subject to limits imposed by tax laws. We provide a 100% match under the broad-based tax-qualified savings plan for the first 6% of salary each eligible
participant (having at least one year of service) elects to defer into the plan.
We have adopted a savings restoration plan for those employees, including most executives, whose base salary exceeds the tax limits imposed on the qualified plan. The restoration plan provides a nonqualified vehicle for highly-paid employees to continue to participate in a savings plan beyond the tax law limits. Unlike the qualified plan, the restoration plan is unfunded. The restoration plan offers many of the same investment options as the qualified plan, but our stock is not among those.
We reduce the risk of our obligations under the restoration and otherour nonqualified deferred compensation plans by purchasing investments designed to track the performance of the investment elections made by participants. The qualified savings plan has no such risk to us because all accounts are fully funded with the plan’s trust holding the investments selected by each participant. Information concerning account activities and balances of the named executive officersNEOs with respect to non-qualifiednonqualified deferred compensation plans, including the savings restoration plan, is presented below.
Nonqualified Deferred Compensation During 2020 and at Year-End 2017 (a) | | (b) | | (c) | | (d) | | (e) | | (f) | | (b) | | (c) | | (d) | | (e) | | (f) | | | Executive | | Company | | Aggregate | | | | Aggregate | | Executive | | Aggregate | | Aggregate | | Aggregate | | | Contributions in | | Contributions in | | Earnings in | | Aggregate | | Balance at Last | | Contributions in | | Company | | Earnings in | | Withdrawals/ | | Balance at Last | | | Last Fiscal | | Last Fiscal | | Last | | Withdrawals/ | | Fiscal Year | | Last Fiscal Year | | Contributions in | | Last Fiscal | | Distributions | | Fiscal Year | Name | | Year ($) | | Year ($) | | Fiscal Year ($) | | Distributions ($) | | End ($) | | ($) | | Last Fiscal Year ($) | | Year ($) | | ($) | | End ($) | | | | | | | | | | | | | | | | | | | | | | | Mr. Jordan | | | $403,350 | | | | $36,300 | | | | $346,262 | | | | — | | | | $2,559,705 | | | | 420,152 | | | 851,845 | | | 1,642,059 | | | — | | | 5,996,725 | | Mr. Losch | | | 24,600 | | | | 12,300 | | | | 22,748 | | | | — | | | | 169,505 | | | | 20,492 | | | 129,476 | | | 325,730 | | | — | | | 473,225 | | Mr. Kisber | | | 39,600 | | | | 19,800 | | | | 70,309 | | | | — | | | | 1,383,381 | | | Mr. Popwell | | | 27,600 | | | | 13,800 | | | | 19,919 | | | | — | | | | 182,655 | | | Mr. Tuggle | | | 24,600 | | | | 12,300 | | | | 82,307 | | | | — | | | | 564,541 | | | Mr. Byrd* | | | | — | | | 14,361,696 | | | 852,113 | | | — | | | 18,711,277 | | Mr. Brown* | | | | — | | | 6,804,718 | | | 300,594 | | | — | | | 7,105,312 | | Mr. Restel* | | | | — | | | 5,528,296 | | | 412,323 | | | — | | | 6,983,046 | |
* | All data in columns (b)-(e) for these NEOs are since July 1, 2020, when they joined First Horizon from IBERIA, not for the full year. |
Explanations of certain columns follow: Col (b).Traditional nonqualified deferred compensation plan.plan. Currently up to 80% of cash salary and 80% of annual cash bonus may be deferred in theour traditional nonqualified deferred compensation plan for executives. Col (b).Savings restoration plan.plan. Column (b) also includes executive salary contributions to thisour savings restoration plan. Col (c). Includes company matching contributions under the savings restoration plan.plan, and PSUs that vested during the year (valued at vesting). Our executive PSUs are subject to a mandatory two-year payment deferral. We make no company
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contributions to the traditional nonqualified deferred compensation plan. Column (c) also includes, for Messrs. Byrd, Brown, and Restel, amounts we became obligated to pay in relation to change in control benefits under certain agreements signed in relation to the merger. See Agreements related to IBERIA Merger beginning on page 108 for additional information. Col (d). Earnings reflect interest for those accounts that earn interest. For accounts that arehold phantom shares of stock or mutual funds, earnings reflect increases and decreases of account value throughout the year. Those amounts are netted as applicable to the individual.
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Col (e). For 2020, amounts shown are the values of deferred PSUs paid in 2020 that had vested in 2018. Hardship withdrawals are allowed under certain deferral plans. Except under the savings restorationIn our traditional plan, an in-service distribution date may be selected when the deferral election is made. Col (f). Certain plan accounts are denominated as numbers of shares of stock or mutual funds. All such accounts are valued based on the fair market value of those shares at year-end. The information above excludes theour tax-qualified savings plan. For additional information concerning deferred compensation plans see “Deferral,Deferral, Retirement, and Other Benefits”Benefits beginning on page 63.89.
Employment & Termination Arrangements We have no traditional employment agreement with any named executive.NEO except Mr. Byrd. Many plans and programs contain special provisions regarding termination of employment in various common situations, including in connection with retirement or a change in control. We also have certain other arrangements that deal primarily with retirement and change in control situations. Each of the NEOs signed letter agreements in connection with our merger with IBERIA. See Agreements related to IBERIA Merger beginning on page 108. Also, Mr. Byrd had an employment agreement with IBERIA that continues with First Horizon. See Daryl Byrd Employment Agreement beginning on page 109. This section provides information concerning those provisions, arrangements, and arrangements.agreements.
Termination Unrelated to Change in Control The table below summarizes the impact upon the amounts of various items of compensation of a termination of employment under certain circumstances, other than termination related to a change in control event. Change in control situations are discussed in the following section. In addition to forfeiture of unpaid benefits, many awards provide for clawback of paid benefits if discharge “for cause,” as defined in the applicable program, occurs within two years of payment.
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Impact of Termination Events on Unpaid Compensation Items | | Resignation/Discharge | | Death/Disability | | Retirement | | Key Facts | | | | | | | | | | MIPAnnual Cash Bonus Plan Opportunity | | Forfeit | | Generally forfeit, but discretionary payment is possible | | Generally forfeit, but discretionary payment is possible | | Committee can pro-rate or fully waive service requirement, still subject to performance conditions | | | | | | | | | | PSUs | | Forfeit | | Pro-rated waiver of service requirement, no waiver of performance | | For approved retirement, pro-rated waiver of service requirement, no waiver of performance | | Committee may require covenants such as non- competesnon-competes as a condition for retirement approval | | | | | | | | | | Exercisable Stock Options | | Expire 3 months after termination | | Expire 3 years after termination | | Expire 3 years after termination | | Option term is shortened to new expiration date, cannot be extended | | | | | | | | | | Unexercisable Stock Options | | Forfeit | | Expire 3 years after termination | | Expire 3 years after termination | | Option term is shortened to new expiration date, cannot be extended | | | | | | | | | | Restricted Stockstock & RSUs | | Forfeit | | Pro-rated | | Discretionary payment is possible, usually pro-rated if approved | | Committee may accelerate vesting in normal retirement situations subject to compliance with covenants such as non-competes | | | | | | | | | | Pension Plans, Qual’d Savings Plan, NQ Def’d Comp Plans | | No impact | | No impact | | No impact | | Contributions, accounts, and benefits are fully vested | | | | | | | | | | Savings Restoration Plan | | Lump sum payment | | Lump sum payment | | Lump sum payment | | Benefits are fully vested; any termination triggers payment |
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Change in Control (CIC) Arrangements Special change in control (CIC) severance agreements are in place with each named executive officer.certain of the NEOs. In addition, many of our compensation programs have special provisions that apply if we experience a CIC event. This section provides information concerning arrangements and benefits that would apply if a CIC occurs. CIC Definition
In our plans and programs, the term “change in control” includes the following events: •· | A majority of the members of our Board of Directors changes, with certain exceptions. | | | •· | A person or other entity becomes the beneficial owner of 20 percent or more of our outstanding voting stock, with certain exceptions. | | | •· | Our shareholders approve, and there is a consummation of, a merger or other business combination, unless (i) more than 50% (60% in the CIC severance agreements)agreements and CIC Plan) of the voting power resulting from the business combination is represented by voting securities |
| represented by voting securities outstanding immediately prior thereto, (ii) no person or other entity beneficially owns 20% or more of the resulting corporation, and (iii) at least a majority (a two-thirds majority in the CIC severance agreements) of the members of the board of directors of the resulting corporation were our directors at the time of board approval of the transaction. | | | •· | Our shareholders’shareholders approve a plan of complete liquidation or dissolution or a sale of substantially all of our assets. In 2016, twoTwo major plans—the Equity Compensation Plan and the Management Incentive Plan—were amended soprovide that consummation of an asset sale, rather than mere approval, is a CIC event. |
Summary of CIC Effects
The following table summarizes the impacts of a CIC event on various items of compensation. Details about current dollar amounts of many of these items are provided in the “CICCIC Potential Payout”Payout section below.
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Impact of CIC on Unpaid Compensation Items Item | | Impact | | Key Factors | | | | | | MIPAnnual Cash Bonus Plan Opportunity | | Pro-rate target amount of bonus if employment terminates | | Performance at target is presumed; pro-rating is based on % of performance period elapsed | | | | | | PSUs | | Award is paid at target if employment terminates; award may be adjusted, or converted to non-performance RSUs, if employment continues. | | Committee has discretion to adjust or convert awards depending on the CIC context | | | | | | Exercisable Stock Options | | No impact | | | | | | | | Restricted Stock, RSUs, Unexercisable Stock Options | | Accelerate if employment terminates, otherwise no impact | | Awards have a double-trigger feature | | | | | | Qualified Pension Plan | | Limited impact | | Any excess funding is allocated to all plan participants | | | | | | Pension Restoration Plan | | Lump sum payment | | See details below | | | | | | Qualified Savings Plan | | No impact | | | Savings Restoration Plan | | No impact from CIC | | Any separation results in lump sum payment; CIC itself has no effect on amount or timing of payment | | | | | | | | | | | NQ Deferred Compensation | | Limited impact | | Accounts are paid into rabbi trusts, inaccessible to FHN’sFirst Horizon’s successor | | | | | | CIC Severance Agreements | | Cash payment & other benefits if employment terminates | | CIC benefits are discussed in the next section |
Under the pension restoration plan, a lump sum payment is made to participants representing the present value, using a discount rate of 4.2%, of the participant’s scheduled projected benefits actuarially adjusted based on the participant’s age at the time of the CIC event. For participants under age 55, the CIC calculation is made assuming age 55 hadhas been reached.
| 78CIC Severance Agreements |
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CIC Severance Agreements
We have CIC severance agreements with alltwo of the named executives.NEOs, Messrs. Jordan and Losch. The agreements provide a paymentcash severance benefit equal to three times annual base salary plus three times a “bonus amount” if we discharge the officer other than for disability, retirement, or cause, or if the officer resigns for a predefined good reason, in either case within 36 months after a CIC event. The “bonus amount” is the average actual annual cash bonus paid over the preceding five years, excluding the years with the highest and lowest bonuses. Older agreements (Messrs. Jordan and Tuggle) provideMr. Jordan’s 2007 agreement provides generally for a federal excise tax gross-up; Mr. Losch’s newer agreements (Messrs. Losch, Kisber, and Popwell) have(2009) agreement has no suchgross-up provision. Severance payments are to be reduced if a small reduction in benefit (up to 5% or $50,000) would avoid the excise tax. The agreements provide for continued healthcare and life insurance benefits for an 18-month period as allowed by tax laws. Non-disparagement, cooperation, and non-solicitation covenants are included in the agreements. These agreements do not guarantee employment for any term or period; they only apply if loss of employment occursends within a certain period following a CIC event. Each agreement generally can be terminated unilaterally uponwith three years’ prior notice. Two of the named executive officers, Messrs. Brown and Restel, participate in our new (2021) Executive Change in Control Severance Plan (“CIC Potential PayoutPlan”). For these two officers, the CIC Plan provides a cash severance benefit equal to 2.5 times annual base salary plus 2.5 times a “bonus amount” if we discharge the officer other than for disability, retirement, or cause, or if the officer resigns for a predefined good reason, in either case within 36 months after a CIC event. The “bonus amount” is the average actual annual cash bonus paid over the preceding five years, excluding the years with the highest and lowest bonuses. Severance payments are to be reduced if a small reduction in benefit (up to 5% or $50,000) would avoid the excise tax. The agreements provide for continued healthcare and life insurance benefits for an 18-month period as allowed by tax laws. Non-disparagement, cooperation, and non-solicitation covenants are incorporated into the Plan. The CIC Plan does not guarantee employment for any term or period. Participation in the CIC Plan generally can be terminated unilaterally with three years’ prior notice, subject to certain extensions.
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The table below shows potential amounts payable to the named executive officersNEOs if a CIC had occurred and employment with us had terminated on December 31, 2017.2020. The closing stock price on December 31, 20172020 of $19.99$12.76 per share is used when valuing stock based items. For purposes of the table, the following assumptions and adjustments have been made: (1) the present value of future health and welfare and other non-cash benefits is calculated by using current costs; (2) the value of non-forfeitednon- forfeited stock options is based solely on the spread between the option price and our actual year-end stock value; and (3) no forfeiture factors exist. Many of the amounts shown in the table accelerate the timing of payment of an amount that would have been paid eventually without increasing the amount paid. The table shows all payment amounts, whether or not increased by the CIC and termination, whether or not increased by the CIC, for the sake of completeness. Also, the table includes Messrs. Brown and Restel under our new CIC Plan, even though participation began in 2021.
Potential Dollar Value of Payments Upon An Assumed Termination of Employment at Year-End 20172020 Related to a CIC Event | | Cash | | | Pro Rata | | Stock | | Pension | | Savings | | Health & | | | | Tax Gross-up | | | | Name | | Severance | | | Bonus* | | Awards | | Restoration** | | Restoration | | Welfare | | Other | | Payments*** | | Total | | | Cash Severance | | Pro Rata Bonus* | | Stock Awards | | Pension Restoration** | | Savings Restoration | | Health & Welfare | | Other**** | | Tax Gross-up Payments*** | | Total | | Mr. Jordan | | $ | 5,684,400 | | | $ | 1,019,800 | | | $ | 15,480,439 | | | $ | 765,986 | | | $ | 394,586 | | | $ | 28,988 | | | $ | 25,000 | | | $ | 7,551,833 | | | $ | 30,951,032 | | | $6,809,800 | | $1,239,933 | | $7,548,712 | | $803,825 | | $736,749 | | $21,009 | | $25,000 | | $4,892,916 | | $22,077,944 | | Mr. Losch | | | 2,491,250 | | | | 355,417 | | | | 2,991,924 | | | | NA | | | | 169,505 | | | | 24,066 | | | | 25,000 | | | | NA | | | | 6,057,162 | | | 3,513,000 | | 496,000 | | 2,439,056 | | NA | | 323,455 | | 26,856 | | 25,000 | | NA | | 6,823,367 | | Mr. Kisber | | | 8,424,000 | | | | 2,208,000 | | | | 1,938,127 | | | | NA | | | | 436,604 | | | | 26,987 | | | | 25,000 | | | | NA | | | | 13,058,718 | | | Mr. Popwell | | | 2,687,500 | | | | 395,833 | | | | 3,204,193 | | | | 362,440 | | | | 182,655 | | | | 24,647 | | | | 25,000 | | | | NA | | | | 6,882,268 | | | Mr. Tuggle | | | 2,548,000 | | | | 374,333 | | | | 2,250,201 | | | | NA | | | | 209,414 | | | | 24,066 | | | | 25,000 | | | | NA | | | | 5,431,014 | | | Mr. Byrd | | | NA | | NA | | 5,635,199 | | NA | | NA | | NA | | 4,275,000 | | NA | | 9,910,199 | | Mr. Brown | | | NA | | NA | | 1,640,400 | | NA | | NA | | NA | | 25,000 | | NA | | 1,665,400 | | Mr. Restel | | | NA | | NA | | 1,565,167 | | NA | | NA | | NA | | 25,000 | | NA | | 1,590,167 | |
| | | * | | The amounts in this column reflect the “bonus“the bonus amount” defined in each CIC severance agreement discussed above. | | | | ** | | Absent a CIC event, a participant in the pension restoration plan can elect, at termination of employment, to receive a lump sum payment based on the present actuarial value of the expected pension payment stream. In a CIC context, participants will receive a lump sum payment in lieu of the payment stream. If a participant terminated in relation to a CIC is under age 55 or has less than 15 years of service, the CIC lump-sum payment would be enhanced to reflect that age and those service years. The amountsamount in the Pension Restoration column of the table for Messrs.Mr. Jordan and Popwell reflectreflects an estimate of that enhancement measured at year-end. Due to his age and length of service, Mr. Tuggle would receive no such enhancement. Messrs. Losch and Kisber are not participants. | | | | *** | | Messrs.Mr. Jordan and Tuggle havehas the right to receive an excise tax gross-up payment, an estimate of which is included in the table. Based | **** | | $4,250,000 was paid based on the assumptions of his hypothetical termination at year-end, Mr. Tuggle’s estimated gross-up amount would be zero. For Messrs. Losch, Kisber, and Popwell, who have agreements after 2008, no gross-up would be paid.Byrd’s employment agreement. |
Agreements related to IBERIA Merger When we signed the IBERIA merger agreement in 2019, we also signed a letter agreements with Messrs. Jordan, Losch, and Byrd. In addition, at that time IBERIA signed letter agreements with Messrs. Byrd, Brown, and Restel. Mr. Byrd’s letter agreements amended his pre-merger employment agreement with IBERIA which continues, as amended, with First Horizon. Bryan Jordan Letter Agreement |
Our letter agreement with Mr. Jordan (the “Jordan Letter Agreement”) required Mr. Jordan to resign as Chairman of the Board on July 1, 2020, which was the closing date of the IBERIA merger. It further provides that he will continue to serve as the President and Chief Executive Officer of our company and First Horizon Bank. Mr. Byrd became our Executive Chairman, as discussed in the next section. Mr. Jordan will be reappointed as Chairman after Mr. Byrd steps down. Under the Jordan Letter Agreement, Mr. Jordan waived any rights to terminate his employment for “Good Reason” under his Change in Control Severance Agreement as a result of those changes, so long as Mr. Jordan remains President and Chief Executive Officer and later is reappointed as Chairman as provided in his Letter Agreement. Daryl Byrd Letter Agreements |
First Horizon Letter Our letter agreement with Mr. Byrd (the “Byrd-FH Letter Agreement”) provides that Mr. Byrd will serve as Executive Chairman of our company and of First Horizon Bank through July 1, 2022, which is the second anniversary of the closing date of the merger of equals (the “Employment Period”). Mr. Byrd has the right to shorten his Employment Period in certain respects, at his election. Following his Employment Period, Mr. Byrd has agreed to serve as Special Advisor to the chief executive officer until July 1, 2025 (the “Advisor Period”).
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During his Employment Period, Mr. Byrd’s annual target direct compensation and form of long-term incentive awards will be in the same amounts and on the same terms, and with the same payout determinations and amounts, as those that apply to Mr. Jordan, subject to certain exceptions. Mr. Byrd is eligible to participate in the same employee benefit plans as are made available to similarly situated First Horizon executives, and he will continue to receive the same or similar perquisites as IBERIA made available to him before the merger of equals. During his Advisor Period, Mr. Byrd will receive an annual consulting fee equal to (i) $3.75 million for the first two years and (ii) $3.5 million for the third year. Through the end of the Consulting Period, Mr. Byrd will continue to have access to administrative support, office space and security arrangements provided by the surviving entity. Mr. Byrd also is being paid a one-time cash Integration and Continuity Award in the total amount of $5 million, payable in $250,000 quarterly installments over five years. We are required to accelerate payment of the remaining installments of the award when Mr. Byrd transitions from Executive Chairman to Special Advisor, or if Mr. Byrd’s employment terminates earlier, unless his termination is by First Horizon for “cause” or by Mr. Byrd without “good reason,” in each case as defined in the Byrd-FH Letter Agreement. Any paid portion of the award is subject to repayment and recovery by First Horizon, and any unpaid portion will be forfeited, if (i) First Horizon terminates Mr. Byrd for cause, (ii) Mr. Byrd resigns other than for good reason, or (iii) Mr. Byrd materially violates the restrictive covenants in the Byrd-FH Letter Agreement (described below). If Mr. Byrd’s employment or consulting arrangement, as applicable, is terminated by First Horizon other than for cause or by him for good reason, that termination will not affect the compensation to be provided to him under the Byrd-FH Letter Agreement, subject to his continued compliance with certain restrictive covenants. If Mr. Byrd dies during the Employment Period or the Advisor Period, any remaining unpaid amounts due to him under the Byrd-FH Letter Agreement (determined assuming target-level performance) will be paid to his estate, to the extent such unpaid amounts exceed the value of incremental life insurance benefits. Under the Byrd-FH Letter Agreement, Mr. Byrd has agreed to certain restrictive covenants, including non-competition and non-solicitation covenants, for the 5-year period following the closing date of the merger of equals (through July 1, 2025). He will also be subject to indefinite non-disparagement and confidentiality covenants. The Byrd-FH Letter Agreement does not affect certain severance and other benefits under the terms of his Employment Agreement in the context of the IBERIA-First Horizon merger. See Daryl Byrd Employment Agreement beginning on page ·. IBERIA Letter IBERIA’s letter agreement with Mr. Byrd (the “Byrd-IB Letter Agreement”) provided for a special restricted stock award. The award was granted in November 2019 and would have forfeited if the merger had not been closed. The award had a grant-date value of $5,000,000 and vested on January 1, 2021, the six-month anniversary of the merger’s closing date. This special award is subject to repayment and recovery by First Horizon if (i) First Horizon terminates Mr. Byrd for cause, (ii) Mr. Byrd resigns other than for good reason, or (iii) Mr. Byrd materially violates the restrictive covenants in the Byrd-FH Letter Agreement, in each case prior to July 1, 2022. Daryl Byrd Employment Agreement |
Mr. Byrd had an employment agreement with IBERIA (the “Byrd Employment Agreement”). The Byrd-FH Letter Agreement changed the duration of the Byrd Employment Agreement, along with Mr. Byrd’s position, it modified his compensation arrangements, and it superseded the Employment Agreement in many other respects. The Byrd-IB Letter agreement provided Mr. Byrd with a special restricted stock award, not contemplated by the Byrd Employment Agreement. These and other matters are noted above in Daryl Byrd Letter Agreements. The Byrd-FH Letter Agreement left in place a change in control severance benefit for Mr. Byrd. For purposes of the Byrd Employment Agreement, the IBERIA-First Horizon merger was a change in control event, and the changes to Mr. Byrd’s position gave him good reason to resign. The Byrd Employment Agreement provides Mr. Byrd with a change in control cash benefit of $14,979,262 which, by the terms of the Byrd-FH Letter Agreement, will be paid to Mr. Byrd when he transitions from Executive Chairman to Special Advisor, or if earlier, when his employment otherwise ends (subject to a possible 6-month delay for tax reasons). The benefit is not forfeitable, and payment is supported by a rabbi trust arrangement. Although the benefit has not yet been paid to Mr. Byrd, it is included as other compensation for 2020 in the Summary Compensation Table on page 94 and is reported as deferred compensation in the Nonqualified
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POST-EMPLOYMENT COMPENSATION |
Deferred Compensation During 2020 and at Year-End table on page 104. In addition, we are required to pay Mr. Byrd certain tax gross up amounts, which we estimate will be approximately $7,370,457, assuming current tax laws remain in effect. The Byrd Employment Agreement also provides for the continuation of certain health and welfare benefits for Mr. Byrd and certain of his dependents for 39 months after his employment ends. Bylaw Provision Restricting Removal |
As we agreed in the IBERIA merger agreement, under our bylaws (as amended when the IBERIA merger closed), the affirmative vote of at least 75% of our Board would be required to remove Mr. Jordan or Mr. Byrd from serving in the capacities set forth in their respective letter agreements. This provision expires on the third anniversary of the merger, July 1, 2023. Other NEO Letter Agreements |
First Horizon Letter Agreements Our letter agreement with Mr. Losch specified his position and role with First Horizon after the merger, and provided for the grant of a special restricted stock award in consideration for his waiver of any right to terminate his employment for good reason under his Change in Control Severance Agreement in connection with the merger of equals. The award was granted in November 2019 and would have been forfeited if the merger had not closed. The award had a grant-date value of $ 1,250,000 and will vest on July 1, 2021, the anniversary of the merger’s closing date. Mr. Losch’s waiver will not operate if, during his 36-month protected period (expiring July 1, 2023), we terminate his employment without cause or take actions (beyond those which took effect when the merger closed) which would give him good reason to resign. This special award is subject to repayment and recovery by First Horizon if Mr. Losch materially violates certain restrictive covenants, including non-solicitation covenants, for one year following the closing date of the merger of equals. He is also subject to indefinite non-disparagement and confidentiality covenants. IBERIA Letter Agreements IBERIA’s letter agreements with Messrs. Brown and Restel specified their positions and roles with First Horizon after the merger and provided each with a special restricted stock award. Each award was granted in November 2019 and would have been forfeited if the merger had not closed. The awards had grant-date values of $1,400,000 (Mr. Brown) and $1,350,000 (Mr. Restel) and will vest on July 1, 2021, the anniversary of the merger’s closing date. Each special award is subject to repayment and recovery by First Horizon if the executive materially violates certain restrictive covenants, including non-solicitation covenants, for one year following the closing date of the merger of equals. Each executive is also subject to indefinite non-disparagement and confidentiality covenants. Messrs. Brown and Restel each had a change in control severance agreement with IBERIA. Each agreement allowed the executive to trigger a severance benefit if a change in control of IBERIA occurred, and if the executive resigned within 30 days after closing for any reason. To incentivize these executive officers to remain with First Horizon following the closing, the letter agreements guarantee that each executive will receive, when employment ends, the cash benefit that otherwise would have been paid had the executive resigned in July 2020. Those amounts were $7,097,327 for Mr. Brown, and $5,766,018 for Mr. Restel, and were treated as contributions to their nonqualified deferred compensation plan accounts. Although these benefits have not yet been paid to the executives, they are included as other compensation for 2020 in the Summary Compensation Table on page 94. They are also included as deferred compensation in the Nonqualified Deferred Compensation During 2020 and at Year-End table on page 104. In addition, we are required to pay Messrs. Brown and Restel certain tax gross up amounts, which we estimate will be approximately $3,529,024 (Mr. Brown) and $2,990,417 (Mr. Restel), assuming current tax laws remain in effect. Each letter agreement also provides for the continuation of certain health and welfare benefits for the executive and certain dependents for 39 months after the executive’s employment ends.
| 2021 PROXY STATEMENT | 110 |
Director Compensation Directors in 20172020 At year-end 2017 and currently,For nearly the first four months of 2020, we have twelvehad fourteen directors:
First Horizon Directors at 1/1/2020 | | Kenneth A. Burdick | Scott M. Niswonger | John C. Compton | | Vicki R. Palmer | Mark A. Emkes | Wendy P. Davidson | Colin V. Reed | Peter M. Foss | Mark A. Emkes | Cecelia D. Stewart | Corydon J. Gilchrist | Peter M. Foss | Rajesh Subramaniam | Corydon J. Gilchrist | R. Eugene Taylor | D. Bryan Jordan
(Chairman) | | R. Eugene Taylor
(Vice Chairman) | Scott M. Niswonger | | Luke Yancy III |
At the 2020 annual meeting, Messrs. Foss and Taylor joinedNiswonger retired from our Board. The Board size was reduced to twelve, and the remaining directors were re-elected. At the closing of the IBERIA merger of equals on July 1, our Board on November 30 after consummationexpanded to seventeen members. Messrs. Emkes, Gilchrist, and Yancy resigned from our Board, and the resulting eight vacancies were filled with directors from IBERIA, all in accord with the merger agreement. After July 1, 2020, our Board consisted of our merger with Capital Bank Financial Corp. In addition, R. Brad Martin served during most of 2017. Mr. Martin retired in December after 23 years of service. Compensation paid to Mr. Martin in 2017 is included in the following disclosures.directors:
First Horizon Directors Post-Merger | | Harry V. Barton, Jr. | Rick E. Maples | Kenneth A. Burdick | Vicki R. Palmer | Daryl G. Byrd | Colin V. Reed | John N. Casbon | E. Stewart Shea III | John C. Compton | Cecelia D. Stewart | Wendy P. Davidson | Rajesh Subramaniam | William H. Fenstermaker | Rosa Sugrañes | D. Bryan Jordan | R. Eugene Taylor | J. Michael Kemp, Sr. | | | | |
Messrs.Mr. Jordan (our Chief Executive Officer) and TaylorMr. Byrd (our Executive Chairman) serve on our Board but, because they are alsowere employees in 2020, they arewere not paid for Board service. No director program discussed in this section applies to either of them. No other director is an employee of ours. For information concerning Mr.Messrs. Jordan and Byrd, see “CompensationCompensation Discussion & Analysis,” “Recent Recent Compensation,” and “Post-Employment Compensation” Post-Employment Compensation beginning on pages 43, 66,70, 94, and 75,103, respectively. Information concerning Mr. Taylor is provided in this section.
Non-Employee Director Compensation Programs Non-employee director compensation falls into two categories: base retainer and additional retainers. For each director the baseBase retainer is $130,000, paid half in two parts: a cash retainer, paid in quarterly installments; and halfan RSU retainer, granted in RSUs.April following the annual meeting of shareholders. Additional cash retainers are paid in cash for particular assignments, such as lead director or Audit Committee chair. Audit Committee members who also serveserved on the Trust Audit Committee of the Bank arewere not separately compensated for Trust Audit service. The Trust Audit Committee was dissolved in January 2020. The pay year for our directors starts April 1 and ends March 31, roughly synchronous with our annual meeting.meeting cycle. Pre-Merger Director Compensation Director pay is summarizedlevels before the IBERIA merger of equals are shown in this table: Pre-Merger Annual Director Compensation 2017-18 Item | | Annual Amt | | | Base Retainer – cash portion: | | $65,000 | | | Base Retainer – RSU portion: | 65,000 | 85,000 | | Additional Retainers (all cash): | | | | Lead director | | 25,000 | | | ChairmanChair – Audit | | 32,000 | | | ChairmanChair – Executive & Risk | | 28,000 | | | ChairmanChair – Compensation | | 17,500 | | | ChairmanChair – other committees | | 10,000 | | | Non-chair service – Audit | | 8,000 | | | Non-chair service – Exec & Risk | | 8,000 | |
| 2021 PROXY STATEMENT | 111 |
RSUs are granted under our Equity Compensation Plan following election at the annual meeting.
RSUs vest in the year following grant, accrue dividends while unvested, and are paid in stock. PaymentRSU payment is required to be deferred for two years after vesting; the dollar value at grant is discounted to reflect that deferral. Grants are pro-rated for anyone elected to the Board after the annual meeting, such as Mr. Foss. Post-Merger Director Compensation Following the IBERIA merger of equals, in July 2020 our Board reconsidered director pay levels benchmarked against practices at our peer banks. As discussed above in Market Reference Perspective: Peer Group and Benchmarking beginning on page 79, by late July we had nearly doubled our asset size, and we adjusted our peer bank group accordingly to remain nearly in the middle. The Board determined to adjust director compensation, effective July 1, to provide a competitive package for current and prospective directors. Pay levels after the merger for current directors are shown in this table: Post-Merger Annual Director Compensation | | | | Item | | | Annual Amt | Base Retainer – cash portion: | | | $80,000 | | Base Retainer – RSU portion: | | | 122,000 | | Additional Retainers (all cash): | | | | | Lead director | | | 50,000 | | Chair – Audit | | | 32,000 | | Chair – Executive & Risk | | | 50,000 | | Chair – other committees | | | 20,000 | | Non-chair service – Audit | | | 10,000 | | Non-chair service – Exec & Risk | | | 10,000 | |
In addition to changing compensation levels, the Board made new committee assignments, effective at the closing of the merger, as discussed in Board Committees beginning on page 25. 2020 Transition Cash Retainers Legacy IBERIA directors who were elected to our Board when the merger closed have been paid cash retainers quarterly at the post-closing annual rate, starting with the third calendar quarter of 2020. Legacy First Horizon directors who continued in office after closing were paid at the old rate (based on old committee assignments) for the second quarter of 2020, and at the new rate (based on new committee assignments) starting with the third quarter. Legacy First Horizon directors who resigned at closing were paid for service during the second quarter of 2020. In addition, all persons on the legacy First Horizon Board at the beginning of 2020 were paid cash retainers at the old rate for the first quarter of 2020. RSUs RSUs were granted to legacy First Horizon directors following election at the 2020 annual meeting in April. After the IBERIA merger closed, as discussed above, the Board approved a supplemental grant of RSUs to all directors then in office. The supplemental grants brought all fifteen non-employee directors up to the new annual RSU grant level for the entire 2020-21 director pay year, taking into account the regular annual stock award grants each had received earlier in 2020 from his or her legacy company before the merger closed. Other Non-Employee Director Programs Non-employee directors may serve as members of our Bank’s regional boards and may be paid, as additional Board compensation, cash attendance fees up to $500 per regional board meeting. In addition, directors may receive the following benefits: a personal account executive, a no fee personal checking account for the director and his or her spouse, a debit card, a no-fee VISA card, no fee for a safe deposit box, no fee for traveler’s checks and cashier’s checks, use of tickets for marketing and other business events up to $5,000 in value, and, subject to certain restrictions and limitations, the repurchase of shares of our common stock under a Board-approved repurchase program with no payment of any fees or commissions. Directors may participate in a charitable gift matching program up to $25,000 per year. Many directors have nonqualified deferred compensation accounts that earn interest or returns indexed to the performance of certain mutual funds selected by the director.
Prior to 2006, directors could receive stock options in lieu of fees under certain deferral plans, someplans. Some of whichthose options remain outstanding. From 1985 to 1995, directors could defer fees and receive an accrual of interest at rates ranging from 17-22 percent annually. Although new deferrals under that old plan have not been permitted since 1995, interest continues to accrue on outstanding accounts. The rate is re-set annually. For many years, the rate has been set at 7 percentage points above a benchmark rate. For the 20172020 plan year, the interest rate was 9.28%9.66% for all active participants, including two directors, Ms. Palmer and Mr. Martin (who has since retired as a director).Palmer. For 2018,2021, the rate has increaseddecreased to 10.12%8.20%, corresponding to an increasea decrease in the benchmark rate. The plan continues to provide a retention tool for us since the above-market rates of return can be largely forfeited in a case of early departure from Board service.
| 2021 PROXY STATEMENT | 112 |
Stock Ownership Guidelines Our stock ownership guidelines set a stock ownership benchmark for non-employee directors of $325,000, or five times the cash portion of the base retainer. Before the merger, that benchmark was $325,000; after the merger, it rose to $400,000. For this purpose, fully-owned shares, RSUs, restricted stock, and any shares held in tax-deferred plans are counted, but stock options are not counted. If the ownership guideline is satisfied, 50% of the net after-tax shares received from stock awards must be retained. If the guideline is not satisfied, 75% must be retained. The retention requirement applies during a director’s tenure on our Board, except that after age 60 directors are permitted to sell shares held at least three years to diversify in preparation for retirement. As Vice Chairman whoOwnership is also an employee, Mr. Taylor’sassessed annually in October. At the last assessment, six directors missed the guideline ownership benchmark is six times his cash salary.level, and are subject to the 75% retention requirement. Four of those first were elected to the board of a legacy company in 2019 or 2018, and the others missed due to the $75,000 increase in guideline levels in July, coupled with continued suppression of bank stock price levels associated with the COVID pandemic and very low interest rates.
Director Compensation Table The following table shows compensation earned last year by non-employee directors, other than Mr. Jordan, whether or not deferred. Director Compensation 20172020 (a) | | (b) | | (c) | | (d) | | (e) | | (f) | | (g) | | (h) | | | (b) | | (c) | | (d) | | (e) | | (f) | | (g) | | (h) | | | | | | | | | | | Change in | | | | | | Fees Earned or Paid in Cash | | Stock Awards | | Option Awards | | Non-Equity Incentive Plan Compensation | | Change in Pension Value and Nonqualified Deferred Compensation Earnings | | All Other Compensation | | Total | | | | | | | | | | | Pension Value | | | | | | | | | | | | | | | | and Nonqualified | | | | | | | | Fees Earned | | | | | | Non-Equity | | Deferred | | | | | | | | or Paid in | | Stock | | Option | | Incentive Plan | | Compensation | | All Other | | | | | | Cash | | Awards | | Awards | | Compensation | | Earnings | | Compensation | | Total | | | Name | | ($) | | ($) | | ($) | | ($) | | ($) | | ($) | | ($) | | | ($) | | ($) | | ($) | | ($) | | ($) | | ($) | | ($) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Mr. Barton* | | | | 87,500 | | | | 17,340 | | | | — | | | | — | | | | — | | | | 22,000 | | | | 126,840 | | Mr. Burdick | | | | 81,500 | | | | 106,798 | | | | — | | | | — | | | | — | | | | — | | | | 188,298 | | Mr. Casbon* | | | | 86,250 | | | | 17,340 | | | | — | | | | — | | | | — | | | | — | | | | 103,590 | | Mr. Compton | | $ | 91,000 | | | $ | 64,985 | | | | — | | | | — | | | | — | | | $ | — | | | $ | 155,985 | | | | 96,500 | | | | 106,798 | | | | — | | | | — | | | | — | | | | 25,000 | | | | 228,298 | | Mr. Emkes | | | 97,000 | | | | 64,985 | | | | — | | | | — | | | | — | | | | 25,400 | | | | 187,385 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Mr. Foss | | | — | | | | 18,944 | | | | — | | | | — | | | | — | | | | — | | | | 18,944 | | | Mr. Gilchrist | | | 81,000 | | | | 64,985 | | | | — | | | | — | | | | — | | | | 25,000 | | | | 170,985 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Mr. Martin | | | 65,000 | | | | 64,985 | | | | — | | | | — | | | | 9,340 | | | | 89,524 | | | | 228,849 | | | Mr. Niswonger | | | 73,000 | | | | 64,985 | | | | — | | | | — | | | | — | | | | 25,000 | | | | 162,985 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Ms. Davidson | | | | 81,500 | | | | 106,798 | | | | — | | | | — | | | | — | | | | — | | | | 188,298 | | Mr. Emkes** | | | | 48,500 | | | | 72,288 | | | | — | | | | — | | | | — | | | | 25,000 | | | | 145,788 | | Mr. Fenstermaker* | | | | 125,000 | | | | 17,340 | | | | — | | | | — | | | | — | | | | — | | | | 142,340 | | Mr. Foss*** | | | | 36,500 | | | | — | | | | — | | | | — | | | | — | | | | 5,000 | | | | 41,500 | | Mr. Gilchrist** | | | | 36,500 | | | | 72,288 | | | | — | | | | — | | | | — | | | | — | | | | 108,788 | | Mr. Kemp* | | | | 80,000 | | | | 17,340 | | | | — | | | | — | | | | — | | | | — | | | | 97,340 | | Mr. Maples* | | | | 96,250 | | | | 17,340 | | | | — | | | | — | | | | — | | | | — | | | | 113,590 | | Mr. Niswonger*** | | | | 36,500 | | | | — | | | | — | | | | — | | | | — | | | | 25,000 | | | | 61,500 | | Ms. Palmer | | | 90,500 | | | | 64,985 | | | | — | | | | — | | | | 10,344 | | | | 25,000 | | | | 190,829 | | | | 106,250 | | | | 106,798 | | | | — | | | | — | | | | 14,798 | | | | 25,000 | | | | 252,846 | | Mr. Reed | | | 116,750 | | | | 64,985 | | | | — | | | | — | | | | — | | | | 25,000 | | | | 206,735 | | | | 129,000 | | | | 106,798 | | | | — | | | | — | | | | — | | | | 25,000 | | | | 260,798 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Mr. Shea* | | | | 81,250 | | | | 17,340 | | | | — | | | | — | | | | — | | | | 25,000 | | | | 123,590 | | Ms. Stewart | | | 83,000 | | | | 64,985 | | | | — | | | | — | | | | — | | | | — | | | | 147,985 | | | | 96,500 | | | | 106,798 | | | | — | | | | — | | | | — | | | | 3,500 | | | | 206,798 | | Mr. Subramaniam | | | 73,000 | | | | 64,985 | | | | — | | | | — | | | | — | | | | 11,500 | | | | 149,485 | | | | 72,500 | | | | 106,798 | | | | — | | | | — | | | | — | | | | 10,000 | | | | 189,298 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Mr. Yancy | | | 83,000 | | | | 64,985 | | | | — | | | | — | | | | — | | | | — | | | | 147,985 | | | Mr. Taylor* | | | — | | | | 2,099,995 | | | | — | | | | — | | | | — | | | | 153,381 | | | | 2,253,376 | | | Ms. Sugrañes* | | | | 80,000 | | | | 17,340 | | | | — | | | | — | | | | — | | | | — | | | | 97,340 | | Mr. Taylor | | | | 81,500 | | | | 106,798 | | | | — | | | | — | | | | — | | | | — | | | | 188,298 | | Mr. Yancy** | | | | 41,500 | | | | 72,288 | | | | — | | | | — | | | | — | | | | — | | | | 113,788 | |
* | As an employee Mr. Taylor does | Denotes a director who joined our Board at the closing of the merger of equals in July 2020. Restricted stock awards granted by legacy IBERIA before closing are not participateincluded in any non-employeethis table. The grant date dollar value was $100,000 for each such award. | ** | | Denotes a director program. His compensation is governed largely by his employment agreement. See “Taylor Arrangements” below.who resigned from our Board at the closing of the merger of equals in July 2020. | *** | | Denotes a director who retired from our Board at the 2020 annual meeting of shareholders in April 2020. |
| 2021 PROXY STATEMENT | 113 |
Explanations of certain columns follow: Col (c) Stock Awards. Includes RSUs granted to non-employee directors during calendar 2017.2020. Amounts shown are the grant date fair values of awards using the accounting method applicable to our financial statements. The accounting values are higher than the base retainer amount scheduled in the table above captioned “Director
Compensation 2017-18” due to the value discount applied for the mandatory two-year payment deferral for those awards. For additional information about valuation, see the note for columns (e)-(f) to the Summary Compensation Table on page 67.94. Additional information about outstanding awards appears under the caption “OutstandingOutstanding Director Equity Awards at Year-End”Year-End below. Mr. Martin’s RSUs are required to be shown even though they forfeited in December 2017. Cash paid in lieu of three quarters of the forfeited RSUs is included in column (g), effectively double counting the RSUs in column (h). For Mr. Taylor, this column shows the grant of a special restricted stock award required by his employment agreement. Mr. Taylor did not receive any regular stock awards in 2017. See “Taylor Arrangements” below for additional information.
Col (e) Incentive Plan CompensationCompensation.. Non-employee directors do not receive cash incentives. We did not pay Mr. Taylor a cash incentive under our plans in relation to 2017. Col (f) Deferred Compensation. Amounts consistAmount consists of above-market interest accrued during the year under a plan discontinued in 1995. Col (g) All Other Compensation. For non-employee directors, amounts in this column consist of matching donations to eligible charitable organizations by First Horizon Foundation and cash attendance fees from regional board meetings. For Mr. Martin, the amount also includes $63,702 related to Mr. Martin’s retirement, substantially all of which consisted of cash paid in lieu of three-fourths of his 2017 RSU award, which forfeited automatically when he retired in December. For Mr. Taylor, this column includes cash salary ($67,308), bonus owed by Capital Bank and paid by us ($84,932), and the value of perquisites and other personal benefits ($1,141) paid during 2017. See “Taylor Arrangements” below for additional information. Taylor Arrangements
Mr. Taylor signed an employment agreement with us in anticipation of our merger with Capital Bank Financial Corp. (“CBF”), of which he was Chief Executive Officer. His agreement provides a framework for his salary, bonus opportunity, a special stock-based award, and other employment matters during the agreement’s two-year term.
Mr. Taylor’s employment agreement provides for an annual base salary floor of $700,000 and an annual incentive payment of no less than 100% of base salary. He also is entitled to the continuation of certain welfare benefits which had been provided to him by CBF.
At the closing of the merger he received a special award of 108,303 shares of restricted stock. The award had a grant date value of $2.1 million and will vest on its second anniversary, subject to Mr. Taylor’s continued employment. Vesting of the award is required to accelerate if his employment is terminated without cause, he resigns with good reason, or his death or disability occurs, all as provided in the agreement.
Mr. Taylor’s agreement has specific provisions for compensation if his employment with us terminates under various circumstances:
• | During the agreement’s term, if Mr. Taylor’s employment is terminated without cause or he resigns with good reason, he would be entitled to receive a lump sum cash payment equal to his base salary and the minimum annual incentive payment he would have received through the second anniversary of the merger closing, a prorated bonus for the year of termination (based on target performance), continued benefits for 36 months, and accelerated vesting of his special award mentioned above. | | | • | Upon Mr. Taylor’s death or disability during the agreement’s term, he would be entitled to receive a prorated bonus for the year of termination (based on target performance), accelerated vesting of the special award, and continued welfare benefits as described above. | | | • | If Mr. Taylor’s employment terminates at or after expiration of his agreement, he would be entitled to receive a prorated bonus for the year of termination (based on target performance) and continued welfare benefits as described above. |
If Mr. Taylor resigns without good reason or is terminated with cause during the term of the agreement, he would be entitled to continued welfare benefits as described above.
As an employee and officer, Mr. Taylor generally is eligible to participate in plans and programs applicable to our other employees and officers, subject to the terms of his employment agreement.
Outstanding Director Equity Awards at Year-End DirectorsAll non-employee directors receive annual RSU awards, and two hold option awards from an old deferral program, as presented in the following table. Directors who joined our Board at the closing of the merger of equals owned pre-merger restricted stock and post-merger RSU awards at year-end. All options are vested. All other awards
shown were unvested at year- end.year-end. Awards held by Mr. Jordan and Mr. Byrd are omitted from the table; see “OutstandingOutstanding Stock Awards at Fiscal Year-End”Year-End beginning on page 7299 for additional information.information for them. Directors who held no options and no other unvested awards at year-end are omitted from this table.
| 2021 PROXY STATEMENT | 114 |
Outstanding Equity Awards at Fiscal Year-End 2017 2020 Held by Directors (a) | | (b) | | (c) | | (d) | | (e) | | (f) | | | Stock Options | | Restricted Stock or Unit Awards | | | Number of | | | | | | | | | | | Securities | | | | | | Number of Shares | | Market Value of | | | Underlying | | Option | | | | or Units of Stock | | Shares or Units of | | | Unexercised | | Exercise | | Option | | Held that Have Not | | Stock that Have | Name | | Options(#) | | Price($/sh) | | Expiration Date | | Vested(#) | | Not Vested($) | | | | | | | | | | | | | | | | | | | | | | Mr. Compton | | | — | | | | — | | | | — | | | | 4,059 | | | $ | 81,139 | | | | | | | | | | | | | | | | | | | | | | | Mr. Emkes | | | — | | | | — | | | | — | | | | 4,059 | | | $ | 81,139 | | | | | | | | | | | | | | | | | | | | | | | Mr. Foss | | | — | | | | — | | | | — | | | | 977 | | | $ | 19,530 | | | | | | | | | | | | | | | | | | | | | | | Mr. Gilchrist | | | — | | | | — | | | | — | | | | 4,059 | | | $ | 81,139 | | | | | | | | | | | | | | | | | | | | | | | Mr. Martin | | | | | | | | | | | | | | | 0 | | | $ | 0 | | | | | 4,704 | | | $ | 22.26 | | | | 6/30/2018 | | | | | | | | | | | | | 3,951 | | | | 26.53 | | | | 12/31/2018 | | | | | | | | | | | | | 3,484 | | | | 27.22 | | | | 6/30/2019 | | | | | | | | | | | | | 3,334 | | | | 20.40 | | | | 12/31/2019 | | | | | | | | | | | | | 2,852 | | | | 23.49 | | | | 7/2/2021 | | | | | | | | | | | | | 3,009 | | | | 23.91 | | | | 1/2/2022 | | | | | | | | | | | | | 2,842 | | | | 25.34 | | | | 7/1/2022 | | | | | | | | | | | | | 3,119 | | | | 24.36 | | | | 12/4/2022 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Mr. Niswonger | | | — | | | | — | | | | — | | | | 4,059 | | | $ | 81,139 | | | | | | | | | | | | | | | | | | | | | | | Ms. Palmer | | | | | | | | | | | | | | | 4,059 | | | $ | 81,139 | | | | | 4,196 | | | $ | 22.26 | | | | 6/30/2018 | | | | | | | | | | | | | 4,378 | | | | 26.53 | | | | 12/31/2018 | | | | | | | | | | | | | 3,848 | | | | 27.22 | | | | 6/30/2019 | | | | | | | | | | | | | 4,584 | | | | 20.40 | | | | 12/31/2019 | | | | | | | | | | | | | 5,226 | | | | 11.85 | | | | 7/3/2020 | | | | | | | | | | | | | 3,518 | | | | 18.85 | | | | 1/2/2021 | | | | | | | | | | | | | 3,107 | | | | 23.49 | | | | 7/2/2021 | | | | | | | | | | | | | 3,093 | | | | 23.91 | | | | 1/2/2022 | | | | | | | | | | | | | 2,764 | | | | 25.34 | | | | 7/1/2022 | | | | | | | | | | | | | 2,709 | | | | 24.36 | | | | 1/2/2023 | | | | | | | | | | | | | 1,121 | | | | 18.28 | | | | 7/1/2023 | | | | | | | | | | | | | 2,028 | | | | 18.24 | | | | 1/2/2024 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Mr. Reed | | | — | | | | — | | | | — | | | | 4,059 | | | $ | 81,139 | | | | | | | | | | | | | | | | | | | | | | | Ms. Stewart | | | — | | | | — | | | | — | | | | 4,059 | | | $ | 81,139 | | | | | | | | | | | | | | | | | | | | | | | Mr. Subramaniam | | | — | | | | — | | | | — | | | | 4,059 | | | $ | 81,139 | | | | | | | | | | | | | | | | | | | | | | | Mr. Yancy | | | | | | | | | | | | | | | 4,059 | | | $ | 81,139 | | | | | 1,379 | | | $ | 23.91 | | | | 1/2/2022 | | | | | | | | | | | | | 2,921 | | | | 25.34 | | | | 7/1/2022 | | | | | | | | | | | | | 3,202 | | | | 24.36 | | | | 1/2/2023 | | | | | | | | | | | | | 1,011 | | | | 18.28 | | | | 7/1/2023 | | | | | | | | | | | | | 1,535 | | | | 18.24 | | | | 1/2/2024 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Mr. Taylor* | | | — | | | | — | | | | — | | | | 108,303 | | | $ | 2,164,977 | |
| | * | As an employee Mr. Taylor does not participate in any non-employee director program. His stock award was required by his employment agreement. See “Taylor Arrangements” above. |
(a) | | (b) | | (c) | | (d) | | (e) | | (f) | | | Stock Options | | Restricted Stock or Unit Awards | Name | | Number of Securities Underlying Unexercised Options(#) | | Option Exercise Price($/sh) | | Option Expiration Date | | Number of Shares or Units of Stock Held that Have Not Vested (#) | | Market Value of Shares or Units of Stock that Have Not Vested ($) | Mr. Barton | | | — | | | | — | | | | — | | | | 14,439 | | | | 184,242 | | Mr. Burdick | | | — | | | | — | | | | — | | | | 11,680 | | | | 149,037 | | Mr. Casbon | | | — | | | | — | | | | — | | | | 14,439 | | | | 184,242 | | Mr. Compton | | | — | | | | — | | | | — | | | | 11,680 | | | | 149,037 | | Ms. Davidson | | | — | | | | — | | | | — | | | | 11,680 | | | | 149,037 | | Mr. Fenstermaker | | | — | | | | — | | | | — | | | | 14,439 | | | | 184,242 | | Mr. Kemp | | | — | | | | — | | | | — | | | | 14,439 | | | | 184,242 | | Mr. Maples | | | — | | | | — | | | | — | | | | 14,439 | | | | 184,242 | | Ms. Palmer | | | | | | | | | | | | | | | 11,680 | | | | 149,037 | | | | | 3,518 | | | | 18.85 | | | | 1/2/2021 | | | | | | | | | | | | | 3,107 | | | | 23.49 | | | | 7/2/2021 | | | | | | | | | | | | | 3,093 | | | | 23.91 | | | | 1/2/2022 | | | | | | | | | | | | | 2,764 | | | | 25.34 | | | | 7/1/2022 | | | | | | | | | | | | | 2,709 | | | | 24.36 | | | | 1/2/2023 | | | | | | | | | | | | | 1,121 | | | | 18.28 | | | | 7/1/2023 | | | | | | | | | | | | | 2,028 | | | | 18.24 | | | | 1/2/2024 | | | | | | | | | | Mr. Reed | | | — | | | | — | | | | — | | | | 11,680 | | | | 149,037 | | Mr. Shea | | | — | | | | — | | | | — | | | | 14,439 | | | | 184,242 | | Ms. Stewart | | | — | | | | — | | | | — | | | | 11,680 | | | | 149,037 | | Mr. Subramaniam | | | — | | | | — | | | | — | | | | 11,680 | | | | 149,037 | | Ms. Sugrañes | | | — | | | | — | | | | — | | | | 14,439 | | | | 184,242 | | Mr. Taylor | | | — | | | | — | | | | — | | | | 11,680 | | | | 149,037 | | Mr. Yancy | | | — | | | | — | | | | | | | | | | | | | | | | | 1,379 | | | | 23.91 | | | | 1/2/2022 | | | | | | | | | | | | | 2,921 | | | | 25.34 | | | | 7/1/2022 | | | | | | | | | | | | | 3,202 | | | | 24.36 | | | | 1/2/2023 | | | | | | | | | | | | | 1,011 | | | | 18.28 | | | | 7/1/2023 | | | | | | | | | | | | | 1,535 | | | | 18.24 | | | | 1/2/2024 | | | | | | | | | |
Explanations of certain columns follow: Cols (b)/(c). Stock Options. Stock options include adjustments for stock dividends distributed 2008-2011, the cumulative compound rate of which was 20.0380%. Col (e). RSUs & RS. Awards held by non-employee directors are RSUs whichthat will vest on April 2, 2018. Mr. Taylor’s award consists of2021 and, for legacy IBERIA directors, restricted stock scheduled tothat will vest on November 30, 2019.April 24, 2021. Col (f). RSU & RS Values. Values reflectare based on the year-end market valueprice of our common stock ($19.99/12.76/share) with no discount for the risk that the award might be forfeited or for the time remaining before vesting. Values shown here are not based on financial accounting assumptions or methods.
Details concerning the awards outstanding at year-end are provided in the following table. Directors who have no unvested full-value awards at year-end are omitted.
| 2021 PROXY STATEMENT | 115 |
Details Concerningof Director Full-Value Stock Awards Outstanding at Year-End 20172020
Name | | Grant Dates | | Vesting Dates | | Units/Shrs Vesting (#) | NameMr. Barton* | | Date4/24/2020 | | Vesting Date4/24/2021 | | Vesting (#)12,606 | | 9/8/2020 | | 4/24/2021 | | 1,833 | Mr. Burdick | | 4/28/2020 | | 4/2/2021 | | 8,032 | | 9/8/2020 | | 4/2/2021 | | 3,648 | Mr. Casbon* | | 4/24/2020 | | 4/24/2021 | | 12,606 | | 9/8/2020 | | 4/24/2021 | | 1,833 | Mr. Compton | | 4/25/201728/2020 | | 4/2/20182021 | | 4,0598,032 | | | | | | | | Mr. Emkes | | 4/25/20179/8/2020 | | 4/2/20182021 | | 4,0593,648 | Ms. Davidson | | 4/28/2020 | | 4/2/2021 | | 8,032 | | | | | | | | Mr. Foss | | 11/30/20179/8/2020 | | 4/2/20182021 | | 9773,648 | Mr. Fenstermaker* | | 4/24/2020 | | 4/24/2021 | | 12,606 | | 9/8/2020 | | 4/24/2021 | | | 1,833 | Mr. GilchristKemp* | | 4/25/201724/2020 | | 4/2/201824/2021 | | 4,05912,606 | | 9/8/2020 | | 4/24/2021 | | | 1,833 | Mr. NiswongerMaples* | | 4/25/201724/2020 | | 4/2/201824/2021 | | 4,05912,606 | | 9/8/2020 | | 4/24/2021 | | | 1,833 | Ms. Palmer | | 4/25/201728/2020 | | 4/2/20182021 | | 4,0598,032 | | 9/8/2020 | | 4/2/2021 | | | 3,648 | Mr. Reed | | 4/25/201728/2020 | | 4/2/20182021 | | 4,0598,032 | | | | | | | | Ms. Stewart | | 4/25/20179/8/2020 | | 4/2/20182021 | | 4,0593,648 | Mr. Shea* | | 4/24/2020 | | 4/24/2021 | | 12,606 | | 9/8/2020 | | 4/24/2021 | | | 1,833 | Mr. Subramaniam | | 4/25/201728/2020 | | 4/2/20182021 | | 4,0598,032 | | | | | | | | Mr. Yancy | | 4/25/20179/8/2020 | | 4/2/20182021 | | 4,0593,648 | Ms. Sugrañes* | | 4/24/2020 | | 4/24/2021 | | 12,606 | | 9/8/2020 | | 4/24/2021 | | | 1,833 | Mr. Taylor | | 11/30/20174/28/2020 | | 11/30/20194/2/2021 | | 108,3038,032 | | 9/8/2020 | | 4/2/2021 | | 3,648 |
* | Denotes a director who joined our Board at the closing of the IBERIA merger of equals in July, 2020. Restricted stock awards were granted on April 24 by legacy IBERIA under its award programs, and were converted to First Horizon stock at closing. |
Director Options Exercised and Stock Vested The following table provides information about stock options exercised during 20172020 by our directors as well as stock units that vested during 2017.2020. Amounts in columns (c) and (e) represent the market values of shares on the exercise or vesting dates. Messrs. FossThe stock awards in column (d) generally consist of RSUs that vested in 2020, but will not be settled until 2022, after a mandatory two-year deferral period. Information for Mr. Jordan and Taylor hold no stock optionsMr. Byrd is omitted from this table; see Options Exercised and Stock Vested beginning on page 101 for their information. Directors who joined our Board from legacy IBERIA had no option exercises, and no full-value award vestings, in 2017, and soduring 2020 after joining our Board; they are omitted from this table. Information for Mr. Jordan also is omitted from the table; see “Options Exercised and Stock Vested” beginning on page 74 for his information.
| 2021 PROXY STATEMENT | 116 |
Director Options Exercised and Stock Vested During 20172020 (a) | | (b) | | (c) | | (d) | | (e) | | | Option Awards | | Stock Awards | | | | | | | Number of | | | | | | | | | Shares | | Value | | | Number of | | Value Realized | | Acquired or Units | | Realized | | | Shares Acquired | | Upon Exercise | | Paid Upon | | Upon Vesting | Name | | on Exercise(#) | | ($) | | Vesting(#) | | ($) | Mr. Compton | | | — | | | | — | | | | 4,510 | | | $ | 82,939 | | Mr. Emkes | | | — | | | | — | | | | 4,510 | | | | 82,939 | | Mr. Gilchrist | | | — | | | | — | | | | 4,510 | | | | 82,939 | | Mr. Martin* | | | 11,143 | | | $ | 5,781 | | | | 7,554 | | | | 144,641 | | Mr. Niswonger | | | — | | | | — | | | | 4,510 | | | | 82,939 | | Ms. Palmer | | | 5,363 | | | $ | 2,987 | | | | 4,510 | | | | 82,939 | | Mr. Reed | | | — | | | | — | | | | 4,510 | | | | 82,939 | | Ms. Stewart | | | — | | | | — | | | | 4,510 | | | | 82,939 | | Mr. Subramaniam | | | — | | | | — | | | | 3,327 | | | | 61,184 | | Mr. Yancy | | | — | | | | — | | | | 4,510 | | | | 82,939 | |
(a) | | (b) | | (c) | | (d) | | (e) | | | Option Awards | | Stock Awards | Name | | Number of Shares Acquired on Exercise (#) | | Value Realized Upon Exercise ($) | | Number of Shares Acquired or Units Paid upon Vesting (#) | | Value Realized Upon Vesting ($) | Mr. Burdick | | | — | | | | — | | | | 6,505 | | | | 50,089 | | Mr. Compton | | | — | | | | — | | | | 6,505 | | | | 50,089 | | Ms. Davidson | | | — | | | | — | | | | 6,505 | | | | 50,089 | | Mr. Emkes* | | | — | | | | — | | | | 14,537 | | | | 125,589 | | Mr. Foss | | | — | | | | — | | | | 6,505 | | | | 50,089 | | Mr. Gilchrist* | | | — | | | | — | | | | 14,537 | | | | 125,589 | | Mr. Niswonger | | | — | | | | — | | | | 6,505 | | | | 50,089 | | Ms. Palmer | | | — | | | | — | | | | 6,505 | | | | 50,089 | | Mr. Reed | | | — | | | | — | | | | 6,505 | | | | 50,089 | | Ms. Stewart | | | — | | | | — | | | | 6,505 | | | | 50,089 | | Mr. Subramaniam | | | — | | | | — | | | | 6,505 | | | | 50,089 | | Mr. Taylor | | | — | | | | — | | | | 6,505 | | | | 50,089 | | Mr. Yancy* | | | — | | | | — | | | | 14,537 | | | | 125,589 | |
* | Mr. Martin’s 2017 RSU award, outstandingDenotes a director who resigned from our Board at his retirement, was forfeited automatically. After retirement the Board approved paying Mr. Martin the pro-rated cash value, at retirement,closing of the forfeited award. That payment-in-lieu is includedIBERIA merger of equals in columns (d)July 2020. Regular RSUs granted in 2020 vested, and (e) as if the award had vested on those terms.two-year deferral ended, due to provisions of the awards at the time of grant. |
| 2021 PROXY STATEMENT | 117 |
Legal Matters Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our directors and officers to file with the SEC initial reports of ownership and reports of changes in ownership of our stock and to furnish us with copies of all forms filed.
To our knowledge, based solely on a review of the copies of such reports furnished to us and written representations that no other reports were required, during the past fiscal year our officers and directors complied with all applicable Section 16(a) filing requirements.
Availability of Annual Report on Form 10-K A copy of our Annual Report on Form 10-K, including the financial statements and schedules thereto, which is filed with the SEC, is availableincluded as part of these proxy materials. If you are a shareholder of record who did not receive a printed copy of the Annual Report on Form 10-K but would like one, you may obtain one free of charge to each shareholder of record upon written request to the Treasurer, First Horizon National Corporation, P. O. Box 84, Memphis, Tennessee, 38101. Each such written request must set forth a good faith representation that as of the record date specified in the notice of annual shareholders’ meeting the person making the request was a beneficial owner of a security entitled to vote at the annual meeting of shareholders. The exhibits to the Annual Report on Form 10-K will also be supplied upon written request to the Treasurer and payment to us of the cost of furnishing the requested exhibit or exhibits. A document containing a list of the exhibits to Form 10-K, as well as a brief description and the cost of furnishing each such exhibit, will accompany the requested printed copy of Annual Report on Form 10-K.
Other Legal Disclosuresdisclosures We are required to disclose a comparison of the 20172020 total compensation of our CEO with that of our median-paid employee.associate. For that purpose, we have selected the median employeeassociate using total federally taxable income reported by us for 20172019 to the U.S. Internal Revenue Service. The median employeeassociate was that person, employed by us at year-end 2020, whose 20172019 taxable income ranked at the fiftieth percentile of all our employeesassociates other than the CEO. For this purpose, all employeesassociates included part-time and seasonal personnel as well as persons who joined us during the year. However, as permitted by applicable disclosure rules, in choosing the median employee we omitted all persons who became our employees as a result of our merger with Capital Bank Financial Corp. late in 2017. Total compensation for our CEO in 2017,2020, calculated using the methodology reported on pages 67 – 68,94–97, was $10,333,764. Included within that total is a special multi-year cash bonus of $5,500,000, discussed at page 62 above under the caption “CEO Multi-Year Cash Bonus.” Excluding that special bonus, CEO total compensation would have been $4,833,764.$5,580,188. Total compensation for our median employeeassociate for 2017,2020, calculated using the same methodology, was $81,836.$95,881. The ratio of 20172020 total compensation for the CEO in relation to that for the median employeeassociate is one hundred twenty six58 to one. Excluding the CEO’s special bonus, that ratio is fifty nine to one.
Late in 2017 we announced that approximately 4,000 non-bonus-eligible, non-commission employees would receive a special cash bonus of $1,000. The median employee was one of those who received that bonus, which was included in calculating the ratios above.
The information disclosed in this section was developed and is provided solely to comply with specific new legal requirements. We do not use any of this information in managing our company. We do not believe this information provides shareholders with a useful mechanism for evaluating our management’s effectiveness, operating results, or business prospects, nor for comparing our company with any other in any meaningful respect.
BY ORDER OF THE BOARD OF DIRECTORS
Clyde A. Billings, Jr.
Senior Vice President,
Assistant General Counsel and
Corporate Secretary
March 12, 2018
| 86Clyde A. Billings, Jr. | | Senior Vice President, | | Assistant General Counsel and | | Corporate Secretary | | March 15, 2021 |
| 2021 PROXY STATEMENT | 118 |
APPENDIX A—AUDIT COMMITTEE CHARTERA: FIRST HORIZON CORPORATION 2021 INCENTIVE PLAN |
FIRST HORIZON CORPORATION 2021 INCENTIVE PLAN |
AUDIT COMMITTEE CHARTER
FIRST HORIZON NATIONAL CORPORATION
(As AmendedThe purposes of this Plan are to promote the interests of the Company and Restated asits shareholders by (i) attracting and retaining officers, Associates, and Non-Employee Directors of July 25, 2017)the Company and its Subsidiaries, (ii) motivating such individuals by means of linking a component of compensation to the Company’s stock value and by means of performance-related incentives to achieve performance goals established by the Board or its Committee, (iii) enabling such individuals to participate in the growth and financial success of the Company, (iv) encouraging ownership of stock in the Company by such individuals, and (v) aligning significant compensation elements with the interests of the Company’s shareholders. Capitalized terms used in this Section and elsewhere in the Plan are defined in Section 18.
Section 2. Administration |
(A) Authority of the Board. The Board will administer Section 7 and other provisions related to Non-Employee Directors. The Board also retains the general authority—parallel and equivalent to that of the Committee—to grant or administer Awards under other sections of the Plan. (B) Establishment and PurposesAuthority of the Committee Acting pursuant. Except as provided in Section 2(A) and Section 7, the Committee will administer the Plan. Subject to Tennessee Code Annotated Section 48-18-206, Article 11(b)(8)the terms of the Corporation’s restated charter, as amended,Plan and Section 3.5applicable law, and in addition to other express powers and authorizations conferred on the Committee by the Plan, the Board, the Company’s Bylaws, or applicable law, the Committee has full power and authority in its discretion to: (i) designate Participants; (ii) determine the type or types of Awards to be granted to a Participant and the names of the Corporation’s bylaws,Awards, if different from the terminology used in the Plan; (iii) determine the number of Shares to be covered by, or with respect to which payments, rights, or other matters are to be calculated in connection with, Awards; (iv) determine the timing, terms, and conditions of any Award; (v) accelerate the time at which all or any part of an Award may be settled or exercised; (vi) determine whether, to what extent, and under what circumstances Awards may be settled or exercised in cash, Shares, other securities, other Awards, or other property, or canceled, forfeited, or suspended, and the method or methods by which Awards may be settled, exercised, canceled, forfeited, or suspended; (vii) determine whether, to what extent, and under what circumstances cash, Shares, other securities, other Awards, other property, and other amounts payable with respect to an Award will be deferred either automatically or at the election of the Participant or of the Committee; (viii) interpret and administer the Plan and any instrument or agreement relating to, or Award made under, the Plan; (ix) amend or modify the terms of any Award after grant; (x) establish, amend, suspend, or waive such rules and regulations and appoint such agents as amended,it deems appropriate for the Boardproper administration of Directorsthe Plan; and (xi) make any other determination and take any other action that the Committee deems necessary or desirable for the administration of First Horizon National Corporation hereby creates the Audit Committee (the “Committee”)Plan, subject to the exclusive authority of the Board of Directors, which shall: (1) assistunder Section 16 to amend, suspend, or terminate the Board of Directors in its oversight of (a) the Corporation’s accounting and financial reporting principles and policies and internal controls and procedures, (b) the integrity of the Corporation’s financial statements, (c) the Corporation’s compliance with legal and regulatory requirements, (d) the independent auditor’s qualifications and independence, and (e) the performance of the independent auditor and Corporation’s internal audit function; and (2) prepare the report to be includedPlan.
(C) Committee Discretion Binding. Unless otherwise expressly provided in the Corporation’s annual proxy statement pursuantPlan, all designations, determinations, interpretations, and other decisions under or with respect to the proxy rules ofPlan or any Award will be within the Securities and Exchange Commission (“SEC”). The functionsole discretion of the Committee, is oversight. Managementmay be made at any time and will be final, conclusive, and binding upon all Persons, including any Employer, any Participant, any holder or beneficiary of any Award, any Associate, any Non-Employee Director and any Regional Board Member.
(D) Action by the Committee. Except as otherwise provided in the Company’s bylaws or the Committee’s charter, if any, a majority of the Corporation is responsible for preparation, presentationCommittee’s members will constitute a quorum. Any decision or determination reduced to writing and integritysigned by all of the Corporation’s financial statements. Management is responsible for maintaining appropriate accounting and financial reporting principles and policies and internal controls and procedures to provide for compliance with accounting standards and applicable laws and regulations, and the officer in charge of the Corporation’s internal audit function (“internal auditor”) is responsible for testing such internal controls and procedures. The independent auditor is responsible for planning and carrying out a proper audit of the Corporation’s annual financial statements, reviews of the Corporation’s quarterly financial statements prior to the filing of each quarterly report on Form 10-Q, and other procedures. It is recognized that, in fulfilling their responsibilities hereunder, members of the Committee are not full-time employees of the Corporation and are not, and do not represent themselves to be, performing the functions of accountants or auditors. As such, it is not the duty or responsibility of the Committee or its members to conduct “field work” or other types of auditing or accounting reviews or procedures or to set auditor independence standards, and each member of the Committee shall be entitled to rely on (1) the integrity of those persons and organizations within and outside the Corporation from which it receives information, (2) the accuracy of the financial and other information provided to the Committee by such persons or organizations absent actual knowledge to the contrary (which shall be promptly reported to the Board) and (3) the representations made by management as to any non-audit services provided by the independent auditor to the Corporation. Further, in fulfilling their responsibilities hereunder, the members of the Committee will incorporatebe fully effective as if it had been made by a majority vote at a meeting duly called and held. The Committee may appoint a secretary and may make such rules and regulations for the useconduct of reasonable materiality standards, including the size of the Corporation and the nature, scope and risks of the activities conducted.its business as it deems advisable. The independent auditor for the Corporation is accountable to the Committee as representatives of the shareholders and must report directly to the Committee. The Committee has the authority and responsibility directly to appoint (subject, if applicable, to shareholder ratification), retain, compensate, evaluate and terminate the Corporation’s independent auditor and to oversee the work of such independent auditor.
The independent auditor shall submit to the Committee annually a formal written statement (the “Auditor’s Statement”) describing: the independent auditor’s internal quality-control procedures; any material issues raised by the most recent internal quality-control review or peer review of the independent auditor, or by any inquiry or investigation by governmental or professional authorities, within the preceding five years, respecting one or more independent audits carried out by the independent auditor, and any steps taken to deal with such issues; and (to assess the independent auditor’s independence) all relationships between the independent auditor and the Corporation addressing each non-audit service provided to the Corporation and at least the matters set forth in the applicable requirements of the Public Company Accounting Oversight Board regarding the independent auditor’s communications with the Audit Committee concerning independence.
The independent auditor shall submit to the Committee annually a formal written statement of the aggregate fees billed for each of the last two fiscal years for professional services rendered by the independent auditor in the following categories (as defined by the rules of the SEC): audit, audit-related, tax and all other services.
| 2021 PROXY STATEMENT | A-1 |
APPENDIX A—AUDIT COMMITTEE CHARTERA: FIRST HORIZON CORPORATION 2021 INCENTIVE PLAN |
(E) QualificationsDelegation. Subject to the terms of the Plan, the Board or the Committee Membersmay, to the extent permitted by law, delegate to (i) a subcommittee of the Committee, (ii) one or more officers or managers of the Company or an Employer, or (iii) a committee of such officers or managers, the authority, subject to such terms and limitations as the Board or the Committee determines, to grant Awards to, or to cancel, modify or waive rights with respect to or to alter, discontinue, suspend, or terminate Awards held by, Participants who are not Section 16 Executives or directors of the Company or who are otherwise not subject to SEC Section 16. (F) Procedures. The Company may adopt or approve administrative procedures and practices (“Procedures”) applicable to the Plan and its Awards from time to time under the authority and oversight of the Committee. The Committee shall consist of at least three members appointed annually by a majority ofmay cause the entire Board onCompany to embed substantive practices and policies in the recommendation ofProcedures, consistent with the Nominating and Corporate Governance Committee ofCommittee’s authorities under the Board of Directors, acting in its capacityPlan, as the nominating committee.well as purely administrative matters. Members shall(G) Deferrals. The Committee may require or permit the payment or delivery of any Award to be directors who meetdeferred after Vesting. Any such deferral must comply with Section 15 unless the independence and experience requirementsCommittee expressly, in a particular case, determines otherwise. Any such deferral feature may be canceled or changed by the Committee at any time prior to commencement of the NYSE and Section 10A(m)(3)deferral period, without the consent of the Securities Exchange Act of 1934,Participant. No Participant has any right to defer payment or delivery. During any deferral period, the Committee may, but need not, provide for interest or dividend accruals, reinvestments, or payments, as amended, and the rules of the SEC promulgated thereunder. Under these requirements as currently adopted, the Board must determine:provided in Section 17(A).
Section 3. Shares Available for Awards; Other Limitations |
(A) | Shares Available for Awards; Limitations. |
(i) | Limits. Subject to adjustment as provided in Section 3(B): |
| •(a) | that each member has no material relationship, either directShare Limits for the Plan. |
| (1) | Overall. The maximum number of Shares which may be issued with respect to Awards is: 14,000,000 Shares newly authorized for this Plan; plus any Shares underlying awards granted under the Prior Stock Plan prior to this Plan’s inception which expire or indirect, withare canceled, forfeited, settled in cash, or otherwise terminated without delivery of Shares to the Corporation;Prior Stock Plan participant. | | | | | •(2) | that each memberShares In Lieu. Of the total authorized in subsection (A)(i)(a)(1), the maximum number of Shares which may be issued as Awards of Shares in Lieu is financially literate, or shall become financially literate within a reasonable period of time after his or her appointment to the Committee; and700,000 Shares. | | | | | •(3) | thatSubstitute Awards. The maximum number of Shares which may be issued as Substitute Awards is 700,000 Shares. |
| (b) | Non-Employee Director Limits per year. |
| (1) | Full-Value. The maximum aggregate dollar value of Full-Value Awards which may be granted in any calendar year to any Non-Employee Director under Section 7 is $500,000. For this purpose, Shares underlying Full-Value Awards will be valued at least one100% of Fair Market Value on the members has accounting or related financial management expertise,grant date, without discount of any sort, and dollar-denominated Units will be valued at 100% of face value, without discount of any sort. | | | | as such requirements are interpreted | (2) | Options & SARS. The maximum aggregate dollar value of Shares underlying Options and/or SARs which may be granted in any calendar year to any Non-Employee Director under Section 7 is $250,000. For this purpose, shares underlying Option and SAR Awards will be valued at 25% of Fair Market Value on the grant date, without any other discount. | | | | | (3) | Savings Clause. If a limit provided in this subsection (b) is or might be violated by the Boardgrant of Directors in the exercise of its business judgment. Members may be replaced by the Board.a Performance Award, that Award is not invalidated. However, after all final performance |
No director may serve as a member of the Committee if such director serves on the audit committees of more than two other public companies unless the Board of Directors determines that such simultaneous service would not impair the ability of such director to serve effectively on the Committee, and discloses this determination in the Corporation’s annual proxy statement. No member of the Committee may be an affiliated person (as such term is defined in SEC Rule 10A-3, including any exceptions or exemptions permitted thereby) of the Corporation or any subsidiary thereof or may receive any compensation from the Corporation other than (i) director’s fees, which may be received in cash, stock options or other in-kind consideration ordinarily available to directors; (ii) a pension or other deferred compensation for prior service that is not contingent on future service; and (iii) any other regular benefits that other directors receive; provided, however, that notwithstanding the foregoing, it shall be permissible for Committee members to receive those types of compensation permitted by the rules of the SEC and the NYSE regarding the independence of audit committee members.
Operation of the Committee
Meetings shall be held at least four times yearly, or more frequently if circumstances dictate, and may be called at any time by the Committee chair or by any two members of the Committee upon written or oral notice to a majority of the members of the Committee prior to the meeting. A quorum shall consist of a majority of the members and the vote of a majority of the members present at a meeting at which a quorum is present shall be the act of the Committee. Proceedings of the Committee over the signature of a member in attendance shall be recorded in a minute book and reflect the names of those in attendance. The chair of the Committee, or acting chair of the meeting, will present a report of Committee activities to the full Board of Directors at its next regularly scheduled meeting. The Secretary of the Board will permanently maintain the minutes of Committee meetings. Meetings may be held jointly with a similar committee of First Tennessee Bank National Association (“Bank”) if either the members of the Bank’s committee and the members of this Committee are identical or all of the members of the Bank’s committee would meet the eligibility requirements of the NYSE, Section 10A(m)(3) and the rules of the SEC, including any exceptions permitted thereby, and meetings may also be held jointly with the Trust Audit Committee of the Bank under the same conditions. The Committee may, in its discretion, delegate all or a portion of its authority and duties to a subcommittee of the Committee, and may delegate to the chair the authority to grant pre-approvals of audit and permitted non-audit services as provided herein, provided that the decisions of such chair to grant pre-approvals shall be presented to the full Committee at its next regularly scheduled meeting.
The Committee shall have unrestricted access to Corporation personnel and documents. The Committee will be given the resources and authority appropriate to discharge its duties and responsibilities, including (i) the authority to retain and compensate special or independent counsel, accountants or other experts or consultants to advise the Committee, without seeking approval of the Board or management, and (ii) appropriate funding, as determined by the Committee, for payment of compensation to such counsel, accountants or other experts and consultants. The Committee may request any officer or employee of the Corporation or of the Corporation’s outside counsel or independent auditor to attend a meeting of the Committee or to meet with any members of, or consultants to, the Committee. It will be the responsibility of the Committee to maintain free and open means of communication between the directors and
| 2021 PROXY STATEMENT | A-2 |
APPENDIX A—AUDIT COMMITTEE CHARTERA: FIRST HORIZON CORPORATION 2021 INCENTIVE PLAN |
managementdeterminations are made, if the Award still violates a limit, the final number of Shares, Units, or dollars, as applicable, will be reduced to the Corporation. The Committee shall meet separately periodicallyminimum extent possible consistent with management, the internal auditor,limits provided in this subsection, and the independent auditor in separate executive sessions to discuss any matters that the Committeeexcess Shares, Units, or any of these persons believes shoulddollars will be discussed privately.
Dutiescancelled and Responsibilities of the Committee
The Committee is hereby delegated full authority with respect to the following matters and such additional matterstreated as may be provided in the bylaws of the Corporation or as the Board of Directors may from time to time by resolution adopted by a majority of the entire Board specify:if they never had been granted.
1.(ii) | Re-Usage if Award Shares are not Paid. If any Shares covered by an Award granted under the Plan, or to which such an Award relates, are forfeited, or if an Award denominated in Shares is settled for cash or terminates, expires unexercised, or is canceled for any reason without the delivery of Shares, then the Shares covered by such Award or to which such Award relates, or the number of Shares otherwise counted against the aggregate number of Shares which may be issued with respect to Awards, to the independent auditor,extent of any such settlement, forfeiture, termination, expiration, or cancellation, will again become Shares which may be issued with respect to Awards under Section 3(A)(i)(i)(a). | | | (iii) | a. | directly appoint (subject, if applicable, to shareholder ratification), retain, compensate, oversee the work of, evaluate and terminate the independent auditor. | | | | | b. | adopt a policy for the Corporation regarding preapproval of all audit and non-audit engagement fees and terms and approve, in advance, all such fees and terms in accordanceOption & SAR Re-Usage Limited. In connection with such policy. | | | | | c. | ensure that the independent auditor prepares and delivers annually an Auditor’s Statement (it being understood that the independent auditor is responsible for the accuracy and completeness of this Statement) and consider such Auditor’s Statement in assessing the independenceany Option or SAR Award, none of the independent auditor. | | | | | d. | ensure that the independent auditor timely reports on all critical accounting policies and practicesfollowing will result in any Shares being added back to be used; all alternative treatments of financial information within generally accepted accounting principles that have been discussed with management, ramificationsany of the uselimits in Section 3(A)(i)(i)(a): (a) the withholding of such alternative disclosures and treatments, and the treatment preferredShares by the independent auditor; and other material written communications betweenCompany for tax liabilities; (b) the independent auditor and management, such as any management letterdelivery of Shares (actual or scheduledeemed) by the Award holder to pay an exercise price or tax liabilities; or (c) in the case of unadjusted differences. | | | | | e. | review and evaluateexercised SARs, the qualifications, performance and independencedelivery of the lead partner of the independent auditor. | | | | | f. | discuss with management the timing and process for implementing the rotation of the lead audit partner, the concurring partner, and any other active audit engagement team partner and consider whether there should be a regular rotation of the audit firm itself. | | | | | g. | instruct the independent auditor that the independent auditor is ultimately accountableShares to the Committee as representativesParticipant in an amount less than the nominal number of Shares covered by the shareholders. | | | | 2. | with respect to the internal audit department,SAR Award. | | | (iv) | a. | appoint and removeNo Tax Withholding Re-Usage. No shares withheld or re-acquired, pursuant to Section 15(A) or otherwise, by the Corporation’s internal auditor and approveCompany from the salary and annual bonusParticipant for tax liabilities caused by Vesting, exercise, or other taxable event relating to Awards (other than Options or SARs) will be added back to any of the internal auditor. | | | | | b. | advise the internal auditor that he or she is expected to provide the Committee summaries of and, as appropriate, significant reports to management prepared by the internal audit department and management’s responses thereto (including but not limited to reports on the Corporation’s risk governance, risk assessment and risk management, the adequacy of policies, and compliance with legal and regulatory requirements). | | | | | c. | advise the internal auditor that he or she is expected to provide the Committee with such additional information and reports as may be providedlimits in the internal audit department charter. | | | | | d. | approve the internal audit department charter, review it annually, and approve such amendments thereto as the Committee may deem necessary or appropriate. | | | | | e. | approve annually the audit plan, and risk assessment methodology of the internal audit department. | | | | | f. | review annually the financial budget of the internal audit department. | | | | | g. | together with the internal auditor, oversee any outsourcing to third parties of internal audit functions. | | | | 3. | with respect to financial reporting principles and policies and internal controls and procedures,Section 3(A)(i)(i)(a). | | | (v) | a.Dividend Reinvestment. Shares credited or paid in connection with a dividend reinvestment feature, if in conformity with Section 17(A), will not be counted against any of the limits in Section 3(A)(i). |
(B) Adjustments. The number of Shares available for Awards, the number of Shares that may be subject to Awards granted to any one Participant in any period, the number of Shares covered by each outstanding Award, and the price per Share covered by each such outstanding Award which uses a price will be proportionately adjusted for any increase or decrease in the number of issued Shares resulting from a stock split, reverse stock split, stock dividend, recapitalization, combination, or reclassification of the Shares, and may be proportionately adjusted, as determined in the sole discretion of the Board, for any other increase or decrease in the number of issued Shares effected without receipt of consideration by the Company or to reflect any distributions to holders of Shares other than regular cash dividends. Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, will affect, and no adjustment by reason thereof will be made with respect to, the number or price of Shares subject to an Award. After any adjustment made pursuant to this paragraph, the number of Shares subject to each outstanding Award may be rounded down to the nearest whole number of shares or to the nearest fraction of a whole share specified by the Committee, all as the Committee may determine from time to time. The Committee may approve different rounding methods for different Award types and for different Award tranches or sizes within any single type. In exercising its authority hereunder, the Committee will seek to adjust Option and SAR Awards so as to avoid creating a modification of the Awards within the meaning of Section 409A. If the Committee determines to make a modification, such modification must be expressly intended by the Committee, and is subject to Participant consent and the other requirements of Section 15(C). (C) Adjustments of Awards Upon the Occurrence of Substantial Spin-off or Certain Other Unusual or Nonrecurring Events. The Committee is hereby authorized to make adjustments in the terms and conditions of, the securities covered by, and the criteria included in, outstanding Awards in recognition of unusual or nonrecurring events (including, without limitation, the events described in Section 3(B)) affecting the Company, any Subsidiary, or the financial statements of the Company or any Subsidiary, or of changes in applicable laws, regulations, or accounting principles, whenever the Committee is required to make such adjustments pursuant to Section 3(B) or whenever the Committee, in its sole discretion, determines that such adjustments are necessary and appropriate in order to prevent or substantially mitigate dilution or enlargement of the benefits or potential benefits intended to be made available under | advise management, the internal auditor and the independent auditor that each is expected to provide to the Committee a timely analysis of significant financial reporting issues and practices.2021 PROXY STATEMENT | A-3 |
APPENDIX A—AUDIT COMMITTEE CHARTERA: FIRST HORIZON CORPORATION 2021 INCENTIVE PLAN |
the Plan. With respect to Awards intended to comply with Section 409A, no adjustment hereunder may be inconsistent with Section 409A compliance of the Plan and such Awards. (D) Substitute Awards. Any Shares issued by the Company as Substitute Awards will not reduce the Shares available for Awards under the Plan. (E) Sources of Shares. Any Shares delivered pursuant to an Award may consist, in whole or in part, of authorized and unissued Shares or, to the extent permitted by applicable law, of issued Shares which have been reacquired by the Company. Any Associate (including any officer or Associate-director of an Employer), Non-Employee Director, or Regional Board Member is eligible to be designated as a Participant; provided, however, that Non-Employee Directors are only eligible to receive Awards granted pursuant to Section 7. The receipt or holding of an Award will not affect a person’s eligibility for other or future Awards; the Committee is permitted to grant more than one Award, and more than one Award type, to a Participant from time to time. Section 5. Stock Options and Stock Appreciation Rights |
(A) Grant. Except for the Board’s reservations of authority under the Plan and otherwise, the Committee has sole and complete authority to determine the Participants to whom Options and SARs will be granted, the number of Shares subject to each Award, the exercise or base price of each Award, and the conditions and limitations applicable to the exercise of Options and SARs. (B) | b. | consider any reports or communications (and management’s and/or the internal auditor’s responses thereto) submitted to the Committee by the independent auditor required by or referred to in Auditing Standard No. 1301, or any successor provision. Communication with Audit Committees, issued by the Public Company Accounting Oversight Board, as may be modified or supplemented. | | | | | c. | meet with management, the independent auditor and, if appropriate, the internal auditor (i) to discuss the scope of the annual audit; the audited financial statements and quarterly financial statements; any significant matters arising from any audit, including any audit problems or difficulties and management’s response thereto; any significant matters arising from changes to the Corporation’s auditing and accounting principles, policies, controls, procedures and practices proposed or contemplated by the independent auditor, the internal auditor or management; any major issues regarding accounting principles and financial statement presentations; any major issues as to the adequacy of the Corporation’s internal controls and any special audit steps adopted in light of material control deficiencies; analyses prepared by management and/or the independent auditor setting forth significant financial reporting issues and judgments made in connection with the preparation of the financial statements; the effect, if significant, of regulatory and accounting initiatives, as well as off-balance sheet structures, on the financial statements of the Corporation; (ii) to review the form of opinion the independent auditor proposes to render to the Board of Directors and shareholders; and (iii) to discuss the Corporation’s risk assessment and risk management policies and to inquire about significant risks and exposures, if any, and the steps taken to monitor and minimize such risks. | | | | | d. | obtain from the independent auditor assurance that the audit was conducted in a manner consistent with Section 10A of the Securities Exchange Act of 1934, as amended, which set forth certain procedures to be followed in any audit of financial statements required under that act. | | | | | e. | review any employee complaints or material reports or inquiries received from regulators or government agencies and management’s responses; in addition to receiving reports from the internal auditor regarding risk and compliance matters as described in Section 2 of this Charter, meet periodically with the Corporation’s chief risk officer to discuss any risk and compliance matters that may have a material effect on the Corporation’s financial statements or internal controls; discuss any significant compliance issues raised in reports or inquiries received from regulators or government agencies; review periodic reports regarding the effectiveness of the Compliance and Ethics Program; and discuss with the Corporation’s General Counsel pending and threatened claims that may have a material impact on the financial statements. | | | | | f. | discuss earnings press releases, including the use of “proforma” or “adjusted” non-GAAP information, as well as financial information and earnings guidance provided to analysts and rating agencies; provided, however, that the Committee’s responsibility to discuss earnings releases as well as financial information and earnings guidance may be done generally and may be limited to the types of information to be disclosed and the types of presentations to be made. | | | | | g. | establish hiring policies for employees or former employees of the independent auditor. | | | | | h. | review and oversee related party transactions. | | | | | i. | establish procedures for the receipt, retention and treatment of complaints received by the Corporation regarding accounting, internal accounting controls or auditing matters, and for the confidential anonymous submission by the Corporation’s employees of concerns regarding questionable accounting or auditing matters. | | | | | j. | review disclosures made to the Committee by the Corporation’s CEO and CFO during their certification process for the Form 10-K and Form 10-Q about any significant deficiencies in the design or operation of internal controls or material weaknesses therein and any fraud involving management or other employees who have a significant role in the Corporation’s internal controls. | | | | 4. | with respect to reporting and recommendations,Pricing. | | | (i) | a. | prepare any reportGeneral Authority. The Committee, in its sole discretion, will determine the Option Price of each Option Award or other disclosures, including any recommendationthe base price of the Committee, required by the rules of the SEC to be included in the Corporation’s annual proxy statement.each SAR Award. | | | (ii) | Price Floor; no Back-Dating. Except in the case of Substitute Awards, the Option Price per Option Share and the base price of an SAR Award may not be less than 100% of the Fair Market Value of a Share on the grant date (determined in accordance with Section 17(E)). | | b. | (iii) | reviewNo Re-Pricing. Except as provided by Section 3(B), Section 3(C), and Section 14, without shareholder approval the Committee does not have the power to: (a) amend the terms of Options or SARs previously granted under the Plan to reduce the Option Price of such Options or base price of such SARs; (b) cancel Options or SARs previously granted under the Plan or under the Prior Stock Plan, and grant substitute Options or SARs with a lower Option Price or base price than the cancelled Options or SARs, respectively; or (c) if such Options or SARs (referenced in clause (b)) are out-of-the-money, cancel such Options or SARs and, in consideration of such cancellation, grant one or more other Awards, make a cash payment, or take any combination of such actions. Any such reduction, substitution, or other such action taken by the Committee in advance of shareholder approval will be subject to, and ineffective until, approved by the Company’s shareholders. For this Charterpurpose, an Award is “out-of-the-money” if the current Fair Market Value of a Share is less than the option price or base price, respectively, of the Award. |
(C) Term. Subject to the Committee’s authority under Section 2(A), each Award of Options or SARs will expire on the expiration date determined by the Committee and specified in the Award Document. However, no Option or SAR Award may be exercisable after the tenth anniversary of its grant date. In the case of a Substitute Award, for this purpose the grant date is the date granted under this Plan. (D) | Exercise. | | | (i) | General. Subject to Section 9(A), each Option and SAR Award will be exercisable at least annuallysuch times and recommend any changessubject to such terms and conditions as the Board.Committee may, in its sole discretion, specify in the |
| 2021 PROXY STATEMENT | A-4 |
APPENDIX A—AUDIT COMMITTEE CHARTERA: FIRST HORIZON CORPORATION 2021 INCENTIVE PLAN |
applicable Award Document or thereafter. The Committee has full and complete authority to determine whether an Option or SAR Award is exercisable in full at any time or from time to time during the term of the Option or SAR Award, or to provide for the exercise thereof in such installments, upon the occurrence of such events and at such times during the term of the Option or SAR Award as the Committee may determine. (ii) | Conditions; Legal Compliance. The Committee may impose such conditions with respect to the exercise of Options, including without limitation, any relating to the application of federal, state or foreign securities laws or the Code, as it may deem necessary or advisable. The exercise of any Options granted hereunder will be effective only at such times as the sale of Shares to the Participant pursuant to such exercise does not violate any state or federal securities or other laws, as determined by the Committee or the Company in their sole discretion. | | | (iii) | Exercise Process. An Option or SAR Award may be exercised in whole or in part at any time within the period permitted thereunder for the exercise thereof. The manner of exercise must conform with the Award Document, the Procedures, and (as applicable) the processes used by the Company’s administrative vendor, if any. | | | (iv) | Payment of Option Price. The manner of exercise of Options must provide for commercially prompt payment of the Option Price to the Company or to the Company’s option administrator, as agent for the Company. |
| c.(a) | report its activitiesCash. Payment may be made in cash (including cash equivalents). The manner of cash payment must conform to the full BoardProcedures, the Award Document, or the requirements of Directors on a regular basis and make such recommendations with respect to the above and other mattersCompany’s option administrator, as the Committee may deem necessary or appropriate.applicable. | | | | | d.(b) | prepareCash from Simultaneous Sale. Subject to applicable securities laws and review withat the Board an annual performance evaluationdiscretion of the Committee, which evaluation must comparecash payment may be effected by exercising the performanceOptions and simultaneously selling the Shares to be issued from the exercise, pursuant to a brokerage or similar arrangement or program approved or permitted by the Committee. | | | | | (c) | Payment with Shares and other Methods. The Committee, in its discretion, may allow payment of the Committee withOption Price: (1) by tendering, either by way of actual delivery of Shares or attestation, (A) Shares acquired directly from the requirements of this Charter. The performance evaluationCompany that have been owned by the Committee shall be conductedOption Award holder for not less than six months, or (B) Shares acquired on the open market prior to the date of exercise, in either case (C) having an aggregate Fair Market Value on the date of exercise at least equal to the Option Price, or (2) by a combination of cash and such mannerShares, or (3) by such other method of payment as the Committee deems appropriate. The reportdetermines to be acceptable; provided, however, that the Board may take the formOption Award holder is not entitled to tender or attest to Shares pursuant to successive, substantially simultaneous exercises of an oral report by the chair of the CommitteeOption Award or any other memberstock option awards granted by the Company or by any of its predecessors. Consistent with Section 15(A), the Committee designated byalso may permit Shares to be tendered or attested to cover applicable withholding taxes. | | | | | (d) | No Rights Until Shares Issued. Until the CommitteeOption Award holder has been issued Shares deriving from an exercise, he or she possesses no rights as a shareholder with respect to make this report. |
APPENDIX B—SECTIONS OF RESTATED CHARTER PROPOSED TO BE AMENDEDsuch Shares and is not entitled to any dividend or distribution the record date of which is prior to the date of issuance of such Shares. |
PROVISIONS OF THE
RESTATED CHARTER OF
FIRST HORIZON NATIONAL CORPORATION
AFFECTED BY VOTE ITEM NO. 2,
WITH PROPOSED CHANGES MARKED
* * * * *
(v) | Payment of SARs. At the Committee’s discretion, the amount payable as a result of the exercise of an SAR Award may be settled in cash, Shares, or a combination of cash and Shares. |
ARTICLE 5Section 6. Restricted Stock, Restricted Stock Units, & Restricted Cash Units |
Proposed New Article 5
(A) | Grant. | | | (i) | General Authority. Except for the Board’s reservations of authority under the Plan and otherwise, the Committee has sole and complete authority to determine the Participants to whom Restricted Stock, |
5. PURPOSES AND POWERS.
The Corporation is organized: to conduct one or more financial services businesses, including any and all related, ancillary, or supportive businesses; to own other companies or enterprises (or interests therein) which conduct financial services businesses, including any and all related, ancillary, or supportive businesses; to engage in any lawful act or activity for which corporations may be organized now or hereafter under the Tennessee Business Corporation Act or other statutes or law of Tennessee; and for every other lawful purpose or purposes. Except as provided otherwise in this Restated Charter, the Corporation has each and every power enumerated in or permitted now or hereafter by the statutes or law of Tennessee, and all powers ancillary thereto.
Current Article 5, which would be replaced
5. PURPOSES.
The purpose or purposes for which the Corporation is organized are, to the extent permitted by law:
(a) To subscribe for, purchase, lease or otherwise acquire and to receive, own, hold, sell, exchange, lease, mortgage, pledge, assign or otherwise dispose of, and otherwise deal in and with “securities” (as such term is herein defined) issued or created by, or other property (real or personal) of any person, corporation, association, firm, trust, organization or other entity whatsoever, including but not limited to this corporation and any national banking association, state-chartered bank, savings bank and trust company, wherever located or organized and whether public, private or municipal, of this state, or any district, territory, subdivision, municipality or department thereof, or any other state or any district, territory, subdivision, municipality or department thereof, or any country, nation or government, or any district, territory, subdivision, municipality or department thereof; to possess and exercise any and all rights, powers and privileges of ownership of such securities or other property, including without limitation the right to vote on such securities; and to issue or deliver in payment or exchange, in whole or in part, for any such securities or other property, its own stock, bonds, notes or other obligations, or to make payment for any such securities or other property by any other lawful means; and to do any and all acts and things necessary or advisable for the preservation, protection, improvement or enhancement in value of any such securities or other property. The term “securities” as used in this Article 5 shall mean any and all shares, stocks, bonds, debentures, notes, mortgages, acceptances, evidences of indebtedness or obligations, certificates of interest or participation in any property or venture, scrip, interim receipts, voting trust certificates, instruments or interests commonly known as securities, and any and all certificates of interest or participation in, or of deposit of, any of the foregoing, or receipts for, guaranties of, or warrants or rights to subscribe for or purchase any of the foregoing.
(b) To promote, finance and assist, financially or otherwise, whether by loan, guaranty, subsidy or otherwise, any person, corporation, partnership, association, firm, trust, organization or other entity in which the Corporation shall have any interest; to guarantee the payment of dividends on any stock or the payment of the obligations issued or incurred by any such person, corporation, partnership, association, firm, trust, organization or other entity, to issue its own stock, bonds or other obligations in payment or exchange for any securities or other property acquired (pursuant to a merger, consolidation or otherwise) by any such person, corporation, partnership, association, firm, trust, organization or other entity; and to do any and all other acts and things for the enhancement, protection or preservation of any securities which are in any manner, directly or indirectly, owned, held or guaranteed by the Corporation.
| 2021 PROXY STATEMENT | A-5 |
APPENDIX B—SECTIONS OF RESTATED CHARTER PROPOSED TO BE AMENDEDA: FIRST HORIZON CORPORATION 2021 INCENTIVE PLAN |
(c) To render assistance, service, counselRestricted Stock Units, and adviceRestricted Cash Units are granted, the number of shares of Restricted Stock and/or the number of Restricted Stock or Cash Units to be granted to each Participant, the dollar value per Cash Unit, the duration of the period during which, and to act as representative in any capacity (whether managing, operating, financial, purchasing, selling, advertising or otherwise) of any person, corporation, partnership, association, firm, trust, organization or other entity, including without limitation those inthe conditions under which, the Corporation shall haveAwards may be paid to the Participant or forfeited to the Company, and the other terms and conditions of such Awards. Restricted Stock, Restricted Stock Unit, and Restricted Cash Unit Awards will be evidenced by Award Documents in such form as the Committee from time to time approves, which documents must comply with and be subject to the terms and conditions provided hereunder and any interest.additional terms and conditions established by the Committee that are consistent with the terms of the Plan.
(ii) | Amounts and Vesting Period. Each Restricted Stock, Restricted Stock Unit, or Restricted Cash Unit Award made under the Plan will be for such number of Shares or Units, as applicable, as will be determined by the Committee and set forth in the Award Document. Consistent with Section 9(B), the Award Document must require a period of time during which the grantee must remain in the continuous employment of one or more Employers in order for the forfeiture and transfer restrictions to lapse. If the Committee so determines, the restrictions may lapse during such restricted period in installments with respect to specified portions of the Shares or Units covered by the Award. The Award Document may also, in the discretion of the Committee, set forth performance or other conditions that, if satisfied, will result in the lapsing of any applicable forfeiture and transfer restrictions, all as provided in Section 8. The Committee may, at its discretion, waive all or any part of the restrictions applicable to any or all outstanding Restricted Stock and Restricted Stock Unit Awards. |
(d) To acquire
(B) Issuance of and Restrictions on Restricted Stock. The Company may implement the grant of a Restricted Stock Award by purchase, lease, exchange (i) book-entry issuance of Shares to the Participant in an account maintained by the Company at its transfer agent, (ii) issuance of certificates for Shares in the name of the Participant with transfer and other restrictions, and/or otherwise,with physical custody arrangements, acceptable to own, hold, use, manage, develop, improve and to sell, lease, mortgage, exchange and otherwise deal in, real estatethe Company, or (iii) any other means of issuing Shares permitted by applicable law. Any such certificates and any interestrelated stock powers will be held by the Company or right therein and personal property of every class and description, either for is own account orany custodian appointed by the Company for the account of others,the grantee subject to erect, construct, rebuild, repair, managethe terms and control, lease, buyconditions of the Plan, and sell, anythe certificate will bear such a legend setting forth the restrictions imposed thereon as the Company, in its discretion, may determine. Unless otherwise determined by the Committee, the grantee will have all rights of a shareholder with respect to the Shares of unvested Restricted Stock, including the right to receive dividends and all kinds of and interest in real estate and personal property; andthe right to engage generallyvote such Shares, subject to the following restrictions: (i) in the businesscase of operating and leasing real estate and personal property of every character and description. (e) To buy, sell, produce, manufacture and dispose of all kinds of goods, documents, instruments, general intangibles, chattel paper, accounts, contract rights, wares, foods, potables, merchandise, manufactures, commodities, furniture, machinery, tools, supplies and products of any kind, character or description whatsoever, and generallycertificated Shares, the grantee will not be entitled to engage in any mercantile, manufacturing or commercial business of any kind or character whatsoever throughout the world, and to do all things incidental to any such business or businesses.
(f) To enter into any lawful arrangements for sharing profits, union of interest, reciprocal concession or cooperation, with any corporation, association, partnership, syndicate, entity, person or governmental, municipal or public authority, domestic or foreign in the carrying on of any business which the Corporation is authorized to carry on or any business or transaction deemed necessary, convenient or incidental to carrying out anydelivery of the purposesstock certificate until the expiration of the Corporation.
(g) To issue bonds, debentures, convertible debentures, notes, commercial paper, or other obligations of this Corporation, from time to time for any ofrestricted period and the objects or purposes of the Corporation and to secure the same by mortgage, pledge, deed of trust or otherwise.
(h) To guarantee obligationsfulfillment of any other entity andrestrictive conditions set forth in the Award Document with respect to secure such guaranties by mortgage, pledge or otherwise by vote of a majorityShares; (ii) transferability of the Shares will be restricted until Vesting and delivery, consistent with Section 12; and (iii) except as otherwise determined by the Committee, all of the Shares will be forfeited and all rights of the grantee to such Shares will terminate, without further obligation on the part of the Company, unless the grantee remains in the continuous employment of one or more Employers for the entire Boardrestricted period in relation to which such Shares were granted and unless any other restrictive conditions relating to the Restricted Stock Award are met. Any cash, any Shares, any other securities of Directors.the Company, and any other property distributed with respect to the Shares subject to Restricted Stock Awards will be subject to the same restrictions, terms and conditions as such Restricted Stock, provided that the Committee may provide in an Award Document for regular cash dividends to be paid prior to Vesting.
(i) To indemnify(C) Vesting of Restricted Stock. At the officersend of the restricted period and directors during their termprovided that any other restrictive conditions of officethe Restricted Stock Award have been met, or thereafter for actions arising during their term of office, either directly or throughat such earlier time as otherwise determined by the purchase of insurance, for expenditures as partiesCommittee, all restrictions set forth in the Award Document relating to suits bythe Restricted Stock Award or in the rightPlan will lapse as to the restricted Shares subject thereto, and, if certificated, a stock certificate for the appropriate number of Shares, free of the Corporationrestrictions and restricted stock legend imposed thereon as described in the second sentence of Section 6(B), will be delivered to the Participant.
(D) Vesting, Valuation, and Payment of Restricted Stock Units. At the end of the restricted period and provided that any other restrictive conditions of the Restricted Stock Unit Award have been met, or other thanat such earlier time as otherwise determined by the Committee, all restrictions set forth in the Award Document relating to the Restricted Stock Unit Award or in the right of the CorporationPlan will lapse. Each Restricted Stock Unit paid in cash will have a value equal to the extent permitted byFair Market Value of a Share on the statutes of Tennessee.Vesting date or (j) Without in any way limiting any of the objects or purposes or powers, whether primary or secondary of the Corporation, it is hereby expressly declared and provided that the Corporation shall have power to do all acts or things necessary, incidental or convenient to do, or calculated, directly or indirectly, to promote the interest of the Corporation, or enhance the value or render profitable any of its property or rights; and in carrying on its business or businesses, or for the purpose of obtaining or furthering any of its objects, to do any and all things and exercise any and all powers, rights and privileges which a corporation for profit may now or hereafter be permitted to do or to exercise under the laws of the State of Tennessee; and to do any and all of the acts and things herein set forth to the same extent as natural persons could do, and in any part of the world, as principal, factor, agent, contractor, trustee or otherwise, either alone or in syndicates, or otherwise in conjunction with any person, entity, syndicate, partnership, association or corporation, governmental or public bodies or authorities of any kind, domestic or foreign; to establish and maintain offices and agencies and to exercise all or any of its corporate powers and rights throughout the world.
(k) To engage, in addition to the foregoing, in any lawful act or activity for which corporations may be organized under the Tennessee General Corporation Act.
(l) It is the intention that the objects, purposes and powers specified in the fifth paragraph hereof shall, except where otherwise specified in said paragraph, be no-wise limited or restricted by reference to or inference from the terms of any other clause or paragraph in this Charter, but that the objects, purposes and powers specified in the fifth paragraph and in each of the clauses or paragraphs of this Charter shall be regarded as independent objects, purposes and powers.
The foregoing clauses shall be construed both as purposes and powers, and it is hereby expressly provided that the foregoing enumeration of specific powers shall not be held to limit or restrict in any manner the powers of this Corporation.
* * * * *
| 2021 PROXY STATEMENT | A-6 |
APPENDIX B—SECTIONS OF RESTATED CHARTER PROPOSED TO BE AMENDED |
ARTICLES 7 & 8A: FIRST HORIZON CORPORATION 2021 INCENTIVE PLAN |
Proposed reservationsuch other prior valuation date selected by the Committee, or equal to the Average Fair Market Value of Articles 7 and 8, after deletiona Share for the trading days in the valuation period selected by the Committee. Restricted Stock Units will be paid in cash, Shares, other securities or other property, as determined in the sole discretion of the Committee, following the lapse of the restrictions applicable thereto, or otherwise in accordance with the applicable Award Document.
7. [reserved]
8. [reserved]
Current Articles 7(E) Vesting, Valuation, and 8, proposed to be deleted as no longer necessary
7. COMMENCEMENT OF BUSINESS.
The Corporation will not commence business until considerationPayment of One Thousand Dollars ($1,000.00) has been received forRestricted Cash Units. At the issuance of shares.
8. PREEMPTIVE RIGHTS.
No shareholderend of the Corporation shall becauserestricted period and provided that any other restrictive conditions of his ownership of stockthe Restricted Cash Unit Award have been met, or at such earlier time as otherwise determined by the Committee, all restrictions set forth in the Award Document relating to the Restricted Cash Unit Award or in the Plan will lapse. Each Restricted Cash Unit will have a preemptivevalue equal to the dollar value per Unit selected by the Committee at grant, plus interest (if any) provided in the Award Document or other right to purchase, subscribe for or take any part of any stock or any partotherwise by the Committee. Restricted Cash Units will be paid in cash following the lapse of the notes, debentures, bondsrestrictions applicable thereto, or other securities convertible into or carrying options or warrants to purchase stock ofotherwise in accordance with the Corporation issued, optioned or sold by it after its incorporation. Any part of the capital stock and any part of the notes, debentures, bonds or other securities convertible into or carrying options or warrants to purchase stock of the Corporation authorized by this Restated Charter or by any amendment duly filed, may at any time be issued, optioned for sale and sold or disposed of by the Corporation pursuant to a resolution of its Board of Directors to such persons and upon such terms as may to such Board seem proper without first offering such stock or securities or any part thereof to existing shareholders.
* * * * *applicable Award Document.
ARTICLE 10, FIRST PARAGRAPHSection 7. Non-Employee Director Awards |
Proposed changesSubject to the first paragraphlimitations of Article 10
10. SERIAL PREFERRED STOCK.
Section 3(A)(i)(b) and Section 9, the Board may provide that all or a portion of a Non-Employee Director’s annual retainer and/or meeting fees, or other forms of compensation, be payable (either automatically or at the election of a Non-Employee Director) in the form of Options, SARs, Restricted Stock, Restricted Stock Units, Restricted Cash Units, or (in accordance with Section 10(F)) Shares In Lieu. The shares of any preferred classBoard may be divided intodetermine the terms and issued in series. If the sharesconditions of any such class are to be issued in series, then each series shall be so designated to distinguishAwards, including the series thereof from all the shares of all other seriesterms and classes. All sharesconditions which apply upon a termination of the same series shall be identical. Any or allNon-Employee Director’s service as a member of the seriesBoard, and has full power and authority in its discretion to administer such Awards, subject to the terms of the Plan and applicable law. The Board may exercise this authority episodically, periodically, by standing resolution, by policy, and in any other legal manner. Notwithstanding Section 10(A) and Section 17(E), the grant date of any class may vary in the relative rights and preferences as between the different seriesAward to the extent permitteda Non-Employee Director will be determined by the statutes of Tennessee. The Board of Directors shall have the authority to divide any or all such classes into series and, within the limitation of the statutes and law ofthe State of Tennessee,and particularlySection 48-16-102 of the Tennessee Business Corporation Act or any successor provision theretoSections 48-502 and 48-503, fix and determine the relative rights and preferences of the shares of any series so established. * * * * *in accordance with Board policy governing director compensation.
ARTICLE 11Section 8. Performance Awards |
(A) Grant. The Committee has sole and complete authority to determine the Participants who receive a Performance Award. A Performance Award consists of a performance-based Option Award, performance-based SAR Award, performance-based Restricted Stock Award, performance-based Restricted Stock Unit Award, performance-based Restricted Cash Unit Award, or other performance-based right that is (i) denominated in cash and/or Shares, (ii) valued, as determined by the Committee, in accordance with the achievement of such performance goals during such performance periods as the Committee will establish, and (iii) payable at such time and in such form as the Committee may determine. For this purpose, “Proposed New Article 11performance-based” means requiring that one or more specified performance conditions, beyond mere continuation of service, be fulfilled prior to Vesting. 11. MANAGEMENT BY BOARD OF DIRECTORS.(B) Terms and Conditions. Subject to the terms of the Plan, the Committee may determine the Performance Measures and other factors to be used to establish Performance Goals, the Performance Goals to be achieved during any Performance Period, the length of Performance Period, the Threshold, Target, and/or Maximum Amount of any Performance Award, and the amount and kind of any payment or transfer to be made pursuant to any Performance Award. The Committee may change specific provisions of a Performance Award after it is granted, provided, however, that no such change may significantly and adversely affect an already-granted Performance Award that has an already-begun Performance Period without the Participant’s consent.
(a) All corporate powers shall(C) Payment of Performance Awards. Performance Awards may be exercised by, andpaid in a lump sum or in installments following the business and affairsclose of the Corporation shall be managed underPerformance Period or, in accordance with the directionAward Document or Procedures, on a deferred basis.
(D) Termination of the Board of Directors. The Board of Directors may exercise all powers conferred or permittedService. (i) Unless otherwise determined by the statutesCommittee, Termination of Service prior to the end of a Performance Award’s Performance Period, or law of Tennessee.prior to the Award’s Vesting date, will (b) Without in any way limiting any of the objects or purposes or powers of the Board of Directors, whether primary or secondary, it is hereby expressly declared and provided that the Board of Directors shall have the power to remove any director for cause, within the meaning of applicable statutes or law of Tennessee, by a vote of a majority of the entire Board of Directors.
| 2021 PROXY STATEMENT | A-7 |
APPENDIX B—SECTIONS OF RESTATED CHARTER PROPOSED TO BE AMENDEDA: FIRST HORIZON CORPORATION 2021 INCENTIVE PLAN |
Current Article 11, whichresult in the forfeiture of the Performance Award. (ii) Unless otherwise determined by the Committee, any partial or complete waiver of forfeiture of a Performance Award resulting from Termination of Service will not waive the performance conditions and requirements associated with the Award, and will not accelerate payment.
Section 9. Minimum Vesting Periods |
(A) Options and SARs. No Option or SAR Award may become exercisable in whole or part sooner than the first anniversary of its grant date, except: (i) | if so provided in the Award Document or Procedures, in connection with the Participant’s death or Disability; | | | (ii) | as required by Section 14 (relating to Change in Control) or another provision of the Plan; | | | (iii) | in the case of Substitute Awards; | | | (iv) | Award grants that are made on the date of an annual meeting of shareholders or the date of a regular periodic Board meeting, or within five days after such meeting, may vest fifty weeks or later after grant; and | | | (v) | Options and SARs may be exercised in whole or part less than one year after grant, apart from clauses (i)–(iv), provided that, in the aggregate, exercises permitted by this clause (v) may cover no more than five percent of the available Shares authorized for issuance under Options and SARs pursuant to Section 3(A)(i)(a). |
(B) Full-Value Awards (except Shares in Lieu). No Restricted Stock, Restricted Stock Unit, or Restricted Cash Unit Award may vest in whole or part sooner than the first anniversary of its grant date, except: (i) | if so provided in the Award Document or Procedures, in connection with the Participant’s death or Disability; | | | (ii) | as required by Section 14 (relating to Change in Control) or another provision of the Plan; | | | (iii) | in the case of Substitute Awards; | | | (iv) | Award grants that are made on the date of an annual meeting of shareholders or the date of a regular periodic Board or Board committee meeting, or within five days after such meeting, may vest fifty weeks or later after grant; and | | | (v) | Vesting may occur less than one year after grant, apart from clauses (i) through (iv), provided that, in the aggregate, Vestings permitted by this clause (v) may cover no more than five percent of the available Shares authorized for issuance under Full-Value Awards pursuant to Section 3(A)(i)(a). |
(C) Examples. (i) RSUs are granted on May 4, 2022, the date of the 2022 annual meeting of shareholders. This Section 9 would be replacedpermit those RSUs to vest on April 22, 2023, the date of the 2023 annual meeting of shareholders. (ii) RSUs are granted on February 15, 2022, at the Committee’s regular meeting held each February. This Section 9 would permit those RSUs to vest on February 5, 2023, the date of the Committee’s regular February meeting in 2023. 11. ADDITIONAL POWERS.(D) Shares In Lieu. As provided in Section 10, Shares In Lieu are vested at grant. However, the aggregate total of all Shares in Lieu is restricted as provided in Section 3(A)(i)(a)(2).
(a) The Corporation shall have the right to purchase, take, receive or otherwise acquire, hold, own, pledge, transfer or otherwise dispose of its own shares; but purchases of its own shares, whether direct or indirect, shall be made only to the extent of unreserved and unrestricted earned or capital surplus available therefor.
(b) Other provisions: Management. The Corporation shall be managed by the Board of Directors, which shall exercise all powers conferred under the laws of the State of Tennessee including without limitation the power:
(1) To hold meetings, to have one or more offices, and to keep the books of the corporation, except as otherwise expressly provided by law, at such places, whether within or without the State of Tennessee, as may from time to time be designated by the Board.
(2) To make, alter and repeal bylaws of the corporation, subject to the reserved power of the shareholders to make, alter and repeal bylaws.
(3) To approve the issuance or sale of any of its authorized but unissued shares of any class, bonds or other securities and rights or options entitling the holders thereof to purchase from the corporation shares of any class or classes, to approve the purchase or other acquisition of or the reissuance, sale or other disposition of treasury shares; to fix the consideration to be received for such shares of any class, bonds or other securities, rights or options and to cause to be issued any such shares of any class, bonds or other securities, rights or options.
(4) To use or apply any funds of the corporation lawfully available therefor for the purchase or acquisition of shares of the capital stock or bonds or other securities of the corporation, in the market or otherwise, at such price as may be fixed by the Board, and to such extent and in such manner and for such purposes and upon such terms as the Board may deem expedient and as may be permitted by law, and to sell, exchange, transfer, reissue or cancel such shares of the capital stock of the corporation upon such terms and for such consideration as it may deem proper.
(5) To determine whether and to what extent and at what times and places and under what conditions and regulations the accounts and books of the corporation, or any of them, shall be open to the inspection of the shareholders, and no shareholder shall have any right to inspect any account, record, book or document of the corporation, except as conferred by the laws of the State of Tennessee or as authorized by the Board.
(6) To remove any director for cause as defined by the laws of the State of Tennessee by a vote of a majority of the entire Board of Directors.
(7) To fill any newly created directorships resulting from an increase in the number of directors and any vacancies occurring in the Board for any reason, (including removal of directors without cause by the shareholders or for cause by the Board of Directors or the shareholders.)
(8) To designate an Executive Committee consisting of two or more directors and such other committees consisting of two or more persons, who may or may not be directors, and to delegate to such Executive Committee and other committees all such authority of the Board that it deems desirable within the limits prescribed by the statutes of the State of Tennessee.
(9) To designate the officer or officers of the corporation who shall vote the shares of capital stock held by the corporation in other corporations and to authorize the execution of any proxy that may be necessary in connection therewith.
(10) To take any action required or permitted of the Board without a meeting on written consent, setting forth the action so taken, sighed by all directors entitled to vote thereon.
* * * * *
| 2021 PROXY STATEMENT | A-8 |
APPENDIX B—SECTIONS OF RESTATED CHARTER PROPOSED TO BE AMENDEDA: FIRST HORIZON CORPORATION 2021 INCENTIVE PLAN |
ARTICLE 14Section 10. Shares In Lieu of Cash Earned |
Proposed change(A) General Terms. The Committee is authorized to Article 14grant Awards of Shares In Lieu, subject to and in conformity with this Section 10, and subject to the Share limitations in Section 3(A)(i)(a)(2). An Award of Shares In Lieu consists of Shares, or Units denominated and payable in Shares, which have no service or other traditional Vesting requirement or period. An Award of Shares In Lieu may only be granted in settlement of an obligation of the Company to pay cash compensation which, not later than the grant date, the Participant has earned. Settlement of an earned compensation obligation with Shares In Lieu may only be dollar-for-dollar, based on: (i) 100% of the Fair Market Value of a Share on the grant date (determined in accordance with Section 17(E)); or (ii) 100% of the Average Fair Market Value of a Share over five consecutive trading days ending with the grant date; or (iii) 100% of the Average Fair Market Value of a Share over ten consecutive trading days ending with the grant date. If (A)(i) is used, the grant date may not be earlier than the date the Committee acts to approve the grant; and if (A)(ii) or (iii) is used, the Committee may act to approve the grant no later than the first trading day used to calculate the Average Fair Market Value.
14. DIRECTOR LIABILITY.(B) Award Document. For an Award of Shares In Lieu, the Award Document may consist of a separate grant notice or agreement similar to the Award Documents used for other Awards, may be part of the Award Document for another Award (denominated in cash but payable in Shares In Lieu), or may consist of any written evidence of the terms of the Award authorized or approved by the Committee, such as (for example) minutes, resolutions, presentations, memos, and program documentation.
No director shall(C) Timing of Payment. If an Award of Shares In Lieu consists of Shares, it will be personally liablepaid or delivered promptly after grant. The Committee may require Shares In Lieu to have payment deferred, or may allow the CorporationParticipant to elect deferral. An Award of Shares In Lieu as to which payment is deferred consists of Units denominated in Shares, payable in Shares when deferral ends.
(D) Holding Period. Although an Award of Shares In Lieu is vested at grant, the Committee may impose a holding or its shareholders for monetary damages for breach of fiduciary duty as director, except for liability (i) fordeferral period on all or any breachportion of the director’s dutyShares delivered, including on the portion remaining after withholding for taxes, consistent with Section 10(C). (E) Limitation on Cash Obligations to be Settled. An Award of loyaltyShares In Lieu may not be granted to a Participant in settlement of any Award under this Plan or the Corporation or its shareholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, or (iii) underPrior Stock Plan. (F) Awards to Non-Employee Directors. Consistent with Section48-18-30248-18-304, or 7, the Board is authorized to settle any successor provision thereto,obligation of the Tennessee Business Corporation Act.Company for cash retainer or fee compensation earned by a Non-Employee Director with one or more Awards of Shares In Lieu. Specifically: (i) | The Board may require settlement of earned compensation with Shares In Lieu. | | | (ii) | The Board may allow Non-Employee Directors to elect to receive Awards of Shares In Lieu. | | | (iii) | The Board may require Shares In Lieu to have payment deferred, or may allow Non-Employee Directors to elect deferral. |
Section 11. Annual Incentives |
(A) Coordination. The Committee may coordinate any Annual Incentive plan, program, or determination with the grant of Awards, consistent with the terms and limitations in this Plan. Without limiting the generality of the foregoing, the Committee may: (i) grant one or more Awards in lieu of all or part of an Annual Incentive; or (ii) establish an Annual Incentive which will be paid, in whole or part, in the form of one or more Awards. In the case of clause (ii), the grant date will be the date the earned amount of the Annual Incentive is finally and fully determined, or such later date as is chosen by the Committee. * * * * *(B) No Special Treatment. An Award granted in connection with an Annual Incentive must comply with all requirements of this Plan applicable that Award type. Each Award granted in connection with an Annual Incentive is subject to, and is counted against all applicable limits in, Section 3(A).
| 2021 PROXY STATEMENT | A-9 |
APPENDIX C—A: FIRST HORIZON CORPORATION 2021 INCENTIVE PLAN |
Section 12. Transferabilty of Awards | |
(A) General Transfer Restriction. Except as otherwise provided in this Section 12 or expressly elsewhere in the Plan, no Award (including its underlying Shares, cash, or other benefits) may be sold, assigned, transferred, pledged, hypothecated, or otherwise encumbered, hedged, or disposed of, in any manner, whether voluntarily or involuntarily, including by operation of law, other than by will or the laws of descent and distribution. (B) Limited Transfers Authorized. In its discretion, the Committee may permit the transfer of an Award, or any group or type of Awards, by any Participant (including a Non-Employee Director) selected by the Committee, to or for the benefit of the Participant’s Immediate Family (including, without limitation, to a trust for the benefit of the Participant’s Immediate Family or to a partnership or limited liability company for one or more members of the Participant’s Immediate Family), subject to such limits and conditions as the Committee may establish or require. If a Participant makes a transfer permitted by the Committee, the Participant will be treated by the Company as having retained a substantial economic interest in any transferred Award, and the Participant’s continued service and/or performance, as applicable, will continue to determine whether the Award vests and how much of it, if any, is paid or delivered to the transferee. The transferee will take the Award subject to all the terms, conditions, and risks applicable to the Award prior to such transfer, including the risks of forfeiture or Clawback. Unless the Committee determines otherwise, the Participant, rather than the transferee, will retain the sole right to consent to amendments to the Award or its Award Document and to take all other substantive and administrative actions associated with the Award, including exercise and tax withholding. For purposes of this Section 12(B), the term “Immediate Family” means the Participant’s spouse, parents, children, stepchildren, sisters, brothers, grandchildren, and step-grandchildren, including both natural and adopted relations. (C) Beneficiary Designations. The Committee is authorized to permit Participants to designate one or more Beneficiaries. A “Beneficiary” is a Person to whom all or a portion of an Award will be transferred after the Participant dies. If the Committee approves a process for a Participant to designate Beneficiaries and to record those designations, the Company’s record of the most recent designation, or set of designations, made by a Participant who has died will govern which Beneficiary(ies) will be entitled to be transferee(s). (D) Administration. No transfer by an Award Beneficiary designation, or by will or the laws of descent and distribution, is effective to bind the Company until the Company is furnished with written notice of the Participant’s death and an authenticated copy of the will and/or such other evidence as the Company may deem necessary to establish the validity of the transfer. The Committee or the Company may impose additional administrative conditions in order to assure the Company, in good faith, that a transfer is legally valid and proper. (E) Personal Exigencies. In its discretion, the Committee may permit transfers of Awards, or create assistive procedural rights in lieu of transfers or otherwise, in connection with death, divorce, child support, incompetence or other Disability, and other severe personal events, and the Committee may delegate broad administrative authority to management in such situations, provided that no such action (delegated or otherwise) may: (i) enlarge the amount of any outstanding Award; (ii) extend the original term of any outstanding Award of Options or SARs; or (iii) allow any Award to be sold or otherwise transferred for value. No Participant, and no Person related to a Participant, has any right under this Section 12(E) to obtain a transfer or assistance. Section 13. Termination of Service, Forfeiture, and Clawback |
(A) General Service Requirement. Except as otherwise determined by the Committee, each Award other than Shares In Lieu, and all rights of the Participant to the Award and any Shares, cash, or other benefits deriving therefrom, will terminate, without further obligation on the part of the Company, unless the Participant remains in continuous employment with one or more Employers for the entire period during which service is required, as specified in the Award Document or otherwise by the Committee. (B) Termination. Without limiting the authorities in Section 2: | 2021 PROXY STATEMENT | A-10 |
APPENDIX A: FIRST HORIZON CORPORATION 2021 INCENTIVE PLAN |
(i) | The Committee has complete discretion to determine the terms and conditions that apply to any Award upon death, Disability, Retirement, or other Termination of Service. Such terms may be provided in the Award Document, in the Procedures, or otherwise in a written form available to the Participant at the time of grant. | | | (ii) | After grant, the Committee has the full power and authority to reduce or waive, in whole or part, conditions and requirements of an Award related to employment or a Termination of Service. The Committee may require concessions or agreements by the Participant in exchange for such waivers. |
(C) Service and Termination of Non-Employee Directors. With respect to Awards to Non-Employee Directors, the Board has complete discretion to determine the service requirements of any Award, and the terms and conditions that will apply to any Award upon death, Disability, Retirement, or other Termination of Service. (D) | Plan, Awards, & Clawback Policy. |
(i) | Awards are subject to forfeiture prior to Vesting or exercise, and to recovery or reimbursement of paid or delivered cash, Shares, or other benefits (“Clawback”), to the extent provided in this Plan from time to time. | | | (ii) | Awards are subject to forfeiture and Clawback to the extent provided in the applicable Award Document or Procedures from time to time. | | | (iii) | Awards are subject to forfeiture and Clawback to the extent provided in the Clawback Policy from time to time. | | | (iv) | An amendment to the forfeiture or Clawback provisions of the Plan, Procedures, or Clawback Policy will not apply retroactively to then-outstanding Awards unless expressly so provided in such amendment. | | | (v) | The Committee or the Board may amend the substance of any or all forfeiture or Clawback provisions in this Section 13 or otherwise in the Plan as the Committee or the Board determine to be appropriate. The Committee or the Board may move any or all forfeiture or Clawback provisions from this Plan to the Clawback Policy for administrative convenience or in order to facilitate compliance with regulatory or reporting requirements. | | | (vi) | The Plan, the Clawback Policy, or an Award may provide for forfeiture or Clawback based on, or triggered by, a restatement or other correction of financial results used to determine the amount paid for the Award. In such cases forfeiture or Clawback may be absolute, or the amount paid may be merely re-determined based on corrected information. For purposes of applying those latter provisions, the following are examples of lowering (or eliminating) an Award payment based on restated or corrected financial results: (i) the payment would have been lower or eliminated directly by application of a Performance Goal based in whole or part on a Performance Measure that incorporates or is adversely affected by the correction; and (ii) for any Award where the amount paid is subject to Committee discretion, the Committee determines in good faith that the payment would have been lower or eliminated through the exercise of discretion by the Committee if the Committee had known the correct financial results at the time the discretion was exercised. | | | (vii) | For the purposes of this Section 13, all amounts paid will be calculated on a gross pretax basis regardless of the net amount remitted to the Participant. For example, if a Participant’s Performance Award pays $1,000 gross and, after withholding for taxes and all other reasons, $750 net is remitted directly to the Participant in cash, then under this Section the Company may seek reimbursement of all or any portion of the $1,000 gross amount, provided that the conditions for Clawback are met. |
(E) | Forfeiture and Reimbursement in the Context of Misconduct. |
(i) | The Company reserves the right (and in certain cases may have the legal duty) to cause or seek the forfeiture of all or any portion of any Performance Award held by any Participant, and/or the |
| 2021 PROXY STATEMENT | A-11 |
APPENDIX A: FIRST HORIZON CORPORATION 2021 INCENTIVE PLAN |
reimbursement by any Participant to the Company of all or any portion of any Performance Award paid (as defined in paragraph (iv) below) to the Participant, for any Performance Award where the Board or the Committee concludes in good faith that the Participant engaged in fraud or other intentional, knowing, or willful misconduct in connection with the performance of his or her duties as an officer or Associate of the Company or of any of its Subsidiaries. (ii) | In determining whether and to what extent the Board or the Committee (as applicable) may cause the Company to exercise its rights under this Section 13(E) after finding that this Section applies, the Board or Committee may weigh all material facts and circumstances pertaining to the relevant acts and events, and may take any factors into account that it deems relevant to the determination, including, among others, the following factors: the degree or risk of harm or other consequences to the Company or its Subsidiaries, including tangible, financial, regulatory, reputational or other intangible harm; the extent to which the misconduct was intended to allow the Participant to personally gain a profit or advantage or personally avoid a loss or disadvantage; the extent to which the Participant did or did not believe his or her misconduct would further the best interests of the Company or its Subsidiaries; the extent to which the Participant’s misconduct took advantage of or otherwise betrayed a trust conferred upon that Participant; and the extent to which the misconduct involved deceit by the Participant. | | | (iii) | The Company’s right in this Section 13(E) with respect to an Award will expire if not asserted—by notice to the Participant, court filing, or otherwise–within three years after the Award is paid or, if the Award is paid in parts on more than one occasion, within three years after the final payment of the Award. For this purpose an assertion of rights need only reflect that the Company is commencing or has commenced a review of possible misconduct by the Participant; such an assertion may, but need not, reflect the completion of the investigation and other processes outlined in this Section or a demand for repayment. Also, for purposes of this Section 13(E) (iii), an Award is deemed paid when actually paid or, if earlier, when the Participant’s elective deferral is effectuated. Accordingly, any deferral period mandated by the terms of an Award or otherwise will extend the period under this Section. | | | (iv) | For the purposes of this Section 13(E) a Performance Award is “paid” when, among other things, any one or more of the following occur: the Award results in a cash payment to or for the benefit of the Participant; the Award results in shares issued or delivered to the Participant; or the Award results in an increase in a deferral account of the Participant or otherwise results in any credit for the account or benefit of the Participant. “Payment” may occur, among other things, in connection with an exercise of the Award, the Vesting of the Award, the delivery of share certificates to the Participant, or the crediting of shares to a Participant’s deferral, brokerage, or other account. The amount paid is the amount of dollars or shares or both that is so paid, issued, delivered, increased, or credited. Shares and share units paid include all proceeds from those shares, including any cash, stock, or stock unit dividends related to those shares or units, as well as shares or share units from stock splits related to those shares or units. Any Performance Award earned and deferred and any Performance Award payments that are earned and deferred for any reason are subject to this Section 13(E) as having been paid, along with all dividends, dividend equivalents, interest, shares, and other amounts earned upon or that are proceeds of the amount or shares deferred. However, if the Participant elects to invest deferred amounts in a manner that results in a loss, the Participant nevertheless may be required to reimburse to the Company the full amount of the Performance Award (measured in dollars or shares, as applicable at the time originally earned) if the conditions of this Section 13 are met. | | | (v) | Any of the Board, the Committee, the Chairman of the Committee, the Chairman of the Board, or the Chief Executive Officer, acting singly based on any good faith suspicion that the conditions of this Section 13(E) above might be met, may halt and suspend payment of any Performance Award (including payment of any amount deferred in connection with any Performance Award and any earnings thereon or proceeds thereof) until the Board, Committee, or Committee’s delegate has investigated, considered, and acted upon the matter hereunder. Any such suspension will be without interest owed to the Participant if it is later determined that any payment should be made to the Participant. |
| 2021 PROXY STATEMENT | A-12 |
APPENDIX A: FIRST HORIZON CORPORATION 2021 INCENTIVE PLAN |
(vi) | No payment of any Award, whether or not following a payment-suspension, will operate to waive or diminish the Company’s right to seek reimbursement under this Section. |
If the Board acts under this Section 13(E), any member of the Board whose conduct is at issue must recuse him- or herself from participating in the matter as a Board member. Section 14. Effects of Change in Control |
(A) Lapse of Restrictions Generally. Except as otherwise provided in this Section or elsewhere in the Plan, upon a Participant’s Qualifying Termination following a Change in Control, all outstanding Awards of that Participant will vest, become immediately exercisable or payable, and have all restrictions lifted, as the case may be. Awards may not vest, and the Committee may not provide in an Award Document that the Vesting of an Award is accelerated, solely because a Change in Control occurs. Subject to the foregoing, an Award Document or an individual agreement between the Participant and the Company may provide for additional or substitute benefits to the Participant in connection with a Change in Control. (B) | Performance Awards. Unless otherwise specified or provided for in the Award Document: | | | (i) | Upon a Qualifying Termination following a Change in Control, for each Performance Award the performance goals and any other performance-related conditions will be deemed met: at the target level, if any is specified in the Award; and, if no target is specified as such, at the nominal or 100% level specified in the Award. | | | (ii) | In connection with any Change in Control, as to each Performance Award held by each Participant where a Qualifying Termination does not occur upon or shortly after that event, the Committee must determine whether or not performance relative to the performance goals of outstanding Performance Awards reasonably can be measured at the end of the respective performance periods. If the Committee determines that such performance cannot reasonably be measured after the Change in Control occurs (a “Substantial Change in Control”), then for each affected Performance Award the performance goals and any other performance-related conditions will be deemed met: at the target level, if any is specified in the Award; and if no target is specified as such, at the nominal or 100% level specified in the Award. A Substantial Change in Control is deemed to have occurred, without determination by the Committee, if the Company’s Shares no longer are outstanding or listed on a national securities exchange or quotation system. Continuing-service conditions, and any other non-performance requirements, will not be affected by a Substantial Change in Control absent a Qualifying Termination. | | | (iii) | The provisions of this Section are not intended to limit the Committee’s authority and discretion under Section 3(B) and Section 3(C) to adjust Performance Awards following any merger or other significant corporate event, whether or not a Change in Control occurs. |
(C) | Options and SARs. Unless otherwise specified or provided for in the Award Document: |
(i) | The Board or Committee may require that all or specified groups of Option and SAR Awards outstanding when a Substantial Change in Control occurs be canceled at that time or as a consequence of that event. For any such Award that is canceled the Participant will be entitled to a cash payment of not less than the amount computed by subtracting the option price or base price (as applicable) per Share from the fair value of the consideration to be received per Share by the Company’s common shareholders in connection with the Substantial Change in Control transaction. In such case the Board or Committee may determine, in its discretion in good faith, the fair value of such consideration. Option and SAR Awards which have a negative value, as so measured, may be canceled without payment. | | | (ii) | Participants holding Option and SAR Awards have no right to receive cancelation. If their Awards are canceled, such Participants have no right to claim or receive the potential future value of their Awards based on possible growth in value after the Substantial Change in Control event. |
| 2021 PROXY STATEMENT | A-13 |
APPENDIX A: FIRST HORIZON CORPORATION 2021 INCENTIVE PLAN |
(D) Retirement. Upon a Qualifying Termination following a Change in Control, unless otherwise specified or provided for in the Award Document: to the extent an Award Document or the Procedures provide that Retirement benefits or treatment apply only upon discretionary approval, such approval will be deemed given; and, to the extent that such Retirement benefits or treatment may be determined or varied in a discretionary manner, the standard or typical benefits or treatment will be deemed approved. For this purpose, standard or typical benefits or treatment will be determined by reference to the Award Document and/or Procedures or, if no such benefits or treatment is there specified, to the most recent Participant Retirement approved by the Committee or its delegate prior to the Change in Control which did not involve termination for Cause or other misconduct. (E) Waiver Clarification. For purposes of this Section 14 and the definitions of “Qualifying Termination” and “Good Reason” as used in connection with this Section, a Termination of Retirement Waiver which occurs with respect to a Participant upon or following a Change in Control will not constitute the Participant’s Retirement but instead will constitute an involuntary Termination of Service by the Company or Employer, as applicable. (F) Change in Control Transaction Agreement May Override. The terms of the merger or other agreement governing a Change in Control, once approved by the Board and the Company’s shareholders, may allow, authorize, encourage, or require acceleration, settlement (cancellation with cash payment), substitution, or other treatment of outstanding Awards supplemental to the provisions in this Section 14 or in an Award Document, and notwithstanding the limitations in this Section upon the Committee’s authority. (G) Section 409A Compliance. If the payment of Shares, cash, or otherwise related to an Award following a Change in Control constitutes the payment of deferred compensation subject to Section 409A, and if the timing or form of that payment is changed as a result of that Change in Control, then no such change in the timing or form of payment may occur unless the event that constitutes a Change in Control as defined in the Plan also is a “change in control event” as defined in Section 409A (including its regulations). If such Change in Control event is not a “change in control event,” then, in order to preserve as much of the benefit of this Section 14 as possible, the Committee may determine to adjust the timing or form of payment in order to avoid becoming subject to Section 409A or in order to comply with Section 409A, even if such adjustment is inconsistent with other provisions of this Section 14 or an Award Document. (H) Failure to Assume or Replace. If the Board or Committee in good faith expect a Change in Control transaction to occur in which a successor would not by Section 17(O)(i) or by operation of law be bound by this Plan, if the Company has been unable to comply with Section 17(O)(ii), and if any Awards are expected to remain outstanding under this Plan immediately after consummation of such transaction, then, whether or not Qualifying Terminations of the Award holders have occurred or are expected to occur: (i) | Each such outstanding Award will be cancelled and paid in cash not later than the close of business on the second business day immediately preceding the expected consummation of the transaction. | | | (ii) | The cash value of Options and SARs will be their aggregate Spread measured using Fair Market Value on the second business day immediately preceding the payment date. For any Award with a negative Spread, the cash value will be zero. | | | (iii) | The cash value of each Restricted Cash Unit will be the nominal dollar value of each Unit. | | | (iv) | The cash value of each other Full-Value Award will be the Fair Market Value of each underlying Share on the second business day immediately preceding the payment date. | | | (v) | For each Performance Award, the provisions of this Section 14(H) will be applied by assuming performance at the target level, if any is specified in the Award, and, if no target is specified as such, at the nominal or 100% level specified in the Award. | | | (vi) | For the avoidance of doubt, this Section 14(H) will not apply if no Awards are expected to remain outstanding because, for example, the successor is expected to replace all such Awards with comparable awards under the successor’s award programs. If the Board or Committee expect a successor to replace some outstanding Awards but not all of them, the provisions of this Section 14(H) will apply only to the Awards not expected to be replaced. |
| 2021 PROXY STATEMENT | A-14 |
APPENDIX A: FIRST HORIZON CORPORATION 2021 INCENTIVE PLAN |
(A) | Withholding for Taxes. | | | (i) | General. A Participant may be required to pay to an Employer or the Company, and each Employer and the Company has the right and is hereby authorized to withhold from any Award, from any payment due or transfer made under any Award or under the Plan, or from any other compensation or other amount owing to a Participant, the amount (in cash, Shares, other securities, other Awards, or other property) of any Taxes associated with the Award, and to take such other action as may be necessary in the opinion of the Company to satisfy all corporate obligations for the payment of such Taxes. Moreover, the Employer and the Company may withhold from payment of an Award any Taxes related to types of compensation other than Awards. | | | (ii) | Withholding Tax Features. The Committee may, in its discretion, allow or require that withholding Taxes associated with an Award be paid to the Company (or its agent) from the cash or Shares to be delivered to the Participant from that Award. A withholding tax feature may cover any Taxes required or permitted to be withheld in connection with the Award. A withholding tax feature may, but need not, be limited to the minimum amount of such Taxes required to be remitted to the applicable taxing authorities, but may not exceed the Company’s estimate of Taxes associated with the Award based on the maximum marginal tax rates applicable to that Participant, or (if greater), applicable to Participants generally in the context of that type of Award. Any Shares withheld by the Company for Taxes will be valued at their Fair Market Value on the applicable tax valuation date for the Award, provided that, for this purpose only, “Fair Market Value” may be either Fair Market Value as defined in the Plan, or (if different) that fair market value determined in accordance with applicable tax law and regulations, as the Committee may choose. |
(B) No Liability for Adverse Tax Treatment. Neither the Company nor any Subsidiary, nor any director, officer, employee, or advisor of the Company or any Subsidiary, is liable to any Participant for the Taxes imposed on the Participant in connection with any Award or for the tax consequences to the Participant of any Award or of participation in the Plan. (C) | Section 409A Compliance. In addition to other provisions in the Plan which refer to Section 409A: | | | (i) | Deferrals and Deferral Features. Unless expressly determined otherwise by the Board (in connection with the Plan and Awards to Non-Employee Directors) or the Committee (in connection with Plan administration and Awards), all deferral provisions, elections, and features authorized under the Plan or provided in connection with any Award are intended to, and will be interpreted and administered to, comply with Section 409A. As to any deferral provision, election, or feature provided in connection with any Award, the Committee may not take action that would fail to comply with Section 409A to the substantial detriment of the Participant, unless the Participant consents. For this purpose, general acceptance of the Award in question does not, by itself, constitute Participant consent to Section 409A non-compliance. | | | (ii) | Timing Changes Generally. Neither the Company nor any Participant may accelerate or delay payment, settlement, or exercise of any Award except to the extent compliant with Section 409A or an applicable exception, or unless Section 409A does not apply at all. | | | (iii) | Termination of Service. The Committee or the Company (subject to Committee oversight) may determine to accelerate or delay, or change the form of, payment of any Award or related benefit triggered by or associated with a Participant’s Termination of Service, notwithstanding general provisions of the Plan, in order to avoid the application of Section 409A or in order to comply with Section 409A. Without limiting the foregoing, the Committee or Company may consider: whether the payment will have the status of a “deferral of compensation” and whether that status could be avoided by changing the form or timing of payment, whether a Participant is a “specified employee” at any given time and whether that status might be different at an earlier or later time, and whether the Participant’s Termination of Service constitutes a “separation from service,” all within the meaning of Section 409A. |
| 2021 PROXY STATEMENT | A-15 |
APPENDIX A: FIRST HORIZON CORPORATION 2021 INCENTIVE PLAN |
Section 16. Inception, Termination, Suspension, and Amendment |
(A) Inception. The Plan is effective the date it is approved by the Company’s shareholders, scheduled to occur at the 2021 Annual Meeting of shareholders on April 27, 2021. Awards may not be granted under the Plan prior to initial shareholder approval. (B) Termination of Authority for New Awards. No new Awards may be granted under the Plan after June 30, 2031. Unless otherwise expressly provided in the Plan or in an applicable Award Document, any Award granted hereunder may, and the authority of the Board or the Committee to amend, alter, modify, adjust, suspend, discontinue, or terminate any such Award or to waive any conditions or rights under any such Award will, continue after the authority for grant of new Awards hereunder has expired or been exhausted. (C) Termination, Suspension, or Amendment of the Plan. The Board may amend, alter, modify, suspend, discontinue, or terminate the Plan or any portion thereof at any time, except that: (i) | The Board may not amend the Plan in violation of law. | | | (ii) | The Board may not enlarge the Share or dollar limitations in subsection (i) of Section 3(A), or amend the limitations in subsections (ii), (iii), or (iv) of Section 3(A), without the approval of the Company’s common shareholders, other than making adjustments in accordance with Section 3(B). | | | (iii) | No amendment, alteration, modification, suspension, discontinuation or termination may materially and adversely affect any right acquired by any Participant under the terms of an Award granted before the date of such amendment, alteration, modification, suspension, discontinuation or termination, unless such Participant consents. | | | (iv) | No amendment of the Plan may be interpreted or administered in a manner that would fail to comply with Section 409A unless expressly determined otherwise by the Board. |
(D) Termination, Suspension, or Amendment of Awards. Subject to the limitations of Section 5(B), the Committee may waive any conditions or rights under, amend any terms of, or modify, alter, suspend, discontinue, cancel or terminate, any Award theretofore granted, prospectively or retroactively. No such waiver, amendment, modification, alteration, suspension, discontinuance, cancellation or termination of an outstanding Award that would materially and adversely affect the rights of the Participant will be effective without the consent of the Participant. Neither adjustments for changes in capitalization as provided in Section 3(B), nor adjustments for other material changes as provided in Section 3(C), will be treated as having materially and adversely affected any such rights. Section 17. Technical & Miscellaneous Matters |
(A) Dividends & Interest. As used in this Section 17(A), “dividends” includes dividend equivalents or substitutes which mirror actual dividends paid to holders of Shares, and “interest” includes any additional cash accrued or paid based on a principal amount and the passage of time. Subject to the limitations enumerated below, the Committee may provide for dividends and interest, including reinvestment of dividends and compounding of interest, in respect of any Award prior to payment. Such determinations may be reflected in the Award Document, the Procedures, or other documentation related to the Award and approved by the Committee, such as meeting minutes or a written Award program. (i) | Options/SARs Restriction. No dividends or interest may accrue or be paid with respect to Shares underlying Options or SARs prior to exercise. | | | (ii) | Performance Award Restriction. With respect to any Performance Award, dividends and interest may accrue and/or reinvest or compound if and to the extent the Committee so determines, but may not be paid prior to Vesting of the Award. | | | (iii) | Full-Value Standard Provisions and Restriction. |
| 2021 PROXY STATEMENT | A-16 |
APPENDIX A: FIRST HORIZON CORPORATION 2021 INCENTIVE PLAN |
| (a) | To the extent that no specific determination is made for a particular Award, the following provisions will apply to Full-Value Awards by default: (1) for Restricted Cash Units generally, no interest may accrue or be paid; (2) for Restricted Cash Units providing for interest accrual, interest may not be compounded; and (3) for other Full-Value Awards, (X) cash dividends will accrue, (Y) dividends will accrue without interest and without reinvestment, and (Z) dividends will be paid only if and when, and only to the extent that, the underlying Award vests and is paid. | | | | | (b) | In any case, dividends and interest on Full-Value Awards may not be paid prior to Vesting of the Award. |
(B) No Rights as Shareholder. Subject to the provisions of the applicable Award, no Participant or holder or beneficiary of any Award has any rights as a shareholder with respect to any Shares to be distributed under the Plan until such Shares are issued to such Participant, holder, or beneficiary and, except in conformity with Section 17(A), will not be entitled to any dividend or distribution the record date of which is prior to the date of such issuance. (C) No Rights to Awards. This Plan gives no Person any right to be granted any Award on any terms. The Plan does not require uniformity of treatment of Award recipients, or of holders or beneficiaries of Awards. The terms and conditions of one Award need not be consistent or uniform in any respect whatever with any other Award. An action taken by the Committee in one instance likewise need not be consistent or uniform in any respect whatever with any other action. (D) Share Certificates. No Participant has any right to demand the issuance of share certificates. To the extent the Committee chooses to issue certificates, all certificates for Shares or other securities of the Company or any Subsidiary delivered under the Plan pursuant to any Award or the exercise thereof will be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the Plan or the rules, regulations, and other requirements of the SEC, any stock exchange upon which such Shares or other securities are then listed, and any applicable federal, state or foreign laws, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions. (E) Grant Date. Subject to Section 7 and Section 11(A), for each Award of Options or SARs, the grant date is the date the Committee acts to approve the grant, or, if so determined by the Committee, any later date selected by the Committee to be the effective date of the Award grant. For all other Awards, the grant date is the date the Committee acts to approve the grant, or, if so determined by the Committee, any other date selected by the Committee to be the effective date of the Award grant. No rights to an Award are created or effective until the grant date, and, prior to the grant date, the Committee may amend, cancel, or rescind any grant action. (F) Award Documents. Each Award must be evidenced by an Award Document that specifies the terms and conditions of the Award. An Award is effective only upon delivery to or acknowledgement by a Participant, either electronically or by other means, of an Award Document. Each Award is subject to, and Award Documents are deemed to include, the terms of the Plan applicable to Awards generally and applicable to that Award type, as well as Procedures applicable to that Award type, unless (subject to requirements of the Plan) the Committee expressly determines otherwise. In the event of a conflict between the terms of the Plan and any Award Document, the terms of the Plan will prevail. (G) Other Compensation Arrangements. Nothing in the Plan will prevent the Company or any Subsidiary from adopting or continuing in effect other compensation arrangements, which may, but need not, provide for compensation, awards, or benefits similar to those provided for hereunder. (H) No Right to Employment. The grant of an Award may not be construed as giving a Participant the right to be retained in the employ of any Employer. Further, an Employer may at any time dismiss a Participant from employment, free from any liability or any claim under the Plan, unless otherwise expressly provided in the Plan or in any Award Document. | 2021 PROXY STATEMENT | A-17 |
APPENDIX A: FIRST HORIZON CORPORATION 2021 INCENTIVE PLAN |
(I) Governing Law. The validity, construction, and effect of the Plan and any rules and regulations relating to the Plan and any Award Document will be determined in accordance with the substantive laws of the State of Tennessee, without giving effect to the conflict of law principles thereof. (J) Severability. To the extent applicable to a particular Award granted to a particular Participant, the forfeiture and Clawback provisions of the Plan, the Clawback Policy, the Procedures, and the Award Document may be limited by the laws of another state associated with where the Participant lives or works. If a court of competent jurisdiction determines that any of those provisions is unlawful or prohibited by law as applied to that Award, then those provisions of that Award will be deemed modified, reduced, or otherwise cut back to the minimum extent possible in order to preserve the original provisions to the maximum extent possible, consistent with applicable state law as applied to that Award and that Participant. (K) Other Laws. The Committee or the Company may refuse to issue or transfer any Shares or other consideration under an Award if, acting in its sole discretion, it determines that the issuance or transfer of such Shares or such other consideration might violate any applicable law or regulation (including applicable non-U.S. laws or regulations) or entitle the Company to recover the same under Section 16(b) of the Exchange Act, and any payment tendered to the Company by a Participant, other holder or beneficiary in connection with the exercise of such Award will be promptly refunded to the relevant Participant, holder, or beneficiary. Without limiting the generality of the foregoing, no Award may be construed as an offer to sell securities of the Company, and no such offer may be outstanding, unless and until the Committee in its sole discretion has determined that any such offer, if made, would be in compliance with all applicable requirements of the U.S. federal or non-U.S. securities laws and any other laws to which such offer, if made, would be subject. (L) No Trust or Fund Created. Neither the Plan nor any Award creates or may be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company or any Subsidiary and a Participant or any other Person. To the extent that any Person acquires a right to receive payments from the Company or any Subsidiary pursuant to an Award, such right is no greater than the right of any unsecured general creditor of the Company or such Subsidiary, as applicable. (M) Fractional Shares. No fractional Shares may be issued or delivered pursuant to any Award unless the Board or the Committee expressly determines otherwise. The Committee may determine whether cash, other securities, or other property will be paid or transferred in lieu of any fractional Shares or whether such fractional Shares or any rights thereto will be canceled, terminated, or otherwise eliminated without payment. Fractional Shares may be used in the administration of outstanding Awards prior to payment or exercise, even if not paid. (N) Headings. Headings are given to the Sections and subsections of the Plan solely as a convenience to facilitate reference. Such headings may not be deemed in any way material or relevant to the construction or interpretation of the Plan or any provision thereof. (O) | Binding Effect. | | | (i) | The terms of the Plan are binding upon the Company and its successors and assigns and the Participants and their beneficiaries and legal representatives, and will bind any successor of the Company (whether direct or indirect, by purchase, merger, consolidation or otherwise), in the same manner and to the same extent that the Company would be obligated under this Plan if no succession had taken place. | | | (ii) | In the case of any transaction in which a successor would not by the foregoing provision or by operation of law be bound by this Plan, the Company must require such successor expressly and unconditionally to assume and agree to perform the Company’s obligations hereunder, in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place. |
| 2021 PROXY STATEMENT | A-18 |
APPENDIX A: FIRST HORIZON CORPORATION 2021 INCENTIVE PLAN |
(P) No Third Party Beneficiaries. Except as expressly provided herein or therein, neither the Plan, the Procedures, nor any Award Document will confer on any person other than the Company and each Participant any rights or remedies hereunder or thereunder. As used in the Plan, the following terms have the meanings set forth below: “Amount” means any Threshold Amount, Target Amount, or Maximum Amount. “Annual Incentive” means an annual cash bonus award earned by a Participant, whether or not under a formal bonus plan. Annual Incentives may be paid using Awards instead of cash, as provided in Section 11. For this purpose, a cash bonus award is “annual” if it relates to a single fiscal year of the Company or a Subsidiary, or any portion of a single fiscal year. The Committee may treat partial-year Annual Incentives, all relating to different parts of the same year, as a single Annual Incentive. “Associate” means an employee of any Employer. “Award” means any Option, Stock Appreciation Right, Restricted Stock, Restricted Stock Unit, Restricted Cash Unit, Performance Award, or Shares In Lieu award granted under the Plan, whether singly or in combination, to a Participant pursuant to such terms, conditions, restrictions, and/or limitations, if any, as may be established from time to time. “Award Document” means, collectively, any agreement, contract, notice, plan, program, or other instrument(s) or document(s), or any combination thereof, collectively evidencing an Award or its terms. An Award Document may, but need not, be executed or acknowledged by the Participant and may be presented, delivered, executed, acknowledged, or recorded in any physical, electronic, or other medium. “Beneficiary” has the meaning given in Section 12(C). “Board” means the Board of Directors of the Company. “Cause” means: (i) | | a Participant’s conviction of, or plea of guilty or nolo contendere (or similar plea) to, (A) a misdemeanor charge involving fraud, false statements or misleading omissions, wrongful taking, embezzlement, bribery, forgery, counterfeiting, or extortion, (B) a felony charge, or (C) an equivalent charge to those in clauses (A) and (B) in jurisdictions which do not use those designations; | | | | (ii) | | a Participant’s engagement in any conduct which constitutes, or which results in, employment or service disqualification, disbarment, or prohibition under applicable law or regulations (including under banking, financial industry, or securities laws or regulations); | | | | (iii) | | a Participant’s knowing violation of any securities or commodities laws, any rules or regulations issued pursuant to such laws, or the rules and regulations of any securities or commodities exchange or association of which the Company or any of its Subsidiaries or affiliates is a member; | | | | (iv) | | a Participant’s substantial failure to perform his or her duties to the Company or its Subsidiaries; | | | | (v) | | a Participant’s knowing and substantial breach of any contract or agreement with the Company or its Subsidiaries; | | | | (vi) | | a Participant’s knowing violation of any policy of the Company or its Subsidiaries concerning hedging, trading, or confidential or proprietary information, or a Participant’s knowing and substantial violation of any other policy of the Company or of any of its Subsidiaries as in effect from time to time; |
| 2021 PROXY STATEMENT | A-19 |
APPENDIX A: FIRST HORIZON CORPORATION 2021 INCENTIVE PLAN |
(vii) | | a Participant’s knowing and substantial unauthorized use, taking, mis-appropriation, conversion, or disclosure of tangible or intangible property, including information, of the Company, any of its Subsidiaries, or of any Associate, director, customer, or client of the Company or any of its Subsidiaries; | | | | (viii) | | a Participant’s deliberate engagement in any act or deliberate making of any statement which substantially impairs, impugns, denigrates, disparages, or negatively reflects upon the name, reputation, or business interests of the Company or any of its Subsidiaries, or upon the name, reputation, or business interests of any Associate, director, customer, or client of the Company or any of its Subsidiaries; or | | | | (ix) | | a Participant’s deliberate engagement in any conduct substantially detrimental to the Company or its Subsidiaries. |
The determination as to whether Cause has occurred in any given instance will be made in the sole discretion of: (a) for a Participant who is a Non-Employee Director, by the Board or, if so directed by the Board, by the Committee; (b) for a Participant who is a Section 16 Executive or Regional Board Member, by the Committee or, if so determined by the Board, by the Board; (c) for any other Participant, by management of the Company under the oversight of the Committee or, if so determined by the Committee, by the Committee. The Board, Committee, or management, as the case may be, also has the authority in its sole discretion to waive the consequences under the Plan or any Award Document of the existence or occurrence of any of the events, acts or omissions constituting Cause. “Change in Control” means, unless otherwise defined in the applicable Award Document and except as defined in Section 14(G) for the purposes of certain tax matters, the occurrence of any one of (and will be deemed to have occurred on the date of the earliest to occur of) the following events: (i) | individuals who, on January 26, 2021, constitute the Board (the “Incumbent Directors”) cease for any reason to constitute at least a majority of the Board, provided that any person becoming a director subsequent to that date, whose election or nomination for election was approved by a vote of at least three-fourths (3/4) of the Incumbent Directors then on the Board (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director, without written objection to such nomination) will be deemed to be an Incumbent Director; provided, however, that no individual elected or nominated as a director of the Company initially as a result of an actual or threatened election contest with respect to directors or as a result of any other actual or threatened solicitation of proxies or consents by or on behalf of any person other than the Board will be deemed to be an Incumbent Director; | | | (ii) | any “Person” (for purposes of this definition only, as defined under Section 3(a)(9) of the Exchange Act as used in Section 13(d) or Section 14(d) of the Exchange Act) is or becomes a “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 20% or more of the combined voting power of the Company’s then outstanding Company Voting Securities; provided, however, that the event described in this paragraph (ii) will not be deemed to be a Change in Control by virtue of any of the following acquisitions: (A) by the Company or any Subsidiary, (B) by an Associate stock ownership or Associate benefit plan or trust sponsored or maintained by the Company or any Subsidiary, (C) by any underwriter temporarily holding securities pursuant to an offering of such securities, or (D) pursuant to a Non-Qualifying Transaction (as defined in paragraph (iii) hereof); | | | (iii) | consummation of a merger, consolidation, share exchange or similar form of corporate transaction involving the Company or any of its Subsidiaries that requires the approval of the Company’s shareholders, whether for such transaction or the issuance of securities in the transaction (a “Business Combination”), unless immediately following such Business Combination: (A) more than 50% of the total voting power of (x) the corporation resulting from such Business Combination (the “Surviving Corporation”), or (y) if applicable, the ultimate parent corporation that directly or indirectly has beneficial ownership of 100% of the voting securities eligible to elect directors of the Surviving Corporation (the “Parent Corporation”), is represented by Company Voting Securities that were outstanding immediately prior to the consummation of such Business Combination (or, if |
| 2021 PROXY STATEMENT | A-20 |
APPENDIX A: FIRST HORIZON CORPORATION 2021 INCENTIVE PLAN |
applicable, is represented by shares into which such Company Voting Securities were converted pursuant to such Business Combination), and such voting power among the holders thereof is in substantially the same proportion as the voting power of such Company Voting Securities among the holders thereof immediately prior to the Business Combination, (B) no Person (other than any Associate benefit plan sponsored or maintained by the Surviving Corporation or the Parent Corporation), is or becomes the beneficial owner, directly or indirectly, of 20% or more of the total voting power of the outstanding voting securities eligible to elect directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation) and (C) at least a majority of the members of the board of directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation) were Incumbent Directors at the time of the Board’s approval of the execution of the initial agreement providing for such Business Combination (any Business Combination which satisfies all of the criteria specified in (A), (B) and (C) above will be deemed to be a “Non-Qualifying Transaction”); (iv) | consummation of a sale of all or substantially all of the Company’s assets; or | | | (v) | the shareholders of the Company approve a plan of complete liquidation or dissolution of the Company. |
Computations required by paragraph (iii) will be made on and as of the date of shareholder approval and will be based on reasonable assumptions that will result in the lowest percentage obtainable. Notwithstanding the foregoing, a Change in Control of the Company will not be deemed to have occurred solely because any Person acquires beneficial ownership of more than twenty percent (20%) of the Company Voting Securities as a result of the acquisition of Company Voting Securities by the Company which reduces the number of Company Voting Securities outstanding; provided, that if after such acquisition by the Company such Person becomes the beneficial owner of additional Company Voting Securities that increases the percentage of outstanding Company Voting Securities beneficially owned by such Person, a Change in Control of the Company will then occur. “Clawback” has the meaning given in Section 13(D)(i). “Clawback Policy” means the Compensation Recovery Policy of the Company and any successor(s) thereto. “Code” means the Internal Revenue Code of 1986, as amended from time to time. “Committee” means a committee of the Board composed solely of not less than two Non-Employee Directors, all of whom (i) satisfy the requirements of Rule 16b-3(b)(3) of the Exchange Act as amended from time to time or any successor to such Rule, and (ii) otherwise meet any “independence” requirements promulgated by the principal stock exchange on which Shares are listed. The members of the Committee are appointed by and serve at the pleasure of the Board. The Board may determine that a standing committee of the Board, with duties beyond administering the Plan and meeting the foregoing requirements, may act as the Committee, and further may determine that a sub-committee of any such standing committee, where the sub-committee meets the foregoing requirements, may act as the Committee. “Company” means First Horizon Corporation, a Tennessee corporation, and its successors and assigns. “Company Voting Securities” means the outstanding securities issued by the Company ordinarily having the general right to vote at elections of the Company’s directors, including shares of the common capital stock of the Company, par value $0.625 per share. Securities which have only a limited right to vote, such as the right (as a class or series) to elect one or two directors but not to vote for directors generally, are not included within “Company Voting Securities.” “Compensation Plans” means any compensation plan such as an incentive, stock option, restricted stock, pension restoration or deferred compensation plan or any Associate benefit plan such as a thrift, pension, profit sharing, medical, disability, accident, life insurance plan or a relocation plan or policy or any other plan, program or policy of the Company intended to benefit Associates, including, without | 2021 PROXY STATEMENT | A-21 |
APPENDIX A: FIRST HORIZON CORPORATION 2021 INCENTIVE PLAN |
limitation, any such compensation plans established after this Plan was established or most recently amended. “Deferred Compensation Award” means any Award that is not an Exempt Award. “Disability” means, unless otherwise defined in the applicable Award Document, a disability that would qualify as a total and permanent disability under the long-term disability plan then in effect (i) at the Employer employing the Participant at the onset of such total and permanent disability, or (ii) for Non-Employee Director and Regional Board Member Participants, at First Horizon Bank, whether or not such Participant is covered by that disability plan. “Employer” means the Company or any Subsidiary. For Non-Employee Directors the “Employer” is the Company or First Horizon Bank, as applicable. For Regional Board Members the “Employer” is First Horizon Bank. “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time. “Fair Market Value” with respect to Shares means: (i) the closing sales price at which Shares were sold on the New York Stock Exchange, or, if the Shares are not listed on the New York Stock Exchange, on any other such exchange on which the Shares are traded, on such date, or, in the absence of reported sales on such date, the closing sales price on the immediately preceding date on which sales were reported, or (ii) in the event there is no public market for the Shares on such date, the fair market value as determined in good faith by the Committee in its sole discretion. “Average Fair Market Value” means the arithmetic average of the Fair Market Values of the Common Stock for the trading days falling within a specified period. “First Horizon Bank” means the Company’s primary banking subsidiary, First Horizon Bank, or any successor from time to time. “Full-Value Award” means any Award other than an Award of Options or SARs. “Good Reason” means, with respect to any Participant who is an Associate, any of the following as to which notice of Participant’s objection is given by the Participant to the Company: (i) | an adverse change in the Participant’s status, title or position with the Company as in effect immediately prior to the Change in Control, including, without limitation, any adverse change in the Participant’s status, title or position as a result of a diminution in the Participant’s duties or responsibilities, or the assignment to the Participant of any duties or responsibilities which are inconsistent with such status, title, or position as in effect immediately prior to the Change in Control, or any removal of the Participant from, or any failure to reappoint or reelect the Participant to, such position; | | | (ii) | a reduction by the Company in the Participant’s cash salary or target amount of annual cash incentive opportunity (including any adverse change in the formula for such annual cash incentive) as in effect immediately prior to the Change in Control or as the same may be increased from time to time thereafter; | | | (iii) | the failure by the Company to provide the Participant with Compensation Plans that provide the Participant with substantially equivalent benefits in the aggregate to the Compensation Plans as in effect immediately prior to the Change in Control (at substantially equivalent cost to the Participant with respect to welfare benefit plans); and | | | (iv) | the Company’s requiring the Participant to be based at an office that is greater than 50 miles from where the Participant’s office is located immediately prior to the Change in Control; |
provided, however, that: (a) an action taken in good faith and which is remedied by the Company within ten days after Company’s receipt of the objection notice thereof will not constitute Good Reason; (b) no action or event will constitute a Good Reason if the Participant has acknowledged to the Company in | 2021 PROXY STATEMENT | A-22 |
APPENDIX A: FIRST HORIZON CORPORATION 2021 INCENTIVE PLAN |
writing that a Good Reason will not arise from that action or event; and (c) no action or event will constitute a Good Reason unless (1) the Participant has given the objection notice to the Company thereof not more than 30 days after the action first was taken or the event first occurred, and (2) the Participant has resigned not less than ten business days after the objection notice has been given to the Company and not more than 90 days after the action first was taken or the event first occurred. “Mandatory Retirement” means a Participant’s Termination of Service required by a Company or Employer Bylaw, Company or Employer policy, or action of the Company, Employer, Committee, or Board, due to one or more conditions having been met at least one of which is the Participant having attained a certain age. The term “Mandatory Retirement” includes Termination of Service following Termination of Retirement Waiver. “Maximum Performance” means, for a given Performance Award, the level of attainment of applicable Performance Goals necessary for the highest level of payment of the Award (the “Maximum Amount”) in relation to the Performance Period, after making all adjustments required by the Award or the Plan but, in the case of Performance Goals, without considering the impact of the exercise of discretion. “Non-Employee Director” means a member of the Board who is not an Associate. “Option” means an option to purchase a Share from the Company at a fixed Option Price that is granted under Section 5 or Section 7 and is not intended to meet the requirements of Section 422 of the Code or any successor provision thereto. “Option Price” means the purchase price payable to purchase one Share upon the exercise of an Option Award established in accordance with Section 5(B). “Out-of-the-money” has the meaning given in Section 5(B)(iii). “Participant” means any Associate, Non-Employee Director, or Regional Board Member who receives an Award under the Plan. “Performance Award” means any Award granted under Section 8 of the Plan. “Performance-based” has the meaning given in Section 8(A). “Performance Goal” means any performance goal, based on one or more Performance Measures, which is established by the Committee for a Performance Period and the attainment of which is necessary for the payment of a Performance Award to a Participant at the completion of the Performance Period. A Performance Goal may be expressed as an absolute amount or percent, as a ratio, or per share or per Associate. “Performance Measure” means one or more, or any combination, of the following financial performance measures: stock price, dividends, total shareholder return, earnings per share, market capitalization, book value, revenues, expenses, assets, loans, deposits, liabilities, shareholder equity, regulatory capital, noninterest income, net interest income, fee income, operating income before or after taxes, net income before or after taxes, economic profit, return on assets, return on equity, return on capital, risk-adjusted return on capital, net interest income, cash flow, credit quality, service quality, market share, customer retention, efficiency ratio, liquidity, strategic business objectives consisting of one or more objectives based on meeting business expansion or contraction goals, and other goals relating to acquisitions or divestitures or openings or closures. Any such Performance Measure may be for the Company or any Subsidiary, operating unit, division, line of business, reporting segment, department, team, or business unit, and may be for any other company or group of other companies identified by the Committee or any segment, subsidiary, or other subdivision of such other company(ies). Any such Performance Measures may provide for adjustment to include or exclude actual or hypothetical items or amounts and may provide for artificial increase or decrease by amounts or percentages selected by the Committee, and any such adjusted or altered measure will be a “Performance Measure.” The term “Performance Measure” includes any component or any combination of components of any such Measure; examples include Common Equity Tier 1 regulatory capital, tangible common equity, tax expense, non-recurring | 2021 PROXY STATEMENT | A-23 |
APPENDIX A: FIRST HORIZON CORPORATION 2021 INCENTIVE PLAN |
expenses, provision expense, southwest Florida pre-tax noninterest income in a particular business segment, wealth management revenue, and tangible assets. Any such Performance Measure may be used for financial reporting purposes, for internal or management purposes, or for any purpose of the Plan created or defined by the Committee. Any such Performance Measure based on balance sheet or similar data may be measured at period-end or on an average or other basis as specified by the Committee. The term “Performance Measure” also means any non-financial or other performance criteria established by the Committee, including any personal plan goal. Without limiting the generality of the foregoing, “non-financial” performance criteria may include measures related to environmental, social, or governance achievements. As used herein, a specific Performance Measure may be “combined” with any one or more other Performance Measures by addition, subtraction, multiplication, division, or other arithmetic means, or by any combination of such operations, as specified by the Committee, and the result of such combination will be a Performance Measure. Without limiting the generality of the previous sentence, the ratio, ranking, or other quantitative relationship of a Performance Measure of the Company with a Performance Measure of another company (or group of other companies) is itself a Performance Measure. “Performance Period” means the period to be used in measuring the degree to which Performance Goal(s) relating to a Performance Award have been met. “Person” (other than in connection with the definition of Change in Control) means any individual, corporation, partnership, group, association, joint-stock company, limited liability company, trust, unincorporated organization, government or political subdivision thereof, or other entity. “Personal Plan Goal” means an individual performance goal to be achieved by a Participant in a Performance Period which is not based upon quantitative or objective corporate performance. Personal Plan Goals may be established in any manner approved by the Committee. “Plan” means this 2021 Incentive Plan, as amended from time to time. “Prior Stock Plan” means the Company’s Equity Compensation Plan, as amended and restated April 26, 2016 and as further amended from time to time. “Procedures” has the meaning given in Section 2(F). “Qualifying Termination” means the Termination of Service of a Participant with the Company and its Subsidiaries resulting from any of the following: (i) | | an involuntary Termination of Service of a Participant by the Company and its Subsidiaries within 24 months following a Change in Control, other than a termination for Cause, a termination due to Disability, or as a result of the Participant’s death; or | | | | (ii) | | a Termination of Service by a Participant for Good Reason within 24 months following a Change in Control. |
Mandatory Retirement, as defined in the Plan, constitutes an involuntary termination by the Company or its Subsidiaries for purposes of clause (i). For any Participant who is a Non-Employee Director or Regional Board Member, a resignation which was requested by the Company, by First Horizon Bank, or by the Board in connection with a Change in Control will be treated as a Qualifying Termination. “Regional Board Member” means any First Horizon Bank regional board member and any member of the board of directors of any bank subsidiary of the Company, other than First Horizon Bank, in each case excluding any Associate. “Renomination Failure” means the failure of the Company or of the Board (including an authorized committee of the Board) to re-nominate for election any Non-Employee for any reason other than: Cause; or the normal operation of the Company’s mandatory retirement bylaw or policy applicable to Non-Employee Directors immediately prior to any Change in Control event which occurred less than 36 months prior to the nomination decisions being made. | 2021 PROXY STATEMENT | A-24 |
APPENDIX A: FIRST HORIZON CORPORATION 2021 INCENTIVE PLAN |
“Restricted Cash Unit” means any unit denominated as a specific or determinable number of dollars (rather than Shares) and granted under Section 6 or Section 7. An Award of Units denominated in Shares is not a Restricted Cash Unit, even if eventual payment is in cash. “Restricted Stock” means any Share granted under Section 6 or Section 7. “Restricted Stock Unit” means any unit denominated as a specific or determinable number of Shares and granted under Section 6 or Section 7. For each Award, “Retirement” has the meaning provided in the applicable Award Document or in the Procedures applicable to that Award. If an Award (including the Procedures) provides no definition of retirement but provides for or alludes to retirement treatment (reduction or elimination of forfeiture) at the discretion of the Committee or its delegate, then for that Award “Retirement” means a Termination of Service as to which retirement treatment has been given. “Retirement Waiver” means an open-ended, discretionary deferral or waiver of a Participant’s Mandatory Retirement. For this purpose “open-ended” means having no defined finite period or end date established prior to the occurrence of a Change in Control. “SEC” means the Securities and Exchange Commission or any successor thereto. “SEC Section 16” means Section 16 of the Exchange Act and the rules promulgated thereunder and any successor provision thereto as in effect from time to time. “Section 16 Executive” means an executive officer of the Company required to file ownership reports by SEC Section 16. “Section 409A” means Section 409A of the Code and the regulations promulgated thereunder or any successor provision thereto as in effect from time to time. “Compliance with Section 409A” or any similar phrase means taking such actions, refraining from such actions, or (in the case of the Plan, an Award, or other document) having such provisions, as are necessary to secure a favorable, ordinary, or expected tax outcome or to avoid a substantially adverse tax outcome, related to Section 409A, for the Company or its Subsidiaries or for a Participant. “Share” means a share of the Company’s common stock, $0.625 par value, as adjusted from time to time for stock splits, reverse stock splits, or recapitalizations affecting such stock. “Shares In Lieu” means an Award of Shares, or Units denominated in Shares, which settle an earned cash obligation of the Company related to compensation, as provided in Section 10. An Award of “Stock Appreciation Rights” or “SARs” means a right granted under Section 5 or Section 7 that entitles the holder to receive, with respect to each Share encompassed by the exercise of such Award, the amount determined by the Committee, or in the case of an Award granted under Section 7, by the Board, and specified in an Award Document. In the absence of such a determination, the holder will be entitled to receive, with respect to each Share encompassed by the exercise of such Award, the excess of the Fair Market Value on the date of exercise over the base price for the Award established at grant. “Spread” means, for each Share underlying an Option or SAR Award on any given date, the difference between Fair Market Value of a Share on that date, and the option or base price of the Award. “Subsidiary” means any Person of which a majority of its voting power or its equity securities or equity interest is owned directly or indirectly by the Company. “Substantial Change in Control” has the meaning given in Section 14(B). | 2021 PROXY STATEMENT | A-25 |
APPENDIX A: FIRST HORIZON CORPORATION 2021 INCENTIVE PLAN |
“Substitute Awards” means Awards granted solely in assumption of, or in substitution for, outstanding awards previously granted by a Person acquired by the Company through merger, purchase, or otherwise, or with which the Company or one of its Subsidiaries combines. “Target Performance” means, for a given Performance Award, the level of attainment of applicable Performance Goals necessary for payment of the Target Amount in relation to a Performance Period, after making all adjustments required by the Award or the Plan but, in the case of Performance Goals, without considering the impact of the exercise of any discretion. The “Target Amount” means the target level of payment established by the Committee for the Award or, if no such level is identified as being “target,” the amount payable to a Participant for the achievement of 100% of the applicable Performance Goals in relation to the Performance Period. If an Award is established without specifying a target level of performance and without providing for an increase in payment for achievement above 100% performance, then the “Target Amount” is the Maximum Amount. “Tax,” in relation to an Award or other compensation, means any income, employment, service, excise, withholding, sales, transfer, value-added, wealth, property, securities, or other tax imposed on or applicable in respect of the Award’s or compensation’s grant, existence, Vesting, exercise, payment, settlement, conversion, transfer, or other event associated with the Award or compensation. Without limiting the foregoing, such a Tax may be imposed or levied by any governmental taxing authority or agency, including local, state, federal, or national authorities and agencies within or outside the U.S. “Termination of Service” means, for any Associate, the termination of the Associate-employer relationship between a Participant and his or her Employer for any reason, with or without Cause, including, but not by way of limitation, a termination by resignation, discharge, death, Disability, or Retirement, but excluding (i) terminations where there is a simultaneous reemployment or continuing employment of the Participant by another Employer; (ii) at the discretion of the Committee, terminations which result in a temporary severance of the Associate-employer relationship; and (iii) at the discretion of the Committee, terminations which are followed by the simultaneous establishment of a consulting relationship by an Employer with the Participant. The Committee, in its absolute discretion, may determine the effect of all matters and questions relating to Termination of Service, including, but not by way of limitation, the question of whether a Termination of Service resulted from a discharge for Cause, and all questions of whether particular leaves of absence constitute Terminations of Service. However, notwithstanding the foregoing: (i) the Committee must interpret “Termination of Service” to be consistent with “separation from service” (or other similar phrase from time to time) as used in Section 409A and its regulations; and, (ii) an Employer has an absolute and unrestricted right to terminate an Associate’s employment at any time for any reason whatsoever, with or without Cause. “Termination of Service” means, for any Regional Board Member or Non-Employee Director, the termination of the engagement of the Participant as a Regional Board Member or Non-Employee Director, as applicable, for any reason, with or without Cause, including, but not by way of limitation, a termination by resignation, discharge, death, Disability, Retirement, or Re-Nomination Failure. The Committee (in the case of Regional Board Members) and the Board (in the case of Non-Employee Directors), in its absolute discretion, may determine the effect of all matters and questions relating to Termination of Service, including, but not by way of limitation, the question of whether a Termination of Service resulted from a discharge for Cause, and all questions of whether a leave of absence constitutes a Termination of Service. “Termination of Retirement Waiver” means action by the Company, Employer, Committee, or Board which results in the termination of a Participant’s Retirement Waiver. “Threshold Performance” means, for a given Performance Award, the level of attainment of applicable Performance Goals necessary for the minimum non-zero level of payment of the Award (the “Threshold Amount”) in relation to a Performance Period, after making all adjustments required by the Award or the Plan but, in the case of Performance Goals, without considering the impact of the exercise of any discretion. “Vesting” occurs when the following occur: (i) in connection with non-performance based Options and SARs, the satisfaction or other lapse of all service and other pre-conditions to the recipient’s ability to | 2021 PROXY STATEMENT | A-26 |
APPENDIX A: FIRST HORIZON CORPORATION 2021 INCENTIVE PLAN |
exercise the Award; (ii) in connection with non-performance based Full-Value Awards, the satisfaction or other lapse of all service and other pre-conditions to the payment of the Award other than a deferral period (e.g., the mere passage of time during which no service, payment, or other thing is required of the Award recipient prior to payment); and (iii) in connection with Performance Awards and any other Awards that contain a performance condition, the satisfaction or other lapse of all service and other pre-conditions to the payment of the Award other than a deferral period and, in addition, the determination by the Committee or its delegate whether, or the degree to which, applicable performance goals have been achieved after the performance period has elapsed and after discretion applicable to the Award, if any, has been exercised. The Vesting of an Award does not mean that the Award has become non-forfeitable, non-recoverable, irreducible, immutable, or immediately payable. The application of conditions subsequent (including, for example, non-competition, non-solicitation, true-up, and misconduct covenants or conditions) which may extend for a period of time following exercisability, exercise, and/or payment will not be affected or diminished by the Vesting of the related Award. | 2021 PROXY STATEMENT | A-27 |
APPENDIX B: RECONCILIATION OF NON-GAAP TO GAAP FINANCIAL INFORMATION |
RECONCILIATION OF NON-GAAP TOReconciliation of Non-GAAP to GAAP
FINANCIAL INFORMATION Financial Information
Portions of this Proxy Statement show financial measures that are not presented according to generally accepted accounting principles (GAAP). Non-GAAP financial measures are noted in this Proxy Statement when used. A reconciliation of those non-GAAP measures to comparable GAAP measures is provided in this appendix.Appendix. Although most non-GAAP measures have no standard definition, our management believes the measures presented in this Proxy Statement are useful for understanding our financial results. Non-GAAP measures are reported to our management and Board of Directors through various internal reports. The non-GAAP financial measures used in this Proxy Statement are: adjusted earnings per share (EPS), adjusted return on assets (ROA), adjusted return on equity (ROE), return on tangible common equity (ROTCE), adjusted ROTCE, and adjusted efficiency ratio, all for the fiscal year 2017. · | adjusted return on common equity (ROCE), return on tangible common equity (ROTCE), and adjusted ROTCE, in each case for 2020; and | | | · | adjusted efficiency ratio, for each of the years 2017 through 2020. |
All adjusted measures exclude from GAAP measures certain “notable items” which are listed in the table below. The amount of each notable item is listed to show relative size. Except for the tax-related adjustments, amounts shown are pretax, and do not flow directly into adjustment calculations. While the selection of which items identified as “notable” is inherently subjective, we believe that the exclusion of these positive and negative notable items from our reported GAAP operating results for 2017 presents a more useful baseline for comparisons to other years. Certain calculated amounts do not add, subtract, or divide precisely as shown due to rounding.
Notable Items: 2017-2020 | | Pretax Amount: Favorable / (Unfavorable) | | $ in millions | | 2020 | | | 2019 | | | 2018 | | | 2017 | | Merger accounting adjustment* | | | $ 533 | | | | — | | | | — | | | | — | | M&A related expenses | | | (170 | ) | | | $(39 | ) | | | $(99 | ) | | | $(61 | ) | Non-PCD provision for credit losses (merger-related) | | | (147 | ) | | | — | | | | — | | | | — | | Non-merger restructuring, rebranding, & similar expenses | | | — | | | | (61 | ) | | | — | | | | — | | Impact of legal matters (net) | | | — | | | | 1 | | | | — | | | | (40 | ) | Visa gains, losses, and adjustments (net) | | | — | | | | (4 | ) | | | 209 | | | | — | | Tax-related gains, losses, and adjustments (net) | | | — | | | | — | | | | — | | | | (38 | ) | Other notable gains, losses, revenues, or expenses (net) | | | — | | | | (11 | ) | | | (5 | ) | | | (15 | ) |
2017 NOTABLE ITEMS* | Item was not subject to income tax. |
| | | | | | Item | Amount | * | | Mortgage repurchase reserve release (positive) | | $ | 20.0 | | | Acquisition expense | | | 61.3 | | | Legal (litigation) expense | | | 40.3 | | | Tax adjustments unrelated to Tax Reform (positive) | | | 43.9 | | | Adjustments related to Tax Reform (negative) | | | 82.0 | | | Special employee bonus expense | | | 9.9 | | | | | * $ | in millions | | | | | |
2017 ADJUSTED EPS | 2021 PROXY STATEMENT | B-1 |
| | | | Item | Amount | * | | Net Income available to common shareholders (NIAC) (GAAP) | | $ | 159 | | | Average Common Diluted Shares (GAAP) | | | 244 | | | EPS (NIAC/Avg Shares) (GAAP) | | $ | 0.65 | | per share | NIAC (GAAP) | | $ | 159 | | | Exclude notable items from NIAC | | + 112 | | | Adjusted NIAC (non-GAAP) | | | 271 | | | Average Common Diluted Shares (GAAP) | | | 244 | | | Adjusted EPS (Adj NIAC/Avg Shares) (non-GAAP) | | $ | 1.11 | | per share | | | * $ | & shrs in millions, except EPS |
APPENDIX C—B: RECONCILIATION OF NON-GAAP TO GAAP FINANCIAL INFORMATION |
2017Non-GAAP to GAAP Reconciliations |
2020 ROCE / ADJUSTED ROAROCE |
| | | | Item | Amount | * | | Net Income available to common shareholders (NIAC) (GAAP) | | $ | 159 | | | Average Assets (GAAP) | | | 29,925 | | | ROA (NIAC/Avg Assets) (GAAP) | | | 0.59% | | | NIAC (GAAP) | | $ | 159 | | | Exclude notable items from NIAC | | | + 112 | | | Adjusted NIAC (non-GAAP) | | | 271 | | | Average Assets (GAAP) | | | 29,925 | | | Adjusted ROA (Adj NIAC/Avg Assets) (non-GAAP) | | | 0.96% | | | | | * $ | in millions | | | | |
Item | | Amount | * | | Net Income available to common shareholders (NIAC) (GAAP) | | $ | 822 | | | Average Common Equity (CE) (GAAP) | | | 6,016 | | | ROCE (NIAC/CE) (GAAP) | | | 13.66 | % | | NIAC (GAAP) | | $ | 822 | | | Exclude notable items from NIAC | | | –294 | | | Adjusted NIAC (non-GAAP) | | | 528 | | | CE (GAAP) | | | 6,016 | | | Exclude impact on CE of notable items | | | –0 | | | Adjusted CE (non-GAAP) | | | 6,016 | | | Adjusted ROCE (Adj NIAC/Adj CE) (non-GAAP) | | | 8.78 | % | | | | * $ in millions | | | 2020 ROTCE / ADJUSTED ROTCE | | | | | | | Item | | Amount | * | | Net Income available to common shareholders (NIAC) (GAAP) | | $ | 822 | | | Average Common Equity (CE) (GAAP) | | | 6,016 | | | ROCE (NIAC/CE) (GAAP) | | | 13.66 | % | | CE (GAAP) | | | 6,016 | | | Exclude Average Intangible Assets (GAAP) | | | –1,696 | | | Average Tangible Common Equity (TCE) (non-GAAP) | | | 4,320 | | | ROTCE (NIAC/TCE) (non-GAAP) | | | 19.03 | % | | NIAC (GAAP) | | $ | 822 | | | Exclude notable items from NIAC | | | –294 | | | Adjusted NIAC (non-GAAP) | | | 528 | | | TCE (non-GAAP) | | | 4,320 | | | Exclude impact on TCE of notable items | | | –23 | | | Adjusted TCE (non-GAAP) | | | 4,343 | | | Adjusted ROTCE (Adj NIAC/Adj TCE) (non-GAAP) | | | 12.15 | % | |
Efficiency Ratio / Adjusted Efficiency Ratio: 2017-2020 | | $ in millions | | 2020 | | | 2019 | | | 2018 | | | 2017 | | Noninterest expense (GAAP) (a) | | | $1,718 | | | | $1,233 | | | | $1,220 | | | | $1,025 | | Plus notable items (GAAP) | | | (170 | ) | | | (114 | ) | | | (102 | ) | | | (92 | ) | Adjusted noninterest expense (non-GAAP) (b) | | | $1,549 | | | | $1,119 | | | | $1,119 | | | | $933 | | Revenue (GAAP) (c) | | | $3,155 | | | | $1,864 | | | | $1,943 | | | | $1,333 | | Plus notable items (GAAP) | | | (533 | ) | | | — | | | | 206 | | | | 14 | | Adjusted revenue (non-GAAP) (d) | | | $2,622 | | | | $1,864 | | | | $2,149 | | | | $1,346 | | Efficiency ratio (GAAP) (a/c) | | | 54 | % | | | 66 | % | | | 63 | % | | | 77 | % | Adjusted Efficiency ratio (non-GAAP) (b/d) | | | 59 | % | | | 60 | % | | | 52 | % | | | 69 | % |
2017 ADJUSTED ROE | 2021 PROXY STATEMENT | B-2 |
| | | | | | Item | Amount | * | | Net Income available to common shareholders (NIAC) (GAAP) | | $ | 159 | | | Average Common Equity (CE) (GAAP) | | | 2,579 | | | ROE (NIAC/CE) (GAAP) | | | 6.2% | | | NIAC (GAAP) | | $ | 159 | | | Exclude notable items from NIAC | | | + 112 | | | Adjusted NIAC (non-GAAP) | | | 271 | | | CE (GAAP) | | | 2,579 | | | Exclude impact on CE of notable items | | | – 49 | | | Adjusted CE (non-GAAP) | | | 2,530 | | | Adjusted ROE (Adj NIAC/Adj CE) (non-GAAP) | | | 10.7% | | | | | * $ | in millions | | | | | | |
2017 ROTCE and ADJUSTED ROTCE |
| | | | | | Item | Amount | * | | Net Income available to common shareholders (NIAC) (GAAP) | | $ | 159 | | | Average Common Equity (CE) (GAAP) | | | 2,579 | | | ROE (NIAC/CE) (GAAP) | | | 6.2% | | | CE (GAAP) | | | 2,579 | | | Exclude Average Intangible Assets (GAAP) | | | – 376 | | | Average Tangible Common Equity (TCE) (non-GAAP) | | | 2,203 | | | ROTCE (NIAC/TCE) (non-GAAP) | | | 7.2% | | | NIAC (GAAP) | | $ | 159 | | | Exclude notable items from NIAC | | | + 112 | | | Adjusted NIAC (non-GAAP) | | | 271 | | | TCE (non-GAAP) | | | 2,203 | | | Exclude impact on TCE of notable items | | | – 49 | | | Adjusted TCE (non-GAAP) | | | 2,154 | | | Adjusted ROTCE (Adj NIAC/Adj TCE) (non-GAAP) | | | 12.6% | | | | | * $ | in millions |
| | | Shareowner Services | | | | | | P.O. Box 64945 | | | | | | St. Paul, MN 55164-0945 | | | | | | Address Change? Mark box, sign, and indicate changes below: APPENDIX C—RECONCILIATION o | | | | | | | | TO VOTE BY INTERNET OR TELEPHONE, SEE REVERSE SIDE OF NON-GAAP TO GAAP FINANCIAL INFORMATIONTHIS PROXY CARD. | | | | | | | | |
The Board of Directors unanimously recommends a vote FOR Items 1, 2, 3 and 4. 1. Election of seventeen directors to serve until the 2022 Annual Meeting of Shareholders: | | | | | | | | | 2017 ADJUSTED EFFICIENCY RATIOFOR | | AGAINST | | ABSTAIN | | | | FOR | | AGAINST | | ABSTAIN | | | | | | | | | | | | | | | | 01 Harry V. Barton, Jr. | | o | | o | | o | | 10 Rick E. Maples | | o | | o | | o | | | | | | | | | | | | | | | | 02 Kenneth A. Burdick | | o | | o | | o | | 11 Vicki R. Palmer | | o | | o | | o | | | | | | | | | | | | | | | | Please fold here — Do not separate. | | | | | | | | | | | | | | | | 03 Daryl G. Byrd | | o | | o | | o | | 12 Colin V. Reed | | o | | o | | o | | | | | | | | | | | | | | | | 04 John N. Casbon | | o | | o | | o | | 13 E. Stewart Shea, III | | o | | o | | o | | | | | | | | | | | | | | | | 05 John C. Compton | | o | | o | | o | | 14 Cecelia D. Stewart | | o | | o | | o | | | | | | | | | | | | | | | | 06 Wendy P. Davidson | | o | | o | | o | | 15 Rajesh Subramaniam | | o | | o | | o | | | | | | | | | | | | | | | | 07 William H. Fenstermaker | | o | | o | | o | | 16 Rosa Sugrañes | | o | | o | | o | | | | | | | | | | | | | | | | 08 D. Bryan Jordan | | o | | o | | o | | 17 R. Eugene Taylor | | o | | o | | o | | | | | | | | | | | | | | | | 09 J. Michael Kemp, Sr. | | o | | o | | o | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Item | Amount | * | | Noninterest expense (Expenses) (GAAP) | | $ | 1,024 | | | Revenues (gross income after loan loss provision) (GAAP) | | | 1,333 | | | Efficiency ratio (Expenses/Revenues) (GAAP) | | | 77% | | | Expenses (GAAP) | | | 1,024 | | | Exclude notable items | | | – 112 | | | Adjusted Expenses (non-GAAP) | | | 912 | | | Revenues (GAAP) | | | 1,333 | | | Adjusted Efficiency ratio (adj Expenses/Revenues) (non-GAAP) | | | 69% | | | | | * $ | in millions |
2. Approval of the First Horizon Corporation 2021 Incentive Plan | o | Forn | o | Againstn | o | Abstain | | | | | | | | 3. Approval of an advisory resolution to approve executive compensation | o | Forn | o | Againstn | o | Abstain | | | | | | | | 4. Ratification of appointment of KPMG LLP as auditors | o | Forn | o | Againstn | o | Abstain | | | | | | | | THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF NOTICE OF SAID MEETING AND THE RELATED PROXY STATEMENT. |
Signature(s) in Box Shareholders sign here exactly as shown on the imprint on this card. When signing as Attorney, Executor, Administrator, Trustee or Guardian, please give full name. If more than one Trustee, all should sign. All Joint Owners should sign.
VIRTUAL ANNUAL MEETING April 24, 201827, 2021 10:00 a.m. Central time In light of public health considerations due to the COVID-19 pandemic, First Tennessee First Ops Building
3451 Prescott Road
Memphis, TN 38118Horizon Corporation has decided to hold a virtual annual meeting. In order to participate in the meeting online, you must register at register.proxypush.com/FHN on or before the deadline of April 26, 2021 at 5:00 p.m. Central time. You will be required to enter your control number, which is located in the upper right corner on the reverse side of this card. After you register, you will receive a confirmation email and a separate email approximately one hour prior to the start of the meeting with a unique link to the virtual meeting. PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND VOTING INSTRUCTION CARD FOR | | | FIRST HORIZON NATIONAL CORPORATION SAVINGS PLAN (“Plan”) | | |
Shareholders of Record:The undersigned appoints Ben C. Adams, Jr., Clyde A. Billings, Jr, George P. Lewis and Ben C. Adams,Charles T. Tuggle, Jr., or any one or bothmore or all of them with full power of substitution, as proxy or proxies, to represent and vote all shares of stock standing in my name on the books of the corporation at the close of business on February 23, 2018,26, 2021, which I would be entitled to vote if personally present at the annual meeting of shareholders of First Horizon National Corporation, to be held in the First Tennessee First Ops Building, 3451 Prescott Road, Memphis, Tennessee 38118,on April 27, 2021 at 1010:00 a.m. Central time, or any adjournments thereof, upon the matters set forth in the notice of said meeting as stated on the reverse side. The proxies are further authorized to vote in their discretion as to any other matters which may properly come before the meeting. The board of directors, at the time of preparation of the proxy statement, knows of no business to come before the meeting other than that referred to in the proxy statement. Plan Shareholders:Under the terms of the Plan, each participant having funds allocated to the FHNCFirst Horizon Common Stock Fund is entitled to instruct State Street Bank and Trust Company, plan trustee (“Plan Trustee”), as to the manner in which to vote the shares of First Horizon common stockCommon Stock held in the FHNCFirst Horizon Common Stock Fund represented by the participant’s interest therein as of the close of business on February 23, 201826, 2021 (the record date for the annual meeting of shareholders). The purpose of this instruction card is for the participant to give instructions to the Plan Trustee as to how to vote such shares in connection with the annual meeting of shareholders of First Horizon National Corporation to be held in the First Tennessee First Ops Building, 3451 Prescott Road, Memphis, Tennessee 38118,a virtual format on April 24, 2018,27, 2021, at 1010:00 a.m. Central time, or any adjournments thereof, upon the matters set forth in the notice of said meeting as stated on the reverse side and also to give discretion to the Plan Trustee to vote on any other matters that may properly come before the meeting. The undersigned hereby directs the Plan Trustee to vote the shares of FHNC common stockFirst Horizon Common Stock in the FHNCFirst Horizon Common Stock Fund represented by the undersigned’s interest therein as specified on the reverse side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ote by Internet, Telephone, or Mail There are three ways to vote. Internet or telephone voting is available 24 hours a day, 7 days a week. Your phone or Internet vote authorizes the named proxies and/or the Plan Trustee to vote your shares in the same manner as if you had marked, signed and returned this card. You will need the last four digits of your Social Security or Tax ID number to vote your shares on the Internet or by phone.
INTERNET/MOBILE www.proxypush.com/FHN | | | MAIL | INTERNET | TELEPHONE | Mark, sign and date this card and return
it in the postage-paid envelope provided
or mail to Shareowner Services, P.O. Box
64873, St. Paul, MN 55164-0873. | www.proxypush.com/fhn | 1-866-883-3382 | Use the Internet to vote your shares
until 11:59 p.m. (CT)at any time prior to the meeting at 10:00 a.m. Central time on April 19, 2018
(for Plan shares) or April 23, 2018
(for all other shares).27, 2021.* | | TELEPHONE 1-866-883-3382 Use any touch-tone telephone to vote your shares until 11:59 p.m. (CT)at any time prior to the meeting at 10:00 a.m. Central time on April 19, 2018 (for Plan shares)27, 2021.* | | MAIL Mark, sign, and date this card and return it in the postage- paid envelope provided or mail to Shareowner Services, P.O. Box 64873, St. Paul, MN 55164-0873 in time to be received by April 23, 2018 (for all other shares).26, 2021. |
*For shares held in the First Horizon Corporation Savings Plan, you must vote your shares no later than April 22, 2021 at 11:59 p.m. Central time. If you vote by Internet or by telephone, you do NOT need to mail back this card. | | Shareowner Services | | | | P.O. Box 64945 | | | | St. Paul, MN 55164-0945 | | | | Address Change? Mark box, sign, and indicate changes below:o | | | | | | | | | | | TO VOTE BY INTERNET OR
TELEPHONE, SEE REVERSE SIDE
OF THIS CARD. | |
The Board of Directors unanimously recommends a vote FOR Items 1, 2, 3 and 4.
| 1. | Election of twelve directors to serve until the 2019 Annual Meeting of Shareholders: |
| | | FOR | AGAINST | ABSTAIN | | | FOR | AGAINST | ABSTAIN | | | | | | | | | | | | | 01 | John C. Compton | o | o | o | 07 | Vicki R. Palmer | o | o | o | | | | | | | | | | | | | 02 | Mark A. Emkes | o | o | o | 08 | Colin V. Reed | o | o | o | | | | | | | | | | | | | Please fold here – Do not separate | | | | 03 | Peter N. Foss | o | o | o | 09 | Cecelia D. Stewart | o | o | o | | | | | | | | | | | | | 04 | Corydon J. Gilchrist | o | o | o | 10 | Rajesh Subramaniam | o | o | o | | | | | | | | | | | | | 05 | D. Bryan Jordan | o | o | o | 11 | R. Eugene Taylor | o | o | o | | | | | | | | | | | | | 06 | Scott M. Niswonger | o | o | o | 12 | Luke Yancy III | o | o | o |
2. | Approval of technical amendments to modernize First Horizon’s Restated Charter | o | For | o | Against | o | Abstain | | | | | | | | | 3. | Approval of an advisory resolution to approve executive compensation | o | For | o | Against | o | Abstain | | | | | | | | | 4. | Ratification of appointment of KPMG LLP as auditors | o | For | o | Against | o | Abstain |
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF NOTICE OF SAID MEETING AND THE RELATED PROXY STATEMENT.
| | | Signature(s) in Box | | | | | Shareholders sign here exactly as shown on the imprint on this card. When signing as Attorney, Executor, Administrator, Trustee or Guardian, please give full name. If more than one Trustee, all should sign. All Joint Owners should sign. | | | | | | | | | | | | | | | | |
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