SECURITIES AND EXCHANGE COMMISSION
Proxy Statement Pursuant to Section 14(a) of
The Securities Exchange Act of 1934
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þ Filed by the Registrant | | ¨☐ Filed by a Party other than the Registrant |
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¨ | ☐ | Preliminary Proxy Statement |
¨ | ☐ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
þ | ☑ | Definitive Proxy Statement |
¨ | ☐ | Definitive Additional Materials |
¨ | ☐ | Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12 |
REGIONS FINANCIAL CORPORATION
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant) |
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REGIONS FINANCIAL CORPORATION
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PROXY STATEMENT AND NOTICE OF
2016 ANNUAL MEETING OF STOCKHOLDERS
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| 2 | | 2018 Proxy Statement |
REGIONS FINANCIAL CORPORATION
1900 Fifth Avenue North
Birmingham, Alabama 35203
Dear Fellow Stockholders:
On behalf of your Board of Directors, we areI am pleased to invite you to attend the 20162018 Annual Meeting of Stockholders of Regions Financial Corporation, to be held at 9:00 A.M., local time, on April 21, 2016, in the Upper Lobby Auditorium of Regions Bank, 1901 Sixth Avenue North, Birmingham, Alabama 35203.Whether or notStockholders. We hope you are able towill attend the meeting in person we invite you
. I want to read this year’s proxy statement, which highlightshighlight some achievements related to our performance and operations, as well as key activitiesfeatures regarding Regions’ ongoing strategy, including our new initiative, “Simplify and accomplishments of 2015 and presents the matters for which we are seekingGrow.” As always, Regions is committed to delivering strong value creation on your vote at the 2016 meeting. Late last year, we held an Investor Day conference in New York where we reviewed our strategy to strengthen financial performance and build sustainable franchise value. Our business model is based on a solid foundation, which focuses on the strength of our team, our markets, our culture and our ability to execute. Additionally, we have identified steps Regions will takebehalf over the next three yearslong term and appreciates your continued investment in our Company.
We continue to grow and diversify revenue, manage expenses and effectively deploy capital. As partmake progress in executing the Company’s strategy, as well as accomplishing our mission of that effort, we have developed detailed plans to restructure our expense base to operate more efficiently while continuing to invest in revenue-producing businesses. We believe that these actions will accelerate our performance and drive growth and improved profitability in a challenging economy.Overall, our 2015 performance reflected continued momentum in an environment that has presented some challengesachieving superior economic value for our industry. And while we entered 2016 with a rigorous focus on expense controlsstockholders over time by making life better for our customers, associates, and improving operating efficiency, we also continuecommunities. Our approach of identifying and understanding customers’ financial needs and goals, and then providing the best solutions to focus on the fundamentals of our business, which — at its core — includes understanding and meeting our customers’ needs.
Throughout 2015, we continued our use of Regions360SM — our go-to-market strategy thatachieve those goals, allows us to effectively deliver Regions’ value propositionproposition. We concluded 2017 by meeting or exceeding our financial performance targets. This resulted in, among other benefits, net income from continuing operations available to customers. Regions360 beginscommon shareholders of approximately $1.2 billion, which represents a 9 percent increase over 2016
and earnings per diluted share from continuing operations of $1.00, a 15 percent increase. Regions’ associates, who are committed to operating our business with obtaining a fully detailed understandingthe highest level of integrity and delivering excellent customer service, made this performance possible. Through our associates’ efforts in 2017, Regions received numerous awards including earning the number one ranking in customer satisfaction by the American Customer Satisfaction Index and being recognized for our commitment to quality service by Greenwich Associates. A key element of our strategy is discovering ways to deliver a better and more efficient customer experience. As part of our regular strategic planning process, which includes the Board’s active and regular review and oversight of strategy, management introduced Simplify and Grow at the end of 2017. The goal of Simplify and Grow is to make banking easier for our customers, accelerate revenue growth, and improve efficiency and the associate experience. As we undertake this new strategic priority, we plan to leverage our culture and commitment to customer service and our communities in order to meet our customers’ financial needs. We connect their needs withincreasingly higher expectations as we simplify our organization and processes to drive efficiencies and effectiveness in the best productsCompany overall.
Prudent risk-taking is an integral part of our strategy, and services acrosswe are committed to protecting the interests of all of our businessesstakeholders. Successful execution of our business strategies requires that we manage our risks well; therefore, our commitment to effective risk management is pervasive throughout all levels of our organization and in everything we do. Our strategic priorities
have long established a responsibility to “Enhance Risk Management”; our Risk Management Framework and Risk Appetite Statement are overseen by the Board’s Risk Committee; and under our well-established “Risk Ownership and Awareness” program, every Regions associate is responsible for prudently managing the Company’s risk.
As we continue to execute on our strategic plan, we are always thinking about how Regions can evolve as an industry leader that is responsive and responsible to societal needs, including investing in our associates, customers, and communities. Our mission drives our desire to improve and make a positive difference in the communities where we work and live.
Accordingly, we committed to the following actions:
Increasing the entry-level wage we pay our associates to $15 per hour by the end of 2018. This increase is part of Regions' ongoing effort to provide sustainable career paths and professional growth opportunities for all associates.
Contributing $40 million to the Company’s charitable foundation to support financial education, job training, economic development, and affordable housing, all of which help foster an environment of inclusive prosperity and create shared value for Regions' customers, achieve their financial goals. The end result is stronger customer relationships, a sustainable business,communities, and communities that thrive. In addition, we also madestockholders.
Increasing the Company’s capital expenditures budget by approximately $100 million, or 50 percent, over 2017 to support investments in facilities, technology, product innovation, and other innovations during 2015 that are intendedpersonalized service to enhancemeet and anticipate customer needs.
On the level of service for our customers and drive revenue.Anext page, you will find a letter from our Lead Independent Director, follows this letter, as well as the formal notice of the annual meeting setting forth thewhich further discusses Regions’ societal responsibilities and our commitment to operating our business that is expectedin an environmentally and socially responsible manner. I encourage you to come before the meeting. Our materials also includeread our proxy statement
Corporate Sustainability Report and form of proxy. If you have elected to receive your proxy statement by mail, it will be accompanied by our Annual Social Responsibility Report on Form 10-K for the year ended December 31, 2015,, which highlight Regions’ environmental stewardship and the Chairman’s Letter. If you have elected to receive your proxy statement electronically, you will be able to access all of these documentscommunity engagement. Both reports are available on the Internet.YourInvestor Relations section of our website.
Finally, your vote is important, andimportant. Whether or not you plan to attend the Annual Meeting in order thatperson, we may be assured of a quorum, we urgeencourage you to vote as soon as possible, even if you plan to attend the meeting. The notice and the proxy statement containpossible. For instructions on how you canto vote, your shares over the Internet, by mobile device, by telephone or by mail if you have received a printed copyplease see page 5 of the materials and proxy card. If your shares are held for you by your broker, it is important that you instruct your broker on how you want to vote. Under New York Stock Exchange rules, your broker will not be able to use its discretion to vote your shares for the election of Directors or matters related to executive compensation. Please instruct your broker on how you want to vote by following the instructions on the form sent by your broker.statement.
On behalf of
theyour Board of Directors and
the over 23,000all of our associates,
of Regions, I want to thank you for your continued
investment in and support of Regions Financial Corporation.
March 8, 20169, 2018Sincerely, |
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Sincerely,
Chairman President and Chief Executive Officer |
REGIONS FINANCIAL CORPORATION
1900 Fifth Avenue North
Birmingham, Alabama 35203
Dear Fellow Stockholders:
As the Lead Independent Director of
Throughout 2017, your Board of Directors
I am honored to have the opportunity to write to you, our stockholders, as part of this year’s proxy statement. The proxy statement affords us the opportunity to reach out to all of Regions’ stockholders to review, among many other things, where the Company has been and where we are going.Over the past few years, we have enhanced our proxy statement to make it clearer, simpler, and more straightforward with a focusremained focused on what matters most to stockholders. This includes providing a better understanding of Regions’ strategy, corporate governance, and executive compensation. We hope the following pages will help you better understand the Company and how our governance and compensation practices are linked to performance and accountability in a manner that drives long-term stockholder value. As overseerseffective oversight of the Company, it is the Board’s responsibility to remain highly engaged in the Company’s strategic approach to creating stockholder value, and therefore, we must ensure that communication with our stockholders is a dialogue rather than a monologue. We appreciate your feedback and look forward to meaningful engagement on issues that are important to all of us.
In 2015, Regions enhanced its stockholder outreach program. As part of this effort, during the summer of 2015, your Directors formalized a Director-Stockholder Engagement Framework to better define the roles of management and the Board,strategy, as well as stockholders, when engaging with one another. This Frameworkcontinued emphasis on strong corporate governance because good governance is designed to guide us all through the engagement process to ensure it is successful and beneficial for everyone involved.
Throughout the year, the Company conducted governance reviews and proactively reached out to stockholders on an individual basis to solicit their feedback on topicsfoundation of importance to them. To reach a broad audience, Regions also hosted its 2015 Investor Day conference in New York, which was simultaneously webcast. This event was well-attended by investors and analysts and gave us the opportunity to set forth our long-term strategy, which involves, among other things, three areas of focus: (1) grow and diversify revenue, (2) practice disciplined expense management, and (3) effectively deploy capital. The Board remains very focused on the Company’s strategic initiatives to strengthen financial performance, which in turn, will foster long-term sustainable growth for our stockholders.
Let me also extend my heartfelt thanks to George W. Bryan who will not be standing for re-election this year as he reached our mandatory retirement age. He currently chairs the Risk Committee and has also served as a member of both the Audit Committee and the Compensation Committee. Throughout his tenure, he has shared his valuable time and insight, which proved crucial to the growth of Regions during a period of significant change in the financial services industry.
On behalf of the Board,business. Before I begin, however, I would like to expresstake a moment to thank David Cooper, who is retiring from our sincere appreciationBoard having reached the mandatory retirement age. David is a leader in one of the most important communities in our footprint, and we appreciate his ongoing engagement and support on behalf of the Company.
On behalf of your Directors, I would like to provide some insight into the boardroom regarding our practices and philosophy.
Board Oversight of Strategy
The Board is actively and regularly engaged in reviewing and overseeing the Company’s strategy, including business and organizational initiatives, potential development opportunities, challenges, risks, capabilities, and capital allocation. Every October, the Board reviews and discusses a rolling three-year strategic plan. Management provides updates on long-range financial plans, as well as reports on various strategic topics throughout the year, and the Board discusses both the Company’s operating plan and long-term strategic plan at almost every Board meeting.
Corporate Governance and Year-Round Stockholder Engagement
Regions’ mission is to make life better for all of our stakeholders by creating shared value. One way to do this is through effective corporate governance. At Regions, effective governance is more than just the annual meeting and proxy votes—it is about continuous and thoughtful assessments of our governance practices and structure. For example, in February 2018, as part of our ongoing evaluation of our governance structure, the Board consolidated oversight of the Company’s policy and decision-making relating to corporate culture and human capital under the Compensation Committee, which was renamed the “Compensation and Human Resources Committee” to reflect that expansion of responsibilities. Also, the Board proactively adopted proxy access in July 2017, reflecting our ongoing commitment to corporate governance best practices.
In addition, as a result of the Board’s 2017 self-assessment process, a Board refreshment and recruitment plan was created to ensure the Board has the necessary skills to support the Company’s strategy. Searching for diverse candidates is a significant focus as the Board believes that diversity is an important aspect of effective governance, diminishes the opportunity for groupthink, and reflects the communities in which we live and serve. The plan is included as a regular agenda item for discussion at every Nominating and Corporate Governance Committee meeting.
Regions proactively engages with our stockholders year-round. Continuous engagement throughout the year allows us to strengthen and deepen our relationship with stockholders and provides us with important feedback on corporate governance matters. Over the past year, Regions engaged with many of our institutional stockholders through in-person meetings, roundtable discussions, conference calls, and written communications to obtain their perspectives on various corporate governance topics such as board composition and diversity, executive compensation, and environmental and social practices and disclosures.
A corporate governance engagement update is a regular agenda item discussed at every Nominating and Corporate Governance Committee meeting. Also included as a regular agenda item for
discussion are articles on leading and emerging corporate governance practices.
The Board is committed to sustainability and social responsibility, and this commitment is reflected in the various environmental, social, and governance practices in place. Regions publishes an annual sustainability report describing our practices, which can be found on the Investor Relations section of the Company’s website. In 2017, the Company expanded its Corporate Social Responsibility team to ensure that it has the appropriate expertise for analyzing and addressing environmental and social matters and engaging with stockholders to understand their views. Last year we undertook a materiality assessment to identify environmental and social priority areas while continuing to enhance our disclosures. We recognize that this area is of increasing importance to a growing number of stockholders, as well as customers, and we will continue to identify ways to strengthen our commitment to corporate responsibility and community engagement.
Executive Management Succession
The Board and the Nominating and Corporate Governance Committee spend a considerable amount of time on executive succession planning. After thorough consideration and deliberation, the Board promoted John Turner, former Head of our Corporate Banking Group, to President of Regions Financial Corporation and Regions Bank in December 2017. Mr. Turner’s promotion is an example of Regions’ talent management process, which ensures that the Company develops its executives to assume greater responsibility and provides continuity of management.
Societal Responsibilities
The Board oversees Regions’ mission to make life better by creating shared value. It is a simple idea: what we do as a business must benefit our customers, Company, stockholders, and communities. Every day, Regions and its associates are making a positive contribution in our communities, whether through partnering with nonprofit organizations, charitable giving, or through Regions’ associate volunteer program, “What A Difference A Day Makes,” which provides a paid day off each year for associates to volunteer in their communities.
The Board appreciates your continued engagement and the trust you have placed in us, and we
look forwardremain committed to serving
you throughout the upcoming year.your interests in 2018.
March 8, 20169, 2018Sincerely, |
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Sincerely,
Lead Independent Director |
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TABLE OF CONTENTS |
| QUICK INFORMATION |
TABLE OF CONTENTS
QUICK INFORMATION
The following charts provide quick information about Regions’ 2018 Annual Meeting and our corporate governance and executive compensation practices. These charts do not contain all of the information provided elsewhere in the proxy statement; therefore, you should read the entire proxy statement carefully before voting.
Meeting Information
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| Date and Time of Annual Meeting | Wednesday, April 25, 2018 9:00 A.M., local time |
| Location of Annual Meeting | Regions Center Auditorium 1900 Fifth Avenue North Birmingham, Alabama 35203 |
| Record Date | February 26, 2018 |
Proposals That Require Your Vote
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| Proposal | Voting Options | Board Recommendation | More Information | Effect of Abstentions
and Broker Non-Votes | Votes Required for Approval |
NOTICE OF 2016 ANNUAL MEETING OF STOCKHOLDERSPROPOSAL 1 – Election of Directors | FOR, AGAINST, or ABSTAIN for each Director nominee | FOR each Nominee | 1Page 25 | Abstentions and Broker non-votes have no effect on the vote results for this proposal. | Affirmative “FOR” vote of a majority of the votes cast for or against each Director nominee. |
PROPOSAL 2 – Ratification of
Appointment of
Independent Registered Public
Accounting Firm | FOR, AGAINST, or ABSTAIN | FOR | Page 65 | Abstentions have no effect on the vote results for this proposal. | Affirmative “FOR” vote of a majority of the votes cast for or against this proposal. |
PROPOSAL 3 – Advisory Vote on
Executive Compensation | FOR, AGAINST, or ABSTAIN | FOR | Page 68 | Abstentions and Broker non-votes have no effect on the vote results for this proposal. | Affirmative “FOR” vote of a majority of the votes cast for or against this proposal. |
PROPOSAL 4 – Advisory Vote on the Frequency of Future Advisory Votes on Executive Compensation | Every Year, Every TWO Years, Every THREE Years, or ABSTAIN | EVERY YEAR | Page 69 | Abstentions and Broker non-votes have no effect on the vote results for this proposal. | The option that receives the highest number of votes cast by stockholders will be considered the preferred frequency. |
Corporate Governance and Compensation Facts
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PROXY STATEMENTCorporate Governance or Compensation Matter | Regions |
| Current Number of Directors | 14 |
| Director Independence | 2Board of Directors - 93% Audit Committee - 100% CHR Committee - 100% NCG Committee - 100% Risk Committee - 100% |
| Separate Board Chair and CEO | No |
| Lead Independent Director | Yes |
| Robust Responsibilities and Duties Assigned to Lead Independent Director | Yes |
| Voting Standard | Majority with plurality carveout for contested elections |
| Frequency of Director Elections | Annual |
| Resignation Policy | Yes |
| Classified Board | No |
| Mandatory Retirement Age | 72 |
| Mandatory Retirement Tenure | No |
| Average Director Age | 66 |
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PROXY SUMMARYCorporate Governance or Compensation Matter | Regions |
| Average Director Tenure | 9 |
| Gender Diversity on the Board | 421% |
| Racial/Ethnic Diversity on the Board | 21% |
| Directors Attending Fewer than 75% of Meetings | 0 |
| Number of Meetings Held in 2017 | Board of Directors: 8 Audit Committee: 12 CHR Committee: 6 NCG Committee: 5 Risk Committee: 4 Joint Audit Committee and Risk Committee: 1 Joint CHR Committee and Risk Committee: 1 Joint CHR Committee, NCG Committee and Board: 1
Total: 38 |
| Directors Overboarded Under ISS or Glass Lewis Voting Guidelines | 0 |
| One Share, One Vote Policy | Yes |
| Dual-Class Common Stock | No |
| Cumulative Voting | No |
| Vote Standard for Charter/By-Law Amendment | 75% |
| Stockholder Right to Call Special Meeting | No |
| Stockholder Right to Act by Written Consent | No |
| Board Authorized to Issue Blank-Check Preferred Stock | Yes; however, our capital actions are required to be included as part of our Capital Plan submitted to the Federal Reserve |
| Poison Pill | No |
| Proxy Access By-Law | Yes |
| Exclusive Forum By-Law | Yes |
| Annual Board and Committee Self-Evaluation Process | Yes |
| Engage with our Stockholders | Yes |
| Political Contributions Disclosed | Yes |
| Anti-Hedging and Anti-Pledging Policies | Yes |
| Robust Stock Ownership Guidelines | Yes |
| Shares Pledged by Directors and Executive Officers | 0 |
| Codes of Conduct for Directors, Officers, and Associates | Yes |
| Material Related Party Transactions with Directors | None |
| Family Relationships | None |
| Director Onboarding and Ongoing Education Program | Yes |
| Independent Directors Meet Without Management Present | Yes |
| Independent Auditor | Ernst & Young LLP |
| Board Oversight of ESG | Yes |
| Board Oversight of Company Strategy and Risks | Yes |
| Board Oversight of Company Sexual Misconduct Policies | Yes |
| ISG Corporate Governance Principles for U.S. Listed Companies Compliance | We believe Regions is in compliance |
| CEO Pay Ratio | 202:1 |
| Clawback Policy | Yes |
| Incentive Plans that Encourage Excessive Risk Taking | No |
| Employment Agreements for Executive Officers | No |
| Repricing of Underwater Options | No |
| Excessive Perks | No |
| Pay-for-Performance | Yes |
| Frequency of Say-on-Pay Advisory Vote | Annual |
| Tax Gross-Ups | No |
| Double-Trigger Change-in-Control Provisions | Yes |
| Compensation Consultant | Frederic W. Cook & Co. |
TABLE OF CONTENTS
REGIONS FINANCIAL CORPORATION
Birmingham, Alabama 35203
NOTICE OF
20162018 ANNUAL MEETING OF STOCKHOLDERS
To be held Thursday,Wednesday, April 21, 201625, 2018
TO THE STOCKHOLDERS OF REGIONS FINANCIAL CORPORATION:
The
20162018 Annual Meeting of Stockholders of Regions Financial Corporation (“Regions”), a Delaware corporation, will be held:
Date:Thursday,Wednesday, April 21, 201625, 2018
Time:9:00 A.M., local time
Place:Upper LobbyRegions Center Auditorium, of Regions Bank, 1901 Sixth1900 Fifth Avenue North, Birmingham, Alabama 35203
Record Date:February 22, 201626, 2018
The annual meeting is being held for the following purposes:
1. | |
| 1. | Election to our Board of Directors of the1113 nominees named in theour proxy statement to serve as Directors until the next annual meeting of stockholders or in each case until their successors are duly elected and qualified; |
2. | |
| 2. | Ratification of the appointment ofErnst & Young LLP as Regions’ independent registered public accounting firm for the year 2016; and2018; |
3. | Nonbinding stockholderapproval of |
| 3. | Advisory vote on executivecompensation.; and |
We also will act
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| 4. | Advisory vote on the frequency of future advisory votes on executive compensation. |
Regions does not know of any business to be presented for action at the annual meeting other than those items listed above. If any other
business that maymatters properly come before the
annual meeting
although we have not received noticeor any adjournment or postponement thereof, it is intended that the proxies will be voted in respect thereof by and at the discretion of
any other matters that may be properly presented.the persons named as proxies on the electronic proxy or proxy card.
The Board of Directors fixedset the close of business on February 22, 2016,26, 2018, as the record dateRecord Date for the annual meeting. This means that only Regions common stockholders of record at such date are entitled to notice of, and to vote at, the annual meeting or any adjournment or postponement of the meeting.
A complete list of Regions stockholders of record entitled to vote at the meeting will be made available for inspection by any Regions stockholder for 10 days prior to the meeting at the principal executive offices of Regions and at the time and place of the meeting.
The annual meeting will begin promptly at 9:00 A.M., local time. Please note that seating is limited and we ask that you allow ample time andfor the check-in will beginprocess, which begins at 8:00 A.M., local time. Please allow ample time for the check-in process. To be admitted to our annual meeting, you must present proof of your stock ownership as of the record dateRecord Date and a valid, government-issued photo identification. See page 184 for further details regarding proof of stock ownership.
Your vote is important to us. Whether or not you plan to attend the annual meeting, you are encouraged to promptly submit your proxy with voting instructions. To vote your shares, please follow the instructions in the Notice of Internet Availability of Proxy Materials or the proxy card you received in the mail. If you vote by telephone or via the Internet, you need not return a proxy card. You may revoke your proxy at any time before the vote is taken by notifying the Corporate Secretary of Regions in writing or by validly submitting another proxy by telephone, Internet, or mail. If you are present at the meeting, you may vote your shares in person, which will supersede your proxy. If you hold shares through a broker or other custodian,Broker, check the voting instructions provided to you by that broker or custodian.Broker. | | | | | | |
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March 8, 20169, 2018 | | | | | | By Order of the Board of Directors |
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Fournier J. Gale, III Corporate Secretary |
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INDEX OF COMMONLY REFERENCED TOPICS |
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| Topic | Page |
| Admission to the Annual Meeting | 19 |
| Anti-Hedging and Anti-Pledging | 24 |
| Auditor Fees | 65 |
| Auditor Tenure | 66 |
| Board Leadership Structure | 47 |
| Board Meeting Director Attendance | 60 |
| Board Refreshment | 28 |
| Board Risk Oversight | 56 |
| Board, Committee, and Individual Director Evaluation | 49 |
| CEO Pay Ratio | 93 |
| Change-in-Control Agreements | 89 |
| Clawback Policy | 86 |
| Committees of the Board | 61 |
| Communications with the Board | 41 |
| Compensation Consultant | 59 |
| Compensation and Performance Peer Groups | 85 |
| Contacts at Regions | 41 |
| Corporate Governance Principles | 38 |
| Corporate Governance Stockholder Engagement | 39 |
| Culture | 44 |
| Cybersecurity | 58 |
| Director Biographies | 30 |
| Director Education | 50 |
| Director Independence | 50 |
| Director Qualifications and Skills | 26 |
| Director Retirement Age | 38 |
| Director Tenure | 29 |
| Economic Development and Community Outreach | 42 |
| Environmental Sustainability | 43 |
| Lead Independent Director Duties | 48 |
| LTIP Grants | 80 |
| Pay-for-Performance | 70 |
| Perks | 83 |
| Political Contributions Policy | 47 |
| Record Date | 1 |
| Related Person Transactions Policy | 54 |
| Say-on-Pay | 68 |
| Stock Ownership Guidelines | 24 |
| Stock Performance Graph | 9 |
| Stockholder Nominations for the 2019 Annual Meeting | 20 |
| Stockholder Proposals for the 2019 Annual Meeting | 20 |
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COMMONLY USED TERMS AND ACRONYMS |
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| Term | Meaning |
| 401(k) Plan | Regions Financial Corporation 401(k) Plan |
| Board | Board of Directors of Regions Financial Corporation |
| Broker | Fournier J. Gale, IIIBrokerage firms, banks, or similar entities |
| BSA/AML/OFAC | Bank Secrecy Act/Anti-Money Laundering/Office of Foreign Assets Control |
| CCAR | Comprehensive Capital Analysis and Review |
| CD&A | Compensation Discussion and Analysis |
| CEO | Chief Executive Officer |
| CFO | Chief Financial Officer |
| CHR Committee | Compensation and Human Resources Committee |
| Code of Conduct | Code of Business Conduct and Ethics |
| Cook & Co. | Frederic W. Cook & Co. |
| CRO | Chief Risk Officer |
| CSR | Corporate Social Responsibility |
| DDSIP | Directors’ Deferred Stock Incentive Plan |
| EPS | Earnings Per Share |
| ESG | Environmental, Social, and Governance |
| Exchange Act | Securities Exchange Act of 1934, as amended |
| EY | Ernst & Young LLP |
| Federal Reserve | The Board of Governors of the Federal Reserve System |
| FDICIA | Federal Deposit Insurance Corporation Improvement Act of 1991 |
| GAAP | Generally Accepted Accounting Principles in the United States |
| IRC | U.S. Internal Revenue Code of 1986, as amended |
| ISG | Investor Stewardship Group |
| LTIP | Long Term Incentive Plan |
| NCG Committee | Nominating and Corporate Governance Committee |
| NEOs | Named Executive Officers |
| NPL | Non-Performing Loan |
| NYSE | New York Stock Exchange |
| OAC | Office of Associate Conduct |
| OREO | Other Real Estate Owned |
| PCAOB | Public Company Accounting Oversight Board |
| PSUs | Performance Stock Units |
| Retirement Plan | Regions Financial Corporation Retirement Plan |
| ROATCE | Return on Average Tangible Common Equity |
| RSUs | Restricted Stock Units |
| SEC | U.S. Securities and Exchange Commission |
| Securities Act | Securities Act of 1933, as amended |
| SERP | Regions Financial Corporation Post 2006 Supplemental Executive Retirement Plan |
| SOX | Sarbanes–Oxley Act of 2002 |
Regions®, the Regions logo, and the LifeGreen bike are registered trademarks of Regions Bank. The LifeGreen color is a trademark of Regions Bank. Other words or symbols in this proxy statement that identify other parties’ goods or services may be trademarks or service marks of those other parties.
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| 2 | | | | | | | | Corporate Secretary2018 Proxy Statement |
ï 2016 Proxy Statement1
REGIONS FINANCIAL CORPORATION
1900 Fifth Avenue North
Birmingham, Alabama 35203
March 8, 2016
9, 2018
The Board of Directors (the “Board”) of Regions Financial Corporation (“
Regions”, “Company”, “we”, “us”,Regions,” “Company,” “we,” “us,” or “our”) is furnishing you with this proxy statement to solicit proxies on its behalf to be voted at the
20162018 Annual Meeting of Stockholders of Regions. The
2016 Annual Meetingmeeting will be held
in the Upper Lobby Auditorium of Regions Bank, 1901 Sixth Avenue North, Birmingham, Alabama 35203 on
Thursday,Wednesday, April
21, 2016,25, 2018, at 9:00 A.M., local
time.time, in the Regions Center Auditorium, 1900 Fifth Avenue North, Birmingham, Alabama 35203. The proxies
may also
may be voted at any adjournments or postponements of the annual meeting.
The mailing address of our principal executive offices is 1900 Fifth Avenue North, Birmingham, Alabama 35203. We are first furnishing the proxy materials to stockholders on March
8, 2016.9, 2018.
All properly executed written proxies and all properly completed proxies submitted by telephone or
the Internet that are delivered pursuant to this solicitation will be voted at the
20162018 Annual Meeting of Stockholders in accordance with the directions given in the proxy, unless the proxy is revoked prior to completion of voting at the meeting.
Only owners of record of shares of Regions common stock as of the close of business on February
22, 2016,26, 2018, the
record date,Record Date, are entitled to notice of, and to vote at, the meeting or at any adjournments or postponements of the meeting. Each owner of record on the
record dateRecord Date is entitled to one vote for each share of common stock held.
On February 22, 2016, thereThere were
1,277,092,7191,122,744,800 shares of common stock issued and
outstanding.outstanding on the Record
Date.
We are continuing to use the SecuritiesSEC’s Notice and Exchange CommissionAccess rule that allows us to furnish our proxy materials to stockholders over the Internet. This means most of our stockholders will receive only a notice containing instructions on how to access the proxy materials over the Internet and vote online. This
offers a convenient way for stockholders to review the materials while substantially reducing our printing and mailing
expenses.expenses and environmental impact. The notice is not a proxy card and cannot be used to vote your shares. If you receive the notice but would still like to receive paper copies of the proxy materials, please follow the instructions on the notice or on the website referred to on the notice.
We
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If you have not already done so, we ask you to consider signing up to receive these materials electronically in the future by following the instructions after you vote your shares over the Internet. Enrolling in future electronic delivery of these materials reduces Regions’ printing and mailing expenses and environmental impact. To enroll for electronic delivery you may also visit http://enroll.icsdelivery.com/rf. |
If, however, you
to consider signing up to receive these materials electronically in the future by following the instructions after you votehave received your
shares over the Internet. By delivering proxy materials electronically
and would like to
our stockholders, we reducereceive a paper copy of the
environmental impact of our meeting. To enroll for electronic delivery, visithttp://enroll.icsdelivery.com/rf.IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON APRIL 21, 2016:
The Notice of Annual Meeting and Proxy Statement,
Annual Report on Form 10-K or proxy statement, you may, at time any, email investors@regions.com, call 205-264-7040, or write to:
Regions Financial Corporation
1900 Fifth Avenue North
Birmingham, Alabama 35203
Attn: Investor Relations
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IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON APRIL 25, 2018: The Notice of Annual Meeting and Proxy Statement, Annual Report on Form 10-K for the year ended December 31, 2017, and Chairman’s Letter are available at www.regions.com or www.proxyvote.com. |
Important Notice Regarding Delivery of Security Holder Documents
This is the
year ended December 31, 2015first distribution of proxy solicitation materials to stockholders.
The SEC has adopted rules that allow us to send, in a single envelope, our proxy statement and
Chairman’s Letterare available at www.regions.com or www.proxyvote.com
2 ï 2016 Proxy Statement
ADMISSION TO THE ANNUAL MEETING
Admission to our 2016 Annual Meeting is limited to our registered and beneficial stockholders as of the record date and persons holding valid proxies from stockholders of record. To be admitted to ourother required annual meeting you must bringmaterials to two or more stockholders sharing the same address. These rules spell out the conditions under which annual reports, information statements, proxy statements, prospectuses, and other disclosure documents of a valid, government-issued photo identificationcompany that would otherwise be mailed in separate envelopes to more than one stockholder at a shared address may be mailed as one copy in one envelope addressed to all stockholders at that address (i.e., “householding”). Stockholders who participate in householding will, however, receive separate proxy cards.
Stockholders of record sharing an address whose shares are registered directly in their name with Computershare, our transfer agent, should contact Broadridge at 1-866-540-7095 if they currently receive (1) multiple copies of our proxy materials or notices and proofwish to receive only one copy of yourthese materials per household in the future or (2) a single copy of our proxy materials or notices and wish to receive separate copies of these materials in the future. Stockholders whose shares of our common stock ownership asare held in street name wishing to make such elections should contact their Broker.
For the safety of
all meeting attendees, we have implemented the
record date, such as:following admission policy and meeting rules:
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| Admission to the Annual Meeting
Admission to the 2018 Annual Meeting is limited to our registered and beneficial stockholders as of February 26, 2018, and persons holding valid proxies from stockholders of record. To be admitted to our annual meeting, you must bring a valid, government-issued photo identification and proof of your stock ownership as of the Record Date, such as: 1. If you are a stockholder of record, bring the Admission Ticket appearing on the top of your proxy card or bring the Notice of Internet Availability of Proxy Materials you received in the mail. | |
| • | | 2. If your shares are held atby a bank or broker,Broker, bring the Notice of Internet Availability of Proxy Materials you received in the mail or a brokerage statement evidencing ownership of Regions common stock as of the record date. | |
| • | | Record Date. 3. If you received our meeting materials electronically, bring a copy of the email notification. | Stockholders who do not present an Admission Ticket or other proof of stock ownership will be admitted only upon verification of ownership at the registration desk. See page 19 for additional information. For security reasons, no large bags, backpacks, briefcases, or packages will be permitted in the annual meeting, and security measures will be in effect to provide for the safety of attendees. The use of any electronic devices such as cameras (including mobile phones with photographic capabilities), recording devices, smartphones, tablets, laptops, and other similar devices is strictly prohibited. Individuals with a disability requesting assistance should contact Regions’ Americans with Disabilities Act Manager, Kathy Lovell, by email at kathy.lovell@regions.com, by phone at 205-264-7495 or toll-free at 1-800-370-5087, or by Regions’ Telecommunication Device for the Hearing Impaired and the Deaf (TTY/TDD) toll-free at 1-800-374-5791. |
Stockholders who do not present the Admission Ticket or other proof of stock ownership will be admitted only upon verification of ownership at the registration desk.
For security reasons, no large bags, backpacks, briefcases or packages will be permitted in the annual meeting, and security measures will be in effect to provide for the safety of attendees. The use of any electronic devices such as cameras (including mobile phones with photographic capabilities), recording devices, smartphones, tablets, laptops and other similar devices is strictly prohibited.
Individuals with a disability requesting assistance please contact Regions’ Americans with Disabilities Act Manager Kathy Lovell by email at kathy.lovell@regions.com, by phone at 205-264-7495 or toll-free 1-800-734-4667, or using Regions’ Telecommunication Device for the Deaf (TTY/TDD) toll free at 1-800-374-5791.
ï 2016 Proxy Statement3
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Rules and Procedures Stockholder Question and Answer Session at the Annual Meeting Following adjournment of the official business of the annual meeting, there will be a time for stockholders to present questions to our Chairman. We will proceed according to the following guidelines: 1. All questions should be directed to the podium. Please wait to address the meeting until after you have been recognized. 2. Upon being recognized, please wait for someone to bring a microphone to you. Clearly state your name, your city and state, and your status as either a stockholder or a proxy holder prior to presenting your question. 3. Each speaker is requested to limit questions to a total of no more than three (3) minutes. 4. Please permit each speaker the courtesy of concluding his or her remarks. 5. Questions are welcome and Regions will provide an opportunity for stockholders to ask appropriate questions; however, the purpose of the meeting will be observed and the following discussions are not appropriate: • irrelevant to the business of the Company or the conduct of its operations; • a request to vote on a proposal or nominee not properly submitted to the Company prior to the meeting; • related to pending or threatened litigation; • derogatory or defamatory remarks related to Regions, its management, Directors, associates, or customers; • language that is profane, loud, threatening, abusive, or encouraging violence or disorder; • substantially repetitious statements made by other stockholders; • related to personal grievances or individual concerns; or • continuing after the maximum time limit is reached.
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Violation of the above rules and procedures will be considered cause for expulsion from the meeting, and you will be escorted from the premises by security personnel. In the event of any disorder during the meeting, we may immediately adjourn the meeting and declare the polls open for such period of time as we may determine to receive votes by proxy or ballot on items of business properly presented before the meeting.
This summary highlights certain information about Regions. This summaryIt does not contain all of the information provided elsewhere in the proxy statement; therefore, you should read the entire proxy statement carefully before voting.
For more
complete information regarding the Company’s 20152017 performance, review the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.
2017.20162018 Annual Meeting of Stockholders
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• Date:
| | Thursday, April 21, 2016 |
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• Time:
Date: | Wednesday, April 25, 2018 |
| Time: | 9:00 A.M., local time |
| Place: | |
• Place:
| | Regions Bank, Upper LobbyCenter Auditorium 1901 Sixth
Birmingham, Alabama 35203 |
| Record Date: | February 26, 2018 |
• Record Date:
| | February 22, 2016 |
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• Voting:
| | Common stockholders as of the record dateRecord Date are entitled to vote. Stockholders of record, as well as most beneficial stockholders, can vote by proxy using one of several ways:methods: |
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| To vote with your mobile device (tablet or smartphone), scan theQuick Response Code that appears on your proxy card or Notice of Internet Availability of Proxy Materials (may require free software). |
| | To vote over the Internet, visitwww.proxyvote.com and enter your 16 digit16-digit control number that appears on your proxy card, email notification, or Notice of Internet Availability of Proxy Materials. |
| | To vote by telephone, call1-800-690-6903 and follow the recorded instructions. If you vote by telephone, you also will need your 16 digit16-digit control number that appears on your proxy card. |
| | If you request printed copies of the proxy materials be sent to you by mail, vote by proxy by filling out the proxy card and sendreturn it back in the envelope provided to:Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, New York 11717. |
| | Additionally, you may votein personat the annual meeting. We will collect the proxy cardsballots prior to the vote being finalized. |
If you hold your stock in street name or through the Regions Financial Corporation 401(k) Plan or our Dividend Reinvestment Plan, see Questions and Answers about the Annual Meeting and Voting & Other Information beginning on page 15 for more information about how to vote your shares.
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| If you holdEach stockholder vote is important! Please submit your stock in street name vote by proxy over the Internet, by telephone, or through the Regions Financial Corporation 401(k) Plan, seeQuestionscomplete, sign, date, and Answers about the Annual Meeting and Voting beginning on page 17 for more information about how to votereturn your shares.proxy card or voting instruction form. |
Admission to ourthe annual meeting is limited to our registered and beneficial stockholders as of the record dateRecord Date and persons holding valid proxies from stockholders of record. To be admitted to our annual meeting, you must bringprovide proof of your stock ownership as of the record dateRecord Date or a valid proxy and a valid, government-issued photo identification. See page 1819 for further details.details about documentation that can be used to prove ownership and some of the security measures that will be in place.If you have not already done so, we strongly encourage you to enroll in electronic delivery of proxy materials because, in addition to reducing Regions’ printing and mailing expenses and environmental impact, doing so allows you to easily reprint your proof of admission should you misplace it.
4 ï 2016 Proxy Statement
Proposals That Require Your Vote
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| Proposal | Voting Options | ��Board Recommendation | More Information | Board
Recommendation
Effect of Abstentions
and Broker Non-Votes | | More
Information
| | Votes Required for Approval |
PROPOSAL 1 | | – Election of Directors | FOR, AGAINST, or ABSTAIN for each Director Nominee | FOR each Nominee | | Page 2625 | Abstentions and Broker non-votes have no effect on the vote results for this proposal. | Affirmative “FOR” vote of a majority of the votes cast for or against each Director Nominee. |
PROPOSAL 2 – Ratification of
Appointment of
Independent Registered Public
Accounting Firm | FOR, AGAINST, or ABSTAIN | FOR | Page 65 | Abstentions have no effect on the vote results for this proposal. | Affirmative “FOR” vote of these proposals.a majority of the votes cast for or against this proposal. |
PROPOSAL 3 – Advisory Vote on
Executive Compensation | FOR, AGAINST, or ABSTAIN | FOR | Page 68 | Abstentions and brokerBroker non-votes have no effect on the vote results for these proposals.this proposal. | Affirmative “FOR” vote of a majority of the votes cast for or against this proposal. |
PROPOSAL 24 – Advisory Vote on the Frequency of Future Advisory Votes on Executive Compensation | Every Year, Every Two Years, Every Three Years, or ABSTAIN | Ratification of Appointment of Independent Registered Public Accounting Firm | | FOR | EVERY YEAR | Page 5769 | |
PROPOSAL 3Abstentions and Broker non-votes have no effect on the vote results for this proposal. | | Nonbinding Stockholder ApprovalThe option that receives the highest number of Executive Compensation | | FOR | | Page 60 | votes cast by stockholders will be considered the preferred frequency. |
Information about Regions
Regions (NYSE:RF) is a financial holding company headquartered in Birmingham, Alabama, that operates in the South, Midwest, and Texas. Regions, through its subsidiaries, provides traditional commercial, retail, and mortgage banking services, as well as other financial services in the fields of asset management, wealth management, securities brokerage, insurance, trust services, merger and acquisition advisory services, and specialty financing.
At December 31,
2015,2017, Regions had total consolidated assets of approximately
$126.1$124.3 billion,
total consolidated deposits of approximately
$98.4$96.9 billion, and total consolidated stockholders’ equity of approximately
$16.8$16.2 billion.
Regions is a Delaware corporation. Regions’Its principal executive offices are located at 1900 Fifth Avenue North, Birmingham, Alabama 35203. Regions is a member of the S&P 500 Index and, as of December 31, 2017, is the 1820th largest full-service bank holding company in the nation. Regions conducts its banking operations through
our wholly-owned subsidiary, Regions Bank, an Alabama state-chartered commercial bank that is a member of the Federal Reserve System. At December 31,
2015,2017, Regions Bank operated
1,962approximately 1,900 ATMs and
1,627 banking offices in 16 states.Our Strategy
Together, our values, mission and vision guide us in developing our business strategy. While our strategic priorities, appearing in the graphic to the right, guide our day-to-day operations, Regions developed a comprehensive three-year strategic plan in 2015 designed to further promote long-term stockholder value. As our 2016-2018 strategic financial plan was prepared and reviewed with our Board, our executive management team worked to ensure there was alignment of our corporate strategy with our Board-approved Risk Appetite Statement. The essence of our strategy demonstrates the strength of our culture, our markets, our team and our strong capital base, as well as our commitment to execute a plan that will deliver sustainable performance and stockholder returns over the next three years.
1,500 branch outlets.2016-2018 Strategic Initiatives
Grow and diversify revenue streams
Disciplined expense management
Effectively deploy capital
ï 2016 Proxy Statement5
The Foundation of our Growth 
Throughout 2015, we continued using Regions360SM, our go-to-market strategy that allows us to effectively deliver our value proposition to customers. Regions360 begins with obtaining a detailed understanding of our customers’ financial needs. We connect their needs with the best products and services across all of our businesses to help customers achieve their financial goals. The end result is stronger customer relationships, a sustainable business and communities that thrive.
In 2015, we continued to make steady progress growing customer accounts, deposits, loans and Regions360 relationships. The growth was broad-based across our footprint and across the many products and services we offer our customers.
Strength of Culture
Our basic values, beliefs and mission reflect our culture.
Strength of Culture
There are many elements of Regions’ culture, but the key element is a shared passion for our mission of making life better for our customers, communities, associates, and stockholders by creating shared value. Our mission defines our corporate purpose and answers the question, “What do we want to accomplish as we work together?”
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Our mission is to achieve superior economic value for our shareholders over time by
making life better for our customers, our associates, and our communities and creating shared value as we help them meet their financial goals and aspirations. | | | | 
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Our culture values integrity and fosters a belief that trust must be earned and all of us are accountable for results. We believe in collaboration and working as a team. The Board and executive management recognize, however, that the tone for our corporate culture starts at the top and that creating a respectful workplace is at the heart of creating and maintaining a desirable culture. As such, the NCG Committee reviews and oversees the Company’s Code of Conduct in conjunction with our General Counsel.
See pages 44 through 47 for more information about Regions’ corporate culture and our policies and practices that support it.
Regions aims to be the premier regional financial institution in America through being deeply embedded in its communities, operating as one team with the highest integrity, providing unique and extraordinary service to all of its customers, and offering an unparalleled opportunity for professional growth for its associates.
Our vision statement is an aspiration, and it defines our future. It is meant to
clarifyguide what we do, where we do it, and how we will execute. We aim to achieve our vision
byby: providing expert financial advice, guidance, and education to customers;
by building well-developed business plans that we execute with discipline;
by building on a foundation of integrity and trust throughout our business;
by delivering excellent customer service and convenience; and
by offering our associates the opportunity to grow professionally and
work onbe part of an outstanding team.
We believe how we reach
Our Values
At Regions, our
potential is just as important as what we achieve. While a company can claim corporate ideals or adopt a tremendous vision statement, ultimately it is a company’s associates who embody those ideals.Our Corporate Values
In Regions’ case, our corporate values are not simply the values of a legal entity; they are values that encompass the ethics and commitment of over 23,000our associates. We believe how we reach our potential and create shared value is just as important as what we achieve. While a company may claim corporate ideals or adopt a lofty vision statement, ultimately it is a company’s associates who will need to embody those ideals in order to make the company’s vision a reality. Our values guide our day-to-day life, how we treat customers and each other, and the expectations we have for ourselves.
At Regions, we strive to use our corporate values as a lens through which decisions should be made. We believe it is more appropriate to look first at customer needs rather than the products or services we can offer. Our approach of “Getting to Know Your Customer” before offering our solutions is, we believe, the right way to do business. Our values are the statement of how we will do business; they are a promise and a measuring stick against which to judge our behavior and results:
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OUR VALUES | Put people FIRST | Do what IS RIGHT |
| Focus on your CUSTOMER | Reach HIGHER | Enjoy LIFE |
Put People First:Have respect for every person. Listen. Care. Serve others before yourself. Build the best team. Be inclusive. Work as one team. Balance work in a full life. Lead humanely. Set the good example. And remember to say thank you.
Do What is Right:Always. Be honest. Do what you say. Use common sense. Stand for quality and integrity. Take the long view. Earn trust. Be responsible and accountable.
Focus on Your Customer:Serving the customer as one team, in an exceptional way, is our business, our only business. Know your customer. Serve your customer. Be committed. Understand needs. Meet needs. Make your customer’s life better by what you do. Create shared value.
6 ï 2016 Proxy Statement
Reach Higher:Grow. Our company must grow, and we must grow prudently. Raise the bar. Be energetic. Be innovative. Achieve excellence. Improve continuously. Inspire and enable others. Succeed the right way. Improve efficiency and effectiveness.
Enjoy Life:Have fun. We are in the business of banking. But more importantly, we are in the business of life. Enjoy it. Laugh. Be creative. Celebrate. Recognize success.
2015 Year-End Business Highlights
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Loans
$81.2B
 5% v. 2014
| 2018 Proxy Statement |  |
Our Strategy
Our values, mission, and vision complement each other and work together to guide how we develop our business strategy. Our strategic priorities, appearing in the graphic to the right, guide our day-to-day operations. Included within the Regions’ triangle is a new strategic priority that was launched in the fall of 2017: Simplify and Grow.
Simplify and Grow will transform how we approach our work and will focus on these four key elements:
• A better customer experience
• Accelerated revenue growth
• Improved efficiency
• A better associate experience
In addition to the strategic priorities, Regions has a comprehensive three-year strategic plan that is updated annually and is designed to further promote long-term stockholder value. As our strategic plan was prepared and reviewed with our Board, our executive management team worked to ensure there was alignment of our corporate strategy with our Board’s Enterprise Risk Appetite Statement. Our strategy demonstrates the strength of our culture, markets, team, and strong capital base, as well as our commitment to deliver sustainable performance and stockholder returns over the three-year period.
Each of the strategic priorities also includes more detailed lists of initiatives that are reviewed annually. With respect to the Strengthen Financial Performance priority, we continue to focus on three initiatives as part of the 2018-2020 Strategic Plan:
Grow and diversify revenue streams
Maintain disciplined expense management
Optimize and effectively deploy capital
Executive management and the Board understand that both long- and short-term strategies must consider more than financial results. We must consider our economic and societal impact. Regions takes a shared value approach, under which we seek to create value for our customers, associates, communities, and stockholders. Regions does not succeed unless all of our stakeholders succeed. We also must consider the impact societal and economic changes can have on us. This shared value can be seen in our mission statement discussed previously.
2017 Year-End Business Highlights and Execution of Our Strategic Plan
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Deposits
$98.4B
4% v. 2014
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Assets
$126.1B
5% v. 2014
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2017 Targets | | 2017 Results |
| Grow and Diversity Revenue | Net Interest Income and other financing income | + 3%-5% | | + 4.2% |
| Adjusted non-interest income* | relatively stable | | - 0.3% |
| Disciplined Expense Management | Adjusted non-interest expense* | + 0%-1% | | + 0.9% |
| Adjusted efficiency ratio* | ~ 62% | | 62.2% |
| Other Key Metrics | Adjusted operating leverage* | ~ 2% | | + 1.8% |
| Net charge-offs | 35-50 bps | | 38 bps |
* Non-GAAP, see reconciliation in Regions’ Current Report on Form 8-K filed January 19, 2018, Exhibit 99.2, page 13.
We reported net income from continuing operations available to common stockholders from continuing operations totaling $1approximately $1.2 billion, an increase of 9 percent, and diluted earnings per commondiluted share from continuing operations of $0.76.
$1.00, a 15 percent increase. We returned $927 millionapproximately $1.6 billion of earnings to our ownersstockholders in the form of quarterly dividends and common share repurchases or 93 percent of net income available to common stockholders.
repurchases.We realized a healthy 4 percent growth in adjusted non-interest income.*
We maintained a strong capital level with year-end Basel III Tier 1 Capital and Total capital ratios of 11.65 percent and 13.88 percent, respectively.
* See reconciliation in Regions’ Annual Report on Form 10-K for the year ended December 31, 2015 on page 46.
ï 2016 Proxy Statement7
This graph shows the cumulative total stockholder return for Regions common stock in each of the five years from December 31,
2010,2012, to December 31,
2015.2017. The graph also compares the cumulative total returns for the same five-year period with the S&P 500 Index and the S&P 500 Banks Index.
The comparison assumes $100 was invested on December 31,
2010,2012, in Regions common stock, the S&P 500 Index, and the S&P 500 Banks Index and that all dividends were reinvested.
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| | | Cumulative Total Return | |
| | | 12/31/10 | | | 12/31/11 | | | 12/31/12 | | | 12/31/13 | | | 12/31/14 | | | 12/31/15 | |
Regions | | $ | 100.00 | | | $ | 61.93 | | | $ | 103.31 | | | $ | 144.87 | | | $ | 157.37 | | | $ | 146.48 | |
S&P 500 Index | | $ | 100.00 | | | $ | 102.11 | | | $ | 118.43 | | | $ | 156.77 | | | $ | 178.22 | | | $ | 180.67 | |
S&P 500 Banks Index | | $ | 100.00 | | | $ | 89.28 | | | $ | 110.76 | | | $ | 150.33 | | | $ | 173.64 | | | $ | 175.12 | |
Economic Development and Community Outreach
We participated in several economic development initiatives during 2015. In August, Regions served as lead sponsor to an Inner City Capital Connections conference held in Birmingham, which serves to educate companies in or near city centers on how to access capital to expand their businesses.
In addition, our associates made a positive difference in the communities we served throughout 2015:
Provided more than 80,000 hours of volunteer work, up 3.2 percent from 2014, including 16,000 volunteer hours on financial education.
• | | Trained over 150 facilitators to incorporate financial education into classrooms and parent workshops, and the Regions at Work® team presented over 59,000 financial education seminars during the year throughout our footprint. |
Implemented financial education in 102 high schools and seven colleges.
Had more than 10,000 volunteer hours with Junior Achievement, earning us the President’s Silver Award.
Contributed $10.7 million in charitable giving — a 2 percent increase from 2014.
Regions also makes an indirect economic impact by taking an active role in economic development throughout our footprint. In 2013, Regions established the Alabama Economic Development Loan Pool, and at that time, earmarked $1 billion to provide economic development capital and support job growth in Alabama. Since 2013, the loan pool amount has been increased to $1.5 billion.
Regions is one of the nation’s leading direct investors in Low Income Housing Tax Credit projects. In 2015, Regions invested more than $231 million in such tax-credit partnerships, supporting 46 developments that provided 3,670 units of affordable housing for low- and moderate-income individuals and families, all within our footprint.
Corporate Social Responsibility
Corporate social responsibility at Regions encompasses coordinating, tracking and reporting our progress around diversity and inclusion; our corporate response when disasters strike; our environmental impact; and our economic development, sustainability and associate volunteer efforts. Key initiatives and activities include:
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| | Cumulative Total Return |
| | 12/31/12 |
| 12/31/13 |
| 12/31/14 |
| 12/31/15 |
| 12/31/16 |
| 12/31/17 |
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| Regions | $ | 100.00 |
| $ | 140.22 |
| $ | 152.32 |
| $ | 141.78 |
| $ | 217.49 |
| $ | 267.40 |
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| S&P 500 Index | $ | 100.00 |
| $ | 132.37 |
| $ | 150.48 |
| $ | 152.55 |
| $ | 170.78 |
| $ | 208.05 |
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| S&P 500 Banks Index | $ | 100.00 |
| $ | 135.72 |
| $ | 156.78 |
| $ | 158.10 |
| $ | 196.54 |
| $ | 240.87 |
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Annual Social Responsibility Report2017-2018 Recognitions
Annual Corporate Sustainability Report
Regions Diversity Advisory Council
8 ï 2016 Proxy Statement
Corporate Diversity Network
Supplier Diversity Program
Minority Capital Markets Initiative
Partnerships with the United Negro College Fund and Historically Black Colleges and Universities, providing scholarships and financial education
“What A Difference A Day Makes” program, offering all associates an annual day of Company-paid time off to volunteer in his or her community
At Regions, we recognize diversity and inclusion are essential to achieving and maintaining a thriving company, and our commitment is reinforced through our ongoing efforts to reflect, anticipate and adapt to the changing demographics of the communities where we live and work. Our public commitment to these efforts is supported by our Directors, executive management, and associates. Our strategic approach to diversity and inclusion — inside and outside of Regions — is not only good business, it is the right thing to do for our customers, communities, associates and stockholders. We have a cross-functional network of Regions associates who work together to advance the Company’s comprehensive diversity and inclusion strategy. Additionally, the Regions Diversity Advisory Council, composed of academic, community, and business leaders, offers an objective perspective on matters of diversity and inclusion in our workplace and marketplace.
Regions also supports the communities in which we operate by striving to minimize our environmental impact. This requires us to be mindful of every decision we make and to continually seek areas in which we can improve. For example, in 2015:
Our confidential trash program collected approximately 13 million pounds of paper and other confidential material (1.6 percent more paper than in 2014). After the paper was shredded, it was used by U.S. mills to manufacture new paper, which saved 109,000 trees, more than 2.4 million gallons of oil, 19,200 cubic yards of landfill space, more than 25.6 million kilowatts of energy and almost 45 million gallons of water.
Regions used 1.1 percent (2.5 million kWh) less electricity than in 2014 when comparing the same buildings. This is enough electricity to power over 236 average homes for a year (per U.S. Department of Energy Residential Energy Consumption Survey, 2014).
By the end of 2015, Regions reached a significant milestone in energy reduction. To measure progress, Regions’ energy consumption program has been monitoring the same buildings since 2008. For the 11.5 million square feet being tracked, electricity consumption has dropped by 20 percent since 2008. Even with rate increases, the cost of electricity for these buildings was $3.4 million less in 2015 than in 2008.
Regions continued our commitment to renewable energy by purchasing 5,000 kWh per month of renewable energy
| | through Duke Energy’s GoGreen Indiana Initiative. The energy for this particular program is generated from regional wind sources.
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Policy on Political Contributions
Regions’ Policy on Political Contributions and Code of Business Conduct and Ethics both govern and promote the highest standards of behavior by our Company and our associates with regard to political activities. The policies also ensure compliance with all current applicable federal and state campaign finance laws. Like most public companies, Regions recognizes that decisions made by governmental agencies and lawmakers can have a significant impact on our operations, stockholders, customers and associates. Accordingly, we monitor and track issues that affect our business and express our views to lawmakers and regulators.
Regions may make corporate political contributions in states where permissible. These contributions may be directed to state party organizations and candidates for statewide offices, state legislatures and, in rare instances, local offices.
Also, where legally permitted, Regions may make independent expenditures or corporate contributions in connection with state and local ballot initiatives and referenda on important policy issues that are likely to impact our business and our stakeholders. Regions does not, however, make contributions to political entities organized under Section 527 of the Internal Revenue Code or to special interest lobbying groups organized under Section 501(c)(4) of the Internal Revenue Code to support political activities, even when legally permissible.
Regions discloses annually its independent expenditures and corporate political giving on the Investor Relations section of our website at www.regions.com.
Recognition
Thanks to our talented and dedicated team, of associates, Regions received industry recognition in a number of categories throughout the year, including:
• | | Ranked Most Reputable Bank in the United States in the Reputation Institute/American Banker survey |
Gallup Great Workplace Award, 2015
Recognized by the Women’s Forum of New York as being a Corporate Champion for having gender diversity on our Board
• | | Corporate Secretary’s Corporate Governance Awards: Finalist for Best Proxy Statement, Large Cap |
Ranked Best-in-Class among all 299 brands in Forrester Research Q3 Customer Experience Index Survey
Ranked number one in customer satisfaction among all measured banks based onin the 2017 American Customer Satisfaction Index (ACSI) Retail Banking Study demonstrating
Named 2017 Gallup Great Workplace Award Winner for the third consecutive year
Recognized by 2020 Women on Boards for having 20 percent or more gender diversity on our commitmentBoard
Regions stock continues to servicemake up part of the Pax Ellevate Global Women’s Index Fund, which is the first mutual fund to invest in the highest rated companies in the world for advancing women’s leadership
Regions stock named a Top Socially Responsible Dividend Stock by Dividend Channel
Corporate Secretary’s Corporate Governance Awards: Finalist for Best Proxy Statement, Large Cap for the third year in a row
ï 2016 Proxy Statement9
Ranked thirdReceived 2017 Javelin Trust in Engagement Lab’s “Total Social” data rankings on the top U.S. banks for online and offline conversations
Banking Leaders AwardScored in the top 10 percent of over 250 companies evaluated for customer experienceRecognized by the Temkin Group, for the fourth straight year, as a top performer in its Customer Experience Rankings
Recognized, for the third consecutive year, by Greenwich Associates for Private Wealth Management’s commitment to quality service in Middle Market and Small Business Banking
Received 1222 additional Greenwich Excellence Awards in middle market and small business banking at the beginning of 2018
Regions’ Directors Carolyn H. Byrd and John E. Maupin Jr. were recognized in Black Enterprise’s Registry of Corporate Directors, an exclusive roster of African Americans who serve on the boards of directors among the nation’s 500 largest publicly-traded companies
Cybersecurity
As a financial institution, we are trusted with sensitive information, which we are expected to protect. Regions considersEarned the safekeeping of our customer, associate, and Company data to be of paramount importance. As such, our risk management program, which is overseen by the Risk Committee of the Board, includes a robust cybersecurity program. We employ a team of information security
Junior Achievement President’s Bronze Award for providing more than 8,000 volunteer hoursspecialists who are tasked with keeping data safe, and we have implemented multiple layers of defense to protect against intrusions.
See page 49 for a more in-depth look at Regions’ cybersecurity risk management program.
Stockholder Engagement
Regions values the viewpoints of our stockholders, and we are committed to providing our stockholders with the ability to express their opinions. Therefore, Regions has taken steps over the past year to strengthen our stockholder engagement efforts.
The following chart describes Regions’ annual stockholder engagement cycle:
As a result of engaging with our stockholders over the past few years, we have taken the following actions:
Made publicly available Regions’ political spending and lobbyist activities
• | | Included a summary of our strategy in ourProxy Summary |
• | | Added more detail to our overall company performance in theProxy Summary |
Enhanced proxy disclosures with respect to our independent auditor
Publicly disclosed a summary of the Director-Stockholder Engagement Framework on our website
Enhanced disclosures around executive compensation practices
We encourage all stockholders as of the record date to attend this year’s annual meeting, as this provides you with an opportunity to engage in direct dialogue with the Company. Our stockholder engagements efforts are further detailed on pages 38-39.
10 ï 2016 Proxy Statement
How to contact us:
| | |
Investor Relations | 2018 Proxy Statement | Regions Financial Corporation
1900 Fifth Avenue North, Birmingham, Alabama 35203
205-581-7890
investors@regions.com
9 |
|
Board of Directors | | Regions Financial Corporation
c/o Office of the Corporate Secretary
1900 Fifth Avenue North, Birmingham, Alabama 35203
|
Audit Committee of the Board of Directors | | Regions Financial Corporation
Attention: Ms. Carolyn H. Byrd
Chair, Audit Committee
c/o Office of the Corporate Secretary
1900 Fifth Avenue North, Birmingham, Alabama 35203
PROXY SUMMARY |
Proposal 1 – Election of Directors (page
26)25)
The proxy statement contains important information about the experience, qualifications, attributes, and skills of the Director nominees. The following chart sets forth information with respect to our 11 nomineessome of that information.
The Board has four standing
for election:Committees: the Audit Committee, the Compensation and Human Resources (“CHR”) Committee, the Nominating and Corporate Governance (“NCG”) Committee, and the Risk Committee. | | | | | | | | |
| | | | | |
| | | Age | | | Independent | | Regions Board Committee(s) | Principal Occupation | | Other Boards (1) | | Regions Board Committee(s) |
Carolyn H. Byrd (2) | | | 67 | | | 69 | Yes | Audit Committee (Chair) | | GlobalTech Financial, LLC | | • Popeyes Louisiana Kitchen, Inc.
• Federal Home Loan Mortgage Corporation
| | • Audit Committee (Chair)
• Risk Committee
(“Freddie Mac”) |
David J. Cooper, Sr.
Don DeFosset | | | 70 | | | 69 | Yes | CHR Committee (Chair) Risk Committee | Retired Chairman, President, and CEO, Walter Industries, Inc. | Vice Chairman, Cooper/
T. Smith
Terex Corporation; National Retail Properties; ITT Corporation | | • Alabama Power Company*
| | • Compensation Committee
• Nominating and Corporate Governance (“NCG”) Committee
|
Don DeFosset
| | Samuel A. Di Piazza, Jr. (2) | 67 | | | | Yes | Audit Committee CHR Committee | Retired Global CEO, PricewaterhouseCoopers; Retired Vice Chairman, Citigroup Global Corporate and Investment Bank | Retired Chairman,
President and CEO,
Walter Industries,
AT&T Inc. | | • Terex Corporation
• National Retail Properties
• ITT Corporation
| | • Compensation Committee (Chair)
• Risk Committee
;ProAssurance Corporation; Jones Lang LaSalle Incorporated |
Eric C. Fast (2) | | | 66 | | | 68 | Yes | | Audit Committee Risk Committee | Retired CEO, Crane Co. | | •
Automatic Data Processing, Inc. • ;
Lord Abbett Family of Funds | | • Audit Committee
• Risk Committee
|
O. B. Grayson Hall, Jr. | | | 58 | | | 60 | No | | | Chairman President and CEO, Regions Financial Corporation and Regions Bank | | •
Vulcan Materials Company• Company;
Alabama Power Company* | | |
John D. Johns (4)(3) | | | 64 | | | 66 | Yes | Risk Committee (Chair) | | Executive Chairman, and CEO, Protective Life Corporation | | •
Genuine Parts Company• Company;
The Southern Company | | • NCG Committee
• Risk Committee
Company;Protective Life Corporation** |
Ruth Ann Marshall | | | 61 | | | 63 | Yes | CHR Committee NCG Committee | | The Americas, MasterCard International, Inc. | | •
Global Payments Inc. | | • Compensation Committee
• NCG Committee
|
Susan W. Matlock | | | 69 | | | 71 | Yes | CHR Committee Risk Committee | | CEO, Innovation Depot, Inc. | | | | • Compensation Committee
• Risk Committee
|
John E. Maupin, Jr. (2) | | | 69 | | | 71 | Yes | | Audit Committee NCG Committee | Retired President and CEO, Morehouse School of Medicine | | •
LifePoint Health, Inc. • ;
VALIC Company I and II•II;
Encompass Health Corporation (f/k/a HealthSouth Corporation | | • Audit Committee
• NCG Committee
Corporation) |
Charles D. McCrary (3) (4) | | | 64 | | | 66 | Yes | | NCG Committee (Chair) | Retired President and CEO, Alabama Power Company | |
| James T. Prokopanko | 64 | • Yes
| NCG Committee (Chair) Risk Committee | Retired President and CEO, The Mosaic Company | Vulcan Materials Company; Xcel Energy Inc. |
Lee J. Styslinger III (2) | | | 55 | | | 57 | Yes | Audit Committee Risk Committee | | Altec, Inc. | | •
Vulcan Materials CompanyCompany; Workday, Inc. |
José S. Suquet (3) | 61 | • AuditYes
| CHR Committee • Compensation
Risk Committee | Chairman, President, and CEO, Pan-American Life Insurance Group |
|
| |
| (1) | Corporations subject to the registration or reporting requirements of the Securities Exchange Act, of 1934, as amended, or registered under the Investment Company Act of 1940. |
| |
| (2) | Audit Committee Financial Expert. |
| |
| (3) | Risk management expert. |
| |
| (4) | Lead Independent Director. |
(4) | Risk Management Expert. |
| * | Alabama Power Company has no publicly traded common stock but does issue public debt and preferred stock. |
| |
| ** | Protective Life Corporation has no publicly traded common stock but does issue public debt. |
ï 2016 Proxy StatementOur Board recommends that you vote “FOR”11 all 13 nominees standing for election.
Corporate Governance (page 38)
Regions has a long-standing commitment to providing effective governance of the Company’s business and affairs for the benefit of stockholders. The Board’s NCG Committee periodically reviews our Corporate Governance Principles to maintain effective and appropriate standards of corporate governance. A commitment to strong governance practices is a hallmark of the Board’s stewardship on behalf of stockholders and stakeholders. As such, we regularly review our practices to ensure effective collaboration between management and our Board.
Below are some of the governance best practices that we follow.
What We Do
| | | | |
ü
10 | | Continuous Focus on Strategic Planning | | The Board and management regularly focus on strategy and planning. |
ü
| | Maintain an Overwhelmingly Independent Board | | Of the Board’s current 12 Directors, 11 are independent, including the Lead Independent Director. |
ü
| | Recruit the Best Directors | | Our Board reflects a range of talents, ages, skills, diversity and expertise. |
ü
| | Strive for Board Diversity | | Currently, 25 percent of our Directors are female and 17 percent are ethnically diverse. |
ü
| | Maintain a Declassified Board | | Directors are elected annually by a majority of votes cast in an uncontested election. |
ü
| | Hold Frequent Board and Committee Meetings | | The Board held 9 meetings in 2015, and the Board’s Committees held 28 meetings in 2015. The Board meets in executive session at each regular Board meeting and most conference call Board meetings. |
ü
| | Expect Director Attendance at Meetings | | Our current Director attendance for Board and Committee meetings averaged over 96 percent in 2015, and each Director attended over 75 percent of Board and Committee meetings on which the Director served. |
ü
| | Maintain Independent Committees | | The Board has four independent, standing Committees to assist it in carrying out its work: an Audit Committee, a Compensation Committee, an NCG Committee, and a Risk Committee. Each Committee operates under a written charter approved by the Board and annually reviewed by each Committee and the NCG Committee. |
ü
| | Maintain Corporate Governance Principles | | The Board has adopted comprehensive Corporate Governance Principles to guide its oversight and independent governance leadership. |
ü
| | Conduct Board Self-Evaluations | | The Board and Committees conduct annual self-evaluations. |
ü
| | Facilitate a Director Education Program | | The Board has a robust Director Education Program to keep abreast of products and services offered by the Company; significant risks and compliance issues; laws, regulations and requirements applicable to the Company and its affiliates; corporate governance best practices; and changes in the financial services industry. |
ü
| | Conduct CEO Evaluation | | The Board conducts an annual evaluation of the Chief Executive Officer. |
ü
| | Administer Board Orientation | | New Directors are provided with an orientation package and attend a Board orientation session, including Committee-specific orientation sessions, as appropriate. |
ü
| | Maintain Stock Ownership Requirements | | Robust stock ownership guidelines for Directors and executive officers are in place. |
ü
| | Properly Align Executive Compensation | | We have specific policies and practices to align executive compensation with long-term stockholder interests; these policies and practices are routinely reviewed by the Compensation Committee in conjunction with an independent compensation consultant. |
ü
| | Provide for a Strong Clawback Policy | | We have adopted an enhanced clawback policy that applies to our executive officers, as well as a number of other senior management. |
ü
| | Review Management and Succession Planning | | The Board reviews management talent and succession at least annually. |
ü
| | Promote Cross-Committee Membership | | The Chairs of the Audit Committee and Risk Committee serve on both Committees. The Chair of the Compensation Committee also serves on the Risk Committee. |
ü
| | Administer a Code of Conduct | | The Company adopted a comprehensive Code of Business Conduct and Ethics (“Code of Conduct”) applicable to all Directors, executive officers and associates. Vendors and consultants are expected to adhere to any applicable Code of Conduct provisions. |
ü
| | Maintain an Ethics Council | | Our internal Ethics Council ensures proper oversight and application of the Code of Conduct. |
ü
| | Actively Fight Cybersecurity Threats | | The Company makes on-going investments in systems and technology, as well as training and education for all associates and Directors to combat cybersecurity threats. |
ü
| | Keep Directors Informed | | Our Directors and Committees are routinely provided with articles and reports to stay well informed of trends and best practices with respect to corporate governance, risk management, compensation, audit, regulatory matters and other topics. |
ü
| | Remain Socially Responsible | | We have a long-standing commitment to corporate social responsibility.2018 Proxy Statement |
12 ï 2016 Proxy Statement
| | | | |
ü
| | Disclose Political Contributions | | Pursuant to our Policy on Political Contributions, we disclose annually our independent expenditures and corporate political giving. |
ü
| | Maintain Mandatory Director Retirement Policy | | Directors retire on the date of the next annual meeting of stockholders after reaching age 72. |
ü
| | Require Management Accountability | | Management is accountable to the Board and the stockholders for their decisions. |
ü
| | Keep Stockholder Voting Rights Consistent with Ownership | | All common stockholders are entitled to one vote per share of common stock. Holders of preferred stock are not entitled to vote at the meeting. |
ü
| | Pay for Performance | | Majority of pay is not guaranteed. Executive compensation is tied to Company performance and aligned with the long-term interests of stockholders. |
ü
| | Engage with our Stockholders | | The NCG Committee has formalized a Director-Stockholder Engagement Framework to guide Directors and stockholders in the engagement process. Throughout the year, members of management meet with stockholders to solicit their opinions on various topics. If requested by major stockholders, our Lead Independent Director will ensure he is available for consultation and direct communication. |
ü
| | Board Oversees Risk Management | | Our Board has oversight of risk management with a focus on the most significant enterprise risks facing the Company, including strategic, reputational, liquidity, market, operational, credit, legal, and compliance risks. |
ü
| | Controls Over 10b5-1 Plans | | We have guidelines governing the use of pre-established trading plans for transactions in our securities. |
|
What We Don’t Do
|
X | | No Hedging of Regions Securities | | Long-standing policies restricting all hedging of Regions equity securities by Directors, executive officers and associates. |
X | | No Pledging of Regions Securities | | Enacted polices restricting pledging of Regions equity securities by Directors and executive officers. |
X | | No Selective Disclosure of Information | | We have a Fair Disclosure Policy applicable to all Directors, executive officers and associates to ensure timely, transparent, consistent and accurate financial and other information is provided to the investing community on a non-selective basis. |
X | | No “Poison Pill” | | There is no stockholder rights plan or “poison pill.” |
X | | No Family Relationships among Directors and Executive Officers | | No immediate family relationships exist between any of our Directors or executive officers and any of our other Directors or executive officers.PROXY SUMMARY |
Board Leadership Structure
Our Board leadership structure currently consists of a Chairman, who also serves as our President and Chief Executive Officer, a Lead Independent Director, and independent Committee chairs and members. The Board is presently composed of 12 Directors, 11 of whom are independent. Director Bryan, who has reached Regions’ mandatory retirement age, is not standing for re-election.
The Board believes that Regions is currently best served in combining the Chairman and Chief Executive Officer positions, complemented by an independent, strong and effective Lead Independent Director with robust responsibilities and duties.
Lead Independent Director
Charles D. McCrary serves as Regions’ Lead Independent Director. Both the Board and management believe that strong, independent Board leadership is a critical aspect of effective corporate governance.
Our Lead Independent Director’s responsibilities and duties are listed on page 40 and include, but are not limited to:
Establishing the agenda and presiding at executive sessions of the independent Directors;
Coordinating the activities of the independent Directors, including the authority to call meetings of independent Directors;
If requested by major stockholders, ensuring that he or she is available for consultation and direct communication; and
Regularly communicating with our Chairman on a variety of issues including business strategy and succession planning.
ï 2016 Proxy Statement13
Current Board Composition
The composition of our current
12-member14-member Board
representrepresents a diverse set of
experience,experiences, expertise, and
attributes and consist of:
Below are someattributes:
Based on information provided as part of this year’s year-end Director questionnaire, the following represents the number of our
13 current
Directors’ skills, qualifications andindependent Directors with considerable or extensive experience in areas
of expertise:that are critical to Regions’ operations, which are further discussed on page 27. Information regarding each Director nominee’s “top skills” can be found within their individual biographies on pages 30 through 36.
|
| ü | |
| Academia2018 Proxy Statement | 11 |
| ü | | Environmental/sustainability/corporate responsibility |
| ü | | Financial expertise/literacy |
| ü | | Financial services industry |
| ü | | International operations |
| ü | | InvestmentsPROXY SUMMARY |
| ü | | Outside board experience |
| ü | | CEO or senior executive officer experience |
| ü | | Regulatory, compliance and legal |
| ü | | Innovator/growth creator |
| ü | | Executive compensation and benefits |
Corporate Governance (page 38)
Our Board Committees
The four standing Committees established byworks with executive management to ensure we are not only in compliance with laws and regulations, but are keeping pace with the Board meet on a regular basis and operate under written charters approved by the Board and reviewed annually by each Committee and the NCG Committee. Each Committee performs an annual self-evaluation to determine whether the Committee is functioning effectively and fulfilling its duties as prescribed by its charter. All members of the Audit Committee have been determined to be an Audit Committee Financial Expert as defined by the Securities and Exchange Commission’s (“SEC”) Regulation S-K Item 407. The Risk Committee includes at least one Director who has experience in identifying, assessing and managing risk exposures of large, complex financial firms, as defined by Regulation YY of the Board of Governors of the Federal Reserve System.
All members of the Audit Committee, the Compensation Committee, the NCG Committee and the Risk Committee are independent. Cross-Committee membership is considered
when the NCG Committee recommends Committee member assignments to the Board.constantly changing corporate governance landscape. For example, we believe Regions is in compliance with ISG Corporate Governance Principles for U.S. Listed Companies that went into effect at the Chairsbeginning of 2018. Doing so also helps provide oversight and guidance for sound decision-making and accountability. We must hold ourselves to high standards when it comes to corporate governance, ethics, and risk management. This requires that we solicit input and feedback from many different stakeholders, both internally and externally.
Information about our corporate governance stockholder engagement, environmental and social practices, culture, Code of Conduct, Director independence, transactions with related persons, cybersecurity, and Committee information, among other topics, can be found in the Audit Committee and the Risk Committee each serve on both Committees. In addition, the ChairCorporate Governance section of the Compensation Committee serves on the Risk Committee and attends the majority of the Audit Committee meetings. The Chair of the NCG Committee, who also serves as the Lead Independent Director, attends a majority of all other Committee meetings as well. Currently, all independent Directors other than the Lead Independent Director serve on at least two Committees, providing further opportunities for cross-Committee membership.Leadership and outside board experience are two of the many qualities considered by the NCG Committee when selecting nominees and determining Committee member assignments each year. Of the eight nominees standing for reelection who currently serve on outside public company boards, seven of these individuals chair committees on their outside boards.
this proxy statement. Proposal 2 — Ratification of Auditors (page
57)65)
We are asking our stockholders to ratify the appointment of Ernst & Young LLP
(“EY”) as our independent registered public accounting firm for
the year 2015.2018. Below is summary information with respect to fees paid by us for
the audit, tax and regulatory compliance advisory services provided by
Ernst & Young LLPEY during
20152017 and
2014. | | | | | | | | |
| | | 2015 | | | 2014 | |
Audit fees | | $ | 6,303,384 | | | $ | 6,181,738 | |
Audit related fees | | | 318,769 | | | | 485,650 | |
Tax fees | | | 71,958 | | | | 218,062 | |
All other fees | | | 133,196 | | | | 1,738,909 | |
Total fees | | $ | 6,827,307 | | | $ | 8,624,359 | |
|
| | | | | | |
| | 2017 |
| 2016 |
|
| Audit fees | $ | 6,728,474 |
| $ | 6,148,610 |
|
| Audit related fees | 391,273 |
| 397,708 |
|
| Tax fees | 249,310 |
| 78,811 |
|
| All other fees | 303,815 |
| 235,506 |
|
| Total fees | $ | 7,672,872 |
| $ | 6,860,635 |
|
14The Board recommends you vote “FOR”ï this proposal. 2016 Proxy Statement
Proposal 3 — 2015Advisory Vote on Executive Compensation (page 60)
201668)
We are asking stockholders to cast a non-binding advisory vote on our executive compensation program. Please review our Compensation Discussion and Analysis (“CD&A”), which begins on page 70, for a description of the actions and decisions of the CHR Committee during 2017 regarding our compensation programs, as well as the accompanying compensation tables and related narrative. Last year our stockholders approved executive compensation with more than 96 percent of the votes cast in favor of the proposal.
The Board recommends that you vote “FOR” this proposal.
Our current executive officers are listed below.
| | | |
| | |
| Name | | Age | | | Position |
O. B. Grayson Hall, Jr. | | | 58 | | 60 | Chairman President and Chief Executive Officer |
David J. Turner, Jr. | | | 52 | | 54 | Chief Financial Officer |
Fournier J. Gale, III | | | 71 | | 73 | General Counsel and Corporate Secretary |
C. Matthew Lusco | | | 58 | | 60 | Chief Risk Officer |
John B. Owen | | | 55 | | 57 | Head of RegionalEnterprise Services and Consumer Banking Group |
John M. Turner, Jr. | 56 | President |
| Brett D. Couch | 54 | | | Head of Corporate Banking GroupReal Estate and Procurement |
Brett D. Couch
| | | 52 | | | Regional President, East Region |
Barb Godin | | | 62 | | 64 | Chief Credit Officer |
C. Keith Herron | | | 52 | | 54 | Head of Strategic PlanningCorporate Responsibility and ExecutionCommunity Engagement |
William E. Horton | 66 | | 64 | | | Regional President, South RegionHead of Commercial Banking |
Ellen S. Jones | | | 57 | | 59 | Head of Strategic Performance and Alignment |
David R. Keenan | | | 48 | | 50 | Head of Human Resources |
Scott M. Peters | 56 | | 54 | | | Head of Consumer ServicesBanking Group Head |
William D. Ritter | 47 | | 45 | | | Head of Wealth Management Group Head |
Ronald G. Smith | 57 | | 55 | | | Regional President, Mid-America RegionHead of Corporate Banking Group |
Executive Compensation
In 2015,
Although total reported compensation for our CEO declined in 2017 as compared to last year, this was the
majorityresult of
a smaller change in pension value for the year. Our CEO’s direct compensation,
awarded toas well as the compensation for our
other Named Executive Officers (“NEOs”)
, increased in 2017 as compared to 2016. The increase in compensation reflects our improved operating results in 2017, which was
performance-based:our strongest performing year since 2007. The 2015following information is an overview of the compensation decisions made in 2017 and the performance-based nature of those decisions:
In December 2017, Regions named Mr. John Turner President of the Company. Mr. Turner is now included in this proxy statement as an NEO. Mr. Turner joined Regions in 2011 after serving as president for another financial institution and led our South Region before assuming responsibility for our Corporate Banking Group over three years ago. Mr. Turner, while serving as Head of Corporate Banking Group, did an exemplary job of diversifying the Corporate Banking Group’s revenue through investments in people, products, and capabilities; fostering teamwork and the execution of our relationship strategies; and reshaping the business to improve profitability returns and effective use of capital while strengthening credit quality and overall risk management. This promotion is an example of Regions’ ongoing talent management process, which ensures our Company develops its executives to assume greater responsibility and provides continuity of management.
After reviewing NEO target pay levels in early 2017, the CHR Committee decided to leave our CEO’s base salary and short term incentive target unchanged from the previous year. Other compensation decisions for our NEOs are described in the CD&A.
Annual short term incentive target opportunities for our NEOs remained consistent, with no change from 2016 to 2017. Diligent execution of our strategic plan yielded above-target corporate results for the year at 158 percent of our target expectations. Accordingly, the 2017 annual cash bonus payments for each of our NEOs increased over payments made in 2016.
While long-term incentive targets remained unchanged for three of our CEO was 150 percent of base pay,NEOs, Mr. Hall and represented 20 percent of total target compensation. DueMr. J. Turner each received an increase to our performance, however, the annualtheir individual long-term incentive paid below target and, therefore, made up a slightly lower percentage of total compensationtargets.
Long-term incentive grants issued for the CEO, as well as the rest of our NEOs.
Long-term incentives issued under our 2010 Long-Term Incentive Plan representyear continue to constitute the largest portion of direct compensation for our NEOs, which includes:is consistent with our philosophy to create a strong tie between NEO and stockholder financial interests through sustaining positive performance over a multi-year period. Consistent with prior grants, the long-term incentives granted in 2017 include three components:
| ¡ |
| 1. | | Performance Stock Units and Performance Cash Unit grants (“PSUs”) that do not vest for three years and for which the ultimate value and amount isare based on the future performance of the Company. |
| ¡ |
| 2. | Performance Cash Units that do not vest for three years and for which the ultimate value and amount are based on the future performance of the Company. |
| |
| 3. | Restricted Stock Unit grantsUnits (“RSUs”) that do not vest for three years and are subject to maintaining certain safety and soundness criteria. |
The chart below shows the
20152017 compensation for Regions’ Chairman
President and CEO, O. B. Grayson Hall, Jr.
, and other NEOs, as a group, in each case expressed as a percentage of total direct compensation.
ï 2016 Proxy Statement15
For 2015, after reviewing our NEO pay levels compared to market medians, the Compensation Committee determined that current target levels of compensation for all of our NEOs with the exception of the Chief Risk Officer (“CRO”) were appropriately positioned to market. As a result, the Committee approved an increase in the total compensation target for our CRO. Because Regions’ executive compensation is designed
|
| | | | | | | | | | | | | | | | |
| 2017 Compensation Overview Table |
| | | | Long-Term Awards($) | | |
| Name | Principal Position | Salary | Stock Awards | Non Equity
LTI Granted (Cash) | Annual
Incentive | Total |
| O. B. Grayson Hall, Jr. | Chairman and Chief Executive Officer | $ | 1,000,000 |
| $ | 3,558,511 |
| $ | 1,800,000 |
| $ | 2,985,500 |
| $ | 9,344,011 |
|
| David J. Turner, Jr. | Chief Financial Officer | $ | 664,200 |
| $ | 790,790 |
| $ | 400,000 |
| $ | 1,140,806 |
| $ | 2,995,796 |
|
| John B. Owen | Head of Enterprise Services and Consumer Banking | $ | 680,600 |
| $ | 790,900 |
| $ | 400,000 |
| $ | 1,191,297 |
| $ | 3,062,797 |
|
| John M. Turner, Jr. | President | $ | 600,000 |
| $ | 790,790 |
| $ | 400,000 |
| $ | 1,039,896 |
| $ | 2,830,686 |
|
C. Matthew Lusco
| Chief Risk Officer
| $ | 584,250 |
| $ | 790,790 |
| $ | 400,000 |
| $ | 1,003,486 |
| $ | 2,778,526 |
|
to balance compensation with an emphasis on performance-based pay that is both deferred and subject to future performance, the increase in target compensation for the CRO was to the long-term incentive compensation portion. The decisions made and the results of performance on pay for 2015 is more fully described in theCompensation Discussion and Analysis(“CD&A”) on page 61.
The following table shows actual NEO compensation attributable to the 2015 performance year. Refer to the discussion of each compensation element described in the section2015 Compensation Decisions – What We Paid and Why beginning at page 66.
2015 Compensation Overview Table
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | Long-Term Awards($) | | | | | | | |
| Name | | Principal Position | | Salary ($) | | | Stock Awards ($) | | | Non
Equity
Incentives (Cash) ($) | | | Annual
Incentive ($) | | | Total ($) | |
O. B. Grayson Hall, Jr. | | Chief Executive Officer | | | 1,007,692 | | | | 3,284,720 | | | | 1,666,667 | | | | 1,381,546 | | | | 7,340,625 | |
David J. Turner, Jr. | | Chief Financial Officer | | | 636,862 | | | | 788,340 | | | | 400,000 | | | | 633,295 | | | | 2,458,497 | |
John B. Owen | | Head of Regional Banking Group | | | 651,977 | | | | 788,340 | | | | 400,000 | | | | 655,498 | | | | 2,495,815 | |
C Matthew Lusco | | Chief Risk Officer | | | 559,269 | | | | 788,340 | | | | 400,000 | | | | 499,987 | | | | 2,247,596 | |
Fournier J. Gale, III | | General Counsel | | | 564,308 | | | | 591,250 | | | | 300,000 | | | | 504,491 | | | | 1,960,049 | |
The table above illustrates how the CompensationCHR Committee viewed NEO compensation for 2015.2017. It differs from the Summary Compensation Table required by the SEC and included in the sectionCompensation of Executive Officers beginning on page 7991 of this proxy statement. The principal differences can be summarized as follows: The table above provides the entire value of the long-term incentive grants made to NEOs in 2015 in2017 through the “Long-Term Award” column.section. The annual grant consisted of three equal parts, Restricted Stock Units, Performance Stock UnitsRSUs, PSUs, and a Performance Cash Award.Units. Both the stock and non-equity (cash) portion of the 20152017 grant is reflected in this table and is considered 20152017 compensation by the CompensationCHR Committee.
Under rules established by the SEC, the Summary Compensation Table required to be included with our CD&A reports only the portion of the long-term incentive grant delivered in the form of stock equivalents in the year granted. Cash
awards from the 20152017 grant will not be
reflected in the Summary Compensation Table until the year they are earned, which, for
20152017 grants, will be in
2018.2020. Similarly, the Summary Compensation Table reports the value of the cash performance portion of the
20132015 long-term incentive grant in the
Non-Equity“Non-Equity Incentive
CompensationCompensation” column
in this year’s table because the performance period for that award ended as of December
31, 2015.2017. As described
in the CD&A on page
70,81, the
20132015 performance grant was earned at
75100 percent of target. The value of this award is not included in this alternative table
asbecause it is considered by the
CHR Committee to be compensation awarded for
a previous year and2015 although subject to future performance criteria.
The Summary Compensation Table reports the change in pension value and nonqualified deferred compensation earnings, as well as all other compensation.
For more detail, refer to the CD&A beginning on page 6170 of this proxy statement.
Proposal 4 — Advisory Vote on the Frequency of Future Advisory Votes on Executive Compensation (page 69)
Submission of Stockholder Proposals or Nominations for 2017 Annual Meeting of Stockholders (page 91)
Stockholder proposals submitted for inclusion in our 2017 Proxy Statement pursuant to Rule 14a-8 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), must be received by us by November 8, 2016.
Regions’ By-Laws include provisions requiring advance notice of a stockholder’s nomination of persons for electionIn addition to the Board oradvisory vote on our executive compensation program, we are also asking stockholders to cast a non-binding advisory vote on the proposalfrequency of other business to be considered by
future advisory votes on our executive compensation program. Our last frequency vote was held in 2012 at which time the stockholders even if notrecommended an annual Say-on-Pay vote, and the Board affirmed that recommendation. We are once again asking our stockholders on how frequently we should hold future Say-on-Pay votes. You may vote to be included inhave the 2017 Proxy Statement for the 2017 Annual Meeting of Stockholders. To be timely outside of Rule 14a-8 of the Exchange Act, such notice must be delivered no earlier than November 8, 2016, and no later than December 8, 2016, for our 2017 Annual Meeting of Stockholders.
Say-on-Pay vote every year, every two years, or every three years.The Board recommends that you vote “EVERY YEAR” on this proposal.
16 ï 2016 Proxy Statement
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QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING |
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING
What is the purpose of the annual meeting?
At our 2016 Annual Meeting, stockholders will act upon the matters outlined in theNotice of 2016 Annual Meeting of Stockholders on page 1 and described in this proxy statement.
What matters or proposals are scheduled to be presented, and what vote is required to approve each proposal?
The matters to be acted upon at the meeting are:
| | | | | | | | |
| | | | Board
Recommendation
| | More
Information
| | Votes Required for
Approval |
PROPOSAL 1 | | Election of Directors | | FOR each Nominee | | Page 26 | | Affirmative “FOR” vote of a majority of the votes cast for or against each of these proposals.
Abstentions and broker non-votes have no effect on the vote results for these proposals.
|
PROPOSAL 2 | | Ratification of Appointment of Independent Registered Public Accounting Firm | | FOR | | Page 57 | |
PROPOSAL 3 | | Nonbinding Stockholder Approval of Executive Compensation | | FOR | | Page 60 | |
Could other matters be decided at the annual meeting?
We are not aware of any other matters that will be voted on at the meeting. If, however, other matters properly come before the meeting, or at any adjournment or postponement thereof, the persons named as proxies for stockholders will vote on those matters in a manner they consider appropriate.
What were the voting results of last year’s annual meeting?
At Regions’ annual meeting held in 2015, the stockholders re-elected Regions’ 12 nominees, ratified the appointment of Ernst & Young LLP as the independent registered public accounting firm for the 2015 fiscal year, approved executive compensation (“Say-on-Pay”) and approved the Company’s 2015 Long Term Incentive Plan (“2015 LTIP”). The following is a summary of the voting on each matter presented to our stockholders last year:
| | | | | | | | |
Eligible Votes | | | 1,342,806,171 | | | | | |
Total Voted | | | 1,131,464,057 | | | | (84.26% | ) |
Broker Non-Votes | | | 189,128,270 | | | | (14.08% | ) |
| | | | |
Proposal | | Votes “For” | |
George W. Bryan
| | | 97.83% | |
Carolyn H. Byrd
| | | 98.90% | |
David J. Cooper, Sr.
| | | 97.23% | |
Don DeFosset
| | | 98.37% | |
Eric C. Fast
| | | 99.48% | |
O. B. Grayson Hall, Jr.
| | | 95.79% | |
John D. Johns
| | | 97.38% | |
Ruth Ann Marshall
| | | 97.80% | |
OTHER INFORMATION | | | | |
Proposal | | Votes “For” | |
Susan W. Matlock
| | | 97.94% | |
John E. Maupin, Jr.
| | | 97.29% | |
Charles D. McCrary
| | | 81.92% | |
Lee J. Styslinger III
| | | 98.09% | |
Ratification of Selection of Auditors
| | | 98.69% | |
Say-on-Pay
| | | 96.06% | |
2015 Long Term Incentive Plan
| | | 94.98% | |
ï 2016 Proxy Statement17
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QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING |
What is a proxy statement, and what is a proxy?
In accordance with the federal securities laws and the regulations of the SEC, a proxy statement is a document we give to you, or provide you access to, when we are soliciting your vote.
A proxy is your designation of another person to vote stock that you own. That other person is called a proxy. If you designate someone as your proxy in a written document, that document is also called a proxy or a proxy card. When you designate a proxy, you also may direct the proxy how to vote your shares. We refer to this as your “proxy vote.”
Fournier J. Gale, III, our General Counsel and Corporate Secretary, and Hope D. Mehlman, our Assistant General Counsel and Assistant Corporate Secretary, have been designated as the proxies to cast the votes of our stockholders at our 2016 Annual Meeting.
What is Notice and Access?
Notice and Access is an SEC rule that allows us to furnish our proxy materials over the Internet to our stockholders instead of mailing paper copies of those materials to each stockholder. As a result, beginning on or about March 9, 2016, we will send to most stockholders a Notice of Internet Availability of Proxy Materials by mail or email containing instructions on how to access our proxy materials over the Internet and vote online.
The Notice of Internet Availability of Proxy Materials is not a proxy card and cannot be used to vote your shares. If you received a notice this year, you will not receive paper copies of the proxy materials unless you request the materials by following the instructions on the notice or on the website referred to in the notice.
Who is entitled to vote at the meeting, and what are my voting rights?
The Board set February 22, 2016,26, 2018, as the record dateRecord Date for the annual meeting. If you were a stockholder of record at the close of business on February 22, 2016,the Record Date, you are entitled to vote at the meeting.
As of the record date, 1,277,092,719Record Date, 1,122,744,800 shares of our common stock were issued and outstanding and, therefore, eligible to be voted at the meeting. Holders of our common stock are entitled to one vote per share. Therefore,share; therefore, a total of 1,277,092,7191,122,744,800 votes are entitled to be cast at the meeting. There is no cumulative voting. Holders of our Depositary Shares, each representing 1/40th interest in a share of our Non-Cumulative Perpetual Preferred Stock, Series A (the “Class A Depositary Shares”) or representing 1/40th interest in a share of our Non-Cumulative Perpetual Preferred Stock, Series B (the “Class B Depositary Shares”), are not entitled to vote at the
annual meeting.
How many shares must be present to hold the meeting?
A majority of the outstanding shares of Regions common stock must be present, in person or by properly executed or otherwise documented proxy, to constitute a quorum at the annual meeting.
Abstentions and
brokerBroker non-votes will be counted for the purpose of determining whether a quorum is present.
We urge you to vote promptly by proxy, even if you plan to attend the meeting, so that we will know as soon as possible that enough shares will be present for us to hold the meeting.
Who can attend
What is a proxy statement, and what is a proxy?
In accordance with the
annual meeting?Only common stockholders of Regions atfederal securities laws and the close of business on February 22, 2016, the record date, may attend the annual meeting.
Admission to the annual meeting will be on a first-come, first-served basis.You will need a valid government-issued identification to gain admission. Admission to our annual meeting is limited to our registered and beneficial stockholders asregulations of the record dateSEC, a proxy statement is a document we give to you, or provide you access to, when we are soliciting your vote.
A proxy is your designation of another person to vote your shares. Fournier J. Gale, III, our General Counsel and persons holding validCorporate Secretary, and Hope D. Mehlman, our Chief Governance Officer, Assistant General Counsel, and Assistant Corporate Secretary, have been designated as the proxies fromto cast the votes of our stockholders at our 2018 Annual Meeting.
What is Notice and Access?
Notice and Access is an SEC rule that allows us to furnish our proxy materials over the Internet instead of
record.Tomailing paper copies of those materials to each stockholder. As a result, beginning on or about March 12, 2018, we will send most of our stockholders a Notice of Internet Availability of Proxy Materials containing instructions on how to access our proxy materials over the Internet and vote online.
The Notice of Internet Availability of Proxy Materials is not a proxy card and cannot be admittedused to our annual meeting,vote your shares. If you also must bring proof of your stock ownership asreceived a notice this year, you will not receive paper copies of the record date, suchproxy materials unless you request the materials by following the instructions on the notice or on the website referred to in the notice.
|
|
| Since 2012, when we started distributing our annual meeting materials under the SEC’s “Notice and Access” rule, we have printed roughly 90 percent fewer Proxy Statements and Annual Reports on Form 10-K each year, helping us reduce our carbon footprint and impact on the environment. |
How can I access Regions’ proxy materials and annual report electronically?
This proxy statement, the Company’s 2017 Annual Report on Form 10-K, and the Chairman’s Letter are available on the Investor Relations section of www.regions.com and at www.proxyvote.com, as the Admission Ticket appearing on your proxy card orset out in the Notice of Internet Availability of Proxy Materials if you are a stockholderMaterials.
How do I sign up for electronic delivery of record. If your shares are held at a bank or broker, you should bringproxy materials?
Most stockholders can elect to view our future proxy statements and annual reports over the
NoticeInternet instead of
Internet Availability of Proxy Materials you receivedreceiving paper copies in the
mail or a brokerage statement evidencing ownership of Regions common stock as of the record date. Stockholders who do not present the Admission Ticket or other proof of ownership will be admitted only upon verification of ownership at the registration desk.For security reasons, no large bags, backpacks, briefcases or packages will be permitted in the annual meeting, and security measures will be in effect to provide for the safety of attendees. The use of any electronic devices such as cameras (including mobile phones with photographic capabilities), recording devices, smartphones, tablets, laptops and other similar devices is strictly prohibited.
18 ï 2016 Proxy Statement
mail.
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QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING |
You can choose to receive future proxy statements and annual reports electronically by following the prompt that will appear if you choose to vote through the Internet. Stockholders who choose to view future proxy statements and annual reports through the Internet will receive an email with instructions containing the Internet address of those materials, as well as voting instructions, approximately four weeks before future meetings.
If you have not already done so, we ask you to consider signing up to receive these materials electronically in the future by following the instructions after you vote your shares over the Internet. Enrolling in future electronic delivery of these materials reduces Regions’ printing and mailing expenses and environmental impact.
|
| |
| Benefits of Accessing Annual Meeting Materials Online |
| Immediate receipt of the proxy statement, Annual Report on Form 10-K, and related materials | It saves Regions and its stockholders money by eliminating the costs of printing and postage |
| Online proxy voting | Electronic documents are more convenient than paper |
| You will receive less mail and will not have to worry about misplacing your paper materials | It is much better for the environment |
If you elect to view our proxy statement and annual report electronically and vote your proxy through the Internet, your enrollment will remain in effect for all stockholder meetings until you cancel it. To cancel, registered stockholders should visit
http://enroll.icsdelivery.com/rf and follow the instructions to cancel your enrollment. If you hold your shares in street name, check the information provided by your Broker for instructions on how to cancel your enrollment.
If at any time you would like to receive a paper copy of the proxy statement or annual report, please email investors@regions.com, call 205-264-7040, or write to:
Regions Financial Corporation
1900 Fifth Avenue North
Birmingham, Alabama 35203
Attention: Investor Relations
What is the difference between being a
stockholder“stockholder of
recordrecord” and a “street name” holder or “beneficial owner”?
If your shares are registered directly in your name with Computershare, our transfer agent, you are considered the
stockholder“stockholder of
recordrecord” with respect to those shares.
If your shares are held inby a brokerage account or by another nominee or custodian,Broker, you are considered the “beneficial owner” of shares held in “street name.” If you hold your shares in street name, you will have the opportunity to instruct your broker, bank, trustee or other nominee as toBroker how to vote your shares. Street name stockholders may only vote in person if they have a legal proxy as subsequently discussed in detail.
How do I vote my shares as a stockholder of record?
If you areproxy.
What is the
record holder of your shares, there are several ways you can vote by proxy:deadline for voting?
|
| | |
If You Are: | And You Are Voting by: | To vote with yourYour Vote Must Be Received: |
| A stockholder of record | Mail or in Person | Prior to the annual meeting |
Internet, mobile device, (tablet or smartphone), scan theQuick Response Code that appearstelephone | By 11:59 p.m. ET on your proxy card or Notice of Internet Availability of Proxy Materials (may require free software).April 24, 2018 |
| A street name holder | Mail or in Person | Prior to the annual meeting |
Internet, mobile device, or telephone | | To vote over the Internet, visitwww.proxyvote.com and enter your 16 digit control number that appearsBy 11:59 p.m. ET on your proxy card, email notification or Notice of Internet Availability of Proxy Materials.April 24, 2018 |
| A participant in Regions 401(k) Plan | Mail | By April 22, 2018 |
Internet, mobile device, or telephone | | To vote by telephone, call1-800-690-6903 and follow the recorded instructions. If you vote by telephone, you also will need your 16 digit control number that appearsBy 11:59 p.m. ET on your proxy card. |
| |
| | If you request printed copies of the proxy materials be sent to you by mail, vote by proxy by filling out the proxy card and return it in the envelope provided to:Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, New York 11717. |
| |
| | Additionally, you may votein person at the annual meeting. We will collect the proxy cards prior to the vote being finalized.April 22, 2018 |
How do I vote?
If you have
Internet access,the ability to vote online, we encourage you to record your vote through the Internet to reduce corporate expenses. The deadline for voting by telephone or through the Internet is 11:59 P.M., Eastern Time on April
20, 2016.24, 2018. If you vote by mail, your proxy card must be received by April
20, 2016.How do I vote my shares held in street name?
24, 2018. If your shares are held in nominee or street name, you may vote your shares before the meeting by phone or over the Internet by following the instructions on the Notice of Internet Availability of Proxy Materials you received or, if you received a Voting Instruction Form from your brokerage firm,Broker, by mail byafter completing, signing, and returning the form you received. You should check your Voting Instruction Form to see if Internet or telephone voting is available to you. Although most brokers and nomineesBrokers offer telephone and Internet voting, availability and specific processes will depend on theirthe Broker’s voting arrangements. See the Notice of Internet Availability of Proxy Materials or Voter Instruction Form for available options.
If you have Internet access, we encourage you to record your vote through the Internet to reduce corporate expenses. The deadline for voting by telephone or through the Internet for most street name holders is 11:59 P.M., Eastern Time on April 20, 2016. If you vote by mail, we must receive your Voter Instruction Form by April 20, 2016.
If you hold your shares through a broker, bank or other nominee and you wish to vote in person at the meeting, you will need to bring a legal proxy to the meeting, which you must request through your broker, bank, or other nominee. Note that if you request a legal proxy, any proxy with respect to your shares of our common stock previously executed by your broker, bank or other nominee will be revoked and your vote will not be counted unless you appear at the meeting and vote in person or legally appoint another proxy to vote on your behalf.
ï 2016 Proxy Statement19
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QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING |
How do I vote if I hold my stock through the Regions 401(k) Plan?
If you are a participant in the Regions 401(k) Plan, the electronic voting instructions constitute the voting instruction form and cover all shares you may vote under the Regions 401(k) Plan. Under the terms of the Regions 401(k) Plan, the Regions 401(k) Plan trustee votes all shares held by the Regions 401(k) Plan, but each participant may direct the trustee how to vote the shares of Regions common stock allocated to his or her Regions 401(k) Plan account. If you own shares through the Regions 401(k) Plan and do not submit voting instructions, the Regions 401(k) Plan trustee will vote the shares in favor of Proposals 1, 2 and 3. To vote your stock held in the Plan, you must do one of the following by 11:59 P.M., Eastern Time on April 18, 2016:
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16 | | 2018 Proxy Statement |
Stockholders of record, and most beneficial stockholders, have several ways to vote:
|
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| To vote with your mobile device (tablet or smartphone), scan theQuick Response Code that appears on your proxy card or Notice of Internet Availability of Proxy Materials (may require free software). |
| |
| | To vote over the Internet, visitwww.proxyvote.com and enter your 16 digit16-digit control number that appears on your proxy card, email notification, or Notice of Internet Availability of Proxy Materials. |
| |
| | To vote by telephone, call1-800-690-6903 and follow the recorded instructions. If you vote by telephone, you also will also need your 16 digit16-digit control number that appears on your proxy card. |
| |
| | If you request printed copies of the proxy materials be sent to you by mail, vote by proxy by filling out the proxy card and return it in the envelope provided to:Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, New York 11717. |
| Additionally, you may vote in person at the annual meeting. We will collect the ballots prior to the vote being finalized. |
How do I vote ifshares held in the Regions 401(k) Plan?
If you are a participant in the Regions 401(k) Plan, you may direct the 401(k) Plan trustee how to vote your shares. Under the terms of the 401(k) Plan, the 401(k) Plan trustee votes all shares held by the 401(k) Plan, but each participant may direct the trustee how to vote the shares of Regions common stock allocated to his or her 401(k) Plan account. If you own shares through the 401(k) Plan and do not submit voting instructions, the 401(k) Plan trustee will vote the shares in favor of Proposals 1, 2, and 3 and “Every Year” for Proposal 4. To vote your shares held in the 401(k) Plan, follow the instructions above by 11:59 P.M., Eastern Time on April 22, 2018.
How do I
hold my stock throughvote shares held in the dividend reinvestment plan?
If you are a participant in the Computershare Investment Plan for Regions Financial Corporation (the
dividend reinvestment plan)“Dividend Reinvestment Plan”), the proxy card or electronic voting instructions cover all shares allocated to your account under the plan. If you do not return your proxy card, or vote by telephone or over the Internet, your shares in the
dividend reinvestment planDividend Reinvestment Plan will not be voted. To vote your
stockshares held in the
dividend reinvestment plan,Dividend Reinvestment Plan, follow the
above instructions.instructions above.
Can I change my vote after submitting my proxy?
If you voted over the Internet or by telephone, you can change your vote by voting again over the Internet or by telephone before 11:59 P.M., Eastern Time on April
20, 2016.24, 2018.
You can revoke your proxy at any time before the vote is taken at the annual meeting by submitting to our Corporate Secretary written notice of revocation or a properly executed proxy of a later date to our Corporate Secretary or by attending the annual meeting and voting in person.
Written notices of revocation and other communications about revoking
Regions proxiesa proxy should be addressed to:
Regions Financial Corporation
Birmingham, Alabama 35203
Attention: Fournier J. Gale, III, Corporate Secretary
If your shares are held in street name, you should follow
theyour Broker’s instructions
of your broker regarding the revocation of proxies.
What if I do not specify how I want my shares voted?
If you requested printed copies of the proxy materials and sign and return your proxy card without giving specific voting instructions, your proxy will be voted in accordance with the Board’s recommendations.
Our telephone and Internet voting procedures do not permit you to submit your proxy vote
by telephone or Internet without specifying how you want your shares voted.
Will
How will my shares be voted if I don’t provide my proxy and don’t attend the annual meeting?
If you
are a stockholder of record and do not provide a proxy or vote
your shares held in
your name,person at the meeting, your shares will not be voted.
As previously described, if
If you hold your shares through the Regions 401(k) Plan and do not vote your shares, your shares (along with all other shares in the
401(k) Plan for which votes are not cast) will be voted by the
Plan trustee
and in favor of Proposals 1, 2, and
3.3 and “Every Year” for Proposal 4 (see above).
If you are a participant in the
Computershare InvestmentDividend Reinvestment Plan
for Regions and do not
return your proxy card, or vote,
by telephone or over the Internet, your shares in
thatthe plan will not be voted.
If you hold your shares in street name and do not give your brokerBroker instructions on how to vote your shares, see the next question.20 ï 2016 Proxy Statement
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QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING |
What if I am a beneficial owner and do not give voting instructions to my broker?
As a beneficial owner, in order to ensure your shares are voted in the way you would like, you must provide voting instructions to your broker by the deadline provided in the materials you receive from your broker. If you do not provide voting instructions to your broker, whether your shares can be voted depends on the item being considered for vote. Brokers may not vote shares held in street name on non-routine matters unless they have received voting instructions from the beneficial owners on how to vote those shares. If you hold your shares in street name and do not give your broker instructions on how to vote your shares, the broker will return the proxy card without voting on proposals not considered “routine.” This is known as a broker non-vote.
Therefore, without instructions from you, the brokerBroker may not vote on any proposal
other than Proposal 2 (the ratification of appointment of Ernst & Young LLPEY as our independent registered public accounting firm for 2016)2018). Who pays the expenses of this proxy solicitation?
Our proxy materials are being distributed by our Board in connection with the solicitation of proxies for our annual meeting. We pay the entire cost of soliciting your proxy, including the cost of preparing, assembling, printing, mailing, or otherwise distributing the Notice of Internet Availability of Proxy Materials and these proxy materials, as well as soliciting your vote. In addition to solicitation of proxies by mail, we request that Brokers
send proxies and
other nomineesproxy materials or Notice of Internet Availability of Proxy Materials to the street name/ beneficial owners of Regions common stock and secure their voting instructions. We will
not be able to vote your shares regarding Proposal 1 (election of Directors) or Proposal 3 (nonbinding stockholder approval of executive compensation) unless you return your voting instruction form or submit your voting instructions by telephone or over the Internet.reimburse Brokers for their reasonable expenses in taking those actions.
Has Regions hired a proxy solicitor?We have made arrangements with Innisfree M&A Incorporated to assist us in soliciting proxies. Weproxies and have agreed to pay $15,000, plus reasonable and customary expenses, for these services. If necessary, we also may use several of our associates, without additional compensation, to solicit proxies from Regions stockholders, either personally or by telephone, facsimile, email, or letter, on Regions’ behalf.
If you have any questions or need assistance voting your shares, please contact Innisfree M&A Incorporated:
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| | Innisfree M&A Incorporated, 501 Madison Avenue, 20th Floor, New York, NY 10022. |
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| | Stockholders may call Innisfree toll-free: 1-888-750-5834. |
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| | Banks and brokersBrokers may call Innisfree collect: 1-212-750-5833. |
How does the Board recommend that I vote?
For the reasons set forth in more detail later in this proxy statement, the Board recommends you vote:
FOR all the nominees named in this proxy statement (Proposal 1)
FOR the ratification of appointment of Ernst & Young LLP as Regions’ independent registered public accounting firm for the year 2016 (Proposal 2)
FORthe nonbinding stockholder approval of executive compensation (Proposal 3)
All shares represented by valid proxies that we receive through this solicitation, and that are not revoked, will be voted in accordance with the instructions received.
Who counts the votes?
We have
hiredengaged Broadridge Financial Solutions, Inc. to count the votes represented by proxies and cast in person by ballot and to act as Inspector of Election. A representative from Broadridge will be present at the annual meeting.
When will the Company announce the voting results?
We will announce the preliminary voting results at the annual meeting. The Company will report the final voting results in a Current Report on Form 8-K filed with the SEC within four business days of the annual meeting.
How can I accessWhat were the voting results of the 2017 Annual Meeting?
At Regions’
proxy materialsannual meeting held in 2017, the stockholders elected Regions’ 14 Director nominees, ratified the appointment of EY as the independent registered public accounting firm for 2017, and
annual report electronically?This proxy statement,approved executive compensation (“Say-on-Pay”). The following is a summary of the Company’s 2015 Annual Reportvoting on Form 10-K, and the Chairman’s Letter are available to Regions stockholders on the Internet in the Investor Relations section ofwww.regions.com and atwww.proxyvote.com through the notice and access process.
Most stockholders can elect to view future proxy statements and annual reports over the Internet instead of receiving paper copies in the mail. If you already have Internet access, there will be no additional charge for you to have electronic access through the Interneteach matter presented to our proxy materials and annual report.
ï 2016 Proxy Statement21
stockholders last year: |
| | | |
| Eligible Votes | 1,205,568,693 | |
| Total Voted | 1,040,221,395 | 86 | % |
| Broker Non-Votes | 157,036,812 | 13 | % |
|
|
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING |
If
|
| | | | | | |
| Proposal | Votes “For” |
| | Proposal | Votes “For” |
|
| Carolyn H. Byrd | 99.24 | % | | Susan W. Matlock | 98.61 | % |
| David J. Cooper, Sr. | 98.21 | % | | John E. Maupin, Jr. | 98.41 | % |
| Don DeFosset | 98.04 | % | | Charles D. McCrary | 97.01 | % |
| Samuel A. Di Piazza, Jr. | 99.15 | % | | James T. Prokopanko | 99.62 | % |
| Eric C. Fast | 99.69 | % | | Lee J. Styslinger III | 97.54 | % |
| O. B. Grayson Hall, Jr. | 96.19 | % | | José S. Suquet | 99.26 | % |
| John D. Johns | 98.95 | % | | Ratification of Selection of Auditors | 98.43 | % |
| Ruth Ann Marshall | 99.61 | % | | Say-on-Pay | 96.49 | % |
Who can attend the annual meeting, and what are the rules for admission or voting at the meeting?
Only stockholders as of the Record Date or their authorized legal proxies are permitted to attend the annual meeting in person. Before being admitted to the meeting, you aremust present a registered stockholder, you can choose to receive future proxy statements and annual reports electronically by following the prompt if you choose to vote through the Internet. Stockholders who choose to view future proxy statements and annual reports through the Internet will receive an email with instructions containing the Internet address of those materials, as well as voting instructions, approximately four weeks before future meetings.If you elect to view our future proxy statements and annual reports electronically and vote your proxy through the Internet, your enrollment will remain in effect for all future stockholder meetings until you cancel it. To cancel, registered stockholders should accesshttp://enroll.icsdelivery.com/rf and follow the instructions to cancel your enrollment. valid, government-issued photo identification.
If you hold your Regions stockshares through a Broker and you wish to vote in nominee name, checkperson at the information providedmeeting, you will need to bring a legal proxy to the meeting, which you must request through your Broker. Note that if you request a legal proxy, any proxy with respect to your shares previously executed by your brokerBroker will be revoked and your vote will not be counted unless you appear at the meeting and vote in person or nomineelegally appoint another proxy to vote on your behalf.
You also must bring proof of your stock ownership as of the Record Date, such as the Admission Ticket appearing on your proxy card, the Notice of Internet Availability of Proxy Materials, or provide one of the alternative forms of meeting admission documentation, as applicable to you, listed below.
|
| | | |
Stockholder of Record | Beneficial (Street Name) Holder | Proxy for Stockholder of Record | Proxy for Street Name/Beneficial Holder |
Admission Ticket appearing on your proxy card or the Notice of Internet Availability of Proxy Materials; OR | Your Notice of Internet Availability of Proxy Materials; OR | A valid, written legal proxy naming you as proxy, signed by the stockholder of record; AND | A valid and assignable written legal proxy naming you as proxy; AND |
The electronic e-mail addressed to you from ProxyVote.com; OR | Your Voting Instruction Form for the 2018 Annual Meeting from your Broker; OR | The stockholder of records’ admission ticket appearing on the proxy card or Notice of Internet Availability of Proxy Materials; OR | The legal proxy is signed by the street name holder’s Broker; AND |
Verification at the registration desk that your name is listed in Regions’ list of stockholders of record as of the Record Date. | A letter from your Broker confirming you owned Regions’ common stock as of the Record Date. | Verification at the registration desk that the stockholder is listed in Regions’ list of stockholders as of the Record Date. | One of the forms of meeting admission documentation in the name of the street holder that would be required to admit the street holder to the annual meeting. |
At the entrance to the meeting, we will inspect your identification and admission documentation. If you do not have a (i) valid, government-issued photo identification and (ii) an admission ticket or one of the other forms of proof listed above showing that you owned, or unless you are legally authorized to act as proxy for instructionssomeone who owned, shares of our common stock as of the Record Date, you will not be admitted to the meeting. The annual meeting will begin at 9:00 A.M., local time. Please allow ample time for the admission procedures described above. Admission to the annual meeting will be on howa first-come, first-served basis as there is limited seating available. There may also be limited parking available as well.
Individuals with a disability requesting assistance should contact Regions’ ADA Manager, Kathy Lovell by email at kathy.lovell@region.com, by phone at 205-264-7495 or toll-free at 1-800-370-5087, or by Regions’ telecommunications device for the hearing impaired and the deaf (TTY/TDD) toll-free at 1-800-374-5791.
For security reasons, no large bags, backpacks, briefcases, or packages will be permitted in the annual meeting, and security measures will be in effect to
cancel your enrollment.Ifprovide for the safety of attendees. The use of any electronic devices such as cameras (including mobile phones with cameras), recording devices, smartphones, tablets, laptops, and other similar devices is strictly prohibited.
How do I inspect the list of stockholders of record?
A list of the stockholders of record as of the Record Date will be made available for inspection at
any timeour headquarters during ordinary business hours from April 13, 2018, to April 24, 2018, as well as at the annual meeting. If you would like to
receive a paper copyreview the list prior to the annual meeting, please contact the Office of the
proxy statement or annual report, please email investors@regions.com, call 205-581-7890, or write to Investor Relations, Regions Financial Corporation,Corporate Secretary at 1900 Fifth Avenue North, Birmingham, Alabama
35203.We also encourage you35203 to visit the Investor Relations section of www.regions.com which, among other things, will enable you to learn more about Regions and elect to view future proxy statements and annual reports over the Internet instead of receiving paper copies in the mail.
22 ï 2016 Proxy Statement
arrange a time for inspection.
How do I submit a stockholder proposal for Regions’ 2019 Annual Meeting of Stockholders?
In accordance with the Rule 14a-8 of the Exchange Act, stockholders who wish to present proposals for inclusion in our proxy materials for Regions’ 2019 Annual Meeting of Stockholders must submit their proposals to our Corporate Secretary as follows:
Regions Financial Corporation
1900 Fifth Avenue North
Birmingham, Alabama 35203
Attention: Fournier J. Gale, III, Corporate Secretary
Proposals must be received by November 9, 2018, and must comply, in all respects, with applicable rules of the SEC. As the rules of the SEC make clear, however, simply submitting a proposal does not guarantee its inclusion.
How do I submit a stockholder nomination for the 2019 Annual Meeting of Stockholders using the proxy access provisions of Regions’ By-Laws?
In July 2017, Regions’ Board adopted Article II, Section 8, “Stockholder Nominations Included in the Corporation’s Proxy Materials,” of our By-Laws (“Proxy Access By-Law”). Our Proxy Access By-Law permits a stockholder, or a group of up to 20 stockholders, owning 3 percent or more of the outstanding shares of common stock for at least three years to nominate and include in Regions’ proxy materials nominees constituting up to two individuals or 20 percent of the Board (whichever is greater); provided, however, the stockholders(s) and nominee(s) must satisfy the requirements specified in our Proxy Access By-Law.
Pursuant to our Proxy Access By-Law, to be timely for inclusion in Regions’ proxy materials for our 2019 Annual Meeting, our Corporate Secretary must receive the stockholder’s notice to nominate an individual for election using Regions’ proxy materials between October 10, 2018, and November 9, 2018. Such notice must contain the information required by our Proxy Access By-Law, and the stockholder(s) and nominee(s) must comply with the information and other requirements in our Proxy Access By-Law.
How do I submit a stockholder nomination or other proposal in accordance with Regions’ By-Laws for the 2019 Annual Meeting of Stockholders?
Regions’ By-Laws include provisions requiring advance notice of a stockholder’s nomination of persons for election to the Board or the proposal of other business to be considered by the stockholders, even if not to be included in our 2019 proxy statement.
To be timely outside of Rule 14a-8 of the Exchange Act, such notice must be delivered no earlier than November 9, 2018, and no later than December 10, 2018, for our 2019 Annual Meeting. However, in the event that: (a) the number of Directors to be elected to the Board at the 2019 Annual Meeting is increased by virtue of an increase in the size of the Board and (b) the Company has not publicly disclosed by January 15, 2019, either (i) all of the nominees for Director at the 2019 Annual Meeting or (ii) the size of the increased Board, then such notice will also be considered timely, but only with respect to nominees for any new positions created by such increase, if it has been delivered no later than the close of business on the 10th day following the first date all of such nominees or the size of the increased Board has been publicly announced or disclosed.
Pursuant to our By-Laws, a stockholder’s notice regarding nomination for election as a Director shall set forth the following information as to each proposed nominee:
All information relating to such person that is required to be disclosed in solicitations of proxies for election of Directors in an election contest, or is otherwise required, in each case pursuant to Regulation 14A under the Exchange Act.
A statement signed by the candidate confirming that the candidate:
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| – | will serve if nominated by the Board and elected by the stockholders; |
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| – | consents to being named in the proxy statement as a nominee; |
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| – | will comply with the Company’s Code of Business Conduct and Ethics, General Policy on Insider Trading, Corporate Governance Principles, and any |
other rule, regulation, policy, or standard of conduct applicable to the Directors; and
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| – | will provide any information required or requested by the Company or its subsidiaries, or banking or other regulators, including, without limitation, all information requested by the form of Directors questionnaire used by the Company. |
Whether each nominee is eligible for consideration as an independent director under the relevant standards contemplated by Item 407(a) of Regulation S-K under the Securities Act, and the relevant listing standards of any exchange where the Company’s equity securities are listed.
As to the proposal of business that the stockholder proposes to bring forth before the meeting (other than nominations of persons for election to the Board), such stockholder’s notice must include:
The text of the proposal to be presented, including the text of any resolutions to be proposed for consideration by stockholders;
A brief written statement of the reasons why such stockholder favors the proposal; and
Any material interest in such business of such stockholder and the beneficial owner, if any, on whose behalf the proposal is made.
Any notice regarding nominations for Director or other proposal of business must include the following information:
As to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made:
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| – | The name and address of such stockholder, as they appear on the Company’s books, and of such beneficial owner; |
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| – | A representation that the stockholder is a holder of the Company’s voting stock (including the number and class or series of shares held); |
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| – | With respect to nominations, a disclosure of any hedging or other arrangement with respect to any |
shares of the Company’s stock (including any short position on or any borrowing or lending of shares of stock) made by or on behalf of the stockholder (i) to mitigate loss to or manage risk of stock price changes for the stockholder or (ii) to increase or decrease the voting power of the stockholder; and
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| – | With respect to nominations, a description of all arrangements or understandings among the stockholder and the candidate and any other person or persons (naming such person or persons and including any person that may be deemed to be acting in concert with such stockholder under applicable federal or state securities or banking laws) pursuant to which the proposal is made by the stockholder. |
The names and addresses of any other stockholders or beneficial owners known to be supporting such nomination or proposal of business by the proposing stockholder on whose behalf the nomination or proposal is made.
Proposals should be addressed to our Corporate Secretary as follows:
Regions Financial Corporation
1900 Fifth Avenue North
Birmingham, Alabama 35203
Attention: Fournier J. Gale, III, Corporate Secretary
Forward-Looking Statements
This proxy statement, other reports filed by Regions Financial Corporation under the Exchange Act and any other written or oral statements made by us or on our behalf to analysts, investors, the media, and others, may include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. The words “future,” “anticipates,” “assumes,” “intends,” “plans,” “seeks,” “believes,” “predicts,” “potential,” “objectives,” “estimates,” “expects,” “targets,” “projects,” “outlook,” “forecast,” “would,” “will,” “may,” “might,” “could,” “should,” “can,” and similar terms and expressions often signify forward-looking statements. Forward-looking statements are not based on historical information, but rather are related to future operations, strategies, financial results, or other developments. Forward-looking statements are based on management’s current expectations as well as certain assumptions and estimates made by, and information available to, management at the time the statements are made. Those statements are based on general assumptions and are subject to various risks, and because they also relate to the future they are likewise subject to inherent uncertainties and other factors
that may cause actual results to differ materially from the views, beliefs, and projections expressed in such statements. Therefore, we caution you against relying on any of these forward-looking statements.
You should not place undue reliance on any forward-looking statements, which speak only as of the date made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible to predict all of them. We assume no obligation to update or revise any forward-looking statements that are made from time to time, either as a result of future developments, new information, or otherwise, except as may be required by law.
See also the reports filed with the Securities and Exchange Commission, including the discussions under the “Forward-Looking Statements” and “Risk Factors” sections of Regions’ Annual Report on Form 10-K for the year ended December 31, 2017, as filed with the Securities and Exchange Commission and available on its website at www.sec.gov.
Information not incorporated into this Proxy Statement
Information contained on our website at www.regions.com is not and shall not be deemed to be a part of this proxy statement by reference or otherwise incorporated into any other filings we make with the SEC, except to the extent we specifically incorporate it by reference.
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| OWNERSHIP OF REGIONS COMMON STOCK |
OWNERSHIP OF REGIONS COMMON STOCK
As of
February 22, 2016 (the “Record Date”),the Record Date, Regions had issued
1,318,125,3951,163,777,476 shares of common stock, of which
1,277,092,7191,122,744,800 shares were outstanding and 41,032,676 shares were held as treasury stock. Treasury stock cannot be voted.
Stockholders are entitled to one vote for each share on all matters to come before the annual meeting. Only common stockholders of record at the close of business on the Record
Date will be
entitled to vote at the annual meeting or any adjournment or postponement thereof.
Holders of our Preferred Stock are not entitled to vote at the annual meeting. As of the Record Date, 20,000,000 Class A Depositary Shares and 20,000,000 Class B Depositary Shares were issued and outstanding.
Security Ownership of Certain Beneficial Owners
The following table sets forth the beneficial ownership of our common stock by any stockholder known to us to own more than 5 percent of the outstanding shares of our common stock as of the Record Date. The number of shares and percentage of our outstanding
common stockCommon Stock indicated in the table are as reported by the respective stockholder in its most recent Schedule 13G filed with the SEC:
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| | | Amount and Nature of Beneficial Ownership | |
| Name and Address of Beneficial Owner | | No. of
Common Shares | | | % of Class | |
BlackRock, Inc. (and subsidiaries) (1) 55 East 52nd Street New York, New York 10055 | | | 92,412,362 | | | | 7.1% | |
FMR LLC (and subsidiaries) (2) 245 Summer Street Boston, Massachusetts 02210 | | | 116,895,209 | | | | 8.95% | |
State Street Corporation (and subsidiaries) (3) One Lincoln Street Boston, Massachusetts 02111 | | | 74,029,397 | | | | 5.7% | |
The Vanguard Group, Inc. (and subsidiaries) (4) 100 Vanguard Blvd. Malvern, Pennsylvania 19355 | | | 110,259,940 | | | | 8.44% | |
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| | | |
| | Amount and Nature of Beneficial Ownership |
| Name and Address of Beneficial Owner | Number of
Common Shares | Percent of Class |
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BlackRock, Inc. (and subsidiaries) (1) 55 East 52nd Street New York, New York 10055 | 90,160,202 | 7.8 | % |
State Street Corporation (and subsidiaries) (2) One Lincoln Street Boston, Massachusetts 02111 | 65,106,339 | 5.61 | % |
The Vanguard Group, Inc. (and subsidiaries) (3) 100 Vanguard Blvd. Malvern, Pennsylvania 19355 | 130,460,232 | 11.24 | % |
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| (1) | This information was derived from the Schedule 13G13G/A filed on January 27, 2016,23, 2018, by BlackRock, Inc. and subsidiaries, which states that BlackRock, Inc. has sole voting power over 80,478,25579,425,082 shares and sole dispositive power over 92,412,36290,160,203 shares as of December 31, 2015,2017, which constitutes 7.2%7.8% of our outstanding common stock as of the Record Date. |
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| (2) | This information was derived from the Schedule 13G filed on February 12, 2016, by FMR LLC and subsidiaries, which states that FMR LLC has sole voting power over 15,960,471 shares and sole dispositive power over 116,895,209 shares as of December 31, 2015, which constitutes 9.2% of our outstanding common stock as of the Record Date. |
(3) | This information was derived from the Schedule 13G filed on February 12, 2016,14, 2018, by State Street Corporation and subsidiaries, which states that State Street Corporation has shared voting and shared dispositive power over 74,029,39765,106,339 shares as of December 31, 2015,2017, which constitutes 5.8%5.61% of our outstanding common stock as of the Record Date. |
(4) | |
| (3) | This information was derived from the Schedule 13G13G/A filed on February 10, 2016,12, 2018, by The Vanguard Group, Inc. and subsidiaries, which states that The Vanguard Group, Inc. has sole voting power over 2,458,7481,632,580 shares, shared voting power over 251,289 shares, sole dispositive power over 107,684,656128,605,602 shares, and shared dispositive power over 2,575,2841,854,630 shares as of December 31, 2015,2017, which constitutes 8.6%11.24% of our outstanding common stock as of the Record Date. |
Security Ownership of Directors and Executive Officers
The following table presents information about beneficial ownership of Regions equity securities as of the Record Date by
theRegions’ Directors and executive
officers of Regions.officers. Unless otherwise indicated, each person has sole voting and investment power over the indicated shares. A person is deemed to be a beneficial owner of any security of which that person has the right to acquire beneficial ownership within 60 days from the Record Date.
The shares of Regions common stockShares that
are issuable tocould be acquired by a person upon
the exercise of
options within 60 days from the
vested portion of the outstanding optionsRecord Date are
assumed to bedeemed outstanding for the purpose of
determiningcomputing the percentage of
shares beneficiallythe class of Common Stock owned by that
person, but not for computing the percentage ownership of any other person.
Most of the Directors of Regions have elected to defer receipt of some or all of the cash compensation they are due for services on the
Board under the Directors’ Deferred Stock Investment
Plan (“DDSIP”). Each Director’s deferred amounts are credited as notional shares of Regions common stockCommon Stock as of the time of deferral and will be settled in actual shares of common stock at the end of the deferral period. Therefore, the ultimate value of the amounts deferred are tied to the performance of Regions common stock.
As of the Record Date, the Directors and executive officers, as a group, were credited with 4,150,3494,312,780 notional shares of common stock, which are included in the table as additional information in the “Additional Underlying Units” column. These may include notional shares allocated under the DDSIP, share equivalents held in the Regions Supplemental 401(k) Plan, Restricted Stock Units (“RSUs”), or Performance Stock Units.Units (“PSUs”).
ï 2016 Proxy Statement23
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| OWNERSHIP OF REGIONS COMMON STOCK |
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| Name of Beneficial Owner | | Shares of
Common Stock (1) | | | Number of
Shares Subject
to Exercisable
Options | | | Total Number
of Shares
Beneficially
Owned | | | Percent
of Class | | | Additional
Underlying
Units (2) | | | Total Shares
Beneficially
Owned Plus
Additional Underlying
Units | |
Current Directors including
Nominees for Director | | | | | | | | | | | | | | | | | | | | | | | | |
George W. Bryan (3) | | | 133,031 | | | | 14,000 | | | | 147,031 | | | | * | | | | 4,300 | | | | 151,331 | |
Carolyn H. Byrd | | | 50,558 | | | | 0 | | | | 50,558 | | | | * | | | | 35,705 | | | | 86,263 | |
David J. Cooper, Sr. | | | 172,853 | | | | 21,177 | | | | 194,030 | | | | * | | | | 18,497 | | | | 212,527 | |
Don DeFosset | | | 76,120 | | | | 21,177 | | | | 97,297 | | | | * | | | | 14,852 | | | | 112,149 | |
Eric C. Fast (4) | | | 83,063 | | | | 0 | | | | 83,063 | | | | * | | | | 77,823 | | | | 160,886 | |
O. B. Grayson Hall, Jr. | | | 398,567 | | | | 451,700 | | | | 850,267 | | | | * | | | | 1,115,823 | | | | 1,966,090 | |
John D. Johns (5) | | | 20,941 | | | | 0 | | | | 20,941 | | | | * | | | | 49,112 | | | | 70,053 | |
Ruth Ann Marshall | | | 57,764 | | | | 0 | | | | 57,764 | | | | * | | | | 47,305 | | | | 105,069 | |
Susan W. Matlock | | | 48,003 | | | | 14,000 | | | | 62,003 | | | | * | | | | 91,190 | | | | 153,193 | |
John E. Maupin, Jr. | | | 53,543 | | | | 14,000 | | | | 67,543 | | | | * | | | | 59,089 | | | | 126,632 | |
Charles D. McCrary | | | 92,329 | | | | 21,177 | | | | 113,506 | | | | * | | | | 159,555 | | | | 273,061 | |
Lee J. Styslinger III | | | 78,498 | | | | 14,000 | | | | 92,498 | | | | * | | | | 132,356 | | | | 224,854 | |
Other Named Executive Officers
(See Summary Compensation Table) | | | | | | | | | | | | | | | | | | | | | | | | |
John B. Owen (6) | | | 189,528 | | | | 128,191 | | | | 317,719 | | | | * | | | | 268,981 | | | | 586,700 | |
David J. Turner, Jr. (7) | | | 182,998 | | | | 113,632 | | | | 296,630 | | | | * | | | | 270,021 | | | | 566,651 | |
C. Matthew Lusco (8) | | | 73,092 | | | | 0 | | | | 73,092 | | | | * | | | | 208,303 | | | | 281,395 | |
Fournier J. Gale, III (9) | | | 95,304 | | | | 114,065 | | | | 209,369 | | | | * | | | | 187,549 | | | | 396,918 | |
Directors and executive officers as a group (26 persons) | | | 2,882,636 | | | | 4,241,333 | | | | 7,123,969 | | | | * | | | | 4,150,349 | | | | 11,274,318 | |
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| Name of Beneficial Owner | Shares of
Common Stock (1) | Number of
Shares Subject
to Exercisable
Options | Total Number
of Shares
Beneficially
Owned | Percent
of Class | Additional
Underlying
Units (2) | Total Shares
Beneficially
Owned Plus
Additional Underlying
Units |
Current Directors including
Nominees for Director | | | | | | |
| Carolyn H. Byrd | 72,534 | 0 | 72,534 | * | 54,367 | 126,901 |
| David J. Cooper, Sr. | 196,364 | 7,000 | 203,364 | * | 19,382 | 222,746 |
| Don DeFosset | 99,127 | 7,000 | 106,127 | * | 15,570 | 121,697 |
| Samuel A. Di Piazza, Jr. | 12,314 | 0 | 12,314 | * | 6,621 | 18,935 |
Eric C. Fast (3) | 105,637 | 0 | 105,637 | * | 98,756 | 204,393 |
| O. B. Grayson Hall, Jr. | 449,945 | 282,019 | 731,964 | * | 1,104,168 | 1,836,132 |
John D. Johns (4) | 41,373 | 0 | 41,373 | * | 70,418 | 111,791 |
| Ruth Ann Marshall | 80,084 | 0 | 80,084 | * | 67,026 | 147,110 |
| Susan W. Matlock | 32,453 | 7,000 | 39,453 | * | 112,089 | 151,542 |
| John E. Maupin, Jr. | 59,512 | 7,000 | 66,512 | * | 70,461 | 136,973 |
| Charles D. McCrary | 115,335 | 7,000 | 122,335 | * | 197,496 | 319,831 |
| James T. Prokopanko | 12,314 | 0 | 12,314 | * | 0 | 12,314 |
| Lee J. Styslinger III | 101,810 | 7,000 | 108,810 | * | 155,031 | 263,841 |
| José S. Suquet | 30,110 | 0 | 30,110 | * | 4,618 | 34,728 |
Other Named Executive Officers
(See Summary Compensation Table on pages 91-93) | | | | | | |
David J. Turner, Jr. (5) | 135,219 | 59,822 | 195,041 | * | 269,809 | 464,850 |
John B. Owen (6) | 180,778 | 128,191 | 308,969 | * | 236,216 | 545,185 |
John M. Turner, Jr. (7) | 195,997 | 134,523 | 330,520 | * | 196,685 | 527,205 |
| C. Matthew Lusco | 89,475 | 0 | 89,475 | * | 245,626 | 335,101 |
| Directors and executive officers as a group (28 persons) | 3,167,130 | 1,935,200 | 5,102,330 | * | 4,312,780 | 9,415,110 |
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| (1) | Includes share equivalents held in the Regions 401(k) Plan. |
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| (2) | Additional underlying units may include notional shares allocated under the DDSIP, share equivalents held in the Regions Supplemental 401(k) Plan, restricted stock unitsRSUs, or performance stock units.PSUs. |
(3) | Includes 18,580 shares held by Director Bryan’s spouse. |
(4)(3) | Includes 20,000 shares held in a grantor retained annuity trust. |
(5) | |
| (4) | Includes 3841,349 shares held by Director Johns’his spouse, as to which he disclaims beneficial ownership, and 1,661 shares held in an IRA. |
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| (5) | Includes 1,808 shares held by his spouse, and 575 shares held for his children. |
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| (6) | Includes 174,857180,778 shares held jointly with spouse. |
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| (7) | Includes 98,363192,089 shares held jointly with spouse, 1,726 shares held by Mr. Turner’s spouse, 575 shares held for Mr. Turner’s children, and 65,000 held in family trusts.spouse. |
(8) | Includes 8,000 shares held in an IRA |
(9) | Includes 7,400 shares held in an IRA. |
No change-in-control of Regions occurred during 2015,2017, meaning that no person or group has acquired the ability to direct or cause the direction of management and policies of Regions through the ownership of voting securities, by contract, or otherwise, and no arrangements are known to Regions that may at a later date result in such a change-in-control of Regions.
Regions’ General Policy on Insider Trading prohibits (a) all hedging transactions by Directors, executive officers
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| OWNERSHIP OF REGIONS COMMON STOCK |
Stock Ownership Guidelines and allHolding Period Requirements
associates, and (b) future pledging of Company equity securities by
We require our Directors and executive officers. In June 2014, a newly appointed executive officer who is not an NEO, had 13,505officers to own shares of Regionsour common stock pledged as collateral for a line of credit and had untilbecause the 2016 Annual Meeting of Stockholders to eliminate that pledge. Due to an administrative oversight, those pledged shares were not disclosed in our 2015 Beneficial Ownership Table. During 2015, the line of credit was paid in full and the shares are no longer pledged.
Stock Ownership and Holding Period Requirements
The Board believes that Directors should havehaving a financial stake in Regions soaligns their interests are aligned with those of the stockholders. Currently, non-managementOur Board has adopted robust stock ownership guidelines that apply to our Directors are expected to own shares of Regions common stock with a value equal to or greater than fiveand executive officers as summarized in the following chart:
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Director Stock Ownership Guidelines | Non-management Directors are expected to own shares of Regions common stock with a value equal to or in excess of 5 times the value of the cash portion of their annual retainer. Until such time as the minimum level of stock ownership is achieved, the Director shall be required to retain 50 percent of the after-tax net shares acquired as a part of any compensatory arrangement, unless granted an exception by the NCG Committee upon showing a hardship or other special circumstances. |
Executive Officer Stock Ownership Guidelines | Executive officers are required to own Regions common stock having a value that is a specified multiple of base salary. The multiple varies based on the tier designation, which in turn reflects the executive officer’s level of responsibility and compensation. In 2017, the Board increased the minimum holding amount for our CEO to 6 times base salary. Other NEOs is 3 times base salary. Until such time as the minimum level of stock ownership is achieved, the executive officer shall be required to retain 50 percent of the after-tax net shares acquired as a part of any compensatory arrangement, unless granted an exception by the CHR Committee upon showing a hardship or other special circumstances. |
Shares counted toward the Directors’ ownership include shares purchased on the open market; shares obtained through option exercises; share equivalents held under any Director’s deferred stock plan; restricted shares awarded; and shares obtained through any other sources. Shares counted toward the executive officers’ ownership include shares owned without restriction; unvested restricted stock or restricted stock units (restricted stock or restricted stock units, the number of which is subject to determination based on future performance are not included); shares (or share equivalents) held in the executive officer’s name in a qualified or nonqualified
retirement or deferred compensation plan; and shares held in trust for the benefit of the cash portionexecutive officer or his or her immediate family members.
Currently, each Director, other than Messrs. Di Piazza and Prokopanko, who became members of the annual retainer paid to Directors.
Directors are required to retain 50 percent ofBoard in November 2016, meet the after-tax net value of any compensatory grant upon vesting until such time as the ownership guidelines are met. Each Director currently meets the robust Director Stock Ownership Guidelines.
See the table on page 88 of this proxy statement further describing the Stock Ownership Guidelines for our CEO and each of the other NEOs, including their compliance with the guidelines.24 ï 2016 Proxy Statement
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OWNERSHIP OF REGIONS COMMON STOCK |
Anti-Hedging and Pledging
Anti-Pledging
We believe it is inappropriate for any Director, executive officer, or associate to enter into speculative transactions in Regions equity securities, and therefore, prohibits all hedging transactions. Regions’our General Policy on Insider Trading
prohibits all hedging transactions and pledgingshort sales of Regions equity securities, as well as transactions in puts, calls, or other derivative securities.
In addition, our General Policy on Insider Trading, which is reviewed and approved annually by the NCG Committee, prohibits all our Directors and executive officers. “Executive officers” are those officers who performfrom purchasing Regions securities on margin or holding them in a policy-making function. No nominee for Director has pledgedmargin account, borrowing against any account in which Regions equity securities.securities are held, or pledging Regions equity securities as collateral for a loan.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires
Regions’ Directors, executive officers, Controller, and,
stockholders who ownto the extent required by SEC rules, beneficial owners of more than 10 percent of a registered class of Regions equity securities,
if any,are subject to Section 16(a) of the Exchange Act, which requires them to file reports of ownership and changes in ownership of Regions stock with the SEC.
Regions’We assist our Directors, executive officers,
and Controller
and stockholders owning greater than 10 percentin complying with these requirements. The reporting persons are required to furnish
Regions withus copies of all Section 16(a) forms they
file.file, and we are required to disclose in this proxy statement the failure to file these reports by any reporting person when due.Based solely on a review of the forms filed during, or with respect to, fiscal year 20152017 and written representations from theeach reporting persons, Regions believesperson, we believe that itsour Directors, executive officers, and Controller filed all required reports on a timely basis.
ï 2016 Proxy Statement25
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PROPOSAL 1 — ELECTION1-ELECTION OF DIRECTORS |
PROPOSAL 1 — ELECTION OF DIRECTORS
You are voting on a proposal to elect
1113 nominees for a one-year term as Directors of the Company.
What vote is required to approve this proposal?
Each nominee requires the affirmative “FOR” vote of a majority of the votes cast for or against the nominee. Abstentions and
brokerBroker non-votes have no effect on the vote results.
What does the Board recommend?
The Board unanimously recommends that you vote“FOR” “FOR” each nominee standing for election as Director.The nominees are: |
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| Carolyn H. Byrd | | Ruth Ann Marshall |
David J. Cooper, Sr. | | Susan W. Matlock |
| Don DeFosset | | John E. Maupin, Jr. |
| Samuel A. Di Piazza, Jr. | Charles D. McCrary |
| Eric C. Fast | | Charles D. McCraryJames T. Prokopanko |
| O. B. Grayson Hall, Jr. | | Lee J. Styslinger III |
| John D. Johns | José S. Suquet |
| Ruth Ann Marshall | |
What is the makeup of the Board, and how
How often are the members
elected?elected, and what is the composition of the Board?
All Directors are elected annually. Our Board currently has
1214 members.
| |
| | |
| Board Composition | |
| Independent Directors | 93 | % |
Independent Directors
| | | 92% | |
Fewer than 10 Years of Board Tenure | 50 | | 50% | % |
Gender, Racial, Ethnic, or Sexual Orientation Diversity • Women
• Ethnicity
| 36 |
| 25%
17%
|
% |
Banking or Financial IndustryCEO Experience
| 86 | | 58% | % |
CEO Experience
| | | 67% | |
Current Other Public Company Board Experience | 71 | | 83% | % |
Under
the Company’sour Corporate Governance Principles, each Director
is required toshould retire immediately prior to the call to order of the annual stockholders’ meeting of the Company following his or her
72nd72nd birthday.
Director George W. Bryan,We would like to thank David T. Cooper, who is retiring from our Board, having reached the mandatory retirement
age, will not stand for re-election at our 2016 Annual Meeting. Our Board extends its sincere gratitude to Mr. Bryan forage. We appreciate his
outstanding leadership and dedicated
service. Mr. Bryan is the outgoing Chair of our Risk Committee and a member of our Audit Committee. He also previously served on our Compensation Committee. We are immensely grateful for his many contributions to the Company over his years of service and
wish him all the best incontributions and will miss his
retirement.commitment and valuable perspectives.
As permitted by
theour By-Laws, the Board has determined that, effective at the annual meeting, the Board will consist of
1113 members to be elected for a term of one year expiring at the
20172019 Annual Meeting. Any Director vacancies created between annual meetings (such as by a current Director’s death, resignation, removal, or an increase in the number of Directors) may be filled by a majority vote of the remaining Directors then in office. Any Director appointed in this manner would hold office until the next election.
What if a nominee is unable or unwilling to serve?
This is not expected to occur, as all
All nominees have
previously consented to serve for the upcoming one-year
term.term, so this is not expected to occur. If, however, a nominee is unable or unwilling to serve and the Board does not elect to reduce the size of the Board, shares represented by proxies will be voted for a substitute candidate nominated by the Board.
26 ï 2016 Proxy Statement
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PROPOSAL 1 — ELECTION OF DIRECTORS |
What if a nominee does not receive a majority of votes cast?
Under our By-Laws, each of the
1113 nominees will be elected if a majority of the votes cast at the annual meeting at which a quorum is present are voted in favor of the
Director.nominee. This means that the number of shares voted
“for”“For” a nominee must exceed the number of shares voted
“against”“Against” the nominee. Shares voting
“abstain”“Abstain” and
brokerBroker non-votes will have no effect on the election.
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| PROPOSAL 1-ELECTION OF DIRECTORS |
Under the Corporate Governance Principles, an incumbent nominee who fails to receive a majority of the votes cast with respect to the election must submit his or her resignation. The NCG Committee will consider the resignation and any factors it deems relevant in deciding whether to accept the resignation and recommend to the Board the action to be taken. The Director whose resignation is under consideration will abstain from participating in any decision regarding his or her resignation.
The Board will take action within 90 days following certification of the stockholder vote unless such action would cause
Regionsus to fail to comply with requirements of the
New York Stock Exchange (the “NYSE”)NYSE or the securities laws, in which event
Regionswe will take action as promptly as practicable while continuing to meet such requirements.
The Board will promptly disclose its decision and the reasons for the decision in a Current Report on Form 8-K filed with the SEC. If the resignation is not accepted, the Director will continue to serve until the next annual meeting and until the Director’s successor is duly elected and qualified.
What criteria were considered by the NCG Committee in selecting the nominees?
The NCG Committee is charged with identifying and evaluating individuals to be recommended to the Board and are believed to be qualified to become Directors. The NCG Committee will consider and assess candidates consistent with criteria established by the Board and set forth in the Corporate Governance Principles and will considertake into consideration such pertinent issues and factors bearing on the qualifications of candidates in light of such criteria. The NCG Committee may, from time to time, use its authority under its charter to retain a professional search firm to help identify candidates. During 2015,2017, the NCG Committee engaged a professional search firm to assist in identifying and compiling information concerningregarding potential nominees.The Corporate Governance Principles affirm that the Board will seek members from diverse professional backgrounds, who combine a broad spectrum of experience and expertise with a reputation for integrity, to ensure that the Board maintains an appropriate mix of skills and characteristics to meet the needs of the Company.
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| The Corporate Governance Principles affirm that the Board will seek members from diverse professional and demographic backgrounds, who combine a broad spectrum of experience and expertise with a reputation for integrity, to ensure that the Board maintains an appropriate mix of skills and characteristics to meet the needs of the Company. |
Directors should have experience in positions with a high degree of responsibility, be leaders in the companies or institutions with which they are affiliated, and be selected based upon contributions they can make to the Board and management.the Company. Although the Company doeswe do not have a formal policy with respect to Board diversity, the NCG Committee actively considers diversity, including gender and ethnic diversity, in its recruitment and nomination of individuals for directorship, and diversity is one component of the Board’s annual self-evaluation. To ensure full flexibility in choosing candidates for nomination, there is no formal process for implementing the nomination policy. In addition to the items specified in the Corporate Governance Principles, the NCG Committee also considers the technical and professional skills that these nominees have gained through their leadership roles. Such skills may include, but are not limited to, corporate governance,experience or acumen in strategic planning financial, information technology, cybersecurity, or strategy development; information/cyber security; risk management; human resources/human capital management;
business
risk assessment, financial modeling, marketing, real estate, insurance, strategic planning, regulatory, international,operations and technology; environmental and sustainability practices; executive compensation and
legal.Regions’ By-Laws establish the proceduresbenefits; corporate governance; growth and requirements for ainnovation; external affairs, public relations or marketing and/or stockholder to nominate candidates for Director. For Regions’ 2017 Annual Meeting, such notice must be submitted to the Corporate Secretaryengagement; banking and be delivered no earlier than November 8, 2016,financial services; and no later than December 8, 2016. The notice must be accompanied by all required information relating to each nominee as described in Regions’ By-Laws, including information to be disclosed in solicitations of proxies for election of Directors in an election contest,regulatory or is otherwise required, in each case pursuant to Regulation 14A under the Exchange Act, and various statements, consents and agreements provided by the nominee. The Company’s By-Laws include additional information that is required to be submitted with the notice about the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made.
See the sectionSubmission of Stockholder Proposals or Nominations for 2017 Annual Meeting of Stockholders on page 91 for further instructions on how to submit such nominations and what must be included with the submission. It is the current policy and practice of the NCG Committee to evaluate any qualified candidate for Director under the applicable criteria without regard to the source of the recommendation of the candidate. A stockholder who desires to recommend a candidate for Director should follow the procedure set forth in our By-Laws.
Thecompliance.
The NCG Committee considers a wide breadth of factors and characteristics when evaluating nominees. In selectingWith respect to the 20162018 nominees, the NCG Committee believes it selected candidates who possess the highest personal and professional ethics, integrity, and values. Candidates aremust also be committed to representing the long-term interests of Regions stockholders. In addition to reviewing aeach candidate’s background and accomplishments, the NCG Committee reviewedassessed candidates for directorship in the context of the current composition of the Board and Regions’ evolving needs. The NCG Committee further sought to ensure that the Board reflects a range of talents, ages, skills, diversity, and expertise sufficient to provide sound and prudent guidance and oversight with respect to Regions’ operations and interests.
The NCG Committee also considered the number of boards on which the candidates already serve. Leadership and outside board experience are two of the many qualities considered by the NCG Committee when selecting nominees. Of the ten nominees standing for election who currently serve on an outside public company board, nine of those nominees chair committees and two serve as the lead independent director on their outside boards. Although the Board values the experience and knowledge gained through service on other boards, the Board also requires that its members be able to dedicate the time and resources necessary to ensure the diligent performance of their duties on the Company’s behalf, including attending Board and Committee meetings and the annual meeting.
It is the Board’s policy that at all times at least a substantial majority of its members meet the standards of independence promulgated by the SEC and the NYSE, and as set forth in the
Company’s Corporate Governance Principles.
The NCG Committee also sought to ensure that the Board reflects a range of talents, ages, skills, diversity, and expertise, particularly in the areas of accounting and finance, management, strategic planning, leadership, and financial related industries, sufficient to provide sound and prudent guidance with respect to Regions’ operations and interests. ï 2016 Proxy Statement27
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PROPOSAL 1 — ELECTION1-ELECTION OF DIRECTORS |
The Board seeks to maintain a diverse membership. The Board also requires that its members be able to dedicate the time and resources necessary to ensure the diligent performance of their duties on the Company’s behalf, including attending Board and Committee meetings.
The following are some key qualifications and skills the NCG Committee considered in evaluating the nominees.
| | |
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| | Acumen | | Description |
| | CEO or senior executive officer experience | | We believe that Directors with CEO or senior executive officer experience provide Regions with valuable insights. These individuals have a demonstrated record of leadership qualitiesBanking and a practical understanding of organizations, processes, strategy, risk and risk management and the ability to drive change and growth. Through their service as top leaders at other organizations, they also bring valuable perspective on common corporate issues affecting both their company and Regions. |
| | Banking and/or financial services industry experience | | We seek to have Directors with leadership experience as executives or directors or experience in other capacities in the financial services industry. The banking and financial services industry has issues,inherent risks, challenges, and opportunities that do not exist or are different from other typesunique to this industry. It is important that the Board have Directors who understand these facets of businesses. Directors with financial services industry experience have valuable perspective on issues specific to Regions’ business.our industry. |
Business operations and technology | | Financial and/or accounting acumen | | We believe that an understanding of finance and financial reporting processesIt is important for our Directors. Regions measures its operating and strategic performance by reference to financial targets. In addition, accurate financial reporting and robust auditing are critical to Regions’ success. We seek to have a number of Directorsmembers on the Board who qualify as audit committee financial experts,are knowledgeable and we expect all of our Directors to be financially knowledgeable. |
| | Outside Boardpossess experience | | Directors in business operations and technology so that sit on other public company boardswe are able to improve our processes, services, and products to provide valuable comparisons to Regions’ corporate practices. They often gain significantthe best customer experience and skills from service on other public boards that prove to be valuable to Regions.possible, as well as reduce operational risk as we meet the challenges of the fast-moving digital environment. |
Corporate governance | | Innovator/
growth creator
| | Regions’ future success depends, in part, on its success in growingThe Board is responsible for shaping the Company’s corporate governance priorities and structure, which must be transparent and responsive to our businesses.stockholders. The Board must have Directors with a track record of innovationexperience in keeping up with and growth creation experience provide a valued perspective on our opportunities to grow.understanding constantly changing corporate governance trends and policies. |
Environmental and sustainability practices | | Operations acumen | | Directors who have significant expertise in operations will often haveAs a better dialog with management on operational issues. They can probe more deeply into potential problemspublic company, Regions must be cognizant of the environmental footprint we leave and opportunities with respectcontinue our efforts to business operations. |
| | Corporate governance and/or regulatory acumen | | The financial services industry is heavily regulated. A Director who has significant corporate governance acumen or experience with regulatory authorities is better situated to oversee and advise management on governance and regulatory issues. |
| | Risk, compliance and/or legal acumen | | Risk management, compliance andreduce the management of legal risk are critical elementsenvironmental impacts of our business. Directors with significant knowledge in these areas are better situated to oversee and advise management with respect to these complex issues. |
| | Executive compensation
and/or benefits acumen
| | Directors with a significant understanding of executive compensation understand its various forms, the purpose of each type and how these can be used to motivate executives and drive performance while not encouraging imprudent risk. |
| | Strategic planning or strategy development experience | | Directors who understand how to plan for the future of the Company in a strategic fashion are better able to interact, oversee and advise management effectively with respect to the formulation and execution of the Company’s strategic planning. |
| | Environmental
and/or sustain-ability acumen
| | operations. Directors who have a significant understanding of environmental issues or issues involving sustainability are better situated to oversee and advise management with respect to these important issues. For |
| Executive compensation and benefits | When properly structured, executive compensation and benefits discourage imprudent risk taking that could harm the Company and/or customers, while simultaneously acting as a business driver and ensuring alignment with long-term stockholder interests. It is important for the Board to have Directors who understand and have experience with the various types of executive compensation and benefits options that may be employed to achieve this balance. |
| External affairs, public relations or marketing and/or stockholder engagement | As a customer-centric public company, Regions sustainabilityregularly communicates with our customer base. In addition, from time to time, the Board may need to engage with stockholders and investors. This may take the form of one-to-many types of communications, or it may involve one-on-one engagements. It is not justimportant for us to have Directors who are adept at communicating on a large scale, as well as individually. |
| Growth and innovation | As part of our strategic planning process, we must continually consider ways to expand our customer base, reach underserved areas, and develop new products and services that could best serve our customers’ needs. The Board must have Directors with an environmental issue;understanding of how to foster growth and innovation. |
Human resources/human capital management | Talent management is important at all levels of an organization, but it is also an issue regarding makingparticularly critical with respect to succession planning for senior executives. Having human resources and human capital management experience represented on the Board is important to ensuring appropriate succession planning. |
| Information/cybersecurity | As a financial institution, we are trusted with sensitive nonpublic information, which we are expected to protect. The safekeeping of our businesscustomer, associate, and profits sustainable.Company data is of paramount importance. Directors with experience in implementing, establishing, or overseeing information security systems and protocols are better able to guide the Company through this constantly changing landscape. |
| Regulatory or compliance | The banking and financial services industry is highly regulated. Regions is subject to both federal and state regulators. Having Directors who understand the regulatory environment and with experience engaging with regulators is critical to the Company. |
| Risk management | Robust risk management is a critical aspect of operating within the financial sector, and the Board must include Directors who are very familiar with risk management processes. |
| Strategic planning or strategy development experience | Directors who understand how to strategically plan for the future of the Company, both in the short- and long-term, are better able to oversee and advise management with respect to the formulation and execution of the Company’s strategic planning. |
28 ï 2016 Proxy Statement
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PROPOSAL 1 — ELECTION1-ELECTION OF DIRECTORS |
The following are some of the personal attributes whichthat each nominee possesses.is expected to possess: |
| |
AttributeCommitment | | DescriptionThe ability to commit the time necessary to function as an effective Director by attending on-site meetings in person. |
EthicsConstructive Questioner | The preparedness to ask questions and Integritychallenge management and peer Directors in a constructive and appropriate way. |
| Contributor and Team Player | | A commitment to:
• understanding and fulfilling the duties and responsibilitiesThe ability to work as a member of a directorteam and maintaining knowledge in this regard through professional development;
• putting Regions’ interests before any personal interests;
• being transparent;demonstrate the passion and
• maintaining Board confidentiality.
time to make a genuine and active contribution to the Board. |
| Critical and Innovative Thinker | | The ability to critically analyze complex and detailed information, readily distill key issues, and develop innovative approaches and solutions to problems. |
LeaderEffective Listener and Communicator | | Leadership skills include the
• listen to and constructively and appropriately represent Regions;debate other people’s viewpoints; • set appropriate Boarddevelop and organizational culture;deliver compelling arguments; and • make and take responsibility for decisions and actions.communicate effectively with a broad range of stakeholders. |
| Ethics and Integrity | A commitment to: • understanding and fulfilling the duties and responsibilities of a Director and maintaining knowledge in this regard through professional development; • putting Regions’ interests before any personal interests; • being transparent; and • maintaining Board confidentiality. |
| Financially Literate | | The ability to read and understand fundamental financial statements and make appropriate decisions. |
Unbiased | | The ability to represent all stockholders and not a particular interest group. |
Effective Listener and Communicator | | The ability to:
• listen to, and constructively and appropriately debate, other people’s viewpoints;
• develop and deliver compelling arguments; and
• communicate effectively with a broad range of stakeholders.
|
Constructive Questioner | | The preparedness to ask questions and challenge management and peer Directors in a constructive and appropriate way. |
Contributor and Team Player | | The ability to work as part of a team, and demonstrate the passion and time to make a genuine and active contribution to the Board. |
| Influencer and Negotiator | | The ability to negotiate outcomes and influence others to agree with those outcomes, including an ability to gain stakeholder support for the Board’s decisions. |
CommitmentLeader | The ability to: • appropriately represent Regions; • set appropriate Board and organizational culture; and • make and take responsibility for decisions and actions. |
| Unbiased | The ability to commit the time necessary to function as an effective Director by attending on-site meetings in person.represent all stockholders and not a particular interest group. |
The individual Director biographies that follow provide additional information about each nominee’s
specific experiences, qualifications, and skills.
A stockholder who wishes to recommend a candidate for consideration by the NCG Committee may do so at any time by submitting such recommendation to the Corporate Secretary as follows:
Regions Financial Corporation
1900 Fifth Avenue North
Birmingham, Alabama 35203
Attention: Fournier J. Gale, III, Corporate Secretary
How is the Board membership refreshed?
Our Board and NCG Committee maintain a robust process in which the members focus on identifying, considering, and evaluating potential Board candidates. The NCG Committee leads this process by considering prospective candidates. In identifying appropriate candidates, with support from an independent search firm, other independent Directors, stockholders, and Regions associates, the NCG Committee conducts a thoughtful evaluation focused on aligning a diversity of skills, experience, and characteristics, of our Board with the strategic development of the Company.
The NCG Committee and Board undertake a thorough review and vetting process before any candidate is recommended to the Board. During this process, the NCG Committee and Board consider many different aspects pertaining to the candidate, such as skills and expertise brought to the Board, other boards on which the candidate sits, diversity, including gender and ethnic diversity, and any potential conflicts or interests with respect to appointing a candidate to the Board.
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| PROPOSAL 1-ELECTION OF DIRECTORS |
The following shows our board refreshment process: |
| | | | | | |
| NCG Committee Oversight |
| | | | | | |
| Identification of Candidates | | Assessment, Interviews, and Discussions | | Recommendation and Appointment | | Onboarding |
The NCG Committee reviews candidates identified by: • Independent Directors, • An independent search firm, • Stockholders, • Our people, and • Other sources. The independent search firm uses criteria given by the Board as a basis to locate candidates that complement the skills currently represented on the Board. | ð | The NCG Committee considers: • The key qualifications and personal attributes expected of Directors, • Due diligence research conducted on the candidate, • Input from other independent Directors following interviews with the candidate, and • The candidate’s availability for Board service. | ð | Upon recommendations from the NCG Committee, the Board determines whether to appoint the candidate and optimal Committee placement.
The NCG Committee, in making its Committee assignment recommendation, typically considers assigning new Directors to the Audit Committee or the Risk Committee within the first two years of joining the Board. | ð | Regions’ comprehensive onboarding program begins with a thorough orientation process that acclimates new Directors to Regions, the Board, and management and involves a combination of written materials, oral presentations, and meetings. All of this is to provide an understanding of our business, risks, regulatory framework, opportunities, and challenges. |
What is the average tenure of the Directors?
Our Directors have a variety of lengths of tenure, with the average tenure being
11nine years;
however,in fact, half of
the 11 nominees, 6our current Directors have
served on our Board for 9 years or less, and 5 have served between 11 and 15tenure of fewer than 10 years.
Following Director Bryan’s retirement, the average tenure will be 9.4 years among the remaining nominees. The NCG Committee, which is responsible for nominating individuals to the Board, considers tenure, among many other factors, when making its determination with respect to Director nominations.
By nominating Directors for continued service on our Board, the
The NCG Committee believes that a Director isDirectors are able to become intimately acquainted with all aspects of our business and best direct our course over time. Our long-servinglonger-serving Directors have vital expertise and institutional knowledge that providesprovide the Board with a better understanding of our business. The NCG Committee believes that this knowledge and perspective continues to generate long-term value for all of our stakeholders.
Notwithstanding a Director’s tenure, each Director is evaluated annually by the NCG Committee to ensure he or she continues to possess valuable skills, talents, and expertise
that Regions believes are necessary for the long-term success of our Company.
Who are this year’s nominees?
All of the 2016
The 13 nominees being voted upon at the annual meeting are
all Directors standing for re-election.
We recognize that board refreshment supports the addition of new ideas, perspectives, independence, and skills to the Board. Near the end of 2016 and at the beginning of 2017, we added three new independent Directors to the Board, each of whom received overwhelming support at the 2017 annual meeting.
The following biographies showdetail the age and principal occupations during at least the past five years for each nominee,nominee; the year the nominee was first elected or appointed, as the case may be, to the Board of Regions,Board; and the directorships he or she now holds and havehas held within at least the last five years with corporations subject to the registration or reporting requirements of the Exchange Act or registered under the Investment Company Act of 1940.
The Board believes that all the nominees are
highlywell qualified. Each nominee’s key experiences, qualifications, attributes, or skills that led the Board to conclude that he or she should serve as a Director
of Regions are subsequently described. There are no family relationships among our Directors and executive officers.
ï 2016 Proxy Statement29
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PROPOSAL 1 — ELECTION OF DIRECTORS |
On July 1, 2004, Regions became the successor by merger to Union Planters Corporation and the former Regions Financial Corporation. Several of our Directors were previously members of the boards of directors of
either of those companies.the former Regions Financial Corporation. On November 4, 2006, AmSouth Bancorporation was merged with and into Regions. Several of the members of the board of directors of AmSouth Bancorporation joined the Board
of Regions at that time.
The Directors
of Regions also serve as the
Boardboard members of Regions Bank, an Alabama state-chartered commercial bank and wholly-owned subsidiary of Regions.
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| 2018 Proxy Statement | 29 |
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| PROPOSAL 1-ELECTION OF DIRECTORS |
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Age: 6769 Top Skills • Banking and Financial Services • Corporate Governance • Information/Cybersecurity • Risk Management • Strategic Planning | | Regions Committees:Committees • Audit Committee (Chair) (Audit(Chair; Audit Committee Financial Expert)• Risk Committee
Public Directorships:• Popeyes Louisiana Kitchen, Inc.
Directorships • Federal Home Loan Mortgage Corporation (“Freddie Mac”) Former Public Directorships Held During Past Five Years • Popeyes Louisiana Kitchen, Inc. Ms. Byrd is the Chairman and Chief Executive OfficerCEO of GlobalTech Financial, LLC, (“GlobalTech”), in Atlanta, Georgia, which she founded in 2000. GlobalTech specializes in business process outsourcing and financial consulting. |
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| Skills and Qualifications:Qualifications Prior to forming GlobalTech in 2000, Ms. Byrd had a long career with The Coca-Cola Company, where she was ultimately appointed Vice President, Chief of Internal Audits and Director of the Corporate Auditing Department. In this position, she provided leadership for the worldwide audits of The Coca-Cola Company. Ms. Byrd served as Senior Account Officer with Citibank, N.A. in New York before joining The Coca-Cola Company. At Popeyes Louisiana Kitchen, Inc.,Freddie Mac, Ms. Byrd serves on the AuditCompensation Committee and Executive Committee and is Chair of the Corporate Governance and NominatingRisk Committee. At Freddie Mac, she servesShe formerly served as Chair of the Audit Committee and serves as a member of the Nominating and Governance Committee and the Executive Committee.Committee at Freddie Mac. She previously served on the Audit Committee and Executive Committee and as Chair of the Corporate Governance and Nominating Committee at Popeyes Louisiana Kitchen, Inc. and on the Audit Committees of Circuit City Stores, Inc., RARE Hospitality International, Inc., and The St. Paul Travelers Companies. Ms. Byrd earned her Bachelor of Science degree from Fisk University and a Masters in Finance and Business Administration from the University of Chicago Graduate School of Business. Ms. Byrd has held many positions in which she was responsible for key managerial, strategic, financial, and operational decisions, and such positions provide significant experience to draw upon in her capacity as a Director of Regions. Her service on the boards of directors of a variety of large public companies, including Freddie Mac, further augments her experience. All of these qualifications make her well qualified to be a member of Regions’ Board. |
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30 ï 2016 Proxy Statement
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PROPOSAL 1 — ELECTION OF DIRECTORS |
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 David J. Cooper, Sr.
Don DeFosset Age: 7069 Top Skills • Business Operations andTechnology • Corporate Governance • Executive Compensationand Benefits • Information/Cybersecurity • StrategicPlanning | | Regions Committees:Committees • Compensation Committee• Nominating and Corporate Governance Committee
Mr. Cooper served on the board of directors of AmSouth Bancorporation from 2005 to 2006. He is currently the Vice Chairman and was previously the President of Cooper/T. Smith Corporation, a privately held corporation that is one of the largest stevedoring and maritime-related firms in the United States. He also serves as a director of Alabama Power Company, a wholly-owned subsidiary of The Southern Company. Alabama Power Company has no publicly traded common stock.
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| Skills and Qualifications:
After graduating from the University of Alabama School of Commerce and Business Administration, Mr. Cooper joined his family’s stevedoring company, Cooper/T. Smith Corporation. Under the direction of Mr. Cooper and his brother, the company expanded its activities to over 37 ports on the East, West and Gulf Coasts of the United States, with additional operations in South America. The company has diversified its business interests, including warehousing, terminal operations, tugboats, push boats, barging and restaurants. Mr. Cooper is also active in civic and educational organizations.
Mr. Cooper served on the board of directors of SouthTrust Corporation and SouthTrust Bank prior to joining the board of AmSouth Bancorporation, which merged with Regions in 2006. Mr. Cooper’s service on the board of Alabama Power Company provides him with insight in an industry that, similar to banking, is highly regulated. He also brings to our Board extensive knowledge of how to effectively run a large business with international operations as evidenced by the diversification and growth of Cooper/T. Smith Corporation under his direction. Mr. Cooper’s experience makes him well qualified to be a member of Regions’ Board.
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 Don DeFosset
Independent
Director Since: 2006
Age: 67
| | Regions Committees:
• CompensationCHR Committee (Chair)
Public Directorships:Directorships • National Retail Properties • ITT Corporation Former Public Directorships within the Past Five Years:
• EnPro Industries, Inc.
Mr. DeFosset served on the board of directors of AmSouth Bancorporation from 2005 to 2006. He is the former Chairman, President, and Chief Executive OfficerCEO of Walter Industries, Inc. (now Walter Energy, Inc.) (“Walter”). During the time of his service, Walter was a diversified public company with businesses in water infrastructure products, metallurgical coal and natural gas, home building, and mortgage financing. |
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| Skills and Qualifications:Qualifications Throughout his career, Mr. DeFosset held significant leadership positions in major multinational corporations, including Dura Automotive Systems, Inc., Navistar International Corporation, and AlliedSignal, Inc. Mr. DeFosset is also active in civic and charitable organizations. He formerly served on Regions’ Audit Committee and was, during his tenure, determined to be an Audit Committee Financial Expert. At Terex Corporation, Mr. DeFosset chairsChairs the Governance and Nominating Committee and serves on the Audit Committee. At National Retail Properties, he serves onChairs the Compensation Committee and chairsserves on the Governance and Nominating Committee. At ITT Corporation, Mr. DeFosset serves on the Compensation and Personnel Committee and Chairs the Nominating and Governance Committee. In addition, he also served on the Audit and Risk Management, Compensation and Human Resources, and Nominating and Corporate Governance Committees of EnPro Industries, Inc. Mr. DeFosset has an Industrial Engineering degree from Purdue University and a Master of Business Administration degree from Harvard University. Having served as Chairman, Chief Executive OfficerCEO, and President of Walter, Mr. DeFosset brings extensive management and business experience to Regions’ Board as well as a deep understanding of complex issues concerning public companies. Mr. DeFosset is also able to draw upon his knowledge of the mortgage industry acquired during his tenure at Walter. His service on the boards of directors of a variety of large public companies further augments his experience. All of these credentials make Mr. DeFossethim well qualified to be a member of Regions’ Board.
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ï 2016 Proxy Statement31
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PROPOSAL 1 — ELECTION OF DIRECTORS |
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 Eric C. Fast
30 | | 2018 Proxy Statement |
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| PROPOSAL 1-ELECTION OF DIRECTORS |
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Samuel A. Di Piazza, Jr. Age: 6667 Top Skills • Business Operations and Technology • Banking and Financial Services • Environmental and Sustainability Practices • Regulatory Compliance • Strategic Planning | | Regions Committees:Committees • Audit Committee (Audit Committee Financial Expert) Public Directorships:Directorships • Automatic Data Processing,AT&T Inc. • Lord Abbett Family of FundsProAssurance Corporation • Jones Lang LaSalle Incorporated Former Public Directorships Held During the Past Five Years:Years • DirecTV Mr. Di Piazza is retired from Citigroup, Inc., where he served as Vice Chairman of the Global Corporate and Investment Bank. Prior to joining Citigroup, Mr. Di Piazza was a partner at PricewaterhouseCoopers, where he served as Chairman and Senior Partner at PwC US and as a member of the firm’s Global Leadership Team. He ultimately served as Global CEO of PricewaterhouseCoopers from 2002 to 2009. |
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| Skills and Qualifications Mr. Di Piazza serves as the Chair of the Audit Committee at ProAssurance Corporation. At Jones Lang LaSalle Incorporated, he serves on the Compensation Committee and the Nominating and Governance Committee. He serves as Chair of the Audit Committee and as a member of the Executive Committee and the Public Policy and Corporate Reputation Committee at AT&T Inc. Mr. Di Piazza is extremely active in and serves on the boards of various nonprofit and professional organizations, including the UN Global Compact Board, The Mayo Clinic, and the National September 11th Memorial and Museum. Mr. Di Piazza is a former Trustee of both the Financial Accounting Foundation and the International Accounting Standards Committee Foundation and former Chairman of the World Business Council for Sustainable Development. He has been awarded the Accountant of the Year by the Beta Alpha Psi Society, the Ellis Island Medal of Honor, and the INROADS Leadership Award. Mr. Di Piazza is also co-author of the book, Building Public Trust: The Future of Corporate Reporting. He earned his Bachelor of Science in Accounting and Economics from the University of Alabama and received a Master of Tax Accounting degree from the University of Houston. Mr. Di Piazza’s extensive audit and tax experience, leadership in civic and not-for-profit organizations, including sustainable development organizations, together with his years in banking and other credentials, make him well qualified to be a member of Regions’ Board.
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Eric C. Fast Independent Director Since: 2010 Age: 68 Top Skills • Corporate Governance • External Affairs, PR or Marketing and/or Stockholder Engagement • Growth and Innovation • Human Resources/Capital Management • Strategic Planning | | Regions Committees • Audit Committee (Audit Committee Financial Expert) • Risk Committee Public Directorships • Automatic Data Processing, Inc. • Lord Abbett Family of Funds Former Public Directorships Held During the Past Five Years From 2001 through January 2014, Mr. Fast served as the Chief Executive OfficerCEO for Crane Co., a diversified manufacturer of engineered industrial products. He also served as President of Crane Co. from 1999 through January 2013. Mr. Fast serves on the board of directors of the privately held National Integrity Life Insurance Company. Additionally, he serves as a director/trustee of the twelve investment companies in the Lord Abbett Family of Funds. |
| | Skills and Qualifications:Qualifications Prior to joining Crane Co., Mr. Fast worked for Salomon Brothers and later Salomon Smith Barney, where he ultimately was co-head of Global Investment Banking and a member of the firm’s Management Committee. He previously served as Treasurer of MacMillan Inc. and began his career as a commercial lending officer at The Bank of New York. Mr. Fast currently serves as Chair of the Audit Committee and serves on the Compensation Committee of Automatic Data Processing, Inc.; is a member of the Audit Committee at the privately held National Integrity Life Insurance Company; and is a member of the Proxy Committee, Nominating and Governance Committee, and Contract Committee at The Lord Abbett Family of Funds. He earned a political science degree from the University of North Carolina, Chapel Hill and received a Master of Business Administration in Finance degree from New York University Graduate School of Business. He currently serves as Chair of the Audit Committee and serves on the Compensation Committee of Automatic Data Processing, Inc., is a member of the Audit Committee at the privately held National Integrity Life Insurance Company, and is a member of the Proxy Committee, Nominating and Governance Committee and Contract Committee at The Lord Abbett Family of Funds.Mr. Fast brings extensive management and business experience to our Board, as well as a deep understanding of complex issues concerning public companies. His service as President and Chief Executive OfficerCEO of a large public company further augments his experience. All of these qualifications make him well qualified to be a member of Regions’ Board.
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| 2018 Proxy Statement | 31 |
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| PROPOSAL 1-ELECTION OF DIRECTORS |
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Age: 5860 Top Skills • Banking and FinancialServices • Business Operations andTechnology • Information/Cybersecurity • Risk Management • Strategic Planning
| | Public Directorships:Directorships • Vulcan Materials Company Former Public Directorships Held During the Past Five Years:Years Mr. Hall has been theserved as Chairman President and Chief Executive OfficerCEO of Regions and Regions Bank since May 2013. He also served as President and Chief Executive Officer of Regions and Regions Bank from April 2010 to May 2013.through December 2017. He also serveshas served as a director of Alabama Power Company, a wholly-owned subsidiary of The Southern Company. Alabama Power Company has no publicly traded common stock.CEO since April 2010. |
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| Skills and Qualifications:Qualifications Mr. Hall’s banking career started in 1980 as a participant in the management trainee program at AmSouth, which merged with Regions in 2006. He has served in roles of increased responsibility, including head of the Operations and Technology Group from 1993 to 2004 and manager of all lines of business from 2005 to 2006. Mr. Hall was named Head of the General Banking Group in 2006 and, in 2008, was elected Vice Chairman and a member of the Board of Regions. The General Banking Group included all banking offices across Regions’ footprint. His responsibilities also included oversight of several key divisions of Regions. In October 2009, the Board named him President. From October 2009 through March 2010 he served as President and Chief Operating Officer of Regions and Regions Bank. Thereafter, the Board named Mr. Hall Chief Executive OfficerCEO effective April 1, 2010. Mr. Hall assumed the additional role of Chairman of the Board in May 2013. He currently serves as the Chairman and CEO. Mr. Hall is also active in several civic and leadership organizations. Mr. Hall is a Class A Director of the Federal Reserve Bank of Atlanta where he serves ason the Audit and Operational Risk Committee. Previously, he was a representative on the Federal Advisory Council of the Board of Governors of the Federal Reserve System. At Vulcan Materials Company, Mr. Hall serves on the Executive Committee, Finance Committee, and is Chair of the Governance Committee. At Alabama Power Company, which is a wholly-owned subsidiary of The Southern Company and has no publicly traded common stock, he Chairs the Compensation Committee. While a director at Zep Inc., he served on the Compensation Committee and the Nominating and Corporate Governance Committee. In addition to a Bachelor’s degree in Economics from The University of the South and a Master of Business Administration degree from the University of Alabama, Mr. Hall is a graduate of the Stonier School of Banking. Mr. Hall’s knowledge of all areas of the Company, together with his years of experience in banking, make him well qualified to be a member of Regions’ Board. |
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32 ï 2016 Proxy Statement
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PROPOSAL 1 — ELECTION OF DIRECTORS |
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 Age: 6466 Top Skills • Banking and Financial Services • Growth and Innovation • Regulatory Compliance • Risk Management • Strategic Planning
| | Regions Committees:• Nominating and Corporate Governance Committee
Committees • Risk Committee (Risk(Chair; Risk Management Expert) Public Directorships:Directorships • Genuine Parts Company • The Southern Company • Genuine Parts Company
Former Public Directorships Held During the Past Five Years:Years • Protective Life CorporationSince 2003,
Mr. Johns hasserves as the Executive Chairman at Protective Life Corporation. From 2003 until July 1, 2017, he served as the Chairman and Chief Executive OfficerCEO of Protective Life Corporation (“Protective”). OnProtective. In February 1, 2015, Protective became a wholly-owned subsidiary of Dai-ichi Life Insurance Company, Limited, a kabushiki kaisha organized under the laws of Japan, a holding company with subsidiaries that provide insurance and other financial services. Mr. Johns continues to serve on the board at Protective, which is no longer a publicly traded company. (Protective is still a registrant under the securities laws but has no publicly traded common stock.) |
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| Skills and Qualifications:Qualifications Prior to joining Protective in 1993, Mr. Johns was Executive Vice President and General Counsel at Sonat, Inc. and was a founding partner of the Birmingham-based law firm of Maynard, Cooper & Gale, P.C. He was inducted into the Alabama Business Hall of Fame in 2017. Mr. Johns serves onChairs the Audit Committee at The Southern Company. At Genuine Parts Company, he serves as the Lead Independent Director; Chair of the Compensation, Nominating and Governance CommitteeCommittee; and is a member of the Executive Committee. At the privately held Protective, he Chairs the Risk, Finance & Investments Committee. Mr. Johns graduated from the University of Alabama and received his MastersMaster of Business Administration and Juris Doctorate degrees from Harvard University. Mr. Johns’ background and considerable experience as a senior executive of a large insurance corporation, hiscorporation; extensive exposure to complex financial issues at large public companies,companies; leadership in other business, economic development, civic, educational, and not-for-profit organizations,organizations; and seasoned business judgment are valuable and make him well qualified to be a member of Regions’ Board.
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 32 | | 2018 Proxy Statement |
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| PROPOSAL 1-ELECTION OF DIRECTORS |
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Age: 6163 Top Skills • Business Operations and Technology • Executive Compensation and Benefits • Growth and Innovation • Human Resources/Capital Management • Strategic Planning
| | • CompensationCHR Committee • Nominating and Corporate GovernanceNCG Committee Ms. Marshall isserved as President, MasterCard North America from 1999 – 2004. From 2004 until she retired from MasterCard where she served in various management roles beginning in 1999 and2006, Ms. Marshall served as President of The Americas, MasterCard International, Inc. from 2004 to 2007.
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| Skills and Qualifications: At MasterCard, Ms. Marshall was responsible for building all aspects of MasterCard’s issuance and acceptance business in the United States, Canada, Latin America, and the Caribbean. Prior to joining MasterCard International, Inc. in 1999, Ms. Marshall served as Group Executive President of two electronic payment service companies, MAC Regional Network and Buypass Corporation. Upon acquisition of these companies by Concord EFS, Ms. Marshall became Senior Executive Vice President of the combined companies, where she oversaw marketing, account management, customer service, and product development. Ms. Marshall started her career at IBM, where, for more than 18 years, she served in managerial and executive positions. In 2004 and 2005, Ms. Marshall was selected by Forbes.com as one of the “World’s 100 Most Powerful Women.” At ConAgra Foods, Inc., Ms. Marshall serves as Chair of the Human Resources Committee and serves on the Nominating, Governance and Public Affairs Committee, and the Executive Committee. At Global Payments, Inc., she serves as Chair of the Governance and Risk Oversight Committee and serves on the Governance and Nominating Committee. Additionally, she is a former director of American Standard Inc. and privately held companies, Pella Corporation, a building materials manufacturer, and Trustwave Holdings, Inc., an information security company. Ms. Marshall earned her bachelorBachelor of Business Administration in Finance and masterMaster of Business Administration degrees from Southern Methodist University. Ms. Marshall’s background and broad marketing, account management, customer service, and product development experience, as well as significant domestic and international experience in growing business at MasterCard and her service as a director for other publicly traded companies all make Ms. Marshallher well qualified to be a member of Regions’ Board.
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ï 2016 Proxy Statement33
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PROPOSAL 1 — ELECTION OF DIRECTORS |
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 Age: 6971 Top Skills • External Affairs, PR or Marketing and/or Stockholder Engagement • Growth and Innovation • Human Resources/Capital Management • Risk Management • Strategic Planning
| | • CompensationCHR Committee Ms. Matlock served on the board of directors of the former Regions Financial Corporation from 2002 to 2004. She retired in March 2014 as President and Chief Executive OfficerCEO of Innovation Depot, Inc., an emerging business incubation center in Birmingham, Alabama. |
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| Skills and Qualifications: Ms. Matlock served for nine years on the board of managers of Ascension Health Ventures, a fund that invests in innovative healthcare businesses. She currently serves onis a former member of the board of directors of Blue Cross/Blue Shield of Alabama where she is a member of the Executive Committee andserved as Chair of the Compensation Committee. In addition, Ms. Matlock serveshas served on the boards of and is active in, various civic, educational, and leadership organizations.organizations and remains active in the community. She is also past Chair of the National Business Incubation Association and founding Chair of the Alabama Business Incubation Network. Ms. Matlock began her career as a banker, lending to small businesses and consumers. She has been recognized by the U.S. Small Business Administration as the Financial Services Advocate of the Year for the State of Alabama. She was named as one of the “Top 25 Most Influential People in the Southeast Technology Community” by TechJournal South in 2007. Ms. Matlock earned a Masters inMaster of Public Administration degree from the University of Alabama at Birmingham and completed an Executive in Residence Program at Harvard Business School. Ms. Matlock’s expertise in technology and healthcare entrepreneurship and innovation, combined with her other experience, make her well qualified to be a member of Regions’ Board.
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| 2018 Proxy Statement | 33 |
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| PROPOSAL 1-ELECTION OF DIRECTORS |
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Age: 6971 Top Skills • Business Operations and Technology • Corporate Governance • Executive Compensation and Benefits • External Affairs, PR or Marketing and/or Stockholder Engagement • Strategic Planning
| | Regions Committees:Committees • Audit Committee (Audit • NCG Committee Financial Expert)• Nominating and Corporate Governance Committee
Public Directorships:Directorships • LifePoint Health, Inc. (formerly LifePoint Hospitals, Inc.) • Encompass Health Corporation (f/k/a HealthSouth CorporationCorporation) Dr. Maupin served as the President and CEO of Morehouse School of Medicine from 2006 through June 2014. He also serves as Chair of Regions Community Development Corporation, the Company’s non-profit corporation dedicated to providing technical assistance for affordable housing, small business, and community development initiatives. |
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| Skills and Qualifications:Qualifications Dr. Maupin has more than 3035 years of leadership experience in healthcare administration, public health, and academic medicine. Prior to becoming the President and CEO of Morehouse School of Medicine in 2006, he was the President of Meharry Medical College. His career includes over 22 years serving as a Chief Executive OfficerCEO and five years as a Chief Operating Officer. He also served in the United States Army Reserves Dental Corp. , retiring in 1997 with over 28 years of service at the rank of lieutenant colonel. Dr. Maupin is a former director of Pinnacle Financial Partners, Inc., a bank holding company, and Monarch Dental Corporation, a dental care management company. He is past president of the National Dental Association and has participated as a member of numerous state and national healthcare task forces, scientific panels, and advisory councils. Dr. Maupin is actively engaged in community service and has received numerous honors and awards. At HealthSouthEncompass Health Corporation, Dr. Maupin serves as Chair ofon the Nominating/Corporate Governance Committee and as a member of the Corporate Compliance and Quality of Care Committee. At LifePoint Health, Inc., he serves as Chair of the Compensation Committee and serves on the Audit and Compliance Committee, the Corporate Governance and Nominating Committee, and the Quality Committee. At VALIC Company I and II, Dr. Maupin serves on the Audit Committee, the Brokerage Committee, and the Governance Committee. Dr. Maupin attended San JoseJosé State College and received his Doctor of Dental Surgery degree from the School of Dentistry, Meharry Medical College, and earned a Master of Business Administration degree from Loyola College. Dr. Maupin’s extensive managerial responsibilities and insight gained from his broad range of experience make him well qualified to be a member of Regions’ Board.
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34 ï 2016 Proxy Statement
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PROPOSAL 1 — ELECTION OF DIRECTORS |
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 Age: 6466 Top Skills • Corporate Governance • Environmental and Sustainability Practices • External Affairs, PR or Marketing and/or Stockholder Engagement • Regulatory Compliance • Strategic Planning
| | Lead Independent Director Regions Committees:Committees • Nominating and Corporate GovernanceNCG Committee (Chair) Former Public Directorships Held During the Past Five Years:Years • Protective Life Corporation Mr. McCrary served on the board of directors of AmSouth Bancorporation from 2001 to 2006. From 2001 through February 2014, Mr. McCrary served as the President and Chief Executive OfficerCEO of Alabama Power Company, a public utility company, which is a wholly-owned subsidiary of The Southern Company, and served as Chairman of Alabama Power Company until May 2014.
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| Skills and Qualifications:Qualifications Mr. McCrary’s career at Alabama Power spanned over 30 years, where he held various positions of increased responsibility within The Southern Company, the parent company of Alabama Power. Mr. McCrary is active in civic, educational, and charitable organizations and formerly served as Chairman of the Economic Development Partnership of Alabama. Mr. McCrary previously served on Regions’ Audit Committee and, during such service, was determined to be an Audit Committee Financial Expert. Since May 2013, Mr. McCrary has served as Regions’ Nominating and Corporate GovernanceNCG Committee Chair and Lead Independent Director. Mr. McCrary served on the Corporate Governance & Nominating Committee and the Risk, Finance and Investments Committee at Protective Life Corporation prior to its acquisition by Dai-ichi Life Insurance Company, Limited in February 2015. Mr. McCrary previously served on the board of the privately held Mercedes-Benz U.S. International, Inc. Mr. McCrary holds an engineering degree from Auburn University and a law degree from Birmingham School of Law. As the former President and Chief Executive OfficerCEO of Alabama Power Company and with his service as a director of Protective, Life Corporation, Mr. McCrary brings a valuable understanding of issues that are unique to a company in a highly regulated industry. Mr. McCrary’s depth of knowledge and experience running regulated companies, as well as his other experience, make him well qualified to be a member of Regions’ Board.
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 34 | | 2018 Proxy Statement |
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| PROPOSAL 1-ELECTION OF DIRECTORS |
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James T. Prokopanko Independent Director Since: 2016 Age: 64 Top Skills • Business Operations and Technology • Environmental and Sustainability Practices • Growth and Innovation • Risk Management • Strategic Planning | | Regions Committees • NCG Committee • Risk Committee Public Directorships • Vulcan Materials Company • Xcel Energy Inc. Former Public Directorships Held During the Past Five Years • The Mosaic Company Mr. Prokopanko served as Executive Vice President and Chief Operating Officer of The Mosaic Company, one of the world’s leading producers and marketers of concentrated phosphate and potash crop nutrients, from 2006 through 2007 and then as President and CEO from 2007 through 2015. He served as Senior Advisor until his retirement in January 2016. |
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| Skills and Qualifications Mr. Prokopanko was awarded the Corporate Responsibility Lifetime Achievement Award from the Corporate Responsibility Magazine in 2015 and the Excellence Award from the Center of Excellence in Corporate Philanthropy in 2013. Mr. Prokopanko also co-authored the article “Sustainability as a Compass for Leadership,” which appeared in the November 2017 edition of Supply Chain Management Review. Prior to joining The Mosaic Company, he served in various senior leadership positions at Cargill, Inc. from 1999 through 2006. At Vulcan Materials Company, he serves as Chair of the Compensation Committee and as a member of the Executive Committee and the Governance Committee, in addition to serving as the lead director. At Xcel Energy Inc., he serves on the Governance, Compensation and Nominating Committee and the Operations, Nuclear, Environmental and Safety Committee. Mr. Prokopanko earned his bachelor’s degree in computer science from the University of Manitoba and a Master of Business Administration from the Ivey Business School at the University of Western Ontario. Mr. Prokopanko’s decade-long career at The Mosaic Company and service as lead director at Vulcan Materials Company have provided him with an in-depth knowledge of environmental risk management in regulated industries. Mr. Prokopanko’s experience in environmental risk management and his various leadership roles make him well qualified to be a member of Regions’ Board.
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Age: 5557 Top Skills • Corporate Governance • Growth and Innovation • Human Resources/Capital Management • Risk Management • Strategic Planning | | Regions Committees:Committees • Audit Committee (Audit Committee Financial Expert) • CompensationRisk Committee Public Directorships:Directorships • Vulcan Materials Company • Workday, Inc. Mr. Styslinger served on the board of directors of the former Regions Financial Corporation from 2003 to 2004. He currently serves as the Chairman and Chief Executive OfficerCEO of the privately held Altec, Inc., a leading equipment and service provider for the electric utility, telecommunications, and contractor markets. Altec, which was founded in 1929, provides products and services in over 100 countries.countries throughout the world. |
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| Skills and Qualifications:Qualifications Mr. Styslinger actively serves on the boards of many educational, civic, and leadership organizations, including Harvard Business School, National Association of Manufacturers, and Northwestern University College of Arts and Sciences.organizations. He was appointed to the President’s Export Council, advising the President of the United States on international trade policy, from 2006-2008.2006-2008 and reappointed beginning in 2017. At Vulcan Materials Company, he serves on the Finance Committee and the Governance Committee and formerly served on the Compensation Committee and the Safety, Health & Environmental Affairs Committee; at Workday, Inc., he serves on the Audit Committee. Mr. Styslinger received his Bachelor of Arts degree from Northwestern University and earned a Master of Business Administration degree from Harvard University. As Chairman and Chief Executive OfficerCEO of Altec, Inc., Mr. Styslinger brings a wealth of management and business experience running a large company in today’s global market. The foregoing qualifications make him well qualified to be a member of Regions’ Board.
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| PROPOSAL 1-ELECTION OF DIRECTORS |
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José S. Suquet Independent Director Since: 2017 Age: 61 Top Skills • Corporate Governance • Executive Compensation and Benefits • Regulatory Compliance • Risk Management • Strategic Planning | | Regions Committees • CHR Committee • Risk Committee (Risk Management Expert) Mr. Suquet currently serves as the Chairman, President, and CEO of the privately held Pan-American Life Insurance Group (“PALIG”), a leading provider of insurance and financial services throughout the Americas. PALIG’s flagship member is New Orleans-based Pan-American Life Insurance Company. |
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| Skills and Qualifications In December 2016, Mr. Suquet completed his term as a member of the board of directors of the Federal Reserve Bank of Atlanta, where he served as Chairman of the Retail Payments Office Oversight Committee. He also previously served on the board of directors for the Federal Reserve Bank of Atlanta, New Orleans Branch. He is a director at the privately held Ochsner Health System, Louisiana’s largest non-profit, academic healthcare system, where he serves on the Compensation Committee and the Audit and Oversight Committee. He is also on the board of directors of The American Council of Life Insurers. Mr. Suquet brings a strong background in enterprise risk management and a commitment to innovation and operational excellence. His commitment to the United States’ Hispanic community, product innovation, and sales force expansion have positioned PALIG as the company Hispanics throughout the Americas rely on to protect their financial security and well-being. Prior to joining PALIG, Mr. Suquet held senior management posts in the insurance industry for more than three decades, including serving as Senior Executive Vice President and Chief Distribution Officer of AXA Financial. He is also involved in various professional and industry associations. Mr. Suquet graduated from Fordham University with a Bachelor of Science degree and holds a Master of Business Administration degree from the University of Miami. All of these qualifications make him well qualified to be a member of Regions’ Board.
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ï 2016 Proxy Statement35
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PROPOSAL 1 — ELECTION OF DIRECTORS |
How much stock are Directors expected to own?The Board believes that Directors should have a financial stake in Regions so that their interests are aligned with those of stockholders. Under Regions’ Director Stock Ownership Guidelines, non-management Directors are expected to own shares of Regions common stock with a value equal to or greater than five times the value of the cash portion of the annual retainer paid to Directors.
Until such time as the minimum level of stock ownership is achieved, a Director is required to retain 50 percent of the after-tax net shares acquired as a part of any compensatory arrangement, unless granted an exception by the NCG Committee upon showing a hardship or other special circumstances. The following are taken into consideration in determining share ownership:
Shares purchased on the open market.
Shares obtained through option exercises.
Share equivalents held under any Director’s deferred stock plan.
Restricted shares awarded.
Shares obtained through any other sources.
Each Director currently meets the Director Stock Ownership Guidelines.
How are Directors compensated?
The
CompensationCHR Committee, along with the NCG Committee, periodically review the compensation of the non-management Directors and recommend changes to the Board.
In July 2017, these Committees recommended, and the Board approved, changes to the Director Compensation Program. To better align with their fiduciary duties, non-management Directors no longer receive meeting fees, unless certain thresholds are triggered. The following table describes the components of the Director Compensation Program for
2015:2017: |
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| Compensation Element | | Director Compensation ProgramAmount |
| Annual Cash Retainer | | $60,000,95,000, which may be deferred, at the Director’s option |
| Annual Equity Retainer | | $105,000115,000 in restricted stock granted three business days following the annual stockholder meeting that vests at the next annual stockholder meeting |
| Board and Committee Meeting Fees | | $1,500None; However, a meeting fee of $1,500 per meeting will be paid if the number of annual meetings exceeds the threshold of: Board — 12 meetings Audit Committee — 10 meetings CHR Committee — 8 meetings NCG Committee — 6 meetings Risk Committee — 6 meetings |
| Additional Annual Fee for Lead Independent Director | | $50,000 |
| Additional Annual Fee for Committee Chairs | | $ 20,00030,000 — Audit Committee $ 20,00025,000 — CompensationCHR Committee $ 20,00025,000 — Risk Committee $10,000 — Special Committees, as applicable |
Additional Annual Fee for Special Committee
Members, as applicable | | $10,000 |
Under the Directors’ Deferred Stock Investment Plan,DDSIP, a Director may elect to defer receipt of some or all cash compensation. Deferred amounts are credited to a bookkeeping account for the Director, which is designated in notional shares of Regions common stock. Dividend equivalents, if any, are converted to additional notional shares of common stock in the Director’s account. At the end of the deferral period, the Director’s account
is settled in actual shares of common stock, plus cash for any fractional share. Receipt and taxability of benefits are deferred until the time of payment in accordance with the payment election made by the Director at the time of the deferral. Most of the Directors have elected to defer receipt of a portion of their cash compensation.
36 ï 2016 Proxy Statement
Regions offers a Matching Gifts Program to full-time associates, retirees, and independent Directors. Under this program, Regions matches Directors’ gifts up to $5,000 to qualifying entities.
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PROPOSAL 1 — ELECTION1-ELECTION OF DIRECTORS |
The following table contains information about the compensation paid to the
non-employeenon-management Directors who served during
2015: | | | | | | | | | | | | | | | | |
| Name | | Fees Earned or
Paid in Cash
($) | | | Stock
Awards
($) (1) | | | All Other
Compensation
($) (2) | | | Total ($) | |
George W. Bryan | | | 128,000 | | | | 105,000 | | | | 5,000 | | | | 238,000 | |
Carolyn H. Byrd | | | 128,000 | | | | 105,000 | | | | — | | | | 233,000 | |
David J. Cooper, Sr. | | | 93,000 | | | | 105,000 | | | | — | | | | 198,000 | |
Don DeFosset | | | 120,500 | | | | 105,000 | | | | — | | | | 225,500 | |
Eric C. Fast | | | 88,500 | | | | 105,000 | | | | 5,000 | | | | 198,500 | |
John D. Johns | | | 91,500 | | | | 105,000 | | | | — | | | | 196,500 | |
James R. Malone | | | 39,000 | | | | — | | | | — | | | | 39,000 | |
Ruth Ann Marshall | | | 91,500 | | | | 105,000 | | | | 5,000 | | | | 201,500 | |
Susan W. Matlock | | | 94,500 | | | | 105,000 | | | | 5,000 | | | | 204,500 | |
John E. Maupin, Jr. | | | 99,000 | | | | 105,000 | | | | 1,500 | | | | 205,500 | |
Charles D. McCrary | | | 173,000 | | | | 105,000 | | | | — | | | | 278,000 | |
Lee J. Styslinger III | | | 99,000 | | | | 105,000 | | | | 5,000 | | | | 209,000 | |
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| Name | Fees Earned or
Paid in Cash
($) | Stock
Awards
($) (1) | All Other
Compensation
($) (2) |
| Total
($) |
| Carolyn H. Byrd | 128,750 | 115,000 | 5,000 |
| 248,750 |
| David J. Cooper, Sr. | 95,250 | 115,000 | 5,000 |
| 215,250 |
| Don DeFosset | 120,500 | 115,000 | 5,000 |
| 240,500 |
| Samuel A. Di Piazza, Jr. | 99,750 | 115,000 | 5,000 |
| 219,750 |
| Eric C. Fast | 105,250 | 115,000 | 2,500 |
| 222,750 |
| John D. Johns | 114,500 | 115,000 | — |
| 229,500 |
| Charles D. McCrary | 176,250 | 115,000 | — |
| 291,250 |
| Ruth Ann Marshall | 105,250 | 115,000 | 5,000 |
| 225,250 |
| Susan W. Matlock | 95,250 | 115,000 | 5,000 |
| 215,250 |
| John E. Maupin, Jr. | 99,750 | 115,000 | — |
| 214,750 |
| James T. Prokopanko | 93,750 | 115,000 | 5,000 |
| 213,750 |
| Lee J. Styslinger III | 96,750 | 115,000 | — |
| 211,750 |
| José S. Suquet | 96,750 | 141,250 | 5,000 |
| 243,000 |
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| (1) | The amounts presented in this column represent the grant date fair valuesvalue of the 20152017 restricted stock award made to all non-employeenon-management Directors in service on April 28, 2015.25, 2017. The grant date fair value of the restricted stock granted April 28, 2015,25, 2017, was $9.64$13.86 per share, for a total grant date fair value of $105,000. The shares$115,000. All restricted stock awarded on April 28, 2015,25, 2017 are scheduled to vest in one lump sum on the date of the 20162018 Annual Meeting. Mr. Suquet was appointed to Regions’ Board on January 5, 2017, and received a restricted stock award on January 6, 2017. The grant date fair value of the restricted stock granted on January 6, 2017 was $14.48 per share, for a total grant date fair value of $26,250. The restricted stock awarded January 6, 2017 vested in one lump sum on the date of the 2017 Annual Meeting. |
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| (2) | The amounts presented in this column reflect matching charitable gifts made through the Regions Matching Gifts Program. |
The following table sets forth those non-employeenon-management Directors who served during 20152017 and who had stock options or restricted stock outstanding as of December 31, 2015,2017, and the number outstanding as of that date: | | | | | | | | |
| Name | | Outstanding
Stock Options
(#) | | | Outstanding
Restricted Stock
(#) | |
George W. Bryan | | | 14,000 | | | | 10,892 | |
Carolyn H. Byrd | | | — | | | | 10,892 | |
David J. Cooper, Sr. | | | 21,177 | | | | 10,892 | |
Don DeFosset | | | 21,177 | | | | 10,892 | |
Eric C. Fast | | | — | | | | 10,892 | |
John D. Johns | | | — | | | | 10,892 | |
James R. Malone | | | 21,177 | | | | — | |
Ruth Ann Marshall | | | — | | | | 10,892 | |
Susan W. Matlock | | | 14,000 | | | | 10,892 | |
John E. Maupin, Jr. | | | 14,000 | | | | 10,892 | |
Charles D. McCrary | | | 21,177 | | | | 10,892 | |
Lee J. Styslinger III | | | 14,000 | | | | 10,892 | |
ï 2016 Proxy Statementdate37.
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| Name | Outstanding Stock Options
(#) |
| Outstanding Restricted Stock
(#) |
| Carolyn H. Byrd | — |
| 8,297 |
| David J. Cooper, Sr. | 7,000 |
| 8,297 |
| Don DeFosset | 7,000 |
| 8,297 |
| Samuel A. Di Piazza, Jr. | — |
| 8,297 |
| Eric C. Fast | — |
| 8,297 |
| John D. Johns | — |
| 8,297 |
| Charles D. McCrary | 7,000 |
| 8,297 |
| Ruth Ann Marshall | — |
| 8,297 |
| Susan W. Matlock | 7,000 |
| 8,297 |
| John E. Maupin, Jr. | 7,000 |
| 8,297 |
| James T. Prokopanko | — |
| 8,297 |
| Lee J. Styslinger III | 7,000 |
| 8,297 |
| José S. Suquet | — |
| 8,297 |
Regions’ Board and executive management work together to ensure we are in compliance with laws and regulations, as well as to provide guidance for sound decision-making and accountability. Maintaining legal and regulatory compliance is, however, a minimum standard, and we endeavor to exceed this by keeping pace with the constantly evolving governance landscape. For example, as demonstrated throughout the following sections, we believe Regions complies with the ISG Corporate Governance Principles for U.S. Listed Companies that went into effect at the beginning of 2018. Further, we strive to conduct business according to the highest ethical standards, as evidenced by our Code of Business Conduct and Ethics (“Code of Conduct”). Our associates and Directors take the Code of Conduct seriously and are mindful of our values, in particular, “Do What is Right.” We maintain an environment of openness and take every opportunity to protect our culture by promoting Regions’ values. We do this because it is the right thing to do, and our customers, stockholders, communities, and associates expect it if they are to continue giving us their trust and confidence.
Keeping our core value “Do What is Right” in mind, Regions has implemented a strong corporate governance program, which incorporates many leading practices. For a list of some of our corporate governance practices, see the Quick Information chart before the Table of Contents of this proxy statement.
Publicly Available Documents. The following corporate governance documents are available on the Investor Relations section of our website at www.regions.com:www.regions.com: Code of Ethics for Senior Financial Officers
Code of Business Conduct and Ethics
Corporate Governance Principles
Audit Committee Charter
CompensationCHR Committee Charter
Nominating and Corporate Governance (“NCG”)NCG Committee Charter
Risk Committee Charter
Director-Stockholder Engagement Framework Summary
Government Affairs Annual Report
Corporate Sustainability Report
Social Responsibility Report
Fair Disclosure Policy Summary
Also available on our website are this proxy statement;
20152017 Annual Report on Form 10-K; Chairman’s Letter;
Annual Review; information regarding our executive officers, Board members, and Board
committeeCommittee composition; and instructions
foron how to contact the Board.
Regions’ Board and executive management work together to ensure we are in compliance with laws and regulations, as well as to provide guidance for sound decision-making and accountability. Regions strives to conduct business according to the highest moral standards, as evidenced by our Code of Business Conduct and Ethics. Our associates and Directors take this Code of Conduct seriously and are mindful of our value to “Do What Is Right.” We maintain an environment of openness and take every opportunity to protect our culture by promoting Regions’ values. And we do this because it is the right thing to do, and our customers, stockholders, communities and associates expect it if they are to continue to give us their trust and confidence.
The Company believes that transparency with respect to any engagement with lawmakers is important to our stockholders. Since 2014, we have voluntarily published on our website our Government Affairs Annual Report, which contains the Company’s Policy on Political Contributions, as well as our activities. There, the Company sets outforth a description of our oversight process for political contributions and a summary of contributions. The CompanyThis report also discloses trade association memberships in this report the trade associations the Company joined wherewhich $25,000 or more of the dues are allocated for lobbying purposes by the trade association. The Company believes that these disclosures on our
website offer transparency with respect to the Company’s public policy advocacy on behalf of stockholders, the Company, our associates, and our customers.
Our annual Corporate Sustainability Report and Social Responsibility Report are also posted on our website. These reports give our customers and other stakeholders a view into actions taken by the Company to steward our resources and to support the communities in which we operate.
Corporate Governance Principles.The NCG Committee periodically reviews theour Corporate Governance Principles to maintain effective and appropriate standards of corporate governance. The Board adopted the principles to further its longstanding goal of providing effective governance of Regions’ business and affairs for the long-term benefit of stockholders. Regions’
Our Corporate Governance Principles address important governance matters,
including:including, but not limited to: Structure of the Board and its leadership, includingand the responsibilities and duties of the Lead Independent Director.
Director qualification standards, including, but not limited to:including:
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| – | Board membership criteria, including the NCG Committee’s consideration of diversity in its recruitment and nomination of individuals for directorship; |
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| – | A description of ordinary course relationships that will not be deemed to impair a Director’s independence; |
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| – | A limit on the number of other public company boards and other audit committees on which Directors may serve; and |
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| – | Our mandatory retirement age of 72. |
Nomination and selection of new Directors.
Director responsibilities including, but not limited to:
| ¡ | | Attending Board and stockholder meetings; |
| ¡ | | Meeting in executive session; and |
| ¡ | | Complying with our Code of Business Conduct and Ethics, General Policy on Insider Trading and confidentiality of Board information and materials. |
Board Committees, including, but not limited to, number and types of committees.expectations.
Board operations, including but not limited to, scheduling meetings and selecting agenda items for meetings.
Director access to management and independent advisors.
Director compensation.
Director orientation and continuing education.
Management succession planning.
Strategic planning.
Annual performance evaluation of the Board, Committees, and individual Directors.
Board interaction with stockholders, investment managers, and the press.
Communications with the Board.
Corporate Governance Stockholder Engagement
Stockholder Engagement
Our commitment
Commitment to our stockholders is front and center in our Company’s mission: mission statement: to achieve superior economic value for our stockholdersshareholders over time by making life better for our customers, our associates, and our communities and creating shared value as we help them meet their financial goals and aspirations. We
take a long-term view of how we create value, and we aretake a similar approach to corporate governance stockholder engagement. Regions is committed to constructive and meaningful communications with our stockholders.
Regions believes that engagingstockholders and buildingongoing relationships over time.
We do not view engagement with our stockholders as a “check-the-box” phone call or occurring only during proxy season. Instead, we consider proper stockholder engagement to be a continuous relationship throughout the year. Engaging with our stockholders and soliciting their points of view is critical to providing long-term
38 ï 2016 Proxy Statement
value to all of the Company’s stakeholders. For that reason,
Regions took steps during 2015 to strengthensignificantly enhanced its engagement activities in 2016 and continued building on these practices in 2017. At the beginning of 2017, members from the Chief Governance Officer’s group, Investor Relations, and Executive Compensation began executing on our engagement plan by formulating our corporate governance stockholder engagement efforts. Followingstrategy for the 2015 Annual Meeting,year. During the early summer months of 2017, we reached out to many of our institutional stockholders, which represented approximately 68 percent of Regions outstanding stock held by institutional investors, to solicit their feedback on our executive compensation and corporate governance practices, particularly with respect to board refreshment and environmental and social practices. These conversations
yielded constructive feedback and discussions. Stockholders’ opinions expressed during these engagement sessions were summarized and reported to and discussed by senior management and the Board. To further build ongoing relationships and keep our large institutional stockholders abreast of significant corporate governance and Board changes at the Company, we send courtesy copies of our public communications announcing these actions, such as our adoption of proxy access.
Regions also had the opportunity to engage with various stakeholders and other corporate governance professionals at corporate governance events held throughout the year, such as the Council of Institutional Investors’ (“CII”) events, including its biannual conferences and invitation-only executive compensation roundtable; 2018 Corporate Governance Symposium at the John L. Weinberg Center for Corporate Governance; various events sponsored by the Society for Corporate Governance; and the Corporate Secretary’s Corporate Governance Awards. Further, Director Marshall, who currently sits on the NCG Committee, was invited to be a cross-functional team worked togetherpanelist at CII’s 2018 Spring Conference to formalizediscuss the critical issue of board oversight of corporate culture, including companies’ sexual harassment and misconduct policies. These events afford us the ability to not only connect with various stakeholders on an individual basis, but also provide us with the opportunity to discuss those corporate governance and stockholder engagement best practices that have been implemented by other leaders within their respective sectors.
The following chart describes our year-round, continuous corporate governance stockholder engagement cycle:
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Winter Associates from the Chief Governance Officer’s group, Investor Relations, and Executive Compensation formulate the corporate governance stockholder engagement plan. We consider ways to enhance the corporate governance stockholder engagement process for both Regions and our stockholders. The Board and Committees conduct the annual self-evaluation process, which considers, among other topics, feedback from our corporate governance stockholder engagements. | ð | Late Winter/Spring We publish and make available our proxy statement, Annual Report on Form 10-K, Chairman’s Letter, Government Affairs Annual Report,Social Responsibility Report, Corporate Sustainability Report, and Annual Review. We hold our annual meeting, which is open to all stockholders as of the Record Date and provides an opportunity to engage with the Company. |
| ñ | Year-Round In-Person Engagement In addition to our “formal” engagement process, we engage with stockholders throughout the year at various governance-related events. These engagements are reported to and discussed by the NCG Committee at its next meeting following the engagement. | ò |
Summer/Early Fall Engagement requests are sent to certain institutional stockholders and meetings commence. We encourage stockholders to candidly provide their views on corporate governance issues, including executive compensation practices and ESG. Feedback from these engagements help initiate the following year’s corporate governance stockholder engagement plan. Information obtained during these engagements is summarized and presented to senior management and the Board for discussion. | ï | Summer Our Board reviews and discusses the Corporate Governance Principles and the Director-Stockholder Engagement Framework, among other corporate governance documents, to ensure they encompass corporate governance leading practices; support the Company’s goals and strategies; and maximize long-term stockholder value. When making enhancements to our corporate governance documents, we take into consideration the voting results from our annual meeting and other feedback from our corporate governance stockholder engagements. |
The following table demonstrates what we heard from our stockholders during our engagements, how we responded, and the intended outcome: |
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What We Heard from
Stockholders | How We Have Responded | Intended Outcome |
| Support for ongoing monitoring of Board composition and appropriate Director refreshment, including the recruitment of diverse Directors | The Board appointed Directors Di Piazza and Prokopanko in November 2016 and Director Suquet, who is a diverse Director, in January 2017. All three Directors received overwhelming support at the 2017 Annual Meeting. In 2016, the NCG Committee enhanced the self-evaluation process to also include individual, confidential conversations between the Chair of the NCG Committee, who also serves as the Board’s Lead Independent Director, and each of the other Directors. The NCG Committee again focused on the self-evaluation process in 2017 to place additional emphasis on outcomes and action plans. | With the addition of new Directors, the Board expects an infusion of fresh perspectives based on these individuals’ diverse backgrounds and experiences. The enhancements to the self-evaluation process is intended to (i) provide the independent Directors with an additional opportunity to provide candid feedback about Board operations and Director performance and (ii) ensure that the self-evaluation process results in follow-up actions. |
| Views of and support for proxy access | In July 2017, the Board proactively adopted proxy access. Our proxy access by-law permits a stockholder, or a group of up to 20 stockholders, owning 3 percent or more of the outstanding shares of common stock for at least three years to nominate and include in Regions’ proxy materials nominees constituting up to two individuals or 20 percent of the Board (whichever is greater); provided, however, the stockholders(s) and nominee(s) must satisfy the requirements specified in our By-Laws. | With the addition of proxy access, stockholders have an additional mechanism to nominate exceptionally qualified individuals for directorship. |
| Increased emphasis on companies’ environmental and social practices and related disclosures | In the summer of 2017, we onboarded a Corporate Social Responsibility (“CSR”) Analyst, whose primary responsibility is to focus on Regions’ practices and disclosures with respect to environmental and social risks and opportunities. One of the first projects undertaken by the CSR Analyst was an evaluation of the environmental and social issues that are the most material to our Company. As part of this process, we solicited feedback from our stockholders to take into account their viewpoints. We enhanced our proxy disclosures to further explain the steps Regions is taking to protect the environment and support our communities and are enhancing our 2017 Corporate Sustainability Report. | Further increasing our focus on environmental and social practices and disclosures helps ensure we are appropriately managing these risks and opportunities and maintaining transparency with our stockholders. Also, operating in an environmentally and socially responsible manner is the right thing to do for all our stakeholders. |
| Support for our executive compensation programs | Because stockholders expressed support for the current design of our executive compensation programs both during our engagements and in the annual Say-on-Pay votes, we made no significant plan design changes. We have, however, continued focusing on simplifying and clarifying disclosures where possible. | Ensuring our disclosures are clear, simple, and transparent improves stockholder understanding of the decisions we make and how those decisions are tied to the long-term interests of our stockholders. |
As a result of our ongoing engagement with our stockholders, as well as keeping abreast of leading practices, we have taken the following actions:
Strengthened our CSR function to ensure that we have the appropriate expertise for analyzing and addressing environmental and social matters and engaging with stockholders to understand their views.
Assigned oversight for environmental and social responsibility to the NCG Committee.
Brought more balance among our newer, mid-tenured, and seasoned Directors by refreshing the Board and appointing two new Directors at the end of 2016 and one new Director at the beginning of 2017.
Adopted proxy access.
Established the Office of Associate Conduct, which oversees complaints of harassment and misconduct.
Amended the purpose of the Compensation Committee, which was renamed to the “Compensation and Human Resources” Committee, to oversee the development,
implementation, and effectiveness of the Company’s strategies and policies regarding its human resources management function.
Appointed a Chief Governance Officer in early 2017, who is primarily focused on corporate governance stockholder engagement and Regions’ corporate governance practices.
Strengthened the Board’s self-evaluation process by (i) including confidential, individual discussions between the Chair of the NCG Committee, who also serves as the Board’s Lead Independent Director, and each of the other Directors and (ii) placing additional emphasis on follow-up action plans.
Revised all Committee charters to incorporate additional risk oversight.
Reduced the number of other boards on which certain Directors are permitted to serve to ensure they are able to devote sufficient time and attention to their responsibilities as a Director on our Board.
Strengthened the Lead Independent Director’s responsibilities and duties.
Made our political spending publicly available.
Enhanced the Director recruitment criteria to incorporate the consideration of diversity, including gender and ethnic diversity, when searching for and evaluating candidates.
Created the Director-Stockholder Engagement Framework (the “Framework”),and provided a summary on our website.
Included more detail in certain corporate governance proxy disclosures, such as the Board self-evaluation process, the structure of the Board, and the skills represented on the Board.
Included a summary of whichour strategy and added more detail to our overall performance in the Proxy Summary.
Enhanced proxy disclosures with respect to our independent auditor.
Enhanced proxy disclosures around executive compensation practices.
A summary of our Director-Stockholder Engagement Framework (“Framework”) is available on the Investor Relations section of our website at www.regions.com.www.regions.com. The primary purpose of thethis Framework, which is overseen and maintained by the NCG Committee, is to assistprovide stockholders with theinformation about our engagement process. In addition, the Framework also provides guidanceprocess and to Regions’ management and Directors by defining who is responsible for engagingdefine roles with stockholders and receiving their feedback, thus ensuring accountability.respect to stockholder engagement. While the Board principally provides oversight, members of management are primarily responsible for engaging with stockholders under the Framework. There are certain topics, however, that may be better addressed by the Board, including financial results, strategic direction, executive compensation, corporate governance, and general Board oversight.Board. Generally, in those instances when it would be more appropriate for Board members to respond to questions about the Board’s oversight responsibilities, the Lead Independent Director will assume this responsibility; however,responsibility.
How to Contact Us:
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| Chief Governance Officer | Regions Financial Corporation 1900 Fifth Avenue North, Birmingham, Alabama 35203 Attention: Chief Governance Officer |
| Investor Relations | Regions Financial Corporation 1900 Fifth Avenue North, Birmingham, Alabama 35203 Attention: Investor Relations Investors@regions.com |
| Corporate Social Responsibility | Regions Financial Corporation 1900 Fifth Avenue North, Birmingham, Alabama 35203 Attention: Corporate Social Responsibility |
| Board of Directors | Regions Financial Corporation c/o Office of the Corporate Secretary 1900 Fifth Avenue North, Birmingham, Alabama 35203 |
| Lead Independent Director | Regions Financial Corporation c/o Office of the Corporate Secretary 1900 Fifth Avenue North, Birmingham, Alabama 35203 Attention: Charles D. McCrary, Lead Independent Director |
| Audit Committee of the Board of Directors | Regions Financial Corporation c/o Office of the Corporate Secretary 1900 Fifth Avenue North, Birmingham, Alabama 35203 Attention: Ms. Carolyn H. Byrd, Chair, Audit Committee |
Communications between Stockholders and Other Interested Parties and the Board of Directors
The Corporate Governance Principles adopted by the Board include a mechanism for stockholders and other membersinterested parties to communicate with Directors. Matters that deal with the Company’s general business operations are more appropriately addressed by management.
The Corporate Secretary circulates communications to the appropriate Director or Directors, with the exception of those communications that are of a personal nature or not related to the duties and responsibilities of the Board, including without limitation, routine customer service complaints.
The Corporate Secretary maintains a log of any such communications not shared with the Board and this log is provided to the Board on a quarterly basis. In addition, Directors may review any communication upon request. Items such as commercial solicitations, opinion survey polls, new product or service suggestions, employment resumes, job inquiries, and mass mailings are available when appropriate. Our Corporate Governance Principles specifically state thatnot shared with the Board nor maintained in a log.
Stockholders and other interested parties may send communications directed to the Board, a Committee, the Chairman, the Lead Independent Director, the independent Directors as a group, or an individual member of the Board by sending a letter with clear notation as “Board Communication” or “Director Communication” to:
Regions Financial Corporation
1900 Fifth Avenue North
Birmingham, Alabama 35203
c/o Office of the Corporate Secretary
Communications regarding customer banking matters should be sent to the following address:
Regions Bank
1900 Fifth Avenue North
Birmingham, Alabama 35203
Attention: Office of Customer Satisfaction
Economic Development and Community Outreach
During 2017, Regions, largely through our dedicated associates, participated in numerous economic development and community outreach projects. We accomplished this through sponsoring various events, corporate and associate charitable giving, and providing thousands of volunteer hours.
Below are some examples of our 2017 activities:
Sponsored an Inner City Capital Connections (“ICCC”) conference in Memphis, Tennessee, which serves to educate companies in or near city centers, at no cost to them, on how to access capital to expand their businesses. The event drew over 130 local entrepreneurs for an all-day training designed to help them grow their companies, serve more customers, and hire more people. Regions has been a major sponsor of ICCC programs since 2014.
Provided more than 77,000 hours ofvolunteer work, including approximately 14,000 volunteer hours on financial education.
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| • | Delivered in-person financial education in classrooms, workplaces, and communities. With more than 1,480 trained facilitators, the Regions at Work® team presented more than 90,000 financial education seminars during the year throughout our footprint. |
Reached 12,275 high school students and 15,220 college students through the Regions Financial Scholars Program, powered by EverFi. In addition, the Regions Collegiate Financial Education Program provided financial education to 1,125 student athletes.
Regions Financial Learning Center, also powered by EverFi, had 15,270 new customers and associates enroll in the online adult financial education.
Provided more than 8,000 volunteer hours with Junior Achievement, earning us the President’s Bronze Award.
Provided more than 5,400 hours of technical assistance to non-profit organizations across our footprint.
Contributed $11.4 million in charitable giving.
Contributed $40 million to the Regions Financial Corporation Foundation to support financial education, job training, economic development, and affordable housing.
Provided $210,000 in assistance to more than 200 associates through the RegionsAssociate Relief Program.
Working with Operation HOPE, we expanded the number of our HOPE Inside financial empowerment centers that provide cost-free financial education, as well as credit and money management counseling to underserved residents and small-business owners. In 2017, we announced plans to expand our HOPE Inside commitment to 100 locations across our footprint.
Continued our What A Difference A Day Makes program, offering every associate an annual day of Company-paid time off to volunteer in his or her community.
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| • | Continued our annual Share the Good® program, which encourages local Regions’ offices to identify volunteer service opportunities in which we can make a positive difference. |
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| • | Sponsored the 2017 Riding Forward ScholarshipSMEssay Contest, where students submitted essays about an inspirational African American of the student’s choosing. Since 2012, Regions has awarded $764,000 in scholarships to high school and college students who submitted winning essays. |
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| • | Continued expanding our Doing More TodaySM website, regions.doingmoretoday.com, to share stories about the communities we serve and the nonprofit organizations we help. |
Regions is also one of the nation’s leading direct investors inLow Income Housing Tax Credit projects. In 2017, Regions invested more than $291 million in such tax credit partnerships, supporting 43 developments that provided 3,528 units of affordable housing for low- and moderate-income individuals and families, all within our footprint. Further, building upon this commitment to be availableprovide financing for consultationaffordable housing, in October 2016, Regions acquired affordable housing syndication and direct communication if requested by our major stockholders.During 2015,asset management businesses from First Sterling Financial, Inc.
Each year we reached out publish a Social Responsibility Report to our 100 largest stockholders, which represented approximately 65 percent of Regions outstanding stock held by institutional investors, to solicit their feedback on Regions and, if so desired, to set up a time to discuss their perspectives. Further, members from Regions’ investor relations, executive compensation, and legal groups met withshare some of our largest stockholders during 2015. These conversations yielded constructive feedbackthe ways that we support small business growth, job creation, safe and discussions, which covered topics such as corporate governance, executive compensation,affordable housing, financial education, and Company strategy. Where appropriate, stockholders’ opinions expressed during these engagement sessions were communicated to other individuals withinvolunteerism. Copies of this report are available on the Company, including membersInvestor Relations section of the Board.Company’s website.
Regions, directly or through our Board, also had the opportunity to engage with various stakeholders and other corporate governance professionals through corporate governance events throughout the year, such as the Council of Institutional Investors’ 2015 Fall Conference, the 21st Annual Stanford Directors’ College, the American Bar Association’s 2015 Business Law Section Spring Meeting, and the
Corporate
Secretary’s Corporate Governance Awards 2015. These events afforded Regions the ability to not only connect with various stakeholders on an individual basis, but also provided us with the opportunity to discuss those corporate governance and stockholder engagement best practices currently being used by other leaders within their respective sectors.Environmental Sustainability
In addition to
meeting with stockholders oncommunity involvement, we understand that we have a
one-on-one basis throughoutcorporate responsibility to act in an environmentally responsible manner. This includes the
year, Regions hosted its Investor Day in November 2015. Members of management reviewed the Company’s strategy,initiatives we support, as well as
short- and long-term targets. The event, which was simultaneously webcast, was well attended by both investors and analysts and gave members of management the
opportunitylending practices we follow to
speak directly to and receive immediate feedback from a large group of investors.As a result of engaging with our stockholdershelp mitigate risk. We have taken great strides over the past few years to act as good stewards of our environment.
For example:
In 2017, we reduced our electricity consumption by more than 14 percent (34.4 million kWh), using a 2013 baseline*. We achieved this reduction through the implementation of our Energy Management Program and branch/office consolidation. (*This is based on properties where utilities are paid directly by Regions, roughly 83 percent of our portfolio. )
The Regions Center in Birmingham, our corporate headquarters, has been Energy Star certified since 2012 after undergoing a full infrastructure upgrade. We continue to adopt energy efficiency best practices, which have reduced the building’s energy consumption by 50 percent and greenhouse gas emissions by 45 percent since 2010.
Through office and branch consolidations, and the continued roll out of open floor plan reconfigurations, we reduced our real estate portfolio by approximately 655,000 square feet.
During 2017, our associates’ participation in CommuteSmart reduced vehicle miles traveled by 460,589, which reduced air pollution by approximately 230 tons and carbon dioxide emissions by over 280 tons.
Our confidential trash program collected approximately 11.4 million pounds of paper and other confidential material. After the paper was shredded, it was recycled in U.S. mills.
We are continuously evaluating opportunities to reduce paper use, both by our associates and our customers. Our Print Optimization program and other efforts have resulted in a 25 percent reduction in internal copy paper use since
2014. We are also expanding the adoption of eSignature capabilities across our business units, allowing our customers to electronically review and sign documents.
As a top 20 U.S. bank, Regions provides financial products and services to companies in diverse industries, including energy and natural resources. As a lender, we acknowledge the unique risks and concerns surrounding the environmental and community impact of our lending practices, and we work collaboratively with our clients, communities, and other stakeholders to promote environmentally sustainable and socially responsible business practices.
Regions’ policies require an assessment of each energy client’s compliance with applicable laws, including environmental regulations, as well as their financial capacity and past performance related to community and safety issues. In addition to our expanded underwriting requirements for companies in the energy and natural resources sector, elevated approvals are required from senior Credit executives. Clients who are identified as having heightened environmental or industry risks are underwritten annually and monitored, at a minimum, on a quarterly basis.
Regions has also established industry concentration limits that are approved by the Risk Committee on an annual basis. Individual industry tolerances are approved annually by the Credit Risk Committee. These limits are monitored by the Risk Analytics team who report to the Chief Credit Officer. Exposure is measured on both a total commitment and economic capital basis each quarter and reported to the Credit Risk Committee to ensure that industry exposure remains within risk tolerances.
We also support the development and implementation of clean energy solutions. In 2017, we provided $347 million in funding for 17 individual photovoltaic solar projects located throughout the U.S. with overall generating capacity exceeding 125 MW.
Additional information about our sustainability efforts is provided in our Corporate Sustainability Report available on the Investor Relations section of our website.
Meeting our Customers’ Needs
Six years ago, we revised Regions’ mission to include its purpose: to make life better for all of our stakeholders by creating shared value. This means that what we do at Regions needs to benefit Regions and its stockholders, but also our associates, customers, and the communities in which we operate.
This was the origin of Regions360®. Rather than pursuing cross-selling efforts, we focused on designing and offering products customers needed at lower prices.
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Our bankers bring Regions360 to life every day by: |
| Identifying customers' financial goals and needs through quality conversations |
| Providing practical and balanced solutions to help meet those goals |
| Offering financial advice and guidance to help customers make better financial decisions |
| Introducing expertise by bringing in the right bank partners to help meet complex needs with a “one bank, one team” approach |
| Offering customers the best client experience possible through relationship teams who are committed and engaged |
We also recognize that the financial needs of the communities we serve are as diverse as the tools required to meet those needs. Therefore, we developed our Regions Now Banking® product to provide lower-priced, more reliable, transparent financial services all under one roof to the unbanked and the underbanked members of the community, who are typically younger and less affluent. These services include check cashing, mobile deposits, bill pay, reloadable prepaid cards, and money remittance.
We also offer the Regions Explore Visa® Credit Card, which is a savings-secured credit card that allows customers who may not otherwise qualify for a credit card to build or rebuild their credit while having access to a traditional credit card at a competitive rate.
We have dedicated resources to financial education as part of our philosophy: the better financially educated our customers are, the more likely they will be financially successful, and this makes it more likely that we have taken actions,helped to make their lives better. Regions at Work® started as a campaign to offer checking accounts to the employees of our corporate customers, but through the shared value approach, it became a financial education program for those employees. They learn something, and their employer (our customer) likely has a workforce less worried about their personal financial situation and more focused on their work. We win, they win.
Conduct and Culture
Regions’ mission is to achieve superior economic value for our stockholders over time bymaking life better for our customers, our associates, and our communities and creating shared value as we help them meet their financial goals and aspirations. We foster a culture of ethics through our governance framework—programs and efforts that embed our culture and expectations for behavior throughout the Company.
Our strong culture begins with setting the right “tone at the top” starting with the Board and executive management. In February 2018, the Board expanded the purpose of and renamed the Compensation Committee to the “Compensation
and Human Resources Committee”. As part of its expanded purpose, the CHR Committee assists the Board in overseeing the development, implementation, and effectiveness of Regions’ strategies and policies regarding its human resources management function, including, but not limited to, human capital and talent management, management succession (in coordination with the NCG Committee), and diversity and inclusion practices.
The following sections further demonstrate our commitment to ensuring a healthy, strong, and robust corporate culture.
Code of Business Conduct and Ethics and Code of Ethics for Senior Financial Officers
Good reputations come from relationships that inspire trust. At Regions, we have relationships with associates, customers, vendors, and the communities where we work and live. In every category, Regions must be regarded as trustworthy and fair. By having a strong Code of Conduct, we demonstrate that doing what is right is not just a slogan—it is the way we do business.
Our corporate values are not simply the values of a legal entity; they are values that encompass the ethics and commitment of all Regions associates.
•Put People First
•Do What is Right
•Focus on Your Customer
•Reach Higher
•Enjoy Life
While the Code of Conduct does not address every potential issue or situation, it offers associates guidance. The Code of Conduct is designed to provide guidance and resources to help ensure, among other matters, that:
Regions and its associates remain in compliance with all applicable laws and regulations;
Regions is a safe and nondiscriminatory place to work and do business;
Confidential and proprietary information is protected;
Inappropriate gifts or favors are not accepted or given; and
Conflicts of interest are avoided.
The Code of Conduct, which
include:is reviewed by the NCG Committee annually, emphasizes Regions’ belief that diversity in our staff is critical to our success, clearly states our commitment to a work environment free from harassment and explains that our “zero tolerance for violence” mandate seeks to prevent the many forms of violence, including, but not limited to, verbal assault and harassment. The Code of Conduct also contains several provisions that serve to regulate transactions with our associates and Directors and to guide them in avoiding situations that could be viewed as actual or perceived conflicts of interest. For example, the Code of Conduct prohibits activities that could be construed as self-dealing.
So that associates are well-versed in reporting potential violations of the Code of Conduct, whether the potential violation involves sexual misconduct or a prohibited transaction, an entire section is dedicated to the different reporting channels available to associates.
Any material departure from a provision of the Code of Conduct on behalf of an executive officer, a Director, or a Senior Financial Officer (as defined below) may only be waived by the Board, and any such waiver will be promptly disclosed as required by applicable law, rule, or regulation.
To ensure that associates understand the various provisions of the Code of Conduct and how to report potential violations or
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| 44 | Made publicly available Regions’ political spending and lobbyist activities | 2018 Proxy Statement |
potentially suspicious behavior by customers, associates, or vendors, Regions requires all associates to complete annual “Business Conduct and Ethics” training. This training is assigned to new associates upon their hiring.
Code of Ethics for Senior Financial Officers. Senior Financial Officers are bound by the provisions set forth in the Code of Conduct relating to, among other topics, ethical conduct, conflicts of interest, and compliance with law. The Board has, however, adopted a separate Code of Ethics for
Senior Financial Officers that supplements the Code of Conduct and applies to Regions’ CEO, CFO, and the Principal Accounting Officer and Controller (the “Senior Financial Officers”). This Code of Ethics for Senior Financial Officers may be found on the Investor Relations section of our website at www.regions.com. We will disclose any amendments or waivers with respect to its Code of Ethics for Senior Financial Officers on our website.
Respect in the Workplace
In 2017, numerous high profile individuals across several industries were the subject of highly publicized sexual harassment and misconduct allegations. As news outlets reported on these matters, it became clear that there is work left to do nationwide to create and maintain workplace cultures of respect. We remain confident that we have a strong, positive culture of respect at Regions and that it is the product of adopting sound policies and practices; however, we know we cannot be complacent. Continuing to maintain our culture will require us to remain focused on it.
Our culture is the result of years of a strong “tone at the top” and efforts to create and maintain a robust, effective risk framework that reflects our values, especially the values of “Put People First” and “Do What is Right.” Our Code of Conduct and written policies form the foundation of this framework. Our No-Harassment Policy, which applies to associates, customers, and vendors, clearly defines “sexual harassment” and what conduct is prohibited. This policy states that associates have a duty to immediately report harassment and that reporting harassment is a must at Regions. It also states our commitment to providing a work environment that is free from harassment and that fosters our associates’ ability to devote their full attention and best efforts to their jobs. Regions’ No-Retaliation Policy complements the No-Harassment Policy by strictly prohibiting retaliation against associates who make good faith reports of unethical, unlawful, or illegal conduct. To address the risks created by a consensual relationship between associates, including the risk of sexual harassment, we also have a Personal Relationships Policy that requires associates to report these relationships and confirms that an associate may not occupy a position in the same department as, work directly for, or supervise another associate with whom he or she is involved.
We want our associates to be clear on what our policies prohibit and to feel comfortable reporting violations. As a result, our policy provides multiple examples of what is prohibited at Regions and gives associates three different avenues to make a report, including an anonymous option. We require “Respect in the Workplace” training on a regular basis as a supplement to our “Business Conduct and Ethics” annual training to make sure that associates are familiar with our policies and how they apply in different situations. In 2017, our CEO reminded all associates, of this training and the importance of each associate’s part in creating a respectful workplace.
To ensure that associates are comfortable reporting policy violations, in addition to providing multiple reporting channels, we also protect the confidentiality of complaints to the extent possible. Complaints may be reported via the associate’s
Human Resources representative, our newly-established Office of Associate Conduct (“OAC”), or anonymously by calling the Report It! Hotline or submitting a Report It! complaint online. Regardless of the method used to report a complaint, our OAC is notified and ensures that harassment and misconduct complaints are investigated promptly, effectively, and fairly. This oversight by the OAC helps to ensure that our preventative measures and complaint handling and resolution efforts are effective.
Nearly all companies talk about culture and doing the right thing, at Regions we mean it. It is the heart of all we do. Our actions have yielded positive results in the form of a culture that reflects our values, but we will continue to review our processes and policies to ensure continued effectiveness. We know that maintaining a great culture creates job satisfaction and associate engagement, which promotes collaboration and a commitment to excellence, and it is through this that we are able to create shared value.
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What We Have Done |
| • | | Included Our Board has set the “tone at the top” that we maintain a summaryworkplace culture where all associates are treated with dignity and respect. |
| • Expanded the purpose of and renamed the Compensation Committee to the CHR Committee to include human capital management and diversity and inclusion practices. |
| • Our CEO periodically sends notices to all associates with messages reinforcing the expectation of a strong, ethical culture and “doing the right thing.” In December 2017, a message was sent to all associates reminding them that our highest priority is to maintain a respectful workplace in which everyone feels free from discrimination, harassment, and inappropriate or unprofessional behavior. |
• Our Board has challenged each aspect of our strategy insuccessful anti-harassment program—which includes policies, training, and practices. |
• Our newly established OAC will oversee the handling, investigation, and resolution of associate complaints and our Proxy Summary | Associate Conduct Officer has met with our Directors. |
| • We reviewed our baseline of sound policies including No-Harassment, No-Retaliation, and Personal Relationships. |
| • | | Added more detail We reviewed our procedures for raising complaints, including our reporting channels to make certain that they will continue to be effective and clear. |
• We reviewed our overall Company performance“Respect in the Proxy Summary | Workplace” training. This training, which all associates are required to take, supplements our “Business Conduct and Ethics” annual training and explains, among other things, what constitutes sexual harassment and how to report it. |
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| Enhanced proxy disclosures with respect to our independent auditor2018 Proxy Statement | 45 |
Report It! Ethics Hotline
We work very hard to have a company that people trust to do the right things for them and truly understand their needs. To keep that trust, we must ensure that we follow our service processes. And if that does not happen, the results can be anything from having an unsatisfied customer to something much worse—for the customer, the Company, and for the individuals involved.
Fraud and abuse are not comfortable topics to discuss, but when it comes to putting our customers first, it is something that we will not and cannot tolerate. Too much is on the line for each associate, our customers, and the Company.
Regions expects associates to raise concerns regarding ethics, discrimination, or harassment matters, and violation or suspected violation of laws or regulations, the Code of Conduct, or other Regions policies or procedures. Regions offers several channels by which associates and others may
report ethical concerns, including concerns about accounting, internal controls, or auditing matters. We provide a Report It! Hotline, a toll free number that is available 24 hours a day, seven days a week, 365 days a year. Additionally, associates may also submit a Report It! complaint online confidentially at any time. The Report It! Hotline is highlighted in multiple annual training courses required to be taken by Regions’ associates. Regions uses an outside third party to receive and catalog these complaints, and associates may remain anonymous if they wish. Associates will receive a confidential file number they can use for follow up.
Finally, Regions does not permit retaliation of any kind for good faith reports of ethical violations or misconduct of others. All reports are investigated fully with prompt, effective remedial action taken when appropriate.
Talent Management and Associate Development & Well-Being
We believe that we are only as strong as our associates. This is why one of our strategic priorities is to “Build the Best Team.” In order to build that team, it is necessary for us to identify talent during the recruitment processes and invest in our associates’ professional development once they join Regions. Throughout the year—in fact, throughout an associate’s career—we emphasize professional development through opportunities such as technical, individual, management, and leadership training programs; formal talent and performance management processes; and sustainable career paths. Regions does not want to simply provide jobs. We are one team, focused on investing in the careers, lives, and well-being of our teammates.
Talent management and associate development must evolve with the expectations of the emerging workforce and organizational strategy. An important talent management tool has been, for many years, Regions’ Management Associate Program. This past year we conducted a thorough review of the program and will be making enhancements to improve value to both the bank and the associates who are selected. Starting with a new name, the Emerging Talent Program will focus more on localized, experiential development that will include progress points and ongoing enrichment activities designed to prepare individuals for future roles in the organization. We will continue to recruit within the colleges and universities in the communities we serve while ensuring a commitment to attracting a diverse pool of emerging talent.
In early 2018, we announced that we will be investing in the lives of our associates by raising our entry-level wage to $15 an hour over the course of the year. Already one of our strategic initiatives, the benefits of the Tax Cut and Jobs Act
have allowed us to accelerate our plans to increase wages and make this investment sooner than we otherwise would have been able to do.
We do not stop there, however. We recognize that an associates’ well-being is impacted by more than their cash compensation. As such, we provide a comprehensive and competitive benefits program for our associates. Benefits provided include significant Company contributions to health, disability, and life insurance, as well as a robust retirement program. We also recognize that situations and challenges outside of the workplace impact the well-being of our associates. To meet the life needs of our associates, Regions offers a free employee assistance program, health and wellness programs, and financial planning tools to assist associates with their financial and retirement preparations. We believe it is important for our associates to secure their own financial futures as they consistently strive to assist our customers in securing theirs.
All of these components work together to create a culture of engaged associates, focused on our customers and creating value for our stockholders.
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Better Life Award. Regions’ Better Life Award is the top honor given to associates at Regions for outstanding dedication and job performance. It is awarded monthly to an associate who is a summaryrole model of our Director-Stockholder Engagement Framework on our website | |
| • | | Enhanced our executive compensation disclosures | values, both at work and in their community. The recipient goes beyond what is required to make life better for a co-worker or customer in a work-related situation and impacts an internal or external customer’s life by providing superior service and the right solution the first time… and every time.
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Diversity and Inclusion
We encourage all stockholders asrecognize that a diverse and inclusive workforce is essential to achieving and maintaining a thriving company. This commitment is reinforced through our ongoing efforts to reflect,
anticipate, and adapt to the changing demographics of the record datecommunities where we live and work. Examples of our efforts and organizational structures include:
In 2017, we created a Human Resources (HR) Diversity Recruiting, Retention, and Development Strategy focusing on ethnic and gender representation throughout our Company and in leadership positions. As part of this strategy, our HR partners developed action plans identifying areas of opportunities with recruiting, retaining, and development while creating measurable goals and increasing accountability.
Regions Diversity Network is a cross-section of associates from all levels who work together to attendadvance our comprehensive diversity strategy and create greater multicultural awareness inside Regions. In 2016, we formed four Diversity Network chapters in the Midwest, Texas, South Florida areas, and within the Consumer Lending group. We are preparing to form new chapters across our footprint in 2018.
Regions Diversity Advisory Council, composed of academic, community, and business leaders, offers an objective perspective on matters of diversity and inclusion in our workplace and marketplace.
We have continued partnerships with the United Negro College Fund and Historically Black Colleges and Universities, providing scholarships and financial education.
We publish A Bank for All, our internal newsletter, which focuses on diversity and inclusion.
In addition, our Leaders at All Levels (“LAL”) programs serve as succession management and talent development tools,
which also provide an opportunity for training on Regions’ culture and diversity and inclusion efforts. One component of this year’s annual meeting, as thistraining is the “Leadership at Regions: A Culture Conversation” course, which discusses corporate culture generally and Regions’ culture individually and provides youassociates with an opportunitythe knowledge needed to engage in direct dialogueefforts to strengthen Regions’ culture. Culture is also discussed in the context of collaborative leadership efforts in the “Senior Level Leaders: Leaders at All Levels” materials. One facet of Regions’ desired culture is providing an inclusive environment where all associates are valued and respected for the skills and talents they bring to Regions. To this end, diversity and inclusion training is provided to LAL participants to give them the knowledge and skills needed to support the creation of an inclusive environment. The LAL “Corporate Diversity and Inclusion: Beyond Black and White” training highlights the benefits of an inclusive culture and provides attendees with the Company.tools to foster such an environment. It also encourages a strengths-based approach to associate development, which calls on LAL participants to learn about and hone their individual strengths and to learn about the strengths of their direct reports in order to improve inclusion by satisfying the needs of belonging and acceptance.
Our commitment to diversity and inclusion is supported by our Directors, executive management, and associates. These efforts are also overseen by the CHR Committee. We understand that our strategic approach to diversity and inclusion—inside and outside of Regions—is not only good business, it is the right thing to do for our customers, communities, associates, and stockholders.
Policy on Political Contributions
Regions’ Policy on Political Contributions and Code of Conduct both govern and promote the highest standards of behavior by our Company and our associates with regard to political activities. The policies also ensure compliance with all current applicable federal and state campaign finance laws. Like most public companies, Regions recognizes that decisions made by governmental agencies and lawmakers can have a significant impact on our operations, stockholders, customers, and associates. Accordingly, we monitor and track issues that affect our business and express our views to lawmakers and regulators.
Regions may make corporate political contributions in states where permissible. These contributions may be directed to state party organizations and candidates for statewide offices, state legislatures, and, in rare instances, local offices. Also,
where legally permitted, Regions may make independent expenditures or corporate contributions in connection with state and local ballot initiatives and referenda on important policy issues that are likely to impact our business and our stakeholders. Regions does not, however, make contributions to political entities organized under Section 527 of the Internal Revenue Code or to special interest lobbying groups organized under Section 501(c)(4) of the Internal Revenue Code to support political activities, even when legally permissible.
Regions discloses annually its independent expenditures and corporate political giving in the Government Affairs Annual Report on the Investor Relations section of our website.
Board Leadership Structure
Governance plays a critical role at
Regions, and the Company understands that Governance is only as strong as its Board.Regions. The Board assumes an active role in providing oversight of, and guidance to,
Regions’our executive management team
in order to maintainand maintaining a strong system of checks and balances.
As part of these checks and balances, the Board is responsible for determining the proper Board leadership structure to ensure independent and effective oversight.
Furthermore, Regions’our Corporate Governance Principles are comprehensive.comprehensive and continuously reviewed and assessed to keep pace with the constantly changing corporate governance landscape. They address: Board leadership structure; the Lead Independent Director’s responsibilities; Director qualification standardsstandards; Director responsibilities and responsibilities;expectations; management succession planning; assessment of Board, Committees, and individual Director performance; strategic planning; Director compensation; Director orientation and
continuing education; direct access of the Board to management and independent advisors; and more.
In addition, based
Based on the requirements of the New York Stock Exchange (“NYSE”)NYSE listing standards, Regions’our Corporate Governance Principles, and an assessment of current needs, the Board believes that an appropriate leadership structure includes
a substantial majority of independent Directors with diverse backgrounds and experiences, extremely capable Committee Chairs, and a strong Lead Independent Director with specific duties. The Board’s current leadership structure meets these attributes.
The Board is presently composed of 1214 Directors, 1113 of whom are independent. Directors are required to stand for election each year, thus allowing our stockholders thean annual opportunity to express their views on each Director’s individual performance on an annual basis.and contribution. All Committee Chairs and members are independent. Our executive officers benefit from the highly experienced, well-informed, and fully engaged Board members who have experience managing variousa broad range of organizations, both public and private. In addition, many of our Directors have experience in areas such as corporate governance, environmental and sustainability practices, strategic planning, risk management, informationinformation/cyber security, business operations and technology, and financial modeling.
We have not adopted a policy mandating the separation of the Chairman and Chief Executive OfficerCEO positions. The Board believes that theits leadership structure
ï 2016 Proxy Statement39
should be flexible to accommodate different approaches based on an evaluation of relevant facts and circumstances as it deems in the best interest of the Company and itsour stockholders.
The Board carefully considers its leadership structure and leadershipmembership each year in conjunctionconsultation with the NCG Committee.
At the present time,
After undertaking such an evaluation this year, the Board believescontinues to believe that the Company is best served in having a combined Chief Executive OfficerCEO and Chairman position, complementedcounterbalanced by an independent, strong, and effective Lead Independent Director.Director and independent, accomplished Committee Chairs. The Board has determined that the Company benefits from having a single leaderits CEO, who is intimately involved with and responsible for managing the primary responsibility of managing ourCompany’s operations and representing usstrategy, chair regular meetings of the Board and represent the Company to our stockholders, customers, associates, regulators, communities, and the public. Further, this combined structure bridges management and the Board, thus ensuring unity of vision and that both groups are working efficiently to fulfill the Company’s goals and strategies. This structure also allows the Board to carry out its oversight responsibilities with the full involvement of each independent Director. Additionally,
Furthermore, this structure
utilizesis particularly beneficial and effective for Regions because it capitalizes on Mr. Hall’s extensive experience and knowledge
regardingof the Company and provides for effective leadership of
ourthe Board and Company, while simultaneously providing for robust communication between the Board and management. Moreover, this combination also
providesfosters effective decision-making and clear accountability to the stockholders, customers, and associates concerning the performance of the Company.
Mr. Hall has more than 35nearly 40 years of experience with the Company and has been our Chief Executive OfficerCEO since 2010. Under his leadership, the Company has successfully met a number of challenges. Regions is a large financial institution, and Mr. Hall, with over three decades ofhis extensive banking experience, including service on our Board of Directors since 2008, and service as President sincefrom October 2009 through December 2017, has extensive knowledge, expertise, and experience in all aspects of our current business operations. In the Board’s opinion, Mr. Hall is the best person to understand and clearly articulate to the Board the opportunities and challenges facing the Company, and he also has the leadership and management skills to promote the Company’s values and execute its strategies. Mr. Hall’s service as Chairman provides clarity of leadership and allows the Company to present its vision and strategy effectively and inwith a unified voice.
Under
The Board does not believe this structure hinders Board independence because, under the Corporate Governance Principles, unless there is an independent, non-executive Chairman, the Chair of the NCG Committee, who must be “independent” under the rules of the NYSE, and who is elected by and from the independent Board members, serves as the Lead Independent Director for the Board. The Lead Independent Director provides independent leadership and oversight on challenges and opportunities facing the Board and the Company. Charles D. McCrary has served as the Lead Independent Director since 2013.
Lead Independent Director Duties:
| ü | | Presides at Board meetings when the Chairman is not present; | |
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üKey Lead Independent Director Duties |
| • Establishes the agenda and presides at executive sessions of the non-management and independent Directors; | Directors |
| ü | | Receives topic suggestions from other Directors to be discussed at upcoming executive sessions and facilitates discussion on key issues outside of meetings; | |
| ü | | Acts as a liaison and facilitates communication between the Chairman of the Board and the non-management and independent Directors (provided, however, that each Director will also be afforded direct and complete access to the Chairman of the Board at any time as such Director deems necessary or appropriate); | |
| ü | | Facilitates teamwork and communication among the independent Directors; | |
| ü | | Approves information sent to the Board; | |
| ü | | • Approves meeting agendas for the Board; | Board |
| ü | | • Approves meeting schedules to assure that there is sufficient time for discussion of all agenda items; | items |
| ü | | Coordinates the activities of the non-management• Follows up on meeting outcomes and independent Directors including the authority to call meetings of non-management and independent Directors; | management deliverables |
| ü | | • If requested by major stockholders, ensures that he or she is available for consultation and direct communication; | communication |
• Provides leadership to the Board in a time of emergency or crisis |
ü | | Communicates, as appropriate, withFor a complete list of responsibilities and duties, see our regulators; | |
| ü | | Regularly communicates with our ChairmanCorporate Governance Principles, which are available on a variety of issues including business strategy and succession planning; | |
| ü | | Maintains close contact with the Chair of each standing committeeInvestor Relations section of the Board, i.e., Compensation, Audit and Risk, and serves as an ex-officio member of each committee where he/she is not a member; | |
| ü | | Assists the Committee Chairs in the establishment of committee agendas and schedules; | |
| ü | | As Chair of the Nominating and Corporate Governance Committee, provides input, as needed, into the assessment of the Board committees’ effectiveness, structure, organization and charters, and the evaluation of the need for changes; and | |
| ü | | With the Nominating and Corporate Governance Committee, coordinates the performance of the annual Board and Committees’ self-evaluation and the evaluation of the Chairman and Chief Executive Officer by the Compensation Committee. | Company’s website. |
40 ï 2016 Proxy Statement
Board, Committee, and Individual Director Evaluation Program
Each year the NCG Committee oversees the self-evaluation process for our Board, its Committees, and individual Directors. This self-evaluation is a necessary process in ensuring the Board and its Committees are best equipped to create superior economic value for the Company’s stockholders over timestockholders.
At Regions, we agree that appropriate Board refreshment and Director succession planning, accompanied by
creating shared value for our customersmeaningful annual Director evaluations, are the best means to ensure that the Board members are independent, engaged, and
communities.More specifically,productive, and have the self-evaluation program assessesrelevant experience and expertise to assist Regions as it executes on its strategy.
As a direct result of the Board’s2017 evaluations, the Board:
Created a Board refreshment and
Committees’ performance in areas such as:recruitment plan to ensure the Board has the necessary skills to support the Company’s strategy. Instructed management to enhance Board and Committee structuremeeting materials so as to better facilitate robust communication and composition;
Efficiency of Boarddiscussion among the Directors and Committee meetings;
Directors’ ability to carry out key Board responsibilities;
Exchanges betweenwith management so that the Boardmeetings are more interactive and management;
discussion-based rather than report-oriented.Interactions with key stakeholders;
Assessing Board member performance; and
Committee-level assessment.
Using these topics as a springboard for discussion, the ChairBegan scheduling regular joint meetings of the NCGBoard’s Risk Committee facilitates the self-evaluation discussions, during which Directors bring their individual expertise and experienceAudit Committee to bear on the topics raised. The self-evaluation pays particular attentionreview and discuss overlapping reporting that was being made to each Committee separately.
Suggested enhancements to the Board’s oversight of Regions’ risk management frameworkDirector Orientation and Ongoing Education Program.
Additionally, following feedback from stockholders regarding the management’s risk-taking activities,annual self-evaluation, we have provided additional transparency into the process, as well as the resulting outcomes.
The following sets forth the Board’s self-evaluation process:
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| ① | One-on-One Discussions Prior to the Board’s and Committees’ full evaluation, the Chair of the NCG Committee, who also serves as the Board’s Lead Independent Director, holds individual discussions with each Director to obtain their candid feedback on Board operations and Directors’ performance. |
| ② | Committee Discussions Each Committee conducts its own self-evaluation on topics that are applicable only to the Committee. Committee self-evaluations are facilitated by each Committee’s Chair. |
| ③ | Reporting to the NCG Committee and full Board Following the one-on-one discussions, the Chair of the NCG Committee provides a verbal summary, as needed and appropriate, to the NCG Committee and full Board prior to its evaluation. |
| ④ | Group Discussions The self-evaluation program assesses the Board’s and Committees’ performance in areas such as: • Board and Committee structure, composition, and efficiency; • Directors’ ability to carry out key Board responsibilities; • Exchanges between the Board and management; • Interactions with key stakeholders; and • Assessing Board member performance and Committee-level assessment. Using these topics as a springboard for discussion, the Chair of the NCG Committee facilitates the self-evaluation discussions, during which Directors bring their individual expertise and experience to bear on topics raised. The self-evaluation pays particular attention to the Board’s oversight of Regions’ risk management framework, Board refreshment, and the Board’s ability to take actions and make decisions efficiently and independently from Regions’ management. |
| ⑤ | Focus on Outcomes In 2017, the NCG Committee enhanced the self-evaluation program by placing additional emphasis on outcomes. Following the completion of the self-evaluation process, the Chair of the NCG Committee has the opportunity to meet with the General Counsel and Chief Governance Officer to discuss follow-up items. The NCG Committee and its Chair track follow-up actions, as applicable. |
| ⑥ | Incorporate Action Items As appropriate, the follow-up action items are implemented. |
| ⑦ | Continually Enhanced Self-Evaluations Any feedback on the self-evaluation process is incorporated into the following year’s evaluation. |
Director Onboarding and Ongoing Education
Director onboarding and ongoing education programs are important components to
take actions and make decisions independently from Regions’ management.Each Committee also conducts its own self-evaluation on topics that are applicable only to the Committee.
Continuing Education
foster Board effectiveness. The Corporate Governance Principles provide that Directors should receive continuing education in areas that will assist them in discharging their duties.
The Board’s Director Onboarding and Ongoing Education Program engages Directors through a mixture of in-house training, outside programs, and on-site activities and includes regular reviews of compliance and corporate governance developments, business-specific learning opportunities through site visits and Board meetings, and briefing sessions on topics that present special risks and opportunities to
Regions’ comprehensive program begins with Director onboarding activities and includes a thorough orientation process that acclimates new Directors to Regions, the Board, and management. Director onboarding involves a combination of written materials, oral presentations, and meetings with members of the Board, management, and other appropriate associates, and continues over an extended period of time. Topics covered during onboarding may include: Company history; profitability; revenue streams; strategy; risk management, including the risk appetite statement, BSA/AML/OFAC and consumer compliance; and legal and regulatory framework. In general, additional educational sessions are
provided to new Directors, as well as any other Directors who would like to attend, the day before the on-site Board Committee meetings commence. In addition, it is typically recommended that new Directors serve on either the Risk Committee or the Audit Committee to help them become acclimated to the Company faster.
Directors are provided information and training on products and services offered by Regions; significant risks and compliance issues; laws, regulations, and supervisory requirements applicable to the Company and its affiliates; corporate governance best practices; changes in the financial services industry; and other topics identified by the Directors.
The Board receives in-house training sessions conducted by leading national law firms and industry-leading audit and consulting firms on various topics, including strategic planning; economic outlook; cybersecurity risks; third party risk management; sales practices; fair lending; CCAR; and BSA/AML/OFAC. During 2017, Directors also attended various external sessions, including conferences sponsored by the Federal Reserve, Harvard Business School, National Association of Corporate Directors, NYSE, Milken Institute, PwC, KMPG, and Spencer Stuart.
Director Independence
Director Independence
To be independent under NYSE rules, our Board must make an affirmative determination that a Director does not have a “material relationship” with Regions (either directly or as a partner, stockholder, or officer of an organization that has a
material relationship with Regions). Under our Corporate Governance Principles, the Board has determined that a substantial majority of its members must be independent.
Board independence determinations.The Board has affirmatively determined that each Director is an independent Director, other than O. B. Grayson Hall, Jr., Regions’ Chairman and CEO. The following current Directors have been determined by the Board to be independent:
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| Carolyn H. Byrd | Susan W. Matlock |
| David J. Cooper, Sr. | John E. Maupin, Jr. |
| Don DeFosset | Charles D. McCrary |
| Samuel A. Di Piazza, Jr. | James T. Prokopanko |
| Eric C. Fast | Lee J. Styslinger III |
| John D. Johns | José S. Suquet |
| Ruth Ann Marshall | |
Approximately 93 percent of Regions’ Directors, as well as all members of the Audit Committee, the CHR Committee, the NCG Committee, and the Risk Committee, are independent directors within the meaning of the listing standards of the NYSE.
NYSE bright-line independence tests. The NYSE has bright-line tests that disqualify a Director from being determined to be independent. The following relationships will preclude a Director from being considered independent for a period of three years:The Director is employed by Regions;Regions.
The Director has an immediate family member who is an executive officer of Regions;Regions.
The Director or an immediate family member has received in a year more than $120,000 in direct compensation from Regions (not including certain permitted payments such as Director and Committee fees);.
The Director or an immediate family member has certain relationships with Regions’ external or internal auditors;auditors.
The Director or an immediate family member is employed as an executive officer of another company and a Regions executive officer serves on that other company’s compensation committee; orcommittee.
The Director is a current employee, or an immediate family member is a current executive officer, of a company that made payments to, or received payments from, Regions in an amount that exceeds the greater of $1,000,000$1 million or 2 percent of the applicable company’s consolidated gross revenues.
Corporate Governance Principles guidance regarding independence. Despite that Although none of the NYSE’s bright-line tests are applicable to our current non-management Directors, this does not make a Director independent. Thethe Board must still consider all circumstances surrounding any existing relationship between Regions and a Director to determine whether a material relationship exists outside of the bright-line tests. To aid in conducting this evaluation, our Corporate Governance Principles describe relationships and transactions that, in the absence of unusual facts and circumstances, would not impair a Director’s exercise of independent judgment or compromise the oversight role that an independent Director is expected to perform, and therefore, presumptively are not material:
The Director or an immediate family member has a customer relationship with Regions that is established and administered by Regions in the ordinary course of business, on terms and conditions not more favorable than those afforded by Regions to other similarly situated customers.
If the Director or immediate family member has a loan or extension of credit, and that loan was made or credit was extended on substantially the same terms, including interest rates and collateral, as those prevailing at the time for
comparable transactions with other persons, and involved no more than the normal risk of collectability and presented no other unfavorable features.ï 2016 Proxy Statement41
| | comparable transactions with other persons, and involved no more than the normal risk of collectability and presented no other unfavorable features.
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If Regions employs an adult family member of the Director in the ordinary course of business in a capacity other than as an executive officer.
The Director’s or immediate family member’s interest in a transaction results solely from service as a director (or comparable position) of another company that is a party to the transaction or from the beneficial ownership of less than 10 percent of the other entity’s equity.
The transaction is one where the rates or charges involved in the transaction are determined by competitive bids, or the transaction involves the rendering of services as a common or contract carrier, or public utility, at rates or charges fixed in conformity with law or governmental authority.
In applying 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-material under our guidelines for independence, but meets one of the NYSE’s bright-line tests, the NYSE test governs and the Director will not be treated as independent.
Board independence considerations. The Board has made an affirmative determination as to all 1214 current Directors’ independence. The NCG Committee presented to the Board its evaluations and made a recommendation as to each Director’s independence.Director
Mr. Hall is employed by Regions. Therefore, under the NYSE bright-line relationship test, he was determined not to be independent.
With respect to the remaining Directors, the following specific relationships were also considered while making a determination:
All of the Directors, except Directors DeFosset, Fast, Prokopanko, and Fast,Suquet, either individually or through an affiliated entity or an immediate family member, have customer relationships with Regions’ subsidiaries, such as a deposit, brokerage, trust, or other financial services relationship in the ordinary course of Regions’ banking and/or brokerage business, on terms and conditions not more favorable than those afforded by Regions or its subsidiaries to other similarly situated customers.
All of the Directors, except Directors DeFosset, Di Piazza, Fast, Marshall, Prokopanko, and Fast,Suquet, either individually or through an affiliated entity, have bank loans from Regions’ subsidiaries on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable loans by Regions’ subsidiaries to unrelated persons, and involving no more than the normal risk of collectability and no other unfavorable features.
Directors Bryan, Cooper, DeFosset, Johns, Maupin, McCrary, and Styslinger serve solely as a member of the board of directors of a charitable organization to which Regions or its subsidiaries made charitable contributions of less than the greater of $1,000,000$1 million or 2 percent of such organization’s consolidated gross revenues in 2013, 2014,2015, 2016, or 2015.2017.
Director Byrd serves as an outsidea director of the Federal Home Loan Mortgage Corporation (“Freddie Mac”). The $21 million in revenue Regions’ subsidiaries receivesreceived from servicing loans for Freddie Mac is not a material portion of Regions’ total revenues. Additionally, Regions’ subsidiaries are not dependent solely on Freddie Mac as a purchaser of loans. Regions’ relationships with Freddie Mac commenced before Ms. Byrd joined Regions’ Board and are expected to continue.
Director Di Piazza serves as a director of AT&T Inc. Regions paid AT&T approximately $1.8 million for services in 2017. Regions’ relationships with AT&T commenced before Mr. Di Piazza was appointed to Regions’ Board and are expected to continue.
Director McCrary serves as a director of Great Southern Wood Preserving, Incorporated. Great Southern Wood and subsidiaries are customers of Regions for typical commercial banking products and services, including
loans and leases, and on terms no more favorable than for other Regions customers, and for which Regions receives customary interest and fees.
Director Styslinger serves as a director of Workday, Inc., a leading provider of enterprise cloud applications for finance and human resources. Workday helps Regions effectively manage its workforce through the use of its human capital application focused on talent management, compensation and benefits administration, payroll and timekeeping, as well as human resources data management. Regions paid Workday approximately $3.3 million for services in 2017. Regions’ relationship with Workday commenced before Mr. Styslinger was appointed to Workday’s board and is expected to continue.
Director Johns currently serves as Chairman and Chief Executive OfficerChairman of Protective Life Corporation, (“Protective”), which was a publicly traded life insurance company headquartered in Birmingham, Alabama until February 1, 2015, when it became a wholly-owned subsidiary of Dai-ichi Life Insurance Company, Limited. The NCG Committee and the Board have determined that the relationships between Regions and Protective do not impair Director Johns’ independence given that the transactions are:
| ¡ |
| – | Not material to Protective in light of its annual income or gross revenues because the payments to or received from Protective of approximately $6.5 million were well below 2 percent of Protective’s consolidated gross revenues and were approximately 0.130.14 percent in 2015, 0.072017, 0.08 percent in 2014,2016, and 0.030.1 percent in 2013;2015; |
| ¡ |
| – | Not material to Regions in light of its annual income or gross revenues; |
| ¡ |
| – | Conducted at arm’s-lengtharm’s length in the ordinary course of business of each party to the transactions; |
| ¡ |
| – | Not material to Director Johns as Chairman and Chief Executive OfficerChairman of Protective; |
| ¡ |
| – | Not involving a personal stake of Director Johns in the transactions; |
| ¡ |
| – | Not involving Director Johns in the negotiations or discussions leading to the transactions; and |
| ¡ |
| – | Typical of transactions that Protective conducts with other financial institutions. |
Director Johns does not have a direct or indirect material interest in the transactions arising out of the business relationships between Regions and Protective, and Director Johns has no material relationships with Regions that would impair his exercise of independent judgment as a Director.
Director Suquet serves as Chairman, President, and CEO of Pan-American Life Insurance Group and its subsidiaries (“PALIG”). Regions Insurance, through normal course of business, received commissions from PALIG from the procurement of insurance for customers in the amounts of approximately $14,300 in 2017; $28,000 in 2016, and $36,000 in 2015. These relationships commenced before Mr. Suquet was appointed to Regions’ Board and are expected to continue.
The NCG Committee and the Board have determined that the relationships between Regions and PALIG do not impair Director Suquet’s independence given that the
transactions are:
| |
| – | Not material to PALIG in light of its annual income or gross revenues; |
| |
| – | Not material to Regions in light of its annual income or gross revenues; |
| |
| – | Conducted at arm’s length in the ordinary course of business of each party to the transactions; |
| |
| – | Not material to Director Suquet as Chairman, President, and CEO of PALIG; |
| |
| – | Not involving a personal stake of Director Suquet in the transactions; |
| |
| – | Not involving Director Suquet in the negotiations or discussions leading to the transactions; and |
| |
| – | Typical of transactions that PALIG conducts with other financial institutions. |
Director Suquet does not have a direct or indirect material interest in the transactions arising out of the business relationships between Regions and PALIG, and Director Suquet has no material relationships with Regions that would impair his exercise of independent judgment as a Director.
Director Maupin serves as Chair of the Board of Directors of Regions Community Development Corporation, a non-profit corporation sponsored by Regions that is dedicated to providing technical assistance for affordable housing, small business, and community development initiatives.
Directors Cooper and Hall serve on the board of directors of Alabama Power Company (a subsidiary of The Southern Company), where Director McCrary previously served as President and Chief Executive Officer.CEO. Alabama Power’sPower Company’s common stock is not publicly traded. Director Johns serves on the board of directors of The Southern Company, the parent company of Alabama Power.Company. C. Dowd Ritter, the father of Regions Executive Officer,executive officer William D. Ritter, serves on the board of directors of Alabama Power Company.
Prior to the February 2015 acquisition of Protective, Life Corporation, Directors Johns and McCrary served on its board of directors, where Director Johns continues to serve as Chairman and Chief Executive Officer.Chairman. C. Dowd Ritter, the
father of Regions executive officer William D. Ritter, served on the board of directors of Protective prior to its acquisition.42 ï 2016 Proxy Statement
| | father of Regions Executive Officer, William D. Ritter, served on the board of directors of Protective Life Corporation prior to its merger.
|
Directors Hall, Prokopanko, and Styslinger also serve on the board of directors of Vulcan Materials Company.
In each case, the Board concluded, in light of the applicable independence standards of the NYSE and the description of relationships and transactions contained in the Corporate Governance Principles, that such
relationshiprelationships would not be considered to impair a Director’s exercise of independent judgment or compromise the oversight role that an independent Director of Regions is expected to perform, and therefore, are not material.
Board independence determinations. The Board has affirmatively determined that each Director is an independent Director, other than O. B. Grayson Hall, Jr., Chairman, President and Chief Executive Officer. The following current Directors have been determined by the Board to be independent:
| | |
George W. Bryan | | Ruth Ann Marshall |
| |
Carolyn H. Byrd | | Susan W. Matlock |
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David J. Cooper, Sr. | | John E. Maupin, Jr. |
| |
Don DeFosset | | Charles D. McCrary |
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Eric C. Fast | | Lee J. Styslinger III |
| |
John D. Johns | | |
Director Bryan, who has reached Regions’ retirement age, is not standing for re-election this year.
During a portion of 2015, one former Director, James R. Malone, served on the Board. In early 2015, the Board made the determination that Mr. Malone was independent based upon the applicable independence standards of the NYSE; the description of relationships and transactions contained in the Corporate Governance Principles; and the consideration by the Board of all relevant transactions, relationships and arrangements with respect to Mr. Malone.
Additional determinations made by the Board.The Board has also affirmatively determined that all members of the Audit Committee are “independent” and “financially literate.” Additionally, all members of the Audit Committee have banking or related financial management expertise as defined by the
Federal Deposit Insurance Corporation Improvement Act of 1991. Finally, each of Directors
Bryan, Byrd,
Di Piazza, Fast,
Maupin and Styslinger has accounting or related financial management expertise as described in Section 303A.07 of the NYSE Governance Rules and is an Audit Committee Financial Expert as defined in Item 407(d) of Regulation S-K of the Securities Act. Further, all members of the Audit Committee are independent within the meaning of the independence standards for audit committee members under
the Sarbanes-Oxley Act of 2001.SOX.
The Board also determined that Director Johns,
the Chair of the Risk Committee, and Director Suquet, a member of the Risk Committee,
is a Risk Management Expertare “risk management experts” as defined by Regulation YY,
thatwhich implements certain of the enhanced prudential standards mandated by Section 165 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Almost 92 percent of Regions’ Directors, as well as all members of the Audit Committee, the Compensation Committee, the NCG Committee, and the Risk Committee, are independent directors within the meaning of the listing standards of the NYSE.
Family Relationships
Family Relationships
No immediate family relationship exists between any of our Directors or executive officers and any other Directors or executive officers.officers
. Transactions with Directors
The following chart reflects transactions, as applicable, between Regions and:
(i) | our non-management Directors or their immediate family members; |
(ii) | a company or charitable organization of which the non-management Director or the Director’s immediate family member is, or was during 2015, a partner, officer, employee; or |
(iii) | a company in which the non-management Director or the Director’s immediate family member holds a significant ownership position. |
ï 2016 Proxy Statement43
our non-management Directors or their immediate family members;
a company or charitable organization of which the non-management Director or the Director’s immediate family member is, or was during 2017, a partner, officer, or employee; or
a company in which the non-management Director or the Director’s immediate family member holds a significant ownership position.
All of these transactions were considered by our Board in making the determination with respect to independence.
| | | | |
| | | | | |
| | | Course” Customer
Relationships (1) | | Extensions
of Credit (2) | | Charitable
Contributions (3) | | Relationships (4) | | Relationships (5) |
George W. Bryan
| Carolyn H. Byrd | ● | | ● | | ● | | None | ● | None |
Carolyn H. Byrd
| David J. Cooper, Sr. | ● | ● | ● | | None | | ● | | None |
David J. Cooper, Sr.
Don DeFosset | None | None | ● | | ● | | ● | | ● | None | None |
Don DeFosset
Samuel A. Di Piazza, Jr. | ● | None | | None | | ● | | None | | None |
Eric C. Fast | | None | None | None | | None | | None | | None |
John D. Johns | | ● | ● | ● | | ● | | ● | | None |
Ruth Ann Marshall | | ● | | ● | None | None | | None | | None |
Susan W. Matlock | | ● | | ● | | None | | None | ● | None |
John E. Maupin, Jr. | | ● | ● | ● | | ● | | ● | | None |
Charles D. McCrary | | ● | ● | ● | | ● | | ● | | None |
James T. Prokopanko | None | None | None | ● | None |
| Lee J. Styslinger III | | ● | ● | ● | | ● | None |
| José S. Suquet | None | None | None | ● | None |
| |
| (1) | “Ordinary Course” customer relationships are transactions or relationships that Regions would enter into on the same terms and conditions with any similarly situated customer. |
| |
| (2) | Includes a loan or extension of credit that was made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with unaffiliated persons, and involve no more than the normal risk of collectability and present no other unfavorable features. |
| |
| (3) | Directors serve solely as a member of the board of directors of a charitable organization to which Regions or its subsidiaries made charitable contributions of less than the greater of $1,000,000$1 million or 2 percent2% of such organization’s consolidated gross revenues. |
| |
| (4) | Nonmaterial relationships include Director Byrd’s service as only a director ofby Director Byrd at Freddie Mac, Director Di Piazza at AT&T, Director McCrary at Great Southern Wood, and Director Styslinger at Workday; arm’s-length business relationships with Protective Life Corporation,and PALIG; Director Maupin’s service as Chairman of Regions’ non-profit corporation, Regions Community Development Corporation,Corporation; and outside Directors’ service on a board of directors (i) where a Regions Director serves or recently served as President and/or Chief Executive OfficerCEO and/or (ii) where C. Dowd Ritter, the father of Regions Executive Officer,executive officer William D. Ritter, serves on the board of directors,directors; or common service on a board.boards at Alabama Power Company or Vulcan Materials Company. |
| |
| (5) | No immediate family relationship exists between any of our Directors or executive officers and any other Directors or executive officers. |
Other Business Relationships and Transactions
Certain Directors and executive officers and their affiliates, other related persons and their affiliates, and beneficial owners of more than 5 percent of Regions common stock and their affiliates were customers of, and had transactions with, Regions and our subsidiaries in the ordinary course of business during
2015,2017, and additional transactions may be expected to take place in the ordinary course of business. As previously noted, included in such transactions are outstanding loans and commitments from Regions Bank, all of which were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with persons not related to Regions, and did not involve more than the normal risk of collectibility or present other unfavorable features.
Other business relationships. We have entered into other business relationships with entities known to or reasonably believed by us to own more than 5 percent of our common stock. These relationships are in the ordinary course of business and are described below: BlackRock, Inc. and subsidiaries are the beneficial owners of more than 5 percent of our common stock. On October 14, 2011, Regions entered into an amended and restated agreement as amended (the “BlackRock Agreement”) with BlackRock Financial Management, Inc. (“BlackRock Financial”), a subsidiary of BlackRock, Inc. (“BlackRock”) for BlackRock Financial to provide risk management and advisory services for Regions’ mortgage servicing rights portfolio and their proprietary trading, portfolio management, and risk reporting system for Regions’ investment
portfolio. The initialcurrent term of the BlackRock Agreement will expire on December 12, 2022, and is for five years and upon the expiration of the initial term, the BlackRock Agreement canscheduled to be renewed for successive 24-monthtwo-year terms unless otherwise terminated. The BlackRock Agreement provides that Regions will pay BlackRock Financial a fee of $2,250,000$2.75 million per year plus an additional fee depending on the size of the portfolio. Regions paid BlackRock Financial approximately $2.75 million in 2017. On January 1, 2017, Regions Bank entered into a Services Agreement with BlackRock Investments, LLC and BlackRock Advisors, LLC that established policies and procedures to allow Regions to perform services as a distributor/intermediary for its clients with respect to the funds. In 2017, BlackRock paid nominal fees to Regions for performing these services. The Regions Financial Corporation Retirement Plan had invested approximately $322$380.8 million in BlackRock funds as of December 31, 2015 2017,
and paid investment management fees of approximately
$272,000$313,900 in
2015.2017. Trust accounts held at Regions Bank have invested approximately
$320.2$552 million in BlackRock-sponsored marketable securities as of
year-end 2015.December 31, 2017. Regions does not receive any revenue share, fees, or commissions for client accounts invested in these securities. Additionally, in
2015,2017, affiliates of BlackRock paid Regions fees and interest on credit facilities of approximately
$125,000.$1.2 million. These relationships
begancommenced before BlackRock became the beneficial owner of more than 5 percent of Regions common stock and are expected to continue.
The Vanguard Group, Inc. and subsidiaries (“Vanguard”) are the beneficial owners of more than 5 percent of our common stock. At year-end 2015, trust accounts held at Regions Bank have invested approximately $2 billion in marketable securities issued by Vanguard Group, Inc. (“Vanguard”) entities. Regions does not receive any revenue share, fees or commissions for client accounts invested in these funds. This relationship began before Vanguard became the beneficial owner of more than 5 percent of Regions common stock and is expected to continue.
44 ï 2016 Proxy Statement
State Street Global Advisors and affiliates (“State Street”) are the beneficial owners of more than 5 percent of our common stock. Trust accounts held at Regions Bank had approximately $30 million invested in marketable securities issued by State Street Global Advisors (“as of December 31, 2017. Regions does not receive any revenue share, fees, or commissions for client accounts invested in these funds. These relationships commenced before State Street”) entities administerStreet became the beneficial owner of more than 5 percent of Regions common stock and are expected to continue. Further, State Street administers rabbi trusts for certain retirement and deferred compensation plans maintained by Regions. Regions pays State Street a nominal monthly administration fee for these services. At year-end 2015, trustIn 2017, State Street served as the custodian for the Regions 401(k) Plan, the BlackArch Partners LLC 401(k) Plan (BlackArch Partners LLC is a Regions subsidiary), the Regions Supplemental 401(k) Plan, and a deferred cash plan, the fees for which are part of the administration fees paid to the plans’ administrator. The plans’ administrator will be transitioning to a different custodian in the first half of 2018.
The Vanguard Group, Inc. and subsidiaries (“Vanguard”) are the beneficial owners of more than 5 percent of our common stock. Trust accounts held at Regions Bank
hadhave invested approximately
$25.8 million invested$3.3 billion in marketable securities issued by
State Street.Vanguard as of December 31, 2017. At year-end 2017, benefit plans sponsored by Regions Bank have invested approximately $239 million in mutual funds offered by Vanguard entities. Regions does not receive any revenue share, fees, or commissions for client accounts invested in these funds. These relationships
begancommenced before
State StreetVanguard became the beneficial owner of more than 5 percent of Regions common stock and
areis expected to continue.
FMR LLC and affiliates (“Fidelity”) are the owners of more than 5 percent of Regions common stock. At year-end 2015, trust accounts held at Regions Bank have invested approximately $312.9 million in marketable securities offered by Fidelity
Management & Research Company entities. National Financial Services (“NFS”), a subsidiary of Fidelity, serves as a sub-custodian for marketable mutual fund positions held by trust clients at Regions Bank pursuant to an agreement entered into on June 29, 2007. The duties of the sub-custodian include execution, settlement of mutual fund securities trades, distribution of earned income to clients and transfer of in-kind mutual fund positions to non-Regions entities. In 2015, NFS received net compensation of $615,657 from Regions to provide sub-custodian services. Regions received $1,369,733 from NFS in 2015 from revenue produced from Regions client-held mutual fund positions. Additionally, NFS processes, clears and holds securities transactions for Regions’ broker-dealer subsidiary, at a cost of approximately $125,000 annually pursuant to an agreement entered into on February 6, 2013. These relationships began before Fidelity became the beneficial owner of more than 5 percent of Regions common stock and are expected to continue.
Policies Relating to Transactions with Related Persons and Code of Conduct
Related Person Transactions Policy. The Board has adopted a written policy entitled the “Related Person Transactions Policy.” This policy provides a mechanism for the identification, evaluation, and approval or disapproval of significant transactions involving Regions and persons related to Regions. For purposes of this policy, a “related person transaction” is a transaction, arrangement, or relationship (or any series of similar transactions, arrangements or relationships) in which Regions was, is, or will be a participant and the amount involved exceeds $120,000 in any fiscal year, and in which any “related person” had, has, or will have a direct or indirect
material interest. The category of related persons consists generally of
Regions’our Directors, nominees, and executive
officers,officers; any person or entity who is known to be the beneficial owner of more than 5 percent of any class of Regions voting
securities, andsecurities; immediate family members of any of the foregoing
persons,persons; and “associated entities” of the foregoing persons.
An “associated entity” of a related person means a firm, corporation, or other organizationorganization: (1) in which the related person isholds an executive officer or other executive managerial position. Associated entity also includes a firm, corporation or other organizationposition; (2) in which the related person owns a 10 percent or greater equity interestinterest; or the related person(3) that engages in a
transaction or series of transactions with Regions and the related person receives a measurable financial benefit resulting from the transaction(s).
Certain types of transactions are excluded from the category of related person’s transactions and are not subject to this policy even if the amount exceeds $120,000. For example, a related person transaction does not include any transaction that involves services of a public utility at rates or charges fixed in conformity with law or governmental authority.
Each Director and executive officer is required to provide the General Counsel, and periodically update quarterly, a list of his or her immediate family members, the affiliated entities of his or her immediate family members, and additional information elicited for administration of this policy. The General Counsel maintains a
master list of related persons and affiliated entities, and distributes it to the heads of or key associates in functional areas of responsibility that include accounts payable, properties, procurement, and certain other business groups, whichwho will use the information to identify potential related person transactions in order to effectuate this policy.
Any related person transaction is subject to either advance notification procedures (if identified in advance) or ratification procedures. In either case, the related person must provide to the General Counsel notice of the facts and circumstances of the transaction, including:
the related person’s relationship to Regions and the person’stheir interest in the transaction;
the significant facts of the potential transaction, including the proposed aggregate value of the transaction without regard to the amount of any profit or loss;transaction;
the purpose of, and the benefits to Regions of the potential transaction;
if applicable, the availability of other sources of comparable products or services;
an assessment of whether the potential transaction is on terms that are no less favorable to Regions or are comparable to the terms available to an unrelated third party or to associates generally; and
an assessment of whether the potential related person transaction is consistent with Regions’our Code of Business Conduct and Ethics (the “Code of Conduct”).Conduct.
The General Counsel will assess whether the transaction is subject to this policy. If it is determined that the transaction is a related person transaction, it will be submitted to the NCG Committee for consideration at the next NCG Committee meeting. If it is not practicable to wait until the next NCG Committee meeting, the transaction is submitted to the NCG Committee’s Chair for prompt consideration.
ï 2016 Proxy Statement45
The NCG Committee, or its Chair, will consider the relevant facts and circumstances of the related party transaction, including but not limited to:
the benefits to Regions;
the impact on a Director’s independence in the event the related person is a Director, an immediate family member of a Director or an entity in which a Director is a partner, significant stockholder or executive officer;
the availability of other sources for comparable products or services;
the terms of the transaction;
the terms available to unrelated third parties or to associates generally; and
whether the potential related person transaction is consistent with the Code of Conduct.
Any Director or executive officer who is or whose family members or affiliated entities are the subject of the related person transaction is not permitted to participate in the review, consideration, or approval of the related person transaction.
The NCG Committee (or its Chair) is authorized to approve or ratify those related person transactions that are in, or are not inconsistent with, the best interests of Regions and its stockholders, and that are consistent with the Code of Conduct, as the NCG Committee or its Chair determines in good faith. Other related person transactions should be disapproved by the NCG Committee (or its Chair) and should not be entered into or continued by Regions. The NCG Committee (or its Chair) will report the decision to the General Counsel, who will report the decision to the appropriate Regions personnel.
This policy also grants the NCG Committee the authority to address situations in which an unauthorized related person transaction subject to this policy is initiated and is subsequently disapproved.
The NCG Committee will annually review and consider any previously approved or ratified related person transaction that remains ongoing.
Regulation O Policies and Procedures. We maintain additional policies and procedures to help ensure our compliance with the Federal Reserve’s Regulation O. This regulation imposes various conditions on a bank’s extension of credit to Directors and executive officers. Any extensions of credit must comply with our Regulation O policies and procedures. As previously discussed, a Director can meet our guidance for independence if the Director or immediate family member has a loan or extension of credit, and that loan was made or credit was extended on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons and involved no more than the normal risk of collectability and presented no other unfavorable features.
Our Regulation O policies and procedures require that:
Extensions of credit (including interest rates and collateral) to covered individuals or entities must be made on substantially the same terms as those prevailing at the time for comparable transactions with those who are not covered.
| | substantially the same terms as those prevailing at the time for comparable transactions with those who are not covered.
|
The covered extension of credit must 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 wholly-owned subsidiary, bank, Regions Bank, designates a Regulation O Credit Officer to review extensions of credit to determine our compliance with our policies and procedures. If an extension of credit would result in an aggregate credit
extension of more than $500,000 to a covered individual or entity, the board of Regions Bank must approve it. Reports of all extensions of credit made to executive officers under Regulation O are provided to the Regions Bank board.
All loans to Directors and executive officers:
Comply with our Regulation O policies and procedures;
Are made in the ordinary course of business;
Are 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 Regions; and
Do not involve more than the normal risk of collectibility or present other unfavorable features.
Code of Conduct. The Code of Conduct contains several provisions that also serve to regulate transactions with our associates and Directors and to guide them in avoiding situations that could be viewed as actual or perceived conflicts of interest. For example, the Code of Conduct prohibits activities that could be construed as self-dealing, such as:
Personally extending credit to a non-relative who applied for and was denied credit by Regions;
Representing Regions in a relationship or transaction in which the associate or Director has a family, financial or other material interest;
Representing an entity other than Regions in any transaction with Regions;
Co-signing, acting as power of attorney or otherwise representing a customer (other than an immediate family member) with respect to a Regions account;
Purchasing any property that the associate or Director understands Regions intends to purchase;
Using Regions’ property or corporate time for personal gain not related to job performance;
Processing of bank transactions by an associate for that associate’s own personal account, for the account of an immediate family member or for an account on which the associate is a signatory; and
46 ï 2016 Proxy Statement
Borrowing from customers, suppliers or other persons or companies that do business with Regions except those that engage in lending in the ordinary course of their business on terms offered others in the normal course of business.
Additionally, under the Code of Conduct, associates or Directors who learn of a business opportunity in the course of their service for Regions cannot appropriate that opportunity for themselves or for others. Instead, the Code of Conduct requires that they allow Regions to take advantage of the opportunity.
Among other things, the Code of Conduct is designed to provide guidance and resources to help ensure, among other matters, that:
Regions and its associates remain in compliance with all applicable laws and regulations.
Regions is a safe and nondiscriminatory place to work and do business.
Confidential and proprietary information is protected.
Inappropriate gifts or favors are not accepted.
Conflicts of interest are avoided.
Any material departure from a provision of the Code of Conduct on behalf of a member of an executive officer, a Director or a Senior Financial Officer (as defined in the paragraph below) may only be waived by the Board, and any such waiver will be promptly disclosed as required by applicable law, rule or regulation.
Code of Ethics for Senior Financial Officers. The Senior Financial Officers are bound by the provisions set forth in the Code of Conduct relating to, among other topics, ethical conduct, conflicts of interest and compliance with law. The Board has, however, adopted a separate Code of Ethics for Senior Financial Officers that supplements the Code of Conduct and applies to Regions’ CEO, CFO, and the Principal Accounting Officer and Controller. This Code of Ethics for Senior Financial Officers may be found on the Investor Relations section of our website at www.regions.com. Regions will disclose any amendments or waivers with respect to its Code of Ethics for Senior Financial Officers on its website.
Director Attendance
Pursuant to Regions’ Corporate Governance Principles, Directors are expected to attend and participate in all Board meetings and meetings of Committees on which they serve. Directors are expected to be available for consultation with management as requested from time to time.
In 2015, all incumbent Directors attended at least 75 percent of the aggregate number of meetings held by the Board and by Committees of which they were members.
Our current Director attendance for Board and Committee meetings averaged over 96 percent in 2015. In his role as Lead Independent Director, Mr. McCrary attended a majority of the meetings of the Committees of which he is not a member.
Director Attendance at the Annual Meeting
As stated in Regions’ Corporate Governance Principles, Directors are expected to attend all meetings of stockholders. At
the 2015 Annual Meeting, all 12 incumbent Directors attended the meeting in person.
Meetings of Independent Directors
All Directors, and then the independent Directors, meet in executive sessions at each regular meeting of the Board, and have the opportunity to meet in executive sessions at regularly scheduled conference call meetings held by the Board.
These executive sessions provide the opportunity for discussion of the CEO’s performance, compensation, succession planning,
critical strategic matters and other topics that should, in certain instances, be discussed without management being present.
The independent Directors met in executive session seven times in 2015 with no other attendees present. Mr. McCrary, as the Lead Independent Director, presided over these executive sessions of the independent Directors.
Communications between Stockholders and Other Interested Parties and the Board of Directors
The Corporate Governance Principles adopted by the Board include a mechanism for stockholders and other interested parties to communicate with Directors. The Board believes questions or concerns related to matters such as financial results, strategic direction, executive compensation, corporate governance and general Board oversight, including accounting, internal accounting controls, auditing and other related matters
are appropriately addressed to the Board. Matters that deal with the Company’s general business operations are more appropriately addressed by management.
The Corporate Secretary circulates communications to the appropriate Director or Directors, with the exception of those communications that are of a personal nature or not related to the duties and responsibilities of the Board, including without
ï 2016 Proxy Statement47
limitation, routine customer service complaints. The Corporate Secretary maintains a log of any such communications not shared with the Board and such log is provided to the Board on a quarterly basis. In addition, Directors may review any communication upon request. Items such as commercial solicitations, opinion survey polls, new product or service suggestions, resumes, job inquiries and mass mailings are not shared with the Board nor maintained in a log.
Stockholders and other interested parties may send communications directed to the Board, a Committee, the
Chairman, the Lead Independent Director, the independent Directors as a group or an individual member of the Board by sending a letter with clear notation as “Board Communication” or “Director Communication” to:
Regions Financial Corporation
c/o Office of the Corporate Secretary
1900 Fifth Avenue North
Birmingham, Alabama 35203
Board’s Role in the Risk Management Process
The Board oversees the management of risk primarily through its Risk Committee, with guidance from the Audit Committee on major financial risks
whileand compliance with legal and regulatory requirements. Additionally, the
CompensationCHR Committee oversees risk as it relates to compensation
and human resources matters, and the NCG Committee monitors risks related to environmental stewardship, social responsibility, and corporate governance matters. The Board
establisheslays the foundation for the Company’s risk culture by
adoptingestablishing the Board’s
Enterprise Risk Appetite Statement, which documents the Company’s tolerance for risk. The
Enterprise Risk Appetite Statement is reviewed and approved annually by the Risk Committee. The Risk Committee monitors the Company’s performance to ensure alignment with the tolerance levels articulated in the
Enterprise Risk Appetite Statement. The Risk Committee is responsible for the risk management policies of Regions’ enterprise operations and oversight of the enterprise risk management framework. This includes the policies, procedures, strategies, and systems established by management to identify, measure, mitigate, monitor, and report major risks, including emerging risks and other enterprise risks, as well as
receiving updates on the capital planning, management, and assessment processes.
The Board reviews and approves the annual Capital Plan.
In accordance with Regulation YY, the Risk Committee is required to consist of a minimum of three outside members of the Board. Members of the Risk Committee are appointed by the Board based on the recommendation of the NCG Committee and serve at the Board’s discretion. Currently, the Risk Committee consists of sixseven outside independent Directors, with a least one Directortwo Directors who hashave experience in identifying, assessing, and managing risk exposures of large, complex financial firms.firms and are each determined to be a “risk management expert” within the meaning of the Federal Reserve’s Regulation YY. The Chair of the Risk Committee, as designated by the Board, is required to be a Director who (i) is not an officer or employee of the Company; (ii) has not been an officer or employee of the Company during the previous three years; (iii) is not a member of the immediate family of a person who is, or has been within the last three years, a Regulation O executive officer of the Company; and (iv) is an independent director under Item 407 of SEC Regulation S-K. The categories of enterprise risks (including emerging risks) overseen by the Risk Committee currently include legal risk, reputational risk, liquidity risk, credit risk, market risk, strategic risk, compliance risk and operational risk. include:
|
| |
| • compliance risk | • market risk |
| • credit risk | • operational risk |
| • legal risk | • reputational risk |
| • liquidity risk | • strategic risk |
In addition, the Risk Committee approves, at least annually, the contingency funding plan that sets out the Company’s strategies for addressing liquidity needs during liquidity stress events, as well as certain other plans from time to time. The Risk Committee is required to meet at least quarterly or more frequently if it deems necessary and fully document and maintain records of its proceedings, including risk management decisions. The Risk Committee meets with and receives and reviews information and regular reports from the Chief Risk Officer (“CRO”)CRO and risk management on at least a quarterly basis, as well as from others from time to time, and
recommends actions and other steps to be taken, as it deems appropriate. In addition, the Risk Committee receives written reports from an independent review function regarding material liquidity risk management, as applicable and permitted by law.management. In the course of these reviews, the Risk Committee interacts on a regular basis with the CRO, the Chief Credit Officer, the Director of Credit Review, Director, and the InternalChief Audit Director.Executive. The Risk Committee is also responsible for ensuring that the compensation of the CRO is consistent with providing an objective assessment of the risks taken by the Company.
The Risk Committee reports to the Board with respect to any notable risk management issues and coordinates with other Board and management
level committees as appropriate regarding risk-related issues. In addition, the Risk Committee, along with the CRO, oversees
risk management’sthe Risk Management group’s responsibilities,
budget and staffing. In carrying out its duties, the Risk Committee is authorized to select, retain, terminate, and approve fees and other retention terms of independent legal, accounting, or other advisors as it deems appropriate, without seeking approval of management or the Board.
The Audit Committee also plays a role in risk management oversight. The Audit Committee reviews the guidelines and policies by which risk management and risk assessments are undertaken with respect to Regions’ major financial exposures. The Audit Committee discusses these major financial exposures with Regions’ management, as well as steps taken to monitor and control such exposures. In addition, the Audit Committee assists and advises the Board in monitoring the integrity of the Company’s financial reporting processes, including matters relating to internal controls over financial reporting. The Audit Committee also has oversight responsibilities for compliance with legal and regulatory requirements, as well as the internal audit function and independent auditor. Furthermore, the Audit Committee reviews any significant report and management response to such report, including any significant instance where
business units or risk management personnelassociates have not adhered to the Company’s risk governance framework.
The CompensationCHR Committee also participates in risk management oversight, particularly as it relates to compensationconcerning compensation-related risk. The CompensationCHR Committee considers, in establishing and reviewing the Company’s associate and executive compensation programs, whether these programs encourage unnecessary or excessive risk taking that could threaten the value of or have a material adverse effect on Regions andRegions. The CHR Committee has concluded that theythese programs do not.not encourage such unnecessary or excessive risk taking. Moreover, in consultation with senior risk officers, the CompensationCHR Committee establishes and
48 ï 2016 Proxy Statement
maintains appropriate processes and procedures and sufficient personnel to manage compensation-related risks. The CompensationCHR Committee, in consultation with management, also oversees regulatory compliance with respect to compensation matters, including any required certification or
reporting requirements under applicable law. Like the Risk Committee, the Compensation CHR
Committee also receives information from Regions’ risk managementRisk Management group and, in particular, the CRO. At the beginning of 2018, the CHR Committee’s responsibilities were expanded to formally include oversight of the Company’s human resources management function.
Cybersecurity
AtAnnually, the CHR Committee and the Risk Committee meet in a time when protecting financial institutions from cyber threatsjoint session, during which the Committees review and discuss the annual incentive compensation risk assessment conducted by Regions’ Risk Management group.
Finally, the NCG Committee oversees risks related to the Company’s environmental and social responsibility practices, as well as corporate governance matters. Insider trading and related person/party transaction risks also fall under the purview of the NCG Committee.
Each of the Committees’ charters are reviewed annually to, among other things, determine if there is a
top priority, Regions continues to fortifyneed for additional risk oversight. The following depicts some of the risks overseen by the Board and its
risk management program around cybersecurity.four standing Committees: |
| • |
| Who is responsible? | Primary Risk Oversight Responsibilities |
| Board of Directors | The Risk Committee• Oversees processes for evaluating the adequacy of the Board oversees operational risk, which includes information technology activities and related risks, through multiple management oversight committees that specifically focus on information security. | |
| • | | On a regular basis, the Audit Committee of the Board reviews our cyber security risk management, primarily by receiving reports on the Company’s cyber security management program prepared by the Chief Information Security Officer, risk management and internal audit. | |
| • | | Key positions at Regions include: | |
| ¡ | | Enterprise Chief Information Officer | |
| ¡ | | Chief Information Security Officer | |
| ¡ | | Cyber Security and Threat Intelligence Officer | |
| ¡ | | Intrusion Detection Officer | |
| ¡ | | Vulnerability Management Officer | |
| ¡ | | Cyber Risk Management Officer | |
| ¡ | | International and Cyber Investigation Manager | |
| • | | We have a dedicated Security Operations Center for monitoring and responding to cyber events to protect the information of our customers, associates and the Company. | |
| • | | Regions Information Security Program includes: | |
| ¡ | | Multiple layers of security controls as part of our in-depth defense strategy; and | |
| ¡ | | Security measures to reliably authenticate customers accessing the Company’s Internet-based services, including multi-factor authentication for high risk systems. | |
| • | | We continuously develop and enhance controls, processes and systems to protect our networks, computers, systems, and data from attacks or unauthorized access. This includes comprehensive due diligence and ongoing oversight of third-party relationships, involving vendors. | |
| • | | We retain a computer forensics firm and an industry-leading consulting firm in case of a breach event. | |
| • | | Regions continuously makes investments in our technology infrastructure. | |
| • | | Regions’ insurance policies have been custom tailored to cover potential financial losses due to cyber breaches. | |
| • | | Regions is a member of the Financial Services Information Sharing and Analysis Center (FS-ISAC), a nonprofit organization funded entirely by its member firms and sponsors. The overall objective of FS-ISAC is to protect the financial services sector against cyber and physical threats and risk. It acts as a trusted third party that provides anonymity to allow members to submit threat, vulnerability and incident information in a non-attributable and trusted manner so information that would normally not be shared is instead provided for the good of the membership. | |
| • | | Regions is also a member of BITS, the technology arm of the Financial Services Roundtable. BITS serves the financial community and its members by providing industry best practices on a variety of security and fraud topics. | |
| • | | Regions leverages a robust management framework to address cyber risk: information security owns the controls, risk management, assessesfinancial reporting, and compliance with law• Reviews management succession planning • Reviews the major strategic, financial, and other objectives of the Company • Annually reviews and approves the Company’s Capital Plan for submission to regulators for final approval • Provides advice to management regarding the achievement of Company goals and objectives |
| Audit Committee | • Reviews internal and external financial reports • Supervises and evaluates Internal Audit function • Reviews and considers Credit Review findings along with those of Internal Audit to ensure independence of those functions • Reviews compliance with laws, regulation, and policy via inquiry and Internal Audit findings • Engages and oversees external audit firm • Reviews FDICIA/SOX compliance • Evaluates and reviews the allowance for loan and lease losses (“ALLL”) • Approves and monitors accounting policy • Considers general control environment and application controls |
| CHR Committee | • Reviews and approves executive compensation policies and corporate compensation principles • Reviews incentive compensation assessment • Engages external compensation consultants • Oversees compensation policies compliance with relevant laws and regulations • Oversees the development, implementation, and effectiveness of the Company’s strategies and policies regarding its human resources management function |
| NCG Committee | • Monitors corporate governance practices • Oversees environmental stewardship and corporate social responsibility • Annually reviews Board composition • Monitors insider trading and related person/party transactions • Oversees management succession In coordination with the CHR Committee |
| Risk Committee | • Oversees the operation of the enterprise risk management framework • Reviews major risks and internal audit tests control effectiveness. | |
| trends via the Enterprise Risk Assessment process, including emerging risks • | | The Board consults with outside experts with an expertise in cybersecurity from time to time. | |
| • | | Cybersecurity education Monitors critical metrics, key risk indicators, and training is regularly provided to our Directorsperformance against the Enterprise Risk Appetite Statement• Annually reviews and associates. | |
| • | | Regions’ Information Security group performs ongoing social engineering assessmentsapproves management committee charters and engages independent third parties to perform annual network penetration tests. | reviews pertinent committee information quarterly • Annually reviews and approves enterprise-wide risk management policies • Supervises Credit Review function • Review and annually approve liquidity policies and the Contingency Funding Plan • Routinely reviews credit performance and concentrations, treasury activities, fiduciary activities, new initiative risk assessment activities, major litigation, major projects, open risk management issues (inclusive of remediation plans), and operational issues |
ï 2016 Proxy Statement49
During 2017, a number of high-profile data breaches demonstrated that such lapses can lead not only to financial losses, but can also negatively affect the confidence in and reputation of the breached company. At Regions, we continue to enhance our Information Security capabilities to increase our operational resilience. Below are some highlights of the measures we employ to identify and mitigate threats to confidentiality, availability, and integrity of our information systems.
The Risk Committee oversees operational risk, which includes information technology activities and risks associated with development, infrastructure, and information/cyber security; approval and oversight of information security risk assessment, strategy, policy, and program framework; disaster recovery, business continuity, and incident response.
On a regular basis, the Audit Committee reviews our cybersecurity risk management practices, primarily by receiving reports on the Company’s cybersecurity management program prepared by the Chief Information Security Officer, risk management, and Internal Audit.
The Company regularly provides cybersecurity education and training to our associates to mitigate, among other things, social engineering attempts.
Mr. Hall, our current Chairman and CEO, has extensive technology and operations expertise, including information security and cybersecurity experience. His background as the former head of the Operations and Technology Group at Regions for eleven years, affords Regions with a leader who has comprehensive knowledge and experience in this area. Furthermore, in addition to Mr. Hall, certain other Directors on the Board have considerable cybersecurity experience.
Regions employs widely accepted cybersecurity guidance, policies, and best practices to help us effectively define and measure our program and its components, including the National Institute of Standards and Technology framework.
Several key technology officers at Regions, who are actively engaged in protecting our information systems and data, include: Enterprise Chief Information Officer; Chief Information Security Officer; Threat Intelligence Officer; Cyber Security Operations Officer; Vulnerability Management Officer; Cyber Risk Management Officer; Head of Innovation and IT Risk; and Director of IT Audit.
We have a dedicated Security Operations Center for monitoring and responding to cyber events to protect the information of our customers, associates, and the Company and the availability and integrity of our information systems.
Our Information Security Program includes multiple layers of security controls as part of our in-depth defense strategy and security measures to reliably authenticate customers accessing the Company’s Internet-based services.
We continuously develop and enhance controls, processes and systems to protect our networks, computers, systems, and data from attacks or unauthorized access. This includes comprehensive due diligence and ongoing oversight of third-party relationships, involving vendors.
Regions has a defined physical security program with industry accepted controls in place that include monitored and defended perimeters, badge restricted access, video surveillance, and biometric readers to access the data center raised floor.
We keep a computer forensics firm and an industry-leading consulting firm on retainer in case of a breach event.
Regions has a Business Continuity/Disaster Recovery program in place that is tested at least annually.
We continuously make investments in our technology infrastructure to ensure appropriate capacity and replace older systems.
Our insurance policies have been tailored to cover potential financial losses due to cyber events.
Regions has contracts with vendors to provide denial of service mitigation. These vendors have also committed the necessary resources to support Regions in the event of an attack.
We are a member of the Financial Services Information Sharing and Analysis Center (“FS-ISAC”), a nonprofit organization funded entirely by its member firms and sponsors. The overall objective of FS-ISAC is to protect the financial services sector against cyber and physical threats and risk. It acts as a trusted third party that provides anonymity to allow members to submit threat, vulnerability, and incident information in a non-attributable and trusted manner so information that would normally not be shared is instead provided to other members for the good of the membership.
We are also a member of BITS, the technology arm of the Financial Services Roundtable. BITS serves the financial community and its members by providing industry best practices on a variety of security and fraud topics.
We leverage a robust risk management framework to address cyber risk: information security owns the controls, risk management assesses and monitors the risk, and internal audit tests control effectiveness.
Our Cyber Risk Management Program is a second line of defense that provides objective challenge, oversight, and independent assessment of the cybersecurity risk posture across Information Technology, Information Security, and business units at Regions with exposure to cybersecurity risk.
The Board consults, from time to time, with outside parties with an expertise in cybersecurity.
Our Information Security group performs ongoing social engineering assessments and engages independent third parties to perform annual network penetration tests.
Relationship of Compensation Policies and Practices to Risk Management
We have long adhered to compensation policies and practices that are designed to support a strong risk management
culture.culture while simultaneously rewarding long-term value through implementation of our strategy. Accordingly, we employ strong and effective corporate governance that includes active oversight and monitoring by the
CompensationCHR Committee
overof our incentive compensation practices.
While we cannot avoid all risk, the successful execution of our strategy requires effective management of the risks we do take. Our risks may be generated from external or internal sources, and may or may not be within our control. We do not attempt to eliminate all risk, but rather identify, understand, assess, monitor, and manage the risk.
We wantAlthough our decisions
are to
reflect abe guided by our mission, vision, and values, these decisions must align with our defined 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 stockholders.
Because this is an ongoing process, our CHR Committee continues to monitor the effect that changes in the economic and external environment could have on our existing risk management practices.
As we describe in the
Compensation Discussion and Analysis (“CD
&A”) section,&A, which begins on page
61,70 we
attempt to align how we
manage riskcompensate associates with how we
compensate associates.manage risk. The process of
limitingmanaging risk starts with the Board in setting the risk appetite for the Company and establishing policies and implementing appropriate limits.
StrategicManagement develops strategic business plans
are developed for each business group and unit of the Company, and these plans recognize and account for the risk tolerances supported by the Board. Compensation policies and plans are then designed,
and periodically reviewed, and revised to ensure that they continue to support
long-term growth and the strategic direction for the Company.
Consistent with effective risk management principles, base salaries of associates are competitive, and represent a significant portion of the compensation, of all associates and therefore,are typically reviewed on an annual basis in a Company-wide exercise. As such, they do not encourage excessive risk taking in order to increase compensation levels. Variable compensation payments are made to many, if not most, associates within the Company and provide an important tool to motivate associates to excel at executing our business plans. However, variableVariable incentive policies and plans are by design, aimed at aligning long-termcarefully designed to align associate and stockholder interests and overall, represent a small percentage of total revenue. CompensationAdditionally, variable incentive plans are governed by a comprehensive set of reviews, alignment tools, and polices to ensure that
adequate controls are in place. And, finally, compensation decisions also rely onare subject to scrutiny by the Compensation Committee’sCHR Committee and management’s discretion to consider other
senior management so that factors such as effective risk management,management; compliance with controls and ethical conduct,conduct; competition for top talent,talent; market-based pay levels,levels; and the need to attract, develop, grow, and retain the leadership team.
As further discussed in our CD&A, our Compensation Committee continues to monitor the effect changes in the economic environment have on our existing risk management practices. team are taken into consideration.
Certain practices established by the Company include:
Strong clawback policy;
Policy providing guidance to business leadership as to the appropriate use of discretion in compensation decisions;
Policy covering adverse risk events and how we consider those events in making compensation decisions;
A centralized group that assists the businesses with the design of incentive plans so that they are in alignment with the business strategies, guiding principles for variable compensation, risk appetite statements, and all relevant guidelines and policies;
A comprehensive internal governance process covering the administration of our incentive compensation programs;
Robust compliance, internal control, disclosure review, and reporting programs;
Long-term compensation awards that are subject to substantial future performance requirements;
Robust internal governance process covering the administration of our incentive compensation programs; and
Policy that prohibits hedging strategies related to the ownership stakes our key associates have in Regions.
As more fully described in the CD&A, the CompensationCHR Committee oversees our compensation practices and meets at least on an annual basis with the CRO to review incentive compensation arrangements for associate compensation plans in order to identify any features that might encourage unnecessary and excessive risk-taking or manipulation of earnings. Based on our approach to enterprise risk management, including the comprehensive risk review and assessment of our incentive compensation plans, our risk assessments for significant businesses and staff functions, and the continued emphasis on incorporating risk mitigating practices and performance requirements within our compensation programs, we believe that theany risks arising from our compensation plans, policies, and practices arewill not reasonably likely to have a material adverse effect on the Company.
50 ï 2016 Proxy Statement
Compensation Consultant Disclosure
Since 2012, the
CompensationCHR Committee has retained Frederic W. Cook & Co., Inc. (“Cook & Co.”) to provide independent
adviceinformation and
informationconsultation regarding the design and implementation of our executive compensation programs. Cook & Co. is a nationally recognized compensation consulting firm
that works exclusivelyand is engaged by and performs work solely for the
CompensationCHR Committee. The duties and services provided by Cook & Co. are more fully described in the CD&A section of this proxy statement.
It is the
CompensationCHR Committee’s view that its compensation consultant and any other advisors should be able to render candid and direct advice independent of management’s influence, and numerous steps have been taken to satisfy this objective.
Annually, and most recently in December 2015,2017, the CompensationCHR Committee considered the independence of Cook & Co. in light of current SEC rules and NYSE listing standards. The Compensation CHR
Committee requested and received a letter from Cook & Co. addressing its independence, including the following factors:
other services provided to usRegions by Cook & Co.;
fees paid by usRegions as a percentage of Cook & Co.’s total revenue;
policies or procedures maintained by Cook & Co. that are designed to prevent a conflict of interest;
any business or personal relationships between the individual consultants involved in the engagement and a member of the CompensationCHR Committee;
any Regions equity securities owned by the individual consultants involved in the engagement;engagement and certain of their family members; and
any business or personal relationships between Regions’ executive officers and Cook & Co. or the individual consultants involved in the engagement.
The CompensationCHR Committee discussed these considerations and concluded that the work of Cook & Co. did not raise any conflict of interest.
Director Attendance at Board and Committee Meetings
CompensationPursuant to Regions’ Corporate Governance Principles, Directors are expected to attend and participate in all Board meetings and meetings of Committees on which they serve. Directors are expected to be available for consultation with management as requested from time to time.
In 2017, all incumbent Directors attended at least 75 percent (the threshold for disclosure under SEC rules) of the aggregate
number of meetings held by the Board and by Committees of which they were members. Our Director attendance for Board and Committee Interlocksmeetings averaged over 94 percent in 2017.
In his role as Lead Independent Director, Director McCrary also attends a majority of the meetings of the Committees of which he is not a member.
Director Attendance at the Annual Meeting
As stated in Regions’ Corporate Governance Principles, Directors are expected to attend all meetings of stockholders. At the 2017 Annual Meeting, all incumbent Directors attended the meeting.
Meetings of Independent Directors
All Directors, and
Insider Participationthen the independent Directors, who served on Regions’ Compensationmeet in executive sessions at each regular meeting of the Board and have the opportunity to meet in executive sessions at regularly scheduled conference call meetings held by the Board. These executive sessions provide the opportunity for discussion of the CEO’s performance, compensation, succession planning, critical strategic matters, and other topics that should, in certain instances, be discussed without management being present.
The independent Directors met in executive session at eight Board meetings in 2017 with no other attendees present. Director McCrary, as the Lead Independent Director, presided over all but one of the executive sessions of the independent Directors. Independent Director Johns presided over the one executive session held during Director McCrary’s absence. In addition to the full Board, each of the standing Committees typically meet in executive sessions at each regular quarterly meeting and, as applicable, at other Committee meetings.
Board and Committee Meetings in 2017
Regular Board and Committee meetings are held at such times as the Board and Committees, respectfully, may determine. Special meetings may be called upon appropriate notice at any time during 2015 are listedtime.
The table to the right. During 2015, there were no relationships that would create a Compensationright shows the number of Board and Committee interlock as defined under applicable SEC regulations.meetings held in 2017.
|
Compensation Committee Members During 2015 | |
David J. Cooper, Sr. Meetings Held |
Don DeFossetBoard of Directors | 8 |
Ruth Ann MarshallAudit Committee | 12 |
Susan W. MatlockCHR Committee | 6 |
Lee J. Styslinger IIINCG Committee | 5 |
| Risk Committee | 4 |
| Joint Meeting of Audit Committee and Risk Committee | 1 |
| Joint Meeting of CHR Committee and Risk Committee | 1 |
| Joint Meeting of NCG Committee, CHR Committee, and the Board | 1 |
| Total | 38 |
Board and Committee meetings typically occur no less frequently than on a quarterly basis. Set forth below is the typical two-day on-site Board and Committee meeting schedule.
|
| |
| Typical Two-Day On-Site Board and Committee Meeting Schedule |
| Meeting Preparation | Committee Chairs and the Lead Independent Director meet with management and outside advisors, as appropriate, to prepare for Committee meetings and set the agendas. In accordance with the Board’s instructions on managing its information flow, the Board and Committee meeting materials are provided to the Directors approximately a week in advance to ensure sufficient time to review the materials before arriving at the meetings. |
| Prior to the Meeting | Upon request, Directors may meet with members of management or other Regions associates to discuss the materials or obtain additional information before the meetings begin. In-house Director education sessions are typically held to cover requested or suggested topics. |
| Day 1 | Meetings of the Audit Committee, the CHR Committee, and Risk Committee, each as applicable, are generally held on the first day of meetings. Routinely, joint meetings of these Committees are also held. Executive sessions (meetings without management present) are typically held at each regularly scheduled Committee meeting and are presided over by the Committee Chairs. These executive sessions provide the Committees with the opportunity to discuss certain topics such as management performance and succession, executive compensation, etc. Depending on the number of agenda items to be discussed by the full Board, the Board may hold a short meeting. Following the Committee meetings, the Directors are provided an additional opportunity to interact directly with members of senior management and any invited external experts during dinner. |
| Day 2 | Breakout sessions and one-on-one meetings with management and additional education sessions are typically held in the morning. The NCG Committee generally meets on the second day of meetings because certain actions taken by the other Committees must be reviewed by the NCG Committee before proceeding to the full Board. The NCG Committee also typically holds an executive session at each of its regularly scheduled meetings. The Board meeting is typically held on the second day so that action can be taken on those recommendations flowing out of the previous Committee meetings. As with the Committees, the Board also holds an executive session at each regularly scheduled Board meeting. The Chairman presides over the executive session of the full Board and then the Lead Independent Director presides over an executive session of independent Directors. |
| Following the Meeting | Directors and management address follow-up and action items from the meetings. Management tracks progress and reports to Committee Chairs as appropriate. |
Committees of the Board of Directors
Our Board has established four standing committees:Committees: an Audit Committee, a CompensationCHR Committee, an NCG Committee, and a Risk Committee. Each of these Committees meet on a regular basis and operate under a written charter approved by the Board.
In addition, eachFebruary 2018, the Board took action to consolidate oversight of the Company’s policy and decision-making relating to corporate culture, human capital, and talent management by amending the name of the Compensation Committee to the “Compensation and Human Resources” Committee and its purpose.
Each standing Committee reviews and reassesses its charter on an annual basis. Moreover, each Committee performs an
annual self-evaluation to determine whether such Committee is functioning effectively and fulfilling its duties as prescribed by its charter. Each Committee may form and delegate authority to subcommittees or one or more
committeeCommittee members.
We describe the mainkey responsibilities of the Board’s standing Committees on the following pages. 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 thesethe Committees discussed in this section are all available on the Investor Relations section of our website at www.regions.com.
www.regions.com.
In addition, our By-Laws authorize the Board to create other committees as needed.
Committee Composition
Board and Committee Meetings in 2015
The table to the right shows the number of Board and Committee meetings held in 2015. Under our Corporate Governance Principles, Board members are expected to attend and participate in all Board meetings and meetings of Committees on which they serve and to attend all meetings of stockholders.
Each Director attended at least 75 percent of the combined total number of meetings of the Board and all Committees on which the Director served (the threshold for disclosure under SEC rules).
Attendance for current Directors for Board and Committee meetings averaged over 96 percent in 2015.
| | | | |
| | Number of
Meetings Held
| |
Board of Directors
| | | 9 | |
Audit Committee
| | | 9 | |
Compensation Committee
| | | 7 | |
NCG Committee
| | | 5 | |
Risk Committee
| | | 7 | |
ï 2016 Proxy Statement51
Committee Composition
The table below indicates the current members and Chairs of each standing Committee. Each Director serving on one of Regions’ standing four Board Committees has been determined to be independent. Also identified are the Directors who have been determined by our Board to be an Audit Committee Financial Expert, as defined under SEC regulations, and thea Risk Committee Risk Management Expert, as defined under“risk management expert,” within the meaning of the Federal Reserve’s Regulation YY.
Cross-Committee membership is a consideration when the NCG Committee recommends Committee member assignments to the
Board. For example, the Chairs of the Audit Committee and the Risk Committee each serve on both Committees. In addition, the Chair of the Compensation Committee serves on the Risk Committee. The Chair of the NCG Committee, who also serves as the Lead Independent Director, attends the majority of all other Committee meetings. The Chair of the CHR Committee serves on the Risk Committee.
The Chairs of the Audit Committee and Risk Committee generally meet in advance of in-person meeting cycles and attend as many of the other Committee’s meetings as well. All independent Directors other than the Lead Independent Director serve on at least two Committees, providingpossible.
To provide further opportunities for cross-Committee membership.membership, most Directors serve on multiple Committees and each Committee has at least one member from each of the other Committees.
The following table sets forth each standing Committee’s current membership.
| | | |
| | | | |
| | Audit Committee | Audit
CHR Committee | NCG Committee | Risk Committee |
Carolyn H. Byrd 4 | Chair | | Compensation
Committee | |
| David J. Cooper, Sr. | | NCG
CommitteeMember | Member | |
| Don DeFosset | | Risk
CommitteeChair | | Member |
George W. Bryan
Samuel A. Di Piazza, Jr. 4 | Member | Member | | | | | | Chair |
Carolyn H. Byrd
Eric C. Fast 4 | | Chair | | | Member | | | Member |
David J. Cooper, Sr.
John D. Johns † | | | | MemberChair |
| Ruth Ann Marshall | | Member | Member | |
Don DeFosset
| | | | Chair | | | | Member |
Eric C. Fast
| | Member | | | | | | Member |
John D. Johns†
| | | | Susan W. Matlock | | Member | | Member |
Ruth Ann Marshall
John E. Maupin, Jr. | Member | | Member | |
| Charles D. McCrary * | | | Chair | |
| James T. Prokopanko | | | Member | Member |
Lee J. Styslinger III 4 | Member | | | Member |
| José S. Suquet † | | Member | | Member | | |
Susan W. Matlock
| | | | Member | | | | Member |
John E. Maupin, Jr.
| | Member | | | | Member | | |
Charles D. McCrary *
| | | | | | Chair | | |
Lee J. Styslinger III
| | Member | | Member | | | | |
4 Audit Committee Financial Expert
| Audit Committee Financial Expert |
| † | Risk Committee Risk Management Expert |
| |
| * | Lead Independent Director |
52 ï 2016 Proxy Statement
Audit Committee
Chair
Carolyn H. Byrd
Members
George W. Bryan
Eric C. Fast
John E. Maupin, Jr.
Lee J. Styslinger III
Audit Committee
The Audit Committee currently consists of Carolyn H. Byrd (Chair), George W. Bryan, Eric C. Fast, John E. Maupin, Jr., and Lee J. Styslinger III. All of these Directors are independent and were selected for membership on the Audit Committee based on the recommendation of the NCG Committee.
The Audit Committee has a written charter that is posted on the Investor Relations section of our website at www.regions.com and is reviewed and approved on an annual basis.
The purpose of the Audit Committee is to assist the Board in monitoring:
(a)Meetings in 2017 | | Key Responsibilities: |
| 12 plus 1 joint meeting with the Risk Committee | | • Assist and advise the Board in monitoring: - Integrity of the Company’s financial statements and the financial reporting process, including matters relating to internal accounting and financial controls; |
(b) | controls - Independent auditor’s qualifications and independence; |
(c) | independence - Performance of the Company’s internal audit function and independent auditor; and |
(d) | auditor - Compliance with legal and regulatory requirements.requirements • Appoint or replace and oversee the independent auditor • Pre-approve all auditing services, internal control-related services, and, subject to certain de minimis exceptions, permitted non-audit services to be performed by the independent auditor • Discuss with management the (i) Company’s major financial risk exposures and (ii) steps management has taken to monitor and control such exposures • Review and discuss financial statements and disclosure matters that will be filed with the SEC • Review and discuss with management non-GAAP information • Oversee, review, and evaluate the Company’s relationship with the independent auditor and the independent auditor’s performance and independence • Oversee the Company’s internal audit function
|
| Members | |
| Carolyn H. Byrd (Chair) | |
| Samuel A. Di Piazza, Jr. | |
| Eric C. Fast | |
| John E. Maupin, Jr. | |
| Lee J. Styslinger III | |
| Each member of the Audit Committee was determined to meet the independence requirements of applicable law, the NYSE, and Regions’ Corporate Governance Principles. | |
| Each member of the Audit Committee was determined to be financially literate, and Directors Byrd, Di Piazza, Fast, and Styslinger were each determined to be an Audit Committee Financial Expert. | |
| The Audit Committee Report can be found on page 67. | |
The Audit Committee has direct access to and open communication with management and may obtain advice and assistance from internal legal, accounting or other advisors. The Audit Committee is authorized to select, retain, terminate, and approve the fees of independent legal, accounting, or other advisors as it deems appropriate.
Each member of the Audit Committee must be independent and financially literate as defined by the SEC and NYSE regulations. Additionally, at least one member of the Audit Committee must be an Audit Committee Financial Expert as that term is defined by the SEC. Pursuant to the Audit Committee’s written charter, members of the Audit Committee may only serve on two other public company audit committees.
The Audit Committee meets at least quarterly, and more often if deemed necessary or advisable. In 2015, the Audit Committee met seven times, as well as two times jointly with the Risk Committee.
Additionally, pursuant to its charter, the Audit Committee will:
Appoint or replace the independent auditor;
Pre-approve all auditing services, internal control-related services and, subject to certain de minimis exceptions, permitted non-audit services to be performed by the independent auditor;
Discuss with management (i) the Company’s major financial risk exposures and (ii) the steps management has taken to monitor and control such exposures;
Review and discuss financial statements and disclosure matters that will be filed with the SEC;Review and discuss with management non-GAAP information;
Oversee, review and evaluate the Company’s relationship with the independent auditor and the independent auditor’s performance and independence; and
Oversee the Company’s internal audit function.
The Audit Committee serves as a Board-level oversight role. Management is responsible for preparing the Company’s consolidated financial statements, for maintaining internal controls, and for complying with laws and regulations. The independent auditors are responsible for auditing the Company’s consolidated financial statements and internal controls.
The Audit Committee regularly meets with Regions’ internal auditors and Ernst & Young LLP, with and without management present, to discuss the results of their examinations, their evaluations of Regions’ internal accounting and financial reporting controls, and the overall quality of Regions’ financial reporting.
The Audit Committee also must prepare the report required to be included in this proxy statement. The Audit Committee has approved such report, which is on page 59.
Audit Committee Financial Experts
The Board believes that all of the members of the Audit Committee have accounting or related financial management expertise under the rules of the NYSE. Additionally, all members qualify as Audit Committee Financial Experts within the meaning of the rules of the SEC.
In addition, all Audit Committee members are financially literate, as required by NYSE listing standards, and all members meet the additional criteria for independence of audit committee members as set forth in Rule 10A-3(b)(1) under the Exchange Act.
Accounting or Audit-Related Matters
The Audit Committee has established procedures for the receipt, retention and evaluation of complaints and submissions concerning accounting and audit-related matters, the features of which include insulation from management, safeguards for protecting anonymity and confidentiality of associate submissions, alternative methods for submissions, dedication of resources for investigations and the recording and preservation of findings.
The procedures are administered by the Audit Committee and a limited number of individuals in Regions’ corporate security, risk, legal and internal audit areas. Regions has notified its associates that the procedures are in place and how to direct a complaint or submission.
In addition, any interested party may communicate concerns regarding accounting, internal accounting controls or auditing matters directly to the attention of the Audit Committee as follows:
Regions Financial Corporation
Attention: Audit Committee Chair
c/o Office of the Corporate Secretary
1900 Fifth Avenue North
Birmingham, Alabama 35203
ï 2016 Proxy Statement53
Compensation
CommitteeThe Compensation Committee currently consists of Don DeFosset (Chair), David J. Cooper, Sr., Ruth Ann Marshall, Susan W. Matlock and Lee J. Styslinger III.
Each member of the CompensationHuman Resources Committee must be independent as defined by the NYSE. Accordingly, all of our Directors who serve on the Compensation Committee are independent, qualify as a “non-employee director” within the meaning of Rule 16b-3 under the Exchange Act, and satisfy the requirement as an “outside director” for the purposes of IRC Section 162(m).
These Directors were selected for membership on the Compensation Committee based on the recommendation of the NCG Committee. The Compensation Committee has a written charter, which is posted on the Investor Relations section of our website at www.regions.com and is reviewed and approved on an annual basis.
The purpose of the Compensation Committee is to assist the Board in:
(a) |
| | |
| Meetings in 2017 | | Key Responsibilities: |
| 6 plus 1 joint meeting with the Risk Committee and 1 joint meeting with the NCG Committee and Board | | • Assist and advise the Board in: - Fulfilling its responsibilities relating to the compensation of the executive officers; and |
(b) | officers - Ensuring that all executive compensation is fair, appropriate, reasonable, and in compliance with all relevant regulations • Oversee and monitor the Company’s compensation plans and programs to determine whether they are properly aligned with the Company’s strategic and financial objectives and ensure that such employee compensation plans and programs are supportive of the Company’s risk appetite and tolerances established by the Board and establish and maintain the appropriate processes and procedures and engage sufficient personnel to manage compensation-related risks • Review and approve all Company goals and objectives relevant to the CEO’s compensation and evaluate the CEO’s performance in light of those goals and objectives • Determine and approve the CEO’s compensation; approve the compensation of the executive officers and certain senior officers • Review and approve any employment agreement, new hire award or payment proposed to be made with any proposed or current executive officer • Ensure that the compensation and other incentives granted to the CRO are consistent with providing an objective assessment of the risks taken by the Company, in consultation with the Risk Committee • Review and approve any severance; change-in-control; or similar termination agreement, award, or payment proposed to be made to any current or former executive officer • Approve any new equity compensation plan or any material change to an existing plan where stockholder approval is not required • Review and make recommendations as to the form and amount of Director compensation in coordination with the NCG Committee • Assist the Board in overseeing the development, implementation, and effectiveness of the Company’s strategies and policies regarding its human resources management function, including, but not limited to, human capital and talent management, management succession (in coordination with the NCG Committee), and diversity and inclusion practices |
| Members | |
| Don DeFosset (Chair) | |
| David J. Cooper, Sr. | |
| Samuel A. Di Piazza, Jr. | |
| Ruth Ann Marshall | |
| Susan W. Matlock | |
| José S. Suquet | |
Each member of the CHR Committee was determined to meet the independence requirements of applicable regulations.law, the NYSE, and Regions’ Corporate Governance Principles. | |
| The CHR Committee Report can be found on page 90. | |
| Under its Charter, the CHR Committee may delegate all or a portion of its authority, duties, and responsibilities to the CEO or a subcommittee. | |
|
| With respect to the management and administration of the Company’s employee benefit plans, the CHR Committee has delegated certain responsibilities to management’s Benefits Management and Human Resources Committee. Further, the CEO has delegated authority to determine and approve annual grants to key associates under the LTIP, subject to annual grant program guidelines. | |
The Compensation Committee may retain and obtain the advice of any compensation consultant, outside legal counsel, or any such other advisors as it deems necessary or desirable to assist with the execution of its duties and responsibilities.
The Compensation Committee meets as frequently as deemed necessary, but not less than three times per year. The Compensation Committee met six times, as well as one time jointly with the Risk Committee in 2015.
The Compensation Committee regularly invites certain members of management to its meetings, as it deems appropriate, consistent with the maintenance of the confidentiality of compensation discussions. The CEO does not attend any portion of a meeting where his performance is evaluated or his compensation discussed.
The Compensation Committee has the additional authority and responsibilities relating to compensation matters to:
Approve the Company’s compensation philosophy;
Supervise and monitor the Company’s compensation plans and programs to determine whether they are properly aligned with the Company’s strategic and financial objectives and ensure that such employee compensation plans and programs are supportive of the Company’s Risk Appetite Statement as established by the Board and maintain the appropriate processes and procedures and sufficient personnel to manage compensation-related risks;
Review and approve all Company goals and objectives relevant to the CEO’s compensation and evaluate the CEO’s performance in light of those goals and objectives;
Determine the CEO’s compensation (including base salary, incentive compensation, long-term compensation, executive benefits, and perquisites);
Approve the compensation of the executive officers and such senior officers as the Compensation Committee determines appropriate;
Review and approve any employment agreement, new hire award or new hire payment proposed to be made with any proposed or current executive officer;
Ensure that the compensation and other incentives granted to the CRO are consistent with providing an objective assessment of the risks taken by the Company, in consultation with the Risk Committee;
Review and approve any severance, change-in-control or similar termination agreement, award or payment proposed to be made with any current or former executive officer;
Approve the creation, termination and amendment of executive compensation plans;
Approve any new equity compensation plan or any material change to an existing plan where stockholder approval is not required; and
Review and make recommendations as to the form and amount of Director compensation in connection with the NCG Committee.
The Compensation Committee meets with the CRO at least annually to review incentive compensation arrangements for employee compensation plans in order to identify any features that might encourage unnecessary and excessive risk-taking or manipulation of earnings.
The Compensation Committee also must prepare the report required to be included in this proxy statement. The Compensation Committee has approved such report, which appears on page 78.
Compensation Philosophy
In determining the long-term incentive award component of compensation for the executive officers, the Compensation Committee considers the Company’s performance for the year. The Compensation Committee may also take into consideration such items as relative stockholder return, the award practices of competitive financial institutions, the awards granted in past years, the Compensation Committee’s assessment of the current and expected contribution of the executive officer to the Company’s success, and such other factors as the Compensation Committee considers appropriate.
Compensation Committee Interlocks and Insider Participation
Directors who served on Regions’ CHR Committee at any time during 2017 are listed to the right. During 2015,2017, there were no relationships that would create a Compensation Committee interlock“compensation committee interlock” as defined under applicable SEC regulations.
Chair
Don DeFosset
Members
David J. Cooper, Sr.
Ruth Ann Marshall
Susan W. Matlock
Lee J. Styslinger III
54 ï 2016 Proxy Statement
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|
| CHR Committee Members During 2017 |
| David J. Cooper, Sr. |
| Don DeFosset |
| Samuel A. Di Piazza, Jr. |
| Ruth Ann Marshall |
| Susan W. Matlock |
| José S. Suquet |
Chair
Charles D. McCrary
Members
David J. Cooper, Sr.
John D. Johns
Ruth Ann Marshall
John E. Maupin, Jr.
Nominating and Corporate Governance Committee
The NCG Committee currently consists of Charles D. McCrary (Chair), David J. Cooper, Sr., John D. Johns, Ruth Ann Marshall, and John E. Maupin, Jr. All of these Directors are independent. The NCG Committee has a written charter, which is posted on the Investor Relations section of our website at www.regions.com and is reviewed and approved on an annual basis.
The primary purpose of the NCG Committee is to assist the Board by:
(a) |
| | |
| Meetings in 2017 | | Key Responsibilities: |
5 plus 1 joint meeting with the CHR Committee and Board | | • Assist and advise the Board in: - Identifying, considering, and evaluating individuals qualified to become Board members; and |
(b) | members - Establishing and maintaining effective corporate governance policies and practices.practices • Monitor Directors’ service on other boards to ensure that each Director has adequate time to appropriately serve on Regions’ Board • Make recommendations as to the appropriate stock ownership and compensation of non-employee Directors, in consultation with the CHR Committee • Review and assess the Company’s Corporate Governance Principles, Code of Conduct, and Director-Stockholder Engagement Framework • Oversee the Company’s significant practices and reporting with respect to environmental stewardship and corporate social responsibility • Facilitate and oversee the Board’s self-evaluation process • Oversee the Company’s management succession plan • Oversee any amendment to the Company’s Certificate of Incorporation or By-Laws |
The NCG Committee has direct access to and open communication with management and may obtain advice and assistance from internal legal, accounting or other advisors. The NCG Committee is authorized to select, retain, terminate, and approve the fees of independent legal, accounting, or other advisors as it deems appropriate.
Each member of the NCG Committee must be independent as defined by the SEC and NYSE. In the absence of a non-executive Chairman of the Board, the NCG Committee Chair serves as the Lead Independent Director.
The NCG Committee meets as frequently as deemed necessary, but not less than three times per year. In 2015, the NCG Committee met five times.
The NCG Committee recommends to the Board the Director nominees for each annual meeting, and may recommend the appointment of qualified individuals as Directors between annual meetings.
The NCG Committee oversees and facilitates the annual evaluation of the performance of the Board, all committees and individual Directors.
The NCG Committee annually reviews and recommends any changes to its charter and the charters of the other standing Committees.
Further, the NCG Committee assesses the Board’s leadership structure, recommends the appropriate size of the Board, and makes an annual evaluation of the independence of each Director.
In addition, the NCG Committee will:
Monitor Directors’ service on other boards to ensure that each Director has adequate time to appropriately serve on Regions’ Board;
Make recommendations as to the appropriate stock ownership and compensation of non-employee Directors, in consultation with the Compensation Committee;
Review and assess the Company’s Corporate Governance Principles, Code of Conduct, and Director-Stockholder Engagement Framework;
Oversee the Company’s management succession plan; and
Oversee any amendment to the Company’s Certificate of Incorporation or By-Laws. The NCG Committee recommends to the Board the number, identity and responsibilities of Board
| Members | |
committees, includingCharles D. McCrary (Chair)
| |
| David J. Cooper, Sr. | |
| Ruth Ann Marshall | |
| John E. Maupin, Jr. | |
| James T. Prokopanko | |
Each member of the ChairNCG Committee was determined to meet the independence requirements of each Committeeapplicable law, the NYSE, and the membership of each Committee.Regions’ Corporate Governance Principles. | |
The NCG
Risk Committee
assesses the skills, qualifications and experience of our Directors and each year recommends a slate of nominees to the Board. From time to time, the NCG Committee also evaluates changes to the composition of our Board. In evaluating existing Directors or new candidates, the NCG Committee assesses the needs of the Board and the qualifications of the individual. See the discussion on pages 29 through 35 for more information on each of our current nominees.In consultation with the Chairman, President and CEO, the NCG Committee evaluates potential new candidates for Board membership, including candidates recommended by stockholders in compliance with procedures set forth in the By-Laws of the Company. Stockholders who wish to nominate Directors at an annual meeting in accordance with the procedures in our By-Laws should follow the instructions in the sectionSubmission of Stockholder Proposals or Nominations for 2017 Annual Meeting of Stockholders on page 91.
The NCG Committee will seek Board members from diverse professional backgrounds who combine a broad spectrum of experience and expertise with a reputation for integrity, such that the Board will maintain an appropriate mix of skills and characteristics to meet the needs of the Company. The NCG Committee and the Board assess the qualifications of nominees based on criteria such as general business knowledge, an understanding of the financial services industry, experience in positions with a high degree of responsibility, leadership positions in the companies or institutions with which they are affiliated, and the contributions they can make to the Board and management.
Nominees are evaluated based on their individual merits, taking into account the Company’s needs and the composition of the Board. Although the Company does not have a formal policy with respect to Board diversity, the NCG Committee actively considers diversity in its recruitment and nomination of individuals for directorship and Board diversity is one component of the Board’s annual self-evaluation. The NCG Committee evaluates diversity in a broad sense, recognizing the benefits of demographic diversity, but also considering the breadth of diverse backgrounds, skills, and experiences that Directors may bring to our Board.
To assist in its identification of qualified Directors, the NCG Committee reviews key qualifications and skills that are described on pages 27 through 29 of this proxy statement.
The NCG Committee may identify potential Directors in a number of ways, including recommendations made by current or former Directors or members of management and through contacts in the business, civic, academic, legal and non-profit communities. When appropriate, the NCG Committee may retain a search firm to identify candidates.
ï 2016 Proxy Statement55
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CORPORATE GOVERNANCE | | |
| Meetings in 2017 | | Key Responsibilities: |
| 4 plus 1 joint meeting with the Audit Committee and 1 joint meeting with the CHR Committee | | • Oversees the Company’s enterprise-wide risk-management framework, including policies, procedures, strategies, and systems established by management to identify, mitigate, monitor, and report major risks, including emerging risks and other enterprise risks • Establishes the Board’s risk appetite parameters to be used by management to operate the Company within the Enterprise Risk Appetite Statement • Monitors the Company’s performance to ensure alignment with the tolerance levels articulated in the Enterprise Risk Appetite Statement • Ensures that the compensation of the Chief Risk Officer is consistent with providing an objective assessment of the risks taken by the Company • Approves, at least annually, the contingency funding plan that sets out the Company’s strategies for addressing liquidity needs during liquidity stress events • Oversees the Company’s fiduciary activities, including oversight of trust powers exercised by Regions Bank • Oversees the Company’s Credit Review function, including approving the appointment of the Director of Credit Review and reviewing his or her performance and compensation |
| Members | |
| John D. Johns (Chair) | |
| Don DeFosset | |
| Eric C. Fast | |
| Susan W. Matlock | |
| James T. Prokopanko | |
| Lee. J. Styslinger III | |
| José S. Suquet | |
| Each member of the Risk Committee was determined to meet the independence requirements of applicable law, the NYSE, and Regions’ Corporate Governance Principles. | |
| Directors Johns and Suquet were each determined to be a “risk managements expert” within the meaning of the Federal Reserve’s Regulation YY. | |
Risk Committee
The Risk Committee currently consists of George W. Bryan (Chair), Carolyn H. Byrd, Don DeFosset, Eric C. Fast, John D. Johns and Susan W. Matlock. All of these Directors are independent and were selected for membership on the Risk Committee based on the recommendation of the NCG Committee.
The Chair of the Risk Committee, as designated by the Board, is required to be a Director who (i) is not an officer or employee of the Company; (ii) has not been an officer or associate of the Company during the previous three years; (iii) is not a member of the immediate family of a person who is, or has been within the last three years, a Regulation O executive officer of the Company; and (iv) is an independent director under Item 407 of SEC Regulation S-K. The Risk Committee must include at least one Director who has experience in identifying, assessing, and managing risk exposures of large, complex financial firms. Mr. Johns has been determined as the Risk Committee’s Risk Management Expert.
The Risk Committee has a written charter, which is posted on the Investor Relations section of our website at www.regions.com and is reviewed and approved on an annual basis.
The Risk Committee is responsible for: (a) the risk management policies of the Company’s enterprise operations; (b) oversight of the Company’s risk management framework; and (c) the Board’s risk appetite parameters to be used by management to operate the Company.
Generally, Regions’ enterprise risks (including emerging risks) can be categorized as follows: legal risk, reputational risk, liquidity risk, credit risk, market risk, strategic risk, compliance risk and operational risk. The Risk Committee considers risk in relation to the potential for growth and increase in stockholder value.
The Risk Committee met four times, as well as two times jointly with the Audit Committee and one time jointly with the Compensation Committee in 2015. The Risk Committee has direct access to management, with open lines of communication. The Risk Committee meets separately with each of the CRO, Chief Credit Officer, the Credit Review Director, and Internal Audit Director at least quarterly, or more frequently if the Risk Committee deems advisable.
The Risk Committee oversees Regions’ enterprise risk management framework, including policies, procedures, strategies and systems established by management to identify, measure, mitigate, monitor and report major risks, including emerging risks and other enterprise risks.
The Risk Committee reviews and approves the level and nature of risks that Regions is willing to assume and communicates such approval in the form of a measurable Risk Appetite Statement.
The Risk Committee monitors the Company’s performance to ensure alignment with the tolerance levels articulated in the Risk Appetite Statement.
The Risk Committee ensures that the compensation of the CRO is consistent with providing an objective assessment of the risks taken by the Company.
In addition, the Risk Committee approves, at least annually, the contingency funding plan that sets out the Company’s strategies for addressing liquidity needs during liquidity stress events. The Committee will also receive written reports from an independent review function regarding material liquidity risk management.
The Risk Committee also has oversight of the Company’s fiduciary activities, including oversight of trust powers exercised by Regions Bank.
The Risk Committee receives information from the risk management team and other management groups, and advises management on the following items:
Asset and liability management and trading activities;
Compliance with asset/liability policies, limits, activities, and procedures;
Operational risk, including information technology activities;
Risks associated with the Company’s technology infrastructure;
Business continuity planning;
Non-credit losses and credit risk, including the level and adequacy of the allowance for loan and lease losses;
Credit risk rating system;
Significant third-party information technology, vendor and outsourcing arrangements and adherence to policies governing outsourcing arrangements;
Compliance risk, reputational risk, legal risk and strategic risk; and
Market risk, including the oversight of funding activities and liquidity risk.
The Risk Committee has oversight of the Company’s Credit Review function, including approving the appointment of the Credit Review Director and reviewing his or her performance and compensation on an annual basis.
In addition, the Risk Committee has direct access to and open communication with management. The Risk Committee has complete authority to obtain advice and assistance from internal legal, accounting or other internal advisors. In the course of performing its duties and responsibilities, the Risk Committee is also authorized to select, retain, and terminate independent legal, accounting or other advisors as it deems appropriate, without seeking approval of management or the Board.
The Risk Committee coordinates with other Board Committees, as appropriate, concerning risk management matters within the other Committees’ respective areas of responsibility. The Risk Committee makes regular reports to the Board, communicates with the Company’s regulators when appropriate, and performs such other activities that it deems necessary or advisable to fulfill its purpose.
Chair
George W. Bryan
Members
Carolyn H. Byrd
Don DeFosset
Eric C. Fast
John D. Johns
Susan W. Matlock
56 ï 2016 Proxy Statement
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|
PROPOSAL 2 — RATIFICATION2-RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM |
PROPOSAL 2 — RATIFICATION OF
APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
You are voting on a proposal to ratify the appointment of Ernst & Young LLP
(“EY”) as our independent registered public accounting firm for the year
2016.2018.
The Audit Committee is directly responsible for the appointment, compensation, retention, and oversight of the independent auditor retained by Regions to audit the Company’s financial statements. The Audit Committee has appointed
Ernst & Young LLPEY as Regions’ independent registered public accounting firm (that is, the independent auditor) for the
20162018 fiscal year.
In making its determination, the Audit Committee reviewed management’s evaluation of EY’s performance, based on the factors recommended by the Center for Audit Quality. Some of the strengths discussed include: (i) heavy lead partner involvement; (ii) partners have a deep knowledge of Regions’ business processes resulting in effective leverage of Regions’ control processes and documentation; and (iii) consistently brings subject matter experts to bear, as necessary.
Although we are not required to seek stockholder ratification of Ernst & Young LLP’sEY’s appointment, the Board believes it is sound corporate governance to do so, and the Board recommends that the stockholders ratify the appointment of Ernst & Young LLP.EY. In the event the appointment is not ratified by our stockholders do not ratify such appointment, it is anticipated that no change in auditors would be made for the current year because of the difficulty and expense of making any change during the current year. The vote results would, however, be considered in connection with the engagement of independent auditors for 2017.2019.
What vote is required to approve this proposal?
Approval of this proposal requires the affirmative “FOR” vote of a majority of the votes cast for or against the proposal. Abstentions
and broker non-votes have no effect on the vote results.
What does the Board recommend?
The Board unanimously recommends that you vote“FOR” this proposal.
What services are provided by
Ernst & Young LLP?Ernst & Young LLPEY?
EY has been engaged to provide audit, tax, and regulatory compliance advisory services. The Audit Committee
carefully considered and determined that
theRegions’ engagement
by Regions of
Ernst & Young LLPEY for tax and regulatory compliance advisory services does not impair
Ernst & Young LLP’sEY’s independence.
How much was
Ernst & Young LLPEY paid for
20152017 and
2014?2016?
The aggregate fees paid to Ernst & Young LLPEY by Regions for 20152017 and 20142016 are set forth in the following table: | | | | | | | | |
| | | 2015 | | | 2014 | |
Audit fees (1) | | $ | 6,303,384 | | | $ | 6,181,738 | |
Audit related fees (2) | | | 318,769 | | | | 485,650 | |
Tax fees (3) | | | 71,958 | | | | 218,062 | |
All other fees (4) | | | 133,196 | | | | 1,738,909 | |
Total fees | | $ | 6,827,307 | | | $ | 8,624,359 | |
|
| | | | | | |
| | 2017 |
| 2016 |
|
Audit Fees (1) | $ | 6,728,474 |
| $ | 6,148,610 |
|
Audit-Related fees (2) | 391,273 |
| 397,708 |
|
Tax Fees (3) | 249,310 |
| 78,811 |
|
All Other Fees (4) | 303,815 |
| 235,506 |
|
| Total Fees | $ | 7,672,872 |
| $ | 6,860,635 |
|
| |
| (1) | Audit fees include fees associated with the annual audit of Regions’ consolidated financial statements and internal control over financial reporting, reviews of Regions’ quarterly reports on Form 10-Q, SEC regulatory filings and other matters, statutory audits, and audits of subsidiaries. | |
| |
| (2) | Audit relatedAudit-related fees include fees associated with audits of employee benefit plans and certain non-registered funds, as well as service organizations controlsorganization reports. |
|
|
| PROPOSAL 2-RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM |
| |
| (3) | Tax fees include fees associated with tax compliance services, including the preparation, review and filing of tax returns, tax advice, and tax planning. | |
| |
| (4) | All other fees principally include fees associated with advisory services related to regulatory compliance reporting. | |
The Audit Committee is responsible for the audit fee negotiations associated with the Company’s retention of Ernst & Young LLP, In accordance with the Audit Committee Charter, the Audit Committee must pre-approve any engagement of Ernst & Young LLP for audit
ï 2016 Proxy Statement57
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PROPOSAL 2 — RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM |
or, subject to certain de minimis exceptions, non-audit services on a case by case basis. The Audit Committee has delegated to its Chair the authority to pre-approve permissible non-audit services. Any such approval of non-audit services pursuant to this delegation of the full Audit Committee’s authority must be presented to the Audit Committee at its next regular meeting for ratification.
Will a representative of
Ernst & Young LLPEY be present at the meeting?
Ernst & Young LLP
EY served as Regions’ independent auditors for the year ended December 31,
2015,2017, and a representative of the firm will be present at the annual meeting to make a statement if he or she so desires and to respond to appropriate questions from stockholders.
How long has
Ernst & Young LLPEY been Regions’ independent auditor?
Ernst & Young LLP
EY (or its predecessors) has served as Regions’ independent auditors
continuously since 1971.
Because EY has served as Regions’ independent auditors for an extended period, this has allowed them the ability to obtain extensive institutional knowledge and understanding of the Company’s accounting policies and practices and internal controls over financial reporting.
EY has advised the Audit Committee that it is an independent accounting firm with respect to the Company in accordance with the requirements of the SEC and the PCAOB.
How is Regions assured that EY remains independent?
The Audit Committee is responsible for the audit fee negotiations associated with the Company’s retention of EY. In accordance with the Audit Committee Charter, the Audit Committee must pre-approve any engagement of EY for audit services or, subject to certain de minimis exceptions, non-audit services on a case-by-case basis. The Audit Committee has delegated to its Chair the authority to pre-approve audit and permissible non-audit services. Any such approval of audit or permissible non-audit services pursuant to this delegation of the full Audit Committee’s authority must be presented to the Audit Committee at its next regular meeting for ratification. In 2017, all audit and permissible non-audit services provided by EY were approved or ratified by the Audit Committee.
A new lead audit partner is designated at least every five years to provide a fresh
perspective.perspective that is in compliance with regulatory requirements. Consistent with this practice, a new lead audit partner was designated for
2013.2018. The Audit Committee and its Chair
will be directly involved in the selectionoversaw a rigorous process of
selecting a new lead audit partner
upon rotation.In order towith EY. The candidates were assessed based on their related experience and industry expertise and interviewed by the Committee and its Chair. The next lead audit partner rotation is scheduled for 2023.
To assure continuing auditor independence, the Audit Committee periodically considers whether there should be a rotation of the independent
external auditregistered public accounting firm. In determining whether to reappoint the independent auditor, the Audit Committee considers the independent auditor’s qualifications, its independence, and the length of time the firm has been engaged, in addition to considering the quality of the work performed by the independent auditor and an assessment of the past performance of both the lead audit partner and
Ernst & Young LLP.EY.
As an independent registered public accounting firm, EY is subject to PCAOB inspections, American Institute of Certified Public Accountants peer reviews, and PCAOB and SEC oversight.
The Audit Committee and the Board believe that the continued retention of
Ernst & Young LLPEY to serve as Regions’ independent auditors is in the best interest of Regions and its stockholders.
58 ï 2016 Proxy Statement
The consolidated balance sheets of Regions Financial Corporation and its subsidiaries as of December 31,
20152017 and
2014,2016, and the related consolidated statements of
operations, otherincome, comprehensive income,
(loss), changes in stockholders’ equity, and cash flows for each of the three years in the period ended December 31,
2015,2017, are included in Regions’ Annual Report on Form 10-K for the
20152017 fiscal year. Regions, acting through its management and Board of Directors, has the primary responsibility for the financial statements and the reporting process, including the systems of internal accounting controls. Ernst & Young LLP, independent auditors engaged by Regions, are responsible for planning and conducting the annual audit, for expressing an opinion on the conformity of Regions’ audited financial statements with U.S. generally accepted accounting principles and for annually auditing the effectiveness of Regions’ internal controls over financial reporting.
The Audit Committee oversees Regions’ financial reporting process on behalf of the Board of Directors. More specifically, the Audit Committee is appointed by the Board to assist and advise the Board in monitoring:
(a) the integrity of the Company’s financial statements and the financial reporting process, including matters relating to internal accounting and financial controls,
(b) the independent auditor’s qualifications and independence,
(c) the performance of the Company’s internal audit function and independent auditor, and
(d) the Company’s compliance with legal and regulatory requirements.
The Audit Committee does not itself prepare financial statements or perform audits. Additionally, the members of the Audit Committee are not the auditors or certifiers of Regions’ financial statements.
In fulfilling its oversight responsibilities, the Audit Committee has reviewed and discussed the audited financial statements with Regions’ management, including a discussion of the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments, the clarity of disclosures in the financial statements, the analysis of financial condition and results of operations, and the effectiveness of internal controls over financial reporting.
The Audit Committee has reviewed with Ernst & Young LLP their judgments as to the quality, not just the acceptability, of Regions’ accounting principles and such other matters as are required to
be discussed with the Audit Committee under auditing standards generally accepted in the United States, including the matters required to be discussed by the Public Company Accounting Oversight Board’s Auditing Standard No. 16,1301, Communications with Audit Committees.
The Audit Committee
also has received
and reviewed the written disclosures and the letter from Ernst & Young LLP required by applicable requirements of the Public Company Accounting Oversight Board regarding Ernst & Young LLP’s communications with the Audit Committee concerning independence, and has discussed with Ernst & Young LLP their independence in relation to Regions.
The Audit Committee has discussed with Regions’ internal auditors and Ernst & Young LLP the overall scope and plans for their respective audits. The Audit Committee regularly meets with Regions’ internal auditors and Ernst & Young LLP, with and without management present, to discuss the results of their examinations, their evaluations of Regions’ internal accounting and financial reporting controls, and the overall quality of Regions’ financial reporting.
In reliance on the reviews and discussions referred to above, and subject to the limitations on the roleroles and responsibilities of the Audit Committee referred to above and in the Audit Committee Charter, the Audit Committee recommended that the Board approve including the audited financial statements in the Annual Report on Form 10-K for the year ended December 31, 2015,2017, for filing with the SEC.
Submitted by the Audit Committee:
Carolyn H. Byrd, Chair
George W. Bryan
Eric C. Fast
John E. Maupin, Jr.
Lee J. Styslinger III
ï 2016 Proxy Statement59
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| Carolyn H. Byrd, Chair | Samuel A. Di Piazza, Jr. | Eric C. Fast |
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| John E. Maupin, Jr. | Lee J. Styslinger III |
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PROPOSAL 3 — NONBINDING STOCKHOLDER APPROVAL OF3-ADVISORY VOTE ON EXECUTIVE COMPENSATION (“SAY-ON-PAY”) |
PROPOSAL 3 —
NONBINDING STOCKHOLDER APPROVAL OFADVISORY VOTE ON EXECUTIVE COMPENSATION (“SAY-ON-PAY”)
The Board is providing stockholders with the opportunity at the 20162018 Annual Meeting to cast an advisory vote on the Company’s executive compensation paid to named executive officers (“NEOs”) described in theCompensation Discussion and Analysis(“CD&A”), the compensation tables, and related disclosures, as required by the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) and Section 14A of the Exchange Act. This proposal is known as a “Say-on-Pay” proposal. At the 2012 Annual Meeting, the Company asked stockholders to recommend how often they should be given the opportunity to cast this
“Say-on-Pay”Say-on-Pay advisory vote on executive compensation. The stockholders overwhelmingly voted in favor of an annual advisory vote, and the Board affirmed the recommendation and has currently elected to hold
future “Say-on-Pay”Say-on-Pay advisory votes on an annual basis. The stockholders will again be asked to vote on how frequently we should hold the
“Say-on-Pay”Say-on-Pay vote at
ourthis 2018 Annual Meeting of Stockholders.
This
Say-on-Pay proposal gives you, as a stockholder, the opportunity to vote
forFor or
againstAgainst the following resolution:
“RESOLVED, that the stockholders of Regions Financial Corporation (the ‘Company’) approve the compensation of the Company’s named executive officers, as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the compensation tables and the narrative discussion described in the Company’s
20162018 Proxy Statement.”
Because your vote is advisory, it will not be binding upon the Company, the Board or the Compensation Committee and may not be construed as overruling any decision by the Board or the Compensation Committee. The Board and the Compensation Committee, however, value our stockholders’ views on executive compensation matters and will take the outcome of the vote into account when considering future executive compensation arrangements for NEOs.
Prior to submitting your vote, we encourage you to carefully review the CD&A and theCompensation of Executive Officers sections of this proxy statement for a detailed discussion of the Company’s executive compensation program, including information about the 20152017 compensation of our NEOs. Our overall executive compensation policies and procedures are described in the CD&A and the tabular disclosure regarding NEO compensation (together with the accompanying narrative disclosure)
ofin this proxy statement. Our compensation policies and procedures are centered on a “pay-for-performance” culture. We emphasize compensation opportunities that reward results. Our stock ownership requirements and use of stock-based incentives foster the creation of long-term value. In doing so, our executive compensation program supports our strategic objectives and mission and is strongly aligned with the short- and long-term interests of our stockholders, as described in the CD&A.
The Compensation
and Human Resources (“CHR”) Committee, which is comprised entirely of independent Directors, in consultation with Cook & Co., its independent compensation consultant, oversees the Company’s executive compensation program and continuously monitors the Company’s policies to ensure they emphasize programs that reward executives for results that are consistent with stockholder interests and with the safety and soundness of the Company.
The Board and the
CompensationCHR Committee believe that Regions’ commitment to these reasonable and responsible compensation practices warrants a vote by stockholders “FOR” the resolution approving the compensation of our NEOs as disclosed in this
20162018 Proxy Statement.
What vote is required to approve this proposal?
Approval of this proposal requires the affirmative “FOR” vote of a majority of the votes cast for or against the proposal. Abstentions and broker non-votes have no effect on the vote results.
What does the Board recommend?
The Board unanimously recommends that you vote“FOR”the advisory approvalvote of the compensation of the Company’s NEOs.
What is the effect of this resolution?
Because your vote is advisory, it will not be binding upon the Company, the
CompensationCHR Committee, or the
Board.Board and may not be construed as overruling any decision by the Board or the CHR Committee. The Board and the
CompensationCHR Committee, however, value our stockholders’ views on executive compensation matters and will take the outcome of the vote into account when considering future executive compensation arrangements for
the NEOs.
60 ï 2016 Proxy Statement
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| PROPOSAL 4–ADVISORY VOTE ON THE FREQUENCY OF FUTURE ADVISORY VOTES ON EXECUTIVE COMPENSATION |
PROPOSAL 4 — ADVISORY VOTE ON THE FREQUENCY OF FUTURE ADVISORY VOTES ON EXECUTIVE COMPENSATION (“SAY-ON-FREQUENCY”)
What am I voting on?
At the 2018 Annual Meeting, as required by Section 14A of the Securities Exchange Act, stockholders will have the opportunity to cast an advisory vote on the frequency of Regions’ Say-on-Pay votes. This proposal is typically known as a “Say-on-Frequency” vote. Stockholders will have the option of voting in favor of future Say-on-Pay votes being held every year, every two years, or every three years. SEC rules requires us to hold this advisory vote every six years; therefore, we anticipate that the next Say-on-Frequency vote will not occur until 2024. At the 2012 Annual Meeting, the Company asked stockholders to recommend how often they should be given the opportunity to cast Say-on-Pay advisory votes on executive compensation. The stockholders overwhelmingly voted in favor of an annual advisory vote, and the Board affirmed the recommendation and has currently elected to hold Say-on-Pay advisory votes on an annual basis. The Board is in favor of continuing annual Say-on-Pay votes because it provides the Board and Company with more frequent stockholder feedback on our executive compensation structure.
The Compensation and Human Resources (“CHR”) Committee and the Board of Directors recognize the importance of receiving regular input from Regions stockholders on important issues such as executive compensation; and the CHR Committee, which administers the Company’s executive compensation program, values the opinions expressed by stockholders in these votes and will continue to consider the outcome of these votes in making its decisions on executive compensation.
Accordingly, the Board recommends that future advisory votes on executive compensation continue to occur every year because it allows our stockholders to provide more frequent, direct input on our compensation policies and practices, and the resulting compensation for our NEOs. Moreover, the Board also believes an annual advisory stockholder vote promotes corporate transparency and accountability for the CHR Committee.
Stockholders may cast a vote on the preferred voting frequency by selecting the option of every year, every two years, or every three years (or abstain) when voting in response to the resolution set forth below.
“RESOLVED, that the stockholders determine, on an advisory basis, that the preferred frequency with which the stockholders shall have an advisory vote on the executive compensation of the Company’s named executive officers, as set forth in the Company’s proxy statement, is:
Option 1 - every year;
Option 2 - every two years;
Option 3 - every three years; or
Option 4 - abstain from voting.”
What vote is required to approve this proposal?
The option that receives the highest number of votes cast by stockholders will be considered the preferred frequency. Abstentions and broker non-votes have no effect on the vote results.
What does the Board recommend?
The Board unanimously recommends that you vote for holding future advisory votes on executive compensation “EVERY YEAR.”
What is the effect of this resolution?
Because your vote is advisory, it will not be binding upon the Company, the CHR Committee, or the Board and may not be construed as overruling any decision by the Board or the CHR Committee. The Board and the CHR Committee, however, value our stockholders’ views on executive compensation. Therefore, should our stockholders recommend that future Say-on-Pay votes be held less frequently than every year, this recommendation will be taken into consideration by the Board when making its final determination.
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| COMPENSATION DISCUSSION AND ANALYSIS |
COMPENSATION DISCUSSION AND ANALYSIS
How Pay is Tied to Company Performance
Throughout the following pages,this Compensation Discussion and Analysis (“CD&A”), we describe our executive compensation philosophy, program, and the decisions we made in 2015. In thisCompensation Discussion and Analysis (“CD&A”), we focus on the compensation of2017 for our Named Executive Officers (“NEOs”) for 2015:: |
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| Name | | Principal Position |
O. B. Grayson Hall, Jr. | | Chairman and Chief Executive Officer (“CEO”) |
David J. Turner, Jr. | | Chief Financial Officer (“CFO”) |
John B. Owen | | Head of RegionalEnterprise Services and Consumer Banking Group |
John M. Turner, Jr. | President |
C. Matthew Lusco
| | Chief Risk Officer (“CRO”) |
Fournier J. Gale, III
| | General Counsel
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Linking Performance to Compensation Decisions.One of the central principles of our executive compensation program is tying pay to Company performance. At the beginning of each year, we set performance goals based on our Board approved budget and other goals related to our strategic priorities. At the end of the year, we compare these expectations to actual results for the Company and each individual. The proxyfollowing is a high-level summary of our 2017 strategic priorities and achievements:
Focus on page 4the Customer. We are committed to keeping the customer first and foremost in every decision we make. This begins with Regions360, our go-to-market relationship strategy that emphasizes “one bank, one team.” Our commitment to service quality and innovation is designed to enhance the experience of our customers. Some of our notable accomplishments in 2017 include:
Regions was the winner of the 2017 American Customer Satisfaction Index for super regional Banks, and tied for first with Citibank among all named financial institutions.
For the fourth year in a row, Regions was recognized by the Temkin Group as a top decile performer in their annual Temkin Retail Banking Experience Rankings. Regions placed 4th out of over 300 companies across 20 industries and was the top rated bank.
Regions won nine 2017 Greenwich Excellence for Small Business/Middle Market Banking awards in our Commercial Banking Group.
Regions won the 2017 Greenwich Excellence award for Overall Satisfaction in Private Wealth.
Regions was recognized as a 2017 Trust in Banking Leader by Javelin Research, a wholly owned subsidiary of Greenwich Associates. Regions was among the top three financial institutions.
Build the Best Team. We believe that we are only as strong as our associates. That is why “Build the Best Team” continues to be one of our most important strategic priorities. Building the best team begins with the execution of a comprehensive, integrated plan focused on attracting, hiring, developing, and retaining talented associates. Our intention to create an
extraordinary place for our associates to build a career is integral to the achievements of our business objectives. In 2017, we improved our associate engagement as measured annually against Gallup’s 12 elements of great management. To make banking easier for our customers, we redesigned the roles of our branch associates so that each team member can assist our customers with the full spectrum of their banking needs. This change also created a work environment that gives our associates a more fully describesclear path to a career in banking.
Strengthen Financial Performance. Throughout 2017, we remained diligent in strengthening financial performance by focusing on the fundamentals of growing and diversifying revenue, practicing disciplined expense management, and optimizing and effectively deploying capital. Key highlights include:
2017 Net Income from Continuing Operations Available to Common Shareholders was $1.193 billion, or $1.00 per diluted share, which is a 15 percent increase over the $0.87 per diluted share realized in 2016.
Expenses were relatively unchanged with a full-year adjusted efficiency ratio of 62.2 percent.
Executed a strategic reduction of high-cost deposits and improved credit metrics.
Consolidated 59 branches, which brings our performancetwo-year total of consolidated branches to 162.
Enhance Risk Management. One of our key risk management initiatives is Risk Ownership and Awareness (“ROA”). ROA emphasizes that every Regions associate is responsible for prudently managing our Company’s risk. As a result, we continue to scrutinize our own regulatory compliance and credit risk management practices in order to lead to a stronger organization now and in the future. To that end, in 2017 we maintained strong governance processes, effectively deployed our Customer Assistance Program in response to natural disasters that impacted our customers, performed continuous credit portfolio shaping activities, and expanded modeling analytics.
Simplify and Grow. Serving as the new foundation of our strategic priorities is the Simplify and Grow initiative that launched in the fall of 2017. This initiative will transform the way we approach our work by focusing on the following key elements: making banking easier for our customers, accelerating revenue growth, achieving greater efficiencies, and improving the associate experience. Led by Mr. Owen, and with the engagement of an external consulting firm, we completed Phase 1 of the initiative in 2017. Phase 1 included a comprehensive organizational review, the execution of an Organizational Health Index survey, and the progress wedevelopment of Simplify and Grow priorities that will be executed over the next three years.
Focused execution supporting these strategic priorities led to Company performance that was well above target expectations in 2017 and represented the Company’s strongest financial
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| COMPENSATION DISCUSSION AND ANALYSIS |
performance since 2007. Pay decisions made in executing on our strategic plan. Although we saw a numberby the Compensation and Human Resources Committee (the “CHR Committee”) reflect these results. The following table and graph summarize key components of quantitative financial improvementspay and key decisions
related to those components, as well as qualitative strategic successes for the year, our overall performance fell short of our high expectations and our pay programs reflect those results. Total compensation paid to our CEO fell by 25 percent from $14.4 million for 2014 to $10.8 million for 2015. Average total compensation for our other NEOs also fell by 25 percent.
The following table summarizes the key components of compensation paid and awards granted in 2015 and the impact of Company performance on the compensation toof our NEOs:
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| Compensation Component | | Key Decisions Made and the Impact of Performance on Decisions |
20152017 Base Salaries | | AtKeeping with the onset of 2015, recognizingprinciple that pay should largely be performance-based, there was little change in base salary. In early 2017, the challenging operating environment,CHR Committee approved the Compensation Committee of the Board (the “Committee”) elected not to grant anyfollowing: – CEO base salary increases to our NEOs.remained unchanged from previous years; and– Most NEOs received a modest base salary increase of 2.5 percent in recognition of solid individual performance.
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Target 2015Annual Cash Incentive Compensation Awards | | No increases inThe short-term incentive target compensation under our short- or long-term incentive plans were approved except in one instance where competitive market analysis demonstrated a target pay level substantially below thatopportunities remained consistent with no changes from 2016 to 2017. Diligent execution of our peers. Our CROstrategic plan yielded above-target corporate results for the year, at 158 percent of target expectations. Individual performance was granted an increase inalso strong for the long-termyear. Accordingly, the 2017 annual cash incentive portion of pay, making receipt of that pay subject to deferral, at risk, and variable based on future performance of the Company.payment for each NEO increased over payments made for 2016.
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Actual Payout of 2015 Short-TermLong-Term Incentives | | Performance expectations under our short-term (annual) incentive plan were raised over the previous year and as a result of our financial performance against increased targets, payouts of 2015 annual incentives were below target as well as below payout levels for 2014. |
Payout of 2013 Long Term Incentives | | The long-term incentive grants made in 20132017 were consistent in structure to those granted in 2016. We continue to measure long-term performance on the two metrics we consider most important to sustained stockholder value, diluted Earnings Per Share (“EPS”) growth and Return on Average Tangible Common Equity (“ROATCE”). While the CHR Committee considers the grants made in 2017 to be current-year compensation, it is important to also recognize and evaluate the impact of performance on prior years’ awards in ensuring executive compensation is in line with performance. To that end, the CHR Committee noted that long-term compensation awarded in 2015 for the three-year performance period ending December 31, 2015 paid2017, will pay out at 75100 percent of target based ontarget. These payout levels evidence the steady improvement in our corporate performance related to diluted EPS growth and ROATCE over the 3-year period.long-term. |
ï 2016 Proxy Statement61
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| COMPENSATION DISCUSSION AND ANALYSIS |
Summary of our Pay for PerformancePay-for-Performance Decisions for 20152017
Below is a graphic presentationrepresentation of our 20152017 pay elements highlighting the performance-based nature of our compensation programs. As noted below, compensation for our NEOs is highly correlated to performance and decisions discussed throughoutheavily weighted towards compensation components directly connected to the CD&A.interests of our stockholders. Detailed discussions of each of these elements can be found in the Section entitled “20152017 Compensation Decisions — What We Paid and Why”Why beginning on page 66.
Overall, while our 2015 performance did not meet our high expectations, we demonstrated continued progress in core operating measures despite a challenging operating environment. With a rigorous focus on the fundamentals of expense management, prudent loan growth, business development, and selective investments in people, processes and technology, we believe we are well positioned to deliver long-term growth and continue to build stockholder value in 2016 and beyond.
6276. ï 2016 Proxy Statement
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| COMPENSATION DISCUSSION AND ANALYSIS |
Compensation Philosophy and Objectives Our compensation and benefit programs operate under the guidance and oversight of the CHR Committee. The CHR Committee is responsible to the Board for approving Regions’ executive compensation objectives and ensuring that the compensation programs and policies of the Company support the business goals and strategic plans approved by the Board including a commitment to a strong risk management culture. WeBoard.
Recognizing that we operate in a highly competitive and highly regulated environment. As a result,environment and that our ability to successfully compete and grow our business critically depends on the skill, acumen, and motivation of our executives. Our executive team mustexecutives and their ability to develop and execute a dynamic strategic plan. To that end,plan, the CHR Committee established the following guiding principles of compensation to serve as the foundation of our executive compensation programs must be driven by a pay philosophy designed to: (1) attract and retain the key talent necessary to compete; (2) incentivize that talent with a strong pay for performance culture to achieve desired results; and (3) ensure that the long-term health of the Company is not sacrificed due to imprudent short-term decisions or excessive risk taking. This section discusses how we look at compensation and make our decisions.philosophy:
Our philosophy and decisions are founded on a set of five core guiding principles:
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| 1. | Compensation targets should be set at competitive levels. |
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| 2. | Actual compensation levels should be related to performance, with at-risk incentive or at-risk compensation playing a greater role in the total compensation for more senior officers. |
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| 3. | Compensation should be aligned with the long-term interests of stockholders and consistent with the safety and soundness of the Company. |
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| 4. | Compensation programs and levels should not encourage associates to take unreasonable risks that may damage the long-term value of the Company. |
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| 5. | Compensation programs should align with our corporate values. |
In addition to these broad guiding principles, the CHR Committee has also adopted a number of key practices that we believe are consistent with our philosophy and our commitment to excellence in corporate governance. Likewise, the Committee has madegovernance, including making the decision to refrain from certain compensation and employment practices as theythat are not consistent with our philosophy and goals. The following chart details some of these decisions:
What We Do
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What We Do |
| ü | | Pay for Performance (pages 66-71)76-82) | | TheExecutive pay decisions are made to ensure that the majority of executive paytotal direct compensation is at-risk and not guaranteed. For example, more than 8689 percent of our CEO’s target compensation is performance-based with 7864 percent of that performance-based pay subject to deferral and futurethe requirement for sustained performance conditions.over a multi-year period. |
ü | | Evaluate Performance Using a Combination of Balanced Performance Metrics (pages 66-71)76-82) | | We evaluate corporate performance in our annual incentive plans by using a numberdiverse set of diverse performance metrics. Using a variety of metrics helpsto ensure that no single measure can inappropriately impact the level of compensation we pay. We evaluate ourcompensation. Our performance is evaluated compared to internal expectations, budgets, and plans but we also balance that evaluationand balanced with the results of our performanceevaluations on a relative basis as comparedby comparing our results to otherthose of similar financial institutions. Plans also include a degree of discretion allowing for the exercise of sound business judgment by the CHR Committee when assessing performance and corresponding pay decisions.
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ü | | Require Strong Stock Ownership and Retention of Equity (pages 75-76)(page 88) | | OurThe Board established robust stock ownership guidelines are robust, andthat each of our NEOs either meets the ownership requirement or has a strong ownership stakemust meet in the Company and is in compliance with the required retention provisionsorder to assure that executives’ interests are tied to those of our guidelines.stockholders.
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ü | | Provide for a Strong Clawback Policy (pages 74-75)86-87) | | In the event previously paid incentive compensation is determined to be based on materially inaccurate performance metrics or it is determined an executive has engaged in excessively risky or other detrimental conduct, the CHR Committee has wide latitude to cancel or otherwise reduce any current or future compensation as well as potentiallyincentive compensation. In addition, the CHR Committee has further authority to recapture incentive compensation that has already been paid if determined to be in the best interests of the Company and our stockholders.
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ü | | Require Double Trigger Change-in-Control Provisions (pages 76-77)(page 89) | | Our change-in-control agreements as well as ourand long-term incentive awards require both a change-in-control and termination of employment to trigger vesting and/or payment. No awards or benefits vest only upon a change-in-control.
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ü | | Use an Independent Compensation Consultant (page 73)(pages 84-85) | | OurThe CHR Committee determined its compensation consultant has been determined to be independent under the SEC and NYSE guidelines.rules.
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ü | �� | Listen to and Engage with Our Stockholders (pages 65 and 74)74-75) | | We conduct an annual advisory Say-on-Pay vote, as recommended by our stockholders, and actively review the results of these votes as we make program decisions. In addition,2017, stockholders voiced substantial support for our executive compensation plans and programs, with over 96 percent of votes cast in approval. Additionally, as a part of our corporate governance and stockholder engagement program, we solicit feedback regarding our compensation programs from our largest investors and consider any stockholder feedbackcomments we receive. In 2015, stockholders voiced substantial support for our executive compensation plans and programs, with more than 96 percentStockholders are also invited to express their views to the CHR Committee as described on page 41 of votes cast approving such plans and programs.this proxy statement.
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ï 2016 Proxy Statement63
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COMPENSATION DISCUSSION AND ANALYSIS |
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| COMPENSATION DISCUSSION AND ANALYSIS |
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| What We Don’t Do |
| X | | No Incentive Plans that Encourage Excessive Risk Taking | | Protecting against undueunreasonable risk is a central pillarcore guiding principle of our compensation philosophy and is demonstrated in numerous ways, including our balanced program design,design; the use of multiple and competing performance measures,measures; the adoption of a clawback and other enterprise wideenterprise-wide risk-related policies, as well aspolicies; and robust governance and oversight processes to identify, monitor, mitigate, and manage risk. We do not believeOur comprehensive risk assessment of incentive-based compensation plans validates our belief that anynone of our compensation programs create risks that are reasonably likely to have a material adverse impact on the Company, as validated through our comprehensive risk assessment of incentive-based compensation plans.Company.
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| X | | No Employment Agreements for Executive Officers | | Our executive officers are at-will employees with no employment contracts. |
| X | | No Tax Gross-Ups on Perquisites (“Perks”) | | We do not provide tax gross-ups to our NEOs for any taxable perquisitesperks provided to them. In addition, since 2011, we have not entered into any new agreements that permit excise tax gross-ups on change-in-control payments.payments since 2011.
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| X | | No Repricing of Underwater Options | | We do not reprice “out-of-the-money” stock options that are out-of-the-money.options.
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| X | | No Hedging, Pledging, or Short Sales | | We do not permit our associates or Directors to hedge or short-sell Regions securities. Additionally, our Directorsexecutive officers and executive officersDirectors are prohibited from pledging Regions securities.
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| X | | No Dividends or Dividend Equivalents on Unearned Grants | | We do not pay dividends or dividend equivalents on shares or units that are not earned. We issue dividend and dividend equivalent payments at the end of a performance period only on shares and units that ultimately vest.
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| X | | No Excessive Perks | | TheWhile the CHR Committee has eliminated most perks, and those we continue to providethat remain are monitored to ensure they continue to be based on sound business rationale.
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With the guiding principles and key practices mentioned above and set forth by the CHR Committee serving as the foundation, our executive compensation pay programs described in this section are designed to: (1) retain the key talent necessary to
compete; (2) motivate talent with a strong pay-for-performance culture to achieve desired results; and (3) ensure the long-term health of the Company is not sacrificed due to imprudent short-term decisions or excessive risk taking.
Compensation-Setting Process and
Time-LineTimelineThe CHR Committee has designedthoughtfully designs a balanced compensation program that provides competitive fixed base compensation, as well as incentive compensation opportunities for performance over the short-short and long-term. The incentive program rewards achievement against measurable goalslong term. To do so, the CHR Committee considers market-competitive pay and qualitative objectives as compared to expectationspractices in establishing target pay levels, then uses both formulaic determinations and discretionary factors in determining the actual compensation for our own performance and also on a relative basis as measured against the performance of other similar financial institutions. In making our decisions each year,year. While the CHR Committee must be thoughtful about program design. Anconsiders an objective evaluation of performance based on business results is critical, and the CHR Committee focuses on the results achieved by the executive team. Equallyalso believes it is important however, is the ability of the Committee to apply discretion, flexibility, and judgment in the decision makingdecision-making process in order to ensure executive
compensation is balanced between near-term performance and progress toward our longer-term objectives.
The
Committee considers market competitive pay and practices in establishing our target pay levels, and we make usefollowing illustrates elements of
formulaic determinations, as well as discretionary decisions in determining the
actual compensation paidCHR Committee’s decision-making process for the
year.The following charts illustrate elements of ourexecutive compensation program and processes the Committee follows in making decisions.program. The program uses a mix of fixed and variable compensation elements that provides alignment to the core guiding principles noted above. TheUsing this process, the CHR Committee has consistently designed executive compensation programs where the large majority of compensation is performance based measuringperformance-based, with measures for both corporate and individual performance.
It is important to note that though we discuss phases and timeliness of the decision-making process in a manner that may appear to be linear, many steps
1. Review Competitiveness
described below occur continuously and Business ObjectivesPrior toconcurrently as the start of each calendar year,CHR Committee evaluates compensation throughout the Committee focuses on two areas related to upcoming compensation decisions:
year. 
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| COMPENSATION DISCUSSION AND ANALYSIS |
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| 1. Review Competitiveness and Business Objectives |
| Prior to the start of each calendar year, the CHR Committee focuses on two areas related to upcoming compensation decisions: |
| Review of Market Competitiveness of Pay | | Review of Potential Plan Changes, Business Plans,
Budgets, and Expected Results |
The CHR Committee evaluates the market competitiveness of compensation for each of our executive officers in order to guide target compensation decisions for the coming year. With the assistance of its independent compensation consultant, the CHR Committee reviews the compensation of our executive officers against that of the Company’s compensation peer group, as well as thea larger group of diversified financial services industry in general.institutions that compete for business.
| | The CHR Committee begins its discussions about compensation plan design for the coming year. Potential plan changes are discussed based on previous effectiveness evaluations. In addition, members of the executive management team advise the Board with respect to business plans, business risks, expected financial results, and stockholder return expectations of the Company.expectations. The CHR Committee uses these discussions to facilitate the goal setting process for both our short- and long-term performance basedperformance-based compensation plans.
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64 ï 2016 Proxy Statement
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COMPENSATION DISCUSSION AND ANALYSIS |
2. Set Pay Levels and Targets
During the first quarter of the year, the Committee generally takes action on current compensation by targeting pay levels, as well as the performance requirements, executives must achieve in order to receive performance-based pay elements:
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2. Set Pay Levels and Targets |
| During the first quarter, the CHR Committee generally takes action on current compensation by targeting pay levels, as well as the performance requirements executives must achieve in order to receive performance-based pay elements: |
Set Competitive Target Pay Levels | | Establish Incentive Plan Metrics, Targets, and
Other Requirements |
Based on the competitive data previously reviewed and the recommendations of the CHR Committee’s independent compensation consultant (andand the CEO when(when appropriate for executive officers other than himself), the CHR Committee establishes the target pay levels for each executive officer. InWhile competitive benchmarking is not the only consideration in establishing these targets, the CHR Committee generally sets expected pay levels at or nearconsiders the 50th50th percentile of a competitive set of peer organizations.From time to time,organizations and other competitors for talent as a reference point in their decision-making process.
In considering competitive market practices, the CHR Committee reviews and determines the compensation peer group on an annual basis. For more information, see page 85 in the Other Policies and Practices Impacting Compensation Decisions section of this proxy statement.
While we generally consider market medians as the competitive standard, the CHR Committee may set one or more components of compensation for an executive at a level above or below the 50th50th percentile if it is determined to be appropriate due to either the experience or performance of an individual executive or the needs or specific circumstances of the Company.
| | Based on previous discussions and presentations to the CHR Committee and the full Board, the CHR Committee reviews previously approved business plans and sets performance targets for both short- and long-term performance plans.
The CHR Committee generally requires budgeted performance levels to be achieved for target payout levels to be paid. Corporate performance is modeled based onusing both adverse and extraordinarily positive performance scenarios. Meaningful threshold and maximum performance levels are also set so that executive officers are appropriately incented to achieve results while not being incented to take excessive risk in order to achieve compensation payments.
Additionally, plan metrics are set on both absolute and relative performance. To measure relative performance, the CHR Committee uses a performance peer group that is reviewed and determined on an annual basis. For more information, see page 85 in the Other Policies and Practices Impacting Compensation Decisions section of this proxy statement. |
3. Assess Risks and Stakeholder Feedback
During the second and third quarters of the year, the Committee focuses on internal performance assessments, risk assessments of compensation, audits of pay practices, pay for performance evaluations, as well as stockholder and other stakeholder feedback related to compensation practices:
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3. Assess Risks and Stockholder and Other Stakeholder Feedback |
| During the second and third quarters, the CHR Committee focuses on internal performance assessments, risk assessments of compensation, audits of pay practices, pay for performance evaluations, as well as stockholder and other stakeholder feedback related to compensation practices: |
Internal Assessments | |
External Feedback Reviews |
The Committee holds
During a joint meeting withof the CHR Committee and the Risk Committee, of the Board. During this Committee meeting, both Committees review a comprehensive risk analysis of incentive compensation plans presented by the CRO. The risk assessment is based on a thorough and comprehensive multi-disciplinary initiative to review of incentive compensation plans to ensure they do not encourage executive officers or other associates of the Company to take excessive risks in order to achieve compensation levels.
The CHR Committee reviews a current assessment of corporate performance against the compensationperformance goals set at the beginning of the year for both the short-term performance plans as well asand any long-term performance grants currently outstanding.
With the assistance of its independent compensation consultant, the CHR Committee also evaluates the effectiveness of the prior year compensation programs in achieving established goals and adhering to program principles.
| | In addition to the internal compensation risk assessments, with
With the assistance of its independent compensation consultant, the CHR Committee also considers feedback from external stakeholders, including feedback from stockholders related to the annual Say-on-Pay vote each year.vote. The CHR Committee also reviews compensation assessments from Institutional Shareholder Services (“ISS”) and other stockholder advisory firms as well asand feedback from individual stockholders that is received by the Company through itsour corporate governance stockholder engagement program.
In addition to stockholder and investor community feedback, the CHR Committee evaluates any regulatory reviews and concernsmatters and, with the assistance of its independent compensation consultant, evaluatesconsiders compensation best practices and governance improvements as a part of its continuing improvement process. The Committee also reviews the peer groups utilized for compensation benchmarking and performance evaluations and determines the appropriateness of these peer groups.
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4. Evaluate and Certify Company Performance and NEO Compensation
During the fourth quarter of the current year and the first quarter of the following year, the Committee considers items related to current year compensation, as well as looks forward to compensation decisions for the following year. Decisions related to NEO compensation and current year performance can be summarized as follows:
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| COMPENSATION DISCUSSION AND ANALYSIS |
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| 4. Evaluate and Certify Company Performance and NEO Compensation |
| During the fourth quarter and the first quarter of the following year, the CHR Committee considers items related to current year compensation, as well as looks forward to compensation decisions for the following year. Decisions related to NEO compensation and current year performance can be summarized as follows: |
| Evaluate Company Performance | |
Certify Company Performance and Calculate Compensation |
The CHR Committee previews Company forecasts with regard to performance under the short-short-term and long-term plans to prepare for payment discussions in the first quarter. Forecasts of performance include financial results based on Generally Accepted Accounting Principles in the Unites States (“GAAP”),GAAP, as well as a thorough review of adjustments to earnings and any unanticipated or extraordinary events that may have occurred during the year. The CHR Committee begins to evaluate qualitative performance factors and participateseparately, in executive session with only CHR Committee members present, participates in a detailed performance review of the CEO.
| | After performance results are known and calculated, the CHR Committee reviews final performance results and determines the need to apply discretion, flexibility, and judgment in order to balance the objective evaluations of performance with near-term performance and progress toward our longer-term objectives. After decisions are made, the CHR Committee certifies the performance results that executive officers have earned for the period just ended.period.
|
ï 2016 Proxy Statement65
|
COMPENSATION DISCUSSION AND ANALYSIS |
2017 Compensation Decisions — What We Paid and Why
Establishment of 2017 Compensation Targets. At the beginning of 2015, afterAfter reviewing the competitive pay data provided by its independent compensation of our NEOs against competitive peer information,consultant, the CHR Committee determined thatmade changes to the target compensation levels for NEOs (other than Mr. Lusco) were generally competitive and at appropriate levels to ensure we could attract and retain the talent we need to execute on our strategic plan. No base salary increases were granted to our NEOs andat the beginning of 2017. As discussed previously on page 71, the CHR Committee elected to changeleave the total target compensation level for only one of our NEOs. A review of competitive data and discussion with its independent compensation consultant confirmed that the CRO position is becoming an increasingly important position for all financial institutions. The competition to attract and retain experienced and talented leadership in this field has increased compensation for the positionCEO’s base salary unchanged at our peer competitors and within the financial
services industry overall. After review, the Committee approved an increase in total target compensation of approximately 15 percent for Mr. Lusco, our CRO.
Based on our core compensation principles that compensation be: (i) performance-based, (ii) aligned with the long-term interests of stockholders, and (iii) consistent with the safety and soundness of the Company, and$1 million annually in keeping with the primary responsibilitiesprinciple that pay should largely be performance-based and in order to achieve the maximum deductibility of compensation under Section 162(m) of the risk management function,IRC (“Section 162(m)”). Additionally, the CHR Committee grantedapproved 2.5 percent base salary increases for three of the NEOs and an 11 percent increase toin base salary for our new NEO, Mr. LuscoJohn Turner.
Since beginning in the role as the Head of the Corporate Banking Group three years ago, Mr. J. Turner’s experience has deepened as he assumed greater responsibility. Under his leadership, the Corporate Banking Group grew through the diversification of revenue and through investments in people, products, and capabilities. Accordingly, our CEO and the CHR
Committee have continued to move Mr. J. Turner’s target pay higher in the competitive range and closer to the 50th percentile of pay for similar roles within our compensation peer group.
The Committee determined to keep the 2017 target annual incentive compensation opportunities for each of our NEOs at the same levels as 2016.
With respect to long-term incentive compensation, the CHR Committee approved target increases for our CEO and Mr. J. Turner. Both of the changes in target long-term incentive opportunity portionlevels were made based on competitive market analysis and were designed to keep overall NEO target pay levels and mix of his pay. Long-termpay competitive when compared to peers. The long-term incentive compensation opportunity is the most compatible withtargets for our compensation principles,other NEOs remained unchanged as it is at-risk and subjectcompared to deferral and sustained performance requirements over a multi-year period. Mr. Lusco received an increase of $300,000 (from $900,000 to $1,200,000) in the target value of the long term incentive grant.2016.
The resulting 20152017 base salaries, annual incentive targets, and long-term compensation targets are summarized below:
| | | | | | | | | | | | | | | | |
| Name | | Annualized Base Salary | | | Annualized Incentive Target as a Percentage of Base Pay | | | Long-Term Incentive Target | | | Total Target Compensation | |
O. B. Grayson Hall, Jr. | | $ | 1,000,000 | | | 150% of Base Pay – $ | 1,500,000 | | | $ | 5,000,000 | | | $ | 7,500,000 | |
David J. Turner, Jr. | | $ | 632,000 | | | 110% of Base Pay – $ | 695,200 | | | $ | 1,200,000 | | | $ | 2,527,200 | |
John B. Owen | | $ | 647,000 | | | 110% of Base Pay – $ | 711,700 | | | $ | 1,200,000 | | | $ | 2,558,700 | |
C. Matthew Lusco | | $ | 555,000 | | | 100% of Base Pay – $ | 555,000 | | | $ | 1,200,000 | | | $ | 2,310,000 | |
Fournier J. Gale, III | | $ | 560,000 | | | 100% of Base Pay – $ | 560,000 | | | $ | 900,000 | | | $ | 2,020,000 | |
|
| | | | | | | | | | | | | | | | | | | | | |
| | Base Salary Change | Annualized Base Salary | Annual Incentive Target* | Long-Term Incentive | Total Target Compensation |
| Name | Percentage of Base Salary (unchanged) | Target Annual Incentive | Target Change | Target |
| O. B. Grayson Hall, Jr. | ó | — | % | $ | 1,000,000 |
| ó | 175% | $ | 1,750,000 |
| ñ | $ | 400,000 |
| $ | 5,000,000 |
| $ | 7,500,000 |
|
| David J. Turner, Jr. | ñ | 2.5% |
| $ | 664,200 |
| ó | 110% | $ | 712,800 |
| ó | $ | — |
| $ | 1,200,000 |
| $ | 2,560,800 |
|
| John B. Owen | ñ | 2.5% |
| $ | 680,600 |
| ó | 110% | $ | 730,400 |
| ó | $ | — |
| $ | 1,200,000 |
| $ | 2,594,400 |
|
| John M. Turner, Jr. | ñ | 11% |
| $ | 600,000 |
| ó | 110% | $ | 627,000 |
| ñ | $ | 300,000 |
| $ | 1,200,000 |
| $ | 2,397,000 |
|
| C. Matthew Lusco | ñ | 2.5% |
| $ | 584,250 |
| ó | 110% | $ | 631,400 |
| ó | $ | — |
| $ | 900,000 |
| $ | 2,105,400 |
|
| |
| * | Annualized incentive target is the product of the target incentive percentage times base pay approved by the CHR Committee for 2018 and does not take into account that the base pay changes are not effective until April 1, 2018. |
2017 Annual Cash Incentive
Payments.Payments
Plan Requirements.Requirements; Minimum Funding Requirement. In designing annual incentive compensation programs for 2015,2017, the CHR Committee determined that corporate performance must first meet a basic earnings requirement before any incentive would be paid. For 2015, the Committeepaid and established a minimum threshold
of $500 million in Net Income
from Continuing Operations Available to Common Shareholders
from Continuing Operations (“Net Income”) in order to fund the incentive pool for our NEOs at the maximum incentive level for
each NEO for deductibility purposes under Section 162(m) of the
IRC.tax code. The CHR Committee further determined that after the
|
|
| COMPENSATION DISCUSSION AND ANALYSIS |
Section 162(m) pool was funded,
that the level and amount of
actual incentive
compensation would be based on
a performance program that considered corporate performance, as well as individual performance. For NEOs, 80 percentconsideration of
the bonus was based on corporate performance using (1) profitability, (2) credit management, and (3) customer service goals. The remaining 20 percent was based on a qualitative evaluation of the individual’s performance with respect to four of our five main strategic priorities: Strengthen Financial Performance, Enhance Risk Management, Focus on Your Customer and Build the Best Team. An individual NEO’s annual cash incentive award can be earned between 0 percent to 200 percent of target depending on achievement ofboth corporate and individual performance.
For the The CHR Committee established corporate performance portion of the plan, targets were established at the beginning of the year based on our financial plans, budgets, and expectations in each support of strategic priorities. Individual NEO performance goals were also determined at the beginning
of the three major categories noted aboveyear. Combined corporate and were weighted: (1) profitability received a 50individual performance result in an annual cash incentive award that can be earned between 0 percent weighting; (2) credit management received a 25 percent weighting; and (3) customer service received a 25 percent weighting. Performance evaluations were designed so
that performance against our internal targets accounted for 75200 percent of results while relative performance against a peer group accounted for 25 percenttarget. The design of results.
the annual cash incentive plan, as determined in early 2017, is tied to the achievement of strategic priorities as follows:
Safety and Soundness Requirements.In keeping with prior years, the CHR Committee decided that in addition to the specific corporate and individual performance requirements, as in the past, the Committee decidedpotential annual incentive calculations would also be subject to subject potential bonus calculations to two important safety and soundness hurdles. Compensation guidancerequirements. Guidance issued by the Board of Governors of the Federal Reserve System (the “Federal Reserve”) to allinstructs banking institutions instructs companies that compensation plans shouldto consider the “full range of current and potential risks including the cost and amount of capital and liquidity needed to support risks.”risks” in their compensation plans. To address this principle, the CHR Committee included two negative modifiers designed to reduce bonusannual incentive payments in the event Regions does not maintain capital and liquidity at levels determined to be vital to the safety and soundness of the Company. The deduction for not meeting each hurdlerequirement is 20 percent of the measured achievement.In other words, Therefore, even if overall corporate performance meets the financial, credit management, and customer service goals set by the Board, if that performance comes at the expense of capital and/or liquidity requirements, the portion of incentive compensation based on corporate performance may be reduced by up to 40 percent (20 percent for each hurdle).
if performance is at the expense of capital and/or liquidity requirements.
Discretion to Adjust in Response to Risk and Performance. Although specific performance requirements were setestablished at the beginning of the year, the CHR Committee reservedreserves some discretion, including the ability to consider corporate performance metrics either on a GAAP or a non-GAAP adjusted basis.basis and other qualitative factors if deemed necessary. The CHR Committee believes that blendingalso retains discretion in the determination of individual performance under the plan. Blending the clarity provided by predetermined targets and expectations together with the thoughtful application of discretion to consider items that should be excluded from performance calculations, provides the CHR Committee the flexibility and judgment critical to the Committee’s ability to deliver incentive
66 ï 2016 Proxy Statement
|
COMPENSATION DISCUSSION AND ANALYSIS |
compensation that reflects both near-term performance results and progress toward longer-term objectives. This combination of fixed formulas, combinedalong with latitude in assessing performance based on the CHR Committee’s informed judgment, allows for consideration of unanticipated market conditions and other events, such as the Tax Cuts and Jobs Acts of 2017 (“Tax Reform”), that may impact operating performance. We believe
that this latitude is important in mitigating risk as it reduces the potential that our executive officers may be encouraged to take actions with respect to unanticipated items based on the impact the actions may have on their incentive compensation, rather than based on the merits and impact that the actions may have on achieving our long-term goals and objectives.
2017 Plan Results. Net Income from Continuing Operations Available to Common Shareholders for 20152017 was $1.01$1.193 billion, and, therefore, the potential incentive opportunity for our NEOs was funded at the maximum amount, giving the CHR Committee the
latitude to determine actual incentive amounts based on the other quantitative and qualitative performance objectives established at the beginning of the year.
Assessment of Corporate Performance. In early 2016,2018, corporate performance under the criteria set at the beginning of 20152017 was certified below targetreviewed and considered. Measuring performance strictly on a GAAP basis, corporate performance was calculated at 91155 percent of goal with no adjustments necessary based on the liquidity and capital modifiers. Although performance was less than 10 percent below expectations,target. However, in keeping with past practices and considerations, the CHR Committee exercised its discretion and excluded certain positive and negative “Adjusted”“adjusted” items as reported to our stockholders in earnings releases and related annual reports and filings. The CHR Committee believes these adjusted results most accurately reflect the performance of the Company as it relates to stockholder value.
In contrast to 2016, in which exclusion of similar items resulted in a 4 percentage point reduction from the GAAP calculated corporate performance score, the adjustments made for 2017 resulted in a 3 percentage point increase over the GAAP results. Adjusted items impacting the results included adjustments related to accounting charges required as a result of Tax Reform, as well as the exclusion of a contribution to Regions’ charitable foundation, severance payments above budget, branch consolidations, securities gains, and gains on the sale of mortgage loans. The exclusion of these items positively impacted the Return on Average Tangible Common EquityROATCE and the Net Income from Continuing Operations Available to Common Shareholders, sub-metrics within the profitability category and resultedresulting in an adjusted performance score of 83158 percent of target as shown in the following table:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Absolute Performance Against Internal Targets - 75% | | | Relative Performance
Against Peers - 25% Weighting |
| | | | | | | | Weighting (Customer Service - 100%) | | |
| | | | | Sub-metric Weighting | | | 2015 Goal Achievements | | | 2015 Achievements |
| | | Performance Metric | | | Target | | | Attainment | | | % of Goal | | | | | | Peer Rank | | | %��of Goal |
50% | | Profitability Metrics (1) | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Return on Average Tangible Common Equity (2) | | | 40% | | | | 10.13% | | | | 8.70% | | | | 29.40% | | | | } | | | | 11/14 | | | } |
| | Net Income Available to Common Shareholders ($millions) (2) | | | 30% | | | | $ 1,084.90 | | | | $ 969.80 | | | | 57.10% | | | | 44.50% | | | | | | | 75% |
| | Adjusted Efficiency Ratio (3) | | | 30% | | | | 63.40% | | | | 64.90% | | | | 51.80% | | | | | | | | 9/14 | | | |
25% | | Credit Metrics | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Criticized Loans/Loans | | | 50% | | | | 3.76% | | | | 5.02% | | | | 0% | | | | } 33.20% | | | | 10/14 | | | } 68.80% |
| | NPAs/Loans + OREO + NPLs Held For Sale (5) | | | 50% | | | | 0.99% | | | | 1.13% | | | | 66.40% | | | | | | | | 11/14 | | | |
25% | | Customer Service Metrics | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Gallup KDS Score | | | 50% | | | | 75th Percentile | | | | 89th Percentile | | | | 180.10% | | | | }185.20% | | | | N/A | | | |
| | Gallup Loyalty Score | | | 50% | | | | 75th Percentile | | | | 91st Percentile | | | | 190.30% | | | | | | | | N/A | | | |
| | | | | | | | | | | | | | |
| | | | | | | Metric | | Overall Metric
Weighting | | Results
(Percent of Goal) | | Weighting
(Internal Goals
vs. Against Peers) | | Performance Results |
| | | | | | Profitability Against Internal Targets | | 50% | | 44.50% | | 75% | | 16.70% |
| | | | | | Credit Against Internal Targets | | 25% | | 33.20% | | 75% | | 6.20% |
| | | | | | Customer Service Against Internal Targets | | 25% | | 185.20% | | 100% | | 46.30% |
| | | | | | Profitability Performance Against Peers | | 50% | | 75.00% | | 25% | | 9.40% |
| | | | | | Credit Performance Against Peers | | 25% | | 68.80% | | 25% | | 4.30% |
| | | | | | Sum of Results | | | | | | | | 82.90% |
| | | Potential Negative Modifiers | | | | Goal | | | | Result | | | | Negative Modifier Indicated? |
| | Primary Liquidity Risk Factor | | | | Low Risk or Better | | | | Low Risk | | | | NO |
| | | Capital Action Status | | | | Monitoring or Deploy | | | | Deploy | | | | NO |
|
|
| COMPENSATION DISCUSSION AND ANALYSIS |
|
| | | | | | | | | | | | |
| | Absolute Performance Against Internal Targets 75% | Relative Performance
Against Peers - 25% Weighting |
| | | | Weighting (Customer Service - 100%) |
| | | Sub-metric Weighting | 2017 Goal Achievements | 2017 Achievements |
| | Performance Metric | Threshold | Target | Maximum | Attainment | % of Goal | | | Peer Rank | | % of Goal |
50% | Profitability Metrics (1) | | | | | | | | | | | |
| | Adjusted Return on Average Tangible Common Equity (2) | 40% | 7.95% | 9.65% | 10.68% | 11.52% | 200.0% | | | 11/15 | | |
| | Adjusted Net Income Available to Common Shareholders ($ millions) (2) | 30% | $900 | $1,096 | $1,212 | $1,255 | 200.0% | 170.1% | | 62.5% |
| | Adjusted Efficiency Ratio (3) | 30% | 64.5% | 62.2% | 60.7% | 62.2% | 100.4% | | 11/15 | |
| 25% | Credit Metrics | | | | | | | | | | | |
| | Criticized and Classified Loans/Loans (4) | 50% | 7.16% | 5.72% | 4.86% | 3.83% | 200.0% | | 200% | 11/15 | | 56.3% |
| | NPAs/Loans + OREO + NPLs Held For Sale (5) | 50% | 2.03% | 1.55% | 1.24% | 0.92% | 200.0% | 12/15 | |
| 25% | Customer Service Metrics (Percentile achievement) | | 25th | 75th | 93rd | 89th | 179.7% | | 179.7% | | | |
| |
| (1) | From continuing operations on an as adjusted basis. For non-GAAP measures, see the reconciliation inAppendix A unless otherwise indicated. |
| |
| (2) | Non-GAAP measuremeasures — see reconciliation inAppendix A.A. |
| |
| (3) | Non-GAAP measuremeasures — see reconciliation in Regions’ Annual Report on Form 10-K for the year ended December 31, 20152017 on page 46.42. |
| |
| (4) | See reconciliation in Appendix A. |
| |
| (5) | See reconciliation inAppendix A. |
(5) | See Regions’ Annual Report on Form 10-K for the year ended December 31, 20152017 on page 72 for detail.66. |
|
| | | | | | |
| | | Metric | Overall Metric Weighting | Results
(Percent of Goal) | Weighting (Internal Goals vs. Against Peers) | Performance Results |
| | | Profitability – Internal Targets | 50% | 170.1% | 75% | 63.8% |
| | | Profitability Performance – Peers | 50% | 62.5% | 25% | 7.8% |
| | | Credit – Internal Targets | 25% | 200.0% | 75% | 37.5% |
| | | Credit Performance – Peers | 25% | 56.3% | 25% | 3.5% |
| | | Customer Service – Internal Targets | 25% | 179.7% | N/A | 44.9% |
| | | Sum of Results | | | | 158% |
| Potential Negative Modifiers | | Goal | | Result | | Negative Modifier Indicated? |
| | | | | | | |
| Primary Liquidity Risk Factor | | Low Risk or Better | | Low Risk | | NO |
| Capital Action Status | | Monitoring or Deploy | | Deploy | | NO |
|
|
| COMPENSATION DISCUSSION AND ANALYSIS |
Assessment of Individual Performance. As previously noted, our NEO annual incentives were based 80consist of 70 percent on corporate performance and 2030 percent on a qualitative assessment of individual performance.performance assessment. With respect to our CEO, the independent Board members used a formal process for assessment ofconsistent with prior years to assess his performance. Each Board member provided an evaluation in the areas of leadership, strategic planning, financial performance management, customer relations, management of personnel, communications, and Board relations. In its
To determine the individual performance deliberations,rating for the CEO, the CHR Committee had
accessmet in executive session to discuss and finalize performance results. To determine the input from the full Board and independently assessed the CEO’sindividual performance achievement at 125 percent of target. In making its determination, the Committee particularly noted the Company’s financial performance in lightrating of the slowness of the economic recovery and the extended and extraordinarily low interest rate environment. The Board also cited the CEO’s leadership in increasing regulatory and investor confidence.
ï 2016 Proxy Statement67
|
COMPENSATION DISCUSSION AND ANALYSIS |
With respect to other NEOs, the CHR Committee consulted with the CEO regarding his assessment of performance and determined thattheir performance. The table below outlines the individual levelperformance ratings of achievement for each was as follows
our NEOs and a high-level summary of the achievements noted when making the performance rating decisions:
| | | |
| | |
| Name | | Individual
Performance
Rating | Comments |
| O. B. Grayson Hall, Jr. | 200% | Comments– Leadership in developing and executing the strategic planning process– Active development and inclusivity of executive management– Focus as a customer advocate– Engagement, experience, and direct contribution to improvement in financial performance |
| David J. Turner, Jr. | 155% | | 120% | | | • Positioned the balance sheet to maximize net interest income and other financing income, making the Company’s financial position more resilient, regardless of future interest rate environment conditions.
• Together with the Risk Management group, successfully developed our Liquidity Coverage Ratio (“LCR”) framework, and achieved compliance with the LCR rule without major balance sheet changes or negative effects on profitability.
• Led
– Successful CCAR submission allowing the Company to return 137 percent of earnings to stockholders– Successful repurchase of 85 million shares of common stock– Heightened emphasis on associate engagement, resulting in successfully executing $623 million in share repurchases.• Led an effective stockholderimproved associate engagement program, executingscores
– Enhanced investor and rating agency outreach efforts to the Company’s largest institutional stockholders, as well as a successful Investor Day (the first such event in 5 years).programs and increase debt ratings from various rating agencies |
| John B. Owen | 165% | | 125% | | | • Led the business
– Regional Banking group teamsdelivered strong results in 2017 by growing revenue by 3 percent, Pre-tax income by 12 percent, Assets under management by 17 percent, and positive operating leverage by 3 percent– Introduction of new products, rebalancing and expansion of product mix to adopt to changing market needs and diversity of risks– Successful deployment of new product offerings and product diversification– Meaningful progress in short- and long-term leadership, talent, and succession planning with an emphasis on diversity; successfully recruited a new Chief Information Officer to Regions– Continued focus on associate engagement with scores in the growth of loan balancestop quartile |
| John M. Turner, Jr. | 170% | – Successfully executed investments in non-interest revenue generating capabilities in the Regional Banking GroupCorporate Bank– Capital Markets revenue grew by $1.4 billion,6 percent year over year while Treasury Management and delivered deposit growthCorporate Card revenue grew 2.5 percent– Effectively deployed capital by reviewing existing capital commitments, exiting certain obligations and adding others– Increased exposure in areas that have produced 44 percent more revenue, 67 percent more non-interest revenue, and over 109 basis points of $2.5 billion.• Launched several new initiatives including GreenSky®, and new branch, video teller and drive-through delivery channels.
• Executed a numberadditional risk adjusted return on capital
– Improved credit quality year-over-year– Criticized credits moved from 7.6 percent to 5.7 percent, which is below our target of business lift-outs and acquisitions within Regions Insurance Group, and increased6 percent for the numberyear– Classified credits moved from 4.9 percent to 3.9 percent, which is below our target of financial consultants within the Wealth Management division.• Drove growth4 percent
– Non Performing Loans (“NPLs”) reached their lowest level in Regions360SM relationships and customer bases in every division, Wealth Management by 29over 10 years at 1.1 percent checking account customers by 2.4 percent, Now Banking® customers by 12.4 percent, credit card customers by 11.3 percent; and debit card customers by 3.3 percent.– Net charge-offs declined to 35 basis points |
| C. Matthew Lusco | 155% | | 115% | | | • Given
– Robust credit improvement by using a series of proactive steps to manage through issues ultimately leading to reductions in NPLs and Non Performing Assets (“NPAs”) to 0.81 percent and 0.92 percent, respectively– Successful reduction of issues inventory to a post financial crisis low– Rating agency upgrades citing improvement in risk management for the basis of change– Made significant investmentsprogress in strengthening the risk organization over prior years, reduced non-interest expenses withinsenior leadership team with the division by over $1.14 million.• Completed expanded scope Resolution Planaddition of key hires and Volcker Rule compliance implementation with minimal reliance on consultants/third parties.
• Oversaw effective use of credit portfoliotalent movement that both enhanced team skills and enterprise risk analytics:
- Proactively serviced the energy portfolio through an adverse environment, and
- Managed concentration and portfolio shaping strategies.
• Led the implementation of effective risk appetite statements for each business unit within the Company.
improved diverse representation in senior leadership ranks |
|
Fournier J. Gale, III | | |
| 115%2018 Proxy Statement | | | • Continued to reduce outside legal fee expenses, resulting in non-Morgan Keegan expenses for 2015 being 31 percent below 2014 levels.
• Continued to expand leadership responsibilities beyond General Counsel and Corporate Secretary duties. This included taking on responsibility for the Procurement division in addition to previously assuming responsibilities for both the External Affairs and Corporate Security divisions.
• Increased focus on two key initiatives in 2015: reputation and public policy. Successes include being ranked as having the top reputation among U.S. banks, as measured by the Reputation Institute/American Banker survey.
• Contributed to reducing the Company’s risk profile by decreasing the number of open legal cases, including a 30 percent reduction in our highest risk cases.
79 |
|
|
| COMPENSATION DISCUSSION AND ANALYSIS |
2017 Annual Incentives Earned. As a result of the decisions discussed above, the CHR Committee approved the following annual cash incentive payments for our CEO and each of our other NEOs were certified by the Committee and paid in early 2016: | | | | | | | | |
| Name | | 2015 Target Incentive | | | Total Incentive Received | |
O. B. Grayson Hall, Jr. | | $ | 1,511,538 | | | $ | 1,381,546 | |
David J. Turner, Jr. | | $ | 700,548 | | | $ | 633,295 | |
John B. Owen | | $ | 717,175 | | | $ | 655,498 | |
C. Matthew Lusco | | $ | 559,269 | | | $ | 499,987 | |
Fournier J. Gale, III | | $ | 564,308 | | | $ | 504,491 | |
682018: ï 2016 Proxy Statement
|
| | | | | | |
| Name | 2017 Target Incentive* |
| Total Incentive Received |
|
| O. B. Grayson Hall, Jr. |
| $1,750,000 |
|
| $2,985,500 |
|
| David J. Turner, Jr. |
| $730,620 |
|
| $1,140,806 |
|
| John B. Owen |
| $748,660 |
|
| $1,191,297 |
|
| John M. Turner, Jr. |
| $660,000 |
|
| $1,039,896 |
|
| C. Matthew Lusco |
| $642,675 |
|
| $1,003,486 |
|
| |
COMPENSATION DISCUSSION AND ANALYSIS * | The actual target incentive for 2017 is based on a target percentage multiplied by actual salary paid for the year and considers that annual increases in base pay did not become effective until April 1 of the year. |
2017 Long-Term Incentive Plan (“LTIP”) Grants. As we previously noted, with the exception of one NEO, target long-term grant values remained unchanged from 2014. Our CRO received a $300,000 increase in the target amount of his long-term incentive to make his total compensation target more in line with that of the chief risk officers at our peer competitors and within the financial services industry at large.The CHR Committee understandsbelieves that deferring a large part of compensation plays an important role in linking incentives to risk outcomes or aspects of performance that become apparent only with the passage of time. The responsibilities of our NEOs are largely strategic in nature, and while weour NEOs understand ourand diligently work to mitigate risks, the actual outcomes of many of the business actions taken will not be certain for extended periods of time. For this reason, long-term incentive compensation comprisesis the largest portion of our executive compensation planprogram for NEOs. After consultation with its independent compensation consultant and with Mr. Hall regarding grants for the other NEOs, the CHR Committee determined and made the grants listed in the chart below,
which include a $300,000 target grant increase for Mr. J. Turner. The plan constructionCHR Committee met separately with their independent compensation consultant to review the long-term incentive grant target for our CEO. After comparing Mr. Hall’s total compensation target to that of CEOs within our compensation peer group, the CHR Committee increased Mr. Hall’s long-term incentive grant target in an effort to ensure Mr. Hall’s total compensation target is competitive with the median of CEOs within the peer group. Increasing Mr. Hall’s long-term target by $400,000 resulted in a 2017 long-term incentive grant target of $5,400,000. The table below presents the total economic value of the grant (at target) and the division of the grant between each long-term component:
|
| | | | | | | | | | | | |
| Name | Total Target LTIP Economic Value |
| Value of Time Vested RSUs |
| Value of PSUs |
| Value of Performance-
Based Cash Units |
|
| O. B. Grayson Hall, Jr. |
| $5,400,000 |
|
| $1,800,000 |
|
| $1,800,000 |
|
| $1,800,000 |
|
| David J. Turner, Jr. |
| $1,200,000 |
|
| $400,000 |
|
| $400,000 |
|
| $400,000 |
|
| John B. Owen |
| $1,200,000 |
|
| $400,000 |
|
| $400,000 |
|
| $400,000 |
|
| John M. Turner, Jr. |
| $1,200,000 |
|
| $400,000 |
|
| $400,000 |
|
| $400,000 |
|
| C. Matthew Lusco |
| $1,200,000 |
|
| $400,000 |
|
| $400,000 |
|
| $400,000 |
|
Long-Term Incentive Program Design. Our long-term incentive program is designed to drive long-term performance, enhance retention, create aligned interest with stockholders, and address longer-term risk concerns. Grants to NEOs in 20152017 included three components:components, which were split equally between (1) performance-based stock unit awards (“PSUs”), (2) restricted stock unit awardsRestricted Stock Unit Awards (“RSUs”) subject to vesting hurdles based on adherence to important safety and soundness measures, (2) Performance-based Stock Unit Awards (“PSUs”), and (3) performance-based cash awards.Performance-based Cash Unit Awards.
RSUs represent one-third of the award and include a three-year time-based vesting requirement, which means that the awards will generally not vest unless the NEO remains employed until April 2018,3, 2020, the third anniversary of the grant. In addition, up to 40 percent of the award may be forfeited if Regions does not continually meet standards for liquidity and capital deployment designed to protect the safety and soundness of the Company.
The
PSUs and Performance-Based Cash Units are performance-based awards comprising the remaining two-thirds of the award is represented by performance-basedaward. These awards which include a three-year service-based vesting requirement and are also subject to specific performance criteria to determine the ultimate value. The performance-based awards are split equally between PSUs and a
performance-based cash
award.As previously noted, only the CRO received an increase in the target value of his long-term grant compared to 2014. In addition, just like in 2014, the Committee elected to issue grants in 2015 that are split equally among RSUs,units. An individual NEO’s PSUs and performance-based cash awards. The following table presentsunits can be earned between 0 and 150 percent of target depending on the total economic valuelevel of the grant (at target) and the division of the grant between each long-term component:
achievement. | | | | | | | | | | | | | | | | |
| Name | | Total Target LTIP
Economic Value | | | Value of
PSUs | | | Value of
Performance-Based
Cash | | | Value of
Time-vested
RSUs | |
O. B. Grayson Hall, Jr. | | $ | 5,000,000 | | | $ | 1,666,666 | | | $ | 1,666,667 | | | $ | 1,666,666 | |
David J. Turner, Jr. | | $ | 1,200,000 | | | $ | 400,000 | | | $ | 400,000 | | | $ | 400,000 | |
John B. Owen | | $ | 1,200,000 | | | $ | 400,000 | | | $ | 400,000 | | | $ | 400,000 | |
C. Matthew Lusco | | $ | 1,200,000 | | | $ | 400,000 | | | $ | 400,000 | | | $ | 400,000 | |
Fournier J. Gale, III | | $ | 900,000 | | | $ | 300,000 | | | $ | 300,000 | | | $ | 300,000 | |
Performance measures. Vesting of both PSUs and performance-based cash isunits are based on two measures: cumulative compounded growth in Diluted Earnings Per Share from Continuing Operations (“Diluted EPS Growth”)Growth and Return on Average Tangible Common Equity (“ROATCE”).ROATCE. Each measure carries a 50 percent weight in determining the final value of the performance award. These operating measures were chosen for a number of reasons:because they (i) they are critical to the long-term success of the Company, (ii) they are transparent to stockholders and the NEOs, and (iii) when used together, they create healthy tension between profitability and the quality of earnings, which is important into stockholder value and protecting the safety and soundness of the Company.
Weighting of Metrics. Each metric is weighted equally and is measured based upon both absolute performance against Company goals over the next three years, as well asthree-year performance period and an evaluation of ourrelative performance relativeas compared to our peers. We do this through the use of the matrix where the “X” axis represents our performance against the absolute goals we set for ourselves over the next three years,performance period, and where the “Y” axis represents our performance against banks selected as our performance
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| COMPENSATION DISCUSSION AND ANALYSIS |
peer group on these same measures. The rationale for this approach isWhile the plan design itself did not change in 2017, the CHR Committee listened to havestockholder feedback and made a balanced look at performance. An individual NEO’s PSUs and performance-based cash award can be earned between 0 percent and 150 percent of target depending on achievement of performance.
Absolute Diluted EPS Growth and ROATCE goals provide NEOs with a goalmodification to strive for, but given ongoing marketplace volatility and a changing regulatory environment, establishing absolute goals and targets for a multi-year time period is challenging. We establish the goals for this portion of the matrix measurement by considering financialto visually represent threshold performance.
Balancing of Absolute and operational expectations set through our strategic planning process over the performance period of January 1, 2015, to December 31, 2017. In the opinion of the Committee, these goals and expectations represent challenging yet achievable levels of performance that both create stockholder value and protect the safety and soundness of the Company.In addition to absolute performance, we also chose to consider our Diluted EPS Growth and ROATCE performance relative to other banking competitors. Relative measurement mitigates the problems inherent with setting long-term goals in a volatile and uncertain environment, but if used as the single measurement, could allow for the outcome of being the “best of the worst.” Performance.
By establishing absolute goals within a range of outcomes, coupled with performance against banks in our performance peer group, a matrix mitigates some of the challenges associated with setting precise goals that could incent imprudent risk taking on behalf of executive officers and avoids the “best of the worst” outcome that is possible with the exclusive use of relative measurement. | |
| – | Absolute Performance: Absolute Diluted EPS Growth and ROATCE goals provide NEOs with a goal to strive for. However, given ongoing marketplace volatility and achanging regulatory environment, establishingabsolute goal targets for a multi-year time period is challenging. The CHR Committee |
ï 2016 Proxy Statement69
established the absolute goals for this portion of the matrix by considering financial and operational expectations set forth as a result of our strategic planning process for the January 1, 2017 through December 31, 2019 performance period. The CHR Committee believes these goals and expectations represent challenging, yet achievable, levels of performance that both create stockholder value and protect the safety and soundness of the Company.
| |
| – | Relative Performance. In addition to absolute performance, the CHR Committee also considers our Diluted EPS Growth and ROATCE performance relative to other banking competitors. Though relative measurement mitigates the inherent difficulties of setting long-term goals in a volatile and uncertain environment, if it was used as the single performance measurement, it could allow for the outcome of being the “best of the worst.” |
|
| | | | | | | | |
| Differences in How the CHR Committee Views Compensation and SEC Reporting Requirements |
In order to understand the decisions made by the CHR Committee for 2017 and the value of the compensation granted to our NEOs, it is important to understand the difference between what the CHR Committee considers as current-year compensation and what SEC rules require us to report. The values of 2017 long-term awards as considered by the CHR Committee and shown in the table here differ from the values listed in the Summary Compensation Table on pages 91 through 93 and the Grants of Plan-Based Awards table on page 95 in two important ways:
1) Equity denominated awards are required to be reported by the SEC in the year of grant in the Grants of Plan-Based Awards Table and in the Summary Compensation Table under the “Stock Awards” column, which is the same way the CHR Committee considers these awards. However, though a Performance-Based Cash Unit award is reported in the Grants of Plan-Based Awards table in the year of grant, under SEC rules, it is not reported in the Summary Compensation Table until the end of the applicable performance period. At that time, the value of the cash earned is reported in the column “Non-Equity Incentive Plan Compensation.” Due to this difference, the Summary Compensation Table does not include the value Performance-Based Cash Unit awards granted by the CHR Committee in 2017, but does include the final value in connection with Performance-Based Cash Unit awards granted in 2015 that became fully vested in 2017. It is important to remember that though it differs from SEC reporting rules, our CHR Committee views long-term Performance-Based Cash Unit Awards as compensation in the year that they are granted just as both the CHR Committee and the SEC consider grants of long-term awards that are equity based.
To understand the value reported in the Summary Compensation Table related to Performance-Based Cash Unit awards, following is a summary of the 2015 award. The 2015 Performance-Based Cash Unit award was subject to a three-year performance period that ended at December 31, 2017. The following table sets forth the performance metrics achieved for the performance period and the percent of target earned by NEOs as of the end of 2017: |
| | | | | 2015 - 2017 Cash Performance Award Results | |
| | | | | Performance | Payout | Weight | Payout % of Target | |
| | Absolute EPS Growth (Compounded Annual Growth Rate) | 25% | 6.7% | 125.0% | 50.0% | 62.5% | |
| | Relative EPS Growth | 25% | Top 1/3 | | | |
| | Absolute ROATCE | 25% | 10.06% | 75.0% | 50.0% | 37.5% | |
| | Relative ROATCE | 25% | Bottom 1/3 | | | |
| | Final Results | 100.0% | |
In making their assessment of performance for the three-year period ending December 31, 2017, the CHR Committee considered and determined to adjust results by excluding the impact of one-time accounting charges related to Tax Reform. Plan documents and the intent of the CHR Committee with respect to such adjustments was determined not to negatively impact either accounting or tax deduction of the award. Similar to the Cash Performance Awards, the PSUs issued in 2015 used the same metrics and goals and, therefore, NEOs also earned 100 percent of target awards granted. The SEC considers this compensation reportable for 2015. Accordingly these awards are not included in the Summary Compensation Table for 2017. continued on following page
|
|
|
| COMPENSATION DISCUSSION AND ANALYSIS |
|
| | | | |
2) The SEC rules require that companies report the value of equity-denominated awards in the”Stock Awards” column of the Summary Compensation Table in the year they are granted. This is the same way the CHR Committee considered these awards. Nevertheless, there is a difference in the values noted in the table above and the values noted in the Summary Compensation Table due to the way we determine the number of shares each NEO will receive after the CHR Committee has established the economic value of an award. To determine the number of PSUs and RSUs, we divide the award value granted by the 30-day average closing price of Regions common stock prior to the grant date to minimize any impact of day-to-day stock price changes on the number of shares granted. The 30-day average for 2017 was $14.75. SEC rules require us to report the grant date fair value of shares, which is the closing price of Regions common stock on the date of the grant. The value of share units granted on April 3, 2017, was $14.58 per share. For further information, page 14 of this proxy statement includes an alternative compensation table that details the way the CHR Committee views the compensation decisions made for 2017.
|
The following chart sets forth the matrices used for measuring performance and the ultimate payout level of the PSUs and performance-based cash awards granted in
2015: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Diluted EPS Growth Metric — 50% Weight | | | | | ROATCE Metric — 50% Weight | | | | | | | |
| | | | | Payout Opportunity for EPS Goal | | | | | | | | | Payout Opportunity for ROATCE Goal | | | | | | | |
Relative Diluted EPS Growth (percentile) | | Top 3rd of
Peer Group | | | 75% | | | | 100% | | | | 125% | | | | 150% | | | | | Relative ROATCE (percentile) | | Top 3rd of
Peer Group | | | 75% | | | | 100% | | | | 125% | | | | 150% | | | | | | | |
| | Middle 3rd of
PeerGroup | | | 50% | | | | 75% | | | | 100% | | | | 125% | | | | | | Middle 3rd of
Peer Group | | | 50% | | | | 75% | | | | 100% | | | | 125% | | | | | | | |
| | Bottom 3rd of
PeerGroup | | | 0 - 25%* | | | | 50% | | | | 75% | | | | 100% | | | | | | Bottom 3rd of
Peer Group | | | 0 - 25%* | | | | 50% | | | | 75% | | | | 100% | | | | | | | |
| | | |
| Below
Threshold |
| |
| Between
Threshold
and
Target |
| |
| Regions’
Target Range |
| |
| Above
Target Range |
| | | | | | |
| Below
Threshold |
| |
| Between
Threshold
and
Target |
| |
| Regions’
Target Range |
| |
| Above
Target Range |
| | | | | | |
| | | |
| Regions’ Absolute Diluted EPS Growth
(3-year cumulative compounded growth rate) |
| | | | | | | |
| Regions’ Absolute ROATCE
(3-year average) |
| | | | | | |
* | Award will be zero in the event a minimum level of net income is not earned over the performance period. |
2017: |
| | | | | | | | | | | | | | |
Diluted EPS Growth Metric — 50% Weight
| | ROATCE Metric — 50% Weight |
| | Peer Group | Payout Opportunity for EPS Goal | | | Peer Group | Payout Opportunity for ROATCE Goal |
| Max | 75 %ile | 50% | 75% | 100% | 125% | 150% | | Max | 75 %ile | 50% | 85% | 100% | 125% | 150% |
| Target | 50 %ile | 25% | 50% | 75% | 100% | 125% | | Target | 50 %ile | 25% | 50% | 85% | 100% | 125% |
| Thresh. | 25 %ile | 0% | 25% | 50% | 75% | 100% | | Thresh. | 25 %ile | 0% | 25% | 50% | 85% | 100% |
| | | Significantly Below Target
| Below Target | Slightly Below Target | Target | Above Target | | | | Significantly Below Target
| Below Target | Slightly Below Target | Target | Above Target |
| | | Regions’ Absolute Diluted EPS Growth (3-year cumulative compounded growth rate) | | | | Regions’ Absolute ROATCE (3-year average) |
Performance targets and the payout percentages generated for each level of performance are determined each year by the CHR Committee based on Company budgets and goals, as well as known prevailing economic conditions. Though we have not disclosedisclosed the internal targets set for the three-year performance period in the above matrices asbecause such disclosure could be construed as earnings guidance. As previously noted, we believeguidance, the CHR
Committee believes the target levels
set represent challenging yet achievable levels of performance.
Additionally, for awards granted in 2015, we subject them to a minimum cumulative net income threshold before any payment is made. While we do not disclose the actual
threshold level, the
requirement ismatrices demonstrate the expectation of a zero percent payment if we do not meet approximately one-half of the cumulative amount we projected,
as part of our strategic planning process, for the three-year period ending December 31,
2017, as a part of our strategic planning process.Differences in How the Committee Views Compensation and SEC Reporting Requirements. In order to understand the decisions made by the Committee for 2015 and the value of the compensation granted to executive officers, it is important to understand the difference between what the Committee considers as current-year compensation and what SEC rules and regulations require us to report. The values of 2015 long-term awards as considered by the Committee and shown in the table above differ from the values listed in the Summary Compensation Table on pages 80 through 81 and the Grants of Plan-Based Awards table on page 82 in two important ways.
The first difference is in how cash-based performance awards and equity awards are treated under SEC rules. As previously noted, the Committee elected to divide the total long-term award granted to our NEOs for 2015 into three equal portions including two equity denominated grants (RSUs and PSUs) and one cash-based grant (cash performance award). The value of equity denominated awards are required to be reported by the SEC in the “Stock Awards” column of the Summary Compensation Table in the year they are granted, which is the same way the Committee considers these awards.
The final one-third of the award granted for 2015, the cash performance award, was awarded to be paid in cash following the end of the performance period in 2017. In accordance with SEC rules, while the grant of these cash-based awards is reported in the Grants of Plan-Based Awards table in the year of
2019. grant (page 82), it is not reported in the Summary Compensation Table until the end of the applicable performance period. At that time, the value of the cash award earned will be reported in the column headed “Non-Equity Incentive Plan Compensation.”
Due to this difference, the Summary Compensation Table on pages 80 through 81 does not include the value of the cash performance award grant made by the Committee in 2015 to our NEOs but does include the final value of the cash performance award grant made to NEOs in 2013. When considering current year compensation, our Committee views long-term cash performance awards as compensation in the year that they are granted just as both the Committee and the SEC consider grants of long-term awards that are equity based.
In 2013, similar to 2015, the Committee awarded our NEOs a long-term incentive grant divided into three portions, one of which was a cash denominated award subject to a three-year performance period that ended at December 31, 2015. The following table sets forth the original value of the 2013 award, the performance metrics achieved for the performance period and the ultimate value of the award earned by NEOs as of the end of 2015:
In addition to the resulting below-target cash performance grant received by NEOs in 2015, it is equally important to note that the PSU portion of the three-year 2013 grant also performed below target and executives only received 75 percent of the target number of shares granted in 2013.
70 ï 2016 Proxy Statement
|
COMPENSATION DISCUSSION AND ANALYSIS |
The second difference in how the Committee views compensation and how it is required to be reported relates to the two-thirds of our long-term incentive compensation grants that are made in the form of equity. As noted above, SEC rules require that companies report the value of equity-denominated awards in the equity compensation column of the Summary Compensation Table in the year they are granted. This is the same way the Committee considered these awards. However, there is a difference in the values noted in the previous table and the values noted in the Summary Compensation Table on pages 80 through 81 due to the way we determine the number of shares each NEO will receive after the Committee has established the economic value of an award.
To determine the number of PSUs and RSUs, we divide the award value granted by the 30-day average closing price of Regions common stock to determine the number of units to be
granted. We use this method of averaging stock price over a period of time because it minimizes the potential impact of day-to-day stock price changes on the ultimate number of shares granted. This 30 day average for 2015 was $9.60. The Summary Compensation Table and the Grants of Plan-Based Awards table require us to report the grant date fair value of shares, which is the closing price of Regions common stock on the date of the grant. For 2015, the grant date value of shares was $9.46 per share. Because the closing price of shares on the date of the grant was lower than the 30-day average share price used to calculate the number of shares granted, the tables accompanying this CD&A reflect a smaller value than considered by the Committee.
For further information, page 16 of this proxy statement includes an alternative compensation table that details the way the Committee views the compensation decisions made for 2015.
Other Benefits and Perquisites
PerksIn addition to the compensation elements described above, NEOs participate in other benefit and
perquisiteperk programs, many of which are available to all associates.
Regions Retirement Plans.Programs. Regions sponsors both atwo types of retirement programs: defined benefit and a401(k) defined contribution (401(k)) retirement program. In addition to the descriptions below, theprograms, each made up of tax-qualified and nonqualified plans. The operation of these benefit plans and the value of the benefits that NEOs accrue under these plans are also fully described below and in the discussion that accompanies the Pension Benefits and Nonqualified Deferred Compensation tables on pages 85 98through 8699 of this proxy statement as well asand the Summary Compensation Table on pages 8091 through 81.93.
(1) Defined benefit plans. The Regions Financial Corporation Retirement Plan for Associates (the “Retirement Plan”) and Regions Financial Corporation Post 2006 Supplemental Executive Retirement Plan (“SERP”). These plans are defined benefit plans. The Retirement Plan is a tax-qualified plan under Section 401(a) of the Internal Revenue Code, and our NEOs participate in this plan on the same basis as all associates. The SERP is a nonqualified plan that provides benefits using the same general formula for benefit determination as is used in the Retirement Plan with three main differences: (i) the SERP definition of eligible compensation includes compensation that exceeds qualified plan limits and annual cash bonus payments that are not included in the qualified plan’s definition of compensation, (ii) the SERP averages compensation over a consecutive three-year period rather than the consecutive five-year period used in the qualified plan, and (iii) the SERP counts service up to 35 years while the qualified plan counts service only up to 30 years.While participation requirements were impacted over time due to several corporate transactions, the Retirement Plan and the SERP generally were closed to new participants as of 2007. Several
The Retirement Plan is a tax-qualified plan under Section
401(a) of our executive officersthe Internal Revenue Code. NEOs participating in this plan participate on the same basis as all associates.
The regular benefit is available to all eligible SERP participants and is calculated using the same formula as the Retirement Plan with the following differences: (1) instead of averaging earnings over five years of service, it averages compensation over the highest three consecutive years of service out of the last 10 years of service; (2) in
addition to base pay, it includes annual cash incentives, as well as 50 percent of any salary earnings and
continue to accrue benefitsrestricted stock granted during the period of Troubled Asset Relief Program participation; and (3) the maximum years of service used in
these plans.the calculation of the regular benefit is 35 years of service instead of 30.
In addition, a limited number of executives are eligible for an alternative target retirement formula in the SERP as a result of a previously grandfathered arrangement. The alternative targettargeted benefit includes a more generous formula for determining retirement benefits, but was designed to be highly retentive as it includes significant vesting requirements. A participant must
work for the Company for a minimum of 10 years and must reach age 60 before the alternative target targeted
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|
| COMPENSATION DISCUSSION AND ANALYSIS |
benefits vest. Any termination of employment (except in the case of death, disability, or a change-in-control) prior to reaching age 60 with a minimum of 10 years of service will result in a forfeiture of amounts attributable to the alternative
targettargeted benefit in excess of the regular benefit.
As noted
The following is a brief description of each executive’s participation in these plans:
Mr. Hall - During 2017, the Company completed a transfer of Mr. Hall’s accrued benefit in the Pension Benefits table on page 85, allSERP to the Supplemental 401(k) Plan. Although Mr. Hall continues to have a fully vested benefit in the Company’s Retirement Plan, he is no longer eligible for future pension benefit accruals in either the Retirement Plan or the SERP due to exceeding the maximum years of our NEOsservice considered.
Mr. David Turner - Mr. D. Turner has 12 years of credited service with the exception of Mr. GaleCompany and participates in both the Retirement Plan and the SERP. His benefits are determined using the regular SERP calculations previously discussed, and he is not eligible for a pensionthe alternative targeted SERP benefit. Mr. Hall and
Mr. Owen are-Mr. Owen has 10 years of credited service. He does not participate in the Retirement Plan but is entitled to receive the alternative targettargeted benefit under the SERP; however, neitherSERP. While he is currentlyaccruing benefits under the alternative formula, he is not vested in the benefit. Mr. Hallbenefit as he has accrued the minimum years of service required to vest in the benefit, but has not yet reached age 60. Mr. Owen has neither accrued the minimum number of years of service nor reached the minimum vesting age at this time. In the event Mr. Owen leaves the Company prior to age 60, he will receive no SERP benefit from the Company.
SEC rules require us to report the value of the benefit althougheven though it may not yet be vested; therefore, the numbers includedvalues reported in the Pension Benefits table (page 85) and in the column of the Summary Compensation Table relating to increases in pension benefits (page 80) include amounts that Mr. Owen has not yet earned for earned.
Mr. Hall and Mr. Owen. Although Mr. Hall is not vested in the alternative target benefit, he has accrued vested benefits in the Retirement Plan and the SERP using the regular formula. Mr. Owen is only entitled to the alternative target benefit and will receive no pension benefits from the Company unless he meets the vesting requirements for the alternative target benefit in the future. Mr. Turner participates in both the Retirement Plan and the SERP but is not eligible for the alternative target benefit, and his benefits are determined using the regular SERP calculations previously discussed.Lusco - With seven years of credited service, Mr. Lusco does not participate in the Retirement Plan but is a participantparticipating in the SERP. His benefit is calculated using the regular SERP calculations previously discussed. In addition, Mr. Lusco’sdiscussed and is not eligible for the alternative targeted benefit formula. Upon electing to grant participation in the SERP isto Mr. Lusco, the Company did determine to subject his participation to significant vesting requirements. In order to receive the normal SERP benefits, Mr. Gale was hired afterLusco must have reached age 55 and have more than 10 years of service. While Mr. Lusco is older than 55, he has not completed the plans were closedrequired 10 years of service. Therefore, in the event he terminates employment prior to new associatescompleting 10 years of service, all SERP benefits will be forfeited.
Mr. John Turner - Mr. J. Turner has seven years of credited service. Through prior service, he is a participant in the Retirement Plan, but is no longer accruing benefits. Mr. J. Turner participates in the SERP under the alternative targeted benefits outlined above. Although he is accruing benefits, he is not vested in the benefit as he has neither the minimum years of service nor reached the minimum vesting age at this time.
SEC rules require us to report the value of the benefit even though it may not be vested; therefore, the values reported in the Pension Benefits table and
after he had already reached full retirement age; therefore, he does not participate in
either plan and will not receive anythe column of the Summary Compensation Table relating to increases in pension benefits
from the Company.include amounts that Mr. J. Turner has not yet earned.
Pension Benefits Table.The Pension Benefits description
and table on pages 8497 and 8598 include a more detailed description of retirement benefits and a calculation of the value of pension benefits for each NEO. In
ï 2016 Proxy Statement71
|
COMPENSATION DISCUSSION AND ANALYSIS |
addition, the Summary Compensation Table on pages 8091 through 8193 provides a figurevalue that represents the change in the lump sum value of pension benefits from 20142016 to 2015.2017. Several factors influence the calculation of this change. First, asFor most participants, the change is a result of the limitations of the Troubled Asset Relief Program on base and bonus opportunity, average pay as used in each plan’s benefit formula had been lower than normal in past averaging periods. After returning to profitability and more normalized pay practices, average pay as calculated for plan benefit purposes increased in 2013, 2014 and 2015, therefore, increasing the resulting benefits. Further, additional years of service earned, the passage of time, and discount rates lower than historical averages, which have alleach contributed to different degrees to the pension benefit increases reported in the Summary Compensation Table. With respect to Mr. Hall, the pension change reflected in the Summary Compensation Table represents the final accrual required as his pension participation was frozen and the lump sum value of his SERP benefit was transferred to the Supplemental 401(k) Plan in mid-2017. Current SEC rules require us to calculate any change in pension benefit at the rate used to value the benefit under the terms of the plan. In most cases, this rate is based on page 80.
actuarial assumptions used to value plan benefits and liabilities for financial statement purposes.
(2) Defined contribution plans. Regions Financial Corporation 401(k) Plan (the “401(k) Plan”) and Supplemental 401(k) Plan. These plansPlan are defined contribution plans and generally allow eligible associates to contribute on a pre-tax or Roth basis a portion of their total base and annual incentive compensation on a pre-tax or Roth basis into investment accounts that are held and invested on a tax-deferred basis until termination of employment or retirement age.retirement. The 401(k) Plan is a tax-qualified 401(k) savings plan under Section 401(a) of the Internal Revenue CodeIRC in which all eligible associates can participate, while the Supplemental 401(k) Plan is a nonqualified plan for certain associates whose participation in the 401(k) Plan is generally limited due to the qualified plan’s wagecompensation and contribution limits. The Company makes a contribution to the
plans401(k) Plan (and a deemed contribution to the Supplemental 401(k) Plan) equal to the deferral rate elected by the participant up to a maximum of 4 percent of pay. In addition to the Company matching contribution, the Company
also provides a non-contributory 2 percent allocation to the
plan401(k) Plan (and a deemed 2 percent allocation to the Supplemental 401(k) Plan) for any associate who does not participate in the Retirement
Plan described above.Plan. In
2015,2017, all of our NEOs participated in these plans and received the Company matching contribution of 4 percent of pay.
In addition, because Mr. Gale is not a participant in the Retirement Plan or SERP previously described, he was eligible for and received the additional non-contributory 2 percent allocation.
Perquisites.Our NEOs are eligible to participate in employee benefit programs generally available to all associates. While we generally do not offer a broad range of perquisites (“perks”)perks to our executive officers,NEOs, we have provided certain personal benefits that are not generally available to the rest of our
other associates. The CHR Committee periodically reviews the perks available to executive officers to determine whether these programs continue to serve the purpose of providing benefit to the Company. The CommitteeCompany and has historically discontinued any program that it determines is not based on sound business rationale.
In General. In 2015,2017, NEOs continued to be eligible for financial planning services, Company-provided security coverage for private residences, certain relocation benefits, and enhanced coverage for annual physicals. These items are provided to NEOs because we believe that they serve a necessary and reasonable business purpose. Each NEO is responsible for all taxes on any imputed income resulting from any of these benefits and
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| COMPENSATION DISCUSSION AND ANALYSIS |
the total cost to the Company represents
a nonmaterialan immaterial portion of total compensation. Any special benefits our NEOs received are included in the Summary Compensation Table on pages
8091 through
8193 of this proxy statement.
Use of Corporate Aircraft. The use of corporate aircraft is subject to a formal policy approved by the CHR Committee and the NCG Committee that sets forth the criteria and procedures applicable to any use of the aircraft.its use.
It has long been our policy to require that our CEO use corporate-owned or other non-commercial aircraft for business travel when possible. In addition, it is our policy to allow our CEO to traveluse corporate-owned aircraft for personal reasonstravel up to a maximum value of $100,000 per year. In the event the value of personal use (as measured based on the incremental cost of operating the aircraft) exceeds $100,000 in any year, our policy
requires the CEO to reimburse the Company the full incremental cost of operating the corporate aircraft.
Mr. Hall is subject to an Aircraft Time Sharing Agreement with the Company that governs the terms and conditions of personal use of the corporate aircraft. Although the policy and the agreement allow for personal use without cost up to $100,000 per year, Mr. Hall’s personal use in 20152017 was limited and represented a value of approximately $20,000.less than $70,000. The Board also has authorized the CEO to make corporate-owned aircraft available for the personal travel of other Company associates on a limited basis, such as in the event of emergency or when personal use may be in the best interest of the Company due to either efficiency and/or safety concerns.
Compensation Framework, Policies, Processes, and Risk Considerations
Our compensation and benefit programs operate under the guidance and oversight of the
CHR Committee. The
CHR Committee is composed of independent Directors who are not eligible to participate in any of the management compensation programs or other employee benefit or compensation plans of the Company, except for grants of equity compensation under the Company’s Long Term Incentive
Plan. Throughout 2015,Plan and pursuant to the
Director Compensation Program. Directors who served as members
serving onof the
CHR Committee
were:during 2017 include:
Samuel A. Di Piazza, Jr.
Susan W. Matlock
Lee J. Styslinger III
Each CHR Committee member has been determined to be independent as defined by NYSE rules and applicable SEC rules and regulations. The CHR Committee operates under a written charter adoptedapproved by the Board. A copy of the charter is available on the Investor Relations section of our website www.regions.com.at
www.regions.com. Committee Meetings.Meetings.The CHR Committee holds meetings as often as it deems necessary to perform its duties and responsibilities, but not fewer than three times a year. Although many compensation decisions are made in the first quarter of the year, as outlined on pages 64 74through 65,76, the decision-making process is continuous and neither ends nor begins with any one meeting. During 2015,2017, the CHR Committee met six times to review, discuss, and approve compensation decisions for the Company and held one joint meeting with the Risk Committee.Committee and one joint meeting with the NCG Committee and Board.
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COMPENSATION DISCUSSION AND ANALYSIS |
The CHR Committee asks its independent compensation consultant to attend all regularly scheduled meetings, as well as some of the Committee’s special meetings. Other outside advisors, including legal counsel, may also attend meetings when members feel additional guidance on specific topics is needed.may be beneficial. Meetings are typically attended by the Chairman/CEO, the Head of Human Resources, and the Head of Compensation and Benefits for the Company.Benefits. The CFO and CRO attend meetings during times when Company budget and performance information is presented and whenor incentive
plan design is presented. As previously noted, at least one joint meeting of the
CHR Committee and the Risk Committee is held each year. During this joint meeting, representatives from the
risk management function,Risk Management Group, including the CRO, review a comprehensive risk assessment of the Company’s incentive plans, including both plans that cover executive officers, as well as plans that cover other associates of the Company.
Throughout the year, the
CHR Committee
willmay hear from the
Strategic Performance and Alignment function or heads of business groups with respect to details about the operation and effectiveness of incentive compensation programs in place within the business groups. From time to time, the
CHR Committee may ask to hear presentations from other members of management regarding topics of interest to the
CHR Committee.
EveryAdditionally, every CHR Committee meeting
however, includes an executive session without the participation of any member of the executive management team. The independent compensation consultant typically participates in a portion of these executive sessions.
Independent Compensation Consultant.During 2015,2017, the CHR Committee engaged the firm of Frederic W. Cook & Co., Inc. (“Cook & Co.”) to serve as the independent compensation consultant to the CHR Committee and to provide advice relating to Regions’ executive compensation programs and practices. As one of the leading independent compensation consulting firms in the country serving as a consultant to a large number of Fortune 500 companies, Cook & Co. advises the CHR Committee on best practices for compensation governance, including practices outside of the financial services industry. The CHR Committee
assessed the independence of Cook & Co., as required under the listing standards adopted by the NYSE pursuant to SEC requirements, and concluded that no conflict of interest exists.
While Cook & Co. reports directly to the
CHR Committee, they also work with
RegionsRegions’ management,
at the direction of the CHR Committee, to obtain information and further
the goals of the Committee.its goals. Cook & Co.
performsdoes no work for executive management and provides no other services to Regions.
The scope of services provided by Cook & Co. for the CHR Committee during 20152017 included:
Attended all CHR Committee meetings;
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| COMPENSATION DISCUSSION AND ANALYSIS |
Provided the CHR Committee with competitive market data to assist in establishing target levels for compensation components, such as base salary levels, annual incentives, and long-term performance awards, as well as benefit levels for executive management;
Assisted the CHR Committee with the evaluation and establishment of the design and construct of the short-short-term and long-term incentive programs for 20152017, including values, opportunity levels, performance metrics, and targets (including thresholds and maximums), performance curves, relative peer group comparisons, and risk mitigants to be included in the plan;
Advised the CHR Committee in connection with respect to year-end compensation determinations based on performance evaluations and other input;factors, including succession planning and related considerations;
Reviewed the Company’s change-in-control practices and provided competitive market practices for severance payments in the event of a change-in-control;
Provided Tax Reform updates and potential considerations throughout the second-half of 2017;
Advised the CHR Committee regarding regulatory and compliance issues and the development of newleading best practices and market competitive information with respect to compensation guidelines established by the SEC, the Federal Reserve, and other banking regulatory bodies; and
Provided current trend information on industry and executive compensation issues.
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Other Policies and Practices Impacting Compensation Decisions
Use of Peer Groups for Benchmarking Purposes.Purposes. In determining market competitiveness of compensation, the CHR Committee, with the assistance of its independent compensation consultant, regularly reviews the compensation of our executive officers against that of the Company’s compensation peer group, as well as survey data from a larger segment of companies within the financial services industryindustry. While we do not specifically benchmark each individual Regions position to specific job matches within these peer companies, we use the information from these peers to assist the CHR Committee in general. Theevaluating the competitiveness of the compensation of our executive team including the NEOs covered in this proxy statement.
When evaluating the compensation peer group for 2017 plans and pay levels, the CHR Committee’s independent compensation consultant recommended expanding the number of companies included in the peer group. After identifying and reviewing potential additions, the CHR Committee elected to include Citizens Financial Group (“Citizens”) in the
compensation peer group for 2017. The CHR Committee’s belief that Citizens is a fit from an industry perspective is confirmed given both Citizens and ISS consider Citizens and Regions to be peers. Adding Citizens to our compensation peer group brings stability to year-over-year comparisons and improves the validity of the peer group on the primary size evaluation criteria of assets, market capitalization, and revenue.
The CHR Committee believes that peer group construction revolves around finding a balance between including relative companies that match in size and focus and enough companies to make comparisons meaningful. The companies listed below are those that the CHR Committee believes are appropriate due to industry, asset size, and market capitalization. These companies have executive positions that are most similar in breadth and scope to Regions and represent the financial institutions that compete with Regions for our top executive talent. Our compensation peer group consists of the following financial institutions:
|
| | |
| Compensation Peer Group |
| Company | 12/31/2017
Assets ($ in millions) | 12/31/2017 Market Cap ($ in millions) |
| U.S. Bancorp | 462,040 | 88,728 |
| The PNC Financial Services Group, Inc. | 380,768 | 68,249 |
| Capital One Financial Corporation | 365,693 | 48,346 |
| BB&T Corporation | 221,642 | 38,881 |
| SunTrust Banks, Inc. | 205,962 | 30,417 |
| M&T Bank Corporation | 118,593 | 25,668 |
| Fifth Third Bancorp | 142,193 | 21,050 |
| KeyCorp | 137,698 | 21,563 |
| Citizens Financial Group (New in 2017) | 152,336 | 20,604 |
| Regions Financial Corporation | 124,294 | 19,596 |
| Huntington Bancshares Incorporated | 104,185 | 15,609 |
| Comerica Incorporated | 71,567 | 15,006 |
| Zions Bancorporation | 66,288 | 10,041 |
In addition to reviewing compensation peer group information annually, the CHR Committee’s independent compensation consultant periodically reviews the Company’s total
compensation program against broader financial services industry survey data compiled by other sources (including compensation surveys prepared for the financial services
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| COMPENSATION DISCUSSION AND ANALYSIS |
industry by McLagan, a leading performance/reward consulting and benchmarking firm focused specifically on the financial services industry). All of this information is used by the CHR Committee when it considers the competitiveness and appropriateness of the amount and composition of pay at Regions.
For purposes of measuring performance under both our short-term annual and long-term incentive plans, we use a different peer group to evaluatemeasure our relative performance against. While the CHR Committee believes compensation measures should be reviewed against financial institutions closer in size and scope to Regions, they further believe performance is more appropriately measured against a broad group of financial institutions that the market would consider in competition with
Regions for their next investment dollar. The key driver for performance peer group selection is business similarities. The CHR Committee looks for a focus on retail, consumer, and corporate banking with a regional/geographic focus. Though the CHR Committee also considers size, it is not a key determining factor due to its lack of material impact on performance comparisons, especially when related to its impact on compensation comparisons. The CHR Committee also elected to include Citizens in the performance peer group, as well as the compensation peer group, for 2017.
The peer group for measuring our performance under our annual short-term and long-term incentive plans consists of the following financial institutions:
|
| | |
| Performance Peer Group |
| Company | 12/31/2017
Assets ($ in millions) | 12/31/2017
Market Cap ($ in millions) |
| U.S. Bancorp | 462,040 | 88,728 |
| The PNC Financial Services Group, Inc. | 380,768 | 68,249 |
| BB&T Corporation | 221,642 | 38,881 |
| SunTrust Banks, Inc. | 205,962 | 30,417 |
M&T Bank Corporation
| 118,593 | 25,668 |
| Fifth Third Bancorp | 142,193 | 21,050 |
| KeyCorp | 137,698 | 21,563 |
| Citizens Financial Group (New in 2017) | 152,336 | 20,604 |
| Regions Financial Corporation | 124,294 | 19,596 |
| Huntington Bancshares Incorporated | 104,185 | 15,609 |
| Comerica Incorporated | 71,567 | 15,006 |
| Zions Bancorporation | 66,288 | 10,041 |
| Synovus Financial Corp. | 31,222 | 5,700 |
| First Horizon National Corporation | 41,423 | 6,531 |
| Hancock Holding Company | 27,336 | 4,217 |
The above-noted peer groups are not the same as the group of companies that comprise the S&P 500 Banks Index, which is the index included in the stock performance chart presented in Regions’ Annual Report on Form 10-K for the year ending December 31,
2015. Our compensation2017 and repeated at page 9 of this proxy statement. Each of these peer
groupgroups represents a smaller group of financial institutions tailored primarily by asset size,
and core business
services. The Committee believes that the companies listed below have executive positions that are most similar in breadthservices, geographic similarity, and
scope to Regions and represent the financial institutions that compete with Regions for our top executive talent. Included in our compensation peer group are the following financial institutions: | | |
• BB&T Corporation
• Capital One Financial Corporation
• Comerica Incorporated
• Fifth Third Bancorp
• Huntington Bancshares Incorporated
| | • KeyCorp
• M&T Bank Corporation
• The PNC Financial Services Group, Inc.
• SunTrust Banks, Inc.
• U.S. Bancorp
|
In addition to annually reviewing information with respectalignment to the selected peer group, the Committee’s independent compensation consultant periodically reviews the Company’s total compensation program against broader financial services industry survey data compiled by other sources (including compensation surveys preparedprinciples for the financial services industry by McLagan, a leading performance/reward consulting and benchmarking firm focused specifically on the financial services industry).
In addition to our compensation peer group, both our short-term annual incentive plan and our long-term plan use a peer group against which we measure our performance. While we believe it is appropriate to measure our compensation against a peer groupeach type of financial institutions closer in size and scope to Regions, the Committee believes that performance is most appropriately measured against a broader group of financial institutions that the market would consider in competition with Regions for their next investment dollar. Previously, the Committee used the banks within the S&P 500 Banks Index as our performance peer group. However, prior to setting our performance requirements for the 2015 year, the S&P 500 Banks Index was reconstituted with large, money center banks added to the index while smaller, regional banks were excluded. With this change in the index, the Committee decided to keep the same performance peer group in 2015 that had been used in the 2014 plans and asked its independent compensation consultant to study and offer suggestions for a custom peer group against which to measure performance in future years.
measurement. Therefore, included in our 2015 performance peer group are the following financial institutions:
| | |
• BB&T Corporation
• Comerica Incorporated
• First Horizon National Corporation
• Fifth Third Bancorp
• Huntington Bancshares Incorporated
• Hudson City Bancorp, Inc.*
• KeyCorp
| | • M&T Bank Corporation
• People’s United Financial, Inc.
• The PNC Financial Services Group, Inc.
• SunTrust Banks, Inc.
• U.S. Bancorp
• Wells Fargo & Company
• Zions Bancorporation
|
* | Hudson City ceased to be part of the peer group as a result of its acquisition by M&T Bank Corporation in late 2015. |
Say-on-Pay.Regions understands that investors,stockholders, regulators, and other stakeholders have a strong interest in executive compensation and attempts to balance the interests of these constituencies.constituencies in the design and execution of our executive compensation program. In accordance with the vote of our stockholders, we providehave provided an annual Say-on-Pay advisory vote regarding executive compensation. This year’s proposal is included as Proposal 3 on page 6068 of this proxy statement.
In addition, this year we are asking stockholders to reapprove the annual frequency for the advisory Say-on-Pay vote. For more information, see Proposal 4 on page 69 of this proxy statement.
In last year’s Say-on-Pay vote, we received overwhelming approval of our executive compensation programs,program, with more than 96 percent of the votes cast being in favor of our pay programs.program. Following our 2017 annual meeting, we also initiatedparticipated in an enhanced corporate governance stockholder engagement program. Executives
process. Members from our
executive compensation, investor relations,
and corporate governance
functions met with large stockholders to answer questions and
executive compensation functions held meetings with key stockholders and discusseddiscuss any issues
of concern or
questions.concerns. We will continue to monitor the results of future advisory votes on compensation and
take feedback from our stockholder outreach program
and will take results of both into consideration when assessing compensation matters in the future.
Clawbacks.It has long been the CHR Committee’s practice to review past awards in light of any material restatement of our financial results, andresults. As such, we continue to review and strengthen our policies with respect to the recoupment of prior incentive compensation awards and/or adjustment of future awards in these events. AThe CHR Committee annually reviews a formal clawback policy that applies to each of our NEOs, as well as a number of other officers of the Company (each a “Covered Officer”). The policy provides that in the event the Company is required to prepare an accounting restatement due to the material noncompliance of the Company with any financial reporting requirement under either GAAP or federal securities law, or the Company subsequently finds that the financial information or performance metrics used to determine the amount of incentive compensation for a prior period is materially inaccurate, the Company may seek repayment of incentive compensation or require the forfeiture or reduction of outstanding or future incentive compensation as may be determined by the CHR Committee. In addition to allowing for
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| COMPENSATION DISCUSSION AND ANALYSIS |
clawback in the case of financial restatement or materially inaccurate performance metrics, the policy allows the Company to recoup incentive compensation in the case of misconduct of a Covered Officer, regardless of whether or not there is an accompanying financial restatement. For purposes of the policy, misconduct is defined as: (i) a knowing violation of federal, state
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COMPENSATION DISCUSSION AND ANALYSIS |
or local law, rule, or regulation; (ii) a material breach of any written Company policy or covenant between Regions and the Covered Officer; (iii) disclosure of the Company’s confidential information or trade secrets; or (iv) commission of an act of fraud, dishonesty, or recklessness in the performance of the Covered Officer’s duties, which is not in good faith and subjects the Company to excessive risk or financial loss or materially disrupts, damages, impairs, or interferes with the business of the Company.
Regulatory Oversight and Risk Governance.As a bank holding company, we must comply with various regulatory requirements. The Federal Reserve adopted guidelines on incentive compensation for financial institutions that include the following three main principles: Incentive compensation arrangements should balance risk and financial results in a manner that does not provide employees with incentives to take excessive risks on behalf of the banking organization.
A banking organization’s risk-management processes and internal controls should reinforce and support the development and maintenance of balanced incentive compensation arrangements.
Banking organizations should have strong and effective corporate governance to help ensure sound compensation practices including effective oversight by the Board.
In response to these guidelines, we established a comprehensive governance and oversight process for the design, operation, and monitoring of our incentive plans, which we believe improves our ability to evaluate and reduce risk or to risk-adjust payouts under the plans. We created an internal cross-functional oversight committee with representation from risk management, finance, human resources, legal, and
our strategic alignment
function to review, consider, and approve, as appropriate, certain higher risk plans. This cross-functional oversight committee also works with business group leadership to monitor the performance and effectiveness of all of our incentive plans to ensure that they include features and metrics designed to discourage inappropriate risk-taking.
As a part of our oversight process,
thethis internal oversight committee meets on a regular basis and provides a quarterly report to the
CHR Committee with respect to the activities around incentive compensation management. In addition, at least once each year, the
CHR Committee meets
jointly with the Risk Committee, the CRO, and other members of the risk management team
and receivesto receive a thorough risk assessment of each of our material incentive plans.
In presenting the risk assessment, the CRO noted that the process of limiting risk starts with the Board in setting the risk appetite of the Company, establishing policies, and implementing appropriate limits andlimits. The process then continues with management in developing the policies and practices to ensure the Company operates within our risk appetite and avoids unnecessary or excessive risk. As described in the
Relationship of Compensation Policies and Practices to Risk Managementon page 50,59, we believe that the risks arising from our compensation plans, policies, and practices are not reasonably likely to have a material adverse effect on the Company. In making this determination, we consider the impact of:of the: (i) the Board’s role in the determination of the overall risk profile and appetite; (ii) entity level of controls in place; and (iii) the incentive policies, procedures, and governance activities we follow.
Management and the CHR Committee acknowledge that compensation practices are important components of our approach to risk management. Therefore, we are committed to working with the Federal Reserve, as well as other regulatory bodies, to achieve our objectives. We strive for clarity and transparency in our compensation structure. As we continue the ongoing evaluation of our compensation policiesstructure and programs, we will take any steps deemed advisable to further strengthen our compensation risk management framework.
framework as we continue the ongoing evaluation of our compensation policies and programs.
Equity Grant Policies and Practices. A grant of equity compensation to eligible key associates is generally is made on an annual basis. Although the Company does not currently issue stock option grants under the 2015 Long TermLong-Term Incentive Plan, in the event this practice resumes, the plan requires that the exercise price for options be based on the closing price of Regions common stock on the date of the grant.grant in the event this practice resumes. The CHR Committee has adopted a schedule and process of reviewing the program provisions and grant levels in the first quarter of the year to coincide with the annual performance management compensation review process established by the Company for all associates. As a part of that process each year, the CHR Committee will pre-establish a grant date for grants to eligible associates subject to the needs and business considerations of the Company. The equity grants to all eligible key associates in 2015 were made in April.on April 3, 2017.
The
CHR Committee specifically approves all grants of equity compensation to executive officers, as well as other officers covered by Section 16(a) of the Exchange Act. The
CHR Committee has delegated authority to the CEO to determine and approve annual
grants, as well as modify outstanding grants, to other key associates within the limits and budgets established each year as part of the
CHR Committee’s consideration of the annual grant program guidelines.
From time to time, the Company may find it necessary to issue special grants to other new hires or key associates outside of the normal grant process. The
CHR Committee also has delegated authority to the CEO to determine the need for and value of these grants. For these grants, the
CHR Committee’s policy provides that grants will be made on the first business day of the calendar quarter following the hire date or the determination for the need to grant an award for retention purposes. This timing was chosen to prevent even an appearance that either management or the associate could manipulate the pricing date and also to reduce the administrative and accounting burden that would be created by multiple grant dates. Any grants made by the CEO are reported to the Committee on a regular basis each year.
Policy on Cash versus Non-Cash and Current versus Future Compensation. The CHR Committee does not maintain a stated policy that dictates cash versus non-cash
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| COMPENSATION DISCUSSION AND ANALYSIS |
compensation or current versus future compensation. However, the allocation of cash and non-cash compensation for each of the NEOs is reviewed by the
CHR Committee annually and reflects the
CHR Committee’s best efforts to balance
short-short-term and long-term objectives of the Company.
Stock Ownership Guidelines and Stock Retention Requirements. Regions has adopted stock ownership guidelines requiring executive officers and members of the Board to have a meaningful economic stake in Regions. These guidelines are designed to maintain stock ownership levels high enough to ensure our commitment to creating stockholder value.
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COMPENSATION DISCUSSION AND ANALYSIS |
The equity stake In 2017, the CHR Committee made the decision to increase the ownership requirement from five to six times base pay for our CEO. Additionally, the CHR Committee reviewed and approved the types of our NEOs and Directors is reflected in the beneficial ownership information contained in this proxy statement on pages 23 and 24. The table below summarizes the stock ownership guidelines for our CEO and each ofthat are counted toward meeting the NEOs (including their compliance with the guidelines):
| | | | | | | | | | | | | | | | |
| Name | | Ownership
Requirement | | | Approximate Stock Value
Required to be Held | | | Holds
Required
Amount | | | Percent of Required
Amount Owned | |
O. B. Grayson Hall, Jr. | | | 5 X Base Pay | | | $ | 5,000,000 | | | | Yes | | | | 159% | |
David J. Turner, Jr. | | | 3 X Base Pay | | | $ | 1,896,000 | | | | Yes | | | | 139% | |
John B. Owen | | | 3 X Base Pay | | | $ | 1,941,000 | | | | Yes | | | | 138% | |
C. Matthew Lusco | | | 3 X Base Pay | | | $ | 1,680,000 | | | | No | | | | 86% | |
Fournier J. Gale, III | | | 3 X Base Pay | | | $ | 1,665,000 | | | | No | | | | 91% | |
guidelines. For purposes of meeting the guidelines, the following types of stock ownership are counted:
shares directly owned by the executive officer or Director without restriction, restriction;
restricted stock, stock units (except for those that may be subject to future performance requirements), ;
stock equivalents allocated through any deferred stock investment plan, as well as an executive officer’s shares held in a 401(k) Plan account and notionally held in a Supplemental 401(k) Plan account. account; and
shares held in trust for the benefit of the executive officer or his or her immediate family members.
Any executive officer who does not meet the ownership guidelines must retain at least 50 percent of the after-tax value of any compensatory equity grant upon vesting until such time as the ownership guidelines are met.
The equity stake of our NEOs and Directors is reflected in the beneficial ownership information contained in this proxy statement on pages 22 and 23. The table below summarizes the stock ownership guidelines for our CEO and each of the NEOs (including their compliance with the guidelines):
|
| | | | | | | |
| Name | Ownership
Requirement | Approximate Stock Value
Required to be Held |
| Holds
Required
Amount | Percent of Required
Amount Owned |
|
| O. B. Grayson Hall, Jr. | 6 X Base Pay | $ | 6,000,000 |
| Yes | 347 | % |
| David J. Turner, Jr. | 3 X Base Pay | $ | 1,992,600 |
| Yes | 285 | % |
| John B. Owen | 3 X Base Pay | $ | 2,041,800 |
| Yes | 290 | % |
| John M. Turner, Jr. | 3 X Base Pay | $ | 1,800,000 |
| Yes | 327 | % |
| C. Matthew Lusco | 3 X Base Pay | $ | 1,752,750 |
| Yes | 245 | % |
Other Policies Related to Stock Ownership (prohibitions against insider trading, hedging, and pledging of Regions securities).The Company has a long-standing General Policy on Insider Trading to guard against improper securities trading. Under the policy, no Director, officer, or other associate of Regions who is aware of material nonpublic information relating to the Company may, directly or through family members or other persons or entities, buy or sell securities of the Company (other than pursuant to a pre-approvedpreviously approved trading plan that complies with SEC Rule 10b5-1), or engage in any other action to take personal advantage of the material nonpublic information.In addition, our insider trading policy
Our General Policy on Insider Trading prohibits speculative trading in ourRegions equity securities, including prohibitions on short-selling securities, buying call optionsall hedging transactions and selling put options or from entering into hedging strategies that protect against downside riskshort sales of Regions stock ownership. Our policies also prohibit
securities, as well as transactions in puts, calls, or other derivative securities. In addition, our General Policy on Insider Trading prohibits our Directors and Section 16 Officersexecutive officers from purchasing CompanyRegions securities on margin or holding them in a margin account, and prohibit borrowing against any account in which any CompanyRegions equity securities are held or pledging CompanyRegions equity securities as collateral for a loan.
Accounting for Stock-Based Compensation.Regions accounts for and reports for stock-based compensation under our long-term incentive plans in accordance with the requirements of Financial Accounting Standards Board’s (FASB)(“FASB”) Accounting Standards Codification (ASC)(“ASC”) Topic 718, Compensation —- Stock Compensation. For further disclosure of
Regions’ accounting for stock-based compensation, refer to Note 17 “Share-Based Payments” to the consolidated financial statements included in Regions’ Annual Report on Form 10-K for the year ended December 31,
2015.Internal Revenue Code Section 162(m) (“2017.
Consideration of the Impact of IRC 162(m)”).As part of its role,responsibilities, the CHR Committee has historically reviewed and considered the deductibility of executive compensation under IRC 162(m), which providesuntil recently provided that public companies generally may not deduct compensation of more than $1,000,000 of non-performance-based compensation paid to certain NEOs. The CHR Committee is cognizant of and will continue to consider the impact of the U.S. Tax Cuts and Jobs Act of 2017, which expanded the number of individuals covered by IRC Section 162(m) and eliminated the exception for performance-based compensation (generally effective beginning for the 2018 tax year) on the Company’s compensation programs and design. While the CHR Committee believesmade certain adjustments in the calculation of performance-based pay for 2017, it is our belief that compensation awarded in 20152017 under the terms of our short-term incentive plan, as well as the PSUs and performance-based cash awards under our long-term incentive plans, meet the requirements of IRC 162(m), it as amended by Tax Reform and are fully deductible. The CHR Committee has reservedhistorically and continues to reserve the right to pay executives compensation that is not deductible under IRC 162(m). and will continue to assess the impact of Tax Reform.
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| COMPENSATION DISCUSSION AND ANALYSIS |
Change-in-Control, Post-Termination, and Other Employment Arrangements
For competitive and fairness reasons, we believe it is important to protect key associates (including the NEOs) in the event of certain terminations of employment during a transition period following a change-in-control of Regions. We believe that stockholders will be best served if the interests of our key associates are aligned with them. The occurrencepotential or potentialactual occurrence of a change-in-control could create uncertainty regarding the continued employment of our NEOs and providing employment protection should eliminate, or at least significantly reduce, any potential reluctance of our executives to pursue potential transactions that may be in the best interests of our stockholders. As a result,To align the interests of our stockholders and our executives, we have entered into agreements with all NEOs that govern some of the terms of their employment and compensation in the event of a qualifying termination after a change-in-control of Regions.
Change-in-Control Agreements.The change-in-control agreements entered into with NEOs generally provide that during the two-year period following a change-in-control of Regions, if the NEO’s employment is terminated other than for “cause,” or if the NEO resigns for “good reason,” he would be paid accrued compensation and benefits, plus an amount equal to a specified multiple of base salary and average annual bonus during the three years preceding the year in which the change-in-control occurs.
Mr. Hall Mr. Owen and Mr. Gale allOwen are entitled to a three times multiple of pay, while Mr. D. Turner, Mr. J. Turner, and Mr. Lusco are entitled to a two times multiple of pay upon termination following a change-in-control. If employment is terminated for “cause” or due to death, disability, or resignation other than for “good reason,” payments would be limited to accrued compensation and benefits. New
76 ï 2016 Proxy Statement
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COMPENSATION DISCUSSION AND ANALYSIS |
agreementsAgreements issued after February 2011 do not include any income tax gross up payments under the excise tax provisions of IRC Section 4999. Mr. Hall, Mr. Owen, and Mr. D. Turner have change-in-control agreements that were issued in 2007 and provide that provideadditional payments may become due to
avoid a negative tax consequence to the executive in the event any payment or benefit would cause the NEO to become subject to the excise tax imposed under IRC Section 4999, additional payments may become due to avoid a negative tax consequence to the executive.4999. Mr. GaleJ. Turner and Mr. Lusco entered into agreements after February 2011, and therefore, are
not entitled to receive a payment to compensate for excise taxes. None of the NEOs’ agreements provide any type of severance benefits in connection with termination of employment at any other time. For additional information, including definitions of “cause,” “good reason”reason,” and “change-in-control,” see the section entitledPotential Payments by Regions Upon Termination or Change-in-Controlon pages 87100 through 90103 of this 2016 Proxy Statement.
proxy statement.
ï 2016 Proxy Statement77
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| COMPENSATION AND HUMAN RESOURCES COMMITTEE REPORT |
COMPENSATION
AND HUMAN RESOURCES COMMITTEE REPORT
Compensation Discussion and Analysis
Regions has the primary responsibility for the Compensation Discussion and Analysis (“CD&A”)
, which is included in this
20162018 Proxy Statement.
On behalf of the Board of Directors, the Compensation and Human Resources Committee oversees the development and administration of Regions’ compensation program for officers and key associates of senior management. As part of this responsibility, the
Compensation and Human Resources Committee has reviewed and discussed with Regions’
management the contents of the CD&A. Based on its review and discussion, and subject to the limitations on the role and responsibility of the Compensation and Human Resources Committee, the Compensation and Human Resources Committee recommended to the Board of Directors that the CD&A be included in this proxy statement and incorporated into Regions’ Annual Report on Form 10-K for the year ended December 31, 2015.2017.
THE COMPENSATION COMMITTEE
Don DeFosset, Chair
David J. Cooper, Sr.
Ruth Ann Marshall
Susan W. Matlock
Lee J. Styslinger III
78Submitted by the Compensation and Human Resources Committee: ï 2016 Proxy Statement
|
| | |
| | |
| Don DeFosset, Chair | David J. Cooper, Sr. | Samuel A. Di Piazza, Jr. |
| | |
| | |
| Ruth Ann Marshall | Susan W. Matlock | José S. Suquet |
|
|
| COMPENSATION OF EXECUTIVE OFFICERS |
COMPENSATION OF EXECUTIVE OFFICERS
The following tables, narratives, and footnotes contain compensation information about our Chairman
President and Chief Executive Officer (“CEO”); our Chief Financial Officer (“CFO”); and our three other most highly paid executive officers for the year ended December 31,
2015,2017, our Named Executive Officers (“NEOs”).
Summary Compensation Table
The Summary Compensation Table that follows contains information with respect to our NEOs. Based on the amounts for
2015 in the following table,2017, salary accounted for approximately
1311 percent of
totaldirect compensation
(excluding the change in pension value(including salary, stock awards, and
nonqualified deferred compensation amounts)non-equity incentive compensation) for our CEO and
2622 percent, on average, among all other NEOs
reflectingwhich reflects our performance-based pay philosophy.
FollowingThe following is a brief summary of the components of
RegionsRegions’ pay programs included in each column of the Summary Compensation Table:
Salary – The “Salary” column includes the actual year-to-date base salary amounts for each NEO for the fiscal years indicated. New base salary amounts are generally effective on April 1 of each year. Therefore, although we did not grant salary increases in 2015 for our NEOs, the table does reflect an increase from 2014 to 2015 due to the fact that the 2014 year salaries increased in April of that year.
Bonus – Regions does not generally issue nonperformance-based or discretionary bonuses, and this column reflects the absence of any such payments.
Stock Awards – Equity awards granted in 20152017 were composed of Performance Stock Units (“PSUs”) and Restricted Stock Units (“RSUs”) and are reported in the Stock Awards“Stock Awards” column at the grant date fair value. The grant date fair value does not correspond with the amounts that may be eventually realized relative to these awards. Any benefit from these awards depends on the future value of Regions stock, the satisfaction of time-based vesting requirements in the case of RSUs and upon the attainment of performance requirements in the case of PSUs. For more detail regarding the stock awards for NEOs, see pages 69 and 7080 through 82 of the CD&A and the Grants of Plan-Based Awards table on page 8295 of this Proxy Statement.proxy statement.
Option Awards – Although our long termlong-term incentive plan allows for it,the granting of option awards, we have not awarded stock options to NEOs forin a number of years. This practice is reflected in the “Options” column.
Non-Equity Incentive Plan Compensation – The amounts in the “Non-Equity Incentive Plan Compensation” column represent annual incentives earned for 20152017 performance under our annual incentive plan as described beginning on page 66.76 of theCD&A and paid in early 2018. Also included in this amount is the value of the 20132015 Performance Cash GrantUnits for the performance period ended December 31, 2015.2017. While the
value of these
Performance Cash Unit awards has been determined, they remain subject to service based vesting until April 1,
2016. The value of the Performance Cash awards2018, and will be payable as of
April 1, 2016.that date. SEC rules require us to report these values in the Summary Compensation Table for the year that represents the final performance year of the grant. However, the CHR Committee does not consider these awards as current compensation, but rather compensation for the year in which the grant was issued. For more information on how the CHR Committee views awards compared to how the SEC requires us to report awards, please see pages 81 and 82 of the CD&A.
Change in Pension Value and Nonqualified Deferred Compensation Earnings – This column includes the change in pension value for each NEO, which is the difference in the total present value of accrued benefit on December 31, 2015,2017, minus the total present value of accrued benefit on December 31, 2014.2016. For additional information about pension benefits, refer to pages 7182 and 7283 in the CD&A and to thePension Benefits section and table on pages 8497 and 85.98. As for nonqualified deferred compensation earnings, none of the NEOs receive above-market or preferential earnings on their nonqualified deferred compensation accounts. More information regarding the provisions of the nonqualified deferred compensation plans in which the NEOs participate can be found on page 86.pages 98 and 99.
All Other Compensation – Amounts in the “All Other Compensation” column represent the aggregate dollar amount for each NEO for perks and perquisites,other personal benefits.benefits, and additional compensation items not disclosed in other columns of the Summary Compensation Table. Items may include the value of: excess group liability insurance coverage, group term life insurance coverage, financial planning services, any personal use of corporate aircraft, an enhanced executive physical, home security, as well as matching charitable gift contributions. It“All Other Compensation” also includes the value of Company contributions to our 401(k) Plan and Supplemental 401(k) plans.Plan.
Total – This column represents the sum of all columns for each of the NEOs, and includes all amounts earned by the NEO, including any amounts that may have been deferred for tax purposes.purposes.
ï 2016 Proxy Statement79
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| COMPENSATION OF EXECUTIVE OFFICERS |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name & Principal Position (1) | | Year | | | Salary ($) | | | Bonus
($) | | | Stock
Awards
($) (2) | | | Option
Awards
($) | | | Non-Equity
Incentive Plan
Compensation
($) (3) | | | Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($) (4) | | | All Other
Compensation
($) (5) | | | Total ($) | |
O. B. Grayson Hall, Jr. | | | 2015 | | | | 1,007,692 | | | | — | | | | 3,284,720 | | | | — | | | | 2,506,546 | | | | 3,764,852 | | | | 220,857 | | | | 10,784,667 | |
Chief Executive Officer | | | 2014 | | | | 993,750 | | | | — | | | | 3,443,535 | | | | — | | | | 3,708,902 | | | | 6,056,343 | | | | 218,717 | | | | 14,421,247 | |
| | | | 2013 | | | | 975,000 | | | | — | | | | 2,930,572 | | | | — | | | | 1,918,800 | | | | 4,328,165 | | | | 161,888 | | | | 10,314,425 | |
David J. Turner, Jr. | | | 2015 | | | | 636,862 | | | | — | | | | 788,340 | | | | — | | | | 883,295 | | | | 314,975 | | | | 98,948 | | | | 2,722,420 | |
Chief Financial Officer | | | 2014 | | | | 627,250 | | | | — | | | | 826,448 | | | | — | | | | 1,249,044 | | | | 1,079,650 | | | | 106,704 | | | | 3,889,096 | |
| | | | 2013 | | | | 607,250 | | | | — | | | | 651,240 | | | | — | | | | 863,024 | | | | 261,825 | | | | 85,515 | | | | 2,468,854 | |
John B. Owen | | | 2015 | | | | 651,977 | | | | — | | | | 788,340 | | | | — | | | | 905,498 | | | | 1,096,867 | | | | 100,552 | | | | 3,543,234 | |
Head of Regional Banking Group | | | 2014 | | | | 641,500 | | | | — | | | | 826,448 | | | | — | | | | 1,281,121 | | | | 1,847,754 | | | | 95,254 | | | | 4,692,077 | |
| | | | 2013 | | | | 618,750 | | | | — | | | | 651,240 | | | | — | | | | 879,368 | | | | 1,142,999 | | | | 87,144 | | | | 3,379,501 | |
C. Matthew Lusco | | | 2015 | | | | 559,269 | | | | — | | | | 788,340 | | | | — | | | | 687,487 | | | | 304,689 | | | | 83,165 | | | | 2,422,950 | |
Chief Risk Officer | | | 2014 | | | | 550,000 | | | | — | | | | 619,830 | | | | — | | | | 985,050 | | | | 1,102,519 | | | | 98,570 | | | | 3,355,969 | |
| | | | 2013 | (1) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
Fournier J. Gale, III | | | 2015 | | | | 564,308 | | | | — | | | | 591,250 | | | | — | | | | 691,991 | | | | N/A | | | | 106,889 | | | | 1,954,438 | |
General Counsel & Corporate | | | 2014 | | | | 555,000 | | | | — | | | | 619,830 | | | | — | | | | 990,880 | | | | N/A | | | | 117,695 | | | | 2,283,405 | |
Secretary | | | 2013 | | | | 533,750 | | | | — | | | | 488,434 | | | | — | | | | 700,280 | | | | N/A | | | | 92,866 | | | | 1,815,330 | |
|
| | | | | | | | | | | | | | | | | |
| Name & Principal Position | Year | Salary ($) |
| Bonus ($) |
| Stock Awards ($) (1) |
| Option Awards ($) |
| Non-Equity Incentive Plan Compensation ($) (2) |
| Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) (3) |
| All Other Compensation ($) (4) |
| Total ($) |
|
O. B. Grayson Hall, Jr. Chairman and Chief Executive Officer | 2017 | 1,000,000 | — |
| 3,558,511 | — |
| 4,652,167 | 3,282,717 | 227,964 | 12,721,359 |
| 2016 | 1,000,000 | — |
| 3,242,916 | — |
| 3,528,584 | 6,102,983 | 188,941 | 14,063,424 |
| 2015 | 1,007,692 | — |
| 3,284,720 | — |
| 2,506,546 | 3,764,852 | 220,857 | 10,784,667 |
David J. Turner, Jr. Chief Financial Officer | 2017 | 660,150 | — |
| 790,790 | — |
| 1,540,806 | 885,279 | 97,843 | 3,974,868 |
| 2016 | 644,062 | — |
| 778,301 | — |
| 1,177,490 | 513,593 | 86,787 | 3,200,233 |
| 2015 | 636,862 | — |
| 788,340 | — |
| 883,295 | 314,975 | 98,948 | 2,722,420 |
John B. Owen Head of Enterprise Services and Consumer Banking | 2017 | 676,450 | — |
| 790,790 | — |
| 1,591,297 | 1,459,534 | 93,121 | 4,611,192 |
| 2016 | 659,816 | — |
| 778,301 | — |
| 1,208,618 | 1,158,093 | 83,148 | 3,887,976 |
| 2015 | 651,977 | — |
| 788,340 | — |
| 905,498 | 1,096,867 | 100,552 | 3,543,234 |
John M. Turner, Jr.* President | 2017 | 585,000 | — |
| 790,790 | — |
| 1,339,896 | 1,527,838 | 101,214 | 4,344,738 |
| 2016 | — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
|
| 2015 | — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
|
C. Matthew Lusco Chief Risk Officer | 2017 | 580,688 | — |
| 790,790 | — |
| 1,403,486 | 403,527 |
| 100,628 | 3,279,119 |
| 2016 | 566,308 | — |
| 778,301 | — |
| 990,092 | 383,462 |
| 77,508 | 2,795,671 |
| 2015 | 559,269 | — |
| 788,340 | — |
| 687,487 | 304,689 |
| 83,165 | 2,422,950 |
(1) | |
| * | Mr. LuscoJohn Turner was not an NEO in 2013.2016 or 2015. |
(2) | |
| (1) | As reflected in the following table, amounts in this column are the grant date fair value of awards computed in accordance with FASB ASC Topic 718. |
| | | | | | | | | | | | | | | | | | | | |
| | | 2015 Annual Equity Grant (PSUs & RSUs) | | | Total Stock
Awards Value
($) | |
| | | PSUs ($/units) (a) | | | RSUs ($/units) (b) | | |
| Name | | Performance
Stock ($) | | | Performance
Stock (#) | | | Restricted
Stock ($) | | | Restricted
Stock (#) | | |
O. B. Grayson Hall, Jr. | | | 1,642,360 | | | | 173,611 | | | | 1,642,360 | | | | 173,611 | | | | 3,284,720 | |
David J. Turner, Jr. | | | 394,170 | | | | 41,667 | | | | 394,170 | | | | 41,667 | | | | 788,340 | |
John B. Owen | | | 394,170 | | | | 41,667 | | | | 394,170 | | | | 41,667 | | | | 788,340 | |
C. Matthew Lusco | | | 394,170 | | | | 41,667 | | | | 394,170 | | | | 41,667 | | | | 788,340 | |
Fournier J. Gale, III | | | 295,625 | | | | 31,250 | | | | 295,625 | | | | 31,250 | | | | 591,250 | |
|
| | | | | | |
| | 2017 Annual Equity Grant (PSUs & RSUs) | Total Stock
Awards Value
($) |
| | PSUs ($/units) (a) | | RSUs ($/units) (b) |
| Name | Performance Stock ($) | Performance Stock (#) | | Restricted Stock ($) | Restricted Stock (#) |
| O. B. Grayson Hall, Jr. | 1,779,256 | 122,034 | | 1,779,256 | 122,034 | 3,558,511 |
| David J. Turner, Jr. | 395,395 | 27,119 | | 395,395 | 27,119 | 790,790 |
| John B. Owen | 395,395 | 27,119 | | 395,395 | 27,119 | 790,790 |
| John M. Turner, Jr. | 395,395 | 27,119 | | 395,395 | 27,119 | 790,790 |
| C. Matthew Lusco | 395,395 | 27,119 | | 395,395 | 27,119 | 790,790 |
| |
| (a) | The amounts in this column reflect the number of units granted and the grant date fair value of PSUs. Actual awards can range from 0% to 150% of target based on performance metrics of absolute and relative Diluted EPS growth and ROATCE established at grant. The maximum award value for the PSUs (determined as described on pages 69 and 70)80-82) is $2,463,545$2,668,884 for Mr. Hall, $591,259 for$593,093 each of Messrs. Turner, Owen and Lusco and $443,438 for Mr. Gale. | D. Turner, Mr. Owen, Mr. J. Turner, and Mr. Lusco. |
| |
| (b) | The amounts in this column represent the number of units granted and the grant date fair value of RSUs that cliff vest at the end of the three-year vesting period ending April 2018. | 3, 2020. |
(2) This amount represents annual cash incentives for 2017 performance plus the value of the 2015 Performance Cash Units based on certification of performance goals as of December 31, 2017, and will be vested based on service effective April 1, 2018. The following table sets forth the details of these awards: |
| | | |
| | Non-equity Incentive Plan Compensation |
| Name | 2017 Annual Cash Incentive ($) | Value of 2015 Performance Cash Units at 12/31/17 ($) (a) | Total ($) |
| O. B. Grayson Hall, Jr. | 2,985,500 | 1,666,667 | 4,652,167 |
| David J. Turner, Jr. | 1,140,806 | 400,000 | 1,540,806 |
| John B. Owen | 1,191,297 | 400,000 | 1,591,297 |
| John M. Turner, Jr. | 1,039,896 | 300,000 | 1,339,896 |
| C. Matthew Lusco | 1,003,486 | 400,000 | 1,403,486 |
(3) | This amount represents annual cash incentives for 2015 performance plus the value of the 2013 Performance Cash Grant that vested at December 31, 2015 and will be released effective April 1, 2016 as detailed in the following table: |
| | | | | | | | | | | | |
| | | Nonequity Incentive Plan Compensation | |
| Name | | 2015 Annual
Cash Incentive
($) | | | Value of 2013
Performance
Cash Grant
at 12/31/15
($) (a) | | | Total ($) | |
O. B. Grayson Hall, Jr. | | | 1,381,546 | | | | 1,125,000 | | | | 2,506,546 | |
David J. Turner, Jr. | | | 633,295 | | | | 250,000 | | | | 883,295 | |
John B. Owen | | | 655,498 | | | | 250,000 | | | | 905,498 | |
C. Matthew Lusco | | | 499,987 | | | | 187,500 | | | | 687,487 | |
Fournier J. Gale, III | | | 504,491 | | | | 187,500 | | | | 691,991 | |
| (a) | This column reflects 75%100% of target earned at December 31, 2015.2017. Grants to Mr. D. Turner, Mr. OwenJ. Turner, and Mr. Lusco remainare subject to service vesting requirements until April 1, 20162018 (the 3rdthird anniversary of the date of grant) and may be forfeited should they separate from the Company prior to that date. | . |
(4) | |
| (3) | This amount includes benefits for Mr. Hall,Owen, Mr. OwenJ. Turner, and Mr. Lusco described on pages 71, 7282-84 and 84 through 86,97-98, which are subject to significant vesting requirements that have not yet been met. Therefore, while accrued, neither part of the change in benefit for Mr. Hall nor all of the change in benefit for Mr. Owen, Mr. J. Turner, and Mr. Lusco has been earned and would not be payable at the present time if they left the Company. Mr. D. Turner is fully vested in his benefit. |
80 ï 2016 Proxy Statement
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| COMPENSATION OF EXECUTIVE OFFICERS |
(5) | |
| (4) | All other compensation consists of the following: |
| | | | | | | | | | | | | | | | | | | | |
| Name | | Life Insurance,
Perquisites and Other
Personal Benefits
(a) ($) | | | Matching Contributions
Under Qualified
Savings Plans (b) ($) | | | Matching Contributions
Under Nonqualified
Savings Plans (b) ($) | | | Non-Elective
Contributions (b) ($) | | | Total All Other
Compensation ($) | |
O. B. Grayson Hall, Jr. | | | 64,309 | | | | 10,600 | | | | 145,948 | | | | — | | | | 220,857 | |
David J. Turner, Jr. | | | 26,612 | | | | 10,600 | | | | 61,736 | | | | — | | | | 98,948 | |
John B. Owen | | | 26,268 | | | | 10,600 | | | | 58,384 | | | | 5,300 | | | | 100,552 | |
C. Matthew Lusco | | | 29,843 | | | | 10,600 | | | | 37,423 | | | | 5,300 | | | | 83,165 | |
Fournier J. Gale, III | | | 34,203 | | | | 10,600 | | | | 37,858 | | | | 24,229 | | | | 106,889 | |
|
| | | | | | |
| Name | Life Insurance, Perquisites and Other Personal Benefits (a) ($) | Matching Contributions Under Qualified Savings Plans ($) | Matching Contributions Under Nonqualified Savings Plans ($) | Non-Elective Contributions under the
Qualified and
Nonqualified
401(k) plans (b) ($) |
| Total All Other Compensation ($) |
| O. B. Grayson Hall, Jr. | 105,154 | 10,800 | 112,010 | — |
| 227,964 |
| David J. Turner, Jr. | 38,338 | 10,800 | 48,706 | — |
| 97,843 |
| John B. Owen | 26,318 | 10,800 | 50,603 | 5,400 |
| 93,121 |
| John M. Turner, Jr. | 44,498 | 10,800 | 40,516 | 5,400 |
| 101,214 |
| C. Matthew Lusco | 42,897 | 10,800 | 41,531 | 5,400 |
| 100,628 |
| |
| (a) | The 20152017 amount includes the value of items such as group term life insurance premiums, excess group liability coverage, financial planning services, personal use of the corporate aircraft, an enhanced executive physical, home security, and matching charitable gift contributions, and Healthmiles Reward.contributions. The total value for personal use of the corporate aircraft by Mr. Hall in 20152017 was $20,250. | $69,500. |
| |
| (b) | These amounts includeThe table above does not reflect the 2017 lump sum value of Company contributionsMr. Hall’s accrued benefits from the Company’s defined benefit SERP transferred to the 401(k) Plan and the Supplemental 401(k) Plan as follows:described above on page 83 of the CD&A and below in the Pension Benefits and Nonqualified Deferred Compensation Tables and accompanying narrative. As Mr. Hall — $156,548; Mr. Turner — $72,336; Mr. Owen — $74,284; Mr. Lusco — $53,323;Hall’s benefit under the defined benefit SERP accrued over the years, the value of that benefit was reflected in the Change in Pension Value and Mr. Gale — $72,687. | Non Qualified Deferred Compensation Earnings column of the Summary Compensation Table. |
CEO Pay Ratio
CEO Pay Ratio and Compensation Philosophy. The guiding principles of compensation set forth by the CHR Committee and described beginning on page 70 of the CD&A form the foundation for Regions’ compensation and benefits philosophy for all associates. Accordingly, our compensation and benefit programs are designed to encourage and reward all associates who contribute to our success. We strive to ensure that the compensation of every associate reflects the level of his or her job impact and responsibilities and is benchmarked to be competitive in the market where the associate is geographically located. By and large, Regions associates are primarily residents of southeastern states where Regions has physical locations.
Under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, we are required to identify and disclose the annual total compensation of our median employee, the annual total compensation of our Chairman and CEO, Mr. Hall, and the ratio of these two amounts.
SEC rules for identifying the median employee and calculating the pay ratio allow companies to apply various methodologies and assumptions. As a result, the pay ratio reported by us may not be comparable to the pay ratio reported by other companies, including those within our peer groups and industry.
Associate Population and Measurement Date. To determine our median employee, we identified 22,709 full- and part-time associates, excluding our CEO, who were actively employed as of the first pay period at the beginning of the fourth quarter (October 6, 2017). Regions generally does not employ seasonal or temporary associates, and, therefore, they did not have a significant impact on our associate population.
Consistently Applied Compensation Measure (“CACM”) and Methodology. Though we considered and modeled multiple CACMs, including Box 1 and Box 5 from Form W-2 statements and base pay, there was not an appreciable difference in the compensation of the median employee under each method. As a result, we determined that base pay was
the most straightforward, consistent, and administratively efficient measure upon which to base this analysis.
We did not convert part-time pay to full-time equivalent pay; however, we did annualize pay for full-time associates who joined the company during the year. Using base pay as the CACM, we identified four potential median employees and ultimately selected the associate with a compensation structure and benefits profile most representative of the average Regions associate.
Median Employee. Of Regions associates, approximately 45 percent are in the retail organization, over 70 percent are incentive eligible, more than 90 percent participate in the 401(k) Plan, and over 80 percent participate in our medical and/or dental insurance programs. Our median employee is a full-time associate serving as a Financial Relationship Senior Consultant - Team Lead within our branch network; is incentive eligible; participates in our 401(k) Plan; and participates in the medical, dental, life, and disability insurance programs provided by the Company. With base pay of $43,160, all elements of the median employee’s 2017 compensation, including the Company-paid cost of the benefits mentioned above, totaled $63,174.
Pay Ratio. Using the compensation elements for our CEO that are disclosed in the Summary Compensation Table and adding $12,554 in Company-paid cost associated with his medical, dental, life, and disability insurance, we calculate our CEO’s total compensation for purposes of this ratio as $12,733,913. As a result, the ratio of our CEO’s annual total compensation to that of our median employee is 202 to 1. We believe that this ratio is a reasonable estimate calculated in a manner consistent with the pay ratio disclosure requirements.
Alternative Pay Ratio. In addition to the required pay ratio calculation, we have also calculated an alternative pay ratio that compares compensation for our median employee to our CEO compensation as adjusted by subtracting the $3,282,717 change in his pension value reported in the Summary Compensation Table. When calculated without this value, our
|
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| COMPENSATION OF EXECUTIVE OFFICERS |
CEO’s adjusted pay is $9,451,196 and the alternative CEO pay ratio is 150 to 1.
Regions’ Retirement Plan was closed to new participants in 2007, and, at this time, only approximately 20 percent of our associates remain participants in the plan. Changes in pension value, as required to be disclosed in the Summary Compensation Table, are impacted by changes in interest rates and, as a result, can represent a significant additional compensation component for those associates still eligible under the closed Retirement Plan. As we noted earlier, when identifying our median employee, we identified four associates with the same base pay who could have been chosen as our median. In keeping with the spirit of the disclosure, we believe it is important to identify an associate most reflective of our average associate. Therefore, while two of the four potential choices for the median employee are participants in the
Retirement Plan, we chose a more representative individual who is not a Retirement Plan participant. Our CEO has over 38 years of tenure with the Company and, as disclosed previously in the CD&A, has historically participated in our Retirement Plan and the SERP. Although we froze his participation in the SERP at the end of 2016, our 2017 compensation totals still reflect increases attributable to actuarial value changes in his benefit as we calculated the lump sum value of the pension and transferred it to our Supplemental 401(k) Plan as described above on page 83 of the CD&A and below in the Pension and Nonqualified Deferred Compensation tables and accompanying narrative.
Grants of Plan-Based Awards
Plan-based awards made in
20152017 to the NEOs included annual cash incentives,
performance-based cash,Performance-Based Cash Units, PSUs, and RSUs.
Annual cash incentives were based on an assessment of both corporate performance, as well as individual performance in
2015.2017. Corporate performance measures, including profitability, credit management, and customer service, accounted for
8070 percent of the
incentive, while individualincentive. Individual performance, in relation to certain strategic priorities, accounted for the remaining
20 percent of the incentive.2015 equity30 percent.
Equity grants were issued in 2017 under the Regions Financial Corporation 20102015 Long Term Incentive Plan (“Regions 20102015 LTIP”). The Regions 20102015 LTIP, which was approved by stockholders at the 2010 annual meeting,2015 Annual Meeting, permits grants of awards in the form of stock options, stock appreciation rights, restricted stock, restricted stock units, performance-based awards, dividend equivalents, and other stock-based awards, and any other right or interest relating to stock or cash. Awards under the Regions 20102015 LTIP may vest over time or upon the
achievement of pre-established performance goals. Awards generally vest on termination of employment within 24 months after a change-in-control.
The
performance-based cash2017 Performance-Based Cash Units awards and PSUs will be issued based on the Company’s absolute and relative Diluted EPS and ROATCE over the three-year period from January 1,
2015,2017, through December 31,
2017.2019. The ultimate value of these performance awards can vary from 0
percent to 150 percent of target, depending on performance measured against goals as more fully described on pages
69 and 7080 through 82 of the CD&A. The RSUs generally cliff vest three years from the date of grant; however, up to 40 percent of a grant may be forfeited if certain capital and liquidity performance thresholds are not met. Dividends and dividend equivalents accrued on both the PSUs and RSUs will be paid in cash at vesting based on the number of units actually earned.
For more information regarding the grants of plan-based awards for NEOs, see pages 6676 through 7182 of the CD&A.
ï 2016 Proxy Statement81
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| COMPENSATION OF EXECUTIVE OFFICERS |
The following table sets forth details regarding non-equity and equity plan-based awards granted to each of the NEOs in
2015: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name | | Grant
Date | | | Estimated Future
Payouts Under Non-Equity
Incentive Plan Awards | | | | | Estimated Future Payouts Under Equity Incentive Plan Awards | | | All
Other
Stock
Awards:
Number
of
Shares
of Stock
or Units
(#) (3) | | | 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 ($) | |
| | | Threshold
($) | | | Target ($) | | | Maximum
($) | | | | | Threshold
(#) | | | Target
(#) | | | Maximum
(#) | | | | | |
O. B. Grayson Hall, Jr. | | | | (1) | | | — | | | | 1,511,538 | | | | 3,023,076 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | 04/01/15 | (2) | | | — | | | | 1,666,667 | | | | 2,500,001 | | | | | | — | | | | 173,611 | | | | 260,417 | | | | 173,611 | | | | — | | | | — | | | | 3,284,720 | |
David J. Turner, Jr. | | | | (1) | | | — | | | | 700,548 | | | | 1,401,096 | | | | | | | | | | | |
| | | | 04/01/15 | (2) | | | — | | | | 400,000 | | | | 600,000 | | | | | | — | | | | 41,667 | | | | 62,501 | | | | 41,667 | | | | — | | | | — | | | | 788,340 | |
John B. Owen | | | | (1) | | | — | | | | 717,175 | | | | 1,434,349 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | 04/01/15 | (2) | | | — | | | | 400,000 | | | | 600,000 | | | | | | — | | | | 41,667 | | | | 62,501 | | | | 41,667 | | | | — | | | | — | | | | 788,340 | |
C. Matthew Lusco | | | | (1) | | | — | | | | 559,269 | | | | 1,118,538 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | 04/01/15 | (2) | | | — | | | | 400,000 | | | | 600,000 | | | | | | — | | | | 41,667 | | | | 62,501 | | | | 41,667 | | | | — | | | | — | | | | 788,340 | |
Fournier J. Gale, III | | | | (1) | | | — | | | | 564,308 | | | | 1,128,616 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | 04/01/15 | (2) | | | — | | | | 300,000 | | | | 450,000 | | | | | | — | | | | 31,250 | | | | 46,875 | | | | 31,250 | | | | — | | | | — | | | | 591,250 | |
|
| | | | | | | | | | | | | | | |
| Name | Grant
Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | Estimated Future Payouts Under Equity Incentive
Plan Awards | All Other Stock Awards: Number of Shares of Stock or Units (#) (3) | All Other Option Awards: Number of Securities Underlying Options (#) |
| Exercise or Base Price of Option Awards ($/sh) |
| Grant Date Fair Value of Stock and Option Awards ($) |
Threshold ($) |
| Target ($) | Maximum ($) | Threshold (#) |
| Target (#) | Maximum (#) |
| O. B. Grayson Hall, Jr. | (1) | — |
| 1,750,000 | 3,500,000 | | | | | | | |
| | 04/03/17 (2) | — |
| 1,800,000 | 2,700,000 | — |
| 122,034 | 183,051 | 122,034 | — |
| — |
| 3,558,511 |
| David J. Turner, Jr. | (1) | — |
| 730,620 | 1,461,240 | | | | | | | |
| | 04/03/17 (2) | — |
| 400,000 | 600,000 | — |
| 27,119 | 40,679 | 27,119 | — |
| — |
| 790,790 |
| John B. Owen | (1) | — |
| 748,660 | 1,497,320 | | | | | | | |
| | 04/03/17 (2) | — |
| 400,000 | 600,000 | — |
| 27,119 | 40,679 | 27,119 | — |
| — |
| 790,790 |
| John M. Turner, Jr. | (1) | — |
| 660,000 | 1,320,000 | | | | | | | |
| | 04/03/17 (2) | — |
| 400,000 | 600,000 | — |
| 27,119 | 40,679 | 27,119 | — |
| — |
| 790,790 |
| C. Matthew Lusco | (1) | — |
| 642,675 | 1,285,350 | | | | | | | |
| | 04/03/17 (2) | — |
| 400,000 | 600,000 | — |
| 27,119 | 40,679 | 27,119 | — |
| — |
| 790,790 |
| |
| (1) | Amounts included in the Estimated Future Payouts Under Non-Equity Incentive Plan Awards column reflect the range of possible annual cash incentive payouts for 20152017 performance. Actual amounts earned, as determined by the CHR Committee in the first quarter of 2016,2018, are reflected in the 20152017 Summary Compensation Table under the Non-Equity Incentive Plan Compensation column. |
| |
| (2) | The performance-based cashPerformance-Based Cash Unit awards included in the Estimated Future Payouts Under Non-Equity Incentive Plan Awards column and PSUs included in the Estimated Future Payouts Under Equity Incentive Plan Awards column have equally weighted performance requirements based on absolute and relative Diluted EPS growth and ROATCE. In addition, in the event the achievement of the performance criteria for Diluted EPS growth is equal to or less than 2%0% on an absolute basis and in the bottom one-third of the peer group on a relative basis or the achievement of the performance criteria for ROATCE is less than 9%5% on an absolute basis and in the bottom one-third of the peer group on a relative basis, the payout will be zero if cumulative net income from continuing operations is less than one-half of the projection for the three-year performance period. The performance period for these awards is January 1, 2015,2017, through December 31, 2017,2019, and will fully vest date on April 1, 2018. |
| 3, 2020. Notwithstanding the achievement of the performance requirements, in order to be eligible to receive any cash payout or shares of stock under these awards, employment must continue through the third anniversary of the grant date, which is April 1, 2018,3, 2020, except in the case of death, disability, retirement, or retirement.certain terminations following a change-in-control. |
| |
| (3) | In addition to service vestingservice-vesting requirements, the RSUs included in this column are subject to performance-vesting requirements based on the Company’s achievement of certain capital and liquidity performance thresholds during each of the periods from January 1, 2015, to December 31, 2015; January 1, 2016, to December 31, 2016; and January 1, 2017 to December 31, 2017.2017; January 1, 2018 to December 31, 2018; and January 1, 2019 to December 31, 2019. To the extent that the capital performance threshold and/or the liquidity performance threshold has not been satisfied for each performance period, 20% for each requirement (up to a maximum of 40% total) of the RSUs awarded will be forfeited. For purposes of this award, the Company’s performance will be measured relative to the following capital and liquidity performance thresholds as certified by the CHR Committee: |
| |
| (i) | “Capital Performance Threshold”: Capital Action Decision Tree Status as defined in the Capital Policy must remain in either “Monitor Capital” or “Capital Deployment” status; and |
| |
| (ii) | “Liquidity Performance Threshold”: Risk for Primary Liquidity Level must remain at “Moderate” or better as established in the Market & Liquidity Risk Framework document. |
| |
| | Notwithstanding the achievement of the capital and liquidity performance thresholds, in order to be eligible to receive any shares of stock under this award, employment must continue through the third anniversary of the grant date, which is April 1, 2018,3, 2020, except in the case of death, disability, retirement, or retirement.certain terminations following a change-in-control. |
82 ï 2016 Proxy Statement
|
COMPENSATION OF EXECUTIVE OFFICERS |
Outstanding Equity Awards at December 31, 2015
2017
Awards in
thisthe following table include:
Grants of stock options made over time that are exercisable and unexercisable.unexercisable;
Grants of restricted stock and RSUs.RSUs;
Grants of PSUs made in 2013, 20142015, 2016, and 20152017 that may paybe paid if Regions achieves specific performance criteria.criteria; and
RSU grants made in 2013, 20142015, 2016, and 20152017 will pay in full only if Regions meets certain capital and liquidity thresholds.
|
|
| COMPENSATION OF EXECUTIVE OFFICERS |
The following table sets forth outstanding equity-based awards held by each of the NEOs as of December 31,
2015: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name | | | | | Option Awards (1) | | | | | Stock Awards (2) | |
| | Grant
Date | | | Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#) | | | Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#) | | | Equity
Incentive
Plan
Awards: # of
Securities
Underlying
Unearned
Options
(#) | | | Option
Exercise
Price ($) | | | Option
Expiration
Date | | | | | Number of
Shares or
Units of
Stock That
Have Not
Vested (a) (#) | | | Market
Value of
Shares or
Units of
Stock
That
Have Not
Vested
(a) ($) | | | Equity
Incentive
Plan
Awards: # of
Unearned
Shares,
Units or
Other
Rights That
Have Not
Vested (b) (#) | | | Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights That
Have Not
Vested (b) ($) | |
O. B. Grayson Hall, Jr. | | | 04/03/06 | | | | 83,966 | | | | — | | | | — | | | | 34.46 | | | | 04/03/16 | | | | | | — | | | | — | | | | — | | | | — | |
| | | 04/24/07 | | | | 85,715 | | | | — | | | | — | | | | 35.07 | | | | 04/23/17 | | | | | | — | | | | — | | | | — | | | | — | |
| | | 02/28/08 | | | | 282,019 | | | | — | | | | — | | | | 21.94 | | | | 02/27/18 | | | | | | — | | | | — | | | | — | | | | — | |
| | | 04/01/13 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | 182,704 | | | | 1,753,958 | | | | 137,028 | | | | 1,315,469 | |
| | | 04/01/14 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | 153,046 | | | | 1,469,242 | | | | 153,046 | | | | 1,469,242 | |
| | | | 04/01/15 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | 173,611 | | | | 1,666,666 | | | | 173,611 | | | | 1,666,666 | |
David J. Turner, Jr. | | | 04/03/06 | | | | 33,810 | | | | — | | | | — | | | | 34.46 | | | | 04/03/16 | | | | | | — | | | | — | | | | — | | | | — | |
| | | 04/24/07 | | | | 20,000 | | | | — | | | | — | | | | 35.07 | | | | 04/23/17 | | | | | | — | | | | — | | | | — | | | | — | |
| | | 02/28/08 | | | | 59,822 | | | | — | | | | — | | | | 21.94 | | | | 02/27/18 | | | | | | — | | | | — | | | | — | | | | — | |
| | | 04/01/13 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | 40,601 | | | | 389,770 | | | | 30,451 | | | | 292,327 | |
| | | 04/01/14 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | 36,731 | | | | 352,618 | | | | 36,731 | | | | 352,618 | |
| | | | 04/01/15 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | 41,667 | | | | 400,003 | | | | 41,667 | | | | 400,003 | |
John B. Owen | | | 02/28/08 | | | | 128,191 | | | | — | | | | — | | | | 21.94 | | | | 02/27/18 | | | | | | — | | | | — | | | | — | | | | — | |
| | | 04/01/13 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | 40,601 | | | | 389,770 | | | | 30,451 | | | | 292,327 | |
| | | 04/01/14 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | 36,731 | | | | 352,618 | | | | 36,731 | | | | 352,618 | |
| | | | 04/01/15 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | 41,667 | | | | 400,003 | | | | 41,667 | | | | 400,003 | |
C. Matthew Lusco | | | 04/01/13 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | 30,451 | | | | 292,330 | | | | 22,838 | | | | 219,247 | |
| | | 04/01/14 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | 27,548 | | | | 264,461 | | | | 27,548 | | | | 264,461 | |
| | | | 04/01/15 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | 41,667 | | | | 400,003 | | | | 41,667 | | | | 400,003 | |
Fournier J. Gale, III | | | 03/01/11 | | | | 114,065 | | | | — | | | | — | | | | 7.43 | | | | 02/28/21 | | | | | | — | | | | — | | | | — | | | | — | |
| | | 04/01/13 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | 30,451 | | | | 292,330 | | | | 22,838 | | | | 219,247 | |
| | | 04/01/14 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | 27,548 | | | | 264,461 | | | | 27,548 | | | | 264,461 | |
| | | | 04/01/15 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | 31,250 | | | | 300,000 | | | | 31,250 | | | | 300,000 | |
|
| | | | | | | | | | | | | | | | | | | | |
| | | Option Awards (1) | | Stock Awards (2) |
| Name | Grant
Date | Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#) |
| Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#) |
| Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#) |
| Option
Exercise
Price ($) |
| Option
Expiration
Date |
| | Number of
Shares or
Units of
Stock That
Have Not
Vested (a) (#) |
| Market
Value of
Shares or
Units of
Stock
That
Have Not
Vested
(a) ($) |
| Equity
Incentive
Plan
Awards: # of
Unearned
Shares,
Units, or
Other
Rights That
Have Not
Vested (b) (#) |
| Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units, or
Other
Rights That
Have Not
Vested (b) ($) |
|
O. B. Grayson
Hall, Jr. | 02/28/08 | 282,019 |
| — |
| — |
| 21.94 |
| 02/27/18 |
| | — |
| — |
| — |
| — |
|
| 04/01/15 | — |
| — |
| — |
| — |
| — |
| | 173,611 |
| 2,999,998 |
| 173,611 |
| 2,999,998 |
|
| 04/01/16 | — |
| — |
| — |
| — |
| — |
| | 205,508 |
| 3,551,178 |
| 256,885 |
| 4,438,973 |
|
| 04/03/17 | — |
| — |
| — |
| — |
| — |
| | 122,034 |
| 2,108,748 |
| 152,543 |
| 2,635,934 |
|
| David J. Turner, Jr. | 02/28/08 | 59,822 |
| — |
| — |
| 21.94 |
| 02/27/18 |
| | — |
| — |
| — |
| — |
|
| 04/01/15 | — |
| — |
| — |
| — |
| — |
| | 41,667 |
| 720,006 |
| 41,667 |
| 720,006 |
|
| 04/01/16 | — |
| — |
| — |
| — |
| — |
| | 49,322 |
| 852,284 |
| 61,653 |
| 1,065,355 |
|
| 04/03/17 | — |
| — |
| — |
| — |
| — |
| | 27,119 |
| 468,616 |
| 33,899 |
| 585,770 |
|
| John B. Owen | 02/28/08 | 128,191 |
| — |
| — |
| 21.94 |
| 02/27/18 |
| | — |
| — |
| — |
| — |
|
| 04/01/15 | — |
| — |
| — |
| — |
| — |
| | 41,667 |
| 720,006 |
| 41,667 |
| 720,006 |
|
| 04/01/16 | — |
| — |
| — |
| — |
| — |
| | 49,322 |
| 852,284 |
| 61,653 |
| 1,065,355 |
|
| 04/03/17 | — |
| — |
| — |
| — |
| — |
| | 27,119 |
| 468,616 |
| 33,899 |
| 585,770 |
|
| John M. Turner, Jr. | 07/01/11 | 134,523 |
| — |
| — |
| 6.30 |
| 06/30/21 |
| | — |
| — |
| — |
| — |
|
| 04/01/15 | — |
| — |
| — |
| — |
| — |
| | 31,250 |
| 540,000 |
| 31,250 |
| 540,000 |
|
| 04/01/16 | — |
| — |
| — |
| — |
| — |
| | 36,991 |
| 639,204 |
| 46,239 |
| 799,006 |
|
| 04/03/17 | — |
| — |
| — |
| — |
| — |
| | 27,119 |
| 468,616 |
| 33,899 |
| 585,770 |
|
| C. Matthew Lusco | 04/01/15 | — |
| — |
| — |
| — |
| — |
| | 41,667 |
| 720,006 |
| 41,667 |
| 720,006 |
|
| 04/01/16 | — |
| — |
| — |
| — |
| — |
| | 49,322 |
| 852,284 |
| 61,653 |
| 1,065,355 |
|
| 04/03/17 | — |
| — |
| — |
| — |
| — |
| | 27,119 |
| 468,616 |
| 33,899 |
| 585,770 |
|
| |
| (1) | All outstanding stock options vest in equal annual installments on each of the first three anniversaries of the date of grant and, as of December 31, 2015,2017, are all fully vested. |
| |
| (2) | Because Company performance, as of the end of the last completed fiscal year, is projected at levels higher than target, amounts reported for 2016 and 2017 are calculated at 125% of target, which is the next higher stated performance level under the terms of each grant. The stock value used to determine the market value of shares is the fair market value of Regions common stock of $17.28 per share on December 29, 2017. In addition to service-vesting requirements, RSUs and PSUs are subject to additional vesting of unvested restricted stock and RSUs isrequirements as follows: |
| |
| | |
| Grant Date | | Vesting Schedule | | Restrictions |
April 1, 2013 2015 | | 3rdThird anniversary of grant date | | (a) Time vested RSUs vesting of which isare also subject to vesting that requires meeting certain capital and liquidity thresholds. |
April 1, 2014April 1, 2015
2016
| Third anniversary of grant date
| | | (b) PSUs may be earned between 0% and 150% subject to achieving required performance levels of equally weighted absolute and relative Diluted EPS growth and ROATCE for the period January 1, 2013, through December 31, 2015, for the grantas follows: •For grants made on April 1, 2013,2015, the performance period January 1, 2014, through December 31, 2016 for the grant made April 1, 2014 and the periodis January 1, 2015, through December 31, 2017 for the grant •For grants made on April 1, 2015.2016, the performance period is January 1, 2016, through December 31, 2018 •For grants made on April 3, 2017, the performance period is January 1, 2017, through December 31, 2019. |
| April 3, 2017 | Third anniversary of grant date
|
ï 2016 Proxy Statement83
|
|
| COMPENSATION OF EXECUTIVE OFFICERS |
Option Exercises and Stock Vested
The following table sets forth the amounts realized by each of the NEOs as a result of the exercise of options and vesting of stock awards in
2015: | | | | | | | | | | | | | | | | |
| | | Option Awards | | | Stock Awards | |
| Name | | Number of Shares
Acquired on Exercise
(#) | | | Value Realized
on Exercise ($) | | | Number of Shares
Acquired on
Vesting (#) | | | Value
Realized
on
Vesting
($) | |
O. B. Grayson Hall, Jr. | | | — | | | | — | | | | 768,770 | | | | 7,594,945 | |
David J. Turner, Jr. | | | — | | | | — | | | | 201,393 | | | | 1,984,672 | |
John B. Owen | | | — | | | | — | | | | 174,272 | | | | 1,722,683 | |
C. Matthew Lusco | | | — | | | | — | | | | 91,910 | | | | 917,262 | |
Fournier J. Gale, III | | | — | | | | — | | | | 91,910 | | | | 917,262 | |
2017:
|
| | | | | | |
| | Option Awards | Stock Awards |
| Name | Number of Shares
Acquired on Exercise
(#) |
| Value Realized
on Exercise ($) |
| Number of Shares
Acquired on
Vesting (#) | Value
Realized on
Vesting ($) |
| O. B. Grayson Hall, Jr. | — |
| — |
| 286,961 | 4,169,543 |
| David J. Turner, Jr. | — |
| — |
| 68,871 | 1,000,696 |
| John B. Owen | — |
| — |
| 68,871 | 1,000,696 |
| John M. Turner, Jr. | — |
| — |
| 34,434 | 500,326 |
| C. Matthew Lusco | — |
| — |
| 51,652 | 750,504 |
The Retirement Plan
for Associates (the “Retirement Plan”) is a qualified defined benefit plan providing for a lifetime monthly annuity following retirement. Benefits earned by our NEOs under the Retirement Plan are generally based on the following formula:
| | | |
| | | | |
Compensation | | + | | Compensation | | X | | total years |
“Average Monthly Earnings” is defined as the average of the highest five consecutive years of base compensation within the last 10 years of service, and “Covered Compensation” is defined as the estimated average maximum amount of a participant’s earnings on which Social Security benefits will be based assuming that in each year of the participant’s working career, the participant’s wages equaled the Social Security Taxable Wage Base.
Any accrued benefit under the
Retirement Plan is
generally 100 percent vested
at all times as there is no minimum service requirement for vesting.after 5 years of service. While the
Retirement Plan
does not define adefines normal retirement
date,age as age 65, there is no reduction in benefits due to age after a participant has reached age 62. Upon separation of service, benefits are payable as early as age 55, although between age 55 and 62, benefits are subject to a reduction for early payment.
Only
Mr. Hall and Mr.
D. Turner
are the only NEOs who participate in the Retirement Plan.
While Mr. J. Turner has a vested benefit in the Retirement Plan that he earned during a previous period of employment, he is no longer accruing a benefit because he was rehired subsequent to the closure of the Retirement Plan.
The Supplemental Executive Retirement Plan (“SERP”) is an unfunded nonqualified defined benefit pension plan that was created to supplement benefits provided through the Retirement Plan. First,
theThe SERP providesrestores benefits that would otherwise be deniedhave been provided to participants under the Retirement Plan but were limited because of tax code limitations on qualified plan benefits. In addition to these restorative benefits, the SERP also provides additional benefits that serve to attract and retain high quality senior executive talent for the
Company. There are two types of retirement benefits in the SERP: a regular benefit and a targeted benefit.
The regular benefit is available to all eligible SERP participants and is calculated using the same formula as the Retirement Plan with the following differences: (1) instead of averaging earnings over five years of service, it
is averagedaverages compensation over the highest three consecutive years of service out of the last 10 years of service; (2) in addition to base pay, it includes annual cash incentives, as well as 50 percent of any salary
stockearnings and restricted stock granted during the period of
TARPTroubled Asset Relief Program participation; and (3) the maximum years of service used in the calculation of the regular benefit is 35 years of service instead of 30.
In 2017, Mr. Hall’s $37,374,045 of accrued benefits under the defined benefit SERP were transferred to the Supplemental 401(k) Plan as described above on page 83 of the CD&A and reflected below in the Nonqualified Deferred Compensation Table and accompanying narrative. After transfer of his accrued defined benefit SERP benefit to the Supplemental 401(k) Plan, Mr. Hall and Mr. Turner participateceased participation in the defined benefit SERP.
Mr. D. Turner participates in the SERP, accruing benefits under the regular benefit.benefit formula. Mr. Lusco does not participate in the Retirement Plan asbecause he was employed by the Company subsequent to its closure, but he does participate in the SERP and is also accruing benefits under the provisions related to the regular benefit formula, subject to significant retentive vesting requirements. In order to vest in the SERP benefit, Mr. Lusco will be entitled to the SERP benefit following termination of employment after reaching age 62 or upon reaching age 55 with a minimum of 10 years of service, except in the case of death, disability, or change-in-control. Termination of employment for any other reason prior to thethese service requirements previously outlined, will result in the forfeiture of his entire SERP benefit, and vested benefits paid prior to age 62 are subject to reductions for early payment.
84 ï 2016 Proxy Statement
|
|
| COMPENSATION OF EXECUTIVE OFFICERS |
The targeted SERP benefit is available to a select group of senior officers as a result of a previously grandfathered arrangement.
ThisThe targeted SERP
benefitsbenefit provides a benefit using the following formula:
| |
| | |
10 Years of Service | | + | | Earnings” for every year in Service up to a maximum of an additional 25 years of 35 Years of Service) |
|
For purposes of this formula, “Average Monthly Earnings” has the same definition as the regular SERP benefit. |
Regions’ targeted benefit is offset by both the benefit under the Retirement Plan, as well as Social Security. The targeted benefit is also subject to significant retentive vesting
requirements. Participants will receive the benefit following termination of
employment after reaching age 60 and completing a minimum of 10 years of service, except in the case of death, disability, or change-in-control. Termination of employment for any other reason prior to age 60 and completion of 10 years of service will result in forfeiture of the targeted benefit. If a participant who is eligible for both the regular benefit and the targeted benefit retires prior to meeting the targeted benefits’benefit’s vesting requirements, he or she will receive a regular benefit.
Due to his long tenure, Mr. Hall participates in the Retirement Plan, as well as the regular and grandfathered targeted benefit under the SERP. Because he has not attained age 60, he is not vested in the entire accrued benefit reported below. In the event of his retirement prior to meeting the targeted benefits’ vesting requirements, Mr. Hall will receive the only the amount attributable to the regular benefit and amounts attributable to the targeted formula will be forfeited.
Mr. Owen participates onlyand Mr. J. Turner participate in the targeted benefit under the SERP. Since heBecause neither has neither attained age 60, norand Mr. Turner has not completed the required 10 years of service at this time, heneither is not vested in any of the benefits accrued to himtargeted benefit currently accruing in the SERP and presented in the table below, and upon termination of service prior to meeting the vesting requirements would forfeit the entire amount reported below.
The following Pension Benefits table reflects the actuarial present value of the benefit from the Retirement Plan for and the SERP:
| | | | | | | | | | | | | | |
| | | | | | | | Pension Benefits | |
| Name | | Plan Name | | Number of
Years Credited
Service (#) (1) | | | Present Value
of Accumulated
Benefit ($) (2) | | | Payments During
Last Fiscal Year
($) | |
O. B. Grayson Hall, Jr. | | Regions Financial Corporation Retirement Plan | | | 30 | | | | 1,504,044 | | | | — | |
| | | Regions Financial Corporation Post 2006 SERP | | | 34 | | | | 28,324,475 | | | | — | |
David J. Turner, Jr. | | Regions Financial Corporation Retirement Plan | | | 10 | | | | 366,529 | | | | — | |
| | | Regions Financial Corporation Post 2006 SERP | | | 10 | | | | 2,350,328 | | | | — | |
John B. Owen | | NA | | | NA | | | | NA | | | | NA | |
| | | Regions Financial Corporation Post 2006 SERP | | | 8 | | | | 5,923,100 | | | | — | |
C. Matthew Lusco | | NA | | | NA | | | | NA | | | | NA | |
| | | Regions Financial Corporation Post 2006 SERP | | | 5 | | | | 1,407,208 | | | | — | |
Fournier J. Gale, III | | NA | | | NA | | | | NA | | | | NA | |
| | | NA | | | NA | | | | NA | | | | NA | |
|
| | | | | | | |
| | | | Pension Benefits |
| Name | Plan Name | Number of
Years Credited
Service (#) (1) |
| Present Value
of Accumulated
Benefit ($) (2) |
| Payments During
Last Fiscal Year
($) (3) |
|
| O. B. Grayson Hall, Jr. | Regions Financial Corporation Retirement Plan | 30 |
| 1,840,174 |
| — |
|
| | Regions Financial Corporation Post 2006 SERP | 35 |
| — |
| (37,374,045 | ) |
| David J. Turner, Jr. | Regions Financial Corporation Retirement Plan | 12 |
| 564,578 |
| — |
|
| | Regions Financial Corporation Post 2006 SERP | 12 |
| 3,551,151 |
| — |
|
| John B. Owen | Regions Financial Corporation Retirement Plan | N/A |
| — |
| — |
|
| | Regions Financial Corporation Post 2006 SERP (4) | 10 |
| 8,540,727 |
| — |
|
| John M. Turner, Jr. | Regions Financial Corporation Retirement Plan | 9 |
| 86,268 |
| — |
|
| | Regions Financial Corporation Post 2006 SERP (5) | 7 |
| 4,416,537 |
| — |
|
| C. Matthew Lusco | Regions Financial Corporation Retirement Plan | N/A |
| — |
| — |
|
| | Regions Financial Corporation Post 2006 SERP | 7 |
| 2,194,197 |
| — |
|
| |
| (1) | The Retirement Plan (a qualified pension plan) caps the number of years of credited service for purposes of benefit accrual at 30 years. The SERP (a nonqualified plan) caps the number of years of credited service at 35 years. Mr. Owen and Mr. Lusco do not participate in the Retirement Plan, andPlan. Mr. Gale doesJ. Turner’s years of credited service are from a previous period of employment; he is not participate incurrently accruing a benefit under the Retirement Plan or the SERP.Plan. |
| |
| (2) | In 2009, future benefit accruals under the Retirement Plan and the SERP were suspended for all participants. Even during the suspension, participants continued to earn service toward vesting and eligibility for early retirement benefits. Effective January 1, 2010, benefit accruals were resumed for Retirement Plan and SERP participants. |
| The present value of the accumulated Retirement Plan benefits is calculated as of December 31, 2015,2017, and was determined using a 4.6%3.82% discount rate for the qualified plan and the MRP-2007RP-2014 employee and retiree mortality tables for males and females, backed off to 2006, no collar, with generational projection based on scale MSS-2007.MSS-2017. The present value of the accumulated SERP benefits is calculated as of December 31, 2015, and2017, was determined using a 4.21%3.52% discount rate (4% to calculate expected lump sum distribution)distributions, except for Mr. Hall’s which reflects the actual transfer during 2017 based on plan provisions), and the 20162018 Pension Protection Act lump sum mortality table. For purposes of the present value calculation, no pre-retirement mortality was assumed, and the payment date was assumed to be the earliest unreduced retirement date under both plans. The payment age of 62 (life only) was assumed for the Retirement Plan and the payment age of 60 was assumed to be age 60 for the SERP for Mr. HallOwen and Mr. OwenJ. Turner and age 62 for Mr. D. Turner and Mr. Lusco. |
ï 2016 Proxy Statement85
| |
COMPENSATION OF EXECUTIVE OFFICERS(3) | On May 31, 2017, the accrued benefit for Mr. Hall under the SERP was converted to a lump sum amount of $37,374,045, in accordance to the applicable terms of the SERP, and was credited to an account under the Supplemental 401(k) Plan. The accrued benefit will be payable to Mr. Hall in a lump sum following his retirement from Regions in the same manner as it would have been payable under the SERP. |
| |
| (4) | Mr. Owen must complete a minimum of 10 years of service and attain at least age 60 before benefits are fully vested. In the event he terminates employment prior to vesting, for reasons other than death or disability, he will forfeit the entire benefit noted. |
| |
| (5) | Mr. J. Turner must complete a minimum of 10 years of service and attain at least age 60 before benefits are fully vested. Mr. J. Turner’s benefit includes partial vesting at age 55 and 10 years of service, which will occur approximately one year prior to full vesting. |
Nonqualified Deferred Compensation
Regions maintains the Regions Financial Corporation Supplemental 401(k) Plan (“Supplemental 401(k) Plan”), which is a non-qualifiednonqualified deferred compensation plan. The Supplemental 401(k) Plan is an excess contribution plan primarily open to NEOs and other highly compensated
individuals whose compensation exceeds the annual tax code limit on compensation that can be taken into account for purposes of contributions to the 401(k) Plan. Under the Supplemental 401(k) Plan, participants may make contributions of up to 80 percent of base salary and cash
|
|
| COMPENSATION OF EXECUTIVE OFFICERS |
incentive pay on a nonqualified basis. Regions’ contribution under the plan is limited to 4 percent of base
salary and incentive compensation, provided the NEO has elected a deferral rate on base or annual incentive compensation of at least 4 percent for the year. All of the NEOs participated in the Supplemental 401(k) Plan during
2015.Like the 401(k) Plan,2017.
Benefits under the Supplemental 401(k) Plan provides for a non-contributory Company contribution equal to 2 percent of base and cash incentive compensation for participants who do not participate in the Retirement Plan. As Mr. Gale is not a
participant in the Retirement Plan, he receives the 2 percent non-elective Company contribution to the Supplemental 401(k) Plan.
Benefits under this plan are held in notional accounts on the Company’s balance sheet. Earnings and losses are credited to accounts based on notional investment elections made by participants. Notional investments available to participants are generally the same investments available under the 401(k) Plan with the exception of Regions stock and certain mutual funds, not available to the Company for investment.Plan. None of these notional investments provide for above market or preferential
earnings
whichthat require us to report earnings in the “Change in Pension Value and Nonqualified Deferred Compensation Earnings” column of the Summary Compensation Table on page
80.92.
Benefits under the plansSupplemental 401(k) Plan are fully vested at all times and are payable only upon separation from service according to the 409A compliant distribution election made by the NEO upon participation in the plan.
The following table sets forth the NEOs’ contributions,contributions; Regions’ contributionscontributions; and the aggregate earnings, withdrawals, and balances during 20152017 under the nonqualified deferred compensation plansplan maintained by Regions:
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | Non-Qualified Deferred Compensation | |
| Name | | | | Executive
Contributions
in 2015
($) (1) | | | Company
Contributions
in 2015
($) (2) | | | Aggregate
Earnings
in 2015
($) (3) | | | Aggregate
Withdrawals /
Distributions
($) | | | Aggregate
Balance at
December 31,
2015 ($) (4) | |
O. B. Grayson Hall, Jr. | | Supplemental 401(k) | | | 104,908 | | | | 145,948 | | | | (175,764 | ) | | | — | | | | 2,522,710 | |
David J. Turner, Jr. | | Supplemental 401(k) | | | 69,806 | | | | 61,736 | | | | (45,994 | ) | | | — | | | | 743,312 | |
John B. Owen | | Supplemental 401(k) | | | 139,514 | | | | 58,384 | | | | (27,835 | ) | | | — | | | | 961,475 | |
C. Matthew Lusco | | Supplemental 401(k) | | | 45,291 | | | | 37,423 | | | | (9,391 | ) | | | — | | | | 299,590 | |
Fournier J. Gale, III | | Supplemental 401(k) | | | 45,701 | | | | 56,786 | | | | (35,772 | ) | | | — | | | | 295,212 | |
|
| | | | | | | |
| | | Nonqualified Deferred Compensation |
| Name | | Executive
Contributions
in 2017 ($) (1) | Company
Contributions
in 2017 ($) (2) | Aggregate
Earnings
in 2017 ($) (3) | Aggregate
Withdrawals/
Distributions
($) (4) |
| Aggregate
Balance at
December 31, 2017 ($) (5) (6) |
| O. B. Grayson Hall, Jr. | Supplemental 401(k) | 116,656 | 112,010 | 612,242 | 1,512,989 |
| 40,831,320 |
| David J. Turner, Jr. | Supplemental 401(k) | 72,068 | 48,706 | 270,604 | — |
| 1,472,054 |
| John B. Owen | Supplemental 401(k) | 214,937 | 50,603 | 23,706 | — |
| 1,659,538 |
| John M. Turner, Jr. | Supplemental 401(k) | 94,886 | 40,516 | 113,646 | — |
| 642,184 |
| C. Matthew Lusco | Supplemental 401(k) | 48,824 | 41,531 | 81,347 | — |
| 588,317 |
| |
| (1) | This column represents amounts deferred from the base salary and annual incentive, if applicable. Although deferred, these amounts are included in the “Salary” and “Non-Equity Incentive Plan Compensation,” if applicable, columns of the Summary Compensation Table. |
| |
| (2) | This column includes Company contributions under the Supplemental 401(k) Plan plus the 2% non-elective contribution for Mr. Gale.Plan. These amounts are included in the “All Other Compensation” column of the Summary Compensation Table. |
| |
| (3) | This column includes total earnings/losses on amounts held in the Supplemental 401(k) Plan. |
| |
| (4) | This column includes withdrawals/distributions from the Supplemental 401(k) Plan. The distribution for Mr. Hall was to pay Medicare taxes on the lump sum transfer from the SERP, which was credited to his account in the Supplemental 401(k) Plan. |
(4) | |
| (5) | The December 31, 20152017 balances do not include true-up Company contributions that were made in early 20162018 based on 20152017 deferral elections. These contributions are included, however, in the column “Company Contributions in 2015.2017.” The aggregate balance at December 31, 2015, includes2017 reflects the balance in the Supplemental 401(k) Plan. |
86 ï 2016 Proxy Statement
| |
| (6) | The aggregate balance at December 31, 2017 for Mr. Hall includes a transfer of $37,374,045 which represents the accrued benefit for Mr. Hall under the SERP which was converted to a lump sum on May 31, 2017, in accordance to the applicable terms of the SERP, and was credited to his account under the Supplemental 401(k) Plan. The accrued benefit will be payable to Mr. Hall in a lump sum following his retirement from Regions in the same manner as it would have been payable under the SERP. |
|
|
| COMPENSATION OF EXECUTIVE OFFICERS |
Potential Payments by Regions Upon Termination or Change-in-Control
Regions maintains certain arrangements, plans, and programs under which our NEOs would be eligible to receive severance payments and other benefits upon termination of employment or a change-in-control of Regions.
Employment and/or Change-in-Control Agreements. Regions does not generally enter into employment agreements with any of our executive officers. As a result, no NEO has post-employment benefits that differ from any other associate. While we
haven’thave not entered into any employment agreements, all of our NEOs hold a change-in-control agreement. Under the change-in-control agreements, certain severance benefits are due if, during the two-year period following a change-in-control, Regions terminates employment without “cause” or the NEO terminates employment with “good reason.”
For Mr. Hall
Mr. Owen and Mr.
Gale,Owen, if Regions terminates their employment other than for “cause,” or if they resign for “good reason” during the two-year period, they are entitled to enhanced severance in an amount equal to three times base salary and average annual bonus during the three years prior to the year in which the change-in-control occurred. In addition to severance benefits, benefit continuation under our welfare benefits plans is also available for the three-year period following termination. Mr.
D. Turner, Mr. J. Turner, and Mr. Lusco are covered by a similar change-in-control agreement, but their severance multiple is equal to two times pay and the benefit continuation period is two years following termination. If a NEO’s employment is terminated by Regions for “cause,” or by reason of death, disability, or resignation other than for “good reason” during the two-year period, Regions’ liability is limited to accrued but unpaid compensation and benefits.
Three of our NEOs are subject to grandfathered agreements that provide for
extraadditional benefits in the event that change-in-control payments
and benefits (referred to as “parachute payments”) become subject to the excise tax under Section 4999 of the IRC. Mr. Hall, Mr.
D. Turner, and Mr. Owen have an agreement that requires Regions to make an additional payment covering the excise tax under IRC Section 4999, as well as any income tax on the excise tax payment and any penalty and interest that might be due (sometimes referred to as “Section 280(g) gross up payments”). However, if
theparachute payments
and benefits provided following a change-in-control do not exceed 110 percent of the greatest amount that could be paid without triggering the excise tax (the “Safe Harbor Amount”), then those payments and benefits will be reduced to that amount.
The agreements for Mr.
Gale’sJ. Turner and Mr.
Lusco’s agreementsLusco do not provide for Section 280(g) gross up payments. Their agreements stipulate that in the event severance benefits are subject to the terms of Section 4999 of the IRC
that amounts payable to them (under their change-in-control agreements or otherwise) would be reduced to the Safe Harbor Amount if
thatthe reduction would result in them receiving a greater after tax amount.
Equity-Based Award Plans. Under the terms of our Long Term Incentive Plans, equity-based awards generally vest fully or in part at retirement, death, disability, iftermination of employment is terminated without “cause”“cause,” or if following a change-in-controlchange-in-
control, termination of employment occurs without “cause” or for “good reason” within
the 24-month period following the change-in-control (so called double trigger“double trigger” vesting following a change-in-control).
Death – Under the terms of performance-based equity grant award agreements, the performance period lapses at death and release/payment is equal to the target performance value.
Retirement and Disability – At retirement and disability,
performanceperformance-based awards continue to vest as scheduled and are released/paid subject to performance at the end of the performance period.
Service-based vesting for RSUs accelerates at retirement and disability.
Termination without “cause” – For involuntary termination without “cause,”
award continuesperformance-based awards continue to vest as scheduled. At the vesting date, grants are released/paid subject to performance achievement at the end of the performance period and are further prorated based on the service between the grant date and the date employment was terminated.
RSUs are released on a prorated basis based on the service between the grant date and the date employment was terminated.
Change-in-control – Upon the occurrence of a change-in-control,
the award isperformance-based awards are fixed at the target value but
service vestingservice-vesting requirements continue. In the event termination of employment without “cause” or for “good reason” occurs within a 24-month period following the change-in-control,
service vestingservice-vesting requirements
on awards are accelerated to the termination of employment.
Pension Benefits. Benefits under the Retirement Plan are fully vested; therefore, upon termination of employment for any reason, each NEO would be entitled to receive the amounts designated as Retirement Plan benefits represented in the “Present Value of Accumulated Benefit” column of the Pension Benefits table on page 85.98. Mr. D. Turner is vested in the SERP benefit as well. Mr. Hall is not yet vested in the targeted benefit afforded him, therefore if he leaves the Company prior to his 60th birthday, he would forfeit an amount equal to the difference between the targeted SERP benefit and the regular SERP benefit except in the case of death or disability. Mr. Owen,
Mr. J. Turner, and Mr. Lusco are not currently vested in
any of the
amountsSERP benefits presented in the Pension Benefits table except in the case of death or disability.
Upon a change-in-control, vesting of pension benefits is accelerated, and therefore, upon termination of employment following a change-in-control, each NEO will fully vest in
these pensiontheir SERP benefits and be entitled to the benefits included in the following table as additional change-in-control termination benefits.
Nonqualified Deferred Compensation Plan Benefits.Each NEO is currently fully vested in the amounts reported in the “Aggregate Balance at December 31, 2015”2017” column of the Nonqualified Deferred Compensation table on page 86,99, and therefore, these amounts would be payable to the NEOs upon termination of employment for any reason.
Welfare and Other Insurance Benefits. Regions sponsors a number of broad-based health, life, and disability benefit programs for its associates, in which NEOs also participate, such as short and long-term disability coverage and group term life insurance coverage.
ï 2016 Proxy Statement87
|
|
| COMPENSATION OF EXECUTIVE OFFICERS |
The following table quantifies certain amounts that would be payable to NEOs upon various separation situations. The amounts reflected in the table assume a December 31,
20152017, termination of employment:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name | | Voluntary
($) | | | Involuntary
Without
Cause ($) | | | Early
Retirement
($) | | | For
Cause
($) | | Involuntary
Without
Cause or
for Good
Reason
Following
a CIC
($) (8) | | | Death ($) (9) | | | Disability
($) | |
O. B. Grayson Hall, Jr. (1) | | | | | | | | | | | | | | | | | | | | | | | | | | |
Compensation: | | | | | | | | | | | | | | | | | | | | | | | | | | |
Cash Severance | | | — | | | | — | | | | — | | | — | | | 8,094,619 | | | | — | | | | — | |
Long Term Incentive | | | | | | | | | | | | | | | | | | | | | | | | | | |
Restricted Stock/Units (2) | | | 2,933,919 | | | | 2,933,919 | | | | 2,933,919 | | | — | | | 4,889,866 | | | | 4,889,866 | | | | 2,933,919 | |
Performance Stock Units (2) | | | — | | | | — | | | | — | | | — | | | 4,889,866 | | | | 4,889,866 | | | | — | |
Performance Cash | | | — | | | | — | | | | — | | | — | | | 4,833,334 | | | | 4,833,334 | | | | — | |
Perquisites: | | | | | | | | | | | | | | | | | | | | | | | | | | |
Financial Planning (3) | | | 30,100 | | | | 30,100 | | | | 30,100 | | | — | | | 30,100 | | | | 30,100 | | | | 30,100 | |
Outplacement (4) | | | — | | | | — | | | | — | | | — | | | 60,000 | | | | — | | | | — | |
280G Tax Gross-up (5) | | | — | | | | — | | | | — | | | — | | | 12,382,940 | | | | — | | | | — | |
Benefits: | | | | | | | | | | | | | | | | | | | | | | | | | | |
Value of continued welfare benefits (6) | | | — | | | | — | | | | — | | | — | | | 24,413 | | | | — | | | | — | |
Value of additional retirement benefits (7) | | | — | | | | — | | | | — | | | — | | | 6,615,268 | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Total: | | | 2,964,019 | | | | 2,964,019 | | | | 2,964,019 | | | — | | | 41,820,406 | | | | 14,643,166 | | | | 2,964,019 | |
David J. Turner, Jr. | | | | | | | | | | | | | | | | | | | | | | | | | | |
Compensation: | | | | | | | | | | | | | | | | | | | | | | | | | | |
Cash Severance | | | — | | | | — | | | | — | | | — | | | 2,793,627 | | | | — | | | | — | |
Long Term Incentive | | | | | | | | | | | | | | | | | | | | | | | | | | |
Restricted Stock/Units (2) | | | — | | | | 397,790 | | | | — | | | — | | | 1,142,390 | | | | 1,142,390 | | | | 685,434 | |
Performance Stock Units (2) | | | — | | | | — | | | | — | | | — | | | 1,142,390 | | | | 1,142,390 | | | | — | |
Performance Cash | | | — | | | | — | | | | — | | | — | | | 1,133,333 | | | | 1,133,333 | | | | — | |
Perquisites: | | | | | | | | | | | | | | | | | | | | | | | | | | |
Financial Planning (3) | | | — | | | | 30,100 | | | | NA | | | — | | | 30,100 | | | | 30,100 | | | | 30,100 | |
Outplacement (4) | | | — | | | | — | | | | — | | | — | | | 60,000 | | | | — | | | | — | |
280G Tax Gross-up (5) | | | — | | | | — | | | | — | | | — | | | 3,269,765 | | | | — | | | | — | |
Benefits: | | | | | | | | | | | | | | | | | | | | | | | | | | |
Value of continued welfare benefits (6) | | | — | | | | — | | | | — | | | — | | | 18,161 | | | | — | | | | — | |
Value of additional retirement benefits (7) | | | — | | | | — | | | | — | | | — | | | 1,063,164 | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Total: | | | — | | | | 427,890 | | | | NA | | | — | | | 10,652,930 | | | | 3,448,213 | | | | 715,534 | |
John B. Owen | | | | | | | | | | | | | | | | | | | | | | | | | | |
Compensation: | | | | | | | | | | | | | | | | | | | | | | | | | | |
Cash Severance | | | — | | | | — | | | | — | | | — | | | 4,309,742 | | | | — | | | | — | |
Long Term Incentive | | | | | | | | | | | | | | | | | | | | | | | | | | |
Restricted Stock/Units (2) | | | — | | | | 397,790 | | | | — | | | — | | | 1,142,390 | | | | 1,142,390 | | | | 685,434 | |
Performance Stock Units (2) | | | — | | | | — | | | | — | | | — | | | 1,142,390 | | | | 1,142,390 | | | | — | |
Performance Cash | | | — | | | | — | | | | — | | | — | | | 1,133,333 | | | | 1,133,333 | | | | — | |
Perquisites: | | | | | | | | | | | | | | | | | | | | | | | | | | |
Financial Planning (3) | | | — | | | | 30,100 | | | | NA | | | — | | | 30,100 | | | | 30,100 | | | | 30,100 | |
Outplacement (4) | | | — | | | | — | | | | — | | | — | | | 60,000 | | | | — | | | | — | |
280G Tax Gross-up (5) | | | — | | | | — | | | | — | | | — | | | 8,939,836 | | | | — | | | | — | |
Benefits: | | | | | | | | | | | | | | | | | | | | | | | | | | |
Value of continued welfare benefits (6) | | | — | | | | — | | | | — | | | — | | | 25,594 | | | | — | | | | — | |
Value of additional retirement benefits (7) | | | — | | | | — | | | | — | | | — | | | 9,375,116 | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Total: | | | — | | | | 427,890 | | | | NA | | | — | | | 26,158,501 | | | | 3,448,213 | | | | 715,534 | |
88 ï 2016 Proxy Statement
|
| | | | | | | | | | | | | | |
| Name | Voluntary
($) |
| Involuntary
Without
Cause ($) |
| Early
Retirement
($) |
| For
Cause
($) |
| Involuntary
for Good
Reason
Following
a CIC ($) (8) |
| Death
($) (9) |
| Disability
($) |
|
| O. B. Grayson Hall, Jr. (1) | | | | | | | |
| Compensation: | | | | | | | |
| Cash Severance | — |
| — |
| — |
| — |
| 8,250,000 |
| — |
| — |
|
| Long Term Incentive | | | | | | | |
| Restricted Stock Units (2) | 5,195,954 |
| 5,195,954 |
| 5,195,954 |
| — |
| 8,659,924 |
| 8,659,924 |
| 5,195,954 |
|
| Performance Stock Units (2) | — |
| — |
| — |
| — |
| 8,659,924 |
| 8,659,924 |
| — |
|
| Performance Cash Units | — |
| — |
| — |
| — |
| 5,133,334 |
| 5,133,334 |
| — |
|
| Perquisites: | | | | | | | |
| Financial Planning (3) | 31,630 |
| 31,630 |
| 31,630 |
| — |
| 31,630 |
| 31,630 |
| 31,630 |
|
| Outplacement (4) | — |
| — |
| — |
| — |
| 60,000 |
| — |
| — |
|
| 280G Tax Gross-up (5) | — |
| — |
| — |
| — |
| — |
| — |
| — |
|
| Benefits: | | | | | | | |
| Value of continued welfare benefits (6) | — |
| — |
| — |
| — |
| 21,551 |
| — |
| — |
|
| Value of additional retirement benefits (7) | — |
| — |
| — |
| — |
| — |
| — |
| — |
|
| Total: | 5,227,584 |
| 5,227,584 |
| 5,227,584 |
| — |
| 30,816,363 |
| 22,484,812 |
| 5,227,584 |
|
| David J. Turner, Jr. | | | | | | | |
| Compensation: | | | | | | | |
| Cash Severance | — |
| — |
| — |
| — |
| 2,829,397 |
| — |
| — |
|
| Long Term Incentive | | | | | | | |
| Restricted Stock Units (2) | — |
| 764,595 |
| — |
| — |
| 2,040,906 |
| 2,040,906 |
| 1,224,544 |
|
| Performance Stock Units (2) | — |
| — |
| — |
| — |
| 2,040,906 |
| 2,040,906 |
| — |
|
| Performance Cash Units | — |
| — |
| — |
| — |
| 1,200,000 |
| 1,200,000 |
| — |
|
| Perquisites: | | | | | | | |
| Financial Planning (3) | — |
| 31,630 |
| N/A |
| — |
| 31,630 |
| 31,630 |
| 31,630 |
|
| Outplacement (4) | — |
| — |
| — |
| — |
| 60,000 |
| — |
| — |
|
| 280G Tax Gross-up (5) | — |
| — |
| — |
| — |
| 3,426,489 |
| — |
| — |
|
| Benefits: | | | | | | | |
| Value of continued welfare benefits (6) | — |
| — |
| — |
| — |
| 18,146 |
| — |
| — |
|
| Value of additional retirement benefits (7) | — |
| — |
| — |
| — |
| 1,521,132 |
| — |
| — |
|
| Total: | — |
| 796,225 |
| — |
| — |
| 13,168,606 |
| 5,313,442 |
| 1,256,174 |
|
| John B. Owen | | | | | | | |
| Compensation: | | | | | | | |
| Cash Severance | — |
| — |
| — |
| — |
| 4,378,704 |
| — |
| — |
|
| Long Term Incentive | | | | | | | |
| Restricted Stock Units (2) | 1,224,544 |
| 1,224,544 |
| 1,224,544 |
| — |
| 2,040,906 |
| 2,040,906 |
| 1,224,544 |
|
| Performance Stock Units (2) | — |
| — |
| — |
| — |
| 2,040,906 |
| 2,040,906 |
| — |
|
| Performance Cash Units | — |
| — |
| — |
| — |
| 1,200,000 |
| 1,200,000 |
| — |
|
| Perquisites: | | | | | | | |
| Financial Planning (3) | 31,630 |
| 31,630 |
| 31,630 |
| — |
| 31,630 |
| 31,630 |
| 31,630 |
|
| Outplacement (4) | — |
| — |
| — |
| — |
| 60,000 |
| — |
| — |
|
| 280G Tax Gross-up (5) | — |
| — |
| — |
| — |
| 9,778,038 |
| — |
| — |
|
| Benefits: | | | | | | | |
| Value of continued welfare benefits (6) | — |
| — |
| — |
| — |
| 22,270 |
| — |
| — |
|
| Value of additional retirement benefits (7) | — |
| — |
| — |
| — |
| 11,063,240 |
| — |
| — |
|
| Total: | 1,256,174 |
| 1,256,174 |
| 1,256,174 |
| — |
| 30,615,694 |
| 5,313,442 |
| 1,256,174 |
|
|
|
| COMPENSATION OF EXECUTIVE OFFICERS |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name | | Voluntary
($) | | | Involuntary
Without
Cause ($) | | | Early
Retirement
($) | | | For
Cause
($) | | Involuntary
Without
Cause or
for Good
Reason
Following
a CIC
($) (8) | | | Death ($) (9) | | | Disability
($) | |
C. Matthew Lusco | | | | | | | | | | | | | | | | | | | | | | | | | | |
Compensation: | | | | | | | | | | | | | | | | | | | | | | | | | | |
Cash Severance | | | — | | | | — | | | | — | | | — | | | 2,336,296 | | | | — | | | | — | |
Long Term Incentive | | | | | | | | | | | | | | | | | | | | | | | | | | |
Restricted Stock/Units (2) | | | — | | | | 313,343 | | | | — | | | — | | | 956,794 | | | | 956,794 | | | | 574,076 | |
Performance Stock Units (2) | | | — | | | | — | | | | — | | | — | | | 956,794 | | | | 956,794 | | | | — | |
Performance Cash | | | — | | | | — | | | | — | | | — | | | 950,000 | | | | 950,000 | | | | — | |
Perquisites: | | | | | | | | | | | | | | | | | | | | | | | | | | |
Financial Planning (3) | | | — | | | | 30,100 | | | | NA | | | — | | | 30,100 | | | | 30,100 | | | | 30,100 | |
Outplacement (4) | | | | | | | | | | | | | | | | | 60,000 | | | | | | | | | |
Benefits: | | | | | | | | | | | | | | | | | — | | | | — | | | | | |
Value of continued welfare benefits (6) | | | — | | | | — | | | | — | | | — | | | 13,704 | | | | — | | | | | |
Value of additional retirement benefits (7) | | | — | | | | — | | | | — | | | — | | | 2,418,972 | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Total: | | | — | | | | 343,443 | | | | — | | | — | | | 7,722,660 | | | | 2,893,688 | | | | 604,176 | |
Fournier J. Gale, III (1) | | | | | | | | | | | | | | | | | | | | | | | | | | |
Compensation: | | | | | | | | | | | | | | | | | | | | | | | | | | |
Cash Severance | | | — | | | | — | | | | — | | | — | | | 3,542,752 | | | | — | | | | — | |
Long Term Incentive | | | | | | | | | | | | | | | | | | | | | | | | | | |
Restricted Stock/Units (2) | | | 514,074 | | | | 514,074 | | | | 514,074 | | | — | | | 856,790 | | | | 856,790 | | | | 514,074 | |
Performance Stock Units (2) | | | — | | | | — | | | | — | | | — | | | 856,790 | | | | 856,790 | | | | — | |
Performance Cash | | | — | | | | — | | | | — | | | — | | | 850,000 | | | | 850,000 | | | | — | |
Perquisites: | | | | | | | | | | | | | | | | | | | | | | | | | | |
Financial Planning (3) | | | 30,100 | | | | 30,100 | | | | 30,100 | | | — | | | 30,100 | | | | 30,100 | | | | 30,100 | |
Outplacement (4) | | | — | | | | — | | | | — | | | — | | | 60,000 | | | | — | | | | — | |
Benefits: | | | | | | | | | | | | | | | | | | | | | | | | | | |
Value of continued welfare benefits (6) | | | — | | | | — | | | | — | | | — | | | 24,481 | | | | — | | | | — | |
Value of additional retirement benefits (7) | | | — | | | | — | | | | — | | | — | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Total: | | | 544,174 | | | | 544,174 | | | | 544,174 | | | — | | | 6,220,913 | | | | 2,593,680 | | | | 544,174 | |
|
| | | | | | | | | | | | | | |
| Name | Voluntary
($) |
| Involuntary
Without
Cause ($) |
| Early
Retirement
($) |
| For
Cause
($) |
| Involuntary
for Good
Reason
Following
a CIC ($) (8) |
| Death
($) (9) |
| Disability
($) |
|
| John M. Turner, Jr. | | | | | | | |
| Compensation: | | | | | | | |
| Cash Severance | — |
| — |
| — |
| — |
| 2,520,000 |
| — |
| — |
|
| Long Term Incentive | | | | | | | |
| Restricted Stock Units (2) | — |
| 591,014 |
| — |
| — |
| 1,647,821 |
| 1,647,821 |
| 988,692 |
|
| Performance Stock Units (2) | — |
| — |
| — |
| — |
| 1,647,821 |
| 1,647,821 |
| — |
|
| Performance Cash Units | — |
| — |
| — |
| — |
| 1,000,000 |
| 1,000,000 |
| — |
|
| Perquisites: | | | | | | | |
| Financial Planning (3) | — |
| 31,630 |
| N/A |
| — |
| 31,630 |
| 31,630 |
| 31,630 |
|
| Outplacement (4) | | | | | 60,000 |
| | |
| Benefits: | | | | | | | |
| Value of continued welfare benefits (6) | — |
| — |
| — |
| — |
| 18,598 |
| — |
| — |
|
| Value of additional retirement benefits (7) | — |
| — |
| — |
| — |
| 7,146,029 |
| — |
| — |
|
| Total: | — |
| 622,644 |
| — |
| — |
| 14,071,899 |
| 4,327,272 |
| 1,020,322 |
|
| C. Matthew Lusco | | | | | | | |
| Compensation: | | | | | | | |
| Cash Severance | — |
| — |
| — |
| — |
| 2,453,850 |
| — |
| — |
|
| Long Term Incentive | | | | | | | |
| Restricted Stock Units (2) | — |
| 764,595 |
| — |
| — |
| 2,040,906 |
| 2,040,906 |
| 1,224,544 |
|
| Performance Stock Units (2) | — |
| — |
| — |
| — |
| 2,040,906 |
| 2,040,906 |
| — |
|
| Performance Cash Units | — |
| — |
| — |
| — |
| 1,200,000 |
| 1,200,000 |
| — |
|
| Perquisites: | | | | | | | |
| Financial Planning (3) | — |
| 31,630 |
| N/A |
| — |
| 31,630 |
| 31,630 |
| 31,630 |
|
| Outplacement (4) | — |
| — |
| — |
| — |
| 60,000 |
| — |
| — |
|
| Benefits: | | | | | | | |
| Value of continued welfare benefits (6) | — |
| — |
| — |
| — |
| 14,736 |
| — |
| — |
|
| Value of additional retirement benefits (7) | — |
| — |
| — |
| — |
| 3,434,453 |
| — |
| — |
|
| Total: | — |
| 796,225 |
| — |
| — |
| 11,276,481 |
| 5,313,442 |
| 1,256,174 |
|
| |
| (1) | Mr. Hall isand Mr. Owen are eligible for early retirement, and Mr. Gale is eligible for normal retirement. For purposes of the various termination columns in the table, with the exception of the “For Cause” column, they wereare assumed to have taken early/normal retirement and, therefore, are entitled to receive the benefits shown. |
| |
| (2) | Based on a fair market value of Regions common stock of $9.60$17.28 per share on December 31, 2015.29, 2017. |
| |
| (3) | The service agreement with Regions’ financial planning provider allows for continuation of servicefinancial planning services for two years following termination due to retirement, death, disability, change-in-control, and involuntary termination without cause. |
| |
| (4) | The change-in-control agreement provides for reasonable outplacement services for up to two years based on a termination date of December 31, 2015.years. |
| |
| (5) | 280G tax gross-upTax Gross-up represents the amount of the excise tax and related gross-up for excise taxes levied under Section 4999 of the IRC on payment and benefits following a change-in-control (otherwise referred to as “excess parachute payments” under Section 280G of the IRC). |
| |
| (6) | The change-in-control agreement provides for continuation of medical and dental coverage equal under Regions’ medical and dental plans for a period of three years for Mr. Hall Mr. Owen and Mr. GaleOwen and for a period of two years for Mr. D. Turner, Mr. J. Turner, and Mr. Lusco. |
|
|
| COMPENSATION OF EXECUTIVE OFFICERS |
| |
| (7) | Mr. Hall, Mr.D. Turner, Mr. Owen, Mr. J. Turner, and Mr. Lusco participate in the Retirement Plan and/or the SERP. The change-in-control agreement provides for additional years’ credit for age and service under the Retirement Plan and the SERP that the NEO would have accrued had he remained employed through the second anniversary of the change-in-control. In addition, Mr. HallJ. Turner and Mr. Owen are each eligible for the alternative target benefit under the SERP, which would normally require the NEO to reach age 60 and have a minimum of 10 years of service. Mr. Lusco is eligible for the regular SERP, which, in his case, would require service to age 62. Under the SERP, in the event of an involuntary termination of employment without cause (or termination for good reason) within 24-months24 months following a change-in-control, unvested benefits become fully vested. Because these benefits are already accrued, they are reflected in the Pension Benefits table on page 8598 and do not represent additional expense to the Company. The following chart details the value of the SERP benefit attributable to the additional years of age and service, as well as the amounts already accrued that will vest upon involuntary termination of employment without cause (or termination with good reason) within 24-months of a change-in-control: |
| | | | | | | | | | | | |
| | | Value for Targeted/Regular Years of Age and Service Credit | | | Value for Vesting in
Targeted/Regular
Benefit | | | Total Additional Value | |
| Name | | ($) | | | ($) | | | ($) | |
O. B. Grayson Hall, Jr. | | | 1,578,247 | | | | 5,037,021 | | | | 6,615,268 | |
David J. Turner, Jr. | | | 1,063,164 | | | | NA | | | | 1,063,164 | |
John B. Owen | | | 2,409,407 | | | | 6,965,709 | | | | 9,375,116 | |
C. Matthew Lusco | | | 808,053 | | | | 1,610,919 | | | | 2,418,972 | |
Fournier J. Gale, III | | | NA | | | | NA | | | | NA | |
ï 2016 Proxy Statement89
|
| | | | | | |
| Name | Value for Targeted/Regular Years of Age and Service Credit ($) |
| Value for Vesting in Targeted/Regular Benefit ($) |
| Total Additional Value ($) |
|
| O. B. Grayson Hall, Jr.* | — |
| — |
| — |
|
| David J. Turner, Jr. | 1,521,132 |
| — |
| 1,521,132 |
|
| John B. Owen | 1,172,985 |
| 9,890,225 |
| 11,063,240 |
|
| John M. Turner, Jr. | 2,017,774 |
| 5,218,255 |
| 7,146,029 |
|
| C. Matthew Lusco | 938,252 |
| 2,496,201 |
| 3,434,453 |
|
| |
COMPENSATION OF EXECUTIVE OFFICERS* | At December 31, 2017, Mr. Hall was not a participant in the plan. |
| |
| (8) | The following chart summarizes the meaning of “cause,” “good reason/without cause”cause,” and “change-in-control” under the change-in-control agreements of the NEOs: |
|
| |
| “cause” | | (i) willful and continued failure to substantially perform reasonably assigned duties; (ii) breach of fiduciary duty involving personal profit or commission of a felony or a crime involving fraud or moral turpitude, material breach of the agreement; (iii) engaging in illegal conduct or gross misconduct that materially injures Regions; (iv) failure to materially cooperate with an investigation authorized by the Board, a regulatory body, or a governmental department or agency; or (v) disqualification or bar by any governmental or regulatory authority from carrying out duties and responsibilities, or loss of any required licenses. |
“without cause” | | (i) an adverse change in responsibilities as in effect immediately before the change-in-control; (ii) a material diminution in the budget over which the executive has control; (iii) a material breach of the compensation provisions of the agreementagreement; or (iv) requiring the executive to move his principal place of work by more than 50 miles. |
| “change-in-control” | | (i) an acquisition of 20% or more of the combined voting power of Regions voting securities; (ii) a change in a majority of the members of the Board; (iii) the consummation of a merger (unless voting securities of Regions outstanding immediately prior to the merger continued to represent at least 55% of the combined voting power of the voting securities of the surviving company outstanding immediately after such merger); or (iv) stockholder approval of a complete liquidation or dissolution of Regions. |
| |
| (9) | Death would result in vesting in the enhanced portion of the benefit for Mr. Hall, Mr. Owen and Mr. Lusco as is displayed in the chart in footnote (7) above. |
90 ï 2016 Proxy Statement
OTHER MATTERS
Important Notice Regarding Delivery of Security Holder Documents
The SEC has adopted rules that allow us to send, in a single envelope, our proxy statement and other required annual meeting materials to two or more stockholders sharing the same address. These rules spell out the conditions under which annual reports, information statements, proxy statements, prospectuses and other disclosure documents of a company that would otherwise be mailed in separate envelopes to more than one stockholder at a shared address may be mailed as one copy in one envelope addressed to all stockholders at that address (i.e., “householding”). Stockholders who participate in householding will, however, receive separate proxy cards.
We are using the SEC’s Notice and Access rule again this year as discussed on page 18; however, we are not householding our proxy materials. This means that stockholders of record who share an address will each be mailed a separate Notice of Internet Availability of Proxy Materials.
It should be noted, however, that certain brokerage firms, banks or similar entities holding our common stock for their customers may household proxy materials or notices.
Stockholders sharing an address whose shares of our common stock are held in street name should contact their broker if they now receive (1) multiple copies of our proxy materials or notices and wish to receive only one copy of these materials per household in the future, or (2) a single copy of our proxy materials or notices and wish to receive separate copies of these materials in the future.
If at any time you would like to receive a paper copy of the annual report or proxy statement, please email investors@regions.com, or write to Investor Relations, Regions Financial Corporation, 1900 Fifth Avenue North, Birmingham, Alabama 35203, or call 205-581-7890.
Cost of Proxy Solicitation
We bear the entire cost of soliciting your proxy, including the cost of preparing, assembling, printing, mailing or otherwise distributing the Notice of Internet Availability of Proxy Materials and these proxy materials, as well as soliciting your vote. In addition to solicitation of proxies by mail, we request that banks, brokers and other record holders send proxies and proxy materials or Notice of Internet Availability of Proxy Materials to the beneficial owners of Regions common stock and secure their voting instructions. We will reimburse the record holders for their reasonable expenses in taking those actions.
We also have made arrangements with Innisfree M&A Incorporated to assist us in soliciting proxies and have agreed to pay $15,000 plus reasonable and customary expenses for these services. If necessary, we may also use several of our associates, without additional compensation, to solicit proxies on Regions’ behalf from our stockholders, either personally or by telephone, facsimile, email or letter.
This is the first distribution of proxy solicitation materials to stockholders.
Submission of Stockholder Proposals or Nominations for 2017 Annual Meeting of Stockholders
The 2017 Annual Meeting of Stockholders is expected to be held on April 20, 2017. To be eligible for inclusion in the proxy materials for the 2017 Annual Meeting, a stockholder proposal submitted pursuant to Rule 14a-8 of the Exchange Act must be received by us by November 8, 2016, and must comply in all respects with applicable rules of the SEC. Proposals should be addressed to the Corporate Secretary as follows: Regions Financial Corporation, 1900 Fifth Avenue North, Birmingham, Alabama 35203, Attention: Fournier J. Gale, III, Corporate Secretary.
Regions’ By-Laws include provisions requiring advance notice of a stockholder’s nomination of persons for election to the Board of Directors or the proposal of other business to be considered by the stockholders, even if not to be included in our 2017 Proxy Statement. To be timely outside of Rule 14a-8 of the Exchange Act, such notice must be delivered no earlier than November 8, 2016, and no later than December 8, 2016, for our 2017 Annual Meeting. However, in the event that: (a) the number of Directors to be elected to the Board at the 2017 Annual Meeting is increased by virtue of an increase in the size of the Board, and (b) the Company has not publicly disclosed by January 11, 2017, either (i) all of the nominees for Director at the 2017 Annual
Meeting or (ii) the size of the increased Board, then such notice will also be considered timely, but only with respect to nominees for any new positions created by such increase, if it has been delivered no later than the close of business on the 10th day following the first date all of such nominees or the size of the increased Board of Directors has been publicly announced or disclosed.
Pursuant to our By-Laws, a stockholder’s notice regarding nomination for election as a Director shall set forth the following information as to each proposed nominee:
All information relating to such person that is required to be disclosed in solicitations of proxies for election of Directors in an election contest, or is otherwise required, in each case pursuant to Regulation 14A under the Exchange Act.
A statement signed by the candidate confirming that the candidate:
| ¡2018 Proxy Statement | | will serve if nominated by the Board and elected by the stockholders;103 |
ï 2016 Proxy Statement91
| ¡ | | consents to being named in the proxy statement as a nominee; |
| ¡ | | will comply with the Company’s Code of Business Conduct and Ethics, General Policy on Insider Trading, Corporate Governance Principles and any other rule, regulation, policy or standard of conduct applicable to the Directors; and |
| ¡ | | will provide any information required or requested by the Company or its subsidiaries, or banking or other regulators, including, without limitation, all information requested by the form of Directors questionnaire used by the Company. |
Whether each nominee is eligible for consideration as an independent director under the relevant standards contemplated by Item 407(a) of Regulation S-K under the Securities Act of 1933, as amended, (or the corresponding provisions of any successor regulation) and the relevant listing standards of any exchange where the Company’s equity securities are listed.
Any notice regarding nominations for Director or other proposal of business must include the following information:
| (a) | As to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made: |
The name and address of such stockholder, as they appear on the Company’s books, and of such beneficial owner.
A representation that the stockholder is a holder of the Company’s voting stock (including the number and class or series of shares held).
With respect to nominations, a disclosure of any hedging or other arrangement with respect to any share of the Company’s stock (including any short position on or any borrowing or lending of shares of stock) made
| | by or on behalf of the stockholder (i) to mitigate loss to or manage risk of stock price changes for the stockholder or (ii) to increase or decrease the voting power of the stockholder.
|
With respect to nominations, a description of all arrangements or understandings among the stockholder and the candidate and any other person or persons (naming such person or persons and including any person that may be deemed to be acting in concert with such stockholder under applicable federal or state securities or banking laws) pursuant to which the proposal is made by the stockholder.
| (b) | The names and addresses of any other stockholders or beneficial owners known to be supporting such nomination or proposal of business by the proposing stockholder on whose behalf the nomination or proposal is made. |
As to the proposal of business that the stockholder proposes to bring forth before the meeting (other than nominations of persons for election to the Board of Directors), such stockholder’s notice must include:
The text of the proposal to be presented, including the text of any resolutions to be proposed for consideration by stockholders.
A brief written statement of the reasons why such stockholder favors the proposal.
Any material interest in such business of such stockholder and the beneficial owner, if any, on whose behalf the proposal is made.
Proposals should be addressed to our Corporate Secretary as follows:
Regions Financial Corporation
1900 Fifth Avenue North
Birmingham, Alabama 35203
Attention: Fournier J. Gale, III, Corporate Secretary.
Other Business
Regions does not know of any business to be presented for action at the annual meeting other than those items listed in theNotice of 2016 Annual Meeting of Stockholders on page 1 and referred to herein. If any other matters properly come before the annual meeting or any adjournment or postponement thereof, it is intended that the proxies will be voted in respect thereof by and at the discretion of the persons named as proxies on the electronic proxy or proxy card.
March 8, 2016
By Order of the Board of Directors
Fournier J. Gale, III
Corporate Secretary
92 ï 2016 Proxy Statement
GAAP TO NON-GAAP AND OTHER RECONCILIATIONS
Adjusted Return on Average Tangible Common Stockholders’ Equity (Non-GAAP)
The table below presents a reconciliation of net income from continuing operations available to common shareholders (GAAP) to adjusted income from continuing operations available to common shareholders for incentive purposes (non-GAAP). Adjusted income from continuing operations available to common shareholders for incentive purposes excludes the items listed in the table below. These selected items are included in financial results presented in accordance with generally accepted accounting principles (GAAP).
The selected items in the table below represent the amounts recognized in the financial results but not included in the 2017 target. Regions believes that their exclusion from income from continuing operations available to common shareholders provides a meaningful base for period-to-period comparisons, which management believes will assist stakeholders in analyzing the operating results of the Company and predicting future performance. These non-GAAP financial measures are also used by management to assess the performance of Regions’ business. It is possible that the activities related to the adjustments may recur; however, management does not consider the activities related to the adjustments to be indications of ongoing operations. Management and the Compensation
and Human Resources Committee
utilizeuse these non-GAAP financial measures for the evaluation of performance. Regions believes that presenting these non-GAAP financial measures will permit stakeholders to assess the performance of the Company on the same basis as that applied by management and the
Board of Directors.Board. Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied, and are not audited. Although these non-GAAP financial measures are frequently used by stakeholders in the evaluation of a company, they have limitations as analytical tools and should not be considered in isolation or as a substitute for analyses of results as reported under GAAP. In particular, a measure of earnings that excludes these selected items does not represent the amount that effectively accrues directly to stockholders.
ï 2016 Proxy StatementA-1
The following table also provides a calculation of
“return“adjusted return on average tangible common stockholders’
equity”equity from continuing operations” and a reconciliation of average stockholders’ equity
from continuing operations (GAAP) to average tangible common stockholders’ equity
from continuing operations (non-GAAP). Tangible common stockholders’ equity has become a focus of some investors and banking regulators, and management believes it may assist investors in analyzing the capital position of the Company absent the effects of intangible assets and preferred stock.
SinceBecause analysts and banking regulators may assess Regions based on these measures, management believes that it is useful to provide investors the ability to assess Regions on these same bases.
| | | | | | |
(Unaudited) ($ amounts in millions) | | | | Year Ended
December 31, 2015 | |
Net income from continuing operations available to common shareholders (GAAP) | | | | $ | 1,011 | |
Adjustments: | | | | | | |
Salaries and employee benefits – severance charges, net of tax | | | | | 4 | |
Branch consolidation and property and equipment charges, net of tax(1) | | | | | 26 | |
Professional, legal and regulatory expenses, net of tax(2) | | | | | 28 | |
Securities gains, net of tax | | | | | (18 | ) |
Loss on early extinguishment of long-term debt, net of tax(3) | | | | | (4 | ) |
Insurance proceeds, net of tax (4) | | | | | (56 | ) |
Leverage lease termination gains, net of tax (5) | | | | | (6 | ) |
Tax related adjustments (6) | | | | | (15 | ) |
Adjusted income from continuing operations available to common shareholders for incentive purposes (non-GAAP) | | A | | $ | 970 | |
Average stockholders’ equity from continuing operations (GAAP) | | | | $ | 16,916 | |
Adjustments: | | | | | | |
Average intangible assets (GAAP) | | | | | (5,099 | ) |
Average deferred tax liability related to intangibles (GAAP) | | | | | 170 | |
Average preferred equity (GAAP) | | | | | (848 | ) |
Average tangible common stockholders’ equity from continuing operations (non-GAAP) | | B | | $ | 11,139 | |
Adjusted return on average tangible common stockholders’ equity from continuing operations (non-GAAP) | | A/B | | | 8.70% | |
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| | | | |
(Unaudited) ($ amounts in millions) | | Year Ended
December 31, 2017 |
| Net income from continuing operations available to common shareholders (GAAP) | | $ | 1,193 |
|
| Adjustments: | | |
Salary and employee benefits - severance charges, net of tax(1) | | 4 |
|
| Tax law change, net of tax | | 55 |
|
| Contribution of foundation, net of tax | | 25 |
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Branch consolidation, property and equipment charges, net of tax(2) | | (6) |
|
Securities gains, net of tax(3) | | (13) |
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| Gain on Sale of mortgage securitization, net of tax | | (3) |
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| Adjusted income from continuing operations available to common shareholders for incentive purposes (non-GAAP) | A | $ | 1,255 |
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| Average stockholders’ equity from continuing operations (GAAP) | | $ | 16,665 |
|
| Adjustments: | | |
| Average intangible assets (GAAP) | | (5,103) |
|
| Average deferred tax liability related to intangibles (GAAP) | | 148 |
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| Average preferred equity (GAAP) | | (820) |
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| Average tangible common stockholders’ equity (non-GAAP) | B | $ | 10,890 |
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| Adjusted return on average tangible common stockholders’ equity from continuing operations (non-GAAP) | A/B | 11.52 | % |
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| (1) | Certain branch consolidation and property and equipment charges related to this item were included in the 20152017 target. This adjustment reflects the portion of the charges recordedincluded in the actual financial results but not included in the target.target, net of taxes. |
| |
| (2) | Regions recorded $50 million of contingent legal and regulatory accruals during the second quarter of 2015,Certain charges related to previously disclosed matters. Certain prior accruals were settled in the second quarter of 2015 for $2 million less than originally estimated and a corresponding recovery was recognized. |
(3) | A greater loss on early extinguishment of long-term debt was included in the 2015 target than recorded in actual. This adjustment reflects the excess portion included in the target. |
(4) | Insurance proceeds recognized in 2015 are related to the settlement of the previously disclosed 2010 class-action lawsuit. |
(5) | Certain leverage lease termination gainsthis item were included in the 20152017 target. This adjustment reflects the portionshortfall of the gains recorded in actual but notfinancial results compared to the charges included in the target.2017 target, net of taxes. |
(6) | Certain income tax benefits |
| (3) | No charges related to this item were recognized in actual during 2015 that were not included in the 20152017 target. ThisTherefore, this adjustment removes those benefits.reflects the charges included in the actual financial results, net of taxes. |
Criticized and Classified Loans
|
| | | | |
(Unaudited) ($ amounts in millions) | | Year Ended
December 31, 2017 |
Total commercial (1) | | $ | 2,233 |
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Total investor real estate (1) | | 223 |
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Total consumer (2) | | 606 |
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| Total criticized and classified loans | A | $ | 3,062 |
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Total loans, net of unearned income | B | 79,947 |
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| Criticized and classified loans/loans | A/B | 3.83 | % |
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($ amounts in millions)
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| Year Ended
December 31, 2015 |
|
Total commercial(1)
| | | | | $ 3,008 | |
Total investor real estate (1)
| | | | | 363 | |
Total consumer(2)
| | | | | 703 | |
Total criticized and classified loans
| | A | | | $ 4,074 | |
Total loans, net of unearned income
| | B | | | $ 81,162 | |
Criticized loans/loans
| | A/B | | | 5.02% | |
| (1) | Amount can be obtained from page 127119 of the Regions Annual Report on Form 10-K for the year ended December 31, 20152017 as the sum of the applicable subtotals of the special mention, substandard accrual and non-accrual columns. |
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| (2) | Amount is from internal management reports. |
A-2 ï 2016 Proxy Statement
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REGIONS FINANCIAL CORPORATION
ATTN: INVESTOR RELATIONS
1900 5TH AVENUE NORTH
BIRMINGHAM, AL 35203
| 2018 Proxy Statement | A-2 |
Our Mission is to achieve superior economic value for our shareholders over time by making life better for our customers, our associates, and our communities and creating shared value as we help them meet their financial goals and aspirations.
In 2017 we continued to create shared value for...
Our Customers
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| Regions360 | 100% of our associates completed Fair and Responsible Banking training |
| approach to customer relationships |
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2017American Customer Satisfaction Index |
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Our Associates
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| +30% | $210,000 |
increase in associate engagement rating last five years | in associate assistance through disaster relief programs |
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E00117-P731313 | $15 per hour |
consecutive years Gallup Great Workplace Award | KEEP THIS PORTION FOR YOUR RECORDSnew entry-level wage for all associates by the end of 2018 |
Our Communities
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| 77,700+ | | | | DETACH AND RETURN THIS PORTION ONLY |
| | | | $291 million invested in affordable housing |
REGIONS FINANCIAL CORPORATION
| | THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. | | |
| | | | | | | | | | | | | | | | | | | | | | | | volunteer hours |
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| 90,000+ |
| financial education seminars | The Board of Directors recommends you vote FOR the following proposals:
-7% reduction in energy consumption from prior year | | | | | | | | | |
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| | Election of Directors
| | For
| | Against
| | Abstain
| | | | | | | | | | | | | | $347 million |
| | Proposal 1. Nominees: | | | | | | | | | | | | | | | | | | | | in financing for solar power |
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1f.
1g.
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1j.
1k.
| | Carolyn H. Byrd
David J. Cooper, Sr.
Don DeFosset
Eric C. Fast
O. B. Grayson Hall, Jr.
John D. Johns
Ruth Ann Marshall
Susan W. Matlock
John E. Maupin, Jr.
Charles D. McCrary
Lee J. Styslinger III
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| | | | | | | | | The Board of Directors recommends you vote
FOR the following proposal:
| | For
| | Against
| | Abstain
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| | | | | | | | | Proposal 2. Ratification of Appointment of Ernst &
Young LLP as the Independent
Registered Public Accounting Firm for
2016.
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| | | | | | | | | The Board of Directors recommends you vote FOR the following proposal:
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| | | | | | | | | Proposal 3. Nonbinding Stockholder Approval of
Executive Compensation.
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| | For address changes and/or comments, please check this box and write them on the back where indicated. | | ¨ | | | | | | | | | | | | |
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| | Signature [PLEASE SIGN WITHIN BOX]
| | Date
| | | | | | Signature (Joint Owners)
| | Date
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REGIONS FINANCIAL CORPORATION
Annual Meeting of Stockholders
April 21, 2016
9:00 A.M. Central Time
Upper Lobby Auditorium of Regions Bank
1901 Sixth Avenue North
Birmingham, AL 35203
Admission Ticket
to the
Regions Financial Corporation 2016 Annual Meeting of Stockholders
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E00118-P73131
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| | | | PROXY CARD
REGIONS FINANCIAL CORPORATION
This proxy is solicited by the Board of Directors
The undersigned hereby appoints Fournier J. Gale, III and Hope D. Mehlman, and each of them, proxies with full power of substitution, to vote all of the shares of common stock of Regions Financial Corporation held of record by the undersigned at the Annual Meeting of Stockholders to be held on Thursday, April 21, 2016, and at any adjournments thereof. This card also provides voting instructions for shares held in the Regions Financial Corporation 401(k) Plan or the Computershare Investment Plan for Regions Financial Corporation and held of record by the trustees or agents of such plans.This proxy, whenproperlyexecuted,willbevotedinthemannerdirectedbyyou.Ifyousignandreturnthisproxybutdo notgiveanydirections,thentheproxieswillvoteFORProposal1,ElectionofallNominees,FORProposal2, RatificationofAppointmentofErnst&YoungLLPastheIndependentRegisteredPublicAccountingFirmfor2016,andFORProposal3,NonbindingStockholderApprovalofExecutiveCompensation.The proxies, in their discretion, are further authorized to vote (i) for the election of a person to the Board of Directors, if any nominee named herein becomes unable or unwilling to serve and (ii) on any other matter that may properly come before the meeting.
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| | | | (If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.)
(Continued and to be signed on reverse side)
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