Ongoing improvement in setting goals and evaluating results, in addition to showing reported results, below we also show the adjusted results. Adjusted results have been adjusted for certain events to reflect coreall NorthStar financial performance in the plan year for annual incentive plan funding purposes:targets: - Return on tangible common equity (ROTCE) - Return on assets (ROA) - Efficiency ratio The reported earnings per share (“EPS”) were $2.01. The adjusted EPS were $1.65, which was 99% of our financial plan. EPS is a commonly used measure for assessing our ability to generate earnings for our shareholders.
The reported return on risk-weighted assets (“RORWA”) was $1.35%. The adjusted RORWA was 1.10%. RORWA is a measure of adjusted net income available to common shareholders as a percent of average risk-weighted assets and excludes certain one-time items to arrive at core earnings consistent with earnings per share. Adjusted RORWA results were 98% of our financial plan.
The reported efficiency ratio was 57.6%. The adjusted ratio was 61.8%, which was slightly better than the financial plan. The efficiency ratio is a measure of expenses as a percentage of revenue, and reflects how effective we are at generating revenue while managing expenses.
![LOGO](https://files.docoh.com/DEF 14A/0001193125-16-499200/g46668g03o26.jpg)
* | One-time adjustments excluded from EPS, RORWA and Efficiency Ratio include Vantiv warrant valuation adjustments, gain on sale of Vantiv shares, gain on Vantiv warrant actions, losses associated with Visa total return swap, treasury-related securities gains/losses, impact of market interest rates relative to expectations at the time of plan design, net gain on TDR sale, branch impairment charges, certain litigation-related items and other one-time adjustments described in our Annual Report on Form 10-K. |
We are entering 2018 with a strong balance sheet as a result of the significant steps taken in 2017, positioning us well to capitalize on future opportunities. | | | | | | | Fifth Third Bancorp | 2018 Proxy Statement | | 29 |
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| | COMPENSATION DISCUSSION AND ANALYSIS |
Compensation Methodology and Structure Compensation Philosophy.Our compensation methodology and structure centers on our compensation philosophy, which comprises the following guiding principles: ![LOGO](https://files.docoh.com/DEF 14A/0001193125-18-072083/g500098g15z30.jpg)
In order to drive our business strategy and human capital plan, compensation must be competitive to attract and retain essential talent, reward high performance, and be internally equitable. The Company is committed to making compensation decisions that are fiscally responsible, such that we carefully consider the expected return on investment for those decisions. Our expected total compensation opportunities generally reflect the median pay levels of our compensation peer group, with variations based on specific talent needs, experience, and other internal factors. We believe that actual total compensation should vary with the performance of the organization so that outstanding performance results in above-market compensation. Since a majority of compensation is tied to performance, actual total compensation will vary within a competitive range. Features of our Executive Compensation Program.Our executive compensation program incorporates features such as: | Paying for performance. | Incorporating risk-balancing features. | Including double-triggerchange-in-control provisions. | Providing no excise taxgross-ups to executive officers. | Maintaining share ownership guidelines and share retention policies. | Prohibiting speculative trading and hedging strategies by executive officers. | Utilizing an independent compensation consultant hired and overseen by the Committee. | Providing minimal perquisites. | Granting long-term incentives onpre-determined dates. | In addition to these key financial performance measures, we had solid performance on other measures considered by Engaging the Committee in assessing annual performance:to perform comprehensive reviews of financial andnon-financial performance.
| | | | | Performance Modifier Measures | | Financial Plan | | Final Results | Net Charge-Offs | | .41% | | .48% | Non-Performing Assets | | .71% | | .70% | Capital Levels | | Meet Required Regulatory Minimum and Internal Target Levels | | Exceeded | Available Liquidity | | $20B | | $29.7B |
| Including claw back features in all executive officer variable pay. |
| | | | | 30 | | Fifth Third Bancorp | 2018 Proxy Statement | | |
| | | COMPENSATION DISCUSSION AND ANALYSIS | | ![LOGO](https://files.docoh.com/DEF 14A/0001193125-18-072083/g500098g38t41.jpg) |
Compensation Risk Management.We believe it is critical to bring a multi-faceted strategy toward mitigating risk in incentive plans. We incorporate formulaic and discretionary risk-balancing mechanisms, which include specific metrics for modifying payouts to discourage taking unnecessary or imprudent risks. Senior executive pay also includes a heavy focus on long-term incentives. This facilitates collaboration among business units, ownership in the Company, and a focus on shareholder goals. To execute the risk mitigation strategies, we conduct yearly review processes, which are documented and incorporate input from business segments including Finance, Human Resources, Risk Management, and business leaders. These processes include: | | | THE COMPANY’S HUMAN CAPITAL AND COMPENSATION COMMITTEE Processes
| | The Committee’s RolePurpose. The
| Market Reviews | | Human Resources use peer benchmark data to ensure that pay programs are competitive. | Incentive Plan Reviews | | Senior business leaders ensure that incentive plans support the business strategy. | Risk Reviews | | Senior risk and credit leaders determine whether incentive plans support the Company’s risk culture and the incentive compensation risk framework. | Financial Reviews | | Senior executives confirm that the incentive plans are fiscally sound, risk-aligned, and contribute to shareholder value. | Board Reviews | | Independent directors, serving on the Human Capital and Compensation Committee is composed of independent directors and is responsible for establishing, implementingRisk and monitoringCompliance Committee, assess the administrationstrategic, risk, and fiscal soundness of compensation plans and benefits programs in accordanceensure that they are aligned with the Company’s compensation philosophy and strategy and approving executive compensation and equity plan awards. The Committee focuses on the attraction and retention of key executives and, when making decisions, considers the Company’s compensation philosophy, the achievement of business goals set by the Company, relevant peer data, recommendations made by the Chief Executive Officer, and the advice of Compensation Advisory Partners LLC (“CAP”), an external executive compensation consulting firm with financial services industry expertise.philosophy. |
We believe it is critical that our people clearly understand how they are rewarded to ensure that pay facilitates the appropriate strategic and risk awareness behaviors. Because of this, we provide ongoing compensation communication and education to our employees through a robust network of Human Resources business partners staffed to each business segment, in addition to employee communications, and online trainings. In February 2017, the Committee, in conjunction with the Risk and Compliance Committee, reviewed our executive and other incentive programs. Based on the provisions and actions above, the Committee concluded that their design and/or metrics do not encourage taking unnecessary or inappropriate risk. Committee’s Role.The Committee is composed of independent directors and is responsible for establishing, implementing, and monitoring the administration of compensation and benefits programs in accordance with the Company’s compensation philosophy and strategy, along with approving executive compensation and equity plan awards. The Committee focuses on the attraction and retention of key executives and, when making decisions, considers the Company’s compensation philosophy, the achievement of business goals set by the Company, relevant peer data, recommendations made by the chief executive officer, and the advice of Compensation Advisory Partners LLC (“CAP”), a respected, independent, external executive compensation consulting firm with financial services industry expertise hired by the Committee. The Committee seeks to establish “Total Rewards” for the Company’s executive officers that are fair, reasonable, risk-balanced, and competitive. The Total Rewards program includes base salary, Variable | | | | | | | Fifth Third Bancorp | 2018 Proxy Statement | | 31 |
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| | COMPENSATION DISCUSSION AND ANALYSIS The Committee seeks to establish “Total Rewards” for the Company’s executive officers that are fair, reasonable, risk-balanced and competitive. The Total Rewards program includes base salary, annual cash incentive compensation, long-term equity-based incentive compensation, benefits, and certain perquisites. Generally, the types of compensation and benefits paid to the Named Executive Officers are similar to those provided to other officers of the Company.
The Committee has taken the following steps to ensure that it effectively carries
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Compensation Plan awards, long-term equity-based incentive compensation, benefits, and certain perquisites. Generally, the types of compensation and benefits paid to Named Executive Officers are similar to those provided to other officers of the Company. The Committee followed several key processes during 2017 to ensure that it effectively carried out its responsibilities: | Engaged CAP a respected external compensation consultant with expertise in executive compensation, to provide the Committee with relevant market data and to advise the Committee on alternatives when making compensation decisions for the Named Executive Officers and on the recommendations being made by the Company’s Managementmanagement for executive officers other than the Named Executive Officers. In addition to the support provided by CAP, reviewed the supporting information, data, and analysis provided by employees who have significant compensation experience inof the Company’s Human Capital division provide support, data, and analysis to the Committeewho have significant compensation experience. Conducted an annual review of the Committee charter to ensure that it effectively reflects the Committee’s responsibilities
| Provided oversight of incentive and variable compensation practices and balanced risk-taking across the Company with the Compensation Risk Oversight Committee (a management committee that reports to the Committee). | Conducted an annual review of the Company’s compensation philosophy to ensure that it remains appropriate given the Company’s strategic objectives Conducted an annual review of the Company’s Compensation Peer Group
Reviewed all compensation components for the Company’s Chief Executive Officer, Chief Financial Officer, and other Named Executive Officers, incorporating a tally sheet and pay-for-performance sensitivity analysis for each executive
COMPENSATION DISCUSSION AND ANALYSISobjectives.
| Evaluated the execution of the Company’spay-for-performance philosophy to ensure that the actual award decisions resulted in alignment of relative pay that aligns with Company performance and relative performance compared toalso aligns with pay in the Compensation Peer Group (as defined below). | Scheduled an executive session prior to the conclusion of the Committee meetings, without members of management,
Reviewed all compensation components for the purpose of discussing decisions related to the Chief Executive Officer’s performance, goal-setting, compensation levels,Company’s chief executive officer, chief financial officer, and other items deemed important by the CommitteeNamed Executive Officers, including a tally sheet andpay-for-performance sensitivity analysis for each executive. | Executed the succession plan for Mr. Kabat
Completed reviews of industry compensation and updated the succession profile based on Mr. Carmichael succeeding Mr. Kabat as Chief Executive Officer Reviewedcorporate governance trends to identify potential changes in programs and approved new hire compensation packages, ensuring that offers were appropriate to the strategic needs of each position and the compensation required to attract the selected candidate to the role
Completed an annual self-evaluation of the Committee’s effectiveness
Completed an annual review of the external compensation consultant’s performance to ensure the Committee receives the appropriate resources and counselalignment with industry governance best practices.
Reviewed jointly with the Risk and Compliance Committee of the Board, the Company’s risk assessment of executive and employee incentive plans with the Chief Risk Officer to ensure that the Company’s compensation design does not incent unnecessary risk-taking behavior
Worked to meet expectations and guidance from our banking regulators
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Role of Executive Officers in Compensation Decisions.The Chief Executive Officerchief executive officer annually reviews the performance of each of the other Named Executive Officers, along withwhich includes a risk performance assessment.assessment completed by the Company’s chief risk officer. Based on this review, the Chief Executive Officerchief executive officer makes compensation recommendations to the Committee, including recommendations for salary adjustments, annual cash incentives,Variable Compensation Plan awards, and long-term equity-based incentive awards. In addition, the Chief Executive Officerchief executive officer and certain other members of Managementmanagement annually assess performance for other executive officers and make compensation recommendations to the Committee. Although the Committee considers these recommendations along with data provided by its other advisors,consultant, it retains full discretion to set all compensation for the Company’s executive officers. The Committee works directly with its consultant, CAP, to determine compensation for the Chief Executive Officer andchief executive officer; the Chief Executive Officerchief executive officer has no input into his own award determinations. Additionally, the Chief Risk Officerchief risk officer reviews and evaluates with the Committee all executive officer and employee incentive compensation plans. The purpose of the review is to ensureconfirm that the Company’s incentive compensation plans do not incent or pose unnecessary or excessive risks to the Company. | | | | | 32 | | Fifth Third Bancorp | 2018 Proxy Statement | | |
| | | COMPENSATION DISCUSSION AND ANALYSIS | | ![LOGO](https://files.docoh.com/DEF 14A/0001193125-18-072083/g500098g38t41.jpg) |
The Role of the Third PartyThird-Party Compensation Consultant.The Committee uses the services of anits outside executive compensation consultant, CAP, to provide guidance and advice to the Committee on all matters covered by its charter. This consultant was directly selected and engaged by the Committee to provide a broad set of services pertaining to the compensation of the Company’s executives.
The consultant fulfills the following responsibilities:
Reviews the Company’s compensation philosophyexecutives and competitive positioning for reasonableness and appropriateness
Annually reviews the Committee’s charter and recommends changes as appropriate
Reviews the Committee’s agendas and supporting materials in advance of each meeting
Advises the Committee on management proposals, as requested
COMPENSATION DISCUSSION AND ANALYSIS
Reviews information from a peer group of publicly traded banking and financial institutions (collectively the “Compensation Peer Group”) and survey data for competitive comparisons
Annually reviews the Company’s executive compensation programs and advises the Committee on the design of incentive plans or practices that might be changed to improve the effectiveness of its compensation program
Annually reviews competitive pay practices of the Compensation Peer Group for its Boards of Directors and recommends to the Committee changes required to pay the Company’s Board of Directors, in a competitive fashion
Reviews, analyzes, and summarizes survey data on executive pay practices and amounts that come before the Committee
Attends all of the Committee meetings, including executive sessions with only the Committee members as requested
Advises the Committee on potential practices for Board governance of executive compensation as well as areas of concern and risk in the Company’s programs
Undertakes special projects at the request of the Committee, including Institutional Shareholder Services (“ISS”) test simulation
During 2015, CAP was specifically engaged on the following projects:these key actions:
Advised the Committee with respect to the appropriateness of compensation structure and actual amounts paid to the Company’s executive officers given the Company’s compensation philosophy, size, and Compensation Peer Group
Actively participated in the review and design of all executive compensation programs
Advised on the appropriateness of executive performance goals and metrics
Reviewed and advised on the compensation program for the Company’s Board of Directors
Reviewed the Company’s risk assessment of executive and employee incentive plans
Advised the Committee on market and regulatory trends and developments
Provided recommendations to the Committee on the compensation of the Chief Executive Officer
Assessed the relationship between the Chief Executive Officer’s compensation and performance on a realizable pay basis
Reviewed the 2015 Compensation Discussion and Analysis and related sections for the proxy statement
| Advising the Committee on compensation program design, competitive practices, market trends, and peer group composition. | Providing recommendations to the Committee on the compensation of the chief executive officer. | Providing advisory recommendations to the Committee and members of management regarding the compensation of the other executive officers. | Reviewing competitive pay practices in the Compensation Peer Group for their Boards of Directors and recommending to the Committee changes required to pay the Company’s Board of Directors in a competitive fashion. | Providing an annual review of performance and pay levels for the Company and its Compensation Peer Group. | Undertaking special projects at the request of the Committee, including during 2017, reviewing the methodology and the process for determining the median employee as required under the CEO Pay Ratio disclosure. |
The Company does not engage CAP for any additional services outside of executive compensation consulting. The Committee believes that the third party services of CAP are objective and unbiased. The Committee conducted an assessment of potential conflicts of interest ofand independence issues for CAP and no conflicts of interest or independence issues relating to CAP’s services were identified by
the Committee. The Committee’s Considerations. The Committee considers both the aggregate amounts and mix of an executive officer’s Total Direct Compensation (base salary, annual cash incentive compensation, and long-term equity-based incentive compensation) when making decisions. In 2015, the Committee assessed Total Direct Compensation relative to competitive market data in its November meeting, discussed recommendations for
COMPENSATION DISCUSSION AND ANALYSIS
executive compensation in its January meeting, and approved final merit, annual cash incentive awards (our Variable Compensation Plan; “VCP”), and final long-term incentive recommendations at its February meeting.
Based on its most recent review of the competitive data, the Committee has determined that the compensation structure for executive officers is effective and appropriate. The structure reflects the Company’s compensation philosophy, in that its incentive payout ranges are aligned with the competitive market data, it has appropriate leverage to ensure a strong linkage between compensation, risk outcomes, and performance, and it drives rewards based on the most relevant performance measures for the Company and shareholders. Also based on this review, the Committee determined that the Company’s aggregate 2015 Total Rewards packages (and potential payouts in the severance and change-in-control scenarios where applicable) for its Named Executive Officers are reasonable, consistent with industry practices, and not excessive.
The Committee believes that the relative difference between the compensation of the Chief Executive Officer and the compensation of the Company’s other executive officers is consistent with such differences found in the Company’s Compensation Peer Group and external reference labor market. Further, the Committee has reviewed the internal relationships between the compensation for the Chief Executive Officer and for other executive officers and has deemed them to be appropriate.
The remainder of this report outlines the Company’s compensation philosophy and executive compensation structure, and provides an analysis of compensation decisions made during 2015. The discussion of 2015 will focus primarily on the compensation structure established for our Named Executive Officers.
EXECUTIVE COMPENSATION PHILOSOPHY AND RISK MANAGEMENT
Compensation Philosophy. The Company endeavors to attract and retain the best people in the financial services industry, and motivate them to fulfill the Company’s vision of becoming the one bank that people most value and trust. We intend to accomplish this in the way that we consider our shareholders’ long-term interests, by establishing compensation programs that reward our people for delivering products our customers highly value, and avoiding excessive risk. Our compensation philosophy comprises the following guiding principles:
Provide competitive compensation opportunities in order to attract and retain executive talent that will drive the business strategy
Effectively manage risk within incentive programs designed to pay for performance
Align compensation with long-term shareholder interests
Provide strong oversight of executive pay
Conduct recurring processes that ensure strategic and fiscal soundness along with balanced risk taking
Communicate for understanding and transparency
In order to drive our business strategy and human capital plan, compensation must be competitive to attract and retain essential talent, reward high performance, and be internally equitable. In addition, the Company is committed to making compensation decisions that are fiscally responsible, such that we carefully consider those decisions’ expected return on investment. Our expected total compensation opportunities generally reflect the median pay levels of our peer group with variations based on specific talent needs, experience and other internal factors. We believe that actual total compensation should vary with the performance of the organization, such that outstanding performance results in above market compensation. Since a majority of compensation is tied to performance outcomes, actual total compensation will vary within a competitive range.
Compensation Risk Management. The above strategic principles include the integration of sound risk management in all aspects of our compensation programs, particularly incentive compensation. We believe it is
COMPENSATION DISCUSSION AND ANALYSIS
critical to bring a multi-faceted strategy toward mitigating risk in incentive plans. We incorporate formulaic and discretionary risk-balancing mechanisms, which outline specific metrics for modifying payouts to discourage unnecessary or imprudent risk-taking actions.
Successful risk management requires strong oversight on pay for senior executives, given their role in the Company’s strategic direction. For this reason, senior executives’ pay includes a heavy focus on long-term incentives. This long-term focus facilitates collaboration among business units, ownership in the Company, and a focus on shareholder goals.
To execute the risk mitigation strategies, we conduct yearly review processes, which are documented and incorporate input from Finance, Human Resources, Risk Management, and business leaders. These processes include:
| | | Processes | | Purpose | Market Reviews
| | Human Resources uses peer benchmark data to ensure that pay programs are competitive in the financial services industry | Incentive Plan Reviews
| | Senior business leaders ensure that incentive plans support the business strategy | Risk Reviews
| | Senior risk and credit leaders determine whether incentive plans support the Company’s risk culture and the incentive compensation risk framework | Financial Reviews
| | Senior executives, including the Chief Executive Officer, confirm that the incentive plans are fiscally sound, risk aligned, and successfully contribute to shareholder value | Board Reviews
| | Independent directors, serving on the Human Capital and Compensation Committee and Risk and Compliance Committee, assess the strategic, risk, and fiscal soundness of compensation plans and ensure that they are aligned with the Company’s compensation philosophy |
As a financial institution that is regulated by federal and state banking authorities, the Company has gone through a rigorous process over the past few years to ensure that our compensation programs for our executives do not provide incentives to take excessive risks that could have material adverse impact on the Company. Our compensation program for our Named Executive Officers has several features that help to address potential concerns about risk:
Downward discretionary pay adjustment based on risk performance assessment which includes results of examinations by our banking regulators, internal examinations by our audit staff, and a qualitative review by the Chief Risk Officer
Caps on the maximum payment under our annual cash incentive plan and our performance share plan
Balanced mix of short-term, medium-term, and long-term compensation
Forfeiture provisions related to material risk events
Stock ownership and retention guidelines
Company claw back rights (as outlined under Other Long-term Equity-based Plan Provisions on page 41
Finally, we believe it is critical that our people clearly understand how they are rewarded to ensure that pay facilitates the appropriate strategic and risk awareness behaviors. Because of this, we provide ongoing compensation communication and education.
COMPENSATION DISCUSSION AND ANALYSIS
In January 2015, the Committee, in conjunction with the Risk and Compliance Committee, reviewed our executive and other incentive programs to determine if their design and/or metrics encourage unnecessary and or material risk taking. The Committee believes, based on the provisions and actions described above, that they do not.
COMPENSATION STRUCTURE AND METHODOLOGY
Compensation Structure. The compensation structure (i.e., each element of pay described below and the respective amounts for each element) for executive officers is reviewed annually. When determining the compensation structure, the following items are considered:
The most recent and prior years’ comparative proxy statement and survey data for similar jobs among the Compensation Peer Group
The 25th percentile, median (i.e., 50th percentile), and 75th percentile peer data for each element of compensation (base salary, target annual cash incentive compensation, and target long-term equity-based incentive compensation, as well as the resulting Total Direct Compensation)
The ability to provide market median (i.e., 50th percentile) Total Cash Compensation (i.e., base salary plus annual cash incentive compensation) for 50th percentile performance relative to the Compensation Peer Group
The ability to provide upper quartile Total Cash Compensation for upper quartile performance (i.e., 75th percentile or better performance relative to the Compensation Peer Group)
Benchmarking Methodology.In making compensation decisions, the Committee compares Company performance and each element of executive officersofficers’ Total Direct Compensation with the Compensation Peer Group. The Committee refers to this Compensation Peer Group for both compensation and performance-related benchmarking.benchmarks. Financial performance data is prepared either by the Committee’s external compensation consultant or by the Company, using publicly available data from public filings. Compensation data is generally prepared by the Committee’s external compensation consultants, using proprietary compensation databases and publicly available data from proxy statements. The Committee’s external compensation consultant reviews all financial and/orand compensation data that is prepared by the Company and provided to the Committee. The Compensation Peer Group consists of companies with which the Committee believes the Company competes for talent and for stockholder investment and which are generally similar in asset size and business mix. The following 1211 companies were identified by the Committee as the 20152017 Compensation Peer Group: | | | BB&T Corporation | | The PNC Financial Services Group, Inc. | Capital One Citizen’s Financial CorporationGroup
| | Regions Financial Corporation | Comerica Incorporated | | SunTrust Banks, Inc. | Huntington Bancshares Incorporated | | U.S. Bancorp | KeyCorp
| | Wells Fargo & CompanyU.S. Bancorp | KeyCorp | | Zions Bancorporation | M&T Bank Corporation | | Zions Bancorporation |
| | | | | | | Fifth Third Bancorp | 2018 Proxy Statement | | 33 |
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| | COMPENSATION DISCUSSION AND ANALYSIS |
The Committee annually reviews the Compensation Peer Group and considers changes to the Compensation Peer Group deemed necessary to ensure that the nature and size of the organizations continue to be appropriate. Based on the Committee’s evaluation of the Compensation Peer Group, for 2015 thereWells Fargo and Company and Capital One Financial Corporation were no changesremoved from the prior year. However, in making decisions on pay levels for the CEO and other senior executives, the Committee regularly looks at side by side data for the Compensation Peer Group includingstarting in 2017 because of those institutions’ business mix, size, and excluding Wells Fargodifferences in pay models. Citizens Financial Group Inc. was added based on its similar size and COMPENSATION DISCUSSION AND ANALYSIS
Capital One, business structure to ensure that the median pay levels of the Compensation Peer Group are not biased upward due to pay levels at these companies.Company. The Company’s assets were inat approximately the 48th55th percentile of its 20152017 Compensation
Peer Group as of September 2015.June 2017. Pay for Performance. Under the compensation structure, annual cash and long-term incentives comprise the majority of executive officers’ Total Direct Compensation. The actual amounts realized by executive officers under these incentive plans vary based on the performance of the Company and individual performance. Company performance is evaluated from a variety of perspectives, including:
Absolute performance and performance relative to peers
Return measures including return on average equity
Growth in earnings per share
Risk performance assessment
Annual cash incentive compensation awards to executive officers are approved from a pool funded on the basis of Company performance relative to the specific goals described below. This pool of available compensation awards is allocated to each participant based on qualitative assessments of individual performance against a set of stated objectives and individual risk assessment. Long-term equity-based incentive compensation awards are also made to each participant based on qualitative assessments of individual performance against a set of stated objectives and individual risk assessment. Long-term equity-based incentive compensation awards derive value based on shareholder return and stock price appreciation. Amounts realizable from prior compensation awards do not influence decisions relative to future awards.
Pay Elements and Pay Mix. Under the pay-for-performance compensation structure, compensation is delivered through three primary elements:
Annual Cash Incentive (delivered through the Variable Compensation Plan)
COMPENSATION DISCUSSION AND ANALYSIS
The 2015 total compensation included a mix of cash and equity awards. The Company typically pays base salary and the annual incentive compensation in cash. All long-term equity-based incentive compensation awards are paid in shares of the Company’s common stock. Generally, our Named Executive Officers have approximately 50% or more of their total compensation delivered in the form of equity-based compensation. The charts below show the mix between cash and equity for our Chief Executive Officer and average pay mix for our other Named Executive Officers. For the purposes of this analysis, we are using Mr. Carmichael as CEO and Messrs. Tuzun, Anderson, Spence and Forrest as the NEOs.
![LOGO](https://files.docoh.com/DEF 14A/0001193125-16-499200/g46668g47d71.jpg)
(1) | The percentages reflect the Named Executive Officer’s base salary as of 12/31/2015, actual annual incentive award the executive earned for 2015 performance under the Annual Incentive Plan, and target long-term incentive. Actual long-term incentive awards for 2015 performance may vary from target and will be approved by the Committee in February 2016. |
Tally Sheet. The Company annually prepares a tally sheet of all compensation and potential payouts for the Committee’s use when considering compensation matters. The Committee reviews all components of compensation for the Company’s Chief Executive Officer, Chief Financial Officer,chief executive officer, chief financial officer, and the other Named Executive Officers’ compensation, NEOs, including: Annual cash incentive compensation
Long-term equity-based incentive compensation
Accumulated, realized, and unrealized equity award gains
| Base salary. | Variable Compensation Plan compensation. | Long-term equity-based incentive compensation targets. | Accumulated, realized, and unrealized equity award gains. | The dollar value to the executive and cost to the Company of all perquisites and other personal benefits. | The earnings and accumulated payout obligations under the Company’s nonqualified deferred compensation plan. | Several potential termination scenarios, includingchange-in-control where applicable. |
The dollar value to the executive and cost to the Company of all perquisites and other personal benefits The earnings and accumulated payout obligations under the Company’s nonqualified deferred compensation plan
Several potential termination scenarios, including change-in-control where applicable
The tally sheet review of 2015 compensation components has been moved from February 2016 to June 2016. At that time, the Committee will reviewreviewed all the above compensation components and the associated dollar amounts for 2015 compensation. Moving this review to2016 compensation in June will allow for a more focused look at each executive’s compensation components, separate from when annual pay recommendations are being made. Also at this2017. At that time, the Committee will reviewalso reviewed a sensitivity analysis of the relationship between each NEO’s 20152016 Total Direct Compensation and the Company’s performance;performance, including both stock price performance and Company performance results. The Committee will perform the annual tally sheet review specific to 2017 compensation components later in 2018.
Determinations.Non-Binding AdvisorySay-on-Pay Proposal.In 2017, our shareholders approved anon-binding advisorysay-on-pay proposal at our 2017 Annual Meeting with 94 percent of the votes cast in favor of that proposal. The Committee reviews the results annually and considers them when approving plan design changes as well as pay decisions. The Committee believes the results of the shareholder vote in 2017 as well as in prior years indicate strong support among shareholders for ourpay-for-performance approach. Future votes cast will be closely monitored to ensure that there is continued support for our pay programs and pay decisions among our shareholders.
Historical Say on Pay Vote ![LOGO](https://files.docoh.com/DEF 14A/0001193125-18-072083/g500098g32m07.jpg)
| | | | | 34 | | Fifth Third Bancorp | 2018 Proxy Statement | | |
| | | COMPENSATION DISCUSSION AND ANALYSIS | | ![LOGO](https://files.docoh.com/DEF 14A/0001193125-18-072083/g500098g38t41.jpg) |
Compensation Structure. The compensation structure (including each element of pay described below and the respective amounts for each element) for executive officers is reviewed annually. When determining the compensation structure, the following items are considered: | The most recent and prior years’ comparative proxy statement and survey data for similar positions among the Compensation Peer Group. | The 25th percentile, median (50th percentile), and 75th percentile peer data for each element of compensation (base salary, Variable Compensation Plan compensation, and target long-term equity-based incentive compensation, as well as the resulting Total Direct Compensation). | The ability to provide market median (50th percentile) Total Cash Compensation (i.e., base salary plus Variable Compensation Plan awards) for 50th percentile performance relative to the Compensation Peer Group. | The ability to provide upper quartile Total Cash Compensation for upper quartile (i.e., 75th percentile or better relative to the Compensation Peer Group) performance. |
Pay Mix and Pay for Performance.Generally, our Named Executive Officers have approximately 50 percent or more of their actual total compensation delivered in the form of equity-based compensation, as demonstrated in the charts on the following page. 2017 Total Compensation Pay Mix1 ![LOGO](https://files.docoh.com/DEF 14A/0001193125-18-072083/g500098g81e85.jpg)
(1) The percentages reflect the Named Executive Officer’s base salary as of December 31, 2017, actual Variable Compensation Plan award the executive earned for 2017, and target long-term equity-based incentive for 2017. Actual long-term equity-based incentives granted will vary from target based on 2017 Company and individual performance and were approved by the Committee in January 2018. The Committee considers several factors and objectives relevant to each specific program when determining compensation, including a risk performance assessment.compensation. The Committee also contemplates the impact of each award’s impactaward on the Total Direct Compensation package. Total Direct Compensation opportunities are COMPENSATION DISCUSSION AND ANALYSIS
intended to target the median (i.e., 50th(50th percentile) of the relevant market data, and actual compensation (both amount and mix) for executives varies based on their performance, prior experience, and other pertinent factors. In addition, for purposes of attracting and retaining key executives, the Committee may determine that an additional award, an above-mediansign-on package, and/or an incentive guarantee for a new hire, or a Total Direct Compensation package that is above market median, is appropriate. | | | | | | | Fifth Third Bancorp | 2018 Proxy Statement | | 35 |
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| | COMPENSATION DISCUSSION AND ANALYSIS |
As shown in the pay mix charts on the previous page, the Variable Compensation Plan award and long-term equity-based incentives constitute the majority of executive officers’ Total Direct Compensation under ourpay-for-performance structure. The actual amounts realized by executive officers under these incentive plans vary based on individual performance and the performance of the Company. Company performance under these incentive plans is evaluated from a variety of perspectives, including: ![LOGO](https://files.docoh.com/DEF 14A/0001193125-18-072083/g500098g03l59.jpg)
2015 EXECUTIVE COMPENSATION PLAN DESIGN AND AWARD DECISIONS2017 Executive Compensation Plan Design and Award Decisions
As stated above, compensation is delivered through three primary elements: base salary, our Variable Compensation Plan, and long-term equity-based incentives. We review and assess our compensation practices and program on an annual basis, taking into account the Company’s strategic objectives, compensation philosophy, regulatory guidance, risk culture, and external market practices. Each element of the senior executive’s compensation program, along with any changes that were made to the program for 2017, are described in the following paragraphs. Base SalarySalary..The Committee reviews individual base salaries of the Company’s executive officers annually; and/annually or at the time of promotion or hire, as applicable. The objectives of the Company’s base salary program are to provide salaries at a level that allows the Company to attract and retain qualified executives and to recognize and reward individual performance. The following items are considered when determining base salary levels: | Market data provided by the Company’s external compensation consultant. | The executive officer’s experience, scope of responsibilities, performance, and potential. | Internal equity in relation to other executives with similar levels of experience, scope of responsibilities, performance, and potential. | Other relevant information, which may include governmental or regulatory considerations. |
Market data provided by the Company’s external compensation consultant
The executive officer’s experience, scope of responsibilities, performance, and potential
Internal equity in relation to other executive officers with similar levels of experience, scope of responsibilities, performance, and potential
Other relevant information, which may include federal programs, regulatory requirements, etc.
Determination of Base Salary.Salary increases, if any, are based on the Company’s overall performance and the executive’s attainment of individual objectives during the preceding year inyear. The annual review and evaluation at the contextbeginning of competitive market data. In establishing 2015 compensation levels for Named Executive Officers, the Committee was guided by these principles and made2017 showed that modest base salary adjustmentsincreases ranging from 0%2 percent to 6% versus 20145 percent were needed in order to maintain pay levels competitive with the market. Mr. Carmichael, Chairman, President, and Chief Executive Officer, did not receive a base salary levels for the NEOs. Increases were driven by the market for equivalent executive positions among peers and subjective evaluation of the individual’s responsibilities, tenure, and overall contribution to the Company.increase in 2017.
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2015 Annual Cash Incentive2017 Variable Compensation Plan DesignDesign.. The annual cash incentive compensation program’sVariable Compensation Plan’s objective is to reward executives for corporate, business unit, and/orand individual performance. Each year, we review and updateBelow is a graphic presentation of the design of our VCP program to ensure alignment with our business strategy, regulatory guidance and the external market. For 2015, the three primary core funding measures were:2017 Variable Compensation Plan:
| 1. | Earnings Per Share vs. Plan: 50% weight |
| 2. | Return on Risk-Weighted Assets vs. Plan: 25% weight |
![LOGO](https://files.docoh.com/DEF 14A/0001193125-18-072083/g500098g79d50.jpg)
| 3. | Efficiency Ratio vs. Plan: 25% weight |
It is the view of the Committee that this mix of core funding measures within the VCP program providemetrics provides executives with balanced incentivesincentive to increase the absolute level of earnings while also ensuringgrowth, ensures that shareholdersshareholder capital is used efficiently to generate competitive returns. The efficiency ratio is useful as a complementary measure as it provides an assessment ofreturns, and assesses the cost efficiency of the Company’s operations. In addition The funding modifiers are useful as complementary metrics to the primary funding measures, there are four funding modifier metrics that the Committee considers to adjust the calculated pool funding up or down, as described in more detail below:
add focus onCOMPENSATION DISCUSSION AND ANALYSISbest-in-class business processes. The Committee retains discretion to adjust pool funding downward based on other factors as well. For 2015,Variable Compensation Plan awards to executive officers are approved from a pool funded on the only change madebasis of Company performance relative to the VCP program comparedspecific goals. This pool of available compensation awards is allocated to 2014 waseach participant based on qualitative assessments of individual performance against a set of stated objectives and an individual risk assessment. Amounts realizable from prior compensation awards do not influence decisions relative to remove return on risk-weighted assets (RORWA) from the funding modifiers and use it as a core funding metric, replacing return on tangible common equity (ROTCE). RORWA provides the appropriate focus on balance sheet effectiveness and capital management while managing risk. Consistent with our prior practice used in setting goals and evaluating performance, results for RORWA will be adjusted for certain events to reflect core financial performance in the plan year for annual incentive plan funding purposes.future awards.
VCPVariable Compensation Plan Performance Goals.The financial plan approved by the Board of Directors includes specific target levels for each of the measures that arecore funding metrics as shown below.below and assumes a Quartile 2 funding pool. Actual performance against these targets is considered, in addition to the four funding modifiers, when determining the available funding for all participants of the VCP.Variable Compensation Plan. The Committee set the 2015 performancegoals for the 2017 core funding metrics to exclude certainnon-recurring items not included in the Company’s financial plan and excluded those items when determining the adjusted
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Company performance results.metrics. These exclusions are discussed on the following page. The goals for the senior executive pool under the VCPVariable Compensation Plan, which includes all senior executives designated as Category 1 in accordance with the federal banking interagency guidance on sound incentive compensation practices (which includes all NEOs), were scaled to represent four quartiles of performance. Each quartile contains a performance level range, a score, a score range, and a funding pool range. The funding pool ranges are set starting with Quartile 4 which represents the sum of the maximum opportunity available for each senior executive who participates in the pool, which generally aligns with the 75th percentile of the market for each participant. | | | | | | | | | | | | | | | Performance Measures | | Weight | | Company Performance Levels | | 2015 Final Results (Adjusted) | | | Below Threshold | | Quartile 1 Score: 1 | | Quartile 2 Score: 2 | | Quartile 3 Score: 3 | | Quartile 4 Score: 4 | | EPS | | 50% | | <$1.50 | | $1.50 – $1.58 | | $1.59 – $1.67 | | $1.68 – $1.76 | | $1.77 – >$1.85 | | $1.65 | RORWA | | 25% | | < 0.92% | | 0.92% – 1.02% | | 1.03% – 1.12% | | 1.13% – 1.22% | | 1.23% – >1.32% | | 1.10% | Efficiency Ratio | | 25% | | > 64.9% | | 64.9% – 63.4% | | 63.3% – 61.9% | | 61.8% – 60.4% | | 60.3% – <58.9% | | 61.8% | Score Range | | | | 0 | | < 1.5 | | > 1.5 < 2.5 | | > 2.5< 3.0 | | > 3.0 – < 4.0 | | | Funding Pool Ranges | | | | $0 | | $6.5M | | $9.15M | | $12.8M | | $15.6M | | |
| | | | | | | | | | | | | Core Funding Metrics | | Weight | | Company Performance Levels | | | Below Threshold | | Quartile 1 Score: 1 | | Quartile 2 Score: 2 | | Quartile 3 Score: 3 | | Quartile 4 Score: 4 | Earnings Per Share (EPS) | | 50% | | £ $1.53 | | $1.54 to $1.63 | | $1.64 to $1.72 | | $1.73 to $1.81 | | ³ $1.82 | Return on Assets (ROA) | | 25% | | £ 84bps | | 85 to 89 bps | | 90 to 95 bps | | 96 to 100bps | | ³ 101 bps | Efficiency Ratio (FTE) | | 25% | | ³ 65.7% | | 65.6% to 64.7% | | 64.6% to 63.6% | | 63.5% to 62.5% | | £ 62.4% | Score Range | | | | 0 | | < 1.5 | | ³ 1.5 < 2.5 | | ³ 2.5£ 3.0 | | > 3.0 - £ 4.0 | Funding Pool Ranges | | | | $0M | | £ $6.8M | | £ $9.9M | | £ $13.7M | | £ $17.8M |
To determine the VCPVariable Compensation Plan funding pool, each performance measurecore funding metric is reviewed to determine the performance quartile that was achieved and the associated score is assigned. The overall funding score represents the sum of the weighted average score for each performance measure.core funding metric. The overall funding score is compared to the quartile score ranges to determine the preliminary funding pool range. The NEOs are included in the senior executive pool, which includes all senior executives designated as Category 1 in accordance with the Federal Reserve’s Interagency Guidance on sound incentive compensation practices. As mentioned in the above Plan Design section, theThe Committee may use the funding modifiers to increase or decrease the preliminary funding score. The Committee may exercise discretion to increase a preliminary funding score up to a maximum increase is 0.6of 6 points; however, downward discretion is not capped and can be made in any amount deemed appropriate. These measures are outlined below:
| | | | | Performance Modifier Measures | | Target Goal | | 2015 Final Results | Net Charge-Offs | | .41% | | .48% | Non-Performing Assets | | .71% | | .70% | Capital Levels | | Meet Required Regulatory Levels | | Exceed | Available Liquidity | | $20B | | $29.7B |
| | | | | | | Funding Modifier | | Threshold Goal | | Target Goal | | Exceptional Goal | | | | | Non-performing assets | | 75th peer percentile | | Peer median | | 25th peer percentile | | | | Capital levels | | Meet required regulatory minimum and internal target levels | | Exceed target levels | | | | Liquidity coverage ratio | | Meet required regulatory minimum and internal target levels | | Exceed target levels | | | | | Customer experience | | > 1 achieved | | 3 – 5 achieved | | > 5 achieved |
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Performance against Variable Compensation Plan Goals.The Company performed well against the goals set for the Variable Compensation Plan for 2017. Consistent with our practice used in setting goals and evaluating performance metrics, we use adjusted Company performance metrics to determine performance against our plan targets. Adjusted Company performance metrics are determined by first excluding financial effects of certain events in order to reflect core financial performance in the plan year. In determining the preliminary 2017 adjusted Company performance metrics for the plan, we excluded: | The net gain resulting from the Company’s third quarter 2017 Vantiv, Inc. share sale; | A charge related to the valuation of the Company’s Visa total return swap; | Items resulting from the Tax Cuts and Jobs Act including a remeasurement of deferred tax liability, a remeasurement of portfolio carrying values for leveraged leases, an impairment related to affordable housing investments, a contribution to the Fifth Third Foundation, and aone-time employee bonus; and, | Treasury securities gains / losses. |
After excluding the items listed above and making further adjustments to account for the effects from a preliminary funding pool greater than Quartile 2, the adjusted Company performance metrics for the Variable Compensation Plan for 2017 would be an adjusted EPS of $1.80, an adjusted ROA of 1.02%, and an adjusted taxable equivalent efficiency ratio of 64.1%. | | | | | Adjusted Core Funding Metrics | | 2017 Reported Metrics | | 2017 Adjusted Metrics (Including effects of preliminary funding pool) | | | | EPS | | $2.83 | | $1.80 | | | | ROA | | 1.56% | | 1.02% | | | | Efficiency Ratio (FTE) | | 56.6% | | 64.1% |
In addition to these key financial performance metrics, we met or exceeded target on the funding modifiers considered by the Committee in assessing annual performance: | | | | | Funding Modifier | | 2017 Actual | | | Non-performing assets | | 38th peer percentile | | | Capital levels | | Exceeded | | | Liquidity coverage ratio | | Exceeded | | | Customer experience | | At target |
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Determination of VCP AwardsVariable Compensation Plan Awards.. As described inon the VCP Performance Goals section,previous page, each core funding metric is assigned a score based on the quartile of its performance and these scores are then weighted to determine an overall funding score which then determines the VCP funding pool, each performance measure is reviewed to determine the performance quartile that was achieved andas well as the associated score is assigned. The overall funding score representsfor the sum of the weighted average score for each performance measure. The overall funding score is compared to the quartile score ranges to determine thepreliminary funding pool range. For 2015,2017, the overall funding score was a 2.25, resulting3.00, which resulted in a preliminary Quartile 3 funding pool of up to $9.15$13.7 million for the senior executives. | | | | | | | | | | | | | | Adjusted Core Funding Metrics | | 2017 Adjusted Metrics | | Quartile Score | | Weight | | Weighted Score (Score * Weight) | | | | | | EPS | | $1.80 | | 3 | | 50% | | 1.50 | | | | | | ROA | | 102 bps | | 4 | | 25% | | 1.00 | | | | | | Efficiency Ratio (FTE) | | 64.1% | | 2 | | 25% | | 0.50 | | | | | | Core Funding Score | | | | | | | | 3.00 |
Considering this performance, the Committee then performed a quantitative and qualitative assessment of other financial factors and approved a negative adjustment to the preliminary funding pool. The pool funding calculation,decision to approve a negative adjustment was based on a review of overall performance against peers and a qualitative assessment of the adjusted primary metrics, producedfollowing items: | | The benefits to planned net interest income from the market interest rate levels; | | A lower than planned fee income growth offset by lower than planned expenses charge related to the valuation of the Company’s Visa total return swap; | | Lower than planned loan growth; and | | The associated impact on loan loss provision combined with lower loan losses. |
This negative adjustment to the preliminary funding pool reduced it to a VCPQuartile 2 funding pool of up to 58%$9.9 million, or 56 percent of the maximum incentive opportunity of the Named Executive Officers. This funding level reflects that the Company’s results on two of the performance metrics relative to our financial plan fell within the second quartile, and results on one of the performance metrics fell within the third quartile. Additionally, the Committee considered the four funding modifiers and determined that, as a result of the strong performance on three of the four funding modifiers, an upward adjustment of .30 would be made. The funding modifier adjustment resulted in a final funding score of 2.55. This moved the pool funding to Quartile 3 (up to $12.8 million). The table below shows the calculation for the 2015 pool:pool. | | | | | | | Performance Measures | | Score | | Weight | | Weighted Score (Score x Weight) | EPS | | 2 | | 50% | | 1.00 | RORWA | | 2 | | 25% | | .50 | Efficiency Ratio | | 3 | | 25% | | .75 | Core Funding Score | | | | 2.25 | | | Core Funding Pool Range | | | | | | < $9.15M (Quartile 2) | Funding Modifier Score Adjustment | | | | | | .30 | Final Funding Score | | | | | | 2.55 | Final Pool Range | | | | | | < 12.8M (Quartile 3) |
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When making the final determination of individual awards not to exceed $12.8 million or 82% ofusing the maximumapproved Quartile 2 pool, the Committee had the benefit of information relating to market median and market 75th75th percentile compensation levels as well as performance and 2015 Company financial performance. The Committee considered that results were slightly better thanrisk assessment rating information. Considering each individual’s qualitative performance assessment (described for each NEO in the goals established in our financial plan. While a pool of $12.8 million was available, considering actualqualitative performance assessments section below) and risk performance assessment, the Committee thought it appropriate to make final individual award decisions ofthat totaled approximately 80%99 percent of the maximumapproved $9.9 million pool. COMPENSATION DISCUSSION AND ANALYSIS
After considering each individual’s qualitative performance assessment described below, overall Company financial performance, each individual’s risk performance assessment, market compensation levels, and that several executives who were either promoted or newly hired had their VCP payments prorated or guaranteed for 2015, the Committee approved These included a VCPVariable Compensation Plan award of 58%63 percent of the Chief Executive Officer’sCEO’s individual maximum for the Chief Executive Officer and VCPVariable Compensation Plan awards ranging from 23%47 percent to 84%65 percent of their individual maximums for the other NEOs.
![LOGO](https://files.docoh.com/DEF 14A/0001193125-16-499200/g46668g95n11.jpg)
VCP payments for Messrs. Carmichael and Spence were prorated for time served in their new roles. The VCP payment for Mr. Anderson was guaranteed as part of his new hire offer.![LOGO](https://files.docoh.com/DEF 14A/0001193125-18-072083/g500098g63n32.jpg)
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20152017 Long-term Equity-based Incentive Compensation Plan Design.The objective of the long-term equity-based incentive programplan is an important piece of the compensation mix for our Named Executive Officers. The objectives of our plan, the types of equity-based awards employed under the plan, and areas included in individual performance assessments used to align executives’ interests with shareholders’ interests, facilitate share ownership amongdetermine award amounts for Named Executive Officers and to link rewards with the long-term performance of the Company. Target award levels are established at the beginning of the year for each executive officer based on market median compensation for each position. Award levels are not automatically made at target. The actual award levels are based on Company performance and the Committee may include qualitative assessments of individual performance of each Named Executive Officer in areas such as:are:
The Company’s revenue and expense results
Division’s revenue and expenses vs. budget
Internal and external customer service levels
Performance relative to the Company’s strategic initiatives
Results related to specific individual responsibilities
Results related to specific individual risk assessments
COMPENSATION DISCUSSION AND ANALYSIS
The Company currently employs three types of long-term equity-based incentive compensation awards: stock-settled stock appreciation rights (“SARs”), restricted stock, and performance shares. The mix of long-term equity-based incentive compensation awards for its executive officers was reviewed in 2015 to ensure that it effectively supported the Company’s objectives of:
Aligning management and shareholders’ interests
Motivating senior executives to optimize long-term shareholder value
Encouraging stock ownership among senior executives
Enhancing the Company’s ability to retain key executives
Ensuring the program design is consistent with our compensation philosophy and reflective of external market trends
Strengthening the risk-adjusted pay decisions
| | | Plan Objectives | | Equity Type Mix | Align management and shareholders’ interests | | ![LOGO](https://files.docoh.com/DEF 14A/0001193125-18-072083/g500098g87e24.jpg)
| Motivate senior executives to optimize long-term shareholder value | | Encourage stock ownership among our employees | | Enhance the Company’s ability to retain key talent | | Ensure the program design is consistent with our compensation philosophy and reflective of external market trends | | Strengthen risk-adjusted pay decisions | | Areas of Assessment | | The Company’s revenue and expense results | | Stock Appreciation Right Awards are calculated by taking 15% of the total LTI award amount divided by the SARs Black-Scholes value on the date of grant Restricted Stock Unit Awards are calculated by taking 40% of the total LTl award amount divided by the Company’s closing stock price on the date of grant Performance Share Awards are calculated by taking 45% of the total LTI award amount divided by the Company’s closing stock price on the date of grant | Division revenue and expenses vs. budget | | Internal and external customer service levels | | Performance relative to the Company’s strategic initiatives | | Results related to specific individual responsibilities | | Results related to specific individual risk assessments | |
The Committee believes that a portion of the long-term equity-based incentive compensation opportunity should come from a growth-oriented incentive, (i.e., SARs)specifically Stock Appreciation Rights, or SARs, that alignsalign executives’ interests with those of the Company’s shareholders. In addition, the Committee believes that full-value share awards (i.e.,in the form of performance shares and restricted stock)stock units complement each other and are important to drivefor driving stronger retention value and enhanced ownership creationownership-creation opportunities, and should therefore be a meaningful portion of the long-term incentive. The Committee also believes that performance shares further the objective of creating a clear connection between results achieved and compensation earned. The Committee determined in 2016 that the mix of long-term incentives for 2014grants to be made in 2017 was still overly weighted towards SARs and as such adjusted the mix of long-term incentives as per the Table below. The Committee believes that the mix is now appropriate based on the Company’s long-term incentive plan objectives, strategic objectives, compensation philosophy, regulatory guidance, risk culture, and competitive practice. Target award levels are established at the beginning of the year for each executive officer based on market median compensation for each position. Award levels are not automatically made at target. Actual award levels are based on Company performance, and the Committee includes qualitative assessments of individual performance of each Named Executive Officer in areas shown in the graphic display above. Amounts realizable from prior compensation awards do not influence decisions relative to future awards. | | | | | | | | | | | Award Type | | 2014 Proportion of Long-Term Incentive Value | | | 2015 Proportion of Long-Term Incentive Value | | | 2015 Calculation of Awards | Stock Appreciation Rights | | | 25 | % | | | 15 | % | | Total award dollar value multiplied by 15% divided by stated yearly SAR value(1) | Performance Shares | | | 35 | % | | | 45 | % | | Total award dollar value multiplied by 45% divided by the Company’s closing stock price on the grant date | Restricted Stock | | | 40 | % | | | 40 | % | | Total award dollar value multiplied by 40% divided by the Company’s closing stock price on the grant date |
(1) | The Company assigns a compensation value for SARs based on a number of factors including the calculated Black-Scholes value using a six year expected life. This valuation utilizes the estimated accounting or expense value of the stock appreciations rights. | | | | 42 | | Fifth Third Bancorp | 2018 Proxy Statement | | |
| | | COMPENSATION DISCUSSION AND ANALYSIS | | ![LOGO](https://files.docoh.com/DEF 14A/0001193125-18-072083/g500098g38t41.jpg) |
Stock Appreciation Rights. SARs for Named Executive Officers have been and will continue to be granted at the closing price of the Company’s common stock on the date of grant, with a 10-year term and generally a 4-year graded vesting schedule. These award terms are consistent with the annual grant for all eligible employees at the Company.
The grant date is the date of the Committee’s approval of the awards, which will typically beis at a first quarter meeting of the Committee or at the annual shareholder meeting in April. The grant dates for 2015 awards made in 2017 are detailed in the 20152017 Grants of Plan-Based Awards table. The Company does not adjust the timing of its annual grant based on SEC filings or press releases. Rather, the annual grant date is established and communicated well in advanceadvance. Stock Appreciation Rights are granted at the closing price of the date.Company’s common stock on the date of grant and with a10-year term. Grants made in 2017 have a three-year graded vesting schedule. The Company does not grant discounted stock options or SARs,re-price previously granted stock options, or SARs, or grant reload stock options. COMPENSATION DISCUSSION AND ANALYSISRestricted stock units have a three-year graded vesting schedule. These grants are eligible for dividend equivalent payments but do not have voting rights during the vesting period. Performance share grants made in 2017 were structured as follows: Performance Share Awards. Prior to granting
![LOGO](https://files.docoh.com/DEF 14A/0001193125-18-072083/g500098g25s88.jpg)
In 2017, the performance shares in 2015, we considered our programs’ alignment with competitive practices compared to our peer banks. Based on this review, the following changes were made toperiod for the performance share award program: The primary metric used for our performance share awardsgranted in 2014 ended. Performance was changed from relativebased on the total shareholder return to return on average equity (“ROAE”TSR”), as adjusted, relative to our peer banks
To achieve balance between relative and absolute metrics, two absolute performance hurdles were added:
| — | ROTCE must be greater than a predetermined threshold each year in order for awards to vest |
| — | Efficiency ratio must be better than a predetermined threshold at the end of the three year performance period in order to earn an award payout greater than target |
The performance payout grid is shown below. Payout opportunities range from 0% to 150% of target, with no payout earned if relative ROAE falls below the 25th percentile of the Compensation Peer Group.Group measured from April 1, 2014 through March 31, 2017. The threshold performance level to achieve any payout was set at the 33rd percentile relative to peers. The Company’s performance on TSR over the three-year performance period was under the 33rd percentile, which resulted in azero-share payout in 2017 for this grant.
| | | | | | | Payout Grid for the 2015 Performance Share AwardFifth Third Bancorp | 2018 Proxy Statement | | 43 |
| | | Performance Level
| | Relative ROECOMPENSATION DISCUSSION AND ANALYSIS
| | Payout Percentage | Threshold
| | Below the 25th Percentile | | 0% | Between Threshold and Below Target performance
| | 25% | Below Target
| | Median performance median 150 basis points | | 50% | Target
| | Median performance (50th percentile) | | 100% | Maximum
| | Median performance plus 150 basis points | | 150% |
| | Straight line interpolation will be used to determine payouts between Threshold and Maximum |
The 2012 performance share award measured performance from April 1, 2012 through March 31, 2015. Thelong-term equity-based incentive plan provides incentive for the creation of shareholder value since the full benefit of the grant to each Named Executive Officer can be realized only with an appreciation in the price of the Company’s performancecommon shares or based on total shareholderrelative return overon average common equity, depending on the 3-year performance period was at the 25th percentile relative to peers. The result was a zero share payout for this award in 2015.type of award. Restricted Stock Awards.Other Long-term Equity-based Plan Provisions. Restricted stock The Variable Compensation Plan and long-term equity-based incentive compensation awards have a 3-year graded vesting schedule. These awards are full-value shares of stock that are eligible for dividend paymentsmade in 2017 were authorized under the Company’s 2014 Incentive Compensation Plan which was approved and receive voting rights duringadopted by the restriction period.Company’s shareholders in 2014.
For senior executives (including NEOs), a performance based vesting requirement was introduced in 2013 using ROTCEThe Committee has delegated to certain Named Executive Officers, as a threshold metric before each annualwell as to the chief human resource officer, the authority to grant ordinary course equity grant vesting tranche is earned. The ROTCE threshold goalawards for 2015 was 2%. The threshold was put in placerecruiting and retention purposes up to protect against high levels of compensation payouts for poor risk or performance outcomes.specified limits.
Determination of Long-term Equity-based Incentive AwardsAwards.. The Chief Executive Officerchief executive officer recommends the award levels for the othereach Named Executive OfficersOfficer except for himself, and the Committee makes the final award determination for all Named Executive Officers.Officers, including the chief executive officer. The award considerations are not based on a formula. Rather, the Committee may choose to make the actual award higher or lower than the target award based on the qualitative assessment of performance against stated objectives as well as the individual’s risk assessment results. The Committee believes that, by including a performance element as part of the upfrontup-front grant process, the Company is able to reinforce further reinforce thepay-for-performance objective of the long-term incentives. These grants provide incentive for the creation of shareholder value since the full benefit of the grant to each Named Executive Officer can only be realized with an appreciation in the price of the Company’s common shares or based on relative return on average equity, depending on the type of award. The Company does not
COMPENSATION DISCUSSION AND ANALYSIS
grant discounted stock options or SARs, re-price previously granted stock options or SARs, or grant reload stock options.compensation structure.
When making the final determination to grant long-term equityequity-based incentive compensation awards in February 2015,2017, the Committee had the benefit ofconsidered information relating to market medianmarket-median compensation levels, Company financial performance during 2014,2016, the qualitative performance assessment described below, and individual risk performance assessments. After reviewing this information for 2014,2016, the Committee granted a 20152017 long-term equity incentive compensation award of 106%125 percent of target for the Chief Executive Officerchief executive officer and equity awards ranging from 90%100 percent to 110%133 percent of target for each of the NEOs.other Named Executive Officers. Qualitative Performance Assessments.The individual qualitative performance assessment referenced in the discussions above is a review of how each Named Executive Officer performed against a set of stated objectives. This assessment is performed by the Board of Directors with respect to the Chief Executive Officer’schief executive officer’s performance and by the Chief Executive Officerchief executive officer with respect to the performance of the other Named Executive Officers.NEOs. The specific objectives assessed for each NEO areNamed Executive Officer is as follows: For Mr. Carmichael:Leadership and execution as Presidentpresident and Chief Operating Officerchief executive officer relating to the NorthStar strategy; short and long-term financial results; driving accountability for a culture of strong risk management; customer and talent goals; and promotion of the Bank’s Core Values: Work as One Bank, Take Accountability, Be Respectful & Inclusive and Act with Integrity. The Variable Compensation Plan award was based on Mr. Carmichael’s 2017 performance against these objectives and his overall contribution to our performance. The long-term equity-based award granted in February 2017 was based on 2016 performance against objectives of leadership and execution as president and chief executive officer relating to Company | | | | | 44 | | Fifth Third Bancorp | 2018 Proxy Statement | | |
| | | COMPENSATION DISCUSSION AND ANALYSIS | | ![LOGO](https://files.docoh.com/DEF 14A/0001193125-18-072083/g500098g38t41.jpg) |
financial performance in a well-managed risk environment; customer and employee index goals; “One Bank” success; and promotion of the Bank’s Core Values. For Mr. Tuzun: Leadership and execution as executive vice president and chief financial officer relating to objectives concerning the management of the 2017 financial plan and financial management of NorthStar initiatives in a well-managed risk environment; operational excellence; customer and talent goals; and promotion of the Bank’s Core Values: Work as One Bank, Take Accountability, Be Respectful & Inclusive and Act with Integrity. The Variable Compensation Plan award was based on 2017 performance against these objectives. The long-term equity-based award granted in February 2017 was based on 2016 performance against these objectives. For Mr. Anderson: Leadership and execution as executive vice president and chief operating officer relating to objectives tied to Companystrategic and financial management of line of business financial performanceand NorthStar initiatives in a well managedwell-managed risk environment,environment; customer service levels, team work across divisional and functional areas,talent goals; and promotion of core values of accountability, integrity, respectthe Bank’s Core Values: Work as One Bank, Take Accountability, Be Respectful & Inclusive and inclusion, and teamwork and collaboration. Mr. Carmichael’s objectives were consistent in 2014 and most of 2015 until his transition to Chief Executive Officer in November.Act with Integrity. The VCPVariable Compensation Plan award was based on 20152017 performance against these objectives. The LTIlong-term equity-based award granted in February 20152017 was based on 20142016 performance against these objectives. For Mr. Kabat:Spence: Leadership and performanceexecution as Chief Executive Officerexecutive vice president and head of payments, strategy, and digital solutions relating to objectives tied to Company financial performancestrategic outcomes of NorthStar initiatives, payments and strategy office in a well managedwell-managed risk environment,environment; customer and employee index goals, “One Bank” success,talent goals; and promotion of core values of accountability, integrity, respectthe Bank’s Core Values: Work as One Bank, Take Accountability, Be Respectful & Inclusive and inclusion, and teamwork and collaboration. Mr. Kabat’s objectives were consistent in 2014 and most of 2015 until he stepped down as Chief Executive Officer in November.Act with Integrity. The VCPVariable Compensation Plan award was based on 2015Mr. Spence’s 2017 performance against these objectives. The LTIlong-term equity-based award granted in February 20152017 was based on 20142016 performance against these objectives. For Mr. Tuzun:Forrest: Leadership and execution as Executive Vice Presidentexecutive vice president and Chief Financial Officer relating to objectives concerning balance sheet, capital and liquidity management,chief risk management and compliance, credit loss management, operational excellence, maintaining a strong financial team, and promotion of core values of accountability, integrity, respect and inclusion, and teamwork and collaboration. The VCP award was based on 2015 performance against these objectives. The LTI award granted in February 2015 was based on 2014 performance against similar objectives. For Mr. Anderson: Mr. Anderson joined the Company as Executive Vice President and Chief Operating Officer in August 2015. His 2015 VCP award was guaranteed at $750,000 as part of his new hire offer. He also received an equity grant of restricted stock valued at approximately $3,000,000 and a sign-on bonus of $3,000,000 to cover equity compensation forfeited when joining the Company.
For Mr. Spence: Mr. Spence joined the Company as Executive Vice President and Chief Strategy Officer in September 2015. His VCP award was prorated for 2015 based on time served in his role and objectives concerning strategic planning, investments, and promotion of the core values of accountability, integrity, respect and inclusion, and teamwork and collaboration. The VCP award was based on 2015 performance against these objectives. He also received an equity grant of restricted stock valued at approximately $3,675,000 to cover cash and equity compensation forfeited when joining the Company, and a sign-on bonus of $700,000 as part of his new hire offer.
COMPENSATION DISCUSSION AND ANALYSIS
For Mr. Forrest: Leadership and execution as Executive Vice President and Chief Risk Officerofficer relating to objectives concerning risk management and compliance,compliance; NorthStar initiatives; operational excellence,excellence; customer and talent goals; and promotion of core values of accountability, integrity, respectthe Bank’s Core Values: Work as One Bank, Take Accountability, Be Respectful & Inclusive and inclusion, and teamwork and collaboration. Mr. Forrest’s objectives were consistent in 2014 and 2015.Act with Integrity. The VCPVariable Compensation Plan award was based on 20152017 performance against these objectives. The LTIlong-term equity-based award granted in February 20152017 was based on 20142016 performance against these objectives.
For Mr. Poston: LeadershipThe Committee’s Considerations.The Committee considers both the aggregate amount and executionmix of an executive officer’s Total Direct Compensation when making the decisions discussed above. The Committee assesses Total Direct Compensation relative to competitive market data annually during its December meeting. Recommendations for executive compensation are reviewed and approved as Executive Vice Presidentfinal during its February meeting.
Based on its most recent review of the competitive data, the Committee has determined that the compensation structure for executive officers is effective and Chief Strategyappropriate. The structure reflects the Company’s compensation philosophy in that its incentive payout ranges are aligned with the competitive market data; it has appropriate leverage to ensure a strong linkage between compensation, risk outcomes, and Administrative Officer relating to objectives concerning strategic planning, capital management, operational excellence,performance; and promotion of core values of accountability, integrity, respect and inclusion, and teamwork and collaboration. Mr. Poston’s objectives were consistent for 2014 and 2015. He did not receive a VCP awardit drives rewards based on 2015the most relevant performance againstmeasures for the Company and shareholders. The Committee also has reviewed the internal relationships between the compensation for the chief executive officer and for other executive officers and has deemed them to be appropriate. The Committee | | | | | | | Fifth Third Bancorp | 2018 Proxy Statement | | 45 |
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believes that the relative difference between the compensation of the chief executive officer and the compensation of the Company’s other executive officers is consistent with such differences found in the Company’s Compensation Peer Group. Tax and Accounting Impacts of Compensation Programs Deductibility of Executive Compensation.Section 162(m) of the Internal Revenue Code limits the deductibility of compensation paid to or earned by certain executive officers of a public company. Section 162(m) limits the annual deductibility of certain executive compensation to $1 million per covered executive officer. Certain other limitations on the deductibility of executive compensation will continue to apply to some forms of compensation earned during the Company’s participation in the Troubled Asset Relief Program’s Capital Purchase Program in addition to the limitation under Section 162(m). While the Company’s compensation philosophy has been to consider the deductibility of executive compensation in approving compensation that may not be deductible, the Committee has determined that the underlying executive compensation programs are appropriate and necessary to attract, retain, and motivate senior executives and that failing to meet these objectives as he separated fromcreates more risk for the Company in October 2015. than the financial impact of losing the tax deduction. For the year ending December 31, 2017, the tax impact related tonon-deductible compensation expense was approximately $4.1 million. Accounting and Financial Reporting.The LTI award granted in February 2015 was based on 2014 performance against these objectives Other Long-term Equity-based Plan Provisions. The annual cash andCompany accounts for long-term equity-based incentive compensation awards madepayments including stock options, SARs, restricted stock, and performance shares in 2015 were authorized under the Company’s 2014 Incentive Compensation Plan. This Plan was approved and adopted by the Company’s shareholders in 2014.
The Company’s Code of Business Conduct and Ethics provides that the Company reserves the right to and, if appropriate, will seek restitution of any bonus, commission, or other compensation received as a result of an employee’s intentional or knowing fraudulent or illegal conduct or misconduct, including the making of a material misrepresentation containedaccordance with accounting principles generally accepted in the Company’s financial statements.United States (U.S. GAAP).
The Committee has delegated to certain Named Executive Officers, as well as to the Chief Human Resource Officer, the authority to grant equity awards for recruiting and retention purposes up to specified limits.
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2016 EXECUTIVE COMPENSATION PLAN DESIGN CHANGES2018 Executive Compensation Plan Design Changes
20162018 Variable Compensation Plan Changes.As stated above, theThe Company and the Committee review the variable compensation planVariable Compensation Plan annually to determine if any changes need toshould be made to the plan for the next year. During 2015,2017, the Company and the Committee reviewed the plan to determine that the right core funding metrics were in place to provide strong business focus and alignment with the business strategy. The Committee determined that the existing core funding metrics and funding modifiers are still appropriate, and it made no changes to them. It was determined, however, that modifications could be made to simplify the design of the Category 1 pool funding structure while also aligning the design to that of the broad-based plan. Starting in 2018, there no longer will be two separate Variable Compensation Plan pool structures for executives and broad-based employees, but instead, one pool structure for all employees. The performance quartile structure will be eliminated, and the core funding metrics and modifiers continue to provide the right business focus and are aligned with business strategy. However, net charge offs will no longer be reviewed as a modifier as the expense associated with net charge offs is includedexpressed in the core funding metric of EPSsame way for executives and typically another one ofbroad-based employees. The chart below highlights the modifier metrics, non-performing assets. Non-performing assets is a forward looking indicator of credit quality and is viewed as a better early warning signal of any emerging credit issues than net charge offs.key changes made in the new design:
| | | From: | | To: | Separate VC plans for Category 1 and broad-based employees. | | Same VC plan for Category 1 and broad-based employees. | Discretionary pool funding within performance quartiles. | | Formulaic pool funding based on core performance metrics with managed discretion. | Pool funding capped at sum of maximums. | | Pool funding capped at 150% of target. | Discretionary individual award allocations. | | Discretionary individual award allocation using same guidelines as broad-based plan. | Individual award ranges aligned with market. | | Individual award targets aligned with market. |
20162018 Long-term Equity-based Incentive Plan Changes.The Company and the Committee also reviewsreview the long-term equity-based incentive plan annually to determine if any changes need to be made to the plan (i.e., award mix, performance measures, modifiers, etc.) for the next year. During 2015,2017, the Company reviewed the long-term incentive plan and decided to make the following changes to continue to strengthen the governance, reporting, competitiveness, and risk adjustedrisk-adjusted pay decisions to meet evolving regulatory guidance:
| For the Performance Share Plan the payout grid will change so that payout amounts are distributed in 20 point increments in an effort to more evenly spread payout opportunities on the upside as well as the downside of the grid. | Payouts will continue to be capped at 150 percent for performance starting at the 75th percentile performance of our Compensation Peer Group and no payout will be achieved for performance at or under the 25th percentile. |
Starting with awardsThese changes will impact any long-term incentives to be granted in 2017, the vesting schedule for SARs granted to executives will change from a 4-year graded vesting to a 3-year graded vesting to align with the vesting schedules of their other equity vehicles
The retirement eligibility criteria for all long-term incentive awards granted after January 1, 2016 will be 55 years of age minimum with 5 or more years of service where age plus years of service equal 65
The termination provision was revised such that employees will now have 90 days post voluntary termination to exercise any vested SARs granted after January 1, 2016
2019 based on 2018 performance. The Committee approved the changes at theirits December 20152017 meeting. COMPENSATION DISCUSSION AND ANALYSIS
EXECUTIVE BENEFITS AND PERQUISITESExecutive Benefits and Perquisites
Summary of Eligibility for Benefits and Perquisites.The Company provides few benefits and perquisites to executive officers that are not available to the general employee population. Special benefits include an executive physical exam programhealth and fitness programs and a deferred compensation plan. Special perquisites for executives | | | | | | | Fifth Third Bancorp | 2018 Proxy Statement | | 47 |
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include the following: financial planning reimbursement, nominal holiday gifts, and parking. Additionally, spouses or guests of executive officers may be provided travel and/or entertainment benefits related to business events whereat which their attendance is expected and appropriate, such as company recognition events or trips, recruiting meals, or social events held for marketing or other business purposes. These benefits are often provided with little or no incremental cost to the Company. The Company does not provide taxgross-ups for these special perquisites. As part of Mr. Anderson’s new hire offer, the Company made a one-time reimbursement of Mr. Anderson’s country club initiation fee. The Company believes that such reimbursement was appropriate and necessary to attract Mr. Anderson to join the Company. This reimbursement is noted in the Summary Compensation Table on page 46.
Retirement Benefits.The Company’s retirement benefits are designed to assist employees in accumulating wealth to provide income during their retirement years. The retirement benefits are designed to attract and retain employees and to encourage employees to save money for their retirement while maintaining a competitive cost structure for the Company. Based on the Company’s research using two national benefits surveys, its retirement benefits are positioned near the market median for similar employers. The Company’s primary retirement benefit plan is a defined contribution 401(k) plan with a company match. This plan was amended effective January 1, 2015 as discussed below. The Company also maintains a defined benefit pension plan that has been frozen and none of the Named Executive Officers participate in the plan. The Company maintains the same 401(k) plan for all eligible employees, including the Named Executive Officers. The 401(k) plan provides a match to employee contributions. Effective January 1, 2015, the Company’s match is 150%contributions of 150 percent on the first 2%2 percent and 100% of100 percent on the next 4%4 percent of eligible compensation an employee contributes to the plan, and is invested in any of the plan’s existing investment alternatives that the employee selects. This Company match is immediately 100%100 percent vested. All Named Executive Officers are eligible for this plan up to the IRS wage or contribution limits. Effective June 23, 2017, the option to invest future contributions in Fifth Third stock was discontinued. The Company maintains a defined benefit pension plan.plan which was frozen to new participants as of November 15, 1998. Employees who met the age and service requirement wereat that time are “grandfathered” and continue to accrue benefits under that plan. No Named Executive Officers continue to accrue benefits underare participants in this plan. Mr. Kabat has a frozen benefit for his service while at Old Kent Bank prior to it being acquired by the Company. The Old Kent Bank defined benefit pension plan was frozen for all participants shortly after the Company acquired Old Kent Financial Corporation. The retirement benefit under the defined benefit pension plan is based on years of service and a percent of an employee’s highest five consecutive years of earnings over the last ten years of employment. Compensation for retirement benefit calculations is defined as the base salary plus variable compensation. Health and Welfare Benefits.The Company offers medical, dental, vision, life, and disability insurance to its employees. The benefits are designed to attract and retain employees and provide security to employees and their dependents for their health and welfare needs. Based on the Company’s research using two national benefits surveys, its health and welfare benefits are positioned near the market median for similar employers. These benefits are offered to employees and Named Executive Officers on a uniform basis and are subject to insurance policy limitations. The Company also provides to each Named Executive Officer a comprehensive physical exam program. The Company provides Company-paid life insurance coverage equalprogram and access to an employee’s base salary, up to $1,000,000. The Company’s long-term disability benefit is 60% of an employee’s base salary and the benefit is limited to $20,000 per month. The Company also offers a Company-paid short-term disability benefit with similar benefits to the long-term disability program.fitness facility. COMPENSATION DISCUSSION AND ANALYSIS
Deferred Compensation.The Company offers some of its employees (atat certain salary band levels, including its executive officers)officers, a nonqualified deferred compensation plan. This plan allows for the deferral of base salary and bonus.awards received under the Variable Compensation Plan. The plan also provides for the Company to make a contribution for loss of qualified plan 401(k) match due to deferral of pay into this plan or due to IRS wage and/or contribution limitations under the qualified 401(k) plan. The deferred funds receive earnings based on the mutual funds elected by each executive. Executives may alsoThe executives do not earn any preferential or above-market returns on these earnings. Prior to June 23, 2017, executives were able to elect a rate equal to the return on Company common stock. The executives do not earn any preferential or above market returns.Effective June 23, 2017, that option was discontinued for future contributions. Severance and Change-in-ControlChange in Control Benefits. On November 18, 2014, the Committee adopted theThe Fifth Third Bancorp Executive Change-in-ControlChange in Control Severance Plan (the “Severance Plan”) that was effective as of January 1, 2015. The Severance Plan replaced all existing change-in-control agreements with executives, which expired on December 31, 2014 in accordance with their terms. The Severance Plan also eliminated the remaining excise tax gross-up provisions in the expiring change-in-control agreements, provides market level severance benefits to certain officers upon a qualifying termination after a change-in-control, continueschange in control, subject to condition receipt of such severance benefits upon execution of a release andnon-compete agreement, and allows for a consistent approach to change-in-control severance benefits for covered officers. agreement. The plan covers approximately 4544 officers, including all of the 2015 Named Executive Officers. | | | | | 48 | | Fifth Third Bancorp | 2018 Proxy Statement | | |
| | | COMPENSATION DISCUSSION AND ANALYSIS | | ![LOGO](https://files.docoh.com/DEF 14A/0001193125-18-072083/g500098g38t41.jpg) |
Under the Severance Plan, certain executives will receive severance if, in connection with a change-in-control,change in control, the executive’s employment is terminated without Cause (as defined in the Severance Plan) or the executive resigns for Good Reason (as defined in the Severance Plan). Upon a qualifying termination after a change-in-control, the Named Executive Officers willchange in control, Messrs. Carmichael, Tuzun, and Anderson are eligible to receive an amount equal to 2.99 times the sum of base salarytheir Base Salary and variable compensationVariable Compensation Plan amount except for(as defined in the Severance Plan), and Messrs. Spence and Forrest who willare eligible to receive an amount equal to 2.0 times (each as defined in the Severance Plan).same amount. In addition, continued insurance benefits and certain retirement benefits payablewill be paid to the Named Executive Officers will be paid for three years.years for Messrs. Carmichael, Tuzun, and Anderson and for two years for Messrs. Spence and Forrest. As noted above, no excise taxgross-ups will be provided. For this purpose, a change-in-controlchange in control would occur in any of the following instances: Any person is or becomes the beneficial owner of 25% or more of the voting power of the Company’s outstanding securities
During any consecutive 2-year period, the directors in office in the beginning of such period (or directors who were approved by 2/3 of such directors) cease to constitute a majority of the Board
The sale or disposition of substantially all of the Company’s assets or the merger or consolidation of the Company with any other corporation unless the voting securities of the Company outstanding prior to such action continue to represent at least 50% of the voting power of the merged or consolidated entity
The Company’s shareholders approve a plan of complete liquidation of the Company
| Any person is or becomes the beneficial owner of 30 percent or more of the voting power of the Company’s outstanding securities. | During any consecutive 12 month period, the directors in office in the beginning of such period (or directors who were approved bytwo-thirds of such directors) cease to constitute a majority of the Board. | The sale or disposition of substantially all of the Company’s assets or the merger or consolidation of the Company with any other corporation unless the voting securities of the Company outstanding prior to such action continue to represent at least 50 percent of the voting power of the merged or consolidated entity. | The Company’s shareholders approve a plan of complete liquidation of the Company. |
The Severance Plan defers to the applicable Incentive Compensation Plans for treatment of long-term equity-based incentive compensation in the event of a change-in-control.change in control. Since April 2008, we have not granted any awards whichthat provide for single trigger“single-trigger” vesting upon a change-in-control.change in control. Instead, the vesting provisions for those awards provide for accelerated vesting only if there is a change-in-controlchange in control and a subsequent qualifying termination of employment (i.e. (“double trigger)trigger” vesting). Performance-based awards (performance shares) would be paid out at the higher of (1) the extent to which the performance goals had been met through the date of the change-in-controlchange in control or (2) the value on the date of the change-in-controlchange in control of the number of target shares awarded on the grant date. COMPENSATION DISCUSSION AND ANALYSIS
Starting with grants to be made in 2018, the payout provision for performance shares in the event of a change in control will change. Performance-based awards will be paid out at the higher of (1) the extent to which the performance goals had been met through the date of the change in control or (2) the value on the date of the change in control of the number of target shares, in each case prorated based on the portion of the performance period elapsed at the time of the change in control. TAX AND ACCOUNTING IMPACT OF COMPENSATION PROGRAMSExecutive Ownership and Capital Accumulation
Deductibility of Executive Compensation.Section 162(m) of the Internal Revenue Code limits the deductibility of compensation paid to or earned by certain executive officers of a public company. Section 162(m) limits the annual deductibility of certain (non-performance based) executive compensation to $1 million per covered executive officer. Certain other limitations on the deductibility of executive compensation will continue to apply to some forms of compensation earned during the Company’s participation in the Troubled Asset Relief Program (TARP) in addition to the limitation under Section 162(m). While the Company’s compensation philosophy has been to, where appropriate, position executive compensation to qualify for deductibility, in approving compensation that may not be deductible, the Committee has determined that the underlying executive compensation programs are appropriate and necessary to attract, retain, and motivate senior executives, and that failing to meet these objectives creates more risk for the Company than the financial impact of losing the tax deduction. For the year ending December 31, 2015, the tax impact related to non-deductible compensation expense was approximately $1,500,000.
Accounting and Financial Reporting. The Company accounts for long-term equity-based incentive compensation payments including stock options, SARs, restricted stock, and performance shares in accordance with accounting principles generally accepted in the United States of America.
EXECUTIVE OWNERSHIP AND CAPITAL ACCUMULATION
Share Ownership Guidelines.The executive compensation program is designed in part to provide opportunities for executive officers to build ownership in the Company and to align performance with shareholder interests. Accordingly, the Company has established share ownership guidelines for senior employees in the Company’s salary band structure, including the executive officers. The amount of shares required to be retained varies based upon the assigned salary band and associated multiple of base salary. These employees are expected to use shares net of taxes obtained through awards under the long-term | | | | | | | Fifth Third Bancorp | 2018 Proxy Statement | | 49 |
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equity-based incentive compensation program to establish a significant level of direct ownership. Stock ownership includes: Shares owned individually and by immediate family sharing the same household
Restricted stock not yet vested
Shares held in the 401(k) plan
Shares held in the employee stock purchase plan
Shares held in the nonqualified deferred compensation plan
| | | | | | | | | Shares owned individually and by immediate family sharing the same household. | | Restricted stock not
yet vested. | | Shares held in the nonqualified deferred compensation plan. | | Shares held in the employee stock purchase plan. | | Shares held in the 401(k) plan. |
Until ownership guidelines are met, executive officers are required to retain 100%100 percent of the netafter-tax shares following exercise or receipt of shares under the shares.long-term equity-based incentive compensation program. Executives have 5five years to achieve their executive share ownership requirements. Specific ownership guidelines for the Named Executive Officers are: | | | | | Share Ownership Guidelines | Chief Executive Officer
| | 6x Salary | Chief Executive Officer | | 6x Salary | | | Other Named Executive Officers | | 3x Salary | | |
The Committee reviews progress toward achieving the ownership goal for the Company’s executive officers on an annual basis. Based onAs of the 2015 review and December 31, 2015 share price,performed in June 2017, all of the Named Executive Officers had reached their ownership guideline except Mr. Tuzun. Mr. Tuzun has until 2018 to meet his ownership requirement and is making appropriate progress toward meeting the requirement.guideline. COMPENSATION DISCUSSION AND ANALYSIS
Beneficial Ownership. The following table sets forth certain information regarding the Named Executive Officers’ beneficial ownership of the common stockCommon Stock of the Company as of January 31, 2016:2018: | Title of Class | | Name of Officer | | Number of Shares Beneficially Owned(1)(2) | | | Percent of Class | | Name of Officer | | Number of Shares Beneficially Owned (1) | | Percent of Class | | Common Stock | | Kevin T. Kabat | | | 3,423,952 | | | 0.4358% | | Greg D. Carmichael | | 1,172,408 | | .1687 | | | Common Stock | | Greg D. Carmichael | | | 1,015,421 | | | 0.1295% | | Tayfun Tuzun | | 224,167 | | .0323 | | | Common Stock | | Daniel T. Poston | | | 610,033 | | | 0.0778% | | Lars C. Anderson | | 221,457 | | .0319 | | | Common Stock | | Timothy N. Spence | | | 197,726 | | | 0.0252% | | Timothy N. Spence | | 157,968 | | .0228 | | | Common Stock | | Lars C. Anderson | | | 158,144 | | | 0.0202% | | Frank R. Forrest | | 77,856 | | .0112 | | | Common Stock | | Tayfun Tuzun | | | 120,609 | | | 0.0154% | | Common Stock | | Frank R. Forrest | | | 63,712 | | | 0.0081% | |
(1) The amounts shown represent the total shares owned outright by such individuals together with shares held in the name of spouses, minor children, certain relatives, trusts, estates, and certain affiliated companies (as to which beneficial ownership may be disclaimed) and SARs and RSAs or RSUs exercisable (or exercisable within 60 days) of January 31, 2018 but unexercised. These individuals have the number of SARs indicated after their names that are exercisable as of January 31, 2018 or will become exercisable within 60 days of January 31, 2018: Mr. Carmichael, 772,860; Mr. Tuzun, 124,571; Mr. Anderson, 39,524; Mr. Spence, 30,238; and Mr. Forrest, 23,115. The amounts listed for SARs represent the number of rights that may be exercised; the actual number of shares delivered will vary based on the stock’s appreciation over the grant price at the time of exercise. (1) | The amounts shown represent the total shares owned outright by such individuals together with shares which are issuable upon the exercise of currently exercisable (or exercisable within 60 days), but unexercised, stock options and stock appreciation rights and shares held in the name of spouses, minor children, certain relatives, trusts, estates and certain affiliated companies as to which beneficial ownership may be disclaimed. These individuals have the right to acquire the shares indicated after their names, upon the exercise of currently exercisable (or exercisable within 60 days of January 31, 2016) stock appreciation rights: Mr. Carmichael, 815,700; Mr. Kabat, 2,498,096; Mr. Poston, 402,345 and Mr. Tuzun, 64,859. The amounts listed for Stock Appreciation Rights represent the number of rights that may be exercised; the actual number of shares delivered will vary based on the stock’s appreciation over the grant price at the time of exercise. |
(2) | The amounts shown do not include shares of common stock underlying outstanding restricted stock units. Named Executive Officers owned the following number of restricted stock units as of January 31, 2016: Greg D. Carmichael, 102,302, and Frank R. Forrest, 26,357. None of these restricted stock units are expected to vest within 60 days of January 31, 2016. |
For beneficial ownership of individual directors and all directors and executive officers as a group see “Election of Directors” on pages 12-18. Prohibition on Hedging.The Company prohibits its executive officers from engaging in speculative trading and hedging shares of Company securities. This includes prohibitions against day trading or short selling of Company securities and in transactions in any derivative of Company securities, including buying and writing options. Executives are restricted from buying Company securities on margin or using Company | | | | | 50 | | Fifth Third Bancorp | 2018 Proxy Statement | | |
securities as collateral for a loan. Additionally, the Company’s insider trading policyInsider Trading Policy prohibits trading during designated blackout periods and requires approval by the Legal Departmentdepartment prior to any trade. Clawbacks and Recoupments.The Company’s Code of Business Conduct and Ethics provides that the Company reserves the right to and, if appropriate, will seek restitution of any bonus, commission, or other compensation received as a result of an employee’s intentional or knowing fraudulent or illegal conduct or misconduct, including the making of a material misrepresentation contained in the Company’s financial statements. COMPENSATION OF NAMED EXECUTIVE OFFICERS AND DIRECTORSCOMMITTEE REPORT The following Report of the Human Capital and Compensation Committee does not constitute soliciting material and should not be deemed filed or incorporated by reference into any other Company filing under the Securities Act or the Exchange Act, except to the extent the Company specifically incorporates this Report by reference therein. The Human Capital and Compensation Committee has reviewed and discussed with management the preceding Compensation Discussion and Analysis. Based on that discussion, the Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement and incorporated into the Company’s Annual Report on Form10-K for the year ended December 31, 2017. Michael B McCallister, Chair Nicholas K. Akins Gary R. Heminger Eileen A. Mallesch | | | | | | | Fifth Third Bancorp | 2018 Proxy Statement | | 51 |
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As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(u) of RegulationS-K, we are providing information about the relationship of the annual total compensation of Greg D. Carmichael, our chief executive officer (“CEO”), and the median annual total compensation of our employees. The Company believes that the ratio of pay included in this information is a reasonable estimate calculated in a manner consistent with Item 402(u) of RegulationS-K. As of December 31, 2017: The median annual total compensation of all employees of our company (other than the CEO) was $60,078; and The annual total compensation of our CEO, as reported in the Summary Compensation Table included on page 54, was $8,688,292. Based on this information, for 2017 the ratio of the annual total compensation for our CEO to the median of the annual total compensation of our employees was 145 to 1. In order to determine this ratio, we first identified one of our employees as the median employee. Since only 11 percent of our employees receive equity compensation, we considered total cash compensation as a consistently applied compensation measure. As allowed by the rules, we excluded our CEO and our 13 employees located outside the United States (11 in Canada and 2 in the United Kingdom) who constitute less than 1 percent of our 18,757 employee base. We then examined the total cash compensation (salary, wages, and bonus) for the remaining employees who were employed on December 31, 2017, as reflected in our payroll records and reported to the Internal Revenue Service on FormW-2 for 2017. In making this examination we annualized the salary of approximately 2,909 full-time employees hired in 2017 who did not work the entire year. We did not annualize the pay of any other type of employee (i.e. part-time,co-ops, etc.) or make any other adjustments to the payroll data. Once we identified the median employee, we then compared all elements of that employee’s 2017 compensation in accordance with the requirements of Item 402(c)(2)(x) of RegulationS-K; the same methodology we used for our named executive officers in the 2017 Summary Compensation Table on page 54 of this proxy statement, to comparable total compensation of our CEO in order to determine the ratio as shown below: | | | | | | | | | | | | | | | | Chairman, President and CEO | | Median employee | Base salary | | | | $1,000,064 | | | | | $52,892 | | Stock awards | | | | $4,526,248 | | | | | $0 | | Option awards | | | | $798,750 | | | | | $0 | | Non-equity incentive plan compensation | | | | $2,000,000 | | | | | $2,800 | | Change in pension value/Nonqualified deferred compensation earnings | | | | $0 | | | | | $0 | | All other compensation | | | | $363,230 | | | | | $4,386 | | TOTAL | | | | $8,688,292 | | | | | $60,078 | | CEO pay ratio | | | | 145 : 1 | |
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| | | CEO PAY RATIO | | ![LOGO](https://files.docoh.com/DEF 14A/0001193125-18-072083/g500098g38t41.jpg) |
December 31, 2017 was the date selected to identify the “median employee” because it is the date consistent with the rest of the discussion included in this proxy statement and because our employee base does not materially change at any point during the year. As stated earlier in this discussion, we believe compensation must be competitive to attract and retain essential talent, to reward high performance, and to be internally equitable. Our expected total compensation opportunities for our employees are specific to the role they hold at the Company and generally reflect market median pay levels for our broader base of employees and median pay levels of our peer group for our executives, with variations based on specific talent needs, experience, and other internal factors. We believe that actual total compensation should vary with the performance of the organization, such that outstanding performance results in above-market compensation. | | | | | | | Fifth Third Bancorp | 2018 Proxy Statement | | 53 |
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| | COMPENSATION OF NAMED EXECUTIVE OFFICERS |
Summary Compensation Table.The table below summarizes the compensation awarded, paid to, or earned by the Company’s Named Executive Officers during 2013-2015.2015-2017. The amounts in the Stock Awards and Option Awards columns indicate the grant date fair value associated with all grants awarded in the corresponding year and do not correspond with the amounts that the Named Executive Officers may eventually realize with respect to these awards. The benefit, if any, actually received from these awards will depend upon the future value of our common stock. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2015 Summary Compensation Table | | Name & Principal Position | | Year | | | Salary ($) | | | Bonus ($)(1) | | | Stock Awards ($)(2)(3) | | | Option Awards ($)(2) | | | Non-Equity Incentive Plan Compensation ($)(4) | | | Change in Pension Value & Nonqualified Deferred Compensation Earnings ($)(5) | | | All Other Compensation ($)(6) | | | Total ($) | | Greg D. Carmichael President and Chief Executive Officer | | | 2015 | | | $ | 806,986 | | | $ | 0 | | | $ | 3,748,629 | | | $ | 308,577 | | | $ | 1,336,000 | | | $ | 0 | | | $ | 250,858 | | | $ | 6,451,050 | | | | 2014 | | | $ | 709,203 | | | $ | 0 | | | $ | 1,385,816 | | | $ | 537,497 | | | $ | 935,459 | | | $ | 0 | | | $ | 345,374 | | | $ | 3,913,349 | | | | 2013 | | | $ | 695,447 | | | $ | 0 | | | $ | 1,505,406 | | | $ | 644,998 | | | $ | 1,151,720 | | | $ | 0 | | | $ | 375,913 | | | $ | 4,373,484 | | Kevin T. Kabat, Vice Chairman and retired Chief Executive Officer | | | 2015 | | | $ | 1,099,768 | | | $ | 0 | | | $ | 4,249,989 | | | $ | 749,998 | | | $ | 1,545,000 | | | $ | 0 | | | $ | 330,725 | | | $ | 7,975,480 | | | | 2014 | | | $ | 1,046,997 | | | $ | 0 | | | $ | 3,222,806 | | | $ | 1,249,999 | | | $ | 1,545,000 | | | $ | 120,800 | | | $ | 241,794 | | | $ | 7,427,396 | | | | 2013 | �� | | $ | 1,024,227 | | | $ | 0 | | | $ | 3,500,933 | | | $ | 1,499,998 | | | $ | 1,850,000 | | | $ | 0 | | | $ | 289,711 | | | $ | 8,164,869 | | Tayfun Tuzun Executive Vice President and Chief Financial Officer | | | 2015 | | | $ | 452,632 | | | $ | 0 | | | $ | 688,494 | | | $ | 121,500 | | | $ | 800,000 | | | $ | 0 | | | $ | 95,681 | | | $ | 2,158,307 | | | | 2014 | | | $ | 425,006 | | | $ | 0 | | | $ | 580,111 | | | $ | 224,998 | | | $ | 367,420 | | | $ | 0 | | | $ | 58,114 | | | $ | 1,655,649 | | | | 2013 | | | $ | 313,365 | | | $ | 0 | | | $ | 175,050 | | | $ | 74,998 | | | $ | 315,000 | | | $ | 0 | | | $ | 46,875 | | | $ | 925,288 | | Lars C. Anderson, Executive Vice President and Chief Operating Officer | | | 2015 | | | $ | 272,597 | | | $ | 3,750,000 | | | $ | 2,999,992 | | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 60,159 | | | $ | 7,082,748 | | Timothy N. Spence, Executive Vice President and Chief Strategy Officer | | | 2015 | | | $ | 131,541 | | | $ | 712,829 | | | $ | 3,674,982 | | | $ | 0 | | | $ | 217,230 | | | $ | 0 | | | $ | 2,372 | | | $ | 4,738,954 | | Frank R. Forrest, Executive Vice President and Chief Risk Officer | | | 2015 | | | $ | 528,093 | | | $ | 0 | | | $ | 1,264,977 | | | $ | 135,001 | | | $ | 750,000 | | | $ | 0 | | | $ | 109,627 | | | $ | 2,787,698 | | | | 2014 | | | $ | 500,011 | | | $ | 0 | | | $ | 644,565 | | | $ | 250,001 | | | $ | 455,002 | | | $ | 0 | | | $ | 100,600 | | | $ | 1,950,179 | | | | 2013 | | | $ | 144,234 | | | $ | 1,150,000 | | | $ | 674,999 | | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 85,168 | | | $ | 2,054,401 | | Daniel T. Poston, former Executive Vice President and Chief Strategy and Administrative Officer | | | 2015 | | | $ | 495,073 | | | $ | 0 | | | $ | 988,110 | | | $ | 174,378 | | | $ | 0 | | | $ | 0 | | | $ | 2,155,435 | | | $ | 3,812,996 | | | | 2014 | | | $ | 544,322 | | | $ | 0 | | | $ | 741,815 | | | $ | 287,718 | | | $ | 540,000 | | | $ | 0 | | | $ | 287,229 | | | $ | 2,401,084 | | | | 2013 | | | $ | 530,281 | | | $ | 0 | | | $ | 927,737 | | | $ | 397,500 | | | $ | 562,500 | | | $ | 0 | | | $ | 306,454 | | | $ | 2,724,472 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2017 Summary Compensation Table | | Name & Principal Position | | Year | | | Salary ($) | | | Bonus ($)(1) | | | Stock Awards ($)(2) | | | Option Awards ($)(3) | | | Non-Equity Incentive Plan Compensation ($)(4) | | | All Other Compensation ($)(5) | | | Total ($) | | Greg D. Carmichael, Chairman, President and Chief Executive Officer | | | 2017 | | | | $1,000,064 | | | | $0 | | | | $4,526,248 | | | | $798,750 | | | | $2,000,000 | | | | $363,230 | | | | $8,688,292 | | | | 2016 | | | | $994,287 | | | | $0 | | | | $3,612,503 | | | | $637,501 | | | | $2,000,000 | | | | $310,790 | | | | $7,555,081 | | | | 2015 | | | | $806,986 | | | | $0 | | | | $3,748,629 | | | | $308,577 | | | | $1,336,000 | | | | $250,858 | | | | $6,451,050 | | Tayfun Tuzun, | | | 2017 | | | | $553,426 | | | | $0 | | | | $1,190,006 | | | | $209,997 | | | | $630,000 | | | | $129,575 | | | | $2,713,004 | | Executive Vice President | | | 2016 | | | | $519,342 | | | | $0 | | | | $849,999 | | | | $150,001 | | | | $900,000 | | | | $127,359 | | | | $2,546,701 | | and Chief Financial Officer | | | 2015 | | | | $452,632 | | | | $0 | | | | $688,494 | | | | $121,500 | | | | $800,000 | | | | $95,681 | | | | $2,158,307 | | Lars C. Anderson, | | | 2017 | | | | $686,943 | | | | $0 | | | | $1,444,996 | | | | $255,004 | | | | $637,500 | | | | $251,669 | | | | $3,276,112 | | Executive Vice President
| | | 2016 | | | | $675,002 | | | | $0 | | | | $1,445,007 | | | | $255,001 | | | | $900,000 | | | | $223,111 | | | | $3,498,121 | | and Chief Operating Officer | | | 2015 | | | | $272,597 | | | | $3,750,000 | | | | $2,999,992 | | | | $0 | | | | $0 | | | | $60,159 | | | | $7,082,748 | | Timothy N. Spence, Executive Vice President and Head of Payments, Strategy and Digital Solutions | | | 2017 | | | | $461,950 | | | | $0 | | | | $1,359,999 | | | | $239,999 | | | | $715,000 | | | | $318,772 | | | | $3,095,720 | | | | 2016 | | | | $450,008 | | | | $12,200 | | | | $1,020,008 | | | | $179,999 | | | | $900,000 | | | | $252,621 | | | | $2,814,836 | | | | 2015 | | | | $131,541 | | | | $712,829 | | | | $3,674,982 | | | | $0 | | | | $217,230 | | | | $2,372 | | | | $4,738,954 | | Frank R. Forrest, Executive Vice President and Chief Risk Officer | | | 2017 | | | | $534,796 | | | | $0 | | | | $1,190,006 | | | | $209,997 | | | | $600,000 | | | | $148,245 | | | | $2,683,044 | | | | 2016 | | | | $519,713 | | | | $0 | | | | $849,999 | | | | $150,001 | | | | $900,000 | | | | $142,614 | | | | $2,562,327 | | | | 2015 | | | | $528,093 | | | | $0 | | | | $1,264,977 | | | | $135,001 | | | | $750,000 | | | | $109,627 | | | | $2,787,698 | |
(1) | The amount shown for Mr. Anderson includes a $3,000,000 signing bonus and a $750,000 VCP(1) The amount shown for Mr. Anderson in 2015 includes a $3 million signing bonus and a $750,000 Variable Compensation Plan payment guaranteed as part of his new hire offer. The amounts shown for Mr. Spence in 2015 and 2016 comprise a signing bonus payable over two years as part of his new hire offer. The amount shown for Mr. Spence is a signing bonus as part of his new hire offer. The amount shown for Mr. Forrest in 2013 includes a $650,000 signing bonus and a $500,000 VCP payment guaranteed as part of his new hire offer. |
(2) | Amounts reflect the aggregate grant date fair value of awards granted during the year valued in accordance with statement accounting principles generally accepted in the United States of America. Assumptions used in determining fair value are disclosed in Note 24 “Stock-Based Compensation” located on pages 149-152 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2015. |
COMPENSATION OF NAMED EXECUTIVE OFFICERS AND DIRECTORS(2) The values included for performance share awards for 2017 in both the Summary Compensation Table and the table below reflect the grant date fair value of $26.52 which was also the closing price on the February 3, 2017 grant date and the price used to calculate the number of performance shares awarded. The values shown for performance share awards for 2016 reflect the grant date fair value of $14.87 which was also the closing price on the February 12, 2016 grant date and the price used to calculate the number of performance shares awarded. The values shown for performance share awards for 2015 reflect the grant date fair value of $18.78 which was also the closing price on the February 11, 2015 grant date and the price used to calculate the number of performance shares awarded. Fair value for 2015, 2016, and 2017 performance share awards assume target performance achievement as of the date of grant. Fair values assuming maximum performance as of the date of grant are as follows:
| | | | | | | Executive | | Fair Value at Maximum Performance | | 2015 | | 2016 | | 2017 | Greg D. Carmichael | | $1,388,612 | | $2,868,758 | | $3,594,362 | Tayfun Tuzun | | $546,752 | | $674,994 | | $945,014 | Lars C. Anderson | | n/a | | $1,147,503 | | $1,147,494 | Timothy N. Spence | | n/a | | $810,006 | | $1,080,000 | Frank R. Forrest | | $607,486 | | $674,994 | | $945,014 |
(3) Amounts reflect the aggregate grant date fair value of awards granted during the year valued in accordance with statement of accounting principles generally accepted in the United States. Assumptions used in determining fair value are disclosed in note 24 “Stock Based Compensation” located on pages 156-159 of the Company’s Annual Report on Form10-K for the year ended December 31, 2017. (3) | The values shown for performance share awards for 2015 in both the Summary Compensation Table and the table below reflect the grant date fair value of $18.78 which was also the closing price on the February 11, 2015 grant date. The number of performance shares awarded was also calculated using this value. The values shown for performance share awards for 2014 reflect the grant date fair value of $15.61 per share for these awards. The grant date closing stock price on April 15, 2014 was $21.63. However, in prior years, the number of performance shares awarded was calculated using the 30-day average closing stock price prior to the April 1, 2014 start of the performance period. That 30-day average stock price was $22.34 in 2014. The values shown for 2013 reflect the grant date fair value of $16.15 per share which is also the grant date closing stock price on April 16, 2013. However, in prior years, the number of performance shares awarded was calculated using the 30-day average closing stock price prior to the April 1, 2013 start of the performance period. That 30-day average stock price was $16.14 in 2013. Fair value for 2015, 2014, and 2013 performance share awards assume target performance achievement as of the date of grant. Upon separation from the Company Mr. Poston’s awards were prorated for time served during the performance period. Fair values assuming maximum performance as of the date of grant are as follows: | | | |
| | | | | | | | | | | | | Fair Value at Maximum Performance | | Executive | | | 2013 | | | | 2014 | | | | 2015 | | Greg D. Carmichael | | $ | 1,290,805 | | | $ | 788,711 | | | $ | 1,388,612 | | Kevin T. Kabat | | $ | 3,001,865 | | | $ | 1,834,214 | | | $ | 3,374,991 | | Tayfun Tuzun | | $ | 150,098 | | | $ | 330,152 | | | $ | 546,752 | | Lars C. Anderson | | | n/a | | | | n/a | | | | n/a | | Timothy N. Spence | | | n/a | | | | n/a | | | | n/a | | Frank R. Forrest | | | n/a | | | $ | 366,843 | | | $ | 607,486 | | Daniel T. Poston | | $ | 662,893 | | | $ | 211,110 | | | $ | 196,176 | |
(4)54 | Amounts reflect the VCP award paid in cash to each NEO for 2015 performance. Mr. Anderson’s VCP payment amount was guaranteed at $750,000 as part of his new hire package. Mr. Spence’s VCP payment was prorated for the time served in his role during 2015. Mr. Poston did not receive a VCP payment for 2015 performance as he separated from the Company in October 2015. |
(5) | Amounts reflect the change in pension value only. The Company has a nonqualified deferred compensation plan in which the executives do not receive any above-market or preferable earnings. The earnings received are disclosed in the “Nonqualified Deferred Compensation” table. |
(6) | The amounts reflected in the All Other Compensation column consist of the benefits provided to the Company’s Named Executive Officers as described above under “Compensation Discussion and Analysis – Executive Benefits and Perquisites.” The following table reflects the costs of these benefits for 2015: |
| | | | | | | | | | | | | | | | | | | | | | | | | Name | | Perquisites and Other Personal Benefits | | | Registrant Contributions to Defined Contribution Plans | | | Tax Reimbursements & Insurance Premiums | | | Severance | | | Other(H) | | | Total | | Greg D. Carmichael | | $ | 25,127 | (A) | | $ | 127,171 | | | $ | 512 | | | $ | 0 | | | $ | 98,048 | | | $ | 250,858 | | Kevin T. Kabat | | $ | 10,359 | (B) | | $ | 190,334 | | | $ | 720 | | | $ | 0 | | | $ | 129,312 | | | $ | 330,725 | | Tayfun Tuzun | | $ | 9,043 | (C) | | $ | 64,929 | | | $ | 307 | | | $ | 0 | | | $ | 21,402 | | | $ | 95,681 | | Lars C. Anderson | | $ | 59,547 | (D) | | $ | 0 | | | $ | 487 | | | $ | 0 | | | $ | 125 | | | $ | 60,159 | | Timothy N. Spence | | $ | 2,047 | (E) | | $ | 0 | | | $ | 325 | | | $ | 0 | | | $ | 0 | | | $ | 2,372 | | Frank R. Forrest | | $ | 3,447 | (F) | | $ | 74,017 | | | $ | 361 | | | $ | 0 | | | $ | 31,802 | | | $ | 109,627 | | Daniel T. Poston | | $ | 6,750 | (G) | | $ | 24,924 | | | $ | 328 | | | $ | 2,050,000 | | | $ | 73,433 | | | $ | 2,155,435 | |
| (A) Fifth Third Bancorp | 2018 Proxy Statement | | |
| | | The amount shown for Mr. Carmichael represents trust and estate planning fees, parking, the incremental cost of travel and entertainment benefits provided to Mr. Carmichael’s spouse at business functions, an executive physical, and a personal computer.COMPENSATION OF NAMED EXECUTIVE OFFICERS
| | ![LOGO](https://files.docoh.com/DEF 14A/0001193125-18-072083/g500098g38t41.jpg) |
(4) Amounts reflect the Variable Compensation Plan award paid in cash to each NEO. (5) The amounts reflected in the All Other Compensation column consist of the benefits provided to the Company’s Named Executive Officers as described above under “Compensation Discussion and Analysis—Executive Benefits and Perquisites.” The following table reflects the costs of these benefits for 2017: | | | | | | | | | | | | | Executive | | Perquisites and Other Personal Benefits | | Registrant Contributions to Defined Contribution Plans | | Tax Reimbursements(F) & Insurance Premiums | | Severance | | Other(G) | | Total | Greg D. Carmichael | | $11,395(A) | | $210,004 | | $672 | | $0 | | $141,159 | | $363,230 | Tayfun Tuzun | | $5,900(B) | | $96,179 | | $356 | | $0 | | $27,140 | | $129,575 | Lars C. Anderson | | $14,809(C) | | $111,086 | | $454 | | $0 | | $125,320 | | $251,669 | Timothy N. Spence | | $113,979(D) | | $95,336 | | $303 | | $0 | | $109,154 | | $318,772 | Frank R. Forrest | | $2,400(E) | | $100,436 | | $350 | | $0 | | $45,059 | | $148,245 |
(A) The amount shown for Mr. Carmichael represents trust and estate planning fees, parking, an executive physical, and the incremental cost of travel and entertainment benefits provided to Mr. Carmichael’s guest at business functions. (B) The amount shown for Mr. Tuzun represents trust and estate planning fees and parking. (C) The amount shown for Mr. Anderson represents trust and estate planning fees, parking, and the incremental cost of travel and entertainment benefits provided to Mr. Anderson’s guest at business functions. (D) The amount shown for Mr. Spence represents parking, an executive physical, relocation expenses, and $96,075 in housing and commuting expenses. (E) The amount shown for Mr. Forrest represents parking. (F) Fifth Third does not provide tax reimbursements to executive officers. The amounts shown in this column represent payments for insurance premiums only. (G) The amount shown for Mr. Carmichael represents wellness rewards, a company Health Savings Account contribution, and dividends of $138,659 paid on unvested restricted stock awards. The amount shown for Mr. Tuzun represents a company Health Savings Account contribution, and dividends of $26,640 paid on unvested restricted stock awards. The amount shown for Mr. Anderson represents wellness rewards, a company Health Savings Account contribution, and dividends of $122,820 paid on unvested restricted stock awards. The amount shown for Mr. Spence represents wellness rewards and dividends of $107,154 paid on unvested restricted stock awards. The amount shown for Mr. Forrest represents wellness rewards, a company Health Savings Account contribution, and dividends of $42,559 paid on unvested restricted stock awards. | | | | | | | (B)Fifth Third Bancorp | 2018 Proxy Statement | | 55 |
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| | The amount shown for Mr. Kabat represents parking, an executive physical and the incremental cost of travel and entertainment benefits provided to Mr. Kabat’s spouse at business functions.COMPENSATION OF NAMED EXECUTIVE OFFICERS
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| (C) | The amount shown for Mr. Tuzun represents trust and estate planning fees, parking, and a personal computer.
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| (D) | The amount shown for Mr. Anderson represents trust and estate planning fees, parking, a one-time country club initiation fee, expenses associated with his move and a personal computer.
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| (E) | The amount shown for Mr. Spence represents parking and a personal computer.
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COMPENSATION OF NAMED EXECUTIVE OFFICERS AND DIRECTORS
| (F) | The amount shown for Mr. Forrest represents parking and a personal computer.
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| (G) | The amount shown for Mr. Poston represents trust and estate planning fees and parking.
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| (H) | The amount shown for Mr. Carmichael represents wellness rewards, a company Health Savings Account contribution, dividends of $58,048 paid on unvested restricted stock and retainer fees of $40,000 from Vantiv, Inc. for serving on the Vantiv Board of Directors. The amount shown for Mr. Kabat represents wellness rewards, a company Health Savings Account contribution and dividends of $125,812 paid on unvested restricted stock. The amount shown for Mr. Tuzun represents wellness rewards, a company Health Savings Account contribution, and dividends of $17,902 paid on unvested restricted stock. The amount shown for Mr. Anderson represents a company Health Savings Account contribution. The amount shown for Mr. Forrest represents wellness rewards, a company Health Savings Account contribution, and dividends of $28,302 paid on unvested restricted stock. The amount shown for Mr. Poston represents wellness rewards, a company Health Savings Account contribution, dividends of $31,100 paid on unvested restricted stock and retainer fees of $40,000 from Vantiv, Inc. for serving on the Vantiv Board of Directors.
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Grants of Plan-Based Awards.The following table illustrates the long-term equity-based incentive compensation awards made to Named Executive Officers during 2015.2017. The table reflects the full grant date fair value of awards made in 2015. 2017. On February 11, 2015,3, 2017, each of the Named Executive Officers (except Messrs. Anderson and Spence), received grants of performance shares that will vest three years from the grant date (contingent on meeting the performance threshold), restricted stockSARs that will vest in three equal annual installments from the date of grant, and SARsrestricted stock units that will vest in fourthree equal annual installments from the date of grant. Dividends are paid on unvested restricted stock;stock units. None of these awards have beenre-priced or modified. Performance shares are reported in the Estimated Future Payouts Under Equity Incentive Plan Award columns below; restricted stock units are reported in the All Other Stock Awards: Number of Shares of Stock or Units column below. Nonebelow; and SARs are reported in the All Other Option Awards: Number of these awards have been repriced or modified. COMPENSATION OF NAMED EXECUTIVE OFFICERS AND DIRECTORSSecurities Underlying Options column below.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2017 Grants of Plan-Based Awards | | Name | | Grant Date(1) | | | Date Grant Approved by Compensation Committee | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(2) | | | Estimated Future Payouts Under Equity Incentive Plan Awards(3) | | | All Other Stock Awards: Number of Shares of Stock or Units (#) | | | All Other Option Awards: Number of Securities Underlying Options (#) | | | Exercise or Base Price of Option Awards ($ / Sh) | | | Grant Date Fair Value of Stock and Option Awards(4) ($) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Number of Units | | | Threshold ($) | | | Target ($) | | | Maximum ($) | | | Number of Units | | | Threshold (#) | | | Target (#) | | | Maxi- mum (#) | | | | | | Greg D. Carmichael | | | | | | | | | | | | | | | — | | | | — | | | $ | 3,200,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2/3/2017 | | | | 2/3/2017 | | | | | | | | | | | | | | | | | | | | 90,356 | | | | 45,178 | | | | 90,356 | | | | 135,534 | | | | | | | | | | | | | | | | $2,396,241 | | | | 2/3/2017 | | | | 2/3/2017 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 93,421 | | | $ | 26.52 | | | | $798,750 | | | | 2/3/2017 | | | | 2/3/2017 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 80,317 | | | | | | | | | | | | $2,130,007 | | Tayfun Tuzun | | | | | | | | | | | | | | | — | | | | — | | | $ | 1,000,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2/3/2017 | | | | 2/3/2017 | | | | | | | | | | | | | | | | | | | | 23,756 | | | | 11,878 | | | | 23,756 | | | | 35,634 | | | | | | | | | | | | | | | | $630,009 | | | | 2/3/2017 | | | | 2/3/2017 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 24,561 | | | $ | 26.52 | | | | $209,997 | | | | 2/3/2017 | | | | 2/3/2017 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 21,116 | | | | | | | | | | | | $559,996 | | Lars C. Anderson | | | | | | | | | | | | | | | — | | | | — | | | $ | 1,350,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2/3/2017 | | | | 2/3/2017 | | | | | | | | | | | | | | | | | | | | 28,846 | | | | 14,423 | | | | 28,846 | | | | 43,269 | | | | | | | | | | | | | | | | $764,996 | | | | 2/3/2017 | | | | 2/3/2017 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 29,825 | | | $ | 26.52 | | | | $255,004 | | | | 2/3/2017 | | | | 2/3/2017 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 25,641 | | | | | | | | | | | | $679,999 | | Timothy N. Spence | | | | | | | | | | | | | | | — | | | | — | | | $ | 1,100,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2/3/2017 | | | | 2/3/2017 | | | | | | | | | | | | | | | | | | | | 27,149 | | | | 13,575 | | | | 27,149 | | | | 40,724 | | | | | | | | | | | | | | | | $719,991 | | | | 2/3/2017 | | | | 2/3/2017 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 28,070 | | | $ | 26.52 | | | | $239,999 | | | | 2/3/2017 | | | | 2/3/2017 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 24,133 | | | | | | | | | | | | $640,007 | | Frank R. Forrest | | | | | | | | | | | | | | | — | | | | — | | | $ | 1,000,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2/3/2017 | | | | 2/3/2017 | | | | | | | | | | | | | | | | | | | | 23,756 | | | | 11,878 | | | | 23,756 | | | | 35,364 | | | | | | | | | | | | | | | | $630,009 | | | | 2/3/2017 | | | | 2/3/2017 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 24,561 | | | $ | 26.52 | | | | $209,997 | | | | 2/3/2017 | | | | 2/3/2017 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 21,116 | | | | | | | | | | | | $559,996 | |
(1) Awards were made under the 2014 Incentive Compensation Plan as approved by shareholders on April 15, 2014. (2) NEOs do not have assigned Variable Compensation Plan targets or thresholds; rather, each NEO has an incentive opportunity range up to an established maximum. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2015 Grants of Plan-Based Awards | | | | | | | | | | Estimated Future Payouts Under Non- Equity Incentive Plan Awards(2) | | | Estimated Future Payouts Under Equity Incentive Plan Awards(3) | | | All Other Stock Awards: Number of Shares of Stock or Units (#) | | | All Other Option Awards: Number of Securities Underlying Options (#) | | | Exercise or Base Price of Option Awards ($ / Sh) | | | Grant Date Fair Value of Stock and Option Awards(4) ($) | | Name | | Grant Date(1) | | | Date Grant Approved by Compensation Committee | | | No. of Units | | Threshold ($) | | | Target ($) | | | Maximum ($) | | | Number of Units | | | Threshold (#) | | | Target (#) | | | Maximum (#) | | | | | | Greg D. Carmichael | | | | | | | | | | | | $ | 0 | | | | — | | | $ | 2,300,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2/11/2015 | | | | 2/11/2015 | | | | | | | | | | | | | | | | | | 49,294 | | | | 12,324 | | | | 49,294 | | | | 73,941 | | | | | | | | | | | | | | | $ | 925,741 | | | | | 2/11/2015 | | | | 2/11/2015 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 56,933 | | | $ | 18.78 | | | $ | 308,577 | | | | | 2/11/2015 | | | | 2/11/2015 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 43,817 | | | | | | | | | | | $ | 822,883 | | | | | 11/2/2015 | | | | 11/2/2015 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 102,302 | | | | | | | | | | | $ | 2,000,005 | | Kevin T. Kabat | | | | | | | | | | | | $ | 0 | | | | — | | | $ | 3,200,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2/11/2015 | | | | 2/11/2015 | | | | | | | | | | | | | | | | | | 119,808 | | | | 29,952 | | | | 119,808 | | | | 179,712 | | | | | | | | | | | | | | | $ | 2,249,994 | | | | | 2/11/2015 | | | | 2/11/2015 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 138,376 | | | $ | 18.78 | | | $ | 749,998 | | | | | 2/11/2015 | | | | 2/11/2015 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 106,496 | | | | | | | | | | | $ | 1,999,995 | | Tayfun Tuzun | | | | | | | | | | | | $ | 0 | | | | — | | | $ | 950,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2/11/2015 | | | | 2/11/2015 | | | | | | | | | | | | | | | | | | 19,409 | | | | 4,852 | | | | 19,409 | | | | 29,114 | | | | | | | | | | | | | | | $ | 364,501 | | | | | 2/11/2015 | | | | 2/11/2015 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 22,417 | | | $ | 18.78 | | | $ | 121,500 | | | | | 2/11/2015 | | | | 2/11/2015 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 17,252 | | | | | | | | | | | $ | 323,993 | | Lars C. Anderson | | | 10/1/2015 | | | | 10/1/2015 | | | | | $ | 0 | | | | — | | | $ | 1,350,000 | | | | | | | | | | | | | | | | | | | | 158,144 | | | | | | | | | | | $ | 2,999,992 | | Timothy N. Spence | | | 10/1/2015 | | | | 10/1/2015 | | | | | $ | 0 | | | | — | | | $ | 950,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 10/1/2015 | | | | 10/1/2015 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 35,582 | | | | | | | | | | | $ | 674,990 | | Frank R. Forrest | | | 2/11/2015 | | | | 2/11/2015 | | | | | $ | 0 | | | | — | | | $ | 950,000 | | | | 21,565 | | | | 5,391 | | | | 21,565 | | | | 32,348 | | | | | | | | | | | | | | | $ | 404,991 | | | | | 2/11/2015 | | | | 2/11/2015 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 24,908 | | | $ | 18.78 | | | $ | 135,001 | | | | | 2/11/2015 | | | | 2/11/2015 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 19,169 | | | | | | | | | | | $ | 359,994 | | | | | 10/1/2015 | | | | 10/1/2015 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 26,357 | | | | | | | | | | | $ | 499,992 | | Daniel T. Poston | | | 2/11/2015 | | | | 2/11/2015 | | | | | $ | 0 | | | | — | | | $ | 0 | | | | 27,855 | | | | 6,964 | | | | 27,855 | | | | 41,783 | | | | | | | | | | | | | | | $ | 523,117 | | | | | 2/11/2015 | | | | 2/11/2015 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 32,173 | | | $ | 18.78 | | | $ | 174,378 | | | | | 2/11/2015 | | | | 2/11/2015 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 24,760 | | | | | | | | | | | $ | 464,993 | |
(3) Comprises performance shares that are settled in Company common stock, only after threshold performance or greater is achieved. (4) Grant Date Fair Value of Option Awards granted on February 3, 2017, calculated as the total number of shares multiplied by $8.55. Grant Date Fair Value of Stock Awards granted (including performance shares) on February 3, 2017, calculated as the total number of shares multiplied by $26.52. (1) | Awards were made under the 2014 Incentive Compensation Plan as approved by shareholders on April 15, 2014 | | | | 56 | | Fifth Third Bancorp | 2018 Proxy Statement | | |
| | | COMPENSATION OF NAMED EXECUTIVE OFFICERS (2) | NEOs do not have assigned annual incentive targets; rather, each NEO has an incentive opportunity range up to an established maximum. | ![LOGO](https://files.docoh.com/DEF 14A/0001193125-18-072083/g500098g38t41.jpg) |
(3) | Includes performance shares that are settled in Company stock, only after threshold performance or greater is achieved |
(4) | Grant Date Fair Value of Option Awards granted on February 11, 2015 calculated as [total number of shares] multiplied by $5.42. Grant Date Fair Value of Stock Awards granted (including performance shares) on February 11, 2015 calculated as [total number of shares] multiplied by $18.78 Grant Date Fair Value of Stock Awards granted on October 1, 2015 calculated as [total number of shares] multiplied by $18.97 Grant Date Fair Value of Stock Awards granted on November 2, 2015 calculated as [total number of shares] multiplied by $19.55 |
Upon separation, Daniel Poston’s 2015 performance share award was prorated for time served during the performance period resulting in 6,964 performance shares remaining. Reflected above is the original grant date value of the award on the grant date.
COMPENSATION OF NAMED EXECUTIVE OFFICERS AND DIRECTORS
Outstanding Equity Awards atYear-End.The following table outlines outstanding long-term equity-based incentive compensation awards for the Named Executive Officers as of December 31, 2015.2017. Each outstanding award is shown separately. The Option AwardAwards columns reflect stock appreciation rights. The Stock AwardAwards columns include restricted stock awards, restricted stock units, and performance share awards,shares, with performance share awardsshares listed in the Equity Incentive Plan Award columns. Performance shares settle entirely in shares of Company common stock only after threshold performance or greater is achieved. The vesting schedule for each award is described in the footnotes to this table. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Outstanding Equity Awards at December 31, 2015 | | | | Option Awards | | | Stock Awards(19) | | Name | | Number of Securities Underlying Unexercised Options (#) Exercisable | | | Number of Securities Underlying Unexercised Options (#) Unexercisable | | | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | | | Option Exercise Price ($) | | | Option Expiration Date | | | Number of Shares or Units of Stock That Have Not Vested (#) | | | Market Value of Shares or Units of Stock That Have Not Vested ($) | | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | | Greg D. Carmichael | | | 60,000 | | | | — | | | | | | | | — | | | $ | 37.58 | | | | 1/23/2016 | | | | — | | | | | | | | — | | | | — | | | | | | | | — | | | | | 71,100 | | | | — | | | | | | | | — | | | $ | 39.36 | | | | 4/7/2016 | | | | — | | | | | | | | — | | | | — | | | | | | | | — | | | | | 66,667 | | | | — | | | | | | | | — | | | $ | 38.27 | | | | 4/9/2017 | | | | — | | | | | | | | — | | | | — | | | | | | | | — | | | | | 84,615 | | | | — | | | | | | | | — | | | $ | 19.26 | | | | 4/15/2018 | | | | — | | | | | | | | — | | | | — | | | | | | | | — | | | | | 125,000 | | | | — | | | | (1) | | | | — | | | $ | 3.96 | | | | 4/21/2019 | | | | — | | | | | | | | — | | | | — | | | | | | | | — | | | | | 185,476 | | | | — | | | | | | | | — | | | $ | 13.36 | | | | 4/19/2021 | | | | — | | | | | | | | — | | | | — | | | | | | | | — | | | | | 177,306 | | | | 59,101 | | | | (2) | | | | — | | | $ | 14.36 | | | | 4/17/2022 | | | | — | | | | | | | | — | | | | — | | | | | | | | — | | | | | 70,724 | | | | 70,723 | | | | (3) | | | | — | | | $ | 16.15 | | | | 4/16/2023 | | | | — | | | | | | | | — | | | | — | | | | | | | | — | | | | | 20,578 | | | | 61,734 | | | | (4) | | | | — | | | $ | 21.63 | | | | 4/15/2024 | | | | — | | | | | | | | — | | | | — | | | | | | | | — | | | | | — | | | | 56,933 | | | | (5) | | | | — | | | $ | 18.78 | | | | 2/11/2025 | | | | — | | | | | | | | — | | | | — | | | | | | | | — | | | | | — | | | | — | | | | | | | | — | | | | — | | | | — | | | | 4,698 | | | | (7) | | | $ | 94,430 | | | | — | | | | | | | | — | | | | | — | | | | — | | | | | | | | — | | | | — | | | | — | | | | 17,748 | | | | (8) | | | $ | 356,735 | | | | — | | | | | | | | — | | | | | — | | | | — | | | | | | | | — | | | | — | | | | — | | | | 26,504 | | | | (10) | | | $ | 532,730 | | | | — | | | | | | | | — | | | | | — | | | | — | | | | | | | | — | | | | — | | | | — | | | | 43,817 | | | | (11) | | | $ | 880,722 | | | | — | | | | | | | | — | | | | | — | | | | — | | | | | | | | — | | | | — | | | | — | | | | 102,302 | | | | (15) | | | $ | 2,056,270 | | | | — | | | | | | | | — | | | | | — | | | | — | | | | | | | | — | | | | — | | | | — | | | | — | | | | | | | | — | | | | 39,963 | | | | (16) | | | $ | 803,256 | | | | | — | | | | — | | | | | | | | — | | | | — | | | | — | | | | — | | | | | | | | — | | | | 33,684 | | | | (17) | | | $ | 677,048 | | | | | — | | | | — | | | | | | | | — | | | | — | | | | — | | | | — | | | | | | | | — | | | | 49,294 | | | | (18) | | | $ | 990,809 | |
COMPENSATION OF NAMED EXECUTIVE OFFICERS AND DIRECTORS
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Outstanding Equity Awards at December 31, 2017 | | | | Option Awards | | | Stock Awards(15) | | Name | | 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 ($) | | | Option Expiration Date | | | Number of Shares or Units of Stock That Have Not Vested (#) | | | | | | Market Value of Shares or Units of Stock That Have Not Vested ($) | | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | | | | | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | | Greg D. Carmichael | | | 185,476 | | | | — | | | | | | | | — | | | $ | 13.36 | | | | 4/19/2021 | | | | — | | | | | | | | — | | | | — | | | | | | | | — | | | | | 236,407 | | | | — | | | | | | | | — | | | $ | 14.36 | | | | 4/17/2022 | | | | — | | | | | | | | — | | | | — | | | | | | | | — | | | | | 141,447 | | | | | | | | | | | | — | | | $ | 16.15 | | | | 4/16/2023 | | | | — | | | | | | | | — | | | | — | | | | | | | | — | | | | | 61,734 | | | | 20,578 | | | | (1 | ) | | | — | | | $ | 21.63 | | | | 4/15/2024 | | | | — | | | | | | | | — | | | | — | | | | | | | | — | | | | | 28,467 | | | | 28,466 | | | | (2 | ) | | | — | | | $ | 18.78 | | | | 2/11/2025 | | | | — | | | | | | | | — | | | | — | | | | | | | | — | | | | | 36,978 | | | | 110,934 | | | | (3 | ) | | | — | | | $ | 14.87 | | | | 2/12/2026 | | | | — | | | | | | | | — | | | | — | | | | | | | | — | | | | | — | | | | 93,421 | | | | (4 | ) | | | — | | | $ | 26.52 | | | | 2/3/2027 | | | | — | | | | | | | | — | | | | — | | | | | | | | — | | | | | — | | | | — | | | | | | | | — | | | | — | | | | — | | | | 14,604 | | | | (5 | ) | | | $443,085 | | | | — | | | | | | | | — | | | | | — | | | | — | | | | | | | | — | | | | — | | | | — | | | | 34,101 | | | | (6 | ) | | $ | 1,034,624 | | | | — | | | | | | | | — | | | | | — | | | | — | | | | | | | | — | | | | — | | | | — | | | | 76,208 | | | | (7 | ) | | $ | 2,312,151 | | | | — | | | | | | | | — | | | | | — | | | | — | | | | | | | | — | | | | — | | | | — | | | | 80,317 | | | | (8 | ) | | $ | 2,436,818 | | | | — | | | | | | | | — | | | | | — | | | | — | | | | | | | | — | | | | — | | | | — | | | | — | | | | | | | | — | | | | 49,294 | | | | (12 | ) | | $ | 1,495,580 | | | | | — | | | | — | | | | | | | | — | | | | — | | | | — | | | | — | | | | | | | | — | | | | 128,615 | | | | (13 | ) | | $ | 3,902,179 | | | | | — | | | | — | | | | | | | | — | | | | — | | | | — | | | | — | | | | | | | | — | | | | 90,356 | | | | (14 | ) | | $ | 2,741,401 | | Tayfun Tuzun | | | 4,615 | | | | — | | | | | | | | — | | | $ | 14.80 | | | | 4/20/2020 | | | | — | | | | | | | | — | | | | — | | | | | | | | — | | | | | 5,714 | | | | — | | | | | | | | — | | | $ | 13.36 | | | | 4/19/2021 | | | | — | | | | | | | | — | | | | — | | | | | | | | — | | | | | 29,551 | | | | — | | | | | | | | — | | | $ | 14.36 | | | | 4/17/2022 | | | | — | | | | | | | | — | | | | — | | | | | | | | — | | | | | 16,447 | | | | — | | | | | | | | — | | | $ | 16.15 | | | | 4/16/2023 | | | | — | | | | | | | | — | | | | — | | | | | | | | — | | | | | 25,842 | | | | 8,614 | | | | (1 | ) | | | — | | | $ | 21.63 | | | | 4/15/2024 | | | | — | | | | | | | | — | | | | — | | | | | | | | — | | | | | 11,209 | | | | 11,208 | | | | (2 | ) | | | — | | | $ | 18.78 | | | | 2/11/2025 | | | | — | | | | | | | | — | | | | — | | | | | | | | — | | | | | 8,701 | | | | 26,102 | | | | (3 | ) | | | — | | | $ | 14.87 | | | | 2/12/2026 | | | | — | | | | | | | | — | | | | — | | | | | | | | — | | | | | — | | | | 24,561 | | | | (4 | ) | | | — | | | $ | 26.52 | | | | 2/3/2027 | | | | — | | | | | | | | — | | | | — | | | | | | | | — | | | | | — | | | | — | | | | | | | | — | | | | — | | | | — | | | | 5,750 | | | | (5 | ) | | | $174,455 | | | | — | | | | | | | | — | | | | | — | | | | — | | | | | | | | — | | | | — | | | | — | | | | 17,931 | | | | (7 | ) | | | $544,027 | | | | — | | | | | | | | — | | | | | — | | | | — | | | | | | | | — | | | | — | | | | — | | | | 21,116 | | | | (8 | ) | | | $640,659 | | | | — | | | | | | | | — | | | | | — | | | | — | | | | | | | | — | | | | — | | | | — | | | | — | | | | | | | | — | | | | 19,409 | | | | (12 | ) | | | $588,869 | | | | | — | | | | — | | | | | | | | — | | | | — | | | | — | | | | — | | | | | | | | — | | | | 30,262 | | | | (13 | ) | | | $918,149 | | | | | — | | | | — | | | | | | | | — | | | | — | | | | — | | | | — | | | | | | | | — | | | | 23,756 | | | | (14 | ) | | | $720,757 | | Lars C. Anderson | | | 14,792 | | | | 44,373 | | | | (3 | ) | | | — | | | $ | 14.87 | | | | 2/12/2026 | | | | — | | | | | | | | — | | | | — | | | | | | | | — | | | | | — | | | | 29,825 | | | | (4 | ) | | | — | | | $ | 26.52 | | | | 2/3/2027 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | — | | | | — | | | | | | | | — | | | | — | | | | — | | | | 30,483 | | | | (7 | ) | | | $924,854 | | | | — | | | | | | | | — | | | | | — | | | | — | | | | | | | | — | | | | — | | | | — | | | | 25,641 | | | | (8 | ) | | | $777,948 | | | | — | | | | | | | | — | | | | | — | | | | — | | | | | | | | — | | | | — | | | | — | | | | 158,144 | | | | (9 | ) | | $ | 4,798,089 | | | | — | | | | | | | | — | | | | | — | | | | — | | | | | | | | — | | | | — | | | | — | | | | — | | | | | | | | — | | | | 51,446 | | | | (13 | ) | | $ | 1,560,872 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | — | | | | | | | | — | | | | 28,846 | | | | (14 | ) | | | $875,188 | |
| | | | | | | Fifth Third Bancorp | 2018 Proxy Statement | | 57 |
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| | COMPENSATION OF NAMED EXECUTIVE OFFICERS |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Outstanding Equity Awards at December 31, 2015 | | | | Option Awards | | | Stock Awards(19) | | Name | | Number of Securities Underlying Unexercised Options (#) Exercisable | | | Number of Securities Underlying Unexercised Options (#) Unexercisable | | | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | | | Option Exercise Price ($) | | | Option Expiration Date | | | Number of Shares or Units of Stock That Have Not Vested (#) | | | Market Value of Shares or Units of Stock That Have Not Vested ($) | | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | | Kevin T. Kabat | | | 60,000 | | | | — | | | | | | | | — | | | $ | 37.58 | | | | 1/23/2016 | | | | — | | | | | | | | — | | | | — | | | | | | | | — | | | | | 71,100 | | | | — | | | | | | | | — | | | $ | 39.36 | | | | 4/7/2016 | | | | — | | | | | | | | — | | | | — | | | | | | | | — | | | | | 233,333 | | | | — | | | | | | | | — | | | $ | 38.27 | | | | 4/9/2017 | | | | — | | | | | | | | — | | | | — | | | | | | | | — | | | | | 500,000 | | | | — | | | | | | | | — | | | $ | 40.10 | | | | 4/23/2017 | | | | — | | | | | | | | — | | | | — | | | | | | | | — | | | | | 269,231 | | | | — | | | | | | | | — | | | $ | 19.26 | | | | 4/15/2018 | | | | — | | | | | | | | — | | | | — | | | | | | | | — | | | | | 350,000 | | | | — | | | | (1) | | | | — | | | $ | 3.96 | | | | 4/21/2019 | | | | — | | | | | | | | — | | | | — | | | | | | | | — | | | | | 428,571 | | | | — | | | | | | | | — | | | $ | 13.36 | | | | 4/19/2021 | | | | — | | | | | | | | — | | | | — | | | | | | | | — | | | | | 398,937 | | | | 132,978 | | | | (2) | | | | — | | | $ | 14.36 | | | | 4/17/2022 | | | | — | | | | | | | | — | | | | — | | | | | | | | — | | | | | 164,474 | | | | 164,473 | | | | (3) | | | | — | | | $ | 16.15 | | | | 4/16/2023 | | | | — | | | | | | | | — | | | | — | | | | | | | | — | | | | | 47,856 | | | | 143,568 | | | | (4) | | | | | | | $ | 21.63 | | | | 4/15/2024 | | | | — | | | | | | | | — | | | | — | | | | | | | | — | | | | | — | | | | 138,376 | | | | (5) | | | | | | | $ | 18.78 | | | | 2/11/2025 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | — | | | | — | | | | | | | | — | | | | — | | | | — | | | | 7,361 | | | | (7) | | | $ | 147,956 | | | | — | | | | | | | | — | | | | | — | | | | — | | | | | | | | — | | | | — | | | | — | | | | 41,275 | | | | (8) | | | $ | 829,628 | | | | — | | | | | | | | — | | | | | — | | | | — | | | | | | | | — | | | | — | | | | — | | | | 61,636 | | | | (10) | | | $ | 1,238,884 | | | | — | | | | | | | | — | | | | | — | | | | — | | | | | | | | — | | | | — | | | | — | | | | 106,496 | | | | (11) | | | $ | 2,140,570 | | | | — | | | | | | | | — | | | | | — | | | | — | | | | | | | | — | | | | — | | | | — | | | | — | | | | | | | | — | | | | 92,937 | | | | (16) | | | $ | 1,868,034 | | | | | — | | | | — | | | | | | | | — | | | | — | | | | — | | | | — | | | | | | | | — | | | | 78,335 | | | | (17) | | | $ | 1,574,534 | | | | | — | | | | — | | | | | | | | — | | | | — | | | | — | | | | — | | | | | | | | — | | | | 119,808 | | | | (18) | | | $ | 2,408,141 | | Tayfun Tuzun | | | 3,923 | | | | — | | | | | | | | — | | | $ | 19.26 | | | | 4/15/2018 | | | | — | | | | | | | | — | | | | — | | | | | | | | — | | | | | 6,000 | | | | — | | | | (1) | | | | — | | | $ | 3.96 | | | | 4/21/2019 | | | | — | | | | | | | | — | | | | — | | | | | | | | — | | | | | 4,615 | | | | — | | | | | | | | — | | | $ | 14.80 | | | | 4/20/2020 | | | | — | | | | | | | | — | | | | — | | | | | | | | — | | | | | 5,714 | | | | — | | | | | | | | — | | | $ | 13.36 | | | | 4/19/2021 | | | | — | | | | | | | | — | | | | — | | | | | | | | — | | | | | 22,164 | | | | 7,387 | | | | 2) | | | | — | | | $ | 14.36 | | | | 4/17/2022 | | | | — | | | | | | | | — | | | | — | | | | | | | | — | | | | | 8,224 | | | | 8,223 | | | | (3) | | | | — | | | $ | 16.15 | | | | 4/16/2023 | | | | — | | | | | | | | — | | | | — | | | | | | | | — | | | | | 8,614 | | | | 25,842 | | | | (4) | | | | — | | | $ | 21.63 | | | | 4/15/2024 | | | | — | | | | | | | | — | | | | — | | | | | | | | — | | | | | — | | | | 22,417 | | | | (5) | | | | — | | | $ | 18.78 | | | | 2/11/2025 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | — | | | | — | | | | | | | | — | | | | — | | | | — | | | | 2,176 | | | | (6) | | | $ | 43,738 | | | | — | | | | | | | | — | | | | | — | | | | — | | | | | | | | — | | | | — | | | | — | | | | 783 | | | | (7) | | | $ | 15,738 | | | | — | | | | | | | | — | | | | | — | | | | — | | | | | | | | — | | | | — | | | | — | | | | 2,063 | | | | (8) | | | $ | 41,466 | | | | — | | | | | | | | — | | | | | — | | | | — | | | | | | | | — | | | | — | | | | — | | | | 11.094 | | | | (10) | | | $ | 222,989 | | | | — | | | | | | | | — | | | | | — | | | | — | | | | | | | | — | | | | — | | | | — | | | | 17,252 | | | | (11) | | | $ | 346,765 | | | | — | | | | | | | | — | | | | | — | | | | — | | | | | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 4,647 | | | | (16) | | | $ | 93,405 | | | | | — | | | | — | | | | | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 14,100 | | | | (17) | | | $ | 283,410 | | | | | — | | | | — | | | | | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 19,409 | | | | (18) | | | $ | 390,121 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Outstanding Equity Awards at December 31, 2017 | | | | Option Awards | | | Stock Awards(15) | | Name | | 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 ($) | | | Option Expiration Date | | | Number of Shares or Units of Stock That Have Not Vested (#) | | | | | | Market Value of Shares or Units of Stock That Have Not Vested ($) | | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | | | | | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | | Timothy N. Spence | | | 10,441 | | | | 31,322 | | | | (3 | ) | | | — | | | $ | 14.87 | | | | 2/12/2026 | | | | | | | | | | | | | | | | — | | | | | | | | — | | | | | — | | | | 28,070 | | | | (4 | ) | | | — | | | $ | 26.52 | | | | 2/3/2027 | | | | | | | | | | | | | | | | — | | | | | | | | — | | | | | — | | | | — | | | | | | | | — | | | | — | | | | — | | | | 21,517 | | | | (7) | | | | $652,826 | | | | — | | | | | | | | — | | | | | — | | | | — | | | | | | | | — | | | | — | | | | — | | | | 24,133 | | | | (8) | | | | $732,195 | | | | — | | | | | | | | — | | | | | — | | | | — | | | | | | | | — | | | | — | | | | — | | | | 11,859 | | | | (10) | | | | $359,802 | | | | — | | | | | | | | — | | | | | — | | | | — | | | | | | | | — | | | | — | | | | — | | | | 79,072 | | | | (11) | | | | $2,399,044 | | | | — | | | | | | | | — | | | | | — | | | | — | | | | | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | 36,315 | | | | (13 | ) | | $ | 1,101,797 | | | | | — | | | | — | | | | | | | | — | | | | — | | | | — | | | | — | | | | | | | | — | | | | 27,149 | | | | (14 | ) | | | $823,701 | | Frank R. Forrest | | | — | | | | 9,571 | | | | (1 | ) | | | — | | | $ | 21.63 | | | | 4/15/2024 | | | | — | | | | | | | | — | | | | — | | | | | | | | — | | | | | — | | | | 12,454 | | | | (2 | ) | | | — | | | $ | 18.78 | | | | 2/11/2025 | | | | — | | | | | | | | — | | | | — | | | | | | | | — | | | | | — | | | | 26,102 | | | | (3 | ) | | | — | | | $ | 14.87 | | | | 2/12/2026 | | | | — | | | | | | | | — | | | | — | | | | | | | | — | | | | | — | | | | 24,561 | | | | (4 | ) | | | — | | | $ | 26.52 | | | | 2/3/2027 | | | | 6,389 | | | | (5) | | | | $193,842 | | | | — | | | | | | | | — | | | | | — | | | | — | | | | | | | | — | | | | — | | | | — | | | | 17,931 | | | | (7) | | | | $544,027 | | | | — | | | | | | | | — | | | | | — | | | | — | | | | | | | | — | | | | — | | | | — | | | | 21,116 | | | | (8) | | | | $640,659 | | | | — | | | | | | | | — | | | | | — | | | | — | | | | | | | | — | | | | — | | | | — | | | | 26,357 | | | | (10) | | | | $799,671 | | | | — | | | | | | | | — | | | | | — | | | | — | | | | | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | 21,565 | | | | (12 | ) | | | $654,282 | | | | | — | | | | — | | | | | | | | — | | | | — | | | | — | | | | — | | | | | | | | — | | | | 30,262 | | | | (13 | ) | | | $918,149 | | | | | — | | | | — | | | | | | | | — | | | | — | | | | — | | | | — | | | | | | | | — | | | | 23,756 | | | | (14 | ) | | | $720,757 | |
(1) All of the granted shares will vest on April 15, 2018. COMPENSATION OF NAMED EXECUTIVE OFFICERS AND DIRECTORS(2) One-fourth of the granted shares will vest on each of February 11, 2018 and 2019. (3) One-fourth of the granted shares will vest on each of February 12, 2018, 2019 and 2020.(4) One-fourth of the granted shares will vest on each of February 3, 2018, 2019, 2020 and 2021. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Outstanding Equity Awards at December 31, 2015 | | | | Option Awards | | | Stock Awards(19) | | Name | | Number of Securities Underlying Unexercised Options (#) Exercisable | | | Number of Securities Underlying Unexercised Options (#) Unexercisable | | | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | | | Option Exercise Price ($) | | | Option Expiration Date | | | Number of Shares or Units of Stock That Have Not Vested (#) | | | Market Value of Shares or Units of Stock That Have Not Vested ($) | | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | | Lars C. Anderson | | | — | | | | — | | | | | | | | — | | | | — | | | | — | | | | 158,144 | | | | (12) | | | | 3,178,694 | | | | — | | | | | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Timothy N. Spence | | | — | | | | — | | | | | | | | — | | | | — | | | | — | | | | 35,582 | | | | (13) | | | $ | 715,198 | | | | — | | | | | | | | — | | | | | — | | | | — | | | | | | | | — | | | | — | | | | — | | | | 158,144 | | | | (14) | | | $ | 3,178,694 | | | | — | | | | | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Frank R. Forrest | | | 9,572 | | | | 28,713 | | | | (4) | | | | — | | | $ | 21.63 | | | | 4/15/2024 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | — | | | | 24,908 | | | | (5) | | | | — | | | $ | 18.78 | | | | 2/11/2025 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | — | | | | — | | | | | | | | — | | | | — | | | | — | | | | 12,320 | | | | (9) | | | $ | 247,632 | | | | — | | | | | | | | — | | | | | — | | | | — | | | | | | | | — | | | | — | | | | — | | | | 12,327 | | | | (10) | | | $ | 247,773 | | | | — | | | | | | | | — | | | | | — | | | | — | | | | | | | | — | | | | — | | | | — | | | | 19,169 | | | | (11) | | | $ | 385,297 | | | | — | | | | | | | | — | | | | | — | | | | — | | | | | | | | — | | | | — | | | | — | | | | 26,357 | | | | (12) | | | $ | 529,776 | | | | — | | | | | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 15,667 | | | | (17) | | | $ | 314,907 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 21,565 | | | | (18) | | | $ | 433,457 | | Daniel T. Poston | | | 30,000 | | | | — | | | | | | | | — | | | $ | 37.58 | | | | 1/23/2016 | | | | — | | | | | | | | — | | | | — | | | | | | | | — | | | | | 35,550 | | | | — | | | | | | | | — | | | $ | 39.36 | | | | 4/7/2016 | | | | — | | | | | | | | — | | | | — | | | | | | | | — | | | | | 26,667 | | | | — | | | | | | | | — | | | $ | 38.27 | | | | 4/9/2017 | | | | — | | | | | | | | — | | | | — | | | | | | | | — | | | | | 30,769 | | | | — | | | | | | | | — | | | $ | 19.26 | | | | 4/15/2018 | | | | — | | | | | | | | — | | | | — | | | | | | | | — | | | | | 40,000 | | | | — | | | | (1) | | | | — | | | $ | 3.96 | | | | 4/21/2019 | | | | — | | | | | | | | — | | | | — | | | | | | �� | | — | | | | | 104,762 | | | | — | | | | | | | | — | | | $ | 13.36 | | | | 4/19/2021 | | | | — | | | | | | | | — | | | | — | | | | | | | | — | | | | | 101,951 | | | | 33,983 | | | | (2) | | | | | | | $ | 14.36 | | | | 4/17/2022 | | | | — | | | | | | | | — | | | | — | | | | | | | | — | | | | | 43,586 | | | | 43,585 | | | | (3) | | | | — | | | $ | 16.15 | | | | 4/16/2023 | | | | — | | | | | | | | — | | | | — | | | | | | | | — | | | | | 11,016 | | | | 33,045 | | | | (4) | | | | — | | | $ | 21.63 | | | | 4/15/2024 | | | | — | | | | | | | | — | | | | — | | | | | | | | — | | | | | — | | | | 32,173 | | | | (5) | | | | — | | | $ | 18.78 | | | | 2/11/2025 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | — | | | | — | | | | | | | | — | | | | — | | | | — | | | | 2,741 | | | | (7) | | | $ | 55,094 | | | | — | | | | | | | | — | | | | | — | | | | — | | | | | | | | — | | | | — | | | | — | | | | 10,937 | | | | (8) | | | $ | 219,834 | | | | — | | | | | | | | — | | | | | — | | | | — | | | | | | | | — | | | | — | | | | — | | | | 14,187 | | | | (10) | | | $ | 285,159 | | | | — | | | | | | | | — | | | | | — | | | | — | | | | | | | | — | | | | — | | | | — | | | | 24,760 | | | | (11) | | | $ | 497,676 | | | | — | | | | | | | | — | | | | | — | | | | — | | | | | | | | — | | | | — | | | | — | | | | — | | | | | | | | — | | | | 24,628 | | | | (16) | | | $ | 495,023 | | | | | — | | | | — | | | | | | | | — | | | | — | | | | — | | | | — | | | | | | | | — | | | | 18,031 | | | | (17) | | | $ | 362,423 | | | | | — | | | | — | | | | | | | | — | | | | — | | | | — | | | | — | | | | | | | | — | | | | 27,855 | | | | (18) | | | $ | 559,886 | |
(5) All unvested shares are scheduled to vest on February 11, 2018. (6) All unvested shares are scheduled to vest on November 2, 2018. COMPENSATION OF NAMED EXECUTIVE OFFICERS AND DIRECTORS(7) One-third of the granted shares will vest on each of February 12, 2018 and 2019. (8) One-third of the granted shares will vest on each of February 3, 2018, 2019 and 2020.(9) All unvested shares are scheduled to vest on October 1, 2019. (10) All unvested shares are scheduled to vest on October 1, 2018. (11) One-fourth of the granted shares will vest on each of October 1, 2018 and 2019. (12) All unvested shares are scheduled to vest on February 11, 2018, subject to achievement of stated performance goals. (13) All unvested shares are scheduled to vest on February 12, 2019, subject to achievement of stated performance goals. (14) All unvested shares are scheduled to vest on February 3, 2020, subject to achievement of stated performance goals. (15) Values are based on the December 29, 2017, closing price of the Company’s common stock of $30.34 with performance shares valued as if target performance was achieved. (1) | A portion of the awards issued in 2009 prior to the Interim Final Rule on TARP Standards for Compensation and Corporate Governance issued by the U.S. Department of the Treasury on June 15, 2009 were forfeited in 2011 in order to comply with the Interim Final Rule. The value for the 2009 SAR award is the maximum possible award value, assuming a minimum proration factor calculated using the expiration date as the end date for the time awards are considered outstanding (proration is based on the number of days the executive officer was considered a TARP MHCE divided by the total number of days the award is considered outstanding). The award value will be less if the executive officer decides to exercise prior to the expiration date. | | | | 58 | | Fifth Third Bancorp | 2018 Proxy Statement | | |
| | | COMPENSATION OF NAMED EXECUTIVE OFFICERS | | ![LOGO](https://files.docoh.com/DEF 14A/0001193125-18-072083/g500098g38t41.jpg) |
(2) | All unvested shares are scheduled to vest on April 17, 2016. |
(3) | One-fourth of the unexercisable shares will vest on each of April 16, 2016, and 2017. |
(4) | One-fourth of the unexercisable shares will vest on each of April 15, 2016, 2017, and 2018. |
(5) | One-fourth of the unexercisable shares will vest on each of February 11, 2016, 2017, 2018, and 2019. |
(6) | All unvested shares are scheduled to vest on April 17, 2016. |
(7) | All unvested shares are scheduled to vest on February 19, 2016. |
(8) | All unvested shares are scheduled to vest on April 16, 2016. |
(9) | All unvested shares are scheduled to vest on October 1, 2016. |
(10) | One-third of the unvested shares will vest on each of April 15, 2016, and 2017. |
(11) | One-third of the unvested shares will vest on each of February 11, 2016, 2017, and 2018. |
(12) | All unvested shares are scheduled to vest on October 1, 2018. |
(13) | One-third of the unvested shares will vest on each of October 1, 2016, 2017, and 2018. |
(14) | One-fourth of the unvested shares will vest on each of October 1, 2016, 2017, 2018, and 2019. |
(15) | One-third of the unvested shares will vest on each of November 2, 2016, 2017, and 2018. |
(16) | All unvested shares are scheduled to vest on April 16, 2016, subject to achievement of stated performance goals. |
(17) | All unvested shares are scheduled to vest on April 15, 2017, subject to achievement of stated performance goals. |
(18) | All unvested shares are scheduled to vest on February 11, 2018, subject to achievement of stated performance goals. |
(19) | Values are based on December 31, 2015 closing price of the Company’s common stock of $20.10 and performance shares are based on achievement of target performance. |
Option Exercises and Stock Vested.The following table outlines stock appreciation rights and stock options exercised and restricted stock performance share awards, and long-term cash that vested during 2015.2017. | 2015 Option Exercises & Stock Vested | | | | | Option Awards(1) | | | Stock Awards(2) | | | Name | | Number of Shares Acquired on Exercise (#) | | | Value Realized on Exercise ($) | | | Number of Shares Acquired on Vesting (#) | | | Value Realized on Vesting ($) | | | | | | 2017 Option Exercises & Stock Vested | | | | | | Option Awards(1) | | Stock Awards(2) | | | Executive | | | Number of Shares Acquired on Exercise (#) | | Value Realized on Exercise ($) | | Number of Shares Acquired on Vesting (#) | | Value Realized on Vesting ($) | | Greg D. Carmichael | | | — | | | | — | | | | 49,742 | | | $ | 953,107 | | | | | | | 100,073 | | | $2,712,523 | | Kevin T. Kabat | | | | | | | 108,990 | | | $ | 2,087,931 | | | Tayfun Tuzun | | | | | | | 11,134 | | | $ | 212,964 | | | 9,923 | | $143,102 | | 20,266 | | | $522,940 | | Lars C. Anderson | | | — | | | | — | | | | — | | | | — | | | | | | | 15,247 | | | $404,198 | | Timothy N. Spence | | | — | | | | — | | | | — | | | | — | | | | | | | 62,158 | | | $1,723,359 | | Frank R. Forrest | | | — | | | | — | | | | 18,487 | | | $ | 351,932 | | | 49,869 | | $346,151 | | 21,521 | | | $554,621 | | Daniel T. Poston | | | — | | | | — | | | | 28,781 | | | $ | 551,543 | | |
(1) | There were noThe dollar figures in the table represent the value on the exercise date for option exercises for Named Executive Officers in 2015.awards. |
(2) | The dollar figures in the table represent the value on the vest date for stock awards. |
Pension Benefits. The following table illustrates the payments in connection with retirement, shown for each retirement plan. The table shows the present value of accumulated benefits payable to each of the Named Executive Officers, including the number of years of service credited to each such Named Executive Officer under The Fifth Third Bancorp Master Retirement Plan (the “Master Retirement Plan”) determined using interest
COMPENSATION OF NAMED EXECUTIVE OFFICERS AND DIRECTORS
rates and mortality rate assumptions consistent with those used in the Company’s Financial Statements (disclosed in Note 21 “Retirement and Benefit Plans” located on pages 142-145 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2015).
The Master Retirement Plan was frozen as of November 15, 1998 except for employees who were at least age 50 and had 15 years of credited service as of December 31, 1998. For the purpose of computing a benefit under these plans on December 31, 2015, Mr. Kabat has a frozen benefit related to his service with Old Kent Financial Corporation. His annual benefit at age 65 would be approximately $65,400. Messrs. Carmichael, Tuzun, Anderson, Spence, Forrest and Poston joined the Company after these plans were frozen and therefore are not eligible to participate.
The figures in the table below were calculated as of December 31, 2015 using the earliest age (or current age, if older) at which the Named Executive Officer may retire under the plan without a reduction of benefits due to age.
The benefits under the Master Retirement Plan for Mr. Kabat are calculated using the highest five out of the last 10 years of eligible wages, which generally includes W-2 pay including pre-tax deferrals. The normal benefit is equal to 1.68% of average monthly compensation plus 0.625% of average monthly earnings in excess of his Social Security covered compensation. This monthly benefit was converted to a present value in the table below. Mr. Kabat became eligible for early retirement upon becoming 55 years old.
Mr. Kabat’s credited service is as of the date the Old Kent Retirement Income Plan was frozen on March 10, 2002. His actual service with the Company is over 33 years. There is no additional value on a termination basis for Mr. Kabat.
| | | | | | | | | | | | | | | 2015 Pension Benefits | | Name | | Plan Name | | Number of Years Credited Service (#) | | | Present Value of Accumulated Benefit ($) | | | Payments During 2015 ($) | | Greg D. Carmichael | | — | | | — | | | | — | | | | — | | Kevin T. Kabat | | Master Retirement Plan | | | 19.75 | | | | 677,300 | | | | — | | Tayfun Tuzun | | — | | | — | | | | — | | | | — | | Lars C. Anderson | | — | | | — | | | | — | | | | — | | Timothy N. Spence | | — | | | — | | | | — | | | | — | | Frank R. Forrest | | — | | | — | | | | — | | | | — | | Daniel T. Poston | | — | | | — | | | | — | | | | — | |
Nonqualified Deferred Compensation.The Company maintains a Nonqualified Deferred Compensation Plan (NQDCP)(“NQDCP”) that allows participant and Company contributions. Participants are able to defer all but $50,000 of their base salary and 100%100 percent of their annual cash incentive compensationVariable Compensation Plan award. BeginningThe plan was amended effective January 1, 2007,2018 to allow participants were able to diversifydefer up to 70 percent of their investments into investment alternatives that are similar to those that are available in the Company’s 401(k) plan.base salary. The allowable deferral amount for Variable Compensation awards remained 100 percent. In addition, the Company makes contributions for loss of qualified 401(k) plan matching contributions due to base salary or annual cash incentive compensationVariable Compensation Plan award deferrals or due to IRS wage and/or contribution limitations under the qualified 401(k) plan. The Company’s contribution to this plan is determined by taking the COMPENSATION OF NAMED EXECUTIVE OFFICERS AND DIRECTORS
participant’s eligible wages above the qualified 401(k) plan compensation limits ($265,000270,000 for 2015)2017) and applying the Company’s 401(k) match (7%) percent.(7 percent). If other qualified plan 401(k) limitations applied, the participants would also have contributions made to the plan for those limitations. Distributions are made in a lump sum or in up to ten10 annual installments. The Named Executive Officers may elect when the payments commence. The earliest distribution is August of the calendar year following the year of retirement. The entire distribution may be made no later than the tenth10th calendar year following the year of retirement. This plan is intended to comply with the requirements of Section 409(A) of the Internal Revenue Code. | | | | | | | Fifth Third Bancorp | 2018 Proxy Statement | | 59 |
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| | COMPENSATION OF NAMED EXECUTIVE OFFICERS |
The following table illustrates the nonqualified deferred compensation plan benefits. It includes each Named Executive Officer’s and the Company’s contributions (each of which are reflected in the amounts disclosed in the 20152017 Summary Compensation Table) under the nonqualified deferred compensation plan as well as the earnings during 2015 but it2017. It does not reflect matching 401(k) or discretionary contributions made under the qualified plan. | 2015 Nonqualified Deferred Compensation | | | Name | | Plan | | Executive Contributions in 2015 ($) | | | Registrant Contributions in 2015 ($) | | | Aggregate Earnings in 2015 ($) | | | Aggregate Withdrawals / Distributions ($) | | | Aggregate Balance at December 31, 2015 ($) | | | | | | 2017 Nonqualified Deferred Compensation | | | Executive | | | Plan | | | Executive Contributions in 2017 ($) | | | Company Contributions in 2017 ($) | | | Aggregate Earnings in 2017 ($) | | | Aggregate Withdrawals / Distributions ($) | | Aggregate Balance at 12/31/17 ($) | | Greg D. Carmichael | | NQDCP(1) | | $ | 314,563 | | | $ | 103,421 | | | ($ | 47,439 | ) | | | — | | | $ | 4,107,851 | | | | NQDCP(1) | | | | - | | | | $191,104 | | | | $967,974 | | | - | | | $6,062,788 | | Kevin T. Kabat | | NQDCP(1) | | $ | 496,227 | | | $ | 166,584 | | | ($ | 16,752 | ) | | | — | | | $ | 3,435,190 | | | Tayfun Tuzun | | NQDCP(1) | | $ | 86,266 | | | $ | 38,854 | | | ($ | 42,986 | ) | | | — | | | $ | 755,708 | | | | NQDCP(1) | | | | $280,343 | | | | $82,840 | | | | $233,098 | | | - | | | $1,824,818 | | Lars C. Anderson | | NQDCP(1) | | | — | | | | — | | | | — | | | | — | | | | — | | | | NQDCP(1) | | | | $95,217 | | | | $92,186 | | | | $40,328 | | | - | | | $350,212 | | Timothy N. Spence | | NQDCP(1) | | | — | | | | — | | | | — | | | | — | | | | — | | | | NQDCP(1) | | | | - | | | | $76,436 | | | | $7,113 | | | - | | | $111,268 | | Frank R. Forrest | | NQDCP(1) | | | — | | | $ | 50,267 | | | $ | 269 | | | | — | | | $ | 74,867 | | | | NQDCP(1) | | | | - | | | | $81,536 | | | | $22,789 | | | - | | | $252,402 | | Daniel T. Poston | | NQDCP(1) | | | — | | | | — | | | ($ | 25,361 | ) | | | — | | | $ | 205,579 | | |
(1) The investments under this plan would produce earnings equal to those of any other investor who invested like money in like investments for the same time period during the year. (1) | The Company maintains a nonqualified deferred compensation plan. The investments under this plan would produce earnings equal to those of any other investor who invested like money in like investments for the same time period during the year. |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROLPotential Payments Upon Termination or Change in Control.
The treatment of long-term equity-based awards issued as of December 31, 2017, under all termination scenarios, is dictated by the 2004, 2008, 2011, and 2014 Incentive Compensation Plans, which were approved by shareholders on March 23, 2004, April 15, 2008,2008; April 19, 2011,2011; and April 15, 2014, respectively. The design of the 2004 plan, including the vesting provisions under which equity awards continue to vest upon retirement and accelerate upon a change-in-control, was determined by the Committee to be appropriate and consistent with competitive practice among the Company’s peers at that time. The 2008, 2011 and 2014 plans provide immediate vesting upon a change-in-control only upon involuntary separation from service within two years after a change-in-control (i.e., a double-trigger). The Company’s change-in-controlchange in control policies were also determined by the Committee to provide appropriate benefits based on a competitive review of the Compensation Peer Group and published guidance at the time of their adoption from institutional shareholder groups such as ISS and CalPERS. These arrangements fit into the Company’s overall compensation objectives as they are viewed to be competitive, but not excessive, relative to our Compensation Peer Group, and they allow us to attract and retain qualified senior executives. However, these arrangements impact neither the compensation target levels that are based on market median compensation nor the compensation awards that are based on a variety of performance factors as described in this proxy statement. COMPENSATION OF NAMED EXECUTIVE OFFICERS AND DIRECTORS
The estimated payouts under a variety of termination scenarios for the Named Executive Officers are showndiscussed below. For allExcept in a change in control scenario, the Named Executive Officer’s termination scenarios, the figures reflect unvested long-term equity-based incentive compensation awards as of December 31, 2015, and at the closing stock price of $20.10 on that date.would not result in enhanced retirement benefits. Voluntary or Without Cause.The Company does not currently have contracts with its Named Executive Officers that would require cash severance payments upon voluntary termination. IfUnder the terms of the 2008, 2011, and 2014 Incentive Compensation Plans, if the Named Executive Officer weremeets certain retirement eligible, heeligibility criteria, any exercisable stock appreciation rights would continue vesting inremain outstanding and under certain other criteria outstanding equity awards themay continue to vest. These values, of whichas applicable, are included in the table below. The Named Executive Officer’s termination would not result in enhanced retirement benefits beyond the benefits described in the Pension Benefits Section. Eligibility for other payments would be determined in a manner consistent with all officers of the Company. | | | | | 60 | | Fifth Third Bancorp | 2018 Proxy Statement | | |
| | | COMPENSATION OF NAMED EXECUTIVE OFFICERS | | ![LOGO](https://files.docoh.com/DEF 14A/0001193125-18-072083/g500098g38t41.jpg) |
With Cause. The Company does not currently have contracts with its Named Executive Officers that would require cash severance payments upon involuntary termination. Under the terms of the 2004, 2008, 2011 and 2014 Incentive Compensation Plans, if the Named Executive Officer is retirement eligible he may continue vesting in outstanding equity awards, the values of which are included in the table below. The Named Executive Officer’s termination would not result in enhanced retirement benefits. Eligibility for other payments would be determined in a manner consistent with all officers of the Company. Death and Disability. Under the terms of the 2004,Company’s 2008, 2011, and 2014 Incentive Compensation Plans, all outstandingequity-based awards would be immediately forfeited.
Death and Disability.Under the terms of the 2008, 2011, and 2014 Incentive Compensation Plans, all unvested stock and option awards vest immediately.immediately and option awards remain outstanding for the remaining term of the grant. Performance shares are earned on a prorated basis based ondetermined by the Named Executive Officer’s full months of service and are adjusted based on the achievement of the performance goals for the full performance period. The table below reflects an assumed payout each Named Executive Officers’ terminationOfficer would not result in enhanced retirement benefits, beyondbe eligible to receive if the benefits described in the Pension Benefits section.Company achieved 100 percent of its performance goals for each outstanding performance share award and paid out effective December 31, 2017. In the event of death, the defined benefit pension would bepays a 50%50 percent joint and survivor payoutbenefit and the 401(k) Plan wouldplan immediately vest. Eligibility for other payouts would be determined in a manner consistent with all other officers of the Company.vests. Change-in-Control.Change in Control.As described in the “Severance and Change-in-ControlChange in Control Benefits” section, the Company’s Executive Change-in-ControlChange in Control Severance Plan provides for the payment of benefits upon a qualifying termination following a change-in-controlchange in control (a “triggering event”) for the Named Executive Officers and other officers of the Company. In exchange for the payments and benefits under the plan, the eligible Named Executive Officer would be required to sign an agreement at the time of the triggering event not to not compete with, nor solicit employees or customers from, the Company for a period of three years following the officer’s termination.termination for Messrs. Carmichael, Tuzun, and Anderson and for a period of two years for Messrs. Spence and Forrest. Forms of these agreements would be filed with the Company’s securities filings.
The cash severance payment would be equal to 2.99 times the Named Executive Officer’s base salary plus his target annual cash incentive compensation award, exceptVariable Compensation amount for Messrs. Carmichael, Tuzun, and Anderson and 2 times base salary plus his Variable Compensation amount for Messrs. Spence and Forrest who would receive 2.0 times base salary.(each as defined in the Severance Plan). In addition, the Named Executive Officer would earn a pro-rated VCPprorated Variable Compensation award for the fiscal year of the termination. The table below reflects an assumed full-year VCPVariable Compensation award at the amount each Named Executive Officer would be eligible to receive if the Company achieves 100%100 percent of its annualVariable Compensation Plan performance incentive target under the Annual Incentive Plan. Mr. Poston’s participation in the plan expired on his separation date. Therefore, he is excluded from the tables below.targets. Upon a change-in-control,change in control, as defined in our Incentive Compensation Plans approved by shareholders, any outstanding equity awardslong-term equity-based award (stock options, stock appreciation rights, and restricted stock awards) granted prior to April 15, 2008 would vest immediately. Thisimmediately only if there is true for all equity award recipients, not just for the Company’s Named Executive Officers.a change in control and a subsequent qualifying termination of employment (“double trigger” vesting). Performance sharesShare Awards would be deemed earned and paid out based on the greater of the extent to which applicable performance goals have been met up through and including the effective date of the change-in-control,change in control, or the target number of performance sharesshare awards determined at the date of grant. The value of performance sharesshare awards would be calculated based on the current market value of the Company’s stock on the date of the change-in-controlchange in control times the earned number of performance shares. The table below reflects an assumed COMPENSATION OF NAMED EXECUTIVE OFFICERS AND DIRECTORS
payout each Named Executive Officer would be eligible to receive if the Company achieves 100%achieved 100 percent of its performance goals for each outstanding performance share award. Awards granted after April 15, 2008, contain double-trigger vesting provisions under which accelerated vesting will applyaward and paid out effective December 31, 2017. The treatment of equity awards applies to all long-term equity-based award recipients eligible for change in control benefits, not just for the event of involuntary termination of employment within two years after the change-in-control. TheCompany’s Named Executive OfficerOfficers.
Upon a triggering event, Messrs. Carmichael, Tuzun, and Anderson would receive three, and Messrs. Spence and Forrest would receive two, additional years of age and service credit under the qualified and | | | | | | | Fifth Third Bancorp | 2018 Proxy Statement | | 61 |
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| | COMPENSATION OF NAMED EXECUTIVE OFFICERS |
nonqualified defined contribution plans, three years ofplans; medical, dental, and life insurance benefits,benefits; and the additional value, if any, of the pension benefit at age 60 (which60. These benefits are reflected in the Other Benefits and Potential Excise Tax Gross-Up category below) upon a triggering event.below. The Named Executive Officer’sNEO’s termination would not result in enhanced retirement benefits beyond the benefits described in the Pension Benefits section. Eligibility for these benefits, as well as any other benefits in a change in control scenario, is determined in a manner consistent with all eligible employees, not just the Company’s Named Executive Officers. Material differences in circumstances relate to retirement eligibility, as described above. As of December 31, 2015,2017, Messrs. Carmichael and Tuzun met one or more of the retirement eligibility criteria under outstanding long-term equity-based compensation award agreements. Both have met the criteria in order to retain the exercisability of all vested stock appreciation rights, except in a termination for cause scenario. In addition, Mr. Carmichael ishas met the only one of our Named Executive Officers that is retirement eligible under any outstanding equity compensation award agreements, which providecriteria to allow all awards granted after January 1, 2016, to continue to vest, except in a termination for continuing vesting of their outstanding equity awards.cause scenario. The tables below contain the total payments one would receive under each termination scenario if the Named Executive Officer separated on December 31, 2017.For all termination scenarios, the figures for long-term equity-based incentive compensation awards are as of December 29, 2017, at the closing stock price of $30.34 on that date. | Termination Scenarios1 | | | Name | | Voluntary or Without Cause | | | With Cause | | | Death or Disability | | | | | | | Termination Scenarios | | | Executive | | | Voluntary or Without Cause(1) | | | With Cause | | | Death or Disability(2) | | Greg D. Carmichael | | | — | | | | — | | | $ | 10,821,274 | | | | $22,429,577 | | | | — | | | | $24,007,417 | | Kevin T. Kabat | | | — | | | | — | | | $ | 14,932,004 | | | Tayfun Tuzun | | | — | | | | — | | | $ | 2,362,784 | | | | $1,363,613 | | | | — | | | | $4,820,663 | | Lars C. Anderson | | | — | | | | — | | | $ | 3,186,441 | | | | — | | | | — | | | | $8,794,747 | | Timothy N. Spence | | | — | | | | — | | | $ | 3,899,076 | | | | — | | | | — | | | | $5,852,781 | | Frank R. Forrest | | | — | | | | — | | | $ | 1,890,109 | | | | — | | | | — | | | | $4,364,262 | |
(1) Amounts in this column include the amount of long-term equity-based compensation each NEO is entitled to retain for meeting some or all of the retirement eligibility criteria under outstanding award agreements in a voluntary or without cause termination scenario. (1) | Unvested equity and/or retirement benefits are the only eligible form of payment in each of the termination scenarios |
| | | | | | | | | | | | | | | | | | | | | Involuntary Termination Upon a Change-in-Control | | Name | | Cash Severance | | | Unvested Equity | | | Potential Excise Tax Gross-Up | | | Other Benefits | | | Total | | Greg D. Carmichael | | $ | 8,027,500 | | | $ | 7,085,748 | | | $ | 0 | | | $ | 5,244,416 | | | $ | 20,357,664 | | Kevin T. Kabat | | $ | 9,335,720 | | | $ | 11,803,363 | | | $ | 0 | | | $ | 6,223,594 | | | $ | 27,362,677 | | Tayfun Tuzun | | $ | 3,303,893 | | | $ | 1,542,105 | | | $ | 0 | | | $ | 1,462,336 | | | $ | 6,308,335 | | Lars C. Anderson | | $ | 5,010,756 | | | $ | 3,178,694 | | | $ | 0 | | | $ | 355,133 | | | $ | 8,544,583 | | Timothy N. Spence | | $ | 2,850,016 | | | $ | 3,893,893 | | | $ | 0 | | | $ | 189,991 | | | $ | 6,933,900 | | Frank R. Forrest | | $ | 2,565,032 | | | $ | 2,191,719 | | | $ | 0 | | | $ | 274,115 | | | $ | 5,052,033 | |
COMPENSATION OF NAMED EXECUTIVE OFFICERS AND DIRECTORS(2) Amounts in this column include the total amount of long-term equity-based compensation each NEO is entitled either to retain or to have the vesting accelerated because of a death or disability scenario.
DIRECTOR COMPENSATION
The following table illustrates the 2015 compensation structure for non-employee directors. Employee directors receive no compensation for their Board service. In addition to the compensation described below, non-employee directors are reimbursed for reasonable out-of-pocket expenses incurred for travel and attendance related to meetings of the Board of Directors or its committees. To the extent available, non-employee directors may travel on corporate aircraft for board or committee meetings where their attendance is expected. Non-employee directors are not authorized to use corporate aircraft for their personal use.
| | | | | | | Element of Compensation | | | | 2015 Amount | | Annual retainer (cash) | | Director | | $ | 50,000 | | | Lead Director | | $ | 100,000 | | | Chairman | | $ | 200,000 | | Annual committee chair retainer (cash) | | Audit | | $ | 17,500 | | | Finance | | $ | 50,000 | | | Human Capital & Compensation | | $ | 15,000 | | | Nominating & Corporate Governance | | $ | 10,000 | | | | Risk & Compliance | | $ | 15,000 | | Board meeting fees – per meeting (cash)1 | | $ | 2,000 | | Committee meeting fees – per meeting (cash)1 | | $ | 2,000 | | Restricted stock units2 | | $ | 100,000 | |
(1) | The Board Chair is not eligible for Board meeting fees or Committee meeting fees. |
(2) | $250,000 for Chairman; all LTI granted to the Board of Directors vests on Board service end date, unless deferral instructions are received prior to the year the grant is made. |
The Company’s 2014 Incentive Compensation Plan provides that the Committee has full authority to provide equity-based or other incentive awards to non-employee directors. Equity-based awards shown in the table below were granted under the 2014 Incentive Compensation Plan. The Company has a stock ownership guideline for its directors of shares having a value equal to at least $250,000.
Pursuant to a Deferred Compensation Plan, directors may annually defer from one-half to all of their cash compensation as directors. The deferred funds receive earnings based on the mutual fund(s) elected by each director or the directors may elect a rate equal to the rate of return on the Company’s common stock. The directors do not receive any above-market or preferential earnings.
COMPENSATION OF NAMED EXECUTIVE OFFICERS AND DIRECTORS
The following table summarizes the compensation earned by or awarded to each non-employee director who served on the Board of Directors during 2015. The Stock Awards and Option Awards columns in the table display the grant date fair value associated with the equity awards. The amounts listed in the Stock Awards column represent a restricted stock unit award which vests once service as a director ends. The award relates to the fiscal year in which it was granted. Directors did not receive any Option Awards or Non-Equity Incentive Plan Compensation in 2015.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2015 Director Compensation | | Name | | Fees Earned or Paid in Cash ($)(1) | | | Stock Awards(2)(4)(5) ($) | | | Option Awards(3) ($) | | | Non-Equity Incentive Plan Compensation ($) | | | Change in Pension Value & Nonqualified Deferred Compensation Earnings ($) | | | All Other Compensation(6) ($) | | | Total ($) | | Nicholas K. Akins | | $ | 166,000 | | | $ | 100,000 | | | | — | | | | — | | | | — | | | $ | 4,362 | | | $ | 270,362 | | B. Evan Bayh | | $ | 128,000 | | | $ | 100,000 | | | | — | | | | — | | | | — | | | $ | 15,564 | | | $ | 243,564 | | Jorge L. Benitez | | $ | 41,000 | | | | — | | | | — | | | | — | | | | — | | | $ | 3,945 | | | $ | 44,945 | | Katherine B. Blackburn | | $ | 108,000 | | | $ | 100,000 | | | | — | | | | — | | | | — | | | $ | 1,368 | | | $ | 209,368 | | Ulysses L. Bridgeman, Jr. | | $ | 113,000 | | | $ | 100,000 | | | | — | | | | — | | | | — | | | $ | 11,035 | | | $ | 224,035 | | Emerson L. Brumback | | $ | 185,500 | | | $ | 100,000 | | | | — | | | | — | | | | — | | | $ | 11,976 | | | $ | 297,476 | | James P. Hackett | | $ | 200,000 | | | $ | 250,000 | | | | — | | | | — | | | | — | | | $ | 18,983 | | | $ | 468,983 | | Gary R. Heminger | | $ | 202,000 | | | $ | 100,000 | | | | — | | | | — | | | | — | | | $ | 11,035 | | | $ | 313,035 | | Jewell D. Hoover | | $ | 183,000 | | | $ | 100,000 | | | | — | | | | — | | | | — | | | $ | 14,346 | | | $ | 297,346 | | Mitchel D. Livingston, Ph.D. | | $ | 43,000 | | | | — | | | | — | | | | — | | | | — | | | $ | 8,466 | | | $ | 51,466 | | Michael B. McCallister | | $ | 116,000 | | | $ | 100,000 | | | | — | | | | — | | | | — | | | $ | 20,489 | | | $ | 236,489 | | Hendrik G. Meijer | | $ | 140,000 | | | $ | 100,000 | | | | — | | | | — | | | | — | | | $ | 7,865 | | | $ | 247,865 | | Marsha C. Williams | | $ | 255,000 | | | $ | 100,000 | | | | — | | | | — | | | | — | | | $ | 14,752 | | | $ | 369,752 | |
(1) | Non-employee directors of Fifth Third Bancorp who also serve as directors of our subsidiary, Fifth Third Bank, receive attendance fees for each board or committee meeting attended. Attendance fees are identical to the schedule of fees paid to directors of Fifth Third Bancorp and are included in these totals. |
(2) | Outstanding Stock Awards for current directors totaled 219,400 shares as of December 31, 2015. |
(3) | There were no options awarded to directors in 2015. Outstanding Option Awards for current directors totaled 1,000 shares as of December 31, 2015. |
COMPENSATION OF NAMED EXECUTIVE OFFICERS AND DIRECTORS
| | | | | | | | | | | | | | | | | | | | | Involuntary Termination Upon a Change in Control | | | | | | | Executive | | Cash Severance | | | Unvested Equity | | | Potential Excise TaxGross-Up | | Other Benefits | | | Total | Greg D. Carmichael | | | $10,271,941 | | | | $16,947,157 | | | $0 | | | $644,676 | | | $27,863,774 | Tayfun Tuzun | | | $4,057,884 | | | | $4,289,129 | | | $0 | | | $294,497 | | | $8,641,510 | Lars C. Anderson | | | $5,051,118 | | | | $9,737,332 | | | $0 | | | $353,816 | | | $15,142,266 | Timothy N. Spence | | | $2,877,014 | | | | $6,661,145 | | | $0 | | | $197,417 | | | $9,735,576 | Frank R. Forrest | | | $2,873,196 | | | | $5,196,341 | | | $0 | | | $181,856 | | | $8,251,393 |
| | | | | 62 | | Director Fifth Third Bancorp | 2018 Proxy Statement | | Number of
Outstanding
Option Awards |
| | | Nicholas K. AkinsCOMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
| | | — | | B. Evan Bayh ![LOGO](https://files.docoh.com/DEF 14A/0001193125-18-072083/g500098g38t41.jpg)
| | | — | | Jorge L. Benitez
| | | — | | Katherine B. Blackburn
| | | — | | Ulysses L. Bridgeman, Jr.
| | | 500 | | Emerson L. Brumback
| | | — | | James P. Hackett
| | | — | | Gary R. Heminger
| | | — | | Jewell D. Hoover
| | | 500 | | Mitchel D. Livingston, Ph.D.
| | | — | | Michael B. McCallister
| | | — | | Hendrik G. Meijer
| | | — | | Marsha C. Williams
| | | — | |
(4) | The full fair value of stock awards granted in 2015 totaled $1,350,000: |
| | | | | | | | | | | | | Director | | Grant Date | | | Shares Granted | | | Grant Date Fair Value of Restricted Stock Awards | | Nicholas K. Akins | | | 4/14/2015 | | | | 5,260 | | | $ | 100,000 | | B. Evan Bayh | | | 4/14/2015 | | | | 5,260 | | | $ | 100,000 | | Jorge L. Benitez | | | 4/14/2015 | | | | 5,260 | | | $ | 100,000 | | Katherine B. Blackburn | | | 4/14/2015 | | | | 5,260 | | | $ | 100,000 | | Ulysses L. Bridgeman, Jr. | | | 4/14/2015 | | | | 5,260 | | | $ | 100,000 | | Emerson L. Brumback | | | 4/14/2015 | | | | 5,260 | | | $ | 100,000 | | James P. Hackett | | | 4/14/2015 | | | | 13,151 | | | $ | 250,000 | | Gary R. Heminger | | | 4/14/2015 | | | | 5,260 | | | $ | 100,000 | | Jewell D. Hoover | | | 4/14/2015 | | | | 5,260 | | | $ | 100,000 | | Michael B. McCallister | | | 4/14/2015 | | | | 5,260 | | | $ | 100,000 | | Hendrik G. Meijer | | | 4/14/2015 | | | | 5,260 | | | $ | 100,000 | | Marsha C. Williams | | | 4/14/2015 | | | | 5,260 | | | $ | 100,000 | |
(5) | Assumptions used in determining fair value are disclosed in Note 24 “Stock Based Compensation” located on pages 149-152 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2015. |
(6) | Amounts include restricted stock dividends and travel and expense reimbursements. |
COMPENSATION OF NAMED EXECUTIVE OFFICERS AND DIRECTORS
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
In 2015,2017, the Human Capital and Compensation Committee members were Messrs. Akins, Heminger, and McCallister and Ms. Mallesch. Former director Hendrik G. Meijer and Ms. Williams.also served on the Committee from January through April 2017. No Executive Officerexecutive officer of the CompanyFifth Third serves on any board of directors or compensation committee of anyan entity that compensates any member of the Human Capital and Compensation Committee. COMPENSATION COMMITTEE REPORT
| | | | | | | Fifth Third Bancorp | 2018 Proxy Statement | | 63 |
The following Report of the Human Capital and Compensation Committee does not constitute soliciting material and should not be deemed filed or incorporated by reference into any other Company filing under the Securities Act or the Exchange Act, except to the extent the Company specifically incorporates this Report by reference therein.
The Human Capital and Compensation Committee has reviewed and discussed with management the preceding Compensation Discussion and Analysis (“CD&A”) as well as the accompanying tables set forth in the section titled “Compensation of Named Executive Officers and Directors.” Based on that discussion, the Committee recommended to the Board of Directors that the CD&A be included in this proxy statement and incorporated into the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.
Marsha C. Williams, Chair
Nicholas K. Akins
Gary R. Heminger
Michael B. McCallister
Hendrik G. Meijer
| | |
| | CERTAIN TRANSACTIONS |
The Charter of the Company’s Human Capital and Compensation Committee requires that the Human Capital and Compensation Committeepre-approve all related party or affiliate transactions between the CompanyFifth Third Bancorp and any of its affiliates, directors, officers, and/or employees or in which any of such persons directly or indirectly is interested or benefited, other than for extensions of credit otherwise covered by policies and procedures governed by Federal Reserve Regulation O. Certain of these related party transactions are required to be disclosed by the CompanyFifth Third Bancorp in this proxy statement: One of the Company’sour directors, Katherine B. Blackburn, is the Executive Vice President of the Cincinnati Bengals professional football team. She and members of her immediate family own substantially all of the equity interests in the parent company of the Cincinnati Bengals. During 2015, the Company2017, we paid the Cincinnati Bengals approximately $1.5$1.7 million for sponsorship arrangements, tickets, and advertising expenses. Prior to Ms. Blackburn’s appointment to the Board in September 2014, the CompanyFifth Third and the Cincinnati Bengals signed a 5five year contract extension for these arrangements that call for total payments by the CompanyFifth Third Bancorp during that period of over $7.9 million. By virtue of Ms. Blackburn’s being an executive officer and a principal owner of the Cincinnati Bengals, she is deemed to be a related party having a direct material interest in these arrangements. Joshua LivingstonKevin Hipskind is employed by Fifth Third Bank as aan Executive Vice President. He is thebrother-in-law of Philip R. McHugh, who is an Executive Vice President and Large Corporate Healthcare Relationship Manager III. He is the son of one of the Company’s former directors, Dr. Mitchel D. Livingston, who retired from the Board in April 2015.Fifth Third Bancorp. In 2015, Joshua Livingston2017, Mr. Hipskind received compensation of approximately $173,100$567,280 including base salary and incentive compensation as well as benefits generally available to similarly situated employees. This
Timothy Smith, Jr. was employed by Fifth Third Bank as an Assistant Vice President. He is the brother of Teresa J. Tanner, who is an Executive Vice President of Fifth Third Bancorp. In 2017, Mr. Smith received compensation package wasof approximately $124,865 including base salary and incentive compensation as well as benefits generally available to similarly situated employees. The compensation packages of Kevin Hipskind and Timothy Smith, Jr. were each established by the CompanyFifth Third Bancorp in accordance with its employment and compensation policies and practices applicable to employees with equivalent qualifications and responsibilities in similar positions. Daniel Johnston is employed by Fifth Third Bank as a Vice President. He is the son-in-law of the Company’s retiring director and Vice Chairman of the Board and retired Chief Executive Officer, Kevin Kabat. In 2015, Mr. Johnston received compensation of approximately $147,000 including base salary and incentive compensation as well as benefits generally available to similarly situated employees.
Kevin Hipskind is employed by Fifth Third Bank as an Executive Vice President. He is the brother-in-law of Philip McHugh, who is an Executive Vice President of the Company. In 2015, Mr. Hipskind received compensation of approximately $292,480 including base salary and incentive compensation as well as benefits generally available to similarly situated employees.
Timothy Smith, Jr., is employed by Fifth Third Bank as an officer and indirect lending underwriter. He is the brother of Teresa Tanner, who is an Executive Vice President of the Company. In 2015, Mr. Smith received compensation of approximately $129,530 including base salary and incentive compensation as well as benefits generally available to similarly situated employees.
The compensation packages of Joshua Livingston, Danny Johnston, Kevin Hipskind and Timothy Smith were each established by the Company in accordance with its employment and compensation policies and practices applicable to employees with equivalent qualifications and responsibilities in similar positions.
The Company hasWe have also engaged in transactions with certain entities that have reported beneficial ownership of over 5% of itsour common stock. The CompanyWe paid State Street CorporationBank and Trust Company approximately $284,000$537,218 in 20152017 for custody, accounting, and trustee services for certain private funds. Additionally, in 2015 the Company2017 we paid BlackRock Financial Management, Inc. approximately $2,145,000$2,641,214 for advisory services and tools used to manage investment portfolios, to measure risk weighted assets, and to analyze risks in certain investment securities and mortgage servicing rights. All of these business relationships and transactions were conducted at arm’s length in the Company’sour ordinary course of business.
Additionally, Fifth Third Bancorp has engaged and intends to continue to engage in the lending of money through its subsidiary bank to various of its directors, executive officers and shareholders, and | | | | | 64 | | Fifth Third Bancorp | 2018 Proxy Statement | | |
| | | CERTAIN TRANSACTIONS | | ![LOGO](https://files.docoh.com/DEF 14A/0001193125-18-072083/g500098g38t41.jpg) |
corporations or other entities in which they may own a controlling interest. The loans to such persons and/or entities (i) were made in the ordinary course of business, (ii) were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable loans with persons not related to the lender, and (iii) did not involve more than a normal risk of collectability or did not present other features unfavorable to Fifth Third Bancorp. Additionally,
| | | | | | | Fifth Third Bancorp has engaged and intends to continue to engage in the lending of money through its subsidiary bank to various of its directors, executive officers and shareholders and corporations or other entities in which they may own a controlling interest. The loans to such persons (i) were made in the ordinary course of business, (ii) were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable loans with persons not related to the lender, and (iii) did not involve more than a normal risk of collectability or did not present other features unfavorable to the Company.| 2018 Proxy Statement | | 65 |
| | |
| | REPORT OF THE AUDIT COMMITTEE |
The following Report of the Audit Committee does not constitute soliciting material and should not be deemed filed or incorporated by reference into any other Company filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent the Company specifically incorporates this Report by reference therein. In accordance with its written charter adopted by the Board of Directors, which may be found in the Corporate Governance Section of the Company’s website at www.53.com, the Audit Committee of the Board assists the Board in fulfilling its responsibility for oversight of the quality and integrity of the accounting, auditing, and financial reporting practices of the Company. During 2017, the Audit Committee met twelve (12) times, and the Audit Committee discussed the interim financial and other information contained in each quarterly earnings announcement and periodic filings to the Securities and Exchange Commission with the Chief Executive Officer, Chief Financial Officer, Controller, and the independent external audit firm prior to public release. In discharging its oversight responsibility as to the audit process, the Audit Committee obtained from the independent external audit firm a formal written statement describing all relationships between the firm and the Company that might bear on the firm’s independence consistent with applicable requirements of the Public Company Accounting Oversight Board (United States) regarding the independent accountant’s communications with the audit committee concerning independence, and has discussed with the independent accountant the independent accountant’s independence and satisfied itself as to the firm’s independence. The Audit Committee also discussed with management, the internal auditors, and the independent external audit firm the quality and adequacy of the Company’s internal controls and the internal audit function’s organization, responsibilities, budget, and staffing. The Audit Committee reviewed both with the independent external audit firm and internal auditors, their audit plans, audit scope, and identification of audit risks. The Audit Committee discussed and reviewed with the independent external audit firm all communications required by standards of the Public Company Accounting Oversight Board, including the matters required to be discussed by Auditing Standard No. 1301,Communications with Audit Committees, and Rule2-07,Communication with Audit Committees, of RegulationS-X, and, with and without management present, discussed and reviewed the results of the independent external audit firm’s examination of the financial statements. The Audit Committee also discussed the results of internal audits. The Audit Committee reviewed and discussed the audited consolidated financial statements of the Company as of and for the year ended December 31, 2017 and management’s assessment as to the effectiveness of the Company’s internal control over financial reporting as of December 31, 2017 with management and the independent external audit firm. Management has the responsibility for the preparation of the Company’s consolidated financial statements and their assessment of the effectiveness of the Company’s internal control over financial reporting and the independent external audit firm has the responsibility for the audits of those consolidated statements and of the effectiveness of internal control over financial reporting. Based on the above-mentioned reviews and discussions with management and the independent external audit firm, the Audit Committee recommended to the Board that the Company’s audited consolidated financial statements and report on the effectiveness of internal control over financial reporting be included in its | | | | | 66 | | Fifth Third Bancorp | 2018 Proxy Statement | | |
| | | REPORT OF THE AUDIT COMMITTEE In accordance with its written charter adopted by the Board of Directors (“Board”), which may be found in the Corporate Governance Section of the Company’s website at www.53.com, the Audit Committee of the Board assists the Board in fulfilling its responsibility for oversight of the quality and integrity of the accounting, auditing and financial reporting practices of the Company. During 2015, the Committee met twelve (12) times, and the Committee discussed the interim financial and other information contained in each quarterly earnings announcement and periodic filings to the Securities and Exchange Commission with the Chief Executive Officer, Chief Financial Officer, Controller and the independent external audit firm prior to public release.
| | In discharging its oversight responsibility as to the audit process, the Committee obtained from the independent external audit firm a formal written statement describing all relationships between the firm and the Company that might bear on the firm’s independence consistent with applicable requirements of the Public Company Accounting Oversight Board (United States) regarding the independent accountant’s communications with the audit committee concerning independence, and has discussed with the independent accountant the independent accountant’s independence and satisfied itself as to the firm’s independence. The Committee also discussed with management, the internal auditors and the independent external audit firm the quality and adequacy of the Company’s internal controls and the internal audit function’s organization, responsibilities, budget and staffing. The Committee reviewed both with the independent external audit firm and internal auditors, their audit plans, audit scope and identification of audit risks. ![LOGO](https://files.docoh.com/DEF 14A/0001193125-18-072083/g500098g38t41.jpg)
The Committee discussed and reviewed with the independent external audit firm all communications required by standards of the Public Company Accounting Oversight Board, including the matters required to be discussed by Auditing Standard No. 16,Communications with Audit Committees, and Rule 2-07,Communication with Audit Committees, of Regulation S-X, and, with and without management present, discussed and reviewed the results of the independent external audit firm’s examination of the financial statements. The Committee also discussed the results of internal audits.
The Committee reviewed and discussed the audited consolidated financial statements of the Company as of and for the year ended December 31, 2015, and management’s assertion on the design and effectiveness of the Company’s internal control over financial reporting as of December 31, 2015 with management and the independent external audit firm. Management has the responsibility for the preparation of the Company’s consolidated financial statements and their assertion on the design and effectiveness of the Company’s internal control over financial reporting and the independent external audit firm has the responsibility for the audits of those consolidated statements and of the effectiveness of internal control over financial reporting.
Based on the above-mentioned reviews and discussions with management and the independent external audit firm, the Committee recommended to the Board that the Company’s audited consolidated financial statements and report on the effectiveness of internal control over financial reporting be included in its Annual Report on Form 10-K for the year ended December 31, 2015, for filing with the Securities and Exchange Commission. The Committee also appointed the independent external audit firm for 2016.
Emerson L. Brumback, Chairman
Nicholas K. Akins
Katherine B. Blackburn
Jewell D. Hoover
|
Annual Report on Form10-K for the year ended December 31, 2017, for filing with the Securities and Exchange Commission. The Audit Committee also appointed the independent external audit firm for 2018. Emerson L. Brumback, Chair Katherine B. Blackburn Jerry W. Burris Jewell D. Hoover | | | | | | | Fifth Third Bancorp | 2018 Proxy Statement | | 67 |
| | |
| | PRINCIPAL INDEPENDENT EXTERNAL AUDIT FIRM FEES |
The following table sets forth the aggregate fees billed to Fifth Third Bancorp for the fiscal years ended December 31, 2017 and December 31, 2016 by the Company’s independent external audit firm Deloitte & Touche LLP. | | | | | | | | | | | December 31, | | | | 2017 | | | 2016 | | Audit fees | | $ | 4,053,900 | | | $ | 3,982,212 | | Audit-related fees(a) | | $ | 1,194,300 | | | $ | 1,161,300 | | Tax fees(b) | | $ | 354,902 | | | $ | 258,175 | | All other fees(c) | | $ | 577,661 | | | $ | 79,287 | | | | | | | | | $ | 6,180,763 | | | $ | 5,480,974 | |
(a) Includes fees for services related to benefit plan audits, private and other common trust fund audits, stand-alone statutory audits, examinations of management’s assertion, reports pursuant to Statement on Standards for Attestation Engagements No. 18, loan servicing reports, and trust compliance. (b) Includes fees for services related to tax compliance and tax consulting and planning. Of these amounts, for 2017, $234,956 represents fees for tax compliance services and $119,946 represents fees for tax consulting and planning services, and for 2016, $138,750 represents fees for tax compliance services and $119,425 represents fees for tax consulting and planning services. (c) Includes fees for management consulting, accounting and human resources subscription services in 2017 and fees for accounting and human resource subscription services in 2016. The Audit Committee has concluded that the provision of these services is compatible with maintaining the principal accountant’s independence. The Audit Committee is responsible forpre-approving all auditing services and permittednon-audit services to be performed by the independent external audit firm, except as described below. The Audit Committee will establish general guidelines for the permissible scope and nature of any permittednon-audit services in connection with its annual review of the audit plan and will review such guidelines with the Board of Directors.Pre-approval may be granted by action of the full Audit Committee or, in the absence of such Audit Committee action, by the Audit Committee Chair whose action shall be considered to be that of the entire Committee.Pre-approval shall not be required for the provision ofnon-audit services if (1) the aggregate amount of all suchnon-audit services constitute no more than 5% of the total amount of fees paid by the Company to the auditors during the fiscal year in which thenon-audit services are provided, (2) such services were not recognized by the Company at the time of engagement to benon-audit services, and (3) such services are promptly brought to the attention of the Audit Committee and approved prior to the completion of the audit. No services were provided by Deloitte & Touche LLP during 2017 or 2016 pursuant to this exception. | | | | | 68 | | Fifth Third Bancorp for the fiscal years ended December 31, 2015 and December 31, 2014 by the Company’s independent external audit firm Deloitte & Touche LLP.| 2018 Proxy Statement | | |
| | | COMPANY PROPOSAL 1 | | | | | | | | | | | December 31, | | | | 2015 | | | 2014 | | Audit Fees | | $ | 3,887,038 | | | $ | 3,875,775 | | Audit-Related Fees (a) | | | 1,147,800 | | | | 1,076,175 | | Tax Fees (b) | | | 213,064 | | | | 163,119 | | All Other Fees (c) | | | 115,348 | | | | 182,934 | | | | | | | | | | | | | $ | 5,363,250 | | | $ | 5,298,003 | | | | | | | | | | |
| | ![LOGO](https://files.docoh.com/DEF 14A/0001193125-18-072083/g500098g38t41.jpg) |
(a) | Includes fees for services related to benefit plan audits, private and other common trust fund audits, stand-alone statutory audits, examinations of management’s assertion, reports pursuant to Statement on Standards for Attestation Engagements No. 16, loan servicing reports and trust compliance.Company Proposal 1: Independent External Audit Firm (Item 2 on Proxy Card) The Audit Committee of the Board of Directors proposes and recommends that the shareholders approve the selection by the Audit Committee of the firm of Deloitte & Touche LLP to serve as its independent external audit firm for the Company for the year 2018. The firm has served as the independent external audit firm for Fifth Third Bank since 1970 and the Company since 1975. Representatives of Deloitte & Touche LLP will be present at the Annual Meeting to make such comments as they desire and to respond to questions from shareholders of the Company. Action by the shareholders is not required by law in the appointment of an independent external audit firm, but their appointment is submitted by the Audit Committee in order to give the shareholders a voice in the designation of the independent external audit firm. If the resolution approving Deloitte & Touche LLP as the Company’s independent external audit firm is rejected by the shareholders, then the Audit Committee will reconsider its choice of independent external audit firm. Even if the resolution is approved, the Audit Committee at its discretion may direct the appointment of a different independent external audit firm at any time during the year if it determines that such a change would be in the best interests of the Company and its shareholders. The Audit Committee is directly responsible for the appointment, compensation, retention, and oversight of the Company’s independent external audit firm. The Audit Committee is also responsible for the audit fee negotiations associated with the Company’s retention of Deloitte & Touche LLP. In order to assure continuing auditor independence, the Audit Committee periodically considers whether there should be a regular rotation of the independent external audit firm. Additionally, the Audit Committee and its Chair are directly involved in the selection and mandated rotation of the lead engagement partner from Deloitte & Touche LLP. The members of the Audit Committee believe that the continued retention of Deloitte & Touche LLP to serve as the Company’s independent external audit firm is in the best interest of the Company and its investors. Vote Required Proxies received by Fifth Third Bancorp and not revoked prior to or at the Annual Meeting will be voted in favor of the resolution unless otherwise instructed by the shareholder. Pursuant to our Code of Regulations, the affirmative vote of the holders of a majority of the shares of our common stock present in person or by proxy at the Annual Meeting and entitled to vote on this proposal is required to approve the appointment of Deloitte & Touche LLP. Abstentions will have the same effect as a vote cast against this proposal. Shares not voted on this proposal by brokers and other entities holding shares on behalf of beneficial owners will not be counted as present to vote on this proposal and will have no effect on the outcome. THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS RECOMMENDS THE ADOPTION OF THE RESOLUTION. | | | | | | | Fifth Third Bancorp | 2018 Proxy Statement | | 69 |
(b) | Includes fees for services related to tax compliance and tax consulting and planning. Of these amounts, for 2015, $113,478 represents fees for tax compliance services and $99,586 represents fees for tax consulting and planning services, and for 2014, $74,361 represents fees for tax compliance services and $88,758 represents fees for tax consulting and planning services.
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| | COMPANY PROPOSAL 2 |
(c)Company Proposal 2: Advisory Vote on Executive Compensation (Item 3 on Proxy Card) As required by Section 14A of the Exchange Act, we are seeking advisory shareholder approval of the compensation of the Named Executive Officers as disclosed in this proxy statement. This proposal, commonly known as a“Say-on-Pay” proposal, gives you, as a shareholder, the opportunity to endorse or not endorse our executive pay program through the following resolution: RESOLVED, that the shareholders advise that they approve the compensation of Fifth Third Bancorp’s Named Executive Officers, as disclosed pursuant to the disclosure rules of the Securities and Exchange Commission (which disclosure shall include the “Compensation Discussion and Analysis” section and the compensation tables and any related material in the “Compensation of Named Executive Officers and Directors” section of this proxy statement for its 2018 Annual Meeting). Because your vote is advisory, it will not be binding upon the Board. However, the Human Capital and Compensation Committee will take into account the outcome of the vote when considering future executive compensation arrangements. As discussed in “Compensation Discussion and Analysis,” the Human Capital and Compensation Committee has determined that the compensation structure for executive officers is effective and appropriate and has determined that the Company’s aggregate 2017 Total Rewards package (and potential payouts in the severance andchange-in-control scenarios) for its Named Executive Officers are reasonable and appropriate. Shareholders are encouraged to read the section of this proxy statement titled “Compensation Discussion and Analysis” as well as the tabular disclosure regarding Named Executive Officer compensation together with the accompanying narrative disclosure. We are currently conducting“Say-on-Pay” advisory votes on an annual basis. The next“Say-on-Pay” vote is currently scheduled for the 2019 Annual Meeting. However, please see Company Proposal 3 regarding an advisory vote on the frequency of these“Say-on-Pay” votes. Vote Required Proxies received by Fifth Third Bancorp and not revoked prior to or at the Annual Meeting will be voted in favor of thisnon-binding advisory proposal unless otherwise instructed by the shareholder. Pursuant to our Code of Regulations, the affirmative vote of the holders of a majority of the shares of our common stock present in person or by proxy at the Annual Meeting and entitled to vote on this proposal is required to approve this advisory proposal. Abstentions will have the same effect as a vote cast against this advisory proposal. Shares not voted on this advisory proposal by brokers and other entities holding shares on behalf of beneficial owners will not be counted as present to vote on this proposal and will have no effect on the outcome. THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” ADVISORY APPROVAL OF THE COMPENSATION OF THE NAMED EXECUTIVE OFFICERS AS DISCLOSED PURSUANT TO THE DISCLOSURE RULES OF THE SECURITIES AND EXCHANGE COMMISSION. | | | | | 70 | | Fifth Third Bancorp | 2018 Proxy Statement | | |
| | | COMPANY PROPOSAL 3 | | ![LOGO](https://files.docoh.com/DEF 14A/0001193125-18-072083/g500098g38t41.jpg) |
Company Proposal 3: Advisory Vote on Frequency of Votes on Executive Compensation (Item 4 on Proxy Card) As required by Section 14A of the Exchange Act, we are seeking advisory shareholder approval of the frequency of advisory shareholder votes on compensation of the Named Executive Officers through the following resolution: RESOLVED, that the shareholders advise that an advisory resolution with respect to executive compensation should be presented to the shareholders every one, two, or three years as reflected by their votes for each of these alternatives in connection with this resolution. In voting on this resolution, you should mark your proxy for one, two, or three years based on your preference as to the frequency with which an advisory vote on executive compensation should be held. If you have no preference, you should abstain. The Board believes that current best corporate practices and governance trends favor an annual advisory vote and has determined to hold an annual advisory vote. This would give shareholders the opportunity to react promptly to emerging trends in compensation, and give the Board and the Human Capital and Compensation Committee the opportunity to evaluate compensation decisions in light of yearly feedback from shareholders. Because your vote is advisory, it will not be binding upon the Board. However, the Board will take into account the outcome of the vote when considering the frequency of advisory shareholder approval of the compensation of named executive officers. Although we are only required to conduct an advisory vote on the frequency of votes on executive compensation every six years, we believe that holding an annual vote will allow the shareholders and our Board to promptly consider this frequency as emerging corporate practices and governance trends develop. Vote Required Proxies received by Fifth Third Bancorp and not revoked prior to or at the Annual Meeting will be voted in favor of “every 1 year” unless otherwise instructed by the shareholder. Pursuant to our Code of Regulations, the affirmative vote of the holders of a majority of the shares of our common stock present in person or by proxy at the Annual Meeting and entitled to vote on this proposal is required to approve one of the selections under this advisory proposal. Abstentions will have the same effect as a vote cast against each of the time periods presented in this advisory proposal. Shares not voted on this advisory proposal by brokers and other entities holding shares on behalf of beneficial owners will not be counted as present to vote on this proposal and will have no effect on the outcome. THE BOARD OF DIRECTORS RECOMMENDS HOLDING AN ADVISORY VOTE FOR THE APPROVAL OF THE COMPENSATION OF THE NAMED EXECUTIVE OFFICERS EVERY “1 YEAR.” | | | | | | | Fifth Third Bancorp | 2018 Proxy Statement | | 71 |
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| | Includes fees for subscription services and certain agreed-upon procedures in 2015 and 2014. The Audit Committee has concluded that the provision of these services is compatible with maintaining the principal accountant’s independence. |
The Audit Committee is responsible for pre-approving all auditing services and permitted non-audit services to be performed by the independent external audit firm, except as described below.
The Audit Committee will establish general guidelines for the permissible scope and nature of any permitted non-audit services in connection with its annual review of the audit plan and will review such guidelines with the Board of Directors. Pre-approval may be granted by action of the full Audit Committee or, in the absence of such Audit Committee action, by the Audit Committee Chair whose action shall be considered to be that of the entire Committee. Pre-approval shall not be required for the provision of non-audit services if (1) the aggregate amount of all such non-audit services constitute no more than 5% of the total amount of fees paid by the Company to the auditors during the fiscal year in which the non-audit services are provided, (2) such services were not recognized by the Company at the time of engagement to be non-audit services, and (3) such services are promptly brought to the attention of the Audit Committee and approved prior to the completion of the audit. No services were provided by Deloitte & Touche LLP during 2015 or 2014 pursuant to this exception.
COMPANY PROPOSAL 1:
INDEPENDENT EXTERNAL AUDIT FIRM
(Item 2 on Proxy Card)
The Audit Committee of the Board of Directors proposes and recommends that the shareholders approve the selection by the Committee of the firm of Deloitte & Touche LLP to serve as its independent external audit firm for the Company for the year 2016. The firm has served as the independent external audit firm for the Bank since 1970 and the Company since 1975. Representatives of Deloitte & Touche LLP will be present at the Annual Meeting to make such comments as they desire and to respond to questions from shareholders of the Company. Action by the shareholders is not required by law in the appointment of an independent external audit firm, but their appointment is submitted by the Audit Committee in order to give the shareholders a voice in the designation of the independent external audit firm. If the resolution approving Deloitte & Touche LLP as the Company’s independent external audit firm is rejected by the shareholders, then the Audit Committee will reconsider its choice of independent external audit firm. Even if the resolution is approved, the Audit Committee at its discretion may direct the appointment of a different independent external audit firm at any time during the year if it determines that such a change would be in the best interests of the Company and its shareholders.
The Audit Committee is directly responsible for the appointment, compensation, retention and oversight of the Company’s independent external audit firm. The Audit Committee is also responsible for the audit fee negotiations associated with the Company’s retention of Deloitte & Touche LLP. In order to assure continuing auditor independence, the Audit Committee periodically considers whether there should be a regular rotation of the independent external audit firm. Additionally, the Audit Committee and its Chair are directly involved in the selection and mandated rotation of the lead engagement partner from Deloitte & Touche LLP.
The members of the Audit Committee believe that the continued retention of Deloitte & Touche LLP to serve as the Company’s independent external audit firm is in the best interest of the Company and its investors.
VOTE REQUIRED
Proxies in the form solicited hereby which are returned to the Company will be voted in favor of the resolution unless otherwise instructed by the shareholder. Pursuant to the Company’s Code of Regulations, the affirmative vote of a majority of the shares of the Company’s common stock present in person or by proxy at the Annual Meeting and entitled to vote on this proposal is required to approve the appointment of Deloitte & Touche LLP. Abstentions will have the same effect as a vote cast against the proposal. Shares not voted by brokers or other entities holding shares on behalf of beneficial owners will not be counted as present to vote on this proposal and will have no effect on the outcome.
THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS RECOMMENDS THE ADOPTION OF THE RESOLUTION.
COMPANY PROPOSAL 2:
ADVISORY VOTE ON EXECUTIVE COMPENSATION
(Item 3 on Proxy Card)
As required by Section 14A of the Exchange Act, we are seeking advisory shareholder approval of the compensation of the Named Executive Officers as disclosed in this proxy statement. This proposal, commonly known as a “Say-on-Pay” proposal, gives you as a shareholder the opportunity to endorse or not endorse our executive pay program through the following resolution:
RESOLVED, that the shareholders advise that they approve the compensation of the Company’s Named Executive Officers, as disclosed pursuant to the disclosure rules of the Securities and Exchange Commission (which disclosure shall include the “Compensation Discussion and Analysis” section and the compensation tables and any related material in the “Compensation of Named Executive Officers and Directors” section of this proxy statement for its 2016 Annual Meeting).
Because your vote is advisory, it will not be binding upon the Board. However, the Human Capital and Compensation Committee will take into account the outcome of the vote when considering future executive compensation arrangements.
As discussed in “Compensation Discussion and Analysis” the Human Capital and Compensation Committee has determined that the compensation structure for executive officers is effective and appropriate and has determined that the Company’s aggregate 2015 Total Rewards package (and potential payouts in the severance and change-in-control scenarios) for its Named Executive Officers are reasonable and appropriate. Shareholders are encouraged to read the section of this proxy statement titled “Compensation Discussion and Analysis” as well as the tabular disclosure regarding Named Executive Officer compensation together with the accompanying narrative disclosure.
The Company is currently conducting “Say-on-Pay” advisory votes on an annual basis. The next “Say-on-Pay” vote is currently scheduled for the 2017 Annual Meeting. However, please see Company Proposal 3 regarding an advisory vote on the frequency of these “Say-on-Pay” votes.
VOTE REQUIRED
Pursuant to the Company’s Code of Regulations, the affirmative vote of a majority of the shares of the Company’s common stock present in person or by proxy at the Annual Meeting and entitled to vote on this proposal is required to approve this advisory proposal. Proxies received by the Company and not revoked prior to or at the Annual Meeting will be voted in favor of this non-binding advisory proposal unless otherwise instructed by the shareholder. Abstentions will have the same effect as a vote cast against the advisory proposal. Shares not voted by brokers and other entities holding shares on behalf of beneficial owners will not be counted as present to vote on this proposal and will have no effect on the outcome.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” ADVISORY APPROVAL OF THE COMPENSATION OF THE NAMED EXECUTIVE OFFICERS AS DISCLOSED PURSUANT TO THE DISCLOSURE RULES OF THE SECURITIES AND EXCHANGE COMMISSION
COMPANY PROPOSAL 3:
ADVISORY VOTE ON FREQUENCY OF VOTES ON EXECUTIVE COMPENSATION
(Item 4 on Proxy Card)
As required by Section 14A of the Exchange Act, we are seeking advisory shareholder approval of the frequency of advisory shareholder votes on compensation of the named executive officers through the following resolution:
RESOLVED, that the shareholders advise that an advisory resolution with respect to executive compensation should be presented to the shareholders every one, two or three years as reflected by their votes for each of these alternatives in connection with this resolution.
In voting on this resolution, you should mark your proxy for one, two or three years based on your preference as to the frequency with which an advisory vote on executive compensation should be held. If you have no preference you should abstain.
The Board believes that current best corporate practices and governance trends favor an annual advisory vote and has determined to hold an annual advisory vote. This would give shareholders the opportunity to react promptly to emerging trends in compensation, and the Board and the Human Capital and Compensation Committee the opportunity to evaluate compensation decisions in light of yearly feedback from shareholders.
Because your vote is advisory, it will not be binding upon the Board. However, the Board will take into account the outcome of the vote when considering the frequency of advisory shareholder approval of the compensation of named executive officers.
Although we are only required to conduct an advisory vote on the frequency of votes on executive compensation every six years, we believe that holding an annual vote will allow the shareholders and our Board to promptly consider this frequency as emerging corporate practices and governance trends develop.
VOTE REQUIRED
Pursuant to the Company’s Code of Regulations, the affirmative vote of a majority of the shares of the Company’s Common Stock present in person or by proxy at the Annual Meeting and entitled to vote on this proposal is required to approve one of the selections under this advisory proposal. Proxies received by the Company and not revoked prior to or at the Annual Meeting will be voted in favor of “every 1 year” unless otherwise instructed by the shareholder. Abstentions, and shares not voted by shareholders of record present or represented at the Annual Meeting and entitled to vote, will have the same effect as a vote cast against this advisory proposal. Shares not voted by brokers and other entities holding shares on behalf of beneficial owners will not be counted as present to vote on this proposal and will have no effect on the outcome.
THE BOARD OF DIRECTORS RECOMMENDS HOLDING AN ADVISORY VOTE FOR THE APPROVAL OF THE COMPENSATION OF THE NAMED EXECUTIVE OFFICERS EVERY “1 YEAR”
20172019 SHAREHOLDER PROPOSALS
Shareholder Proposals to be included in the Company’s Proxy Statement
In order for a shareholder proposal for the 2017 Annual Meeting of Shareholders to be eligible for inclusion in the Company’s proxy statement, it must comply with the requirements of Rule 14a-8 of the Securities Exchange Act of 1934 (the “Exchange Act”), and must be received by the Company on or before November 10, 2016
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Shareholder Proposals to be included in Fifth Third Bancorp’s Proxy Statement. In order for a shareholder proposal for the 2019 Annual Meeting of Shareholders to be eligible for inclusion in our proxy statement, it must comply with the requirements of Rule14a-8 of the Exchange Act and must be received by Fifth Third Bancorp on or before November 6, 2018 at the following address or facsimile number: Fifth Third Bancorp c/o Fifth Third Legal Department Office of the Corporate Secretary 38 Fountain Square Plaza MD10AT76MD10909F
Cincinnati, Ohio 45263 Attn: Corporate Secretary Facsimile: (513)534-6757 Shareholder Proposals not included in the Company’sFifth Third Bancorp’s Proxy Statement .Any shareholder who intends to propose any matter to be acted upon at the 20172019 Annual Meeting of Shareholders without such proposal being included in the Company’sour proxy statement as a shareholder proposal must send a notice to the Corporate Secretary using the address and facsimile number listed above no earlier than January 19, 201717, 2019 and no later than February 18, 2017.16, 2019. If the notice is not provided by February 18, 2017,16, 2019, and the proposal is voted upon, SEC rules permit the persons named as proxies for the 20172019 Annual Meeting will be allowed to exercise discretionary authority to vote upon such additional proposal without describingif we advise shareholders in the proxy statement for the 20172019 Annual Meeting how they intend to vote on it. The notice to the Corporate Secretary must meet the requirements set forth in the Company’sour Code of Regulations which are summarized below. The notice must include: the name and address of the record shareholder as they appear on the Company’sin Fifth Third Bancorp’s books and the name and address of any beneficial owner of the shares on whose behalf the record shareholder is acting, and, if different, the current name and address of the shareholder and any beneficial owner; the class and number of shares of the CompanyFifth Third Bancorp held of record by the shareholder or beneficially owned as of the date of the notice, and a representation that the shareholder will notify the CompanyFifth Third Bancorp in writing within five (5) business days after the record date for such meeting of the class and number of shares of the CompanyFifth Third Bancorp held of record or beneficially owned on such record date; any other information relating to such shareholder and beneficial owner, if any, that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for the matter proposed; such shareholder’s and any beneficial owner’s written consent to the public disclosure of information provided to the CompanyFifth Third Bancorp in the notice; | | | | | 72 | | Fifth Third Bancorp | 2018 Proxy Statement | | |
| | | 2019 SHAREHOLDER PROPOSALS | | ![LOGO](https://files.docoh.com/DEF 14A/0001193125-18-072083/g500098g38t41.jpg) |
a representation that the shareholder intends to appear at the meeting to bring such nomination or other business before the meeting; and such other information as may reasonably be required by the Board of Directors and described in this proxy statement . statement.The notice must also include: | a) | any agreements, arrangements or understandings entered into by the shareholder or beneficial owner and their affiliates with respect to equity securities of the Company,Fifth Third Bancorp, including any put or call arrangements, derivative securities, short positions, borrowed shares or swap or similar arrangements, |
2017 SHAREHOLDER PROPOSALS
| specifying in each case the effect of such agreements, arrangements or understandings on any voting or economic rights of equity securities of the Company,Fifth Third Bancorp, in each case as of the date of the notice and in each case describing any changes in voting or economic rights which may arise pursuant to the terms of such agreements, arrangements or understandings; |
| b) | to the extent not covered in clause (a) above, any disclosures that would be required pursuant to Item 5 or Item 6 of Schedule 13D (regardless of whether the requirement to file a Schedule 13D is applicable to the shareholder or beneficial owner); and |
| c) | a representation that the shareholder will notify the Company in writing within five (5) business days after the record date for such meeting of the information set forth in clauses (a) and (b) above as of the record date. |
If the notice relates to the nomination of directors, it must include for each nominee: all information relating to such nominee that is required to be disclosed in a proxy statement or other filing required to be made in connection with solicitations of proxies for election of directors in a contested election pursuant to Section 14 of the Exchange Act (including such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected); a description of all direct and indirect compensation and other material monetary agreements, arrangements and understandings during the past three (3) years, and any material relationships, between or among the nominating shareholder and beneficial owner, if any, and their respective affiliates and associates, or others acting with them, and each proposed nominee, and his or her respective affiliates and associates, or others acting with them, including all information that would be required to be disclosed under Item 404 of RegulationS-K if the nominating shareholder and any beneficial owner, or any affiliate or associate or any person acting with them, were the “registrant” for purposes of such rule and the nominee were a director or executive officer of the registrant; and information necessary to make a determination of the eligibility of the nominee to serve as an independent director of the CompanyFifth Third Bancorp as defined by Rule 5605(a)(2) of the National Association of Securities Dealers listing standards and to meet the requirements of membership for each of the Committees of the Company’sFifth Third Bancorp’s Board of Directors (which are contained in the charters of the Committees and are accessible on the Company’sour website at www.53.com) and such information that could be material to a reasonable shareholder’s understanding of the independence, or lack thereof, of the nominee. | | | | | | | Fifth Third Bancorp | 2018 Proxy Statement | | 73 |
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| | 2019 SHAREHOLDER PROPOSALS |
| information that could be material to a reasonable shareholder’s understanding of the independence, or lack thereof, of the nominee. |
If the notice relates to any business other than nomination of directors, it must contain: a description in reasonable detail of the business to be brought before the meeting, the reasons for conducting such business at the meeting, and any material interest of the proposing shareholder and any beneficial owner in such business; the text of the proposal or business (including the text of any resolutions proposed for consideration and, if the business includes a proposal to amend the Company’sour Code of Regulations or Articles of Incorporation, the language of the proposed amendment); and a description of all agreements, arrangements and understandings between the proposing shareholder, any beneficial owner, and any other person or persons (including their names) acting in connection with them in bringing the proposal of such business. OTHER BUSINESS
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| | | OTHER BUSINESS | | ![LOGO](https://files.docoh.com/DEF 14A/0001193125-18-072083/g500098g38t41.jpg) |
Our Code of Regulations provides that only such business will be conducted as is properly brought before the meeting in accordance with the procedures set forth in Article II, Section 11 of the Code of Regulations. Except as otherwise provided by law, our Articles or the Code of Regulations, the determination of whether any business sought to be brought before the Annual Meeting of Shareholders is properly brought before such meeting will be made by the Chair of such meeting. If the Chair determines that any business is not properly brought before the meeting, then any such business will not be conducted or considered. Discretion of Proxies .The Board of Directors does not know of any other business to be presented toat the Annual Meeting and does not intend to bring other matters before the Annual Meeting. However, if any other matters properly come before the Annual Meeting, it is intended that the persons named in the Proxy will vote thereon according to their best judgment and interest of the Company.Fifth Third Bancorp. No other shareholder has informed the Companyus of any intention to propose any other matter to be acted upon at the Annual Meeting. Accordingly, the persons named in the accompanying Proxy are allowed to exercise their discretionary authority to vote upon any such proposal without the matter having been discussed in this proxy statement. HouseholdingHouseholding. Shareholders of record who have the same address and last name and have not previously requested electronic delivery of proxy materials will receive a single envelope containing the notices or the proxy statement and proxy card for all shareholders having that address. The notice or proxy card for each shareholder will include that shareholder’s unique control number needed to vote his or her shares. This procedure reduces our printing costs and postage fees. If, in the future, you do not wish to participate in householding and prefer to receive your notice or proxy statement in a separate envelope, or if your household currently receives more than one Notice or Proxy Statement and in the future, you would prefer to participate in householding, please call us toll-free at 1-800-821-87801-800-488-8035 in the U.S., or inform us in writing at: Fifth Third Bancorp, c/o D.F. King & Co., Inc., 48 Wall Street – 22nd Floor, New York, NY 10005, or by email at FITB@dfking.com. We will respond promptly to such requests. For those shareholders who have the same address and last name and who request to receive a printed copy of the proxy materials by mail, we will send only one copy of such materials to each address unless one or more of those shareholders notifies us, in the same manner described above, that they wish to receive a printed copy for each shareholder at that address. Beneficial shareholders can request information about householding from their banks, brokersbank, broker or other holders of record.nominee. CopiesCopies. A copy of the Company’sour Annual Report onForm 10-K for the most recent fiscal year, as filed with the Securities and Exchange Commission, not including exhibits, will be mailed without charge to shareholders upon written request. Requests should be addressed to Investor Relations, 38 Fountain Square Plaza, MD 1090QC, Cincinnati, OH 45263 or by emailing ir@53.com. You can also view information and request documents from the Investor Relations page of Fifth Third’s website at www.53.com. TheForm 10-K includes certain listed exhibits, which will be provided upon payment of a fee covering the Company’sour reasonable expenses. By Order of the Board of Directors Heather Russell KoenigJelena McWilliams
Corporate Secretary ANNEX A
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| | ANNEX A: REGULATIONS FOR CONDUCT |
REGULATIONS FOR CONDUCT AT THE APRIL 19, 201617, 2018 ANNUAL MEETING OF SHAREHOLDERS OF FIFTH THIRD BANCORP We welcome you to the 20162018 Annual Meeting of Shareholders of Fifth Third Bancorp. In order to provide a fair and informative Meeting, we ask you to honor the following regulations for the Meeting. 1. GENERAL ORDER OF BUSINESS. The business of the Meeting will be taken up as set forth in the Agenda attached to these Regulations. Annual Meetings are business meetings, and they can be effective only if conducted in an orderly, business-like manner. Strict rules of parliamentary procedure will not be followed. The Chairman of the Meeting will controlhas sole authority to preside over the meetingMeeting and make any required procedural rulings. Please followand all determinations with respect to the instructionsconduct of the Chairman. Thank you for your cooperation. 1.ELECTION OF DIRECTORS. Every shareholder havingMeeting. Any action taken by the right to vote shallChairman at the Meeting will be entitled to vote in person or by proxy. Each shareholder of record shall be entitled to one vote for each share of common stock registered in his or her namefinal, conclusive and binding on the booksall persons. The Secretary of the Company. All uncontested elections where cumulative voting is not in effectBancorp shall be determined by a majority voting standard whereby a director will only be elected if he or she receives more votes “for” election than votes “against” election. All other elections shall be determined by a plurality vote.
The Company has, however, adopted provisions of its Corporate Governance Guidelines stating that,act as long as cumulative voting is not in effect, in an uncontested election of Directors (i.e., an election where the only nominees are those recommended by the Board of Directors), any nominee for Director who receives a greater number of votes “against” his or her election than votes “for” his or her election will promptly tender his or her resignation to the Chairmansecretary of the Board following certification of the shareholder vote. The Nominating and Corporate Governance Committee will promptly consider the tendered resignation and will recommend to the Board whether to accept or reject the tendered resignation no later than 60 days following the date of the shareholders’ meeting at which the election occurred. In considering whether to accept or reject the tendered resignation, the Nominating and Corporate Governance Committee will consider factors deemed relevant by the Committee members including, without limitation, the Director’s length of service, the Director’s particular qualifications and contributions to Fifth Third, the reasons underlying the majority against vote (if known) and whether these reasons can be cured, and compliance with stock exchange listing standards and the Corporate Governance Guidelines. The Board will act on the Nominating and Corporate Governance Committee’s recommendation no later than 90 days following the date of the shareholders’ meeting at which the election occurred. In considering the Nominating and Corporate Governance Committee’s recommendation, the Board will consider the factors considered by the Committee and such additional information and factors the Board believes to be relevant.Meeting.
2.VOTING AT THE MEETING. Every shareholder having the right to vote shall be entitled to vote in person or by proxy at the Meeting.If you have already voted by proxy, there is no need to vote by ballot, unless you wish to change your vote.vote. The polls shall be opened immediately after completion of the nominations, and shall remain open until closed by the Chairman. After the closing of the polls, no further voting shall be permitted and no further proxies, ballots or evidence shall be accepted by the Inspectors of Election. Except as otherwise stated in the proxy materials for this Meeting or as required by Ohio law, each matter brought before this Meeting for a vote shall require the affirmative vote of a majority of the votes entitled to be cast by the holders of the Company’s common stock at this Meeting and entitled to vote on such matter. 3.ITEMS OF BUSINESS; SHAREHOLDER PROPOSALS – THREE MINUTE LIMIT. The items of business listed on the accompanying Agenda are expected to be properly introduced at the Meeting and taken up in the orderMatters not set forth in the Agenda. Additional mattersAgenda may be proposed by shareholders of record in accordance with the federal securities laws, the Ohio Revised Code and theseour Code of Regulations. The Chairman will not entertain any proposals that are inconsistent with Ohio law or that relate to activities that have been delegated to the Company’s Board of Directors by the authority of Ohio law. Shareholder proposals will be entertained in the following order: first, any proposals of which the CompanyBancorp was informed prior to the commencement of this Meeting; and then, any other proposals properly made in accordance with these Regulations. Each proposing shareholder will be allotted three minutes in which to present the proposal and any desired remarks in support thereof. Properly introduced motions need not be seconded in order to be considered by the shareholders at this Meeting. 4.QUESTIONS/STATEMENTS BY SHAREHOLDERS – ONE MINUTE LIMIT. To makeask a proposalquestion or to speak at the Meeting you must be either a shareholder of record as of February 26, 201623, 2018 or a person named in a proxy given by such a shareholder. No other persons will be permitted to make a proposal or to speak at the Meeting. There will be one period for questions and statements by shareholders as set forth on the Agenda attached to these Regulations. In order that we may give as many shareholders as possible the opportunity to speak, remarks Remarks and questions will be limited to one minute per shareholder. You must restrict yourselfshareholder and to one comment or question at a time so that others may have an opportunitytime. Additional turns to be heard. Each shareholder may have only one turn to speak until all shareholders who wish to speak have had the opportunity to do so- additional turns may be allowed as time permits.
If you wish to speak, please raise your hand and wait until you are recognized. Please do not address the Meeting until recognized by the Chairman. When you are recognized, please state your name, place of residence, and whether you are a Fifth Third shareholder or a holder of a shareholder proxy, and, in the latter case, identify the shareholder on whose behalf you are speaking. All questions should be directed to the Chairman, who may call on other persons to respond or further direct questions when appropriate. If you have a matter of individual concern which is not an appropriate subject for general discussion, please defer discussion until after the Meeting at which time officers of the Company will be available. The Chairman will stop discussions which are repetitive, derogatory, over the time limit, irrelevant to the business of the CompanyBancorp or the items on the Agenda for the Meeting, related to pending or threatened litigation, regulatory proceedings or similar actions or otherwise inappropriate. Derogatory references to personalities, comments that are in bad taste, the airing of personal grievances, the injection of irrelevant controversy, personal attacks, refusal to follow these Regulations or interference with any speaker will not be permitted and will be a basis for silencing or removal from the Meeting.
| | | | | 76 | | Fifth Third Bancorp | 2018 Proxy Statement | | |
| | | ANNEX A: REGULATIONS FOR CONDUCT | | ![LOGO](https://files.docoh.com/DEF 14A/0001193125-18-072083/g500098g38t41.jpg) |
5.MISCELLANEOUS. No recording devices, photographic equipment, or bullhorns will be permitted into the Meeting. No written materials may be distributed by any person at or in physical proximity to the Meeting. The Chairman of the Meeting shall have the power to silence or have removed any person in order to ensure the orderly conduct of the Meeting. 6.ADMINISTRATION AND INTERPRETATION. The Chairman of the Meeting has sole authority to preside over the Meeting and make any and all determinations with respect to the conduct of the Meeting, including, without limitation, the administration and interpretation of these regulations and procedures. The Chairman also has sole authority to create such additional regulations and procedures and to waive full or partial compliance with any regulation or procedure as the reasonably determines. Any action taken by the Chairman at the Meeting will be final, conclusive and binding on all persons. The Secretary of the Company shall act as secretary of the Meeting.
THANK YOU FOR YOUR COOPERATION AND ENJOY THE MEETING. | | | | | | | Fifth Third Bancorp | 2018 Proxy Statement | | 77 |
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| | AGENDA |
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Annual Meeting of Shareholders APRIL 19, 201617, 2018 AGENDA
Call to Order Introductions Approval of 20152017 Minutes Nomination and Election of Directors Ratification of Auditors Approval of executive compensationExecutive Compensation Determination of frequencyFrequency of votesVotes on executive compensationExecutive Compensation Presentation of 20152017 Results Question and Answer Session Announcement of Voting Results on all matters presentedAll Matters Presented Adjournment
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38 Fountain Square PlazaFOUNTAIN SQUARE PLAZA Cincinnati, OhioCINCINNATI, OHIO 45263
(800)972-3030
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| | | | | | | | ![LOGO](https://files.docoh.com/DEF 14A/0001193125-18-072083/g500098pcpg01a.jpg) | | VOTEBY INTERNET | | WWW.CESVOTE.COMWWW.CESVOTE.COM
| | | | Use the Internet to submit your proxy until 11:00 a.m., Easterneastern daylight saving time, on the morning of the Annual Meeting, April 19, 2016.17, 2018. Have your proxy card in hand when you access the website listed above and follow the instructions provided. | | | | | | VOTEBY TELEPHONE | | 1-888-693-8683 | | | | | | Use any touch-tone telephone to submit your proxy until 11:00 a.m., Easterneastern daylight saving time, on the morning of the Annual Meeting, April 19, 2016.17, 2018. Have your proxy card in hand when you call and follow the instructions provided. | | | | | | VOTEBY MAIL | | | | | | | | Please mark, sign, date and promptly mail your proxy card using thepostage-paid envelopeprovided or return your proxy card to: Fifth Third Bancorp, c/o Corporate Election Services, PO Box 3230, Pittsburgh PA 15230 to ensure that your vote is received prior to the Annual Meeting on April 19, 2016.17, 2018. |
| | | | | | | | | Vote by Telephone | | | | Vote by Internet | | | | Vote by Mail | Call Toll-Free using a | | | | Access the Website and | | | | Sign and return your proxy | touch-tone telephone: | | | | submit your proxy: | | | | in the postage-paid | 1-888-693-8683 | | | | www.cesvote.com | | | | envelope provided. |
NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL: The Notice of meeting, proxy statement, and proxy card are available at www.ViewMaterial.com/fitb IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, DETACH ALONG THE PERFORATION, ![LOGO](https://files.docoh.com/DEF 14A/0001193125-16-499200/g46668img4.jpg) MARK, SIGN, DATE, AND RETURN THE BOTTOM PORTION USING THE ENCLOSED ENVELOPE. ![LOGO](https://files.docoh.com/DEF 14A/0001193125-16-499200/g46668img4.jpg) ![LOGO](https://files.docoh.com/DEF 14A/0001193125-18-072083/g500098pcpg01c.jpg)
| | | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | | | FIFTH THIRD BANCORP | | ANNUAL MEETING PROXY CARD |
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. The undersigned hereby appoints James P. Hackett, Kevin T. KabatEmerson L. Brumback, Greg D. Carmichael and Marsha C. Williams, and each of them, with full power of substitution and power to act alone, as proxies to vote all shares of stock of FIFTH THIRD BANCORP which the undersigned would be entitled to vote if personally present and acting at the Annual Meeting of the Shareholders of Fifth Third Bancorp, to be held April 19, 201617, 2018 at the Hyatt Regency Cincinnati, Regency Ballroom, 151 West 5thJarson-Kaplan Theater, located at the Aronoff Center for the Arts, 650 Walnut Street, Cincinnati, Ohio, and at any adjournments or postponements thereof. In their discretion, the PROXIES are authorized to vote upon such other business as may properly come before the meeting. This PROXY when executed will be voted in the manner directed herein by the undersigned SHAREHOLDER(S).If no direction is made, this PROXY will be voted FOR Items 1, 2, and 3, and 1 Year on Item 4. | | | | | | | | | | | | | , 20162018 | | | | | Shareholder Sign Here | | Date | | | | | | | | | | | , 20162018 | | | | | Shareholder (Joint Owner) Sign Here | | Date | | | | | | | | Please sign exactly as name appears on this proxy card. If shares are held jointly, each holder should sign. When signing as attorney, executor, administrator, corporation, trustee, guardian, or custodian, please give full title as such. If a corporation, please sign in full corporate name by President or other authorized officer. If a partnership, please sign in partnership name by authorized person. |
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Annual Meeting of Shareholders of FIFTH THIRD BANCORP Hyatt Regency Cincinnati, Regency BallroomJarson-Kaplan Theater, located at the Aronoff Center for the Arts,
151 West 5th650 Walnut Street, Cincinnati, Ohio, at 11:30 a.m., Eastern Time,eastern daylight saving time, April 19, 2016.17, 2018.
Upon arrival, please present this admission ticket and photo identification at the registration desk. Please tear off this Admission Ticket. If you plan to attend the Annual Meeting of shareholders,Shareholders, you will need this ticket to gain entrance to the meeting. This ticket is valid to admit the shareholder to the Annual Meeting. The Annual Meeting of shareholdersShareholders will be held at the following address: Hyatt Regency Cincinnati, Regency Ballroom, 151 West 5thThe Aronoff Center for the Arts, Jarson-Kaplan Theater, 650 Walnut Street, Cincinnati, Ohio,
at 11:30 a.m., Eastern Time,eastern daylight saving time, April 19, 2016.17, 2018. You must present this ticket to gain admission to the meeting. You should send in your proxy or vote electronically even if you plan to attend the meeting. IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, DETACH ALONG THE PERFORATION, ![LOGO](https://files.docoh.com/DEF 14A/0001193125-16-499200/g46668img4.jpg) MARK, SIGN, DATE, AND RETURN THE BOTTOM PORTION USING THE ENCLOSED ENVELOPE. ![LOGO](https://files.docoh.com/DEF 14A/0001193125-16-499200/g46668img4.jpg) ![LOGO](https://files.docoh.com/DEF 14A/0001193125-18-072083/g500098pcpg01c.jpg)
----------------------------------------------------------------------------------------------------------------------------------------------------------------- The Board of Directors recommends a vote “FOR”For the election of Directors, “FOR”For Items 2 and 3, and “1 YEAR” on Item 4. 1. | Election of all members of the Board of Directors to serve until the Annual Meeting of Shareholders in 2017:2019: |
| | | | | | | | | | | | | | | | | | | Nominees: | | FOR | | AGAINST | | ABSTAIN | | | | FOR | | AGAINST | | ABSTAIN | | | (01) Nicholas K. Akins | | q❑ | | q ❑ | | q ❑ | | (07) Gary R. HemingerGreg D. Carmichael | | q❑ | | q ❑ | | q ❑ | | | (02) B. Evan Bayh III | | q❑ | | q ❑ | | q ❑ | | (08) Jewell D. HooverGary R. Heminger | | q❑ | | q ❑ | | q ❑ | | | (03) Jorge L. Benitez | | q❑ | | q ❑ | | q ❑ | | (09) Michael B. McCallisterJewell D. Hoover | | q❑ | | q ❑ | | q ❑ | | | (04) Katherine B. Blackburn | | q❑ | | q ❑ | | q ❑ | | (10) Hendrik G. MeijerEileen A. Mallesch | | q❑ | | q ❑ | | q ❑ | | | (05) Emerson L. Brumback | | q❑ | | q ❑ | | q ❑ | | (11) Marsha C. WilliamsMichael B. McCallister | | q❑ | | q ❑ | | q ❑ | | | (06) Greg D. CarmichaelJerry W. Burris | | q❑ | | q ❑ | | q ❑ | | (12) Marsha C. Williams | | ❑ | | ❑ | | ❑ |
2. | Approval of the appointment of the firm of Deloitte & Touche LLP to serve as the independent external audit firm for the Company for the year 2016.2018: |
| | | | | | | | | | | q❑ FOR | | q❑ AGAINST | | q❑ ABSTAIN | | |
3. | An advisory approval of the Company’s executive compensation.compensation: |
| | | | | | | | | | | q❑ FOR | | q❑ AGAINST | | q❑ ABSTAIN | | |
4. | An advisory vote to determine whether the shareholder vote on the compensation of the Company’s executives will occur every 1, 2, or 3 years.years: |
| | | | | | | | | | | q❑ 1 YEAR | | q❑ 2 YEARS | | q❑ 3 YEARS | | q❑ ABSTAIN |
(Continued, and please sign on reverse side.) |
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