Donald J. Shepard
Age 65
Director Since 2007
| | Experience, Qualifications, Attributes, or Skills | | |  | | Donald J. Shepard Age 68 Mr. Shepard is the retired Chairman of the Executive Board and Chief Executive Officer of AEGON N.V., a large life insurance and pension company.
Director Since 2007 Experience, Qualifications, Attributes, or Skills Mr. Shepard is the retired Chairman of the Executive Board and Chief Executive Officer of AEGON N.V., a large life insurance and pension company. |
Mr. Shepard received a master’s degree in business administration from the University of Chicago. Mr. Shepard joined our Board following PNC’s acquisition of Mercantile Bankshares Corporation. He joined the Mercantile Board of Directors in 1992. Mr. Shepard’s service as the CEO of a large, international public company, particularly a company in the financial services sector, gives him insights into many issues facing PNC, and supports the Board’s ability to oversee complex and dynamic issues. Mr. Shepard’s duties and experiences at AEGON also assist our Board with its oversight of financial and risk issues. Our Board also values Mr. Shepard’s experience on the boardBoard of a public company in the banking business and his involvement infamiliarity with the Baltimore community. PNC Board Committee Memberships Executive Committee Audit Committee Nominating and Governance Committee Risk Committee (Chairman) BaselSpecial Technology Subcommittee (Chairman)
Public Company Directorships CSX Corporation The Travelers Companies, Inc. Mercantile Bankshares Corporation (until 2007)
| | |  | | Lorene K. Steffes Age 69 Director Since 2000 Experience, Qualifications, Attributes, or Skills Ms. Steffes is an independent business advisor with executive, business management and technical expertise in the
|
| | | 6 | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders |
| | | | | | | Election of Directors (Item 1)
|
| | | 
Lorene K. Steffes
Age 66
Director Since 2000
| | Experience, Qualifications, Attributes, or Skills
Ms. Steffes is an independent business advisor with executive, business management and technical expertise in the telecommunications and information technology industries. She formerly served as Vice President and General Manager, Global Electronics Industry, for IBM, an information technology company. Ms. Steffes also served as the President and Chief Executive Officer of Transarc Corporation, a software development firm, which was later acquired by IBM.
Ms. Steffes received undergraduate and master’s degrees from Northern Illinois University. Our Board values Ms. Steffes’s managerial experiences throughout the technology industry, including as a chief executive. Her wide array of experiences in this industry and her understanding of operational and technological issues assist the Board in its oversight of technological issues, which have become increasingly important for large, complex banking organizations. PNC Board Committee Memberships Risk Committee BaselSpecial Technology Subcommittee
(Chair) Public Company Directorships RadiSys Corporation | 
Dennis F. Strigl
Age 65
Director Since 2001
| | Experience, Qualifications, Attributes, or SkillsTHE PNC FINANCIAL SERVICES GROUP, INC. - 2015 Proxy Statement 15
Mr. Strigl served as the President and Chief Operating Officer of Verizon Communications Inc., one of the world’s leading providers
ELECTION OF DIRECTORS (ITEM 1) | | |  | | Dennis F. Strigl Age 68 Director Since 2001 Experience, Qualifications, Attributes, or Skills Mr. Strigl served as the President and Chief Operating Officer of Verizon Communications Inc., one of the world’s leading providers
|
of communications services, until his retirement in December 2009. Prior to that, he was the President and Chief Executive Officer of Verizon Wireless, a joint venture controlled by Verizon. Mr. Strigl received an undergraduate degree from Canisius College and a master’s degree in business administration from Fairleigh Dickinson University. Our Board values Mr. Strigl’s service as a senior executive at a large public company, and his former executive management expertise as the CEO of Verizon Wireless. His management of a large workforce at Verizon informs his judgment as the Chair of our Personnel and Compensation Committee and gives him a strong understanding of human resources and compensation matters. Mr. Strigl’s additional responsibility for internal functional services, such as finance and real estate, adds depth and experience to the Board’s ability to oversee the operations of our company. PNC Board Committee Memberships Executive Committee Nominating and Governance Committee Personnel and Compensation Committee (Chairman) Public Company Directorships ANADIGICS, Inc. (until 2007;(2000-2008; 2010-Present) Eastman Kodak Company (until September 2013) Nokia Corporation Tellabs, Inc. (until December 2013) | | |  | | Thomas J. Usher Age 72 Director Since 1992 Experience, Qualifications, Attributes, or Skills Mr. Usher is the non-executive Chairman of Marathon Petroleum Corporation, a transportation fuels refining company, which
|
| | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders | | 7 |
| | | | | Election of Directors (Item 1)
| | |
| | | 
Thomas J. Usher
Age 69
Director Since 1992
| | Experience, Qualifications, Attributes, or Skills
Mr. Usher is the non-executive Chairman of Marathon Petroleum Corporation, a transportation fuels refining company, which began as an independent company on July 1, 2011. Until July, 2011 he served as the non-executive Chairman of Marathon Oil Corporation, an integrated international energy company. He formerly served as the Chairman, Chief Executive Officer, and President of United States Steel Corporation, an integrated international steel producer, until his retirement in 2004. He served as the Chairman of the Board of U.S. Steel until 2006.
Mr. Usher received an undergraduate degree, master’s degree, and Ph.D. from the University of Pittsburgh. Our Board values Mr. Usher’s extensive executive management experience, including as the CEO of a public company, and significant involvement throughout the Pittsburgh community. In his duties as the Board’s Presiding Director, and as Chairman of the Nominating and Governance Committee, Mr. Usher can draw from a diverse set of leadership experiences and governance perspectives at large public companies, having served as a CEO, a non-executive Chairman, and an independent director. PNC Board Committee Memberships Presiding Director Executive Committee (Chairman) Nominating and Governance Committee (Chairman) Personnel and Compensation Committee Public Company Directorships H.J. Heinz Company (until June 2013) Marathon Petroleum Corporation (Non-Executive Chairman) PPG Industries, Inc. | 
George H. Walls, Jr.
Age 69
Director Since 2006
| | Experience, Qualifications, Attributes, or Skills
General Walls was the Chief Deputy Auditor for the State of North Carolina from 2001 to 2004. His responsibilities included oversight of the statewide operations of audit, administrative, and support staff.
General Walls served on active duty for over 28 years in the United States Marine Corps, retiring at the rank of Brigadier General in 1993.
General Walls received an undergraduate degree from West Chester State College and a master’s degree from North Carolina Central University.
Our Board values the financial and managerial experiences that General Walls brings to his duties as a director, both as the former Chief Deputy Auditor of North Carolina, and as displayed by the missions he led during an esteemed military career. These experiences show a strong fiscal management and operations experience, as well as valuable perspectives in human resources and internal audit.
16 THE PNC Board Committee MembershipsFINANCIAL SERVICES GROUP, INC. - 2015 Proxy Statement Audit Committee
Risk Committee
Special Compliance CommitteeCORPORATE GOVERNANCE
Public Company Directorships
Lincoln Electric Holdings, Inc.
|
| | | 8 | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders |
| | | | | | | Election of Directors (Item 1)
|
| | | 
Helge H. Wehmeier
Age 69
Director Since 1992
| | Experience, Qualifications, Attributes, or Skills
Mr. Wehmeier retired as the Vice Chairman of Bayer Corporation in 2004. He had served in that capacity since 2002, and was President and Chief Executive Officer since 1991. Bayer Corporation is the U.S. subsidiary of Bayer Group of Germany, an international life sciences, polymers, and specialty chemicals company.
Mr. Wehmeier is an alumnus of the International Management Development Institute in Lausanne, Switzerland and the Institut European d’Administration des Affaires in Fontainebleau, France.
Our Board values Mr. Wehmeier’s executive management experience and, in particular, his extensive experiences with merger integration activities at Bayer, which contributesis committed to strong corporate governance practices. Through the Board’s oversight of our operations and acquisition integrations. PNC Board Committee Memberships
Nominating and Governance Committee, Public Company Directorships
Owens-Illinois, Inc.
Terex Corporation (until 2010)
|
| | | the Board evaluates its governance policies and practices against evolving best practices. This section highlights some of our corporate governance policies and practices. Please seewww.pnc.com/corporategovernance for additional information about corporate governance at PNC, – Proxy Statement for 2012 Annual Meeting of Shareholders | | 9 |
| | | | | Corporate Governanceincluding:
| | |
Corporate governance guidelines To receive free, printed copies of any of these This section highlights some of our corporate governance policies and practices. Our website includes additional information about corporate governance at PNC, including:
Corporate governance guidelines
Go towww.pnc.com/corporategovernance for more information
Our Board’s Nominating and Governance Committee reviews the corporate governance guidelines at least once a year. The guidelines address important principles adopted by the Board, including:
The qualifications that we want to see in a director
What we expect the lead independent director to do
How the Board committees serve to support the Board’s oversight
A description of ordinary course relationships that will not impair a director’s independence
Our views on outside board positions
Our approach to director education
The mandatory retirement age (72)
The importance of meeting in executive session without management
The importance of having access to management at all times
How the Board evaluates our CEO’s performance
How the Board considers management succession planning
How the Board continually evaluates its own performance
This proxy statement is also available at:
www.pnc.com/proxystatement
To receive free, printed copies of any of these documents, please send a request to:
Corporate Secretary The PNC Financial Services Group, Inc. One PNC Plaza – 21st Floor249 Fifth Avenue
Pittsburgh, Pennsylvania 15222-2707 or corporate.secretary@pnc.com This proxy statement is also available at www.pnc.com/proxystatement corporate.secretary@pnc.comRecent corporate governance developments
Five of our current directors have reached the Board adopted mandatory retirement age of 72. In anticipation of this event, the Board and Nominating and Governance Committee have been addressing Board composition and director succession planning. Mr. Feldstein was appointed to our Board in 2013 and elected by shareholders at the 2014 annual meeting. In October 2014, the Board appointed Marjorie Rodgers Cheshire as a director. As part of its analysis of orderly director succession and optimal Board composition, the Nominating and Governance Committee recommended, and our Board approved, a limited waiver of the mandatory retirement age for two of our directors: Paul W. Chellgren, the current chair of our Audit Committee, and Thomas J. Usher, the current chair of our Nominating and Governance Committee and our Presiding Director, in connection with director nominations made by them in February 2015. Mr. Chellgren and Mr. Usher abstained from this vote. Mr. Chellgren and Mr. Usher have been nominated by our Board for election by shareholders at the 2015 annual meeting and are included in the Board nominees beginning on page 12. In connection with this waiver, it is expected that Mr. Chellgren will remain a member of the Audit Committee and will assist a new chair of that committee, to be appointed by the Board following our annual meeting of shareholders in April 2015, during the next year. It is also expected that Mr. Usher will remain a member of the Nominating and Governance Committee and will assist a new chair of that committee during the next year. The Board also waived the provision in the corporate governance guidelines that the Presiding Director also serve as the chair of the Nominating and Governance Committee. This waiver is limited to the period ending with the 2016 annual meeting of shareholders. The Board has determined that Mr. Usher should continue to perform the duties of the Presiding Director during the transitional year of our new Nominating and Governance Committee chair. The Board believes that it is in the best interests of the company to waive the mandatory retirement age provision on a limited basis as described above. The Board does not intend to amend this retirement age policy on a permanent basis. The Board also believes that it is in the best interests of the company for Mr. Usher to remain the Presiding Director through the 2016 annual meeting. Corporate governance guidelines Our Board has approved corporate governance guidelines. Our Board’s Nominating and Governance Committee reviews the corporate governance guidelines at least once a year. Any changes recommended by the Committee are approved by the Board. The guidelines address important principles adopted by the Board, including: The qualifications that we want to see in a director THE PNC FINANCIAL SERVICES GROUP, INC. - 2015 Proxy Statement 17
CORPORATE GOVERNANCE The director nomination process The duties of our lead independent director (Presiding Director) How the Board committees serve to support the Board’s duties A description of ordinary course relationships that will not impair a director’s independence The importance of meeting in executive session without management The importance of having access to management The mandatory director retirement age (72) How the Board evaluates our CEO’s performance How the Board considers management succession planning Our views on directors holding other board positions How the Board continually evaluates its own performance Our approach to director education The Board’s role in strategic planning Annual meeting format Although our By-laws provide the ability to hold a virtual only annual meeting of shareholders, PNC currently has no intention to conduct its annual meeting of shareholders in the form of a virtual only annual meeting. Our By-laws preserve our option under Pennsylvania law to hold a virtual annual meeting should we ever decide to do so. While we will continue to monitor the development of corporate governance practices in regard to the conduct of annual meetings, we currently believe that we would move to a combined form of annual meeting supplementing the in-person meeting with a virtual annual meeting before we would consider any further format changes to our annual meeting. Our Board leadership structure Based on an assessment of its current needs and the composition, skills, and qualifications of the directors, the Board believes that the appropriate leadership structure should include the following attributes: A substantial majority (at least 2/3) of independent directors A lead independent director with specific dutiesPresiding Director Regular executive sessions of all independent directors without management present The Board’s current leadership structure includes all three attributes. We haveThe Board has not adopted a policy with respect to separating the Chairman and CEO positions. The Board believes that the leadership structure should be flexible enough to accommodate different approaches based on an evaluation of relevant facts and circumstances. The Board considers its structure and leadership each year. The Personnel and Compensation Committee discusses whether to separate the positions of Chairman and CEO as part of its ongoing evaluation of management succession plans. James E. Rohr,William S. Demchak, our current CEO, also serves as the Chairman of the Board. Thomas J. Usher, the Board’s Presiding Director, serves as our lead independent director. We describe his duties in more detail below.
| | | 10 | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders |
In connection with the evaluation of annual performance and decisions regarding compensation, the Personnel and Compensation Committee typically reviews the performance of the CEO in the first quarter of the year. The Committee performs this review in its own committee meeting and in a follow-up session with all independent directors of the Board.
The Board most recently reviewed Mr. Rohr’s performance at a meeting held on February 7, 2012.
This evaluation helped to inform the Personnel and Compensation Committee’s compensation decisions for Mr. Rohr. These decisions are discussed in more detail in theCompensation Discussion and Analysis section, which begins on page 32. This discussion of CEO performance in a full Board session also helps to inform the Board’s oversight of the execution of PNC’s strategic objectives.
The Board continues to value Mr. Rohr’s substantial experience at PNC, his leadership in growing PNC and delivering value over a volatile period, and his extensive industry knowledge and insights. The Board also values Mr. Usher’s experience as the Presiding Director and his fulfillment of the duties of the position. Based on a review of the skills, qualifications, and experience of our Chairman and lead independent director, the Board does not currently recommend a separation of the positions of Chairman and CEO.
Substantial majority of independent directors.We have long maintained a Board with a substantial majority of directors who are not PNC employees. The NYSE and our corporate governance guidelines, requirerequires at least a majority of our directors to be independent from management. As the Chairman and CEO of PNC, Mr. RohrDemchak is currently the only director who is not independent under NYSE’s “bright-line” rules. The Board has affirmed the independence of each of our other 1412 nominees for director. Please seeDirector and Executive Officer Relationshipson pages 2228 to 2830 for a description of how we evaluate independence.
Lead independent directorPresiding Director duties.As the Presiding Director, Mr. Usher is the lead independent director for our Board. The Board’s independent and non-management directors selected him for this role. The Board approved the following duties for the Presiding Director:Director, which are included in our corporate governance guidelines:
Preside at meetings of the Board of Directors ifin the Chairman is unavailableevent of the Chairman’s unavailability. Convene and preside at executive sessions of the Board’s independent directors whenever he or she deems it appropriate to do so. Preside at executive sessions of the Board’s non-management and independent directors. Confer with the Chairman or CEO immediately following the executive sessions of the Board’s non-management or independent directors and communicateto convey the substance of the discussions held during those sessions, subject to any discussions tolimitations specified by the Chairman, as appropriateindependent directors. Act as the principal liaison between the Chairman and the CEO and the Board’s independent directorsdirectors. Be available for confidential discussions with any non-management or independent director who may 18 THE PNC FINANCIAL SERVICES GROUP, INC. - 2015 Proxy Statement
CORPORATE GOVERNANCE | | have concerns which he or she believes have not been properly considered by the Board as a whole. |
AdviseFollowing consultation with the Chairman, regardingCEO and other directors as appropriate, approve the Board’s agendas, meeting schedule and flowagendas, and the information provided to the Board, in order to promote the effectiveness of information
Participate with management in meetings with stakeholders, as necessary or appropriatethe Board’s operation and decision making and help ensure that there is sufficient time for discussion of all agenda items.
Be available to receivefor consultation and direct communications fromcommunication with major shareholders as appropriate. Discharge such other responsibilities as the Board’s independent directors may assign from time to timetime. During the course of the year, the Presiding Director may suggest, revise, or otherwise discuss agenda items for the Board meetings.meetings with the Chairman or CEO. In between meetings, each director is encouraged to raise any topics or issues with the Presiding Director tothat the director believes should be discussed among the non-management or independent directors. The Presiding Director will raise any such matter in an executive session As Chairman of the Board, without identifying the source of the request, unless the director asks to be identified. | | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders | | 11 |
The Presiding Director also chairs the Board’s Nominating and Governance Committee. AsCommittee, the chair of that Committee, Mr. UsherPresiding Director leads the Board and committee annual self-evaluation process and the evaluation of Board independence.the independence of directors. That Committee also reviews, and the Presiding Director as Chairman of the Committee reports to the Board, significant developments in corporate governance, which the chair reviews with the full Board from time to time.governance.
ExecutiveRegular executive sessions of independent directors.Our directors have met and will continue to meet in regularly scheduled executive sessions without management present. The NYSE requires our independent directors to meet once a year. Under our Board’s own policy, our independent directors meet by themselves at least quarterly. As theOur Presiding Director Mr. Usher leads these executive sessions.
Communicating with our Board If you want to communicate directly to our directors, please mail your communication to the following address: Presiding Director The PNC Financial Services Group, Inc. Board of Directors P.O. Box 2705 Pittsburgh, Pennsylvania 15230-2705 If you follow this process, your communication will not be opened or screened by a PNC employee. The Presiding Director will receive the communication and determine how to respond. Depending on the content, he may forward the communication to a PNC employee, ora third party, another director, a committee, or Board committee.the full board. If you send a director-related communication to a PNC location or by electronic mail to a PNC employee, we will evaluate it based on a process thatestablished by our Board’s independent directors have approved.directors. Under this process, PNC employees will determine whichwhat communications should be providedare relayed to directors. If you are a shareholder and want to recommend a candidate for our Board to be considered by our Nominating and Governance Committee, please follow the instructions on page 16.24. If you are a shareholder and want to directly nominate a director candidate at an annual meeting, submit a proposal at an annual meeting, or includesubmit a proposal to us to be included in our proxy materials next year, please follow the instructions on pages 100-101.page 89. Our code of ethics PNC has adopted, and the Audit Committee has approved, a Code of Business Conduct and Ethics that applies generally to all employees and directors. Our code of ethics addresses these important topics, among others: Our commitment to ethics and values Fair dealing with customers, suppliers, competitors, and employees Conflicts and potential conflicts of interest Self-dealing and outside employment Insider trading and other trading restrictions, including prohibitions on transactions in any derivative of PNC securities, including buying and writing options Creating business records, document retention, and protecting confidential information Protection and proper use of our assets, including intellectual property and electronic media Communicating with the public Political contributions and fundraising Compliance with lawlaws and regulations Protection from retaliation The code of ethics is available on our website (www.pnc.com/corporategovernance). Any shareholder may also request a free print copy by writing to our Corporate Secretary at the address given on page 10.17. | | | 12 | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders |
THE PNC FINANCIAL SERVICES GROUP, INC. - 2015 Proxy Statement 19
CORPORATE GOVERNANCE We intend that this code satisfies the SEC’s requirement to adopt a code that applies to a company’s CEO and senior financial officers. The appropriate committee of our BoardOur Board’s Audit Committee must approve any waivers or exceptions to code provisions for our directors or executive officers. We will post on our website any future amendments to, or waivers from, a provision of the code of ethics that applies to our directors or executive officers (including our Chairman and Chief Executive Officer, Chief Financial Officer,CEO, CFO, and Controller). PNC has also adopted, and our Audit Committee has approved, Ethics Guidelines for Directors to supplement the PNC code of ethics. Orientation and education All of our new directors undergo a director orientation program. In addition to written materials provided to new directors, in-person orientation sessions are held for each new director. In-person orientation sessions generally include meetings with members of senior management to familiarize new directors with PNC’s strategic plan, its significant financial, accounting and risk management issues, its compliance program, its Code of Business Conduct and Ethics and related policies, and specific matters related to the committees to which a new director has been appointed. Continuing education is provided to the directors through a combination of in-person sessions held in connection with, or as part of, a meeting of the Board or a committee, and coordination of attendance by directors at outside seminars relevant to the duties of a director. The sessions include training on complex products and services, PNC’s lines of business, significant risks to PNC, and other topics identified by our Board and management. Board committees Our Board currently has five standing committees. Four of these committees—Audit, Nominating and Governance, Personnel and Compensation, and Risk—meet on a regular basis. The fifth committee—the Executive—Executive Committee meets as needed.needed and is composed of our Chairman and CEO, and the chairs of our other four primary standing committees. The Executive Committee may act on behalf of the Board and reports regularly to the full Board. The Executive Committee members include the Chairman and CEO, and the chairs of the other four standing Board committees. Our Presiding Director chairs the Executive Committee, which met four timesone time in 2011.2014. Our By-laws authorize the Board to create other committees. Each committee may form and delegate authority to subcommittees of one or more committee members. Our Board created a Special Compliance Committee to assist the Board in its oversight and reporting responsibilities in connection with relevant provisions of consent orders entered into between PNC and banking regulators related to certain residential mortgage and identity theft protection product matters. Our Risk Committee has formed a subcommittee to facilitate Board-level oversight of our enterprise- wide technology risk (the Special Technology Subcommittee). Each committee operates under a written charter approved by the Board.Board, or in the case of a sub-committee the applicable standing committee. Each committee and subcommittee annually reviews and reassesses its charter. Each committeeof the four primary standing committees also performs an annual self-evaluation to determine whether the committee and any of its subcommittees is functioning effectively and fulfilling its charter duties. The Special Compliance Committee performed a self-evaluation in 2014 and will perform an annual evaluation until it is dissolved. We describe the main responsibilities of the Board’s four principalprimary standing committees below. The descriptions of the committee functions in this proxy statement are qualified by reference to the charters and our relevant By-law provisions. The charters for the four Board committees discussed in this section are all available on our website atwww.pnc.com/corporategovernance.corporategovernance. 20 THE PNC FINANCIAL SERVICES GROUP, INC. - 2015 Proxy Statement
CORPORATE GOVERNANCE Audit Committee.Committee | | | | |  | | Chair | | Other members: | | Paul W. Chellgren | | Richard O. Berndt | | | | Marjorie Rodgers Cheshire | | | | Richard B. Kelson | | | | Donald J. Shepard | | | | George H. Walls, Jr. | | | | |
The Audit Committee consists entirely of directors who are independent directors.as defined in the NYSE’s corporate governance rules and in the regulations of the Securities and Exchange Commission related to audit committee members. When our Board meets on April 24, 2012,28, 2015, only independent directors will be appointed to the committee. Committee. Neither Mr. Berndt nor General Walls will stand for re-election to the Board at the annual meeting as they have each reached the mandatory retirement age set in PNC’s corporate governance guidelines and, following the annual meeting, neither will be a member of the Committee. The currentBoard has determined that each Audit Committee member is financially literate and that at least two members are: | | | Paul W. Chellgren (Chair) | | | Richard B. Kelson | | | Bruce C. Lindsay | | | Donald J. Shepard | | | George H. Walls, Jr. | | |
possess accounting or related financial management expertise. The Board made these determinations in its business judgment, based on its interpretation of the NYSE’s requirements for committee members. Acting on the recommendation of the Nominating and Governance Committee, the Board of Directors determined that Mr. Chellgren and Mr. Kelson are each an “audit committee financial expert,” as that term is defined by the SEC. Our Board most recently approved the charter of the Audit Committee on August 18, 2011,November 13, 2014, and it is available on our website. The Audit Committee satisfies the requirements of SEC Rule 10A-3, which includes the following topics: The independence of committee members
| • | | The independence of committee members | |
The responsibility for selecting and overseeing our independent auditors
| • | | The responsibility for selecting and overseeing our independent auditors | |
The establishment of procedures for handling complaints regarding our accounting practices
| • | | The establishment of procedures for handling complaints regarding our accounting practices | |
The authority of the committee to engage advisors
| • | | The authority of the committee to engage advisors | |
The determination of appropriate funding for payment of the independent auditors and any outside advisors engaged by the committee and for the payment of the committee’s ordinary administrative expenses.
| • | | The determination of appropriate funding for payment of the independent auditors and any outside advisors engaged by the committee and for the payment of the committee’s ordinary administrative expenses | |
The Audit Committee’s primary purposes are to assist the Board by: Monitoring the integrity of our consolidated financial statements
| • | | Monitoring the integrity of our consolidated financial statements | |
| | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders• | | 13 |
| | | | | Corporate Governance
Monitoring internal control over financial reporting | | |
| • | | Monitoring compliance with our code of ethics | |
Monitoring compliance with legal and regulatory requirements and with our code of ethics
| • | | Evaluating and monitoring the qualifications and independence of our independent auditors | |
| • | | Evaluating and monitoring the performance of our internal audit function and our independent auditors | |
At each in-person meeting of our independent auditors Evaluatingfull Board, the chair of the Committee presents a report of the items discussed and monitoring the performance of our internal audit function and our independent auditors
The Audit Committee must also prepare the report required to be included in this proxy statement. The Audit Committee hasactions approved that report, which is on page 94.at previous meetings.
The Audit Committee’s responsibility is one of oversight. Our management is responsible for preparing our consolidated financial statements, for maintaining internal controls, and for our compliance with laws and regulations, and the independent auditors are responsible for auditing our consolidated financial statements. The Committee typically reviews and approves the internal and external audit plans. The Committee is directly responsible for the selection, appointment, compensation and oversight of our independent auditors (including the resolution of any disagreements between management and the auditors regarding financial reporting if disagreements occur) for the purpose of preparing or issuing an audit report or related work. We describe the role of the Committee in regard to the independent auditors in more detail on page 79. For work performed by the independent auditors, the Committee must pre-approve all audit engagement fees and terms, as well as all permitted non-audit engagements. The Committee (or delegate) pre-approves all audit services, audit-related services, and permitted non-audit services. The Committee considers whether providing audit services, audit-related services, and permitted non-audit services will impair the auditors’ independence. We describe the Committee’s procedures for the pre-approval of audit services, audit-related services, and permitted non-audit services on pages 93-94.page 80. The Committee receives routine reports on finance, reserve adequacy, ethics, and internal and external audit. THE PNC FINANCIAL SERVICES GROUP, INC. - 2015 Proxy Statement 21
CORPORATE GOVERNANCE The Committee has the authority to retain independent legal, accounting, economic, or other advisors. The Committee regularly holds privateexecutive sessions with our management, internal auditors,the General Auditor, the Chief Ethics Officer, and the independent auditors. The independent auditors report directly to the Committee. The Committee appoints our General Auditor, who leads PNC’s internal audit function and reports directly to the Committee. The Committee reviews the performance and approves the compensation of our General Auditor, who leads PNC’s internal audit function and reports directly to the Committee.Auditor. Under our corporate governance guidelines, Audit Committee members may only serve on the audit committee of no more than three public company audit committees,companies, including PNC’s.PNC. The Audit Committee has approved the report on page 81 as required under its charter and in accordance with SEC regulations. 22 THE PNC FINANCIAL SERVICES GROUP, INC. - 2015 Proxy Statement
CORPORATE GOVERNANCE Nominating and Governance Committee. | | | | | | | | Chair | | Other members: | | Thomas J. Usher | | Charles E. Bunch | | | | Kay Coles James | | | | Anthony A. Massaro | | | | Donald J. Shepard | | | | Dennis F. Strigl | | | | Helge H. Wehmeier |
The Nominating and Governance Committee consists entirely of independent directors. When our Board meets on April 24, 2012,28, 2015, only independent directors will be appointed to the Committee. The current members are: Mr. Wehmeier will not stand for re-election to the Board at the annual meeting as he has reached the mandatory retirement age set in PNC’s corporate governance guidelines and, following the annual meeting, he will no longer be a member of the Committee. | | | Thomas J. Usher (Chair) | | | Charles E. Bunch | | | Anthony A. Massaro | | | Dennis F. Strigl | | | Helge H. Wehmeier | | |
Our Board most recently approved the charter of the Nominating and Governance Committee on February 9, 2011,November 13, 2014, and it is available on our website. At each in-person meeting of our full Board, the chair of the Committee presents a report of the items discussed and the actions approved at previous meetings. The primary purpose of our Nominating and Governance Committee is to assist our Board in promoting the best interests of PNC and its shareholders through the implementation of sound corporate governance principles and practices. The Committee also assists the Board by identifying individuals qualified to become Board members. The Committee recommends to the Board the director nominees for each annual meeting, and may also recommend the appointment of qualified individuals as directors between annual meetings. In addition to the annual self-evaluation that all primary standing committees perform, the Nominating and Governance Committee also oversees the annual evaluation of the performance of the Board and | | | 14 | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders |
all committees and reports to the Board on the evaluation results, as necessary or appropriate. The Committee annually reviews and recommends any changes to the Executive Committee charter.
How we evaluate directors and candidates.candidates. At least once a year,annually, the Committee assesses the skills, qualifications and experience of our directors and recommends a slate of nominees to the Board. From time to time, the Committee also evaluates changesconsiders whether to change the composition of our Board. In evaluating existing directors or new candidates, the Committee assesses the needs of the Board and the qualifications of the individual. Please see the discussion on pages 2-912 to 16 for more information on each of our current director nominees. Our Board and its committees must satisfy SEC, NYSE, and other banking regulatory standards. At least a majority of our directors must be independent under the NYSE standards.standards, however, our corporate governance guidelines require that a substantial majority (at least 2/3) of our directors be independent. We require a sufficient number of independent directors to satisfy the membership needs of committees that also require independence. Our Audit Committee must include independent, financially literate directors with accounting or related financial management expertise. Beyond that, the Nominating and Governance Committee expects directors to understandgain a sound understanding of our strategic vision, our mix of businesses, and the bankour approach to regulatory environmentrelations and material requirements.risk management. The Board must possess a mix of qualities and skills to address the various risks facing PNC and understand how PNC manages risk.PNC. For a discussion of our Board’s oversight of risk, please see the section entitledRisk Committee,, which begins on page 20.27. To assist the Committee in its identification of qualified directors, the Board approved criteria that include:
A sustained record of high achievement, manifest competence, and integrity
A strong commitment to the ethical and diligent pursuit of shareholders’ best interest
The strength of character necessary to challenge management’s recommendations and actions when appropriate and to confirm the adequacy and completeness of management’s responses to such challenges to his or her satisfaction
Our Board’s strong desire to maintain its diversity in terms of race and gender
Personal qualities that will help to sustain an atmosphere of mutual respect and collegiality among the members of our Board
The Committee doeshas not haveadopted any specific, minimum qualifications for director candidates. Each year,When evaluating each director, as well as new candidates for nomination, the Committee assesses our current directors for possible nomination and re-election. In doing so, it considers the factors listed above. following Board-approved criteria: | • | | A sustained record of high achievement in financial services, business, industry, government, academia, the professions, or civic, charitable, or non-profit organizations | |
| • | | Manifest competence and integrity | |
| • | | A strong commitment to the ethical and diligent pursuit of shareholders’ best interest | |
| • | | The strength of character necessary to challenge management’s recommendations and actions when appropriate and to confirm the adequacy and completeness of management’s responses to such challenges to his or her satisfaction | |
| • | | Our Board’s strong desire to maintain its diversity in terms of race and gender | |
THE PNC FINANCIAL SERVICES GROUP, INC. - 2015 Proxy Statement 23
CORPORATE GOVERNANCE | • | | Personal qualities that will help to sustain an atmosphere of mutual respect and collegiality among the members of our Board | |
The committee generallyCommittee also considers the diversity, age, skills, experience in the context of the current needs of the Board the independence of directors from PNC, a director’sand its committees, meeting attendance and participation, and the value of a director’s contributions to the effectiveness of our Board and its committees. Although the Board has not adopted a formal policy on diversity, the Committee considers the diversity of directors in the context of the Board’s overall needs. The Committee evaluates diversity in a broad sense, recognizing the benefits of racial and genderdemographic diversity, but also considering the breadth of diverse backgrounds, skills, and experiences that directors may bring to our Board. How we identify new directors.directors. The Nominating and Governance Committee may identify potential directors in a number of ways. The Committee may consider recommendations made by current or former directors or members of executive management. WeThe Committee may also identify potential directors through contacts in the business, civic, academic, legal and non-profit communities. When appropriate, the Committee may retain a search firm to identify candidates. | | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders | | 15 |
In addition, the Committee will consider director nomineescandidates recommended by our shareholders. In ordershareholders for nomination at next year’s annual meeting. For the Committee to consider a nomineedirector candidate for election,nomination, the shareholder must submit a written proposal recommending the candidaterecommendation in writing to the office of the Corporate Secretary at our principal executive offices.office. Each submission must include the information required byunder “Director nomination process” in Section 3 of our By-laws and corporate governance guidelines both of which canfound at www.pnc.com/corporategovernance and must be found on our website.received by November 18, 2015. The Committee will evaluate candidates recommended by a shareholder in the same manner as candidates identified by the Committee or recommended by the Committee. The Committee has the right to request any additional information it may deem appropriate or desirable to evaluate the candidate.others. The Committee will not consider any candidate with an obvious impediment to serving as one of our directors. Shareholders who wish to nominate directors directly at an annual meeting in accordance with the procedures in our By-laws should follow the instructions in the section entitledGeneral Information—Shareholder proposals for 2013 annual meeting—Advance notice procedures on page 101. The Committee will meet to consider relevant information regarding a director candidate, in light of the Board approved evaluation criteria and needs of our Board. If the Committee does not recommend a candidate for nomination or appointment, or for more evaluation, no further action is taken. The chair of the Committee will later report this decision to the full Board. For shareholder-recommended candidates, the Committee’s secretaryCorporate Secretary will communicate the decision to the shareholder. If the Committee decides to recommend a candidate to our Board as a nominee for election at an annual meeting of shareholders or for appointment by our Board, the chair of the Committee will report that decision to the full Board at its next meeting. Before that meeting, each of the other directors will receive the same biographical and other background information about the candidate that the Committee considered. Board. After allowing for a discussion, the full Board will vote on whether to nominate the candidate for election or appoint the candidate to the Board. The Board may postpone this vote if it needs more information or deliberation, including additional evaluations regarding independence. Potential candidates may be informally approached by Mr. Usher, as Presiding Director and chair of the Committee, or Mr. Rohr, as Chairman of PNC. As our corporate governance guidelines describe, invitations to join the Board should come from the chair ofPresiding Director and the Nominating and Governance Committee and PNC’s Chairman, jointly acting on behalf of our Board.
Shareholders who wish to directly nominate a director candidate at an annual meeting must do so in accordance with the procedures contained in our By-laws and should follow the instructions in the section entitledShareholder proposals for 2016 annual meeting—Advance notice procedures on page 89. 24 THE PNC FINANCIAL SERVICES GROUP, INC. - 2015 Proxy Statement
CORPORATE GOVERNANCE Personnel and Compensation Committee. | | | | | | | | Chair | | Other members: | | Dennis F. Strigl | | Charles E. Bunch | | | | Paul W. Chellgren | | | | Andrew T. Feldstein | | | | Richard B. Kelson | | | | Thomas J. Usher | | | | |
The Personnel and Compensation Committee consists entirely of independent directors. The Committee membership is intended to satisfy the independence standards established by applicable federal income tax and securities laws, as well as NYSE standards. When our Board meets on April 24, 2012,28, 2015, only independent directors will be appointed to the Committee. The current members are: | Dennis F. Strigl (Chair) | Charles E. Bunch | Paul W. Chellgren | Kay Coles James | Richard B. Kelson | Thomas J. Usher |
Our Board most recently approved the charter of the Committee on February 9, 2011,November 13, 2014, and it is available on our website. The Committee’s principal purpose is to discharge our Board’s oversight responsibilities relating to the compensation of our executive officers and other designated employees.specified responsibilities related to personnel and compensation matters affecting PNC. The Committee may also evaluate and approve, or recommend for approval, benefit, incentive compensation, severance, equity-based or other compensation plans, policies, and programs. The Committee charter provides that approval of the compensation of the General Auditor and the Chief Risk Officer shall be made by the Audit Committee and the Risk Committee, respectively. | | | 16 | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders |
The Committee has the authority to retain independent legal, compensation, accounting, or other advisors. The charter provides the Committee with the sole authority to retain and terminate a compensation consultant acting on the Committee’s behalf, and to approve the consultant’s fees and other retention terms. The Committee retained an independent compensation consultant in 20112014 and prior years. SeeRole of compensation consultantson page 18. below. The Committee also reviews the Compensation Discussion and Analysis (CD&A) section of the proxy statement with management. See theCompensation Committee Reporton page 53. The CD&A begins on page 32.36. The Committee reviews the aggregate risk impact of our incentive compensation programs and plans. SeeCompensation and Riskon pages 54-56.54 and 55. The Committee has responsibility for reviewing and evaluating the development of an executive management succession plan and for reviewing our progress on diversity. The Committee reviews a detailed succession planning report at least annually. The materials typically include a discussion of the individual performance of executive officers as well as succession plans and development initiatives for other high potential employees. These materials provide necessary background and context to the Committee, and give each member a familiarity with the employee’s position, duties, responsibilities, and performance. How the committee makes decisions.decisions. The Committee meets at least six times a year. Before each meeting, the chair of the Committee reviews the agenda, materials, and issues with members of our management and the Committee’s independent executive compensation consultant, as appropriate. The Committee may invite legal counsel or other external consultants to advise the Committee during meetings and preparatory sessions. The Committee regularly meets in executive sessions without management present. At each in-person meeting of our full Board, the chair of the Committee presents a report of the items discussed and the actions approved at previous meetings. The chair provides these reports during an executive session of the Board. The Committee consults with independent directors before approving the CEO’s compensation. The Committee adopted guidelines for information that will be presented to the Committee. The guidelines contemplate, among other things, that any major changes in policies or programs be considered over the course of two separate Committee meetings, with any vote occurring at the later meeting. The guidelines also describe the recommendations for the content submitted to the Committee. For significant proposals, information presented to the Committee should include, among other things, a written analysis and recommendation by the Committee’s independent consultant, an overview of the internal implications of any proposal or decision, and a summary of related public disclosure, as appropriate. The guidelines also note that the Committee’s independent consultant should present any proposals or other recommendations concerning our CEO’s compensation.
The Committee reviews all of the elements of the compensation programs periodically and adjusts those programs as appropriate. Each year, the Committee makes decisions regarding the amount of annual compensation and equity-based or other longer-term compensation for our executive officers corporate executive group, and aother designated group of other individuals.senior employees. For the most part, these decisions are made in the first quarter of each year, following the evaluation of the prior year’s performance. The Committee reviews aspects of our post-employment compensation programs annually, but does not necessarily adjust them each year. | | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders | | 17 |
THE PNC FINANCIAL SERVICES GROUP, INC. - 2015 Proxy Statement 25
CORPORATE GOVERNANCE Delegations of authority.authority. TheIn May 2014, the Committee has delegatedupdated the authority delegated to management to make certain decisions to various members of management. In particular, the Committee has delegated to our Chief Human Resources Officer the abilityor to take certain actions with respect to compensation or benefit plans or arrangements (other than those that are solely or predominantly for the benefit of executive officers). For employee benefit, bonus, incentive compensation, severance, equity-based and benefitother compensation or incentive plans and arrangements, includingthe Committee delegated to our Chief Human Resources Officer (or her designee) the ability to adopt a new plan or arrangement or amend plans and arrangements,an existing one if: | • | | the decision is not expected to result in a material increase in incremental expense to PNC, defined as an expense that exceeds 5% of the relevant expense for that plan category, or | |
| • | | the change is of a technical nature or is otherwise not material. | |
This delegation also includes authority to make clarifications and technical changes, to take certain actions to implement, administer, interpret, construe or construemake eligibility determinations under the plans and arrangements,arrangements. For grants of equity or equity-based awards, the Committee has delegated to our Chief Executive Officer and our Chief Human Resources Officer (or the designee of either) the responsibility to make eligibility determinations.decisions with respect to equity grants for individuals who are not designated by the Committee as executives, including the determination of participants and grant sizes, allocation of the pool from which grants will be made, establishment of the terms of such grants, approval of amendments to outstanding grants and exercise of any discretionary authority pursuant to the terms of the grants. The Committee has also delegated to our CEO the abilityAudit Committee (or a qualified subcommittee) and to offer change in control agreements to employees, within specific parameters. In November 2011,a qualified subcommittee of the Risk Committee delegatedthe authority to members of management to determine equity grant awards for less senior employees. The Committee also delegated authority to our Chief Human Resources Officer to vest certain equitymake equity-based grants and award restricted stock unitsother compensation under applicable plans to less senior employees.the General Auditor and Chief Risk Officer, respectively. Management’s role in compensation decisions.decisions. Our executive officers, including our CEO and our Chief Human Resources Officer, often review information with the Committee during meetings and may present management’s views or recommendations. The Committee evaluates these recommendations, generally in consultation with an independent compensation consultant retained by the Committee, who attends each meeting. The chair of the Committee typically meets with management and an independent compensation consultant before each Committee meeting to discuss agenda topics, areas of focus, or outstanding issues. The chair generally schedules other meetings with the Committee’s compensation consultant without management present.present, as needed. Occasionally, management will schedule meetings with each Committee member to discuss substantive issues. For more complicated issues, these one-on-one meetings provide a dedicated forum for Committee members to ask questions outside of the meeting environment. During Committee meetings, the CEO often reviews corporate and individual performance as part of the compensation discussions, and other members of executive management may be invited to speak to the Committee about specific performance or risk management. The Committee reviews any compensation decisions for the Chief Human Resources Officer and CEO and chairman in executive session, without either officer present for the discussion of their compensation. Any recommendations for CEO compensation are also discussed with the full Board, with no members of management present for the discussion. Role of compensation consultants.consultants. The Committee has the sole authority to retain and terminate any compensation consultant directly assisting it. The Committee also has the sole authority to approve fees and other engagement terms. The Committee receives comparative compensation data from our management, from proxy statements and other public disclosures, and through surveys and reports prepared by compensation consultants. The Committee previously retained McLagan as its independent compensation consultant. In 2011, PNC paid McLagan $313,160 for services provided to management, including surveys, that were not related to Committee work. PNC paid $56,125 to McLagan in 2011 for Committee-related work. Although in its most recent annual review of McLagan’s performance the Committee considered McLagan to be independent, the Committee elected to terminate its relationship with McLagan effective February 23, 2011 due to the increased level of fees being paid by PNC to affiliates of McLagan. Many of these fees resulted from the 2010 merger of Hewitt and Aon, the parent company of McLagan. We discussed this relationship in more detail in last year’s proxy statement. The Committee then evaluated several other potential consultants to replace McLagan, and the chair and other members of the Committee interviewed the finalists in April. Management
| | | 18 | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders |
participated in some of these interviews, and the chair interviewed each finalist without
management present. Following the completion of this process, the Committee retained Meridian Compensation Partners as its independent compensation consultant.consultant for 2014. In this capacity, Meridian reports directly to the Committee.
Beginning with the meeting in August 2011, In 2014, one or more representatives attended all of the in-person and telephonic meetings of the Committee, and met regularly with the Committee without members of management present. Meridian also reviewed meeting agendas.
Meridian and members of management assisted the Committee in its review of proposed compensation packages for our executive officers. For the 20112014 performance year, Meridian prepared all discussion materials for the compensation of the CEO, which were reviewed in executive session without any members of management present. Meridian also prepared competitive pay analyses and other benchmarking reviews and pay for performance analyses for the committee.Committee. PNC did not pay any fees to Meridian in 2011,2014 other than in connection with work for the Committee. The Committee evaluated whether the work of Meridian raised any conflict of interest. The Committee considered various factors, including six factors mandated by the SEC rules, and determined that no conflict of interest was raised by the work of Meridian described in this proxy statement. Our management retains other compensation consultants.consultants for its own use. In 2014, our management retained McLagan to provide certain market data in the financial services industry. It also uses Towers 26 THE PNC FINANCIAL SERVICES GROUP, INC. - 2015 Proxy Statement
CORPORATE GOVERNANCE Watson, a global professional services firm, as its principal compensation advisor. Towers Watson provides from time to time various actuarial and management consulting services to us, including: Analyzing the competitiveness of specific compensation programs, such as executive retirement benefits or change in control arrangements
| • | | Preparing specific actuarial calculations on values under our retirement plans | |
Preparing specific actuarial calculations on values under our retirement plans
| • | | Preparing surveys of competitive pay practices | |
Preparing surveys of competitive pay practices
| • | | Analyzing our director compensation packages and providing reports to our management and the Board’s Nominating and Governance Committee | |
Analyzing our director compensation packages and providing reports to our management and the Board’s Nominating and Governance Committee
Updating management on the effect of relevant laws and regulations
| • | | Providing guidance on certain aspects of total rewards, talent management and other human resources initiatives | |
Reports prepared by Towers Watson and McLagan that relate to executive compensation may also be shared with the Committee, and Towers Watson may, from time to time, make presentations to the Committee. Compensation committee interlocks and insider participation.participation. None of the current members of the Personnel and Compensation Committee are officers or employees or former officers of PNC or any of our subsidiaries. No PNC executive officer served on the compensation committee of another entity that employed an executive officer who also served on our Board. No PNC executive officer served as a director of an entity that employed an executive officer who also served on our Personnel and Compensation Committee. Certain members of the Personnel and Compensation Committee, their immediate family members, and entities with which they are affiliated, were our customers or had transactions with us (or our subsidiaries) during 2011.2014. Transactions that involved loans or commitments by subsidiary banks were made in the ordinary course of business and on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons and did not involve more than the normal risk of collectability or present other unfavorable features. Please seeDirector and Executive Officer Relationships—Related person transactions policies and procedures—Regulation O policies and procedures,, which begins on page 27,31, for more information. Risk Committee | | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders | | 19 |
| | | | | | Chair | | Other members: | | | Corporate Governance
| Donald J. Shepard | | Richard O. Berndt | | Anthony A. Massaro | | | | Marjorie Rodgers Cheshire | | Jane G. Pepper | | | | William S. Demchak | | Lorene K. Steffes | | | | Andrew T. Feldstein | | George H. Walls, Jr. | | | | Kay Coles James | | | | | | | | |
Risk Committee.The Board performs its risk oversight function primarily through the Risk Committee, which includes both independent and management directors. The current members are:
Neither Mr. Berndt nor General Walls will stand for re-election to the Board at the annual meeting as they have each reached the mandatory retirement age set in PNC’s corporate governance guidelines and, following the annual meeting, neither will be a member of the Committee. | | | Donald J. Shepard (Chair) | | | Richard O. Berndt | | | Kay Coles James | | | Bruce C. Lindsay | | | Anthony A. Massaro | | | Jane G. Pepper | | | James E. Rohr | | | Lorene K. Steffes | | | George H. Walls, Jr. | | |
Our Board most recently approved the charter of the committeeCommittee on August 18, 2011,November 13, 2014, and it is available on our website. At each in-person meeting of our full Board, the chair of the Committee presents a report of the items discussed and the actions approved at previous meetings. The Committee’s purpose is to provide oversight of our enterprise-wide risk structuregovernance framework and activities and the processes established to identify, measure, monitor, and manage ourdirect and indirect risks of PNC. We consider credit risk, market risk (interest rate and price risk), liquidity risk, and operatingoperational risk (including technology, operational, compliance,(compliance, legal, fiduciary and fiduciaryinvestment risk). to be direct risks. Indirect risks include business risk, strategic risk, model risk, insurance risk and reputation risk. PNC’s major financial risk exposures are the responsibility of the Audit Committee. The Risk Committee serves as the primary point of contact between our Board and the management-level committees dealing with strategy and risk management. The Committee’s responsibility is one of oversight, and the Committee has no duty to assure compliance with laws and regulations. The Committee receives regular reports on enterprise-wide risk management, credit risk, market and liquidity risk, operating risk, and capital management. The Committee may also form sub-committeessubcommittees from time to time. It has formed a joint sub-committeesubcommittee to assist the Risk Committee in fulfilling its oversight responsibilities with respect to technology risk matters. The Committee appoints our Chief Risk Officer, who leads PNC’s risk management function. The Committee reviews the Audit Committee to provide oversightperformance and approves the compensation of PNC’s implementation efforts related to the framework adopted by the Basel Committee on Banking Supervision.our Chief Risk Officer. The Risk Committee, along with the Personnel and Compensation Committee, each reviewreviews the risk components of our incentive compensation plans. For a discussion of the relationship between compensation and risk, please seeCompensation and Risk,, beginning on page 54. | | | 20 | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders |
THE PNC FINANCIAL SERVICES GROUP, INC. - 2015 Proxy Statement 27
DIRECTOR AND EXECUTIVE OFFICER RELATIONSHIPS Board meetings in 20112014 The table below shows the names of our directors as of December 31, 2011.2014. The table also shows the number of Board committee meetings held in 2011,2014, and the members and chairs of each committee. We also identify each director who has been designated by our Board as an “audit committee financial expert,” as defined under SEC regulations. Our Board held 1611 meetings in 2011.2014. Each director attended at least 75% of the combined total number of meetings of the Board and all committees on which the director served. Our Board has adopted a policy that strongly encourages each director to attend the annual meeting in person. We remind each director of this policy before the date of the annual meeting. All but one of our directors then serving attended PNC’s 20112014 annual meeting of shareholders. | | | | | | | | | | | | | | | | | | Director | | | | Audit | | | | Nominating and
Governance | | | | Personnel and
Compensation | | | | Risk | | | | | | | | | | | | | | | | | | Richard O. Berndt | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Charles E. Bunch | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Paul W. Chellgren | | (1) | | Chair | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Kay Coles James | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Richard B. Kelson | | (1) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Bruce C. Lindsay | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Anthony A. Massaro | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Jane G. Pepper | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | James E. Rohr | | (2) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Donald J. Shepard | | | | | | | | | | | | | | | | Chair | | | | | | | | | | | | | | | | | | Lorene K. Steffes | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Dennis F. Strigl | | | | | | | | | | | | Chair | | | | | | | | | | | | | | | | | | | | | | Thomas J. Usher | | (3) | | | | | | Chair | | | | | | | | | | | | | | | | | | | | | | | | | | George H. Walls, Jr. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Helge H. Wehmeier | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Meetings Held | | | | 12 | | | | 5 | | | | 6 | | | | 7 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Richard O.
Berndt | | Charles E.
Bunch | | Paul W.
Chellgren | | Marjorie
Rodgers
Cheshire | | William S.
Demchak | | Andrew T.
Feldstein | | Kay Coles
James | | Richard B.
Kelson | | Anthony A.
Massaro | | Jane G.
Pepper | | Donald J.
Shepard | | Lorene K.
Steffes | | Dennis F.
Strigl | | Thomas J.
Usher | | George H.
Walls, Jr. | | Helge H.
Wehmeier | | Meetings
Held | | | | | | | | | (1) | | | | (2) | | | | | | (1) | | | | | | | | | | | | (3) | | | | | | | | | | | | | | | | | | | | | | | | | | Audit | | l | | | |  | | l | | | | | | | | l | | | | | | l | | | | | | | | l | | | | | 13 | | | | | | | | | | | | | | | | | | | | Nominating and Governance | | | | l | | | | | | | | | | l | | | | l | | | | l | | | | l | | | | | | l | | | 6 | | | | | | | | | | | | | | | | | | | | Personnel and Compensation | | | | l | | l | | | | | | l | | | | l | | | | | | | | | | | | l | | | | | | | 6 | | | | | | | | | | | | | | | | | | | | Risk | | l | | | | | | l | | l | | l | | l | | | | l | | l | | | | l | | | | | | l | | | | | 11 | |
(1) | Chair |
| (1) | Designated as “audit committee financial expert” under SEC regulations |
| (2) | Non-independent director |
| (3) | Presiding director (lead independent director) |
| | | PNC – Proxy Statement for 2012 Annual Meeting of ShareholdersDIRECTOR AND EXECUTIVE OFFICER RELATIONSHIPS | | 21 |
| | | | | Director and Executive Officer Relationships
| | |
This section discusses relationships between PNC (or affiliated entities)and its subsidiaries and our directors, executive officers, immediate family members, or certain of their affiliated entities. These relationships include transactions that we analyzed to determine the independence of our directors. In this section, we describe the NYSE independence standards for directors, our Board-adopted independence guidelines, and our policies and procedures governing related person transactions. Director independence To be independent under NYSE rules, our Board must affirmatively determine that a director does not have a “material relationship” with PNC. A material relationship between a director and PNC could also include a relationship between PNC and an organization affiliated with a director. NYSE rules describe specific relationships that will always impair independence. The absence of one of these “bright-line” relationships does not mean that a director is automatically independent. The Board must consider all relevant facts and circumstances in determining whether a material relationship exists. Material relationships that we may consider include commercial, industrial, banking, consulting, legal, accounting, charitable, and family relationships. The ownership of a significant amount of PNC stock, by itself, will not prevent a finding of independence under NYSE rules. 28 THE PNC FINANCIAL SERVICES GROUP, INC. - 2015 Proxy Statement
DIRECTOR AND EXECUTIVE OFFICER RELATIONSHIPS The NYSE bright-line independence tests.Each of the following relationships will automatically impair a director’s independence under the NYSE’s “bright-line” tests: A director employed by PNC A director whose immediate family member is a PNC executive officer The director’s receipt of more than $120,000 a year in direct compensation from PNC, except for certain permitted payments (such as director fees) Certain relationships with PNC’s external or internal auditors A director (or immediate family member) who has been an executive officer of a company where a PNC executive officer serves or served on that company’s compensation committee Business relationships involving certain companies affiliated with a director or immediate family member of a director that make payments to, or receive payments from, PNC in excess of certain amounts An employee-director of PNC (or a director with an immediate family member who is a PNC executive officer) will not be independent until three years after the employment relationship ends. The other bright-line tests will impair independence if they existed at any time within the past three years. For more information about the NYSE’s bright-line director independence tests, including the commentary explaining the application of the tests, please go to the NYSE’s website atwww.nyse.com. Our Board guidance on independence.To help assess whether a material relationship exists, our Board adopted certain guidelines that describe four categories of relationships that will not be considered material. If a relationship meets the criteria outlined in this guidance, it will not be deemed to be a material relationship. This guidance can be found in our corporate governance guidelines on our website atwww.pnc.com/corporategovernance.The Board may then affirm a director’s independence without further analysis of this relationship, provided that the director otherwise meets the other relevant independence tests. The four categories of relationships described in this guidance include: Ordinary course business relationships, such as lending, deposit, banking, or other | | | 22 | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders |
| | | | | | | Director and Executive Officer Relationships
|
| financial service relationships involving the provision of products or services on substantially the same terms as would be available to similarly situated customers between PNC or its subsidiaries and a director, his or her immediate family members, or a company or charitable organization of which the director or an immediate family member is a partner, shareholder, officer, employee, or director |
Other relationships with entities whereor other relationships involving the provision of products or services between PNC or its subsidiaries and a director, ishis or her immediate family members, or an investor such asaffiliated entity of a shareholder,director or immediate family member, or partnerwhich meet the criteria defined in the guidelines
Contributions made by PNC, its subsidiaries, or a PNC sponsored foundation to a charitable organization in which a director or an immediate family member is an executive officer, director, or trustee Relationships involving a director’s relative who is not an immediate family member Relationships or transactions between PNC or its subsidiaries and a company or charitable organization where a director or an immediate family member serves solely as a non-management board member, or where an immediate family member is employed in a non-officer position These guidelines also allow investors to assess the quality of a Board’s independence determinations. In interpretingapplying this guidance, an “immediate family member” includes a person’s spouse, parents, children, siblings, mothers and fathers-in-law, sons and daughters-in-law, brothers and sisters-in-law, and anyone (other than domestic employees) who shares such person’s home. If a director has a relationship that would be deemed non-materialnot be considered material under our guidelines for independence, but crosses one of the NYSE’s bright-line tests, the NYSE test governs and the director will not be treated as independent. Our Board’s independence determinations.determinations. At a meeting held on February 7, 2012,13, 2015, the Board made an independence determination for each of our 1516 directors, including our 13 director nominees. Each nominee currently serves as a director. In making these determinations, our Board relied on the evaluation and recommendations made by the Nominating and Governance Committee. The Board considered relevant facts and circumstances when making these determinations, including an evaluation of the relationships described below. Our Board based the independence decisions on information known as of February 7, 2012, and each13, 2015. Each director has been asked to provide updates on changes that could impact the director’s status as an independent director. The Nominating and Governance Committee and Board will consider information throughout the year that may impact independence. Non-independent directors. Our Board affirmatively determined that Mr. RohrDemchak is the only non-independent director. HeMr. Demchak meets the NYSE’s bright-line relationship test as an executive officer of PNC. Independent directors. Our Board affirmatively determined that each of the directors listed below has no material relationship with PNC under the NYSE corporate governance listing standards. These determinations were based, in part, on an evaluation of the facts and circumstances of relevant relationships in light of PNC’s own independence guidelines. TheIn some cases, the relationships that we analyzed could include relationships that a director has as a partner, member, shareholder, officer or officeremployee of an organization that has a relationship with PNC. They may also include relationships between directors andwhere an immediate family members.member of a director is a partner, member, shareholder or officer of an organization that has a relationship with PNC. Based on these evaluations, our Board affirmatively determined that each of these directors qualifies as independent under the NYSE’s corporate governance listing standards: Richard O. Berndt, Charles E. Bunch, THE PNC FINANCIAL SERVICES GROUP, INC. - 2015 Proxy Statement 29
DIRECTOR AND EXECUTIVE OFFICER RELATIONSHIPS Marjorie Rodgers Cheshire, Paul W. Chellgren, Andrew T. Feldstein, Kay Coles James, Richard B. Kelson, Bruce C. Lindsay, Anthony A. Massaro, Jane G. Pepper, Donald J. Shepard, Lorene K. Steffes, Dennis F. Strigl, Thomas J. Usher, George H. Walls, Jr., and Helge H. Wehmeier. Mr. Berndt, General Walls and Mr. Wehmeier are not nominees for director. Bruce C. Lindsay, who served as a director until April 22, 2014, also qualified as independent until he retired from the Board. James E. Rohr, who served as a director until April 22, 2014, did not qualify as independent as he met the NYSE’s bright-line relationship test as a former executive officer of PNC. | | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders | | 23 |
| | | | | Director and Executive Officer Relationships
| | |
Transactions with directors This chart reflects banking relationships between PNC and the director, the director’s spouse, the director’s immediate family members, orand a company or charitable organization of which the director or the director’s spouse is, or was during 2011,2014, a partner, officer, employee, any immediate family member is, or was during 2014, a partner or officer, or in which the director or the director’s spouseany immediate family member holds a significant ownership or voting position (an affiliated entity). The chart also reflects relationships where PNC contributed to a charitable organization of which a director or immediate family member was a trustee, director or executive officer. All of these transactions meet our Board guidance on independence. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Richard O.
Berndt | | Charles E.
Bunch | | Paul W.
Chellgren | | Marjorie Rodgers Cheshire | | William S.
Demchak | | Andrew T.
Feldstein | | Kay Coles
James | | Richard B.
Kelson | | Anthony A.
Massaro | | Jane G.
Pepper | | Donald J.
Shepard | | Lorene K.
Steffes | | Dennis F.
Strigl | | Thomas J.
Usher | | George H.
Walls, Jr. | | Helge H.
Wehmeier | | Personal or Family Relationships | | Deposit, Wealth Management and Similar Banking Products(1) | | l | | l | | l | | l | | l | | l | | l | | l | | l | | l | | l | | l | | l | | l | | l | | l | | Credit Relationships(2) | | | | l | | l | | l | | l | | | | l | | l | | l | | l | | l | | l | | | | l | | l | | l | | Charitable Contributions(3) | | l | | | | | | Personal & Family Relationshipsl | | Affiliated Entity Relationshipsl | | | | | | l | | | | l | | l | | | | | | l | | | | l | Director NameAffiliated Entity Relationships | | Deposit, Wealth Management
and
Similar
Banking
Products
(1)
| | Credit
Relationships
(2)
| | Charitable
Contributions
(3)
| | Deposit,
Wealth
Management
and Similar Banking Products(1) Similar
Banking
Products
(1)
| | Credit
Relationships
or
Commercial
Banking
Products
(4)
| Richard O. Berndt
| | — | | | | —l | | —l | | — | Charles E. Bunch
| | —l | | —l | | | | | | | | —l | | | | | | —l | | — | Paul W. Chellgren
| | | — | | — | | —l | | | | | Kay Coles James
| Credit Relationships or Commercial Banking Products(4) | | —l | | l | | l | | l | | | | | | | | l | | | | | | | | | Richard B. Kelson
| | — | | — | | — | | — | | — | Bruce C. Lindsay
| | — | | — | | — | | — | | | Anthony A. Massaro
| | — | | | | — | | | | | Jane G. Pepper
| | — | | — | | | | | | | James E. Rohr
| | — | | — | | — | | | | | Donald J. Shepard
| | — | | — | | — | | | | | Lorene K. Steffes
| | — | | — | | — | | | | | Dennis F. Strigl
| | — | | — | | — | | — | | — | Thomas J. Usher
| | — | | — | | — | | — | | — | George H. Walls, Jr.
| | — | | — | | — | | | | | Helge H. Wehmeier
| | — | | — | | —l | | | | |
| (1) | Includes deposit accounts, trust accounts, certificates of deposit, safe deposit boxes, workplace banking, or wealth management products. |
| (2) | Includes extensions of credit, including mortgages, commercial loans, home equity loans, credit cards, or similar products, as well as credit and credit-related products. |
| (3) | Includes both charitable contributions made to entities affiliated with directors, as well asDoes not include matching gifts provided to charities personally supported by the director althoughbecause under our Board guidanceguidelines matching gifts are not a “material relationship” and are not included in considering the value of contributions against our guidance. Matching gifts are capped at $5,000 and are included as other compensation in the director compensation table. |
| (4) | Includes extensions of credit, including commercial loans, credit cards, or similar products, as well as credit, credit-related products, and other commercial banking products, including treasury management, purchasing card programs, foreign exchange, and global trading services. |
| | | 24 | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders |
| | | | | | | Director and Executive Officer Relationships
|
Customer relationships.We provide financial services to most of our directors. We also provide financial services to some of their immediate family members and affiliated entities. We offer these services in the ordinary course of our business. We provide the services on substantially the same terms and conditions, including price, as we provide to other similarly situated customers. We also extend credit to some of our directors and their immediate family members and affiliated entities. Federal banking law (Regulation O) governs these extensions of credit. We discuss the impact of Regulation O and our process for managing these extensions onof credit on page 27.pages 31 and 32. Business relationships.We also enter into other business relationships with entities affiliated with our directors or their immediate family members. These relationships are in the ordinary course of business. Mr. Kelson’s son and daughter-in-law are each partners in law firms. PNC did not engage Mr. Kelson’s son’s firm in 2011. PNC engaged Mr. Kelson’s daughter-in-law’s firm in 2011.
The Board evaluated the relationship between PNC and the daughter-in-law’s firm, but did not consider it to be a material relationship for the following reasons, among others: PNC had engaged the law firm for various services prior to Mr. Kelson joining the Board in 2002 and prior to the daughter-in-law joining the firm; the daughter-in-law provided no legal services personally to PNC; the daughter-in-law does not receive compensation based on the services that the firm provides or has provided to PNC; and the fees paid to the law firm represented less than 0.2% of the firm’s disclosed gross revenues for 2011, and less than 1% of PNC’s overall outside counsel expense for 2011.
PNC will not engage the son’s or daughter-in-law’s law firm as its counsel, as long as one of Mr. Kelson’s family members continues to have a relationship with the firm, or as long as Mr. Kelson serves on the Audit, Nominating and
Governance, or Personnel and Compensation Committees of our Board of Directors. This policy will be effective as of our annual meeting date, April 24, 2012. The law firm may continue to provide services with respect to matters involving an estate, trust, or other traditional fiduciary account where PNC serves as an executor, trustee, or in another traditional fiduciary capacity, as long as an independent third party initially selected the law firm to provide services with respect to the estate, trust, or account. In accordance with this policy, PNC will transfer all other active matters from the daughter-in-law’s firm to other law firms or internal counsel, as appropriate, on or before April 24, 2012.
Certain charitable contributions.contributions. We make contributions to charitable organizations where our directors serve as directors, or trustees but not asor executive officers. We also match charitable contributions made by our directors. We describe this matching gift program on page 30.34. 30 THE PNC FINANCIAL SERVICES GROUP, INC. - 2015 Proxy Statement
DIRECTOR AND EXECUTIVE OFFICER RELATIONSHIPS Related person transactions policies and procedures Code of ethics.Our Code of Business Conduct and Ethics contains several provisions that regulate related person transactions. The Code of Business Conduct and Ethics applies generally to all employees, including our executive officers, and directors. Doing business with PNC.An employee or an immediate family member may want to engage in a business arrangement, such as the sale or lease of property or the provision of services, with PNC. For these transactions, we require prior approval from a supervisor and our Corporate Ethics Office. If a director desires to engage in a business arrangement with PNC, approval is required from the Corporate Ethics Office and from a Board committee or the independent directors.committee. Financial services to employees.Our employees and their extended families are encouraged to use PNC for their personal financial services. Any services must be provided on the same terms as | | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders | | 25 |
| | | | | Director and Executive Officer Relationships
| | |
are available to the general public, all employees in a market or business, or all similarly situated employees. Transacting PNC business.We prohibit directors and employees from transacting business on behalf of PNC with a supplier or customer in which the director, employee, or extended family member has a significant personal or financial interest. We also prohibit directors and employees from transacting business on behalf of PNC with respect to their own accounts, extended family member accounts, or accounts for anyone whose close relationship may reasonably be viewed as creating a conflict of interest. Our phrase “extended family member” is similar to the SEC’s definition of “immediate family member” in Item 404(a) of Regulation S-K. We have established procedures in certain of our businesses to permit employees to transact business with family members, subject to appropriate oversight and compliance with applicable laws and regulations, including Regulation O. Employing relatives.We employ relatives of executive officers and may employ relatives of directors, in some cases under circumstances that constitute related person transactions. SeeFamily relationshipson page 27.32. We track the employment and compensation of relatives of executive officers and directors. We have policies that restrict special treatment in the hiring or compensation of a relative of an executive officer or director. Our employment of a director’s relative would be a factor in the determination of the director’s independence under NYSE rules and our own adopted guidelines for director independence. SeeDirector and Executive Officer Relationships—Director independence, which begins on page 22.28. Waivers. Under the Code of Business Conduct and Ethics, employees may generally request waivers or exceptions from our Corporate Ethics Office. In the case of directors and executive officers, any proposed waiver or exception must be approved by both the Corporate Ethics Office and the appropriate committee of our Board. In 2011,2014, no directors or executive officers requested an exemption under any of the provisions described above. Ethics guidelines for directors. During 2011 theThe Nominating and Governance Committee adopted Ethics Guidelines for Directors that contain comprehensive guidance regarding the various PNC policies that govern the conduct of our directors, to supplement and assist directors in understanding these policies. These guidelines were most recently amended on August 13, 2014. The guidelines include reference to our policies and procedures applicable to directors, including our Code of Business Conduct and Ethics, described above, and our Related Person TransactionTransactions Policy and Regulation O policies and procedures, each described in more detail below, as well as our Director Pre-Clearance of Securities Policy, and our Foreign Corrupt Practices Act Policy Guidelines.Anti-Corruption Policy. Related person transactions policy. In 2011, we adopted a newOur policy for the considerationreview and approval of related person transactions. transactions was most recently amended on August 14, 2014. A related person transaction is generally any transaction in which PNC or its subsidiaries is or will be a participant, in which the amount involved exceeds $120,000, and a director (or nominee), executive officer, family member, or any beneficial owner of more than 5% of our common stock, has or will have a direct or indirect material interest. This policy provides guidance on the framework for reviewing potential related person transactions, and approving, or ratifying related person transactions, and establishes our Presiding Director as the individual who decides how transactions should be evaluated. In general, a potential related person transaction that involves a director would be reviewed by our Nominating and Governance Committee, as the transaction could also impact independence. A transaction involving an executive officer would generally be reviewed by the Audit Committee. Under this policy, our Audit Committee will receive reports of approved related person transactions, and thefull Board will also receivereceives reports on approved, disapproved and ratified transactions. Under the policy, a permitted related person transaction must be considered in, or not inconsistent with, the best interest of PNC and its shareholders. A related person transaction is generally any transaction in which PNC or its subsidiaries is or may be a party, in which the amount involved exceeds $120,000, and a director (or nominee), executive officer, or family member may be deemed to have a direct or indirect material interest. | | | 26 | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders |
| | | | | | | Director and Executive Officer Relationships
|
Regulation O policies and procedures.We design additional policies and procedures to help ensure our compliance with Regulation O. This regulation imposes various conditions on a bank’s extension of credit to directors and executive officers.officers and related interests. Any extensions of credit must comply with our own Regulation O policies and procedures. This includes a separate review by our designated Regulation O credit officer. A director can only meet our guidelines for independence for extensions of credit if the credit complied with Regulation O at the time PNC extended it. Our Regulation O policies and procedures require: Extensions of credit to covered individuals or entities must be made on substantially the same terms (including interest rates and collateral) as those prevailing at the time for comparable transactions with those who are not covered. For credit extensions under a benefit or compensatory program widely available to all employees, we may not give preference to any covered individual. THE PNC FINANCIAL SERVICES GROUP, INC. - 2015 Proxy Statement 31
DIRECTOR AND EXECUTIVE OFFICER RELATIONSHIPS | | (including interest rates and collateral) as those prevailing at the time for comparable transactions with those who are not covered. For credit extensions under a benefit or compensatory program widely available to all employees, we may not give preference to any covered individual. |
The covered extension of credit be made following credit underwriting procedures no less stringent than those prevailing at the time for comparable transactions with non-covered individuals or entities. The extension of credit may not involve more than the normal risk of repayment or present other unfavorable features. The amount of covered extensions of credit do not exceed individual and aggregate lending limits, depending on the identity of the borrower and the nature of the loan. Our subsidiary bank, PNC Bank, National Association, designates a Regulation O Credit Officer to review extensions of credit to determine our compliance with these policies. If an extension of credit would result in an aggregate credit extension of more than $500,000, the bank’s Board of Directors must approve it. The bank’s Board of Directors receives a report of all extensions of credit made to executive officers under Regulation O. All loans to directors, executive officers, and executive officers:related interests outstanding during 2014: complied with our Regulation O policies and procedures; 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 comparable loans with persons not related to PNC; and did not involve more than the normal risk of collectibilitycollectability or present other unfavorable features. Certain related person transactions. Based on information contained in a Schedule 13G filed with the SEC, BlackRock, Inc. (BlackRock), through certain of its subsidiaries, indicated that it beneficially owned more than 5% of our outstanding shares of common stock as of December 31, 2014 (seeSecurity ownership of certain beneficial owners on page 78). BlackRock is the beneficial owner of our common stock as a result of being a parent company or control person of the subsidiaries disclosed in its Schedule 13G, each of which holds less than 5% of the outstanding shares of common stock. During 2014, PNC paid BlackRock approximately $7 million for use of BlackRock’s enterprise investment system and related services, which include risk analytics, portfolio management, compliance and operational processing. PNC also paid BlackRock approximately $3 million for securities trading related services, and approximately $5 million for investment advisory and administration services provided to certain PNC subsidiaries and separate accounts assets for a fee based on assets under management. These transactions were entered into on an arm’s length basis and contain customary terms and conditions. During 2014, PNC received approximately $2 million in fees from BlackRock for distribution and shareholder servicing activities. These transactions were entered into on an arm’s length basis and contain customary terms and conditions. PNC may in the ordinary course of business engage in transactions with BlackRock mutual funds, including using the BlackRock funds as treasury management vehicles for PNC’s corporate clients, selling BlackRock investment products to PNC customers or placing PNC customer funds in BlackRock mutual funds, using BlackRock funds as an investment vehicle for the PNC 401(k) accounts, providing commercial loan servicing to BlackRock funds, or providing shareholder services to PNC clients who are shareholders of BlackRock mutual funds. PNC may also make loans to BlackRock or the BlackRock funds. These loans are made in the ordinary course of business on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable loans with persons not related to PNC; and do not involve more than the normal risk of collectability. PNC holds an equity investment of approximately 22% in BlackRock. In connection with this equity investment, PNC has entered into various agreements governing the terms of this relationship. PNC received cash dividends from BlackRock of $285 million during 2014. Family relationships No family relationship exists between any of our directors or executive officers and any of our other directors or executive officers. There are family relationships between certain directors and executive officers and some of the approximately 52,00054,000 PNC employees. These employees participate in compensation and incentive plans or arrangements on the same basis as other similarly situated employees. A brother-in law of Gregory Jordan, one of our executive officers, is employed by PNC and had been for many years before Mr. Jordan joined PNC in 2013. He participates in compensation and incentive plans or arrangements on the same basis as similarly situated employees. He does not share a household with Mr. Jordan, is not an executive officer of PNC, and does not report directly to an executive officer of PNC. His compensation paid in 2014 exceeded the $120,000 related person transaction threshold and as a result was reviewed by the Audit Committee. 32 THE PNC FINANCIAL SERVICES GROUP, INC. - 2015 Proxy Statement
DIRECTOR AND EXECUTIVE OFFICER RELATIONSHIPS A son of Michael Hannon, one of our executive officers, is employed by PNC. He participates in compensation and incentive plans or arrangements on the same basis as similarly situated employees. He does not share a household with Mr. Hannon, is not an executive officer of PNC, and does not report directly to an executive officer of PNC. His compensation paid in 2014 exceeded the $120,000 related person transaction threshold and as a result was reviewed by the Audit Committee. The daughter of Charles E. Bunch, one of our non-management directors, has been employed by PNC for several years. She participates in compensation and incentive plans or arrangements on the same basis as similarly situated employees. She does not share a household with Mr. Bunch, is not an executive officer of PNC, and does not report directly to an executive officer of PNC. Her compensation paid in 2014 exceeded the $120,000 related person transaction threshold. Her compensation was reviewed by the Nominating and Governance Committee. Indemnification and advancement of costs We indemnify directors, officers and, in some cases, employees and agents, against certain liabilities. The covered person may have incurred a liability as a result of service on our behalf or at our request. On behalf of a covered person, we may also advance the costs of certain claims or proceedings. If we advance costs, the person agrees to repay us if it is determined that the person was not entitled to indemnification. The insurance policies we maintain for our directors and executive officers also provide coverage against certain liabilities. The indemnification provisions, the advancement of costs, and our insurance coverage may provide benefits to our directors and executive officers. During 2011,2014, we advanced costs of less than $5,000 with respect to pending litigation against us on behalf of certain former and current directors and officers, including our CEO. CEO, who were also named as defendants. | | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders | | 27 |
| | | | | Director and Executive Officer Relationships
| | |
Section 16(a) beneficial ownership reporting compliance Section 16(a) of the Securities Exchange Act of 1934 requires our directors, executive officers and persons who own more than ten percent of a registered class of our equity securities (currently, none) and our directors and executive officers to file with the SEC initial reports of ownership and reports in changes in ownership of any PNC equity securities. To the best of our knowledge all forms were filed on a timely basis during 2011.2014 except for the following. One of our former directors, James E. Rohr, had a late Form 4 filing related to a distribution from a PNC deferred compensation plan on January 2, 2014. The information was not processed on a timely basis. The Form 4 was filed on January 17, 2014. Additionally, on March 8, 2014 we withheld shares to satisfy the tax liability in connection with the vesting of restricted stock for Gregory H. Kozich, an executive officer, but did not file the Form 4 until April 23, 2014. In making this statement, we have relied in part on the written representations of our directors and executive officers and on copies of the reports provided to us. | | | 28 | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders |
THE PNC FINANCIAL SERVICES GROUP, INC. - 2015 Proxy Statement 33
DIRECTOR COMPENSATION Our Board’s Nominating and Governance Committee reviews all elements of non-employee director compensation, explained below, and makes an annual compensation recommendation to the Board. In addition to annual compensation, the Committee may approve special compensation to a director for extraordinary service. The primary objectives of the Committee’s annual review are to confirm continued alignment with business and shareholder interests, evaluate the competitiveness of our director compensation program relative to the peer group, and identify and respond to continued changes in director compensation in light of the competitive environment. On April 24, 2012, theThe Nominating and Governance Committee will conductconducted its annual compensation review for 2012. In connection with this review, management retained Towers Watson in 2011 to analyze the non-employee director compensation program and compare the program to peer group programs. PNC paid Towers Watson $17,544 for its services related to director compensation. PNC paid Towers Watson $122,358 for other services provide to management. See page 19 for a discussion of the nature of the other services provided by Towers Watson to management.2014 on April 22, 2014.
Mr. RohrDemchak receives no additional compensation for serving as a PNC director. The following table describes the components of director compensation in 2011:2014: | | Annual Retainer | Annual Retainer | | | | Each Director | | $ | 55,000 | | | $ | 60,000 | | Presiding Director | | $ | 20,000 | | | $ | 25,000 | | Additional retainer for Chairs of Audit, Risk, and Personnel and Compensation Committees | | $ | 20,000 | | | $ | 20,000 | | Additional retainer for Chair of Nominating and Governance Committee | | $ | 10,000 | | | $ | 15,000 | | | Board Meeting Fees | | | Additional retainer for Chair of Executive Committee | | | $ | 10,000 | | Meeting Fees (Board) | | | | Each meeting (except for quarterly scheduled telephonic meetings) | | $ | 1,500 | | | $ | 1,500 | | Each quarterly scheduled telephonic meeting | | $ | 750 | | | $ | 750 | | | Committee/Subcommittee Meeting Fees | | | Meeting Fees (Committee/Subcommittee) | | | | First six meetings | | $ | 1,500 | | | $ | 1,500 | | All other meetings | | $ | 2,000 | | | $ | 2,000 | | | 2011 Equity-Based Grants | | | | Value of 1,935 deferred stock units awarded as of April 26, 2011 | | $ | 119,989 | | | Equity-Based Grants | | | | Value of 1,535 deferred stock units awarded as of April 22, 2014 | | | $ | 129,953 | |
Deferred compensation plans. Our non-management directors may choose to defer the compensation they receive from meeting fees and retainers under our Directors Deferred Compensation Plan. Our Outside Directors Deferred Stock Unit Plan provides for automatic deferrals of any stock units that we may award from time to time. For compensation deferred under these plans: The deferred compensation account tracks the price of PNC common stock (the Directors Deferred Compensation Plan allows a director to track an interest rate option instead). Additionally, the accounts are credited with a number of units (including fractional shares) that could have been purchased with the equivalent of PNC common stock cash dividends. We do not pay above-market or preferential earnings on any director compensation that is deferred. | | Deferred Compensation Plan allows a director to track an interest rate option instead). We do not pay above-market or preferential earnings on any director compensation that is deferred.
|
The director may choose the payout date and beneficiary (the stock unit plan does not allow a payout date until retirement or age 72). The payouts will be made in cash. | | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders | | 29 |
Other director benefitsbenefits.. We generally limit the benefits that we provide to our directors, but we regularly provide the following: | • | | Charitable matching gifts.We will match a director’s personal gifts to qualifying charities up to a limit of $5,000 a year. Mr. RohrDemchak is only eligible to participate in our employee matching gift program ($2,500 annual limit). |
| • | | Insurance policies.We pay for various insurance policies that protect directors and their families from personal loss connected with Board service. |
| • | | Benefits related to Board service.service. We pay for expenses connected with our directors’ Board service, including travel on corporate, private or commercial aircraft, lodging, meals, and incidentals. We may also provide other incidental benefits to our directors from time to time, including tickets to cultural, social, sporting or other events and small gifts for holidays, birthdays, or special occasions. We may also provide travel for directors on corporate aircraft for personal purposes in |
| | limited circumstances, such as a family emergency or when a seat is available on a previously scheduled flight. We determine the value of these benefits based on the incremental cost to PNC, as described on page
We may also provide other incidental benefits to our directors from time to time, including tickets to cultural, social, sporting or other events and small gifts for holidays, birthdays, or special occasions. We may also provide travel for directors on corporate aircraft for personal purposes in limited circumstances, such as a family emergency or when a seat is available on a previously scheduled flight. We determine the value of these benefits based on the incremental cost to PNC, as described on pages 50 and 51 and we include the amount in the “All Other Compensation” column below. |
Director stock ownership requirement. Our Board has adopted a common stock purchase guideline for our non-management directors. Under this guideline, each director must own at least 5,000 shares of PNC common stock (including phantom stock units). Until a director meets this ownership level, he or she must purchase or acquire common stock or stock units that equal at least 25% of the annual retainer for that year. A director may satisfy this requirement through open market purchases, or by deferring compensation into stock units under the Directors Deferred Compensation Plan. As of December 30, 2011,31, 2014, the minimum ownership threshold for directors was valued at $288,350,$456,150, and all of our directors, other than Marjorie Rodgers Cheshire who was appointed in October 2014, satisfied the ownership guideline. 34 THE PNC FINANCIAL SERVICES GROUP, INC. - 2015 Proxy Statement
DIRECTOR COMPENSATION Director compensation in 20112014 For the fiscal year 2011,2014, we provided the following compensation to our non-employee directors: | | | | | | | | | | Director Name | | Fees Earned (a) | | Stock Awards (b) | | All Other
Compensation (c) | | Total | Richard O. Berndt | | $110,250 | | $119,989 | | $15,263 | | $245,502 | Charles E. Bunch | | $ 93,250 | | $119,989 | | $14,763 | | $228,002 | Paul W. Chellgren | | $141,750 | | $119,989 | | $57,926 | | $319,665 | Kay Coles James | | $ 98,250 | | $119,989 | | $13,721 | | $231,960 | Richard B. Kelson | | $110,750 | | $119,989 | | $30,796 | | $261,535 | Bruce C. Lindsay | | $120,750 | | $119,989 | | $43,155 | | $283,894 | Anthony A. Massaro | | $ 96,750 | | $119,989 | | $18,252 | | $234,991 | Jane G. Pepper | | $108,750 | | $119,989 | | $22,917 | | $251,656 | Donald J. Shepard | | $138,250 | | $119,989 | | $32,869 | | $291,108 | Lorene K. Steffes | | $ 95,250 | | $119,989 | | $26,805 | | $242,044 | Dennis F. Strigl | | $119,250 | | $119,989 | | $48,858 | | $288,097 | Stephen G. Thieke* | | $ 30,278 | | - | | $14,092 | | $ 44,370 | Thomas J. Usher | | $135,750 | | $119,989 | | $47,718 | | $303,457 | George H. Walls, Jr. | | $129,250 | | $119,989 | | $26,365 | | $275,604 | Helge H. Wehmeier | | $ 90,250 | | $119,989 | | $32,911 | | $243,150 |
| | | | | | | | | | | | | | | | | | Director Name* | | Fees Earned(a) | | | Stock Awards(b) | | | All Other
Compensation(c) | | | Total | | Richard O. Berndt | | $ | 144,500 | | | $ | 129,953 | | | $ | 32,462 | | | $ | 306,915 | | Charles E. Bunch | | $ | 91,500 | | | $ | 129,953 | | | $ | 42,462 | | | $ | 263,915 | | Paul W. Chellgren | | $ | 128,500 | | | $ | 129,953 | | | $ | 114,246 | | | $ | 372,699 | | Marjorie Rodgers Cheshire** | | $ | 24,000 | | | $ | - | | | $ | - | | | $ | 24,000 | | Andrew T. Feldstein | | $ | 107,500 | | | $ | 129,953 | | | $ | 8,473 | | | $ | 245,926 | | Kay Coles James | | $ | 97,000 | | | $ | 129,953 | | | $ | 36,346 | | | $ | 263,299 | | Richard B. Kelson | | $ | 113,000 | | | $ | 129,953 | | | $ | 51,842 | | | $ | 294,795 | | Bruce C. Lindsay*** | | $ | 30,674 | | | $ | - | | | $ | 48,000 | | | $ | 78,674 | | Anthony A. Massaro | | $ | 116,500 | | | $ | 129,953 | | | $ | 42,045 | | | $ | 288,498 | | Jane G. Pepper | | $ | 119,500 | | | $ | 129,953 | | | $ | 57,118 | | | $ | 306,571 | | Donald J. Shepard | | $ | 154,000 | | | $ | 129,953 | | | $ | 57,078 | | | $ | 341,031 | | Lorene K. Steffes | | $ | 107,500 | | | $ | 129,953 | | | $ | 55,024 | | | $ | 292,477 | | Dennis F. Strigl | | $ | 113,000 | | | $ | 129,953 | | | $ | 80,154 | | | $ | 323,107 | | Thomas J. Usher | | $ | 143,000 | | | $ | 129,953 | | | $ | 99,107 | | | $ | 372,060 | | George H. Walls, Jr. | | $ | 140,500 | | | $ | 129,953 | | | $ | 60,577 | | | $ | 331,030 | | Helge H. Wehmeier | | $ | 82,500 | | | $ | 129,953 | | | $ | 73,125 | | | $ | 285,578 | |
| | | 30 | * | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders |
* | Mr. ThiekeJames E. Rohr served as an employee director through April 22, 2014. He did not standreceive any compensation for re-election at the 2011 Annual Meeting and retired on April 26, 2011.his services as a director. |
(a)** | Ms. Cheshire was appointed as a director on October 2, 2014. |
| *** | Mr. Lindsay served as a director through April 22, 2014. |
| (a) | This column includes the annual retainers, additional retainers for Chairschairs of standing committees and meeting fees earned for 2011.2014. The amounts in this column also include the fees voluntarily deferred by the following directors under our Directors Deferred Compensation Plan, a non-qualified defined contribution plan: Paul W. Chellgren ($141,750)128,500); Andrew T. Feldstein ($107,500); Kay Coles James ($24,564)24,250); Bruce C. LindsayAnthony A. Massaro ($120,750)116,500); Jane G. Pepper ($13,750)29,875); Donald J. Shepard ($138,250)154,000); Lorene K. Steffes ($33,339)32,250); Dennis F. Strigl ($119,250); Stephen G. Thieke ($1,250)113,000); and George H. Walls, Jr. ($129,250)140,500). |
| (b) | The dollar values in this column include the grant date fair value, under Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation—Stock Compensation, of 1,9351,535 deferred stock units awarded to each director’s account under our Outside Directors Deferred Stock Unit Plan as of April 26, 2011,22, 2014, the date of grant. The closing stock price of PNC on the date of grant was $62.01$84.66 a share. See Note 1514 in our Annual Report on Form 10-K for the year ended December 31, 20112014 for more information. |
As of December 31, 2011, the non-employee directors listed in the table below had outstanding stock options in the following amounts:
| | | Director Name | | Stock OptionsAs of December 31, 2014, the non-employee directors listed in the table below had outstanding stock units and stock options in the following amounts: | Paul W. Chellgren
| | 10,000 | Richard B. Kelson
| | 2,000 | Anthony A. Massaro
| | 6,000 | Jane G. Pepper
| | 10,000 | Lorene K. Steffes
| | 10,000 | Dennis F. Strigl
| | 6,000 | Stephen G. Thieke
| | 6,000 | Thomas J. Usher
| | 10,000 | Helge H. Wehmeier
| | 10,000 |
No stock options have been granted to any non-employee director since 2005. None of our non-employee directors had any unvested stock awards as of December 31, 2011.
| | | | | | | | | | Director Name | | Stock Units | | | Stock Options | | Richard O. Berndt | | | 15,568 | | | | - | | Charles E. Bunch | | | 15,568 | | | | - | | Paul W. Chellgren | | | 59,356 | | | | - | | Andrew T. Feldstein | | | 3,080 | | | | - | | Kay Coles James | | | 20,464 | | | | - | | Richard B. Kelson | | | 26,021 | | | | - | | Anthony A. Massaro | | | 22,640 | | | | - | | Jane G. Pepper | | | 28,992 | | | | 2,000 | | Donald J. Shepard | | | 31,592 | | | | - | | Lorene K. Steffes | | | 27,215 | | | | 1,000 | | Dennis F. Strigl | | | 27,755 | | | | - | | Thomas J. Usher | | | 51,514 | | | | - | | George H. Walls, Jr. | | | 28,626 | | | | - | | Helge H. Wehmeier | | | 37,500 | | | | - | |
| No stock options have been granted to any non-employee director since 2005. None of our non-employee directors had any unvested stock awards as of December 31, 2014. |
| (c) | This column includes income under the Directors Deferred Compensation Plan, the Outside Directors Deferred Stock Unit Plan, and the Mercantile Bankshares Corporation Deferred Compensation Plan (for Mr. Berndt and Mr. Shepard only) as follows: Richard O. Berndt ($10,263)27,462); Charles E. Bunch ($9,763)27,462); Paul W. Chellgren ($52,926)109,246); Andrew T. Feldstein ($3,473); Kay Coles James ($13,721)36,346); Richard B. Kelson ($20,796)46,842); Bruce C. Lindsay ($33,155)43,000); Anthony A. Massaro ($15,752)42,045); Jane G. Pepper ($22,917)52,118); Donald J. Shepard ($27,869)57,078); Lorene K. Steffes ($24,961)53,624); Dennis F. Strigl ($43,858); Stephen G. Thieke ($11,092)80,154); Thomas J. Usher ($47,703)94,107); George H. Walls, Jr. ($23,365)55,577); and Helge H. Wehmeier ($32,911)68,125). This column also includes the dollar amount of matching gifts made by us in 20112014 to charitable organizations andorganizations. No director received any incidental benefits. For one director the value of other incidental benefits described on page 30. For certain directors the 20112014 matching gift amountsamount included above exceedexceeds $5,000 because both 2010the director’s 2012, 2013 and 2011 director2014 donations were matched in 2011.2014. No non-employee director had incremental cost to PNC for personal use of our corporate aircraft in 2014. |
THE PNC FINANCIAL SERVICES GROUP, INC. - 2015 Proxy Statement 35
COMPENSATION DISCUSSION AND ANALYSIS This section (CD&A) explains our executive compensation philosophy, describes our compensation programs and reviews compensation decisions for the following named executive officers (NEOs): | | | PNC – Proxy Statement for 2012 Annual Meeting of ShareholdersName | | 31Title | William S. Demchak | | Chairman, President and Chief Executive Officer | Robert Q. Reilly | | Executive Vice President and Chief Financial Officer | Michael P. Lyons | | Executive Vice President and Head of Corporate and Institutional Banking | E. William Parsley, III | | Executive Vice President, Chief Investment Officer and Treasurer | Joseph C. Guyaux* | | Senior Vice Chairman and Chief Risk Officer |
| * | Effective January 31, 2015, Mr. Guyaux became the Senior Vice Chairman and CEO and President of PNC Mortgage. |
2014 key compensation decisions | | | | | Compensation Discussion and Analysis
| | Awarded incentive compensation to NEOs based on 2014 performance – with at least 50% of total compensation being equity-based (60% for our CEO and another NEO) and all equity-based awards being 100% at risk, and tied to future performance and risk adjustments | | |
| | Beginning with the February 2015 equity grants to our NEOs and other senior executives, we no longer provide for automatic acceleration of vesting upon a change in control (“single trigger”) – accelerated vesting will now require a change in control as well as a qualifying termination of employment (“double trigger”) | | |
| | We adopted a policy that prohibits our directors, NEOs and certain other employees from pledging PNC securities | | |
| | We amended our executive stock ownership guidelines so that the base ownership threshold includes only 50% of unvested equity awards (not 100%) and excludes any restricted stock units paid in cash |
In this section (the CD&A) and the tables that follow, we describe how we compensate our executives, including the following named executive officers (NEOs):36 THE PNC FINANCIAL SERVICES GROUP, INC. - 2015 Proxy Statement
COMPENSATION DISCUSSION AND ANALYSIS 2014 PNC performance | | |
| | We delivered a successful year in 2014, reporting net income of $4.2 billion (8.7% over budget) and $7.30 diluted earnings per share (7.4% over budget) | | | | | | | | | | | | James E.
Rohr
| | Our annual total shareholder return was 20.32%, second highest in our peer group | | | Richard J.
Johnson
| | | | William S.
Demchak
| | | | Joseph C.
Guyaux
| | | | E. William
Parsley, III
We strengthened our capital throughout the year and returned capital to our shareholders through both a dividend increase and share repurchases |
| | | | | | | | | | | | | | | | | | | | | | KEY PERFORMANCE METRICS | | 2014
actual(1) | | | 2013
actual(1) | | | 2014 vs.
2013 actual | | | 2014 budget(2) | | | 2014 actual
vs. budget | | Net interest income (in millions) | | $ | 8,525 | | | $ | 9,147 | | | | (6.8%) | | | $ | 8,796 | | | | (3.1%) | | Noninterest income (in millions) | | $ | 6,850 | | | $ | 6,865 | | | | (0.2%) | | | $ | 6,684 | | | | 2.5% | | Diluted earnings per common share | | $ | 7.30 | | | $ | 7.43 | | | | (1.7%) | | | $ | 6.80 | | | | 7.4% | | Return on common equity (without goodwill) | | | 12.84% | | | | 14.52% | | | | (168 bps) | | | | 11.97% | | | | 87 bps | | Return on assets | | | 1.28% | | | | 1.39% | | | | (11 bps) | | | | 1.20% | | | | 8 bps | | Efficiency ratio | | | 61.71% | | | | 60.10% | | | | (161 bps) | | | | 61.20% | | | | (51 bps) | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2014
actual(1) | | | 2013
actual(1) | | | 2014 vs.
2013 actual | | Tangible book value per share | | | | | | | | | | | $59.88 | | | $ | 54.57 | | | | 9.7% | | Estimated Tier 1 risk-based capital ratio | | | | | | | | | | | 12.70% | | | | 12.40% | | | | 30 bps | | Return on economic capital vs. cost of capital | | | | | | | | | | | 5.02% | | | | 13.76% | | | | (874 bps) | | Annual total shareholder return | | | | | | | | | | | 20.32% | | | | 36.50% | | | | (1618 bps) | |
These tables include non-GAAP financial measures. See Annex A for additional information. | | | | | | | | | Chief
Executive Officer
| | | | Chief
Financial Officer
| | | | Senior
Vice Chairman
| | | | Senior Vice Chairman | | | | Executive
Vice President
| | | | | | | | | | | | | | | | | | Responsible(1)
for all PNC businesses
| | | | Responsible
for Risk Management
| | | | ResponsibleTo the extent permitted, the amounts have been adjusted to omit, among other things, the effect of extraordinary items (as such term is used under generally accepted accounting principles), discontinued operations, and merger integration and acquisition costs. The results also include adjustments for Asset & Liability Managementselect categories of events and transactions that are viewed as being outside our ongoing management of the business, some categories of which are provided in footnote (b) on page 58 with respect to incentive performance units. When comparing performance metrics to our peers, we adjust their results comparably. 2013 actual includes adjustments of $57 million or $0.07 per share related to the redemption of trust preferred securities (TRUPs). Expense, earnings and return metrics for 2013 other than return on common equity (without goodwill) and return on economic capital vs. cost of capital have also been updated to reflect first quarter 2014 adoption of Accounting Standards Update 2014-01 related to investments in low income housing tax credits. |
| (2) | 2014 budget results were lower than 2013 actual results for several reasons, including, without limitation, the continued impact of the challenging economic environment on business results and the runoff of purchase accounting accretion, the recognition that 2013 actual results benefited from a release of reserves for residential mortgage repurchase obligations, and our intent to avoid more balance sheet risk by adding assets that do not fit within our enterprise risk appetite. |
THE PNC FINANCIAL SERVICES GROUP, INC. - 2015 Proxy Statement 37
COMPENSATION DISCUSSION AND ANALYSIS | | | | | | PERFORMANCE AGAINST STRATEGIC OBJECTIVES | TopicDrive growth in newly acquired
and underpenetrated markets | | | Page | | Continued growth across all lines of business in the Southeast, including increases in key metrics such as average referral sales (Asset Management Group segment), new primary clients (Corporate & Institutional Banking segment) and increases in average loan volume (Retail Banking segment) | |
| | Increased revenue year over year in the Chicago market in both the Corporate & Institutional Banking and Asset Management group segments | | | | | Increased assets under administration and assets under management year over year | Significant compensation decisionsCapture more investable assets
| | | 33 | | | | PNC performance during 2011
| | | 33 | | | | Compensation philosophy and principles
| | | 34 | | | | Compensation program—summary
| | | 35 | | Total compensation targets
| | | 36 | | Other compensation and benefits
| | | 38 | | | | Compensation program—decisions
| | | 38 | | Impact of 2011 "say-on-pay" vote
| | | 38 | | Evaluating 2011 performance
| | | 38 | | 2011 corporate performance factor
| | | 40 | | Annual incentive awards
| | | 43 | | Long-term incentive awards
| | | 43 | | Incentive performance units—metrics and payout
| | | 46 | | ALM incentive performance units—metrics and payout
| | | 46 | | Vesting or payout from 2009 awards
| | | 47 | | New or updated policies
| | | 47 | | | | Compensation policies and practices
| | | 48 | | Compensation and risk
| | | 48 | | Retaining an independent compensation consultant
| | | 48 | | Selecting a peer group
| | | 48 | | Clawback of prior compensation
| | | 48 | | Shareholder approval of severance agreements
| | | 49 | | Consideration of tax deductibility
| | | 49 | | Limiting perquisites
| | | 49 | | Guidelines onIncreased noninterest income within the use of discretion
| | | 50 | | Executive stock ownership and retention
| | | 50 | | Timing of equity grants
| | | 51 | | Restrictions on trading and hedging
| | | 51 | |
| | | 32 | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders |
| | | | Asset Management Group segment | | | Compensation Discussion
| | Increased retail brokerage fees and Analysisbrokerage account client assets | Redefine the retail banking business | | | | Increased the percentage of consumers using non-teller channels for the majority of their transactions | |
| | Converted 156 branches to universal branches and closed or consolidated 48 other branches | Build a stronger mortgage banking business | | | | Loan origination and purchase volume down year over year but better than the overall market | |
| | Launched and consolidated all home lending content within one online experience to help improve the customer experience | Bolster critical infrastructure and streamline core processes | | | | Completed significant accomplishments against our multi-year infrastructure enhancement plan | |
| | Implemented an extensive array of tools and methodologies to improve efficiencies and foster continuous improvement across our Technology and Operations function |
Stakeholder engagement and impact of 2014 say-on-pay vote SignificantIn 2014, our shareholders voiced substantial support for the compensation decisionsof our NEOs, with approximately 88% of the votes cast approving the “say-on-pay” advisory vote on executive compensation. Our shareholders previously recommended that we hold a “say-on-pay” vote annually.
Our Board’s PersonnelFor the past several years, we have initiated specific outreach efforts with certain institutional investors. At least once a year, we have met in person, or telephonically, with the governance representatives at these investors, and Compensationdiscussed our governance and compensation programs and philosophies. Typically, these meetings have taken place with the
participation of our Head of Investor Relations and our Corporate Secretary. In light of the decrease in last year’s say-on-pay vote, when compared to our five-year average (92%) and based on publicly disclosed votes, we reached out to specific investors to determine whether they had concerns with our compensation philosophy, program or decisions. Based on these discussions and in light of overall investor support in 2014, the Committee madedid not believe that any significant changes to the following significantcompensation program were needed to address shareholder concerns. The Committee considered the results of this vote as one factor in its compensation decisions, related toamong the 2011 performance year: | • | | Approved a total compensation target for each NEO, with at least 50% of the target allocated to equity-based awards deferred over multiple years (60% for our CEO)
| |
| • | | Approved an incentive compensation pool that paid out at 105% of target (last year’s pool paid out at 135.6% of target)
| |
| • | | Considered the results of the 2011 “say-on-pay” vote, which exceeded 96% support from shareholders (the third consecutive year that support exceeded 90%)
| |
| • | | Continued to strengthen the alignment of performance, risk management and incentive compensation by:
| |
| - | | Granting 50% of the long-term incentive award in an equity-based award that will take four years to vest, will only vest if PNC meets specific regulatory capital thresholds, and may be increased or decreased based on our total shareholder return for the year
| |
| - | | Adding a new, risk-based performance metric to our three-year incentive performance unit grants that could reduce or eliminate the entire payout for grants made in 2012 (the same metric could reduce the payouts for grants made in 2011 by up to 30%)
| |
| • | | Reviewed a new risk assessment of our material incentive compensation plans
| |
| • | | Continued to exercise strong oversight of compensation policies and practices by:
| |
| - | | Replacing our independent compensation consultant based on fees paid to an affiliate
| |
| - | | Amending our existing “clawback” policy
| |
| - | | Adopting a policy that requires shareholders to approve certain future severance agreements
| |
| - | | Adopting a set of guiding principles on the role of discretion in our incentive compensation plans
| |
| - | | Adding several dozen additional employees to the Committee’s oversight and expanding the use of deferred, risk-adjusted compensation throughout the enterprise
| |
PNC performance during 2011
PNC is one of the nation’s largest diversified financial services organizations providing retail and business banking; residential mortgage banking; specialized services for corporations and governmental entities, including corporate banking, real estate finance and asset-based lending; wealth management and asset management. At December 31, 2011, we had consolidated total assets of $271 billion and deposits of $188 billion. We operated in 14 states and the District of Columbia with approximately 52,000 employees.
In 2011, PNC capped a five-year period of double-digit growth by adding new customers, attracting higher-quality deposits, and managing
credit costs. We leveraged our capital strength to expand into the southeastern United States, an attractive market, and we remained focused on strong risk and expense management.
In 2010, we achieved record earnings of $3.4 billion, and in 2011 we earned $3.1 billion. Our management team led PNC to the second-highest net income in our history and record customer growth despite:
a challenging economic environment, with high unemployment and historically low interest rates
increasing compliance costs and significant reductions in fee income due to new regulations
| | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders | | 33 |
| | | | | Compensation Discussion and Analysis
| | |
$240 million of residential mortgage foreclosure-related expenses primarily as a result of ongoing governmental matters
a charge of $198 million related to the redemption of trust preferred securities, which will reduce our future funding costs by approximately $30 million a year
Some of the 2011 performance highlights include:
Second-highest net income in history
| - | | Retail banking checking relationships increased by 296,000 – almost 4 times the growth from 2010
|
| - | | 1,165 new primary corporate banking clients – 15% over the record growth from 2010
|
| - | | $8.4 billion increase in loans
|
| - | | $12.4 billion increase in average transaction deposits
|
| - | | $4.1 billion net increase in higher quality average transaction deposits
|
An expansion of our geographic presence in attractive new markets in Georgia and Florida, and with the March 2012 acquisition of RBC Bank (USA), the U.S. retail banking subsidiary of Royal Bank of Canada, the addition of more than 400 branches across the southeastern United States
Improving credit profile—nonperforming assets and provision decreased by 19% over the year
Continued strengthening of capital, with an increase in our Tier 1 common capital ratio to 10.3%
A return to our desired moderate risk profile
Based on this performance, and other criteriafactors discussed in this CD&A, the Committee approved a pool of incentive compensation for our NEOs that paid out at 105% of the target amount established at the beginning of 2011.&A.
38 THE PNC FINANCIAL SERVICES GROUP, INC. - 2015 Proxy Statement
COMPENSATION DISCUSSION AND ANALYSIS Compensation philosophy and principles A well-designed compensation program provides incentives forto achieve desired behaviors, rewards sound risk management,results, helps to retain and retainsattract talent, and attracts talent.discourages excessive risk-taking. This section talks about how we view compensation, and why we make the decisions that we do. Compensation provides insights into a firm’s governance and culture. A strong compensation program helps to attract, motivate, and retain key leaders, who can achieve strategic objectives and increase shareholder value. Our Committee relies on several key principles to help guide its compensation decisions:
| | | Compensation principlesCOMPENSATION PRINCIPLES | 1. | | Pay for performance | | | 2. | | Align executive compensation with long-term shareholder value creation | | | 3. | | Provide competitive compensation opportunities to attract, retain, and motivate executives | | | 4. | | Encourage the focus on the long-term success of PNC and discourage excessive risk-taking |
The Committee believes that the successful application of these principles requires a thoughtful program design, blending the clarity provided by specificwhich includes a balanced evaluation of performance as measured against predetermined financial goals with the thoughtful application of discretion.metrics. The Committee believes that discretion, flexibility, and judgment are critical to its ability to deliver incentive compensation that reflects near-term performance results and progress toward longer-term objectives that enhance PNC’s ability to continue to create value for our shareholders. The tables on pages 57-82 show the amounts associated with some of our compensation decisions, and many readers will understandably focus on them. These tables may be useful tools for investors, providing a basis for comparing and assessing the Committee’s decisions against companies in our peer group or against whom we might expect to compete for capital, talent, or customers. Tables can also show PNC compensation trends over time.
| | | 34WHAT WE DO | | | | PNC – Proxy StatementPay for 2012 Annual Meetingperformance. Most executive pay is at risk and not guaranteed. Our standard long-term equity incentive award is 100% performance-based. | | | | Discourage excessive risk taking. Multiple performance measures and deferral periods, along with robust stock ownership and retention policies, clawback and forfeiture provisions help discourage excessive risk taking. | | | | Engage with shareholders. We actively engage with our shareholders on governance and compensation issues. | | | | Require strong ownership and retention of Shareholdersequity. We have adopted strong stock ownership guidelines, and all of our NEOs currently comply with those guidelines. Executives are subject to additional retention requirements as equity grants vest. |
| | | Clawback. Our clawback policy permits recapture of prior incentive compensation awarded based on materially inaccurate performance metrics and cancels all or a portion of long-term incentive awards based on performance against risk metrics, risk-related actions or detrimental conduct. The amount of any clawback applied will be publicly disclosed as appropriate. | | | | Limit perquisites. We believe that perquisites should promote modest business-related benefits and we limit them to a modest amount. Executives are asked to reimburse the value of perquisites over that amount, if legally permissible. | | | | Provide reasonable post-employment benefits. We have closed legacy supplemental defined benefit plans to new entrants and we require shareholder approval on change in control benefits above a certain level. | | | | Retain an independent compensation consultant. The Personnel and Compensation Committee retains an independent compensation consultant that provides no other services to PNC. | | | WHAT WE DON’T DO | | û | | Compensation DiscussionNo tax gross-ups. Since 2009, we have not entered into any new agreements that permit excise tax gross-ups upon a change in control. We also do not provide tax gross-ups on our perquisites.
| | û | | No “single trigger” acceleration of equity. Beginning with 2015 grants, equity for our senior executives will require a “double trigger” to vest upon a change in control – the change in control must occur and Analysisthere must be a qualifying termination of employment. | | û | | No change in control agreements without shareholder approval. We will not enter into new change in control arrangements with our executives that would pay more than 2.99 times base and bonus in the year of termination unless we get shareholder approval. | | û | | No repricing of options. Our equity plan does not permit us to reprice stock options that are out-of-the-money, without shareholder approval. | | û | | No employment agreements for NEOs. Our named executives do not have individual employment agreements. They serve at the will of the Board, which enables us to set the terms of any termination of employment, preserving the Committee’s flexibility to consider the facts and circumstances of any particular situation. | | û | | No hedging, pledging, or short sales. We do not permit any of our employees or directors to hedge or pledge PNC securities, or sell PNC securities short. |
The tables only represent a part of the overall compensation program, however. For our NEOs, the Committee made several decisions in early 2012, based on our performance in 2011. We discuss these decisions throughout this CD&A. TheTHE PNC FINANCIAL SERVICES GROUP, INC. - Summary compensation table2015 Proxy Statement on page57, however, does not reflect all of the decisions made by the Committee for 2011 performance and includes, for 2011, decisions made based on our performance in 2010. In addition, the amounts in theSummary compensation table are sometimes calculated using different valuation methods than what the Committee uses to make its decisions.39
The following table shows how the decisions about 2011 performance differ from what we are required to report in theSummary compensation table for 2011, using our CEO as an example.COMPENSATION DISCUSSION AND ANALYSIS
| | | | | | | | | | | Compensation Program Feature | | Reported Value in
Summary
compensation table
for 2011 | | | Committee
Decision Related to
2011 Performance | | | Comment | Base Salary | | $ | 1,169,231 | | | $ | 1,200,000 | | | Committee approved annualized base salary target – table reports actual salary paid for the year | Annual Incentive Award | | $ | 2,010,000 | | | $ | 2,010,000 | | | No difference – reflects cash incentive paid in 2012 | Long-Term Incentive Award | | $ | 8,861,121 | | | $ | 4,815,000 | | | Committee granted two long-term incentive awards in 2012 (reflecting 2011 performance) - table reports three long-term incentive awards granted in 2011 (reflecting 2010 performance) | Total Direct Compensation | | $ | 12,040,352 | | | $ | 8,025,000 | | | | Total Other Compensation and Benefits | | $ | 4,566,798 | | | | n/a | | | Table reflects the change in pension plan value based on 39 years of service by CEO, as well as PNC contributions to 401(k) plan, insurance premiums, and dividends paid on stock units | Total Compensation | | $ | 16,607,150 | | | | n/a | | | |
Compensation program—program summary Our Personnel and Compensation
The Committee reviews and approves the compensation to be paid to executive officers, including our NEOs,CEO and other membersa group of senior leadership, referred to as the Corporate Executive Group (CEG). leaders that includes all of our NEOs. Our compensation program strives to balance multiple objectives and address the concerns of a variety of stakeholders. Our shareholders include individuals and institutions, located in the U.S. and other countries. Our investors have differing time horizons, philosophies, and investment goals. As a bank holding company,financial institution, we must also comply with various regulatory requirements. The Board of Governors of the Federal Reserve Board, our primary banking regulator,(Federal Reserve) regulates PNC as a bank holding company and has provided specific guidance and recommendations onset expectations with respect to our current compensation program,program. We expect that the Federal Reserve, the Office of the Comptroller of the Currency and other banking regulatory entities, will conduct an ongoing review of our incentiveremain involved in compensation structure. In addition, the Dodd-Frank Act requires the SEC to issue various executive compensation regulations that could influence our programs or disclosures.matters. We also try to understand the compensation recommendations made by proxy advisory firms. Many of our shareholders consider these recommendations in evaluating their investment in PNC.
| | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders | | 35 |
| | | | | Compensation Discussion and Analysis
| | |
While we try to balance the expectations of shareholders and regulators, we want our compensation program to balance the achievement of multiple objectives, which include:
Paying for performance while managing risk
Rewarding measurable financial achievements (earnings per share, return on equity) as well as more qualitative strategic objectives (successful acquisitions, investments in future growth, risk management discipline, talent development)
Rewarding past performance while encouraging retention
Providing a mixture of short-term and long-term rewards, with payouts in cash and PNC equity
Encouraging desired behavior with clearly communicated objectives
We strive for clarity and transparency in our compensation structure, utilizing features to design a balanced program. The Committee sharesWhile we try to reflect the concernsexpectations of those who believe that today’sshareholders and regulators, we want our compensation programs can be difficultprogram to understand.achieve multiple objectives, consistent with our compensation principles. Taken as a whole, the features of our program attempt to provideprovides incentives for performance over the short and long-term, rewardrewards achievement against measurable goals and qualitative objectives, considerconsiders market data formulas, and discretion, and useuses cash today as well as equity deferred into the future. This array of multiple characteristics and time horizons helps to ensure that the range of our objectives are met. The Committee alsoevaluates multiple performance metrics, both on an absolute basis and as measured against our peers. The Committee reviews and backteststhe operation of our compensation program to help ensure that our objectives continue to be met. | | | Compensation program
| Feature | | Rationale | Setting a total compensation target and clear performance goals | | Provides market-based guidance for the Committee and expectations for executives | Paying compensation based on actual performance using a combination of formulas and discretion | | Rewards actual performance, including both measurable outcomes and achievement of qualitative strategic objectives | Using both cash and long-term deferred incentive compensation | | Rewards performance immediately and over the long term, based on continued performance and risk management | Tying long-term compensation to risk-adjusted metrics | | Discourages excessive risk-taking | Adjusting long-term deferred compensation for total shareholder return | | Further aligns compensation with long-term risk management and executives with shareholders |
Total compensation targets. We generally believe that a target level of compensation should be paid out if we achieve target performance for the year. We set total compensation targets for our executives in the first quarter of the year, before any substantial performance has occurred. Afteror when an executive assumes a new role with PNC. In establishing targets, the endCommittee reviews, on an annual basis, available market data for total compensation. Total compensation targets for our executives, however, are not formulaically set at a particular percentile. Instead, the Committee uses a variety of factors to determine a total compensation target including but not limited to, the appropriateness of the year,job match and market data, responsibilities of the Committee evaluates actual performance to determine whether we performedposition at above, or below target.PNC and the executive’s experience. For NEOs, our targetsCEO, our total compensation target generally fall within a range offalls near the median compensation for peers, as adjusted for PNC’s size. For our other NEOs, our total compensation targets generally fall near the unadjusted median compensation for peers. The Committee approves a total compensation target for each NEO that includesgenerally consists of the following components: A
We calculate the amounts of cash and equity in the total compensation target using a predetermined mix, with at least 50% allocated to long-term equity awards. The Committee retains discretion in determining the allocation of cash target compensation between a base salary, paid and an annual incentive award. In addition to approving target compensation amounts that are at least 50% equity-based, the Committee believes that the cash provided to NEOs should include a substantial performance-based component that varies from year to year. This is why we include an annual incentive award payable incash, which is intended in addition to compensatea base salary. The Committee believes that these components collectively provide an executive officer fairly forappropriate balance between fixed and variable amounts, short-term and long-term duration of payouts, and cash and equity-based awards. 40 THE PNC FINANCIAL SERVICES GROUP, INC. - 2015 Proxy Statement
COMPENSATION DISCUSSION AND ANALYSIS For 2014, the responsibilities ofCommittee set the position held. In 2011, base salaries represented 13% of the aggregate totalfollowing compensation targets for our NEOs.NEOs: | | | | | | | | | | | | | | | | | | | | | | | | William S.
Demchak(1) | | | Robert Q. Reilly | | | Michael P. Lyons | | | E. William Parsley, III(2) | | | Joseph C. Guyaux | | Base salary | | $ | 1,100,000 | | | $ | 500,000 | | | $ | 700,000 | | | $ | 500,000 | | | $ | 620,000 | | | | | | | | Incentive compensation target | | $ | 8,400,000 | | | $ | 3,000,000 | | | $ | 4,800,000 | | | $ | 5,000,000 | | | $ | 2,480,000 | | Annual cash incentive portion | | $ | 2,700,000 | | | $ | 1,250,000 | | | $ | 1,500,000 | | | $ | 750,000 | | | $ | 930,000 | | Long-term incentive portion | | $ | 5,700,000 | | | $ | 1,750,000 | | | $ | 3,300,000 | | | $ | 4,250,000 | | | $ | 1,550,000 | | | | | | | | Total compensation target | | $ | 9,500,000 | | | $ | 3,500,000 | | | $ | 5,500,000 | | | $ | 5,500,000 | | | $ | 3,100,000 | |
| | | 36 | (1) | PNCMr. Demchak’s total compensation target for 2014 included an annualized base salary of $1,100,000. His actual base salary for 2014 was $1,089,615. |
| (2) | Mr. Parsley’s long-term incentive target includes two anticipated grants – Proxy Statementthe grant of equity-based awards that all other NEOs would otherwise receive (valued at $1,250,000) and a separate grant of incentive performance units related to the management of our Asset & Liability Management (ALM) unit, valued at $3,000,000. Please see page 61 for 2012 Annual Meetinga discussion of ShareholdersMr. Parsley’s ALM units. |
| | | | | | | Compensation Discussion and Analysis
|
AFor the 2015 performance year, the Committee approved total compensation target increases for two NEOs. The Committee approved an increase in Mr. Demchak’s annualized incentive compensation target, which includes from $8,400,000 to $9,900,000 and anannual incentive award, paid increase incash, and along-term incentive award, which isequity-based anddeferred over multiple years. In 2011, the total Mr. Parsley’s annualized incentive compensation target represented 87%from $5,000,000 to $5,500,000. The Committee approved these increases based on the skills and experience of the aggregate total compensation targets for our NEOs. For each NEO, as well as changes in market information for similar executives at least 50% of the incentive compensation target was tied to PNC equity and deferred over the long term. For Mr. Rohr and Mr. Demchak, this percentage was higher at 60%.
For members of the CEG, including all NEOs, the Committee ultimately approves a pool of incentive compensation. The pool is discretionary, and created by adding together the incentive compensation targets for each executive, multiplying the total by a corporate performance factor, and then increasing or decreasing that amount based on additional criteria that the Committee considers appropriate in providing a balanced view of performance. The Committee then allocates individual incentive compensation awards out of this pool.
While the incentive compensation pool may be derived, in large part, from actual performance, the Committee believes that it is essential to retain discretion to increase or decrease the pool size. This discretion may be used to reflect
important performance considerations or external events that are not fully captured by other metrics.financial institutions.
The Committee may take into account factors that it deems relevant, including risk management discipline and performance, business unit performance (if applicable), the executive’s scope of responsibility and value to PNC, the ability of the executive to help execute the strategic plan, leadership and teamwork, talent development, and any concerns related to retention and succession planning.
The chart below shows how a total compensation target relates to the compensation that we actually award. This chart shows how the Committee uses the following elements to assist it in its decisions:
market-driven total compensation targets
a corporate performance factor that evaluates measurable performance metrics, both absolute and relative
discrete discretionary adjustments that may take qualitative objectives and individual performance into account
a mix of short- and long-term programs weighted significantly toward long-term deferred equity
| | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders | | 37 |
| | | | | Compensation Discussion and Analysis
| | |
Other compensation and benefits. In addition to the components included in the total compensation target outlined above, our executive compensation program also includes the following components: | • | | Perquisites, which are intended to provide modest, business-related benefits and arelimited to $10,000 in value, withno tax gross-ups permitted.
|
Change in control arrangements, which are discussed in more detail on pages83-89,
| | and are intended to provide continuity of management in anticipation of a change in control as well as to provide income following an executive officer’s involuntary termination of employment following a change in control.
|
Health benefits and retirement plans, which are intended to promote health and wellness and to help employees achieve financial security after retirement.
Compensation program—decisions
For the 2011 performance year, the Committee:
approved a total compensation target for each NEO
approved the maximum annual incentive award that certain executive officers may receive
reviewed corporate performance for 2011
evaluated other qualitative criteria that it deemed appropriate, including risk management
approved a pool that was used to make incentive compensation awards for the CEG
evaluated individual performance and approved individual incentive compensation awards
approved the programs and material terms of incentive compensation awarded
approved compensation-related policies and procedures
The Committee also made decisions on awards made in 2009 to NEOs, based on the achievement of certain performance objectives over the 2009-2011 performance period. We discuss these decisions as well.
Impact of 2011 "say-on-pay" vote.In 2011, our shareholders voiced substantial support for the compensation of our NEOs, with more than 96% of the votes cast approving the “say-on-pay” advisory vote on executive compensation. This was the third year in a row that we provided a “say-on-pay” vote to our shareholders, and we have received support that exceeded 90% in each year. The shareholders also recommended that we include this advisory vote on executive compensation each year, which our Board had also recommended, and our Board approved this recommendation at a meeting held on April 24, 2011.
As a result of this alignment between our Board and shareholders for 2011, the Committee did not believe that any significant changes to the
compensation program were needed to address concerns arising from this advisory vote. The Committee considered the results of this vote as one factor in its compensation decisions, among the other factors discussed in this CD&A. For the 2012 annual meeting, our Board has recommended that shareholders again approve an advisory, non-binding resolution on executive compensation. Please see page 95.
Evaluating 2011 performance.At the beginning of 2011, the Committee reviewed available market data in setting the total compensation targets for each NEO. We may adjust targets throughout the year based on changes to job duties or changes to market data. During 2011, the Committee reviewed the total compensation targets for all NEOs. Following a review of
| | | 38 | | PNC – Proxy Statement for 2012 Annual Meeting of ShareholdersPerquisites
|
| | | | | | | Compensation Discussion• Provide modest business-related benefits
| | • Limited to $10,000, unless approved by the Committee, with reimbursement by the executive for any excess amounts | | • No tax gross-ups permitted | Change in Control Arrangements | | • Allow for continuity of management in anticipation of and Analysisthrough a change in control | | • Provide compensation when an executive officer is involuntarily terminated following a change in control | | • Described in more detail on pages 71 to 76 | Health and Retirement Plans | | • Promote health and wellness | | • Help employees achieve financial security after retirement |
Compensation program decisions availableAs described previously in this CD&A, we delivered very good performance in 2014, with solid net income, a well-positioned balance sheet, strong shareholder returns, and substantial execution against our main strategic objectives. We also performed well against our peers. In determining actual compensation, the Committee does not rely on a specific formula. This allows the Committee to use its judgment in considering performance, without providing a particular weight to any one measure.
Evaluating performance After undertaking a comprehensive review of our corporate performance, the Committee evaluated the performance of each NEO. To help the Committee understand the market, management provided current benchmarked compensation data for CEOs, and considering Mr. Rohr’seach NEO. The CEO reviewed his assessment of the performance and tenure, and discussingof executives, including the dataNEOs, with its independentthe Committee. The Committee approved the compensation consultantamounts for each of our NEOs. For our CEO, the Committee approved the compensation amounts in an executive session, with no members of management present. Meridian, the Committee’s independent compensation consultant for 2014, participated in this discussion with the Committee approved a $200,000 increase induring the base salary to be paid to Mr. Rohr in 2011. This increased Mr. Rohr’s total compensation target from $7,500,000 to $7,700,000. In addition, the Committee approved an increase in Mr. Johnson’s total compensation target for 2011 from $2,200,000 to $3,000,000, based on a consideration of Mr. Johnson’s performance and a review of market-based data for CFOs. This consisted of an increase in Mr. Johnson’s base salary (from $475,000 to $500,000) and an increase in his total incentive compensation target (from $1,725,000 to $2,500,000). After the end of the year, the Committee reviewed various aspects of PNC’s performance against pre-established internal financial and non-financial goals, year-over-year performance, and how we performed against our peers. Based on the quantitative financial performance and the qualitative assessment, the Committee approved an incentive compensation pool at 105% of target. This represented a 23% decline from last year’s payout ratio, which funded the pool at 135.6% of target.
In absolute terms, the Committee believed that PNC’s solid financial performance in 2011 occurred amidst a challenging environment, and that PNC’s leaders had executed exceptionally well on key strategic objectives, including making new acquisitions in desirable markets, attracting record numbers of new customers, and returning to a desired moderate risk profile. The strength of our 2011 performance was evidenced, in large part, by our performance against our internal financial goals for 2011 and our year-over-year performance.executive session.
The Committee believedalso reviewed its decisions for our CEO in an executive session of the independent directors of PNC, with no members of management present. In that PNC’s performance in 2011 againstexecutive session, the measures selectedCommittee allowed time for the independent directors to help benchmark our relative performance was not as strong as our relative performance in 2010. PNC’s return on common equity, excluding goodwill (ROCE), exceeded our 2011 budget. Actual performance placed PNC 6th inprovide comments or questions before finalizing the peer group.decisions for the CEO.
We achieved positive adjusted earnings per share (EPS) growth over 2010, which placed us at 10th in the peer group. The Committee reviewed this performance in more detail,evaluates several metrics when making compensation decisions. These metrics are designed to align with how management, long-term shareholders and also reviewed the performance of PNCbanking regulators assess our performance. The metrics represent achievement against both objective and subjective goals, and the peer group sinceCommittee does not necessarily favor one metric over another. Instead, the beginningCommittee uses these metrics to gain a comprehensive understanding of our overall performance.
THE PNC FINANCIAL SERVICES GROUP, INC. - 2015 Proxy Statement 41
COMPENSATION DISCUSSION AND ANALYSIS The following chart describes some of the financial crisis in 2008. While PNC achieved positive EPS and EPS growth throughout the crisis, the Committee noted that several peers that had higher EPS growth than PNC in 2011 also had negative earnings in one or more of the previous four years, or had not yet returned to the level of earnings that they had achieved before the financial crisis began. During this significant period of volatility, the Committee believed that it was important to take into account the sustainability and stability of financial performance, and whether a bank lost money, eroded shareholder value, or otherwise failed to return to its level of pre-crisis performance. As a result, the Committee considered the financial performance, overall health, and future prospects of PNC and its peer group.
The table below lists the performancekey metrics that the Committee uses as guidance for an assessmentevaluates, and a brief explanation of absolute and relative performance. The absolute performance metrics include pre-tax, pre-provision net income (PPNI), EPS, and ROCE, while the relative metrics include EPS growth and ROCE.why we use them.
The evaluation focuses equally on absolute and relative performance and translates the average of the metrics into a percentage of target—from 0 to 150%.
| | | | | PNC – Proxy Statement for 2012 Annual Meeting of ShareholdersCategory | | | 39Metric | |
| | | | Why we use it | Compensation DiscussionCapital and Analysis
risk | | |
| | | | | | | | | | | | | | | | 2011 corporate performance factor | Absolute
Metric | | 2011 Budget | | 2011 Performance, as adjusted | | Performance
as % of
Budget | | Payout Grid % | | Payout Grid (d) | | | | | | | % of Budget | | Payout % | PPNI (a) | | $5.441 billion | | $5.391 billion | | 99%
| | 99%
| | > 120% | | 150% | | | | | | | 120% | | 150% | | | | | | | 110% | | 125% | EPS | | $5.15 | | $5.84 | | 113%
| | 133%
| | 100% | | 100% | | | | | | | 90% | | 85% | | | | | | | 80% | | 70% | ROCE (b) | | 11.96% | | 13.03% | | 109%
| | 122%
| | 50% | | 40% | | | | | | | 20% | | 10% | | | | | | | <=10% | | 0% | | | | | | | | | | | | | | Relative
Metric | | 2011
Performance, as adjusted | | Peer Group | | Peer Rank (c) | | Payout Grid % | | Payout Grid (d) | | | | | | | Peer Rank | | Payout % | EPS growth | | 0.1% | | BB&T Bank of America Capital One Comerica Fifth Third JPMorgan Chase KeyCorp M&T Bank Regions Financial SunTrust U.S. Bancorp Wells Fargo | | 10th | | 20% | | 1st | | 150% | | | | | | | 2nd | | 140% | | | | | | | 3rd | | 130% | | | | | | | 4th | | 120% | | | | | | | 5th | | 110% | | | | | | | 6th | | 100% | ROCE (b) | | 13.03% | | | 6th | | 87% | | 7th | | 80% | | | | | | | 8th | | 60% | | | | | | | 9th | | 40% | | | | | | | 10th | | 20% | | | | | | | 11th | | 0% | | | | | | | 12th | | 0% | | | | | | | 13th | | 0% | | | | | | | | | | | | | | Absolute Metrics (average) | | 118.2% | Relative Metrics (average) | | 53.7% | All Metrics (average) | | 85.9% | Discretion Applied? | | Yes | Final Corporate Performance Factor | | 105% |
(a) | PPNI, a non-GAAP financial measure, equals total revenue less noninterest expense, both from continuing operations, as adjusted for certain non-recurring items approved by our Board’s Personnel and Compensation Committee. For 2011, these non-recurring items included $(70) million in pre-established indemnification liability related to our membership in Visa, $198 million associated with the redemption of trust preferred securities, and $42 million for integration costs. Please seeAnnex A for a further explanation of PPNI and a reconciliation of PPNI to net income, which is the most directly comparable GAAP financial measure.Economic capital |
(b) | ROCE is adjusted without goodwill. |
(c) | In ranking EPS Growth, the three peers with one unprofitable year (in either 2010 or 2011), were ranked below peers that were profitable in both years. |
(d) | We calculate the payout percentage by interpolating percentages between the relevant payout grid ranks, based on how close PNC is to the rank above and below. |
| | | 40 | | PNC – Proxy Statement for 2012 Annual MeetingEconomic capital represents the amount of Shareholdersresources that we should hold to guard against unexpected losses. Economic capital serves as a “common currency” of risk that allows us to compare different risks on a similar basis across our company. |
| | | | | Return on economic
capital (ROEC) vs.
cost of capital | | Compensation DiscussionROEC is our annualized net income divided by our economic capital. Comparing our profits to how much capital we are holding against potential losses helps to provide a risk-based evaluation of profitability. When we compare ROEC to our cost of capital – that is, a minimum rate of return on the overall capital that we hold – it provides a good measure of the excess value that we provide to shareholders.
| | Tier 1 risk-based
capital ratio | | The Tier 1 risk-based capital ratio is used by banking regulators to assess the capital adequacy and Analysisfinancial strength of a bank. This capital ratio must exceed 6% for PNC to be considered well-capitalized by our regulators. | Expenses | | Efficiency ratio | | The efficiency ratio helps us evaluate how efficiently we operate our business. The ratio divides our noninterest expense (such as compensation and benefits, occupancy costs, equipment, and marketing) by our revenue. In general, a smaller ratio is better. | Profitability | | Earnings per share
(EPS) | | EPS is a common metric used by investors to evaluate the profitability of a company. It shows the earnings (net income) we make on each outstanding share of our stock. | | EPS growth | | While EPS represents a specific dollar amount, EPS growth represents the percentage growth of EPS since last year. EPS growth helps us to compare our annual earnings strength to our peers. | | Return on assets
(ROA) | | Investors often evaluate banks by their asset size, with loans and investment securities generally making up the largest components of assets. ROA is our annualized net income divided by our average assets and represents how efficiently we use assets to generate profit. | | Return on common
equity | | Return on common equity is our annualized net income attributable to our common shareholders divided by average common shareholders’ equity. It shows how efficiently we use our investor funds (common equity) to generate profit. | Revenue | | Net interest income | | Net interest income measures the revenue generated from lending and other activities minus all interest expenses (such as interest paid on deposits and borrowing). It is a good indicator of performance for banks given the importance of interest earning assets and interest bearing sources of funds. | | Noninterest income | | Noninterest income measures the fees and other revenue we derive from our businesses (other than interest income). A healthy mix of net interest income and noninterest income provides diverse earnings streams and lessens a bank’s reliance on the interest rate environment. | Valuation | | Tangible book value
per share | | This measure takes our total tangible common shareholders’ equity (intangible assets, such as goodwill, are excluded) and divides that by the number of shares outstanding. This provides investors with an objective valuation method and allows them to compare relative values of similar companies. | | Total shareholder
return (TSR) | | TSR is a common metric used to show the total returns for an investor in our common stock. Annual TSR takes into account the change in stock price from the beginning to the end of the year, as well as the reinvestment of any dividends issued throughout the year. |
42 THE PNC FINANCIAL SERVICES GROUP, INC. - 2015 Proxy Statement
COMPENSATION DISCUSSION AND ANALYSIS In additionawarding compensation to an assessment of absolute and relative performance,each NEO, the Committee considers other qualitative achievements. The Committee applies its judgment and discretion to approve a final corporate performance factor. This factor reflects the Committee’s view ofconsidered PNC’s overall performance and how that performance translates into our short-term results and prospects for longer-term success. As a result of this process, the Committee approved a total incentive compensation pool that equaled 105% of the target incentive compensation amount, which was significantly less than the amount that the Committee approved to fund last year’s pool (135.6% of target). This reflected PNC’s solid overallyear, as well as performance for 2011, which the Committee believed was slightly above target. The Committee considered PNC’s 2011 EPS, which exceededlines of business or functions managed by the 2011 budgetNEO, and the EPS growth, which was slightly up over 2010, the significant reduction in loan loss provision and stable PPNI in a difficult environment, the year-over-year increase in ROCE, and the solid relative ROCE performance against peers.
For EPS growth, the Committee also considered the ways that some peers had achieved annual earnings growth, whether the peer had returned to the level of performance it had achieved before the financial crisis, or whether the peer had yet to recover and was rebounding from a level of low earnings. The Committee believes that, for some peers, the unprecedented volatility of the past several years resulted in strong annual EPS growth that did not reflect true earnings strength compared to PNC.
The Committee continues to believe that the five metrics that it uses to help guide its decisions are appropriate and provide a broad overview of absolute and relative performance. The Committee also believes that it is important to retain discretion to allow for adjustments to formula-driven results that might otherwise lead to potential windfalls or excessive penalties.
For example, the Committee elected to remove a substantial after-tax gain of $1.3 billion ($4.36 a
share) from the incentive compensation pool in 2007, even though the gain was included in that year’s earnings. This gain occurred due to a significant acquisition made by BlackRock, Inc., and PNC’s ongoing investment in BlackRock. Although PNC’s BlackRock investment and continuing oversight continues to be a performance consideration, this particular transaction was not viewed as relevant to the performance discussion for that year.
In arriving at the final corporate performance factor for 2011 performance, the Committee also considered the significant qualitative performance objectives that PNC had achieved, including ongoing risk management and return to a moderate risk profile, substantial increases in new clients, expansion into attractive markets, and the overall strategic positioning for the future.
The corporate performance factor of 105% established the incentive compensation pool for the NEOs and other members of the CEG. The Committee granted incentive compensation awards to each NEO out of this pool and made certain adjustments based on the individual performance of the NEO. The table below reflects, for each officer in 2011.
Mr. Rohr’s actualNEO, the incentive compensation represented 105% of histarget for 2014 and the actual annual cash incentive
and long-term equity-based incentives awarded in 2015 for 2014 performance. These amounts differ, in part, from the amounts reflected in the Summary compensation target. The Committee believedtable on page 56- that Mr. Rohr’s strong and seasoned leadership helped navigate PNC through an unprecedented financial crisis and resultedtable shows the long-term equity-based incentives awarded in a solid 2011 performance, particularly2014 (for 2013 performance), in accordance with respect to the overall strategic positioning of PNC, and operation under a desired moderate risk profile. Mr. Johnson’s actual incentive compensation also represented 105% of his incentive compensation target. The Committee believed that Mr. Johnson’s leadership contributed to PNC’s achievement of key financial objectives. These included measurable metrics, such as earnings per share, return on equity, and pre-tax, pre-provision net income, but also qualitative achievements in managing risk and improving the operation and efficiencies within the finance function.SEC regulations.
| | | | | | | | | | | | | | | | | | | | | | | | William S.
Demchak | | | Robert Q. Reilly | | | Michael P. Lyons | | | E. William Parsley, III(1) | | | Joseph C. Guyaux | | Incentive compensation target | | $ | 8,400,000 | | | $ | 3,000,000 | | | $ | 4,800,000 | | | $ | 5,000,000 | | | $ | 2,480,000 | | | | | | | | Incentive compensation awarded | | $ | 10,500,000 | | | $ | 3,250,000 | | | $ | 6,000,000 | | | $ | 5,600,000 | | | $ | 3,380,000 | | Annual incentive portion | | $ | 3,540,000 | | | $ | 1,375,000 | | | $ | 1,980,000 | | | $ | 1,050,000 | | | $ | 1,380,000 | | Long-term incentive portion | | $ | 6,960,000 | | | $ | 1,875,000 | | | $ | 4,020,000 | | | $ | 4,550,000 | | | $ | 2,000,000 | |
| (1) | Mr. Parsley’s incentive compensation target and award includes two anticipated grants – the grant of equity-based awards that all other NEOs would otherwise receive (valued at $1,250,000) and a separate grant of incentive performance units related to the management of our Asset & Liability Management (ALM) unit, valued at $3,000,000. Please see page 61 for a discussion of Mr. Parsley’s ALM units. |
The charts below show the base salary for 2014 for each NEO, and the annual cash incentive and long-term incentive awarded in 2015 for 2014 performance. The bar surrounding each circle shows the amount of total compensation that is variable and at-risk. These amounts differ, in part, from the amounts reflected in the Summary compensation table on page 56- that table shows the long-term equity-based incentives awarded in 2014 (for 2013 performance), in accordance with SEC regulations. WILLIAM S. DEMCHAK: CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER Mr. Demchak was appointed CEO in April 2013 and Chairman in April 2014. | | | PNCWILLIAM S. DEMCHAK – Proxy Statement for 2012 Annual Meeting of ShareholdersPAY-FOR-PERFORMANCE | | 2014 KEY ACHIEVEMENTS | | 41 | • Delivered outstanding performance as CEO, with strong net income and shareholder returns, a well-positioned balance sheet, and reduced expenses. • Performed well against our peers, ranking 2nd in our peer group with an annual total shareholder return (TSR) of 20.3%. • Maintained a well-positioned and core funded balance sheet with a loans to deposits ratio of 88%. • Strengthened capital by growing key capital ratios and improving our CCAR process while returning capital to shareholders through a dividend increase and repurchases of shares. • Made significant strides in executing on our key strategic objectives. | | 
|
THE PNC FINANCIAL SERVICES GROUP, INC. - 2015 Proxy Statement 43
COMPENSATION DISCUSSION AND ANALYSIS ROBERT Q. REILLY: EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER Mr. Reilly was appointed Chief Financial Officer in August 2013. | | | | ROBERT Q. REILLY – PAY-FOR-PERFORMANCE | | 2014 KEY ACHIEVEMENTS | | | Compensation Discussion• As Chief Financial Officer, provided effective supervision of major internal financial and Analysisaccounting functions and continued to play an integral part in our achievement of financial priorities, including exceeding our continuous improvement goal of $500 million in cost savings and decreasing our overall expenses year over year.
• Increased collaboration between the finance function and our lines of business, and improved employee engagement within finance. • Served as primary spokesperson with investors, the media and the investment community and continued to support our reputation with those stakeholders. • Maintained strong financial control and discipline, collaborating with our business leaders to drive business performance, growth, efficiency and returns. | |  |
MICHAEL P. LYONS: EXECUTIVE VICE PRESIDENT AND HEAD OF CORPORATE AND INSTITUTIONAL BANKING Mr. Lyons has been an Executive Vice President since November 2011 and is head of Corporate and Institutional Banking. | | | | MICHAEL P. LYONS – PAY-FOR-PERFORMANCE | | 2014 KEY ACHIEVEMENTS | | | • Managed a major business that contributed approximately 36% of our revenue and 50% of our profits in 2014. • Delivered solid financial results, growing adjusted pre-provision net revenue over the prior year, with notable outperformance in our asset-based lending group and Harris Williams. • Achieved loan and deposit growth while maintaining our desired risk appetite and credit quality. • Successfully focused on cross-selling opportunities and new revenue initiatives while managing expenses. | | 
|
44 THE PNC FINANCIAL SERVICES GROUP, INC. - 2015 Proxy Statement
COMPENSATION DISCUSSION AND ANALYSIS E. WILLIAM PARSLEY, III: EXECUTIVE VICE PRESIDENT, CHIEF INVESTMENT OFFICER AND TREASURER Mr. Parsley has served as Treasurer and Chief Investment Officer since January 2004. He was appointed Executive Vice President of PNC in February 2009. | | | | E. WILLIAM PARSLEY, III – PAY-FOR-PERFORMANCE | | 2014 KEY ACHIEVEMENTS | | | • Delivered outstanding performance on our core investment portfolio while continuing to improve the credit quality of the portfolio. • Enhanced the firm’s liquidity and capital profile, increasing our liquidity coverage and improving our long-term capital plan. • Partnered successfully with the Risk and Finance functions to improve the evaluation and reporting of risks across the entire balance sheet. • Made several improvements to the Comprehensive Capital Analysis and Review (CCAR) process. | | 
|
Mr. Demchak’s actual incentive compensation represented 107.5% of his incentive compensation target, slightly higher than the corporate performance factor. The Committee believed that Mr. Demchak’s strong management of our overall businesses justified his incentive compensation, particularly the record client growth in the corporate and institutional bank, the growth and innovation within the asset management group, and the performance of the retail bank despite a challenging regulatory and interest rate environment. The Committee also believed that Mr. Demchak helped to manage risk, improve operational efficiencies, and improve the talent within the corporate and institutional bank.JOSEPH C. GUYAUX: SENIOR VICE CHAIRMAN AND CHIEF RISK OFFICER
Mr. Guyaux’s actual incentive compensation represented 102% of his incentive compensation target, slightly lower than the corporate performance factor. The Committee believed that compensation slightlyGuyaux was appointed Senior Vice Chairman and Chief Risk Officer in excess of the target was appropriate based on Mr. Guyaux’s oversight in 2011 of the retail bank and mortgage business. The Committee believed that this amount appropriately reflected Mr. Guyaux’s strong leadership and also reflected the challenges that the businesses experienced in 2011. In the first quarter of 2012, Mr. GuyauxFebruary 2012. Effective January 31, 2015, he was appointed as Senior Vice Chairman and Chief Risk Officer.
Mr. Parsley’s actual incentive compensation represented approximately 104%CEO and President of his incentive compensation target. The Committee believed that Mr. Parsley’s compensation reflected outstanding management and repositioning of the balance sheet throughout 2011, and Mr. Parsley’s effective leadership of our non-strategic assets group as well as the regulatory “stress tests” of our capital position.PNC Mortgage.
The first table below shows the value of the incentive compensation awards for 2011 – the annual incentive award paid in cash and the aggregate value of the two long-term incentive awards granted on February 7, 2012. The second table compares the total compensation awarded for 2011 performance (salary + incentive compensation) to the total compensation awarded for 2010 performance. In both years, each NEO received a salary, an annual incentive award, and long-term incentive awards. For the 2010 performance year, each NEO also received a special long-term incentive award.
| | | | | | | | | | | | | | | | | | NEO | | 2011 incentive
compensation
target | | | 2011 incentive
compensation
paid | | | 2011 annual
incentive paid (cash) | | | 2011
long-term
incentive
award
(equity-based) | | James E. Rohr | | $ | 6,500,000 | | | $ | 6,825,000 | | | $ | 2,010,000 | | | $ | 4,815,000 | | Richard J. Johnson | | $ | 2,500,000 | | | $ | 2,625,000 | | | $ | 1,062,500 | | | $ | 1,562,500 | | William S. Demchak | | $ | 6,000,000 | | | $ | 6,450,000 | | | $ | 2,130,000 | | | $ | 4,320,000 | | Joseph C. Guyaux | | $ | 2,480,000 | | | $ | 2,530,000 | | | $ | 955,000 | | | $ | 1,575,000 | | E. William Parsley, III | | $ | 5,100,000 | | | $ | 5,300,000 | | | $ | 950,000 | | | $ | 4,350,000 | |
| | | | | | | | | | | | | NEO | | | | | % change from 2010 total
compensation awarded | | | | 2011 total
compensation
awarded | | | (with special award) | | | (without
special award) | | James E. Rohr | | $ | 8,025,000 | | | | -34.6 | % | | | -13.4 | % | Richard J. Johnson | | $ | 3,125,000 | | | | -4.6 | % | | | +17.9 | % | William S. Demchak | | $ | 7,200,000 | | | | -25.6 | % | | | -9.1 | % | Joseph C. Guyaux | | $ | 3,150,000 | | | | -30.9 | % | | | -16.8 | % | E. William Parsley, III | | $ | 5,700,000 | | | | -34.5 | % | | | -29.5 | % | NEOs as a group | | | | | | | -29.3 | % | | | -14.2 | % |
| | | 42 JOSEPH C. GUYAUX – PAY-FOR-PERFORMANCE | | 2014 KEY ACHIEVEMENTS | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders |
| | | | | • Completed a comprehensive risk appetite reassessment to enhance the process for assessing PNC’s aggregate risk. • Created a new Enterprise Risk Appetite Statement with supporting risk principles; linked our risk appetite to capital planning and the stress testing process. • Strengthened the model validation and model development functions, and helped to support the validation of models for the CCAR process. • Improved our enterprise data governance strategy and leadership. | | Compensation Discussion and Analysis
|
THE PNC FINANCIAL SERVICES GROUP, INC. - 2015 Proxy Statement 45
COMPENSATION DISCUSSION AND ANALYSIS The amount of incentive compensation that we award to our NEOs – both annual and long-term – is based on corporate, business and individual performance for the year. For our NEOs, a significant portion of the total compensation target - at least 50% - consists of a long-term, equity-based award. For our CEO and another NEO, this percentage is 60%. Annual incentive awards.awards (cash).Based on the cash-to-equity ratio for the NEOs for the 2011 performance year, the Committee approved the cash We pay annual incentive awards listed in cash. To preserve the table above in February 2012. Thetax deductibility of these awards, the Committee had previously approved the eligibility of Mr. Demchak and the next three highest-paid NEOs (except for Mr. Johnson, who is not subject to 162(m) limitations on tax deductibility)(other than the CFO), to receive annual incentive awards under theour 1996 Executive Incentive Award Plan, a shareholder-approved plan that allows PNC to receive a tax deduction for certain compensation. At that time the Committee also established the maximum amount that each executive could receive.
Under this 1996 plan, no eligible participant may receive an annual incentive award that exceeds 0.2% of PNC’s "Incentive Income" for the year—defined as our consolidated net income, with certain adjustments. Once the year ends, the Committee decides whether to make a downward adjustment from the maximum annual incentive award amount for each participant.
In February 2012, the Committee made a downward adjustment from the maximum amount, taking into account the same types of performance factors it used in making compensation decisions for the executive officers who do not participate in the 1996 plan. For more information on this plan and the process for establishing maximum amounts, please see footnote (a) of theGrants of plan-based awards in 20112014 table on page 65,58, andConsideration of tax deductibilityon page 49.52.
Long-term incentive awards.awards (equity-based).In February 2012, the Committee awarded two separate Under our current programs, each NEO generally receives his long-term incentive awards to each NEO. These awards consisted of performance-based restricted share units andaward in two primary forms - the incentive performance unit, opportunities. The grant date fair value of the overall long-term incentive award was divided evenly betweenwhich measures PNC performance over a three-year period, and the performance-based restricted share units andunit (RSU), which vests in equal annual installments over a four-year period. In addition to the incentive performance units. As in prior years, the Committee granted Mr. Parsley an additionalregular incentive performance unit, opportunityMr. Parsley received an incentive performance unit tied to the performance of theour Asset & Liability Management (ALM) unit thatfunction, which he manages. The Committee made each
46 THE PNC FINANCIAL SERVICES GROUP, INC. - 2015 Proxy Statement
COMPENSATION DISCUSSION AND ANALYSIS All of these incentiveequity-based awards are made under PNC’s shareholder-approved 2006 Incentive Award Plan. The awards are described in the table above andbelow summarizes the material features of the individual long-term incentive awards are summarized below: | | | | | | | | | | | | | | | | | | | | | Award | | Equity-
based
| | | | Deferral
period | | | | Components | | | | Amount
at risk | | | | | | | | Performance-based | | | | Risk adjustment | | | | Performance-based restricted share units | | Yes | | | | 4 years | | | | Will be increased or decreased based on total shareholder return each year | | | | Will not vest unless PNC exceeds a designated capital
ratio for the year | | | 100% | | Incentive performance units | | Yes | | | | 3 years | | | | Long-term performance against peers in earnings per share growth and return on common equity | | | | Units may be reduced or eliminated if PNC’s return on economic capital does not exceed our cost of capital | | | 100% | | ALM incentive performance units | | Yes | | | | 3 years | | | | ALM unit performance against a benchmark index | | | | | | | 100% | |
| | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders | | 43 |
| | | | | Compensation Discussion and Analysis
| | |
Performance-based restricted share units
Based on the prior year’s performance, we granted performance-based restricted share units (performance RSUs) to our NEOs in 2011terms and 2012. To vest, the performance RSUs require the achievement of risk-based performance goals. If we satisfy the conditions the performance RSUs will vest in four equal annual installments.
In each of the four years, PNC must meet or exceed the required Tier 1 capital ratio for well-capitalized institutions, as established by our primary banking regulator. We use Tier 1 capital as a threshold performance metric due to its risk-based nature, and the regulatory importance of the measure in assessing the capital adequacy of a financial institution.
The vesting performance condition must be met in each of the four years—if we do not meet or exceed the capital ratio in a given year, the executive forfeits the installment for that year. Future installments may vest if we meet or exceed the capital requirement at that time.
For each annual installment that vests, the amount that vests will increase or decrease based on PNC’s one-year total shareholder return (TSR). TSR helps to align the interests of our executives and long-term shareholders. TSR measures the total return of a share of PNC common stock by measuring the change in stock price, plus the reinvestment of any dividends. TSR performance for the year will increase or decrease the vested amount by no more than 25% (75% to 125% of the original amount).
The Committee believed that this range of adjustment would reward decisions that provide value to our long-term shareholders while discouraging the taking of excessive risks. The TSR adjustment penalizes underperformance and rewards strong performance, but avoids the potential for an unlimited increase that could encourage imprudent short-term risk-taking.
Overall, the Committee believes that a combination of these risk-focused design elements—the Tier 1 capital ratio and a TSR adjustment—helps to balance the overall incentive compensation program and objectives.
Performance RSUs will have no voting rights, but dividends will be deemed to accrue. If an installment vests, the recipient will receive shares of PNC common stock.awards. The deemed dividends for that installment will be paid out in cash at the time of vesting.
Incentive performance units
Based on the prior year’s performance, we granted incentive performance unit opportunities to our NEOs in 2011 and 2012. These grants will pay out if PNC achieves certain performance objectives when measured against its peers over the relevant three-year period (2011-2013 and 2012-2014).
The objectives consist of relative earnings per share (EPS) growth and return on common equity, excluding goodwill (ROCE). For PNC and its peers, EPS will be adjusted, on an after-tax basis, for the impact of several items, which are discussed in more detail in footnote (b) ofthe Grants of plan-based awards in 2011 table on page 65.
The potential payout percentage may range from 0 to 200%, with 100% representing the target grant amount. See page 46 for the payout scale for our relative performance. Payouts up to 100% of the target amount will be made in PNC common stock, with any excess (up to 200%) payable in cash. The Committee retains the discretion to reduce, but not increase, a payout calculated by the formula. Incentive performance units will have no voting rights, but dividends will be deemed to accrue and be reinvested. The deemed dividends will be paid out in cash in connection with any final payout.
For thesignificant differences between grants made in February 2011, the Committee approved a risk-based enhancement that could reduce the entire payout by up to
| | | 44 | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders |
| | | | | | | Compensation Discussion2014 and Analysis
|
30%. For the grants made in February 2012,2015 are that the Committee approved a modified enhancement that could eliminate 100% of the payout. The risk-based trigger for either grant is whether our return on economic capital (ROEC) exceeds the cost of our capital.
Economic capital attempts to measure the potential impact of an unexpected loss and helps us assess the appropriate capital levels for our firm. If a highly unlikely event occurred, economic capital represents how much capital we think we would need. Our federal banking regulators require us to measure economic capital. We also use economic capital to set limits on risk-taking activities throughout PNC.
For the2015 grants made in 2011, the reduction in the payout is formulaic—if our ROEC does not exceed our cost of capital in a given year, the payout will be reduced by 10 percentage points a year, for a maximum reduction of 30 percentage points over the 3-year performance period.
For the grants made in 2012, the Committee will not rely solely on a formulaic adjustment and will also perform a second level of review. The purpose of this review is to determine if the performance resulted from reasons that should be
deemed as being appropriately beyond management’s control or responsibility. These could include things such as the impact of an acquisition that was otherwise deemed to be in the best interests of shareholders, or external events that we could not have reasonably anticipated.
If the Committee determines that a risk-based adjustment is appropriate, the Committee may reduce or eliminate the number of units granted. The Committee also retains discretion to exempt individuals from this reduction.
For the grants in 2011 and 2012, ROCE will be calculated as annualized earnings for the period, divided by the average economic capital for the year. Earnings will be PNC’s publicly-reported earnings adjusted, on an after-tax basis, for the impact of the same items as for purposes of measuring PNC’s EPS growth performance as described in footnote (b) ofthe Grants of plan-based awards in 2011 table on page 65.
The cost of capital will include a performance expectation forrevised peer group (see page 48) and include a reasonable rate“double trigger” acceleration of return on goodwill, and will be approved by the Committee. For 2011, the cost of capital was 10.0% and for 2012, the cost of capital is 11.3%vesting provision upon a change in control (see page 72).
| | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders | | 45 |
| | | | | Compensation Discussion and Analysis
| | |
| | | | | | | | | | | | | | | | | | | | Incentive performance units | | Performance-based RSUs | | ALM incentive performance units | | Who receives an award? | | All NEOs | | | | | | All NEOs | | Mr. Parsley | How do we measure performance? | | • 2015-2017 (three years) • Vesting occurs at the end of the period • Performance based on absolute and relative metrics - 50% based on our return on common equity without goodwill (ROCE) compared to our cost of common equity (COCE) - 50% based on our EPS growth rank against our peers • 0-125% of target award • Units payable in PNC common stock up to target (0-100%) and payable in cash above target (100-125%) | | • 2015-2018 (four years) • Vesting occurs in annual installments • Vested amount adjusted based on PNC’s annual total shareholder return (TSR) • Aligns executives’ interests directly with the interests of shareholders, and has a considerably stronger tie to performance than time-based restricted shares while also supporting retention | | • 2015-2017 (three years) • Vesting occurs at the end of the period • PNC’s ALM performance compared to a benchmark performance index • 0-200% of target award • Units payable in cash | | | | | | • 75-125% of target award • Units payable in PNC common stock | | | What is the payout? | | • The payout percentage grid ranges are listed below. Actual payout percentages will take into account how close the performance metric or peer group rank is to the metric or rank above and below. For example, if EPS Growth Rank is closer to 5th than 6th, the actual payout percentage will be closer to 115% than 105%. If ROCE as a % of COCE is between 105% and 110%, the payout percentage will be between 100% and 125%. | | | | ROCE as % of COCE | | Payout
% | | EPS
Growth
Rank | | Payout % | | Annual TSR | | Payout % | | ALM vs. index | | Payout % | | | >= 110% | | 125% | | 1 | | 125% | | >= +25% | | 125% | | >= +40 basis points | | 200% | | | 105% | | 100% | | 2 | | 125% | | 0% | | 100% | | +20 basis points | | 150% | | | 100% | | 75% | | 3 | | 125% | | <= -25% | | 75% | | 0 to -25 basis points | | 100% | | | 75% | | 50% | | 4 | | 120% | | | | | | -35 basis points | | 40% | | | <= 50% | | 0% | | 5 | | 115% | | | | | | <= -40 basis points | | 0% | | | | | | | 6 | | 105% | | | | | | | | | | | | | | | 7 | | 95% | | | | | | | | | | | | | | | 8 | | 80% | | | | | | | | | | | | | | | 9 | | 60% | | | | | | | | | | | | | | | 10 | | 40% | | | | | | | | | | | | | | | 11 | | 0% | | | | | | | | | | | | | | | 12 | | 0% | | | | | | | | | How do we adjust for risk? | | • If PNC does not meet or exceed the required Tier 1 risk-based capital ratio for “well-capitalized” institutions in a specific year, the award will not vest. • If our return on economic capital does not exceed our cost of capital for the year, the Committee may reduce or eliminate the award. | | | What are other significant provisions? | | • No voting rights • Dividends will accrue until vesting and be paid out in cash, adjusted for actual performance | | • No voting rights • No accrued dividends |
| Incentive performance units – metrics and payout |
| | | | | | | Metric
| | Purpose
| | Payout Grid—based on three years of performance | Earnings per share (EPS) growth | | EPS is a commonly reported metric that affects the stock price—showing EPS growth rates allow for industry comparisons. | | Peer Ranking | | Payout% | | | 1st | | 200% | | | 2nd | | 183% | | | 3rd | | 167% | | | 4th | | 150% | | | 5th | | 133% | | | 6th | | 117% | Return on Average Common Equity without goodwill (ROCE) | | The Committee believes that ROCE shows how efficiently the company creates shareholder returns and that peer comparisons are informative, as returns on equity vary across industries. | | 7th | | 100% | | | 8th | | 80% | | | 9th | | 60% | | | 10th | | 40% | | | 11th | | 0% | | | 12th | | 0% | | | 13th | | 0% | | Risk Adjustment—if PNC’s return on economic capital does not exceed our cost of capital, the entire payout could be reduced or eliminated. |
THE PNC FINANCIAL SERVICES GROUP, INC. - ALM incentive performance units2015 Proxy Statement 47 For the grants made to Mr. Parsley in 2011 and 2012, the ALM incentive performance unit opportunities will pay out based on the investment performance of PNC’s ALM unit compared to a benchmark performance index for the relevant three-year performance period (2011-2013 and 2012-2014).
The grant has a maximum award size at the end of the performance period of 200% of the target units. Any awarded performance units will be paid in cash.
At the end of the relevant performance period, the Committee will decide whether to exercise negative discretion. In doing so, the Committee expects to take into account such factors as absolute ALM unit financial performance, absolute proprietary trading results, cumulative performance relative to the benchmark, adherence to risk parameters, and contributions to the success of our other businesses. Unlike the other incentive performance units, these units will not be adjusted for the value of any "deemed" dividends accrued.
| ALM incentive performance units – metrics and payout |
| | | | | | | Metric | | Purpose | | Payout Grid—based on three years of performance | Asset and Liability Management Performance | | This measures performance of the asset and liability management unit against a benchmark index. | | Annual Performance
Relative to Benchmark
Index
| | Annual Payout
% (of Target)
| | | +40 basis points or higher | | 200% | | | +20 basis points | | 150% | | | 0 to -25 basis points | | 100% | | | -35 basis points | | 40% | | | -40 basis points or below | | 0% |
| | | 46 | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders |
| | | | | | | Compensation Discussion and Analysis
|
Vesting or payout from 2009 awards. In February 2009, the Committee made equity-based awards that would vest or pay out upon the achievement of certain goals during the 2009-2011 period. At a meeting held in February 2012, the Committee determined that these goals were achieved and approved the following actions:COMPENSATION DISCUSSION AND ANALYSIS
The vesting of along-term incentive award consisting ofperformance-based options tied to the successful acquisition and integration of National City Corporation
Payout of along-term incentive award to Bill Demchak consisting of anALM incentive performance unit tied to the performance of the ALM unit from 2009 through 2011
PNC participated in the Treasury’s TARP Capital Purchase Program until February 2010. While all of the performance-based options granted in February 2009 became exercisable in February 2012, the recipients may ultimately forfeit a portion of those options, due to restriction related to PNC’s participation in TARP. Similarly, TARP-related restrictions resulted in Mr. Demchak forfeiting a portion of the ALM incentive performance units that paid out in February 2012.
For a discussion of the performance achieved under these awards, and the payouts awarded to NEOs, please read the introduction to theOutstanding equity awards at 2011 fiscal year-endtables, beginning on page66.
New or updated policies. In 2011, the Committee approved or updated the following compensation-related policies:
A policy on thetiming of equity compensation grants
A policy that provides for recapture ("clawback") of prior compensation
A policy that requiresshareholder approval of certainseverance arrangements
A policy that requires a minimum level ofexecutive stock ownership, with aretention component that increases over time as awards vest.
A policy establishingguiding principles on how PNC will apply discretion with respect to awards paid under incentive compensation plans.
| | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders | | 47 |
| | | | | Compensation Discussion and Analysis
| | |
Compensation policies and practices The Committee adopts policies and procedures to assist in the fulfillment of its duties, and reviews these from time to time. We describe some of the significant policies and procedures in this section. In addition to formal policies and procedures, the Committee has several practices that it follows in the fulfillment of its duties and responsibilities. Some of these practices are described below. Compensation and risk.risk The Committee evaluates the risks inherent in the incentive compensation program. For a detailed discussion of how the Committee evaluates risk, please seeCompensation and Risk, which begins on page 54. In addition to formal policies and procedures, theIndependent compensation consultant
The Committee has several practices that it follows in the fulfillment ofretains Meridian Compensation Partners, LLC as its duties and responsibilities. Some of these practices are described below. Retaining an independent compensation consultant.In 2011, the Committee terminated its relationship with McLagan, which had served as the Committee’s independent compensation consultant. For a discussion of the termination of McLaganthis relationship and the retention of Meridian,considerations that the Committee takes into
account when determining independence, please see pages 18-19.26 and 27. Selecting a peer group.Peer group
The Committee selects a peer group each year. We use this group to measure relative performance (as part of our corporate performance factor) and to determine our incentive performance unit payouts. We also use this group for general compensation comparisons. In approving a peer group, the Committee analyzes several factors, including the mix and complexity of businesses, the markets being served, market capitalization, asset size, and changes resulting from mergers or shifts in strategic direction. We also look at the companies with whom we compete for talent. For 2011 and 2012, theThe Committee discussedannually reviews the composition of the peer group with management and its independent consultant. The following peer group for 2012 remains2014 remained unchanged from the prior year:year and included 12 companies in addition to PNC, with assets, revenues and market capitalization for each company measured as of December 31, 2014:
| | | Peer
| | Ticker Symbol
| BB&T
| | BBT | Bank of America
| | BAC | Capital One
| | COF | Comerica
| | CMA | Fifth Third
| | FITB | JPMorgan Chase
| | JPM | KeyCorp
| | KEY | M&T Bank
| | MTB | Regions Financial
| | RF | SunTrust
| | STI | U.S. Bancorp
| | USB | Wells Fargo
| | WF |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | Peer Group Company | | Ticker
Symbol | | | | Peer | | Assets (in millions) | | | | | Peer | | Revenue (in millions) | | | | | Peer | | Market
Capitalization (in millions) | | Bank of America Corporation | | BAC | | | | JPM | | $ | 2,573,126 | | | | | JPM | | $ | 94,205 | | | | | WFC | | $ | 283,439 | | BB&T Corporation | | BBT | | | | BAC | | $ | 2,104,534 | | | | | WFC | | $ | 84,347 | | | | | JPM | | $ | 232,472 | | Capital One Financial Corporation | | COF | | | | WFC | | $ | 1,687,155 | | | | | BAC | | $ | 84,247 | | | | | BAC | | $ | 188,141 | | Comerica Incorporated | | CMA | | | | USB | | $ | 402,529 | | | | | COF | | $ | 22,314 | | | | | USB | | $ | 80,281 | | Fifth Third Bancorp | | FITB | | | | PNC | | $ | 345,072 | | | | | USB | | $ | 19,939 | | | | | PNC | | $ | 47,713 | | JPMorgan Chase & Co. | | JPM | | | | COF | | $ | 308,854 | | | | | PNC | | $ | 15,375 | | | | | COF | | $ | 45,683 | | KeyCorp | | KEY | | | | STI | | $ | 190,328 | | | | | BB&T | | $ | 9,158 | | | | | BB&T | | $ | 28,028 | | M&T Bank Corporation | | MTB | | | | BB&T | | $ | 186,814 | | | | | STI | | $ | 8,163 | | | | | STI | | $ | 21,978 | | Regions Financial Corporation | | RF | | | | FITB | | $ | 138,706 | | | | | FITB | | $ | 6,052 | | | | | FITB | | $ | 16,790 | | SunTrust Banks, Inc. | | STI | | | | RF | | $ | 119,679 | | | | | RF | | $ | 5,100 | | | | | MTB | | $ | 16,626 | | U.S. Bancorp | | USB | | | | MTB | | $ | 96,686 | | | | | MTB | | $ | 4,456 | | | | | RF | | $ | 14,298 | | Wells Fargo & Company | | WFC | | | | KEY | | $ | 93,821 | | | | | KEY | | $ | 4,090 | | | | | KEY | | $ | 11,946 | | | | | | | | CMA | | $ | 69,190 | | | | | CMA | | $ | 2,523 | | | | | CMA | | $ | 8,385 | |
TheFor 2014, the Committee believesbelieved that this peer group providesprovided a balanced mix of institutions in light of our size, mix and scope of businesses, products and services, and industry consolidation. Based on asset size,sources of executive talent. PNC is larger than a majority of the peer grouppeers, positioned between the median but smaller thanand the 75th percentile.percentile of the peer group, based on total assets, revenue, and market capitalization. For 2015, the Committee decided, after a review of the peer group companies, to remove Comerica Incorporated from the peer group. The Committee approved the removal of Comerica based on its relatively smaller size, business mix and geographic footprint as compared to PNC.
Executive stock ownership and retention Our executive officers historically have held a significant portion of their personal wealth in the form of our common stock (or other equity that reflects the performance of our common stock). The Committee believes it is important to require our executive officers, to meet minimum stock ownership guidelines, denominated in shares. Each executive officer and other key employees is subject to additional ownership requirements, even after the original ownership target is met. The ownership requirements increase the number of 48 THE PNC FINANCIAL SERVICES GROUP, INC. - 2015 Proxy Statement
COMPENSATION DISCUSSION AND ANALYSIS PNC shares that an individual needs to own over time. As new awards vest, designated employees need to retain more shares of stock, which they must then hold until they retire or leave PNC. This ownership policy reflects compensation awards over an executive’s career, and also ties an executive’s personal wealth closely to the performance of PNC and the interests of our long-term shareholders. Equity interests that count toward satisfaction of the ownership guidelines include shares owned outright by the officer, or his or her spouse and dependent children, restricted shares (subject to vesting requirements), certain equity awards and shares or stock units held in a benefit plan. We count 50% of any unvested equity-based award toward satisfaction of the ownership guidelines. The guidelines are as follows: | | | | | | | | | | | | | | Officer/Category | | Share ownership
(base requirement) | | | Base requirement
(value as of
12/31/2014)(1) | | | Ongoing retention
requirement | | President and Chief Executive Officer | | | 125,000 | | | | $11,403,750 | | | | 33% | | Management Executive Committee and Other Corporate Executive Group (CEG) Members | | | 15,000 - 25,000 | | | $ | 1,368,450 - $2,280,750 | | | | 25% | | | Executive Officers (non-CEG Members) | | | 5,000 | | | | $456,150 | | | | 10% | |
| (1) | Value based on PNC closing price of $91.23 as of December 31, 2014. |
Newly hired or promoted employees who become subject to these guidelines will have up to six years to satisfy the guidelines. The Committee monitors compliance with these stock ownership guidelines and has determined that our current NEOs satisfy the guidelines. All other employees subject to the guidelines either satisfy the guidelines or are within the compliance period. Clawback of prior compensation.and forfeiture In January 2011, the Committee approved We have a "clawback"“clawback” policy that applies to all of our NEOs and other executive officers, as well as other senior executives.employees and those employees receiving equity-based compensation. This policy which supplements our existing clawback policies, applies to grants madeall incentive compensation provided on or after January 1, 2011. Under2013, although some elements of the policy anywere in effect previously. A summary of PNC’s clawback and incentive compensation provided toadjustment policy is included in the affected executives will be subjecttable below. | | | | | | | | Provision | | Explanation | | Eligible Compensation
Elements | | Applicable Employee
Population | Clawback –Inaccurate Metrics | | Applies to incentive compensation awarded as the result of materially inaccurate performance metrics (see below for additional details) | | All incentive compensation – vested or unvested | | NEOs and other senior leaders | Negative Adjustments –Risk Metrics Performance | | May apply when there is less than desired performance against corporate or business unit risk metrics, as applicable | | All unvested long-term incentive compensation | | Clawback –Detrimental Conduct | | Applies in the following instances: • when an individual engages in competitive activity without prior consent – either as an employee of PNC or for one year after employment • when an individual commits fraud, misappropriation or embezzlement • when an individual is convicted of a felony | | All unvestedlong-term incentive compensation | | All equity recipients | Negative Adjustments –Risk-Related Actions | | May apply when an individual’s actions, or the failure to act, either as an individual or a supervisor, demonstrates a failure to provide appropriate consideration of risk (see below for additional details) | | |
THE PNC FINANCIAL SERVICES GROUP, INC. - 2015 Proxy Statement 49
COMPENSATION DISCUSSION AND ANALYSIS For purposes of the clawback if the amount of compensation was based on afor materially inaccurate performance metric that was materially inaccurate. For these purposes,metrics, performance metrics include any metric, including corporate financial results, used directly or indirectly to determine whether or not incentive compensation is to be provided to an executive (or group of executives) or to determine the amount of any such compensation.
The portion of the incentive compensation that represents the excess over what would have been provided if there had been no material inaccuracy | | | 48 | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders |
| | | | | | | Compensation Discussion and Analysis
|
in the performance metric will be subject to clawback. The Committee retains discretion, to the extent legally permissible, to determine that it would not be in PNC’s best interests to seek to enforce the clawback. For purposes of the negative adjustment resulting from risk related actions, the Committee may reduce or cancel unvested long-term incentive compensation granted to an employee who takes risk-related actions (or fails to take action) that result in or are reasonably expected to result in a material adverse impact to PNC or a business unit, such as: Not following applicable risk management policies or procedures, Disregarding the significant risks associated with a course of action for which the employee is responsible, Violating, or permitting or enabling PNC to violate, statutory or regulatory requirements, or Not escalating risk concerns to appropriate individuals, committees or other governing bodies. This applies both to individual employees who took risk-related actions (or failed to take action) and their supervisors. The types of adverse impacts could include matters such as impacts to PNC’s or a business segment’s or corporate function’s financial performance, capital or liquidity positions, reputation or business prospects. The negative adjustment resulting from risk related actions allows PNC to recoup unvested equity awards from recipients whose inappropriate risk-taking activities have resulted in or are expected to result in a material adverse impact to PNC in the future. By doing so, PNC is able to add further risk-balancing to our incentive arrangements by accounting for both forward- and backward-looking risk adjustments. In February 2014, the Committee adopted amendments to the policy to provide that if PNC applies the policy to recoup or clawback incentive compensation or negatively adjust incentive compensation as a result of risk-related actions and the underlying factual circumstances are otherwise publicly reported by PNC (1) in a filing with the SEC or (2) in disclosure that would otherwise meet the requirements for public disclosure by PNC under the SEC’s Regulation FD or (3) are disclosed by a third party in a publicly available court or administrative filing, then PNC will disclose in its annual shareholder meeting proxy statement, a current report on Form 8-K or other public filing made by it with the SEC or a posting in a clearly identifiable location in the Investor Relations section of its corporate website: a general description of the circumstances giving rise to the incentive compensation recovery or adjustment, including items such as number of employees, seniority of employees, and line of business impacted, and the aggregate amount of incentive compensation recovered or adjusted. PNC may limit such disclosure if it would be likely to result in, or exacerbate, any existing or threatened, employee, shareholder or other litigation, arbitration or proceeding against PNC. Shareholder approval of severance agreements.agreementsOn February 9, 2011, our Board adopted, at We have a Board-approved policy regarding the recommendationshareholder approval of the Committee, a Policy Regarding Shareholder Approval of Future Severance Arrangements.future severance arrangements. This policy applies to future severance arrangements with executive officers. Under this policy, PNC will not enter into an arrangement with an executive officer that provides for additional severance benefits in an amount exceeding 2.99 times the sum of the executive officer’s annual base salary and target bonus for the year of termination, unless the future severance arrangement is approved by the affirmative vote of a majority of votes cast by shareholders on the matter. The policy applies only to future severance arrangements. Future severance arrangements do not include existing severance agreements or agreements to which PNC becomes obligated in connection with an acquisition, unless in each case the severance agreement is modified to materially increase benefits that would be considered additional severance benefits. Our Board retains the right to amend, terminate or waive the policy and will promptly disclose any such change. We have made this policy available atwww.pnc.com/corporategovernance.corporategovernance. Since 2009, no new executive officer has received a tax gross-up in the change in control agreement.agreement has included an excise tax gross-up. For a more detailed discussion on change in control arrangements, please seeChange in control agreements on page 83.71. Limiting perquisites The Committee believes in limiting the amount of perquisites provided to our executives. During 2014, each executive officer received a $10,000 allowance for perquisites. If the executive exceeded this allowance, the executive was asked to reimburse PNC for the excess, if legally permissible. 50 THE PNC FINANCIAL SERVICES GROUP, INC. - 2015 Proxy Statement
COMPENSATION DISCUSSION AND ANALYSIS We consider a benefit to be a perquisite or personal benefit unless its purpose is clearly and exclusively business related. We value perquisites based on their incremental cost to us. Executive officers do not receive tax “gross-ups” on any perquisites. The principal perquisites that we may provide to our executive officers include financial consulting and tax preparation services and limited personal use of corporate aircraft, as approved by our CEO. One of our executive officers also receives the reimbursement of costs related to home security services. We may provide additional perquisites to an executive officer from time to time. William S. Demchak also has access to our corporate aircraft for personal flights. During 2014, Mr. Demchak was required to pay PNC for the cost of all such flights, as determined under the terms of lease (“time-sharing”) agreements between PNC and Mr. Demchak. Mr Reilly and Mr. Guyaux also havetime-sharing agreements. During 2014, Mr. Guyaux paid for most of his personal usage of the corporate aircraft under the terms of histime-sharing agreement. During 2014, the Committee chair approved personal costs for use of the corporate aircraft in excess of $10,000 for Mr. Reilly that were not reimbursed under histime-sharing agreement. The Committee has approved the time-sharing agreements in order to comply with Federal Aviation Administration (FAA) rules and regulations that would otherwise prohibit executives from reimbursing PNC for the incremental cost of personal flights. Due to certain operational restrictions and administrative efficiencies, we operate our corporate aircraft under FAA rules and regulations that limit our ability to accept reimbursement for personal aircraft usage unless an individual has a time-sharing agreement. The time-sharing agreements provide a mechanism to obtain reimbursement from the executive. The costs paid by our executive officers under the terms of the agreements include incremental costs, as well as a federal excise tax and other fees. For flights subject to these time-sharing agreements, the officer is required to pay us for the following costs: fuel, oil, lubricants, and other additives; travel expenses of crew, including food, lodging, and ground transportation; hangar and tie-down costs away from the aircraft’s base of operation; insurance obtained for the specific flight; landing fees, airport taxes, and similar assessments; custom, foreign permit, and similar fees directly related to the flight; in-flight food and beverages; and passenger ground transportation. During 2014, the Committee approved amendments to the policy governing the use of company aircraft. To supplement the policy, the Committee also adopted written procedures to document and refine the principles to be applied in determining the classification of a flight as business or personal and the calculation of aggregate incremental cost for perquisite purposes, including definitions of personal use and enhanced methods for allocating costs between business and personal in complex situations and an approach for capturing deadhead flights where appropriate in the calculation of incremental costs for personal aircraft use. The Committee also approved the use of an amended form of time-sharing agreement to bring amounts to be billed into alignment with the new procedures (subject to FAA maximum billing limitations). As permitted by the FAA rules, the new form of agreement provides for the billing of an additional charge equal to 100% of the costs of fuel, oil and lubricants listed above to facilitate the alignment of incremental cost as currently calculated and amounts billed. Beginning with the 2015 performance year, the Committee approved some changes to the policy on perquisites. The Committee continues to believe in limiting perquisites for executives, and most of our NEOs receive only two perquisites – financial preparation and tax consulting services and occasional personal use of the corporate aircraft. We ask our NEOs to reimburse PNC for the incremental cost of perquisites over a threshold amount, which has been $10,000. FAA regulations impose restrictions on the ability of NEOs to reimburse PNC for personal aircraft use. As a result, minimal aircraft use often results in perquisites that exceed the threshold. Personal flights often include trips that the Committee believes are reasonable, such as attending funerals or asking an executive to return early to headquarters from vacation. The Committee approved a new annual perquisites limit of $20,000 for each NEO, other than the CEO, consisting of a $10,000 general limit and a $10,000 limit for personal aircraft use. This would allow each NEO to continue to receive financial consulting and tax preparation services and also allow for an occasional personal flight on the corporate aircraft (usually no more than 2-4 hours of flight time a year). We continue to provide Mr. Demchak a $10,000 general perquisite limit. In addition, as the Committee has previously recommended that Mr. Demchak take all flights (personal or business) on the corporate aircraft, the Committee approved an allowance, not to exceed $100,000, for personal flights taken on the aircraft. Mr. Demchak will continue to pay for the cost of any flights that exceed this allowance under the terms of his existing time-sharing agreement. Mr. Reilly and Mr. Guyaux will pay for any personal flights in excess of their $10,000 allowance pursuant to the terms of their time-sharing agreements. THE PNC FINANCIAL SERVICES GROUP, INC. - 2015 Proxy Statement 51
COMPENSATION DISCUSSION AND ANALYSIS Guidelines on the use of discretion The Committee has adopted guidelines regarding the use of discretion in incentive compensation plans. Under these guidelines, the use of discretion will be exercised so that incentive compensation awards are reasonably aligned with risk-adjusted performance. The guidance provides, among other things, that discretionary increases in compensation should be based on behaviors, actions, or results that are deemed to be extraordinary, exceed expectations, or provide meaningful direct or indirect benefits to PNC or our businesses. At the same time, discretionary reductions in compensation should be based on behaviors, actions, or results that fail to meet expectations or negatively impact our performance, reputation, or work environment. The guidelines specifically address the need to evaluate both inappropriate risk-taking behaviors during the performance year, as well as the outcome of prior inappropriate risk-taking behaviors, when making discretionary incentive compensation decisions. In addition, managers are generally required to document how discretion was applied in considering risk-taking behaviors and outcomes in employees’ performance evaluations or incentive compensation recommendations, particularly for our most senior level employees. Restrictions on trading, hedging and pledging We have a policy that prohibits certain employees, including all executive officers, from purchasing or selling our securities beginning the 16th day of the last month of each calendar quarter until the second business day after we release our earnings for that quarter. We may also impose additional trading restrictions on our employees, including our executive officers, due to the availability of material, non-public information regarding PNC or our securities. In addition, we require certain employees, including all executive officers, to pre-clear personal investments (other than in specified types of securities) made by the individual or any immediate family members. Our Code of Business Conduct and Ethics and related policies, which apply to all of our employees, have for many years included anti-hedging provisions that prohibit all employees from day trading or short selling PNC securities and prohibit all employees from engaging in transactions in any derivative of PNC securities (other than securities issued under a PNC compensation plan), including buying and writing options. Additionally, the Restricted Employee Investment Transaction Rules, which covers executive officers, senior executives, and other employees who by the nature of their role must comply with additional restrictions and procedures that govern their personal investment transactions, was amended in June 2014 to prohibit pledging PNC securities. This policy prohibits employees and directors from pledging PNC securities owned by them for loans or obligations on the margin or otherwise. Consideration of tax deductibility. deductibility Section 162(m) of the Internal Revenue Code does not generally allow a company to deduct compensation over $1 million paid to certain executive officers. Under current SEC andthe tax rules, the NEOs are not the same individuals as the executive officers whose compensation is subject to Section 162(m) includes the CEO and the next three highest-compensated executive officers (other than the CEO and the CFO). One exception to this disallowance applies to performance-based compensation paid under shareholder-approved plans. Awards made under our shareholder-approved plans—the 1996 Executive Incentive Award Plan (annual incentive awards) and the 2006 Incentive Award Plan (other equity-based awards)—are intended to be eligible for the performance-based exception and therefore, deductible by PNC for federal income tax purposes. Although the Committee considers the desirability of limiting PNC’s non-deductible expenses when it makes compensation decisions, the Committee believes in maintaining the flexibility and competitive effectiveness of the executive compensation program. Tax deductibility, while an important consideration, is analyzed as one component of the overall program. Limiting perquisites.The Committee believes in limiting the amount of perquisites provided to our executives. Since 2009, each executive officer receives a $10,000 allowance for perquisites. If the executive exceeds this allowance, the executive must reimburse PNC for the excess.
We consider a benefit to be a perquisite or personal benefit unless its purpose is clearly and exclusively business related. We value perquisites based on their incremental cost to us. The Committee adopted a policy prohibiting executive officers from receiving tax "gross-ups" on any perquisites.
The principal perquisites that we may provide to some or all of our executive officers include: financial consulting and tax preparation services; occasional personal use of corporate aircraft, as approved by our CEO; incidental costs of medical examinations not covered by health insurance; and costs related to home security services. We may provide additional perquisites to an executive officer from time to time.
James E. Rohr, Joseph C. Guyaux, and William S. Demchak continue to have access to our
| | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders | | 49 |
| | | | | Compensation Discussion and Analysis
| | |
corporate aircraft for personal flights, but each of these individuals is required to pay PNC for the incremental cost of all such flights, as contemplated under the terms of lease ("time-sharing") agreements between PNC and the executive. During 2011, each of these three executives paid for all personal usage of the aircraft under the terms of these agreements.
The Committee previously approved the time-sharing agreements in order to comply with Federal Aviation Administration (FAA) rules and regulations that would otherwise prohibit executives from reimbursing PNC for the incremental cost of personal flights. Due to certain operational restrictions and administrative efficiencies, we operate our corporate aircraft under FAA rules and regulations that limit our ability to accept reimbursement for personal aircraft usage. These lease agreements provide a mechanism to obtain reimbursement from the executive. The costs paid by our executive officers under the terms of the agreements include certain incremental costs (such as fuel and pilot expenses), as well as a federal excise tax and other fees. For flights subject to these time sharing agreements, the officer is required to pay us the maximum amount permissible under FAA regulations.
Guidelines on the use of discretion. In 2011, the Committee adopted guidelines regarding the use of discretion in incentive compensation plans.Under these guidelines, the use of discretion will be exercised so that incentive compensation awards are reasonably aligned with risk-adjusted performance, so that higher risk-adjusted performance leads to higher incentive compensation (and lower risk-adjusted performance leads to lower incentive
compensation). The guidance provides, among other things, that discretionary increases in compensation should be based on behaviors, actions, or results that are deemed to be extraordinary, exceed expectations, or provide meaningful direct or indirect benefits to PNC or businesses. At the same time, discretionary reductions in compensation should be based on behaviors, actions, or results that fail to meet expectations or negatively impact our performance, reputation, or work environment.
Executive stock ownership and retention. Our executive officers historically have held a significant portion of their personal wealth in the form of our common stock (or phantom stock units that mirror the performance of our common stock). The Committee believes it is important to require most of our executive officers, including all of the NEOs, to meet minimum stock ownership guidelines.
Our policy denominates the ownership requirement in shares, and each executive officer and other key employees are also subject to additional ownership requirements, even after the original ownership target is met. The ownership requirements increase the number of PNC shares that an individual needs to own over time. The increased ownership amounts are calculated using a percentage of future equity grants. As new awards vest, designated employees need to retain more shares of stock, which they must then hold until they retire or leave PNC. This ownership policy reflects compensation awards over an executive’s career, and also ties an executive’s personal wealth closely to the performance of PNC and the interests of our long-term shareholders.
| | | 50 | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders |
| | | | | | | Compensation Discussion and Analysis
|
Equity interests that count toward satisfaction of the ownership guidelines include shares owned outright by the officer, or his or her spouse and dependent children, restricted shares (subject to vesting requirements), and shares or stock units held in a benefit plan. The guidelines are as follows:
| | | | | | | Officer/Category | | Share
ownership
(base
requirement) | | | Ongoing
retention
requirement
(as shares
vest) | Chairman and CEO | | | 125,000 | | | 33% | Senior Vice Chairman | | | 50,000 | | | 33% | President | | | 50,000 | | | 33% | | Management Executive Committee Member* | | | 25,000 | | | 25% | | Other Corporate Executive Group (CEG) Members | | | 25,000 | | | 25% | Controller | | | 5,000 | | | 10% |
* | Includes other executive officers, including two of our NEOs. |
Over time, the guidelines will link additional stock ownership to compensation awards, rather than stock price volatility. For the NEOs, the required stock ownership levels are as follows: James E. Rohr (125,000 shares); Richard J. Johnson (25,000 shares); William S. Demchak (50,000 shares); Joseph C. Guyaux (50,000 shares); and E. William Parsley, III (25,000 shares). Newly hired or promoted employees who become subject to these guidelines will have up to six years to satisfy the guidelines. The Committee monitors compliance with these stock ownership guidelines and has determined that our NEOs currently satisfy the guidelines. All other employees subject to the guidelines either satisfy the guidelines or are within the six-year compliance period.
Timing of equity grants. The Committee has adopted a policy for making equity compensation grants. This policy formalizes the practices that we generally use to grant stock options and other equity awards to all employees, including our
NEOs. The Committee believes that making equity grants as of specifically identified dates improves transparency and reduces risk. The Committee also seeks the flexibility to make all of its principal compensation decisions (salary, annual incentive, equity-based grants) on one specific date. We have not granted any stock options to our NEOs since 2010.
Generally, the Committee delegates to management the opportunity to grant equity-based awards to non-executive employees out of a pool of units established by the Committee for each year. The policy for these grants is otherwise the same as the policy applicable to grants to executive officers and other members of senior executive management. Most of these grants are awarded to non-executive employees as part of the annual performance and compensation review process, with the same grant date as the one used for the executive officers and other members of senior executive management. To the extent that units remain in the pool after the annual performance review period, management may grant additional units later in the year, with any stock options being granted two business days after the first quarterly earnings release following the grant decision date.
Restrictions on trading and hedging. We have a policy that prohibits certain employees, including all executive officers, from purchasing or selling our securities beginning 15 days before the end of each calendar quarter until the second business day after we release our earnings for that quarter. We may also impose additional trading restrictions on our executive officers due to the availability of material, non-public information regarding PNC or our securities. In addition, we require certain employees, including all executive officers, to pre-clear personal investments (other than in specified types of securities) made by the individual or any immediate family members.
Our Code of Business Conduct and Ethics and related policies, which apply to all of our employees, have for many years included anti-hedging provisions that prohibit all employees
| | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders | | 51 |
| | | | | Compensation Discussion and Analysis
| | |
from day trading or short selling PNC securities and prohibit all employees from engaging in transactions in any derivative of PNC securities
(other than securities issued under a PNC compensation plan), including buying and writing options.
| | | 52 | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders |
| | | | | | | Compensation Committee Report
|
52 THE PNC FINANCIAL SERVICES GROUP, INC. - 2015 Proxy Statement
Compensation Committee ReportCOMPENSATION COMMITTEE REPORT
We have reviewed and discussed the Compensation Discussion and Analysis with PNC’s management, and based on our review and discussions, we recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement. The Personnel and Compensation Committee of the Board of Directors of The PNC Financial Services Group, Inc. Dennis F. Strigl,Chairman Charles E. Bunch Paul W. Chellgren Kay Coles JamesAndrew T. Feldstein
Richard B. Kelson Thomas J. Usher | | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders | | 53 |
THE PNC FINANCIAL SERVICES GROUP, INC. - 2015 Proxy Statement 53
COMPENSATION AND RISK This section explains how we consider risk at PNC, and the relationship between risk management, performance, and compensation. We also discuss the risk reviews presented to our Board’s Personnel and Compensation Committee, and the methodology we use to assess the potential risks in our incentive compensation plans. Risk management at PNC We cannot avoid risk.encounter risk as part of the normal course of operating our business. The successful execution of our strategy requires effective management of the risks we decide to take. Our risks may be internal or external, within our control or not, but we do not attempt to eliminate all risk. Instead, we want to understand, assess and manage the risk. We want our decisions to reflect a definedour desired risk appetite and a moderate risk profile.appetite. It is our responsibility to establish an enterprise risk management framework that facilitates risk management for the benefit of our shareholders.
Enterprise risk appetite statement We manage our risk appetite to optimize long-term shareholder value while supporting our employees, customers, and communities. In doing so, we: | 1. | Achieve our business objectives and protect our brand by accepting risks that are understood, quantifiable, and analyzed through all phases of the economic cycle | |
| 2. | Earn trust and loyalty from all stakeholders including employees, customers, communities, and shareholders | |
| 3. | Reward individual and team performance by taking into account risk discipline and performance measurement | |
| 4. | Practice disciplined capital and liquidity management so that the firm can operate effectively through all economic cycles | |
We strive to embed a culture of risk management throughout PNC. With each of our employees, we reinforce the importance of managing risks in executing on our strategic objectives. We set expectations by focusing onobjectives and in support of our desired risk management and this, together with other risk management tools, helps to create risk-sensitive incentive compensation programs.appetite. We have adoptedapprove our Enterprise Risk Management Framework and implemented a risk philosophy with a goal of managing to an overall moderate level of risk to capture opportunities and optimize shareholder value. We actively support a risk management culture that promotes communication, teamwork, and our governance structure to help us manage our risks in the best interests of our business and shareholders. We dynamically set our strategies and make distinct risk taking decisions with consideration for the impact to our aggregate risk position. During 2011, our corporate risk profile returned to an overall moderate level due to continued improvement in a number of key measures, disciplined credit management, and the successful execution and implementation of strategic business initiatives.
Our risk management group sets limits on the transactions that may be taken by employees in a line of business. In managing the risks we encounter, we employ the following accepted guiding principles to establish boundaries for the risks which we are willing to accept in the course of doing business. These include being able to effectively:
identify and understand risks and returns
make balanced risk decisions
We identify certain key risk policies that are approved at the Board level. We discuss our risk management approach beginning on page 72in the Risk Management section of Item 7 of this year’s Annual Report on Form 10-K.
We intendreflect our desired enterprise risk appetite by helping to ensure that theour performance management and compensation arrangements for all employees are balanced in ways that do not create incentives we build intofor imprudent or excessive risk-taking and best reflect our executivestrategic objectives, business model, and management structure. Compensation and risk Our compensation structure support ourphilosophy supports and reflects PNC’s risk appetite and that these incentives, when viewed in total, should not encourage our employees to take unnecessary or excessive risks. The relationship between compensation and risk
We attempt to align how we manage risk with how we compensate employees. We intend that our risk management culture. Our risk policies and procedures will guide behavior.our management decisions, including how we pay employees. By setting and communicating our risk tolerancesappetite in advance, we attemptseek to manage and control the risks that our employees can take. Ourtake or influence, consistent with their roles and responsibilities.
All employees have performance goals tied to business and individual performance, but each employee, no matter their role at PNC, also has risk management goals. We evaluate employee performance against these goals, including the risk management goals, in addition to considering risk outcomes from actions taken in prior years. We incorporate this comprehensive evaluation of employee risk management into our incentive compensation programs should encouragedecisions. In addition, all employees are encouraged to collaborate across groups to identify and reward this desired behaviormitigate risks and the execution of our strategy.elevate issues as required. Our compensation program is designed to encourage management of risk within our appetite and discourage inappropriate risk-taking by granting a diverse portfolio of incentive compensation awards to our executives and other senior employees that is expected to reward desired behavior over time. Specifically, we balance our portfolio of awards between fixed and variable compensation; cash | | | 54 | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders |
and equity-based compensation; and annual and long-term compensation. We base awards on the Committee’s assessment of a variety of quantitative and qualitative performance measurements, both on 54 THE PNC FINANCIAL SERVICES GROUP, INC. - 2015 Proxy Statement
COMPENSATION AND RISK an absolute and a relative basis. Compensation decisions also rely on discretion to consider other factors, such as effective risk management, compliance with controls and ethical duties, competition for top talent, market-based pay levels, and the need to attract, develop, grow, and retain the leadership team. Risk review of compensation plans
In 2009, we performed a comprehensive risk review of our incentive compensation plans. This included all legacy PNC plans, as well as the plans that we acquiredAs discussed in our acquisition of National City Corporation. Members ofCD&A, the long-term incentive program includes grants to our human resourcesNEOs and certain other executives that include robust risk-based performance metrics. Payouts under these grants could be reduced or eliminated if we do not meet specific risk management groups, working with legal counsel and external consultants at Towers Watson, performed this risk review. We reviewed this process withcriteria over the Committee during several meetings in 2009.
Faced with a broad range of plans, we developed a methodology to analyze the potential risks. We used principles of materiality and risk measurement to analyze incentive compensation plans posing the highest potential risk to PNC. We looked at multiple metrics and plan characteristics to give us different ways to assess risk.
We looked at the plans that posed the greatest potential risks to the company, either by the nature of the plans themselves or the job responsibilities of the plan participants. We then looked at specific plan attributes to determine how the plan might encourage excessive risk-taking and whether there were any factors to mitigate risk.
We also looked at how the design of each plan, the determination of payouts, and the ability to change plan features could impact PNC. We analyzed plan governance, which covered independent controls through design features, payout approvals, the tracking of disputes,vesting period.
exceptions, or adjustments, and the monitoring of plan decisions and information.
This additional review allowed us to identify a subset of short-term incentive plans that could have a potential medium or high impact on PNC, from either a financial or plan design perspective. Our risk management group actively participated in this process and reviewed all of these plans in greater detail to identify any mitigating factors. We provided the Committee with the collective findings of our review and established a remediation plan that identified four higher-risk compensation plans. We redesigned those plans or added additional mitigating factors or processes, as appropriate.
The risk-based process that we developed in 2009 allowed us to focus on the highest-risk plans and also eliminate several incentive compensation plans that we acquired through our acquisition of National City. It established the foundation for the recent risk evaluation of our material incentive compensation plans.
Throughout 2010 and 2011, we identified material incentive compensation plans at PNC — plans that covered 85% of the population eligible to receive incentive compensation awards. We initiated and completed design assessments of these plans. To do this, we relied on work from cross-functional teams that included business unit leaders, and senior executives from our risk management, finance, and human resources functions. We looked at how plan participants could earn incentives under the plan, and evaluated plan design and plan decisions to understand the overall risks, as well as the duration of those risks.
We added several design features to the plans to help balance compensation and risk. These features typically included the addition of a risk-based metric or the introduction of a deferred payout. We also enhanced the documentation regarding how we use discretion in making decisions under these plans, and we modified our performance evaluation process for all of our employees to reflect specific risk considerations.
| | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders | | 55 |
In addition, we implemented a deferralmaintain an equity program for approximately 120130 senior executivesleaders below the executive levels to help ensure that their incentive compensation awards reflect risk-basedrisk-adjusted performance outcomes that would pay out, if at all, over a four-year period. For an expanded group of keyThese senior leaders of PNC, a deferred equity-based award will replacereceive a portion of the traditional cash incentive award beginning in the 2012 performance year.
We also completed our identification of individuals — or groups of employees — who could potentially expose us to material financial loss, either individually or a collective group. As with ourtheir incentive compensation plan assessment, we also establishedin an equity-based award that is subject to a cross-functional teamrisk-based review trigger. We maintain separate risk-based review triggers for senior leaders in business segments versus those in administrative or control functions. If a risk-based review is triggered, the applicable review committee will determine whether a downward adjustment is warranted, up to help identify these individuals or groups. We developed systems to help us track the compensation for these employees.
We also continue to refine a framework to help validate the work of our design assessment team and to backtest, on an ongoing basis, our material incentive compensation plans. Developing this framework will help ensure that incentive compensation does not drive or influence excessive risk taking on behalfcomplete cancellation of the plan participants.share units in that year’s tranche.
In 2011 and 2012, our
Risk review of compensation plans Our Chief Risk Officer discussed risk management’s role in incentive compensation with(CRO) reports at least quarterly to our Board’s Personnel and Compensation Committee to discuss risk management and Risk Committee.review the connection between effective risk management and incentive compensation. Our Chief Risk OfficerCRO also presentedpresents the Committee with a risk assessment for each of our principal business units as well as a collective assessment of staff functions including finance, human resources, technology,legal, operations and operations.technology. In addition, we have at least one director who iswas a member of both the Personnel and Compensation and Risk Committees. ThisCommittees during 2014. We also have systematically identified individuals — or groups of employees — who could potentially expose us to material financial loss, either individually or as a collective group. As with our incentive compensation plan assessment, we also established a cross-functional team that continues to identify and monitor these individuals or groups. We have developed a governance framework for our incentive compensation plans to help monitor and validate these plans. We want our plans to achieve an appropriate balance of compensation and risk-adjusted performance — this framework helps to strengthenensure that we have the linkage betweenappropriate procedures, controls and reviews in place to do so. We will continue to assess and modify our incentive compensation plans as part of this framework to appropriately reflect risk considerations and the work that these committees do.duration of the risks and to enhance the documentation of existing risk-balancing strategies. Examples of incentive plan modifications include: As discussed
Adding or increasing the visibility of risk metrics to plans based on the structure of the plan and the nature of the business and the roles of participants Adding or formalizing language around delaying award payments or recapture of payments. Delayed payments (“hold backs”) are used in our CD&A,instances where quality metrics are critical to help mitigate risk Enhancing documentation of the long-term incentive compensation granted to our NEOsplan design and certain other executives include risk-based metrics. These include an equity-based grant that will not vest unless we meet specific risk criteria over a four-year period as well as risk criteria that could reduceuse of discretion in non-formulaic plans at the pool funding, business allocation, or eliminate any payouts under our traditional incentive performance unit grants.individual award level Based on our approach to enterprise risk management, theour comprehensive risk review of our incentive compensation plans,plan governance framework, our risk assessments for significant businesses and staff functions, and the addition of risk-based metrics to long-term incentive compensation programs, we believe that the risks arising from our compensation plans, policies, and practices are not reasonably likely to have a material adverse effect on PNC. | | | 56 | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders |
THE PNC FINANCIAL SERVICES GROUP, INC. - 2015 Proxy Statement 55
COMPENSATION TABLES Summary compensation table | | | | | | | | | | | | | | | | | Name &
Principal Position | | Year | | Salary ($)(a) | | Stock
Awards ($)(b) | | Option
Awards ($)(c) | | Non-Equity
Incentive Plan
Compensation ($)(d) | | Change in
Pension Value &
Nonqualified
Deferred
Compensation
Earnings ($)(e) | | All Other
Compensation ($)(f) | | Total ($) | | | | | | | | | | | | | | | | | | James E. Rohr Chairman and Chief Executive Officer | | 2011 | | $1,169,231 | | $8,861,121 | | - | | $2,010,000 | | $4,369,782 | | $197,016 | | $16,607,150 | | | 2010 | | $1,557,692 | | $2,420,100 | | $5,325,750 | | $2,170,000 | | $4,968,783 | | $158,468 | | $16,600,793 | | | 2009 | | $2,750,000 | | $8,061,442 | | $3,811,008 | | - | | $3,225,975 | | $179,431 | | $18,027,856 | | | | | | | | | | | | | | | | | | Richard J. Johnson Executive Vice President and Chief Financial Officer | | 2011 | | $ 496,154 | | $1,997,864 | | - | | $1,062,500 | | $ 155,973 | | $ 45,493 | | $ 3,757,984 | | | 2010 | | $ 603,365 | | $ 510,910 | | $1,124,325 | | $ 750,000 | | $ 169,031 | | $ 40,382 | | $ 3,198,013 | | | 2009 | | $ 862,500 | | $2,011,323 | | $ 897,552 | | - | | $ 96,413 | | $ 50,338 | | $ 3,918,126 | | | | | | | | | | | | | | | | | | William S. Demchak Senior Vice Chairman | | 2011 | | $ 750,000 | | $5,903,515 | | - | | $2,130,000 | | $ 428,617 | | $ 80,830 | | $ 9,292,962 | | | 2010 | | $1,168,269 | | $3,306,663 | | $1,775,250 | | $2,710,000 | | $ 404,041 | | $ 58,766 | | $ 9,422,989 | | | 2009 | | $2,250,000 | | $8,414,699 | | $1,612,944 | | - | | $ 188,163 | | $ 69,029 | | $12,534,835 | | | | | | | | | | | | | | | | | | Joseph C. Guyaux
Senior Vice Chairman | | 2011 | | $ 620,000 | | $2,758,081 | | - | | $ 955,000 | | $ 738,476 | | $ 39,284 | | $ 5,110,841 | | | 2010 | | $ 867,308 | | $ 806,700 | | $1,775,250 | | $1,037,000 | | $ 853,263 | | $ 28,418 | | $ 5,367,939 | | | 2009 | | $1,385,000 | | $3,217,316 | | $1,649,376 | | - | | $ 697,111 | | $ 40,865 | | $ 6,989,668 | | | | | | | | | | | | | | | | | | E. William Parsley, III Executive Vice President, Treasurer and Chief Investment Officer | | 2011 | | $ 400,000 | | $3,984,997 | | - | | $ 950,000 | | $ 176,214 | | $ 39,967 | | $ 5,551,178 | | | 2010 | | $1,115,385 | | $ 268,900 | | - | | $3,700,000 | | $ 253,227 | | $ 6,654 | | $ 5,344,166 | | | 2009 | | - | | - | | - | | - | | - | | - | | - |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name & Principal Position | | Year | | | Salary ($)(a) | | | Stock
Awards ($)(b) | | | Non-Equity
Incentive Plan
Compensation
($)(c) | | | Change in
Pension
Value &
Nonqualified
Deferred
Compensation
Earnings ($)(d) | | | All Other
Compensation
($)(e) | | | Total ($) | | | William S. Demchak | | | 2014 | | | $ | 1,089,615 | | | $ | 5,999,978 | | | $ | 3,540,000 | | | $ | 650,626 | | | | $57,685 | | | $ | 11,337,904 | | | Chairman, President | | | 2013 | | | | 922,115 | | | | 3,863,752 | | | | 3,083,333 | | | | 53,668 | | | | 59,235 | | | | 7,982,103 | | | & CEO | | | 2012 | | | | 750,000 | | | | 4,416,686 | | | | 1,825,840 | | | | 473,720 | | | | 58,894 | | | | 7,525,140 | | | Robert Q. Reilly | | | 2014 | | | | 500,000 | | | | 1,549,936 | | | | 1,375,000 | | | | 316,836 | | | | 60,922 | | | | 3,802,694 | | | Executive V.P. & | | | 2013 | | | | 475,000 | | | | 1,189,642 | | | | 1,075,000 | | | | 35,169 | | | | 35,327 | | | | 2,810,138 | | | Chief Financial Officer | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Michael P. Lyons | | | 2014 | | | | 700,000 | | | | 4,079,882 | | | | 1,980,000 | | | | 21,677 | | | | 6,577 | | | | 6,788,136 | | | Executive V.P. & Head of Corporate | | | 2013 | | | | 700,000 | | | | 4,555,912 | | | | 2,020,000 | | | | 21,411 | | | | 2,154 | | | | 7,299,477 | | | & Institutional Banking | | | 2012 | | | | 700,000 | | | | 5,982,880 | | | | – | | | | 11,448 | | | | 336,352 | | | | 7,030,680 | | | E. William Parsley, III | | | 2014 | | | | 500,000 | | | | 4,574,917 | | | | 1,050,000 | | | | 164,669 | | | | 10,200 | | | | 6,299,786 | | | Executive V.P., Chief | | | 2013 | | | | 500,000 | | | | 4,194,598 | | | | 1,075,000 | | | | – | | | | 5,577 | | | | 5,775,175 | | | Investment Officer | | | 2012 | | | | 484,615 | | | | 4,380,190 | | | | 694,700 | | | | 148,751 | | | | 12,762 | | | | 5,721,018 | | | & Treasurer | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Joseph C. Guyaux* | | | 2014 | | | | 620,000 | | | | 1,874,984 | | | | 1,380,000 | | | | 725,352 | | | | 22,235 | | | | 4,622,571 | | | Senior Vice Chairman | | | 2013 | | | | 620,000 | | | | 1,605,308 | | | | 1,255,000 | | | | 435,506 | | | | 34,253 | | | | 3,950,067 | | | & Chief Risk Officer | | | 2012 | | | | 620,000 | | | | 3,610,221 | | | | 985,400 | | | | 706,775 | | | | 21,438 | | | | 5,943,834 | |
(a)* | For 2010Effective January 31, 2015, Mr. Guyaux became the Senior Vice Chairman and 2009, the “Salary” column includes amounts paid in cashCEO and amounts paid in stock units. We eliminated the salary amounts paid in stock units in February 2010.President of PNC Mortgage. |
| (a) | The ”Salary”“Salary” column also includes any salary amounts deferred by an NEO under qualified (ISP) or non-qualified (SISP)(DCIP) benefit plans. We describe these PNC plans on page 79.67. Please also see theNon-qualified deferred compensation in fiscal 20112014 table on page 8068 for the aggregate SISP deferrals during 2011.2014. |
| | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders(b) | | 57 |
(b) | The amounts in the “Stock Awards” column reflect the grant date fair value related to stockof long-term incentive awards. The grant date fair values are calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation—Stock Compensation (FASB ASC Topic 718). See Note 1514 in our Annual Report on Form 10-K for the year ended December 31, 2011 (10-K Note 15)2014 for more information. In 2011,2014, stock awards consistedwere granted on February 13, 2014 consisting of long-term incentive performance units and performance-based restricted share units, (consisting of annual grants and special achievement awards) and for Mr. Parsley, a grant of ALM incentive performance units. These awards were granted on February 9, 2011. The grant date fair value of the incentive performance units, performance-based restricted share units and the ALM incentive performance units is calculated using the target number of units underlying the award and a per share value based on the NYSE closing price of our common stock on February 9, 201113, 2014 of $64.21. The grant date fair value of the performance-based restricted share units is calculated using the target number of units underlying the award and a grant date fair value per unit of $67.59.$81.14. If PNC’s performance during the applicable measurement period results in the maximum number of units vesting, our executives would each be entitled to receive a maximum award with a grant date fair value of the maximum award as follows: |
| | | | | | | | | | Grant Date Fair Value of Maximum Award | | NEO | | Long-Term
Incentive Performance
Units | | Performance-Based
Restricted Share Units | | Performance-Based
Restricted Share
Units—Special
Achievement Awards | James E. Rohr | | $5,556,990 | | $3,655,943 | | $3,947,340 | Richard J. Johnson | | $1,305,646 | | $ 858,984 | | $ 822,317 | William S. Demchak | | $3,957,262 | | $2,603,482 | | $2,302,622 | Joseph C. Guyaux | | $1,892,526 | | $1,245,092 | | $1,019,680 | E. William Parsley, III | | $2,023,899 | | $1,331,523 | | $ 822,317 |
| | | | | | | | | | | | Grant Date Fair Value of Maximum Award | | | NEO | | Incentive Performance Units | | | Performance-Based Restricted Share Units | | William S. Demchak | | $ | 3,749,987 | | | $ | 3,749,987 | | Robert Q. Reilly | | $ | 968,710 | | | $ | 968,710 | | Michael P. Lyons | | $ | 2,549,926 | | | $ | 2,549,926 | | E. William Parsley, III* | | $ | 984,330 | | | $ | 984,330 | | Joseph C. Guyaux | | $ | 1,171,864 | | | $ | 1,171,864 | |
| | * | The grant date fair value of Mr. Parsley’s ALM grant at the maximum value is $2,499,952.$5,999,978. |
| | | See the Grants of plan-based awards in 20112014 table on pages 60-6558 and 59 for more information regarding the grants we made in 2011,2014, the Outstanding equity awards at 20112014 fiscal year-end table on pages 66-7462 to 63 for more information regarding options and other awards outstanding at December 31, 2011,2014, and the Option exercises and stock vested in fiscal 20112014 table on page 7564 for more information regarding stock vesting during 2011.2014. |
| (c) | There were no stock option grants to the NEOs during 2011. |
(d) | In each of 2012 and 2011 ourOur NEOs received an annual incentive award paid in cash early in 2015 which is reflected in this column for 2011 and 2010the 2014 performance respectively, that we paid entirely in cash. We did not pay a cash incentive award in 2010 to any of our NEOs for 2009 performance due to restrictions under the U.S. Treasury’sInterim Final Rule on TARP Standards for Compensation and Corporate Governanceyear.. |
(e)(d) | The dollar amounts in this column include the increase in the actuarial value of our Cash BalanceQualified Pension Plan, ERISA Excess Pension Plan and Supplemental Executive Retirement Plan, as measured from the plan measurement date used for our 2010 audited consolidated financial statements to the plan measurement date used for our 2011 audited consolidated financial statements.Plan. We describe these plans on pages 76-77.page 65. The amounts include both (1) the increasechange in value due to an additional year of service, compensation increaseschanges and plan amendments (if any) and (2) the change in value attributable to interest.other assumptions, most significantly discount rate. |
| We do not pay above-market or preferential earnings on any compensation that is deferred on a basis that is not tax-qualified, including such earnings on non-qualified defined contribution plans. For an additional explanation on how we calculate the earnings on our deferred compensation plans, see the 20112014 rates of return chart in theNon-qualified deferred compensation in fiscal 20112014 table on page 81.70. |
56 THE PNC FINANCIAL SERVICES GROUP, INC. - 2015 Proxy Statement
SUMMARY COMPENSATION TABLE (f)(e) | The amounts in this column include, for all NEOs:NEOs, net of any reimbursements to PNC: (1) the dollar value of matching contributions made by us to the ISP; (2) the net insurance premiums paid by us in connection with our Key Executive Equity Program; (3) the executive long-term disability premiums paid by us; (4) perquisites and (4) the dividends that had accrued on the 2010other personal benefits; and 2009 base salary paid in stock units. (5) matching gifts made by us to charitable organizations under our employee charitable matching gift program. |
| None of our NEOs received perquisites in 2014 with a value that exceeded $10,000, after giving effect to any reimbursements made by executives in accordance with our policy.policy, except for Mr. Reilly whose only perquisite included incremental personal costs in connection with his use of the PNC aircraft. Our Personnel and Compensation Committee prohibits reimbursements for taxes in connection with perquisites and personal benefits. For an additional discussion of perquisites, see our CD&A on pages 49-50. All amounts listed below are net of any reimbursements to PNC. |
| | All other compensation for 2014 consisted of the following: |
| | | | | | | | | | | | | | | | | | | | | | NEO | | Perquisites and Other
Personal Benefits* | | | Registrant ISP
Contributions | | | Insurance
Premiums** | | | Other*** | | | Total to Summary
Compensation Table | | William S. Demchak | | | – | | | $ | 10,400 | | | $ | 47,285 | | | | – | | | $ | 57,685 | | Robert Q. Reilly | | $ | 26,995 | | | $ | 10,400 | | | $ | 23,377 | | | $ | 150 | | | $ | 60,922 | | Michael P. Lyons | | | – | | | $ | 6,577 | | | | – | | | | – | | | $ | 6,577 | | E. William Parsley, III | | | – | | | $ | 10,200 | | | | – | | | | – | | | $ | 10,200 | | Joseph C. Guyaux | | | – | | | $ | 10,400 | | | $ | 9,335 | | | $ | 2,500 | | | $ | 22,235 | |
58 | | PNC – Proxy Statement for 2012 Annual Meeting* | The dollar amount of Shareholders |
| | | | | | | | | | | | NEO | | Perquisites and Other Personal
Benefits ($)(1) | | Registrant
Contributions to
Defined Contribution
Plans ($)(2) | | Insurance
Premiums ($)(3) | | Dividends on
Salary Paid in
Stock Units ($)(4) | | Total to
Summary
Compensation
Table ($) | James E. Rohr | | - | | $10,023 | | $164,053 | | $22,940 | | $197,016 | Richard J. Johnson | | - | | $ 9,800 | | $ 30,638 | | $ 5,055 | | $ 45,493 | William S. Demchak | | - | | $10,023 | | $ 49,189 | | $21,618 | | $ 80,830 | Joseph C. Guyaux | | - | | $10,062 | | $ 19,212 | | $10,010 | | $ 39,284 | E. William Parsley, III | | - | | $ 9,800 | | - | | $30,167 | | $ 39,967 |
| (1) | PNC provides limited perquisites and requires its NEOs to reimburse the company for any perquisites with anperquisite represents the incremental cost of providing the benefit. For 2014, the incremental cost to PNC of the personal aircraft use is calculated by multiplying the total number of personal flight hours times the average direct variable operating costs (including costs related to fuel, maintenance expenses related to operation of the plane during the year and landing and parking fees) per flight hour for the particular aircraft for the year plus crew expenses attributable to the personal use. Since the aircraft are used primarily for business travel, we do not include in the calculation the fixed costs that exceeds $10,000.do not change based on usage, such as crew salaries and other maintenance and inspection and capital improvement costs intended to cover a multiple-year period. |
| | (2)** | The dollar amounts under the “Registrant Contributions to Defined Contribution Plans” column include our matching contributions to the ISP for each NEO. |
| (3) | We pay premiums for mostcertain of the NEOs in connection with our Key Executive Equity Program, which is a split-dollar insurance arrangement. However, new participants have not been permitted in this program since 2007. In addition, we pay long-term disability premiums on behalf of mostcertain of our NEOs. The dollar amounts under the “Insurance Premiums” column include the 20112014 net premiums we paid in connection with our Key Executive Equity Program on behalf of James E. Rohr ($151,857); Richard J. Johnson ($20,400); William S.Mr. Demchak ($40,534); and Joseph C. GuyauxMr. Reilly ($7,671)16,732). These net premiums represent the full dollar amounts we paid for both the term and non-term portions of this plan, after any officer contributions. The amounts under this column also include the long-term disability premiums we paid on behalf of James E. Rohr ($12,196); Richard J. Johnson ($10,238); William S.Mr. Demchak ($8,655);6,751), Mr. Reilly ($6,645) and Joseph C.Mr. Guyaux ($11,541)9,335). |
| | (4)*** | This column reflects the cash paymentdollar amount of dividends that had accrued on the 2010 and 2009 base salary paid in stock units that settled in March 2011. Amounts are included as other compensation in the year of payment because the dividends were not factored into the value disclosed in theSummary compensation tablematching gifts made by us to charitable organizations under our employee charitable matching gift program. in the year of the award. |
| | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders | | 59 |
THE PNC FINANCIAL SERVICES GROUP, INC. - 2015 Proxy Statement 57
GRANTS OF PLAN-BASED AWARDS IN 2014 Grants of plan-based awards in 20112014 | | | | | | | | | | | | | | | | | | | | | | | James E. Rohr | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards (a) | | Estimated Future Payouts Under Equity Incentive Plan Awards (b) | | All Other Stock Awards:
Number of
Shares of Stock or Units (#) | | All Other
Option Awards:
Number of
Securities
Underlying
Options
(#) | | Exercise or Base Price of Option Awards ($ / Sh) | | Grant Date
Fair Value of Stock and Option Awards ($)(c) | | | | | | Threshold | | Target | | Maximum | | Threshold | | Target | | Maximum | | | | | | Award Type | | Grant Date | | ($) | | ($) | | ($) | | (#) | | (#) | | (#) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Annual Incentive Award | | February 8, 2011 | | - | | $1,880,000 | | $7,682,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Long-Term Incentive Performance Units | | February 9, 2011 | | | | | | | | - | | 43,272 | | 86,544 | | | | | | | | $2,778,495 | | | | | | | | | | | | | | | | | | | | | | | | Performance-Based
Restricted Share Units - Annual Grant | | February 9, 2011 | | | | | | | | - | | 43,272 | | 54,090 | | | | | | | | $2,924,754 | | | | | | | | | | | | | | | | | | | | | | | | Performance-Based
Restricted Share Units - Special
Achievement Award | | February 9, 2011 | | | | | | | | - | | 46,721 | | 58,401 | | | | | | | | $3,157,872 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Estimated Future Payouts
UnderNon-Equity
Incentive
Plan Awards(a) | | | Estimated Future Payouts
Under Equity
Incentive
Plan Awards(b) | | | All Other
Stock
Awards:
Number
of Shares
of Stock
or Units (#) | | Grant Date
Fair Value
of Stock
and Option
Awards ($)(c) | | | Award Type | | Grant Date | | | Thres-
hold
($) | | | Target ($) | | | Maximum ($) | | | Thres-
hold ($) | | | Target (#) | | | Maximum (#) | | | | | William S. Demchak | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Annual Incentive
Award | | | February 12, 2014 | | | | – | | | $ | 2,700,000 | | | $ | 10,412,000 | | | | | | | | | | | | | | | | | | | | | Incentive Performance Units | | | February 13, 2014 | | | | | | | | | | | | | | | | – | | | | 36,973 | | | | 46,216 | | | | | $ | 2,999,989 | | Performance-Based Restricted Share Units | | | February 13, 2014 | | | | | | | | | | | | | | | | – | | | | 36,973 | | | | 46,216 | | | | | $ | 2,999,989 | | | Robert Q. Reilly | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Annual Incentive
Award | | | February 12, 2014 | | | | – | | | $ | 1,250,000 | | | | – | | | | | | | | | | | | | | | | | | | | | Incentive Performance Units | | | February 13, 2014 | | | | | | | | | | | | | | | | – | | | | 9,551 | | | | 11,938 | | | | | $ | 774,968 | | Performance-Based Restricted Share Units | | | February 13, 2014 | | | | | | | | | | | | | | | | – | | | | 9,551 | | | | 11,938 | | | | | $ | 774,968 | | | Michael P. Lyons | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Annual Incentive
Award | |
| February 12, 2014
|
| | | – | | | $ | 1,500,000 | | | $ | 10,412,000 | | | | | | | | | | | | | | | | | | | | | Incentive Performance Units | | | February 13, 2014 | | | | | | | | | | | | | | | | – | | | | 25,141 | | | | 31,426 | | | | | $ | 2,039,941 | | Performance-Based Restricted Share Units | | | February 13, 2014 | | | | | | | | | | | | | | | | – | | | | 25,141 | | | | 31,426 | | | | | $ | 2,039,941 | | | E. William Parsley, III | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Annual Incentive
Award | | | February 12, 2014 | | | | – | | | $ | 750,000 | | | $ | 10,412,000 | | | | | | | | | | | | | | | | | | | | | Incentive Performance Units | | | February 13, 2014 | | | | | | | | | | | | | | | | – | | | | 9,705 | | | | 12,131 | | | | | $ | 787,464 | | Performance-Based Restricted Share Units | | | February 13, 2014 | | | | | | | | | | | | | | | | – | | | | 9,705 | | | | 12,131 | | | | | $ | 787,464 | | | ALM Incentive Performance Units | | | February 13, 2014 | | | | | | | | | | | | | | | | – | | | | 36,973 | | | | 73,946 | | | | | $ | 2,999,989 | | | Joseph C. Guyaux | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Annual Incentive
Award | | | February 12, 2014 | | | | – | | | $ | 930,000 | | | $ | 10,412,000 | | | | | | | | | | | | | | | | | | | | | Incentive Performance Units | | | February 13, 2014 | | | | | | | | | | | | | | | | – | | | | 11,554 | | | | 14,442 | | | | | $ | 937,492 | | Performance-Based Restricted Share Units | | | February 13, 2014 | | | | | | | | | | | | | | | | – | | | | 11,554 | | | | 14,442 | | | | | $ | 937,492 | |
| | | 60 | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders |
Grants of plan-based awards in 2011
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Estimated Future Payouts Under
Non-Equity Incentive Plan Awards (a) | | Estimated Future Payouts Under Equity Incentive Plan Awards (b) | | All Other
Stock
Awards:
Number of Shares of
Stock or
Units (#) | | All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#) | | Exercise
or Base
Price of
Option
Awards ($ / Sh) | | Grant Date
Fair Value of Stock and Option Awards ($)(c) | | Award Type | | Grant Date | | Threshold ($) | | Target ($) | | Maximum ($) | | Threshold
(#) | | Target (#) | | Maximum
(#) | | | | | | | | | | | | | | | | | | | | | | | | | | | | Annual Incentive Award | | February 8, 2011; August 17, 2011 | | - | | $1,000,000 | | $1,500,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Long-Term Incentive Performance Units | | February 9, 2011 | | | | | | | | - | | 10,167 | | 20,334 | | | | | | | | $652,823 | | | | | | | | | | | | | | | | | | | | | | | | Performance-Based Restricted Share Units - Annual Grant | | February 9, 2011 | | | | | | | | - | | 10,167 | | 12,708 | | | | | | | | $687,188 | | | | | | | | | | | | | | | | | | | | | | | | Performance-Based Restricted Share Units - Special Achievement Award | | February 9, 2011 | | | | | | | | - | | 9,733 | | 12,166 | | | | | | | | $657,853 |
| | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders(a) | | 61 |
Grants of plan-based awards in 2011
| | | | | | | | | | | | | | | | | | | | | | | William S. Demchak | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards (a) | | Estimated Future Payouts Under Equity Incentive Plan Awards (b) | | All Other Stock Awards:
Number of
Shares of
Stock or Units | | All Other Option Awards:
Number of
Securities
Underlying
Options | | Exercise or Base Price of Option Awards | | Grant Date Fair Value of Stock and Option Awards | | | | | | Threshold | | Target | | Maximum | | Threshold | | Target | | Maximum | | | | | | Award Type | | Grant Date | | ($) | | ($) | | ($) | | (#) | | (#) | | (#) | | (#) | | (#) | | ($ / Sh) | | ($)(c) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Annual Incentive Award | | February 8, 2011 | | - | | $1,950,000 | | $7,682,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Long-Term Incentive Performance Units | | February 9, 2011 | | | | | | | | - | | 30,815 | | 61,630 | | | | | | | | $1,978,631 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Performance-Based Restricted Share Units –Annual Grant | | February 9, 2011 | | | | | | | | - | | 30,815 | | 38,518 | | | | | | | | $2,082,786 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Performance-Based Restricted Share Units – Special Achievement Award | | February 9, 2011 | | | | | | | | - | | 27,254 | | 34,067 | | | | | | | | $1,842,098 |
| | | 62 | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders |
Grants of plan-based awards in 2011
| | | | | | | | | | | | | | | | | | | | | | | | | Joseph C. Guyaux | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards (a) | | Estimated Future Payouts Under Equity Incentive Plan Awards (b) | | All Other Stock Awards:
Number of
Shares of
Stock or Units | | All Other Option Awards:
Number of
Securities
Underlying
Options | | Exercise or Base Price of Option Awards | | Grant Date Fair Value of Stock and Option Awards | | | | | | | | Threshold | | Target | | Maximum | | Threshold | | Target | | Maximum | | | | | | Award Type | | | | Grant Date | | ($) | | ($) | | ($) | | (#) | | (#) | | (#) | | (#) | | (#) | | ($ / Sh) | | ($)(c) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Annual Incentive Award | | | | February 8, 2011 | | - | | $930,000 | | $7,682,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Long-Term Incentive Performance Units | | | | February 9, 2011 | | | | | | | | - | | 14,737 | | 29,474 | | | | | | | | $946,263 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Performance-Based Restricted Share Units – Annual Grant | | | | February 9, 2011 | | | | | | | | - | | 14,737 | | 18,421 | | | | | | | | $996,074 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Performance-Based Restricted Share Units – Special Achievement Award | | | | February 9, 2011 | | | | | | | | - | | 12,069 | | 15,086 | | | | | | | | $815,744 |
| | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders | | 63 |
Grants of plan-based awards in 2011
| | | | | | | | | | | | | | | | | | | | | | | E. William Parsley, III | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards (a) | | Estimated Future Payouts Under Equity Incentive Plan Awards (b) | | All Other Stock Awards:
Number of
Shares of
Stock or Units | | All Other Option Awards:
Number of
Securities
Underlying
Options | | Exercise or Base Price of Option Awards | | Grant Date Fair Value of Stock and Option Awards | | | | | | Threshold | | Target | | Maximum | | Threshold | | Target | | Maximum | | | | | | Award Type | | Grant Date | | ($) | | ($) | | ($) | | (#) | | (#) | | (#) | | (#) | | (#) | | ($ / Sh) | | ($)(c) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Annual Incentive Award | | February 8, 2011 | | - | | $850,000 | | $7,682,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Long Term Incentive Performance Units | | February 9, 2011 | | | | | | | | - | | 15,760 | | 31,520 | | | | | | | | $1,011,950 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Performance-Based Restricted Share Units - Annual Grant | | February 9, 2011 | | | | | | | | - | | 15,760 | | 19,700 | | | | | | | | $1,065,218 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Performance-Based Restricted Share Units - Special Achievement Award | | February 9, 2011 | | | | | | | | - | | 9,733 | | 12,166 | | | | | | | | $657,853 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ALM Performance Units | | February 9, 2011 | | | | | | | | - | | 19,467 | | 38,934 | | | | | | | | $1,249,976 |
| | | 64 | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders |
(a) | The amounts listed in the “Target” column relate to the target annual incentive award for the 20112014 performance year. Annual incentive awards for 2014 were paid in 2012, as described2015. All incentive awards–cash and equity-based–are payable based on performance, and the targets help the Personnel and Compensation Committee to determine the appropriate amount of incentive compensation for target performance. The amount listed in footnote (d) to theSummary compensation table on page 57. The “Target” column listsshows the target annual incentive award included in the total compensation target approved by our Board’s Personnel and Compensationthe Committee for each NEO as of the date listed. Mr. Johnson’sThe amount listed in the “Maximum” column shows the amount that the Committee approves each year in order to preserve tax deductibility under Section 162(m) of the Internal Revenue Code of 1986, as amended. The “Maximum” amount is not intended to be tied to performance – rather, it is a formulaic determination made under IRS regulations that provides PNC with the flexibility to receive tax deductions for performance-based compensation. The Committee looks to the performance for the year and the “target” annual incentive amount when making incentive compensation decisions, and exercises negative discretion to provide an award target was adjusted bythat is significantly smaller than the Committee on August 17, 2011 as described in the CD&A on page 39.“Maximum” amount. For NEOs who are covered employees under §162(m) of the Internal Revenue Code of 1986, as amended, the calculation of the “Maximum” amount was approved by the Personnel and Compensation Committee on February 23, 2011,27, 2014, based on 0.2% of our “Incentive Income,” an adjusted net income metric that is defined in the 1996 Executive Incentive Award Plan. At the time the “Maximum” amount is set, the Committee uses a budgeted amount for 2011,2014, which is included as $7,682,000$10,412,000 in the “Maximum” column. ForUnder our current approach, there is no maximum bonus amount for Mr. Johnson, the “Maximum” amount consists of the target annual incentive amount multiplied by 150% - the maximum amount contemplated by the payout grid set forth on page 40. In the aggregate, the annual incentive awards paid to the NEOs are limited by the incentive compensation pool that the Committee approves. Subject to that overall limitation, the Committee could exercise its discretion to provide an annual incentive award that exceeds 150% of target, but the table shows the maximum amount that could be provided by relying solely on the formula.Reilly. |
(b) | (b) | The amounts listed in these columns include the incentive performance unit grants and the performance-based restricted share unit grants, (both annual grants and special achievement awards), as further described on pages 43-46.46 and 47. As there is no guaranteed minimum payout for these awards and, in the case of the incentive performance unit grants, the Personnel and Compensation Committee has discretion to decrease any award otherwise payable, we have not included a “Threshold” amount in this column. The “Target” amount represents 100% of the grant and the “Maximum” amount represents 200%125% of the grant for the incentive performance units and 125% of that grant for the performance-based restricted share units (both annual grants and special achievement awards)(rounded down to whole shares). For the incentive performance unit grants, the performance period began on January 1, 20112014 and will end on December 31, 2013.2016. For the performance-based restricted share unit grants, (both annual grants and special achievement awards), the performance period began on January 1, 20112014 and will end on December 31, 20142017, with vesting opportunities for a portion of the grant on each of the four applicable grant date anniversaries. |
58 THE PNC FINANCIAL SERVICES GROUP, INC. - 2015 Proxy Statement
GRANTS OF PLAN-BASED AWARDS IN 2014 | | | In addition, for Mr. Parsley the amounts also include an ALM incentive performance unit grant as described in footnote (b) to theSummary compensation table on page 57.56. For a discussion of the terms, conditions and performance goals related to this incentive performance unit grant, see page 46.47. As there is no guaranteed minimum payout for Mr. Parsley’s award, and the Personnel and Compensation Committee has the discretion to decrease any award otherwise payable, we have not included a “Threshold” amount in this column for this award. The “Target” amount represents 100% of the grant and the “Maximum” amount represents 200% of thatthe grant. For this grant, the performance period began on January 1, 20112014 and will end on December 31, 2013.2016. |
| | For | In determining the payout for regular grants of incentive performance units made in 2011, the earnings per share2014, adjustments will be adjustedmade on an after-tax basis for the impact of: |
any extraordinary items (as such term is used under GAAP)
items resulting from a change in tax law
acquisition costs and merger integration costs
any costs or expense arising from specified Visa litigation and any other gains recognized on redemption or sale of Visa shares as applicable
acceleration of the accretion of any remaining issuance discount in connection with the redemption of TARP
in PNC’s case, the net impact on PNC of significant gains or losses related to BlackRock transactions
| | For grants• | | extraordinary items or discontinued operations (as such terms are used under GAAP) |
| • | | items resulting from a change in tax law |
| • | | acquisition costs and merger integration costs |
| • | | any costs or expense arising from specified Visa litigation and any other gains recognized on redemption or sale of incentive performance units made Visa shares, as applicable |
| • | | in 2012,PNC’s case, the earnings per share will be adjusted for allnet impact on PNC of the above factors, as well as for the significant gains or losses related to certain BlackRock transactions |
| • | | acceleration of the accretion of any remaining issuance discount in connection with the redemption of any preferred stock and |
| • | | any other charges or benefits related to the redemption of trust preferred or other preferred securities. This additional adjustment will also be made prospectively for the 2011 and 2010 grants.securities |
(c) | (c) | The grant date fair values for incentive performance units and performance-based restricted share units are all calculated in accordance with FASB ASC Topic 718. See Note 14 in our Annual Report on Form 10-K Note 15for the year ended December 31, 2014 for more information. The grant date fair values for incentive performance units, performance-based restricted share units and ALM incentive performance units represent the closing price for our common stock on February 9, 201113, 2014 of $64.21. The grant date fair values for the performance-based restricted share units are based on the ASC 718 grant date fair value per unit of $67.59.$81.14. The grant date fair values for incentive performance units and performance-based restricted share units represent the target amount of units in the grant. |
| | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders | | 65 |
THE PNC FINANCIAL SERVICES GROUP, INC. - 2015 Proxy Statement 59
OUTSTANDING EQUITY AWARDS AT 2014 FISCAL YEAR-END Outstanding equity awards at 20112014 fiscal year-end The following tables show, for each NEO, the outstanding equity awards as of December 31, 2011.2014. These awards include the following: Grants of stockStock options exercisable over time
Grants ofRestricted stock options exercisable over timeor restricted share units that each require the achievement of separatehave not vested
Incentive performance criteria,units, specifically: | | - | | PNC’s stock price reaching a 20% premium over the exercise price
|
| - | | PNC meeting qualitative and quantitative criteria in connection with the acquisition and integration of National City Corporation
|
Grants of restricted stock
Grants of incentive performance unit opportunities, specifically:
| -– | | Regular units granted in 20102012, 2013 and 2014 that willmay pay out if PNC achieves specific performance criteria as measuredand risk-based criteria. 2012 awards measure our earnings per share growth (EPS growth) and return on common equity excluding goodwill (ROCE) against a peer groupour peers. 2013 and 2014 awards measure our EPS growth against our peers and our ROCE compared to our cost of common equity. The awards are also subject to annual risk-based requirements and adjustments, which include meeting or exceeding the required Tier 1 risk-based capital ratio for “well-capitalized” institutions (2013 and 2014 awards) and return on economic capital |
| | (ROEC) meeting or exceeding our cost of capital (2012, 2013 and 2014 awards). |
| | - | | Regular units granted in 2011 that will pay out if PNC achieves specific performance criteria as measured against a peer group
|
| - | | In recognition of Mr. Demchak’s oversight of the asset and liability management (ALM) function at PNC during 2009 and 2010, Mr. Demchak was granted units in those years that will only pay out if our ALM unit outperforms a benchmark index during the 2009 to 2011 or 2010 to 2012 performance period, respectively
|
| -– | | In recognition of Mr. Parsley’s management responsibilities regarding the ALM function at PNC during 2011,2012, 2013 and 2014, units granted to Mr. Parsley was granted units in 2011 that2012, 2013 and 2014 will only pay out if our ALM unit outperforms a benchmark index during the 20112012 to 2014, 2013 to 2015 or 2014 to 2016 performance period, respectively. |
Grants of performance-basedPerformance-based restricted share units, specifically:
| | -– | | An annualAnnual long-term incentive awardawards, each granted in 2011, 2012, 2013 and 2014 and a special achievement award each granted in 2011, that will each pay out if PNC meets the minimum well-capitalized Tier 1 capital ratio established by our primary regulator; payout may be adjusted by 25% up or down based on TSR in each yearyear. The 2013 and 2014 awards also have an ROEC related risk metric that functions as a trigger to determine whether or not a risk review is required by the Committee. The Committee can decide to reduce, but not increase, payout amounts.
|
The ALM-based incentive performance unit grant made
With respect to Mr. Demchak in 2009 was outstanding asthe following three forms of December 31, 2011 and isequity-based awards included in the following tables. At a meeting on January 26, 2012, our Board’s Personnel and Compensationtable, the Committee certified the levels of performance achieved under Mr. Demchak’s ALM-based grant and determined the final award. The maximum potential payout percentage was 200%. The maximum permitted payout for these units is generated by applying the performance factor to the number of target share units (96,556) adjusted for TARP-related forfeitures (21,252). The Committee approved payout at the maximum payout permitted for the performance achieved, reduced for TARP-related forfeitures resulting in 150,608 units. In accordance with the terms of this grant, the ALM-based units awarded to Mr. Demchak paid out entirely in cash share equivalents. The National City performance options were outstanding as of December 31, 2011 and are includedmade performance-based or risk-based determinations in the following tables. At a meeting held on January 26, 2012, our Board’s Personnel and Compensation Committee certified that the performance criteria had been achievedfirst quarter of 2015, as described in connection with the National City acquisition and approved vesting of 100% of the options. In accordance with their terms, the options vested on February 12, 2012. These options may be subject to TARP-related forfeitures upon exercise.more detail below:
| | | 66 | | PNC – Proxy Statement for 2012 Annual Meeting of ShareholdersPerformance-based restricted share units |
The performance-based restricted share units that vest based on 2014 performance are included in the following table as of December 31, 2011.2014. At a meeting held on January 26, 2012,28, 2015, our Board’s Personnel and Compensation Committee certified the levels of performance achieved for the 20112014 tranche of each of the 2011 regular and special achievement grants, the 2012 grants, the 2013 grants and the 2014 grants and determined the payout level. The Committee certified that the required Tier 1 risk-based capital ratio of 6% established by our primary regulator had been achieved. The Committee then determined the size of the payout, which could range from 75% to 125% of the target number of units based on 2014 TSR. The Committee approved a payout at 96.94%.120.32% for the applicable tranche of each of the 2011, 2012, 2013 and 2014 grants. As noted above, 2013 and 2014 awards also have an ROEC related risk metric that could trigger an additional review or adjustment. No additional review or adjustment was required as ROEC exceeded the Committee approved hurdle. | | | | | | | | | 2009 grant of ALM incentive performance unit to Mr. Demchak (based on 2009-2011 performance period) | | Metric | | Payout Percentage | | | | | 2009 | | 2010 | | 2011 | | Overall | Performance of PNC’s Asset & Liability Management (ALM) unit against a benchmark index | | 200% | | 200% | | 200% | | 200% |
| | | 2009 grants of performance-based options
(based on National City acquisition and integration)
| | Metric | | Status*Status | $1.2 billion in annual pre-tax cost savings achieved on a run-rate basis by 2011 | | Exceeded – over $1.8 billion
(full year 2011)
| Return on assets at least equal to 0.90% by 2011 | | Exceeded – 1.16% (full year 2011) | Acquisition accretive to PNC’s EPS on a GAAP basis by 2010 | | Achieved – $2.23 (2010),
$2.09 (2011)
| Acquisition internal rate of return of at least 15% | | Exceeded – 22.6%
(full year 2011)**
| Balance sheet acquired by PNC from National City positioned to meet PNC’s desired risk profile | | Achieved – moderate risk profile achieved in 2011 through loan risk mitigation, capital improvements and deposit repositioning | Successful implementation of PNC’s established enterprise risk management discipline | | Achieved by 2011 | Strong and reputable leadership team in place | | Achieved by 2011 | PNC well-positioned for future growth | | Achieved by 2011 |
| | | 2011 grants of performance-based restricted share units
(first of four tranches)
| Metric | | Status* | | Estimated Tier 1 risk-based capital ratio at least 6% | | Exceeded – actual ratio was 12.6%12.7% (exceeded) | Total shareholder return (TSR) adjustment, if applicable | | PNC’s TSR for 2011 reduced amount by (3.06)% for total payout of 96.94% |
* | As determined by the Committee. |
** | Internal rate of return, a non-GAAP financial measure, is a performance metric that measures the return of the net present value of all cash flows on the total invested capital. Management believes that there are no directly comparable measures under GAAP. We believe that internal rate of return on the acquisition was a useful tool to help the company evaluate how effectively the company employed its capital and resources with respect to the acquisition of National City, which was completed on December 31, 2008. |
| | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders | | 67 |
| | | | | Compensation Tables
| | 120.32% (Target + actual TSR 20.32% for 2014) |
Outstanding equity awards at 2011 fiscal year-end60 THE PNC FINANCIAL SERVICES GROUP, INC. - 2015 Proxy Statement
| | | | | | | | | | | | | | | | | | | | | James E. Rohr
OUTSTANDING EQUITY AWARDS AT 2014 FISCAL YEAR-END
|
| | | | | | | | | | | | | | | | | | | | Option Awards | | Stock Awards | Grant Date or
Performance
Period
(a) | | No. of
Securities
Underlying
Unexercised
Options (#)
Exercisable
(b) | | No. of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
(b) | | Option
Exercise
Price ($) | | Option Expiration Date | | Grant Date or
Performance
Period
(a) | | No. of
Shares or
Units of
Stock That
Have Not
Vested (#) (c) | | Market
Value of
Shares or
Units of
Stock That
Have Not
Vested ($)
(d) | | Equity
Incentive
Plan Awards: No. of
Unearned
Shares, Units or
Other Rights That Have
Not Vested (#) (e) | | Equity
Incentive Plan Awards:
Market or
Payout Value
of Unearned
Shares, Units or Other
Rights That Have Not Vested ($) (d) | | Options Exercisable Over Time | | | | | | Restricted Stock | January 3, 2002 | | 273,000 | | | | $57.10 | | January 3, 2012 | | December 23, 2009 | | 90,242 | | $5,204,256 | | | | | January 8, 2004 | | 71,643* | | | | $53.90 | | January 3, 2013 | | | | | | | | | | | January 25, 2005 | | 247,000 | | | | $53.50 | | January 25, 2015 | | | | | | | | | April 29, 2005 | | 73,832* | | | | $53.03 | | January 3, 2013 | | Performance-Based Restricted Shared Units | January 23, 2006 | | 275,000 | | | | $65.45 | | January 23, 2016 | | Jan. 1, 2011–Dec. 31, 2014 | | | | 43,272 | | $2,495,496 | November 17, 2006 | | 64,313* | | | | $69.38 | | January 3, 2013 | | Jan. 1, 2011–Dec. 31, 2014 | | | | 46,721 | | $2,694,400 | January 25, 2007 | | 203,500 | | | | $72.65 | | January 25, 2017 | | | | | | | | | | | May 17, 2007 | | 206,507* | | | | $74.65 | | January 6, 2014 | | | | | | | | | January 22, 2008 | | 242,000 | | | | $57.21 | | January 22, 2018 | | | | | | | | | February 12, 2009 | | 193,600 | | 96,800 | | $31.07 | | February 12, 2019 | | | | | | | | | April 26, 2010 | | 75,000 | | 150,000 | | $66.77 | | April 26, 2020 | | | | | | | | | | Options with Additional Performance Criteria | | | | | | | | | July 21, 2008 | | | | 350,000 | | $63.69(f) | | July 21, 2018 | | | | | | | | | February 12, 2009 | | | | 400,000 | | $31.07(f) | | February 12, 2019 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Incentive Performance Units | | | | | | | | | | | | Apr. 1, 2010–Dec. 31, 2012 | | 92,329 | | $5,324,613 | | | | | | | | | | | | Jan. 1, 2011–Dec. 31, 2013 | | 44,101 | | $2,543,305 |
| | | 68 | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders |
Outstanding equity awards at 2011 fiscal year-endIncentive performance units
| | | | | | | | | | | | | | | | | | | | Option Awards | | Stock Awards | Grant Date or
Performance
Period
(a) | | No. of
Securities
Underlying
Unexercised
Options (#)
Exercisable
(b) | | No. of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
(b) | | Option Exercise
Price ($) | | Option Expiration Date | | Grant Date or
Performance
Period
(a) | | No. of
Shares or
Units of
Stock That
Have Not
Vested (#) (c) | | Market
Value of
Shares or
Units of
Stock That
Have Not
Vested ($)
(d) | | Equity
Incentive
Plan Awards: No. of
Unearned
Shares, Units or
Other Rights That Have
Not Vested
(#) (e) | | Equity
Incentive Plan Awards:
Market or
Payout Value
of Unearned
Shares, Units or Other
Rights That Have
Not Vested
($) (d) | | Options Exercisable Over Time | | | | | | Restricted Stock | January 6, 2004 | | 9,000 | | | | $54.04 | | January 6, 2014 | | December 23, 2009 | | 23,273 | | $1,342,154 | | | | | April 23, 2004 | | 2,000 | | | | $52.23 | | April 23, 2014 | | | | | | | | | | | January 25, 2005 | | 20,000 | | | | $53.50 | | January 25, 2015 | | | | | | | | | | | July 22, 2005 | | 10,000 | | | | $55.37 | | July 22, 2015 | | Performance-Based Restricted Shared Units | January 23, 2006 | | 49,500 | | | | $65.45 | | January 23, 2016 | | Jan. 1, 2011–Dec. 31, 2014 | | | | 10,167 | | $ 586,331 | January 25, 2007 | | 44,000 | | | | $72.65 | | January 25, 2017 | | Jan. 1, 2011–Dec. 31, 2014 | | | | 9,733 | | $ 561,302 | January 22, 2008 | | 60,500 | | | | $57.21 | | January 22, 2018 | | | | | | | | | | | February 12, 2009 | | 48,400 | | 24,200 | | $31.07 | | February 12, 2019 | | | | | | | | | April 26, 2010 | | 15,833 | | 31,667 | | $66.77 | | April 26, 2020 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Options with Additional Performance Criteria | | | | | | | | | July 21, 2008 | | | | 83,000 | | $63.69(f) | | July 21, 2018 | | | | | | | | | February 12, 2009 | | | | 90,000 | | $31.07(f) | | February 12, 2019 | | | | | | | | | | | | | | | | | | | | | | Incentive Performance Units | | | | | | | | | | | | Apr. 1, 2010–Dec. 31, 2012 | | | | 19,491 | | $1,124,046 | | | | | | | | | | | | Jan. 1, 2011–Dec. 31, 2013 | | | | 10,362 | | $ 597,577 |
| | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders | | 69 |
Outstanding equity awards at 2011 fiscal year-end
| | | | | | | | | | | | | | | | | | | | Option Awards | | Stock Awards | Grant Date or
Performance
Period
(a) | | No. of
Securities
Underlying
Unexercised
Options (#)
Exercisable
(b) | | No. of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
(b) | | Option Exercise
Price ($) | | Option Expiration Date | | Grant Date or
Performance
Period
(a) | | No. of
Shares or
Units of
Stock That
Have Not
Vested (#) (c) | | Market
Value of
Shares or
Units of
Stock That
Have Not
Vested ($)
(d) | | Equity
Incentive
Plan Awards: No. of
Unearned
Shares,
Units or
Other Rights That Have
Not Vested
(#) (e) | | Equity
Incentive Plan Awards:
Market or
Payout Value
of Unearned
Shares, Units or Other
Rights That Have
Not Vested
($) (d) | | Options Exercisable Over Time | | | | | | Restricted Stock | January 23, 2006 | | 110,000 | | | | $65.45 | | January 23, 2016 | | December 23, 2009 | | 75,782 | | $4,370,348 | | | | | February 16, 2006 | | 40,110* | | | | $69.66 | | January 3, 2013 | | | | | | | | | | | February 27, 2006 | | 10,000* | | | | $70.90 | | January 3, 2013 | | | | | | | | | | | November 7, 2006 | | 28,512* | | | | $69.67 | | January 3, 2013 | | Performance-Based Restricted Shared Units | November 28, 2006 | | 58,247* | | | | $69.52 | | September 9, 2012 | | Jan. 1, 2011–Dec. 31, 2014 | | | | 30,815 | | $ 1,777,101 | January 25, 2007 | | 82,500 | | | | $72.65 | | January 25, 2017 | | Jan. 1, 2011–Dec. 31, 2014 | | | | 27,254 | | $ 1,571,738 | October 29, 2007 | | 57,861* | | | | $71.81 | | January 6, 2014 | | | | | | | | | | | October 29, 2007 | | 22,109* | | | | $71.81 | | September 9, 2012 | | | | | | | | | January 22, 2008 | | 93,500 | | | | $57.21 | | January 22, 2018 | | | | | | | | | February 12, 2009 | | 74,800 | | 37,400 | | $31.07 | | February 12, 2019 | | | | | | | | | April 26, 2010 | | 25,000 | | 50,000 | | $66.77 | | April 26, 2020 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Options with Additional Performance Criteria | | | | | | | | | July 21, 2008 | | | | 138,000 | | $63.69(f) | | July 21, 2018 | | | | | | | | | February 12, 2009 | | | | 180,000 | | $31.07(f) | | February 12, 2019 | | | | | | | | | | | | | | | | | | | | | | Incentive Performance Units | | | | | | | | | | | | Jan. 1, 2009–Dec. 31, 2011(g) | | | | 150,608 | | $8,685,563 | | | | | | | | | | | | Apr. 1, 2010–Dec. 31, 2012 | | | | 30,776 | | $1,774,852 | | | | | | | | | | | | Apr. 1, 2010–Dec. 31, 2012(g) | | | | 92,970 | | $5,361,580 | | | | | | | | | | | | Jan. 1, 2011–Dec. 31, 2013 | | | | 31,405 | | $1,811,126 |
| | | 70 | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders |
Outstanding equity awards at 2011 fiscal year-end
| | | | | | | | | | | | | | | | | | | | Option Awards | | Stock Awards | Grant Date or
Performance
Period
(a) | | No. of
Securities
Underlying
Unexercised
Options (#)
Exercisable
(b) | | No. of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
(b) | | Option Exercise
Price ($) | | Option Expiration Date | | Grant Date or
Performance
Period
(a) | | No. of
Shares or
Units of
Stock That
Have Not
Vested (#) (c) | | Market
Value of
Shares or
Units of
Stock That
Have Not
Vested ($)
(d) | | Equity
Incentive
Plan Awards: No. of
Unearned
Shares, Units or
Other Rights That Have
Not Vested (#) (e) | | Equity
Incentive Plan Awards:
Market or
Payout Value
of Unearned
Shares, Units or Other
Rights That Have
Not Vested
($) (d) | | Options Exercisable Over Time | | | | | | Restricted Stock | January 3, 2002 | | 84,000 | | | | $57.10 | | January 3, 2012 | | December 23, 2009 | | 38,585 | | $2,225,197 | | | | | January 6, 2004 | | 96,724** | | | | $54.04 | | January 6, 2014 | | | | | | | | | | | January 23, 2006 | | 121,000 | | | | $65.45 | | January 23, 2016 | | | | | | | | | | | January 25, 2007 | | 88,000 | | | | $72.65 | | January 25, 2017 | | Performance-Based Restricted Shared Units | August 21, 2007 | | 30,720* | | | | $72.71 | | January 6, 2014 | | Jan. 1, 2011–Dec. 31, 2014 | | | | 14,737 | | $ 849,883 | January 22, 2008 | | 99,000 | | | | $57.21 | | January 22, 2018 | | Jan. 1, 2011–Dec. 31, 2014 | | | | 12,069 | | $ 696,019 | February 12, 2009 | | 79,200 | | 39,600 | | $31.07 | | February 12, 2019 | | | | | | | | | | | April 26, 2010 | | 25,000 | | 50,000 | | $66.77 | | April 26, 2020 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Options with Additional Performance Criteria | | | | | | | | | July 21, 2008 | | | | 142,000 | | $63.69(f) | | July 21, 2018 | | | | | | | | | February 12, 2009 | | | | 180,000 | | $31.07(f) | | February 12, 2019 | | | | | | | | | | | | | | | | | | | | | | Incentive Performance Units | | | | | | | | | | | | Apr. 1, 2010–Dec. 31, 2012 | | | | 30,776 | | $1,774,852 | | | | | | | | | | | | Jan. 1, 2011–Dec. 31, 2013 | | | | 15,019 | | $ 866,146 |
| | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders | | 71 |
Outstanding equity awards at 2011 fiscal year-end
| | | | | | | | | | | | | | | | | | | | Option Awards | | Stock Awards | Grant Date or
Performance
Period
(a) | | No. of
Securities
Underlying
Unexercised
Options (#)
Exercisable
(b) | | No. of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
(b) | | Option Exercise
Price ($) | | Option Expiration Date | | Grant Date or
Performance
Period
(a) | | No. of
Shares or
Units of
Stock That
Have Not
Vested (#) (c) | | Market
Value of
Shares or
Units of
Stock That
Have Not
Vested ($)
(d) | | Equity
Incentive
Plan Awards: No. of
Unearned
Shares, Units or
Other Rights That Have
Not Vested
(#) (e) | | Equity
Incentive Plan Awards:
Market or
Payout Value
of Unearned
Shares, Units or Other
Rights That Have
Not Vested
($) (d) | | Options Exercisable Over Time | | | | | | Restricted Stock | December 18, 2003 | | 25,000 | | | | $53.41 | | December 18, 2013 | | February 12, 2009 | | 2,790 | | $160,899 | | | | | January 6, 2004 | | 75,000 | | | | $54.04 | | January 6, 2014 | | February 12, 2009 | | 78,302 | | $4,515,676 | | | | | January 25, 2005 | | 75,000 | | | | $53.50 | | January 25, 2015 | | December 23, 2009 | | 62,256 | | $3,590,304 | | | | | July 21, 2008 | | 25,000 | | | | $63.69 | | July 21, 2018 | | | | | | | | | | | | | | | | | | | | | | Performance-Based Restricted Shared Units | | | | | | | | | | | | Jan. 1, 2011–Dec. 31, 2014 | | | | 15,760 | | $908,879 | | | | | | | | | | | | Jan. 1, 2011–Dec. 31, 2014 | | | | 9,733 | | $561,302 | | | | | | | | | | | | | | | | | | | | | Options with Additional Performance Criteria | | | | | | | | | February 12, 2009 | | | | 50,000 | | $31.07(f) | | February 12, 2019 | | | | | | | | | | | | | | | | | | | | Incentive Performance Units | | | | | | | | | | | | Apr. 1, 2010–Dec. 31, 2012 | | | | 10,258 | | $ 591,579 | | | | | | | | | | | | Jan. 1, 2011–Dec. 31, 2013 | | | | 16,062 | | $ 926,296 | | | | | | | | | | | | Jan. 1, 2011–Dec. 31, 2013(g) | | | | 38,934 | | $2,245,324 |
| | | 72 | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders |
The incentive performance units granted in 2012 are included in the following table as of December 31, 2014. At a meeting held on January 28, 2015, our Board’s Personnel and Compensation Committee certified the levels of performance achieved for the January 1, 2012 to December 31, 2014 performance period and determined the payout level. The units provided an opportunity for the executive to receive a payout after the end of the performance period based on our earnings per share growth (EPS growth) and return on average common shareholders’ equity (ROCE) performance, each adjusted as defined in the grants, relative to our peers. These awards were also subject to the same ROEC related risk metric as noted above which could have reduced the payout; however, no reduction was required as ROEC exceeded the hurdle, and the Committee approved a payout at 88.88% for these awards. | | | | | | | | | | | | | | | | | | | | | | Payout % (PNC Ranking out of 13 Companies) | | | Overall Payout
Percentage | | | | | Metric | | 2012 | | | 2013 | | | 2014 | | | | EPS Growth | | | 47 | % (10) | | | 175 | % (2) | | | 34 | % (10) | | | 88.88% | | | | ROCE | | | 57 | % (9) | | | 117 | % (6) | | | 103 | % (7) | | |
ALM incentive performance units The ALM-based incentive performance units granted in 2012 to Mr. Parsley were outstanding as of December 31, 2014 and are included in the following table. At a meeting on January 28, 2015, our Board’s Personnel and Compensation Committee certified the levels of performance achieved under Mr. Parsley’s ALM-based grant and determined the final award. The maximum potential payout percentage was 200%. The maximum permitted payout for these units is generated by applying the performance factor to the number of target share units of 49,423. The Committee approved payout at the maximum payout permitted for the performance achieved, resulting in 97,328.71 units. In accordance with the terms of this award, the ALM-based units awarded to Mr. Parsley paid out entirely in cash share equivalents. | | | | | | | | | | | | | | | | | | | | Payout Percentage | | | Metric | | 2012 | | | 2013 | | | 2014 | | | Overall | | Performance of ALM unit against benchmark index | | | 200 | % | | | 200 | % | | | 190.78 | % | | | 196.93 | % |
THE PNC FINANCIAL SERVICES GROUP, INC. - 2015 Proxy Statement 61
OUTSTANDING EQUITY AWARDS AT 2014 FISCAL YEAR-END | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Option Awards | | | Stock Awards | | Grant Date or
Performance Period(a) | | No. of
Securities
Underlying
Unexercised
Options (#)
Exercisable(b) | | | No. of Securities
Underlying
Unexercised
Options (#)
Unexercisable(b) | | Option
Exercise
Price ($) | | | Option Expiration
Date | | | Grant Date or
Performance Period(a) | | No. of Shares or Units of
Stock
That
Have Not
Vested
(#)(c) | | | Market
Value of
Shares or
Units of
Stock
That
Have Not
Vested
($)(d) | | | Equity
Incentive
Plan
Awards:
No. of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested
(#)(e) | | | Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested
($)(d) | | William S. Demchak | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Options | | | | | | | | | | | | | | | | Performance-Based Restricted Share Units | | | | | | | | | | January 25, 2007 | | | 82,500 | | | | | $ | 72.65 | | | | January 25, 2017 | | | Jan. 1, 2011–Dec. 31, 2014 | | | 9,271 | | | $ | 845,793 | | | | | | | | | | January 22, 2008 | | | 93,500 | | | | | $ | 57.21 | | | | January 22, 2018 | | | Jan. 1, 2011–Dec. 31, 2014 | | | 8,199 | | | $ | 747,995 | | | | | | | | | | July 21, 2008 | | | 138,000 | | | | | $ | 63.69 | | | | July 21, 2018 | | | Jan. 1, 2012–Dec. 31, 2015 | | | 10,703 | | | $ | 976,435 | | | | 8,896 | | | $ | 811,582 | | February 12, 2009 | | | 112,200 | | | | | $ | 31.07 | | | | February 12, 2019 | | | Jan. 1, 2013–Dec. 31, 2016 | | | 9,098 | | | $ | 830,011 | | | | 15,124 | | | $ | 1,379,763 | | February 12, 2009 | | | 180,000 | | | | | $ | 31.07 | | | | February 12, 2019 | | | Jan. 1, 2014–Dec. 31, 2017 | | | 11,121 | | | $ | 1,014,569 | | | | 27,730 | | | $ | 2,529,808 | | April 26, 2010 | | | 75,000 | | | | | $ | 66.77 | | | | April 26, 2020 | | | Incentive Performance Units | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Jan. 1, 2012–Dec. 31, 2014 | | | 33,803 | | | $ | 3,083,848 | | | | | | | | | | | | | | | | | | | | | | | | | | Jan. 1, 2013–Dec. 31, 2015 | | | | | | | | | | | 37,808 | | | $ | 3,449,224 | | | | | | | | | | | | | | | | | | | Jan. 1, 2014–Dec. 31, 2016 | | | | | | | | | | | 36,973 | | | $ | 3,373,047 | | Robert Q. Reilly | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Options | | | | | | | | | | | | | | | | Performance-Based Restricted Share Units | | | | | | | | | | January 25, 2007 | | | 22,000 | | | | | $ | 72.65 | | | | January 25, 2017 | | | Jan. 1, 2011–Dec. 31, 2014 | | | 1,512 | | | $ | 137,940 | | | | | | | | | | January 22, 2008 | | | 33,000 | | | | | $ | 57.21 | | | | January 22, 2018 | | | Jan. 1, 2011–Dec. 31, 2014 | | | 2,343 | | | $ | 213,752 | | | | | | | | | | July 21, 2008 | | | 65,000 | | | | | $ | 63.69 | | | | July 21, 2018 | | | Jan. 1, 2012–Dec. 31, 2015 | | | 2,180 | | | $ | 198,881 | | | | 1,812 | | | $ | 165,309 | | February 12, 2009 | | | 50,000 | | | | | $ | 31.07 | | | | February 12, 2019 | | | Jan. 1, 2013–Dec. 31, 2016 | | | 2,801 | | | $ | 255,535 | | | | 4,657 | | | $ | 424,858 | | February 12, 2009 | | | 19,800 | | | | | $ | 31.07 | | | | February 12, 2019 | | | Jan. 1, 2014–Dec. 31, 2017 | | | 2,872 | | | $ | 262,013 | | | | 7,164 | | | $ | 653,572 | | April 26, 2010 | | | 25,000 | | | | | $ | 66.77 | | | | April 26, 2020 | | | Incentive Performance Units | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Jan. 1, 2012–Dec. 31, 2014 | | | 6,885 | | | $ | 628,119 | | | | | | | | | | | | | | | | | | | | | | | | | | Jan. 1, 2013–Dec. 31, 2015 | | | | | | | | | | | 11,641 | | | $ | 1,062,008 | | | | | | | | | | | | | | | | | | | Jan. 1, 2014–Dec. 31, 2016 | | | | | | | | | | | 9,551 | | | $ | 871,338 | | Michael P. Lyons | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Restricted Stock Award | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | January 20, 2012 | | | 14,586 | | | $ | 1,330,681 | | | | | | | | | | | | | | | | | | | | | | | | | | Performance-Based Restricted Share Units | | | | | | | | | | | | | | | | | | | | | | | | | | Jan. 1, 2012–Dec. 31, 2015 | | | 8,176 | | | $ | 745,896 | | | | 6,796 | | | $ | 619,999 | | | | | | | | | | | | | | | | | | Jan. 1, 2013–Dec. 31, 2016 | | | 7,426 | | | $ | 677,474 | | | | 12,344 | | | $ | 1,126,143 | | | | | | | | | | | | | | | | | | Jan. 1, 2014–Dec. 31, 2017 | | | 7,562 | | | $ | 689,881 | | | | 18,856 | | | $ | 1,720,233 | | | | | | | | | | | | | | | | | | Incentive Performance Units | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Jan. 1, 2012–Dec. 31, 2014 | | | 25,821 | | | $ | 2,355,650 | | | | | | | | | | | | | | | | | | | | | | | | | | Jan. 1, 2013–Dec. 31, 2015 | | | | | | | | | | | 30,858 | | | $ | 2,815,175 | | | | | | | | | | | | | | | | | | | Jan. 1, 2014–Dec. 31, 2016 | | | | | | | | | | | 25,141 | | | $ | 2,293,613 | | E. William Parsley, III | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Options | | | | | | | | | | | | | | | | Performance-Based Restricted Share Units | | | | | | | | | | July 21, 2008 | | | 25,000 | | | | | $ | 63.69 | | | | July 21, 2018 | | | Jan. 1, 2011–Dec. 31, 2014 | | | 4,740 | | | $ | 432,430 | | | | | | | | | | February 12, 2009 | | | 50,000 | | | | | $ | 31.07 | | | | February 12, 2019 | | | Jan. 1, 2011–Dec. 31, 2014 | | | 2,928 | | | $ | 267,121 | | | | | | | | | | | | | | | | | | | | | | | | | | Jan. 1, 2012–Dec. 31, 2015 | | | 3,344 | | | $ | 305,073 | | | | 2,780 | | | $ | 253,619 | | | | | | | | | | | | | | | | | | Jan. 1, 2013–Dec. 31, 2016 | | | 2,813 | | | $ | 256,630 | | | | 4,676 | | | $ | 426,591 | | | | | | | | | | | | | | | | | | Jan. 1, 2014–Dec. 31, 2017 | | | 2,918 | | | $ | 266,209 | | | | 7,279 | | | $ | 664,063 | | | | | | | | | | | | | | | | | | Incentive Performance Units | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Jan. 1, 2012–Dec. 31, 2014 | | | 10,563 | | | $ | 963,662 | | | | | | | | | | | | | | | | | | | | | | | | | | Jan. 1, 2012–Dec. 31, 2014(f) | | | 97,328 | | | $ | 8,879,233 | | | | | | | | | | | | | | | | | | | | | | | | | | Jan. 1, 2013–Dec. 31, 2015(f) | | | | | | | | | | | 93,940 | | | $ | 8,570,146 | | | | | | | | | | | | | | | | | | Jan. 1, 2013–Dec. 31, 2015 | | | | | | | | | | | 11,690 | | | $ | 1,066,479 | | | | | | | | | | | | | | | | | | Jan. 1, 2014–Dec. 31, 2016(f) | | | | | | | | | | | 73,946 | | | $ | 6,746,094 | | | | | | | | | | | | | | | | | | | Jan. 1, 2014–Dec. 31, 2016 | | | | | | | | | | | 9,705 | | | $ | 885,387 | |
62 THE PNC FINANCIAL SERVICES GROUP, INC. - 2015 Proxy Statement
OUTSTANDING EQUITY AWARDS AT 2014 FISCAL YEAR-END | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Option Awards | | | Stock Awards | | Grant Date or
Performance Period(a) | | No. of
Securities
Underlying
Unexercised
Options (#)
Exercisable(b) | | | No. of Securities
Underlying
Unexercised
Options (#)
Unexercisable(b) | | Option
Exercise
Price ($) | | Option Expiration
Date | | | Grant Date or
Performance Period(a) | | No. of Shares or Units of
Stock
That
Have Not
Vested
(#)(c) | | | Market
Value of
Shares or
Units of
Stock
That
Have Not
Vested
($)(d) | | | Equity
Incentive
Plan
Awards:
No. of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested
(#)(e) | | | Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested
($)(d) | | Joseph C. Guyaux | | | | | | | | | | | | | | | | | | | | | | | | | | | | Options | | | | | | | | | | | | | | Restricted Stock Award | | | | | | | | | | | | | | | | | July 21, 2008 | | | 70,000 | | | | | $63.69 | | | July 21, 2018 | | | February 15, 2012 | | | 6,039 | | | $ | 550,938 | | | | | | | | | | February 12, 2009 | | | 180,000 | | | | | $31.07 | | | February 12, 2019 | | | Performance-Based Restricted Share Units | | | | | | | | | | April 26, 2010 | | | 75,000 | | | | | $66.77 | | | April 26, 2020 | | | Jan. 1, 2011–Dec. 31, 2014 | | | 4,433 | | | $ | 404,423 | | | | | | | | | | | | | | | | | | | | | | | | Jan. 1, 2011–Dec. 31, 2014 | | | 3,631 | | | $ | 331,256 | | | | | | | | | | | | | | | | | | | | | | | | Jan. 1, 2012–Dec. 31, 2015 | | | 3,901 | | | $ | 355,888 | | | | 3,244 | | | $ | 295,950 | | | | | | | | | | | | | | | | Jan. 1, 2013–Dec. 31, 2016 | | | 3,780 | | | $ | 344,849 | | | | 6,284 | | | $ | 573,289 | | | | | | | | | | | | | | | | Jan. 1, 2014–Dec. 31, 2017 | | | 3,474 | | | $ | 316,933 | | | | 8,666 | | | $ | 790,599 | | | | | | | | | | | | | | | | Incentive Performance Units | | | | | | | | | | | | | | | | | | | | | | | | | | | | Jan. 1, 2012–Dec. 31, 2014 | | | 12,323 | | | $ | 1,124,227 | | | | | | | | | | | | | | | | | | | | | | | | Jan. 1, 2013–Dec. 31, 2015 | | | | | | | | | | | 15,708 | | | $ | 1,433,041 | | | | | | | | | | | | | | | | | Jan. 1, 2014–Dec. 31, 2016 | | | | | | | | | | | 11,554 | | | $ | 1,054,071 | |
*(a) | With respect to these options, the officer exercised a previously granted option with a “reload” feature and received a new stock option grant, shown in this table, as the result of “reloading” the previously granted option. |
** | This option is still subject to a “reload” feature, but the officer has not yet exercised his ability to “reload” the option. |
| In 2004, the Committee decided to eliminate the “reload” feature from future option grants. However, there are still reload options outstanding from prior years that could be exercised and result in additional option grants in future years. If an option holder exercises an option with a reload feature, the option holder uses shares of stock already owned to satisfy the exercise price and meet any associated tax withholding obligation, and the options exercised are replaced (or “reloaded”) with a new, at-the-market option for each share of common stock used. Options with this feature can only be reloaded once; the reload options cannot be replaced when they are exercised. The reload option normally will become exercisable in one year and will have the same remaining term as the option that was exercised. |
(a) | This column shows the grant dates of stock options and restricted stock and the performance period for the regular and ALM incentive performance unit awardsunits and the performance-based restricted share units. |
| (b) | The vesting schedule for theAll outstanding stock option grants listedoptions are vested in this column is as follows:their entirety. |
Option grants that have been “reloaded” – vest 100% on the anniversary of the original grant date.
Option grants on July 21, 2008 – 3-year cliff vesting, if the performance criterion in footnote (f) below has been achieved.
Option grants on February 12, 2009 related to the National City integration vested on February 12, 2012 based on meeting the performance criteria.
All other options – 1/3 vesting each year, beginning on the anniversary of the grant date.
| (c) | This column reflects the remaining tranche of restricted stock granted to Mr. Lyons and Mr. Guyaux. Mr. Lyons’ and Mr. Guyaux’s awards vested 1/3 each year on the anniversary of the grant date. This column also reflects120.32% of the target amounts for the 2014 tranche of the performance based restricted share units granted in each of 2011, 2012, 2013 and 2014 and88.88% of the target amounts for the 2012-2014 incentive performance units for all NEOs. The incentive performance grants include deemed dividends accrued as units through the end of 2014. This column also reflects196.93% of the target amounts for the 2012-2014 ALM incentive performance units for Mr. Parsley. The performance conditions of the 2014 tranches of performance based restricted share units, the 2012-2014 incentive performance units and the 2012-2014 ALM incentive performance units were satisfied as of December 31, 2014 but remained subject to approval of payout by the Personnel and Compensation Committee of the Board, which took place on January 28, 2015. Awards are included at actual payout percentages. |
(c)(d) | This column includes restricted stock grants. The vesting schedule for the grants listed in this column is as follows: |
Grant date of December 23, 2009 – two years of required service from January 25, 2010, with one additional year of service required before any sale will be permitted on or after January 25, 2013.
Mr. Parsley’s column also includes two grants of restricted share units that have different vesting schedules and pay out in cash. Of the 8,368 units granted on February 12, 2009, 1/3 vested on each of February 12, 2010, February 12, 2011 and February 12, 2012. The 78,302 units granted on February 12, 2009 vested 100% on February 12, 2012.
(d) | The market value of these awards is calculated using our common stock closing price of $57.67$91.23 a share on December 30, 2011.31, 2014. |
| (e) | This column reflects the incentive performance unit opportunitiesunits granted in 20102013 and 20112014 and the remaining tranches of performance-based restricted share units granted in 2012, 2013 and 2014. This column also includes the ALM incentive performance unit opportunitiesunits granted to Mr. Demchak in 2009 and 2010 and to Mr. Parsley in 2011. This column also includes2013 and 2014. |
| For the performance-based restricted share units granted in 2011. |
For the regular incentive grants,2012, 2013 and 2014, this column reflects the target amounts that could be paid under the 2011 grant and the maximum amount that could be paid under the 2010 grants. These amounts also include deemed dividends accrued and reinvested as units through the end of 2011. Actual payouts, if any, for the 2010 grants will not be determined until early 2013 and until early 2014 for the 2011 grants, and could differ from the amounts listed.
For Mr. Demchak, this column reflects the maximum amount that could be paid under the 2009 and 2010 ALM incentive performance unit grants. His grants do not provide for any deemed dividends to be accrued and reinvested. The actual payout for Mr. Demchak’s 2009 ALM incentive performance unit grant was at the maximum, adjusted for TARP forfeitures. See page 66. The actual payout for Mr. Demchak’s 2010 ALM incentive performance unit grant will not be determined until early 2013 and could differ from the amount listed.
For Mr. Parsley, this column reflects the maximum amount that could be paid under the 2011 ALM incentive performance unit grant. This grant does not provide for any deemed dividends to be accrued and reinvested. The actual payout for Mr. Parsley’s 2011 ALM incentive performance unit grant will not be determined until early 2014 and could differ from the amount listed.
| | | PNC – Proxy Statement for the 2015 tranche for the 2012 Annual Meeting of Shareholders | | 73 |
For the performance-based restricted share units granted in 2011, this column reflects the target amounts for the 2011 tranche as well as for each of the tranches from 2012 through 2014. Thesegrants, the 2015 through 2016 tranches for the 2013 grants do not provide for any deemed dividends to be accrued and reinvested. The actual payout for the 2011 tranche was less than target based on PNC’s total shareholder return for 2011. See page 67.
| See footnote (b) of theSummary compensation table on page 57 and footnote (b) of theGrants of plan-based awards 2015 through 2017 tranches for the 2014 grants. For performance-based restricted share unit grants, dividend equivalents without reinvestment or interest accrue for each tranche and are paid out in 2011cash, performance adjusted, when the tranche vests and settles.table on page 65, as well as pages 43-46 of our CD&A. |
(f) | Since July 21, 2011,For the options granted on July 21, 2008 can become exercisable in their entirety if PNC stock closes at or above 120% ofregular incentive performance units, this column reflects the exercise pricemaximum amounts that could be paid under the 2013 grants and target for the five trading days before2014 grants. Beginning with 2013 incentive grants, deemed dividends will be paid in cash, performance adjusted, when the vesting date. Based on an exercise price of $63.69, these optionsawards vests and settles. Actual payouts, if any, for the 2013 grants will not be exercisabledetermined until early 2016, and until early 2017 for 2014 grants and could differ from the PNC stock price closes above $76.428 a share. The options granted on February 12, 2009 vested after the Board’s Personnel and Compensation Committee determined that the performance criteria related to the acquisition and integration of National City Corporation had been achieved. The Committee made its determination on January 26, 2012 and 100% of the options, which may be subject to TARP-related forfeitures, vested on February 12, 2012.amounts listed. |
(g) | For Mr. Parsley, this column reflects the maximum amount that could be paid under the 2013 and 2014 ALM incentive performance unit grants. These grants do not provide for any deemed dividends to be accrued and reinvested. The actual payout for Mr. Parsley’s 2013 ALM incentive performance unit grant will not be determined until early 2016 and until early 2017 for the 2014 grant, and could differ from the amount listed. |
| (f) | These ALM incentive performance unit grants were awarded to Mr. Demchak in 2009 and 2010 and Mr. Parsley in 20112012, 2013 and 2014 and are described in footnotefootnotes (c) and (e) above. |
| | | 74 | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders |
THE PNC FINANCIAL SERVICES GROUP, INC. - 2015 Proxy Statement 63
OPTION EXERCISES AND STOCK VESTED IN FISCAL 2014 Option exercises and stock vested in fiscal 20112014 | | | | | | NEO | | Stock Awards | | | Number of Shares
Acquired on Vesting (#) | | Value Realized on
Vesting ($) | James E. Rohr | | 122,363 | | $7,760,675 | Richard J. Johnson | | 27,003 | | $1,712,376 | William S. Demchak | | 136,882 | | $8,672,813 | Joseph C. Guyaux | | 51,691 | | $3,278,928 | E. William Parsley, III | | 62,703 | | $3,954,763 |
None of our NEOs exercised stock options in 2011. The columns include the vesting of shares of restricted stock granted previously, as well as the total units approved for payout in connection with previously granted incentive performance unit opportunities. These incentive units pay out in shares for the target amount of units and cash for the amount of units above target. With respect to the incentive performance units granted in 2008, which paid out in 2011 at 140.63% of target, the value realized includes cash for the amounts over target as follows: Mr. Rohr $1,279,701; Mr. Johnson $287,933; Mr. Demchak $511,880; and Mr. Guyaux $511,880. The columns also include shares that vested but were withheld for tax purposes.
For Mr. Demchak, the columns also include 62,665 ALM incentive performance units granted in 2008, which paid out in 2011 at 133.33% of target. These were paid in cash ($3,975,161). For Mr. Parsley, the columns also include 3,838 units that were paid in cash of $246,855.
The above table includes the portions of base salaries in 2009 and 2010 that were paid in stock units. These units were fully vested when granted in 2010 or 2009, and settled in March 2011 based on a market price of PNC’s common stock of $62.99. For each NEO, the value of stock units when paid out in 2011 was:
| | | | | | | | | | | | | | | | | | | | | | Option Awards | | | | | Stock Awards(b) | | | NEO | | Number of Shares
Acquired on Exercise
(#) | | | Value Realized
on Exercise(a)
($) | | | | | Number of Shares
Acquired on Vesting
(#) | | | Value Realized
on Vesting ($) | | William S. Demchak | | | 110,000 | | | $ | 2,449,700 | | | | | | 68,682 | | | $ | 5,543,807 | | Robert Q. Reilly | | | 42,500 | | | $ | 1,093,713 | | | | | | 14,058 | | | $ | 1,134,775 | | Michael P. Lyons | | | - | | | $ | - | | | | | | 30,790 | | | $ | 2,523,151 | | E. William Parsley, III | | | 75,000 | | | $ | 2,349,152 | | | | | | 68,623 | | | $ | 5,556,414 | | Joseph C. Guyaux | | | 201,000 | | | $ | 3,315,295 | | | | | | 47,053 | | | $ | 3,767,392 | |
| | | NEO(a) | | PayoutThe dollar amount in this column includes the value realized upon the exercise of
Salary Paid various options throughout 2014. This amount was computed by determining the difference between the average of the high and low sales prices of our common stock on the date of exercise (as reported in The Wall Street Journal), less the exercise price.
Stock Units*
| James E. Rohr
| | $2,819,620 | Richard J. Johnson
| | $ 620,766 | William S. Demchak
| | $2,657,045 | Joseph C. Guyaux
| | $1,230,259 | E. William Parsley, III
| | $3,707,908 |
| *(b) | Amounts do notThese columns include the dividend paymentsvesting of shares of restricted stock granted previously, as well as the total units approved for payout in connection with previously granted incentive performance units and performance based restricted share unit opportunities. The value realized on such units disclosed in the Other Compensation column of theSummary compensation table in 2011vesting for stock awards includes cash paid for fractional shares as follows: Mr. Demchak ($123), Mr. Reilly ($169), Mr. Lyons ($121), Mr. Parsley ($97) and discussed in footnote (f) to theSummary compensation tableMr. Guyaux ($148). on page 58. | |
| | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders | | 75 |
| | | | | Compensation Tables
| | For Mr. Parsley, the columns also include 38,934 ALM incentive performance units granted in 2011 that were paid out in cash of $3,159,105 in 2014 at 200% of target. |
| The columns also include shares that vested but were withheld for tax purposes. |
64 THE PNC FINANCIAL SERVICES GROUP, INC. - 2015 Proxy Statement
PENSION BENEFITS AT 2014 FISCAL YEAR-END Pension benefits at 20112014 fiscal year-end The principal elements of our post-employment compensation includeare a qualified defined benefit cash balance pension plan, a non-qualified excess cash balance pension plan and a non-qualified supplemental executive retirement plan, as well as a qualified defined contribution savings plan, a non-qualified supplemental incentive savings plan and a non-qualified deferred compensation and incentive plan. Cash balance pension plan. We maintain a pension plan for most of our full-time employees. The pension plan is a defined benefit cash balance pension plan under the Employee Retirement Income Security Act of 1974, as amended (ERISA), and is intended to be qualified under Section 401(a) of the Internal Revenue Code. Each calendar quarter, eligible participants receive “earnings credits” based on a percentage of covered earningseligible compensation in accordance with a schedule based on the participant’s age and years of credited service. Earnings credit percentages for plan participants on December 31, 2009 are frozen at their level earned to that point. Earnings credits for all employees who become participants on or after January 1, 2010 are a flat 3% of covered earnings.eligible compensation. The plan defines “covered earnings”eligible “compensation” as regular earnings plus eligible variable compensation, such as paid annual incentives. Covered earnings doEligible “compensation” does not include deferred payments of annual incentives; these are instead taken into account under our excess pension plan described below. We generally limit total eligible variable compensation for a plan year to a total of 100% of the first $25,000 plus 50% of the next $225,000. For participants who had accrued benefits prior to 1999 under the prior pension plan formula then in effect, an initial cash balance “account” was established based on the present value of the accrued benefits at the time of the conversion.conversion to the current program. Employees who were at least age 40 and had at least 10 years of credited service as of January 1, 1999 were awarded additional “Transitional Earnings Credits” under the plan for up to 10 years. ParticipantsEmployees already participants at December 31, 2009 generally receive quarterly “interest credits” at a rate of one-fourth of the annual interest rate on 30-year Treasury securities, with a minimum interest credit. New participants on or after January 1, 2010 are not subject to this minimum interest credit.
At the end of 2008, the cash balance pension plan previously sponsored by National City Corporation was merged into this plan. Earnings and interest credits for National City participants are generally as noted above. We contribute to the plan an actuarially determined amount necessary to fund the total benefits payable to participants. Actuaries calculate total contributions instead of contributions for each individual participant. Excess pension plan. We maintain an ERISA excess pension plan, which is a supplemental non-qualified pension plan. The excess benefits under this plan equal the difference, if any, between a participant’s benefit under the qualified pension plan computed without regard to applicable Internal Revenue Code limits and taking into account bonus amounts deferred under the non-qualified deferred compensation and incentive plan, and the participant’s actual benefit under the qualified pension plan. Supplemental executive retirement plan. We maintain a supplemental executive retirement plan for certain executive officers. As part of its ongoing review of compensation practices, the Committee decided in 2007 to eliminate future plan participation for new executive officers. This plan provides | | | 76 | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders |
earnings credits based on a percentage of annual incentives awarded under eligible executive bonus plans in accordance with a schedule based on the participant’s age and years of credited service. This plan also provides quarterly interest credits that mirror the interest credits under the qualified pension plan. Executive officers who participated in the supplemental executive retirement plan on December 31, 1998 and who were at least age 50 with five or more years of credited service receive grandfathered benefits based on the pension formula in effect prior to 1999. For executive officers at or above a certain organizational level who participated on December 31,1998,31, 1998, but who did not meet the requirements for grandfathered benefits, we doubled the earnings credit percentages in order to mitigate the effect of the transition to the cash balance pension formula. Each of James E. Rohr and Joseph C. Guyaux received the credits and benefits provided in connection with the transitional provisions of the cash balance pension plan and the supplemental executive retirement plan.
THE PNC FINANCIAL SERVICES GROUP, INC. - 2015 Proxy Statement 65
PENSION BENEFITS AT 2014 FISCAL YEAR-END | | | | | | | | | | | | | | | | NEO | | Plan Name | | Number of
Years Credited
Service (#)(a) | | | Present Value
of Accumulated
Benefit ($)(b) | | | Payments
during last
fiscal year | | William S. Demchak | | Qualified Pension Plan | | | 12 | | | $ | 176,910 | | | $ | – | | | | ERISA Excess Pension Plan | | | 12 | | | $ | 1,069,229 | | | $ | – | | | | | Supplemental Executive Retirement Plan | | | 12 | | | $ | 1,529,933 | | | $ | – | | | | | Total | | | | | | $ | 2,776,072 | | | $ | – | | Robert Q. Reilly | | Qualified Pension Plan | | | 27 | | | $ | 321,121 | | | $ | – | | | | ERISA Excess Pension Plan | | | 27 | | | $ | 383,045 | | | $ | – | | | | | Supplemental Executive Retirement Plan | | | 27 | | | $ | 523,880 | | | $ | – | | | | | Total | | | | | | $ | 1,228,046 | | | $ | – | | Michael P. Lyons | | Qualified Pension Plan | | | 3 | | | $ | 18,814 | | | $ | – | | | | ERISA Excess Pension Plan | | | 3 | | | $ | 35,722 | | | $ | – | | | | | Supplemental Executive Retirement Plan | | | NA | | | $ | – | | | $ | – | | | | | Total | | | | | | $ | 54,536 | | | $ | – | | E. William Parsley, III | | Qualified Pension Plan | | | 11 | | | $ | 151,705 | | | $ | – | | | | ERISA Excess Pension Plan | | | 11 | | | $ | 648,509 | | | $ | – | | | | | Supplemental Executive Retirement Plan | | | NA | | | $ | – | | | $ | – | | | | | Total | | | | | | $ | 800,214 | | | $ | – | | Joseph C. Guyaux | | Qualified Pension Plan | | | 42 | | | $ | 1,221,289 | | | $ | – | | | | ERISA Excess Pension Plan | | | 42 | | | $ | 2,485,989 | | | $ | – | | | | | Supplemental Executive Retirement Plan | | | 42 | | | $ | 5,480,639 | | | $ | – | | | | | Total | | | | | | $ | 9,187,917 | | | $ | – | |
| | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders(a) | | 77 |
| | | | | | | | NEO | | Plan Name | | Number of Years Credited Service (#) | | Present Value of
Accumulated Benefit ($) | | | (a) | | (b) | | (c) | | | | | | | | James E. Rohr | | Qualified Pension Plan | | 39 | | $ 1,392,759 | | | ERISA Excess Pension Plan | | | $ 6,457,747 | | | Supplemental Executive Retirement Plan | | | $31,084,937 | | | Total | | | $38,935,443 | | | | | | | | Richard J. Johnson | | Qualified Pension Plan | | 9 | | $ 117,944 | | | ERISA Excess Pension Plan | | | $ 251,645 | | | Supplemental Executive Retirement Plan | | | $ 295,930 | | | Total | | | $ 665,519 | | | | | | | | William S. Demchak | | Qualified Pension Plan | | 9 | | $ 107,399 | | | ERISA Excess Pension Plan | | | $ 616,907 | | | Supplemental Executive Retirement Plan | | | $ 873,752 | | | Total | | | $ 1,598,058 | | | | | | | | Joseph C. Guyaux | | Qualified Pension Plan | | 39 | | $ 1,003,490 | | | ERISA Excess Pension Plan | | | $ 1,983,300 | | | Supplemental Executive Retirement Plan | | | $ 4,333,494 | | | Total | | | $ 7,320,284 | | | | | | | | E. William Parsley, III | | Qualified Pension Plan | | 8 | | $ 84,857 | | | ERISA Excess Pension Plan | | | $ 425,022 | | | Supplemental Executive Retirement Plan | | | - | | | Total | | | $ 509,879 |
(a) | None of the NEOs received payments under any of these plans during fiscal 2011. |
(b) | To compute the number of years of service, we use the same plan measurement date that we use for our 20112014 audited consolidated financial statements. Credited service, where applicable, is generally equal to actual service;full years of service, however, for purposes of determining the level of benefits earned in the Qualified Pension Plan and ERISA Excess cash balance plansPension Plan, credited service has been frozen as of December 31, 2009. As of that date, the NEOs had the following years of credited service: Mr. RohrGuyaux 37, Mr. Johnson 7,Reilly 22, Mr. Demchak 7, Mr. Guyaux 37, and Mr. Parsley 6. Mr. Lyons was hired after service accruals ceased to be applicable for purposes of calculating the amount of Qualified Pension Plan and ERISA Excess Pension Plan benefits. |
(c)(b) | We compute the present values shown here as of December 31, 20112014 in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 715, Compensation—Retirement Benefits (“FASB(FASB ASC Topic 715”)715), as specified in the SEC regulations. The amounts do not necessarily reflect the amounts to which the executive officers would be entitled under the terms of these plans as of December 31, 2011.2014. |
| We calculate the present values for the plans by projecting the December 31, 20112014 account balances to an assumed retirement age of 65, using an interest crediting rate of 4.4%.(i) 4.40% for Mr. Demchak, Mr. Reilly, Mr. Parsley, and Mr. Guyaux and (ii) 2.7% for Mr. Lyons who is not eligible for the guaranteed minimum annual interest crediting rate since he became a plan participant after January 1, 2010. We then apply a discount rate of 4.6%3.95% for the Qualified Pension Plan and 4.2%3.65% for the other plans to discount the balances back to December 31, 2011. The present value for the grandfathered Supplemental Executive Retirement Plan, for which Mr. Rohr is the only eligible NEO, equals the present value of his December 31 accrued benefit. Since Mr. Rohr is currently eligible for an unreduced retirement, no early retirement reductions apply. 2014. |
| See Note 1413 in our Annual Report on Form 10-K for the year ended December 31, 20112014 for more information on the discount rates and other material assumptions. |
| | | 78 | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders |
66 THE PNC FINANCIAL SERVICES GROUP, INC. - 2015 Proxy Statement
NON-QUALIFIED DEFERRED COMPENSATION IN FISCAL 2014 Non-qualified deferred compensation in fiscal 20112014 IncentiveSupplemental incentive savings plan (ISP) and(SISP). Prior to 2012, we offered a non-qualified supplemental incentive savings plan (SISP). We maintain anfor certain designated employees who exceeded a compensation threshold. Effective January 1, 2012, the SISP was frozen to new participants and to the deferral of amounts earned on and after January 1, 2012. Participants with existing account balances can direct the investment of their accounts among the hypothetical investment alternatives made available under the plan and their accounts are adjusted for deemed investment gains or losses resulting from such investment directions.
The SISP was a supplement to the incentive savings plan (ISP) in which most of our employees can participate after they meet certain age andany applicable service requirements. The ISP is a defined contribution 401(k) plan which is intended to be qualified under Section 401(a) of the Internal Revenue Code. During 2014, Participants maycould elect to contribute between 1% and 20%75% of eligible compensation to the plan each year as pre-tax elective deferrals, subject to Internal Revenue Code limits. Participants who are age 50 or older may contribute additional pre-tax amounts called “catch-up contributions” each year. For 2010,2014, we made employer matching contributions on behalf of eligible participants equal to 100% of elective deferrals up to 4% of eligible compensation. Matching contributions were made in employer stock. For 2011 matching contributions are made in cash. Participants direct the investment of their accounts among the investment options offered under the plan and their account balances are adjusted for gains or losses resulting from those investment directions. As ISP and SISP participants have the same investment options. The employee directs investment of December 31, 2011, we also maintainedcontributions under either plan. Investment options include several collective funds and mutual funds (including BlackRock mutual funds), a proprietary PNC investment fund, and a PNC common stock fund. We no longer permit new funds to be contributed or transferred into the PNC common stock fund. SISP investments are invested on a phantom basis and are considered “deemed” investments. Deferred compensation plan (DCP) and deferred compensation and incentive plan (DCIP). We maintain a non-qualified supplementaldeferred compensation and incentive savings plan (DCIP) for certaindesignated employees who exceed a compensation threshold. Participants can elect to defer up to 20% of base salary and/or up to 75% of eligible short-term incentive pay earned with respect to a plan year. The DCIP’s plan year is the calendar year and the DCIP’s first plan year began January 1, 2012. Prior to 2012, we offered a non-qualified deferred compensation plan (DCP) for designated employees who exceeded a compensation threshold. Participants could electEffective January 1, 2012, the DCP was frozen to defer a portion of their compensation that could not be deferred under the qualified ISP due to Internal Revenue Code limits. Once the applicable limits were reached under the ISP for a plan year, elective deferrals were madenew participants and to the SISP.deferral of amounts earned on and after January 1, 2012. Distributions from this plan are paid in cash in accordance with the participant’s election. Participants with existing account balances can direct the investment of their accounts among the hypothetical investment alternatives made available under the plan and their accounts are adjusted for deemed investment gains or losses resulting from such investment directions. Deferred compensation plan. As of December 31, 2011, we maintained a non-qualified deferred compensation plan (DCP) for certain designated employees who exceeded a compensation threshold. Participants could elect to deferDCP and contribute to the plan all or a portion of the eligible annual cash incentive awards they received. No deferral could be less than $5,000. Distributions from this plan are paid in cash in accordance with the participant’s election, but no deferral could be made for less than one full calendar year. Participants direct the investment of their accounts among the hypothetical investment alternatives made available under the plan and their accounts are adjusted for deemed investment gains or losses resulting from such investment directions.
ISP and SISPDCIP participants have the same investment options. The employee directs investment of contributions under either plan. Investment options include several publicly available mutual funds (including BlackRock mutual funds), a proprietary PNC investment fund, and a PNC common stock fund. We no longer permit new funds to be contributed or transferred into the PNC common stock fund.
Employees who may defer compensation under our DCPcurrently have many of the same investment options available to ISP and SISP participants. DCP and DCIP participants also have additional investment options, consisting ofincluding additional BlackRock mutual funds. DCP and SISPDCIP investments are invested on a phantom basis and are considered “deemed” investments.
| | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders | | 79 |
THE PNC FINANCIAL SERVICES GROUP, INC. - 2015 Proxy Statement 67 | | | | | | | | | | | | | | NEO | | Name of Plan | | Executive Contri- butions in
Last FY ($) | | Registrant
Contri-
butions in
Last FY ($) | | Aggregate
Earnings in
Last FY ($) | | Aggregate
Withdrawals /
Distributions
in Last FY ($) | | Aggregate
Balance
at Last
FYE ($) | | | | (a) | | | | (b) | | (c) | | (d) | | | | | | | | | | | | | | James E. Rohr | | Supplemental Incentive Savings Plan | | | | | | $(148,891) | | | | $4,347,229 | | | Deferred Compensation Plan | | | | | | $ (54,658) | | | | $1,663,794 | | | Total | | | | | | $(203,549) | | | | $6,011,023 | | | | | | | | | | | | | | Richard J. Johnson | | Supplemental Incentive Savings Plan | | $87,662 | | | | $ 4,184 | | | | $ 561,614 | | | Deferred Compensation Plan | | | | | | $ (7,201) | | | | $ 505,934 | | | Total | | $87,662 | | | | $ (3,017) | | | | $1,067,548 | | | | | | | | | | | | | | William S. Demchak | | Supplemental Incentive Savings Plan | | | | | | $ 4,340 | | | | $ 600,747 | | | Deferred Compensation Plan | | | | | | $(258,639) | | $(185,001) | | $3,639,646 | | | Total | | | | | | $(254,299) | | $(185,001) | | $4,240,393 | | | | | | | | | | | | | | Joseph C. Guyaux | | Supplemental Incentive Savings Plan | | | | | | $ (33,225) | | | | $1,071,967 | | | Deferred Compensation Plan | | | | | | $ 59,506 | | | | $2,640,933 | | | Total | | | | | | $ 26,281 | | | | $3,712,900 | | | | | | | | | | | | | | E. William Parsley, III | | Supplemental Incentive Savings Plan | | | | | | $(100,095) | | | | $1,094,425 | | | Deferred Compensation Plan | | | | | | $ (21,085) | | $(448,142) | | $3,115,908 | | | Total | | | | | | $(121,180) | | $(448,142) | | $4,210,333 |
NON-QUALIFIED DEFERRED COMPENSATION IN FISCAL 2014 | | | | | | | | | | | | | | | | | | | | | | | | | | | | Executive
Contributions
in Last FY
($) | | | Registrant
Contributions in
Last FY
($) | | | Aggregate
Earnings
in Last FY
($) | | | Aggregate
Withdrawals/
Distributions
($) | | | Aggregate
Balance at
Last FYE
($) | | | NEO | | Name of Plan | | (a) | | | | | | (b) | | | | | | (c) | | | William S. Demchak | | Supplemental Incentive Savings Plan | | | – | | | | – | | | $ | 136,143 | | | | – | | | $ | 1,038,076 | | | | Deferred Compensation & Incentive Plan | | $ | 385,417 | | | | – | | | $ | 114,079 | | | $ | (379,075 | ) | | $ | 1,169,926 | | | | | Deferred Compensation Plan | | | – | | | | – | | | $ | 125,731 | | | $ | (1,202,598 | ) | | $ | 2,835,463 | | | | | Total | | $ | 385,417 | | | | – | | | $ | 375,953 | | | $ | (1,581,673 | ) | | $ | 5,043,465 | | Robert Q. Reilly | | Supplemental Incentive Savings Plan | | | – | | | | – | | | $ | 52,601 | | | | – | | | $ | 646,744 | | | | Deferred Compensation & Incentive Plan | | | – | | | | – | | | | – | | | | – | | | | – | | | | | Deferred Compensation Plan | | | – | | | | – | | | $ | 140,480 | | | | – | | | $ | 2,298,561 | | | | | Total | | | – | | | | – | | | $ | 193,081 | | | | – | | | $ | 2,945,305 | | Michael P. Lyons | | Supplemental Incentive Savings Plan | | | – | | | | – | | | | – | | | | – | | | | – | | | | Deferred Compensation & Incentive Plan | | | – | | | | – | | | | – | | | | – | | | | – | | | | | Deferred Compensation Plan | | | – | | | | – | | | | – | | | | – | | | | – | | | | | Total | | | – | | | | – | | | | – | | | | – | | | | – | | | E. William Parsley, III | | Supplemental Incentive Savings Plan | | | – | | | | – | | | $ | 99,148 | | | | – | | | $ | 1,796,242 | | | | Deferred Compensation & Incentive Plan | | | – | | | | – | | | | – | | | | – | | | | – | | | | | Deferred Compensation Plan | | | – | | | | – | | | $ | 79,294 | | | $ | (576,685 | ) | | $ | 2,402,386 | | | | | Total | | | – | | | | – | | | $ | 178,442 | | | $ | (576,685 | ) | | $ | 4,198,628 | | | Joseph C. Guyaux | | Supplemental Incentive Savings Plan | | | – | | | | – | | | $ | 198,361 | | | | – | | | $ | 1,870,983 | | | | Deferred Compensation & Incentive Plan | | | – | | | | – | | | | – | | | | – | | | | – | | | | | Deferred Compensation Plan | | | – | | | | – | | | $ | 37,929 | | | | – | | | $ | 2,775,536 | | | | | Total | | | – | | | | – | | | $ | 236,290 | | | | �� | | | $ | 4,646,519 | |
| (a) | Amounts in this column have been reported in theSummary compensation table on page 57.56. |
| (b) | No amounts in this column have been reported in theSummary compensation table on page 5756 as none of our NEOs received above-market preferential earnings. |
| (c) | Mr. Demchak and Mr. Parsley elected to take distributions from the Deferred Compensation Plan in 2011. |
(d) | We calculate the dollar amounts in this column by taking the aggregate balance at the end of fiscal year 20102013 and then adding the totals in the other columns to that balance. The aggregate balance at the end of fiscal year 20112014 includes any unrealized gains and losses on investments. |
| In previous years, some executive officers have deferred receipt of restricted stock. AnyPlease see page 69 for the amounts deferred as restricted phantom stock units are includedreported in the amounts under this column. |
| | | 80 | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholdersaggregate balance at last fiscal year end that were disclosed as compensation in previous Summary compensation tables. |
68 THE PNC FINANCIAL SERVICES GROUP, INC. - 2015 Proxy Statement | The following table shows the 2011 investment options for the ISP, SISP and DCP, along with annual rates of return. See page 79 for an explanation of our ISP, SISP and DCP. Ticker symbols are listed for investment options available to the general public. |
| | | | | | | | | | | | | | | | | | | | Fund | | Ticker
Symbol | | | | DCP | | | | ISP/SISP | | | | 2011 Annual
Rate of Return | | | AM EuroPacific Growth Fund R5 | | RERFX | | | | x | | | | x | | | | -13.34% | | | | | American Beacon Small-Cap Value | | AVFIX | | | | x | | | | x | | | | -4.07% | | | | | Black Rock Small/Mid Index | | N/A | | | | | | | | x | | | | -3.49% | | | | | BlackRock Asset Allocation Portfolio | | PBAIX | | | | x | | | | | | | | -3.21% | | | | | BlackRock Core Bond Fund | | BFMCX | | | | x | | | | | | | | 5.28% | | (1) | | | BlackRock Core Fixed Income Index | | N/A | | | | | | | | x | | | | 7.88% | | | | | BlackRock High Yield Bond Portfolio/BR | | BRHYX | | | | x | | | | x | | | | 3.14% | | | | | BlackRock Inflation Protected Bond | | BPRIX | | | | x | | | | | | | | 11.87% | | | | | BlackRock Intermediate Government Bond Portfolio | | PNIGX | | | | x | | | | | | | | 6.70% | | | | | BlackRock International Bond Portfolio | | CINSX | | | | x | | | | | | | | 2.63% | | | | | BlackRock International Index | | N/A | | | | | | | | x | | | | -10.72% | | | | | BlackRock International Opportunities Portfolio | | BISIX | | | | x | | | | | | | | -14.15% | | | | | BlackRock Large Cap Index | | N/A | | | | | | | | x | | | | 2.23% | | | | | BlackRock Large-Cap Core Portfolio | | MALRX | | | | x | | | | | | | | 0.01% | | | | | BlackRock LifePath Retirement Fund | | STLAX | | | | | | | | x | | | | 3.72% | | | | | BlackRock LifePath Retirement 2015 Fund | | N/A | | | | | | | | x | | | | 2.57% | | | | | BlackRock LifePath Retirement 2020 Fund | | N/A | | | | | | | | x | | | | 1.16% | | | | | BlackRock LifePath Retirement 2025 Fund | | N/A | | | | | | | | x | | | | 0.20% | | | | | BlackRock LifePath Retirement 2030 Fund | | N/A | | | | | | | | x | | | | -0.90% | | | | | BlackRock LifePath Retirement 2035 Fund | | N/A | | | | | | | | x | | | | -1.84% | | | | | BlackRock LifePath Retirement 2040 Fund | | N/A | | | | | | | | x | | | | -2.59% | | | | | BlackRock LifePath Retirement 2045 Fund | | N/A | | | | | | | | x | | | | -3.36% | | | | | BlackRock LifePath Retirement 2050 Fund | | N/A | | | | | | | | x | | | | -3.99% | | | | | BlackRock Liquidity Funds TempFund | | TMPXX | | | | x | | | | x | | | | 0.12% | | | | | BlackRock Small-Cap Growth Equity Portfolio | | PSGIX | | | | x | | | | | | | | 0.22% | | | | | BlackRock Treasury Inflation Protection | | N/A | | | | | | | | x | | | | 13.48% | | | | | BlackRock U.S. Opportunities Portfolio | | BMCIX | | | | x | | | | | | | | -9.16% | | | | | CRM Mid Cap Value Fund | | CRIMX | | | | x | | | | x | | | | -6.96% | | | | | Dodge & Cox Stock Fund | | DODGX | | | | x | | | | x | | | | -4.08% | | | | | Eagle Small Cap Growth Fund | | HSIIX | | | | | | | | x | | | | -1.60 | | (2) | | | Fidelity Spartan International | | FSIIX | | | | x | | | | | | | | -12.16% | | | | | Harbor Capital Appreciation Fund | | HACAX | | | | x | | | | x | | | | 0.62% | | | | | Munder Mid Cap Core Growth Y | | MGOYX | | | | x | | | | x | | | | -0.78% | | | | | PNC Common Stock Fund | | PNC | | | | x | | | | x | | | | -6.11% | | | | | PNC Investment Contract Fund z | | N/A | | | | x | | | | x | | | | 2.41% | | | | | Vanguard Institutional Index Fund Plus | | VIIIX | | | | x | | | | | | | | 2.11% | | | | | Vanguard Small Cap Index | | NAESX | | | | x | | | | | | | | -2.78% | | | | | Vanguard Total Bond market Index Investment | | VBMFX | | | | x | | | | | | | | 7.55% | | | | | Wells Fargo Adv Total Return I | | MBFIX | | | | | | | | x | | | | 8.52% | | | | |
(1) | Replaced BlackRock Managed Income Portfolio in the DCP 7/15/2011. |
(2) | Replaced BlackRock Small-Cap Grown Equity in the ISP 11/1/2011. |
| | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders | | 81 |
NON-QUALIFIED DEFERRED COMPENSATION IN FISCAL 2014 The amounts included infor each year reflect the aggregate year-end balance columncontributions that were reported in previous summary compensation tables (since 2006) are as follows:. The total represents the portion of the aggregate balance, without giving effect to earnings or distributions, that were reported in previous summary compensation tables. | | | | | | | | | | | | | | | | NEO | | 2006 | | 2007 | | 2008 | | 2009 | | 2010 | | 2011 | | Total* | James E. Rohr | | | | | | | | | | | | | | | Supplemental Incentive Savings Plan | | $ 153,800 | | $ 163,000 | | $ 155,738 | | $140,300 | | - | | - | | $ 612,838 | Deferred Compensation Plan | | - | | - | | - | | - | | - | | - | | - | Richard J. Johnson | | | | | | | | | | | | | | | Supplemental Incentive Savings Plan | | $ 47,105 | | $ 76,000 | | $ 75,473 | | $ 58,500 | | $ 33,479 | | $87,662 | | $ 378,219 | Deferred Compensation Plan | | $ 262,569 | | - | | $ 475,000 | | - | | - | | - | | $ 737,569 | William S. Demchak | | | | | | | | | | | | | | | Supplemental Incentive Savings Plan | | $ 77,102 | | $ 97,100 | | $ 75,200 | | $ 63,620 | | - | | - | | $ 313,022 | Deferred Compensation Plan | | $1,278,907 | | $1,625,000 | | $1,125,603 | | - | | - | | - | | $4,029,510 | Joseph C. Guyaux | | | | | | | | | | | | | | | Supplemental Incentive Savings Plan | | $ 61,944 | | $ 21,000 | | $ 17,625 | | $ 15,864 | | $ 4,127 | | - | | $ 120,560 | Deferred Compensation Plan | | - | | - | | - | | - | | - | | - | | - | E. William Parsley, III | | | | | | | | | | | | | | | Supplemental Incentive Savings Plan | | - | | - | | - | | - | | $665,038 | | - | | $ 665,038 | Deferred Compensation Plan | | - | | - | | - | | - | | - | | - | | - |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | NEO | | Plan | | | 2006 | | | 2007 | | | 2008 | | | 2009 | | | 2010 | | | 2011 | | | 2012 | | | 2013 | | | 2014 | | | Total* | | William S. Demchak | | | SISP | | | $ | 77,102 | | | $ | 97,100 | | | $ | 75,200 | | | $ | 63,620 | | | | - | | | | - | | | | - | | | | - | | | | - | | | $ | 313,022 | | | | | DCIP | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | $ | 150,000 | | | $ | 684,690 | | | $ | 385,417 | | | $ | 1,220,107 | | | | | | DCP | | | $ | 1,278,907 | | | $ | 1,625,000 | | | $ | 1,125,603 | | | | – | | | | – | | | | – | | | $ | 745,500 | | | | – | | | | – | | | $ | 4,775,010 | | Robert Q. Reilly | | | SISP | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | | DCIP | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | | | DCP | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | Michael P. Lyons | | | SISP | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | | DCIP | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | | | DCP | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | E. William Parsley, III | | | SISP | | | | – | | | | – | | | | – | | | | – | | | $ | 665,038 | | | | – | | | | – | | | | – | | | | – | | | $ | 665,038 | | | | | DCIP | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | | | DCP | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | Joseph C. Guyaux | | | SISP | | | $ | 61,944 | | | $ | 21,000 | | | $ | 17,625 | | | $ | 15,864 | | | $ | 4,127 | | | | – | | | | – | | | | – | | | | – | | | $ | 120,560 | | | | | DCIP | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | | | DCP | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | |
| * | The total amounts may exceed the aggregate balance at year-end due to the impact of plan withdrawals by the individual. |
THE PNC FINANCIAL SERVICES GROUP, INC. - 2015 Proxy Statement 69
NON-QUALIFIED DEFERRED COMPENSATION IN FISCAL 2014 The following table shows the 2014 investment options for the ISP, SISP, DCP and DCIP, along with annual rates of return. See page 67 for an explanation of our ISP, SISP, DCP and DCIP. Ticker symbols are listed for investment options available to the general public. | | | 82 | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders |
| | | | | | | | | | | | | | | | Benchmark Performance | | Ticker
Symbol | | | DCP | | | DCIP | | | ISP/SISP | | | 2014 Annual
Rate of Return | | Am Beacon Sm Cp Value Inst | | | AVFIX | | | | X | | | | X | | | | | | | | 4.72 | % | Change in ControlAm EuroPacific Growth R5
| | | RERFX | | | | X | | | | X | | | | | | | | -2.35 | % | BlackRock Asset Allocation Instl. | | | PBAIX | | | | X | | | | | | | | | | | | 2.34 | % | BlackRock Core Bond Fund1 | | | BFMCX | | | | X | | | | | | | | | | | | 6.64 | % | BlackRock Core Fixed Income Index | | | | | | | | | | | X | | | | | | | | 6.22 | % | BlackRock High Yield BR | | | BRHYX | | | | X | | | | X | | | | X | | | | 3.29 | % | BlackRock Intermediate Government Instl. | | | PNIGX | | | | X | | | | | | | | | | | | 5.63 | % | BlackRock Inflation Protected Bond Instl. | | | BPRIX | | | | X | | | | | | | | | | | | 2.63 | % | BlackRock International Bond Instl.* | | | CINSX | | | | X | | | | | | | | | | | | 3.64 | % | BlackRock International Index | | | | | | | | | | | X | | | | | | | | -5.32 | % | BlackRock International Opportunities Instl. | | | BISIX | | | | X | | | | | | | | | | | | -11.15 | % | BlackRock US Opportunities Instl. | | | BMCIX | | | | X | | | | X | | | | | | | | 12.75 | % | BlackRock Large Cap Core Instl. | | | MALRX | | | | X | | | | | | | | | | | | 11.89 | % | BlackRock Large Cap Index Fund | | | | | | | | | | | X | | | | | | | | 13.74 | % | BlackRock LifePath 2015 Fund** | | | | | | | | | | | X | | | | X | | | | 5.42 | % | BlackRock LifePath 2020 Fund | | | | | | | | | | | X | | | | X | | | | 5.58 | % | BlackRock LifePath 2025 Fund | | | | | | | | | | | X | | | | X | | | | 5.74 | % | BlackRock LifePath 2030 Fund | | | | | | | | | | | X | | | | X | | | | 5.88 | % | BlackRock LifePath 2035 Fund | | | | | | | | | | | X | | | | X | | | | 5.98 | % | BlackRock LifePath 2040 Fund | | | | | | | | | | | X | | | | X | | | | 6.08 | % | BlackRock LifePath 2045 Fund | | | | | | | | | | | X | | | | X | | | | 6.19 | % | BlackRock LifePath 2050 Fund | | | | | | | | | | | X | | | | X | | | | 6.24 | % | BlackRock LifePath Retirement Fund | | | | | | | | | | | X | | | | X | | | | 5.35 | % | BlackRock Liquidity Temp Fund | | | TMPXX | | | | X | | | | X | | | | X | | | | 0.04 | % | BlackRock Small Cap Growth Instl | | | PSGIX | | | | X | | | | | | | | | | | | 2.11 | % | BlackRock Small/Mid Index Fund | | | | | | | | | | | X | | | | | | | | 7.62 | % | BlackRock TIPS | | | | | | | | | | | X | | | | X | | | | 3.53 | % | Brandywine Intern’l Opp Fixed Inc Fund* | | | LMOTX | | | | X | | | | | | | | | | | | 4.52 | % | CRM Mid Cap Value Instl | | | CRIMX | | | | X | | | | X | | | | | | | | 5.98 | % | Dodge & Cox Stock Fund | | | DODGX | | | | X | | | | X | | | | | | | | 10.40 | % | Eagle Small Cap Growth Fund | | | HSIIX | | | | | | | | X | | | | | | | | 5.43 | % | Fidelity Spartan International Index Inv. | | | FSIIX | | | | X | | | | | | | | | | | | -5.45 | % | Harbor Capital Appreciation | | | HACAX | | | | X | | | | X | | | | | | | | 9.93 | % | Munder Mid Cap Core Growth Y | | | MGOYX | | | | X | | | | | | | | | | | | 10.17 | % | PNC Common Stock Fund | | | PNC | | | | X | | | | | | | | X | | | | 20.32 | % | PNC Stable Value Fund*** | | | | | | | X | | | | X | | | | X | | | | 1.45 | % | Vanguard Instl. Index Fund Plus | | | VIIIX | | | | X | | | | | | | | | | | | 13.68 | % | Vanguard Small Cap Index Inv. | | | NAESX | | | | X | | | | | | | | | | | | 7.37 | % | Vanguard Total Bond Mkt. Index Inv. | | | VBMFX | | | | X | | | | | | | | | | | | 5.76 | % | Wells Fargo Adv. Total Return I | | | MBFIX | | | | | | | | X | | | | | | | | 6.17 | % | SSgA S&P 500 Index Fund | | | | | | | | | | | | | | | X | | | | 13.66 | % | SSgaA U.S. Extended Market Index Fund | | | | | | | | | | | | | | | X | | | | 7.66 | % | SSgA Global Equity ex U.S. Index Fund | | | | | | | | | | | | | | | X | | | | -4.39 | % | SSgA Real Return ex Nat. Res. Index Fund | | | | | | | | | | | | | | | X | | | | 3.58 | % | SSgA U.S. Bond Index Fund | | | | | | | | | | | | | | | X | | | | 5.96 | % | SSgA Internation Equity Index Fund**** | | | | | | | | | | | | | | | X | | | | -6.45 | % | SSgA Emerging Markets Equity Index Fund**** | | | | | | | | | | | | | | | X | | | | -2.85 | % |
| * | Fund removed from the DCP effective 3/31/2014, then fund liquidated and Terminationwas replaced with the Brandywine Int’l. Opportunistic FI Fund as of Employment6/1/2014. |
| ** | Fund removed from ISP, SISP, DCIP line up effective 11/14/14 due to maturity. |
| *** | Name change effective September 1, 2014. |
| **** | Funds added effective 4/1/2014 to the ISP & SISP—Rates represent inception to date returns. |
70 THE PNC FINANCIAL SERVICES GROUP, INC. - 2015 Proxy Statement
CHANGE IN CONTROL AND TERMINATION OF EMPLOYMENT Benefits upon termination of employment A NEO
Our NEOs, may receive various forms of compensation or benefits in connection with a termination of employment. These benefits result from: change in control agreements, the terms of our equity-based grants, and other existing plans and arrangements in which our NEOs participate. We do not have a separate severance plan or program for the NEOs, although the Committee has discretion to provide severance benefits, subject to the parameters of the policy we adopted in February 2011 and described on page 4950 of our CD&A. The benefits will depend on whether PNC or the executive terminated employment and, if PNC terminated employment, whether it was for cause; whether the termination resulted from death or disability; whether the termination followed a change in control and whether the executive is retirement-eligible. If a retirement-eligible employee resigns or is terminated without cause, we consider it a retirement. For these purposes, a “retirement-eligible” employee is someone who is at least 55 years old and has at least five years of service with us. As of December 31, 2011, Mr. Rohr, Mr. Johnson, and2014, Mr. Guyaux werewas retirement-eligible, while Mr. Demchak, Mr. Reilly, Mr. Lyons, and Mr. Parsley were not. Change in control agreements We
As of December 31, 2014 we have entered into separate change in control agreements with each of our NEOs and similar agreements with a limited group of other senior officers. These agreements have been a valuable component of our executive compensation program for several years. We believe that these arrangements mitigate concerns arising from a change in control, and help to ensure the continued dedicated service of our key employees. While the acceleration of equity requires only a change in control,Cash payments received under these agreements require a “double trigger”—that is, the occurrence of both a change in control and a qualifying termination of employment. A qualifying termination would occur if the executive resigned for “good reason” or the surviving company terminated the executive without “cause” (each as defined in the change in control agreement). The treatment of equity awards upon a change in control is handled in the equity awards agreements themselves, described below, not in these agreements. These agreements would pay cash to our executives, calculated based on various compensation components. These components include base salary and an annual incentive award (bonus). The cash severance payment related to base salary for Mr. Rohr,Demchak, Mr. Johnson, Mr. DemchakReilly and Mr. Guyaux is based on three times, and for Mr. Lyons two times, the base salary (the highest monthly base salary rate for the twelve months preceding the change in control multiplied by twelve). For these executives, theThe cash severance payment related to the bonus is three times for Mr. Demchak, Mr. Reilly and Mr. Guyaux, and two times for Mr. Lyons, the applicable average bonus percent multiplied by the applicable base salary. For Mr. Parsley, the multiple for the base salary component is two and the multiple for the bonus component is one. The agreements also provide for continued benefits under (or compute cash payments by reference to) some of our retirement and health and welfare benefit plans. Our historical agreements require a payment to the NEO to reimburse the executive for any excise taxes on severance or other benefits that are considered “excess parachute payments” under the Internal Revenue Code as long as severance and other benefits are at least 105% of the maximum that can be paid without incurring the excise tax. Since 2009, we have eliminated the excise tax “gross-up” provision from new change in control agreements. Mr. Parsley’s agreement doesand Mr. Lyons’ agreements do not contain an excise tax gross-up provision. In addition, ourOur Board adopted a policy in February 2011 that requires shareholder approval of certain future severance arrangements if the arrangement provides for additional severance benefits in an amount exceeding 2.99 times the sum of the executive’s annual base salary and target bonus. See page 49. | | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders | | 83 |
| | | | | Change in Control and Termination of Employment
| | |
The change in control agreements prohibit the executive from using or disclosing any of our confidential business or technical information or trade secrets. The executive may also not employ or solicit any of our officers during the one-year period following termination. While the benefits to be received under a change in control agreement may be significant to an individual, they first require the occurrence of a significant transaction. As a result, the benefits are THE PNC FINANCIAL SERVICES GROUP, INC. - 2015 Proxy Statement 71
CHANGE IN CONTROL AND TERMINATION OF EMPLOYMENT highly speculative, and contingent on a variety of facts and circumstances. In recognition of this, our Personnel and Compensation Committee does not consider the amount of potential change in control payments when it makes annual compensation decisions for NEOs. Change in control protections, although meaningful, also become relatively less significant to PNC as we increase in size. Equity-based grants If aan NEO resigns or is terminated with or without cause, any unvested equity-based compensation is generally forfeited. If a retirement-eligible employee resigns or is terminated without cause, we consider it a retirement. AThe tables and narrative that follow describe the impact of a change in control, or the retirement or disability of aan NEO, has the following impact on any unvested equity-based compensation:compensation granted prior to 2015 and outstanding at December 31, 2014. Beginning in 2015, grants to our executive officers have a “double-trigger” rather than a “single trigger” in the event of a change of control of PNC. In general, this means that payout isnot accelerated on a change of control of PNC (although the potential payout amount would still be calculated and fixed at that time, generally in the same manner as for prior year awards), and that the change of control does not itself end the required service period, although after a change of control, the service requirement would also be satisfied if the executive’s employment were to be terminated without cause or if the executive were to leave for good reason. Grants that vest or become exercisable over timeGRANTS THAT VEST OR BECOME EXERCISABLE OVER TIME OR OPTIONS WHERE PERFORMANCE CRITERIA HAS BEEN MET
| | | | | | Change in Control | | Retirement | | Disability | •Securities vest or, if not already exercisable, become exercisable, regardless of whether employment is terminated.
•Following a termination without cause, or a resignation for good reason, the employee will have three years to exercise stock options. The three-year period cannot extend beyond the original option termination date, however.date.
| | •For stock options where the performance criteria has already been met or for other options granted at least one year before retirement, there will be no change. These options will continue in accordance with their original terms. No options have been granted to NEOs since 2010 and thus any outstanding options would meet the one year of service pre-retirement threshold.
• For stock options granted between six months and one year before retirement, the employee will forfeit two-thirds of the options. The remaining one-third of the options will continue in accordance with their original terms.
• For stock options granted less than six months before retirement, the employee will forfeit all of the options.
•For restricted stock and restricted share units that have not already satisfied the Personnel and Compensationservice requirements, the Committee may accelerate or approve vesting. IfFor certain awards, if the Committee does not take action withwithin a certain time of the scheduled vesting date, then the stock does not vest. For certain restricted stock awards, the Committee may accelerate vesting. For certain awards, retirement or retirement a specified period after grant will satisfy the service requirement. Certain awards do not include a service requirement.
| | •All stock options that were not already exercisable become exercisable and the employee has three years to exercise them. The three-year period cannot extend beyond the original option termination date, however.
•For restricted stock and restricted share units that have not already satisfied the Personnel and Compensationapplicable service requirement, the Committee may accelerateapprove vesting or, approve vesting. Ifin the case of certain restricted share units, the service requirement is satisfied. For certain awards, if the Committee does not take action withwithin a certain time of the scheduled vesting date, then the stockaward does not vest. For certain restricted stock awards, the Committee may accelerate vesting. Certain awards do not include a service requirement.
|
| | | 84 | | PNC – Proxy Statement for 2012 Annual Meeting of ShareholdersGRANTS THAT VEST UPON THE ACHIEVEMENT OF ADDITIONAL PERFORMANCE CRITERIA |
| | | | | | | Change in Control and Termination of Employment
|
Grants that vest upon the achievement of additional performance criteria(a)Performance-Based Restricted Stock Units
| | | | | Performance-Based Restricted Stock Units | | Change in Control | | Retirement | | Disability | •Any unvested performance RSUs will vest and pay out at 100% if we meet the Tier 1 capital ratio.ratio risk factor as of the last-completed quarter-end, provided that for 2013 and 2014 grants, the payout percentage will be subject to risk-based adjustments based on the most recent annual factor used prior to that time for the other risk factor. If we do not meet the required performance for the capital ratio risk factor, the units are cancelled.
| | •Performance RSUs continue in effect in accordance with their terms.
| | •Performance RSUs continue in effect in accordance with their terms.
|
72 THE PNC FINANCIAL SERVICES GROUP, INC. - 2015 Proxy Statement
CHANGE IN CONTROL AND TERMINATION OF EMPLOYMENT GRANTS THAT VEST UPON THE ACHIEVEMENT OF ADDITIONAL PERFORMANCE CRITERIA (CONTINUED) Incentive Performance Units 2008 Performance Options | | | | | | | | Change in Control | | Retirement | | Disability | • In general, these options will become exercisable upon a change in controlFor both regular and ALM incentive performance units, if our stock price meets or exceeds 120% of the grant date exercise price.
| | • If an employee retires before PNC meets the stock price threshold, the Committee may permit the options to remain outstanding and be eligible for exercise if we meet the price threshold.
| | • If an employee becomes disabled and is not terminated before PNC meets the stock price threshold, the options remain outstanding in accordance with their original terms.
• If an employee becomes disabled before PNC meets the stock price threshold and is terminated, the Committee may permit the options to remain outstanding and be eligible for exercise after termination of employment, if we meet the price threshold, for the period from then until the third anniversary of the employment termination date.
|
(a) | The National City performance options vested in February 2012. See discussion on page 66. If a change in control had occurred before February 12, 2012, the options would have become exercisable unless our Board’s Personnel and Compensation Committee had determined that it was unlikely that the performance criteria would have been met. |
| | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders | | 85 |
| | | | | Change in Control and Termination of Employment
| | |
Grants that vest upon the achievement of additional performance criteria (continued)
| | | | | Incentive Performance Units | Change in Control | | Retirement | | Disability | • If the performance period has not yet ended before the date of a change in control, the employee would receive no less than twicea two-part award. Each part of the amount of dividend-adjusted target units,award would be prorated for thebased on a portion of time that has elapsed inthe original multi-year performance period.
The first part of the award relates to the part of the performance period.period that had already elapsed before the change in control. The second part of the award relates to the part of the performance period that had not been completed due to the change in control. • We calculateIn each part, the amountaward would be calculated by first determiningmultiplying a performance factor by the target number of units originally granted (plus any deemed dividends sinceand then applying the grant date) and adjusting that number by a factor that accounts for theapplicable proration (for example, if half of the performance period has elapsed,factor. (For 2012 regular grants, the target number willof units would be reduced by half).
• After we adjust the original target grant sizeadjusted for the prorated performance period, we calculate two amounts:
(1) An amount equaldeemed dividends up to the adjusted targetchange in control date. For 2013 and 2014 regular grants, the related dividend equivalents, which receive the same performance adjustment as their related units, cease to accrue at the change in control date. The ALM units do not have deemed dividends or the adjusted target multiplied by the performance through the endequivalents. The 2011 and earlier grants of the quarter, if performance exceeds 100% (using the performance metrics and payout grid discussed on page 46).
(2) An additional amount equal to the adjusted target.
• We will then pay out these two amounts in accordance with the plan, payable in PNC common stock, and any amounts based on performance exceeding 100% payable in cash.
• For the ALM incentive performance units grantedare no longer outstanding.)
The performance factor used to Mr. Demchak and Mr. Parsley,calculate the calculation and payout willfirst part would be the same, except that: •higher of 100% and the target units will not be adjusted for dividends
• all payments will be in cash,payout percentage achieved, based on the closing stock price of PNC common stock onactual applicable corporate performance prior to the date of the change in control.
| | • The Personnel and Compensation Committee maycorporate performance factor used to calculate the second part would be a flat 100%. For the regular grants, the performance factors used to calculate the awards would also be subject to additional, risk-based adjustments, with both parts of the award a proratedsubject to risk-based adjustment in certain circumstances.
For the first part of the award, the performance-adjusted amount to a retired employee. This amount willof units would then be prorated based on the retirementportion of the overall performance period (measured in quarters) that had elapsed before the date of the employee andchange in control. For the remaining performance period, and any payoutsecond part, the proration would occur,be based on the remainder of the originally scheduled performance achievedperiod not completed due to the change in control. | | For grants of regular or ALM units made in 2012, 2013 and 2014, in the case of either retirement or disability, the grantee remains eligible for consideration for a full award equal to the same award the grantee could have received had the grantee remained employed for the full performance period. The 2011 and earlier grants of incentive performance units are no longer outstanding. For all grants, regardless of the year that they were made, the Committee retains downward discretion to adjust or eliminate the payout. Any payout would occur after the performance period ends. | | • The Personnel and Compensation Committee may award the full amount to an employee who becomes disabled during the performance period. Any payout would occur, based on the performance achieved after the performance period ends.
|
| | | 86 | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders |
| | | | | | | Change in Control and Termination of Employment
|
THE PNC FINANCIAL SERVICES GROUP, INC. - 2015 Proxy Statement 73
CHANGE IN CONTROL AND TERMINATION OF EMPLOYMENT The retirement and disability benefits summarized above are generally subject to termination by PNC if it is determined that an employee has engaged in certain competitive activities during employment or the first year post-employment, or that the employee has engaged in other detrimental conduct. Clawback provisions are generally limited after a change of control. If the executive officer dies, generally stock options becomeremain exercisable until the original option termination date, restricted stock vests,and restricted share units vest, performance RSUs vest and pay out at 100% (provided, for 2013 and 2014 grants, if death occurs after the close of a performance year but before that year’s tranche has paid out, payout of that tranche is the same as if still an employee and otherwise at 100%), and a portion of the outstanding incentive performance units (or all of such units for 2014 grants) may be paid out, subject to the discretion of our Board’s Personnel and Compensation Committee. Any options will generally remain exercisable untilCommittee, up to a maximum based on actual corporate and risk performance through the original option termination date.calendar year of the executive officer’s death (and, for 2014 grants, at 100% thereafter). Existing plans and arrangements As of December 31, 2011,2014, our NEOs could participate in our qualified cash balance pension plan, our ERISA excess pension plan, our supplemental executive retirement plan,ISP, and our ISP,DCIP. In addition, our NEOs, other than Mr. Lyons, participate in our SISP and our DCP.DCP (although they may no longer make contributions to these plans) and our NEOs, other than Mr. Lyons and Mr. Parsley, participate in our supplemental executive retirement plan. The officers earn these benefits for services provided to us while employed, and many of these plans are also available on a broader basis to other employees. For the most part, an officer’s entitlement to these benefits does not depend on how employment terminates. Estimated benefits upon termination The following table shows the estimated benefits payable to our NEOs as of December 31, 20112014 as a result of termination of employment in a variety of situations. These estimated amounts have been calculated as if employment was terminated on December 31, 2011.2014. For change in control benefits, we assumed a change in control of PNC and a termination of employment by the surviving company without cause (or a resignation of the officer for good reason) on that date. To the extent relevant, the amounts assume a PNC stock price of $57.67, $91.23 the closing price for our stock on December 30, 2011.31, 2014. If we calculated these amounts using a different price, the amounts could be significantly different. The benefits below do not include the balances under our qualified cash balance pension plan, our ERISA excess pension plan, our supplemental executive retirement plan, our ISP, our SISP, our DCP and our DCPDCIP unless the NEO receives an enhanced benefit under the termination scenario. | | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders | | 87 |
| | | | | Change in Control and Termination of Employment
| | |
EMPLOYEES WHO ARE NOT ELIGIBLE FOR RETIREMENT | | | | | | | | | | | | | | | | | | | | | | | | | | William S. Demchak | | Termination
for Cause | | | Voluntary
Termination/
Termination
without Cause(a) | | | Retirement(a) | | | Change
in Control(b) | | | Disability | | | Death | | Cash Severance | | | – | | | | – | | | | – | | | $ | 12,780,037 | | | | – | | | | – | | Base Salary | | | – | | | | – | | | | – | | | $ | 3,300,000 | | | | – | | | | – | | Bonus | | | – | | | | – | | | | – | | | $ | 9,480,037 | | | | – | | | | – | | Enhanced Benefits | | | – | | | | – | | | | – | | | $ | 1,036,136 | | | | – | | | | – | | Defined Benefit Plans | | | – | | | | – | | | | – | | | $ | 970,803 | | | | – | | | | – | | Defined Contribution Plans | | | – | | | | – | | | | – | | | $ | 31,200 | | | | – | | | | – | | General Health & Welfare | | | – | | | | – | | | | – | | | $ | 34,133 | | | | – | | | | – | | Acceleration of Unvested Equity | | | – | | | | – | | | | – | | | $ | 18,296,157 | | | $ | 18,934,314 | | | $ | 17,179,043 | | Restricted Stock/Units | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | Performance-based RSUs | | | – | | | | – | | | | – | | | $ | 8,691,874 | | | $ | 9,494,975 | | | $ | 8,691,874 | | Incentive Performance Units | | | – | | | | – | | | | – | | | $ | 9,604,283 | | | $ | 9,439,339 | | | $ | 8,487,169 | | Excise Tax and Gross-Up | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | TOTAL | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 32,112,330 | | | $ | 18,934,314 | | | $ | 17,179,043 | |
Employees who are eligible for retirement:74 THE PNC FINANCIAL SERVICES GROUP, INC. - 2015 Proxy Statement
CHANGE IN CONTROL AND TERMINATION OF EMPLOYMENT | | James E. Rohr | | Termination
for
Cause | | | Voluntary
Termination/
Termination
without
Cause (a) | | Retirement (a) | | Change in
Control (b) | | | Disability | | Death | | | Robert Q. Reilly | | | Termination
for Cause | | | Voluntary
Termination/
Termination
without Cause(a) | | | Retirement(a) | | | Change
in Control(b) | | | Disability | | | Death | | Cash Severance | | | - | | | - | | - | | $ | 11,253,177 | | | - | | - | | | – | | | | – | | | | – | | | $ | 4,768,704 | | | | – | | | | – | | Base Salary | | | - | | | - | | - | | $ | 3,600,000 | | | - | | - | | | – | | | | – | | | | – | | | $ | 1,500,000 | | | | – | | | | – | | Bonus | | | - | | | - | | - | | $ | 7,653,177 | | | - | | - | | | – | | | | – | | | | – | | | $ | 3,268,704 | | | | – | | | | – | | Enhanced Benefits | | | - | | | - | | - | | $ | 1,441,900 | | | - | | - | | | – | | | | – | | | | – | | | $ | 519,319 | | | | – | | | | – | | Defined Benefit Plans | | | - | | | - | | - | | $ | 1,381,584 | | | - | | - | | | – | | | | – | | | | – | | | $ | 449,556 | | | | – | | | | – | | Defined Contribution Plans | | | - | | | - | | - | | $ | 29,400 | | | - | | - | | | – | | | | – | | | | – | | | $ | 31,200 | | | | – | | | | – | | General Health & Welfare | | | - | | | - | | - | | $ | 30,916 | | | - | | - | | | – | | | | – | | | | – | | | $ | 38,563 | | | | – | | | | – | | Acceleration of Unvested Equity | | | | $15,925,144 | | $15,925,144 | | $ | 24,044,357 | | | $24,035,082 | | $21,138,675 | | | – | | | | – | | | | – | | | $ | 4,670,874 | | | $ | 4,818,326 | | | $ | 4,331,363 | | Restricted Stock | | | - | | | $ 5,180,621 | | $ 5,180,621 | | $ | 10,394,152 | | | $ 10,384,877 | | $ 10,394,152 | | Unexercisable Options | | | - | | | $ 8,296,061 | | $ 8,296,061 | | $ | 8,296,061 | | | $ 8,296,061 | | $ 8,296,061 | | Restricted Stock/Units | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | Performance-based RSUs | | | | – | | | | – | | | | – | | | $ | 2,204,961 | | | $ | 2,398,752 | | | $ | 2,204,961 | | Incentive Performance Units | | | - | | | $ 2,448,462 | | $ 2,448,462 | | $ | 5,354,144 | | | $ 5,354,144 | | $ 2,448,462 | | | – | | | | – | | | | – | | | $ | 2,465,913 | | | $ | 2,419,574 | | | $ | 2,126,402 | | Excise Tax and Gross-Up | | | - | | | - | | - | | | - | | | - | | - | | | – | | | | – | | | | – | | | $ | 3,716,874 | | | | – | | | | – | | Total | | $ | 0 | | | $15,925,144 | | $15,925,144 | | $ | 36,739,434 | | | $24,035,082 | | $21,138,675 | | | Richard J. Johnson | | Termination
for
Cause | | | Voluntary
Termination/
Termination
without
Cause (a) | | Retirement (a) | | Change in
Control (b) | | | Disability | | Death | | Cash Severance | | | - | | | - | | - | | $ | 3,657,345 | | | - | | - | | Base Salary | | | - | | | - | | - | | $ | 1,500,000 | | | - | | - | | Bonus | | | - | | | - | | - | | $ | 2,157,345 | | | - | | - | | Enhanced Benefits | | | - | | | - | | - | | $ | 334,297 | | | - | | - | | Defined Benefit Plans | | | - | | | - | | - | | $ | 284,160 | | | - | | - | | Defined Contribution Plans | | | - | | | - | | - | | $ | 29,400 | | | - | | - | | General Health & Welfare | | | - | | | - | | - | | $ | 20,737 | | | - | | - | | Acceleration of Unvested Equity | | | | $ 3,549,215 | | $ 3,549,215 | | $ | 5,547,352 | | | $5,545,220 | | $4,893,501 | | Restricted Stock | | | - | | | $ 1,145,501 | | $ 1,145,501 | | $ | 2,489,787 | | | $ 2,487,655 | | $ 2,489,787 | | Unexercisable Options | | | - | | | $ 1,866,602 | | $ 1,866,602 | | $ | 1,866,602 | | | $ 1,866,602 | | $ 1,866,602 | | Incentive Performance Units | | | - | | | $ 537,112 | | $ 537,112 | | $ | 1,190,963 | | | $ 1,190,963 | | $ 537,112 | | Excise Tax and Gross-Up | | | - | | | - | | - | | $ | 3,237,951 | | | - | | - | | Total | | $ | 0 | | | $ 3,549,215 | | $ 3,549,215 | | $ | 12,776,945 | | | $5,545,220 | | $4,893,501 | | | Joseph C. Guyaux | | Termination
for
Cause | | | Voluntary
Termination/
Termination
without
Cause (a) | | Retirement (a) | | Change in
Control (b) | | | Disability | | Death | | Cash Severance | | | - | | | - | | - | | | $4,917,579 | | | - | | - | | Base Salary | | | - | | | - | | - | | | $ 1,860,000 | | | - | | - | | Bonus | | | - | | | - | | - | | | $ 3,057,579 | | | - | | - | | Enhanced Benefits | | | - | | | - | | - | | | $ 820,772 | | | - | | - | | Defined Benefit Plans | | | - | | | - | | - | | | $ 760,317 | | | - | | - | | Defined Contribution Plans | | | - | | | - | | - | | | $ 29,400 | | | - | | - | | General Health & Welfare | | | - | | | - | | - | | | $ 31,055 | | | - | | - | | Acceleration of Unvested Equity | | | - | | | $6,098,602 | | $6,098,602 | | | $9,307,440 | | | $9,304,624 | | $8,326,615 | | Restricted Stock | | | - | | | $ 1,543,086 | | $ 1,543,086 | | | $3,771,099 | | | $3,768,283 | | $3,771,099 | | Unexercisable Options | | | - | | | $ 3,733,230 | | $ 3,733,230 | | | $3,733,230 | | | $3,733,230 | | $3,733,230 | | Incentive Performance Units | | | - | | | $ 822,286 | | $ 822,286 | | | $1,803,111 | | | $1,803,111 | | $822,286 | | Excise Tax and Gross-Up | | | - | | | - | | - | | | - | | | - | | - | | Total | | | $0 | | | $6,098,602 | | $6,098,602 | | | $15,045,791 | | | $9,304,624 | | $8,326,615 | | TOTAL | | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 13,675,771 | | | $ | 4,818,326 | | | $ | 4,331,363 | |
| | | 88 | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders |
| | | | | | | Change in Control and Termination of Employment
|
| | | | | | | | | | | | | | | | | | | | | | | | | | Michael P. Lyons | | Termination
for Cause | | | Voluntary
Termination/
Termination
without Cause(a) | | | Retirement(a) | | | Change
in Control(b) | | | Disability | | | Death | | Cash Severance | | | – | | | | – | | | | – | | | $ | 6,600,756 | | | | – | | | | – | | Base Salary | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | Bonus | | | – | | | | – | | | | – | | | $ | 6,600,756 | | | | – | | | | – | | Enhanced Benefits | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | Defined Benefit Plans | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | Defined Contribution Plans | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | General Health & Welfare | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | Acceleration of Unvested Equity | | | – | | | | – | | | | – | | | $ | 13,925,103 | | | $ | 14,182,982 | | | $ | 13,025,558 | | Restricted Stock/Units | | | – | | | | – | | | | – | | | $ | 1,330,681 | | | $ | 1,330,681 | | | $ | 1,330,681 | | Performance-based RSUs | | | – | | | | – | | | | – | | | $ | 5,383,522 | | | $ | 5,763,804 | | | $ | 5,383,522 | | Incentive Performance Units | | | – | | | | – | | | | – | | | $ | 7,210,900 | | | $ | 7,088,497 | | | $ | 6,311,355 | | Excise Tax and Gross-Up | | | – | | | | – | | | | – | | | | N/A | | | | – | | | | – | | TOTAL | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 20,525,859 | | | $ | 14,182,982 | | | $ | 13,025,558 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | E. William Parsley, III | | Termination
for Cause | | | Voluntary
Termination/
Termination
without Cause(a) | | | Retirement(a) | | | Change
in Control(b) | | | Disability | | | Death | | Cash Severance | | | – | | | | – | | | | – | | | $ | 1,993,085 | | | | - | | | | - | | Base Salary | | | – | | | | – | | | | – | | | $ | 1,000,000 | | | | – | | | | – | | Bonus | | | – | | | | – | | | | – | | | $ | 993,085 | | | | – | | | | – | | Enhanced Benefits | | | – | | | | – | | | | – | | | $ | 147,153 | | | | – | | | | – | | Defined Benefit Plans | | | – | | | | – | | | | – | | | $ | 99,654 | | | | – | | | | – | | Defined Contribution Plans | | | – | | | | – | | | | – | | | $ | 20,800 | | | | – | | | | – | | General Health & Welfare | | | – | | | | – | | | | – | | | $ | 26,699 | | | | – | | | | – | | Acceleration of Unvested Equity | | | – | | | | – | | | | – | | | $ | 25,819,575 | | | $ | 26,051,408 | | | $ | 24,049,939 | | Restricted Stock/Units | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | Performance-based RSUs | | | – | | | | – | | | | – | | | $ | 2,716,640 | | | $ | 2,995,352 | | | $ | 2,716,640 | | Incentive Performance Units | | | – | | | | – | | | | – | | | $ | 2,819,786 | | | $ | 2,772,907 | | | $ | 2,478,507 | | Phantom Units | | | – | | | | – | | | | – | | | $ | 20,283,149 | | | $ | 20,283,149 | | | $ | 18,854,792 | | Excise Tax and Gross-Up | | | – | | | | – | | | | – | | | | N/A | | | | – | | | | – | | TOTAL | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 27,959,813 | | | $ | 26,051,408 | | | $ | 24,049,939 | |
Employees who are not eligible for retirement:THE PNC FINANCIAL SERVICES GROUP, INC. - 2015 Proxy Statement 75
CHANGE IN CONTROL AND TERMINATION OF EMPLOYMENT EMPLOYEES WHO ARE ELIGIBLE FOR RETIREMENT | | | | | | | | | | | | | | | | | | William S. Demchak | | Termination
for
Cause | | | Voluntary
Termination/
Termination
without
Cause | | Retirement | | Change in
Control (b) | | | Disability | | Death | Cash Severance | | | - | | | - | | - | | $ | 8,100,000 | | | - | | - | Base Salary | | | - | | | - | | - | | $ | 2,250,000 | | | - | | - | Bonus | | | - | | | - | | - | | $ | 5,850,000 | | | - | | - | Enhanced Benefits | | | - | | | - | | - | | $ | 611,566 | | | - | | - | Defined Benefit Plans | | | - | | | - | | - | | $ | 551,250 | | | - | | - | Defined Contribution Plans | | | - | | | - | | - | | $ | 29,400 | | | - | | - | General Health & Welfare | | | - | | | - | | - | | $ | 30,916 | | | - | | - | Acceleration of Unvested Equity | | | - | | | - | | - | | $ | 18,343,548 | | | $18,337,512 | | $15,514,195 | Restricted Stock | | | - | | | - | | - | | $ | 7,719,187 | | | $ 7,713,151 | | $ 7,719,187 | Unexercisable Options | | | - | | | - | | - | | $ | 3,733,230 | | | $ 3,733,230 | | $ 3,733,230 | Incentive Performance Units | | | - | | | - | | - | | $ | 2,748,092 | | | $ 2,748,092 | | $ 1,137,280 | Phantom Units | | | - | | | - | | - | | $ | 4,143,039 | | | $ 4,143,039 | | $ 2,924,498 | Excise Tax and Gross-Up | | | - | | | - | | - | | | - | | | - | | - | Total | | $ | 0 | | | $0 | | $0 | | $ | 27,055,114 | | | $18,337,512 | | $15,514,195 | | E. William Parsley, III | | Termination
for
Cause | | | Voluntary
Termination/
Termination
without
Cause | | Retirement | | Change in
Control (b) | | | Disability | | Death | Cash Severance | | | - | | | - | | - | | | $2,321,569 | | | - | | - | Base Salary | | | - | | | - | | - | | | $800,000 | | | - | | - | Bonus | | | - | | | - | | - | | | $1,521,569 | | | - | | - | Enhanced Benefits | | | - | | | - | | - | | | $159,077 | | | - | | - | Defined Benefit Plans | | | - | | | - | | - | | | $116,078 | | | - | | - | Defined Contribution Plans | | | - | | | - | | - | | | $19,600 | | | - | | - | General Health & Welfare | | | - | | | - | | - | | | $23,399 | | | - | | - | Acceleration of Unvested Equity | | | - | | | - | | - | | | $8,993,874 | | | $8,991,204 | | $7,493,444 | Restricted Stock | | | - | | | - | | - | | | $5,221,384 | | | $5,218,714 | | $5,221,384 | Unexercisable Options | | | - | | | - | | - | | | $1,037,001 | | | $1,037,001 | | $1,037,001 | Incentive Performance Units | | | - | | | - | | - | | | $1,238,606 | | | $1,238,606 | | $486,618 | Phantom Units | | | - | | | - | | - | | | $1,496,883 | | | $1,496,883 | | $748,441 | Excise Tax and Gross-Up | | | - | | | - | | - | | | - | | | - | | - | Total | | | $0 | | | $0 | | $0 | | | $11,474,520 | | | $8,991,204 | | $7,493,444 |
| | | | | | | | | | | | | | | | | | | | | | | | | | Joseph C. Guyaux | | Termination
for Cause | | | Voluntary
Termination/
Termination
without Cause(a) | | | Retirement(a) | | | Change
in Control(b) | | | Disability | | | Death | | Cash Severance | | | – | | | | – | | | | – | | | $ | 5,055,400 | | | | – | | | | – | | Base Salary | | | – | | | | – | | | | – | | | $ | 1,860,000 | | | | – | | | | – | | Bonus | | | – | | | | – | | | | – | | | $ | 3,195,400 | | | | – | | | | – | | Enhanced Benefits | | | – | | | | – | | | | – | | | $ | 843,504 | | | | – | | | | – | | Defined Benefit Plans | | | – | | | | – | | | | – | | | $ | 787,878 | | | | – | | | | – | | Defined Contribution Plans | | | – | | | | – | | | | – | | | $ | 31,200 | | | | – | | | | – | | General Health & Welfare | | | – | | | | – | | | | – | | | $ | 24,426 | | | | – | | | | – | | Acceleration of Unvested Equity | | | – | | | | – | | | $ | 7,528,419 | | | $ | 7,268,270 | | | $ | 7,528,419 | | | $ | 6,813,396 | | Restricted Stock/Units | | | – | | | | – | | | $ | 550,938 | | | $ | 550,938 | | | $ | 550,938 | | | $ | 550,938 | | Performance-based RSUs | | | – | | | | – | | | $ | 3,556,242 | | | $ | 3,236,826 | | | $ | 3,556,242 | | | $ | 3,236,826 | | Incentive Performance Units | | | – | | | | – | | | $ | 3,421,239 | | | $ | 3,480,506 | | | $ | 3,421,239 | | | $ | 3,025,632 | | Excise Tax and Gross-Up | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | TOTAL | | $ | 0 | | | $ | 0 | | | $ | 7,528,419 | | | $ | 13,167,174 | | | $ | 7,528,419 | | | $ | 6,813,396 | |
| (a) | If a retirement-eligible employee resigns or is terminated without cause, we consider it a retirement. |
| (b) | The benefits shown under “Acceleration of Unvested Equity” are received upon the change in control itself and do not require termination of employment while the other benefits require a qualifying termination of employment. In addition, it is possible that an Excise Tax Gross-Up payment may be required if a change in control occurred even without a qualifying employment termination. |
| | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders | | 89 |
| | | | | Security Ownership of Directors and Executive Officers
| | |
76 THE PNC FINANCIAL SERVICES GROUP, INC. - 2015 Proxy Statement
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS Security ownership of directors and executive officers The table below sets forth information regarding common stock ownership by our directors and executive officers. We include beneficial ownership of common stock as of January 31, 201230, 2015 for each director (including all nominees for director), each executive officer named in the Summary compensation table on page 52,56, and all directors and executive officers as a group. Unless we otherwise note, each person exercises sole voting and investment power over these shares of common stock. We determine the number of shares in the Common Stock Ownership column as beneficially owned by each director and executive officer pursuant to SEC regulations. This information does not necessarily indicate beneficial ownership for any other purpose. Beneficial ownership includes any shares of common stock as to which the individual has sole or shared voting power or investment power. We also include any shares of common stock that the individual has the right to acquire within 60 days of January 31, 201230, 2015 through the exercise of any option, warrant or right.right and any restricted stock units payable in common stock that vest within 60 days of January 30, 2015. The table also shows, as of January 31, 2012,30, 2015, the number of common stock units credited to the accounts of our directors and executive officers under various compensation and benefit plans. Each of our directors standing for election owns shares of our common stock. | | Name | | Common
Stock
Ownership* | | Number of
Shares
Subject to
Exercisable
Options | | Total
Number of
Shares
Beneficially
Owned | | Common Stock Unit Ownership** | | Total
Shares
Beneficially
Owned
Plus
Common
Stock Units | | Common
Stock
Ownership* | | Options
and
Restricted
Share
Units** | | | Total
Number of
Shares
Beneficially
Owned | | | Common
Stock Unit
Ownership*** | | | Total
Shares
Beneficially
Owned
Plus
Common
Stock Units | | | | | | | Non-Employee Directors: | | | | | | | | | | | | | | | | | | | | | | | Richard O. Berndt | | 13,968 | | - | | 13,968 | | 9,367 | | 23,335 | | | 8,298 | | | | — | | | | 8,298 | | | | 15,567 | | | | 23,865 | | | | Charles E. Bunch | | 781 | | - | | 781 | | 9,367 | | 10,148 | | | 781 | | | | — | | | | 781 | | | | 15,567 | | | | 16,348 | | | | Paul W. Chellgren | | 23,735 (1) | | 10,000 | | 33,735 | | 48,698 | | 82,433 | | | 24,096 | (1) | | | — | | | | 24,096 | | | | 59,645 | | | | 83,741 | | | | Marjorie Rodgers Cheshire | | | | 100 | | | | — | | | | 100 | | | | 59 | | | | 159 | | | | Andrew T. Feldstein | | | | 38,000 | (2) | | | — | | | | 38,000 | | | | 3,407 | | | | 41,407 | | | | Kay Coles James | | 15 | | - | | 15 | | 13,090 | | 13,105 | | | 315 | | | | — | | | | 315 | | | | 20,496 | | | | 20,811 | | | | Richard B. Kelson | | 624 (1) | | 2,000 | | 2,624 | | 19,091 | | 21,715 | | | 119 | | | | — | | | | 119 | | | | 26,019 | | | | 26,138 | | | | Bruce C. Lindsay | | 2,669 | | - | | 2,669 | | 27,588 | | 30,257 | | Anthony A. Massaro | | 3,121 (1) | | 6,000 | | 9,121 | | 14,609 | | 23,730 | | | 3,143 | (1)(3) | | | — | | | | 3,143 | | | | 22,726 | | | | 25,869 | | | | Jane G. Pepper | | 2,840 (1) | | 10,000 | | 12,840 | | 21,193 | | 34,033 | | | 2,840 | | | | 2,000 | | | | 4,840 | | | | 29,083 | | | | 33,923 | | | | Donald J. Shepard | | 8,967 (2) | | - | | 8,967 | | 14,831 | | 23,798 | | | 8,967 | (2) | | | — | | | | 8,967 | | | | 31,989 | | | | 40,956 | | | | Lorene K. Steffes | | 2,041 (1)(3) | | 10,000 | | 12,041 | | 19,229 | | 31,270 | | | 2,041 | (3) | | | 1,000 | | | | 3,041 | | | | 27,301 | | | | 30,342 | | | | Dennis F. Strigl | | 10,714 (1) | | 6,000 | | 16,714 | | 20,917 | | 37,631 | | | 10,714 | (3) | | | — | | | | 10,714 | | | | 27,754 | | | | 38,468 | | | | Thomas J. Usher | | 7,139 (1)(3) | | 10,000 | | 17,139 | | 42,806 | | 59,945 | | | 7,139 | (3) | | | — | | | | 7,139 | | | | 51,513 | | | | 58,652 | | | | George H. Walls, Jr. | | 371 | | - | | 371 | | 19,084 | | 19,455 | | | 392 | | | | — | | | | 392 | | | | 28,953 | | | | 29,345 | | | | Helge H. Wehmeier | | 24,183 (1) | | 10,000 | | 34,183 | | 29,770 | | 63,953 | | | 24,761 | | | | — | | | | 24,761 | | | | 37,499 | | | | 62,260 | | | | | | | | | NEOs: | | | | | | | | | | | | | | | | | | | | | | | William S. Demchak | | 228,629 (3)(4) | | 820,039 | | 1,048,668 | | 20,456 | | 1,069,124 | | | 301,371 | (3)(4) | | | 729,592 | | | | 1,030,963 | | | | 5,928 | | | | 1,036,891 | | | | Robert Q. Reilly | | | | 65,517 | (3)(4) | | | 226,508 | | | | 292,025 | | | | 2,106 | | | | 294,131 | | | | Michael P. Lyons | | | | 65,240 | | | | 23,164 | | | | 88,404 | | | | — | | | | 88,404 | | | | E. William Parsley, III | | | | 72,363 | | | | 91,743 | | | | 164,106 | | | | — | | | | 164,106 | | | | Joseph C. Guyaux | | 94,756 (4)(5) | | 759,244 | | 854,000 | | 1,633 | | 855,633 | | | 60,258 | (3)(4) | | | 344,219 | | | | 404,477 | | | | 1,744 | | | | 406,221 | | | | Richard J. Johnson | | 82,326 (4) | | 373,433 | | 455,759 | | 5,313 | | 461,072 | | E. William Parsley, III | | 41,184 (4) | | 250,000 | | 291,184 | | 880 | | 292,064 | | James E. Rohr | | 574,515 (4)(6) | | 2,149,195 | | 2,723,710 | | 95,655 | | 2,819,365 | | Eight remaining executive officers | | 379,703 (3)(4)(7) | | 1,533,528 | | 1,913,231 | | 24,683 | | 1,937,914 | | | | | | | | | | | | | | Directors and executive officers as a group (27 persons): | | 1,502,281 | | 5,949,439 | | 7,451,720 | | 458,260 | | 7,909,980 | | Ten remaining executive officers | | | | 149,668 | (2)(3)(4) | | | 269,555 | | | | 419,223 | | | | 11,741 | | | | 430,964 | | | | | Directors and executive officers as a group (30 persons): | | | | 846,123 | | | | 1,687,781 | | | | 2,533,904 | | | | 419,097 | | | | 2,953,001 | | | |
THE PNC FINANCIAL SERVICES GROUP, INC. - 2015 Proxy Statement 77
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS | * | As of January 31, 2012,30, 2015, there were 527,501,897521,540,186 shares of PNC common stock issued and outstanding. The number of shares of common stock beneficially owned by each individual is less than 1% of the outstanding shares of common stock; the total number of shares of common stock |
| | | 90 | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders |
| | | | | | | Security Ownership of Directors and Executive Officers
|
| beneficially owned by the group is approximately 1.4%.5% of the class. If employee or director stock options were exercisable or units payable in common stock vest within 60 days of January 31, 2012,30, 2015, we added those numbers to the total number of shares issued and outstanding. As of January 31, 2012,30, 2015, the number of shares of common stock and units held by the group was 1.5%.6%. No director or executive officer beneficially owns shares of PNC preferred stock. |
| ** | RepresentsIncludes options exercisable within 60 days of January 30, 2015 and performance-based restricted share units payable in common stock that are expected to vest within 60 days of January 30, 2015. |
| *** | For non-employee directors, includes common stock units credited to their accounts pursuant to deferrals made under the accounts of directorsDirectors Deferred Compensation Plan and predecessor plans and common stock units granted under the Outside Directors Deferred Stock Unit Plan, which will be paid in cash. For executive officers, includes common stock units credited under various compensationour DCP and benefit plans thatSISP, which are payable in cash. These units are not considered beneficially owned under SEC rules. |
| (1) | Includes shares owned by spouse. |
| (2) | Included 7,845Includes shares held in a trust. |
| (3) | Includes shares held jointly with spouse. |
| (4) | Includes shares held in our incentive savings plan (ISP). |
(5) | Includes 20 shares held indirectly as custodian for grandchild. |
(6) | Includes 517 shares held indirectly as custodian for daughter, 58,200 shares owned by spouse, 66,564 shares held in trust for daughter, 12,167 shares held as assets in two grantor retained annuity trusts and 242,509 shares held in a revocable trust. |
(7) | Includes, for an executive officer not named in the table, 287 shares held directly or indirectly as custodian or trustee. |
Security ownership of certain beneficial owners Based on a review, as of February 14, 2012,17, 2015, of Schedules 13D and 13G filed with the SEC, the following entityentities beneficially owns at leastown more than five percent of our common stock. The numbers shown on the table below represent holdings as of December 31, 20112014 provided in the Schedule 13G filed with the SEC and should be interpreted in light of the related footnotes. | | | | | | | | | Name and Address of Beneficial Owner | | Amount and Nature
of Beneficial Ownership | | | Percent
of Class | | Wellington Management Company, LLP 280 Congress Street Boston, MA 02210 | | | 29,379,661 | (1) | | | 5.58 | % |
(1) | | | | | | | | Name and Address of Beneficial Owner | | Amount and Nature of Beneficial Ownership | | Percent of Class | | BlackRock, Inc. | | 26,456,111(1) | | | 5.0 | % | 55 East 52nd Street | | | | | | | New York, NY 10022 | | | | | | | The Vanguard Group, Inc. | | 28,793,701(2) | | | 5.5 | % | 100 Vanguard Blvd. | | | | | | | Malvern, PA 19355 | | | | | | | Wellington Management Company, LLP | | 39,739,295(3) | | | 7.6 | % | 280 Congress Street | | | | | | | Boston, MA 02210 | | | | | | |
| (1) | According to the Schedule 13G filed by BlackRock, Inc. with the SEC on February 3, 2015, BlackRock, Inc. and its subsidiaries have beneficial ownership of 26,456,111 shares of our common stock. BlackRock, Inc. reported (1) sole dispositive power with respect to 26,455,611 shares, (2) shared dispositive power with respect to 500 shares, (3) sole voting power with respect to 22,107,494 shares and (4) shared voting power with respect to 500 shares. BlackRock, Inc. is the beneficial owner of our common stock as a result of being a parent company or control person of the following subsidiaries, each of which holds less than 5% of the outstanding shares of common stock: BlackRock (Luxembourg) S.A.; BlackRock (Netherlands) B.V.; BlackRock Advisors (UK) Limited; BlackRock Advisors, LLC; BlackRock Asset Management Canada Limited; BlackRock Asset Management Ireland Limited; BlackRock Asset Management North Asia Limited; BlackRock Financial Management, Inc.; BlackRock Fund Advisors; BlackRock Fund Managers Ltd; BlackRock Institutional Trust Company, N.A.; BlackRock International Limited; BlackRock Investment Management (Australia) Limited; BlackRock Investment Management (UK) Ltd; BlackRock Investment Management, LLC; BlackRock Japan Co Ltd; and BlackRock Life Limited. |
| (2) | According to the Schedule 13G filed by The Vanguard Group, Inc. with the SEC on February 11, 2015, The Vanguard Group, Inc. has beneficial ownership of 28,793,701 shares of our common stock. The Vanguard Group, Inc. reported (1) sole dispositive power with respect to 27,936,299 shares, (2) shared dispositive power with respect to 857,402 shares and (3) sole voting power with respect to 908,389 shares. Vanguard Fiduciary Trust Company, a wholly-owned subsidiary of The Vanguard Group, Inc., is the beneficial owner of 711,762 shares or .13% of our common stock as a result of its serving as investment manager of collective trust accounts. Vanguard Investments Australia, Ltd., a wholly-owned subsidiary of The Vanguard Group, Inc., is the beneficial owner of 342,267 shares or .06% of our common stock as a result of its serving as investment manager of Australian investment offerings. |
| (3) | According to the Schedule 13G filed by Wellington Management Company,Group LLP with the SEC on February 12, 2015, Wellington Management Group LLP, formerly known as Wellington Management Company, in its capacity as investment adviser, may be deemed to beneficially own 23,379,661LLP, has beneficial ownership of 39,739,295 shares of our common stock which are held of record by clients of Wellington Management.one or more investment advisors directly or indirectly owned by Wellington Management Group LLP. Wellington Management Group LLP shares dispositive power with respect to 29,379,66139,739,295 shares of our common stock and shares voting power with respect to 15,951,24618,843,440 shares of our common stock. |
| | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders | | 91 |
| | | | | Ratification of Auditors (Item 2)
| | |
78 THE PNC FINANCIAL SERVICES GROUP, INC. - 2015 Proxy Statement
RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (ITEM 2) Our Board’s Audit Committee is composed entirely of directors who are independent as defined in the NYSE’s corporate governance rules and in the regulations of the Securities and Exchange Commission related to the independence of audit committee members. Among other things, the Board has also determined that each committee member is financially literate and possesses accounting or related financial management expertise. The Board made these determinations in its business judgment, based on its interpretation of the NYSE’s requirements for committee members.
Under the Audit Committee’s charter, the Audit Committee is responsible for selectingthe selection, appointment, compensation, retention and oversight of PNC’s independent auditors. TheIn connection with this responsibility, the Audit Committee evaluates and monitors the auditors’ qualifications, performance and independence. This responsibility includes a review and evaluation of the lead audit partner. The Audit Committee also listens toapproves all audit engagement fees and terms associated with the opinionsretention of the independent auditors. The Audit Committee has selected PricewaterhouseCoopers LLP (PwC) as PNC’s independent auditors for 2015. PwC has been PNC’s independent auditors since 2007. The Audit Committee carefully considered the selection of PwC as our General Auditor, who supervises the internal audit function, and other members of our management. You can learn more aboutindependent auditors. In connection with this selection, the Audit Committee’s responsibilities with respect toCommittee considered whether there should be a rotation of the independent auditorsaudit firm. The Audit Committee charter requires the Audit Committee to consider, not less frequently than when the lead audit partner is rotated, whether PNC should adopt a policy of regular rotation of the independent audit firm. In addition to assuring the required rotation of the lead audit partner, the Audit Committee oversees the selection of the new lead audit partner and the Audit Committee chair participates directly in the committee’s charter, which is posted onselection of the corporate governance section of our corporate website at
www.pnc.com/corporategovernance.new lead audit partner.
On February 7, 2012,13, 2015, the Audit Committee presented its conclusions regarding the selection and appointment of PwC as the independent auditors to our Board of Directors.Directors, including a determination that the selection of PwC as our independent auditors is in the best interests of PNC. Following this presentation, the Board voted unanimously to recommend that shareholders vote to ratify the Audit Committee’s selection of PricewaterhouseCoopers LLP (PwC)PwC as PNC’s independent registered public accounting firm for 2012.2015. The Audit Committee and the Board of Directors believe that the continued retention of PwC as PNC’s independent auditors is in the best interests of PNC. The Audit Committee and Board of Directors have adopted a policy that if a majority of the votes cast at the annual meeting is against ratification, the committeeAudit Committee will reconsider its selection of PwC. The committeeAudit Committee will be under no obligation, however, to select new independent auditors. If the committeeAudit Committee does select new independent auditors for 2012,2015, we will not seek shareholder ratification of the committee’s new selection. At its meeting on February 9, 2011, the Board appointed PwC to audit our consolidated financial statements for 2011 based upon the recommendation of our Audit Committee, and our shareholders ratified that appointment on April 26, 2011.
We expect representatives of PwC to be available at the annual meeting. They will have an opportunity to make a statement and respond to appropriate questions. You can learn more about the Audit Committee’s responsibilities with respect to the independent auditors in the Committee’s charter, which is posted on the corporate governance section of our corporate website atwww.pnc.com/corporategovernance. Audit, audit-related and permitted non-audit fees In considering the nature of the services provided by our independent auditors, the Audit Committee determined that the services are compatible with the provision of independent audit services. The committeeCommittee discussed these services with the independent auditors and our management to determine that they are permitted under the SEC rules and regulations concerning auditor independence. | | | 92 | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders |
| | | | | | | Ratification of Auditors (Item 2)
|
The following table summarizes the total fees for professional services rendered by PwC to PNC for 20112014 and 2010:2013: | | | | | | Category | | 2011 (in millions) | | 2010 (in millions) | Audit fees | | $16.8 | | $16.0 | Audit-related fees* | | $ 1.5 | | $ 2.9 | Tax fees | | $ 0.9 | | $ 0.3 | All other fees | | $ 0.3 | | $ 0.1 | Total fees billed | | $19.5 | | $19.3 |
| | | | | | | | | | Category | | 2014 (in millions) | | | 2013 (in millions) | | Audit fees | | $ | 19.1 | | | $ | 17.8 | | Audit-related fees* | | $ | 1.9 | | | $ | 1.9 | | Tax fees | | $ | 0.3 | | | $ | 0.2 | | All other fees | | $ | 0.5 | | | $ | 0.9 | | TOTAL FEES BILLED | | $ | 21.8 | | | $ | 20.8 | |
| * | * | Excludes fees of $0.4 million in 2014 and $0.8 million in 2011 and $0.7 million in 20102013 for financial due diligence services related to potential private equity investments. In those instances the fees were paid by the company issuing the equity. |
THE PNC FINANCIAL SERVICES GROUP, INC. - 2015 Proxy Statement 79
RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (ITEM 2) Audit fees. These fees consisted primarily of the audit of PNC’s annual consolidated financial statements, reviews of PNC’s quarterly consolidated financial statements included in Form 10-Q filings, comfort letter procedures, other services related to SEC matters and required attestation services. Audit-related fees. These fees consisted primarily of SSAE 16 and compliance and internal control reviews. Tax fees. These fees were attributable to federal and state tax compliance services and tax planning services. All other fees. These fees primarily consisted of consulting services related to various regulatory matters. Procedures for pre-approving audit services, audit-related services and permitted non-audit services The Audit Committee is responsible for pre-approving audit services, audit-related services and permitted non-audit services (such as tax) to be provided to us by our independent auditors. The Committee is given this responsibility to confirm that providing services will not impair our auditors’ independence. The Committee performs this function for us our subsidiaries and our employee benefit plans.subsidiaries. The Committee’s responsibility also includes pre-approval of the fees for such services (although SEC regulations do not require the pre-approval of fees) and the other terms of the engagement. The Committee may either pre-approve specific fees, or a methodology for determining fees. Any proposed increase in fees that exceed the pre-approved amounts require the Committee’s approval. Pre-approval may be general (categories of services) or specific (individual services). If the Committee pre-approves a general category of services, it will review and pre-approve the categoryscope of services related to such general pre-approval at least every year.annually. The Committee is responsible for approving any fee or other compensation arrangements for services covered by a pre-approval of a general category of services. The full Committee may exercise pre-approval authority, or the Chairman of the Committee may exercise the authority as required between meetings. The Committee may also delegate this authority, in whole or in part, to one or more Committee members. Any person exercising delegated authority reports on the pre-approvals at the next scheduled meeting of the Committee, which will be reflected in the meeting minutes. The Audit Committee may not delegate its pre-approval authority to any other person, including any member of our management or other PNC employee or agent. The written request for pre-approval includes, at a minimum, a description of the nature of the engagement, the proposed fee for the services, and a statement by the independent auditor that the provision of the services is consistent with SEC and other applicable rules | | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders | | 93 |
| | | | | Ratification of Auditors (Item 2)
| | |
on auditor independence. All requests for pre-approval of services are reviewed by management to ensure the services are permitted under SEC regulations and the Audit Committee charter and include a recommendation of the proposal by the Chief Financial Officer or the Controller and the General Auditor. In reviewing a pre-approval request, the Committee or Chairman may request members of our management to provide their views on auditor independence questions. The Controller or designee reports to the Audit Committee at least quarterly as to the status of services that had been pre-approved and the related fees. All audit services, audit-related services and permitted non-audit services and related fees disclosed above were pre-approved by the Audit Committee. The Audit Committee may amend these procedures from time to time. 80 THE PNC FINANCIAL SERVICES GROUP, INC. - 2015 Proxy Statement
Report of the audit committeeREPORT OF THE AUDIT COMMITTEE
The Audit Committee’s job is one of oversight, as set forth in its charter. It is not the duty of the Audit Committee to prepare PNC’s consolidated financial statements, to plan or conduct audits, or to determine that PNC’s consolidated financial statements are complete and accurate and are in accordance with generally accepted accounting principles. PNC’s management is responsible for preparing PNC’s consolidated financial statements and for establishing and maintaining effective internal control over financial reporting. PNC’s management is also responsible for its assessment of the effectiveness of internal control over financial reporting. The independent auditors are responsible for the audit of PNC’s consolidated financial statements and the audit of the effectiveness of PNC’s internal control over financial reporting. In addition, the independent auditors are responsible for the audit of management’s assessment of the effectiveness of internal control over financial reporting as of December 31, 2011.2014. The Audit Committee has reviewed and discussed PNC’s audited consolidated financial statements with management and with PricewaterhouseCoopers LLP (PwC), PNC’s Independent Registered Public Accounting Firm for 2011.2014. The Audit Committee has selected PwC as PNC’s independent auditors for 20122015 subject to shareholder ratification. A portion of the Audit Committee’s review and discussion of PNC’s audited consolidated financial statements with PwC occurred in private sessions, without PNC management present. The Audit Committee has discussed with PwC the matters required to be discussed by Statement on Auditing StandardsStandard No. 61, as amended (AICPA Professional Standards, Vol. 1. AU Section 380)16, “Communications with Audit Committees”, as adopted by the Public Company Accounting Oversight Board in Rule 3200T.Board. The Audit Committee has received the written disclosures and the letter from PwC required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the Audit Committee concerning independence, and has discussed PwC’s independence with representatives of PwC. Based on the review and discussions referred to above, the Audit Committee has recommended to the Board of Directors that the audited consolidated financial statements be included in PNC’s Annual Report on Form 10-K for the year ended December 31, 2011,2014, for filing with the Securities and Exchange Commission. The Audit Committee of the Board of Directors of The PNC Financial Services Group, Inc. Paul W. Chellgren,Chairman Richard O. Berndt Marjorie Rodgers Cheshire Richard B. Kelson Bruce C. Lindsay
Donald J. Shepard George H. Walls, Jr. In accordance with SEC regulations, the Report of the Audit Committee is not incorporated by reference into any of our future filings made under the Securities Exchange Act of 1934 or the Securities Act of 1933. The report is not deemed to be soliciting material or to be filed with the SEC under the Exchange Act or the Securities Act. The Board of Directors recommends a vote FOR the ratification of the Audit Committee’s selection of PricewaterhouseCoopers LLP as the independent registered public accounting firm for 2012.2015. | | | 94 | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders |
THE PNC FINANCIAL SERVICES GROUP, INC. - 2015 Proxy Statement 81
“SAY-ON-PAY”: ADVISORY VOTE ON EXECUTIVE COMPENSATION (ITEM 3) What is the purpose of this item? We describe this item as an advisory vote on executive compensation, but it is more commonly known as “say-on-pay.” We provide this vote under the federal securities laws (Section 14A of the Securities Exchange Act of 1934) and in recognition of our shareholders’ vote in 2011 recommending that we hold an advisory vote on executive compensation each year. After our shareholders voted in 2011, the Board affirmed itsthat recommendation and elected to hold future “say-on-pay” advisory votes on an annual basis, until the next shareholder vote on “say-on-pay” frequency. We expect to conduct our next shareholder vote on “say-on-pay” frequency at our 2017 annual meeting of shareholders. With this item, shareholders may submit an advisory vote on the compensation of our CEO and the other four executive officers named in theSummary compensation table on page 57.56. That table provides an annual snapshot of the compensation paid or granted to our NEOs. What does it mean to have a “say-on-pay” advisory vote? As an advisory vote, the outcome will not bind PNC or our Board. We will disclose how many shareholders voted “For”“For��� or “Against” the resolution, and how many shareholders abstained from voting. We believe in soliciting input from our investors throughout the year on a variety of issues, and this advisory vote fits within our broader shareholder engagement efforts. Last year our Board recommended that we should seek shareholder input through an annual advisory vote on executive compensation. We first provided a “say-on-pay” vote in 2009, voluntarily provided the vote again in 2010, andprovided the vote as required by the federal securities laws provided the vote again in 2011. In each year, we received the support of over 90% of the votes cast2011 and as recommended by our shareholders. shareholders annually since then. We cannot predict what actionshave averaged 92% support for say-on-pay over the past five years. While this vote is non-binding, our Board values the opinions of shareholders and will take, if any, in response to this vote.carefully consider the results when making future compensation decisions. In considering an overall executive compensation program, “say-on-pay” cannot convey a shareholder’s view on a discrete element of our compensation program or a specific decision made by our Board’s Personnel and Compensation Committee. InFrom 2009 2010 and 2011,through 2014, the Committee received reports on the outcome of the “say-on-pay” vote, how PNC compared to its peer group and other large public companies, and whether any changes to the compensation program were being considered in light of the results. The Committee expects to undertake a similar evaluation this year. Where can I find more information on executive compensation? We describe our executive compensation program and the compensation awarded under that program in the CD&A, the Compensation Tables, and the related disclosure contained in this proxy statement. See pages 32-82.36 to 76. 82 THE PNC FINANCIAL SERVICES GROUP, INC. - 2015 Proxy Statement
“SAY-ON-PAY”: ADVISORY VOTE ON EXECUTIVE COMPENSATION (ITEM 3) What are some of the performance and compensation program highlights for 2011?2014? Please review our CD&A, which begins on page 32,36, as well as the accompanying compensation tables and the related disclosure beginning on page 57.56. Performance and compensation program highlights, which are also included in our CD&A, should be read in connection with the full CD&A, the Compensation Tables and the related disclosure contained in this proxy statement. The Board of Directors recommends a vote FOR the following advisory resolution: “RESOLVED, that the holders of the common stock and the voting preferred stock of The PNC Financial Services Group, Inc. (the “Company”), voting together as a single class, approve the compensation of the Company’s five executive officers named in the Summary compensation table of the Company’s proxy statement for the 20122015 Annual Meeting of Shareholders (the “2012“2015 Proxy Statement”), as described in the Compensation Discussion and Analysis, the Compensation Tables and the related disclosure contained in the 20122015 Proxy Statement.” | | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders | | 95 |
THE PNC FINANCIAL SERVICES GROUP, INC. - 2015 Proxy Statement 83
GENERAL INFORMATION PNC will hold theits annual meeting of its shareholders on Tuesday, April 24, 2012.28, 2015. This proxy statement includes information about PNC, describes the proposals to be considered at the meeting, and explains the voting process. We encourage you to read it carefully. This section of the proxy statement reviews important technical points, such as how to attend the meeting, how to access our proxy materials, how to vote, how a proposal gets approved and how shareholder proposals can be brought before a meeting. In this section we sometimes discuss differences between “registered” and “street name” shareholders. For purposes of reviewing the proxy materialmaterials and voting shares, this distinction is important. We refer to individualsthose owning PNC shares in their own name as “registered” holders or “shareholders of record.” We refer to individualsthose who own PNC shares through an account at an intermediary—such as a brokerage firm or bank—as holding our shares in “street name.name” or as “beneficial owners.” Attending the annual meeting Our annual meeting of shareholders will be held on Tuesday, April 28, 2015 at One PNC Plaza, 15th Floor, 249 Fifth Avenue, Pittsburgh, Pennsylvania 15222. The meeting will begin at 11:00 a.m., Eastern time, on Tuesday, April 24, 2012. We will hold the meeting at the August Wilson Center for African American Culture, 980 Liberty Avenue, Pittsburgh, Pennsylvania 15222.time. Directions to the meeting are available atwww.pnc.com/annualmeeting.annualmeeting. We will haveGeneral requirements
You must be a shareholder on the record date of January 30, 2015 to attend the annual meeting registration desk in the lobby of the August Wilson Center for African American Culture to assist shareholders attending in person. person, or hold a valid legal proxy. Each shareholder may bring one guest. All shareholders, guests of shareholders and persons holding legal proxies must present an acceptablea valid form of photo identification, such as a driver’s license.license, to be admitted to the annual meeting. If you areAdditional requirements
In addition to presenting a registered shareholder, locatevalid form of photo identification, please follow these instructions to be admitted to the meeting: Registered shareholder. Present one of the following: (i) proxy card admission ticket, in the information you receive from us—either the proxy card attachment or the (ii) Notice of Availability of Proxy Materials—and bring it withMaterials or (iii) admission ticket that you toprinted if you voted electronically. Street name shareholder. Present one of the meeting. The ticket will admit you and one other person. If you hold PNC shares in street name, your individual name will not appear on our list of registered shareholders. To attend the meeting, please bring an accountfollowing: (i) brokerage statement or a letter from your bank or broker that shows thedemonstrating PNC shares that you ownedshare ownership as of our record date of January 31, 2012. You30, 2015, (ii) voting instruction form or copy, (iii) Notice of Availability of Proxy Materials or (iv) a written legal proxy issued by your broker or bank.
Proxy for registered shareholder. Present a written legal proxy to you signed by the registered shareholder and one of the following: (i) proxy card admission ticket, (ii) Notice of Availability of Proxy Materials or (iii) printed admission ticket if the registered shareholder voted electronically. Proxy for street name shareholder. Present a written legal proxy from a broker or bank that is assignable and signed by the street name holder with an indication by the street name holder that you are the person authorized to seek admission, and one of the following: (i) a brokerage statement or letter from the street name holder’s bank or broker demonstrating PNC share ownership as of our record date of January 30, 2015, (ii) voting instruction form or copy or (iii) Notice of Availability of Proxy Materials. A shareholder representative (for example, a person representing an entity that is a shareholder) must present thissatisfactory documentation atevidencing his or her authority with respect to the registration deskshares in addition to attendcomplying with the meeting.general and additional requirements. We will decide in our sole discretion whether the documentation presented for admission meets the above requirements. Everyone attending the annual meeting agrees to abide by the rulesregulations for the conduct offor the meeting. These rulesregulations for conduct are included in Annex B to this proxy statement and will also be printed on the meeting agenda and distributed orand reviewed at the meeting. No large bags, backpacks, briefcases or similar items will be permitted at the meeting. No cameras, mobile phones, laptops, tablets, or recording equipment are permitted atin the meeting. Mobile phones must be turned offmeeting room. In addition, large bags, backpacks, briefcases, and put away before enteringsimilar items are not permitted in the meeting room. If you cannot attend the annual meeting in person, you can listen to the meeting by using the webcast or conference call options that are described on the Notice of Annual Meeting of Shareholders just afteron page 10. However, those using the cover page of this proxy statement. You may viewwebcast or print the slides used during the annual meeting.dial-in numbers will not be able to vote or ask questions. Please visit the websitewww.pnc.com/investorevents orwww.pnc.com/annualmeeting ahead of time to register and download any necessary software.software and to view or print related materials. 84 THE PNC FINANCIAL SERVICES GROUP, INC. - 2015 Proxy Statement
GENERAL INFORMATION Reviewing proxy materials Mailing date.We provided access to our proxy materials beginning on Wednesday,Tuesday, March 14, 2012.17, 2015. On that day, we mailed the Notice of Availability of Proxy Materials, began mailing paper copies of our 2014 Annual Report, this proxy statement and proxy card to ourregistered shareholders, and delivered proxy materials electronically to registered shareholders who previously consented to that type of delivery. Our 2011 annual reportPlease note that our 2014 Annual Report is not considered part of our proxy solicitation materials. | | | 96 | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders |
Accessing proxy materials.The SEC allows us to deliver proxy materials to shareholders over the Internet. We believe that this offers a convenient way for shareholders to review our information. It also reduces printing expenses and lessens the environmental impact of paper copies. Any shareholder may access our proxy materials electronically. Upon request, we will continue to provide email or paper copies of proxy materials to shareholders for the current meeting or for future meetings. If you hold PNC shares in street name, we generally cannot mail our materials to you directly. Your broker or bank must provide you with the Notice of Availability of Proxy Materials or the proxy statement and proxy card,voting instruction form, and must also explain the voting process to you. IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON APRIL 24, 2012:28, 2015: This Notice of Annual Meeting and Proxy Statement and the 20112014 Annual Report are available at: www.envisionreports.com/PNC Have you received more than one set of proxy materials? If two or more PNC shareholders live in your household, or you maintain more than one shareholder account on the books of our transfer agent, you may have received more than one set of our proxy materials. In order to reduce duplicate packages and lower expenses, we rely on Securities and Exchange Commission rules allowing delivery of one set of proxy materials to multiple shareholders sharing the same address and last name who consent in a manner provided by these rules. This is referred to as “householding.” Even if you consent to householding, we will always deliver a separate proxy card or Notice of Availability of Proxy Materials for each account. Householding will not affect your right to vote. If you would like to opt out of or into householding in the future, or would like to receive a separate copy of the proxy materials, please write or call Computershare Trust Company, N.A., our stock transfer agent, at the address or phone number below: Computershare Trust Company, N.A. P.O. Box 43078 Providence, RI 02940-3078 800-982-7652 You may also receive more than one set of our proxy materials if you have more than one brokerage account. Our householding process does not include accounts that you maintain at a brokerage firm or bank. Some brokerage firms and banks now offer householding—please contact your broker directly if you are interested. Voting your shares We want our shareholders, as the owners of PNC, to consider the important matters before them and exercise their right to vote. Our Board of Directors is asking for, or soliciting, a proxy from our shareholders. This section describes the different aspects of the voting process and how proxy voting works. Who can vote?You must beare entitled to vote if you were a shareholder of record as of the record date of January 31, 2012 to vote at the annual meeting.30, 2015. What is a proxy?We understand that not everyone can For shareholders unable to attend and vote at the annual meeting in person. If you are a shareholder,person, you can tell us exactly how you want to vote and then allow an officer to vote on your behalf. That is called giving us a “proxy.” By allowing a proxy to carry out your wishes, you can ensure that your vote counts. Soliciting your proxy.Our Board of Directors is soliciting your proxy to make sure that your vote is properly submitted and received on time, and to improve the efficiency of the annual meeting. We may ask for, or solicit, proxies using several methods. | | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders | | 97 |
We may solicit proxies by mail, personal interviews, telephone or fax. We may use the Internet to solicit proxies. PNC officers or employees may solicit proxies, but will not receive any special compensation for doing so. We will ask brokerage houses, banks and other custodians of PNC stock to forward proxy materials to their clients who hold PNC stock. We will pay for their expenses to do so. We hired Morrow & Co., LLC, 470 West Ave., Stamford, CT 06902, a proxy soliciting firm, to help us with the solicitation of proxies for the 20122015 annual meeting. We will pay Morrow $15,000, plus its out-of-pocket expenses, to provide information THE PNC FINANCIAL SERVICES GROUP, INC. - 2015 Proxy Statement 85
GENERAL INFORMATION to our shareholders and to assist with distributing proxy materials. Revoking your proxyproxy..What if you change your mind after you give us your proxy to vote? You can amend your voting decisions until the polls close at the annual meeting.in several ways. We call this “revoking” your proxy. To revoke your current proxy and replace it with a new proxy, we must receive the newly executed proxy before the deadline. If you revoke by mail, we must receive the new proxy card before the annual meeting begins. Please make sure you have provided enough time for the replacement proxy to reach us. If you revoke by using the telephone or Internet voting options, we must receive your revocation by 1:00 a.m. Eastern time on April 24, 2012. If you choose to revoke by mail, please make sure you have provided enough time for the replacement proxy to reach us.28, 2015. After the above deadlines have passed, you can only revoke your proxy in person. You cannot use the webcast or conference call to revoke your proxy. Once the polls close at the annual meeting, the right to revoke ends. If you have not properly revoked your proxy, we will vote your shares in accordance with your most recent valid proxy. If you hold PNC shares in street name, follow the instructions provided by your broker to revoke your voting instructions or otherwise change your vote. How to vote.Shareholders of record If your shares are registered in your name, you may always vote in person by submitting a ballot at the annual meeting. We will distribute ballots at the meeting. To make it convenient and simple for you, we offer a number of other ways to vote your shares. We include voting instructions in the Notice of Availability of Proxy Materials and the proxy card. If you hold PNC shares in street name, you will receive information on how to give voting instructions to your brokerage firm or bank. For registered holders, we offer the following methods to vote your shares and give us your proxy:
| | | Internet | | Go towww.envisionreports.com/PNC and follow the instructions. This voting system has been designed to provide security for the voting process and to confirm that your vote has been recorded accurately. | Telephone | | Follow the instructions on the proxy card. | Mail | | Complete, sign and date the proxy card and return it in the envelope provided if you requested or were sent copies of thesethe proxy materials. The envelope requires no postage if mailed in the United States. |
If you hold PNC shares in street name, you will receive information on how to give voting instructions to your brokerage firm or bank. Note that if you hold PNC shares in street name and plan to vote at the annual meeting, you must present a written legal proxy from your broker or bank authorizing you to vote the shares it holds for you in its name. PNC is incorporated in Pennsylvania. Pennsylvania law allows properly authenticated proxies to be transmitted by telephone or the Internet. Pennsylvania law also permits a shareholder of record, such as a brokerage firm or bank, to communicate a vote by telephone or Internet for a beneficial owner. Brokers voting your shares.If you hold PNC shares in street name, you must give instructions to your broker on how you would like your shares to be voted. If you do not provide any instructions, your broker can vote your shares on “routine” items. New York Stock Exchange (NYSE) rules define which items are “routine” or “non-routine.” We discuss below underVotes required for approvalwhether the items to be acted upon at the annual meeting are “routine” or “non-routine.” | | | 98 | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders |
A broker “non-vote” occurs when the shareholder provides no instructions and the item is non-routine. In determining whether a vote was cast for a proposal, we will not count broker non-votes. Our voting recommendations.If you sign, date and return your proxy card but do not give voting instructions, or if you use Internet or telephone voting and do not provide voting instructions for each proposal, we will vote your shares as follows: FOReach of the Board’s 1513 nominees for director.director FORthe ratification of the selection of PricewaterhouseCoopers LLP as PNC’s independent registered public accounting firm for 2012.2015 FORthe advisory resolution on executive compensation.compensation If you use Internet or telephone voting, you will need to provide voting instructions for each proposal.
Confidential voting.We keep votes confidential and do not disclose them to our directors, officers or employees, except: As necessary to meet legal requirements or to pursue or defend legal actions. To allow the Judge of Election to certify the voting results. When expressly requested by a shareholder or benefit plan participant. If there is a contested proxy solicitation. Our Board has adopted a “confidential voting” policy. With the exceptions described above, this policy states that all proxies, ballots, voting instructions from employee benefit plan participants and voting tabulations that identify the particular vote of a shareholder or benefit plan participant be kept permanently confidential and not be disclosed. Computershare Trust Company, N.A., our independent vote tabulator and Judge of Election for the 20122015 annual meeting, confirmed that its procedures will be consistent with this policy. 86 THE PNC FINANCIAL SERVICES GROUP, INC. - 2015 Proxy Statement
GENERAL INFORMATION How a proposal gets approved On the record date, we had over 500 million outstanding shares of common stock, as well as additional shares of preferred stock. Under Pennsylvania law, we must have a quorum before we can consider proposals at an annual meeting. A quorum is the number of shares that must be present at the meeting. In determining if a quorum exists, we count the number of shares represented by shareholders in person as well as the number of shares represented by proxies. To have a quorum, we need the presence of shareholders or their proxies who are entitled to cast atleasta majorityof the votes that all shareholders are entitled to cast. If you return a proxy, whether you vote for or against a proposal, abstain from voting or only sign and date your proxy card, your holdings will be counted toward the quorum. Once a quorum is achieved, different proposals may require different standards of approval. Street name holders may need to take additional precautions to ensure that their vote counts. We discuss the mechanics of proposal approval below. Issued and outstanding shares.shares.This table shows the number of issued and outstanding shares of our common and preferred stock entitled to vote on January 31, 2012,30, 2015, the record date. We have additional issued and outstanding series of preferred stock that are not entitled to vote at the meeting. The table also shows the number of votes for each share for the matters brought before this meeting. The number of votes shown for each share of voting preferred stock equals the number of full shares of PNC common stock that can be acquired upon the conversion of a share of preferred stock. At the meeting, holders of | | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders | | 99 |
common and preferred stock entitled to vote will vote together as a single class. There is no cumulative voting. | | | | | | | | Class | | Shares Issued and Outstanding | | Votes Per Share | | Effective Voting Power | Common | | 527,416,569* | | 1 | | 527,416,569 | Preferred – Series B | | 1,031 | | 8 | | 8,248 | Preferred – Series K | | 50,000 | | 0 | | 0 | Preferred – Series L | | 1,500 | | 0 | | 0 | Preferred – Series O | | 10,000 | | 0 | | 0 |
* | There are also 85,328 issued and outstanding shares that are not entitled to vote. These shares represent shares originally issued by predecessor companies that PNC acquired that have not been exchanged for PNC shares. |
| | | | | | | | | | | | | | Class | | Issued and
Outstanding
Shares
Entitled to
Vote | | | Votes
Per
Share | | | Effective
Voting
Power | | Common | | | 521,512,951 | | | | 1 | | | | 521,512,951 | | Preferred – Series B | | | 663 | | | | 8 | | | | 5,304 | |
Votes required for approval.approval.Under Pennsylvania law, if you abstain from voting it will not count as a vote “cast.” To abstain, you must check the “Abstain” box on your proxy card, or select the appropriate option when voting by Internet or telephone. If you sign, date and return your proxy card but do not provide voting instructions, or if you do not provide voting instructions when voting over the Internet, we will vote your shares represented by that proxy as recommended by our Board of Directors and this vote will count as a vote cast. A broker non-vote will also be treated as a failure to record a vote and will not count as a vote cast. Election of directors (Item 1).. Unless a company’s articles of incorporation or By-lawsby-laws provide otherwise, Pennsylvania law contemplates election of directors by a plurality of votes cast. In 2009, PNC amended its By-laws to include an eligibility requirement for director nominees in uncontested elections, whereby an incumbent director will offer to resign if he or she does not receive a majority of the votes cast. Our By-laws and corporate governance guidelines describe this majority voting requirement and the related procedure that requires an incumbent director to tender his or her resignation to the Board. To receive a majority of the votes cast means that the shares voted “for” a director’s election exceedsexceed 50% of the number of votes cast with respect to that director’s election. This will be considered a non-routine item. As a non-routine item, there may be broker non-votes. Any broker non-votes or abstentions will not be included in the total votes cast and will not affect the results. Ratification of auditorsindependent registered public accounting firm (Item 2).. A majority of the votes cast will be required to approve the ratification of our Audit Committee’s selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2012.2015. This will be considered a routine item, and brokers have the discretion to vote uninstructed shares on behalf of clients. As a routine item, there will be no broker non-votes, although brokers may otherwise fail to submit a vote. Any failures by brokers to vote or abstentions will not be included in the total votes cast and will not affect the results. “Say-on-pay”: advisory vote on executive compensation (Item 3).. A majority of the votes cast will be required to approve this item, an advisory vote on executive compensation. Because your vote is advisory, it will not be binding on the Board or PNC. This will be considered a non-routine item. As a non-routine item, there may be broker non-votes. Any broker non-votes or abstentions will not be included in the total votes cast and will not affect the results. THE PNC FINANCIAL SERVICES GROUP, INC. - 2015 Proxy Statement 87
GENERAL INFORMATION Shareholder proposals for the 20132014 annual meeting voting results
| | | Eligible Votes (millions) | | 533.9 | Total Voted (millions) | | 455.8 (85.4%) | Broker Non-Votes (millions) | | 41.4 (7.8%) |
| | | | Proposal | | Votes “For”* | Director Elections — Average | | 98.2% | Richard O. Berndt | | 99.5% | Charles E. Bunch | | 98.4% | Paul W. Chellgren | | 98.1% | William S. Demchak | | 99.1% | Andrew T. Feldstein | | 99.3% | Kay Coles James | | 99.5% | Richard B. Kelson | | 98.4% | Anthony A. Massaro | | 98.2% | Jane G. Pepper | | 99.1% | Donald J. Shepard | | 99.4% | Lorene K. Steffes | | 99.2% | Dennis F. Strigl | | 97.9% | Thomas J. Usher | | 90.0% | George H. Walls, Jr. | | 99.5% | Helge H. Wehmeier | | 97.9% | Ratification of Auditors | | 99.8% | Say-on-Pay | | 87.6% | Shareholder Proposal regarding a report on greenhouse gas emissions of borrowers | | 23.4% |
| * | As a percentage of total votes cast not including abstentions or broker non-votes. |
88 THE PNC FINANCIAL SERVICES GROUP, INC. - 2015 Proxy Statement
SHAREHOLDER PROPOSALS FOR THE 2016 ANNUAL MEETING SEC Rule 14a-8.If you are a shareholder who would like us to include your proposal in our notice of the 20132016 annual meeting and related proxy materials, you must follow SEC Rule 14a-8. In submitting your proposal, our Corporate Secretary must receive your proposal, in writing, at our principal executive offices, no later than November 14, 2012.18, 2015. If you do not follow Rule 14a-8, we will not | | | 100 | | PNC – Proxy Statement for 2012 Annual Meeting of Shareholders |
consider your proposal for inclusion in next year’s proxy statement. Advance notice procedures.Under our By-laws, a shareholder who wishes to nominate an individual for election to the Board of Directors directly at an annual meeting, or to propose any business to be considered at an annual meeting, must deliver advance notice of such nomination or business to PNC. The shareholder must be a shareholder of record as of the date the notice is delivered and at the time of the annual meeting and must be entitled to vote at the meeting. The notice must be in writing and contain the information specified in our By-laws for a director nomination or other business. The Company’s 2013company’s 2016 annual meeting is currently scheduled to be held on April 23, 2013,26, 2016, and to be timely, the written notice must be delivered not earlier than December 25, 201230, 2015 (the 120th120th day prior to the first anniversary of this year’s annual meeting) and not later than January 24, 201329, 2016 (the 90th90th day prior to the first anniversary of this year’s annual meeting) to the Corporate Secretary at our principal executive offices by mail or facsimile. The requirements described aboveThese advance notice procedures are separate from the procedures you must follow to submit a director nominee for consideration by the Nominating and Governance Committee for recommendation to the Board for election as described underCorporate Governance at PNC—Governance—Board committees—Nominating and Governance Committee—How We Identify New Directorswe identify new directorsand from the SEC’s requirements that a shareholder must meet in order to have a shareholder proposal included in our proxy statement pursuant to SEC Rule 14a-8.14a-8 referred to above.
The proxies we appoint for the 20122016 annual meeting may exercise their discretionary authority to vote on any shareholder proposal timely received and presented at the meeting. Our proxy statement must advise shareholders of the proposal and how our proxies intend to vote. A shareholder may mail a separate proxy statement to our shareholders, and satisfy certain other requirements, to remove discretionary voting authority from our proxies. The Chairperson or other officer presiding at the annual meeting has the sole authority to determine whether any nomination or other business proposed to be brought before the annual meeting was made or proposed in accordance with our By-laws, and to declare that a defective proposal or nomination be disregarded. Please direct any questions about the requirements or notices in this section to our Corporate Secretary at the address given on page 10.17. Other mattersOTHER MATTERS
Our Board of Directors does not know of any other business to be presented at the meeting. If any other business should properly come before the meeting, or if there is any meeting adjournment, proxies will be voted in accordance with the best judgment of the persons named in the proxies. By Order of the Board of Directors,
George P. Long, III
Chief Governance Counsel and
Corporate Secretary
| | | PNC – Proxy Statement for 2012 Annual Meeting of ShareholdersMarch 17, 2015 | | 101By Order of the Board of Directors, | | | | |  | | | Christi Davis | | | Senior Counsel and Corporate Secretary |
THE PNC FINANCIAL SERVICES GROUP, INC. - 2015 Proxy Statement 89
AnnexANNEX A (NON-GAAP RECONCILIATIONS)
We provide information below to reconcile to GAAP those financial metrics used by the Personnel and Compensation Committee that are either non-GAAP financial metrics or reflect adjustments approved by the Personnel and Compensation Committee (as described in footnote 1 to the table on pages 6 and 37). Financial metrics disclosed in the table on pages 6 and 37 that are not discussed below are GAAP metrics that were not affected by the Personnel and Compensation Committee approved adjustments in 2013 and 2014. Amounts for 2013 periods have been updated to reflect the first quarter 2014 adoption of Accounting Standards Update (ASU) 2014-01 related to investments in low income housing credits. Earnings per Share | | | | | | | | | | | | Year ended December 31 | | | | | 2014 | | | 2013 | | Diluted earnings per common share, as adjusted | | $ | 7.30 | | | $ | 7.43 | | Personnel and Compensation Committee approved adjustments, on an after-tax basis | | $ | (0.00 | ) | | $ | (0.07 | ) | Diluted earnings per common share | | $ | 7.30 | | | $ | 7.36 | |
Return on Common Equity without Goodwill | | | | | | | | | | | | Year ended December 31 | | | Dollars in millions | | 2014 | | | 2013 | | Net income attributable to common shareholders, as adjusted | | $ | 3,947 | | | $ | 3,971 | | Personnel and Compensation Committee approved adjustments, on an after-tax basis | | $ | (0 | ) | | $ | (37 | ) | Net income attributable to common shareholders | | $ | 3,947 | | | $ | 3,934 | | Average common shareholders’ equity less average goodwill | | $ | 30,738 | | | $ | 27,351 | | Average goodwill | | $ | 9,082 | | | $ | 9,074 | | Average common shareholders’ equity | | $ | 39,820 | | | $ | 36,425 | | Return on common equity without goodwill (a) | | | 12.84% | | | | 14.52% | | Return on common equity (b) | | | 9.91% | | | | 10.80% | |
| (a) | This metric was calculated by dividing net income attributable to common shareholders, as adjusted, by average common shareholders’ equity less average goodwill. |
| (b) | This metric was calculated by dividing net income attributable to common shareholders by average common shareholders’ equity. |
Return on Assets | | | | | | | | | | | | Year ended December 31 | | | Dollars in millions | | 2014 | | | 2013 | | Net income, as adjusted | | $ | 4,207 | | | $ | 4,249 | | Personnel and Compensation Committee approved adjustments, on an after-tax basis | | $ | (0 | ) | | $ | (37 | ) | Net income | | $ | 4,207 | | | $ | 4,212 | | Average assets | | $ | 327,853 | | | $ | 305,664 | | Return on average assets, as adjusted (a) | | | 1.28% | | | | 1.39% | | Return on average assets | | | 1.28% | | | | 1.38% | |
| (a) | This metric was calculated by dividing net income, as adjusted, by average assets. |
90 THE PNC FINANCIAL SERVICES GROUP, INC. - 2015 Proxy Statement
Efficiency Ratio | | | | | | | | | | | | Year ended December 31 | | | Dollars in millions | | 2014 | | | 2013 | | Noninterest expense, as adjusted | | $ | 9,488 | | | $ | 9,624 | | Personnel and Compensation Committee approved adjustments, on a before-tax basis | | $ | 0 | | | $ | 57 | | Noninterest expense | | $ | 9,488 | | | $ | 9,681 | | Total revenue | | $ | 15,375 | | | $ | 16,012 | | Efficiency ratio, as adjusted | | | 61.71% | | | | 60.10% | | Efficiency ratio | | | 61.71% | | | | 60.46% | |
Tangible Book Value per Common Share | | | | | | | | | | | | Year ended December 31 | | | Dollars in millions, except per share data | | 2014 | | | 2013 | | Tangible common shareholders’ equity | | $ | 31,330 | | | $ | 29,071 | | Goodwill and other intangible assets (a) | | $ | (9,595 | ) | | $ | (9,654 | ) | Deferred tax liabilities on goodwill and other intangible assets (a) | | $ | 320 | | | $ | 333 | | Common shareholders’ equity | | $ | 40,605 | | | $ | 38,392 | | Period-end common shares outstanding (in millions) | | | 523 | | | | 533 | | Tangible book value per common share | | $ | 59.88 | | | $ | 54.57 | | Book value per common share | | $ | 77.61 | | | $ | 72.07 | |
| (a) | Excludes mortgage servicing rights of $1.4 billion at December 31, 2014 and $1.6 billion at December 31, 2013. |
Return on Economic Capital vs. Cost of Capital | | | | | | | | | | | | Year ended December 31 | | | Dollars in millions | | 2014 | | | 2013 | | Net income, as adjusted | | $ | 4,090 | | | $ | 4,155 | | Personnel and Compensation Committee approved adjustments, on an after-tax basis | | $ | 117 | | | $ | 72 | | Net income | | $ | 4,207 | | | $ | 4,227 | | Average economic capital | | $ | 32,202 | | | $ | 18,790 | | Plan-specified cost of capital hurdle | | | 7.68% | | | | 8.4% | | Return on economic capital less cost of capital hurdle, as adjusted (a) | | | 5.02% | | | | 13.76% | | Return on economic capital less cost of capital hurdle (b) | | | 5.38% | | | | 14.15% | |
| (a) | This metric was calculated by dividing net income, as adjusted, by economic capital, expressing the quotient as a percentage, and then subtracting the plan-specified cost of capital hurdle. |
| (b) | This metric was calculated by dividing net income by economic capital, expressing the quotient as a percentage, and then subtracting the plan-specified cost of capital hurdle. |
THE PNC FINANCIAL SERVICES GROUP, INC. - 2015 Proxy Statement 91
ANNEX B (REGULATIONS FOR CONDUCT AT ANNUAL MEETING) In the interest of a fair and orderly meeting, and to accommodate as many shareholders as possible who may wish to speak, we have established the following rules: | 1. | Calling the Meeting to Order |
Our CEO will preside as the Chairman of the meeting. The Chairman will call the meeting to order promptly at 11 a.m. The Chairman will conduct the meeting in accordance with the Agenda and these Regulations for Conduct. The Chairman retains sole authority to make any and all determinations with respect to the conduct of the meeting. If your shares are registered in your name, you may vote in person by submitting a ballot at the meeting. If you hold PNC shares in street name, you may present a written legal proxy from your broker or bank authorizing you to vote the shares it holds for you in its name. The Chairman will announce the opening and closing of the polls. No proxies or ballots will be accepted after the polls have closed. PNC representatives will be on hand to distribute ballots or to accept proxies. If you have already submitted your proxy, your shares will be voted in accordance with the instructions you provided. Unless you want to change your vote, or have not submitted a proxy, you do not need a ballot. You will have an opportunity to ask questions or make comments about each Agenda item as it is addressed. Your questions or comments must pertain to the Agenda item. We have scheduled a general question and answer session at the conclusion of the meeting to discuss matters not on the Agenda, but appropriate for discussion. | 4. | Procedures for Speaking |
Only shareholders or their proxies may be heard during the meeting. To ask a question or make a comment, please proceed to a microphone and wait to be recognized by the Chairman. All questions or comments must be addressed to the Chairman. After the Chairman recognizes you, please give your name and state whether you are a shareholder or a proxy for a shareholder. Speaking out of turn or interfering when another speaker has the floor is prohibited. After a shareholder has spoken, the Chairman may respond personally or designate another person to respond. | 5. | Speaker Rotation and Time Limits |
The Chairman may limit questions to one at a time. Shareholders who wish to speak will be recognized on a rotating basis. Please keep your comments brief in order to give other shareholders the opportunity to speak. You may speak for up to two minutes on a particular matter and no one person may speak for more than six minutes. The Chairman may refuse to permit a nomination or proposal to be made by a shareholder who has not complied with applicable laws or rules, or the procedures set forth in PNC’s By-laws. The Chairman may end discussion if it appears that the matter has been adequately addressed, or is not appropriate, or for other reasons. Personal matters are not appropriate for discussion. Representatives of PNC will be available following the meeting to address individual shareholder concerns. Rudeness, personal attacks, comments in bad taste, and the injection of irrelevant controversy are not permitted at any time. | 7. | Mobile Devices, Recording Devices, and Briefcases |
No cameras, mobile phones, laptops, tablets, or recording equipment are permitted in the meeting room. In addition, large bags, backpacks, briefcases, and similar items are not permitted in the meeting room. A staffed coat check for personal belongings is available. Disturbing this meeting is a misdemeanor punishable by imprisonment and fines. 18 Pa. Cons. Stat. §§ 1101, 1104, 5508. Violators will be prosecuted. A sergeant at arms and/or local law enforcement will be present to enforce compliance with these Regulations for Conduct and all applicable laws at the direction of the Chairman, including removal of noncompliant attendees, as necessary. Weapons are not permitted in the meeting room and may not be checked in the staffed coat room. Bags, briefcases or other carried items may be searched. In the event of an emergency, exit the doors at the back of the room. Failure to comply with these Regulations for Conduct or otherwise impeding a fair and orderly Non-GAAP Financial Measuresmeeting may be grounds for removal from the meeting.
Pre-tax, pre-provision net income (PPNI)The Annual Meeting of Shareholders is audio-recorded.
PPNI, or pre-tax, pre-provision net income, is a non-GAAP financial measure. Management believes that PPNI is useful as a tool to help evaluate our ability to provide for credit costs through operations.
The following is a reconciliation of PPNI to net income, the most directly comparable GAAP financial measure.
| | | | | | | | | | | | Year ended | | | Dollars in millions | | December 31
2011 | | | December 31
2010 | | Net income | | $ | 3,071 | | | $ | 3,397 | | Less: Income from discontinued operations, net of tax | | | — | | | | (373 | ) | Plus: Income taxes | | | 998 | | | | 1,037 | | Plus: Provision for credit losses | | | 1,152 | | | | 2,502 | | Plus: Personnel and Compensation Committee approved adjustments | | | 170 | | | | 264 | | | | | | | | | | | PPNI | | $ | 5,391 | | | $ | 6,827 | | | | | | | | | | |
92 THE PNC FINANCIAL SERVICES GROUP, INC. - 2015 Proxy Statement
Corporate Headquarters The PNC Financial Services Group Inc. One PNC Plaza, 249 Fifth Avenue Pittsburgh, PA 15222-2707 412-762-2000 
| | | | | | | | | | | 
 | | | |  | | | |  | | | | | | | | Electronic Voting Instructions | | | | | | | | Available 24 hours a day, 7 days a week! | | | | | | | | Instead of mailing your proxy, you may choose one of the voting methods outlined below to vote your proxy. | | | | | | | | VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR. | | | | | | | | | Proxies submitted by the Internet or telephone must be received by 1:00 a.m., Eastern Time, on April 24, 2012. 28, 2015. | | | | |  | | | | 
| | Vote by Internet | | | | | | | | | • Go towww.envisionreports.com/PNC | | | | | | | | | • Or scan the QR code with your smartphone | | | | | | | | | • Follow the steps outlined on the secure website | | | | | | | | Vote by telephone | | | | | | | Vote by telephone
| | • Call toll free 1-800-652-VOTE (8683) within the USA, US
territories & Canada on a touch tone telephone • Follow the instructions provided by the recorded message
| Using ablack inkpen, mark your votes with anXas shown in x this example. Please do not write outside the designated areas. | | x | | | | | | | | • Follow the instructions provided by the recorded message |
 
‚q IF YOU HAVE NOT VOTED VIA THE INTERNETOR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.‚q
| | | | | A | | Proposals — The Board recommends a voteFOR all nominees in Proposal 1 andFOR Proposals 2 and 3. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1. | | Election of Directors: | | For | | Against | | Abstain | | | | For | | Against | | Abstain | | | | | | For | | Against | | Abstain | | + | | | | | 01 - Charles E. Bunch | | ¨ | | ¨ | | ¨ | | 02 - Paul W. Chellgren | | ¨ | | ¨ | | ¨ | | 03 - Marjorie Rodgers Cheshire | | ¨ | | ¨ | | ¨ | | | | | | | | | | | | | | | | | | | | | | + 04 - William S. Demchak | | ¨ | | ¨ | | ¨ | | 05 - Andrew T. Feldstein | | ¨ | | ¨ | | ¨ | | 06 - Kay Coles James | | ¨ | | ¨ | | ¨ | | | | | | | | | | | | | | | | | | | | | | 07 - Richard B. Kelson | | ¨ | | ¨ | | ¨ | | 08 - Anthony A. Massaro | | ¨ | | ¨ | | ¨ | | 09 - Jane G. Pepper | | ¨ | | ¨ | | ¨ | | | | | | | | | | | | | | | | | | | | | | 10 - Donald J. Shepard | | ¨ | | ¨ | | ¨ | | 11 - Lorene K. Steffes | | ¨ | | ¨ | | ¨ | | 12 - Dennis F. Strigl | | ¨ | | ¨ | | ¨ | | | | | | | | | | | | | | | | | | | | | | 13 - Thomas J. Usher | | ¨ | | ¨ | | ¨ | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | For | | Against | | Abstain | | | | | | For | | Against | | Abstain | | | | | | | | | | | | 2. | | Ratification of the Audit Committee’s selection of PricewaterhouseCoopers LLP as PNC’s independent registered public accounting firm for 2015. | | ¨ | | ¨ | | ¨ | | 3. | | Advisory vote to approve named executive officer compensation. | | ¨ | | ¨ | | ¨ |
| | | | B | | Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below |
| | | | | | | | | | Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title. | | Date (mm/dd/yyyy) — Please print date below. | | | | Signature 1 — Please keep signature within the box. | | | | Signature 2 — Please keep signature within the box. | | / / | | | | | | | | |
IF VOTING BY MAIL, PLEASE COMPLETE SECTIONS A AND B ON THIS CARD. 
Notice of Annual Meeting of Shareholders THE PNC FINANCIAL SERVICES GROUP, INC. 2015 Annual Meeting of Shareholders For the purpose of considering and acting upon the election of 13 directors to serve until the next annual meeting and until their successors are elected and qualified, the ratification of the Audit Committee’s selection of PricewaterhouseCoopers LLP as PNC’s independent registered public accounting firm for 2015, the advisory vote to approve named executive officer compensation and such other business as may properly come before the meeting and any adjournment. If you sign and date this proxy card in Section B but do not give voting instructions in Section A, this proxy will be voted in accordance with the recommendations of the Board of Directors. Tuesday, April 28, 2015 - 11:00 a.m. Eastern Time One PNC Plaza - 15th Floor 249 Fifth Avenue Pittsburgh, Pennsylvania 15222 Upon arrival, please present this admission ticket and valid photo identification at the registration desk. q IF YOU HAVE NOT VOTED VIA THE INTERNETOR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q | | | Proxy — The PNC Financial Services Group, Inc. | | + |
This proxy is solicited on behalf of the Board of Directors for the Annual Meeting of Shareholders on April 28, 2015. William S. Demchak, Robert Q. Reilly and Christi Davis, and each of them with full power to act alone and with full power of substitution, are hereby authorized to represent the undersigned at The PNC Financial Services Group, Inc. Annual Meeting of Shareholders to be held on April 28, 2015, and at any adjournment, and to vote, as indicated on the reverse side, the shares of common stock and/or preferred stock that the undersigned would be entitled to vote if personally present at said meeting. The above-named individuals are further authorized to vote such stock upon any other business as may properly come before the meeting, and any adjournment, in accordance with their best judgment. If you are a participant in The PNC Financial Services Group, Inc. Incentive Savings Plan (the ISP or 401(k) plan) this proxy also serves as voting instructions to the Trustee of the plan for voting at the Annual Meeting of Shareholders to be held on April 28, 2015, and at any adjournment. You have the right to provide the Trustee with voting instructions for the units you hold in your PNC Stock Fund account. Your vote must be received by 11:59 p.m., Eastern Time, on April 23, 2015 to insure that the Trustee has adequate time to tabulate voting instructions. The Pennsylvania Business Corporation Law of 1988, as amended, 15 Pa. Cons. Stat. § 1759(b), provides that shareholders voting by means of the telephone or the Internet, as instructed, will be treated as transmitting a properly authenticated proxy for voting purposes. Pennsylvania law permits the use of telephone or Internet voting both when a shareholder of record is voting and when a beneficial owner is communicating its vote to a shareholder of record, such as a securities depositary or brokerage firm. Please sign and return promptly. | | | | | | | | C | | Non-Voting Items | | | | | | Change of Address— Please print new address below. | | | | | | | | | Will attend Meeting ¨ | | | | | |
IF VOTING BY MAIL, PLEASE COMPLETE SECTIONS A AND B ON THIS CARD.
| | | | | | |  | | | | | |  | | | | | Using ablack inkpen, mark your votes with anXas shown in x this example. Please do not write outside the designated areas. | | | | | | |
q PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q | | | 01 - Richard O. Berndt | | ¨ A | | ¨Proposals — The Board recommends a voteFOR all nominees in Proposal 1 andFOR Proposals 2 and 3. |
| ¨ | | 02 - Charles E. Bunch | | ¨ | | ¨ | | ¨ | | | | 03 - Paul W. Chellgren | | ¨ | | ¨ | | ¨ | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1. | | Election of Directors: | | For | | Against | | Abstain | | | | For | | Against | | Abstain | | | | For | | Against | | Abstain | | + | | | 01 - Charles E. Bunch | | ¨ | | ¨ | | ¨ | | 02 - Paul W. Chellgren | | ¨ | | ¨ | | ¨ | | 03 - Marjorie Rodgers Cheshire | | ¨ | | ¨ | | ¨ | | | | | | | | | | | | | | | | | | | 04 - William S. Demchak | | ¨ | | ¨ | | ¨ | | 05 - Andrew T. Feldstein | | ¨ | | ¨ | | ¨ | | 06 - Kay Coles James | | ¨ | | ¨ | | ¨ | | 05 | | | | | | | | | | | | | | | | | 07 - Richard B. Kelson | | ¨ | | ¨ | | ¨ | | 08 - Anthony A. Massaro | | ¨ | | ¨ | | ¨ | | 09 - Jane G. Pepper | | ¨ | | ¨ | | ¨ | | | | 06 - Bruce C. Lindsay | | | | | | | | | | | | | | | ¨ 10 - Donald J. Shepard | | ¨ | | ¨ | | ¨ | | 11 - Lorene K. Steffes | | ¨ | | ¨ | | ¨ | | 12 - Dennis F. Strigl | | ¨ | | ¨ | | ¨ | | | | | | | | | | | | | | | | | | | 13 - Thomas J. Usher | | ¨ | | ¨ | | ¨ | | | | | | | | | 07 - Anthony A. Massaro | | ¨ | | ¨ | | ¨ | | 08 - Jane G. Pepper | | ¨ | | ¨ | | ¨ | | | | 09 - James E. Rohr | | ¨ | | ¨ | | ¨ | | | | | | | | | 10 - Donald J. Shepard | | ¨ | | ¨ | | ¨ | | 11 - Lorene K. Steffes | | ¨ | | ¨ | | ¨ | | | | 12 - Dennis F. Strigl | | ¨ | | ¨ | | ¨ | | | | | | | | | 13 - Thomas J. Usher | | ¨ | | ¨ | | ¨ | | 14 - George H. Walls, Jr. | | ¨ | | ¨ | | ¨ | | | | 15 - Helge H. Wehmeier | | ¨ | | ¨ | | ¨ | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | For | | Against | | Abstain | | | | | | | | | | For | | Against | | Abstain | | 2. | | Ratification of the Audit Committee’s selection of PricewaterhouseCoopers LLP as PNC’s independent registered public accounting firm for 2012. | | ¨ | | ¨ | | ¨ | | | | 3. | | Advisory vote to approve named executive officer compensation. | | | | ¨ | | ¨ | | ¨ |
| | | | | | | | | | | | | | | | | | | | | | | | For | | Against | | Abstain | | | | | | For | | Against | | Abstain | | | | | | | | | | | | 2. | | Ratification of the Audit Committee’s selection of PricewaterhouseCoopers LLP as PNC’s independent registered public accounting firm for 2015. | | ¨ | | ¨ | | ¨ | | 3. | | Advisory vote to approve named executive officer compensation. | | ¨ | | ¨ | | ¨ |
| | | | | | | B | | Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below | |
| | Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title. |
Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title.
| | | | | | | | | | Date (mm/dd/yyyy) — Please print date below. | | | | Signature 1 — Please keep signature within the box. | | | | Signature 2 — Please keep signature within the box. | // | | | | | | | | |
IF VOTING BY MAIL, YOUMUST COMPLETE SECTIONS A AND B ON THIS CARD.
 
Notice of Annual Meeting of Shareholders
THE PNC FINANCIAL SERVICES GROUP, INC.
2012 Annual Meeting of Shareholders
For the purpose of considering and acting upon the election of 15 directors to serve until the next annual meeting and until their successors are elected and qualified, the ratification of the Audit Committee’s selection of PricewaterhouseCoopers LLP as PNC’s independent registered public accounting firm for 2012, the advisory vote to approve named executive officer compensation and such other business as may properly come before the meeting or any adjournment.
If you sign and date this proxy card in Section B but do not give voting instructions in Section A, this proxy will be voted in accordance with the recommendations of the Board of Directors.
Tuesday, April 24, 2012 - 11:00 a.m. Eastern Time
August Wilson Center for African American Culture
980 Liberty Avenue
Pittsburgh, PA 15222
Upon arrival, please present this admission ticket and photo identification at the registration desk.
‚ IF YOU HAVE NOT VOTED VIA THE INTERNETOR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.‚
| | | | | Proxy — The PNC Financial Services Group, Inc.
| | +
|
|
| This proxy is solicited on behalf of the Board of Directors for the
| | | | | Annual Meeting of Shareholders on April 24, 2012. | | | | | | | James E. Rohr, Joseph C. Guyaux, and George P. Long, III, and each of them with full power to act alone and with full power of substitution, are hereby authorized to represent the undersigned at The PNC Financial Services Group, Inc. Annual Meeting of Shareholders to be held on April 24, 2012, or at any adjournment, and to vote, as indicated on the reverse side, the shares of common stock and/or preferred stock that the undersigned would be entitled to vote if personally present at said meeting. The above-named individuals are further authorized to vote such stock upon any other business as may properly come before the meeting, or any adjournment, in accordance with their best judgment. | | | | | | | If you are a participant in any incentive savings plan (e.g., a 401(k) plan), sponsored by The PNC Financial Services Group, Inc., this proxy also serves as a voting instruction card to the Trustee of such plan for voting at the Annual Meeting of Shareholders to be held on April 24, 2012 or at any adjournment. You have the right to provide the Trustee with voting instructions for the units you hold in your PNC Common Stock Fund account which are included in the total on the reverse side. | | | | | | | The Pennsylvania Business Corporation Law of 1988, as amended, 15 Pa. C.S.A. section 1759 (b), provides that shareholders voting by means of the telephone or the Internet, as instructed, will be treated as transmitting a properly authenticated proxy for voting purposes. Pennsylvania law permits the use of telephone or Internet voting both when a shareholder of record is voting and when a beneficial owner is communicating its vote to a shareholder of record, such as a securities depositary or brokerage firm. | | | | | | | Please sign and return promptly. | | | | |
| | | | | | | | | Change of Address — Please print new address below. | | | | | | | | | Will attend Meeting | | | ¨ | | | | | | | | | | | | | | | | | | IF VOTING BY MAIL, YOUMUST COMPLETE SECTIONS A AND B ON THIS CARD.
| | | | | | | n | | | | | | + | | |
| | | | | | | | | 
| | | | | Using ablack inkpen, mark your votes with anXas shown in this example. Please do not write outside the designated areas. | | x | | | | | | |
| | | Annual Meeting Proxy Card
| | |
‚q PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.‚q
| | | | | A
| | Proposals — The Board recommends a voteFOR all nominees andFOR Proposals 2 and 3. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | For | | Against | | Abstain | | | | For | | Against | | Abstain | | | | | | For | | Against | | Abstain | | | | | | | | + | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 01 - Richard O. Berndt | | ¨ | | ¨ | | ¨ | | 02 - Charles E. Bunch | | ¨ | | ¨ | | ¨ | | | | 03 - Paul W. Chellgren | | ¨ | | ¨ | | ¨ | | | | | | | | | | | | | | | | | | | | | | | | | 04 - Kay Coles James | | ¨ | | ¨ | | ¨ | | 05 - Richard B. Kelson | | ¨ | | ¨ | | ¨ | | | | 06 - Bruce C. Lindsay | | ¨ | | ¨ | | ¨ | | | | | | | | | 07 - Anthony A. Massaro | | ¨ | | ¨ | | ¨ | | 08 - Jane G. Pepper | | ¨ | | ¨ | | ¨ | | | | 09 - James E. Rohr | | ¨ | | ¨ | | ¨ | | | | | | | | | 10 - Donald J. Shepard | | ¨ | | ¨ | | ¨ | | 11 - Lorene K. Steffes | | ¨ | | ¨ | | ¨ | | | | 12 - Dennis F. Strigl | | ¨ | | ¨ | | ¨ | | | | | | | | | 13 - Thomas J. Usher | | ¨ | | ¨ | | ¨ | | 14 - George H. Walls, Jr. | | ¨ | | ¨ | | ¨ | | | | 15 - Helge H. Wehmeier | | ¨ | | ¨ | | ¨ | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | For | | Against | | Abstain | | | | | | | | | | For | | Against | | Abstain | | 2. | | Ratification of the Audit Committee’s selection of PricewaterhouseCoopers LLP as PNC’s independent registered public accounting firm for 2012. | | ¨ | | ¨ | | ¨ | | | | 3. | | Advisory vote to approve named executive officer compensation. | | | | ¨ | | ¨ | | ¨ |
| | | | | B
| | Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below | | |
Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title.
| | | | | | | | | Date (mm/dd/yyyy) — Please print date below. | | | | Signature 1 — Please keep signature within the box. | | | | Signature 2 — Please keep signature within the box. | //
| | | | | | | | |
IF VOTING BY MAIL, YOUMUST COMPLETE SECTIONS A AND B ON THIS CARD.
‚ PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.‚Proxy — The PNC Financial Services Group, Inc.
This proxy is solicited on behalf of the Board of Directors for the | | | Annual Meeting of Shareholders on April 28, 2015. William S. Demchak, Robert Q. Reilly and Christi Davis, and each of them with full power to act alone and with full power of substitution, are hereby authorized to represent the undersigned at The PNC Financial Services Group, Inc. Annual Meeting of Shareholders to be held on April 28, 2015, and at any adjournment, and to vote, as indicated on the reverse side, the shares of common stock and/or preferred stock that the undersigned would be entitled to vote if personally present at said meeting. The above-named individuals are further authorized to vote such stock upon any other business as may properly come before the meeting, and any adjournment, in accordance with their best judgment. The Pennsylvania Business Corporation Law of 1988, as amended, 15 Pa. Cons. Stat. § 1759(b), provides that shareholders voting by means of the telephone or the Internet, as instructed, will be treated as transmitting a properly authenticated proxy for voting purposes. Pennsylvania law permits the use of telephone or Internet voting both when a shareholder of record is voting and when a beneficial owner is communicating its vote to a shareholder of record, such as a securities depositary or brokerage firm. Please sign and return promptly. Proxy — The PNC Financial Services Group, Inc.
| This proxy is solicited on behalf of the Board of Directors for the
| Annual Meeting of Shareholders on April 24, 2012. | | James E. Rohr, Joseph C. Guyaux, and George P. Long, III, and each of them with full power to act alone and with full power of substitution, are hereby authorized to represent the undersigned at The PNC Financial Services Group, Inc. Annual Meeting of Shareholders to be held on April 24, 2012, or at any adjournment, and to vote, as indicated on the reverse side, the shares of common stock and/or preferred stock that the undersigned would be entitled to vote if personally present at said meeting. The above-named individuals are further authorized to vote such stock upon any other business as may properly come before the meeting, or any adjournment, in accordance with their best judgment. | | If you are a participant in any incentive savings plan (e.g., a 401(k) plan), sponsored by The PNC Financial Services Group, Inc., this proxy also serves as a voting instruction card to the Trustee of such plan for voting at the Annual Meeting of Shareholders to be held on April 24, 2012 or at any adjournment. You have the right to provide the Trustee with voting instructions for the units you hold in your PNC Common Stock Fund account which are included in the total on the reverse side. | | The Pennsylvania Business Corporation Law of 1988, as amended, 15 Pa. C.S.A. section 1759 (b), provides that shareholders voting by means of the telephone or the Internet, as instructed, will be treated as transmitting a properly authenticated proxy for voting purposes. Pennsylvania law permits the use of telephone or Internet voting both when a shareholder of record is voting and when a beneficial owner is communicating its vote to a shareholder of record, such as a securities depositary or brokerage firm. | | Please sign and return promptly. |
|
|
