UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
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March 16, 202014, 2022
Dear Fellow Shareholder:
YouOn behalf of the Board of Directors, we are cordially invitedpleased to invite you to attend First Horizon National Corporation’s 2020our 2022 annual meeting of shareholders. We will hold the meetingshareholders, to be held at 8:00 a.m. Central Time on April 28, 202026, 2022, in the Auditorium of the First Horizon Building, 165 Madison Avenue, Memphis, Tennessee 38103, at 10:00 a.m. local time.38103.
Transformation has been First Horizon’s theme for 2019. The company has continuedIn order to have strong loanprovide the proxy materials to our shareholders in an expedited manner while significantly lowering the costs of delivery and deposit growth across key markets and in specialty areas, and revenue growth and expense management have created profitability. Achievementreducing the environmental impact of our cost savings goals has enabled usannual meeting, we are furnishing these materials to make significant investments in technology and talent. Our sharpened focus on efficiency and agility will support our announced expansion into key markets in North Carolina, Virginia and Georgia through the acquisition of 30 branches, expected to be completed in second quarter 2020. In 2019, we unified our family of companies under the First Horizon brand, and our new brand promise puts understanding into action as we work to advocate for our customers. Finally, our upcoming merger of equals with IBERIABANK Corporation, expected to be completed in the first half of 2020, will create a leading regional financial services company with an expansive 11-state reach in high-growth, attractive markets across the combined company’s footprint. Even while accomplishing these strategic transformations, First Horizon has continued to receive recognition as a great banking organization and a great place to work. Highlights of 2019 include:
As First Horizon embarks on its 156th year, our Firstpower culture, with its emphasis on Accountability, Adaptability, Integrity and Relationships, continues to help us meet the challenges that we face. We are proud that First Horizon was recently named to the 2020 list of America’s Most JUST Companies, ranking third overall among banks. The inclusion of First Horizonshareholders on the JUST 100 list recognizes that financial performanceinternet at https://ir.firsthorizon.com/financialdocs. You will receive a notice with instructions for accessing the materials and positive contributionsvoting via the internet in addition to society can go hand-in-hand. The strengthinformation about how to obtain paper copies of our culture and the quality of our people have also been reaffirmed with top-employer recognition from Fortune, Forbes, Phoenix-Hecht, the National Association for Female Executives, the Bloomberg Gender-Equality Index, the Dave Thomas Foundation for Adoption, and Working Mother Magazine. Our Corporate Social Responsibility report,Herefor Good, highlights our commitment to all our stakeholders—communities, employees, customers and shareholders.
Accompanyingproxy materials if you would prefer. Following this letter are the formal notice of the annual meeting our 2020 proxy statement and our annual report to shareholders, which contains detailed financial information relating to our activities and operating performance during 2019. Though it is being delivered to you with our2022 proxy statement, the annual report to shareholders is not “soliciting material” under SEC Regulation 14A.
At the meeting, we will ask you to elect twelve directors; to vote on an advisory resolution to approve executive compensation (“say on pay”); and to ratify the appointment of KPMG LLP as our independent auditors for 2020.statement. The accompanying proxy statement contains detailed information about these matters.on the matters to be voted on at the annual meeting.
Your vote is important. You mayWe encourage you to vote your proxy by telephone overor via the internet or, if you received a paper proxy card by mail, you may also vote by signing,
dating and returning the proxy cardit by mail (as directed on the proxy card).mail. Even if you plan to attend the meeting, please vote your proxy by telephone or over the internet or return your proxy card as soon as possible.
In order to accommodate those attending, we ask that you let us know of your plans to attend by so indicating when you vote. Registration and seating will begin at 7:30 a.m. Central Time. We will ask you to sign in and present valid photo identification (or other identification acceptable to the company) as well as proof of ownership acceptable to the company, such as an appropriate brokerage statement. If you are the legal representative of a shareholder, also bring proof thereof. Cameras and recording devices will not be permitted at the meeting. For the health and safety of all meeting attendees, if you have not been vaccinated against COVID-19, we ask that you wear a mask and practice social distancing. Though not required of vaccinated individuals, we encourage everyone to wear a mask and practice social distancing where possible.
Thank you for your continued support of First Horizon and I look forward to seeingfor the trust and confidence you at the annual meeting.place in our company.
D. Bryan Jordan
Chairman of the Board,
President and Chief Executive Officer
Notice of Annual Shareholders’ meetingMeeting of Shareholders
April 28, 202026, 2022
10:8:00 a.m. Central Time
The annual meeting of the holders of First Horizon National Corporation’s common stock will be held at 8:00 a.m. Central Time on April 28, 2020, at 10:00 a.m. local time26, 2022 in the Auditorium of the First Horizon Building, 165 Madison Avenue, Memphis, Tennessee 38103.
The items of business are:
1. | Election of | |
2. | ||
3. | Approval of an advisory resolution to approve executive compensation (“say on pay”). | |
These items are described more fully in the following pages, which are made a part of this notice. The close of business on February 28, 202025, 2022 is the record date for the meeting. All holders of record of First Horizon’s common stock as of that time are entitled to vote at the meeting.
This meeting does not relate to the Special Meeting of Shareholders that will be held in connection with our pending merger of equals with IBERIABANK Corporation.acquisition by The Toronto-Dominion Bank, a Canadian chartered bank. A separate proxy statement is being prepared and delivered, and a separate Special Meeting of Shareholders will be held, in connection with the pending merger.that transaction.
Management requests that you vote your proxy by telephone or over the internet or that you sign and return the form of proxy promptly, as applicable, so that if you are unable to attend the meeting your shares can nevertheless be voted. You may revoke a proxy at any time before it is exercised at the annual meeting in the manner described on page 7 of the proxy statement.
Clyde A.A Billings, Jr.
Senior Vice President, Assistant General
Counsel
and Corporate Secretary
Memphis, Tennessee
March 16, 202014, 2022
IMPORTANT NOTICE
Please (1) vote your proxy by telephone, (2) vote your proxy over the internet, or (3) mark, date, sign and promptly mail the form of proxy, as applicable, so that your shares will be represented at the meeting.
If you hold your shares in street name, it is critical that you instruct your broker or bank how to vote if you want your vote to count in the election of directors and the advisory resolution to approve executive compensation (vote item nos. 1 and 23 of this proxy statement). Under current regulations, if you hold your shares in street name and you do not instruct your broker or bank how to vote in these matters, no votes will be cast on your behalf with respect to these matters. For additional information, see page 8 of the proxy statement.
Proxy Statement for 2020 First Horizon National Corporation Annual Meeting
Table of ContentsTABLE OF CONTENTS
1 | 2022 PROXY STATEMENT |
PROXY SUMMARY
Please read the entire proxy statement before voting. This summary highlights information contained elsewhere in this proxy statement and does not contain all of the information that you should consider. Page references are supplied to help you find further information in the proxy statement.
Time and | ||
The Auditorium of the First Horizon Building, 165 Madison Avenue, Memphis, Tennessee 38103 | ||
Record | February | |
Common Shares Outstanding | ||
Internet | First Horizon uses the SEC’s “notice and access” rule. Notice of internet availability of proxy materials will be sent on or about March | |
Admission Requirements and COVID-19 Protocols | To attend the meeting in person you will need proof of your stock ownership such as an appropriate brokerage statement and valid photo identification (or other identification acceptable to the company). If you are the legal representative of a shareholder, you must also bring a letter from the shareholder certifying (a) the beneficial ownership you represent and (b) your status as a legal representative. We will determine in our sole discretion whether the letter presented for admission meets the above requirements. For the health and safety of all meeting attendees, if you have not been vaccinated against COVID-19, we ask that you wear a mask and practice social distancing. Though not required of vaccinated individuals, we encourage everyone to wear a mask and practice social distancing where possible. |
ITEM | ||||||
Vote Item 1 | Election of directors. We are asking you to elect the | FOR each | ||||
Vote Item 2 | FOR | 47 | ||||
Vote Item 3 | Say-on-Pay advisory resolution on executive compensation. In accordance with SEC rules, we are asking you to approve, on an advisory basis, the compensation of our named executive officers as disclosed in this proxy statement. | FOR | ||||
20192021 Performance Highlights
Financial Overview2021 was a year of opportunities and progress for First Horizon. Our July 1, 2020 merger of equals with IBERIABANK Corporation (“IBKC merger”) and July 6, 2020 acquisition of 30 Truist branches nearly doubled our size and helped make us a top-30 U.S. bank ranked by assets. As our associates worked to achieve integration and systems conversion, business momentum began building due to their efforts and commitment.
Disciplined Organic Loan & Deposit Growth Drove Excellent Returns in 2019
We grew average loans by 7% and average deposits by 5% in 2019. Loan growth was strongest in the “specialty” commercial lending category, led by loans to mortgage companies. Our net interest margin for the year declined only 0.17% despite federal interest rate reductions totaling 0.75%, while our net
1
2 | 2022 PROXY STATEMENT |
charge-off ratio for loans remained very low at 0.09% for the year. In 2019 our fixed income business increased its noninterest income by 69%, and its average daily revenue by 72%, taking advantage of market volatility and falling rates in 2019. During our last Investor Day conference, late in 2018, we presented our “outlook” for 2019. The outlook included two key measures that we use to manage our businesses: return on assets (“ROA”) of 1.20%, and return on tangible common equity (“ROTCE”) of 17%. Our outlook was announced before the Federal Reserve reversed its interest rate policy, from raising rates four times in 2018 to lowering rates three times in 2019. Results for those measures in 2019 are presented below, along with two other commonly-followed measures: return on common equity (“ROCE”) and earnings per share (“EPS”).
In 2019, our adjusted results surpassed our outlook. Key contributors to this success were organic loan and deposit synergies stemming from the Capital Bank merger in 2017, organic loan and deposit growth in our other markets, and disciplined lending and pricing practices.PROXY SUMMARY
*ROTCE2021 Financial Results
While pressure on short-term rates continued and adjustedthe competitive landscape amplified, we delivered better than expected results differ fromaided by strong credit performance and a differentiated, client-focused value proposition with a broader product set. Our solid results reported using generally accepted accounting principles (GAAP). The impacts of mergerreflect the underlying momentum in our balanced business model and restructuring expensesattractive geographic footprint. Non-GAAP results in the text and certain other notable items have been excluded from 2019 adjusted results. Non-GAAP resultstable below are reconciled to GAAP results in Appendix B.
available to common shareholders of $1.1 billion, up 116% from 2020. These results were driven by the benefits of the IBKC merger, exceptional credit quality as well as a strong focus on deposit cost and expense discipline. | ||
• | Diluted earnings per common share of $1.74 decreased $0.15, driven by a $0.36 reduction tied to notable items. On an adjusted basis, we grew diluted earnings per common share of $2.07 by 70%. | |
• | We delivered full year ROTCE of 16.5% compared with 19.0% in 2020 and adjusted ROTCE of 19.3% compared with 12.2% in 2020 and returned $733 million of capital to common shareholders, up 179% from 2020. |
2021 Key Financial Highlights | |
PPNR/Adjusted PPNR | $1.0 billion/$1.2 billion |
NIAC/Adjusted NIAC | $1.0 billion/$1.1 billion |
Diluted EPS/Adjusted Diluted EPS | $1.74/$2.07 |
ROTCE/Adjusted ROTCE | 16.5%/19.3% |
Average Loans | $56.3 billion |
Average Loans (excluding PPP) | $52.9 billion |
Average Deposits | $73.1 billion |
CET1 Ratio | 9.92% |
Tier 1 Capital Ratio | 11.04% |
Total Capital Ratio | 12.34% |
TBV per Share | $11.00 |
Merger Milestones and Technology Enhancements
As we continued to navigate the effects of the pandemic and disruptive natural disasters in 2021, we completed a number of technology enhancements and achieved critical merger-related milestones:
• | Onboarded new technology and digital capabilities and upgraded and consolidated operating systems, including wealth and trust, mortgage banking and online banking. | |
• | Continued to make progress against our targeted merger cost saves with annualized run-rate savings of $104 million in the fourth quarter of 2021, achieving efficiencies to deliver a differentiated client experience across the organization. | |
• | Identified $45 million of annualized revenue synergies largely tied to commercial loans. |
• | Maintained associate retention in line with expectations, including leadership/critical positions (approximately 92%). | |
• | Continued to enhance our culture through regular virtual and in person leadership workshops, culture calls, and team building sessions. | |
2As we look to the future, we are focused on our goals: delivering the benefits of our diversified business model through revenue synergies and loan growth, actively managing capital and the balance sheet, maintaining excellent credit quality and delivering top-quartile ROTCE.
3 | 2022 PROXY STATEMENT |
Strategic TransactionsPROXY SUMMARY
30-Branch AcquisitionESG & Compensation Highlights
In the fourth quarterfollowing tables we provide a high-level summary of 2019selected practices, including statistical data, in environmental, social, and governance (ESG) areas or related to executive compensation. The areas were selected based on feedback we announced an agreement to purchase 30 brancheshave received from shareholders in North Carolina (20), Virginia (8), and Georgia (2). We expect the branch acquisition to close in the second quarter this year. Along with the branch locations, we will acquire approximately $0.4 billion of loans and assume approximately $2.4 billion of deposits. The branch transaction will expand our presence in several attractive southeastern markets. The transaction is subject to customary closing conditions.recent years.
IBERIABANK
Board Composition and Governance | ||
PRACTICE | FIRST HORIZON | PROXY PAGE NUMBER |
Number of director nominees | 17 | 36 |
Independence % of director nominees | 82% (14 of 17) | 15 |
Independence on key* board committees | 100% | 20 |
Is there majority voting for directors (in uncontested elections)? | Yes | 7 |
Must director tender resignation if fails to receive majority vote? | Yes | 36 |
Average director nominee age | 65 years | 40-46 |
Average director nominee tenure | 6.5 years | 40-46 |
Board refreshment | 11 new directors in the past 5 years | 40-46 |
Does the company disclose a director skills matrix? | Yes | 39 |
Gender diversity % of director nominees | 24% (4 of 17) | 38 |
Racial/ethnic diversity % of director nominees | 24% (4 of 17) | 38 |
Are CEO and Chairman of the Board separate? | Yes | 17-18 |
Is the Chairman of the Board independent? | No | 15 |
Is there an independent Lead Director? | Yes | 17 |
Director terms | All directors are elected for a term of one year | 36 |
Does the company disclose stock ownership guidelines for directors? | Yes | 62 |
Mandatory retirement age** | 72, for non-employee directors | 36-37 |
Retirement age waivers | Board may waive each year for up to 3 additional terms | 36-37 |
Resignation tender if director has major job change (other than promotion)? | Yes | 36-37 |
Director nominees on more than two other public company boards | None | 40-46 |
Annual Board & committee self-evaluations? | Yes | 37-38 |
Annual individual director evaluations? | Yes | 37-38 |
Third party engaged to conduct Board and director evaluations? | Yes; every 3 years or as determined by the Nominating & Corporate Governance Committee | 37-38 |
Director attendance at Board & committee meetings | Average attendance > 96% | 29 |
Total Board meetings held in 2021 | 6 | 29 |
Total Board committee meetings held in 2021 | 34 | 29 |
Do directors meet in executive session without management? | Yes, generally at each regular Board meeting | 29 |
In* Key board committees are Audit, Compensation, and Nominating & Corporate Governance.
* * Under the fourth quarterprovisions of 2019 we announced a merger of equals transaction with IBERIABANK Corporation (“IBKC”), which is the parent company of IBERIABANK based in Lafayette, Louisiana. The combined company, on a September 30, 2019 pro-forma basis and including the 30-branch acquisition, would have had $78 billion in assets, $59 billion in deposits, and $55 billion in loans. A special meeting of our shareholders to vote on the IBKC transaction, including related amendments to our corporate charter, is expected to be held during the second quarter of 2020. None of the matters to be considered at our 2020 regular annual meeting, or discussed in this proxy statement, relate directly to the IBKC transaction. The IBKC transaction is subject to approval by shareholders of both companies, regulatory approvals, and other customary closing conditions. Currently we expect the IBKC merger agreement, the mandatory retirement provisions will not apply to close inany of the second quartercurrent director nominees until after the third anniversary of 2020.
Compensation Highlights (detailed discussion begins on page 48)
Our compensation policies and practices are designed to align the interests of our employees with the interests of our shareholders. We seek to attract, retain, incent, and reward individuals who contribute to our long-term success. We strive to link pay to Company performance for all executive officers, including our CEO. Our compensation practices embrace many best practice corporate governance principles.merger (July 1, 2023).
AREA | FIRST HORIZON | ||
| Yes | ||
Dual or multiple class common stock? | No | ||
Cumulative voting of stock? | No | ||
Vote required for shareholders to amend Charter | Generally, votes cast favoring exceed votes cast opposing | ||
Exceptions to general vote requirement in preceding row | 80% for any provision of charter inconsistent with any provision of bylaws or for Article 12 of charter | ||
Vote required for shareholders to amend Bylaws | 80% | ||
Shareholder right to act by written consent? | Yes; all shareholders must consent to take action | ||
Shareholder right to call a special meeting? | Yes, upon demand of holders of 10% of outstanding shares | ||
Blank-check preferred stock authorized? | Yes | ||
Blank-check preferred stock outstanding? | Six Series: B, C, D, E, F and
| ||
Outstanding shareholder
| No | ||
Proxy access bylaw? |
|
3* See our Amended and Restated Charter and our Bylaws, both available on our website at https://ir.firsthorizon.com (click on “Investor Relations,” then “Corporate Governance,” and then “Governance Documents”), for details.
4 | 2022 PROXY STATEMENT |
Governance Highlights (a detailed discussion begins on page 10)PROXY SUMMARY
First Horizon is dedicated to operating in accordance with sound corporate governance principles. We believe that these principles not only form the basisOther Governance
AREA | FIRST HORIZON | PROXY PAGE NUMBER |
Anti-hedging policy for directors and executives? | Yes | 35 |
Annual shareholder outreach? | Yes | 12 |
Code of Business Conduct and Ethics? | Yes | 13 |
Code of Ethics for Senior Financial Officers? | Yes | 13 |
Compliance and Ethics Program Policy? | Yes | 13 |
Board oversight of cybersecurity? | Yes, by Executive & Risk Committee | 18 |
Audit committee financial experts? | 3 currently serve on Audit Committee | 21 |
Environmental and Social* | |
AREA | FIRST HORIZON |
Diversity, Equity and Inclusion Program? | Yes |
Board oversight of environmental, social and governance matters? | Yes, by the Nominating & Corporate Governance Committee |
Chief Diversity, Equity and Inclusion Officer? | Yes |
ESG Officer? | Yes |
Human Rights Statement? | Yes |
Social Issues Statements? | Yes |
Code of Conduct for Suppliers? | Yes |
Corporate Social Responsibility working group and task forces? | Yes |
Corporate Social Responsibility Report? | Yes--most recently published July 2021 |
Shareholder Outreach on ESG Matters? | Yes |
*See Environmental, Social & Governance Matters on pages 10-13 of this proxy statement, as well as our Corporate Social Responsibility Report, for our reputation of integrity in the marketplace but also are essential to our efficiency and overall success. Some of our corporate governance principles, policies and practices are listed below.additional details.
Executive Compensation | ||
AREA | FIRST HORIZON | PROXY PAGE NUMBER |
Independent consultant for the Compensation Committee | Meridian Compensation Partners, LLC | 25 |
Frequency of Say-on-Pay vote? | Annual | 49 |
Clawback policy? | Yes | 62 |
Clawback features in award plans? | Yes, long-term and annual bonus | 62 |
Below-market options allowed? | Only in substitution, in a merger, limited to 5% of plan authorization | 53 |
Stock ownership guidelines for executives? | Yes | 62 |
Executive-level employment agreements? | None except one with the Executive Chairman of the Board, related to a merger | 77-78 |
Portion of CEO’s 2021 TDC that is performance-based | 60% | 51 |
Portion of CEO’s 2021 TDC that is stock-based | 62% | 51 |
Change in control (CIC) severance program? | Yes; new executive plan & legacy agreements | 75 |
Single-trigger CIC severance benefits? | No | 75 |
Range of CIC severance benefit | 1.5 to 3.0 times salary & bonus | 75 |
Named Executive Officers in CIC severance program | 4 out of 7 | 75 |
Tax gross-up paid on CIC severance benefit? | Generally no, with one exception from 2007 | 75 |
4
ANNUAL MEETING MATTERS
First Horizon always strives to be Here for Good. We’re honored by the recognition awarded us for our efforts. We are especially proud of the praise we have received for our community service and family-friendly work environment. Here are some of our honors:
World’s Best Banks List
Forbes Magazine, 2019
America’s Best Large Employers List
Forbes Magazine, 2019
Top 50 Companies for Executive Women
National Association for Female Executives, 2019 (received in 2009, and every year since 2012)
Top 100 America’s Most JUST Companies for Corporate Citizenship
Forbes Magazine and JUST Capital, 2019
100 Best Adoption-Friendly Workplaces in America
Dave Thomas Foundation for Adoption, 2019 (every year since 2009)
Diversity Best Practices Inclusion Index
Working Mother Magazine, 2019 (also 2018)
Bloomberg Gender-Equality Index
Bloomberg, 2019 (also 2018 and 2020)
Best Workplaces in Finance and Insurance
Fortune Magazine, 2019
Phoenix-Hecht 2019 Middle Market Quality Index
Excellence in Middle Market Banking
5
2020 Annual Meeting & Proxy Statement—General Matters
Purpose of the Annual Meeting of Common Shareholders
Our Board of Directors is soliciting proxies to be voted at our upcoming annual meeting of the holders of First Horizon’s common stock (and at any adjournment or adjournments of the meeting). At the meeting, our
common shareholders will act
to elect twelve17 directors; to vote on an advisory resolution to approve executive compensation (“say on pay”); and to ratify the appointment of KPMG LLP as our independent auditors for 2020.2022; and to approve an advisory resolution to approve executive compensation (“say on pay”).
Date, Time &and Place of the Annual Meeting
The annual meeting of the holders of our common stock will be held on Tuesday, April 28, 202026, 2022 at 10:8:00 a.m. local timeCentral Time in the Auditorium atof the First Horizon Building, 165 Madison Avenue, Memphis, Tennessee
Tennessee 38103. To obtain additional information or directions to be able to attend the meeting and vote in person, contact our Corporate Communications officetransfer agent at 866-365-4313.(877) 536-3558.
What You Will Need to Attend the Meeting in Person
You will need proof of your share ownership acceptable to the company (such as an appropriate brokerage statement if you hold your shares through a broker) and a form of valid photo identification (or other identification acceptable to the company). If you do not have proof of ownership and acceptable identification, you may not be admitted to the Annual Meeting. If you are the legal representative of a shareholder, you must also bring a letter from the shareholder certifying (a) the beneficial ownership you represent and (b) your status as a legal representative. We will determine in our sole discretion whether the documents presented for admission meets the above requirements.
No cameras, laptops, tablets, recording equipment, large bags, backpacks, briefcases, and similar items are permitted in the meeting room. Cell phones may not be used during the meeting, and we reserve the right to remove individuals who do not adhere to these requirements.
For the health and safety of all meeting attendees, if you have not been vaccinated against COVID-19, we ask that you wear a mask and practice social distancing. Though not required of vaccinated individuals, we encourage everyone to wear a mask and practice social distancing where possible.
Terms Used in this Proxy Statement
In this proxy statement, First Horizon National Corporation is referred to by the use of “we,” “us” or similar pronouns, or simply as “FHN” or “First Horizon,” and First Horizon and its consolidated subsidiaries are referred to collectively as “the company.” First Horizon and IBERIABANK Corporation completed a merger of equals in 2020. IBERIABANK Corporation is referred to in this proxy statement by the use of “IBKC.” The term “shares” means
First Horizon’s common stock, and the term “shareholders” means the holders of that common stock, unless otherwise clearly stated. In addition,
The term “associates” means persons employed by the company. The notice of the 20202022 annual meeting of shareholders, this proxy statement, our annual report to shareholderson Form 10-K for the year ended December 31, 2019,2021, and the proxy card are together referred to as our “proxy materials.” Though the annual report to shareholders is included in the term “proxy materials,” it is not “soliciting material” under SEC Regulation 14A.
Internet Availability of Proxy Materials
We use the SEC’s “notice and access” rule, which allows us to furnish our proxy materials over the internet to our shareholders instead of mailing paper copies of those materials to each shareholder. As a result, beginning on or about March 16, 2020,14, 2022, we sent to most of our shareholders by mail or e-mailemail a notice of internet availability of proxy materials, which contains instructions
on how to access our proxy materials over the internet and vote online. This notice is not a proxy card, and you cannot use it to vote your shares. If you received only a notice, you will not receive paper copies of the proxy materials unless you request the materials by following the instructions on the notice.
6 | 2022 PROXY STATEMENT |
ANNUAL MEETING MATTERS
If you received a paper copy of the notice, we encourage you to help us save money and reduce the environmental impact of delivering paper notices by signing up to receive all of your future proxy materials electronically.
If you own shares of common stock in more than one account—for example, in a joint account with your spouse
and in your individual brokerage account—you may have received more than one notice. To vote all of your shares, please follow each set of the separate voting instructions that you received for yourthe shares of common stock held in each of your different accounts.
Voting by Proxy & Revoking yourYour Proxy
The First Horizon Board of Directors is asking you to give us your proxy. Giving us your proxy means that you authorize another person or persons to vote your shares of our common stock at the annual meeting of shareholders in the manner you direct. Giving us your proxy allows your shares to be voted even if you do not attend the annual meeting in person.meeting. You may revoke your proxy at any time before it is exercised by writing to the Corporate Secretary, by timely delivering a properly executed, later-dated proxy (including by telephone or internet) or by voting by ballot at the meeting. All shares represented by valid proxies received pursuant to this solicitation, and not revoked before they are exercised, will be voted in the manner specified on the proxy.If you submit a proxy without giving specific voting instructions, your shares will be voted in accordance with the recommendations of our Board of Directors as follows:
FOR:
1. | Election of |
duly elected and qualified. Note, however, that | |
2. | Ratification of the appointment of auditors. |
3. | Approval of an advisory resolution to approve executive compensation (“say on pay”). |
This meeting does not relate to the Special Meeting of Shareholders that will be held in connection with our pending acquisition by The Toronto-Dominion Bank, a Canadian chartered bank. A separate proxy statement is being prepared and delivered, and a separate Special Meeting of Shareholders will be held, in connection with that transaction.
Solicitation of Proxies
First Horizon will pay the entire cost of soliciting the proxies. In following up the original solicitation of the proxies, we may request brokers and others to send proxy materials to the beneficial owners of the shares and may reimburse them for their expenses in so doing. If we deem it necessary, we may also use several of our employeesassociates to solicit proxies from the shareholders, either personally or by telephone, letter or e-mail,email, for which they will receive
receive no compensation in addition to their normal compensation. We have hired Morrow Sodali LLC, 470 West Ave.,333 Ludlow Street, Fifth Floor, Stamford, CT 06902 to aid us in the solicitation of proxies for a fee of $9,000 plus out-of-pocket expenses. An additional charge of $6.50 per holder will be incurred should we choose to have Morrow Sodali LLC solicit individual holders of record.
Quorum & Vote Requirements
Except for our depositary shares (each representing a 1/4000thfractional interest in a share of one of the several series of our non-cumulative perpetual preferred stock, Series A, issued by First Horizon on January 31, 2013)stock), which have limited voting rights and no right to vote at the annual meeting, our common stock is our only class of voting securities. There were 311,787,579533,968,325 shares of common stock outstanding and entitled to vote as of February 28, 2020,25, 2022, the record date for the annual meeting.
Each share is entitled to one vote. A quorum of the shares must be represented at the meeting to take action on any matter at the meeting. A majority of the votes entitled to be cast constitutes a quorum for purposes of the annual meeting. Both “abstentions” and broker “non-votes” will be
considered present for quorum purposes, but will not otherwise have any effect on the vote items.
The affirmative vote of a majority of the votes cast is required to elect the nominees as directors, and we have
7 | 2022 PROXY STATEMENT |
ANNUAL MEETING MATTERS
adopted a director resignation policy that requires a director who does not, in an uncontested election, receive the affirmative vote of a majority of the votes cast with respect to his or her election to tender his or her resignation. For additional information on our director resignation policy, see the summary of the policy under Director Resignation and Retirement Policiesin the “Corporate Governance & Board Matters” sectionVote Item 1 of this proxy statement, beginningwhich begins on page 10.36. The policy is also contained in our Corporate Governance
Guidelines, which are available on our website at www.firsthorizon.comhttps://ir.firsthorizon.com (click on “Investor Relations,” then “Corporate Governance,” and then “Governance Documents”).
The affirmative vote of a majority of the votes cast is required to approve the advisory resolution on
executive compensation and to ratify the appointment of auditors.
Effect of Not Casting Your Vote
Shares Held in Street Name.If you hold your shares in street name it is critical that you instruct your broker or bank how to vote if you want your vote to count in the election of directors and the advisory resolution to approve executive compensation (vote items 1 and 23 of this proxy statement). Under current regulations, your broker or bank will not have the ability to vote your uninstructed shares in these matters on a discretionary basis. Thus, if you hold your shares in street name and you do not instruct your broker or bank how to vote, no votes
will be cast on your behalf with respect to these matters. Your broker
or bank will have the ability to vote uninstructed shares on the ratification of the appointment of auditors (vote item 3)2).
Shareholders of Record.If you are a shareholder of record and you do not vote your proxy, no votes will be cast on your behalf on any of the items of business at the annual meeting unless you attend the annual meeting and vote your shares there.
Duplicate Mailings & Householding
Duplicate mailings in most cases are inconvenient for you and an unnecessary expenditure for us. We encourage you to eliminate them whenever you can as described below.
Multiple Accounts. Some of our shareholders own their shares using multiple accounts registered in variations of the same name. If you have multiple accounts, we encourage you to consolidate your accounts by having all your shares registered in exactly the same name and address. You may do this by contacting our stock transfer agent, Equiniti Trust Company (EQ), by phone toll-free at 1-877-536-3558, or by mail to EQ Shareowner Services, P.O. Box 64854, St. Paul, MN 55164-0854.
Shares Held in Street Name. If you and other members of your household are beneficial owners of shares, meaning that you own shares indirectly through a broker, bank, or other nominee, you may eliminate any duplication of mailings by contacting your broker, bank, or other nominee. If you have eliminated duplicate mailings but for any reason would like to resume them, you must contact your broker, bank, or other nominee.
Shareholders with the Same Address; Requesting Changes. If you are among the shareholders who receive paper copies of our proxy materials, SEC rules allow us to mail a single copy of those materials to all shareholders residing at the same address if certain conditions are met. This practice is referred to as
“householding. “householding.” (HouseholdingHouseholding does not apply to either the proxy card or the notice of internet availability of proxy materials.) If
your household receives only one copy of the proxy materials and if you wish to start receiving separate copies in your name, apart from others in your household, you must request that action by contacting our stock transfer agent, EQ, by phone toll-free at 1-877-536-3558(877) 536-3558 or by writing to it at EQ Shareowner Services, Attn: Householding, P.O. Box 64854, St. Paul, MN 55164-0854. That request must be made by each person in the household who desires a separate copy. Within 30 days after your request is received we will start sending you separate mailings. If you and members of your household are receiving multiple copies and you want to eliminate the duplications, please request that action by contacting EQ using the contact information given in this paragraph above. In either case, in your communications, please refer to your account number. Please be aware that if you hold shares both in your own name and as a beneficial owner through a broker, bank or other nominee, it is not possible to eliminate duplications as between these two types of ownership. If your household receives only a single copy of the proxy materials, and if you desire your own separate copies for the 20202022 annual meeting, you may pick up copies in person at the meeting in April or download them from our website using the website address listed in the box below. If you would like additional copies mailed, we will mail them promptly if you request them from our Investor Relations department at our
website or by mail to Investor Relations, P.O. Box 84, Memphis, TN 38101. You may also request that additional copies be mailed by calling our Corporate Communications departmenttransfer agent at
1-866-365-4313. (877536-3558. However, we cannot guarantee you will receive mailed copies before the 20202022 annual meeting.
ANNUAL MEETING MATTERS
to be held on April 26, 2022 |
This proxy statement, our proxy card, and our annual report on Form 10-K are available at https://ir.firsthorizon.com/financialdocs. Also available there is a letter to shareholders discussing our 2021 activities and performance. |
Corporate GovernanceCulture & Governance
Our principal business is providing financial services to our clients. Although many financial services can be delivered through technology today, we believe that our clients’ experience with our associates is a critical way we differentiate our company from our competitors. Specifically, we ask our associates to strive consistently to anticipate and respond to client needs and exceed client expectations.
For this “differentiated experience” strategy to succeed, we have to build and nurture a diverse, equitable and inclusive workplace culture that strives to attract, hire, and retain the best people available by compensating and treating them fairly; ensuring that they have opportunities for professional growth and advancement; supporting them with appropriate workplace resources and training; promoting constructive collegiality and a sense of workplace community; encouraging innovation and the development of better ways to address business challenges; recognizing associate achievements, both great and small; and promoting behaviors that provide clients with best-in-class service. At First Horizon, we call this culture “Firstpower.”
As the post-merger integration process has progressed, Firstpower has evolved to incorporate the best aspects of both organizations into the culture of our company. We have developed the following Purpose and Values to guide our associates on our core values and philosophies.
Our Purpose: First Horizon’s purpose is to help our clients unlock their full potential with capital and counsel.
Our Values:
▪ | Put Clients First – Go above and beyond to listen, understand and solve the client’s needs. Follow through and exceed expectations every step of the way. | |
▪ | Care About People – Treat others with respect and dignity. Foster a culture of collaboration. Demonstrate kindness and empathy for all. |
▪ | Commit to Excellence in Everything We Do – Conduct business with professionalism and dignity. Embody a “can do” spirit that gets results for our clients. | |
▪ | Elevate Equity – Place equity at the center of our diversity and inclusion efforts. Create accountability and ensure accessibility and opportunity for all. | |
▪ | Foster Team Success – Measure wins in terms of “we” not “me.” Take pride in company success. Be invested in a shared vision for future growth. |
Our Action: Own the moment.
We use many tools and resources—programs, events, promotions, communication channels—to nurture and enhance our Firstpower culture. We focus on offering a variety of opportunities that promote mentoring, wellness, internships, diversity, inclusion, volunteering, informal shout-outs and formal recognitions, career management and continuing education, resource groups, and parental and care-giver support.
Our Firstpower culture is a key enabler of First Horizon’s enterprise-wide diversity, equity, and inclusion strategy. Our DEI strategy has a particular focus on elevating equity —an approach that ensures we hold ourselves accountable for quantifying and reducing disparities in accessibility and opportunity based on gender, age, socioeconomic status, sexual orientation, disability status, veteran status, race/ethnicity, etc. We elevate equity through:
▪ | Ensuring representation of diverse talent | |
▪ | Strengthening leadership capabilities and accountability | |
▪ | Fostering inclusion and equality through fairness and transparency | |
▪ | Better serving diverse markets and clients | |
▪ | Investing in the well-being of communities |
9 | 2022 PROXY STATEMENT |
GOVERNANCE & CULTURE
The full Board oversees the company’s DEI strategy and receives periodic reports from management on our DEI efforts.
At December 31, 2021, First Horizon had:
▪ | 7,867 associates, or 7,676 full-time-equivalent associates, not including contract labor for certain services: |
○ | 69% white, 18% African American, 9% Hispanic, 2% Asian, and 2% other races or ethnicities | ||
○ | 63% female and 37% male | ||
○ | 2% have disabilities |
• | 1,215 corporate managers: |
○ | 79% white, 12% African American, 6% Hispanic, 2% Asian, and 1% other races or ethnicities | ||
○ | 54% female and 46% male | ||
○ | 1% have disabilities |
• | 30 members of the Operating Committee (composed of senior leaders from across the organization): |
○ | 73% white, 10% African American, 7% Hispanic, 3% Asian, and 7% other races or ethnicities | ||
○ | 43% female and 57% male |
First Horizon strives to strengthen the lives of our associates, clients and communities. We’re honored by the recognition awarded us for our efforts. We are especially proud of the praise we have received for our community service, diversity, equity and inclusion efforts, and family-friendly work environment. Here are some of the honors we’ve received in the past two years:
World’s Best Banks List Forbes Magazine | America’s Most Just Companies Forbes Magazine | |
Best Banks to Work For American Banker | U.S. Top 10 Most Reputable Bank RepTrak | |
Diversity Leader Profiles in Diversity Journal | 100 Best Adoption-Friendly Workplaces in America Dave Thomas Foundation for Adoption | |
Best Companies for Multicultural Women Working Mother Magazine | Bloomberg Gender Equality Index Bloomberg | |
Environmental, Social & Governance Matters
Our ESG journey is ongoing. We have made progress since the IBKC merger, with several enhancements to our overall ESG practices completed or in progress as described in the chart and narrative on the following pages. We will continue to focus on the ESG issues that
matter most to our business and stakeholders and look forward to sharing our progress in our next Corporate Social Responsibility Report, slated to be published in Summer 2022.
10 | 2022 PROXY STATEMENT |
GOVERNANCE & CULTURE
ESG Progress and Opportunities
Recent Progress | Opportunities in Progress and on the Horizon |
Governance | |
Strategy. Adopted initial ESG strategy and pillars. Responsibility. • Board assigned Nominating & Corporate Governance Committee with ESG oversight; regular updates at Committee meetings scheduled. • Scheduled regular updates on climate-related risks and opportunities for Executive & Risk Committee. • Incorporated climate risk into statement of risk appetite. • Delegated management responsibility to an ESG Officer. • Established Corporate Social Responsibility working group and task forces. • Engaged ESG advisors. | Measurement. Establish qualitative and quantitative measurements to monitor ESG progress. Implementation. Engage with advisors, working group and task forces to operationalize solutions. Risk management. Incorporate climate risk throughout our risk management processes and policies. |
Environmental | |
Roadmap. Established a roadmap and framework to achieve sustainability goals. Resources. Engaged climate scientist to advise on environmental matters. Accomplishments. • Completed initial portfolio analysis on climate risk exposure. • Reduce, reuse and recycle initiatives, including becoming a styrofoam free workplace. | Carbon footprint. Calculate our own greenhouse gas emissions and set baseline so that we are positioned to set reduction targets. Environmental initiatives. Work with environmental task force, corporate properties and procurement to assess cost save opportunities and identify measures to improve the resource efficiency of our footprint and activities. |
Social | |
DEI. • Hired Dr. Hood as Chief DEI Officer. • Launched enterprise-wide DEI Council. • Women appointed to key leadership roles: COO, CFO and CHRO. • Participated in the W.K. Kellogg Foundation’s Expanding Equity program. • Launched 3 new Associate Resource Groups: Hispanic Outreach and Latino Alliance, Eco Champions and Black Inclusion Guild. • Executive Management Committee participated in DEI training at National Civil Rights Museum's Corporate Equity Center. Wellness & Benefits. Continue to provide tools, resources and support to promote associates’ financial, emotional and physical well-being. | Culture. Continue to work toward infusing DEI into our programs and activities, internally and externally. Talent. Focus on increasing underrepresented talent in key business units and leadership roles. CRA. Work to expand access to housing for LMI individuals, support economic development and community revitalization in LMI communities, and improve financial capability and stability in LMI communities. |
Outreach and Disclosure | |
SASB/TCFD. Began the process of aligning ESG reporting with SASB and TCFD frameworks. Shareholder Outreach. Conducted first proactive corporate governance outreach effort in 2020; continued that outreach in 2021. CSR Report • Published comprehensive CSR Report covering combined company. • Enhanced ESG, environmental, DEI, compliance, political involvement and data privacy and cybersecurity disclosures. | Materiality assessment. Look to conduct ESG materiality assessment with our stakeholders to help us prioritize time and resources. SASB/TCFD. Work toward disclosure aligned with SASB and TCFD frameworks. ESG Ratings. Continue to review and update rating organizations’ data in order to improve scores further. |
Governance. In accordanceApril 2021, First Horizon hired an Environmental, Social and Governance Officer and began work on a more formalized ESG strategy for our company. We adopted our first ESG strategy and pillars, identified near-term priorities, and incorporated climate risk into our statement of risk appetite. The Board charged the Nominating & Corporate Governance Committee with
overseeing the management of and commitment to ESG matters and ESG reporting. That Committee is scheduled to receive updates on ESG matters at every regular meeting, and the Executive & Risk Committee is scheduled to receive regular updates on climate-related risks and opportunities. The Board is also scheduled to receive regular updates on ESG matters, including climate-related
11 | 2022 PROXY STATEMENT |
GOVERNANCE & CULTURE
risks and opportunities. Management responsibility was delegated to the ESG Officer, working under the oversight of the Chief Communications Officer. We also established a Corporate Social Responsibility working group and task forces under the leadership of our Chief Communications Officer to review, direct and guide the company’s ESG efforts. Finally, we engaged advisors to help guide our ESG strategy. Going forward, we plan to engage with our Bylaws,advisors, the CSR working group and the various task forces to establish qualitative and quantitative measurements to track and monitor ESG progress and to further develop our ESG pillars and operationalize solutions. We are also working to incorporate climate risk throughout our risk management processes and policies.
Environmental. In 2021, First Horizon is managed underestablished a roadmap and framework to achieve our sustainability goals and hired a climate scientist to advise the direction ofcompany and all corporate powers are exercised by or under the authority of our Board of Directors. Our Board of Directors currently has fourteen members. Allon environmental matters. In addition to opportunities, we are aware of the challenges a changing climate could pose for our business, clients and communities and continue to evaluate these and incorporate them into our risk management framework. We also completed an initial analysis of climate risk exposure in our loan portfolio and became a styrofoam free workplace. Going forward, we plan to work with the environmental task force, corporate properties and procurement to assess cost save opportunities and identify measures to improve the resource efficiency of our directorsfootprint and activities.
Social. Under the leadership of Dr. Anthony C. Hood, our Chief Diversity, Equity & Inclusion (“DEI”) Officer, First Horizon participated in the W.K. Kellogg Foundation’s Expanding Equity program, which is designed to increase diversity, equity and inclusion in corporate America. In addition, our Executive Management Committee participated in a two-day intensive DEI training at the National Civil Rights Museum’s Corporate Equity Center. Under Dr. Hood’s oversight, we will continue to focus on infusing DEI into our programs and activities, internally
and externally, and on increasing underrepresented talent in key business units and leadership roles. Our Community Reinvestment Act area will focus on expanding access to housing for low to moderate income (“LMI”) individuals by financing affordable housing and home rehabilitation programs; supporting economic development and community revitalization in LMI communities by providing small business and commercial financing, technical assistance, job training and creation, and workforce development initiatives; and improving financial capability and stability in LMI communities through banking products and services, volunteerism, financial support for critical community services and financial literacy education programs.
Outreach and Disclosure. Post-merger, we conducted the company’s first proactive corporate governance outreach effort with shareholders and benefited from their feedback and perspectives on a variety of ESG topics. This feedback provided an opportunity to adopt and apply suggestions and practices to best support our business and culture. See Shareholder Outreach immediately following this section for detailed information on our 2021 outreach. We intend to continue our outreach to shareholders on an annual basis going forward and to participate in proactive ESG conversations with shareholders throughout the year. In addition, our ESG team began the process of aligning our ESG reporting with industry-leading frameworks including the Sustainable Accounting Standards Board (“SASB”) and the Task Force on Climate-related Financial Disclosures (“TCFD”). As we move beyond merger integration and systems conversion priorities, we plan to conduct an ESG materiality assessment with participation by our shareholders, associates and clients to help identify issues that represent our most significant and material risks as well as opportunities for enhanced stakeholder value. We also intend to enhance our ESG disclosures with an eye to improving our ESG scores from organizations that rate companies on ESG matters.
We are also directorscommitted to ongoing dialogue with our shareholders, and in the fourth quarter of First Tennessee Bank National Association (the “Bank” or “FTB”).2021 we contacted shareholders representing 54% of our outstanding common shares to offer to engage with them and solicit feedback on areas of interest to them regarding corporate governance.
Lead director Colin Reed, Compensation Committee Chair Rick Maples and members of the legal, compensation, investor relations and ESG teams subsequently held discussions with representatives of firms holding about 18% of our outstanding common shares. The Bank iscomments
and insights they received were shared with the Nominating & Corporate Governance Committee in early 2022 and provided valuable insights into our principal operating subsidiary.shareholders’ perspectives on various topics related to the merger of equals, Board composition, executive compensation, and ESG matters.
Key strategic, compensation, and governance feedback included:
12 | 2022 PROXY STATEMENT |
GOVERNANCE & CULTURE
have made considerable progress in advancing our corporate governance and ESG initiatives. |
• | Associate retention at all levels is crucial, and executive transitions must be well-managed. | |
• | Credit quality is critical. We are showing good focus on credit quality and transparency with shareholders. | |
• | Data security, especially when so many associates work remotely, is an ongoing concern. | |
• | Our governance and executive compensation programs are strong. | |
• | Oversight of ESG matters should be a focus for our Board. Some inquired about management’s plans to produce a TCFD report and to incorporate ESG matters into our strategy and ESG metrics into our executive compensation programs. | |
• | Diversity is important at the board, management and workforce levels. | |
• | Some noted the need to reduce the size of the Board post-merger via attrition or other options in the future. |
In response to shareholder feedback, we will continue to make adjustments that represent the best interests of our shareholders by:
• | Continuing to improve transparency and refine our overall corporate governance framework; | |
• | Consistently reviewing the makeup of our board with a strong focus on ensuring an appropriate level of skills, experience and diversity; | |
• | Ensuring we have strong board oversight in place regarding risk management with overarching goals of soundness, profitability, and growth, in that order; | |
• | Further enhancing our compensation framework to help ensure we deliver strong financial performance with appropriate alignment of management and shareholder interests; | |
• | Fostering an open and inclusive work environment and continuing to advance diversity; | |
• | Working toward alignment with SASB, TCFD and other disclosure frameworks as appropriate; and | |
• | Continuing to advance our overall ESG efforts with a goal of delivering for our key stakeholders and driving enhanced long-term shareholder returns. |
First Horizon is dedicated to operating in accordance with sound corporate governance principles. We believe that these principles not only form the basis for our reputation of integrity in the marketplace but also are essential to our
efficiency and overall success. Some of our corporate governance principles, policies and practices are highlighted below.
Corporate Governance Highlights
Key Corporate Governance Documents
Our Board has adopted the following key corporate governance documents. All of these are available, along with several other governance documents, such as our compensation recovery policy, stock ownership guidelines, and committee charters, on our website at www.firsthorizon.comhttps://ir.firsthorizon.com (click on “Investor Relations,” then “Corporate Governance,” and then “Governance Documents”). Paper copies are also available to shareholders upon request to the Corporate Secretary.
Corporate Governance Guidelines.The Guidelines provide our directors with guidance as to their legal accountabilities, promote the functioning of the Board and its committees, and set forthestablish a common set of
expectations as to how the Board should perform its functions.
Code of Business Conduct and Ethics.This code sets forth the overarching principles that guide the conduct of every aspect of our business. Any waiver of the Code of Business Conduct and Ethics for an executive officer or director must be promptly disclosed to shareholders in any manner that is acceptable under the NYSE listing
standards, including but not limited to distribution of a press release, disclosure on our website, or disclosure on Form 8-K.
Code of Ethics for Senior Financial Officers.This code promotes honest and ethical conduct, proper disclosure of
13 | 2022 PROXY STATEMENT |
GOVERNANCE & CULTURE
financial information and compliance with applicable governmental laws, rules and regulations by our senior financial officers and other employeesassociates who have financial responsibilities. We intend to satisfy our disclosure obligations under Item 5.05 of Form 8-K related to amendments or waivers of the Code of Ethics for Senior Financial Officers by posting such information on our website.
We have also adopted a Compliance and Ethics Program Policy, which highlights our commitment to having an effective compliance and ethics program by exercising due diligence to prevent and detect criminal conduct and otherwise by promoting an organizational culture that encourages ethical conduct and a commitment to compliance with the law.
Policy on HedgingRelated Party Transaction Procedures
First Horizon has a policy that prohibits all “pre-clearance persons” from engaging in any activity that hedges an economic interest in First Horizon or Bank stock, unless approved by the CEO or General Counsel, or a designee, in accordance with the policy. To date, no such approval has been granted. For this purpose, a hedge includes any transaction, position, or financial instrument which offsets or ameliorates any decrease in the market value of First Horizon or Bank stock beneficially owned by the pre-clearance person, including any shares owned directly or indirectly as well as any unvested, deferred, or otherwise restricted stock-based awards. “Pre-clearance persons” consist of all executive officers, all First Horizon and Bank directors, all membersThe Audit Committee of the
CEO’s executive management committee, and certain additional employees.
When a person first becomes a pre-clearance person, the person is required to inform the General Counsel of all derivative and short holdings, including any position that would constitute a hedge, which would violate the policy or the procedures if undertaken while the person has pre-clearance person status. Each pre-clearance person further is required to pre-clear any change in his or her derivative and short holdings from time to time other than a change caused by expiration due solely to the passage of time.
Our Board has adopted a director resignation policy that requires a director who does not receiveprocedures for the affirmative voteapproval, monitoring, and ratification of a majority of the votes cast with respect to his or her election to tender his or her resignation. Under the policy, the Nominating & Corporate Governance Committee must promptly consider the resignation tender and a range of
possible responses and make a recommendation to the Board. The Board will acttransactions between First Horizon, on the Nominating & Corporate Governance Committee’s recommendation within 90 days following certificationone hand, and our directors, executive officers or 5% shareholders, their immediate family members, their affiliated entities and their immediate family members’ affiliated entities, on the other hand. A copy of the shareholder vote. Thereafter, the Board will promptly disclose its decision regarding whether to accept the director’s resignation tender,
including an explanation of the decision (or the reason(s) for rejecting the resignation offer, if applicable), in a Form 8-K (or other appropriate report) filed with or furnished to the Securities and Exchange Commission. If any director’s tender of resignation under the policyour procedures is not accepted by the Board, such director will serve until the next annual meeting of shareholders and until his or her successor has been duly elected and qualified. Any director who tenders his or her resignation pursuant to the director resignation policy shall not participate in the Nominating & Corporate Governance Committee recommendation or Board action regarding whether to accept the tender of resignation. If a majority of the members of the Nominating & Corporate Governance Committee did not receive the affirmative vote of a majority of
the votes cast at the same election, then all the directors who are “independent” under the listing standards of the New York Stock Exchange and who received the affirmative vote of a majority of the votes cast shall appoint a committee amongst themselves to consider the resignation tenders and recommend to the Board whether to accept them.
This committee may, but need not, consist of all of the independent directors who received the affirmative vote of a majority of the votes cast. The director resignation policy is contained in our Corporate Governance Guidelines, which are available on our website at www.firsthorizon.comhttps://ir.firsthorizon.com (click on “Investor Relations,” then “Corporate Governance,” and then “Governance Documents”). Our procedures require management to submit any proposed “related party transaction” (defined as a transaction that is required to be disclosed in our proxy statement pursuant to the requirements of Item 404(a) of Regulation S-K promulgated by the SEC) or amendment to an existing related party transaction to the Audit Committee for approval or ratification. In some cases, the matter may be determined by the chair of the Audit Committee. In considering whether to approve a given transaction, the Audit Committee (or chair) must consider:
would apply if the other party was not, or did not have an affiliation with, a director or executive officer of First Horizon; | ||
• | whether First Horizon is currently engaged in other related party transactions with the related party at issue or other related parties of the same director or executive officer; whether there are demonstrable business reasons for First Horizon to enter into the related party transaction; whether the related party transaction would impair the independence of a director; and | |
• | whether the related party transaction would present an improper conflict of interest for any director or executive officer of First Horizon, taking into account the size of the transaction, the overall financial position of the director or executive officer, the direct or indirect nature of the interest of the director or executive officer in the transaction, the ongoing nature of any proposed relationship, and any other factors the Audit Committee deems relevant. |
Recent ESG EnhancementsTransactions with Related Persons
First Horizon, made several enhancements to its environmental, socialthe Bank and governance practices between late 2018 and early 2020. These are outlined below.
Adoptionthe subsidiaries of human rights statement and social issues statements (2020).First Horizon’s human rights statement reflects our respect for individual human rights and commitment to operate our companyeach, as applicable, have entered into lending transactions and/or other banking or financial services transactions in an environment where everyone is treated with dignity. Our other social issues statements address other areasthe ordinary course of shareholder and stakeholder concern, including diversity and inclusion and data privacy and cybersecurity.
Adoption of code of conduct for suppliers (2020).This code establishes the business conduct expectations for the company’s suppliers (i.e., third parties that provide goods or services to First Horizon). First Horizon expects its suppliers to comply with applicable laws and regulations and act ethically in all matters related to doing business with our executive officers, directors, nominees, their immediate family members and affiliated entities, and the company.
Adoptionpersons of proxy access (2019).Our proxy access bylaw allows a shareholder or group of up to 20 shareholderswhich we are aware that has held at least 3%beneficially own more than five percent of our common stock, and we expect to have such transactions in the future. Such transactions were made in the ordinary course of business, were made on substantially the same terms, including interest rates and collateral, as those
prevailing at the time for at least three years to nominate upcomparable transactions with persons not related to the greatercompany, and did not involve more than the normal risk of two directorscollectability or 20% ofpresent other unfavorable features. We note that as a perquisite we offer all associates discounts on certain financial services (for example, no-fee domestic wire transfers). These discounts are available to our executive officers except in relation to credit extended at the Board and have those nominees appear in our proxy statement, subject to notice and other specific requirements in our Bylaws.
Enhanced commitment to corporate social responsibility (2018).Our inaugural Corporate Social Responsibility (CSR) report,Here for Good, which highlights the company’s impact on and outlines its commitment to its communities, employees, and customers, was published in late 2018;time an updated reportexecutive officer is expected to be published in first quarter 2020. The report is available on our website and details First Horizon’s initiatives focused on promoting social and environmental responsibility, building stronger communities, and practicing sound corporate governance. We also established an internal Corporate Social Responsibility Committee, which reviews, directs and guides the company’s environmental, social and governance efforts. The CSR committee provides the CEO, Board of Directors and Executive Management Committee with periodic reports on CSR activities and ESG initiatives. This committee is composed of senior leaders appointed by the CEO and led by the Chief Communications Officer.
Update to individual director evaluation process (2019).Our individual director evaluation process was updated in 2019 to provide that at least every three years, in lieu of the regular evaluation of the directors conducted by the Nominating & Corporate Governance Committee, the company will engage a third party to conduct individual director assessments and to provide advice and reports on how individual directors and the Board can improve.serving as such.
2022 PROXY STATEMENT |
BOARD MATTERS
In accordance with our Bylaws, First Horizon is managed under the direction of and all corporate powers are exercised by or under the authority of our Board of Directors. Our Board of Directors currently has 17
members. All of our directors are also directors of First Horizon Bank (the “Bank”). The Bank is our principal operating subsidiary.
Independence & Categorical Standards
Independence
Our common stock is listed on the New York Stock Exchange. The NYSE listing standards require a majority of our directors and all of the members of the Audit, Compensation, Committee, theand Nominating & Corporate Governance Committee and the Audit CommitteeCommittees of the Board of Directors to be independent as defined in the listing standards. Under these standards, our Board of Directors is required to determine affirmatively that a director has no material relationship with the company for that director to qualify as independent. In order to assist in making independence determinations, the Board, upon the recommendation of the Nominating & Corporate Governance Committee, has adopted the categorical standards set forth below. In making its independence determinations, each of the Board and the Nominating & Corporate Governance Committee considered the relationships between each director and the company, including those that fall within the categorical standards. In addition, the NYSE listing standards require that the Board specifically consider certain factors in determining the independence of any director who will serve on the Compensation Committee. These factors are described under the heading “TheThe Compensation Committee—In General” General below in this proxy
statement. Our Board specifically considered such factors in making the
independence determinations for all of our directors, including those who serve on the Compensation Committee. Based on its review and the application of the categorical standards, the Board, upon the recommendation of the Nominating & Corporate Governance Committee, determined that twelve14 of our current non-employee directors (Messrs. Barton, Burdick, Casbon, Compton, Emkes, Foss, Gilchrist, Niswonger,Fenstermaker, Kemp, Maples, Reed, SubramaniamShea, and YancySubramaniam and Mses. Davidson, Palmer, Stewart, and Stewart)Sugrañes) are independent under the NYSE listing standards. The Nominating & Corporate Governance Committee and the Board determined that all transactions and relationships with each director identified aboveNone of Mr. Byrd, as independent fell within our categorical standards. NeitherExecutive Chairman, Mr. Jordan, as our Chief Executive Officer, noror Mr. Taylor, who was employed by First Horizon until November 2019 pursuant to an employment agreement entered into in connection with our merger with Capital Bank Financial Corp., is independent.
The categorical standards established by the Board which were last revised in 2010, are set forth below and are also available on our website at www.firsthorizon.comhttps://ir.firsthorizon.com (click on “Investor Relations,” then “Corporate Governance,” and then “Governance Documents”).
Director Transactions by Category or Type
With respect to each director who is identified above as independent under the NYSE listing standards, the Board considered the following types or categories of transactions, relationships or arrangements in determining the director’s independence under the NYSE standards and our categorical standards.
and Subramaniam); loans (including mortgage | ||
• | Provision by an entity affiliated with a director or his or her immediate family member, in the ordinary course of business and on substantially the same |
2022 PROXY STATEMENT |
BOARD MATTERS
terms and conditions as those prevailing at the time for comparable transactions with non-affiliated persons, of the following products and services to the company: package delivery and print services (Mr. Subramaniam); hotel lodging for business travel by associates of the company (Mr. Reed); venues for business development and for holding seminars and other corporate functions (Mr. Reed); restaurant meals for business purposes (Mr. Reed); and title insurance and related loan services (Mr. Casbon).
Categorical Standards
Categorical Standards
Each of the following relationships between the Corporation (as defined below) and its subsidiaries, on the one hand, and a director, an immediate family member of a director, or a company or other entity as to which the director or an immediate family member is a director, executive officer, employee or shareholder (or holds a similar position), on the other hand, will be deemed to be immaterial and therefore will not preclude a determination by the Board of Directors that the director is independent for purposes of the NYSE listing standards:
1. | Depository and other banking and financial services relationships (excluding extensions of credit which are covered in paragraph 2), including transfer agent, registrar, indenture trustee, other trust and fiduciary services, personal banking, capital markets, investment banking, equity research, asset management, investment management, custodian, securities brokerage, financial planning, cash management, insurance brokerage, broker/dealer, express processing, merchant processing, bill payment processing, check clearing, credit card and other similar services, provided that the relationship is in the ordinary course of business and on substantially the same terms and conditions as those prevailing at the time for comparable transactions with non-affiliated persons. | |
2. | An extension of credit, provided that, at the time of the initial approval of the extension of credit as to (1), (2) and (3), (1) such extension of credit was in the ordinary course of business, (2) such extension of credit was made in compliance with applicable law, including Regulation O of the Federal Reserve, Section 23A and 23B of the Federal Reserve Act and Section 13(k) of the Securities and Exchange Act of 1934, (3) such extension of credit was on substantially the same terms as those prevailing at the time for comparable transactions with non-affiliated persons, and (4) the extension of credit has not been placed on non-accrual status. |
3. | Contributions (other than mandatory matching contributions) made by the Corporation or any of its subsidiaries or First Horizon Foundation to a |
charitable organization as to which the director is an executive officer, director, or trustee or holds a similar position or as to which an immediate family member of the director is an executive officer; provided that the amount of the contributions to the charitable organization in a fiscal year does not exceed the greater of $500,000 or 2% of the charitable organization’s consolidated gross revenue (based on the charitable organization’s latest available income statement). | ||
4. | Vendor or other business relationships (excluding banking and financial services relationships and extensions of credit covered by paragraph 1 or 2 above), provided that the relationship is in the ordinary course of business and on substantially the same terms and conditions as those prevailing at the time for comparable transactions with non-affiliated persons. | |
5. | All compensation and benefits provided to non-employee directors for service as a director. | |
6. | All compensation and benefits provided in the ordinary course of business to an immediate family member of a director for services to the Corporation or any of its subsidiaries as long as such immediate family member is compensated comparably to similarly situated associates and is not an executive officer of the Corporation or based on salary and bonus within the top 1,000 most highly compensated associates of the Corporation. |
employees and is not an executive officer of the Corporation or based on salary and bonus within the top 1,000 most highly compensated employees of the Corporation.
Excluded from relationships considered by the Board is any relationship (except contributions included in category 3) between the Corporation and its subsidiaries, on the one hand, and a company or other entity as to which the director or an immediate family member is a director or, in the case of an immediate family member, an employee (but not an executive officer or significant shareholder), on the other hand.
The fact that a particular relationship or transaction is not addressed by these standards or exceeds the thresholds in these standards does not create a presumption that the director is or is not independent.
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The following definitions apply to the categorical standards listed above:
“Corporation” means First Horizon National Corporation and its consolidated subsidiaries.
“Executive Officer” means an entity’s president, principal financial officer, principal accounting officer (or, if there is no such accounting officer, the controller), any vice president of the entity in charge of a principal business unit, division or function, any other officer who performs a policy-making function, or any other person who performs similar policy-making functions for the entity.
“Immediate family members” of a director means the director’s spouse, parents, children, siblings, mother-in-law, father-in-law, sons-in-law, daughters-in-law, brothers-in-law, sisters-in-law and anyone (other than domestic employees) who shares the director’s home.
“Significant shareholder” means a passive investor [meaning a person who is not in control of the entity] who beneficially owns more than 10% of the outstanding equity, partnership or membership interests of an entity. “Beneficial ownership” will be determined in accordance with Rule 13d-3 of the Securities Exchange Act of 1934.
Board Leadership Structure & Role in Risk Oversight
Evolution of Leadership Structure
First Horizon’s Board leadership structure has evolved significantly over the years. Prior to 2007, the Chairman of the Board and Chief Executive Officer roles were held by the same individual (except for two transition periods relating to CEO succession). In 2007, the Board made certain governance changes in order to facilitate the implementation of strategic changes it was then initiating, including the appointment of a new CEO and of a separate
individual as the Chairman of the Board. Under the Bylaws, the position of Chairman of the Board was at that time an executive officer position, but in 2009, the Board adopted amendments to the Bylaws that made the position of Chairman of the Board a non-officer position. In 2012, the Board elected Mr. Jordan, who had become our President and CEO in 2008, as Chairman of the Board as well. Finally, upon the closing of the merger of equals of First Horizon and IBKC in 2020, Mr. Byrd became Executive Chairman of the Board of First Horizon and the Bank (an executive officer position), with Mr. Jordan continuing in the roles of President and CEO.
Current Leadership Structure
Executive Chairman; President and CEO
In accordance with the Agreement and Plan of Merger with IBKC entered into as of November 3, 2019 in connection with the merger of equals (the “merger agreement”), the company’s Bylaws provide that Mr. Byrd will serve as Executive Chairman of First Horizon and the Bank until the second anniversary of the closing of the merger (or any such earlier date as of which Mr. Byrd ceases for any reason to serve in the position of Executive Chairman), at which time Mr. Jordan will succeed Mr. Byrd as the Chairman of the Board of First Horizon and the Bank. Under his agreement with the company, Mr. Byrd is required to step down as Executive Chairman and a director of First Horizon and the Bank as of the second anniversary of the closing of the merger. Thereafter, Mr. Byrd will serve as a senior advisor to First Horizon and the Bank until the fifth anniversary of the closing date.
Under First Horizon’s current Bylaws, the Chairman of the Board presides at all meetings of
the shareholders and of the Board (except, with respect to meetings of the Board, as the Board may otherwise determine) and has the powers and performs the duties as are normally incident to the position and as may be assigned by the Board. The Chief Executive Officer is responsible for carrying out the orders of and the resolutions and policies adopted by the Board, has general management of the business of the company and exercises general supervision over all of its affairs.
affairs, and has the powers and performs the duties as are normally incident to the position and as may be assigned by the Board.
Lead Director
In accordance with the merger agreement, First Horizon’s Bylaws also provide that from the closing of the merger until Mr. Jordan succeeds Mr. Byrd as Chairman of the Board of First Horizon and the Bank, the Lead Director of the Board of First Horizon and the Bank will be an independent director chosen by the continuing First Horizon directors from among the continuing First Horizon directors. After Mr. Jordan succeeds Mr. Byrd as Chairman of the Board and until the third anniversary of the closing date, the Lead Director will be an independent director chosen by the majority of the continuing IBKC directors from among the continuing IBKC directors; the Lead Director thereafter will serve in that capacity until replaced by a majority vote of the entire Board.
Mr. Reed, who is independent under the listing standards of the NYSE, is currently serving as Lead Director for the Board. The Lead Director’s responsibilities include, among other things, supporting the Chairman of the Board in developing (in conjunction with the Corporate Secretary) the agenda for each Board meeting and in defining the scope, quality, quantity and timeliness of the flow of information between management and the Board;
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presiding (or, if he cannot be in attendance, designating another independent director to preside) at executive sessions of the Board; taking any actions he deems necessary or appropriate in connection with
the Board and committee self-evaluation process (including contacting each director individually to obtain additional input on Board and committee effectiveness, if he deems appropriate); receiving reports from directors who have concerns about another director’s performance pursuant to our process for individual director performance evaluations; and receiving communications from shareholders pursuant to our process for communications with the Board.
Reasons for Current Leadership Structure
We believe that our current board leadership structure, with a combinedMr. Byrd and Mr. Jordan serving as Executive Chairman and CEO, and Chairman positionrespectively, and with a separate Lead Director who is independent under the NYSE listing standards and has the principal duties specified in the Corporate Governance Guidelines, has been appropriate for our company during the post-merger transition period. The leadership of both Messrs. Byrd and Jordan has been crucial to overseeing and facilitating the integration of First Horizon and IBKC since the merger in July 2020. In negotiating the merger, both boards of directors wanted to ensure substantial continuity in leadership for the combined company post-merger. Thus both boards agreed that roughly half of the new board, and roughly half of the new executive team, would come from each legacy company. The division of the roles of Executive Chairman and CEO between Mr. Byrd and Mr. Jordan also reflected this desire. While Mr. Jordan has the overall responsibility for managing the business, Mr. Byrd was tasked as Executive Chairman with making key aspects of the merger work, including blending the two business cultures (on the Board, within the executive group, and within the combined company overall), promoting the best practices of each legacy company, smoothing transitions for clients, and assuring our many communities that we will continue our support of them.
Mr. Byrd will step down as Executive Chairman effective July 1, 2022, and Mr. Jordan will succeed him as Chairman of the Board. At that point, we will again have a combined CEO and Chairman in Mr. Jordan. We believe that that leadership structure, along with a separate Lead Director
who is independent under the NYSE listing standards and has the principal duties specified in the Corporate Governance Guidelines, will be most appropriate for our company at this time.going forward. We believe that combining the roles of CEO and Chairman facilitatesbeginning in July 2022 will facilitate our prudent management of the company.company as we leave merger integration and systems conversion tasks behind us. Holding both roles will best positionsposition Mr. Jordan as CEO and Chairman to be aware of major issues facing the company on a day-to-day and long-term basis and to identify key risks and developments facing the company that should be brought to the Board’s attention. The combined role will also providesprovide a single point of leadership for the company so that the company maintains a unified message and strategic direction.
The combined CEO/Chairman position iswill be counterbalanced by our strong Lead Director position, currently held by Mr. Reed, who is also chair of the Executive & Risk Committee of the Board.Reed. The Lead Director, who has the responsibilities described above, provides an independent voice on issues facing the company and ensures that key issues are brought to the Board’s attention. The Board and its committees also regularly hold executive sessions with no members of management present, thereby providing an opportunity for the independent directors to discuss their views freely; the executive sessions of the Board are generally presided over by the Lead Director (or his designee, if he cannot attend). All four regular meetings of the Board in 20192021 concluded with such an executive session. The Board itself has a high degree of independence, with 1214 of the 1415 non-employee directors qualifying as independent under the NYSE listing standards. In addition, the Board values the fresh perspectives brought by new directors: over the past six years, we have added five new directors to our Board.
We recognize that different board leadership structures may be appropriate for First Horizon at different times and in different situations. As part of our Board self-evaluation process, the Board annually evaluates the company’s leadership structure to ensure that it remains the most appropriate one for the company. As stated in our Corporate Governance Guidelines, the Board is free to select its Chairman and First Horizon’s Chief Executive Officer in the manner it considers in the best interests of the company at any given point in time. The Board has currently separated the roles of Chairman and CEO in the past and will consider doing so in the future should circumstances arise that make such separation appropriate.
In the fourth quarter of 2019 we announced a merger of equals transaction with IBERIABANK Corporation (“IBKC”). If the proposed merger is consummated, the merger agreement provides that Mr. Jordan will continue to serve as President and Chief Executive Officer of the combined company and the combined bank, and Daryl G. Byrd, current President and Chief Executive Officer of IBKC, will become the Executive Chairman of the Boards of Directors of the combined company and the combined bank until the second anniversary of the closing date (or any such earlier date as of which Mr. Byrd ceases for any reason to serve in the position of Executive Chairman). At that time Mr. Jordan will succeed Mr. Byrd as the Chairman of the Boards of Directors of the combined company and the combined bank. The merger agreement also provides that until Mr. Jordan succeeds Mr. Byrd as Chairman of the Board of Directors of the combined company and the combined bank, the Lead Director of the Boards of Directors of the combined company and the combined bank will be an independent director chosen by the continuing First Horizon directors from among the continuing First Horizon directors. Following the date on which Mr. Jordan succeeds Mr. Byrd as Chairman and until the third (3rd) anniversary of the closing date, the Lead Director will be an independent director chosen by the majority of the continuing IBKC directors from among the continuing IBKC directors, and thereafter will serve in that capacity until replaced by a majority vote of the entire Board of Directors of the combined company.
Board Role in Risk Oversight
As stated in our Corporate Governance Guidelines, oversight of risk management is central to the role of the Board. Our Board provides continuous oversight of overall risks, with emphasis on strategic risks and those related to reputation and corporate social responsibility. The Board reviews and approves our statement of risk appetite,
which defines the outside limit of risk that First Horizon is willing to assume in executing our business strategy through the business cycle, on an annual basis. Our risk management processes are reflected in a Board policy on risk management governance and in a Board statement of strategic objectives and risk appetite. The policy delegates
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primary responsibility for enterprise risk management oversight (including oversight of information security risk) to the Executive & Risk Committee. The role of that Committee, as well as that of the Audit, Compensation and TrustNominating & Corporate Governance Committees, is outlined below. Each of these committees and the full Board receive regular reports from management regarding the company’s risks, and each committee reports regularly to the full Board concerning risk.
Executive & Risk Committee. |
The Executive & Risk Committee’s charter authorizes and directs the Committee to assist the Board in its oversight of (i) the establishment and operation of our enterprise risk management framework, including policies and procedures establishing risk management governance, risk management procedures, risk control infrastructure, and processes and systems for implementing and monitoring compliance with the framework with respect to the management of credit, market, operational, liquidity, interest rate sensitivity, capital and equity investment risks, including emerging risks, (ii) the adoption, implementation and periodic review of significant risk management and compliance policies and (iii) our risk appetite statement. In fulfilling its risk responsibilities, the Board delegated the following duties to the Committee: to review periodically and recommend to the Board the risk appetite parameters to be employed by management in operating the company; to receive information on our business practices, policies and procedures related to the risks listed above; to monitor results to ensure alignment with First Horizon’s risk appetite; to review periodic risk and compliance reports from the Chief Risk Officer and the Chief Credit Officer, including reports on major risk exposures and steps taken to monitor, mitigate and control such exposures; to review periodically with management regulatory correspondence and actions; to review and approve First Horizon’s stress testing program and results; and to establish (or recommend to the Board the establishment of) risk management and compliance policies and periodically review such policies, as appropriate. The reports from the Chief Risk Officer referred to above take place on a quarterly basis and include information on information security (including cybersecurity) risk and the steps taken to monitor, mitigate and control it. The Committee’s charter specifically states that the Committee may meet separately in executive session with the Chief Risk
Officer as often as the Committee deems necessary or appropriate.
In connection with its credit risk responsibilities, the Committee oversees First Horizon’s independent Credit Assurance Services department. The Committee charter requires the Committee to advise the Chief Audit Executive (who has responsibility for the Credit Assurance Services department) that he or she is expected to provide the Committee summaries of and, as appropriate,
significant reports to management prepared by the Credit Assurance Services department and management’s responses thereto; to approve the department’s Annual Review Plan and schedule of activities; to meet quarterly with the Chief Audit Executive in separate executive session to discuss any matters that the Committee or the Chief Audit Executive believes should be discussed privately; and to review the Annual Credit Assurance Services department Statement of Independence.
Federal Reserve regulations previously requiredrequire banking organizations with assets greater than $50 billion to establish an independent risk committee of the company toboard of directors that has, as its sole and exclusive function, responsibility for the risk management policies of the organization’s global operations and oversight of the organization’s risk management framework. The regulations also specify that the organization must have a risk committee that is chaired by a director who is independent as defined in the regulations and that has at least one member with “experience in identifying, assessing and managing risk exposures of large, complex firms.” The regulations were recently amended and no longer requireThese requirements will apply to the company to have a risk committee meetingbeginning in the fourth quarter of 2022. The company currently complies voluntarily with the requirements outlined above. Nevertheless, the company intendsabove with respect to continue voluntarily to comply with these requirements as a matter of prudent risk management, and the Executive & Risk Committee currently meets these requirements. Ifchair and membership and expects to establish a separate risk committee in advance of the proposed merger with IBKC is consummated, we expectdate that these requirements as well as others impacting the company’s risk management, will bebecome applicable to the company once again, and the company’s risk management structure will change accordingly.company.
Audit Committee. |
Other Board committees play a role in First Horizon’s risk management processes as well. In accordance with the NYSE listing standards and its charter, the Audit Committee receives reports from the Chief Audit Executive regarding risk governance, risk assessment and risk management, the adequacy of the company’s policies and compliance with legal and regulatory requirements. These include reports from the IT Audit area on the company’s information security, including risk assessment and planning relating to cybersecurity, network security and physical security. Pursuant to its charter, the Audit Committee also reviews employeeassociate complaints or material reports or inquiries received from
regulators or government agencies and management’s responses; meets periodically with the company’s Chief Risk Officer to discuss any risk and compliance matters that may have a material effect on the company’s financial statements or internal controls; discusses any significant compliance issues raised in reports or inquiries received from regulators or government agencies; reviews periodic reports regarding the Compliance and Ethics Program on the effectiveness of that program; and discusses with the General Counsel pending and threatened claims that may have a material impact on the financial statements.
Compensation Committee. |
The Compensation Committee is responsible for compensation-related risks. The charter of the Committee requires the Committee to oversee our compliance with all applicable laws and regulations
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relating to (i) appropriate management of the risks associated with incentive compensation programs or arrangements or (ii) public, regulatory, or other reporting associated with such risks, programs or arrangements. Additional information about the Committee’s role in risk management is included under the heading “The Compensation Committee—Risk within The Compensation Risk”Committee, which begins on page 26.23.
The TrustNominating & Corporate Governance Committee which is a committee of the Bank’s Board, is responsible for overseeing risks relating to the fiduciary activities ofcompany’s governance structure and Board succession, as well as those relating to the Bank, including risks arising in connection with such activities. The Trust Committee receives reports fromcompany's management of the Trust Division and any other units operating pursuantcommitment to the fiduciary powers of the Bank regarding fiduciary account recordsESG matters and the investment and distribution of fiduciary account funds.ESG reporting.
Committee Charters & Committee Composition
The Board has five standing committees: the Audit Committee, the Compensation Committee, the Executive & Risk Committee, the Information Technology Committee and the Nominating & Corporate Governance Committee. The charter of each of these committees is currently available on our website at www.firsthorizon.comhttps://ir.firsthorizon.com (click on “Investor Relations,” then “Corporate Governance,” and then “Governance Documents”) (and a copy of the Nominating & Corporate Governance Committee charter is attached as Appendix A to this proxy statement). Paper copies are available to shareholders upon request to the Corporate Secretary. The Audit, Committee, the Compensation, Committee, and the Nominating & Corporate Governance CommitteeCommittees are each
composed of directors who are independent, as defined above under the heading “IndependenceIndependence & Categorical Standards”Standards beginning on page 14.15. The chair of the Executive & Risk Committee is also independent, as defined by the Federal Reserve regulations that govern risk committees. The current membership of each of the Board’s standing committees is set forth in the table below. Membership and chairmanship continued during the entire period from January 1, 2019 until2021 through the filing of this proxy statement unless otherwise indicated in the notes following the table.
2019 Committees of the Board
Mr. Yancy also serves as chair of the Trust Committee, a standing committee of the Bank on which Ms. Stewart also serves and on which Mr. Niswonger will also serve until his retirement at the April 2020 annual meeting.
Mr. Emkes was the chair of the Trust Audit Committee, a standing committee of the Bank on which all the other members of the Audit Committee listed above also served, until January 28, 2020. As of that date, the Trust Audit Committee was dissolved. For additional details, please see “The Audit Committee” beginning on page 21. Mr. Subramaniam served as a member of the Audit and Trust Audit Committees until April 23, 2019.
If the proposed mergerIn accordance with IBKC is consummated, the merger agreement providesentered into in connection with the merger of equals of First Horizon and
IBKC, First Horizon’s Bylaws provide that, for a period of three years following completionthe closing of the merger, each committee of the board of the combined company and of the combined bankBoard will, to the fullest extent practicable, have at least five members, and each such committee will, to the extent reasonably practicable, have one more continuing First Horizon director than continuing IBKC director. The merger agreement also contains provisions concerningprovides that, for a period of three years following the chairsclosing of the merger, the chair of the Compensation Committee shall be a director selected from among the continuing IBKC directors by majority vote of the continuing IBKC directors, and the chair of the Executive & Risk Committee shall be selected as follows: until the second anniversary of the combined companyclosing of the merger (or any earlier date as of which Mr. Byrd ceases for any reason to serve in the position of Executive Chairman), at which time Mr. Jordan will succeed Mr. Byrd as the Chairman of the Board of First Horizon and combined bank.the Bank, the chair of the Executive & Risk Committee shall be a director selected from among the continuing IBKC directors by a majority vote of the continuing IBKC directors, and thereafter shall be a director selected from among the continuing First Horizon directors by a majority vote of the continuing First Horizon directors.
AUDIT | COMPENSATION | EXECUTIVE & RISK | INFORMATION TECHNOLOGY | NOMINATING & CORPORATE GOVERNANCE | ||||
Mr. Barton | Mr. Burdick | Mr. Byrd | Mr. Barton | Mr. Burdick | ||||
Mr. Burdick | Mr. Casbon | Mr. Casbon | Ms. Davidson | Mr. Compton (chair) | ||||
Ms. Davidson | Mr. Maples (chair) | Mr. Compton | Mr. Kemp | Mr. Fenstermaker | ||||
Mr. Kemp | Ms. Palmer | Mr. Fenstermaker (chair) | Ms. Stewart (chair) | Mr. Kemp | ||||
Ms. Palmer (chair) | Mr. Reed | Mr. Jordan | Mr. Subramaniam | Mr. Shea | ||||
Ms. Stewart | Mr. Shea | Mr. Maples | Ms. Sugrañes | Mr. Subramaniam | ||||
Ms. Sugrañes | Ms. Palmer | |||||||
Mr. Reed | ||||||||
Mr. Taylor |
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Overview |
The Audit Committee was established by our Board of Directors and operates under a written charter that was last amended in 20192020 to reflect the change in the Bank’s name and conversion from a national bank to a Tennessee state chartered bank.make minor updates. In 2019,2021, the Committee met seven12 times and took action by written consent once for the principal purpose of executing its responsibilities under the Committee’s charter. TwoEight of those meetings concluded with an executive session during which management was not present.
Subject to the limitations and provisions of its charter, the Committee assists our Board in its oversight of our accounting and financial reporting principles and policies, internal controls and procedures, the integrity of our financial statements, our compliance with legal and regulatory requirements, the independent auditor’s qualifications and independence, and the performance of the independent auditor and our internal audit function. The Committee is directly responsible for the appointment (subject, if applicable, to shareholder ratification), retention, compensation and termination of the independent auditor as well as for overseeing the work of and evaluating the independent auditor and its independence. The members of the Committee are themselves independent, as that term is defined in the NYSE listing standards (described above), and meet the additional independence requirements prescribed by Section 10A(m)(3) of the Securities Exchange Act of 1934, as amended, and the rules of the SEC promulgated thereunder. In addition, the Board of Directors has determined that all the members of the Committee are financially literate as required by the NYSE listing standards. The Audit Committee’s Report is included below.
In accordance with regulations of the Office of the Comptroller of the Currency requiring national banks to have a separate fiduciary audit committee, the Bank formerly had a Trust Audit Committee (whose members were the same as thoseFinancial Experts
Mr. Barton. The Board of Directors has determined that Harry V. Barton Jr. (member of the Audit Committee), which carried out is an audit committee financial expert, as that term is defined in Item 407(d)(5) of SEC Regulation S-K. Prior to joining First Horizon’s Board in 2020, Mr. Barton had served as a risk oversight roledirector of IBKC since 1993. He was a member of IBKC’s audit committee from 2000 to 2020 and chaired the committee from 2005 to 2020, and IBKC’s board determined that Mr. Barton was an audit committee financial expert. IBKC’s financial statements were generally comparable to First Horizon’s in the breadth and complexity of the issues that they raised. Mr. Barton has been a practicing certified public accountant since 1984, for most of that time as the owner of his own accounting firm. In order to maintain his license as a practicing CPA, he has obtained the required continuing education for accountants every year. His broad professional experience
as a practicing certified public accountant and his service on IBKC’s audit committee allowed him to gain an understanding of generally accepted accounting principles and financial statements, the ability to assess the general application of accounting principles in connection with respectthe accounting for estimates, accruals and reserves, experience evaluating financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the fiduciary activitiesbreadth and complexity of the Bank. Since the Bank is no longer a national bank, it is no longer subjectissues that can reasonably be expected to this requirement, so the Trust Audit Committee was dissolved in January 2020. The Internal Audit Department continues to conduct fiduciarybe raised by First Horizon’s financial statements, an understanding of internal control over financial reporting, and an understanding of audit activities as appropriate in the usual course of its
audit work, and the Audit Committee oversees those activities.
committee functions.
Mr. Burdick.The Board of Directors has determined that Kenneth A. Burdick (member of the Audit Committee) is an audit committee financial expert, as that term is defined in Item 407(d)(5) of SEC Regulation S-K. Mr. Burdick received his Bachelor of Arts in American Studies from Amherst College and law degree from the University of Connecticut School of Law. Over the course of his 40 year career in healthcare, Mr. Burdick served in various positions with Cigna, UnitedHeathcare and Blue Cross and Blue Shield of Minnesota, culminating in his service as Chief Executive Officer and a director of WellCare Health Plans, Inc. (“WellCare”) from 2015 until January 23,early 2020. On that date, Centene Corporation (“Centene”) acquired WellCare, and Mr. Burdick became Centene’s Executive Vice President of Products and Markets. Centene, a Fortune 100 company with approximately $74.6 billion in total revenue and managed care membership of approximately 15.2 million in 2019, is a diversified, multi-national healthcare enterprise that provides a portfolio of services to government sponsored and commercial healthcare programs. In 2019, WellCare had approximately $20.4 billion in total revenue and about 5.5 million members nationwide and was among the largest managed care organizations providing Medicaid managed care services plans, MA Plans and PDPs, as measured by membership. As CEO of WellCare, Mr. Burdick was responsible for the financial statements of the company. He actively supervised the company’s chief financial officer, who reported directly to him, regularly reviewing the company’s results in detail and discussing with the CFO issues relating to its financial statements, including issues relating to its estimates, accruals and reserves. He was an active member of WellCare’s Risk Management group, whose oversight responsibilities include accounting risks. He met quarterly with DeloitteWellCare’s independent auditors to discuss financial statement and accounting matters and annually signed a certificate for WellCare in connection with the certification process for the Sarbanes-Oxley Act and a management representation letter for Deloitte in connection with Deloitte’sthe audit of the financial results of WellCare (the financial statements of which were audited in accordance with generally accepted accounting principles). Early in 2020, Centene Corporation (“Centene”) acquired WellCare, and Mr. Burdick became Centene’s Executive Vice President of Products and Markets. Centene, a Fortune 100 company with approximately $74.6 billion in total revenue and managed care membership of approximately 15.2 million in 2019, provides a portfolio of services to government
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sponsored and commercial healthcare programs. In 2021, Mr. Burdick retired from his position at Centene; he continued to serve as a consultant to Centene until January 2022, when he also became a director of Centene. Mr. Burdick has served on First Horizon’s Audit Committee since 2019.
Mr. Emkes.Ms. Palmer.The Board of Directors has determined that Mark A. EmkesVicki R. Palmer (chair of the Audit Committee) is an audit committee financial expert, as that term is defined in Item 407(d)(5) of SEC Regulation S-K. Mr. Emkes received his BachelorAfter receiving her B.A. in economics and business administration from Rhodes College and her M.B.A. in finance from The University of ArtsMemphis, Ms. Palmer was employed as a commercial loan officer with the Bank, where she was trained in Economics from DePauw University and his Mastersworked daily in evaluating financial statements of Business Administrationcorporate clients in International Management fromconnection with their credit applications. In 1978, she joined Federal Express Corporation as Manager of Corporate Finance, and her major areas of responsibility included debt financing, cash management and pension asset management. Ms. Palmer joined The Coca-Cola Company in 1983 as Manager of Pension Investments, thus becoming responsible for the Thunderbird Schoolcompany’s worldwide pension assets. Upon moving to Coca-Cola Enterprises, Inc. (“CCE”) in 1986, she was involved at the inception of Global Management. Over the coursecompany with the evaluation of his career, Mr. Emkes served in various positions with Tokyo-based Bridgestone Corporation, including as President and Managing Director of Bridgestone Firestone Mexico and of Bridgestone Firestone Brazil, President of Bridgestone Latin America, and Chairman and CEO of Bridgestone North America.
In each of these positions, he actively supervised the divisional chief financial officer, who reported directly to him, and he reviewedcompany-wide financial results regularly. His service with Bridgestone culminated in hisand the establishment of internal controls. Until 2004, Ms. Palmer served as Senior Vice President, Treasurer and Special Assistant to the CEO. In this position, as Chairman, Chief Executive Officer and President of Bridgestone Americas, Inc., a company with approximately $12 billion in annual revenue, and as a director of its parent company, Bridgestone Corporation. As CEO of Bridgestone Americas, Inc., Mr. Emkesshe was responsible for management of CCE’s $12 billion multi-currency debt portfolio; its $2.5 billion pension plan and 401(k) plan investments; currency management; global cash management; and commercial and investment banking relationships. In 2004, she became Executive Vice President, Financial Services and Administration, responsible for overseeing treasury, pension and retirement benefits, asset management, internal audit and risk management. In this position she was a member of CCE’s Risk Committee, which was charged with establishing policy and internal controls for hedging and financial and non-financial derivatives. In addition, she served on CCE’s Senior Executive Committee and had oversight responsibility for CCE’s enterprise-wide risk assessment process. Ms. Palmer also served for over ten years on CCE’s Financial Reporting Committee, which reviewed the company’s financial statements and dealt periodically with accounting issues, and in her most recent position with CCE she supervised the treasurer who served on this committee. Ms. Palmer retired as a CCE officer in 2009. She is currently the President of The Palmer Group, LLC, a general consulting firm. She was a member of our Audit Committee from 1995 to 1999 (chairing the Committee from 1996 to 1999), and she again served as chair from 2003 to 2014. She returned to the Committee once again as chair in 2020. She is also a member of the subsidiary, and he actively supervisedaudit committee of another public company, Haverty
Furniture Companies Inc.; the CFO, regularly reviewing results in detail and discussing with the CFO issues relating to the subsidiary’sboard of Haverty has determined that she is an audit committee financial statements, including issues relating to its estimates, accruals and reserves. He annually signed a certificate for Bridgestone Corporation in connection with the certification process for Japan’s version of the Sarbanes-Oxley Act and a management representation letter in connection with the audit of the financial results of Bridgestone Corporation (the financial statements of which were audited in accordance with generally accepted accounting principles). For part of Mr. Emkes’s tenure at Bridgestone Americas, the internal audit division reported to him. Most recently, Mr. Emkes served as the Commissioner of the Department of Finance and Administration of the State of Tennessee, a position he retired from in May 2013. Mr. Emkes has served on First Horizon’s Audit Committee since 2008.expert.
Messrs. Barton and Burdick and EmkesMs. Palmer meet in all respects the independence requirements of the NYSE and Section 10A(m)(3) of the Securities Exchange Act of 1934, as amended, and the rules of the SEC promulgated thereunder.
Notwithstanding anything to the contrary set forth in any of our previous filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, that might
incorporate future filings by reference, including this proxy statement, in whole or in part, the following Audit Committee Report and the statements regarding members of the Committee who are not independent (if any) shall not be incorporated by reference into any such filings.filings.
Audit Committee Report |
The roles of the Audit Committee (“Committee”) are (1) to assist First Horizon’s Board of Directors in its oversight of (a) the company’s accounting and financial reporting principles and policies and internal controls and procedures, (b) the integrity of its financial statements, (c) its compliance with legal and regulatory requirements, (d) the independent auditor’s qualifications and independence, and (e) the performance of the independent auditor and internal audit function; and (2) to prepare this report to be included in First Horizon’s annual proxy statement pursuant to the proxy rules of the SEC. The Committee operates pursuant to a charter that was last amended and restated by the Board in 2019.2020. As set forth in the Committee’s charter, management of First Horizon is responsible for preparation, presentation and integrity of the company’s financial statements and 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 internal auditor is responsible for testing such internal controls and procedures. The independent auditor is responsible for planning and carrying out audits of First Horizon’s annual financial statements and effectiveness of internal control over financial reporting, reviews of First Horizon’s quarterly financial statements prior to the filing of each quarterly report on Form 10-Q and certain other procedures.
In the performance of its oversight function, the Committee has considered and discussed the audited financial statements with management and the independent auditors. The Committee has discussed with the Chief Executive Officer and Chief Financial Officer their respective certifications that were included in First Horizon’s Annual Report on Form 10-K for the year ended December 31, 2019.2021. The Committee has also discussed
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with the independent auditors the matters required to be discussed by Auditing Standard No. 1301,Communications with Audit Committees,issued by the Public Company Accounting Oversight Board (formerly the Statement on Auditing Standards No. 61, as amended (AICPA,Professional Standards,, Vol. 1. AU Section 380), as adopted by the Public Company Accounting Oversight Board in
Rule 3200T). Finally, the Committee has received the written disclosures and the letter (or other written communication) from the independent auditors required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the audit committee concerning independence, has adopted an audit and non-audit services pre-approval policy and considered whether the provision of non-audit services by the independent auditors to First Horizon is compatible with maintaining the auditor’s independence and has discussed with the auditors the auditors’ independence. At each of its regular quarterly meetings, the Committee is scheduled to meet, in separate executive sessions with no members of management present, with both the independent auditors and the internal auditor to discuss any matters that the Committee in its discretion deems appropriate.
While the Board of Directors has determined that each member of the Audit Committee has the broad level of general financial experience required to serve on the Committee and that Messrs. Barton and Burdick and EmkesMs. Palmer are audit committee financial experts as that term is defined in Item 407(d)(5) of Regulation S-K, none of the members of the Committee currently devotes specific attention to the narrower fields of auditing or accounting or is professionally engaged in the practice of auditing or accounting, nor are they performing the functions of auditors or accountants with respect to the company, nor are they expertsis any of them an expert in respect of auditor independence. Members of the Committee rely without independent verification on the information provided to
them and on the representations made by management and the independent auditors.
Accordingly, the Committee’s oversight does not provide an independent basis upon which to determine that management has maintained appropriate accounting and financial reporting principles or appropriate internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations. Furthermore, the Committee’s considerations and discussions referred to above do not assure that the audit of First Horizon’s financial statements has been carried out in accordance with generally accepted auditing standards, that the financial statements are presented in accordance with generally accepted accounting principles or that First Horizon’s auditors are in fact “independent.”
Based upon the reports and discussions described in this report, and subject to the limitations on the role and responsibilities of the Committee referred to above and in the Committee’s charter, the Committee recommended to the Board of Directors that the audited financial statements be included in our Annual Report on Form 10-K for the year ended December 31, 20192021 filed with the SEC.
Submitted by the Audit Committee of our Board of Directors.
Audit Committee
Mark A. Emkes,Vicki R. Palmer, Chair
Harry V. Barton, Jr.
Kenneth A. Burdick
Wendy P. Davidson
Peter N. FossJ. Michael Kemp, Sr.
Cecelia D. Stewart
Luke Yancy IIIRosa Sugrañes
In General |
The purposes of the Compensation Committee are (1) to discharge the Board’s responsibilities relating to the compensation of our executive officers and members of the CEO’s executive management committee, (2) to produce an annual report on executive compensation for inclusion in our proxy statement, in accordance with the rules and regulations of the SEC [the current report is set forth below], (3) to identify and recommend to the Board individuals for appointment as officers, (4) to evaluate our management, and (5) to carry out certain other duties as set forth in the Committee’s charter.
The Compensation Committee operates under a written charter that was last amended and restated by the Board of Directors in 20192020. The 2020 amendments added to reflectthe
list of plans that the changeCommittee has authority to administer the names of the legacy IBKC stock option and other equity-based award plans and programs adopted by First Horizon in connection with the Bank’s namemerger of equals and conversion from a national bank to a Tennessee state chartered bank.made minor updates.
The members ofAll directors who served on the Committee during any portion of 2021, including all current Committee members, are independent as that term is defined in the NYSE listing standards (described above), and meet the additional independence requirements that specifically apply to Compensation Committee members as set forth in the listing standards (as prescribed by Section 10C of the Securities Exchange Act of 1934, as amended, and the rules of the SEC promulgated thereunder). In affirmatively determining the independence of all of the current directors (other than Messrs. Byrd, Jordan and Taylor),
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including those who serve on the Committee (as well as any director who served on the Board during any portion of 2021), the Board has considered all factors specifically relevant to determining whether any of those directors has a relationship to the company which is material to that director’s ability to be independent from management in connection with the duties of a Committee member, including, but not limited to, the source of compensation of such director, including any consulting, advisory or other compensatory fee paid by the company to such director, and whether such director is affiliated with First Horizon, a subsidiary of First Horizon, or an affiliate of a subsidiary of First Horizon.
Most of our executive compensation plans specify that they will be administered by a committee. The Committee’s charter provides that the Committee will administer plan-committee functions under our various executive-level compensation plans. Under the charter, at least two members of the Committee must be “outside directors” for
purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended, and at least two members of the Committee must be “non-employee directors” for purposes of Section 16 of the Securities Exchange Act of 1934. Many of our plans have similar provisions concerning their respective plan committees. The charter stipulates that if a Committee member is disqualified under one or the other of those tests, then that member must recuse him- or herself from participating in decisions impacted by the relevant test. In that situation, the remaining members would constitute the Committee for that action. On occasion, in connection with a specific action, a Committee member may feel that his or her qualification under one of those tests may be in doubt for some reason; in that case, the member may elect recusal to avoid any risk of possible disqualification.
Processes & Procedures Regarding Executive & Director Compensation |
The Committee’s Authority
The charter of the Compensation Committee provides that the Committee has the authority to review and approve corporate goals and objectives relevant to the compensation of the CEO, to evaluate the performance of the CEO in light of those goals and objectives, to set the CEO’s compensation level based on this evaluation, and to fix the compensation, including bonus and other compensation and any severance or similar termination payments, of executive officers and members of the CEO’s executive management committee. The Committee also has the authority, pursuant to its charter, to make recommendations to the Board concerning the adoption or amendment of employee benefit plans, management compensation plans, incentive compensation plans and equity-based plans, including plans applicable to executive officers, and to make recommendations to the Board concerning director compensation. The charter also
provides that the Committee will oversee the company’s compliance with all applicable laws, regulations and listing standards relating to (1) appropriate management of the risks associated with incentive compensation programs or arrangements, (2) the compensation of the company’s executive officers and (3) any reporting associated with either of the above or with the compensation of any other employeesassociates or directors. The Committee may not delegate any of the substantive authority described
in this paragraph related to executive and director compensation to any other persons. In 2019,2021, the Committee met foursix times for the principal purpose of executing its responsibilities under the Committee’s charter; all four of the meetings included an executive session during which management was not present.
Director Compensation
The Committee periodically conducts a review of our director compensation program. The last comprehensive review took place in 2019. (Following the July 2020 merger of equals, our Board made changes to director compensation.) During each comprehensive review, the design and amount of director compensation is considered by management, and any changes are recommended to the Committee, either as a short list of alternatives or as single-item recommendations. In general, management uses a consultant in formulating many of its recommendations, both for advice in designing director compensation and as a source of peer-company data. (Additional information on the use of consultants in compensation matters is provided below.) Management also prepares various presentations, analyses, and other tools for the Committee to use in considering director compensation decisions. As a result of the most recent review process, several changes were made and took effect in April 2019. A complete description of our current director compensation program can be found under the heading “Director Compensation”Director Compensation beginning on page 8730 of this proxy statement.
Executive Compensation
The Committee determines the CEO’s salary and bonus in executive session independent of management, generally on an annual basis. That determination is based on a review of the CEO’s personal plan results for the prior year, along with peer CEO salary data provided by management’s compensation consultant as well as input from the Committee’s independent compensation consultant. The CEO participates in establishing his personal plan, but otherwise is not involved in the determination of his own salary.
Our CEO recommends to the Committee salary levels for the executive officers other than himself as well as for members of the CEO’s executive management committee. Other compensation matters (bonus, equity awards, etc.) involving these officers are reviewed by management,
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including the CEO, which then makes recommendations to the Committee, either as a short list of alternatives or as single-item recommendations. Management uses a consultant
consultants in formulating certain of its recommendations, both for advice and as a source of peer-company data. Management also prepares various presentations, analyses, forecasts, and other tools for the Committee to use in considering compensation decisions during the year. The Committee’s independent consultant reviews all major proposals and makes recommendations to the Committee.
Benefit Programs and Plans
Management monitors and considers benefit programs used by other companies, or needed within our company, to attract and retain key employees.associates. Recommendations are presented by management to the Committee for review and discussion. The CEO ultimately oversees these management processes. New benefit plans, or significant amendments to existing plans, typically are considered by the full Board based on recommendations from the Committee. Enrollment and other administrative actions associated with the benefit plans are handled mainly through third party vendors in accordance with the terms in the Board-approved plans. If executive-level exceptions are required for administration of the plans, such as approval of an early retirement, management generally reviews the facts of the situation and provides a recommendation to the Committee for approval.
Use of Consultants
Management uses a national compensation consulting firmfirms to provide advice with respect to executive and director compensation matters. Management also uses a number of other specialist firms to provide data relevant to specific needs such as funding for non-qualifiednonqualified deferred compensation and any special compensation arrangements that are unique to specific business units such as the capital markets industry.units. The consultants provide competitive data/trends, keep management informed of best practices and work with management to develop programs that permit the company to attract and retain the talent needed.
In 2019, management continued its engagement of McLagan as its primary advisor for executive and director compensation matters. Among other things, management directed McLagan to provide objective advice to management, the Committee and the Board on executive and director compensation, to provide expertise in executive and director compensation design, market practices in our industry and data to support recommendations, and to ensure timely reports to management and the Committee on all critical
accounting, tax, securities law and market developments and trends relating to executive and director compensation. In addition, management engages nationally-recognized law firms as appropriate to provide advice on compliance with new laws, administration of stock plans, and compensation-related agreements and arrangements. Management also engages other advisers from time to time to provide expertise in executive and director compensation matters.
In 2019,2021, the Compensation Committee continued its engagement of Frederic W. Cook & Co., Inc.Meridian Compensation Partners, LLC (“FW Cook”Meridian”) to provide it with independent analysis and advice on executive compensation-related matters. Among other things, FW CookMeridian assists the Committee in its reviews of compensation program actions recommended by management, reviewing the chosen peer group and survey data for competitive comparisons and advising the Committee on best practices and ideas for board governance of executive compensation. The Committee
specifically directed FW CookMeridian to undertake no work on behalf of management, and the firm has no other relationships with the company or management.
The NYSE listing standards require that all compensation consultants, legal counsel or other advisers to the Committee (which we collectively refer to as “advisers”) undergo an assessment of independence from management. The Committee must consider all factors relevant to each adviser’s independence from management, including the following:
• | the provision of other services to the company by the person that employs the adviser; | |
• | the amount of fees received from the company by the person that employs the adviser, as a percentage of the total revenue of the person that employs the adviser; | |
• | the policies and procedures of the person that employs the adviser that are designed to prevent conflicts of interest; | |
• | any business or personal relationship of the adviser with a member of the Committee; | |
• | any stock of the company owned by the adviser; and | |
• | any business or personal relationship of the adviser or the person employing the adviser with an executive officer of the company. |
The Committee has assessed the independence of FW CookMeridian and all other advisers to the Committee as required by the NYSE listing standards, considering the factors described above, and has determined that FW CookMeridian (and the individual adviseradvisers that FW CookMeridian employs with respect to the engagement by the company) is independent of
management. The Committee has also considered the factors listed above for determining whether the work performed by FW CookMeridian has raised any conflict of interest and has concluded that no such conflict of interest exists.
Management and the Committee seek to balance several competing corporate goals: to motivate employeesassociates to achieve key goals through appropriate risk-taking; to avoid incenting inappropriate risk-taking and to reinforce risk management practices; to promote retention in the face of efforts by competitors to hire away our talent; and to comply with regulatory standards concerning compensation and risk management. At least once each year the Committee meets with management to review and assess risks associated with incentive and other compensation plans.
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As part of the 20192021 review, management conducted a risk and culture assessment of the top three tiers of management. This “tone from the top” assessment evaluated leadership performance and behaviors against risk management expectations. The results of this assessment, which management judged to be satisfactory, were reported to the Committee early in 2020.2022.
In 20192021 senior management measured achievement using risk-adjusted return on capital and economic profit. These performance measures adjust profit for risk and measure profit net of the cost of capital employed. This approach has been applied to individual business lines and products, among other things, and it discourages business activities which entail risk or capital usage disproportionate to expected profit and encourages activities whose profit is at least commensurate with risk and capital usage. Our focus on these metrics is intended to drive capital-efficient, risk-appropriate, and therefore superior performance over the long term. This focus is directly supportive of our risk management goals and practices.
Other risk management features employed in various performance and retention incentives include a qualitative risk assessment used in annual personal plan performance, which can directly impact annual bonus and salary decisions; use of a mandatory deferral feature for many incentives; forfeiture of equity awards for termination for cause and certain misconduct; clawback of previously-paid awards for certain types of misconduct;
and corrective clawback for incentive awards if payment is based on erroneous data.
Compensation Committee Report
Notwithstanding anything to the contrary set forth in any of our previous filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, that might incorporate future filings by reference, including this proxy statement, in whole or in part, the following Compensation Committee Report shall not be incorporated by reference into any such filings.
The Compensation Committee of our Board of Directors has reviewed and discussed with management, among other things, the section of this proxy statement captioned “Compensation
Compensation Discussion & Analysis”Analysis beginning on page 48.50. Based on that review and discussion, the Compensation Committee recommended to our Board that the “CompensationCompensation Discussion & Analysis”Analysis section be included in this proxy statement.
Compensation Committee
Vicki R. Palmer,Rick E. Maples, Chair
Kenneth A. Burdick
John C. ComptonN. Casbon
Mark A. EmkesVicki R. Palmer
Colin V. Reed
Rajesh SubramaniamE. Stewart Shea III
The Executive & Risk Committee
The Executive & Risk Committee was established by our Board of Directors and operates under a written charter. The charter was last amended and restated in 20192021 to make minor clarifying changes and to reflectchanges. During 2021, the change in the Bank’s name and conversion from a national bank to a Tennessee state chartered bank. The Committee met seveneight times during 2019.and took action by written consent once.
The Board has delegated primary responsibility for enterprise risk management oversight to the Executive & Risk Committee. In connection with its credit risk responsibilities, the Committee oversees First Horizon’s independent Credit Assurance Services department. Additional information on the Committee’s risk-related duties is available under Executive & Risk Committee within the heading “BoardBoard Structure & Role in Risk Oversight—Executive & Risk Committee” beginningOversight section, which begins on
page 1817 above. As an executive committee, the Committee is authorized and empowered to exercise during the intervals between meetings of the Board all authority of the Board, except as prohibited by applicable law and provided that it may not approve (1) the acquisition of control of any bank; (2) other acquisitions, divestitures or the entry into definitive
agreements (not in the ordinary course of business) where the purchase or sale price or transaction amount exceeds $150 million, or as to which the total assets being acquired are more than $2 billion, or (3) FDIC-assisted transactions where the total assets being offered by the FDIC exceed $2 billion. Also, no authority has been delegated to the Committee in its charter to approve any acquisition involving the issuance of our stock.
Federal Reserve regulations require banking organizations with assets greater than $50 billion to establish an independent risk committee of the board of directors that has, as its sole and exclusive function, responsibility for the risk management policies of the organization’s global operations and oversight of the organization’s risk management framework. This requirement (among others) will apply to the company beginning in the fourth quarter of 2022. The company expects to establish a separate risk committee in advance of the date that this requirement becomes applicable to the company.
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The Information Technology Committee
The Information Technology Committee was established in 2015 and operates under a written charter that was last amended in 20192021 to reflectprovide, in keeping with the change inCommittee's actual practice, that the Bank’s name and conversion from a national bank to a Tennessee state chartered bank.Committee generally meets four times yearly (and must meet at least twice yearly). The purposes of the Committee are (1) to assist management in its understanding of information technology trends, its development and maintenance of
an information technology
strategy, and its management of major information technology investments, and (2) to assist the Board in its oversight of information technology matters.
The Committee met threefour times in 20192021 for the principal purpose of executing its responsibilities under its charter.
The Nominating & Corporate Governance Committee
In General
The Nominating & Corporate Governance Committee operates under a written charter that
was last amended in 20192021 to reflect(1) add as a duty of the changeCommittee oversight of the company’s management of and commitment to ESG matters and ESG reporting and (2) to provide, in keeping with the Bank’s name and conversion from a national bank to a Tennessee state chartered bank.Committee's actual practice, that the Committee generally meets four times yearly (and must meet at least twice yearly). The purposes of the Nominating & Corporate Governance Committee are (1) to identify and
recommend to the Board individuals for nomination as members of the Board and its committees, (2) to develop and recommend to the Board a set of corporate governance principles applicable to the company, and (3) to oversee the evaluation of the Board and management.management, and (4) to perform such other duties and responsibilities as set forth herein. The Committee met threefour times in 20192021 for the principal purpose of executing its responsibilities under its charter.charter, a copy of which is attached as Appendix A to this proxy statement.
In the past, the Committee has from time to time retained a director search firm to assist it in assessing Board competencies and identifying potential director candidates.
Director Nominations and Qualifications; Consideration of Diversity
With respect to the nominating process, the Nominating & Corporate Governance Committee discusses and evaluates possible candidates in detail and suggests individuals whose potential membership on the Board could be explored in greater depth. The Committee, with input from the Chairman of the Board, and Chief Executive Officer and the Lead Director, recommends new nominees for the position of independent director based on the following criteria:
• | Personal qualities and characteristics, experience, accomplishments and reputation in the business community. | |
• | Current knowledge and contacts in the communities in which the company does business and in the |
company’s industry or other industries relevant to the company’s business. | ||
• | Diversity of viewpoints, background, experience and other demographics. | |
• | Ability and willingness to commit adequate time to Board and committee matters. | |
• | The fit of the individual’s skills and personality with those of other directors and potential directors in building a Board that is effective and responsive to its duties and responsibilities. |
The Nominating & Corporate Governance Committee does not set specific, minimum qualifications that nominees must meet in order for the Committee to recommend them to the Board of Directors, but rather believes that each nominee should be evaluated based on his or her individual merits, taking into account the needs of the company and the composition of the Board of Directors.
As described above and set forth in our Corporate Governance Guidelines, diversity, broadly defined to mean diversity of viewpoints, background, experience and other demographics, is one
criterion on which the Committee bases its recommendations of new nominees for director positions. The inclusion of diversity in the listed criteria for director nominees reflects the Board’s belief that diversity is important to the effective functioning of the Board. This belief is expressed in the fact that when the Committee has engaged a director search firm in the past, that firm was instructed to consider diversity as a factor in seeking director candidates, and the Committee defined the success of the search process to include the presentation of a diverse slate of candidates. More generally, our Human Rights Statement and Board-adopted Code of Business Conduct and Ethics reflect First Horizon’s firm commitment to non-discrimination and equal opportunity for employees, customersassociates, clients and suppliers and to treatment of everyone without discrimination or harassment based on race, color, religion, sex, sexual orientation, gender identity, national origin, age, veteran status or disability. However, neither the Committee nor the Board has a
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formal policy with regard to the consideration of diversity in identifying director nominees.
Once a candidate is identified whom the Committee wants seriously to consider and move toward nomination, the Chairman, and CEO and/or other directors as the Committee determines will enter into a discussion with that candidate.
Shareholder Recommendations and Nominations
Committee Consideration of Shareholder Recommendations of Nominees
The Nominating & Corporate Governance Committee will consider individuals recommended by shareholders as director nominees and will give any such individual appropriate consideration in the same manner as individuals recommended by the Committee, a director or executive officer, or a director search firm.
Shareholders who wish to submit individuals for consideration by the Nominating & Corporate Governance Committee as director nominees may do so by submitting, in compliance with the procedures and along with the other information required by our Bylaws (as described below), a notice in writing that gives such individuals’ names to the Corporate Secretary. A shareholder’s notice must state:
• | The name, age, business address and residence address of the person whom the shareholder recommends; the principal occupation or employment of such person; the class and |
number of shares of First Horizon that are beneficially owned (as defined in the Bylaws) by such person on the date of the notice; | ||
• | any other information relating to such person that is required to be disclosed in solicitations of proxies for election of directors or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (including, without limitation, such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected); |
• | The name and address, as they appear on our books, of the shareholder giving the notice and any other shareholders known by such shareholder to be supporting the proposed nominee; |
• | The class and number of shares of our stock which are beneficially owned (as defined in the Bylaws) by the |
shareholder giving the notice on the date of the notice and by any other shareholders known by the shareholder giving the notice to be supporting the proposed nominee on the date of such shareholder’s notice; and
Director Nominations for Inclusion in our Proxy Statement (Proxy Access)
First Horizon has adopted a proxy access bylaw that commencing with the annual meeting of shareholders to be held in 2020, allows a
shareholder or group of up to 20 shareholders that has held at least 3% of our common stock for at least three years to nominate up to the greater of two directors or 20% of the Board and have those nominees appear in our proxy statement, subject to notice, eligibility and other specific requirements in our Bylaws. Any shareholder considering a proxy access nomination should carefully review our Bylaws, which are available on our website at www.firsthorizon.comhttps://ir.firsthorizon.com (click on “Investor Relations,” then “Corporate Governance,” and then “Governance Documents”). The deadlines for a proxy access nomination are availablediscussed on page 4781 of this proxy statement.
Other Director Nominations to be Brought before the Annual Meeting
Any shareholder who is entitled to vote in the election of directors at any meeting of shareholders and who complies with the procedures described in our Bylaws may nominate an individual for election to the Board of Directors. A shareholder who wishes to nominate an individual in accordance with those procedures must submit a notice in writing to the Corporate Secretary. The notice must provide detailed information about the nominee (including but not limited to information relating to the nominee that is required to be disclosed in solicitations of proxies for election of directors or is otherwise required pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended) and about the shareholder giving the notice, all as described in detail in the Bylaws. Our Bylaws are available on our website at www.firsthorizon.comhttps://ir.firsthorizon.com (click on “Investor Relations,” then “Corporate Governance,” and then “Governance Documents”). The deadlines for submitting a notice to the Corporate Secretary are available on page 4781 of this proxy statement.
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Compensation Committee Interlocks & Insider Participation
Messrs. Burdick, Compton, Emkes,Casbon, Maples, Reed, and SubramaniamShea and Ms. Palmer, all non-employee directors, served as members of the Board of Director’s Compensation Committee during 2019. Refer to the table in “Corporate Governance and
Board Matters—Composition of Board Committees” above for additional committee information.2021. No interlocking relationships existed with respect to any of the members of the Committee.
Board & CommitteeDirector Meeting Attendance
During 2019,2021, the Board of Directors held sevensix meetings (four of which took place over a period of two days) and took action by written consent twice.
The Audit Committee held seventwelve meetings, the Compensation Committee held six meetings, the Executive & Risk Committee held eight meetings and took action by written consent once, the Compensation Committee held four meetings, the
Executive & Risk Committee held seven meetings, the Information Technology Committee held threefour meetings, and the Nominating & Corporate Governance Committee held three meetings. The Trust Committee of the Bank’s Board held twofour meetings. The average attendance at Board and committee meetings exceeded 96 percent. No incumbent director attended fewer than 75 percent of the meetings of the Board and the committees
of the Board on which he or she served during 2019.2021, except for Mr. Subramaniam, who attended 64 percent of the Board and committee meetings on which
he served during 2021. Due to conflicts with previously scheduled professional commitments, he was unable to attend the two special Board meetings held during 2021, both of which were called on notice of less than 48 hours. If not for those two special Board meetings, Mr. Subramaniam, who attended all regular Board meetings, would not have attended fewer than 75 percent of the meetings of the Board and committees on which he served during 2021. As set forth in our Corporate Governance Guidelines, we expect our directors to make every effort to attend every meeting of our shareholders. For the last 10 years, all of our directors have been in attendance at every annual meeting of shareholders, except for one director in 2012 and one director in 2014.
Executive Sessions of the Board
To ensure free and open discussion and communication among the non-management directors of the Board and its committees, our Corporate Governance Guidelines provide that the non-management directors will meet in regularly scheduled executive sessions and as often as the Board shall request, with no members of management present, and that if any non-management directors are not independent under the NYSE listing standards, the independent, non-
managementnon-management directors will meet in
executive session at least once a year. During 2019,2021, our non-management directors met four times in executive session and our independent, non-management directors met four times in executive session. The Lead Director presides (or, if he cannot be in attendance, designates another independent director to preside) at the executive sessions of the Board.
Communication with the Board of Directors
A shareholder who desires to communicate with the Board of Directors (other than to nominate a director pursuant to our Bylaws or recommend the nomination of a director to the Nominating & Corporate Governance Committee) should submit his or her communication in writing to the Lead Director, c/o Corporate Secretary, First Horizon National Corporation, 165 Madison Avenue, Memphis,
Memphis, Tennessee 38103, and identify himself or herself as a shareholder. The Corporate Secretary will forward all such communications to the Lead Director for a determination as to how to proceed. Other interested parties desiring to communicate with the Board of Directors should submit their communications in the same manner.
Approval, Monitoring & Ratification Procedures for Related Party Transactions
The Audit Committee of the Board has adopted procedures for the approval, monitoring, and ratification of transactions between First Horizon, on the one hand, and our directors, executive officers or 5% shareholders, their immediate family members, their affiliated entities and their immediate family members’ affiliated entities, on the other hand. A copy of our procedures is available on our website at www.firsthorizon.com (click on “Investor Relations,” then “Corporate Governance,” and then “Governance Documents”). Our procedures require management to submit any proposed “related party transaction” (defined as a transaction that is required to be disclosed in our proxy statement pursuant to the requirements of Item 404(a) of Regulation S-K promulgated by the
SEC) or amendment to an existing related party transaction to the Audit Committee for approval or ratification. In some cases, the matter may be determined by the chair of the Audit Committee. In considering whether to approve a given transaction, the Audit Committee (or chair) must consider:
DIRECTOR COMPENSATION
Seventeen directors serve on our Board. All 17 served for all of 2021, and all are nominated for election at the 2022 annual meeting. See The Nominees for background and other information concerning each director.
Mr. Jordan (our Chief Executive Officer) and Mr. Byrd (our Executive Chairman) serve on our Board but, because they were employees in 2021, they were 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 the compensation of Messrs. Jordan and Byrd, see Compensation Discussion & Analysis (CD&A), Recent
Compensation, and Post-Employment Compensation beginning on pages 50, 64, and 72, respectively.
Our fifteen non-employee directors are:
Non-Employee Directors
Harry V. Barton, Jr. | ||||||
E. Stewart Shea, III | ||||||
J. Michael Kemp, Sr. | Cecelia D. Stewart |
Rick E. Maples | Rajesh Subramaniam | |||||
John C. Compton | Vicki R. Palmer | Rosa Sugrañes | ||||
Wendy P. Davidson | Colin V. Reed | R. Eugene Taylor |
Transactions with Related PersonsDirector Programs
First Horizon,Non-employee director compensation falls into two categories: base retainer and additional retainers. Base retainer is paid in two parts: a cash retainer, paid in quarterly installments; and an RSU retainer, granted in April following the Bankannual meeting of shareholders. Additional cash retainers are paid for particular assignments, such as lead director or Audit Committee chair. The pay year for our directors starts April 1 and ends March 31, roughly synchronous with our annual meeting cycle.
Director pay levels are considered for adjustment every three years. The last adjustment was in July 2020 following the subsidiariesexpansion of each, as applicable, have entered into lending transactions and/or other banking or financial services transactionsthe Board to 17 persons after we closed our merger of equals with IBKC. Director pay levels for the 2021-2022 cycle are shown below:
Annual Director Compensation Rates | |||
Item | Ann. Amt. | ||
Base Retainer – cash portion: | $ | 80,000 | |
Base Retainer – RSU portion: | $ | 120,000 | |
Additional Retainers (all cash): | |||
Lead director | $ | 50,000 | |
Chair – Audit | $ | 32,000 | |
Chair – Executive & Risk | $ | 50,000 | |
Chair – other committee | $ | 20,000 | |
Non-Chair Service – Audit | $ | 10,000 | |
Non-Chair Service – Executive & Risk | $ | 10,000 |
Each director may elect to be paid retainer amounts in the ordinary courseform of additional RSUs instead of cash, granted at the same time as base RSUs.
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 with our executive officers, directors, nominees, their immediate family membersevents up to $5,000 in value, and, affiliated entities,subject to certain restrictions and limitations, the personsrepurchase of which we are aware that beneficially own more than five percentshares of our common stock and we expectunder a Board-approved repurchase program with no fees or commissions. Directors may participate in a charitable gift matching program up to $25,000 per year.
Several directors have such transactions in the future. Such transactions were made in the ordinary course of business, were made on substantially the same terms, including
nonqualified deferred compensation accounts that earn interest rates and collateral, as those prevailing at the time for comparable transactions with persons not relatedor returns indexed to the company,performance of certain mutual funds selected by the director.
Prior to 2006, directors could receive stock options in lieu of fees under certain deferral plans. Some of those options remain outstanding.
From 1985 to 1995, directors could defer fees and didreceive an accrual of interest at rates ranging from 17-22 percent annually. Although new deferrals under that old plan have not involve more thanbeen permitted since 1995, interest continues to accrue on outstanding accounts. The rate is re-set annually. For many years, the normal risk of collectability or present other unfavorable features. We note that as a perquisite we offer all employees discounts on certain financial services (for example, no-fee domestic wire transfers). These discounts are available to our executive officers except in relation to credit extendedrate has been set at the time an executive officer is serving as such.seven
2022 PROXY STATEMENT |
DIRECTOR COMPENSATION
percentage points above a benchmark rate. For the 2021 plan year, the interest rate was 8.20% for Ms. Palmer, who is the only active participant. For 2022, the rate increased to 9.07%, corresponding to an increase in the benchmark
rate. The plan continues to promote retention since the above-market rates of return can be largely forfeited in a case of early departure from Board service.
The following table shows compensation earned last year by non-employee directors, whether or not deferred.
Director Compensation 2021 | ||||||||||||||
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | |||||||
Name | Fees Earned or Paid in Cash ($) | Stock Awards ($) | Option Awards ($) | Non-Equity Incentive Plan Compensa- tion ($) | Change in Pension Value & Nonqualified Deferred Compensation Earnings ($) | All Other Compensation ($) | Total ($) | |||||||
Mr. Barton | 90,000 | 122,000 | — | — | — | 25,000 | 237,000 | |||||||
Mr. Burdick | 22,500 | 212,000 | — | — | — | 25,000 | 259,500 | |||||||
Mr. Casbon | 90,000 | 122,000 | — | — | — | 500 | 212,000 | |||||||
Mr. Compton | 27,500 | 232,000 | — | — | — | — | 259,500 | |||||||
Ms. Davidson | 22,500 | 212,000 | — | — | — | — | 234,500 | |||||||
Mr. Fenstermaker | 130,000 | 122,000 | — | — | — | — | 252,000 | |||||||
Mr. Kemp | 90,000 | 122,000 | — | — | — | — | 212,000 | |||||||
Mr. Maples | 27,500 | 232,000 | — | — | — | — | 259,500 | |||||||
Ms. Palmer | 122,000 | 122,000 | — | — | 14,982 | 10,000 | 268,982 | |||||||
Mr. Reed | 140,000 | 157,000 | — | — | — | 25,000 | 322,000 | |||||||
Mr. Shea | 80,000 | 122,000 | — | — | — | 25,000 | 227,000 | |||||||
Ms. Stewart | 110,000 | 135,750 | — | — | — | — | 245,750 | |||||||
Mr. Subramaniam | 50,000 | 162,000 | — | — | — | 25,000 | 237,000 | |||||||
Ms. Sugrañes | 90,000 | 122,000 | — | — | — | — | 212,000 | |||||||
Mr. Taylor | 90,000 | 122,000 | — | — | — | — | 212,000 |
Explanations of certain columns follow:
Col (c) Stock Awards. Includes RSUs granted to non-employee directors during calendar 2021. Amounts shown are the grant date fair values of awards using the accounting method applicable to our financial statements. For additional information about valuation, see the note for columns (e)-(f) to the Summary Compensation Table; discussion of that Table begins on page 64. Additional information about outstanding awards appears under the caption Outstanding Director Equity Awards at Year-End below.
Col (e) Incentive Plan Compensation. Non-employee directors do not receive cash incentives.
Col (f) Deferred Compensation. Amount 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.
Awards Outstanding at Year-End
All non-employee directors receive annual RSU awards, and one holds option awards from an old deferral program, as presented in the following table. All options are vested. All other awards shown were unvested at year-end. Awards held by Mr. Jordan and Mr. Byrd are
omitted from the table; see Awards Outstanding at Year-End beginning on page 69 for additional information for them.
2022 PROXY STATEMENT |
DIRECTOR COMPENSATION
Outstanding Equity Awards at Year-End 2021 Held by Directors | ||||||||||
(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 | — | — | — | 6,576 | 107,386 | |||||
Mr. Burdick | — | — | — | 11,428 | 186,619 | |||||
Mr. Casbon | — | — | — | 6,576 | 107,386 | |||||
Mr. Compton | — | — | — | 12,506 | 204,223 | |||||
Ms. Davidson | — | — | — | 11,428 | 186,619 | |||||
Mr. Fenstermaker | — | — | — | 6,576 | 107,386 | |||||
Mr. Kemp | — | — | — | 6,576 | 107,386 | |||||
Mr. Maples | — | — | — | 12,506 | 204,223 | |||||
3,093 | 23.91 | 1/2/2022 | ||||||||
2,764 | 25.34 | 7/1/2022 | ||||||||
Ms. Palmer | 2,709 | 24.36 | 1/2/2023 | |||||||
1,121 | 18.28 | 7/1/2023 | ||||||||
2,028 | 18.24 | 1/2/2024 | 6,576 | 107,386 | ||||||
Mr. Reed | — | — | — | 8,463 | 138,201 | |||||
Mr. Shea | — | — | — | 6,576 | 107,386 | |||||
Ms. Stewart | — | — | — | 7,318 | 119,503 | |||||
Mr. Subramaniam | — | — | — | 8,733 | 142,610 | |||||
Ms. Sugrañes | — | — | — | 6,576 | 107,386 | |||||
Mr. Taylor | — | — | — | 6,576 | 107,386 |
Explanations of certain columns follow:
Cols (b)/(c) Stock Options. Stock options include adjustments for stock dividends distributed from 2008-2011, the cumulative compound rate of which was 20.0380%.
Col (e) RSUs & RS. Awards held by non-employee directors are RSUs that will vest on April 22, 2022.
Col (f) RSU & RS Values. Values are based on the year-end market price of our common stock ($16.33/share) with no discount for the risk that the award might be forfeited or for the time remaining before vesting. Values shown here are not based on financial accounting assumptions or methods.
Director Awards Exercised & Vested
The following table provides information about stock options exercised during 2021 by our directors as well as RSUs and RSAs that vested during 2021. Amounts in columns (c) and (e) represent the market values of shares on the exercise or vesting dates. Information for Mr.
Jordan and Mr. Byrd is omitted from this table; see Awards Exercised & Vested beginning on page 71 for their information.
32 | 2022 PROXY STATEMENT |
DIRECTOR COMPENSATION
Director Options Exercised & Stock Awards Vested During 2021 | ||||||||
(a) | (b) | (c) | (d) | (e) | ||||
Option Awards | Stock Awards | |||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized upon Exercise ($) | Number of Shares Acquired or Units Paid on Vesting (#) | Value Realized upon Vesting ($) | ||||
Mr. Barton | — | — | 14,439 | 259,469 | ||||
Mr. Burdick | — | — | 11,680 | 201,714 | ||||
Mr. Casbon | — | — | 14,439 | 259,469 | ||||
Mr. Compton | — | — | 11,680 | 201,714 | ||||
Ms. Davidson | — | — | 11,680 | 201,714 | ||||
Mr. Fenstermaker | — | — | 14,439 | 259,469 | ||||
Mr. Kemp | — | — | 14,439 | 259,469 | ||||
Mr. Maples | — | — | 14,439 | 259,469 | ||||
Ms. Palmer | — | — | 11,680 | 201,714 | ||||
Mr. Reed | — | — | 11,680 | 201,714 | ||||
Mr. Shea | — | — | 14,439 | 259,469 | ||||
Ms. Stewart | — | — | 11,680 | 201,714 | ||||
Mr. Subramaniam | — | — | 11,680 | 201,714 | ||||
Ms. Sugrañes | — | — | 14,439 | 259,469 | ||||
Mr. Taylor | — | — | 11,680 | 201,714 |
33 | 2022 PROXY STATEMENT |
STOCK OWNERSHIP INFORMATION
As of December 31, 2019,2021, there were 8,5439,426 shareholders of record of our common stock. To our knowledge, there were fourtwo persons who owned beneficially, as that term is defined by Rule 13d-3 of the Securities Exchange Act of 1934, more than five percent (5%) of our common stock as of December 31, 2019.2021. Certain information concerning beneficial ownership of our common stock by those persons as of December 31, 20192021 is set forth in the following table:
Security Ownership of Certain Beneficial Owners
Security Ownership by Certain Beneficial Owners | |||||
Name and Address* of Beneficial Owner | Amount & Nature of Beneficial Ownership | Percent of Class | |||
BlackRock, Inc | 61,543,301 | 11.40% | |||
The Vanguard Group, Inc | 57,729,147 | 10.68% |
Name and Address of Beneficial Owner* | Amount and Nature of Beneficial Ownership | Percent of Class | |||
BlackRock, Inc | 36,406,220 | 11.7% | |||
FMR LLC | 18,152,399 | 5.833% | |||
Franklin Mutual Advisers, LLC | 16,274,927 | 5.2% | |||
The Vanguard Group, Inc | 31,187,307 | 10.02% |
* | Addresses appear in the text below. |
BlackRock. The information in the table above with respect to BlackRock is based on information set forth in Amendment No. 10 to Schedule 13G/A,13G, filed with the Securities and Exchange Commission on February 4, 2020January 25, 2022 by BlackRock, Inc. on behalf of its subsidiaries BlackRock Life Limited, BlackRock International Limited, Aperio Group, LLC, BlackRock Advisors, LLC, BlackRock (Netherlands) B.V., BlackRock Fund Advisors, BlackRock Institutional Trust Company, National Association, BlackRock Asset Management Ireland Limited, BlackRock Financial Management, Inc., BlackRock Japan Co., Ltd., BlackRock Asset Management Schweiz AG, BlackRock Investment Management, LLC, BlackRock Investment Management (UK) Limited, BlackRock Advisors, LLC, BlackRock Asset Management Canada Limited, BlackRock Asset Management Ireland Limited,Deutschland AG, BlackRock Asset Management Schweiz AG, Blackrock Financial Management, Inc.(Luxembourg) S.A., BlackRock Fund Advisors, BlackRock Institutional Trust Company, N.A., BlackRock International Limited, BlackRock Investment Management (Australia) Limited, BlackRock Investment ManagementAdvisors (UK) Ltd, BlackRock Investment Management, LLC, BlackRock Japan Co Ltd and BlackRock Life Limited, BlackRock (Luxembourg) S.A., BlackRock (Singapore) Limited, BlackRock Fund Managers Ltd, 55 East 52nd Street, New York, NY 10055. According to this amendment to Schedule 13G, BlackRock has sole voting power with respect to 33,552,37259,133,269 shares of our common stock and sole dispositive power with respect to 36,406,22061,543,301 shares of our common stock.
FMR.Vanguard. The information in the table above with respect to FMR is based on information set forth in Schedule 13G, filed with the Securities and Exchange Commission on February 7, 2020 by FMR LLC, 245 Summer Street, Boston, MA 02210, on behalf of its subsidiaries and affiliates FIAM LLC, Fidelity Institutional Asset Management Trust Company, FMR Co., Inc., and Strategic Advisers LLC. According to this Schedule 13G, FMR has sole voting power with respect to 1,478,233 shares of our common stock and sole dispositive power with respect to 18,152,399 shares of our common stock. Abigail P. Johnson is also listed as a
reporting person in the Schedule 13G. According to the Schedule 13G, Ms. Johnson is a Director, the Chairman and the Chief Executive Officer of FMR LLC. The Schedule 13G provides the following additional disclosure: Members of the Johnson family, including Abigail P. Johnson, are the predominant owners, directly or through trusts, of Series B voting common shares of FMR LLC, representing 49% of the voting power of FMR LLC. The Johnson family group and all other Series B shareholders have entered into a shareholders’ voting agreement under which all Series B voting common shares will be voted in accordance with the majority vote of Series B voting common shares. Accordingly, through their ownership of voting common shares and the execution of the shareholders’ voting agreement, members of the Johnson family may be deemed, under the Investment Company Act of 1940, to form a controlling group with respect to FMR LLC. Neither FMR LLC nor Abigail P. Johnson has the sole power to vote or direct the voting of the shares owned directly by the various investment companies registered under the Investment Company Act (“Fidelity Funds”) advised by Fidelity Management & Research Company (“FMR Co”), a wholly owned subsidiary of FMR LLC, which power resides with the Fidelity Funds’ Boards of Trustees. FMR Co carries out the voting of the shares under written guidelines established by the Fidelity Funds’ Boards of Trustees.
Franklin Mutual Advisers. The information in the table above with respect to Franklin Mutual Advisers is based on information set forth in Schedule 13G, filed with the Securities and Exchange Commission on February 3, 2020 by Franklin Mutual Advisers, LLC, 101 John F. Kennedy Parkway, Short Hills, New Jersey 07078-2789. According to this Schedule
13G, Franklin Mutual Advisers has sole voting power with respect to 15,732,427 shares of our common stock and sole dispositive power with respect to 16,274,927 shares of our common stock.
Vanguard.The information in the table above with respect to The Vanguard Group, Inc. (“Vanguard”) is based on information set forth in Amendment No. 911 to Schedule 13G, filed with the Securities and Exchange Commission on February 12, 202010, 2022 by Vanguard, 100 Vanguard Boulevard, Malvern, Pennsylvania 19355, on behalf of itself and its
subsidiaries Vanguard Fiduciary Trust Company and Vanguard Investments Australia, Ltd.
19355. According to this Schedule 13G, Vanguard has sole voting power with respect to 163,056 shares of our common stock, shared voting power with respect to 46,673290,334 shares of our common stock, shared dispositive power with respect to 166,028758,368 shares of our common stock and sole dispositive
power with respect to 31,021,27956,970,779 shares of our common stock.
Security Ownership of Management
The table below sets forth certain information concerning beneficial ownership of our common stock by each director and nominee, each executive officer named in the Summary Compensation Table, and the directors and executive officers as a group. The information in the table is as of December 31, 20192021 except as otherwise noted in the notes to the table.
Security Ownership by Management | Security Ownership by Management | ||||||||||||||
Name of Beneficial Owner | Amount and Nature of Beneficial Ownership(1) | Percent of Class | Amount & Nature of Beneficial Ownership(1) | Percent of Class | |||||||||||
Harry V. Barton, Jr. | 143,373 | * | |||||||||||||
Michael J. Brown(5) | 656,815 | (3) | * | ||||||||||||
Kenneth A. Burdick | 2,000 | * | 19,935 | * | |||||||||||
Daryl G. Byrd | 2,292,458 | (3)(4) | * | ||||||||||||
John N. Casbon | 94,626 | * | |||||||||||||
John C. Compton | 74,477 | * | 94,152 | * | |||||||||||
Wendy P. Davidson | 150 | * | 16,085 | * | |||||||||||
Mark A. Emkes | 53,194 | * | |||||||||||||
Peter N. Foss | 38,712 | * | |||||||||||||
Corydon J. Gilchrist | 71,331 | * | |||||||||||||
Hope Dmuchowski | — | (3) | * | ||||||||||||
William H. Fenstermaker | 344,827 | (4) | * | ||||||||||||
D. Bryan Jordan | 1,316,682 | (4) | * | 1,247,923 | (3) | * | |||||||||
Michael E. Kisber(2) | 429,703 | (4) | * | ||||||||||||
William C. Losch, III | 434,242 | (4) | * | ||||||||||||
Scott M. Niswonger | 706,712 | * | |||||||||||||
J. Michael Kemp, Sr. | 20,719 | * | |||||||||||||
William C. Losch III(5) | 360,670 | (3) | * | ||||||||||||
Rick E. Maples | 58,265 | * | |||||||||||||
Vicki R. Palmer | 72,114 | (3) | * | 79,938 | (2) | * | |||||||||
David T. Popwell | 508,257 | (4) | * | 440,956 | (3) | ||||||||||
Colin V. Reed | 101,606 | * | 127,866 | * | |||||||||||
Susan L. Springfield | 241,922 | (4) | * | ||||||||||||
Anthony J. Restel | 499,307 | (3) | * | ||||||||||||
E. Stewart Shea, III | 403,473 | (4) | * | ||||||||||||
Cecelia D. Stewart | 14,947 | * | 34,622 | * | |||||||||||
Rajesh Subramaniam | 3,407 | * | 23,082 | * | |||||||||||
Rosa Sugrañes | 26,219 | * | |||||||||||||
R. Eugene Taylor | 1,173,356 | * | 585,036 | * | |||||||||||
Luke Yancy III | 51,903 | (3) | * | ||||||||||||
Directors and Executive Officers as a Group (22 persons) | 6,248,805 | (4) | 2.0 | % | |||||||||||
Directors & Executive Officers as a Group (25 persons)(5) | 8,306,551 | (3) | 1.55% |
* | No current individual director, nominee or executive officer beneficially owns more than one percent (1%) of our outstanding common stock or depositary shares. |
(1) | The respective directors, nominees and officers have sole voting and investment powers with respect to all of such shares except as specified in notes |
2022 PROXY STATEMENT |
STOCK OWNERSHIP INFORMATION
Includes the following shares as to which the named non-employee | |
Includes the following shares of restricted stock with respect to which the named person or group has sole voting power but no investment |
power: Mr. |
(4) | Includes 714,361, 199,573 and 92,133 shares pledged by Messrs. Byrd, Fenstermaker and Shea, respectively, on loans from unaffiliated parties. |
(5) | Mr. Losch stepped down as our CFO effective July 31, 2021, and Mr. Brown retired as our President--Regional Banking effective October 31, 2021. The beneficial ownership of each is shown as of those dates. The director and executive officer group does not include either Mr. Losch or Mr. Brown. |
No current director or executive officer beneficially owns any of the perpetual convertible preferred stock, Series G, issued by First Horizon; any of the depositary shares, each representing a 1/4000th interest in a share of non-cumulative perpetual preferred stock, Series E and F, issued by First Horizon; or any of the depositary shares, each representing a 1/400th interest in a share of non-cumulative perpetual preferred stock, Series B, C and D, respectively, issued by First Horizon, except for Mr. Restel, who owns 3,050 depositary shares representing interests in shares of our Series C non-cumulative perpetual preferred stock.
Delinquent Section 16(a) Reports
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, except as noted below.
Jeff L. Fleming, our Executive Vice President and Chief Accounting Officer, inadvertently failed timely to file one Form 4 in 2020 to report mandatory withholding of shares to pay withholding taxes associated with the vesting of two restricted stock awards. Such withholding is treated as a disposition event under the applicable Section 16(a) filing requirements. The required form was filed in 2021. The failure to file in a timely manner did not give rise to liability for short-swing profits.
Policy on Hedging
First Horizon has a policy that prohibits all “pre-clearance persons” from engaging in any activity that hedges an economic interest in First Horizon or Bank stock, unless approved by the CEO or General Counsel, or a designee, in accordance with the policy. To date, no such approval has been granted. For this purpose, a hedge includes any transaction, position, or financial instrument which offsets or ameliorates any decrease in the market value of First Horizon or Bank stock beneficially owned by the pre-clearance person, including any shares owned directly or indirectly as well as any unvested, deferred, or otherwise restricted stock-based awards. “Pre-clearance persons” consist of all executive officers, all First Horizon and Bank directors, all members of the CEO’s executive
management committee, and certain additional associates.
When a person first becomes a pre-clearance person, he or she is required to inform the General Counsel of all derivative and short holdings, including any position that would constitute a hedge, which would violate the policy or the procedures if undertaken while the person has pre-clearance person status. Each pre-clearance person further is required to pre-clear any change in his or her derivative and short holdings from time to time other than a change caused by expiration due solely to the passage of time.
2022 PROXY STATEMENT |
VOTE ITEM 1—ELECTION OF DIRECTORS
Vote Item 1—Election of Directors
Overview; Impact of 2020 Merger Agreement
TheIn accordance with the merger agreement entered into in connection with the merger of equals of IBKC and First Horizon, First Horizon’s Bylaws provide that, for a period of three years after the closing of the merger in 2020, the Board will be composed of 17 members, initially consisting of (i) the chief executive officer of First Horizon as of immediately prior to the closing of the merger, (ii) the chief executive officer of IBKC as of immediately prior to the closing of the merger, (iii) eight other continuing First Horizon directors (designated by First Horizon), and (iv) seven other continuing IBKC directors (designated by IBKC). Pursuant to these provisions of the Bylaws, the Board of Directors is proposing for election twelve of our 17 current directors:directors, Messrs. Barton, Burdick, Byrd, Casbon, Compton, Emkes, Gilchrist,Fenstermaker, Jordan, Kemp, Maples, Reed, Shea, Subramaniam, Taylor and YancyTaylor and Mses. Davidson, Palmer, Stewart, and Stewart,Sugrañes, at the 20202022 annual meeting, to hold office until the 20212023 annual meeting of shareholders and until their successors are duly elected
and qualified. Note, however, that if our proposed merger of equalsunder his agreement with IBKCthe company Daryl G. Byrd is consummated, the merger agreement provides that the combined Board of Directors after the merger will have seventeen members, consisting of the individuals who are serving, immediately priorrequired to the closing of the merger,step down as the CEOExecutive Chairman and a director of First Horizon and the CEO of IBKCBank as well as eight additional members of the First Horizon Board (designated by First Horizon) and seven additional memberssecond anniversary of the IBKC Board (designated by IBKC). Therefore, we expect Messrs. Emkes, Gilchrist, and Yancy not to complete their full terms but to step down upon the closing of the proposed merger.
Two of our current directors, Messrs. Foss and Niswonger, Therefore, Mr. Byrd will not stand for reelection atcomplete his full term as a director but will step down effective July 1, 2022. (Thereafter, Mr. Byrd will serve as a senior advisor to First Horizon and the annual meeting but rather will retire at that time.Bank until the fifth anniversary of the closing date.)
If any nominee proposed by the Board of Directors is unable to accept election which(which the Board of Directors has no reason to anticipate,anticipate) the persons named in the enclosed form of proxy will vote for the election of such other persons as directed by the Board pursuant to the Bylaws, unless the Board decides to reduce the number of directors pursuant to the Bylaws.
Director Resignation and Retirement Policies
Director Resignation Policy
Our Board has adopted a director resignation policy that requires a director who does not, in an uncontested election, receive the affirmative vote of a majority of the votes cast with respect to his or her election to tender his or her resignation. Under the policy, the Nominating & Corporate Governance Committee must promptly consider the resignation tender and a range of possible responses and make a recommendation to the Board. The Board will act on the Nominating & Corporate Governance Committee’s recommendation within 90 days following certification of the shareholder vote. Thereafter, the Board will promptly disclose its decision regarding whether to accept the director’s resignation tender, including an explanation of the decision (or the reason(s) for rejecting the resignation offer, if applicable), in a Form 8-K (or other appropriate report) filed with or furnished to the Securities and Exchange Commission. If any director’s tender of resignation under the policy is not accepted by the Board, such director will serve until the next annual meeting of shareholders and until his or her successor has been duly elected and qualified. Any director who tenders his or her resignation pursuant to the director resignation policy shall not participate in the Nominating & Corporate Governance Committee recommendation or Board action regarding whether to accept the tender of resignation. If a
majority of the members of the Nominating & Corporate Governance Committee did not receive the affirmative vote of a majority of the votes cast at the same election, then all the directors who are “independent” under the listing standards of the New York Stock Exchange and who received the affirmative vote of a majority of the votes cast shall appoint a committee amongst themselves to consider the resignation tenders and recommend to the Board whether to accept them. This committee may, but need not, consist of all of the independent directors who received the affirmative vote of a majority of the votes cast. The director resignation policy is contained in our Corporate Governance Guidelines, which are available on our website at https://ir.firsthorizon.com (click on “Investor Relations,” then “Corporate Governance,” and then “Governance Documents”).
Our Bylaws also provide that any director who has a major change in his or her principal position (other than by a promotion) must tender a resignation for consideration by the Board. The Board will accept unless it determines that (i) the director has assumed another position in which he or she continues to be actively engaged as a business or professional person, (i) the director is engaged in a specific project for the Board so as to make his or her resignation detrimental to First Horizon, or (iii) it is beneficial to the
36 | 2022 PROXY STATEMENT |
VOTE ITEM 1—ELECTION OF DIRECTORS
Board and in the best interests of the company for the director to continue to serve.
Director Retirement Policy
Under our Bylaws, any non-officer director who reaches age 72 on or before the last day of his or her term must retire from the Board of Directors at the expiration of such term. Notwithstanding the foregoing, each year the Board in the exercise of its discretion may waive this age limit for
any director for up to an additional three terms if it determines such waiver to be beneficial to the Board and in the best interests of First Horizon. Note, however, that under the merger agreement, the retirement provisions outlined above will not apply to any of the current director nominees until after the third anniversary of the merger of equals (July 1, 2023).
Candidate Nominations Process
The Board and the Nominating & Corporate Governance Committee regularly assess the composition of the Board as a whole and the contributions of each director. The Nominating & Corporate Governance Committee’s charter assigns to that Committee the duty to identify individuals believed to be qualified to become Board members and to recommend to the Board the individuals to stand for election or reelection as directors. In nominating candidates, the Committee may take into consideration such factors as it deems appropriate, including personal qualities and characteristics, experience, accomplishments and reputation in the business community; current
knowledge and contacts in the communities in which the company does business and in the company’s industry or other industries relevant to the company’s business; diversity of viewpoints, background, experience and other demographics; ability and willingness to commit adequate time to Board and committee matters; and the fit of the individual’s skills and personality with those of other directors and potential directors in building a Board that is effective and responsive to its duties and responsibilities and the needs of the company.
Assessment of Board Composition
At each of its regularly scheduled meetings, the Nominating & Corporate Governance Committee reviews the composition of the Board as a whole, considering the mix of skills and experience that directors bring to the Board, and evaluates Board composition in light of the company’s then-current business needs as well as applicable legal, regulatory and NYSE requirements. Among the areas considered by the Committee are each director’s independence under the NYSE listing standards;standards and other applicable laws and regulations; experience, including experience as a public company officer or director; primary area of business expertise; geographical markets experience; and projected retirement date. In accordance with the requirements of Tennessee banking law and regulations, the Committee also considers the
proportion of directors who reside in states in which the Bank has a main or branch office (or within 100 miles of Memphis)the location of any branch). In light of this review, the Committee assesses whether the Board has the necessary tools to perform its oversight functions effectively and recommends, as appropriate, new nominees for consideration by the Board. The Board, with oversight provided by the Committee, also conducts anBoard’s annual self-evaluation that(described in the next section) includes an evaluation of whether Board members have an appropriately broad and diverse range of experience and whether committee members have the right expertise, background and skills to be effective and responsive to their duties and responsibilities as committee members.
Board and Committee Self-Evaluations; Individual Director Evaluations
The Board, with oversight provided by the Nominating and Corporate Governance Committee, conducts a self-evaluation at least annually to determine whether it is functioning effectively. Each committee of the Board, under the oversight of the Nominating & Corporate Governance Committee, also conducts a self-evaluation at least annually and reports the results to the Board. Each committee’s evaluation must compare the performance of the committee with the requirements of its written charter, if any.
The Nominating & Corporate Governance Committee also conducts annual individual director evaluations. To facilitate these evaluations, the Board has adopted a Statement of Expectations of Directors. The Statement of Expectations contains specific activities and conduct each director should
engage in or adhere to and includes consideration of each director’s background, expertise and skills. The Statement of Expectations is provided to each new director at the time of orientation and to all directors once a year. Each year, the Nominating & Corporate Governance Committee conducts evaluations
37 | 2022 PROXY STATEMENT |
VOTE ITEM 1—ELECTION OF DIRECTORS
against the Statement of Expectations of the performance of each non-employee director who has been serving for at least six months (as of the time of the evaluations) prior to determining whether to recommend him or her to the Board for renomination. In addition, at
At least every three years in lieu of the regular evaluation of individual directors(or as otherwise determined by the Nominating & Corporate Governance Committee,Committee), the company engages a third party to conduct individual director assessments and to provide advice and reports on
how individual directors and the Board can improve. These assessments may include both director self-assessments and peer assessments. In the years in which a third party conducts such assessments, no evaluation of individual directors against the Statement of Expectations (as described above) will be conducted unless otherwise determined by the chair of the Nominating & Corporate Governance Committee.
Board Experiences, Qualifications, Attributes and Skills
Our Board selected our twelve17 director nominees based on the belief that each one brings significant
experience and expertise that will serve First Horizon well. The breadth of their expertise and their mix of attributes is reflected in the chart and tablematrix below. See the matrix for a description of each of the categories of skills. Following the tablematrix is a biographical summary for each nominee of the particular experiences, qualifications, attributes or skills that led the Board to conclude that he or she should
serve as a director of First Horizon, as well as the age, current principal occupation (which has continued for at least five years unless otherwise indicated), name and principal business of the organization in which his or her occupation is carried on, directorships in other reporting companies (including those held in the past but not currently held), and year first elected to our Board. All of our directors are also directors of the Bank.
Director committee appointments are disclosed below and in a table on page 20 in the “Corporate Governance and Board Matters—Committee Charters & Committee Composition” section of this proxy statement above.
Diversity on Our director nominees at a glanceBoard
10 | 6 | 4 | 10 | 6 |
have experience as a CEO/President1 | have finance or accounting experience2 | have experience in the banking industry | have served as a director or executive officer of another public company | have experience in information technology matters3 |
1 | 12 | 5 | 9 | 5 |
has served in government | have strategic planning/leadership experience | are diverse in terms of race, gender or ethnicity | have marketing and retail distribution experience | joined the Board within the last six years |
First Horizon values diversity and believes it is important to the effective functioning of the whole organization, from the newest associates to the Board of Directors. This belief is reflected in the diversity of our Board members:
Our Board at a Glance* | ||||||
13 | 9 | 7 | 17 | 9 | 8 | 13 |
have experience as a CEO/President | have finance or accounting experience | have experience in the banking/ financial services industry | have served as a director or executive officer of another public company | have experience in information technology/ cybersecurity matters | have experience in digital innovation/ fintech | have experience in human capital management |
17 | 6 | 10 | 11 | 11 | 16 | 8 |
have strategic planning/ leadership experience | are diverse in terms of race, gender or ethnicity | have marketing or retail distribution experience | joined the Board within the past 5 years | have experience in legal/ regulatory/ ethics/ compliance matters | have experience in risk management | have experience in environmental matters |
*Please see the matrix below for additional information on the scope of each category.
38 | |
VOTE ITEM 1—ELECTION OF DIRECTORS
Director Skills and Characteristics Matrix
x | x | x | x | x | x | x | x | x | x | x | x | x | |||||
Finance/accounting. Audit company financial expert, CFO, or experience (including oversight experience) in accounting or financial planning and analysis. | x | x | x | x | x | x | x | x | X | ||||||||
Banking/financial services industry.Executive experience in banking, investment banking, broker-dealer or insurance. | x | x | x | x | x | x | x | ||||||||||
Strategic planning/leadership. Experience defining the strategic direction of a business or organization; service in a significant leadership position. | x | x | x | x | x | x | x | x | x | x | x | x | x | x | x | x | x |
Public company. Experience as a public company director or executive officer. | x | x | x | x | x | x | x | x | x | x | x | x | x | x | x | x | x |
Racial, ethnic or gender diversity. As identified by the director. | x | x | x | x | x | x | |||||||||||
Information technology/ cybersecurity.Experience implementing information technology and cybersecurity systems or managing a business in which such systems play a significant role. | x | x | x | x | x | x | x | X | x | ||||||||
Digital Innovation/Fintech.Experience in the use of technology to facilitate business operations and customer service. | x | x | x | x | x | x | x | x | |||||||||
Environmental Matters. Experience understanding, evaluating and managing environmental risks and opportunities. | x | x | x | x | x | x | x | x | |||||||||
Human Capital Management.Experience in workforce management, compensation, inclusion and diversity efforts, culture, succession planning and talent management. | x | x | x | x | x | x | x | x | x | x | x | x | x | ||||
Risk Management. Experience with understanding and managing risk in a large organization. | x | x | x | x | x | x | x | x | x | x | x | x | x | x | x | x | |
Legal/regulatory/ethics/compliance matters.Experience (including oversight experience) managing legal, regulatory, ethical and compliance risks and obligations. | x | x | x | x | x | x | x | x | x | x | x | ||||||
Marketing/retail distribution.Experience in building and maintaining customer relationships. | x | x | x | x | x | x | x | x | x | x |
39 | 2022 PROXY STATEMENT |
VOTE ITEM 1—ELECTION OF DIRECTORS
Harry V. Barton, Jr. |
Skills and Expertise: • Extensive experience in accounting and tax matters, including audit, review, and compilation of financial statements, the preparation of individual and corporate tax returns, tax planning for business and high net worth clients, and consulting and advising on business mergers and acquisitions • Knowledge of public company audit, risk and compliance matters due to public company board service • Louisiana resident with knowledge of the Louisiana market Prior Public Company Board Service: IBERIABANK Corporation (1993-2020)
|
Certified Public Accountant and Owner, Barton Advisory Services, LLC | |
Independent director since 2020 | |
Age | |
Committees:
• Information Technology Audit Committee Financial Expert |
Kenneth A. Burdick | Kenneth A. Burdick Skills and Expertise:
• Florida resident with knowledge of the Florida market Public Company Board Service: Orion Acquisition Corporation (2021-present); Centene Corporation (2022-present)
Prior Public Company Board
Non-Profit Board |
Retired Executive Vice President of Products and Markets, Centene Corporation | |
Independent director since 2019 | |
Age 63 | |
Committees: • Audit • Compensation • Nominating & Corporate Governance Audit Committee Financial Expert |
40 | 2022 PROXY STATEMENT |
VOTE ITEM 1—ELECTION OF DIRECTORS
Daryl G. Byrd | Daryl G. Byrd became the Executive Chairman of the Board of First Horizon and First Horizon Bank upon the closing of the merger of equals of IBKC and First Horizon in July 2020. From 1999 to 2020, he served as the President and Chief Executive Officer and a director of IBKC and IBERIABANK. Mr. Byrd began his career in banking with Trust Company Bank of Georgia (now Truist) in 1980. He later held positions with three subsidiaries of First Commerce Corporation: First National Bank of Lafayette, Rapides Bank and Trust Company, and First National Bank of Commerce. Following the First Commerce/Bank One merger, Mr. Byrd served as President and CEO of Bank One, Louisiana, New Orleans region until 1999. Skills and Expertise: • Extensive experience in the banking and financial services industry, including digital innovation and fintech • Experience in finance and accounting, human capital management, mergers and acquisitions, risk management and compliance, information technology/cybersecurity, environmental matters, civic affairs, government relations, corporate governance, securities markets and compliance and similar matters associated with leadership positions at public companies • Knowledge of public company governance matters due to public company board service Prior Public Company Board Service: IBERIABANK Corporation (1999-2020) Non-Profit Board Service: Serves on the boards of two non-profit organizations |
Executive Chairman of the Board, First Horizon Corporation and First Horizon Bank | |
Director since 2020 | |
Age 67 | |
Committees: • Executive & Risk |
John N. Casbon | John N. Casbon serves as Executive Vice President of First American Title Insurance Company, New Orleans, Louisiana, a title insurance company and member of The First American Corporation family of companies. He has been associated with First American for over 30 years. Mr. Casbon has served on the boards of the American Land Title Association, the New Orleans Police Foundation, the LSU Department of Psychiatry Advisory Board, the Louisiana Trooper Foundation, the Business Council of New Orleans and the River Region, the New Orleans/River Region Chamber of Commerce, The New Orleans Advocate newspaper and the Anti-Defamation League. Mr. Casbon became a director of First Horizon in July 2020 upon the closing of the merger of equals of IBKC and First Horizon. He had previously served as a director of IBKC since 2001. Skills and Expertise: • Executive experience at a large subsidiary of a public company • Experience in matters affecting public companies, including finance and accounting, human capital management, mergers and acquisitions, risk management and compliance, information technology/ cybersecurity, environmental matters, civic affairs, government relations, corporate governance and compliance and similar matters • Knowledge of public company executive compensation, governance, risk and compliance matters due to public company board service • Louisiana resident with knowledge of the Louisiana market Prior Public Company Board Service: IBERIABANK Corporation (2001-2020) Non-Profit Board Service: Serves on the board of a non-profit organization |
Executive Vice President, First American Title Insurance Company | |
Independent director since 2020 | |
Age 73 | |
Committees: • Compensation • Executive & Risk |
41 | 2022 PROXY STATEMENT |
VOTE ITEM 1—ELECTION OF DIRECTORS
John C. Compton
Partner at Clayton, Dubilier & Rice
Independent director since 2011
Age 60
Committees:
|
Skills and Expertise:
Prior Public Company Board Non-Profit Board |
Wendy P. Davidson
President-Americas, Glanbia Performance Nutrition
Independent director since 2019
Age
Committees:
| Wendy P. Davidson Skills and
Non-Profit Board |
Associates, LLC
Independent director since 2020
Age
Committees:
|
Skills and
• Expertise in environmental matters, including coastal protection, flood plain management and
Prior Public Company Board
Non-Profit Board |
2022 PROXY STATEMENT |
VOTE ITEM 1—ELECTION OF DIRECTORS
|
|
D. Bryan Jordan
Age
Committees:
|
Skills and
Other Current Public Company Board
Non-Profit Board |
J. Michael Kemp, Sr. Founder and CEO, Kemp Management Solutions Independent director since 2020 Age 51 Committees: • Audit • Information Technology • Nominating & Corporate Governance | J. Michael Kemp, Sr. is the Founder and CEO of Kemp Management Solutions (“KMS”), a program management and consulting firm based in Birmingham, Alabama. With 30 years in the construction industry, he has managed or built more than $6.8 billion in construction projects. Mr. Kemp founded KMS in January 2011 to provide program management services and consulting on environmental and sustainability matters in the U.S. and Europe to the healthcare, financial, retail, municipal, infrastructure and higher education sectors. Mr. Kemp became a director of First Horizon in July 2020 upon the closing of the merger of equals of IBKC and First Horizon. He had previously served as a director of IBKC since 2019. Skills and Expertise: • Extensive general management experience, including finance, operations, information technology/cybersecurity and risk management • Expertise in environmental matters gained from management of large environmental-related projects and consulting on environmental/sustainability matters • Knowledge of public company governance matters due to public company board service • Birmingham resident with knowledge of the Birmingham market Prior Public Company Board Service: IBERIABANK Corporation (2019-2020) Non-Profit Board Service: Serves on the boards of several non-profit organizations |
Rick E. Maples Retired Co-Head of Investment Banking, Stifel, Nicolaus and Company Incorporated Independent director since 2020 Age 63 Committees: • Compensation (chair) • Executive & Risk | Rick E. Maples retired after 31 years at Stifel, Nicolaus and Company Incorporated (“Stifel Nicolaus”), in 2015 and served as a Senior Advisor to Stifel Financial Corp. (“Stifel Financial”) from 2016 until 2018. Headquartered in St. Louis, Missouri, Stifel Financial is a diversified financial services holding company which conducts business through several subsidiaries. Its primary broker dealer subsidiary is Stifel Nicolaus, which is a full service brokerage and investment banking firm. Mr. Maples joined Stifel Nicolaus in 1984, and in 1991, he became Head of Investment Banking. With Stifel Financial’s acquisition of Legg Mason Capital Markets in 2005, Mr. Maples became Co-Head of Investment Banking for the combined investment bank. In addition, when in 2013 Stifel Financial acquired Keefe, Bruyette & Woods, Inc. (“KBW”), an investment banking firm specializing in investment banking services for the financial services industry, Mr. Maples was named Executive Vice President and Co-Head of Global Investment Banking of KBW. Mr. Maples became a director of First Horizon in July 2020 upon the closing of the merger of equals of IBKC and First Horizon. He had previously served as a director of IBKC since 2016. Skills and Expertise: • Understanding of corporate finance, business value, business risk, digital innovation/fintech and strategic decision-making with a focus on the financial services industry • Experience analyzing various matters, including finance and accounting, securities markets, corporate governance, mergers and acquisitions, and risk assessment, that affect public companies • Knowledge of public company audit, executive compensation, human capital management and governance matters due to public company board service Prior Public Company Board Service: IBERIABANK Corporation (2016-2020) |
2022 PROXY STATEMENT |
VOTE ITEM 1—ELECTION OF DIRECTORS |
Vicki R. Palmer
President of The Palmer Group, LLC
Independent director since 1993
Age
Committees:
• Executive & Risk Audit Committee Financial Expert |
Skills and
Other Current Public Company Board
Non-Profit Board |
Colin V. Reed
Chairman of the Board and Chief Executive Officer of Ryman Hospitality Properties, Inc.
Independent director since 2006
Lead
Age
Committees:
|
Skills and
Other Current Public Company Board
Prior Public Company Board |
E. Stewart Shea, III Private investor Independent director since 2020 Age 70 Committees: • Compensation • Nominating & Corporate Governance | E. Stewart Shea, IIIserved as the Managing Partner and a member of the board of The Bayou Companies, LLC, New Iberia, Louisiana, a provider of services to the domestic gas pipeline industry and to international markets, from 1994 until 2009, when the majority of the company’s assets were sold in an asset based transaction. Mr. Shea continues to manage the remaining assets of the company and is also actively involved in other investments. Mr. Shea became a director of First Horizon in July 2020 upon the closing of the merger of equals of IBKC and First Horizon. He had previously served as a director of IBKC since 1990 and was serving as the Vice Chairman of the Board of IBKC and IBERIABANK and Co-Chairman of IBERIABANK’s New Iberia Advisory Board at the time of the merger. Skills and Expertise: • Extensive general management experience, including finance, operations, human capital management, risk management and compliance, and management of international business activities • Knowledge of public company executive compensation, human capital management, governance and risk matters due to public company board service • Louisiana resident with knowledge of the Louisiana market Prior Public Company Board Service: IBERIABANK Corporation (1990-2020) Non-Profit Board Service: Serves on the board of a non-profit organization |
44 | 2022 PROXY STATEMENT |
VOTE ITEM 1—ELECTION OF DIRECTORS
Cecelia D. Stewart
Retired President of U.S. Consumer and Commercial Banking of Citigroup, Inc
Independent director since 2014
Age
Committees:
| Cecelia D. Stewartretired as the President of U.S. Consumer and Commercial Banking of Citigroup, Inc., a global diversified financial services holding company, in 2014. She had held that position since 2011. From 2009 to 2011, she was President of the retail banking group and CEO of Morgan Stanley Private Bank N.A. Ms. Stewart’s career in banking began at Wachovia Bank N.A. in 1978, where she held a variety of regional banking positions, culminating in her service as Executive Vice President and Head of Retail and Small Business Banking from 2003 to 2008.
Skills and
Other Current Public Company Board |
Rajesh Subramaniam
President and Chief Operating Officer of FedEx Corporation
Independent director since 2016
Age
Committees:
|
Skills and
• Memphis resident with knowledge of the Memphis market
Other Current Public Company Board
Non-Profit Board |
Rosa Sugrañes Founder and former Chief Executive Officer, Iberia Tiles Independent director since 2020 Age 64 Committees: • Audit • Information Technology | Rosa Sugrañes was the founder and served as the Chief Executive Officer of Iberia Tiles, Miami, Florida, a ceramic tile distributor, from 1980 until 2012 when the company was sold. She currently serves on the board of directors of Rosa Gres, a manufacturer of ceramic tiles in Barcelona, Spain, and on the board of directors of Sabadell Consumer Finance, a Spanish consumer bank. She was a director of Sabadell United Bank in Miami from 2006 to 2017, and a former Board member and past Chairman of the Federal Reserve Bank of Atlanta, Miami Branch. Ms. Sugrañes became a director of First Horizon in July 2020 upon the closing of the merger of equals of IBKC and First Horizon. She had previously served as a director of IBKC since 2018. Skills and Expertise: • Extensive general management experience, including finance, operations, human capital management, risk management, marketing and retail distribution and management of international business activities • Experience in the banking and financial services industry due to service on bank boards and on the board of the Miami Branch of the Federal Reserve Bank of Atlanta • Knowledge of public company audit, governance and risk matters due to public company board service • Florida resident with knowledge of the Florida market Prior Public Company Board Service: IBERIABANK Corporation (2018-2020) Non-Profit Board Service: Serves on the boards of two non-profit organizations |
2022 PROXY STATEMENT |
VOTE ITEM 1—ELECTION OF DIRECTORS
R. Eugene Taylor
Director since 2017
Age
Committees:
|
Skills and
Other Current Public Company Board
Prior Public Company Board |
|
|
The Board of Directors unanimously recommends that the
shareholders votefor FOR the election of all director nominees as described in vote itemVote Item 1.
2022 PROXY STATEMENT |
VOTE ITEM 2—AUDITOR RATIFICATION
Vote Item 2—Advisory Resolution to Approve Executive CompensationAuditor Ratification
2019 Appointment of Auditors for 2022
KPMG LLP audited our annual consolidated financial statements for the year 2021. The Audit Committee has appointed KPMG LLP to be our auditors for the year 2022. Although not required by law, regulation or the rules of the New York Stock Exchange, the Board has determined, as a matter of good corporate governance and consistent with past practice, to submit to the shareholders as vote item 2 the ratification of KPMG LLP’s appointment as our auditors for the year 2022, with the recommendation that the shareholders vote for item 2. Representatives of KPMG LLP are expected to be present at the annual
meeting of shareholders with the opportunity to make a statement and to respond to appropriate questions. The 2021 engagement letter with KPMG LLP was subject to alternative dispute resolution procedures that comply with applicable federal bank regulatory guidance. If the shareholders do not vote to ratify KPMG LLP’s appointment as our auditors for the year 2022, the Board of Directors will consider what course of action would be appropriate.
The table below and the paragraphs following it provide information regarding the fees billed to us by KPMG LLP during 2020 and 2021 for services rendered in the categories of audit fees, audit-related fees, tax fees and all other fees.
KPMG Fees Paid 2020-21
Service Type | 2020 | 2021 | ||||||
Audit Fees | $ | 4,673,935 | $ | 3,535,455 | ||||
Audit-Related Fees | 113,500 | 115,000 | ||||||
Tax Fees | — | — | ||||||
All Other Fees | — | — | ||||||
Total | $ | 4,787,435 | $ | 3,650,455 |
Audit Fees. Represents the aggregate fees billed to us by KPMG LLP for professional services rendered for the audit of our consolidated financial statements, including the audit of internal controls over financial reporting, and review of our quarterly financial statements or for services that are normally provided by KPMG LLP in connection with statutory and regulatory filings or engagements, including registration statements and offerings, and acquisition-related audit procedures.
Audit-Related Fees. Represents the aggregate fees billed to us by KPMG LLP for assurance and related services that are reasonably related to the performance of the audit or review of our consolidated financial statements and that are not reported under Audit Fees above. The amount for both years consists of fees for attestation and reports on controls placed in operation and tests of operating effectiveness.
Tax Fees. Represents the aggregate fees (if any) billed to us by KPMG LLP for professional services for tax compliance, tax advice, and tax planning.
All Other Fees. Represents the aggregate fees (if any) billed to us by KPMG LLP for products and services other than those reported under the three preceding paragraphs.
None of the services provided to us by KPMG LLP and described in the paragraphs entitled Audit-Related Fees, Tax Fees and All Other Fees above were approved pursuant to the de minimis exception of SEC Rule 2-01(c)(7)(i)(C).
Pre-Approval Policy for Auditor’s Services
The Audit Committee has adopted a policy providing for pre-approval of all audit and non-audit services to be performed by KPMG LLP, as the registered public accounting firm that performs the audit of our consolidated financial statements that are filed with the SEC. Services either may be approved in advance by the
Audit Committee specifically on a case-by-case basis (“specific pre-approval”) or may be approved in advance (“advance pre-approval”). Advance pre-approval requires the Committee to identify in advance the specific types of services that may be provided and the fee limits applicable to such types of services, which limits may be expressed as
47 | 2022 PROXY STATEMENT |
VOTE ITEM 2—AUDITOR RATIFICATION
a limit by type of service or by category of services. All requests to provide services that have been pre-approved in advance must be submitted to the Chief Accounting Officer prior to the provision of such services for a determination that the service to be provided is of the type and within the fee limit that has been pre-approved. Unless the type of service to be provided by KPMG LLP has received advance pre-approval under the policy and the fee for such service is within the limit pre-approved, the service will require specific pre-approval by the Committee.
The terms of and fee for the annual audit engagement must receive the specific pre-approval of the Committee. Audit, Audit-related, Tax, and All Other services, as those terms are defined in the policy, have the advance pre-approval of the Committee, but only to the extent those services have been specified by the Committee and only in amounts that do not exceed the fee limits specified by the Committee. Such advance pre-approval shall be for a term
of 12 months following the date of pre-approval unless the Committee specifically provides for a different term. Unless the Committee specifically determines otherwise, the aggregate amount of the fees pre-approved for All Other services for the fiscal year must not exceed seventy-five percent (75%) of the aggregate amount of the fees pre-approved for the fiscal year for Audit services, Audit-related services, and those types of Tax services that represent tax compliance or tax return preparation.
The policy delegates the authority to pre-approve services to be provided by KPMG LLP, other than the annual audit engagement and any changes thereto, to the chair of the Committee. The chair may not, however, make a determination that causes the 75% limit described above to be exceeded. Any service pre-approved by the chair will be reported to the Committee at its next regularly scheduled meeting.
The Board of Directors unanimously recommends that
shareholders vote FOR the ratification of our auditors under Vote Item 2.
48 | 2022 PROXY STATEMENT |
VOTE ITEM 3—SAY ON PAY
At our 20182021 annual meeting, our Advisory Resolutionthe advisory resolution to Approve Executive Compensation,approve executive compensation, commonly known as “say on pay”—received a FOR vote of 32%97% of the shares voted. This contrasted sharply
Alignment of Pay with Performance
We remain committed to the voteprinciple of paying our sayexecutives based on pay vote item had historically received, and although the say on pay vote is technically advisory, the Committeetheir performance and the entire Board took the 2018 results very seriously, reached out to our shareholderscompany’s financial and listened to their concerns.
In response to the feedback we received from our shareholders, First Horizon implemented a number of enhancements to its executive compensation. Key outcomes of our 2018 shareholder engagement process included:
At our 2019 annual meeting, our say on pay vote item received a FOR vote of 97%.
2019 Corporate Performance and Compensation Outcomes
We grew average loans by 7% and average deposits by 5% in 2019. Loan growth was strongest in the “specialty” commercial lending category, led by loans to mortgage companies. Our net interest margin for the year declined only 0.17% despite federal interest rate reductions totaling 0.75%, while our net charge-off ratio for loans remained very low at 0.09% for the year. In 2019 our fixed income business increased its noninterest income by 69%, and its average daily revenue by 72%, taking advantage of market
volatility and falling rates in 2019. During our last Investor Day conference, late in 2018, we presented our “outlook” for 2019. The outlook included two key measures that we use to manage our businesses: return on assets (“ROA”) of 1.20%, and return on tangible common equity (“ROTCE”) of 17%. Our outlook was announced before the Federal Reserve reversed its interest rate policy, from raising rates four times in 2018 to lowering rates three times in 2019. Results for those measures in 2019 are presented below, along with two other commonly-followed measures: return on common equity (“ROCE”) and earnings per share (“EPS”)
2019 Financial Highlights
In 2019, our adjusted results surpassed our outlook. Key contributors to this success were organic loan and deposit synergies stemming from the Capital Bank merger in 2017, organic loan and deposit growth in our other markets, and disciplined lending and pricing practices.
*ROTCE and adjusted results differ from results reported using generally accepted accounting principles (GAAP). The impacts of merger and restructuring expenses and certain other notable items have been excluded from 2019 adjustedstrategic results. Non-GAAP results are reconciled to GAAP items in Appendix A.
The Compensation Committee took these achievements and results into account in executive
compensation decisions. Our compensation policies and practices arecontinue to be designed to align the interests of all of our employees,associates, including our executives, with the interests of our shareholders. WeAs always, we seek to attract, retain, incent, and reward individuals who contribute to the long-term success of the company. Key practices linking performance to compensation include significant weighting of pay mix in favor of awards at risk for financial or market performance, meaningful share
retention requirements for executives, and correlation of the payouts of financial performance awards with total returns to our shareholders. Details regarding these practices and their effects are discussed throughoutA detailed discussion of the CD&Aexecutive compensation decisions made by the Compensation Committee, including information on the achievement of key performance indicators directly related to goals established for 2021’s annual incentive awards, can be found in the Compensation Discussion & Analysis portion of this proxy statement beginning on page 48.the next page.
Under Section 14A of the Securities Exchange Act, our shareholders are entitled to an advisory vote on the compensation of our named executive officers as disclosed in this proxy statement pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion & Analysis, compensation tables and the related material. This advisory vote, commonly known as a “say on pay” proposal, gives our shareholders the opportunity to endorse or not endorse our executive pay program. At the 2017 annual meeting, our shareholders had the opportunity to cast an advisory vote on how frequently we should hold a say on pay vote. The Board recommended and the shareholders approved an annual frequency for the say on pay vote, and the Board subsequently determined that we would in fact conduct a say on pay vote at each annual meeting.
We believe that the information we have provided in the Compensation Discussion & Analysis, the executive compensation tables and the related disclosure contained in this proxy statement demonstrates that our executive compensation program was designed appropriately and is working to ensure management’s interests are aligned
with our shareholders’ interests to support
the long-term success of First Horizon. Accordingly, the Board of Directors unanimously recommends that you vote in favor of the following resolution:
“RESOLVED, that the holders of the common stock of First Horizon National Corporation (“Company”) approve, on an advisory basis, the compensation of the Company’s executive officers named in the Summary Compensation Table of the Company’s proxy statement for the 20202022 annual meeting of shareholders as such compensation is disclosed in such proxy statement pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion & Analysis, the executive compensation tables and the related disclosure contained in the proxy statement.”
Because your vote is advisory, it will not be binding upon the Board, and the vote on this item will not be construed as overruling a Board decision or as creating or implying any additional fiduciary duty by the Board. However, the Compensation Committee will take into account the outcome of the vote when considering future executive compensation arrangements.
The Board of Directors unanimously recommends that the
shareholders votefor vote item 2. FOR Vote Item 3.
2022 PROXY STATEMENT |
Vote Item 3—Ratification of Appointment of Auditors
Appointment of Auditors for 2020
KPMG LLP audited our annual consolidated financial statements for the year 2019. The Audit Committee has appointed KPMG LLP to be our auditors for the year 2020. Although not required by law, regulation or the rules of the New York Stock Exchange, the Board has determined, as a matter of good corporate governance and consistent with past practice, to submit to the shareholders as vote item 3 the ratification of KPMG LLP’s appointment as our auditors for the year 2020, with the recommendation that the
shareholders vote for item 3. Representatives of KPMG LLP are expected to be present at the annual meeting of shareholders with the opportunity to make a statement and to respond to appropriate questions. The 2019 engagement letter with KPMG LLP was subject to alternative dispute resolution procedures. If the shareholders do not vote to ratify KPMG LLP’s appointment as our auditors for the year 2020, the Board of Directors will consider what course of action would be appropriate.
Fees Billed to Us by Auditors during 2018 and 2019
The table below and the paragraphs following it provide information regarding the fees billed to us by KPMG LLP during 2018 and 2019 for services
rendered in the categories of audit fees, audit-related fees, tax fees and all other fees.
2018 | 2019 | ||||||
Audit Fees | $ | 2,318,500 | $ | 2,438,500 | |||
Audit-Related Fees | 113,500 | 113,500 | |||||
Tax Fees | 107,585 | 9,433 | |||||
All Other Fees | 0 | 0 | |||||
Total | $ | 2,539,585 | $ | 2,561,433 |
Audit Fees. Represents the aggregate fees billed to us by KPMG LLP for professional services rendered for the audit of our consolidated financial statements, including the audit of internal controls over financial reporting, and review of our quarterly financial statements or for services that are normally provided by KPMG LLP in connection with statutory and regulatory filings or engagements, including registration statements and offerings, and acquisition-related audit procedures.
Audit-Related Fees. Represents the aggregate fees billed to us by KPMG LLP for assurance and related services that are reasonably related to the performance of the audit or review of our consolidated financial statements and that are not reported under “Audit Fees” above. The amount for both years consists of fees for attestation and reports on controls placed in operation and tests of operating effectiveness.
Tax Fees. Represents the aggregate fees (if any) billed to us by KPMG LLP for professional services for tax compliance, tax advice, and tax planning. The amounts for 2018 and 2019 consist of fees for assistance with tax research and tax consulting services.
All Other Fees. Represents the aggregate fees (if any) billed to us by KPMG LLP for products and services other than those reported under the three preceding paragraphs.
None of the services provided to us by KPMG LLP and described in the paragraphs entitled “Audit-Related Fees,” “Tax Fees” and “All Other Fees” above were approved pursuant to the de minimis exception of SEC Rule 2-01(c)(7)(i)(C).
Policy on Pre-Approval of AuditCOMPENSATION DISCUSSION & Non-Audit Services
The Audit Committee has adopted a policy providing for pre-approval of all audit and non-audit services to be performed by KPMG LLP, as the registered public accounting firm that performs the audit of our consolidated financial statements that are filed with the SEC. Services either may be approved in advance by the Audit Committee specifically on a case-by-case basis (“specific pre-approval”) or may be approved in advance (“advance pre-approval”). Advance pre-approval requires the Committee to identify in advance the specific types of services that may be provided and the fee limits applicable to such types of services, which limits may be expressed as a limit by type of service or by category of services. All requests to provide services that have been pre-approved in advance must be submitted to the Chief Accounting Officer prior to the provision of such services for a determination that the service to be provided is of the type and within the fee limit that has been pre-approved. Unless the type of service to be provided by KPMG LLP has received advance pre-approval under the policy and the fee for such service is within the limit pre-approved, the service will require specific pre-approval by the Committee.
The terms of and fee for the annual audit engagement must receive the specific pre-approval
of the Committee. “Audit,” “Audit-related,” “Tax,” and “All Other” services, as those terms are defined in the policy, have the advance pre-approval of the Committee, but only to the extent those services have been specified by the Committee and only in amounts that do not exceed the fee limits specified by the Committee. Such advance pre-approval shall be for a term of 12 months following the date of pre-approval unless the Committee specifically provides for a different term. Unless the Committee specifically determines otherwise, the aggregate amount of the fees pre-approved for All Other services for the fiscal year must not exceed seventy-five percent (75%) of the aggregate amount of the fees pre-approved for the fiscal year for Audit services, Audit-related services, and those types of Tax services that represent tax compliance or tax return preparation.
The policy delegates the authority to pre-approve services to be provided by KPMG LLP, other than the annual audit engagement and any changes thereto, to the chair of the Committee. The chair may not, however, make a determination that causes the 75% limit described above to be exceeded. Any service pre-approved by the chair will be reported to the Committee at its next regularly scheduled meeting.
The Board of Directors unanimously recommends that the shareholders votefor vote item 3.
The Board of Directors, at the time of the preparation and printing of this proxy statement, knew of no other business to be brought before the meeting other than the matters described in this proxy statement. If any other business properly comes before the meeting, the persons named in the enclosed proxy will have discretionary authority to vote all proxies in accordance with their best judgment.ANALYSIS (CD&A)
Shareholder ProposalCompensation Discussion & Nomination DeadlinesAnalysis
If you intend to submit a shareholder proposal in our 2021 proxy materials for presentation at the 2020 annual meeting in accordance with Rule 14a-8 under the Securities Exchange Act of 1934, as amended, it must be received by the Corporate Secretary, First Horizon National Corporation, 165 Madison Avenue, Memphis, Tennessee, 38103, not later than November 17, 2020.
If you would like to nominate a director for inclusion in our 2020 proxy materials in accordance with Section 3.16 of our Bylaws (our proxy access bylaw), such nomination must be submitted to the Corporate Secretary, 165 Madison Avenue, Memphis, Tennessee 38103 no earlier than 150 calendar days and no later than 120 calendar days before the anniversary of the date that the company mailed its proxy statement for the prior year’s annual meeting of shareholders. Our mailing date for the 2020 annual meeting is March 16, 2020, so a proxy access nomination would have to be submitted not earlier than October 17, 2020 and not later than November 16, 2020. If our annual meeting is not scheduled to be held within 30 days before or 30 days after the first anniversary date of the previous year’s annual meeting, the nomination must be submitted by the later of the close of business on the date that is 180 days prior to the annual meeting date or the tenth day following the date such annual meeting date is first publicly announced or disclosed.
Sections 2.8 and 3.6 of our Bylaws provide that a shareholder who wishes to bring before a shareholder meeting a director nomination or other proposal, outside the processes that permit them to be included in our proxy statement, must comply with certain procedures. These procedures require written notification to us, generally not less than 90 nor more than 120 days prior to the date of the shareholder meeting. Such shareholder proposals and nominations must be submitted to the Corporate Secretary. Section 2.4 of our Bylaws provides that our annual meeting of shareholders will be held each year on the date and at the time fixed by the Board of Directors. The Board of Directors has determined that our 2021 annual meeting will be held on April 27, 2021. Thus, shareholder proposals and director nominations submitted outside the processes that permit them to be included in our proxy statement must be submitted to the Corporate Secretary between December 28, 2020 and January 27, 2021, or the proposals will be considered untimely. If we give fewer than 100 days’ notice or public disclosure of a shareholder meeting date to shareholders, then we must receive the shareholder notification not later than 10 days after the earlier of the date notice of the shareholders’ meeting was mailed or publicly disclosed. Untimely proposals may be excluded by the Chairman or our proxies may exercise their discretion and vote on these matters in a manner they determine to be appropriate.
50 |
Compensation Discussion and Analysis
CD&A
| 54 |
2021 Pay Components & Decisions | 54 |
Total Direct Compensation (TDC) | 54 |
Salary | 54 |
Incentive Mix | 55 |
Annual Cash Incentive | 55 |
Long-Term Incentive Awards | 57 |
Compensation Practices & Philosophies
| 59 |
Peer Group & Market Benchmarking | 60 |
Deferral, Retirement,
| 60 |
Clawback Policy & Practices | 62 |
Compensation Governance | 62 |
Compensation Committee Report |
The Compensation Committee of the Board oversees compensation for executives, as discussed under “The Compensation Committee”Committee beginning on page 2423 of this
proxy statement. This CD&A section discusses and analyzes executive compensation decisions made by the Committee related to 2019.
This CD&A section focuses on the compensation of five of our executives, referred to as the “Named Executive Officers” or “NEOs”:
2021. Several technical terms appearare used in this section. A glossary is provided on page 56.54.
This CD&A section, along with the two compensation sections that follow, focuses on the compensation of five executives plus two former executives. These seven are our “Named Executive Officers” or “NEOs” for 2021:
2021 NEOs | |
Name | Position |
D. Bryan Jordan | President & Chief Executive Officer |
Hope Dmuchowski | Senior Executive Vice President—Chief Financial Officer |
Daryl G. Byrd | Executive Chairman of the Board |
Anthony J. Restel | President—Regional Banking |
David T. Popwell | President—Specialty Banking |
Michael J. Brown | Former President—Regional Banking |
William C. Losch III | Former Senior Executive Vice President—Chief Financial Officer |
CD&A HighlightsExecutive Summary
Financial & Strategic OverviewKey Events Shaping 2021 Pay
In 2021, one member of our executive team retired, and one left to pursue another opportunity. Both of these individuals are listed in the 2021 NEOs table above. In response to Michael Brown’s retirement, Anthony Restel moved from Chief Operating Officer to become the President of our Regional Banking segment. After an executive search to replace William C. Losch III, we hired Hope Dmuchowski to become our Chief Financial Officer, allowing Mr. Restel to step down from his role as interim CFO. These events affected compensation decisions after the first half of last year, as described in this CD&A.
We grew average loans by 7% and average deposits by 5% in 2019. Loan growth was strongest in the “specialty” commercial lending category, led by loans to mortgage companies. Our net interest marginbelieve our financial performance for the year declined only 0.17% despite federal interest rate reductions totaling 0.75%, while our net charge-off ratio for loans remained very low at 0.09% forwas solid. That performance is discussed under Performance Highlights within the year. In 2019 our fixed income business increased its noninterest income by 69%, and its average daily revenue by 72%, taking advantage of market volatility and falling rates in 2019.Proxy Summary section beginning on
During our last Investor Day conference, late in 2018, we presented our “outlook” for 2019. The outlook included two key measures that we use to manage our businesses: return on assets (“ROA”) of 1.20%, and return on tangible common equity (“ROTCE”) of 17%.page 2. Our outlook was announced before the Federal Reserve reversed its interest rate policy, from raising rates four times in 2018 to lowering rates three times in 2019. Results for those measures in 2019 are presented below, along with two other commonly-followed measures: return on common equity (“ROCE”) and2021 reported earnings per share (“EPS”of $1.74 was modestly lower than reported earnings per share of $1.89 in 2020. However, 2020 results included a net after-tax benefit of $0.68 per share from notable items largely related to our 2020 merger of equals with IBERIABANK Corporation. Adjusting notable items out of the calculations, 2021 adjusted EPS of $2.07 improved substantially compared with 2020 adjusted EPS of $1.22. Performance for the year impacted two key compensation outcomes, as explained in the next two sections, Pay & Performance Alignment and Financial Performance Related to Incentives. (Notable items and non-GAAP adjustments are described more fully in Appendix B.).
2022 PROXY STATEMENT |
2019 Financial Highlights
In 2019, our adjusted results surpassed our outlook. Key contributors to this success were organic loan and deposit synergies stemming from the Capital Bank merger in 2017, organic loan and deposit growth in our other markets, and disciplined lending and pricing practices.
*ROTCE and adjusted results differ from results reported using generally accepted accounting principles (“GAAP”). The impacts of merger and restructuring expenses and certain other notable items have been excluded from 2019 adjusted results. Non-GAAP results are reconciled to GAAP results in Appendix A.
Since 2015, we substantially improved ROA, ROCE, ROTCE, EPS, and efficiency, based on both as-reported GAAP results and adjusted non-GAAP results. Our annual dividend rate per share more than doubled, as did our adjusted EPS. The impacts of a large legal settlement in 2015 (related
to our legacy mortgage business), merger and restructuring expenses in 2015 and 2019, and certain other notable items have been excluded from all adjusted results. Non-GAAP results are reconciled to GAAP results in Appendix A.
30-Branch Acquisition
In the fourth quarter of 2019 we announced our agreement to purchase 30 branches in North Carolina (20), Virginia (8), and Georgia (2). We expect the branch acquisition to close in the second quarter this year. Along with the branch locations, we will acquire $0.4 billion of loans and assume $2.4 billion of deposits. The branch transaction will expand our presence in several attractive southeastern markets, in particular the North Carolina markets of Winston-Salem and Durham-Chapel Hill. The transaction is subject to customary closing conditions.
IBERIABANK
In the fourth quarter of 2019 we announced a merger of equals agreement with IBERIABANK Corporation (“IBKC”), which is the parent company
of IBERIABANK based in Lafayette, Louisiana. The combined company, on a September 30, 2019 pro-forma basis and including the 30-branch acquisition, would have had $78 billion in assets, $59 billion in deposits, and $55 billion in loans. After closing, our board will expand to 17 directors, of which nine will be from legacy FHN and eight will be from legacy IBKC. IBKC shareholders will receive 4.584 shares of our common stock for each IBKC common share held, and collectively will be issued 44% of our post-closing outstanding common shares. A special meeting of our shareholders to vote on the IBKC transaction, including related amendments to our corporate charter, is expected to be held during the second quarter of 2020. None of the matters to be considered at our 2020 regular annual meeting, or discussed in this proxy statement, relate directly to the IBKC transaction. The IBKC transaction is subject to approval by shareholders of both companies, regulatory approvals, and other customary closing conditions. Currently we expect the IBKC merger to close mid-2020.
Branch Map Showing First Horizon, IBKC*, and 30 Acquired Branches
COMPENSATION DISCUSSION & ANALYSIS (CD&A)
NEO Compensation Changes After the IBKC MergerPay & Performance Alignment
When we signed the merger agreement with IBKC in November, our board of directors expected significant changes to be made, after closing, to our executive officer positions. At that time we signed letter agreements with several of our executive officers, including four of the named executives: Messrs. Jordan, Losch, and Popwell and Ms. Springfield. The letter agreements settled the roles each executive will have with the combined company after the IBKC merger closes. Additional information concerning NEO arrangements following the IBKC merger is provided under “Letter Agreements related to IBKC Merger” beginning on page 85 of this proxy statement.
In addition, the Compensation Committee and the Board of Directors will consider changes in executive compensation after the IBKC merger closes. Key changes known or expected at this time are:
OurFirst Horizon’s compensation policies and practices are designed to align the interests of our employeesexecutives with the intereststhose of our shareholders. We seek to attract, retain, incent, and reward individuals who contribute to our long-term success. Key practices linking performance to compensation include:
• | Significant weighting of pay mix in favor of | |
• | Meaningful share retention requirement. Our stock ownership guidelines extend the effective time horizon of our stock awards substantially, requiring executives to hold 50% of net after-tax shares realized from stock awards until retirement after multiple-of-salary minimum ownership levels are attained (increasing to a 75% retention requirement if an executive holds less than the minimum ownership level). |
Financial performance goals in 2021 were focused on metrics that management could control and that are meaningful to shareholders’ long-term interests in stock value. Specifically:
2021 Financial Performance Metrics
2021 Annual Cash Incentive | • Pre-provision net revenue (PPNR) – target payout at budget performance (50% weight) • Merger integration – non-quantitative with focus on cost synergies, talent retention, & client experience (40% weight) • Credit Quality – non-quantitative with focus on net charge-offs and non-performing loans (10% weight) | |
• ROTCE Rank – target payout at median performance vs KRX index banks over 3-yr period • TSR-rank modifier – ROTCE outcome adjusted based on |
Our strong alignment of pay with performance and shareholder interests is discussed further in Financial Performance Related to Incentives and in CEO Pay & Performance, which immediately follow.
Financial Performance Related to Incentives
Annual Incentive for 2021
Our achievement of key performance indicators directly related to goals established for 2021’s annual incentive was largely on track. PPNR results were slightly below budget, while expense outcomes were on-track and credit quality was excellent, blending to a 100% corporate rating.
KPIs for 2021 Annual Incentive
Budget/Goal | Achieved | |||
PPNR* | $1,244 million | $1,213 million | ||
Annualized cost reductions | $200 million by YE 2022 | $104 million thru YE 2021 | ||
One-time IBKC merger expenses | $460 million thru YE 2022 | $381 million thru YE 2021 | ||
Credit Quality | Net charge offs between 25-35bps for 2021 | Net charge offs of 0 bp for 2021 |
* | Adjusted to exclude merger expenses & gains, non-strategic results, and certain other amounts. See Annual Cash Incentive starting on page 55. |
PSUs Vested in 2021
Key recent actions enhancingPerformance stock units granted in 2018 vested in May 2021. The performance goal was our pay-for-performance policies and practices were:return on equity averaged over the three years 2018-2020, ranked against the ROEs of the fifty banks in the KRX regional bank index over the same period.
KPI for 2018 PSUs
KRX Median | FHN Achieved | |||
Average ROE over the 2018-2020 | ROE = 9.28% | ROE* = 9.70% | ||
Rank = 25th | Rank = 18th | |||
Overview
Early each year, the CEO develops a personal plan that contains financial and strategic goals aligned with the Board-approved company plan for the year. The CEO submits that personal plan to the Committee for review
and approval. The Board of Directors also reviews the plan. After the end of each year, the Committee reviews the CEO’s achievement of objectives in his personal plan.
The Compensation Committee considered Mr. Jordan’s significant contributions to our financial results and
51 | 2022 PROXY STATEMENT |
COMPENSATION DISCUSSION & ANALYSIS (CD&A)
competitive position when making decisions about his pay for 2019.2021. In each
of the past five years, Mr. Jordan has met or exceeded his personal goals. He continues to provide consistent, and critical leadership.
Mr. Jordan’s leadership is known throughout the industry. He is a director or executive committee
member of the Federal Reserve Board’s Federal Advisory Council, American Bankers Association, and Operation Hope (which strives to provide banking services to financially or socially disadvantaged persons). He has been named CEO of the year byInside Memphis Business,, has been featured as a top-ten CEO inAmerican Banker,, and has been a director of the Federal Reserve Bank of St. Louis and an executive committee member of the Mid-Size Bank Coalition of America. These associations and recognitions, as well as others outside of banking, reflect well on our company and enhance Mr. Jordan’s connections to the financial services community.
|
Within FHN’s peer group, Mr. Jordan’s total direct compensation package in 2019 was below median
levels. The Committee raised his package in 2020 to roughly median. After the IBKC merger closes, the Committee expects to re-assess the composition of FHN’s peer group and to re-evaluate all executive compensation levels, including that of the CEO.
The Compensation Committee has weighted the pay mix of Mr. Jordan heavily in favor of incentives tied to thefinancial performance of our company’s operations and themarket performance of our common stock. As illustrated in the following diagram, fully 80% of Mr. Jordan’s regular total direct compensation in 2019, measured at target, was at-risk in one or both of those areas.
CEO Pay At Risk for Performance in 2019
Of the CEO’s 2021 total direct compensation, 62% was at risk for market performance of our common stock, and
60% was at risk for financial performance of the company. Combined, 85% of the CEO’s TDC was at risk for market or financial performance, or for both, as illustrated in this chart:
Executive & Compensation Changes in 2021
The Committee re-set all executive pay levels and components in July 2020, after the closing of First Horizon’s merger of equals with IBKC. No broad or categorical changes were made for 2021. Changes in executive roles during 2021 resulted in special RSU awards late in the year, and, in 2022, resulted in general changes to compensation for affected persons consistent with their new roles.
The chartSpecifically, changes among the NEOs in 2021 were:
• | Mr. Brown retired in October, and Mr. Restel was elected to succeed him as President—Regional Banking while retaining his interim position as Chief Financial Officer. Mr. Restel received a special award of RSUs after he was promoted to President—Regional Banking following the retirement of Mr. Brown. | |
• | Ms. Dmuchowski joined us in November as Chief Financial Officer, ending Mr. Restel’s interim position. Components of her negotiated compensation package are reflected in the remainder of this CD&A; her package included a special new-hire/retention RSU award. |
Say on Pay Vote History
Each year, we present to our shareholders an advisory resolution to approve executive compensation. This is commonly known as “say on pay.” We ask our shareholders to approve, on an advisory basis, our executive compensation programs. See Vote Item 3—Say on Pay beginning on page 49 for further information. For nine of the right compares actual payouts of regular PSU awards andpast ten years, our total shareholder return (“TSR”) during the award timeframes. The chart shows the percentage of target earned for those regular PSUs that vested during 2015-2019 alongside the TSR we achieved during each PSU’s lifetime, from grant to vesting. In each case the TSR base level is indexed to 100%; a positive return is added to 100%, and a negative return is subtracted from that level.FOR vote has exceeded 90%:
The chart shows that the percentage earned is aligned with the TSR achieved during the same period. Specifically, regular PSU payout percentages have tended to fall and rise in step with the TSR achieved during each PSU’s performance period, and in most cases the TSR percentage significantly exceeded the PSU’s payout percentage.
Say on Pay Past Ten Years | ||||
Year | FOR Vote | Year | FOR Vote | |
2012 | 95% | 2017 | 95% | |
2013 | 91% | 2018 | 32% | |
2014 | 94% | 2019 | 97% | |
2015 | 94% | 2020 | 94% | |
2016 | 98% | 2021 | 97% |
2022 PROXY STATEMENT |
COMPENSATION DISCUSSION & ANALYSIS (CD&A)
Shareholder Outreach
UntilWe are committed to enhancing our corporate governance outreach to engage with, and solicit feedback from, external stakeholders. Members of management, the 2019 grants (which will vest in 2022), TSR was not used as a performance metric inCommittee’s Chair, and our regular annual PSU awards. The alignment of regular PSU outcomesLead Director met with TSR over corresponding time periods illustrates that the performance metrics used and goals set by the Compensation Committee have, over time, aligned with significant growth in shareholder value.
shareholders representing about 18% of our outstanding common shares. The findings and outcomes from this process are discussed in Shareholder Outreach beginning on page 12 of this proxy statement.
At our 2020 Annual meeting, vote item 2—Advisory Resolution to Approve Executive Compensation, commonly known as “say on pay”—asks our shareholders to approve, on an advisory basis, our executive compensation programs as described in this proxy statement. Shareholders have voted on a similar proposal for many years:
Year | FOR Vote | Year | FOR Vote | |||
2010 | 97% | 2015 | 94% | |||
2011 | 97% | 2016 | 98% | |||
2012 | 95% | 2017 | 95% | |||
2013 | 91% | 2018 | 32% | |||
2014 | 94% | 2019 | 97% |
Typically, more than 90% of the vote isFOR. At our 2018 Annual meeting, however, the say on pay item received only 32%FOR.
Although the say on pay vote item is technically advisory, the Compensation Committee took the 2018 results very seriously. After extensive shareholder outreach and consultation, the Committee took the following actions in 2018 and early 2019 in response to shareholder feedback:
Alignment with Governance Principles
Our executive compensation practices embrace manyprograms are designed to align with industry best practice corporate governance principles.practices.
Practices We Employ Include | Practices We Avoid or Prohibit Include | |
All executive long-term incentives are stock-based and
Incentive measures reflect outcomes that our executives control and that we believe drive shareholder value Performance measures emphasize controllable outcomes for which management is accountable Committee use of independent compensation consultant Meaningful Require holding 50% of after-tax vested stock awards during career with the company, rising to 75% if multiple-of-salary minimum stock ownership levels are not met Double-trigger on change in control features and agreements (CIC event plus qualifying termination) Clawbacks |
NO stock option repricings
NO discount-priced stock options
NO single-trigger change in control
NO dividends paid on long-term incentive awards until vesting; failure to vest means no dividends NO employment agreements** NO hedging transactions allowed in First Horizon stock ( |
* | An excise tax gross-up feature is grandfathered in certain older change in control severance agreements, but has not been used in new agreements since 2008. Also, change in control and other benefits under certain legacy IBKC arrangements contained or preserved a tax gross-up feature, and we are obligated to honor those for the duration of each contractually binding arrangement. | |
** | We have agreed to retain Mr. Byrd as Executive Chairman for two years after closing the First Horizon/IBKC merger (in July 2020), subject to certain exceptions. See Agreements related to IBKC Merger beginning on page 77 for additional information. |
Overview of Direct Compensation Components Overview
The major components of executive compensation in 20192021 consisted of cash salary, annual cash bonus under our Management Incentive Plan (“MIP”),incentive, and annual stock awards granted under our Equity Compensation Plan (“ECP”).long-term incentive (LTI) awards. Regular annual stockLTI awards for NEOsexecutives in 20192021 consisted of PSUs stock options, and RSUs.
The key corporate performance measures for 2019 cash bonuses were consolidated pre-tax earnings
and noninterest expense (efficiency). The key performance measure for 2019 PSUs is based on ROTCE for our core segments measured in relation to certain peer banks over three years, modified by our TSR ranked against our peers. The following table presents an overview of the total direct compensation components for our NEOs.executives.
Regular Direct Compensation Components in 2019
2021
Component | Primary Purpose | Key Features | ||
Cash salary | To provide competitive baseline compensation to attract and retain executive talent. | Salaries are determined based on prevailing market levels with adjustments for individual factors such as performance, experience, skills, and tenure. | ||
Annual cash | To | |||
Annual PSUs | To |
Compensation Practices & Philosophies
Our compensation programs are designed to attract and retain a talented workforce. We recruit from a broad talent pool. Our people in turn may be recruited by competitors, other financial services firms, and firms in other industries. The
total compensation opportunity we provide at each level is designed to be competitive so that over the long-term we reduce the risk of losing our best people.
COMPENSATION DISCUSSION & ANALYSIS (CD&A)
Use of Peer Bank DataCD&A Glossary
NEO | Executive officer named in this CD&A | |
TDC | Total direct compensation (salary, annual incentive, & long-term incentive awards) | |
IP | 2021 Incentive Plan (long-term incentive awards starting April 2021) | |
PSU | Performance stock unit award | |
RSU | Restricted stock unit award; variations include ARSU (regular annual award), BRSU (award granted in lieu of annual cash incentive), and RRSU (targeted retention or other special award) | |
LTI | Long-term incentive | |
RSA | Restricted stock award | |
CIC | Change in control | |
IBERIA or IBKC | IBERIABANK Corporation |
IB RSA | Special restricted stock award granted in 2019 shortly after the IBKC-First Horizon merger was announced | |
KPI | Key performance indicator | |
PPNR | Pre-provision net revenues | |
ROA | Return on average assets | |
ROE | Return on average equity | |
ROCE | Return on average common equity | |
ROTCE | Return on average tangible common equity | |
TSR | Total shareholder return | |
EPS | Earnings per share | |
GAAP | Generally accepted accounting principles | |
CECL | Current expected credit loss accounting |
2021 Pay Components & Decisions
Total Direct Compensation (TDC)
The Compensation Committee reviewsIn July 2020, after our merger with IBKC closed, the compensation practices of a peer group of selected U.S. banks of roughly comparable size and business mix (Peer Banks). The peer review helps our programs remain competitive. For many years the Committee has considered specific data from Peer Banks in setting the compensation components for our executives. The Peer Banks used in 2017 were fourteen regional financial services companies selected by the Committee.
Late in 2017 we merged with Capital Bank, increasing our asset size by roughly one-third. Overall, we have increased our asset size by more than 70% since 2013, and our business mix has shifted toward traditional banking services. The Committee fully reconsidered our Peer Bank list, re-evaluating our current size, business mix, and target markets. As a result, for 2018 and 2019 our Peer Banks have consisted of thirteen financial services institutions:
The Committee uses peer and other market data to help establish the size and terms of themajor components of direct compensation for executives. Salary is targeted at the median of the market compensation—salary, annual incentive, and long-term incentive awards—for each position. Actual salariesNEO were set after a review of practices within our post-merger peer group (see Peer Group & Market Benchmarking beginning on page 60 below). Peer data was for 2019, the latest available at that time.
Post-merger, the Committee’s preferences and goals were to set target total direct compensation aligned with peer median, recognizing that individual packages may be higher or lower than medianat any particular time based on individual factors—factors including performance, experience, skills, tenure and tenure—or retention needs. Bonus opportunities and equity awards are targeted similarly: target compensation
is intended to be paid for median performance, and maximum compensation is intended to be paid for top-quartile performance.
For special compensation components, including retention awards and individual retirement and severance arrangements, relevant market data often is not available. In those cases the Committee relies on recommendations from management (for awards other than to the CEO) along with external advice from the Committee’s independent consultant to determine the types, amounts, or terms of such benefits that are reasonable and appropriate for the circumstances.
The Total Shareholder Return Performance Graph (“TSR Graph”) that appears in our annual report to shareholders (on page 180 of that report) uses the published Keefe, Bruyette & Woods regional banking index (ticker symbol KRX) against which to compare our TSR. The KRX index encompasses fifty regional U.S. banks, including us. The annual PSU awards granted to executives in 2019 used the KRX index banks as the group against which our core-segment ROE will be ranked over the three-year performance period of those awards. The Committee believes that, in the context of a multi-year financial performance award, the KRX index provides a larger, and more stable, group representing “the industry” against which to measure our performance, even though many of those banks would not be appropriate for benchmarking compensation practices.
After the IBKC merger closes later in 2020 (see “2019’s Strategic Transactions Will Drive Our Future” beginning on page 50 of this proxy statement), the Committee expects to reconsider the Peer Bank list in light of our larger financial size, broader market footprint, and broader business mix.
Stock Ownership GuidelinesSalary
Under our stock ownership guidelines,Salary is the foundation for all NEOs and directors are required to retain 50%major components of direct compensation: the size of each incentive is a percentage of base salary (see Incentive Mix immediately below). Early each year the Compensation Committee reviews the salaries of the net after-tax shares received from stock awards. The retention level increases to 75% ifCEO and other executives, considering market data, competitive practices within the person fails to meet certain minimum stock ownership levels. For each person,industry and 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. See page 12 for additional details.company’s performance.
The CEO’s minimum ownership level under the guidelines is six times cash salary. The minimum levelssalary rates set in July 2020, as described in Total Direct Compensation immediately above, applied 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 paidsecond half of 2020 and were not changed for 2021. The outcome of that review is summarized in shares, and shares held in tax-deferred plans are counted, while PSUs, stock options, and RSUs paid in cash are not counted.the following table.
NEO Salaries 2021 | ||
Mr. Jordan | 1,030,000 | |
Ms. Dmuchowski | 600,000 | |
Mr. Byrd* | 1,150,000 | |
Mr. Restel | 675,000 | |
Mr. Popwell | 700,000 | |
Mr. Brown | 700,000 | |
Mr. Losch | 675,000 |
We intend for the combined emphasis on corporate performance in setting executive compensation and meaningful stock retention to link the interests of
* | Mr. Byrd’s pay is governed by an employment agreement. |
2022 PROXY STATEMENT |
our executives strongly with those of our shareholders.COMPENSATION DISCUSSION & ANALYSIS (CD&A)
Guideline ownership levels are assessed annually, in the third quarter. In the 2019 assessment, all
NEOs exceeded guideline ownership levels and all complied with the retention requirement.
Performance compensation under the MIP, ECP, 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; if 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
The Compensation 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 assists the Committee in its reviews of compensation program actions recommended by management. FW Cook has no other relationships with the company or management. Key engagement items for FW Cook in 2019 were:
In 2019 management engaged an external compensation consultant, McLagan, mainly to conduct an updated competitive pay assessment for executives and for peer metrics.
Additional information concerning our use of compensation consultants appears under the caption “The Compensation Committee—Use of Consultants” on pages 25-26 of this proxy statement.
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 presents recommendations to the Compensation Committee for approval. The CEO ultimately oversees the
development of recommendations. If executive-level exceptions are appropriate, such as approval of an executive’s early retirement, management generally reviews the facts of the situation and provides a recommendation to the CEO and, ultimately, to the Committee for approval. The CEO does not participate in Committee deliberations concerning his own compensation.
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 played no 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 in the future, the Committee intends to consider preservation of deductibilty as one factor, among many, in making decisions consistent with the objectives of the program in question and our business needs.
Direct Compensation Components
The direct components of NEO compensation in 2019 were cash salary, annual bonus under the MIP, and annual stock awards consisting of RSUs, stock options, and PSUs under our ECP. An
overview of these components appears under “Overview of Direct Compensation Components” beginning on page 55 of this proxy statement above.
In setting the size of the direct compensation components for 2019, the Compensation Committee considered the total compensation opportunity at target payout levels for each position. The target total mix of the direct components is summarized in the following chart, which illustrates the regular annual pay packages planned by the Committee early in the year. The chart shows only regular annual compensation elements. Special awards in 2019 that are not
included consist of: for Mr. Losch, $1,250,000 of restricted stock contingent on closing the IBKC merger mentioned above; for Mr. Popwell, $1,400,000 of restricted stock contingent on closing the IBKC merger; and for Ms. Springfield, $863,000 of restricted stock contingent on closing the IBKC merger. See “Summary Compensation Table” beginning on page 73 for additional information concerning amounts paid, granted, or earned in 2019.
2019 Direct Compensation Mix at Target
The amount of each component usually is determined in relation to cash salary. Salary levels are based largely on these factors: individual experience, individual performance, level of responsibility, and competitive market levels. A
specific need for retention also can play a role. No specific weighting is given to any one factor. The size of each direct component for the named executives as a percentage of cash salary is shown in the following chart.
Sizing of 2019 Direct Compensation Components
As a Percentage of Annual Cash Salary
2019 Regular Annual Stock Awards | ||||||||||||||||||||
NEO | Annual Bonus (target) | Performance Stock Units (target) | Stock Options | Restricted Stock Units | Total Stock Awards | |||||||||||||||
Mr. Jordan | 140 | % | 150 | % | 50 | % | 50 | % | 250 | % | ||||||||||
Mr. Losch | 100 | % | 70 | % | 35 | % | 35 | % | 140 | % | ||||||||||
Mr. Kisber* | 583 | % | 140 | % | 93 | % | 83 | % | 317 | % | ||||||||||
Mr. Popwell | 100 | % | 70 | % | 35 | % | 35 | % | 140 | % | ||||||||||
Ms. Springfield | 90 | % | 55 | % | 28 | % | 28 | % | 110 | % |
Key factors considered when incentive target levels are set include the appropriate mix of base pay (salary)salary versus pay at risk for corporatefinancial performance or stock value performance, and the mix between short- and long-term compensation. The chart andfollowing table above showshows that the CEO’s regular compensation package is more heavily weighted in favor of financial performance, and more heavily at-risk overall, than the other NEOs except Mr. Kisber.NEOs. This practice is consistent with the greater responsibilities of the CEO position, prevalent market practices among our Peer Banks,peer group, and our compensation philosophy, which endeavors to link a substantial portion of executive pay to performance.
For 2019, the Committee increased the CEO’s mix ofall NEOs, PSUs towere 60% of total equityLTI awards, up from 50% in 2018, and correspondingly decreasedwhile RSUs and stock options to 20% each. For all other named executives except Mr. Kisber, 2019 stock awards consisted of 50% PSUs, 25% RSUs, and 25% options.
The percentages shown for all regular 2019 stock awards in the table above are based upon 2019 salary rates and upon our closing stock price on the grant date, February 11, 2019, which was $15.43 per share.
In 2019, for purposes of converting the percentages mentioned above into specific share or unit numbers the Compensation Committee used the following valuation methods: for RSUs,were 40%.
100%2021 Incentive Mix
(at target level, as a percentage of market value at grant; for stock options, 25%; and for PSUs, 91.9%, as explained below.salary)
RSUs and PSUs. The valuation methods for RSUs and PSUs are consistent with those used for financial reporting purposes. PSU values in 2019 were discounted 8.1% (net) from target levels due to the mandatory two-year post-vesting deferral coupled with the TSR modification feature added in 2019. Neither award type is discounted for the risk of forfeiture due to employment termination or non-performance.
Stock Options. The actual value of a service-vested option cannot be determined in any definitive way. Many commonly used estimation methods, including the method used for financial reporting, were developed in connection with ordinary market trading of short-term options. The Committee believes that those methods overstate the value that an executive generally would ascribe to our long-term, unmarketable options with service-vesting requirements. That overstatement is structural, given the original usage of those methods. For those reasons, the Committee believes that the relatively simple and stable 25% method it has used for several years provides a more appropriate approximation of value for our option program.
Annual | Long-Term Incentive Awards | |||||||
NEO | Incentive | PSUs | RSUs | Total LTI | ||||
Mr. Jordan | 150% | 240% | 160% | 400% | ||||
Ms. Dmuchowski* | 85% | 90% | 60% | 150% | ||||
Mr. Byrd | 124% | 215% | 143% | 358% | ||||
Mr. Restel | 100% | 105% | 70% | 175% | ||||
Mr. Popwell | 100% | 105% | 70% | 175% | ||||
Mr. Brown | 100% | 105% | 70% | 175% | ||||
Mr. Losch** | 100% | 105% | 70% | 175% |
Ms. Dmuchowski’s 2021 annual incentive had a one-time $500,000 floor as part of her negotiated offer letter. Her regular annual LTI awards began in 2022 at the levels shown. | ||
** | Mr. Losch’s annual incentive and long-term incentive awards were forfeited when he left the company in July 2021. |
The Committee uses a tally sheet tool to review executive pay packages and when considering adjustments to executive pay levels and mix. A “sheet” for each executive summarizes all major
categories of current and recent compensation levels, including the aggregate retention value and duration of unvested awards. Tally sheets are
reviewed in conjunction with market data related to each executive position.
Early each year,In February 2021, the CEO developsCommittee decided to continue (from 2020) using pre-provision net revenue (PPNR) as a personal plan that containskey (50% weighting) financial/quantitative driver of annual incentive performance outcomes for 2021. PPNR—operating revenue net of operating expenses before counting loan-loss provision expense—is a performance measure often used by financial industry analysts and strategic goals aligned with the Board-approved company plan for the year. The CEO submits that plan to the Compensation Committee for reviewregulators in forecasting, modelling, and approval. The Board of Directors also reviews the plan. The Committee reviews the CEO’s achievement of objectives in his personal plan for the preceding year when assessing the CEO’s salary for therisk
coming year. The Committee also weighs competitive practices withinmanagement. PPNR is used to measure operating performance without the industry as well as corporate initiatives. For other NEOs, the Committee approves salaries each year taking the CEO’s recommendations into account.
For 2019, noneimpact of the NEOs received a raise in salary.
Under our MIP, the annual bonus opportunity offered to each NEO (other than Mr. Kisber, discussed at the end of this section) is based on target amountsloan-loss provision, which can be unpredictably volatile and performance goals that are approved by the Committee early in that year.
Early in 2019 the Committee established a formulaic structure for 2019 MIP bonuses, subject to certain potential adjustments. Individual bonuses
were determined by applying a corporate rating, along with an individual rating, to individual target bonus amounts set for each NEO. The corporate rating, in turn, was determined by adding together an income factor and an efficiency factor; the resulting sum was subjected to several potential company-wide subjective adjustments. These calculation processes are depicted in the following chart:
Corporate Rating
The Corporate Rating in 2019 was the sum of two percentages—the efficiency factor plus the income factor—multiplied by a subjective adjustment factor.
Efficiency Factor
The efficiency factor provided threshold-level reward (50%) for achieving budget noninterest expense levels, and target-level reward (100%) for achieving a 3% reduction from budget. The calculated factor was capped at 100%; better-than-target efficiency performance was to be considered as part of the subjective adjustment factor. Interest expense was excluded as being largely outside of management’s control. Expenses of our fixed income segment were excluded because theyThe Committee also maintained high focus (40% weighting) on the merger integration process and outcomes, and assigned credit quality outcomes a 10% weighting. These decisions are driven substantially by commissions, which rise and fall in tandem with revenues. Except for the CEO, half of the efficiency factor outcome was driven by company-wide results, and half was driven by resultsillustrated in the business unit or other area of the company managed by each specific officer. In both cases (company-wide and business unit),following table:
“target” outcomes required a 3% reduction in expense from budget.
2019 Efficiency Factor Grid (40% Weighting*)
Pre-Provision Net Revenue (PPNR) Factor (50% wtg) | ||||||||
PPNR Factor | ||||||||
• Pre-provision net revenue (50%) • Merger integration (40%) • Credit quality (10%) Adjustments: • Corporate rating adjustment • Individual rating | ||||||||
à | $1,244 to $1,555 million | 100% to 125% | 100% to 150% | |||||
100% | 100% (target) | |||||||
$ | 50% | |||||||
0% |
Corporate Rating: PPNR (50%)
In contrast to many other measures of operating earnings, PPNR ignores provision for loan loss expense. This can be an advantage in times of economic uncertainty or flux, when loan loss provisioning can be largely outside of management’s control. The Committee knew that the COVID-19 pandemic, coupled with CECL accounting rules, had created substantial provisioning in 2020, enlarging the loan loss reserve to very high levels even though, through
year-end 2020, loan charge-offs had remained relatively low. In early 2021, vaccines offered the hope of economic recovery along with the risk that new viral variants might cause significant setbacks. Using PPNR removed the risk of large provision expenses, and large provision reversals (reserve releases), from the annual incentive calculus.
Corporate Rating: Merger Integration (40%)
The IBKC merger integration factor was intended to be judged using both quantitative and non-quantitative
2022 PROXY STATEMENT |
COMPENSATION DISCUSSION & ANALYSIS (CD&A)
considerations, viewed by the Committee with hindsight. Items the Committee expected to assess included, without any pre-determined weighting:
• | Retain key talent in the top three tiers of the company who are critical to integration and long-term success | |
• | Achieve 2021 target to reduce annual expenses by $132M, plus make meaningful progress toward the company’s ultimate annual cost reduction goal of $200 million | |
• | One-time merger expenses remain on track to be not more than $460 million | |
• | Achieve customer retention targets and minimize customer impact | |
• | Achieve systems integration milestones |
Income FactorCorporate Rating: Credit Quality (10%)
Credit risk management plays a critical role in our long-term results over the course of a credit cycle. PPNR ignores loan loss provision, and the credit quality factor is intended to fill this gap. It includes a non-quantitative assessment of credit underwriting, grading, and other related management practices. Key focus points for 2021 compared actual results to forecast/budget net charge offs (NCOs) and non-performing loans (NPLs).
Corporate Rating Adjustment
The income factor provided target-level reward for achieving budget, and superior reward for exceeding budget, in 2019.
2019 Income Factor Grid (60% Weighting)
Adj’d 2019 Pre- Tax Earnings | Percent of Budget | Income Factor* | ||
$717 million & above | 110% & above | 110% to max of 150% | ||
$652-717 million | 100% - 110% | 100% - 110% | ||
$651 million(budget) | 100% | 100% | ||
$586-651 million | 90% - 100% | 90% - 100% | ||
$489-585 million | 75% - 90% | 75% - 90% | ||
$326-488 million | 50% - 75% | 50% - 75% | ||
Below $326 million | below 50% | 0% |
Subjective Adjustment Factor
In 2019 calculated corporate rating—the sumoutcome of the efficiencyPPNR, merger integration, and income factors couldcredit quality factors—can be modifiedadjusted by a subjective adjustment factor, in the discretion of the Compensation Committee to arrive at a final Corporate Rating.corporate rating. The subjective factoradjustment could have been affected byencompass both quantitative and non-quantitative considerations. Potential subjective adjustment categories in 2019 were:considerations, including:
Balanced scorecard results | |
Quality of earnings assessment | |
Other adjustments, as determined by the Committee |
The balanced scorecard process rankedranks our company among Peer Banksrelative to peer group companies on various financial measures. The scorecard process used quantitative financial measures and peer rankings, but was not used in a quantitative manner to determine a specific numerical rating.
The risk management factor was intended to be used if unusual or exceptional events occurred that tested our levelFor quality of preparedness, or if events
occurred that reflected well or poorly upon our risk management functions.
Under “quality of earnings”earnings, the Committee intended, among other things, to take account of unusual shortfalls or windfalls in revenues associated with interest rate movements, asset sales, and other events 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 efficiency and income 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.Individual Rating
Calculations & Rationales
CalculationsIn addition to the corporate rating, which applies to all NEOs, the Committee also considers each NEO’s individual performance in determining final results. Each individual rating is based on the Committee’s assessment of personal plan results and any other individual factors the efficiencyCommittee chooses to consider. Individual ratings range from 0% to 150%, and income factors were quantitative, without discretionary input fromare multiplied by the Committee. As mentioned above, the two factors were added with weightings of 40% and 60%, respectively.corporate rating to arrive at a final performance percentage.
The increased focus on efficiency in 2019 was intensified by setting target (100%) efficiencyCEO’s 2021 personal plan included four major performance at expense levels 3%area groups:
Strategic Priorities
• | ESG framework & progress | |
• | systems and business integration | |
• | culture & processes | |
• | differentiated customer experience | |
• | information technology | |
• | brand awareness |
Associates
• | promotion of diversity and inclusion | |
• | engaging associates | |
• | succession and talent development |
Financial
• | efficiency and revenue improvements | |
• | shareholder value creation | |
• | strong risk culture and credit quality |
IBKC Merger
• | integration | |
• | optimization |
These areas had no particular weighting.
Actual individual rating impacts are discussed under budget, and by setting threshold (50%) performance at budget. The Committee also split the efficiency factor into company-wide and business unit parts so that, except for the CEO, each executive would be focused on driving efficiency in that part of our business that he or she could control directly. As a result, merely achieving budgeted expense levels (company-wide and business unit) would result in a 20% nominal reduction in earned bonus; moreover, failure to achieve company-wide budget would result in a 20% reduction by itself, and failure to achieve business unit budget separately would result in a 20% reduction.Annual Incentive Outcomes below.
Pre-Defined Quantitative Adjustments
The subjective adjustment factor, an unweighted blend of many company-wide considerations, was applied toCommittee, in setting the sum of the efficiency and income factors.
Required Quantitative Adjustments
Pre-tax earnings, noninterest expense,performance goals, provided that PPNR and other financial performance measures for 2019 were required tomust be adjusted for certain specific items, including changes in accounting principles and certain unusual or non-recurring items, such as litigation settlements. Also, the unusual gains and losses recognized for the merger of equals, as required by accounting rules, were adjusted out of budget and performance calculations. The required adjustments arewere similar to, but not the same as, the notable item adjustments presented in Appendix A.B.
2022 PROXY STATEMENT |
COMPENSATION DISCUSSION & ANALYSIS (CD&A)
Actual adjustments to the calculated factors are discussed under “2019 MIP Bonus Outcomes” below.2021 Annual Incentive Outcomes
IndividualCorporate 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 2019, the CEO’s personal plan included eight major performance areas: strategic, financial (efficiency and revenue growth), merger integration/optimization, technology, risk
management & credit quality, customers, shareholder value, and employees. A theme common to many of these areas was maintaining, improving, or instilling appropriate and constructive corporate culture. These areas had no particular weighting. 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 “2019 MIP Bonus Outcomes” immediately below.
2019 MIP Bonus Outcomes
The outcomes of the MIP bonus processcorporate rating for the NEOs other than Mr. Kisber2021 was 100%. The quantitative and qualitative determinations leading to that result are summarized in the following table.
2019 MIP Bonus Outcomesbelow:
Company | Bus. Unit | |||||||||||||||||||||||
Income | Efficiency | Efficiency | Subjective | |||||||||||||||||||||
Factor | Factor | Factor | Adjustment | Corporate | Individual | Bonus | Final | |||||||||||||||||
NEO | (60%) | (20%) | (20%) | Factor | Rating | Rating | Target ($) | Bonus ($) | ||||||||||||||||
Mr. Jordan | 107 | % | 100 | % | 100 | % | 106 | % | 110 | % | 108 | % | 1,260,000 | 1,500,000 | ||||||||||
Mr. Losch | 107 | % | 100 | % | 100 | % | 106 | % | 110 | % | 104 | % | 500,000 | 575,000 | ||||||||||
Mr. Popwell | 107 | % | 100 | % | 100 | % | 106 | % | 110 | % | 104 | % | 550,000 | 630,000 | ||||||||||
Ms. Springfield | 107 | % | 100 | % | 100 | % | 106 | % | 110 | % | 100 | % | 360,000 | 396,000 |
2021 Corporate Rating | |||
Drivers | Results & Rationales | Rating | |
PPNR (50%) • Outcome: 95% | PPNR for 2021, after all required adjustments, was 95% of forecast/budget. After all discretionary adjustments, PPNR was 97% of forecast/budget. | 100% | |
Merger (40%) • Outcome: 100% | Annualized expense reduction by year-end 2021 was on-track at $104 million, vs. $200 million target by year-end 2022. Estimated merger expenses increased and systems integration was delayed until early 2022 in significant part due to hurricane and other severe events in several markets in third quarter 2021. Customer and talent retention, and impact mitigation, all were judged to be good. | ||
Credit (10%) • Outcome: 125% | Net Charge-Offs for 2021 were zero basis points (0.00%) vs 25-35 bps forecast in January 2021. The Committee judged credit management to be excellent. | ||
Overall Rating Adjustments • Outcome: 100% | The Committee adjusted the PPNR rating up by about 2%, mainly to exclude the costs of retiring financing instruments obtained in the IBKC merger, but did not make any overall adjustments. In the balanced scorecard assessment, First Horizon ranked third among the peer group banks in NCOs, and was near-median for most other financial performance categories. |
Pretax earnings in 2019 were $695 million after all required adjustments. That was nearly $44 million above “target” performance, and, as a result, the Income Factor was 107%. Company noninterest expense in 2019 was $872 million after all required adjustments. That was nearly $21 million below “target” performance and more than 5% below budget; as a result, the Company Efficiency factor was 100%, which was the cap. Mr. Jordan’s Business Unit Efficiency Factor was the same as the Company Efficiency Factor, and each other NEO achieved better-than-target Efficiency results. The Corporate Rating, with efficiency capped at 100%, calculated to 104% before considering subjective corporate adjustments. After considering overall results for the year, the Compensation Committee set the Subjective Adjustment Factor at 106%, resulting in a final, fully-adjusted Corporate Rating for each NEO of 110%. The most important fact impacting the Committee’s determination of the corporate Subjective Adjustment Factor was that noninterest expense had been driven down more than 5% below budget. “Target” efficiency required expenses to fall 3% below budget, which (a year earlier) had been considered a fairly aggressive goal. Another key factor was quality of earnings: despite interest rate reductions during the year that put downward pressure on net interest income and traditionally would have dampened deposit growth, loan and deposit growth in 2019 were excellent, achieving strong revenue growth without significant credit quality deterioration.
Lastly, the Committee credited management with achieving these results consistently during the year despite, in the fourth quarter, having to devote substantial attention and resources to negotiating and planning for the IBKC merger that is expected to close in 2020.Individual Ratings
The Committee gave Mr. Jordan a 108%determined that each of the five still-active NEOs achieved an individual rating for 2019. The Committee creditedof 100%, other than Mr. Jordan with leading the excellent corporate efficiency results, loan growth, and deposit growth mentioned above,Restel, whose bonus was increased $50,000 (7.4%) over target largely because he served as interim Chief Financial Officer as well as the excellent fixed income results mentioned in the next section of this proxy statement. For two other NEO bonuses,Chief Operating Officer from July until November. The key factors the Committee madeconsidered in approving individual and rounding adjustments resulting in 104% ratings.ratings were similar to those considered for the corporate rating:
Mr. Kisber is the president of our fixed income business unit (FHN Financial). His bonus for 2019 was earned under the MIP, but was driven by the overall incentive pool created under the FHN 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 basic structure of Mr. Kisber’s pay package has not changed in many years. His compensation
Systems integration was delayed in third quarter due to severe weather events impacting key markets and clients. Mr. Jordan and the rest of the management team appropriately judged that the practical realities |
elementsfor any given year are paid or grantedduringthat year and the next.
Mr. Kisber’s package is a variable percentage of the incentive pool, subject to possible reduction approved by the Committee, and subject to a $6 million overall cap on the package. Specifically, his percentage of the pool is calculated based on divisional return on equity (ROE): ROE below 10% results in Mr. Kisber earning 9% of the pool, ROE from 10% to 15% results in 12% of the pool, and ROE above 15% results in Mr. Kisber earning 15% of the pool.
Early in 2020, the fixed income pool for 2019 was to be calculated, 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:
facing clients outweighed the | ||
Credit quality during the | ||
By year-end 2021, merger-related cost saves remained on track. | ||
Management adjusted well to two unplanned departures, by Messrs. Losch and Brown. | ||
�� | ||
• | Revenue synergies, especially in |
The first $0.5 million of regular annual stock awards were to be granted as RSUs, and any remainder (up to $1.4 million) were to be granted 60% in PSUs and 40% in stock options. The Committee retained the discretion under the MIP to reduce any calculated bonus amount for Mr. Kisber, but made no reduction for 2019.2021 Outcomes
Mr. Kisber’s 2018 packageApplying these processes and FHN Financial’s performance resulted in no grantdeterminations to him of regular stock awardsduring 2019,for 2018. However, inthe target opportunities established early 2019, based in part on input from Mr. Kisber and Mr. Jordan, the Committee converted
Mr. Kisber’s 2018 earned MIP cash bonus into an award of 2019 executive PSUs on standard terms. The conversion was done in the same manner, usingyear for each NEO led to the same valuation method, asoutcomes in the regularfollowing table. Mr. Losch is omitted from the table; his opportunity was forfeited when he departed.
2021 Annual Incentive Outcomes | ||||||||
NEO | Target ($) | Corp. Rating | Indiv. Rating | Incentive Paid ($) | ||||
Mr. Jordan | 1,545,000 | 100% | 100% | 1,545,000 | ||||
Ms. Dmuchowski | 500,000 | 100% | 100% | 500,000 | ||||
Mr. Byrd | 1,425,000 | 100% | 100% | 1,425,000 | ||||
Mr. Restel | 675,000 | 100% | 107% | 725,000 | ||||
Mr. Popwell | 700,000 | 100% | 100% | 700,000 | ||||
Mr. Brown | 700,000 | 100% | 100% | 700,000 |
In order to induce her to join First Horizon, we agreed to pay Ms. Dmuchowski a full-year annual awardsincentive for other executives (see “Valuation of Stock Awards”2021 with the target level shown in the table. Also, we agreed that her 2021 annual incentive would pay at least $500,000. No future annual incentives have any agreed minimum amount. See Dmuchowski Offer Letter beginning on page 60). The performance period for those PSUs is 2019-2021.
Mr. Kisber’s 2019 package resulted in total pay of $5,837,000, slightly less than the $6 million cap. That earned package consisted of: $600,000 of salary; $2,500,000 of MIP cash bonus; $1,900,000 of regular stock award grantsduring 2020, for 2019, consisting of $500,000 of RSUs, $560,000 of stock options, and $840,000 of PSUs (at target); and $837,000 of MIP-driven RSUs that will settle in cash at vesting. FHN Financial’s business is highly cyclical, benefiting the most from high volatility in the fixed income markets and falling interest rates. The cycle was “down” in 2017 and 2018, with low volatility and rising rates, but improved significantly in 2019. The fixed income segment’s contribution to our net income in 2019 was $52 million, substantially higher than the $9 million contributed in 2018.79 below.
In the chart which follows, Mr. Kisber’s potential total direct compensation packageBrown’s separation agreement with us, we agreed to pay him his annual incentive for each of the years 2016 through 2019 (far left column) is compared to his actual compensation earned for each of those years, without regard to which year payment or grant occurred. All dollar values of awards are measured at grant using values assigned by the Committee,2021 as discussedestablished early in the “Stock Awards” section year, determined in the normal manner as described above except that we agreed that his individual rating would be fixed at 100% and that his incentive for 2021 would not be less than $525,000. See Brown Separation Agreement beginning on page 66. PSU values granted are shown at 100% of target using our stock value at grant; actual vesting of PSUs will depend upon company performance relative to applicable PSU performance goals, and actual value per unit vested will depend on our future stock price.80 below.
Mr. Kisber Potential vs Actual Pay Package 2016-2019
($ in thousands)
|
StockLong-Term Incentive Awards
2021 LTI Award Mix
In 2019,As mentioned above, in 2021, the annual stocklong-term incentive award mix for Mr. Jordanall NEOs was 60% PSUs, with RSUs and options comprising 20% each. The mix for all other NEOs except Mr. Kisber was 50% PSUs, with RSUs and options comprising 25% each.40% RSUs. The Committee believesbelieved that these mixes providecomponents provided an appropriate balance between performance and retention.
The dollar amounts and mix of awards granted in 2019 to the NEOs is 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.
Performance Stock Units (PSUs)
Consistent with our philosophy to tie a significant portion of our executives’ pay to our long-term performance and align executives’ interests with shareholders’, the
2022 PROXY STATEMENT |
2019 Annual Stock Award Grant Mix
($ in thousands)COMPENSATION DISCUSSION & ANALYSIS (CD&A)
Regular RSUs granted to NEOs vest in March three years after grant if the NEO remains employed with the company through the vesting date. They are settled in shares. Dividends accrue during the vesting period and are paid in cash at vesting.
NEO stock option awards in 2019 vest in equal installments in MarchCommittee believes PSUs should comprise a majority of the first four years following grantlong-term incentive program. PSU awards vest only if the NEO remains employed with the company through the vesting dates. There is no accrual of cash dividends 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 incentivepre-defined goals are achieved over its vesting period directly linked to our stock price growth. Options inherently align compensation with the interests of shareholders.
2019 PSUs
Consistent with competitive practice, the Committee makes annual grants of performance equity awards, each with a three-year performance period. The financial goalsmetrics are 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.period. The Committee setsapproves the performance metrics and 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.
PayoutFor the 2021 PSUs, payout is based on how we rank relative to the group of 2019banks included in the KBW regional bank index (symbol “KRX”), an objective industry comparator group. We believe these metrics and the relative perspective reflect how shareholders view our performance. Specifically, the vesting percentage of 2021 PSUs will be based on achievement of two goals as shown in the following chart. Adjusted ROTCE of our core business segments, averaged over the three-year period 2019-21, will be ranked against the average ROTCE results of those banks that comprise themetrics:
Our adjusted ROTCE averaged over the three-year period 2021-23, ranked against the average ROTCE results of the KRX banks. |
A TSR modifier, applied to the ROTCE outcome. Our TSR performance will be ranked against the KRX banks. |
KBW Regional Bank Index (ticker symbol KRX). The ROTCE outcome will be modified by our TSR performance, ranked against the same peers. Peer banksBanks that fall out of the IndexKRX index after grant for certain specific reasons (including merger and certain types of de-listing)delisting) will not be included in the final peer calculation.
Both rankings will follow our traditional practice: top-quartile performance will results in maximum payout, and bottom-quartile resultsperformance will result in zero (ROTCE) payout or minimum (TSR) payout, and formodification. For the middle quartiles, the percentages are interpolated. The ROTCE percentage (of target) will range from 50%0% to 150% (with 50% the “threshold” level), the TSR percentage will range from 75% to 125%, and the final payout calculation will multiply the two with equal weighting. The ROTCE percentage will be zero if ROTCE performance falls below the 50% threshold; the TSR percentage cannot fall below 75%. Dividends accrue until payment but are paid only to the extent the underlying units vest. Performance will be determined in 2022, but payment will be deferred until 2024.
If the TSR percentage outcome is similar to the ROTCE outcome, the TSR adjustment will amplify the degree to which the overall payout percentage deviates from target. For example, if both percentages are 109%, the overall payout will be 119%; if both percentages are 85%, the overall payout will be 72%. On the other hand, if one measure is above target and the other is below, the TSR adjustment will moderate the degree to which the overall payout will deviate from target. The Committee believes using the TSR modifier in this manner more closely aligns PSU awards with the interests of shareholders.
Only whole-year ROTCE results count in the rankings. The adjustments to our ROTCE are the same as the required adjustments associated with the 2019 MIP bonus2021 annual incentive opportunity, discussed aboveearlier under “Ordinary MIP Bonus”Annual Cash Incentive starting on page •.55. The required adjustments are similar to, but not the same as, the notable item adjustments presented in Appendix A.B.
TheFor the 2021 PSUs, the KRX banks currently areindex represented 50 regional banks, a wider range of institutions than those in our Peer
Bankpeer group used for other purposes. For 2021 PSU awards, the Committee believesbelieved that an independently-selected basket of competitorscomparator group, like the banks in the KRX banks providesindex, provided 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.competitors, from an investor perspective. 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
Before 2019, PSU performance was measuredPSUs performed based on our ROEreturn on equity (ROE) performance ranked against KRX peers, without aindex banks. Before 2019, there was no TSR adjustment. Peeradjustment, so ROE ranking was the sole driver of PSU performance. ROE data for a given year is not fully available from the index banks until the following March. The most recent PSUs with final performance determined were granted in February 20162018 with a 2016-182018-20 performance period, vesting in May 2019.2021. Our adjusted ROE over those three performance years ranked in the top half ofwell above the KRX peers. The following table shows themedian, and those PSUs were paid at 133% of target. FHN’s ROE was adjusted to exclude merger expenses and gains, non-strategic results, and certain other amounts. Without adjustment, our ROE averaged 11.88% over this period, our rank would have been 5th, and payout of the 2016 PSUs in relation to our TSR (base=100%) from grant to vesting, and stock prices on those dates.would have been 150%.
The overall amountImpact 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 FHN Financial Executive” startingIBKC Merger on page 64 above.pre-Merger PSUs
In February 2016July 2020, First Horizon and IBKC closed their merger of equals transaction. Later that month, the newly constituted Compensation 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 financialdetermined that unvested PSUs, with 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.periods that were
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COMPENSATION DISCUSSION & ANALYSIS (CD&A)
partially pre-merger and partially post-merger, did not need to have performance goals adjusted.
Those PSUs, granted in 2018, 2019, and 2020, collectively used these performance goals: the ranking of our average adjusted ROTCE among the KRX banks (2019-20); the ranking of our TSR among the KRX Banks (2019-20); and the ranking of our average adjusted return on equity (ROE) among the KRX banks (2018). The merger changed our situation in relation to those goals in two important ways: we became much larger, roughly the size of the largest KRX bank; and the merger resulted in significant expenses and significant income related to the transaction rather than our operating results. The Committee determined that no adjustment to those goals was necessary for two key reasons: our ranking among the KRX banks pertained to ROTCE, TSR, and ROE, all of which are ratios and, therefore, are not driven by our size in any direct manner; and all items of expense and income directly related to the merger transaction were excluded from performance calculations. During 2020 the impacts of the merger netted to a substantial accounting gain unrelated to operating results. Excluding that gain from the performance calculations for the 2018 PSUs significantly lowered our ROE ranking, as described immediately above under the caption Most Recent PSU Performance.
Restricted Stock Units (RSUs)
RSUs align executives’ interests with shareholder interests by providing rewards in stock options were granted at-market with serviceand rewarding for increases in our stock value. These awards also promote ownership and retention through service-based vesting and our stock ownership guidelines. Regular annual RSUs cliff-vest in 2020, 2021, and 2022, or four, five, and sixMarch three years after grant. The options expiregrant if the NEO remains employed with the company through the vesting date. Special RSU awards can and often do have longer vesting
periods. Like PSUs, RSUs are settled in 2023, seven years after grant.shares, and dividends accrue during the vesting period. Dividends are paid in cash if and when the award vests.
RSU Awards In Lieu of 2020 Annual Incentive
In early 2021, the Committee determined to hold back a significant portion of the 2020 annual cash incentive for each NEO other than Ms. Dmuchowski. Instead, the Committee approved grants of extra RSUs, with the same grant date, vesting date, and other terms as the regular 2021 RSU awards, and having a grant date value equal to 45% of the 2020 annual incentive target.
The Committee wanted this awardbelieved it prudent to have substantial retention value as well asuse RSUs with a strong linkage to shareholder value. The entire award continues to be at-riskservice period consistent with the time horizon for significant realization of management’s longer-term synergy goals for the market performanceIBKC merger of our common stockequals. Also, RSUs align well with shareholder interests and enhance retention of key leaders during its seven-yearthat period.
duration. In making this award
The RSUs granted in lieu of the Committee wanted to close a gap it perceived2020 annual incentives are reflected in the competitivenessSummary Compensation Table (on page 64) as part of Mr. Jordan’s target2021 compensation, included with the regular and any special equity awards granted in 2021.
Dividends Related to LTI Awards
For PSUs and RSUs, cash dividends accrue during the retention valuevesting period but are paid (without interest) only if and when the award vests. If an award forfeits, dividends also forfeit.
Valuation of his outstanding awards. The Committee believes that Mr. Jordan’s leadershipLTI Awards
All 2021 long-term incentive awards were based upon the 2021 salary rates and experience have been critical toincentive mix discussed above, using our company’s recent successes and will remain crucial inclosing stock price on the years to come.grant date, February 11, 2021, which was $15.45 per share. See Incentive Mix on page 55 for details.
Deferral, Retirement,Compensation Practices & Philosophies
Our compensation programs are designed to attract and Other Benefitsretain experienced and talented executives that develop and execute strategic goals driving long-term shareholder value. We recruit from a broad talent pool including other large regional banks as well as other industries. In return, our people may be recruited by competitors, other financial services firms, and firms in other industries. Our executive compensation program is designed to provide pay opportunities that are competitive and enable us to
attract and retain top talent. While target pay is designed to be competitive, over 70 percent of our executives’ pay is variable and tied to overall company and individual performance. The mix of fixed and at-risk components, before and after the merger of equals, is examined in the Pay & Performance Alignment section, which begins on page 50.
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COMPENSATION DISCUSSION & ANALYSIS (CD&A)
Peer Group & Market Benchmarking
Peer Benchmarking
The Committee’s independent consultant conducted comprehensive benchmarking of the compensation peer group to provide reference for pay levels as well as program designs for the organization after the IBKC merger. The Committee used this information to set salaries, target incentive opportunities and determine the components of direct compensation for executives. Post-merger, the Committee’s preferences and goals were to set target total direct compensation aligned with peer median, recognizing that individual packages may be higher or lower at any particular time based on individual factors including performance, experience, skills, tenure and retention needs.
Peer Group Used for Benchmarking
To ensure our pay programs are competitive and fair, the Compensation Committee reviews the compensation practices of a peer group of selected U.S. banks of roughly comparable size and business mix. The Committee uses peer group data to benchmark our executive compensation and to provide context and reference points when setting pay levels.
In July 2020, the Committee updated our peer group to better reflect our new size. Our peer group, unchanged for 2021, reflects regional banks with assets (at year-end 2020) ranging from $48 billion to $205 billion, positioning us near median. Our peer banks are shown in the following table, with First Horizon included for context:
Peer Banks 2021 | ||||
Rank | Peer | Assets $B | ||
1 | Fifth Third Bancorp | 205 | ||
2 | Citizens Financial Group, Inc. | 183 | ||
3 | KeyCorp | 170 | ||
4 | Regions Financial Corporation | 147 | ||
5 | M&T Bank Corporation | 143 | ||
6 | First Republic Bank | 143 | ||
7 | Huntington Bancshares | 123 | ||
8 | SVB Financial Group | 116 | ||
9 | Comerica, Inc. | 88 | ||
First Horizon Corporation | 84 | |||
10 | Zions Bancorporation | 81 | ||
11 | Signature Bank | 74 | ||
12 | Popular, Inc. | 66 | ||
13 | People’s United Financial | 63 | ||
14 | CIT Group Inc. | 58 | ||
15 | Synovous Financial Corp. | 54 | ||
16 | East West Bancorp, Inc. | 52 | ||
17 | TCF Financial Corporation* | 48 |
* | Merged with Huntington Bancshares June 2021. |
Tally Sheets
The Committee uses tally sheets to review executive pay packages and when considering adjustments to executive pay levels and mix. A “sheet” for each executive summarizes all major categories of current and recent direct compensation, including the aggregate retention value and duration of unvested awards. Tally sheets are reviewed in conjunction with peer group market data related to each executive position.
Deferral, Retirement, & Other Benefits
Benefits other than Change in Control
WeIn order to remain competitive in retaining and recruiting talent, 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,broad-
based, meaning that they are available to most or all full-time employees,associates, and many others are available generally to employeesassociates whose compensation levels exceed certain thresholds, regardless of officer status.
Deferral, Retirement, and Other Benefits Summary
Non-CIC 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 | Match amounts for the NEOs are included in column (i) of the Summary Compensation Table on page |
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COMPENSATION DISCUSSION & ANALYSIS (CD&A)
Benefit | Type | Benefit Provided | Further Information | |||
Savings Restoration Plan | 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 | ||||
Deferred Compensation Plan | Participants may defer payment of a portion of salary, | Deferral and withdrawal information for the NEOs, along with other plan information, is provided under |
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. Of the NEOs, only Messrs. Jordan and Popwell participate. | Pension benefit information for the NEOs, along with other plan information, is provided under | |||
Pension Restoration Plan | 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 | Cafeteria benefit program | 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 | ||||
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 | |||
Executive | 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 |
We provide | Cost amounts for the NEOs are included in column (i) of the Summary Compensation Table on page |
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 also created substantial personal uncertainties for employees.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 each NEO.Messrs. Jordan and Popwell. 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 “CICCIC Severance Agreements”Agreements within the Change in the “Change in Control”Control (CIC) Arrangements section, beginningwhich begins on page 8575 of this proxy statement.
The primary objectivesobjective of our CIC severance agreements areis 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.
Even though we will be the surviving company, the
The IBKC merger isof equals was a CIC transaction under our executive CIC severance agreements. For those executives who will lose their positions or experience a significant change in position, the CIC severance agreements, will operate as intended. As mentioned above,well as under legacy IBKC’s similar agreements. Mr. Jordan, Mr. Popwell, and certain other NEOsMr. Losch signed letter agreements with us waiving their right to treat the IBKC transaction and their related position changes,events as a benefit triggerstrigger under their CIC severance agreements. Each of the NEOs from legacy IBKC also signed letter agreements confirming the benefits under their legacy agreements with IBKC. Additional information about the letter agreements is provided under the captions “NEO Compensation Changes After the IBKC Merger”caption and “Letter Agreements related to IBKC Merger”Merger beginning on pages 51page 77.
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COMPENSATION DISCUSSION & ANALYSIS (CD&A)
In 2021, our Board of Directors adopted a new Executive Change in Control Severance Plan (the “CIC Plan”). We stopped offering new individual CIC severance agreements, and 85began 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, including those of Messrs. Jordan and Popwell. We expect the CIC Plan to supplant the agreements by attrition over time.
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. Ms. Dmuchowski and Mr. Restel became participants in the CIC Plan in 2021. Additional information about the CIC Plan is provided under the caption CIC Severance Plan within the Change in Control (CIC) Arrangements section, which begins on page 75 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.
Performance compensation under our executive bonus programs, long term incentive awards, 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 for stock awards is two years after vesting.
Compensation Governance & 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. 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 2021 assessment, all still-active NEOs
exceeded guideline ownership levels and all complied with the retention requirement.
Compensation Consultants
For 2021, the 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 2021.
Key engagement items were:
• | Review and discuss written Committee materials in preparation for meetings | |
• | Confer with the Committee chair and management regarding compensation matters | |
• | Regularly meet with the Committee | |
• | Provide observations on current external trends and developments | |
• | Advise the Committee regarding executive programs for annual cash incentives and long-term equity awards approved during and for 2021 |
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COMPENSATION DISCUSSION & ANALYSIS (CD&A)
• | Advise the Committee regarding current peer and market practices related to annual incentive, long-term incentive, and change in control plans and programs | |
• | Advise the Committee regarding the new executive change in control plan | |
• | Assist the Committee in preparing for shareholder outreach and engagement |
The Committee determined that Meridian is independent and has no other relationships with the Company or management.
Additional information concerning our use of compensation consultants appears under the caption Use of Consultants appearing within Board Committees—Compensation Committee, which begins on page 23.
Management Role
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) during which his or 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.
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. One award, from 2016, remains outstanding and subject to the old rules.
The Compensation Committee Report is locatedprovided under the caption Compensation Committee Report at the end of the Board Committees—Compensation Committee discussion, which begins on page 2723 of this proxy statement under the caption “The Compensation Committee.”statement.
2022 PROXY STATEMENT |
RECENT COMPENSATION
This Recent Compensation section provides detailed information about the compensation paid to our named executive officersNEOs in 2019.2021. This section should be read in conjunction with the immediately preceding Compensation Discussion and& Analysis section.
2019 Direct Compensation Earned
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 earned in 2019 by our named executive officers. The 2019 MIP bonus (which was paid early in 2020) is
included. Direct compensation components include salary, bonus earned in relation to 2019, and stock awards vested during 2019. For this purpose, amounts are considered “earned” if they were paid or deferred on a fully-vested basis. All amounts are shown before reduction for withholding taxes and other payroll deductions.
2019 Direct Compensation Earned
($ in millions)
Key details regarding the segments in this chart follow:
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.
Summary Compensation & Award Grant Tables
The amounts shown in the Summary Compensation Table include all compensation earned by our NEOs for 2019,2021, 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
years are also included. Additional compensation information is provided in the remainder of this section. No named executive officerNEO 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 | 2019 | $ | 900,000 | — | $ | 1,800,000 | $ | 314,360 | $ | 1,500,000 | $ | 921,334 | $ | 115,350 | $ | 5,551,044 | |||||||||||||||||||
Chairman, President, | 2018 | 896,827 | — | 1,687,490 | 468,249 | 1,171,800 | — | 120,931 | 4,345,297 | ||||||||||||||||||||||||||
& CEO | 2017 | 875,000 | $ | 5,500,000 | 1,640,822 | 520,273 | 1,225,000 | 479,791 | 92,879 | 10,333,765 | |||||||||||||||||||||||||
W.C. Losch EVP & CFO | 2019 | $ | 500,000 | — | $ | 1,721,059 | $ | 122,252 | $ | 575,000 | $ | — | $ | 70,461 | $ | 2,988,772 | |||||||||||||||||||
2018 | 496,827 | — | 524,983 | 145,677 | 450,000 | — | 70,408 | 1,687,894 | |||||||||||||||||||||||||||
2017 | 475,000 | — | 498,769 | 158,164 | 525,000 | — | 43,885 | 1,700,818 | |||||||||||||||||||||||||||
M.E. Kisber | 2019 | $ | 600,000 | — | $ | 700,000 | $ | — | $ | 2,500,000 | $ | 195,426 | $ | 49,583 | $ | 4,045,018 | |||||||||||||||||||
President— | 2018 | 600,000 | — | — | — | 700,000 | — | 49,632 | 1,349,632 | ||||||||||||||||||||||||||
FHN Financial | 2017 | 600,000 | — | 954,879 | 288,449 | 2,099,000 | 121,354 | 49,632 | 4,113,314 | ||||||||||||||||||||||||||
D.T. Popwell | 2019 | $ | 550,000 | — | $ | 1,917,103 | $ | 134,475 | $ | 630,000 | $ | 157,899 | $ | 90,804 | $ | 3,480,281 | |||||||||||||||||||
President— | 2018 | 543,654 | — | 577,477 | 160,244 | 500,000 | — | 89,815 | 1,871,190 | ||||||||||||||||||||||||||
Banking | 2017 | 500,000 | — | 525,026 | 166,484 | 575,000 | 86,332 | 62,223 | 1,915,065 | ||||||||||||||||||||||||||
S.L. Springfield EVP & Chief Credit Officer | 2019 | $ | 400,000 | — | $ | 1,163,242 | $ | 78,588 | $ | 396,000 | $ | 160,372 | $ | 71,108 | $ | 2,269,310 |
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | ||||||||||||||||||
Name & 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 President & CEO | 2021 | 1,030,000 | — | 4,815,250 | — | 1,545,000 | 868,537 | 155,709 | 8,414,496 | ||||||||||||||||||
2020 | 1,037,538 | — | 2,000,000 | 292,327 | 1,236,000 | 893,748 | 120,575 | 5,580,188 | |||||||||||||||||||
2019 | 900,000 | — | 1,800,000 | 314,360 | 1,500,000 | 921,334 | 115,350 | 5,551,044 | |||||||||||||||||||
H. Dmuchowski 1 SEVP & Ch. Financial Off. | 2021 | 57,692 | — | 375,000 | — | 500,000 | — | 6,100 | 938,792 | ||||||||||||||||||
D.G. Byrd 2 | 2021 | 1,150,000 | — | 4,791,250 | — | 1,425,000 | — | 1,646,253 | 9,012,503 | ||||||||||||||||||
Executive Chairman of the Board | 2020 | 552,885 | — | — | — | 1,140,000 | — | 23,148,573 | 24,841,458 | ||||||||||||||||||
A.J. Restel 2,4 | 2021 | 675,000 | — | 2,485,000 | — | 725,000 | — | 55,252 | 3,940,252 | ||||||||||||||||||
President—Regional Banking | 2020 | 326,000 | — | — | — | 540,000 | — | 8,770,954 | 9,636,954 | ||||||||||||||||||
D.T. Popwell 3,4 | 2021 | 700,000 | — | 1,540,000 | — | 700,000 | 124,012 | 3,064,012 | |||||||||||||||||||
President—Specialty Banking | 2019 | 550,000 | — | 1,917,103 | 134,475 | 630,000 | 157,899 | 90,804 | 3,480,281 | ||||||||||||||||||
M.J. Brown 5 | 2021 | 700,000 | — | 1,540,000 | — | 700,000 | — | 40,300 | 2,980,300 | ||||||||||||||||||
former President—Regional Banking | 2020 | 337,535 | — | — | — | 540,000 | — | 10,668,026 | 11,565,561 | ||||||||||||||||||
W.C. Losch III 4,5 former SEVP & Ch. Financial Officer | 2021 | 389,423 | — | 1,485,000 | — | — | — | 36,470 | 1,910,893 | ||||||||||||||||||
2020 | 626,538 | — | 577,500 | 112,544 | 540,000 | — | 57,093 | 1,913,675 | |||||||||||||||||||
2019 | 500,000 | — | 1,721,059 | 122,252 | 575,000 | — | 70,461 | 2,988,772 |
2 | Messrs. Byrd, Brown, and Restel joined First Horizon on July 1, 2020, when First Horizon’s merger with IBKC was completed. Compensation granted or paid by IBKC before the merger closing is not included in this table. Specifically: salary is shown since July 1, 2020; no stock awards were granted by First Horizon to these 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 IBKC that were vested and deferred after the merger closed. |
3 | Mr. |
4 | Mr. Restel received a special |
5 | Messrs. Brown and Losch left First Horizon’s employment during 2021. Mr. Brown negotiated a retirement agreement with |
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RECENT COMPENSATION
Explanations of certain columns follow:
Col (c) Salary.Annual cash Cash salary is shown.shown in full, whether or not deferred. Ms. Dmuchowski’s salary started in November.
Col (d) Bonus. Column (g) shows the annual MIPcash incentive awards for each year under our bonus awardsplan for executive officers, to the extent earned. Mr. Jordan was paidColumn (d) reports discretionary off-plan bonuses, if any. No NEO received a discretionary specialCol (d) bonus in October 2017 to recognize outstanding performance overfor any of the previous six years.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. For RSUs and RSAs, the award value is simply our stock value on the grant date, with no discount for the risk of forfeiture. The accounting valuation method for PSUs makes assumptions about growth and volatility of our stock value, expected duration in
the case of options, vesting, performance forfeiture, future company performance, and other matters.matters, and therefore differs from the target dollar value assigned by the Committee at grant. A discussion of those assumptions appears in note 19 to the financial statements in our 20192021 annual report to shareholders.on Form 10-K. Actual future events may be substantially inconsistent with the assumptions.assumptions and, for both award types, our stock price will change over time. 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, retention RS, and IBKC RSIB RSA awards granted by First Horizon 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 IBKC RSIB RSA awards were granted when we signed aas part of the IBKC merger agreement with IBKC and will forfeit entirely if that merger fails to close. For additional information, see “2019’s Strategic Transactions Will Drive Our Future” beginning on page 50.transaction.
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,requirement. For the years shown, PSU performance depends upon our adjusted core-segment ROEROTCE ranking relative to certain peer banks during the performance period. The 2019 PSUs also haveperiod, and 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 substantially 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,NEO other than Ms. Dmuchowski, 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 the other NEOs except Mr. Kisber, starting in 2018 the weighting of PSUs doubled to 50% of total equity awards, and the weighting of RSUs halved to 25%.
Maximum Dollar Values* of PSUs
(Based on Share Price at Grant Date)
Year Granted | |||||||||||||||
Name | 2017 | 2018 | 2019 | 2019 | 2020 | 2021 | |||||||||
Mr. Jordan | $ | 1,640,956 | $ | 1,687,495 | $ | 2,025,030 | 2,754,805 | 3,129,359 | 4,635,000 | ||||||
Mr. Losch | 249,427 | 524,991 | 524,997 | ||||||||||||
Mr. Kisber | 682,322 | — | 1,050,023 | ||||||||||||
Mr. Byrd | — | 4,668,749 | |||||||||||||
Mr. Restel | — | 1,328,883 | |||||||||||||
Mr. Popwell | 262,554 | 577,492 | 577,512 | 785,628 | na | 1,378,101 | |||||||||
Ms. Springfield | 154,705 | 329,997 | 337,493 | ||||||||||||
Mr. Brown | — | 1,378,101 | |||||||||||||
Mr. Losch* | 714,197 | 803,179 | 1,328,883 |
* |
Col (e) Regular RSUs. The annual equity award package includes RSUs which vest in three years and settle in shares.
Col (e) 2020 Annual Incentive RSUs. The Committee significantly reduced the cash incentive paid for the 2020 bonus year, and correspondingly increased the 2021 RSU awards.
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 2017-19.2019-21. Messrs. Popwell and Losch received IB RSA awards in 2019, as explained in footnote 3 of the table.
Col (f) Stock Options. Column (f) includes the accounting values of stock options granted.
Col (g) Annual MIPPlan-based Cash Bonus Awards. This column shows the annual plan-based bonus earned for each year under our MIP. year. For all three years, MIP2019, bonuses (except for Mr. Kisber) 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. Mr. Kisber’sFor 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 cash paid. For the second half of 2020, bonuses were based on thesimilar criteria, using pre-provision net profitsrevenue instead of our FHN Financial division, of which he is the President and, for 2018 and 2019, on divisional return on equity. FHN Financial net profits and ROE each year also drove stock awards granted to Mr. Kisberpre-tax earnings. For 2021, bonuses were based upon achievement in the following year. For his 2018 MIP bonus,areas: pre-set levels of adjusted annual pre-provision net revenue; merger integration; credit quality; execution of personal plan goals; individual contribution to risk management, quality of earnings, and objectives for our non-strategic business segment; and the entire cash amount earned ($700,000) was converted into an awardresults of 2019 PSUs using standard executive termsa balanced scorecard process
65 | 2022 PROXY STATEMENT |
RECENT COMPENSATION
ranking us among selected peer banks on a matrix of balance sheet, capital, expense, earnings, and conditions (service and performance requirements), and using the standard valuation method (the risk of forfeiture is ignored).other measures.
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 employeesassociates in 2007; among the NEOs, only Mr. Losch does notJordan and Mr. Popwell 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. Elements of “All Other Compensation” for 20192021 consist of the following:
All Other Compensation (Col (Col.(i)) for 20192021
(i)(b) | (i)(c) | (i)(d) | (i)(a) | (i)(b) | (i)(c) | (i)(d) | (i)(e) | |||||||||||||||||||||||||||||
Name | Perquisites & Other Personal Benefits $ | 401(k) Match $ | Life Insur. Prems. $ | Total Col (i) $ | Perqs. & Other Personal Benefits $ | 401(k) & Savings Rest. Match $ | Life Insur. Premiums $ | Tax Reim- bursements $ | Integration $ | |||||||||||||||||||||||||||
Mr. Jordan | 52,554 | 54,000 | 8,796 | 115,350 | 85,117 | 61,800 | 8,792 | — | — | |||||||||||||||||||||||||||
Ms. Dmuchowski | 6,100 | — | — | — | — | |||||||||||||||||||||||||||||||
Mr. Byrd | 823,094 | 69,000 | 204 | 3,955 | 750,000 | |||||||||||||||||||||||||||||||
Mr. Restel | 11,388 | 40,500 | 204 | 3,160 | — | |||||||||||||||||||||||||||||||
Mr. Popwell | 75,146 | 41,408 | 7,458 | — | — | |||||||||||||||||||||||||||||||
Mr. Brown | 21,512 | 17,400 | 204 | 1,185 | — | |||||||||||||||||||||||||||||||
Mr. Losch | 34,559 | 30,000 | 5,903 | 70,461 | 8,070 | 23,365 | 5,035 | — | — | |||||||||||||||||||||||||||
Mr. Kisber | 6,120 | 36,000 | 7,463 | 49,583 | ||||||||||||||||||||||||||||||||
Mr. Popwell | 51,121 | 33,000 | 6,683 | 90,804 | ||||||||||||||||||||||||||||||||
Ms. Springfield | 42,765 | 24,000 | 4,343 | 71,108 |
Explanations of certain columns in the Col (i) table follow:
Col (i)(b) “Perquisites and(a) “Perqs. & Other Personal Benefits” includes the following types of benefits: Flexible Dollars, Financial Counseling, Disability Insurance, Charitable Match, Aircraft Usage, Club, Auto, and Aircraft Usage.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. “Security” includes security alarm expenses. “Aircraft Usage” represents imputed income to the executives when spouses accompany them on business trips using non-commercial aircraft.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 an executive health program. The remaining types of benefits apply only to the Mayo Clinic Executive Health Program. The BoardNEOs who joined us in July from IBKC, and reflect continuations of Directors requires Mr. Jordan to participate in the Mayo program.IBKC’s practices: “Club” includes dues and other expenses associated with social or recreational club membership; and “Auto” represents an automobile allowance.
Col (i)(c)(b) “401(k) & Savings Rest. 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)(c) “Life InsuranceInsur. 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 Reimbursements” represents income and other taxes levied on former IBKC NEOs which we reimbursed after the IBKC merger closed. Reimbursed taxes primarily related to change in control benefits associated with legacy IBKC’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 IBKC 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 Byrd Letter Agreements within the section captioned Agreements related to IBKC Merger, which begins on page 77, for additional information.
Col (i)(e) “Integration” represents a cash integration and continuity award which was contractually promised in connection with the IBKC merger. For additional information, see Byrd Letter Agreements within the section captioned Agreements related to IBKC Merger, which begins on page 77.
66 | 2022 PROXY STATEMENT |
RECENT COMPENSATION
20192021 Grants of Plan-Based Awards
The following table provides information about the MIP bonusannual cash incentive opportunity established for, and the grants of PSUs stock options,and RSUs retention awards, and “closing incentive” awards during, 2019.2021. In this table the MIP bonuseach annual incentive opportunity is considered a “Non-Equity Incentive Plan Award,”Award” in columns (c) through (e) and is noted as “Cash”; PSUs are considered to be “Equity Incentive Plan
Awards,” while Awards” in columns (f) through (h); and RSUs and restricted stock awards are considered to beshown as “All Other Stock Awards.” In the table eachAwards” in column (i). 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 $0.zero.
The table shows three types of RSUs. One was the regular annual award (noted in the table as “ARSU”), one was granted in lieu of a portion of the 2020 annual cash incentive which the Committee determined not to pay (“BRSU”), and the third type consisted of targeted retention RSUs (“RRSU”). RRSUs were granted in October to Mr. Restel in connection with his promotion to President—Regional Banking and in November to Ms. Dmuchowski in connection with her hiring. No stock options were granted to any NEO in 2021.
Awards Granted in 2021
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | (k) | (l) | ||||||
Estimated Possible Payouts under Non-Equity Incentive Plan Awards | Estimated Future Payouts under Equity Incentive Plan Awards | All Other Stock Awards: Number of Shares of Stock or Units (#) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise Price of Option Awards ($/sh) | Grant Date Fair Value of Stock & Option Awards ($) | ||||||||||||
NEO | Award | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Thres- hold (#) | Target (#) | Maximum (#) | |||||||||
Mr. Jordan | Cash | 2/11 | 772,500 | 1,545,000 | 2,317,500 | ||||||||||||
PSU | 2/11 | 60,000 | 160,000 | 300,000 | |||||||||||||
ARSU | 2/11 | 106,666 | |||||||||||||||
BRSU | 2/11 | 45,000 | |||||||||||||||
Ms. Dmuchowski 1 | Cash | 11/29 | 255,000 | 500,000 | 765,000 | ||||||||||||
RRSU | 12/6 | 22,590 | |||||||||||||||
Mr. Byrd | Cash | 2/11 | 712,500 | 1,425,000 | 2,137,500 | ||||||||||||
PSU | 2/11 | 60,436 | 161,165 | 302,184 | |||||||||||||
ARSU | 2/11 | 107,443 | |||||||||||||||
BRSU | 2/11 | 41,504 | |||||||||||||||
Mr. Restel | Cash | 2/11 | 337,500 | 675,000 | 1,012,500 | ||||||||||||
PSU | 2/11 | 17,202 | 45,873 | 86,011 | |||||||||||||
ARSU | 2/11 | 30,582 | |||||||||||||||
BRSU | 2/11 | 19,660 | |||||||||||||||
RRSU | 10/26 | 59,594 | |||||||||||||||
Mr. Popwell | Cash | 2/11 | 350,000 | 700,000 | 1,050,000 | ||||||||||||
PSU | 2/11 | 17,839 | 47,572 | 89,197 | |||||||||||||
ARSU | 2/11 | 31,715 | |||||||||||||||
BRSU | 2/11 | 20,388 | |||||||||||||||
Mr. Brown 2 | Cash | 2/11 | 350,000 | 700,000 | 1,050,000 | ||||||||||||
PSU | 2/11 | 17,839 | 47,572 | 89,197 | |||||||||||||
ARSU | 2/11 | 31,715 | |||||||||||||||
BRSU | 2/11 | 20,388 | |||||||||||||||
Mr. Losch 3 | Cash | 2/11 | 337,500 | 675,000 | 1,012,500 | ||||||||||||
PSU | 2/11 | 17,202 | 45,873 | 86,011 | |||||||||||||
ARSU | 2/11 | 30,582 | |||||||||||||||
BRSU | 2/11 | 19,660 |
Ms. Dmuchowski was hired in November in 2021. To induce her to join us, we agreed that her 2021 annual cash incentive (cols. (c)-(e)) would not be less than $500,000. See Dmuchowski Offer Letter beginning on page 79 for additional information. | ||
2 | Mr. Brown retired in 2021. As part of his separation agreement, we agreed that his 2021 annual cash incentive (cols. (c)-(e)) would not be less than $525,000. See Brown Separation Agreement beginning on page 80 for additional information. | |
3 | Mr. Losch left First Horizon’s employment during 2021. As a result, he forfeited his opportunity for a 2021 annual cash incentive (cols. (c)-(e)), and forfeited all other 2021 awards (cols. (f)-(i)). |
67 | 2022 PROXY STATEMENT |
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Awards Granted in 2019
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | (k) | (l) | |||||||||||||||||||||||||||||||||
Estimated Possible Payouts under Non-Equity Incentive Plan Awards | Estimated Future Payouts under Equity Incentive Plan Awards | All Other Stock Awards: Number of Shares of Stock | All Other Option Awards: Number of Securities Underlying | Exercise Price of Option | Grant Date Fair Value of Stock and Option | |||||||||||||||||||||||||||||||||||||||
Name | Award | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | or Units (#) | Options (#) | Awards ($/sh) | Awards ($) | ||||||||||||||||||||||||||||||||
Mr. Jordan | MIP | 2-11 | $ | 630,000 | $ | 1,260,000 | $ | 1,890,000 | NA | |||||||||||||||||||||||||||||||||||
Opt | 2-11 | 116,655 | $ | 15.43 | $ | 314,360 | ||||||||||||||||||||||||||||||||||||||
PSU | 2-11 | 47,610 | 95,219 | 142,829 | 1,350,205 | |||||||||||||||||||||||||||||||||||||||
RSU | 2-11 | 29,163 | 449,985 | |||||||||||||||||||||||||||||||||||||||||
Mr. Losch | MIP | 2-11 | $ | 250,000 | $ | 500,000 | $ | 750,000 | NA | |||||||||||||||||||||||||||||||||||
Opt | 2-11 | 45,366 | $ | 15.43 | $ | 122,252 | ||||||||||||||||||||||||||||||||||||||
PSU | 2-11 | 12,343 | 22,686 | 37,029 | 350,047 | |||||||||||||||||||||||||||||||||||||||
RSU | 2-11 | 11,341 | 174,992 | |||||||||||||||||||||||||||||||||||||||||
RS-IBKC | 11-25 | 74,060 | 1,196,069 | |||||||||||||||||||||||||||||||||||||||||
Mr. Kisber | MIP | 2-11 | NA | NA | $ | 3,500,000 | NA | |||||||||||||||||||||||||||||||||||||
Opt | $ | — | ||||||||||||||||||||||||||||||||||||||||||
PSU | — | |||||||||||||||||||||||||||||||||||||||||||
RSU | — | |||||||||||||||||||||||||||||||||||||||||||
PSU-MIP | 2-11 | 18,514 | 49,373 | 92,574 | NA | |||||||||||||||||||||||||||||||||||||||
Mr. Popwell | MIP | 2-11 | $ | 275,000 | $ | 550,000 | $ | 825,000 | NA | |||||||||||||||||||||||||||||||||||
Opt | 2-11 | 49,902 | $ | 15.43 | $ | 134,475 | ||||||||||||||||||||||||||||||||||||||
PSU | 2-11 | 13,578 | 27,155 | 40,733 | 385,058 | |||||||||||||||||||||||||||||||||||||||
RSU | 2-11 | 12,475 | 192,489 | |||||||||||||||||||||||||||||||||||||||||
RS-IBKC | 11-25 | 82,948 | 1,339,610 | |||||||||||||||||||||||||||||||||||||||||
Ms. Springfield | MIP | 2-11 | $ | 180,000 | $ | 360,000 | $ | 540,000 | NA | |||||||||||||||||||||||||||||||||||
Opt | 2-11 | 29,163 | $ | 15.43 | $ | 78,588 | ||||||||||||||||||||||||||||||||||||||
PSU | 2-11 | 7,935 | 15,869 | 23,804 | 225,022 | |||||||||||||||||||||||||||||||||||||||
RSU | 2-11 | 7,290 | 112,485 | |||||||||||||||||||||||||||||||||||||||||
RS-IBKC | 11-25 | 51,131 | 825,766 |
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) MIPPlan-based Bonus Opportunities. The Committee established performance criteria and set target amounts early in 20192021 for MIP bonus opportunities.annual cash incentive opportunities for each NEO. Details about the opportunities, their goals, and their limitations are discussed in “Annual MIP Bonus”Annual Cash Incentive beginning on page 61.
Mr. Kisber’s 2019 compensation package, including annual MIP bonus, was based on a percentage of net profits generated by the FHN Financial fixed income division, without any threshold or target levels. The Compensation Committee established an overall maximum of $6 million for Mr. Kisber’s 2019 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 2020; and fourth, $1 million in cash-paid MIP-driven RSUs, also to be granted in 2020. His MIP bonus opportunity was, therefore, $3.5 million. In 2018, FHN Financial’s performance was sufficient to result in a cash bonus of $700,000 under the MIP and no stock awards. Mr. Kisber’s
entire earned MIP bonus for 2018 was converted into a grant of standard 2019 PSUs, which are denoted in the table as “PSU-MIP.”55.
The information in columns (c)-(e) shows 2019 MIP bonus opportunities. Information concerning MIP bonuses actually earned for 20192021 is shown in column (g) of the Summary Compensation Table and under the caption “Annual MIP Bonus”in Annual Cash Incentive, beginning on pages 7364 and 61,55, respectively.
Cols (f)-(h) Stock Incentives. The performance requirements for the 20192020 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 “PerformancePerformance Stock Units” beginningUnits within the section captioned Long-Term Incentive Awards, which begins on page 6757, for additional information. The 20192021 PSUs will vest on May 12, 20222024 if threshold performance is achieved, but payment will be deferred for two years.achieved.
Col (i) Other Stock Awards. Column (i) includesshows regular annual RSUs granted in 2019 along with “closing incentive” restricted stock awards2021, RSUs granted in connection withlieu of a portion of the IBKC merger. The closing2020 annual cash incentive, awards will forfeit if the merger failsand retention RSUs granted to close.Ms. Dmuchowski and Mr. Restel.
Cols (j)-(k) Stock Options. Column (j) shows the number of sharesNo stock options were granted under options to the named executivesany NEO in 2019, 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. For additional information regarding option awards, see the discussion of column (f) of the Summary Compensation Table beginning on page 73 of this proxy statement.2021.
Col (l) Grant date fair values.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 11, 2019,2021, was $15.43 per share. For stock options, the grant date fair value is based on the Black Scholes value on the grant date, which was $2.6948$15.45 per share. For additional information see the discussion of columns (e) and (f) of the Summary Compensation Table beginning on page 74.64.
Supplemental Disclosures for Summary Compensation and Grant TablesDisclosures
For information about the rationale behind, sizing of, and other aspects of the major compensation elements, see “Overview of Direct Compensation2021 Pay Components” “Relative Sizing & Mix,” and “Salary” Decisions beginning on pages 55, 59, and 61, respectively.page 54.
The vesting and expiration schedules of equity-based awards granted in 20192021 are as follows:
• | PSUs vest on May 12 three years after grant if goals are achieved at the 37.5% payout level or greater. | |
• | ||
• | RRSUs vest in three installments on the third, fourth, and fifth anniversaries of grant. |
Vesting information related to all equity awards held by the named executivesNEOs at year-end appears under the heading “Outstanding Equity Awards Outstanding at Fiscal Year-End” Year-End beginning on page •,69, 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 84.75.
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 weWe 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 2019 PSUs haveNo 2021 executive awards contained a mandatory two-year payment deferral after vesting.requirement at grant.
2022 PROXY STATEMENT |
RECENT COMPENSATION
Awards 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 (at target levels) held at December 31, 20192021 by the named executive officers.officers other
than Mr. Losch, whose awards all forfeited or expired before year-end. Values are based on our market price at year-end, $16.33 per share.
Outstanding Equity Awards at Fiscal Year-End 20192021
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | |||||||||||||||||||||||||||
Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unearned Options (#) | Option Exercise Price ($/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. Jordan | 185,434 | — | — | $ | 10.82 | 2/12/2020 | ||||||||||||||||||||||||||||||
119,456 | — | — | 11.77 | 2/12/2021 | ||||||||||||||||||||||||||||||||
106,880 | — | — | 14.28 | 3/2/2022 | ||||||||||||||||||||||||||||||||
141,189 | 47,064 | — | 11.62 | 3/2/2023 | ||||||||||||||||||||||||||||||||
— | 411,747 | — | 11.62 | 3/2/2023 | ||||||||||||||||||||||||||||||||
55,435 | 55,436 | 19.73 | 3/2/2024 | |||||||||||||||||||||||||||||||||
30,096 | 90,289 | 18.69 | 3/2/2025 | |||||||||||||||||||||||||||||||||
— | 116,655 | 15.43 | 3/2/2026 | |||||||||||||||||||||||||||||||||
86,976 | $ | 1,440,323 | 384,550 | $ | 6,368,148 | |||||||||||||||||||||||||||||||
Mr. Losch | 45,136 | — | — | 11.77 | 2/12/2021 | |||||||||||||||||||||||||||||||
41,666 | — | — | 14.28 | 3/2/2022 | ||||||||||||||||||||||||||||||||
42,921 | 14,307 | — | 11.62 | 3/2/2023 | ||||||||||||||||||||||||||||||||
16,852 | 16,853 | — | 19.73 | 3/2/2024 | ||||||||||||||||||||||||||||||||
9,363 | 28,090 | — | 18.69 | 3/2/2025 | ||||||||||||||||||||||||||||||||
— | 45,366 | — | 15.43 | 3/2/2026 | ||||||||||||||||||||||||||||||||
122,680 | $ | 2,031,581 | 56,206 | $ | 930,771 | |||||||||||||||||||||||||||||||
Mr. Kisber | 8,513 | — | — | 23.49 | 7/2/2021 | |||||||||||||||||||||||||||||||
30,734 | 30,735 | — | 19.73 | 3/2/2024 | ||||||||||||||||||||||||||||||||
25,342 | $ | 419,664 | 76,021 | $ | 1,258,908 | |||||||||||||||||||||||||||||||
Mr. Popwell | 47,790 | — | — | 11.77 | 2/12/2021 | |||||||||||||||||||||||||||||||
44,117 | — | — | 14.28 | 3/2/2022 | ||||||||||||||||||||||||||||||||
45,180 | 15,060 | — | 11.62 | 3/2/2023 | ||||||||||||||||||||||||||||||||
17,739 | 17,739 | — | 19.73 | 3/2/2024 | ||||||||||||||||||||||||||||||||
10,299 | 30,899 | — | 18.69 | 3/2/2025 | ||||||||||||||||||||||||||||||||
— | 49,902 | — | 15.43 | 3/2/2026 | ||||||||||||||||||||||||||||||||
137,466 | $ | 2,276,437 | 61,366 | $ | 1,016,221 | |||||||||||||||||||||||||||||||
Ms. Springfield | 28,037 | — | — | 11.77 | 2/12/2021 | |||||||||||||||||||||||||||||||
25,420 | — | — | 14.28 | 3/2/2022 | ||||||||||||||||||||||||||||||||
28,076 | 9,359 | — | 11.62 | 3/2/2023 | ||||||||||||||||||||||||||||||||
10,453 | 10,454 | — | 19.73 | 3/2/2024 | ||||||||||||||||||||||||||||||||
5,885 | 17,657 | — | 18.69 | 3/2/2025 | ||||||||||||||||||||||||||||||||
— | 29,163 | — | 15.43 | 3/2/2026 | ||||||||||||||||||||||||||||||||
74,759 | $ | 1,238,009 | 35,601 | $ | 589,553 |
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | ||||||||
Option Awards | Stock Awards | ||||||||||||||||
NEO | Number of Securities Underlying Unexer- cised Options (#) Exercisable | Number of Securities Underlying Unexer- cised Options (#) Un- exercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unearned Options (#) | Option Exercise Price ($/ sh) | Option Expiration Date | Number of Shares or Units of Stock Held that have not Vested (#) | Market Value of Shares or Units of Stock Held that have not Vested ($) | 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 | — | 137,249 | — | 11.62 | 3/2/2023 | ||||||||||||
110,871 | — | — | 19.73 | 3/2/2024 | |||||||||||||
90,288 | 30,097 | — | 18.69 | 3/2/2025 | |||||||||||||
58,328 | 58,327 | — | 15.43 | 3/2/2026 | |||||||||||||
31,447 | 94,339 | — | 15.90 | 3/2/2027 | |||||||||||||
212,275 | 3,466,451 | 515,425 | 8,416,890 | ||||||||||||||
Ms. Dmuchowski 1 | — | — | — | 22,590 | 36,889 | — | — | ||||||||||
Mr. Byrd | 155,328 | — | — | 11.42 | 2/22/2022 | ||||||||||||
51,853 | — | — | 11.43 | 2/19/2023 | |||||||||||||
67,338 | — | — | 14.27 | 2/17/2024 | |||||||||||||
73,068 | — | — | 13.65 | 2/20/2025 | |||||||||||||
121,406 | — | — | 10.33 | 2/18/2026 | |||||||||||||
50,914 | — | — | 18.68 | 2/15/2027 | |||||||||||||
59,472 | — | — | 17.94 | 2/22/2028 | |||||||||||||
76,103 | — | — | 15.35 | 1/11/2029 | |||||||||||||
27,835 | 55,662 | — | 16.01 | 1/9/2030 | |||||||||||||
243,784 | 3,980,993 | 161,165 | 2,631,824 | ||||||||||||||
Mr. Restel | 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 | |||||||||||||
8,182 | 16,369 | — | 16.01 | 1/9/2030 | |||||||||||||
137,725 | 2,249,033 | 45,873 | 749,106 | ||||||||||||||
Mr. Popwell | 35,478 | — | — | 19.73 | 3/2/2024 | ||||||||||||
30,898 | 10,300 | — | 18.69 | 3/2/2025 | |||||||||||||
24,952 | 24,950 | — | 15.43 | 3/2/2026 | |||||||||||||
12,767 | 38,302 | — | 15.90 | 3/2/2027 | |||||||||||||
77,345 | 1,263,044 | 103,138 | 1,684,244 | ||||||||||||||
Mr. Brown 2 | 16,163 | — | — | 18.68 | 3/31/2022 | ||||||||||||
19,633 | — | — | 17.94 | 3/31/2022 | |||||||||||||
81,925 | 1,337,835 | 47,572 | 776,851 |
Mr. Brown forfeited 17,505 options priced at $16.01 per share that were not yet exercisable as of his retirement date. |
69 | 2022 PROXY STATEMENT |
RECENT COMPENSATION
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, nonetwo-thirds of which had vested by year-end. The vesting dates of options reported in column (c) are:
Stock Options Unvested at Year-End
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Date
| Vesting Date | Mr. Jordan | Ms. Dmuchowski | Mr. Byrd | Mr. Restel | Mr. Popwell | Mr. Brown | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/11/2016 | 3/2/2022 | 137,249 | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/8/2018 | 3/2/2022 | 30,097 | — | — | — | 10,300 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/11/2019 | 3/2/2022 | 29,164 | — | — | — | 12,475 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3/2/2023 | 29,163 | — | — | — | 12,475 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/19/2020 | 3/2/2022 | 31,447 | — | — | — | 12,767 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3/2/2023 | 31,446 | — | — | — | 12,767 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3/2/2024 | 31,446 | — | — | — | 12,768 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1/9/2020 | 1/9/2022 | — | — | 27,829 | 8,187 | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1/9/2023 | — | — | 27,833 | 8,182 | — | — |
Col (g) Unvested Non-Performance Shares & Units. Column (g) includes RSUs and RSAs unvested at year-end. Numbers represent units or shares, respectively. The vesting dates of those awards are shown in the following table:
RSUs & RSAs Unvested at Year-End | ||||||||||||||||
Grant Date | Award Type | Vesting Date | Mr. Jordan | Ms. Dmuchowski | Mr. Byrd | Mr. Restel | Mr. Popwell | Mr. Brown | ||||||||
2/11/2019 | RSU | 3/2/2022 | 29,163 | — | — | — | 12,475 | — | ||||||||
2/19/2020 | RSU | 3/2/2023 | 31,446 | — | — | — | 12,767 | — | ||||||||
1/9/2020 | RSA | 1/9/2022 | — | — | 47,416 | 13,944 | — | 14,911 | ||||||||
RSA | 1/9/2023 | — | — | 47,421 | 13,944 | — | 14,911 | |||||||||
2/11/2021 | ARSU | 3/2/2024 | 106,666 | — | 107,443 | 30,582 | 31,715 | 31,715 | ||||||||
BRSU | 3/2/2024 | 45,000 | — | 41,504 | 19,660 | 20,388 | 20,388 | |||||||||
10/26/2021 | RRSU | 10/26/2024 | — | — | — | 19,864 | — | — | ||||||||
RRSU | 10/26/2025 | — | — | — | 19,864 | — | — | |||||||||
RRSU | 10/26/2026 | — | — | — | 19,866 | — | — | |||||||||
12/6/2021 | RRSU | 12/6/2024 | — | 7,530 | — | — | — | — | ||||||||
RRSU | 12/6/2025 | — | 7,530 | — | — | — | — | |||||||||
RRSU | 12/6/2026 | — | 7,530 | — | — | — | — |
Col (i) Performance Equity Awards. Column (i) reports PSU awards and a special retention stock unit award that are outstanding at year-end. The performance periods and target numbers of units for those awards are shown below. The performance period for the regular 2019 PSU awards has ended, but performance (relative to peers) cannot be determined until all peer companies have reported 2021 earnings. Awards are reported in units at
target levels. For the PSUs, the maximum is 187.5% of target. For the special retention award in 2016, the maximum is 100%; that award 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.
RS & RSU Awards Unvested at Year-End
Grant Date | Award Type | Vesting Date | Mr. Jordan | Mr. Losch | Mr. Kisber | Mr. Popwell | Ms. Springfield | ||||||||||||||||||
2/12/2015 | Ret RS | 3/2/2020 | — | 11,064 | — | 14,005 | — | ||||||||||||||||||
2/10/2017 | RSU | 3/2/2020 | 27,717 | 16,852 | 25,342 | 17,739 | 10,453 | ||||||||||||||||||
2/08/2018 | RSU | 3/2/2021 | 30,096 | 9,363 | — | 10,299 | 5,885 | ||||||||||||||||||
2/11/2019 | RSU | 3/2/2022 | 29,163 | 11,341 | — | 12,475 | 7,290 | ||||||||||||||||||
11/25/2019 | IBKC RS | 1stanniv. of IBKC closing | — | 74,060 | — | 82,948 | 51,131 |
Col (i) Performance Equity Awards. Column (i) reports PSU awards, and a special retention stock unit award, granted from 2016 through 2019 which are outstanding at year-end. For three NEOs, starting in 2018 the PSU numbers increased largely because the Compensation Committee doubled the weighting of PSUs to 50% of total equity awards, and cut RSUs in half to 25%. The performance periods and target numbers of units for those awards are shown below. The performance period for the regular 2017 PSU awards has ended, but performance (relative to peers) cannot be determined until all peer companies have reported 2019 earnings.
Awards are reported in units at target levels. For the 2019 PSUs, the maximum is 187.5% of target. For the 2017 and 2018 PSUs, the maximum is 150% of target. For the special retention award in 2016 (a special incentive-retention award for the CEO), the maximum is 100%; that award pays if the total shareholder return value of a share of stock is at least $11.63 on the 7thanniversary of grant. The special award requires continuous employment with the company during the performance period.
Mr. Kisber’s 2019 PSUs were granted in lieu of his $700,000 cash bonus for 2018 under the MIP.