Enterprise risk appetite statement
We dynamically manage our risk appetite to optimize long-term shareholder value while supporting our employees, customers, and communities. In doing so, we:
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| | Achieve our business objectives and protect our brand by accepting risks that are understood, quantifiable, and analyzed through all phases of the economic cyclecycle. |
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| 2. | Earn trust and loyalty from all stakeholders, including employees, customers, communities, and shareholdersshareholders. | | |
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| 3. | Reward individual and team performance by taking into account risk discipline and performance measurementmeasurement. | | |
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| 4. | Practice disciplined capital and liquidity management so that the firmwe can operate effectively through all economic cyclescycles. | |
We strive to embed a culture of risk management throughout PNC. With each of our employees, we reinforce the importance of managing risks in executing on our strategic objectives and in support of our desired risk appetite. We approve our Enterprise Risk Management Framework and key risk policies at the Board level. We discuss our risk management approach in the Risk Management section of Item 7 of our 2015this year’s Annual Report on Form10-K. We reflect our desired enterprise risk appetite by helping to ensure that our performance management and compensation arrangements for all employees are balanced in ways that do not create incentives for imprudent or excessive risk-taking, are designed to provide a superior customer experience, and best reflectare reflective of our strategic objectives, business model, management structure and management structure.risk appetite. Our compensation philosophy supports and reflects PNC’s risk appetite and risk management culture. Our risk policies and procedures guide our management decisions, including how we pay employees. By setting and communicating our risk appetite in advance, we seek to manage and control the risks that employees can take or influence, consistent with their roles and responsibilities. All employees have performance goals tied to business and individual performance, but each employee, no matter their role at PNC, also has customer focus and risk management goals. We evaluate employee performance against these goals, including the risk management goals, in addition to considering risk outcomes from actions taken in prior years. This year, we also required, for each of our employees, a rating for how well they achieved the risk management goal. We incorporate this comprehensive evaluation of employee risk management into our performance and incentive compensation decisions. In addition, all employees are encouraged to collaborate across groups to identify and mitigate risks and elevate and address identified issues as required.or concerns. Our compensation program is designed to encourage management of risk within our appetite and discourage inappropriate risk-taking by granting a diverse portfolio of incentive compensation awards to our executives and other senior employees that is expected to reward desired behavior over time. Specifically, we balance our portfolio of awards between fixed and variable compensation; cash and equity-based compensation; and annual and long-term compensation. We base awards on the Committee’s assessment of a variety of quantitative and qualitative performance measurements, both on an absolute and a relative basis. Compensation decisions also rely on discretion to consider other factors, such as effective risk management, commitment to delivering a superior customer experience, compliance with controls and ethical duties.duties, competition for top talent, market-based pay 5658 THE PNC FINANCIAL SERVICES GROUP, INC. - 20162019 Proxy Statement
COMPENSATION AND RISK levels and the need to attract and engage our leaders. As discussed in ourthe CD&A, the long-term incentive program includes grants to our NEOs and certain other executives that include robusta risk-based performance metrics.metric. Payouts under these grants could be reduced or eliminatedforfeited if we do not meet specific risk criteria over the vesting period.CET1 Ratio described on page 44. We also have a broad-based clawback and incentive compensation adjustment policy as described beginning on pages 51 and 52.page 54. We maintain an equity program for approximately 130 senior leaders below the executive levels that is designed to help ensure that their incentive compensation awards reflect risk-adjusted performance outcomes that would pay out, if at all, over a four-yearthree-year period. These senior leaders receive a portion of their incentive compensation in an equity-based award that is subject to a risk-based review trigger. Thethe same risk-related performance metric that will be applied to the PSU and RSU grants made to NEOs and certain other executives. Additionally, the equity award agreements for ourthese senior leaders all contain an enterprise-wide risk-based review trigger, while the agreements for senior leaders in business segments (as opposed to those in administrative or control functions) contain an additional business-specific risk-based review trigger. If a risk-based review is triggered, the applicable review committee will determine whether a downward adjustment is warranted, up to a complete cancellation of the share units in that year’s tranche. Risk review of compensation plans Our Chief Risk Officer (CRO) reports at least quarterly to our Board’sthe Personnel and Compensation Committee to discuss risk management and review the connection between effective risk management and incentive compensation. Our CROThe Chief Risk Officer also presents the Committee with a risk assessment for each of our principal business units as well asand a collective assessment of staff functions, including finance, human resources, legal, operations and technology. In addition, we have a practice of havingmaintain at least one director who is a member of both the Personnel and Compensation and Risk Committees. At present, the Chair of the Risk Committee also serves on the Personnel and Compensation Committee. We also have systematically identified individuals — or groups of employees — who could potentially expose us to material amounts of risk or financial loss, either individually or as a collective group.loss. As with our incentive compensation planrisk assessment described below, we alsohave established a cross-functional team that continues to identify and monitor these individuals. These individuals or groups.are subject to a supplemental risk management review as part of the performance management process by the Chief Risk Officer and his designees — we take this review into account when determining incentive compensation awards for our most senior executives. We have developed a standardized governance framework for our incentive compensation plans to help monitor and validate these plans. We wantthat our plans to achievebalance risk and reward, comply with applicable laws and regulations, demonstrate fiscal responsibility and maintain an appropriate balance of compensation and risk-adjusted performance — this customer focus. This framework helps to ensure that we have the appropriate procedures, controls and reviewsindependent challenges in place to do so. We will continue to assess and, where appropriate, modify our incentive compensation plans as part ofin accordance with this framework to help ensure our plans appropriately reflect risk considerations, andincluding the management of identified issues, the duration of the risks and to enhance the documentation of existing risk-balancing strategies.alignment with our desired risk appetite. Examples of incentive plan modifications include: Adding or increasing the visibility of risk and customer focus metrics into plans based on the structure of the plan and the nature of the business and the roles of participants Adding or formalizing language around delaying award payments or recapture or reduction of payments where subsequent risk metrics indicate excessive risk taking risk-taking Enhancing documentation of the plan design and use of discretion innon-formulaic plans at the pool funding, business allocation or individual award level Based on our approach to risk management, our comprehensive incentive plan governance framework, our risk assessments for significant businesses and staff functions, and the additioninclusion of risk-based metrics toin our long-term incentive compensation programs, we believe that the risks arising from our compensation plans, policies and practices are not reasonably likely to have a material adverse effect on PNC. THE PNC FINANCIAL SERVICES GROUP, INC. - 20162019 Proxy Statement 5759
COMPENSATION TABLES Summary compensation table | | Name & Principal Position | | Year | | Salary ($)(a) | | Stock Awards ($)(b) | | Non-Equity Incentive Plan Compensation ($)(c) | | Change in Pension Value & Nonqualified Deferred Compensation Earnings ($)(d) | | All Other Compensation ($)(e) | | Total ($) | | | Year | | Salary ($)(a) | | Stock Awards ($)(b) | | Non-Equity Incentive Plan Compensation ($)(c) | | Change in Pension Value & Nonqualified Deferred Compensation Earnings ($)(d) | | All Other Compensation ($)(e) | | Total ($) | | William S. Demchak | | | 2015 | | | $ | 1,100,000 | | | $ | 6,959,910 | | | $ | 4,100,000 | | | $ | 393,715 | | | $ | 165,501 | | | $ | 12,719,126 | | | | 2018 | | | $ | 1,100,000 | | | $ | 9,479,858 | | | | $4,400,000 | | | | $530,583 | | | | $165,853 | | | $ | 15,676,294 | | Chairman, President | | | 2014 | | | $ | 1,089,615 | | | $ | 5,999,978 | | | $ | 3,540,000 | | | $ | 650,626 | | | $ | 57,685 | | | $ | 11,337,904 | | | | 2017 | | | $ | 1,100,000 | | | $ | 6,749,956 | | | | $5,220,000 | | | | $666,341 | | | | $165,556 | | | $ | 13,901,853 | | & Chief Executive Officer | | | 2013 | | | $ | 922,115 | | | $ | 3,863,752 | | | $ | 3,083,333 | | | $ | 53,668 | | | $ | 59,235 | | | $ | 7,982,103 | | | | 2016 | | | $ | 1,100,000 | | | $ | 7,799,958 | | | | $3,400,000 | | | | $623,494 | | | | $218,008 | | | $ | 13,141,460 | | Robert Q. Reilly | | | 2015 | | | $ | 500,000 | | | $ | 1,874,944 | | | $ | 1,400,000 | | | $ | 193,677 | | | $ | 43,344 | | | $ | 4,011,965 | | | | 2018 | | | $ | 673,077 | | | $ | 2,362,411 | | | | $1,650,000 | | | | $178,815 | | | | $ 43,116 | | | $ | 4,907,419 | | Executive Vice President & | | | 2014 | | | $ | 500,000 | | | $ | 1,549,936 | | | $ | 1,375,000 | | | $ | 316,836 | | | $ | 60,922 | | | $ | 3,802,694 | | | | 2017 | | | $ | 500,000 | | | $ | 1,774,900 | | | | $1,862,500 | | | | $339,545 | | | | $ 47,817 | | | $ | 4,524,762 | | Chief Financial Officer | | | 2013 | | | $ | 475,000 | | | $ | 1,189,642 | | | $ | 1,075,000 | | | $ | 35,169 | | | $ | 35,327 | | | $ | 2,810,138 | | | | 2016 | | | $ | 500,000 | | | $ | 1,899,844 | | | | $1,275,000 | | | | $295,003 | | | | $ 47,495 | | | $ | 4,017,342 | | Michael P. Lyons | | | 2015 | | | $ | 700,000 | | | $ | 4,019,824 | | | $ | 2,020,000 | | | $ | 22,953 | | | $ | 6,754 | | | $ | 6,769,531 | | | | 2018 | | | $ | 700,000 | | | $ | 5,099,853 | | | | $2,800,000 | | | | $ 26,429 | | | | $ 19,459 | | | $ | 8,645,741 | | Executive Vice President & Head of | | | 2014 | | | $ | 700,000 | | | $ | 4,079,882 | | | $ | 1,980,000 | | | $ | 21,677 | | | $ | 6,577 | | | $ | 6,788,136 | | | Corporate & Institutional Banking | | | 2013 | | | $ | 700,000 | | | $ | 4,555,912 | | | $ | 2,020,000 | | | $ | 21,411 | | | $ | 2,154 | | | $ | 7,299,477 | | | Executive Vice President, Head of | | | | 2017 | | | $ | 700,000 | | | $ | 3,959,882 | | | | $2,700,000 | | | | $ 24,170 | | | | $ 14,529 | | | $ | 7,398,581 | | Corporate & Institutional Banking and Asset Management Group | | | | 2016 | | | $ | 700,000 | | | $ | 4,079,848 | | | | $1,940,000 | | | | $ 22,610 | | | | $ 36,228 | | | $ | 6,778,686 | | E William Parsley, III | | | 2015 | | | $ | 500,000 | | | $ | 4,549,900 | | | $ | 1,300,000 | | | $ | 50,634 | | | $ | 22,108 | | | $ | 6,422,642 | | | | 2018 | | | $ | 686,538 | | | $ | 5,699,808 | | | | $2,800,000 | | | | $ 69,183 | | | | $ 21,030 | | | $ | 9,276,559 | | Executive Vice President, Chief | | | 2014 | | | $ | 500,000 | | | $ | 4,574,917 | | | $ | 1,050,000 | | | $ | 164,669 | | | $ | 10,200 | | | $ | 6,299,786 | | | Investment Officer & Treasurer | | | 2013 | | | $ | 500,000 | | | $ | 4,194,598 | | | $ | 1,075,000 | | | | – | | | $ | 5,577 | | | $ | 5,775,175 | | | Joseph C. Guyaux | | | 2015 | | | $ | 620,000 | | | $ | 1,999,842 | | | $ | 1,130,000 | | | $ | 708,458 | | | $ | 38,551 | | | $ | 4,496,851 | | | Senior Vice Chairman & CEO & | | | 2014 | | | $ | 620,000 | | | $ | 1,874,984 | | | $ | 1,380,000 | | | $ | 725,352 | | | $ | 22,235 | | | $ | 4,622,571 | | | President of PNC Mortgage | | | 2013 | | | $ | 620,000 | | | $ | 1,605,308 | | | $ | 1,255,000 | | | $ | 435,506 | | | $ | 34,253 | | | $ | 3,950,067 | | | Executive Vice President, | | | | 2017 | | | $ | 600,000 | | | $ | 4,349,903 | | | | $3,200,000 | | | | $183,992 | | | | $ 18,696 | | | $ | 8,352,591 | | Chief Operating Officer | | | | 2016 | | | $ | 588,462 | | | $ | 4,799,872 | | | | $2,250,000 | | | | $123,239 | | | | $148,341 | | | $ | 7,909,914 | | Joseph E. Rockey* | | | | 2018 | | | $ | 500,000 | | | $ | 1,999,848 | | | | $1,750,000 | | | | $ 16,400 | | | | $ 21,126 | | | $ | 4,287,374 | | Executive Vice President, | | | | | | | | | | | | | | | | Chief Risk Officer | | | | | | | | | | | | | | | |
| * | Mr. Rockey was not an NEO in 2016 and 2017. |
| (a) | The “Salary”This column includes any salary amounts deferred by an NEO under qualified (ISP) ornon-qualified (DCIP) benefit plans. We describe these PNC plans on page 69. Please also see71. See theNon-qualified deferred compensation in fiscal 20152018 table on page 7072 for the aggregate deferrals during 2015.2018.
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| (b) | In 2018, stock awards were granted on February 15, 2018 consisting of PSUs and RSUs. The amounts in the “Stock Awards”this column reflect the grant date fair value of stock awards (whole shares only). The grant date fair values are calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation—Stock Compensation (FASBFASB ASC Topic 718). See Note 13 in our Annual Report on Form 10-K for the year ended December 31, 2015 for more information. The value of any fractional shares is paid in cash and included in the All Other Compensation column. See footnote (e) for additional details. In 2015, stock awards were granted on February 13, 2015 consisting of long-term incentive performance units and performance-based restricted share units, and for Mr. Parsley, a grant of ALM incentive performance units.718. The grant date fair value of the incentive performance units, performance-based restricted share units and the ALM incentive performance unitseach award is calculated using the target number of units underlying the award and a per share value based on the NYSE closing price of our common stock on February 13, 2015the date of $92.38.grant of $159.86. The value of any fractional shares is paid in cash and included in the All Other Compensation column. See footnote (e) for additional information. If PNC’s performance during the applicable measurement period results in the maximum number of units vesting, our executivesNEOs would each be entitled to receive a maximum award with a grant date fair value of the maximum award as follows: |
| | | | | | | | | | | | Grant Date Fair Value of Maximum Award | | | NEO | | Incentive Performance Units | | | Performance-Based Restricted Share Units | | William S. Demchak | | $ | 4,349,943 | | | $ | 4,349,943 | | Robert Q. Reilly | | $ | 1,171,840 | | | $ | 1,171,840 | | Michael P. Lyons | | $ | 2,512,390 | | | $ | 2,512,390 | | E William Parsley, III* | | $ | 968,720 | | | $ | 968,720 | | Joseph C. Guyaux | | $ | 1,249,901 | | | $ | 1,249,901 | |
| * | The grant date fair value of Mr. Parsley’s ALM grant at the maximum value is $5,999,896. |
| | | | | | | | | | | | Grant Date Fair Value of Maximum Award | | | NEO | | Performance Share Units | | | Restricted Share Units | | William S. Demchak | | | $8,531,888 | | | | $3,791,879 | | Robert Q. Reilly | | | $2,126,138 | | | | $ 944,932 | | Michael P. Lyons | | | $4,589,740 | | | | $2,039,973 | | E William Parsley, III | | | $5,129,748 | | | | $2,279,923 | | Joseph E. Rockey | | | $1,799,864 | | | | $ 799,939 | |
| | See the Grants of plan-based awards in 2015 tablefiscal 2018 on pages 60 and 61page 62 for moreadditional information regarding the grants we made in 2015, the2018, Outstanding equity awards at 20152018 fiscalyear-end table beginning on pages 64 and 65page 63 for moreadditional information regarding options and otherequity awards outstanding at December 31, 2015,2018, and the Option exercises and stock vested in fiscal 2015 table2018 on page 6668 for moreadditional information regarding option exercise and stock vesting activity during 2015.2018. |
| (c) | Our NEOs received an annual incentive award paid in cash early in 20162019, which is reflected in this column for the 20152018 performance year. |
| (d) | The dollar amounts in this column include the increase in the actuarial value of our Qualified Pension Plan, ERISA Excess Pension Plan and Supplemental Executive Retirement Plan. We describe these plans on page 67.69. The amounts include both (1)(i) the change in value due to an additional year of service, compensation changes and plan amendments (if any), and (2)(ii) the change in value attributable to other assumptions, most significantly discount rate. |
| We do not pay above-market or preferential earnings on any compensation that is deferred on a basis that is nottax-qualified, including such earnings onnon-qualified defined contribution plans. For an additional explanation oninformation regarding how we calculate the earnings on our deferred compensation plans, see the 2015 rates of return chart in the Non-qualified deferred compensation in fiscal 2015 table2018 beginning on page 72.71. |
(e) | The amounts in this column include, for all NEOs, net of any reimbursements to PNC: (1) the dollar value of matching contributions made by us to the ISP; (2) the net insurance premiums paid by us in connection with our Key Executive Equity
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5860 THE PNC FINANCIAL SERVICES GROUP, INC. - 20162019 Proxy Statement
SUMMARY COMPENSATION TABLE | (e) | The amounts in this column include, for all NEOs, net of any reimbursements to PNC: (i) the dollar value of matching contributions made by us to the ISP; (ii) the insurance premiums paid by us in connection with our Key Executive Equity Program; (3)(iii) the executive long-term disability premiums paid by us; (4)(iv) perquisites and other personal benefits; (5)(v) matching gifts made by us to charitable organizations under our employee charitable matching gift program; and (6)(vi) cash paid for fractional shares of the 20152018 stock awards described in footnote (b) on page 58.60. |
| | “ All Other Compensation”Compensation for 20152018 consisted of the following:
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| | NEO | | Perquisites and Other
Personal Benefits* | | Registrant ISP
Contributions | | Insurance
Premiums** | | Other*** | | Total to Summary
Compensation Table | | | Perquisites and Other Personal Benefits* | | | Registrant ISP Contributions | | | Insurance Premiums** | | | Other*** | | | Total to Summary Compensation Table | | William S. Demchak | | $ | 109,975 | | | $ | 10,600 | | | $ | 44,835 | | | $ | 91 | | | $ | 165,501 | | | | $109,975 | | | | $11,000 | | | | $44,736 | | | | $ 142 | | | | $165,853 | | Robert Q. Reilly | | $ | 10,761 | | | $ | 10,600 | | | $ | 20,927 | | | $ | 1,056 | | | $ | 43,344 | | | | $ 9,975 | | | | $11,000 | | | | $20,927 | | | | $1,214 | | | | $ 43,116 | | Michael P. Lyons | | | – | | | $ | 6,577 | | | | – | | | $ | 177 | | | $ | 6,754 | | | | $ 8,513 | | | | $10,800 | | | | – | | | | $ 146 | | | | $ 19,459 | | E William Parsley, III | | $ | 11,108 | | | $ | 10,900 | | | | – | | | $ | 100 | | | $ | 22,108 | | | | $ 10,000 | | | | $10,838 | | | | – | | | | $ 192 | | | | $ 21,030 | | Joseph C. Guyaux | | $ | 20,000 | | | $ | 10,600 | | | $ | 5,293 | | | $ | 2,658 | | | $ | 38,551 | | | Joseph E. Rockey | | | | $ 9,975 | | | | $11,000 | | | | – | | | | $ 151 | | | | $ 21,126 | |
| | * | The dollar amount of the perquisite represents the incremental cost to PNC of providing the benefit. For 2015,This column includes the costs of financial consulting and tax preparation services for Mr. Demchak, Mr. Reilly, Mr. Parsley and Mr. Rockey, and personal use of corporate aircraft by Mr. Demchak and Mr. Lyons during 2018. The incremental cost of Mr. Demchak’s use of the aircraft in 2018 was $100,000. Mr. Demchak used his time-sharing agreement for flights in excess of this amount during 2018. The incremental cost to PNC of the personal aircraft use is calculated by multiplying the total number of personal flight hours timesby the average direct variable operating costs (including costs related to fuel, maintenance expenses related to operation of the plane during the year, and landing and parking fees) per flight hour for the particular aircraft for the year, plus crew expenses attributable to the personal use. Since the aircraft are used primarily for business travel, we do not include in the calculation the fixed costs that do not change based on usage, such as crew salaries and other maintenance and inspection and capital improvement costs intended to cover a multiple-year period. Mr. Demchak, Mr. Reilly, Mr. Parsley and Mr. Guyaux used the aircraft for personal flights during 2015. For these flights, Mr. Demchak, Mr. Reilly and Mr. Guyaux did not use their time-sharing agreements. The incremental cost of Mr. Demchak’s use of the aircraft was $100,000. This column also includes the costs of financial preparation and tax consulting services for Mr. Demchak, Mr. Reilly, Mr. Parsley and Mr. Guyaux. Mr. Demchak, Mr. Reilly, and Mr. LyonsNEOs each have a corporate travel credit card not generally available to all employees, for which there is no incremental cost to PNC. |
| | ** | We pay premiums for certain of the NEOs in connection with our Key Executive Equity Program, which is a split-dollar insurance arrangement. However, newNew participants have not been permitted in this program since 2007. In addition, we pay long-term disability premiums on behalf of certain of our NEOs. The dollar amounts under the “Insurance Premiums” column include the 2015 net2018 premiums we paid in connection with our Key Executive Equity Program on behalf of Mr. Demchak ($40,534) and Mr. Reilly ($16,732). These net premiums represent the full dollar amounts we paid for both the term andnon-term portions of this plan, after any officer contributions.plan. The amounts under this column also include the long-term disability premiums we paid on behalf of Mr. Demchak ($4,301),4,202) and Mr. Reilly ($4,195) and Mr. Guyaux ($5,293). |
| | *** | This column reflects the dollar amount of matching gifts made by us to charitable organizations under our employee charitable matching gift program for Mr. Reilly ($1,000) and Mr. Guyaux ($2,500)1,125) and the cash paid for fractional shares of the 20152018 stock awards described in footnote (b) on page 58.60. |
THE PNC FINANCIAL SERVICES GROUP, INC. - 20162019 Proxy Statement 5961
GRANTS OF PLAN-BASED AWARDS IN 2015FISCAL 2018 Grants of plan-based awards in 2015fiscal 2018 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Estimated Future Payouts
Under Non-Equity
Incentive
Plan Awards(a) | | | Estimated Future Payouts
Under Equity
Incentive
Plan Awards(b) | | | Grant Date
Fair Value of Stock
and Option
Awards ($)(c) | | | Award Type | | Grant Date | | | Thres-
hold
($) | | | Target ($) | | | Maximum ($) | | | Thres-
hold
($) | | | Target
(#) | | | Maximum
(#) | | | | William S. Demchak | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Annual Incentive Award | | | February 13, 2015 | | | | – | | | $ | 3,300,000 | | | $ | 10,152,000 | | | | | | | | | | | | | | | | | | | Incentive Performance Units | | | February 13, 2015 | | | | | | | | | | | | | | | | – | | | | 37,670 | | | | 47,087 | | | $ | 3,479,955 | | | Performance-Based Restricted Share Units | | | February 13, 2015 | | | | | | | | | | | | | | | | – | | | | 37,670 | | | | 47,087 | | | $ | 3,479,955 | | | Robert Q. Reilly | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Annual Incentive Award | | | February 13, 2015 | | | | – | | | $ | 1,250,000 | | | | – | | | | | | | | | | | | | | | | | | | Incentive Performance Units | | | February 13, 2015 | | | | | | | | | | | | | | | | – | | | | 10,148 | | | | 12,685 | | | $ | 937,472 | | | Performance-Based Restricted Share Units | | | February 13, 2015 | | | | | | | | | | | | | | | | – | | | | 10,148 | | | | 12,685 | | | $ | 937,472 | | | Michael P. Lyons | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Annual Incentive Award | | | February 13, 2015 | | | | – | | | $ | 1,500,000 | | | $ | 10,152,000 | | | | | | | | | | | | | | | | | | | Incentive Performance Units | | | February 13, 2015 | | | | | | | | | | | | | | | | – | | | | 21,757 | | | | 27,196 | | | $ | 2,009,912 | | | Performance-Based Restricted Share Units | | | February 13, 2015 | | | | | | | | | | | | | | | | – | | | | 21,757 | | | | 27,196 | | | $ | 2,009,912 | | | E William Parsley, III | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Annual Incentive Award | | | February 13, 2015 | | | | – | | | $ | 1,000,000 | | | $ | 10,152,000 | | | | | | | | | | | | | | | | | | | Incentive Performance Units | | | February 13, 2015 | | | | | | | | | | | | | | | | – | | | | 8,389 | | | | 10,486 | | | $ | 774,976 | | | Performance-Based Restricted Share Units | | | February 13, 2015 | | | | | | | | | | | | | | | | – | | | | 8,389 | | | | 10,486 | | | $ | 774,976 | | | ALM Incentive Performance Units | | | February 13, 2015 | | | | | | | | | | | | | | | | – | | | | 32,474 | | | | 64,948 | | | $ | 2,999,948 | | | Joseph C. Guyaux | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Annual Incentive Award | | | February 13, 2015 | | | | – | | | $ | 930,000 | | | $ | 10,152,000 | | | | | | | | | | | | | | | | | | | Incentive Performance Units | | | February 13, 2015 | | | | | | | | | | | | | | | | – | | | | 10,824 | | | | 13,530 | | | $ | 999,921 | | | Performance-Based Restricted Share Units | | | February 13, 2015 | | | | | | | | | | | | | | | | – | | | | 10,824 | | | | 13,530 | | | $ | 999,921 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Estimated Future Payouts
Under Non-Equity
Incentive
Plan Awards(a) | | | Estimated Future Payouts
Under Equity
Incentive
Plan Awards(b) | | | Grant Date Fair Value of Stock and Option Awards ($)(c) | | | Award Type | | Grant Date | | | Threshold ($) | | | Target ($) | | | Maximum ($) | | | Threshold (#) | | | Target (#) | | | Maximum (#) | | William S. Demchak | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Annual Incentive Award | | | February 15, 2018 | | | | – | | | $ | 3,940,000 | | | | – | | | | | | | | | | | | | | | | | | PSUs | | | February 15, 2018 | | | | | | | | | | | | | | | | – | | | | 35,581 | | | | 53,371 | | | $ | 5,687,979 | | RSUs | | | February 15, 2018 | | | | | | | | | | | | | | | | – | | | | 23,720 | | | | 23,720 | | | $ | 3,791,879 | | Robert Q. Reilly | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Annual Incentive Award | | | February 15, 2018 | | | | – | | | $ | 1,550,000 | | | | – | | | | | | | | | | | | | | | | | | PSUs | | | February 15, 2018 | | | | | | | | | | | | | | | | – | | | | 8,867 | | | | 13,300 | | | $ | 1,417,479 | | RSUs | | | February 15, 2018 | | | | | | | | | | | | | | | | – | | | | 5,911 | | | | 5,911 | | | $ | 944,932 | | Michael P. Lyons | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Annual Incentive Award | | | February 15, 2018 | | | | – | | | $ | 2,500,000 | | | | – | | | | | | | | | | | | | | | | | | PSUs | | | February 15, 2018 | | | | | | | | | | | | | | | | – | | | | 19,141 | | | | 28,711 | | | $ | 3,059,880 | | RSUs | | | February 15, 2018 | | | | | | | | | | | | | | | | – | | | | 12,761 | | | | 12,761 | | | $ | 2,039,973 | | E William Parsley, III | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Annual Incentive Award | | | February 15, 2018 | | | | – | | | $ | 2,500,000 | | | | – | | | | | | | | | | | | | | | | | | PSUs | | | February 15, 2018 | | | | | | | | | | | | | | | | – | | | | 21,393 | | | | 32,089 | | | $ | 3,419,885 | | RSUs | | | February 15, 2018 | | | | | | | | | | | | | | | | – | | | | 14,262 | | | | 14,262 | | | $ | 2,279,923 | | Joseph E. Rockey | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Annual Incentive Award | | | February 15, 2018 | | | | – | | | $ | 1,375,000 | | | | – | | | | | | | | | | | | | | | | | | PSUs | | | February 15, 2018 | | | | | | | | | | | | | | | | – | | | | 7,506 | | | | 11,259 | | | $ | 1,199,909 | | RSUs | | | February 15, 2018 | | | | | | | | | | | | | | | | – | | | | 5,004 | | | | 5,004 | | | $ | 799,939 | |
| (a) | The amounts listed in the “Target” column relate to the target annual cash incentive award for the 20152018 performance year. Annual cash incentive awards for 20152018 were paid in 2016.2019. All incentive awards–compensation—cash and equity-based–areequity-based—is payable based on performance, and thetotal compensation targets are established to help the Personnel and Compensation Committee to determine the appropriate amount of incentive compensation payable upon achievement for target performance. The amount listed in the “Target” column shows the target annual cash incentive awardamount included in the total compensation target approved by the Committee for each NEO as of the date listed. The amount listed in the “Maximum” column shows the amount that the Committee approves each year in order to preserve tax deductibility under Section 162(m) of the Internal Revenue Code of 1986, as amended. Mr. Reilly’s compensation is not subject to Section 162(m). The “Maximum” amount is not intended to be tied to performance – rather, it is a formulaic determination made under IRS regulations that provides PNC with the flexibility to receive tax deductions for performance-based compensation. The Committee looks to the performance for the year and the “target” annual incentive amount when making incentive compensation decisions, and exercises negative discretion to provide an award that is significantly smaller than the “Maximum” amount. For NEOs who are covered employees under §162(m) of the Internal Revenue Code of 1986, as amended, the calculation of the “Maximum” amount was approved by the Personnel and Compensation Committee on February 26, 2015, based on 0.2% of our “Incentive Income,” an adjusted net income metric that is defined in the 1996 Executive Incentive Award Plan. At the time the “Maximum” amount is set, the Committee uses a budgeted amount for 2015 which is included as $10,152,000 in the “Maximum” column.15, 2018. |
| (b) | The amounts listed in these columns include the incentive performance unit grants of PSUs and the performance-based restricted share unit grants,RSUs, as further described on page 43.pages 43 to 45. As there is no guaranteed minimum payout for these awards, and in the case of the incentive performance unit grants,PSUs, the Personnel and Compensation Committee has discretion to decrease any award otherwise payable, we have not included a “Threshold” amount in this column.amount. The “Target” amount represents 100% of the grant for the PSUs and the RSUs. The “Maximum” amount represents 125%150% of the grant (rounded down to whole shares). for the PSUs and 100% of the grant for the RSUs. For the incentive performance unit grants,PSUs, the performance period began on January 1, 20152018 and will end on December 31, 2017.2020. For the performance-based restricted share unit grants,RSUs, the performance period began on January 1, 20152018 and will end on December 31, 2018,2020, with a vesting opportunitiesopportunity for a portionone-third of the grant on each of the four applicablethree anniversaries of the grant date. |
| (c) | The grant date anniversaries. In addition, for Mr. Parsleyfair value of each award is calculated in accordance with FASB ASC Topic 718 based on the NYSE closing price of our common stock on February 15, 2018, the date of grant, of $159.86 per share. The amounts also include an ALM incentive performance unit grant as described in footnote (b) to the Summary compensation table on page 58. For a discussion of the terms, conditions and performance goals related to this incentive performance unit grant, see page 43. As there is no guaranteed minimum payout for Mr. Parsley’s award, and the Personnel and Compensation Committee has the discretion to decrease any award otherwise payable, we have not included a “Threshold” amountlisted in this column for this award. The “Target” amount represents 100% ofrepresent the grant anddate fair value of each award based upon achievement at the “Maximum” amount represents 200% of the grant. For this grant, the performance period began on January 1, 2015 and will end on December 31, 2017.target level. |
6062 THE PNC FINANCIAL SERVICES GROUP, INC. - 20162019 Proxy Statement
GRANTS OF PLAN-BASED AWARDS IN 2015
| | In determining the payout for regular grants of incentive performance units made in 2015, adjustments will be made on an after-tax basis for the impact of: |
| • | | extraordinary items (as such term is used under GAAP)
|
| • | | items resulting from a change in tax law
|
| • | | acquisition costs and merger integration costs
|
| • | | any costs or expense arising from specified Visa litigation and any other gains recognized on redemption or sale of Visa shares, as applicable
|
| • | | in PNC’s case, the net impact on PNC of significant gains or losses related to certain BlackRock transactions
|
| • | | acceleration of the accretion of any remaining issuance discount in connection with the redemption of any preferred stock
|
| • | | any other charges or benefits related to the redemption of trust preferred or other preferred securities
|
| (c) | The grant date fair values for incentive performance units and performance-based restricted share units are all calculated in accordance with FASB ASC Topic 718. See Note 13 in our Annual Report on Form 10-K for the year ended December 31, 2015 for more information. The grant date fair values for incentive performance units, performance-based restricted share units and ALM incentive performance units represent the closing price for our common stock on February 13, 2015 of $92.38. The grant date fair values for incentive performance units and performance-based restricted share units represent the target amount of units in the grant. |
THE PNC FINANCIAL SERVICES GROUP, INC. - 2016 Proxy Statement 61
OUTSTANDING EQUITY AWARDS AT 20152018 FISCALYEAR-END Outstanding equity awards at 20152018 fiscalyear-end The following tables show, for each NEO, the outstanding equity awards as of December 31, 2015.2018. These awards include stock options exercisable over time and the following: Stock options exercisable over time
Incentive performance units, specifically:
| | | | | | | | | –Name of Award | | Regular units granted in 2013, 2014 and 2015 that may pay out if PNC achieves specificVesting
Schedule | | Metrics | | Payout Range (% of target) | | Stock or Cash Payout | Performance Share Units (PSUs) | | After3-year performance period ends | | PNC’s return on equity (ROE) compared to performance and risk-based criteria. These awards measure our targets EPS growth rank against our peers and ourpeer group | | 0-150% | | Stock | | | | | | Restricted Share Units (RSUs) | | Annual installments over 3 years | | Time-based | | 0-100% | | Stock | | | | | | Performance-based Restricted Share Units (PRSUs) | | Annual installments over 4 years | | Adjustment based on PNC’s annual TSR | | 75-125% | | Stock | | | | | | Incentive Performance Units
(IPUs) | | After3-year performance period ends | | PNC’s return on common equity without goodwill (ROCE) compared to our cost of common equity (COCE). The awards are also subject to annual risk-based requirements and adjustments, which include meeting or exceeding the required Tier 1 risk-based capital ratio for “well-capitalized” institutions and return on economic capital (ROEC) meeting or exceeding our cost of capital. |
EPS growth rank against our peer group | –0-125% | | In recognition of Mr. Parsley’s management responsibilities regarding the ALM function atStock (up to target)
Cash (above target) |
| | | | | ALM Incentive Performance Units (ALM IPUs) (a) | | PNC during 2012, 2013 and 2014, units grantedAfter3-year
performance period ends | | Based on PNC’s Asset & Liability Management function performance, compared to Mr. Parsley in 2013, 2014 and 2015 will pay out based on our ALM unit performance against a benchmark index during | | 0-200% | | Cash |
| (a) | Mr. Parsley was the 2013only NEO to 2015, 2014receive this grant, which relates to 2016 or 2015 to 2017 performance period, respectively.his management of our Asset & Liability Management function. |
Performance-based restricted share units, specifically:
| – | | Annual long-term incentive awards, each granted in 2012, 2013, 2014 and 2015, that will each pay out if PNC meets or exceeds the required Tier 1 risk-based capital ratio for “well-capitalized” institutions established by our primary regulator; payout may be adjusted by 25% up or down based on TSR in each year. The 2013, 2014 and 2015 awards also have an ROEC related risk metric that functions as a trigger to determine whether or not a risk review is required by the Committee. The Committee can decide to reduce, but not increase, payout amounts.
|
With respect to the following three forms of equity-basedperformance-based equity awards included inthat vested based on performance for the table,period ended December 31, 2018, the Personnel and Compensation Committee made performance-based orand risk-based determinations in the first quarter of 2016,2019, as described in more detail below:below. The payout percentage grids are included below for each of these performance-based equity awards. Performance share units The PSUs granted in 2018 that vest based on performance for the three-year period ended December 31, 2020 are included in the following table as of December 31, 2018. Following the conclusion of the performance period, the Committee will determine the level of the payout, which could range from 0% to 150% of the target number of units based on our ROE, as adjusted, compared to established performance targets and our EPS growth, as adjusted, compared to the EPS growth of our peers, with actual payout percentages calculated using bilinear interpolation. As discussed in the CD&A beginning on page 40, these awards are also subject to a risk-based performance metric that could reduce the payout. The PSUs will be paid out in shares of PNC common stock. Restricted share units The RSUs granted in 2018, which vest in annual installments over three years, are included in the following table as of December 31, 2018. As discussed in the CD&A beginning on page 40, these awards are subject to a risk-based performance metric that could reduce the payout. The RSUs will be paid out in shares of PNC common stock. THE PNC FINANCIAL SERVICES GROUP, INC. - 2019 Proxy Statement 63
OUTSTANDING EQUITY AWARDS AT 2018 FISCALYEAR-END Performance-based restricted share units The performance-based restricted share unitsPRSUs that vestvested based on 20152018 performance are included in the following table as of December 31, 2015.2018. At a meeting held on January 28, 2016, our Board’s30, 2019, the Personnel and Compensation Committee certified the levelslevel of performance achieved and determined the payout for the 20152018 tranche of each of the 2012 grants, the 2013 grants, the 2014 grants2015, 2016 and the 2015 grants and determined the payout level.2017 grants. The Committee certified that the required Tier 1 risk-based capital ratio of 6% established by our primary regulator had been achieved. The Committee then determined the size of the payout, which could range from 75% to 125% of the target number of units based on 2015 TSR. The Committee approved a payout at 106.81% for the applicable tranche of each of the 2012, 2013, 2014 and 2015 grants. As noted above, 2013, 2014 and 2015 awards also have an ROEC related risk metric that could trigger an additional review or adjustment. No additional review or adjustment was required as ROEC exceeded the Committee approved hurdle.
| | | Metric | | Status | Estimated Tier 1 risk-based capital ratio at least 6%
| | 12.0% (exceeded) | Total shareholder return (TSR)
| | 106.81% (Target + actual one-year TSR 6.81% for 2015) |
62 THE PNC FINANCIAL SERVICES GROUP, INC. - 2016 Proxy Statement
OUTSTANDING EQUITY AWARDS AT 2015 FISCAL YEAR-END
Incentive performance units
The incentive performance units granted in 2013 are included in the following table as of December 31, 2015. At a meeting held on February 10, 2016, our Board’s Personnel and Compensation Committee certified the levels of performance achieved for the January 1, 2013 to December 31, 2015 performance period and determined the payout level. The units provided an opportunity for the executive to receive a payout after the end of the performance period based on our earnings per share growth (EPS growth) as compared to our peers and our ROCE performance compared to our COCE, each adjusted as defined in the award agreement. The
Committee certified that the required Tier 1 risk-based capital ratio of 6% established by our primary regulator had been achieved. TheseThe Committee then determined the level of the payout, which could range from 75% to 125% of the target number of units based on TSR for 2018, with actual payout percentages based on straight-line interpolation between the data points reflected in the payout percentage grid. The payout under these awards were alsois subject to the same ROEC related risk metric as noted earlier which could have reduced the payout;reduction or elimination if our return on economic capital (“ROEC”) does not exceed our cost of capital; however, no reduction was required, as ROEC exceeded the cost of capital hurdle and thein 2018. The Committee approved a payout at 109.78%83.02% for these awards.the 2018 tranche of each of the 2015, 2016 and 2017 grants. In accordance with the terms of these awards, the incentive performance unitsPRSUs were payablepaid out in PNC common stock up to target (100%) and payable in cash above target.stock. | | | | | | | | | | | | | | | | Payout % | | Overall Payout
Percentage | | | | | Metric | | 2013 | | 2014 | | 2015 | | | EPS Growth Payout | | 125.00% | | 59.23% | | 99.45% | | | 109.78% | | | | (PNC Ranking in peer group) | | (2 out of 13) | | (10 out of 13) | | (7 out of 12) | | | | ROCE Payout | | 125.00% | | 125.00% | | 125.00% | | | (ROCE as a percentage of COCE) | | (180.00%) | | (169.75%) | | (160.41%) | | | |
ALM incentive performance units
The ALM-based incentive performance units granted in 2013 to Mr. Parsley were outstanding as of December 31, 2015 and are included in the following table. At a meeting held on February 10, 2016, our Board’s Personnel and Compensation Committee certified the levels of performance achieved under Mr. Parsley’s ALM-based grant and determined the final award. The maximum potential
payout percentage was 200%. The maximum permitted payout for these units is generated by applying the performance factor to the number of target share units of 46,970. The Committee approved payout at 199.78% of target. In accordance with the terms of this award, the ALM-based units awarded to Mr. Parsley paid out entirely in cash share equivalents.
| | | | | | | | | | | | | | | | | | | | Payout Percentage | | | Metric | | 2013 | | | 2014 | | | 2015 | | | Overall | | Performance of ALM unit against benchmark index | | | 200.00 | % | | | 199.33 | % | | | 200.00 | % | | | 199.78 | % |
THE PNC FINANCIAL SERVICES GROUP, INC. - 2016 Proxy Statement 63
OUTSTANDING EQUITY AWARDS AT 2015 FISCAL YEAR-END
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Option Awards | | | | | Stock Awards | | Grant Date or Performance Period(a) | | No. of
Securities
Underlying
Unexercised
Options (#)
Exercisable(b) | | | Option
Exercise
Price
($) | | | Option Expiration Date | | | | | Grant Date or
Performance Period(a) | | No. of
Shares or Units of Stock That Have Not Vested (#)(c) | | | Market Value of Shares or Units of Stock That Have Not Vested ($)(d) | | | Equity Incentive Plan Awards: No. of Unearned Shares, Units or Other Rights That Have Not Vested (#)(e) | | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(d) | | William S. Demchak | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Options | | | | | | | | | | | | | | | | Performance-Based Restricted Share Units | | | | | | January 25, 2007 | | | 82,500 | | | $ | 72.65 | | | | January 25, 2017 | | | | | Jan. 1, 2012–Dec. 31, 2015 | | | 9,501 | | | $ | 905,540 | | | | | | | | | | January 22, 2008 | | | 93,500 | | | $ | 57.21 | | | | January 22, 2018 | | | | | Jan. 1, 2013–Dec. 31, 2016 | | | 8,076 | | | $ | 769,724 | | | | 7,562 | | | $ | 720,734 | | July 21, 2008 | | | 138,000 | | | $ | 63.69 | | | | July 21, 2018 | | | | | Jan. 1, 2014–Dec. 31, 2017 | | | 9,872 | | | $ | 940,900 | | | | 18,487 | | | $ | 1,761,996 | | February 12, 2009 | | | 180,000 | | | $ | 31.07 | | | | February 12, 2019 | | | | | Jan. 1, 2015–Dec. 31, 2018 | | | 10,058 | | | $ | 958,628 | | | | 28,253 | | | $ | 2,692,793 | | April 26, 2010 | | | 75,000 | | | $ | 66.77 | | | | April 26, 2020 | | | | | Incentive Performance Units | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Jan. 1, 2013–Dec. 31, 2015 | | | 33,205 | | | $ | 3,164,769 | | | | | | | | | | | | | | | | | | | | | | | | | | Jan. 1, 2014–Dec. 31, 2016 | | | | | | | | | | | 46,216 | | | $ | 4,404,847 | | | | | | | | | | | | | | | | | | Jan. 1, 2015–Dec. 31, 2017 | | | | | | | | | | | 47,087 | | | $ | 4,487,862 | | Robert Q. Reilly | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Options | | | | | | | | | | | | | | | | Performance-Based Restricted Share Units | | | | | | January 25, 2007 | | | 22,000 | | | $ | 72.65 | | | | January 25, 2017 | | | | | Jan. 1, 2012–Dec. 31, 2015 | | | 1,935 | | | $ | 184,425 | | | | | | | | | | January 22, 2008 | | | 33,000 | | | $ | 57.21 | | | | January 22, 2018 | | | | | Jan. 1, 2013–Dec. 31, 2016 | | | 2,486 | | | $ | 236,941 | | | | 2,329 | | | $ | 221,977 | | July 21, 2008 | | | 65,000 | | | $ | 63.69 | | | | July 21, 2018 | | | | | Jan. 1, 2014–Dec. 31, 2017 | | | 2,550 | | | $ | 243,041 | | | | 4,776 | | | $ | 455,201 | | February 12, 2009 | | | 50,000 | | | $ | 31.07 | | | | February 12, 2019 | | | | | Jan. 1, 2015–Dec. 31, 2018 | | | 2,709 | | | $ | 258,195 | | | | 7,611 | | | $ | 725,404 | | February 12, 2009 | | | 19,800 | | | $ | 31.07 | | | | February 12, 2019 | | | | | Incentive Performance Units | | | | | | | | | | | | | | April 26, 2010 | | | 25,000 | | | $ | 66.77 | | | | April 26, 2020 | | | | | Jan. 1, 2013–Dec. 31, 2015 | | | 10,223 | | | $ | 974,354 | | | | | | | | | | | | | | | | | | | | | | | | | | Jan. 1, 2014–Dec. 31, 2016 | | | | | | | | | | | 11,938 | | | $ | 1,137,811 | | | | | | | | | | | | | | | | | | Jan. 1, 2015–Dec. 31, 2017 | | | | | | | | | | | 12,685 | | | $ | 1,209,007 | | Michael P. Lyons | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Performance-Based Restricted Share Units | | | | | | | | | | | | | | | | | | | | | | Jan. 1, 2012–Dec. 31, 2015 | | | 7,258 | | | $ | 691,760 | | | | | | | | | | | | | | | | | | | | | | | | | | Jan. 1, 2013–Dec. 31, 2016 | | | 6,592 | | | $ | 628,284 | | | | 6,172 | | | $ | 588,253 | | | | | | | | | | | | | | | | | | Jan. 1, 2014–Dec. 31, 2017 | | | 6,713 | | | $ | 639,816 | | | | 12,571 | | | $ | 1,198,142 | | | | | | | | | | | | | | | | | | Jan. 1, 2015–Dec. 31, 2018 | | | 5,809 | | | $ | 553,656 | | | | 16,318 | | | $ | 1,555,269 | | | | | | | | | | | | | | | | | | Incentive Performance Units | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Jan. 1, 2013–Dec. 31, 2015 | | | 27,101 | | | $ | 2,582,996 | | | | | | | | | | | | | | | | | | | | | | | | | | Jan. 1, 2014–Dec. 31, 2016 | | | | | | | | | | | 31,426 | | | $ | 2,995,212 | | | | | | | | | | | | | | | | | | Jan. 1, 2015–Dec. 31, 2017 | | | | | | | | | | | 27,196 | | | $ | 2,592,051 | | E William Parsley, III | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Options | | | | | | | | | | | | | | | | Performance-Based Restricted Share Units | | | | | | July 21, 2008 | | | 25,000 | | | $ | 63.69 | | | | July 21, 2018 | | | | | Jan. 1, 2012–Dec. 31, 2015 | | | 2,969 | | | $ | 282,975 | | | | | | | | | | February 12, 2009 | | | 50,000 | | | $ | 31.07 | | | | February 12, 2019 | | | | | Jan. 1, 2013–Dec. 31, 2016 | | | 2,497 | | | $ | 237,989 | | | | 2,338 | | | $ | 222,835 | | | | | | | | | | | | | | | | | | Jan. 1, 2014–Dec. 31, 2017 | | | 2,591 | | | $ | 246,948 | | | | 4,853 | | | $ | 462,539 | | | | | | | | | | | | | | | | | | Jan. 1, 2015–Dec. 31, 2018 | | | 2,239 | | | $ | 213,399 | | | | 6,292 | | | $ | 599,691 | | | | | | | | | | | | | | | | | | Incentive Performance Units | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Jan. 1, 2013–Dec. 31, 2015 | | | 10,266 | | | $ | 978,452 | | | | | | | | | | | | | | | | | | | | | | | | | | Jan. 1, 2013–Dec. 31, 2015(f) | | | 93,836 | | | $ | 8,943,509 | | | | | | | | | | | | | | | | | | | | | | | | | | Jan. 1, 2014–Dec. 31, 2016(f) | | | | | | | | | | | 73,946 | | | $ | 7,047,793 | | | | | | | | | | | | | | | | | | Jan. 1, 2014–Dec. 31, 2016 | | | | | | | | | | | 12,131 | | | $ | 1,156,206 | | | | | | | | | | | | | | | | | | Jan. 1, 2015–Dec. 31, 2017(f) | | | | | | | | | | | 64,948 | | | $ | 6,190,194 | | | | | | | | | | | | | | | | | | | Jan. 1, 2015–Dec. 31, 2017 | | | | | | | | | | | 10,486 | | | $ | 999,421 | |
| | | | | | | | | | | | | Annual
TSR | | Payout % | | | | 2018 TSR | | | 2018
Payout % | | >= +25% | | 125% | | | | | (17.0)% | | | | 83.02% | | 0% | | 100% | | | | | | | | | | | <= -25% | | 75% | | | | | | | | | | |
64 THE PNC FINANCIAL SERVICES GROUP, INC. - 20162019 Proxy Statement
OUTSTANDING EQUITY AWARDS AT 20152018 FISCALYEAR-END | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Option Awards | | | | | Stock Awards | | Grant Date or Performance Period(a) | | No. of
Securities
Underlying
Unexercised
Options (#)
Exercisable(b) | | | Option
Exercise
Price
($) | | | Option Expiration Date | | | | | Grant Date or
Performance Period(a) | | No. of
Shares or Units of Stock That Have Not Vested (#)(c) | | | Market Value of Shares or Units of Stock That Have Not Vested ($)(d) | | | Equity Incentive Plan Awards: No. of Unearned Shares, Units or Other Rights That Have Not Vested (#)(e) | | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(d) | | Joseph C. Guyaux | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Options | | | | | | | | | | | | | | | | Performance-Based Restricted Share Units | | | | | | | | | | February 12, 2009 | | | 180,000 | | | $ | 31.07 | | | | February 12, 2019 | | | | | Jan. 1, 2012–Dec. 31, 2015 | | | 3,464 | | | $ | 330,154 | | | | | | | | | | | | | | | | | | | | | | | | | | Jan. 1, 2013–Dec. 31, 2016 | | | 3,355 | | | $ | 319,765 | | | | 3,142 | | | $ | 299,464 | | | | | | | | | | | | | | | | | | Jan. 1, 2014–Dec. 31, 2017 | | | 3,084 | | | $ | 293,936 | | | | 5,778 | | | $ | 550,701 | | | | | | | | | | | | | | | | | | Jan. 1, 2015–Dec. 31, 2018 | | | 2,890 | | | $ | 275,446 | | | | 8,118 | | | $ | 773,727 | | | | | | | | | | | | | | | | | | Incentive Performance Units | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Jan. 1, 2013–Dec. 31, 2015 | | | 13,796 | | | $ | 1,314,897 | | | | | | | | | | | | | | | | | | | | | | | | | | Jan. 1, 2014–Dec. 31, 2016 | | | | | | | | | | | 14,442 | | | $ | 1,376,467 | | | | | | | | | | | | | | | | | | | Jan. 1, 2015–Dec. 31, 2017 | | | | | | | | | | | 13,530 | | | $ | 1,289,544 | |
Standard incentive performance units The Standard IPUs granted in 2016 that vest based on performance for the three-year period ended December 31, 2018 are included in the following table as of December 31, 2018. At a meeting held on February 12, 2019, the Personnel and Compensation Committee certified the level of performance achieved and determined the payout for the January 1, 2016 to December 31, 2018 performance period. The Committee certified that the required Tier 1 risk-based capital ratio of 6% established by our primary regulator had been achieved. The Committee then determined the level of the payout, which could range from 0% to 125% of the target number of units based on our earnings per share growth as compared to our peers and our ROCE performance compared to our COCE, each adjusted as defined in the award agreement. The actual payout percentages are interpolated, which takes into account how close the actual performance or peer group rank is to the metric or rank above and below. The payout under these awards is subject to reduction or elimination if ROEC does not exceed our cost of capital; however, no reduction was required, as ROEC exceeded the cost of capital hurdle in 2018. The Committee approved a payout at 102.61% for the Standard IPUs granted in 2016. In accordance with the terms of these awards, the Standard IPUs were paid out in PNC common stock up to target (100%) and were paid out in cash above target. | | | | | ROCE as % of COCE | | Payout % | | | >= 110% | | 125% | | | 105% | | 100% | | | 100% | | 75% | | | 75% | | 50% | | | <= 50% | | 0% | | |
| | | | | 2016-2017 EPS Growth Payout Grid | | | EPS Growth
Rank | | Payout% | | | 1 | | 125% | | | 2 | | 125% | | | 3 | | 125% | | | 4 | | 120% | | | 5 | | 115% | | | 6 | | 105% | | | 7 | | 95% | | | 8 | | 80% | | | 9 | | 60% | | | 10 | | 40% | | | 11 | | 0% | | | 12 | | 0% | | |
| | | 2018 EPS Growth Payout
Grid | EPS Growth Rank | | Payout% | 1 | | 125% | 2 | | 125% | 3 | | 125% | 4 | | 125% | 5 | | 116.7% | 6 | | 108.3% | 7 | | 100% | 8 | | 90% | 9 | | 80% | 10 | | 60% | 11 | | 40% | 12 | | 0% | 13 | | 0% |
| | | | | | | | | | | | | | | | | | 2016 | | 2017 | | 2018 | | | | | | ROCE as % of COCE | | EPS Growth | | ROCE as % of COCE | | EPS Growth | | ROCE as % of COCE | | EPS Growth | | 2016-2018 Payout% | | Metric | | 161.41% | | 8th | | 164.10% | | 6th | | 186.80% | | 10th | | 102.61% | | Payout | | 125% | | 73.62% | | 125% | | 107.73% | | 125% | | 59.30% |
ALM incentive performance units The ALM IPUs granted to Mr. Parsley in 2016 that vest based on performance for the three-year period ended December 31, 2018 are included in the following table as of December 31, 2018. At a meeting held on January 30, 2019, the Personnel and Compensation Committee certified the level of performance achieved and determined the payout for the January 1, 2016 to December 31, 2018 performance period. The Committee determined the level of the payout, which could range from 0% to 200% of the target number of units based on our Asset & Liability Management function performance against a benchmark index, with actual payout percentages based on straight-line interpolation between the data points reflected in the payout percentage grid. The Committee approved a payout at 200% for the ALM IPUs granted in 2016. In accordance with the terms of this award, the ALM IPUs awarded to Mr. Parsley were paid out in cash. | | | | | | | | | | | | | | | | | | | | | ALM Performance vs. Index | | Payout % | | | | 2016 | | | 2017 | | | 2018 | | | 2016-2018
Payout % | | | >= +40 basis points | | 200% | | | | | 200% | | | | 200% | | | | 200% | | | | 200% | | | +20 basis points | | 150% | | | | | | | | | | | | | | | | | | | | 0 to -25 basis points | | 100% | | | | | | | | | | | | | | | | | | | | -35 basis points | | 40% | | | | | | | | | | | | | | | | | | | | <= -40 basis points | | 0% | | | | | | | | | | | | | | | | | | |
THE PNC FINANCIAL SERVICES GROUP, INC. - 2019 Proxy Statement 65
OUTSTANDING EQUITY AWARDS AT 2018 FISCALYEAR-END | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Option Awards | | | | | | Stock Awards | | | Grant Date | | Number of Securities Underlying Unexercised Options (#) Exercisable | | | Option Exercise Price ($) | | | Option Expiration Date | | | | | | Number of Shares or Units of Stock That Have Not Vested (#) | | | Market Value of Shares or Units of Stock That Have Not Vested ($)(a) | | | 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 ($)(a) | | William S. Demchak | | | | | | | | | | | | | | | | | | | | | | | | | | April 26, 2010 | | | 75,000 | | | $ | 66.77 | | | | April 26, 2020 | | | | | | | | 7,818 | (b) | | $ | 914,002 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 10,355 | (c) | | $ | 1,210,603 | | | | 12,473 | (d) | | $ | 1,458,217 | | | | | | | | | | | | | | | | | | | | | 51,193 | (e) | | $ | 5,984,974 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 5,517 | (f) | | $ | 644,992 | | | | 13,292 | (g) | | $ | 1,553,968 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 33,228 | (h) | | $ | 3,884,685 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 53,371 | (i) | | $ | 6,239,604 | | | | | | | | | | | | | | | | | | | | | 23,720 | (j) | | $ | 2,773,105 | | | | | | | | | | Robert Q. Reilly | | | | | | | | | | | | | | | | | | | | | | | | | | February 12, 2009 | | | 25,000 | | | $ | 31.07 | | | | February 12, 2019 | | | | | | | | 2,106 | (b) | | $ | 246,212 | | | | | | | | | | April 26, 2010 | | | 25,000 | | | $ | 66.77 | | | | April 26, 2020 | | | | | | | | 2,522 | (c) | | $ | 294,847 | | | | 3,038 | (d) | | $ | 355,173 | | | | | | | | | | | | | | | | | | | | | 12,469 | (e) | | $ | 1,457,751 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1,450 | (f) | | $ | 169,520 | | | | 3,496 | (g) | | $ | 408,717 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 8,737 | (h) | | $ | 1,021,443 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 13,300 | (i) | | $ | 1,554,903 | | | | | | | | | | | | | | | | | | | | | 5,911 | (j) | | $ | 691,055 | | | | | | | | | | Michael P. Lyons | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 4,516 | (b) | | $ | 527,966 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 5,416 | (c) | | $ | 633,185 | | | | 6,524 | (d) | | $ | 762,721 | | | | | | | | | | | | | | | | | | | | | 26,777 | (e) | | $ | 3,130,499 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 3,236 | (f) | | $ | 378,321 | | | | 7,798 | (g) | | $ | 911,664 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 19,493 | (h) | | $ | 2,278,927 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 28,711 | (i) | | $ | 3,356,603 | | | | | | | | | | | | | | | | | | | | | 12,761 | (j) | | $ | 1,491,889 | | | | | | | | | | E William Parsley, III | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1,741 | (b) | | $ | 203,540 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2,389 | (c) | | $ | 279,298 | | | | 2,879 | (d) | | $ | 336,584 | | | | | | | | | | | | | | | | | | | | | 11,813 | (e) | | $ | 1,381,058 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 76,754 | (k) | | $ | 8,973,310 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2,329 | (f) | | $ | 272,283 | | | | 5,612 | (g) | | $ | 656,099 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 14,030 | (h) | | $ | 1,640,247 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 23,628 | (l) | | $ | 2,762,349 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 32,089 | (i) | | $ | 3,751,525 | | | | | | | | | | | | | | | | | | | | | 14,262 | (j) | | $ | 1,667,370 | | | | | | | | | | Joseph E. Rockey | | | | | | | | | | | | | | | | | | | | | | | | | | February 9, 2011 | | | 18,000 | | | $ | 64.21 | | | | February 9, 2021 | | | | | | | | 498 | (m) | | $ | 58,221 | | | | | | | | | | February 7, 2012 | | | 18,000 | | | $ | 60.70 | | | | February 7, 2022 | | | | | | | | 664 | (c) | | $ | 77,628 | | | | 800 | (d) | | $ | 93,528 | | | | | | | | | | | | | | | | | | | | | 3,281 | (e) | | $ | 383,582 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 718 | (f) | | $ | 83,941 | | | | 1,733 | (g) | | $ | 202,605 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 4,331 | (h) | | $ | 506,337 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 11,259 | (i) | | $ | 1,316,290 | | | | | | | | | | | | | | | | | | | | | | 5,004 | (j) | | $ | 585,018 | | | | | | | | | |
| (a) | This column showsThe market value is calculated based on the grant datesNYSE closing price of our common stock options and the performance period for the regular and ALM incentive performance units and the performance-based restricted share units.on December 31, 2018 of $116.91 per share.
|
| (b) | All outstanding stock options are2015 PRSUs. The performance conditions applicable to the 2018 tranche of the award were satisfied as of December 31, 2018, and the PRSUs subject to the 2018 tranche vested in their entirety.on February 13, 2019 based on achievement at 83.02% of the target level.
|
66 THE PNC FINANCIAL SERVICES GROUP, INC. - 2019 Proxy Statement
OUTSTANDING EQUITY AWARDS AT 2018 FISCALYEAR-END | (c) | This column reflects 106.81% of2016 PRSUs. The performance conditions applicable to the target amounts for the 20152018 tranche of the performance-based restricted share units granted in each of 2012, 2013, 2014 and 2015 and 109.78% of the target amounts for the 2013-2015 incentive performance units for all NEOs. This column also reflects 199.78% of the target amounts for the 2013-2015 ALM incentive performance units for Mr. Parsley. The performance conditions of the 2015 tranches of performance-based restricted share units, the 2013-2015 incentive performance units and the 2013-2015 ALM incentive performance unitsaward were satisfied as of December 31, 2015 but remained2018, and the PRSUs subject to approval of payout by the Personnel and Compensation Committee2018 tranche vested on February 11, 2019 based on achievement at 83.02% of the Board, which took place on January 28, 2016 for the performance-based restricted share units and February 10, 2016 for the incentive performance units. Awards are included at actual payout percentages. For the 2013-2015 incentive performance units, any amount above target (100%) is payable in cash. The regular and ALM incentive performance units vested as of February 10, 2016 and the performance-based restricted share units vested as of the following dates:level.
|
| | | | | Grant Date | | Performance Period | | Vest Date of the 2015 tranche | February 7, 2012
| | Jan. 1, 2012–Dec. 31, 2015 | | February 7, 2016 | February 14, 2013
| | Jan. 1, 2013–Dec. 31, 2016 | | February 14, 2016 | February 13, 2014
| | Jan. 1, 2014–Dec. 31, 2017 | | February 13, 2016 | February 13, 2015
| | Jan. 1, 2015–Dec. 31, 2018 | | February 13, 2016 |
| (d) | The market value2016 PRSUs (Performance Not Yet Achieved). Represents the remaining tranche of these awardsthe award, which is calculated using our common stock closing pricescheduled to vest on February 11, 2020 based on achievement of $95.31 a share onthe applicable performance conditions for the performance period ending December 31, 2015.2019. The number of PRSUs included in the table above is based on achievement at the target level.
|
| (e) | This column reflects2016 Standard IPUs. The performance conditions applicable to the remaining tranchesaward were satisfied as of performance-based restricted share units granted in 2013, 2014 and 2015December 31, 2018, and the incentive performance units granted in 2014 and 2015. This column also includes the ALM incentive performance units granted to Mr. Parsley in 2014 and 2015.
|
| For the performance-based restricted share units granted in 2013, 2014 and 2015, this column reflectsStandard IPUs vested on February 12, 2019 based on achievement at 102.61% of the target amounts for the 2016 tranche for the 2013 grants, the 2016 through 2017 tranches for the 2014 grants, and the 2016 through 2018 tranches for the 2015 grants. Such unvested tranches of performance-based restricted share unit grants and related dividend equivalents (which dividend equivalents accrue without reinvestment or interest for each tranche, are performance-adjusted and paid out in cash) vest and settle as follows:level. |
| | | | | Grant Date | | Performance Period | | Tranche Vesting Schedule | February 14, 2013 | | Jan. 1, 2013–Dec. 31, 2016 | | On the fourth anniversary of the grant date | | | | February 13, 2014 | | Jan. 1, 2014–Dec. 31, 2017 | | In approximately equal installments on the third and fourth anniversary of the grant date | | | | February 13, 2015 | | Jan. 1, 2015–Dec. 31, 2018 | | In approximately equal installments on the second, third and fourth anniversary of the grant date |
| For the regular incentive performance units, this column reflects the maximum amounts, as required by SEC rules, that could be paid under the 2014 and 2015 grants. Vesting and payout of (x) the 2014 grants will not be determined until early 2017 and (y) the 2015 grants will not be determined until early 2018 and could differ from the amounts listed in this column. For these grants, dividend equivalents without reinvestment or interest accrue and are paid in cash, performance adjusted, when the award vests and settles. |
| For Mr. Parsley, this column reflects the maximum amount, as required by SEC rules, that could be paid under the 2014 and 2015 ALM incentive performance unit grants. The actual payout, if any, and vesting of Mr. Parsley’s 2014 ALM incentive performance unit grant will not be determined until early 2017 and until early 2018 for the 2015 grant, and could differ from the amount listed. These grants do not provide for any deemed dividends to be accrued or reinvested. |
| (f) | These2017 PRSUs. The performance conditions applicable to the 2018 tranche of the award were satisfied as of December 31, 2018, and the PRSUs subject to the 2018 tranche vested on February 16, 2019 based on achievement at 83.02% of the target level.
|
| (g) | 2017 PRSUs (Performance Not Yet Achieved). Represents the remaining two tranches of the award, which are scheduled to vest in approximately equal annual installments on February 16, 2020 and February 16, 2021 based on achievement of the applicable performance conditions for the performance period ending December 31, 2019 and December 31, 2020, respectively. The number of PRSUs included in the table above is based on achievement at the target level. |
| (h) | 2017 Standard IPUs (Performance Not Yet Achieved). The award is scheduled to vest in early 2020 based on achievement of the applicable performance conditions over a three-year performance period ending December 31, 2019. The number of Standard IPUs included in the table above is based on achievement at the maximum level. |
| (i) | 2018 PSUs (Performance Not Yet Achieved). The award is scheduled to vest in early 2021 based on achievement of the applicable performance conditions over a three-year performance period ending December 31, 2020. The number of PSUs included in the table above is based on achievement at the maximum level. See the description of the 2018 PSUs in the Compensation Discussion and Analysis section of our 2018 proxy statement. |
| (j) | 2018 RSUs. The first tranche of the award vested on February 15, 2019, and the remaining two tranches are scheduled to vest in approximately equal annual installments on February 15, 2020 and February 15, 2021. |
| (k) | 2016 ALM incentiveIPUs. The performance unit grantsconditions applicable to the award were awardedsatisfied as of December 31, 2018, and the ALM IPUs vested on January 30, 2019 based on achievement at 200% of the target level. |
| (l) | 2017 ALM IPUs (Performance Not Yet Achieved).The award is scheduled to Mr. Parsleyvest in 2013, 2014early 2020 based on achievement of the applicable performance conditions over a three-year performance period ending December 31, 2019. The number of ALM IPUs included in the table above is based on achievement at the maximum level. |
| (m) | 2015 Senior Leader PRSUs. The performance conditions applicable to the 2018 tranche of the award were satisfied as of December 31, 2018, and 2015 and are described in footnotes (c) and (e) above.the Senior Leader PRSUs subject to the 2018 tranche vested on February 13, 2019 based on achievement at 100% of the target level. |
THE PNC FINANCIAL SERVICES GROUP, INC. - 20162019 Proxy Statement 6567
OPTION EXERCISES AND STOCK VESTED IN FISCAL 20152018 Option exercises and stock vested in fiscal 20152018 | | | | Option Awards | | | | | Stock Awards(b) | | | Option Awards | | | | | | Stock Awards(b) | | | NEO | | Number of Shares
Acquired on Exercise
(#) | | | Value Realized
on Exercise(a)
($) | | | Number of Shares
Acquired on Vesting
(#) | | | Value Realized
on Vesting ($) | | | Number of Shares Acquired on Exercise (#) | | | Value Realized on Exercise(a) ($) | | | | | | Number of Shares Acquired on Vesting (#) | | | Value Realized on Vesting ($) | | William S. Demchak | | | 102,057 | | | | $6,176,490 | | | | | | 82,195 | | | | $ 7,267,946 | | | | – | | | $ | – | | | | | | 87,598 | | | $ | 13,640,632 | | Robert Q. Reilly | | | - | | | | - | | | | | | 18,593 | | | | $ 1,650,212 | | | | 24,710 | | | $ | 2,706,239 | | | | | | 23,012 | | | $ | 3,585,268 | | Michael P. Lyons | | | - | | | | - | | | | | | 63,571 | | | | $ 5,547,511 | | | | – | | | $ | – | | | | | | 51,001 | | | $ | 7,941,458 | | E William Parsley, III | | | - | | | | - | | | | | | 124,634 | | | | $10,681,420 | | | | – | | | $ | – | | | | | | 86,697 | | | $ | 13,730,693 | | Joseph C. Guyaux | | | 145,000 | | | | $4,396,675 | | | | | | 37,581 | | | | $ 3,340,859 | | | Joseph E. Rockey | | | | – | | | | – | | | | | | 3,149 | | | $ | 490,402 | |
| (a) | The dollar amount in this column includes the value realized upon the exercise of various options throughout 2015.2018. This amount was computed by determining the difference between (i) the average of the high and low sales prices of our common stock on the date of exercise (as reported in The Wall Street Journal), lessand (ii) the exercise price.price of the option. |
| (b) | These columns include the vesting of shares of restricted stock granted previously, as well as the total units approved for payout in connection with previously granted incentive performance unitsStandard IPUs and performance based restricted share unit opportunities.PRSUs. For Mr. Parsley, these columns also include 64,948 ALM IPUs granted in 2015 that were paid out at 200% of target in cash equal to $10,340,371 in 2018. The value realized on vesting for stock awards includes cash paid for fractional shares as follows: Mr. Demchak ($313), Mr. Reilly ($165), Mr. Lyons ($179),76) and Mr. Parsley ($332) and Mr. Guyaux ($372)114). |
| | For Mr. Parsley, the columns also include 97,328 ALM incentive performance units granted in 2012 that were paid out in cash of $8,265,641 in 2015 at 196.93% of target. In light of additional information that became known to PNC following the Personnel and Compensation Committee’s previous certification of this award in January 2015, the performance payout rate was increased to 199.78% and recertified by the Committee in February 2016. Following this February 2016 recertification, a cash payment of $119,622 was paid to Mr. Parsley to account for the difference.
|
| TheThese columns also include shares that vested but were withheld for tax purposes. |
6668 THE PNC FINANCIAL SERVICES GROUP, INC. - 20162019 Proxy Statement
PENSION BENEFITS AT 20152018 FISCALYEAR-END Pension benefits at 20152018 fiscalyear-end The principal elements of our post-employment compensation are a qualified defined benefit cash balance pension plan, anon-qualified excess cash balance pension plan and anon-qualified supplemental executive retirement plan, each described in this section, as well as a qualified defined contribution savings plan and anon-qualified deferred compensation and incentive plan.plan as described inNon-qualified deferred compensation in fiscal 2018 on page71. Cash balance pension plan. We maintain a pension plan for most of our full-time employees. The pension plan is a defined benefit cash balance pension plan under the Employee Retirement Income Security Act of 1974, as amended (ERISA)(“ERISA”), and is intended to be qualified under Section 401(a) of the Internal Revenue Code. Each calendar quarter, eligible participants receive “earnings credits” based on a percentage of eligible compensation in accordance withcompensation. Earnings credit percentages for employees who were plan participants on December 31, 2009 are based on a schedule based onusing the participant’s age and years of credited service. Earnings credit percentages for plan participants on December 31, 2009service at that date and are frozen at their level earned to that point.level. Earnings credits for all employees who become participants on or after January 1, 2010 are a flat 3% of eligible compensation. The plan defines eligible “compensation” as regular earnings plus eligible variable compensation, such as paid annual incentives. Eligible “compensation” does not include deferred payments of annual incentives; these are instead taken into account under our excess pension plan described below. We generally limit eligible variable compensation for a plan year to a total of 100% of the first $25,000 plus 50% of the next $225,000. For participants who had accrued benefits prior to 1999 under the pension plan formula then in effect, an initial cash balance “account” was established based on the present value of the accrued benefits at the time of the conversion to the current program. Employees who were at least age 40 and had at least 10 years of credited service as of January 1, 1999 were awarded additional “Transitional Earnings Credits” under the plan for up to 10 years. Employees who were alreadyPlan participants at December 31, 2009 generally receive quarterly “interest credits” at a rate ofone-fourth of the annual interest rate on30-year Treasury securities, withsecurities. Employees who were already plan participants as of December 31, 2009 receive a minimum interest credit. New participants on
or after January 1, 2010 are not subject to this minimum interest credit.
At the end of 2008, the cash balance pension plan previously sponsored by National City Corporation was merged into this plan. Earnings and interest credits for National City participants are generally as noted above. We contribute to the plan an actuarially determined amount necessary to fund the total benefits payable to participants. Actuaries calculate total contributions instead of contributions for each individual participant. Excess pension plan. We maintain an ERISA excess pension plan, which is a supplementalnon-qualified pension plan. The excess benefits under this plan equal the difference, if any, between a participant’s benefit under the qualified pension plan computed without regard to applicable Internal Revenue Code limits and taking into account bonus amounts deferred under thenon-qualified deferred compensation and incentive plan, and the participant’s actual benefit under the qualified pension plan. Supplemental executive retirement plan. We maintain a supplemental executive retirement plan for certain executive officers. As part of its ongoing review of compensation practices, the Personnel and Compensation Committee decided in 2007 to eliminate future plan participation for new executive officers. This plan provides earnings credits based on a percentage of annual incentives awarded under eligible executive bonus plans in accordance with a schedule based on the participant’s age and years of credited service. This plan also provides quarterly interest credits that mirror the interest credits under the qualified pension plan. Executive officers who participated in the supplemental executive retirement plan on December 31, 1998 and who were at least age 50 with five or more years of credited service receive grandfathered benefits based on the pension formula in effect prior to 1999. For executive officers at or above a certain organizational level who participated on December 31, 1998 but who did not meet the requirements for grandfathered benefits, we doubled the earnings credit percentages in order to mitigate the effect of the transition to the cash balance pension formula. THE PNC FINANCIAL SERVICES GROUP, INC. - 20162019 Proxy Statement 6769
PENSION BENEFITS AT 20152018 FISCALYEAR-END | | NEO | | Plan Name | | Number of
Years Credited
Service (#)(a) | | | Present Value
of Accumulated
Benefit ($)(b) | | | Payments
during last
fiscal year | | | Plan Name | | Number of Years Credited Service (#)(a) | | | Present Value of Accumulated Benefit ($)(b) | | | Payments During Last Fiscal Year | | William S. Demchak | | Qualified Pension Plan | | | 13 | | | $ | 191,866 | | | | – | | | Qualified Pension Plan | | | 16 | | | $ | 261,029 | | | | – | | | | ERISA Excess Pension Plan | | | 13 | | | $ | 1,212,820 | | | | – | | | ERISA Excess Pension Plan | | | 16 | | | $ | 1,826,456 | | | | – | | | | | Supplemental Executive Retirement Plan | | | 13 | | | $ | 1,765,101 | | | | – | | | Supplemental Executive Retirement Plan | | | 16 | | | $ | 2,902,720 | | | | – | | | | | Total | | | | $ | 3,169,787 | | | | – | | | Total | | | | $ | 4,990,205 | | | | – | | Robert Q. Reilly | | Qualified Pension Plan | | | 28 | | | $ | 337,520 | | | | – | | | Qualified Pension Plan | | | 31 | | | $ | 434,215 | | | | – | | | | ERISA Excess Pension Plan | | | 28 | | | $ | 441,694 | | | | – | | | ERISA Excess Pension Plan | | | 31 | | | $ | 691,980 | | | | – | | | | | Supplemental Executive Retirement Plan | | | 28 | | | $ | 642,509 | | | | – | | | Supplemental Executive Retirement Plan | | | 31 | | | $ | 1,108,891 | | | | – | | | | | Total | | | | $ | 1,421,723 | | | | – | | | Total | | | | $ | 2,235,086 | | | | – | | Michael P. Lyons | | Qualified Pension Plan | | | 4 | | | $ | 25,976 | | | | – | | | Qualified Pension Plan | | | 7 | | | $ | 50,147 | | | | – | | | | ERISA Excess Pension Plan | | | 4 | | | $ | 51,513 | | | | – | | | ERISA Excess Pension Plan | | | 7 | | | $ | 100,551 | | | | – | | | | | Supplemental Executive Retirement Plan | | | NA | | | | – | | | | – | | | Supplemental Executive Retirement Plan | | | N/A | | | | – | | | | – | | | | | Total | | | | $ | 77,489 | | | | – | | | Total | | | | $ | 150,698 | | | | – | | E William Parsley, III | | Qualified Pension Plan | | | 12 | | | $ | 165,157 | | | | – | | | Qualified Pension Plan | | | 15 | | | $ | 230,677 | | | | – | | | | ERISA Excess Pension Plan | | | 12 | | | $ | 685,691 | | | | – | | | ERISA Excess Pension Plan | | | 15 | | | $ | 996,585 | | | | – | | | | | Supplemental Executive Retirement Plan | | | NA | | | | – | | | | – | | | Supplemental Executive Retirement Plan | | | N/A | | | | – | | | | – | | | | | Total | | | | $ | 850,848 | | | | – | | | Total | | | | $ | 1,227,262 | | | | – | | Joseph C. Guyaux | | Qualified Pension Plan | | | 43 | | | $ | 1,294,615 | | | | – | | | Joseph E. Rockey | | | Qualified Pension Plan | | | 19 | | | $ | 304,000 | | | | – | | | | ERISA Excess Pension Plan | | | 43 | | | $ | 2,671,828 | | | | – | | | ERISA Excess Pension Plan | | | 19 | | | $ | 226,856 | | | | – | | | | | Supplemental Executive Retirement Plan | | | 43 | | | $ | 5,929,932 | | | | – | | | Supplemental Executive Retirement Plan | | | N/A | | | | – | | | | – | | | | | Total | | | | $ | 9,896,375 | | | | – | | | Total | | | | $ | 530,856 | | | | – | |
| (a) | To compute the number of years of service, we use the same plan measurement date that we use for our 20152018 audited consolidated financial statements. Credited service, where applicable, is generally equal to actual full years of service,service; however, for purposes of determining the level of benefits earned in the Qualified Pension Plan and ERISA Excess Pension Plan, credited service has been frozen as of December 31, 2009. As of that date, the NEOs had the following years of credited service: Mr. Guyaux 37,Demchak, 7; Mr. Reilly, 22,22; Mr. Demchak 7,Parsley, 6; and Mr. Parsley 6.Rockey, 10. Mr. Lyons was hired after service accruals ceased to be applicable for purposes of calculating the amount of Qualified Pension Plan and ERISA Excess Pension Plan benefits. |
| (b) | We compute the present values shown here as of December 31, 20152018 in accordance with Financial Accounting Standards Board Accounting Standards CodificationFASB ASC Topic 715, Compensation—Retirement Benefits, (FASB ASC Topic 715), as specified in theapplicable SEC regulations. The amounts do not necessarily reflect the amounts to which the executive officersNEOs would be entitled under the terms of these plans as of December 31, 2015.2018. |
| | We calculate the present values for the plans by projecting the December 31, 20152018 account balances to an assumed retirement age of 65, using an interest crediting rate of (i) 4.40% for Mr. Demchak, Mr. Reilly, Mr. Parsley and Mr. GuyauxRockey, and (ii) 3.0%3.05% for Mr. Lyons, who is not eligible for the guaranteed minimum annual interest crediting rate since he became a plan participant after January 1, 2010. We then apply a discount rate of 4.25%4.30% for the Qualified Pension Plan and 3.95%4.15% for other plans to discount the balances back to December 31, 2015.2018. |
| | See Note 1211 in the Notes to Consolidated Financial Statements in our Annual Report on Form10-K for the year ended December 31, 20152018 for moreadditional information onregarding the discount rates and other material assumptions. |
6870 THE PNC FINANCIAL SERVICES GROUP, INC. - 20162019 Proxy Statement
NON-QUALIFIED DEFERRED COMPENSATION IN FISCAL 20152018 Non-qualified deferred compensation in fiscal 20152018 SupplementalWe offer an incentive savings plan (SISP). Prior to 2012, we offered a non-qualified supplemental incentive savings plan for certain designated employees who exceeded a compensation threshold. Effective January 1, 2012, the SISP was frozen to new participants and to the deferral of amounts earned on and after January 1, 2012. Participants with existing account balances can direct the investment of their accounts among the hypothetical investment alternatives made available under the plan and their accounts are adjusted for deemed investment gains or losses resulting from such investment directions.
The SISP was a supplement to the incentive savings plan (ISP)(“ISP”) in which most of our employees can participate after they meet any applicable service requirements.requirements, and for designated employees who exceed a compensation threshold, we also offer anon-qualified deferred compensation and incentive plan (“DCIP”). Prior to establishing the DCIP in 2012, we offered anon-qualified supplemental incentive savings plan (“SISP”), which was a supplement to the ISP, and anon-qualified deferred compensation plan (“DCP”), in each case for certain designated employees who exceeded applicable compensation thresholds.
Incentive savings plan (ISP). The ISP is a defined contribution 401(k) plan whichthat is intended to be qualified under Section 401(a) of the Internal Revenue Code. During 2015, Participants2018, participants could elect to contribute between 1% and 75% of eligible compensation to the plan each year aspre-tax elective deferrals, subject to Internal Revenue Code limits. Participants who are age 50 or older may contribute additionalpre-tax amounts called “catch-up“catch-up contributions” each year. For 2015,2018, we made employer matching contributions on behalf of eligible participants equal to 100% of elective deferrals up to 4% of eligible compensation. Matching contributions were made in cash. Participants direct the investment of their accounts among the investment options offered under the plan and their account balances are adjusted for gains or losses resulting from those investment directions. ISP and SISP participants have the same investment options. The employee directs investment of contributions under either plan. Investment options include several collective funds and mutual funds
(including BlackRock mutual funds), a proprietary PNC investment fund, and a PNC common stock fund. We no longer permit new funds to be contributed or transferred into the PNC common stock fund. SISP investments are invested on a phantom basis and are considered “deemed” investments.
Deferred compensation plan (DCP) and deferred compensation and incentive plan (DCIP). We maintain a non-qualified deferred compensation and incentive plan (DCIP)DCIP for designated employees who exceed a compensation threshold. Participants can elect to defer up to 20% of base salary and/or up to 75% of eligible short-term incentive pay earned with respect to a plan year. The DCIP’s plan year is the calendar yearyear. Supplemental incentive savings plan (SISP) and the DCIP’s first plan year began January 1, 2012. Prior to 2012, we offered a non-qualified deferred compensation plan (DCP) for designated employees who exceeded a compensation threshold.. Effective January 1, 2012, the SISP and DCP waswere frozen to new participants and to the deferral of amounts earned on and after January 1, 2012. Distributions from this planthese plans are paid in cash in accordance with the participant’s election. Participants with existing account balances can direct the investment of their accounts among the hypothetical investment alternatives made available under the plan and their accounts are adjusted for deemed investment gains or losses resulting from such investment directions. Investment options. ISP, DCIP, SISP and DCP and DCIP participants currently have many of the same investment options available tolisted on page 73. The employee directs investment of contributions under each plan. Investment options include several collective funds and mutual funds (including BlackRock mutual funds) and a proprietary PNC investment fund. ISP and SISP participants.participants may also hold investments in a PNC common stock fund; however, we no longer permit new funds to be contributed or transferred into the PNC common stock fund. ISP, DCIP, SISP and DCP and DCIP participants also have additional investment options, including additional BlackRock mutual funds. DCP and DCIP investments are invested on a phantom basis and are considered “deemed” investments. THE PNC FINANCIAL SERVICES GROUP, INC. - 20162019 Proxy Statement 6971
NON-QUALIFIED DEFERRED COMPENSATION IN FISCAL 20152018 | | | | | | Executive
Contributions
in Last FY ($) | | | Registrant
Contributions in
Last FY ($) | | | Aggregate
Earnings
in Last FY
($) | | Aggregate
Withdrawals/
Distributions
($) | | Aggregate
Balance at
Last FYE
($) | | | | | Executive Contributions in Last FY ($) | | | Aggregate Earnings in Last FY ($) | | Aggregate Withdrawals/ Distributions ($) | | Aggregate Balance at Last FYE ($) | | | NEO | | Name of Plan | | (a) | | | | | | (b) | | | | (c) | | | Name of Plan | | (a) | | | (b) | | | | (c) | | William S. Demchak | | Supplemental Incentive Savings Plan | | | – | | | | – | | | $ | 27,196 | | | | – | | | $ | 1,065,272 | | | Supplemental Incentive Savings Plan | | | – | | | $ | (119,930 | ) | | | – | | | $ | 1,388,486 | | | | Deferred Compensation & Incentive Plan | | $ | 442,500 | | | | – | | | $ | (40,678 | ) | | $ | (971,618 | ) | | $ | 600,129 | | | Deferred Compensation & Incentive Plan | | $ | 652,500 | | | $ | 10,598 | | | $ | (1,172,156 | ) | | $ | 654,608 | | | | | Deferred Compensation Plan | | | – | | | | – | | | $ | (14,617 | ) | | $ | (1,182,566 | ) | | $ | 1,638,280 | | | Deferred Compensation Plan | | | – | | | $ | 4,641 | | | $ | (164,600 | ) | | $ | 166,247 | | | | | Total | | $ | 442,500 | | | | – | | | $ | (28,099 | ) | | $ | (2,154,184 | ) | | $ | 3,303,681 | | | Total | | $ | 652,500 | | | $ | (104,691 | ) | | $ | (1,336,756 | ) | | $ | 2,209,341 | | Robert Q. Reilly | | Supplemental Incentive Savings Plan | | | – | | | | – | | | $ | (591 | ) | | | – | | | $ | 646,153 | | | Supplemental Incentive Savings Plan | | | – | | | $ | (62,160 | ) | | | – | | | $ | 808,167 | | | | Deferred Compensation & Incentive Plan | | | – | | | | – | | | | – | | | | – | | | | – | | | Deferred Compensation & Incentive Plan | | | – | | | | – | | | | – | | | | – | | | | | Deferred Compensation Plan | | | – | | | | – | | | $ | 21,673 | | | | – | | | $ | 2,320,235 | | | Deferred Compensation Plan | | | – | | | $ | (194,403 | ) | | | – | | | $ | 2,780,849 | | | | | Total | | | – | | | | – | | | $ | 21,082 | | | | – | | | $ | 2,966,388 | | | Total | | $ | – | | | $ | (256,563 | ) | | $ | – | | | $ | 3,589,016 | | Michael P. Lyons | | Supplemental Incentive Savings Plan | | | – | | | | – | | | | – | | | | – | | | | – | | | Supplemental Incentive Savings Plan | | | – | | | | – | | | | – | | | | – | | | | Deferred Compensation & Incentive Plan | | | – | | | | – | | | | – | | | | – | | | | – | | | Deferred Compensation & Incentive Plan | | | – | | | | – | | | | – | | | | – | | | | | Deferred Compensation Plan | | | – | | | | – | | | | – | | | | – | | | | – | | | Deferred Compensation Plan | | | – | | | | – | | | | – | | | | – | | | | | Total | | | – | | | | – | | | | – | | | | – | | | | – | | | Total | | $ | – | | | $ | – | | | $ | – | | | $ | – | | E William Parsley, III | | Supplemental Incentive Savings Plan | | | – | | | | – | | | $ | (42,052 | ) | | | – | | | $ | 1,754,190 | | | Supplemental Incentive Savings Plan | | | – | | | $ | (210,255 | ) | | | – | | | $ | 2,171,084 | | | | Deferred Compensation & Incentive Plan | | | – | | | | – | | | | – | | | | – | | | | – | | | Deferred Compensation & Incentive Plan | | | – | | | | – | | | | – | | | | – | | | | | Deferred Compensation Plan | | | – | | | | – | | | $ | (64,928 | ) | | $ | (599,350 | ) | | $ | 1,738,109 | | | Deferred Compensation Plan | | | – | | | $ | 3,483 | | | $ | (710,094 | ) | | | – | | | | | Total | | | – | | | | – | | | $ | (106,980 | ) | | $ | (599,350 | ) | | $ | 3,492,299 | | | Total | | $ | – | | | $ | (206,772 | ) | | $ | (710,094 | ) | | $ | 2,171,084 | | Joseph C. Guyaux | | Supplemental Incentive Savings Plan | | | – | | | | – | | | $ | 620 | | | | – | | | $ | 1,871,603 | | | Joseph E. Rockey | | | Supplemental Incentive Savings Plan | | | – | | | $ | (97,339 | ) | | | – | | | 797,606 | | | | Deferred Compensation & Incentive Plan | | | – | | | | – | | | | – | | | | – | | | | – | | | Deferred Compensation & Incentive Plan | | $ | 203,125 | | | $ | (127,595 | ) | | | – | | | $ | 722,751 | | | | | Deferred Compensation Plan | | | – | | | | – | | | $ | 41,904 | | | | – | | | $ | 2,817,439 | | | Deferred Compensation Plan | | | – | | | | – | | | | – | | | | – | | | | | Total | | | – | | | | – | | | $ | 42,524 | | | | – | | | $ | 4,689,042 | | | Total | | $ | 203,125 | | | $ | (224,934 | ) | | $ | – | | | $ | 1,520,357 | |
| (a) | Amounts in this column have beenare included in the compensation reported in the Summary compensation table on page 58.60. PNC made no contributions to these plans in 2018. |
| (b) | No amounts in this column have been reported in the Summary compensation table on page 5860 as none of our NEOs received above-market or preferential earnings. |
| (c) | We calculate the dollar amounts in this column by taking the aggregate balance at the end of fiscal year 20142017 and then adding the totals in the other columns to that balance. The aggregate balance at the end of fiscal year 20152018 includes any unrealized gains and losses on investments. |
| Please see page 71 for the amounts reported in All contributions comprising a portion of the aggregate balance at lastthe end of fiscal year end that2018 were disclosed asincluded in the compensation reported in previousthe Summary compensation tables.table on page 60 and prior years’ summary compensation tables, as applicable. |
7072 THE PNC FINANCIAL SERVICES GROUP, INC. - 20162019 Proxy Statement
NON-QUALIFIED DEFERRED COMPENSATION IN FISCAL 20152018 The amounts for each year reflect the contributions that were reported in previous summary compensation tables (since 2006). The total represents the portion of the aggregate balance, without giving effect to earnings or distributions, that were reported in previous summary compensation tables.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | NEO | | Plan | | | 2006 | | | 2007 | | | 2008 | | | 2009 | | | 2010 | | | 2011 | | | 2012 | | | 2013 | | | 2014 | | | 2015 | | | Total* | | William S. Demchak | | | SISP | | | $ | 77,102 | | | $ | 97,100 | | | $ | 75,200 | | | $ | 63,620 | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | $ | 313,022 | | | | | DCIP | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | $ | 150,000 | | | $ | 684,690 | | | $ | 385,417 | | | $ | 442,500 | | | $ | 1,662,607 | | | | | | DCP | | | $ | 1,278,907 | | | $ | 1,625,000 | | | $ | 1,125,603 | | | | – | | | | – | | | | – | | | $ | 745,500 | | | | – | | | | – | | | | – | | | $ | 4,775,010 | | Robert Q. Reilly | | | SISP | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | | DCIP | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | | | DCP | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | Michael P. Lyons | | | SISP | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | | DCIP | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | | | DCP | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | E William Parsley, III | | | SISP | | | | – | | | | – | | | | – | | | | – | | | $ | 665,038 | | | | – | | | | – | | | | – | | | | – | | | | – | | | $ | 665,038 | | | | | DCIP | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | | | DCP | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | Joseph C. Guyaux | | | SISP | | | $ | 61,944 | | | $ | 21,000 | | | $ | 17,625 | | | $ | 15,864 | | | $ | 4,127 | | | | – | | | | – | | | | – | | | | – | | | | – | | | $ | 120,560 | | | | | DCIP | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | | | DCP | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | |
* | The total amounts may exceed the aggregate balance at year-end due to the impact of plan withdrawals by the individual. |
THE PNC FINANCIAL SERVICES GROUP, INC. - 2016 Proxy Statement 71
NON-QUALIFIED DEFERRED COMPENSATION IN FISCAL 2015
The following table shows the 20152018 investment options for the DCP, DCIP, ISP SISP, DCP and DCIP,SISP, along with annual rates of return. See page 6971 for an explanation of ourthe DCP, DCIP, ISP SISP, DCP and DCIP.SISP. Ticker symbols are listed for investment options available to the general public. | | | | | | | | | | | | | | | | | | | | | | Benchmark Performance | | Ticker
Symbol | | | DCP | | | DCIP | | | ISP/SISP | | | 20152018 Annual
Rate of Return | | Am Beacon Sm Cp Value Inst*
| | | AVFIX | | | | X | | | | X | | | | | | | | -5.04 | % | Am EuroPacific Growth R5*
| | | RERFX | | | | X | | | | X | | | | | | | | -0.54 | % | BlackRock Asset Allocation Instl.*
| | | PBAIX | | | | X | | | | | | | | | | | | -0.54 | % | BlackRock Core Bond Fund1*
| | | BFMCX | | | | X | | | | | | | | | | | | 0.45 | % | BlackRock Core Fixed Income Index*
| | | | | | | | | | | X | | | | | | | | 0.61 | % | BlackRock High Yield BR | | | BHYIX | | | | X | | | | X | | | | X | | | | -3.96(3.25 | )% | BlackRock Intermediate Government Instl.* | | | PNIGX | | | | X | | | | | | | | | | | | 0.55 | % | BlackRock Inflation Protected Bond Instl.*
| | | BPRIX | | | | X | | | | | | | | | | | | -2.10 | % | BlackRock International Index*
| | | | | | | | | | | X | | | | | | | | -0.53 | % | BlackRock International Opportunities Instl.*
| | | BISIX | | | | X | | | | | | | | | | | | -0.66 | % | BlackRock US Opportunities Instl.*
| | | BMCIX | | | | X | | | | X | | | | | | | | -1.58 | % | BlackRock Large Cap Core Instl.*
| | | MALRX | | | | X | | | | | | | | | | | | 0.35 | % | BlackRock Large Cap Index Fund*
| | | | | | | | | | | X | | | | | | | | 1.45 | % | BlackRock LifePath 2020 Fund**Short Term Inv. Fund
| | | | | | | X | | | | X | | | | X | | | | -1.291.88 | % | BlackRock LifePath 2025 Fund**2020 Fund | | | | | | | X | | | | X | | | | X | | | | -1.44(3.87 | )% | BlackRock LifePath 2030 Fund**2025 Fund | | | | | | | X | | | | X | | | | X | | | | -1.64(4.86 | )% | BlackRock LifePath 2035 Fund**2030 Fund | | | | | | | X | | | | X | | | | X | | | | -1.82(5.68 | )% | BlackRock LifePath 20402035 Fund | | | | | | | | | | | X | | | | X | | | | -2.02 | % | BlackRock LifePath 2045 Fund
| | | | | | | | | | | X | | | | X | | | | -2.17 | % | BlackRock LifePath 2050 Fund
| | | | | | | | | | | X | | | | X | | | | -2.20 | % | BlackRock LifePath 2055 Fund**, ***
| | | | | | | | | | | X | | | | X | | | | -2.19 | % | BlackRock LifePath 2060 Fund***
| | | | | | | | | | | | | | | X | | | | -2.17 | % | BlackRock LifePath Retirement Fund
| | | | | | | | | | | X | | | | X | | | | -1.17 | % | BlackRock Liquidity Temp Fund
| | | TMPXX | | | | X | | | | X | | | | X | | | | 0.10 | % | BlackRock Small Cap Growth Instl*
| | | PSGIX | | | | X | | | | | | | | | | | | -3.60 | % | BlackRock Small/Mid Index Fund*
| | | | | | | | | | | X | | | | | | | | -3.13 | % | BlackRock TIPS**
| | | | | | | X | | | | X | | | | X | | | | -1.29(6.47 | )% | BlackRock LifePath 2040 Fund | | | | | | | X | | | | X | | | | X | | | | (7.19 | )% | BlackRock LifePath 2045 Fund | | | | | | | X | | | | X | | | | X | | | | (7.84 | )% | BlackRock LifePath 2050 Fund | | | | | | | X | | | | X | | | | X | | | | (8.09 | )% | BlackRock LifePath 2055 Fund | | | | | | | X | | | | X | | | | X | | | | (8.11 | )% | BlackRock LifePath 2060 Fund | | | | | | | X | | | | X | | | | X | | | | (8.11 | )% | BlackRock LifePath Retirement Fund | | | | | | | X | | | | X | | | | X | | | | (3.46 | )% | BlackRock TIPS | | | | | | | X | | | | X | | | | X | | | | (1.13 | )% | Brandywine Intern’l Opp Fixed Inc Fund**Fund | | | LMOTX | | | | X | | | | X | | | | | | | | -9.80(5.44 | % | CRM Mid Cap Value Instl*
| | | CRIMX | | | | X | | | | X | | | | | | | | -2.42 | % | Dodge & Cox Stock Fund*
| | | DODGX | | | | X | | | | X | | | | | | | | -4.49 | % | Eagle Small Cap Growth Fund*
| | | HSIIX | | | | | | | | X | | | | | | | | -0.50 | % | Fidelity Spartan International Index Inv.*
| | | FSIIX | | | | X | | | | | | | | | | | | -0.87 | % | Harbor Capital Appreciation*
| | | HACAX | | | | X | | | | X | | | | | | | | 10.99 | % | Munder Mid Cap Core Growth Y*
| | | MGOYX | | | | X | | | | | | | | | | | | -4.36 | )% | PNC Common Stock Fund | | | PNC | | | | X | | | | | | | | X | | | | 6.81(17.53 | )% | PNC Stable Value Fund | | | | | | | X | | | | X | | | | X | | | | 1.572.01 | % | Vanguard Instl. Index Fund Plus* | | | VIIIX | | | | X | | | | | | | | | | | | 1.39 | % | Vanguard Small Cap Index Inv.*
| | | NAESX | | | | X | | | | | | | | | | | | -3.78 | % | Vanguard Total Bond Mkt. Index Inv.*
| | | VBMFX | | | | X | | | | | | | | | | | | 0.29 | % | Wells Fargo Adv. Total Return I*
| | | MBFIX | | | | | | | | X | | | | | | | | 0.62 | % | SSgAState Street S&P 500 Index Fund**Fund
| | | | | | | X | | | | X | | | | X | | | | 1.34(4.41 | )% | SSgaAState Street U.S. Extended Market Index Fund**Fund | | | | | | | X | | | | X | | | | X | | | | -3.45(9.36 | )% | SSgAState Street Global Equity ex U.S. Index Fund**Fund | | | | | | | X | | | | X | | | | X | | | | -5.62(14.17 | )% | SSgAState Street Real Return ex Nat. Res. Index Fund | | | | | | | | | | | | | | | X | | | | -5.67(4.70 | )% | SSgAState Street U.S. Bond Index Fund**Fund | | | | | | | X | | | | X | | | | X | | | | 0.54(0.06 | )% | SSgAState Street International Equity Index Fund**Fund | | | | | | | X | | | | X | | | | X | | | | -0.54(13.62 | )% | SSgAState Street Emerging Markets Equity Index Fund**Fund | | | | | | | X | | | | X | | | | X | | | | -15.33(14.92 | )% | FPA Cresent Fund**Crescent Fund | | | FPACX | | | | X | | | | X | | | | | | | | -2.06(7.43 | )% | Aberdeen Emerging Markets InsitutionalInstitutional Fund Instl**Instl | | | ABEMX | | | | X | | | | X | | | | | | | | -13.68(14.65 | )% | BlackRock Global Allocation I Fund**Fund | | | MALOX | | | | X | | | | X | | | | | | | | -0.83(7.37 | )% | First Eagle Overseas I Fund**Fund | | | SGOIX | | | | X | | | | X | | | | | | | | 2.56(9.99 | )% | Vulcan Large Cap Value Fund**Fund | | | VVPLX | | | | X | | | | X | | | | | | | | -9.63(7.68 | )% | Fiduciary Mgmt Small Cap Fund**Fund | | | FMIMX | | | | X | | | | X | | | | | | | | -6.84(8.65 | )% |
* | Funds removed from the DCP, DCIP and/or both from the fund line up effective September 1, 2015. |
** | Funds added to the DCP, DCIP and/or both to the fund line up effective September 1, 2015. |
*** | Funds added to the ISP and SISP fund line up effective January 1, 2015. |
72 THE PNC FINANCIAL SERVICES GROUP, INC. - 20162019 Proxy Statement 73
CHANGE IN CONTROL AND TERMINATION OF EMPLOYMENT Benefits upon termination of employment Our NEOs may receive various forms of compensation or benefits in connection with a termination of employment. These benefits result from: change inof control agreements, the terms of our equity-based grants, and other existing plans and arrangements in which our NEOs participate. We do not have a separate severance plan or program for the NEOs, although theNEOs. The Personnel and Compensation Committee has discretion to provide severance benefits subject to the parameters of our Board-approved policy, as described in the policy we adopted in February 2011 and describedCD&A on page 52 of our CD&A.55. The benefits an executive may receive will depend on whether PNC or the executive terminated employment and, if PNC terminated employment, whether itthe termination was for cause; whether the terminationcause, resulted from death or disability; whether the terminationdisability, or followed a change in control, and whether the executive is retirement-eligible. If a retirement-eligible employee resigns or is terminated without cause, we consider it a retirement. For these purposes, a “retirement-eligible” employee is someone who is at least 55 years old and has at least five years of service with us.PNC. As of December 31, 2015, Mr. Guyaux2018, one of our NEOs was retirement-eligible, while Mr. Demchak, Mr. Reilly, Mr. Lyons, and Mr. Parsley were not.retirement-eligible. Change inof control agreements As of December 31, 20152018 we have entered into separate change inof control agreements with each of our NEOs and similar agreements with a limited group of other senior officers. These agreements have been a valuable component of our executive compensation program for several years. We believe that these arrangements mitigate concerns arising from a change inof control, and help to ensure the continued dedicated service of our key employees. Cash payments received undercontemplated by these agreements require a “double trigger”—that is, the occurrence of both a change inof control and a qualifying termination of employment. A qualifying termination would occur if the executive resigned for “good reason”“Good Reason” or the surviving company terminated the executive without “cause”other than for “Cause,” “Disability” or death (each as defined in the change inof control agreement). The treatment of equity awards upon a change inof control is handledaddressed in the equity awardsaward agreements themselves, as described below, not in theserather than the change of control agreements. TheseThe change of control agreements would payprovide for cash payments to our executives,NEOs calculated based on various compensation components. These components, includeincluding annual base salary and an annual incentive award (bonus). For purposes of the change of control agreements, annual base salary is equal to 12 times the highest monthly base salary rate payable to the executive in the12-month period preceding the month of the change of control. The cash severance payment related to base salary for Mr. Demchak, Mr. Reilly and Mr. Guyaux is based on three times, and for Mr. Lyons and Mr. Parsleyequal to two times the annual base salary, (the highest monthly base salary rate forand the twelve months preceding the change in control multiplied by twelve). The cash severance payment related to the bonus is three times for Mr. Demchak, Mr. Reilly and Mr. Guyaux,equal to two times for Mr. Lyons, one times for Mr. Parsley, the applicable average bonus percentpercentage multiplied by the applicableannual base salary.
The agreements also provide for continued benefits under (or compute cash payments by reference to) somecertain of our retirement and health and welfare benefit plans. Our historicalNone of our change of control agreements require a payment to the NEO to reimburse the executive forcontain any excise tax“gross-up” provisions. Our current change of control agreements provide that in the event the benefits payable to an executive trigger excise taxes on severance or other benefits that are considered “excess parachute payments” under Section 4999 of the Internal Revenue Code, as long as severance and otherthe executive will be entitled to a reduction in benefits are at least 105%so that no excise tax is imposed if such a reduction would result in a greater net(after-tax) benefit to the executive than payment of the maximum that can be paid without incurring the excise tax. Since 2009, wefull amount of his or her benefits. We have eliminated the excise tax “gross-up” provision from new change in control agreements. Mr. Parsley’s and Mr. Lyons’ agreements do not contain an excise tax gross-up provision. Our Board adopted a Board-approved policy in February 2011 that requires shareholder approval of certain future severance arrangements if the arrangement provides for additional severance benefits in an amount exceeding 2.99 times the sum of the executive’s annual base salary and target bonus.
The change inof control agreements prohibit the executiveexecutives from employing or soliciting any of our officers during theone-year period following termination, and from using or disclosing any of our confidential business or technical information or trade secrets. The executive may also not employ or solicit any of our officers during the one-year period following termination. While the benefits to be received under a change inof control agreement may be significant to an individual, they first require the occurrence of a significant transaction. As a result, the benefits are highly speculative and are contingent on a variety of facts and circumstances. In recognition of this, ourthe Personnel and Compensation Committee of the Board does not THE PNC FINANCIAL SERVICES GROUP, INC. - 2016 Proxy Statement 73
CHANGE IN CONTROL AND TERMINATION OF EMPLOYMENT
consider the amount of potential change in control payments when it makes annual compensation decisions for our NEOs. Change in control protections, although meaningful, also become relatively less significant to PNC as we increase in size. 74 THE PNC FINANCIAL SERVICES GROUP, INC. - 2019 Proxy Statement
CHANGE IN CONTROL AND TERMINATION OF EMPLOYMENT Equity-based grants If aan NEO resigns or the NEO’s employment is terminated with or without cause, any unvested equity-based compensation is generally forfeited. IfHowever, if an NEO retires (i.e., a retirement-eligible employeeNEO resigns or is terminated without cause, we consider itcause), equity-based compensation is not forfeited and continues in effect until its originally scheduled payment date. Equity-based compensation is also not forfeited under certain circumstances following a retirement. Beginningchange in 2015, grantscontrol. Grants to our executive officers arecontain a “double trigger”, feature, meaning such grants require the occurrence of both a change in control of PNC and a qualifying termination (which qualifying termination includes a termination without cause or a resignation for good reason following a change reason) in control)order to vest prior to the original vesting year, although payout does not occur until the original vesting year. Upondate in connection with a change in control of PNC, while the potential payout amount is calculated and fixed at that time, payout is not accelerated.control.
A change in control of PNC, retirement of aan NEO or termination of an NEO’s employment by PNC by reason of disability of a NEO, has the following impact on unvested equity-based compensation: OUTSTANDING OPTION AWARDS | | | | | | Change in Control | | Retirement | | Disability | | | | OptionAll outstanding option awards are fully vested and exercisable as of December 31, 2015.2018. Following a termination of employment without cause or a resignation for good reason, the grantee has three years to exercise stock options (but not later than the original option termination date).
| | OptionAll outstanding option awards are fully vested and exercisable as of December 31, 2015.2018. Upon retirement, such options continue in effect in accordance with their terms.
| | OptionAll outstanding option awards are fully vested and exercisable as of December 31, 2015. Grantee2018. The grantee has three years to exercise stock options (but not later than the original option termination date).
|
RESTRICTED SHARE UNITS | | | | | | Change in Control | | Retirement | | Disability | Following a change in control, outstanding RSUs will vest upon a qualifying termination or continued employment through the original vesting date, and will be paid as soon as practicable following the original vesting date. All outstanding RSUs pay out in shares if the CET1 Ratio is met or exceeded as of the last-completed quarter-end. If the Tier 1 capital ratio risk factor is not met, the remaining tranches will be forfeited and expire. Dividend equivalents cease to accrue at the change in control date. | | RSUs continue in effect in accordance with their terms as if the grantee had remained employed through each vesting date. |
GRANTS THAT VEST UPON THE ACHIEVEMENT OF ADDITIONAL PERFORMANCE CRITERIA Performance-Based Restricted StockPerformance Share Units
| | | | | | Change in Control | | Retirement | | Disability | Performance RSUsFollowing a change in control, outstanding PSUs will vest (subject to, for 2015 grants only,upon a qualifying termination or continued employment through the original vesting year)year, and will be paid out as soon as practicable following the end of the original performance period. Outstanding PSUs pay out (forin shares at 100% performance if the CET1 Ratio is met or exceeded as of the last-completed quarter-end. If the Tier 1 capital ratio risk factor is not met, the PSUs are forfeited and expire. Dividend equivalents cease to accrue at the change in control date. | | PSUs continue in effect in accordance with their terms as if the grantee had remained employed for the full performance period. |
THE PNC FINANCIAL SERVICES GROUP, INC. - 2019 Proxy Statement 75
CHANGE IN CONTROL AND TERMINATION OF EMPLOYMENT GRANTS THAT VEST UPON THE ACHIEVEMENT OF ADDITIONAL PERFORMANCE CRITERIA (CONTINUED) | | | | | Performance-Based Restricted Share Units | | | | | | Change in Control | | Retirement | | Disability | The remaining 2014 PRSUs will vest and be paid as soon as practicable following a change in control. The remaining 2015, grants only,2016, and 2017 PRSUs will vest upon the occurrence of both a change in control and a qualifying termination (or continued employment through the original vesting year)date) and will be paid as soon as practicable following the original vesting date. All outstanding PRSUs pay out in cash at 100% performance if the Tier 1 capital ratio risk factor is met or exceeded as of the last-completedquarter-end, provided that the payout percentage will also be subject to a second risk-based adjustment based on the most recent annual discretionary risk factor applied prior to the change in control.control (or if no such factor has previously been applied, payout will remain at 100%). If the Tier 1 capital ratio risk factor is not met, the Performance RSUsPRSUs are cancelled. Dividend equivalents cease to accrue at the change in control date.date and receive the same performance adjustment as their related units. | | Performance RSUsPRSUs continue in effect in accordance with their terms as if the grantee had remained employed for the full performance period. |
74 THE PNC FINANCIAL SERVICES GROUP, INC. - 2016 Proxy Statement
CHANGE IN CONTROL AND TERMINATION OF EMPLOYMENT
GRANTS THAT VEST UPON THE ACHIEVEMENT OF ADDITIONAL PERFORMANCE CRITERIA (CONTINUED)
Incentive Performance Units (IPUs) | | | | | | | | Change in Control | | Retirement | | Disability | For bothFollowing a change in control, outstanding regularStandard IPUs and ALM incentive performance units, ifIPUs will vest upon a qualifying termination or continued employment through the original vesting year, and will pay out in cash as soon as practicable thereafter. If the performance period has not yet ended before the date of a change in control, the award is calculated in two parts –parts: (1) the portion of the performance period that elapsed prior to the change in control (measured in quarters) and (2) the portion of the performance period that not completed due to the change in control.
In each part, the award is calculated by multiplying a performance factor by the target number of units, and then prorating such performance-adjusted amount of units as described below: Part 1 - The corporate performance factor used to calculate the first part would be the higher of 100% and the actual payout percentage achieved prior to the date of the change in control, and the proration is based on the portion of the overall performance period (measured in quarters) that elapsed before the date of the change in control. Part 2 - The corporate performance factor used to calculate the second part is 100%, and the proration is based on the remainder of the overall performance period not completed due to the change in control. Dividend equivalents cease to accrue at the change in control date and receive the same performance adjustment as their related units. Beginning with 2015 grants, regular and ALM incentive performance units will only vest and pay out upon a qualifying termination following the change in control or continued employment through the original vesting year. In addition, for the regular IPU grants,Standard IPUs, the performance factors used to calculate the awards are subject to additional risk-based adjustments.
| | Outstanding regular orStandard IPUs and ALM incentive performance unitsIPUs continue in effect in accordance with their terms as if the grantee had remained employed for the full performance period. |
THE PNC FINANCIAL SERVICES GROUP, INC. - 2016 Proxy Statement 75
CHANGE IN CONTROL AND TERMINATION OF EMPLOYMENT
Acceleration upon death. If the executive officer dies,Upon death, generally (1)(i) stock options remain exercisable until the original option termination date, (2)(ii) outstanding RSUs immediately vest and pay out at 100%, (iii) outstanding PSUs will vest and pay out based on target corporate performance RSUsand actual risk performance through the calendar year of the NEO’s death, subject to the negative discretion of the Personnel and Compensation Committee, (iv) PRSUs vest and pay out at 100% (provided that if death occurs after the close of a performance year but before that year’s tranche has paid out, payout of that tranche is the same as if still an employee and otherwise at 100%)employee), and (3) for incentive performance units (a) granted in 2013, a portion of the(v) all outstanding incentive performance units,Standard IPUs and (b) for incentive performance units granted in 2014 and 2015, all such outstanding units,ALM IPUs may be paid out up to a maximum based on actual corporate and risk performance through the calendar year of the executive officer’sNEO’s death (and, for 2014 and 2015 grants, at 100% thereafter) andthereafter, subject to the negative discretion of the Board’s Personnel and Compensation Committee. Vested awards are paid out no later than December 31 of the year following the year of death. Other material conditions. The retirement and disability awards summarized above are generally subject to forfeiture by PNC if it is determined that a grantee has engaged in certain competitive activities during employment andor the one yearone-year period following termination of employment, or if the grantee has engaged in other detrimental conduct. In addition, the award is subject to grantee’s 76 THE PNC FINANCIAL SERVICES GROUP, INC. - 2019 Proxy Statement
CHANGE IN CONTROL AND TERMINATION OF EMPLOYMENT agreement not to solicit certain customers or employees of PNC during employment and the one yearone-year period following termination of employment, as well as to at all times maintain the confidentiality of business and technical information, and to disclose certain and assign certain inventions. Awards are generally subject to PNC’s clawback, adjustment, or similar policies and to any clawback or recoupment that may be required by applicable law or regulations. THE PNC FINANCIAL SERVICES GROUP, INC. - 2019 Proxy Statement 77
CHANGE IN CONTROL AND TERMINATION OF EMPLOYMENT Existing plans and arrangements As of December 31, 2015,2018, our NEOs could participate in our qualified cash balance pension plan, our ERISA excess pension plan, our ISP and our DCIP. In addition, our NEOs, other than Mr. Lyons,Demchak, Mr. Reilly, Mr. Parsley and Mr. Rockey participate in our SISP, and Mr. Demchak, Mr. Reilly and Mr. Parsley participate in our DCP (although they may no longer make contributions to these plans) and our. The NEOs other than Mr. Lyons and Mr. Parsley, participate in our supplemental executive retirement plan. The officers earn these benefits for services provided to us while employed, and many of these plans are also available on a broader basis to other employees. For the most part, an officer’sNEO’s entitlement to these benefits does not depend on how employment terminates.
Mr. Demchak and Mr. Reilly also participate in our supplemental executive retirement plan, a company-paid executive long-term disability (“LTD”) program, and the Key Executive Equity Program (“KEEP”), a split-dollar life insurance program. Participants in the executive LTD program are generally eligible for additional LTD benefits of $10,000 per month until they are no longer disabled or have reached age 65. KEEP provides benefits in the event of a participating executive’s death while actively employed (equal to 1.5 times then-current annual base salary) or following an eligible retirement (retirement after reaching age 55 and five years of service with PNC, generally equal to annual base salary prior to retirement). Following a change in control, the life insurance policy would transfer to the participating executive. The supplemental executive retirement plan, executive LTD program and KEEP were frozen to new participants as of December 31, 2007. Certain NEOs are also eligible to receive two years of company-paid financial planning and tax preparation services upon retirement. Estimated benefits upon termination The following table shows the estimated incremental benefits payable to our NEOs as of December 31, 20152018 as a result of termination of employment in a variety of situations. These estimated amounts have been calculated as if employment was terminated on December 31, 2015.2018. For change in control benefits, we assumed a change in control of PNC and a termination of employment by the surviving company without cause (or a resignation of the officer for good reason) on that date. To the extent relevant, the amounts assume a PNC stock price of $95.31,$116.91, the closing price for our common stock on December 31, 2015.2018. If we calculated these amounts using a different price, the amounts could be significantly different. The benefits below do not include the balances under our qualified cash balance pension plan, our ERISA excess pension plan, our supplemental executive retirement plan, ourSISP, ISP, our SISP, ourDCIP or DCP and our DCIP unless the NEO receives an enhanced benefit under the termination scenario. In addition, the value of vested but unexercised stock options as of December 31, 2015 are2018 is not included as they do not provide anthere is no incremental benefit.benefit provided. | | | | | | | | | | | | | | | | | | | | | | | | | | William S. Demchak | | Termination for Cause | | | Voluntary Termination/ Termination without Cause(a) | | | Retirement(a) | | | Change in Control(b) | | | Disability | | | Death | | Cash Severance | | | – | | | | – | | | | – | | | $ | 10,680,000 | | | | – | | | | – | | Base Salary | | | – | | | | – | | | | – | | | $ | 2,200,000 | | | | – | | | | – | | Bonus | | | – | | | | – | | | | – | | | $ | 8,480,000 | | | | – | | | | – | | Enhanced Benefits | | | – | | | | – | | | $ | 19,950 | | | $ | 374,964 | | | $ | 1,040,000 | | | $ | 1,650,000 | | Defined Benefit Plans | | | – | | | | – | | | | – | | | $ | 322,000 | | | | – | | | | – | | Defined Contribution Plans | | | – | | | | – | | | | – | | | $ | 22,000 | | | | – | | | | – | | General Benefits & Perquisites | | | – | | | | – | | | $ | 19,950 | | | $ | 30,964 | | | $ | 1,040,000 | | | $ | 1,650,000 | | Value of Unvested Equity | | | – | �� | | | – | | | $ | 22,942,992 | | | $ | 23,809,719 | | | $ | 22,942,992 | | | $ | 23,547,366 | | RSUs | | | – | | | | – | | | $ | 2,835,963 | | | $ | 2,835,963 | | | $ | 2,835,963 | | | $ | 2,835,963 | | PSUs | | | – | | | | – | | | $ | 4,254,064 | | | $ | 4,254,064 | | | $ | 4,254,064 | | | $ | 4,254,064 | | PRSUs | | | – | | | | – | | | $ | 6,133,458 | | | $ | 6,737,832 | | | $ | 6,133,458 | | | $ | 6,737,832 | | Standard IPUs | | | – | | | | – | | | $ | 9,719,507 | | | $ | 9,981,860 | | | $ | 9,719,507 | | | $ | 9,719,507 | | TOTAL | | | $0 | | | | $0 | | | $ | 22,962,942 | | | $ | 34,864,683 | | | $ | 23,982,992 | | | $ | 25,197,366 | |
7678 THE PNC FINANCIAL SERVICES GROUP, INC. - 20162019 Proxy Statement
CHANGE IN CONTROL AND TERMINATION OF EMPLOYMENT EMPLOYEES WHO ARE NOT ELIGIBLE FOR RETIREMENT
| | | | | | | | | | | | | | | | | | | | | | | | | | Robert Q. Reilly | | Termination for Cause | | | Voluntary Termination/ Termination without Cause(a) | | | Retirement(a) | | | Change in Control(b) | | | Disability | | | Death | | Cash Severance | | | – | | | | – | | | | – | | | $ | 5,635,000 | | | | – | | | | – | | Base Salary | | | – | | | | – | | | | – | | | $ | 1,400,000 | | | | – | | | | – | | Bonus | | | – | | | | – | | | | – | | | $ | 4,235,000 | | | | – | | | | – | | Enhanced Benefits | | | – | | | | – | | | | – | | | $ | 264,014 | | | $ | 1,320,000 | | | $ | 1,050,000 | | Defined Benefit Plans | | | – | | | | – | | | | – | | | $ | 211,050 | | | | – | | | | – | | Defined Contribution Plans | | | – | | | | – | | | | – | | | $ | 22,000 | | | | – | | | | – | | General Benefits & Perquisites | | | – | | | | – | | | | – | | | $ | 30,964 | | | $ | 1,320,000 | | | $ | 1,050,000 | | Value of Unvested Equity | | | – | | | | – | | | | – | | | $ | 5,983,698 | | | $ | 5,763,081 | | | $ | 5,918,222 | | RSUs | | | – | | | | – | | | | – | | | $ | 706,719 | | | $ | 706,719 | | | $ | 706,719 | | PSUs | | | – | | | | – | | | | – | | | $ | 1,060,139 | | | $ | 1,060,139 | | | $ | 1,060,139 | | PRSUs | | | – | | | | – | | | | – | | | $ | 1,719,200 | | | $ | 1,564,059 | | | $ | 1,719,200 | | Standard IPUs | | | – | | | | – | | | | – | | | $ | 2,497,640 | | | $ | 2,432,164 | | | $ | 2,432,164 | | TOTAL | | | $0 | | | | $0 | | | | $0 | | | $ | 11,882,712 | | | $ | 7,083,081 | | | $ | 6,968,222 | |
| | William S. Demchak | | Termination
for Cause | | | Voluntary
Termination/
Termination
without Cause(a) | | | Retirement(a) | | | Change
in Control(b) | | | Disability | | | Death | | | | Michael P. Lyons | | | Termination for Cause | | | Voluntary Termination/ Termination without Cause(a) | | | Retirement(a) | | | Change in Control(b) | | | Disability | | | Death | | Cash Severance | | | – | | | | – | | | | – | | | $ | 13,246,251 | | | | – | | | | – | | | | – | | | | – | | | | – | | | $ | 5,840,000 | | | | – | | | | – | | Base Salary | | | – | | | | – | | | | – | | | $ | 3,300,000 | | | | – | | | | – | | | | – | | | | – | | | | – | | | $ | 1,400,000 | | | | – | | | | – | | Bonus | | | – | | | | – | | | | – | | | $ | 9,946,251 | | | | – | | | | – | | | | – | | | | – | | | | – | | | $ | 4,440,000 | | | | – | | | | – | | Enhanced Benefits | | | – | | | | – | | | | – | | | $ | 1,077,458 | | | | – | | | | – | | | | – | | | | – | | | | – | | | $ | 104,810 | | | | – | | | | – | | Defined Benefit Plans | | | – | | | | – | | | | – | | | $ | 1,010,430 | | | | – | | | | – | | | | – | | | | – | | | | – | | | $ | 50,250 | | | | – | | | | – | | Defined Contribution Plans | | | – | | | | – | | | | – | | | $ | 31,800 | | | | – | | | | – | | | | – | | | | – | | | | – | | | $ | 22,000 | | | | – | | | | – | | General Benefits & Perquisites | | | – | | | | – | | | | – | | | $ | 35,228 | | | | – | | | | – | | | | – | | | | – | | | | – | | | $ | 32,560 | | | | – | | | | – | | Value of Unvested Equity | | | – | | | | – | | | | – | | | $ | 19,750,224 | | | $ | 19,909,025 | | | $ | 19,671,127 | | | | – | | | | – | | | | – | | | $ | 12,997,794 | | | $ | 12,519,195 | | | $ | 12,855,230 | | Performance-based RSUs | | | – | | | | – | | | | – | | | $ | 8,815,302 | | | $ | 9,053,200 | | | $ | 8,815,302 | | | Incentive Performance Units | | | – | | | | – | | | | – | | | $ | 10,934,922 | | | $ | 10,855,825 | | | $ | 10,855,825 | | | Excise Tax and Gross-Up | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | RSUs | | | | – | | | | – | | | | – | | | $ | 1,525,705 | | | $ | 1,525,705 | | | $ | 1,525,705 | | PSUs | | | | – | | | | – | | | | – | | | $ | 2,288,498 | | | $ | 2,288,498 | | | $ | 2,288,498 | | PRSUs | | | | – | | | | – | | | | – | | | $ | 3,744,468 | | | $ | 3,408,433 | | | $ | 3,744,468 | | Standard IPUs | | | | – | | | | – | | | | – | | | $ | 5,439,123 | | | $ | 5,296,559 | | | $ | 5,296,559 | | TOTAL | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 34,073,933 | | | $ | 19,909,025 | | | $ | 19,671,127 | | | | $0 | | | | $0 | | | | $0 | | | $ | 18,942,604 | | | $ | 12,519,195 | | | $ | 12,855,230 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | Robert Q. Reilly | | Termination
for Cause | | | Voluntary
Termination/
Termination
without Cause(a) | | | Retirement(a) | | | Change
in Control(b) | | | Disability | | | Death | | Cash Severance | | | – | | | | – | | | | – | | | $ | 5,250,000 | | | | – | | | | – | | Base Salary | | | – | | | | – | | | | – | | | $ | 1,500,000 | | | | – | | | | – | | Bonus | | | – | | | | – | | | | – | | | $ | 3,750,000 | | | | – | | | | – | | Enhanced Benefits | | | – | | | | – | | | | – | | | $ | 572,208 | | | | – | | | | – | | Defined Benefit Plans | | | – | | | | – | | | | – | | | $ | 502,500 | | | | – | | | | – | | Defined Contribution Plans | | | – | | | | – | | | | – | | | $ | 31,800 | | | | – | | | | – | | General Benefits & Perquisites | | | – | | | | – | | | | – | | | $ | 37,908 | | | | – | | | | – | | Value of Unvested Equity | | | – | | | | – | | | | – | | | $ | 5,375,673 | | | $ | 5,417,409 | | | $ | 5,356,080 | | Performance-based RSUs | | | – | | | | – | | | | – | | | $ | 2,343,412 | | | $ | 2,404,741 | | | $ | 2,343,412 | | Incentive Performance Units | | | – | | | | – | | | | – | | | $ | 3,032,261 | | | $ | 3,012,668 | | | $ | 3,012,668 | | Excise Tax and Gross-Up | | | – | | | | – | | | | – | | | $ | 4,057,844 | | | | – | | | | – | | TOTAL | | | $0 | | | | $0 | | | | $0 | | | $ | 15,255,725 | | | $ | 5,417,409 | | | $ | 5,356,080 | |
| | Michael P. Lyons | | Termination
for Cause | | | Voluntary
Termination/
Termination
without Cause(a) | | | Retirement(a) | | | Change
in Control(b) | | | Disability | | | Death | | | | E William Parsley, III | | | Termination for Cause | | | Voluntary Termination/ Termination without Cause(a) | | | Retirement(a) | | | Change in Control(b) | | | Disability | | | Death | | Cash Severance | | | – | | | | – | | | | – | | | $ | 5,001,600 | | | | – | | | | – | | | | – | | | | – | | | | – | | | $ | 6,898,275 | | | | – | | | | – | | Base Salary | | | – | | | | – | | | | – | | | $ | 1,400,000 | | | | – | | | | – | | | | – | | | | – | | | | – | | | $ | 1,400,000 | | | | – | | | | – | | Bonus | | | – | | | | – | | | | – | | | $ | 3,601,600 | | | | – | | | | – | | | | – | | | | – | | | | – | | | $ | 5,498,275 | | | | – | | | | – | | Enhanced Benefits | | | – | | | | – | | | | – | | | $ | 98,436 | | | | – | | | | – | | | | – | | | | – | | | | – | | | $ | 262,016 | | | | – | | | | – | | Defined Benefit Plans | | | – | | | | – | | | | – | | | $ | 50,250 | | | | – | | | | – | | | | – | | | | – | | | | – | | | $ | 207,456 | | | | – | | | | – | | Defined Contribution Plans | | | – | | | | – | | | | – | | | $ | 21,200 | | | | – | | | | – | | | | – | | | | – | | | | – | | | $ | 22,000 | | | | – | | | | – | | General Benefits & Perquisites | | | – | | | | – | | | | – | | | $ | 26,986 | | | | – | | | | – | | | | – | | | | – | | | | – | | | $ | 32,560 | | | | – | | | | – | | Value of Unvested Equity | | | – | | | | – | | | | – | | | $ | 13,405,295 | | | $ | 13,521,468 | | | $ | 13,353,817 | | | | – | | | | – | | | | – | | | $ | 20,510,641 | | | $ | 20,269,386 | | | $ | 20,433,825 | | Performance-based RSUs | | | – | | | | – | | | | – | | | $ | 5,903,993 | | | $ | 6,071,644 | | | $ | 5,903,993 | | | Incentive Performance Units | | | – | | | | – | | | | – | | | $ | 7,501,302 | | | $ | 7,449,824 | | | $ | 7,449,824 | | | Excise Tax and Gross-Up | | | – | | | | – | | | | – | | | | N/A | | | | – | | | | – | | | RSUs | | | | – | | | | – | | | | – | | | $ | 1,705,165 | | | $ | 1,705,165 | | | $ | 1,705,165 | | PSUs | | | | – | | | | – | | | | – | | | $ | 2,557,747 | | | $ | 2,557,747 | | | $ | 2,557,747 | | PRSUs | | | | – | | | | – | | | | – | | | $ | 2,012,411 | | | $ | 1,847,972 | | | $ | 2,012,411 | | Standard IPUs | | | | – | | | | – | | | | – | | | $ | 2,960,050 | | | $ | 2,883,234 | | | $ | 2,883,234 | | ALM IPUs | | | | – | | | | – | | | | – | | | $ | 11,275,268 | | | $ | 11,275,268 | | | $ | 11,275,268 | | TOTAL | | | $0 | | | | $0 | | | | $0 | | | $ | 18,505,331 | | | $ | 13,521,468 | | | $ | 13,353,817 | | | | $0 | | | | $0 | | | | $0 | | | $ | 27,670,932 | | | $ | 20,269,386 | | | $ | 20,433,825 | |
THE PNC FINANCIAL SERVICES GROUP, INC. - 20162019 Proxy Statement 7779
CHANGE IN CONTROL AND TERMINATION OF EMPLOYMENT | | | | | | | | | | | | | | | | | | | | | | | | | | E William Parsley, III | | Termination
for Cause | | | Voluntary
Termination/
Termination
without Cause(a) | | | Retirement(a) | | | Change
in Control(b) | | | Disability | | | Death | | Cash Severance | | | – | | | | – | | | | – | | | $ | 1,947,252 | | | | – | | | | – | | Base Salary | | | – | | | | – | | | | – | | | $ | 1,000,000 | | | | – | | | | – | | Bonus | | | – | | | | – | | | | – | | | $ | 947,252 | | | | – | | | | – | | Enhanced Benefits | | | – | | | | – | | | | – | | | $ | 151,455 | | | | – | | | | – | | Defined Benefit Plans | | | – | | | | – | | | | – | | | $ | 97,362 | | | | – | | | | – | | Defined Contribution Plans | | | – | | | | – | | | | – | | | $ | 21,200 | | | | – | | | | – | | General Benefits & Perquisites | | | – | | | | – | | | | – | | | $ | 32,893 | | | | – | | | | – | | Value of Unvested Equity | | | – | | | | – | | | | – | | | $ | 24,095,802 | | | $ | 24,141,314 | | | $ | 24,075,831 | | Performance-based RSUs | | | – | | | | – | | | | – | | | $ | 2,285,190 | | | $ | 2,350,673 | | | $ | 2,285,190 | | Incentive Performance Units | | | – | | | | – | | | | – | | | $ | 2,875,079 | | | $ | 2,855,108 | | | $ | 2,855,108 | | Phantom Units | | | – | | | | – | | | | – | | | $ | 18,935,533 | | | $ | 18,935,533 | | | $ | 18,935,533 | | Excise Tax and Gross-Up | | | – | | | | – | | | | – | | | | N/A | | | | – | | | | – | | TOTAL | | | $0 | | | | $0 | | | | $0 | | | $ | 26,194,509 | | | $ | 24,141,314 | | | $ | 24,075,831 | |
EMPLOYEES WHO ARE ELIGIBLE FOR RETIREMENT
| | Joseph C. Guyaux | | Termination
for Cause | | | Voluntary
Termination/
Termination
without Cause(a) | | | Retirement(a) | | | Change
in Control(b) | | | Disability | | | Death | | | | Joseph E. Rockey | | | Termination for Cause | | | Voluntary Termination/ Termination without Cause(a) | | | Retirement(a) | | | Change in Control(b) | | | Disability | | | Death | | Cash Severance | | | – | | | | – | | | | – | | | $ | 5,480,400 | | | | – | | | | – | | | | – | | | | – | | | | – | | | $ | 3,259,384 | | | | – | | | | – | | Base Salary | | | – | | | | – | | | | – | | | $ | 1,860,000 | | | | – | | | | – | | | | – | | | | – | | | | – | | | $ | 1,000,000 | | | | – | | | | – | | Bonus | | | – | | | | – | | | | – | | | $ | 3,620,400 | | | | – | | | | – | | | | – | | | | – | | | | – | | | $ | 2,259,384 | | | | – | | | | – | | Enhanced Benefits | | | – | | | | – | | | $ | 16,275 | | | $ | 931,548 | | | | – | | | | – | | | | – | | | | – | | | | – | | | $ | 108,887 | | | | – | | | | – | | Defined Benefit Plans | | | – | | | | – | | | | – | | | $ | 872,880 | | | | – | | | | – | | | | – | | | | – | | | | – | | | $ | 63,750 | | | | – | | | | – | | Defined Contribution Plans | | | – | | | | – | | | | – | | | $ | 31,800 | | | | – | | | | – | | | | – | | | | – | | | | – | | | $ | 22,000 | | | | – | | | | – | | General Benefits & Perquisites | | | – | | | | – | | | $ | 16,275 | | | $ | 26,868 | | | | – | | | | – | | | | – | | | | – | | | | – | | | $ | 23,137 | | | | – | | | | – | | Value of Unvested Equity | | | – | | | | – | | | $ | 6,590,667 | | | $ | 6,532,304 | | | $ | 6,590,667 | | | $ | 6,509,330 | | | | – | | | | – | | | | – | | | $ | 2,942,952 | | | $ | 2,885,442 | | | $ | 2,920,487 | | Performance-based RSUs | | | – | | | | – | | | $ | 2,948,332 | | | $ | 2,866,995 | | | $ | 2,948,332 | | | $ | 2,866,995 | | | Incentive Performance Units | | | – | | | | – | | | $ | 3,642,335 | | | $ | 3,665,309 | | | $ | 3,642,335 | | | $ | 3,642,335 | | | Excise Tax and Gross-Up | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | RSUs | | | | – | | | | – | | | | – | | | $ | 598,278 | | | $ | 598,278 | | | $ | 598,278 | | PSUs | | | | – | | | | – | | | | – | | | $ | 897,417 | | | $ | 897,417 | | | $ | 897,417 | | PRSUs | | | | – | | | | – | | | | – | | | $ | 517,246 | | | $ | 482,201 | | | $ | 517,246 | | Standard IPUs | | | | – | | | | – | | | | – | | | $ | 866,984 | | | $ | 844,519 | | | $ | 844,519 | | Senior Leader PRSUs | | | | – | | | | – | | | | – | | | $ | 63,027 | | | $ | 63,027 | | | $ | 63,027 | | TOTAL | | | $0 | | | | $0 | | | $ | 6,606,942 | | | $ | 12,944,252 | | | $ | 6,590,667 | | | $ | 6,509,330 | | | | $0 | | | | $0 | | | | $0 | | | $ | 6,311,223 | | | $ | 2,885,442 | | | $ | 2,920,487 | |
| (a) | If a retirement-eligible employee resigns or is terminated without cause, we consider it a retirement. |
| (b) | The benefits and awards shown under “Value of Unvested Equity” that were granted in 2015 areis received upon a change in control and a termination of employment by the surviving company without cause (or a resignation of the officer for good reason), which this table assumes takes place on December 31, 2015. Awards granted prior to 2015 are received upon the change in control itself and do not require qualifying termination of employment.2018. |
7880 THE PNC FINANCIAL SERVICES GROUP, INC. - 20162019 Proxy Statement
CEO PAY RATIO We are providing the following information about the relationship between the annual total compensation of William S. Demchak, our Chairman, President and CEO, and the median of the annual total compensation of all of our employees (other than Mr. Demchak). For the year ended December 31, 2018: The annual total compensation of Mr. Demchak was $15,695,189 The median of the annual total compensation of all of our employees was $67,648 (see below for an explanation of how we calculate this amount) The resulting ratio of Mr. Demchak’s annual total compensation to the median of the annual total compensation of all of our employees is 232 to 1 We believe that our ratio represents a reasonable estimate, calculated in a manner consistent with SEC rules, based on the following methodology: | • | | We evaluated the compensation for 52,885 active U.S. employees as of December 31, 2018 (this population excluded Mr. Demchak and all of our 126 non-U.S. employees)(1) |
To identify the median employee, we used the Form W-2 (Box 5) issued by the IRS for federal tax purposes as the compensation measure. We did not annualize the compensation of any employee who was employed by us for part of the year | • | | Using this compensation measure, we identified the median employee and calculated the annual total compensation for that employee(2) |
We determined that the total compensation for the median employee did not include any PNC contribution for the employee’s 401(k) plan, which is an anomalous pay characteristic for our workforce | • | | To calculate the ratio, we identified a new median employee by selecting the first employee with a lower W-2 compensation amount than the original median employee whose annual total compensation did not include anomalous pay characteristics(3) |
For purposes of calculating the ratio, the annual total compensation for Mr. Demchak includes incentive awards from two different performance years. In order to comply with SEC rules, Mr. Demchak’s total compensation amount includes the equity-based incentive award granted in 2018 (based on 2017 performance) and the cash incentive award paid in 2019 (based on 2018 performance). This is described in more detail in the CD&A on page 49. If the ratio had been calculated using the equity-based incentive awards granted to Mr. Demchak in 2019 (for 2018 performance), his annual total compensation would have been $14,465,331 and the ratio would have been 214 to 1. | (1) | We excluded 78 employees in the UK, 33 employees in Canada and 15 employees in Germany, representing less than 1% of our total employee population. |
| (2) | We calculated the annual total compensation for the median employee in accordance with SEC rules, using the same methodology used to calculate Mr. Demchak’s total compensation in the Summary compensation table, and we also included PNC’s health care premium contributions for both the employee and for Mr. Demchak. As a result, Mr. Demchak’s annual total compensation for pay ratio purposes is slightly higher than the amount reported for him in the Summary compensation table on page 60. |
| (3) | For purposes of calculating the ratio, anomalous pay characteristics may include the following: the absence of PNC contributions to the employee’s health care premiums or 401(k) plan, or factors that could unfairly distort the change in the employee’s pension value, such as years of service (either too few or too many). |
THE PNC FINANCIAL SERVICES GROUP, INC. - 2019 Proxy Statement 81
SECURITY OWNERSHIP OF DIRECTORSMANAGEMENT AND EXECUTIVE OFFICERSCERTAIN BENEFICIAL OWNERS Security ownership of directors and executive officers The table below sets forth information regarding ownership of our common stock ownership by our directors and executive officers. We include beneficial ownership of common stock as of January 29, 2016February 1, 2019, the record date for the annual meeting, for each director (including all nominees for director), each executive officer named in the Summary compensation table on page 58,NEO and all directors and executive officers as a group. Unless we otherwise note,noted, each person listed in the table below exercises sole voting and investment power over thesethe shares of common stock.stock they beneficially own. We determine the numberbeneficial ownership of shares in the Common Stock Ownership column as beneficially owned by each director and executive officer pursuant to SEC regulations. This information does not necessarily indicate beneficial ownership for any other purpose. Beneficial ownership includes any shares of common stock as to which the individual has sole or shared voting power or investment power. Wepower, and also includeincludes any shares of common stock that the individual has the right to acquire within 60 days of January 29, 2016February 1, 2019 through the exercise of any option, warrant or right andor the vesting or payout of any restricted stockshare units or other units payable in common stock that vest within 60 days of January 29, 2016. Thestock. Although not considered beneficially owned under SEC rules, the table also shows as of January 29, 2016, the number of cash-payable common stock units credited to the accounts of our directors and executive officers under various benefit plans.plans as of February 1, 2019. Each of our directors standingthe nominees for electiondirector owns shares of our common stock. | | Name | | Common
Stock
Ownership* | | Options
and
Restricted
Share
Units** | | | Total
Number of
Shares
Beneficially
Owned | | | Common
Stock Unit
Ownership*** | | | Total
Shares
Beneficially
Owned
Plus
Common
Stock Units | | | | Common Stock Ownership | | Options and Common Stock Units* | | | Total Number of Shares Beneficially Owned | | | Cash- Payable Common Stock Unit Ownership** | | | Total Shares Beneficially Owned Plus Cash-Payable Common Stock Units*** | | Non-Employee Directors: | | | | | | | | | | | | | | | | | | | | | | | Joseph Alvarado | | | | 120 | (1) | | | – | | | | 120 | | | | – | | | | 120 | | Charles E. Bunch | | | 781 | | | | — | | | | 781 | | | | 17,429 | | | | 18,210 | | | | | | 2,781 | | | 2,247 | | | | 5,028 | | | | 20,292 | | | | 25,320 | | Paul W. Chellgren | | | 24,209 | (1) | | | — | | | | 24,209 | | | | 60,026 | | | | 84,235 | | | | | Debra A. Cafaro | | | | 20 | | | 1,012 | | | | 1,032 | | | | 1,316 | | | | 2,348 | | Marjorie Rodgers Cheshire | | | 218 | | | | — | | | | 218 | | | | 2,069 | | | | 2,287 | | | | | | 218 | | | 2,247 | | | | 2,465 | | | | 5,374 | | | | 7,839 | | Andrew T. Feldstein | | | 83,600 | (1)(2) | | | — | | | | 83,600 | | | | 6,377 | | | | 89,977 | | | | | | 83,600 | (1)(2) | | 2,247 | | | | 85,847 | | | | 12,462 | | | | 98,309 | | Richard J. Harshman | | | | 150 | (3) | | | – | | | | 150 | | | | – | | | | 150 | | Daniel R. Hesse | | | 100 | | | | — | | | | 100 | | | | — | | | | 100 | | | | | | 1,100 | | | 2,247 | | | | 3,347 | | | | 2,662 | | | | 6,009 | | Kay Coles James | | | 315 | | | | — | | | | 315 | | | | 22,466 | | | | 22,781 | | | | | Richard B. Kelson | | | 119 | | | | — | | | | 119 | | | | 28,111 | | | | 28,230 | | | | | | 119 | | | 2,247 | | | | 2,366 | | | | 17,659 | | | | 20,025 | | Anthony A. Massaro | | | 3,149 | (1)(3) | | | — | | | | 3,149 | | | | 24,745 | | | | 27,894 | | | | | Jane G. Pepper | | | 2,840 | | | | — | | | | 2,840 | | | | 29,535 | | | | 32,375 | | | | | Linda R. Medler | | | | 10 | | | 1,012 | | | | 1,022 | | | | 252 | | | | 1,274 | | Martin Pfinsgraff | | | | 1,050 | | | 1,012 | | | | 2,062 | | | | – | | | | 2,062 | | Donald J. Shepard | | | 8,967 | (2) | | | — | | | | 8,967 | | | | 34,606 | | | | 43,573 | | | | | | 8,967 | (2) | | 2,247 | | | | 11,214 | | | | 41,862 | | | | 53,076 | | Lorene K. Steffes | | | 2,041 | (3) | | | — | | | | 2,041 | | | | 29,728 | | | | 31,769 | | | | | Dennis F. Strigl | | | 10,714 | (3) | | | — | | | | 10,714 | | | | 29,884 | | | | 40,598 | | | | | Thomas J. Usher | | | 7,139 | (3) | | | — | | | | 7,139 | | | | 54,163 | | | | 61,302 | | | | | Toni Townes-Whitley | | | | 1,000 | | | | – | | | | 1,000 | | | | – | | | | 1,000 | | Michael J. Ward | | | 1,000 | | | | — | | | | 1,000 | | | | — | | | | 1,000 | | | | | | 1,000 | | | 2,247 | | | | 3,247 | | | | 4,569 | | | | 7,816 | | Gregory D. Wasson | | | 2,070 | | | | — | | | | 2,070 | | | | 683 | | | | 2,753 | | | | | NEOs: | | | | | | | | | | | | | | | | | | | | | | | William S. Demchak | | | 360,592 | (3)(4) | | | 636,754 | | | | 997,346 | | | | 2,869 | | | | 1,000,215 | | | | | | 539,306 | (3)(4) | | 156,487 | | | | 695,793 | | | | 3,055 | | | | 698,848 | | Robert Q. Reilly | | | 72,328 | (3)(4) | | | 233,793 | | | | 306,121 | | | | 2,160 | | | | 308,281 | | | | | | 107,779 | (3)(4) | | 70,200 | | | | 177,979 | | | | 2,310 | | | | 180,289 | | Michael P. Lyons | | | 61,263 | | | | 51,059 | | | | 112,322 | | | | — | | | | 112,322 | | | | | | 124,841 | | | 43,517 | | | | 168,358 | | | | – | | | | 168,358 | | E William Parsley, III | | | 70,470 | | | | 94,648 | | | | 165,118 | | | | — | | | | 165,118 | | | | | | 97,025 | | | 22,726 | | | | 119,751 | | | | – | | | | 119,751 | | Joseph C. Guyaux | | | 55,099 | (3)(4) | | | 205,360 | | | | 260,459 | | | | 1,781 | | | | 262,240 | | | | | 10 remaining executive officers | | | 171,975 | (2)(3)(4) | | | 341,468 | | | | 513,443 | | | | 14,266 | | | | 527,709 | | | | | | Directors and executive officers as a group (30 persons): | | | 938,989 | | | | 1,563,082 | | | | 2,502,071 | | | | 360,898 | | | | 2,862,969 | | | | | Joseph E. Rockey | | | | 13,870 | | | 42,746 | | | | 56,616 | | | | – | | | | 56,616 | | 7 remaining executive officers | | | | 162,756 | (2)(3)(4) | | 70,103 | | | | 232,859 | | | | – | | | | 232,859 | | Directors and executive officers as a group (25 persons): | | | | 1,145,712 | | | | 424,544 | | | | 1,570,256 | | | | 111,813 | | | | 1,682,069 | |
| * | Includes options exercisable within 60 days of February 1, 2019 and common stock units that may vest or pay out within 60 days of February 1, 2019. |
| ** | Fornon-employee directors, includes cash-payable common stock units credited to their accounts pursuant to deferrals made under the Directors Deferred Compensation Plan and predecessor plans and cash-payable common stock units granted under the Outside Directors Deferred Stock Unit Plan used fornon-employee director equity-based grants prior to 2017. For executive officers, includes cash-payable common stock units credited under our DCP and SISP. These units are not considered beneficially owned under SEC rules. |
82 THE PNC FINANCIAL SERVICES GROUP, INC. - 2019 Proxy Statement
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS | *** | As of January 29, 2016,February 1, 2019, there were 502,419,441453,046,877 shares of PNC common stock issued and outstanding. The number of shares of common stock beneficially owned by each individual is less than 1% of the outstanding shares of common stock; the total number of shares of common stock beneficially owned by the group is approximately .5%0.3% of the class. If stock options wereare exercisable or units payable in common stock vest or pay out within 60 days of January 29, 2016, weFebruary 1, 2019, those shares were added those numbers to the total number of shares issued and outstanding to determinefor purposes of determining these ownership percentages. As of January 29, 2016,February 1, 2019, the total number of shares of common stock beneficially owned and cash-payable common stock units held by the group was .6%.approximately 0.4% of the class. No director or executive officer beneficially owns shares of PNC preferred stock. |
THE PNC FINANCIAL SERVICES GROUP, INC. - 2016 Proxy Statement 79
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
** | Includes options exercisable within 60 days of January 29, 2016 and restricted share units payable in common stock that are expected to vest within 60 days of January 29, 2016. |
*** | For non-employee directors, includes common stock units credited to their accounts pursuant to deferrals made under the Directors Deferred Compensation Plan and predecessor plans and common stock units granted under the Outside Directors Deferred Stock Unit Plan, which will be paid in cash. For executive officers, includes common stock units credited under our DCP and SISP, which are payable in cash. These units are not considered beneficially owned under SEC rules. |
| (1) | Includes shares owned by spouse. |
| (2) | Includes shares held in a trust. |
| (3) | Includes shares held jointly with spouse. |
| (4) | Includes shares held in our incentive savings plan (ISP).plan. |
Security ownership of certain beneficial owners BasedThe table below sets forth information regarding the entities that beneficially own more than five percent of our common stock, based on a review as of February 16, 2016, of Schedules 13D and 13G filed with the SEC the following entities beneficially own more than five percentas of our common stock.February 14, 2019. The numbers shownincluded in the table
on the table below represent each entity’s holdings as of December 31, 2015 provided2018, as disclosed in the applicable Schedule 13G filed with the SEC, and should be interpreted in light of the relatedaccompanying footnotes.
| | | | | | | Name and Address of Beneficial Owner | | Amount and Nature of Beneficial Ownership | | Percent of Class | | BlackRock, Inc.
| | 25,893,358(1) | | | 5.1 | % | 55 East 52nd Street
| | | | | | | New York, NY 10055
| | | | | | | The Vanguard Group, Inc.
| | 30,379,060(2) | | | 6.0 | % | 100 Vanguard Blvd.
| | | | | | | Malvern, PA 19355
| | | | | | | Wellington Management Group LLP
| | 41,491,519(3) | | | 8.2 | % | c/o Wellington Management Company LLP
280 Congress Street
| | | | | | | Boston, MA 02210
| | | | | | |
| | | | | | | | | | Name and Address of Beneficial Owner | | Amount and Nature of Beneficial Ownership | | | Percent of Class | | BlackRock, Inc. 55 East 52nd Street New York, NY 10055 | | | 27,642,474 | (1) | | | 6.0% | | Capital World Investors 333 South Hope Street, 55th Floor Los Angeles, CA 90071 | | | 25,130,096 | (2) | | | 5.4% | | The Vanguard Group, Inc. 100 Vanguard Blvd. Malvern, PA 19355 | | | 33,539,808 | (3) | | | 7.3% | | Wellington Management Group LLP c/o Wellington Management Company LLP 280 Congress Street Boston, MA 02210 | | | 28,921,506 | (4) | | | 6.3% | |
| (1) | According to the Schedule 13G13G/A filed by BlackRock, Inc. with the SEC on January 28, 2016,February 6, 2019, BlackRock, Inc. and its subsidiaries have beneficial ownership of 25,893,35827,642,474 shares of our common stock. BlackRock, Inc. reported (1) sole dispositive power with respect to 25,892,85827,642,474 shares, (2) shared dispositive power with respect to 5000 shares, (3) sole voting power with respect to 21,751,57923,663,294 shares and (4) shared voting power with respect to 5000 shares. BlackRock, Inc. is the beneficial owner of our common stock as a result of being a parent company or control person of the following subsidiaries, each of which holds less than 5% of the outstanding shares of our common stock: BlackRock (Luxembourg) S.A.; BlackRock (Netherlands) B.V.; BlackRock (Singapore) Limited; BlackRock Advisors (UK) Limited; BlackRock Advisors, LLC; BlackRock Asset Management Canada Limited; BlackRock Asset Management Ireland Limited; BlackRock Asset Management North Asia Limited; BlackRock Asset Management Schweiz AG; BlackRock Capital Management; BlackRock Financial Management, Inc.; BlackRock Fund Advisors; BlackRock Fund Managers Ltd; BlackRock Institutional Trust Company, N.A.;National Association; BlackRock International Limited; BlackRock Investment Management (Australia) Limited; BlackRock Investment Management (UK) Ltd;Limited; BlackRock Investment Management, LLC; BlackRock Japan Co Ltd;Co., Ltd.; and BlackRock Life Limited. |
| (2) | According to the Schedule 13G filed by Capital World Investors with the SEC on February 14, 2019, Capital World Investors has beneficial ownership of 25,130,096 shares of our common stock. Capital World Investors reported (1) sole dispositive power with respect to 25,130,096 shares, (2) shared dispositive power with respect to 0 shares, (3) sole voting power with respect to 25,130,096 shares and (4) shared voting power with respect to 0 shares. Capital World Investors divisions of Capital Research and Management Company and Capital International Limited collectively provide investment management services under the name Capital World Investors, and Capital World Investors is deemed to be the beneficial owner of our common stock as a result of such provision of services. |
| (3) | According to the Schedule 13G/A filed by The Vanguard Group, Inc. with the SEC on February 10, 2016,12, 2019, The Vanguard Group, Inc. has beneficial ownership of 30,379,06033,539,808 shares of our common stock. The Vanguard Group, Inc. reported (1) sole dispositive power with respect to 29,378,32332,907,184 shares, (2) shared dispositive power with respect to 1,000,737632,624 shares, (3) sole voting power with respect to 945,024536,782 shares and (4) shared voting power with respect to 51,300107,412 shares. Vanguard Fiduciary Trust Company, a wholly-owned subsidiary of The Vanguard Group, Inc., is the beneficial owner of 788,997391,756 shares or .15%.08% of our outstanding common stock as a result of its serving as investment manager of collective trust accounts. Vanguard Investments Australia, Ltd., a wholly-owned subsidiary of The Vanguard Group, Inc., is the beneficial owner of 367,767380,205 shares or .07%.08% of our outstanding common stock as a result of its serving as investment manager of Australian investment offerings. |
(3)(4) | According to the Schedule 13G13G/A filed by Wellington Management Group LLP with the SEC on February 11, 2016,12, 2019, Wellington Management Group LLP has beneficial ownership of 41,491,51928,921,506 shares of our common stock which are held of record by clients of one or more investment advisors directly or indirectly owned by Wellington Management Group LLP. Wellington Management Group LLP shares dispositive power with respect to 41,491,51928,921,506 shares of our common stock and shares voting power with respect to 19,521,7719,116,870 shares of our common stock. |
80 THE PNC FINANCIAL SERVICES GROUP, INC. - 20162019 Proxy Statement 83
RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (ITEM 2) Under the Audit Committee’s charter, the Audit Committee is responsible for the selection, appointment, compensation, retention, and oversight of PNC’sour independent auditors. In connection with this responsibility, the Audit Committee evaluates and monitors the auditors’ qualifications, performance and independence. This responsibility includesindependence, including a review and evaluation of the lead audit partner. The Audit Committee approves all audit engagement fees and terms associated with the retention of the independent auditors. The Audit Committee has selected PricewaterhouseCoopers LLP (PwC) as PNC’s independent auditors for 2016. PwC has been PNC’s independent auditors since 2007. The Audit Committee carefully considered the selection of PwC as our independent auditors. In connection with this selection, the Audit Committee considered whether there should be a rotation of the independent audit firm. The Audit Committee charter requires the Audit Committee to consider, not less frequently than when the lead audit partner is rotated, whether PNC should adopt a policy of regular rotation of the independent audit firm. In addition to assuring the required rotation of the lead audit partner, the Audit Committee oversees the selection of the new lead audit partner and the AuditChair of the Committee chair participates directly in the selection of the new lead audit partner. The Audit Committee has selected PricewaterhouseCoopers LLP (“PwC”) as our independent auditors for 2019. PwC has been our independent auditors since 2007. The Committee carefully considered the selection of PwC as our independent auditors, including whether there should be a rotation of the independent audit firm. On February 11, 2016,13, 2019, the Audit Committee presented its conclusions regarding the selection and appointment of PwC as theour independent auditors to our the Board, of Directors, including a determination that the selection of PwC as our independent auditors is in the best interests of PNC. Following this presentation, the Board voted unanimously to recommend that shareholders vote to ratify the Audit Committee’s selection of PwC as PNC’sour independent registered public accounting firm for 2016.2019. The Audit Committee and the Board of Directors believe that the continued retention of PwC as PNC’sour independent auditors is in the best interestsinterest of PNC. The Audit Committee and the Board of Directors have adopted a policy that if the ratification of the independent auditors does not receive a majority of the votes cast at the annual meeting, is against ratification, the Audit Committee will reconsider its selection of PwC. The Auditindependent auditors. However, the Committee will be under no obligation however, to select new independent auditors. If the Audit Committee does select new independent auditors for 2016,2019, we will not seek shareholder ratification of the new selection. We expect representatives of PwC to be available at the annual meeting. They will have an opportunity to make a statement and respond to appropriate questions. You can learn more about the Audit Committee’s responsibilities with respect to the independent auditors in the Committee’s charter, which is posted onin the corporate governance section of our corporate website atwww.pnc.com/corporategovernance. Audit, audit-related and permittednon-audit fees In considering the nature of the services provided by our independent auditors, the Audit Committee determined that the services are compatible with the provision of independent audit services. The Committee discussed these services with the independent auditors and our management to determine that they are permitted under the SEC rules and regulations concerning auditor independence. The following table summarizes the total fees for professional services rendered by PwC to PNC for 20152018 and 2014:2017: | | Category | | 2015 (in millions) | | | 2014 (in millions) | | | 2018 (in millions) | | | 2017 (in millions) | | Audit fees | | $ | 19.0 | | | $ | 19.1 | | | $ | 20.0 | | | $ | 20.0 | | Audit-related fees* | | $ | 1.8 | | | $ | 1.9 | | | $ | 2.6 | | | $ | 2.1 | | Tax fees | | $ | 0.2 | | | $ | 0.3 | | | $ | 0.1 | | | $ | 0.1 | | All other fees | | | - | | | $ | 0.5 | | | $ | 0.5 | | | $ | – | | TOTAL FEES BILLED | | $ | 21.0 | | | $ | 21.8 | | | $ | 23.2 | | | $ | 22.2 | |
| * | Excludes fees of $0.6$1.5 million in 20152018 and $0.4$1.6 million in 20142017 for financial due diligence services related to potential private equity investments. In those instances, the fees were paid by the company issuing the equity. |
84 THE PNC FINANCIAL SERVICES GROUP, INC. - 20162019 Proxy Statement 81
RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (ITEM 2) Audit fees. These fees consisted primarily of the audit of PNC’sour annual consolidated financial statements, reviews of PNC’sour quarterly consolidated financial statements included in Form10-Q filings, comfort letter procedures, other services related to SEC matters and required attestation services. Audit-related fees. These fees consisted primarily of SSAE 16 and18, compliance and internal control reviews. Tax fees. These fees were primarily attributable to federal and state tax compliance services, including tax return preparation and review, and assistance with tax planning services.examinations. All other fees. These fees consisted primarily consisted of consulting services related to various regulatory matters.fees for review and analysis of technology and subscription-based services. Procedures forpre-approving audit services, audit-related services and permittednon-audit services The Audit Committee is responsible forpre-approving audit services, audit-related services and permittednon-audit services (such as tax) to be provided to us by our independent auditors. The Committee is given this responsibility to confirm that providing services will not impair our auditors’ independence. The Committee performs this function for us and our subsidiaries. The Audit Committee’s responsibility also includespre-approval of the fees for such services (although SEC regulations do not require thepre-approval of fees) and the other terms of the engagement. The Committee may eitherpre-approve specific fees or a methodology for determining fees. Any proposed increase in fees that exceedexceeds thepre-approved amounts requirerequires the Committee’s approval. Pre-approval may be general (categories of services) or specific (individual services). If the Audit Committeepre-approves a general category of services, it will review the scope of services related to such generalpre-approval at least annually. The Committee is responsible for approving any fee or other compensation arrangements for services covered by apre-approval of a general category of services. The full Audit Committee may exercisepre-approval authority, or the ChairmanChair of the Committee may exercise the authority as required between meetings. The Committee may also delegate this authority, in whole or in part, to one or more Committee members. Any person exercising delegated authority reports on thepre-approvals at the next scheduled meeting of the Committee, which will be reflected in the meeting minutes. The Audit Committee may not delegate itspre-approval authority to any other person, including any member of our management or other PNC employee or agent. The written request forpre-approval includes, at a minimum, a description of the nature of the engagement, the proposed fee for the services and a statement that the services to be performed by the independent auditor that the provision of the services isare consistent with SEC and other applicable rules on auditor independence. In addition, eachpre-approval request is reviewed by the independent auditor to confirm the provision of services is consistent with SEC and other applicable auditor independence rules. All requests forpre-approval of services are reviewed by management to ensure the services are permitted under SEC regulations and the Audit Committee charter and include a recommendation of the proposal by the Chief Financial Officer or the Controller and the General Auditor. In reviewing apre-approval request, the Committee or Chairmanthe Chair of the Committee may request that members of our management to provide their views on auditor independence questions. The Controller or a designee of the Controller reports to the Audit Committee at least quarterly as to the status of services that hadhave beenpre-approved and the related fees. All audit services, audit-related services and permitted non-audit services and related fees disclosed above were pre-approved by the Audit Committee. The Audit Committee may amend these procedures from time to time.
All audit services, audit-related services and permittednon-audit services and related fees disclosed above werepre-approved by the Audit Committee. 82 THE PNC FINANCIAL SERVICES GROUP, INC. - 20162019 Proxy Statement 85
REPORT OF THE AUDIT COMMITTEE The Audit Committee’s job is one of oversight, as set forth in its charter. It is not the duty of the Audit Committee to prepare PNC’s consolidated financial statements, to plan or conduct audits, or to determine that PNC’s consolidated financial statements are complete and accurate and are in accordance with generally accepted accounting principles. PNC’s management is responsible for preparing PNC’s consolidated financial statements and for establishing and maintaining effective internal control over financial reporting. PNC’s management is also responsible for its assessment of the effectiveness of internal control over financial reporting. The independent auditors are responsible for the audit of PNC’s consolidated financial statements and the audit of the effectiveness of PNC’s internal control over financial reporting. In addition, the independent auditors are responsible for the audit of management’s assessment of the effectiveness of internal control over financial reporting as of December 31, 2015. The Audit Committee has reviewed and discussed PNC’s audited consolidated financial statements with management and with PricewaterhouseCoopers LLP (PwC)(“PwC”), PNC’s Independent Registered Public Accounting Firmindependent registered public accounting firm for 2015.2018. The Audit Committee has selected PwC as PNC’s independent auditors for 20162019, subject to shareholder ratification. A portion of the Audit Committee’s review and discussion of PNC’s audited consolidated financial statements with PwC occurred in private sessions, without PNC management present. The Audit Committee has discussed with PwC the matters required to be discussed by Statement on Auditing StandardStandards No. 16,1301, “Communications with Audit Committees”,Committees,” as adopted by the Public Company Accounting Oversight Board. The Audit Committee has received the written disclosures and the letter from PwC required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the Audit Committee concerning independence, and has discussed PwC’s independence with representatives of PwC. Based on the review and discussions referred to above, the Audit Committee has recommended to the Board of Directors that the audited consolidated financial statements be included in PNC’s Annual Report on Form10-K for the year ended December 31, 2015,2018, for filing with the Securities and Exchange Commission. The Audit Committee of the Board of Directors of The PNC Financial Services Group, Inc. Richard B. Kelson,Chair Paul W. ChellgrenJoseph Alvarado
Marjorie Rodgers CheshireDebra A. Cafaro
Richard J. Harshman Martin Pfinsgraff Donald J. Shepard Gregory D. Wasson
In accordance with SEC regulations, the Report of the Audit Committee is not incorporated by reference into any of our future filings made under the Securities Exchange Act of 1934 or the Securities Act of 1933. The report is not deemed to be soliciting material or to be filed with the SEC under the Exchange Act or the Securities Act. The Board of Directors recommends a vote FOR the ratification of the Audit Committee’s selection of PricewaterhouseCoopers LLP as the independent registered public accounting firm for 2016.2019. THE PNC FINANCIAL SERVICES GROUP, INC. - 2016 Proxy Statement 83
APPROVAL OF 2016 INCENTIVE AWARD PLAN (ITEM 3)
Overview
On March 3, 2016, our Board of Directors adopted, subject to shareholder approval, the PNC Financial Services Group, Inc. 2016 Incentive Award Plan (2016 Plan) and directed that the 2016 Plan be submitted to our shareholders for approval at the 2016 annual meeting. If approved by shareholders, the 2016 Plan will become effective as of April 26, 2016.
The Board believes that approval of the 2016 Plan will further PNC’s ability to attract, retain and motivate top-quality management, employees, officers and non-employee directors of PNC and its subsidiaries, upon whose judgment and efforts we rely to promote the long-term growth and financial success of PNC and its subsidiaries.
PNC has a well-designed compensation program and strong governance principles. Shares received under an award granted from the 2016 Plan would be subject to our policy which prohibits any of our employees or directors from hedging or pledging PNC securities or selling PNC securities short. In addition, our executive officers and other key executives are subject to executive stock ownership requirements. As new awards vest under the 2016 Plan (excluding stock options), designated employees need to retain a portion of the vested award, which they must hold until they retire or leave PNC.
The independent compensation consultant to the Board’s Personnel and Compensation Committee, Meridian Compensation Partners, reviewed and provided feedback on the 2016 Plan. In approving
the 2016 Plan, the Board considered the importance of long-term incentives in supporting the key objectives of PNC’s equity compensation program and aligning employees’ interests with those of our shareholders as well as our understanding of our shareholders’ perspective with respect to equity-based compensation. We also took into consideration our stock price, business performance, competitive pay practices, regulatory requirements, and our use of equity-based awards to determine the number of shares needed. Based on these considerations, the Board approved the 2016 Plan, with the proposed shares available for issuance under the 2016 Plan of 30,000,000, representing approximately 6.0% of our outstanding common stock as of December 31, 2015, plus the balance of shares authorized but unissued (including such shares subject to outstanding awards) available under the 2006 Incentive Award Plan (as amended, the “Prior Plan”). Under the 2016 Plan, each share issued pursuant to awards, other than options or share appreciation rights (SARs), will be counted against the 2016 Plan reserve as 2.5 shares. Shares issued pursuant to options or SARs count against the 2016 Plan reserve on a one-for-one basis.
“Burn rate” and dilution. Burn rate and potential dilution are two common measures used in assessing a company’s equity compensation program. Burn rate measures the annual usage of shares available for grant under an equity compensation plan. Potential dilution is used to measure the dilutive impact of equity programs on existing shareholders.
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APPROVAL OF 2016 INCENTIVE AWARD PLAN (ITEM 3)
We have historically demonstrated a prudent use of shares for equity compensation purposes. As shown in the charts below, for the fiscal years ended December 31, 2013, 2014, and 2015, respectively, our burn rates and dilution rates have decreased each year:
| 1 | Burn rate is calculated by dividing the number of shares of common stock subject to equity awards granted by the weighted average number of shares of common stock outstanding at year end. |
| 2 | Dilution is equal to the number of shares available to be granted as future equity awards plus the number of securities to be issued upon exercise of outstanding options, warrants and rights divided by the total number of common shares outstanding at year end (based on annual 10-K filings). |
The material terms of the 2016 Plan are summarized below. This summary is qualified in its entirety by the actual text of the 2016 Plan, which is attached to this proxy statement as Annex B. We will not grant any awards under the 2016 Plan prior to obtaining shareholder approval.
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APPROVAL OF 2016 INCENTIVE AWARD PLAN (ITEM 3)
Highlights of the 2016 Plan
• | | Prohibition against discounted options and SARs.Options and SARs may not be granted with exercise or base prices lower than the fair market value of the underlying shares on the grant date.
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• | | Prohibition against option or SAR repricing. The 2016 Plan generally prohibits the reduction of the purchase price of an option or SAR, or the exchange of an option or SAR for an option or SAR with a lower purchase price or for cash, without shareholder approval.
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• | | Prohibition against liberal share recycling. Shares that are delivered in payment of option exercise or SAR base prices, used to satisfy tax withholding, repurchased by PNC using proceeds from option exercises, or not issued or delivered as a result of net settlement of options or SARs may not be recycled back into the 2016 Plan’s share reserve.
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• | | No dividend equivalents paid on unvested performance awards or on stock options or SARs. Under the 2016 Plan,payment of dividends or dividend equivalent rights on unvested performance awards (which include performance share and performance share unit awards) will not be made until such awards are vested, and no dividend equivalents may be granted with respect to stock options or SARs.
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• | | Annual limit on dollar value of director awards. Non-employee directors may not receive awards with an aggregate maximum grant date fair market value of more than $500,000 in any one calendar year.
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• | | Minimum vesting schedules on awards. Option, restricted share, restricted share unit, share unit, performance awards, and SAR awards all provide for a minimum vesting schedule or performance period of at least 12 months, subject to certain exceptions as described in more detail below.
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• | | No “evergreen” provision.The 2016 Plan does not contain an “evergreen” provision pursuant to which shares authorized for issuance may be automatically replenished.
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• | | Awards subject to clawback.Awards granted under the 2016 Plan will be subject to any clawback, adjustment or recoupment policy of PNC, including the policies currently in effect or that may be adopted or required pursuant to applicable law.
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• | | Independent committee. The 2016 Plan is administered by committees comprised of independent directors.
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Material Terms of the 2016 Plan
Purpose. The purpose of the 2016 Plan is to promote the success and enhance the value of PNC by linking the personal interests of those persons eligible to receive awards under the 2016 Plan to the interests of PNC’s shareholders.
Administration. The 2016 Plan is administered and interpreted by a Board committee comprised entirely of independent directors (Committee).
For purposes of awards granted to employees, the “Committee” means the Personnel and Compensation Committee or its delegate.
For purposes of awards granted to non-employee directors, the “Committee” means the Nominating and Governance Committee or its delegate.
Subject to the terms of the 2016 Plan, the Committee has the authority to determine the individuals to whom awards will be made under the 2016 Plan and to establish the type, size, and other terms of awards under the 2016 Plan, including applicable performance criteria and restrictions on awards, as well as to construe and interpret the 2016 Plan and applicable award agreements. Subject to certain limitations, the Committee may delegate its authority under the 2016 Plan to certain officers, directors or managers of PNC.
Eligibility. Awards under the Plan may be granted to employees of PNC and its subsidiaries and to
non-employee members of the Board. As of December 31, 2015, approximately 8,000 employees and 12 non-employee directors who are standing for re-election at the 2016 annual meeting will be eligible to receive awards under the 2016 Plan. The selection of participants eligible under the 2016 Plan is subject to the Committee’s discretion and not all eligible participants may receive awards in any given year.
Shares available. Subject to adjustment in certain circumstances as described below, the 2016 Plan authorizes up to 30,000,000 shares of common stock for issuance, plus the balance of shares authorized but unissued (including such shares subject to outstanding awards, which awards will continue to be governed in accordance with their existing terms) available under the Prior Plan. As of December 31, 2015, the Prior Plan had 14,026,308 shares of common stock remaining available for issuance, which amount includes shares reserved for our annual awards granted in February 2016 and any other awards granted under the Prior Plan through April 25, 2016.
Each share issued pursuant to awards, other than options or SARs, will be counted against the 2016 Plan reserve as 2.5 shares. Shares issued pursuant to options or SARs count against the 2016 Plan reserve on a one-for-one basis.
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APPROVAL OF 2016 INCENTIVE AWARD PLAN (ITEM 3)
Under any of the following circumstances, shares underlying an award, including with respect to Prior Plan awards, will be re-credited to the 2016 Plan share reserve and once again become available for future awards if:
an award lapses, expires, terminates or is canceled or forfeited without the underlying shares (or any portion thereof) being issued;
the Committee determines that all or a portion of shares underlying an award may not be issued because the conditions for such issuance were not or will not be satisfied;
an award, or any portion thereof, is settled for cash; or
such shares are issued pursuant to an award but are subsequently reacquired by PNC (for example, as a result of PNC exercising clawback rights).
Shares re-credited to the 2016 Plan share reserve due to a reacquisition by PNC will not increase the aggregate number of shares that may be issued pursuant to incentive stock options.
Furthermore, shares retained or reacquired by PNC, including Prior Plan shares, will not be re-credited to the 2016 Plan’s share reserve if such shares are:
delivered in payment of the option exercise price, base price of a SAR or other exercise price of an award;
delivered to or withheld by PNC to satisfy federal, state or local tax withholding obligations;
purchased by PNC using proceeds from option exercises; or
not issued or delivered as a result of a net settlement of an outstanding option or SAR.
Individual limitations. Subject to the adjustment provisions of the 2016 Plan, as described below, the maximum number of shares underlying awards that may be granted to any individual during a calendar year is limited to 2,000,000 shares. Furthermore, no individual may be granted in any one calendar year:
options or SARs for more than 2,000,000 shares (and no more than 1,000,000 shares in the case of incentive stock options);
qualified performance-based compensation (payable in shares), other than options or SARs, for more than 1,000,000 shares, based on a target award level on the grant date; and
qualified performance-based compensation (payable in cash by the terms of the award) for more than an amount equal to 1,000,000 shares, based on a target award level on the grant date and calculated based on the fair market value of a share of PNC’s common stock on the grant date.
Additionally, non-employee directors may not receive, in any one calendar year, awards with an aggregate maximum value, calculated as of the grant date based on the fair market value of each award, of more than $500,000.
Types of Awards
The following briefly describes the principal features of the various awards that may be granted under the 2016 Plan. Awards under the 2016 Plan may be settled in cash, shares of PNC common stock, units, or a combination of the foregoing, as provided in each award agreement.
Options. The Committee may grant (1) options that qualify as incentive stock options within the meaning of Section 422 of the Code (ISOs), (2) “nonqualified” stock options that are not intended to qualify as ISOs (NQSOs), or (3) any combination of ISOs and NQSOs. Anyone eligible to participate in the 2016 Plan may receive a grant of NQSOs. Only employees of PNC and certain of its subsidiaries may receive a grant of ISOs.
The Committee fixes the share exercise price for ISOs and NQSOs as of the grant date. The exercise price of any option may not be less than the fair market value of a share of common stock on the date of grant.
The Committee determines all terms and conditions of each option, including the number of shares subject to the option and the applicable vesting period. Except in the event of death or disability, or as otherwise provided in the award agreement, the
vesting period for options cannot be less than 12 months. Generally, the term of an option may not exceed 10 years from the date of grant. Options may be exercised while the participant is employed by or providing service to PNC or within a specified period of time after termination of employment or service, as determined by the Committee. The Committee may at any time substitute SARs for options granted under the 2016 Plan, if so provided in the applicable award agreement.
A participant may exercise an option by delivering a properly executed notice of exercise to PNC or its designated agent. The participant will pay the exercise price and any withholding taxes for the option in cash or by check, or, if provided in the agreement, by (1) delivering shares of common stock already owned by the participant, (2) a broker-assisted cashless exercise, or (3) such other method as the Committee may approve, to the extent permitted by applicable law.
Share appreciation rights. The Committee may grant SARs to any eligible participant in the 2016 Plan. SARs may be granted in connection with, or independent of, other awards. Upon exercise of a SAR, the participant will receive an amount equal to the excess of the fair market value of PNC’s
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APPROVAL OF 2016 INCENTIVE AWARD PLAN (ITEM 3)
common stock on the date the SAR is exercised over the base amount of the SAR, as set forth in the applicable award agreement. The base amount of a SAR may not be less than the fair market value of a share of PNC common stock on the date of grant. Except in the event of death or disability, or as otherwise provided in the award agreement, a SAR may not be exercised until the expiration of at least 12 months from the date of grant. SARs may be exercised while the participant is employed by or providing services to PNC or within a specified period of time after termination of such employment or service, as determined by the Committee. Generally, the term of a SAR award may not exceed 10 years from the date of grant.
Share units and restricted share units. The Committee may grant share units to any eligible participant in the 2016 Plan. Each share unit provides the participant with the right to receive a share of common stock or an amount based on the value of a share of common stock at a future date. Share units issued pursuant to a share unit award may be subject to restrictions (“restricted share units”) or may be unrestricted, as determined by the Committee. Share units may be granted in connection with, or independent of, other awards. The Committee determines the number of share units that will be granted, restrictions applicable to restricted share units, and the other terms and conditions applicable to the share units; provided, however, that the restrictions applicable to restricted share units may not lapse until at least 12 months from the date of grant, except in the event of death or disability or as otherwise permitted by the award agreement. Share units may be paid at the end of a specified period or deferred to a date authorized by the Committee in accordance with the deferral requirements set forth in Section 409A of the Code, to the extent applicable. Payments with respect to share units may be made in cash, in shares, or a combination of both. Specific vesting and payment provisions applicable to current awards to executive officers are described on pages 74 to 76.
Share awards and restricted shares. The Committee may grant share awards to any eligible participant in the 2016 Plan. Shares issued pursuant to a share award may be subject to restrictions (“restricted shares”) or may be unrestricted, as determined by the Committee. The Committee determines the conditions under which restrictions on restricted shares may lapse (i.e., over time, or pursuant to such other criteria as the Committee deems appropriate, including performance-based criteria); provided, however, that no restrictions may lapse prior to 12 months from the date of grant, except in the event of death or disability, or as otherwise permitted by the award agreement.
Performance awards.Performance awards may be granted to any eligible participant under the 2016 Plan, and may be payable in cash, shares, or a combination thereof, as determined by the Committee. Vesting or payment of performance awards may be based on the satisfaction of performance criteria as established by the Committee or any other criteria that the Committee, in its sole discretion, may determine, and may be particular to an eligible person or to the department, branch, subsidiary or other unit in which the eligible participant works, or may be based on the performance of PNC or of a specified portion or portions of PNC and its subsidiaries generally. Specific vesting and payment provisions applicable to current awards to executive officers are described on page 65 and pages 74 to 76.
If the Committee determines that the award is intended to meet the requirements of “qualified performance based compensation” under Section 162(m) of the Code, then the performance criteria for vesting or payment of the award will be based on any one or more of the following:
earnings measures (including earnings per share, net income, net interest income, non-interest income) or earnings growth measures, revenue or cash flow;
market or market-related measures (including stock price, dividends or dividend yield, total shareholder return, market to book value, price / earnings ratio);
improvement or maintenance of financial or credit ratings;
return or use of capital measures (including return on assets, equity or investment) or other capital or liquidity measures or objectives (including measures or objectives related to economic capital, cost of capital);
other measures of operating or profitability margin or performance (including net interest margin, operating or profit margin, productivity ratios) or risk adjusted profitability measures;
regulatory compliance (including Tier 1 capital ratios or Basel III objectives) or internal or external regulatory capital, liquidity, risk or other regulatory-related requirements, expectations, goals or objectives;
satisfactory internal or external audits;
achievement of balance sheet, income statement, or other financial objectives (including objectives related to capital management, assets, loans, charge-offs, allowance for loan and lease losses, other reserves, reduction of nonperforming assets, asset quality levels, investments, deposits, deposit mix, interest sensitivity gap levels);
expense measures (including objectives related to expense management, operating efficiencies, efficiency ratios, non-interest expense);
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on or off-balance sheet portfolio objectives (including those related to servicing portfolios, securitizations, assets under administration or management, loan originations or sales);
achievement of asset quality objectives or credit quality objectives;
achievement of risk management objectives, strategic objectives or goals (including workforce objectives or goals), technology or innovation objectives, product, customer or market-related objectives (including sales, product revenues, revenue mix, product growth, customer growth, number or type of customer relationships, customer satisfaction, cross-selling goals, associate satisfaction, market share, branding);
consummation of acquisitions, dispositions, projects or other specific events or transactions or acquisition integration or disposition management goals or objectives; and
any other objective goals established by the Committee.
The Committee may specify that the performance criteria under an award of qualified performance-based compensation will include adjustments to include or exclude the effect of certain events, including any of the following events: litigation or claim judgments or settlements; changes in tax law, accounting principles or other such laws or provisions affecting reported results; severance, contract termination and other costs related to exiting certain business activities; gains or losses from the disposition of businesses or assets or from the early extinguishment of debt; or charges for unusual or non-recurring items of loss or expense, such as expenses related to goodwill and other intangible assets, stock offerings, stock repurchases and loan loss provisions.
As specified by the Committee, performance criteria may be measured annually or for a shorter or longer performance period, on an absolute basis or relative to an established target, to previous years or other
comparable period or periods’ results, to a designated comparison group or groups, or to one or more designated external or internal indices or benchmarks.
The Committee will determine whether, and the extent to which, the applicable performance goals have been achieved or satisfied. Except as otherwise provided in an award agreement, performance awards will be distributed only after the completion of the relevant performance period. The length of a performance period will be determined by the Committee upon the grant of each performance award and will be at least 12 months in duration, except as otherwise specified in the award agreement. Performance awards may be paid in a lump sum, in installments, or on a deferred basis.
Other share-based awards (including dividend equivalents). The Committee may grant other types of share-based awards that would not otherwise constitute options, SARs, share units, share awards, or performance awards, such as dividend equivalent rights. The Committee may grant other share-based awards to any eligible participant in the 2016 Plan based on or measured by shares of common stock,
and the terms and conditions for these awards will be determined by the Committee. Dividend equivalents will not be granted with respect to options or SARs. Dividend equivalents granted with respect to a performance award will not be distributed during the applicable performance period or to the extent any such award is otherwise unearned.
Dollar-denominated awards. The Committee may grant dollar-denominated awards to eligible participants in the 2016 Plan, which may be based upon the achievement of performance criteria or other conditions, as determined by the Committee. Such awards may be payable in cash, shares, or a combination of both, as determined by the Committee.
Deferrals
The Committee may establish rules to permit or require participants to defer receipt of the payment of cash or the delivery of shares of common stock that would otherwise be due to the participant in
connection with a grant under the 2016 Plan in accordance with Section 409A of the Code, if applicable.
Adjustment Provisions
If there is any change in the number or kind of shares of common stock by reason of a corporate transaction involving PNC, including share dividend, share split, spinoff, recapitalization, merger, consolidations or reorganizations, then (1) the number and class of shares subject to each outstanding award, (2) the exercise price, base price or other purchase price for an award, (3) the total
number and class of shares for which future awards may be made or paid, (4) the limit on the number of shares of common stock which any individual may receive pursuant to awards in any year, or (5) any other aspect of any award, in each case, as the Committee in its sole discretion deems appropriate to reflect such transaction so that the rights of a grantee are neither enlarged nor diminished as a
THE PNC FINANCIAL SERVICES GROUP, INC. - 2016 Proxy Statement 89
APPROVAL OF 2016 INCENTIVE AWARD PLAN (ITEM 3)
result of the transaction. This includes, without limitation, (1) measuring the value per share unit of any award authorized for payment to grantee by reference to the per share value of the consideration payable to a common shareholder of PNC in connection with such transactions and (2) authorizing payment of the entire value of any award authorized for payment to grantee to be paid in cash.
Change of control. Adjustments in connection with a change of control of PNC are generally not covered by the foregoing adjustment provisions. Treatment of adjustments in connection with a change of control of PNC is at the discretion of the Committee, as provided in the applicable award agreement.
Sub-plans
The 2016 Plan permits the Committee to provide for special terms for awards to grantees who are foreign nationals, who are employed by PNC or any subsidiary outside of the United States, who provide services to PNC under an agreement with a foreign nation or agency, or as the Committee may consider necessary or appropriate. Moreover, the Committee has the authority to approve such supplements to or amendments, restatements, or alternative
versions of the 2016 Plan (including, without limitation, sub-plans) as it may consider necessary or appropriate; provided that no such special terms, supplements, amendments or restatements will include any provisions that are inconsistent with the terms of the 2016 Plan as then in effect unless the 2016 Plan could have been amended to eliminate such inconsistency without further approval by PNC’s shareholders.
Amendment and Termination of the Plan
The Board or the Committee may amend or terminate the 2016 Plan in any respect, and at any time; provided, however, that no amendment, alteration or termination of the 2016 Plan will be made by the Board or the Committee without approval of (1) PNC’s shareholders, to the extent shareholder approval of the amendment is required by applicable law or regulations or the requirements of the principal exchange or interdealer quotation system on which the common stock is listed or
quoted, and (2) each affected participant if such amendment, alteration or termination would adversely affect, in a material way, his or her rights or obligations under any grant or award made prior to the date of such amendment, alteration or termination except as otherwise permitted under 2016 Plan. No awards may be granted under the 2016 Plan after April 25, 2026 (and no ISOs may be granted after March 3, 2026).
Federal Income Tax Consequences
The following is a brief summary of the principal United States federal income tax consequences applicable to 2016 Plan participants and PNC, and is based upon an interpretation of present federal tax laws and regulations and may be inapplicable if such laws and regulations are changed. This summary is not intended to be exhaustive or constitute tax advice, nor does it describe state, local or foreign tax consequences. The 2016 Plan is not subject the Employee Retirement Income Security Act of 1974 and is not qualified under Section 401(a) of the Code.
Incentive stock options. Options issued under the 2016 Plan and designated as incentive stock options are intended to qualify as such under Section 422 of the Code. In this regard, an optionee who has been granted an incentive stock option will not recognize income and PNC will not be entitled to a deduction at the time of the grant or exercise of the option; provided, however, that the difference between the
value of the common stock received on the exercise date and the exercise price paid is an item of tax preference for purposes of determining the optionee’s alternative minimum tax. The taxation of gain or loss upon the sale of the common stock acquired upon exercise of an incentive stock option depends, in part, on whether the holding period of the common stock is at least (1) two years from the date the option was granted and (2) one year from the date the option was exercised. If these holding period requirements are satisfied, any gain or loss realized on a subsequent disposition of the common stock will be treated as a long-term capital gain or loss. If these holding period requirements are not met, then, upon such “disqualifying disposition” of the common stock, the optionee will realize compensation, taxable as ordinary income, in an amount equal to the excess of the fair market value of the common stock at the time of exercise over the exercise price, limited to the gain on sale. Any further gain (or loss) realized by the optionee
90 THE PNC FINANCIAL SERVICES GROUP, INC. - 2016 Proxy Statement
APPROVAL OF 2016 INCENTIVE AWARD PLAN (ITEM 3)
generally will be taxed as short-term or long-term capital gain (or loss) depending on the holding period. If the optionee recognizes ordinary income upon a disqualifying disposition, PNC generally will be entitled to a tax deduction in the same amount. If, however, the optionee meets the applicable holding period, PNC generally will not be entitled to a tax deduction with respect to capital gains recognized by the optionee. If an incentive stock option is exercised at a time when it no longer qualifies as an incentive stock option, the option will be treated as a nonqualified stock option.
Nonqualified stock options and share appreciation rights. A participant generally will not recognize income at the time a nonqualified stock option or share appreciation right is granted. Rather, the participant with respect to such an award recognizes compensation income only when the nonqualified stock option or share appreciation right is exercised. The amount of income recognized upon the exercise of a nonqualified stock option is equal to the excess of the fair market value of the common stock received over the sum of the exercise price plus the amount, if any, paid by the participant for such option. Upon the exercise of the share appreciation right, the participant will recognize compensation taxable as ordinary income equal to either: (1) the cash received upon the exercise; or (2) if common stock is received upon the exercise of the share appreciation right, the fair market value of the common stock received. In either case, PNC is generally entitled to a tax deduction in an amount equal to the compensation income recognized by the participant. Upon a subsequent disposition of the common stock acquired under a nonqualified stock option, the participant will realize short-term or long-term capital gain (or loss) depending on the holding period. The capital gain (or loss) will be short-term if the common stock is disposed of within one year after the nonqualified stock option is exercised, and long-term if the common stock was held more than one year, as of the sale date.
Restricted shares. A participant that receives a restricted share award under the 2016 Plan normally will not be required to recognize income for federal income tax purposes at the time of grant, nor is PNC entitled to any deduction, to the extent that the common stock awarded has not vested (i.e., is no longer subject to a substantial risk of forfeiture). When any part of a restricted share award vests, the participant will realize compensation taxable as ordinary income in an amount equal to the fair market value of the vested common stock on the vesting date (less the amount, if any, paid for the stock). The participant may, however, make an election, referred to as a Section 83(b) election, within 30 days following the grant of the restricted share award, to be taxed at the time of the grant of the award based on the fair market value of the common stock on the grant date. A participant who
makes a Section 83(b) election will recognize ordinary taxable income on the grant date equal to the fair market value of the shares as if the shares were unrestricted. If the shares subject to such election are subsequently forfeited, the recipient will not be entitled to any deduction, refund or loss for tax purposes with respect to the forfeited shares. If a Section 83(b) election has not been made, any dividends received with respect to the restricted share award prior to the lapse of the restrictions will be treated as additional compensation that is taxable as ordinary income to the participant. PNC will be entitled to a deduction in the same amount and at the same time that the participant recognizes ordinary income. Upon the sale of the vested common stock, the participant will realize short-term or long-term capital gain or loss depending on the holding period. The holding period generally begins when the restriction period expires. If the recipient timely made a Section 83(b) election, the holding period commences on the date of the grant.
Restricted share units. A recipient of restricted share units will not be required to recognize any income for federal income tax purposes, and PNC is not entitled to a deduction, at the time of grant. Rather, upon the settlement of units, the recipient of such units generally will be subject to tax at ordinary income rates on the fair market value of any common stock issued or cash paid in settlement of the award of such units, and PNC generally will be entitled to a deduction equal to the amount of the ordinary income realized by the recipient. If the recipient receives shares of common stock upon settlement then, upon disposition of such shares, appreciation or depreciation after the settlement date is treated as either short-term or long-term capital gain or loss, depending on how long the shares have been held.
Performance awards. A participant generally will not recognize income upon the grant of a performance award. Upon payment of the performance award, the participant will recognize ordinary income in an amount equal to the cash received or, if the performance award is payable in common stock, the fair market value of the common stock received. When the participant recognizes ordinary income upon payment of a performance award, PNC generally will be entitled to a tax deduction in the same amount.
Unrestricted shares, dollar-denominated awards and other share-based awards. The tax consequences of receiving common stock pursuant to an unrestricted share award or cash pursuant to a dollar-denominated award under the 2016 Plan is similar to receiving cash compensation from PNC. In such event, the participant must recognize ordinary income equal to the cash received or the fair market value of the common stock received, less any amount paid for common stock. PNC generally is entitled to a tax deduction for compensation paid to a participant at the same time and in the same
THE PNC FINANCIAL SERVICES GROUP, INC. - 2016 Proxy Statement 91
APPROVAL OF 2016 INCENTIVE AWARD PLAN (ITEM 3)
amount as the participant recognizes ordinary income. The federal income tax consequences of other incentive awards will depend on how the awards are structured. Generally, PNC will be entitled to a deduction with respect to other incentive awards only to the extent that the recipient realizes compensation income in connection with such awards.
Consequences of change of control. If a change of control of PNC causes awards under the 2016 Plan to accelerate vesting or is deemed to result in the attainment of performance goals, the participants could, in some cases, be considered to have received “excess parachute payments,” which could subject participants to a 20% excise tax on the excess parachute payments and result in a disallowance of PNC’s deductions under Section 280G of the Code.
Section 409A.Section 409A of the Code (“Section 409A”) applies to compensation that individuals earn in one year but that is not paid until a future year. This is referred to as nonqualified deferred compensation. If a deferred compensation arrangement does not meet either an exemption from, or the requirements of, Section 409A, the compensation may be subject to accelerated taxation in the year in which such compensation is no longer subject to a substantial risk of forfeiture and certain additional taxes, interest and penalties, including a 20% additional income tax. Section 409A does not impose any penalties on PNC and does limit PNC’s deduction with respect to compensation paid to a participant. Awards under the Plan are intended to comply with Section 409A or an exception thereto. Notwithstanding, Section
409A may impose upon a participant certain taxes or interest charges for which the participant is responsible.
Section 162(m). Section 162(m) of the Code limits the deductibility of compensation paid to each of PNC’s CEO and the three other highest compensated officers, other than the CFO (collectively, the “covered employees”), in any one year to $1,000,000, unless the compensation is “qualified performance-based compensation.” Among other requirements, for compensation to be “performance-based” for purposes of Section 162(m), the performance goals must be pre-approved and objective. The 2016 Plan has been
structured in a manner that enables PNC to grant awards to covered employees that are designed to be “qualified performance-based compensation.”
Shareholders are being asked to approve the 2016 Plan and, specifically, the material terms of the performance goals under which an award of qualified performance-based compensation may be granted in the 2016 Plan, in order to preserve PNC’s ability to deduct compensation paid to covered employees pursuant to any qualified performance-based compensation that may be made in the future under the 2016 Plan. However, nothing in this proposal precludes the Committee from granting, and the Committee reserves the right to grant, awards that do not qualify as qualified performance-based compensation under Section 162(m). Additionally, there is no guarantee that awards intended to qualify as qualified performance-based compensation under Section 162(m) ultimately will be deductible by PNC.
New Plan Benefits
No benefits or amounts have been granted, awarded or received under the 2016 Plan. Benefits under the Plan generally will be granted at the discretion of the applicable Committee and are
therefore not currently determinable. The closing market price of PNC’s common stock on March 3, 2016 was $86.58 per share.
The Board of Directors recommends that you vote FOR the approval of the 2016 Incentive Award Plan.
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APPROVAL OF 2016 INCENTIVE AWARD PLAN (ITEM 3)
The table below sets forth the number of outstanding awards and securities remaining available for future issuance under the 2006 Incentive Award Plan and our other equity-based plans.
Equity Compensation Plan Information
(At December 31, 2015)
| | | | | | | | | | | | | | | | (a) | | | (b) | | | (c) | | | Plan Category | | Number of securities
to be issued upon
exercise of
outstanding options,
warrants and rights | | | Weighted-average
exercise price of
outstanding
options, warrants
and rights | | | Number of securities
remaining available
for future issuance
under equity
compensation plans
(excluding securities
reflected in
column (a)) | | Equity compensation plans approved by security holders | | | 10,183,983 | (1) | | | $ 55.49 | | | | 14,877,217(2) | | Equity compensation plans not approved by security holders(3) | | | 1,819,801 | | | | $519.71 | | | | — | | Total | | | 12,003,784 | | | | | | | | 14,877,217 | |
| (1) | Of this total, 24,080 are stock options that relate to the 1997 Long-Term Incentive Award Plan. In addition, the following amounts relate to the 2006 Incentive Award Plan, as amended and restated (2006 Incentive Plan): 4,904,983 are stock options, 519,948 are incentive performance unit awards and 4,734,972 are stock-payable restricted stock units. | |
| | With respect to incentive performance units under the 2006 Incentive Plan, this amount reflects the maximum number of shares that could be issued pursuant to awards outstanding at December 31, 2015 upon targetachievement of the performance goals and other conditions of the awards. For achievement of the performance goals and other conditions above target level, payment is made in cash share equivalents, up to a maximum of 25% of the target number of share units. | |
| | With respect to the stock-payable restricted stock units under the 2006 Incentive Plan, such restricted stock units include 2012, 2013, 2014 and 2015 awards of performance-based restricted share units (with the units payable solely in stock and related dividend equivalents payable solely in cash) that have a service condition, risk-related performance conditions and a market condition, and also include awards of other stock-payable restricted share units, some of which are time-based, others which are performance-based and some of which also include related dividend equivalents payable solely in cash. The number in column (a) includes the maximum number of shares that could be issued pursuant to awards of this type of award outstanding at December 31, 2015 upon achievement of the performance and market conditions, where applicable, and other conditions of the awards. Where stock-payable restricted share units include a fractional share interest, such fractional share interest is payable only in cash share equivalents. During 2015, a total of 57 cash share equivalents were paid for fractional share interests. | |
| (2) | The entire amount available for future issuance includes 850,909 shares available under the Employee Stock Purchase Plan, which includes 85,709 shares subject to purchase during the current purchase period as of December 31, 2015, which purchase period began on July 1, 2015, and ended on December 31, 2015. The entire amount available for awards under the 2006 Incentive Plan is 14,026,308. No further awards are available under the 1997 Long-Term Incentive Award Plan. | |
| (3) | The plans in this section of the table reflect awards under pre-acquisition plans of National City Corporation and Sterling Financial Corporation. National City was merged into PNC on December 31, 2008 and Sterling was merged into PNC on April 4, 2008. Pursuant to the respective merger agreements for these acquisitions, common shares of National City or Sterling, as the case may be, issuable upon the exercise or settlement of various equity awards granted under the National City or Sterling plans were converted into corresponding awards covering PNC common stock. The number of securities to be issued upon the exercise of outstanding options, warrants and rights of the former National City Corporation equity-based incentive plans and the former Sterling Financial Corporation 1996 Stock Incentive Plan are 1,818,244 and 1,557, respectively. The weighted-average exercise price of the outstanding options, warrants and rights of the former National City Corporation equity-based incentive plans and the former Sterling Financial Corporation 1996 Stock Option Plan are $522.54 and $77.82, respectively. Additional information is included in Note 13 Stock Based Compensation Plans in the Notes To Consolidated Financial Statements in Item 8 of our 2015 Form 10-K and in Note 16 Stock Based Compensation Plans in the Notes To Consolidated Financial Statements in Item 8 of our 2008 10-K. | |
The 1997 Long-Term Incentive Award Plan
After shareholder approval of the 2006 Incentive Plan at the 2006 annual meeting of PNC’s shareholders on April 25, 2006 (see paragraph
below), no further awards were permitted under the 1997 Long-Term Incentive Award Plan, with certain exceptions that are no longer applicable.
The 2006 Incentive Award Plan
The 2006 Incentive Plan was approved by PNC shareholders on April 25, 2006, and was amended and restated effective as of March 11, 2011 upon shareholder approval on that date. The 2006 Incentive Plan (as amended and restated) originally
authorized up to 46,000,000 shares of common stock for issuance, subject to adjustment in certain circumstances. Shares available for issuance under this plan are also reduced by the number of any shares used in payment of bonuses under the 1996 Executive Incentive Award Plan.
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APPROVAL OF 2016 INCENTIVE AWARD PLAN (ITEM 3)
Under the 2006 Incentive Plan, awards or portions of awards that, by their terms, are payable only in cash do not reduce the number of shares that remain available for issuance under the plan (the number in column (c) of theEquity Compensation Plan Information table on page 93). During 2015, a total of 429,679 cash-payable share units (adjusted to reflect the maximum number of share units that
could be paid out in cash pursuant to the terms and conditions in the grant agreements) plus cash-payable dividend equivalents with respect to 364,731 of those share units were granted under the plan.
If the 2016 Plan is approved by shareholders at the 2016 annual meeting, no further awards will be made under the 2006 Incentive Plan.
94 THE PNC FINANCIAL SERVICES GROUP, INC. - 2016 Proxy Statement
“SAY-ON-PAY”: ADVISORY VOTE ON EXECUTIVE COMPENSATION (ITEM 4)3) What is the purpose of this item? We describe this item as an advisory vote on executive compensation, but it is more commonly known as “say-on-pay.“say-on-pay.” We provide this vote under the federal securities laws (Section 14A of the Securities Exchange Act of 1934) and in recognition of our shareholders’ vote in 20112017 recommending that we hold an advisory vote on executive compensation each year. After our shareholders voted in 2011,2017, the Board affirmed that recommendation and elected to hold future “say-on-pay”“say-on-pay” advisory votes on an annual basis, until the the next shareholder vote on “say-on-pay”“say-on-pay” frequency. We expect to conduct ourthe next shareholder vote on “say-on-pay”“say-on-pay” frequency at our 20172023 annual meeting of shareholders. With this item, shareholders may submit an advisory vote on the compensation of our CEO and the other four executive officers named in theSummary compensation table on page 58. That60. The Summary compensation table provides an annual snapshot of the compensation paid or granted to our NEOs. What does it mean to have a “say-on-pay”“say-on-pay” advisory vote? As an advisory vote, the outcome will not bind PNC or ourthe Board. We will disclose how many shareholders voted “For” or “Against” the resolution and how many shareholders abstained from voting. We believe in soliciting input from our investorsshareholders throughout the year on a variety of issues, and this advisory vote fits within our broader shareholder engagement efforts. We first provided a “say-on-pay” vote in 2009, voluntarily provided the vote again in 2010, provided the vote as required by the federal securities laws in 2011 and as recommended by our shareholders annually since then. We have averaged 92%approximately 95% support insay-on-pay votes over the past five years. While this vote isnon-binding, our the Board values the opinions of shareholders and will carefully consider the results when making future compensation decisions. In considering an overall executive compensation program, “say-on-pay”“say-on-pay” cannot convey a shareholder’s view on a discrete element of our compensation program or a specific decision made by our Board’sthe Personnel and Compensation Committee. From 2009 through 2015,Each year, the Committee receivedreceives reports on the outcome of the “say-on-pay”“say-on-pay” vote, how PNCour“say-on-pay” vote compared to itsour peer group and other large public companies, and whether any changes to the compensation program were being consideredrecommended for the Committee’s consideration in light of the results. The Committee expects to undertake a similar evaluation this year. THE PNC FINANCIAL SERVICES GROUP, INC. - 2016 Proxy Statement 95
“SAY-ON-PAY”: ADVISORY VOTE ON EXECUTIVE COMPENSATION (ITEM 4)
Where can I find more information on executive compensation? We describe our executive compensation program and the compensation awarded under that program in the CD&A, the Compensation Tables,compensation tables and the related disclosure contained in this proxy statement. See pages 3940 to 78.81 for additional information. THE PNC FINANCIAL SERVICES GROUP, INC. - 2019 Proxy Statement 87
”SAY-ON-PAY”: ADVISORY VOTE ON EXECUTIVE COMPENSATION (ITEM 3) What are some of the performance and compensation program highlights for 2015?2018? Please review ourthe CD&A, which begins on page 39,40, as well as the accompanying compensation tables and the related disclosure beginning on page 58.60. Performance and compensation program highlights for 2018, which are also included in ourthe CD&A, should be read in connectionconjunction with the full CD&A, the Compensation Tablescompensation tables and the related disclosure contained in this proxy statement. The Board of Directors recommends a vote FOR the following advisory resolution: “RESOLVED, that the holders of the common stock and the voting preferred stock of The PNC Financial Services Group, Inc. (the “Company”)(PNC), voting together as a single class, approve the compensation of the Company’s fivePNC’s named executive officers named in the Summary compensation table of the Company’s proxy statement for the 2016 Annual Meeting of Shareholders (the “2016 Proxy Statement”), as described in the Compensation Discussion and Analysis, the Compensation Tablescompensation tables and the related disclosure contained in PNC’s proxy statement for the 2016 Proxy Statement.2019 Annual Meeting of Shareholders.” 9688 THE PNC FINANCIAL SERVICES GROUP, INC. - 20162019 Proxy Statement
GENERAL INFORMATION PNCWe will hold itsour annual meeting of shareholders on Tuesday, April 26, 2016.23, 2019.
This proxy statement includes information about PNC, describes the proposals to be considered at the meeting and explains the voting process. We encourage you to read it carefully. This section of the proxy statement reviews important technical points,topics such as how to attend the meeting, how to access our proxy materials, how to vote and how a proposal gets approved and how shareholder proposals can be brought beforeapproved. Although ourBy-laws provide that we may hold a meeting.virtual-only annual meeting of shareholders, we currently have no intention to conduct our annual meeting of shareholders in that format. In this section, we sometimes discuss differences between “registered” and “street name” shareholders. For purposes of reviewing the proxy materials and voting shares, this distinction is important. We refer to those owningwho own PNC shares in their own name as “registered” holders or “shareholders of record.” We refer to those who own PNC shares through an account at an intermediary—such as a brokerage firm or bank—as holding our shares in “street name” or as “beneficial owners.” For purposes of reviewing the proxy materials and voting your shares, this distinction is important. Attending the annual meeting OurThe annual meeting of shareholders will be held on Tuesday, April 26, 201623, 2019 in the James E. Rohr Auditorium in The Tower at PNC Plaza, 300 Fifth Avenue, Pittsburgh, Pennsylvania 15222. The meeting will begin at 11:00 a.m., Eastern time.Time. Directions to the meeting are available atwww.pnc.com/annualmeeting.
General requirements You must be a PNC shareholder on the record date of January 29, 2016,February 1, 2019, or hold a valid legal proxy, to attend the annual meeting in person. Each shareholder may bring one guest. All shareholders, guests of shareholders and persons holding legal proxies must present a valid form of photo identification, such as a driver’s license, to be admitted to the annual meeting. Additional requirements In addition to presenting a valid form of photo identification, please follow these instructions to be admitted to the meeting: Registered shareholder. Present one of the following: (i) proxy card admission ticket, (ii) Notice of Internet Availability of Proxy Materials or (iii) admission ticket that you printed if you voted electronically. Street name shareholder. Present one of the following: (i) brokerage statement or letter from your bankbroker or brokerbank demonstrating PNC share ownership as of ourthe record date of January 29, 2016,February 1, 2019, (ii) voting instruction form or copy, (iii) Notice of Internet Availability of Proxy Materials or (iv) a written legal proxy issued by your broker or bank. Proxy for registered shareholder. Present a written legal proxy to you signed by the registered shareholder and one of the following: (i) proxy card admission ticket, (ii) Notice of Internet Availability of Proxy Materials or (iii) printed admission ticket if the registered shareholder voted electronically. Proxy for street name shareholder. Present a written legal proxy from a broker or bank to the street name holder, in assignable form, and a written legal proxy from the street name holder to you and one of the following: (i) a brokerage statement or letter from the street name holder’s bankbroker or brokerbank demonstrating PNC share ownership as of ourthe record date of January 29, 2016,February 1, 2019, (ii) voting instruction form or copy, or (iii) Notice of Internet Availability of Proxy Materials.Materials or (iv) written legal proxy issued by the street name holder’s broker or bank to the street name holder, in assignable form. A shareholder representative (for example, a person representing an entity that is a shareholder) must present satisfactory documentation evidencing his or her authority with respect to the shares in addition to complying with the general and additional requirements.requirements discussed above. We will decide in our sole discretion whether the documentation presented for admission meets the above requirements. Everyone attendingAnyone who attends the annual meeting agrees to abide by the regulations for conduct forat the meeting. These regulations for conduct are included in Annex CB to this proxy statement and will also be printed on the meeting agenda and distributed and reviewed at the meeting.
No cameras, mobile phones, laptops, tablets or recording equipment are permitted in the meeting room. In addition, large bags, backpacks, briefcases and similar items are not permitted in the meeting room. THE PNC FINANCIAL SERVICES GROUP, INC. - 2019 Proxy Statement 89
GENERAL INFORMATION If you cannot attend the annual meeting in person, you can listen to the meeting by using the webcast or conference call options that are described on theNotice of Annual Meeting of Shareholders on page 11.10. However, those using the webcast or dial-in numbersconference call options will not be able to vote or ask questions. Please visit the websitewww.pnc.com/annualmeeting orwww.pnc.com/investorevents orwww.pnc.com/annualmeeting aheadbefore the start of timethe meeting to register, and download any necessary software and to view or print related materials. THE PNC FINANCIAL SERVICES GROUP, INC. - 2016 Proxy Statement 97
GENERAL INFORMATION
Reviewing proxy materials Mailing date. We provided access to our proxy materials beginning on Tuesday, March 15, 2016.12, 2019. On that day, we mailed the Notice of Availability of Proxy Materials, began mailing paper copies of thisthe proxy statement and proxy card and our 20152018 Annual Report to registered shareholders, began mailing the Notice of Internet Availability of Proxy Materials and deliveredbegan delivering proxy materials electronically to registered shareholders who previously consented to that type ofelectronic delivery. Please note that our 20152018 Annual Report is not considered part of our proxy solicitation materials. Accessing proxy materials. The SEC allows us to deliver proxy materials to shareholders over the Internet. We believe that this offers a convenient way for shareholders to review our information. It also reduces printing expenses and lessens the environmental impact of paper copies. Shareholders may access our proxy materials electronically. Upon request, we will continue to provide email or paper copies of proxy materials to shareholders for the current annual meeting or for future meetings. If you hold PNC shares in street name, we generally cannot mail our materials to you directly. Your broker or bank must provide you with the Notice of Internet Availability of Proxy Materials or the proxy statement and a voting instruction form, and must also explain the voting process to you. IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON APRIL 26, 2016:23, 2019: This Notice of Annual Meeting and Proxy Statement and the 20152018 Annual Report are available at: www.envisionreports.com/PNC Have you received more than one set of proxy materials? If two or more PNC shareholders live in your household, or you maintain more than one shareholder account on the books of our transfer agent, you may have received more than one set of our proxy materials. In order to reduce duplicate packages and lower expenses, we rely on Securities and Exchange CommissionSEC rules allowingthat allow delivery of one set of proxy materials to multiple shareholders sharing the same address and the same last name, who consent in a mannerif this type of delivery has been consented to as provided by these rules. This is referred to as “householding.”“householding” of the proxy materials. Even if you consent to householding, we will always deliver a separate proxy card or Notice of Internet Availability of Proxy Materials for each account. Householding will not affect your right or ability to vote. If you would like to opt out of or into householding in the future, or would like to receive a separate copy of the proxy materials, please write or call Computershare Trust Company, N.A., our stock transfer agent, at the address or phone number below: Computershare Trust Company, N.A. P.O. Box 43078 Providence, RI 02940-3078 800-982-7652 You may also receive more than one set of our proxy materials if you have more than one brokerage account. Our householding process does not include accounts that you maintain at a brokerage firm or bank. Some brokerage firms and banks offer householding—please contact your broker or bank directly if you are interested. Voting your shares We want our shareholders, as the owners of PNC, to consider the important matters before them and exercise their right to vote. OurThe Board of Directors is asking for, or soliciting, a proxy from our shareholders. This section describes the different aspects of the voting process and how proxy voting works. Who can vote? You are entitled to vote if you were a PNC shareholder as of the record date of January 29, 2016.February 1, 2019. What is a proxy? For shareholdersIf you are unable to attend and vote at the annual meeting in person, you can tell us exactly how you want to vote your shares and then allow an officer to vote on your behalf. ThatThis is calledreferred to as giving us a “proxy.” By allowinginstructing a proxy to carry out your wishes, you can ensure that your vote counts.is counted. 90 THE PNC FINANCIAL SERVICES GROUP, INC. - 2019 Proxy Statement
GENERAL INFORMATION Soliciting your proxy. OurThe Board of Directors is soliciting your proxy to make sure that your vote is properly submitted and received on time, and to improve the efficiency of the annual meeting. We may ask for, or solicit proxies using several methods. We may solicit proxiesmethods, including by mail, personal interviews, telephone or fax. We may also use the Internet to solicit proxies.
PNC officers or employees may solicit proxies, but will not receive any special compensation for doing so. We will ask brokerage houses, banks and other custodians of PNC stock to forward proxy materials to their clients who hold PNC stock. Westock, and we will pay for theirthe expenses they incur to do so. 98 THE PNC FINANCIAL SERVICES GROUP, INC. - 2016 Proxy Statement
GENERAL INFORMATION
We hired In addition, we have retained Morrow & Co.,Sodali, LLC, 470 West Ave., Stamford, CT 06902, a proxy soliciting firm, to helpassist us with the solicitation of proxies for the 2016 annual meeting. We will pay Morrowmeeting for a fee of $15,000, plus its reimbursement of reasonableout-of-pocket expenses, to provide information to our shareholders and to assist with distributing proxy materials. expenses.
Revoking your proxy. What if you change your mind after you give us your proxy to vote? You can amend your voting decisions in several ways. We callrefer to this as “revoking” your proxy. To revoke your current proxy and replace it with a new proxy, we must receive the newly executed proxy before the applicable deadline. If you revoke by mail, we must receive the new proxy card before the annual meeting begins. Please make sure you have provided enough time for the replacementnew proxy card to reach us. If you revoke by using the telephone or Internet voting options, we must receive your revocation by 1:00 a.m., Eastern timeTime on April 26, 2016.23, 2019. After the above deadlines have passed, you can only revoke your proxy in person. You cannot useperson at the annual meeting. If you listen to the annual meeting using the webcast or conference call options, you will be unable to revoke your proxy.proxy during the meeting. Once the polls close at the annual meeting, the right to revoke your proxy ends. If you have not properly revoked your proxy by that time, we will vote your shares in accordance with your most recent valid proxy. If you hold PNC shares in street name, follow the instructions provided by your broker or bank to revoke your voting instructions or otherwise change your vote. How to vote. If your shares are registered in your name, you may vote in person by submitting a ballot at the annual meeting. We will distribute ballots at the meeting. To make it convenient and simple for you, we also offer a number of other ways to vote your shares. We include votingVoting instructions are included in the Notice of Internet Availability of Proxy Materials and the proxy card. For registered holders, we offer the following methods to vote your shares and give us your proxy: | | | | Internet | | Go towww.envisionreports.com/PNC and follow the instructions. This voting system has been designed to provide security for the voting process and to confirm that your vote has been recorded accurately. | | Telephone | | Follow the instructions on the proxy card. | | Mail | | Complete, sign and date the proxy card and return it in the envelope provided if you were mailed paper copies of the proxy materials. The envelope requires no postage if mailed in the United States. |
If you hold PNC shares in street name, you will receive information on how to give voting instructions to your brokerage firmbroker or bank. Note that if you hold PNC shares in street name and plan to vote at the annual meeting, you must present a written legal proxy from your broker or bank authorizing you to vote the shares it holds for you in its name. PNC is incorporated inunder the laws of Pennsylvania. Pennsylvania law allows properly authenticated proxies to be transmittedsubmitted by electronic transmission, including by telephone or over the Internet. Pennsylvania law alsoInternet, and permits a shareholder of record, such as a brokerage firm or bank, to communicate a vote by telephone or Internet foron behalf of a beneficial owner. Brokers voting your shares. If you hold PNC shares in street name, you must give instructions to your broker onor bank regarding how you would like your shares to be voted. If you do not provide any instructions, your broker has discretionary authority to vote your shares ononly with respect to proposals that are “routine” items. New York Stock Exchange (NYSE)NYSE rules define which items are “routine” or “non-routine.“non-routine.” We discuss below underVotes required for approvalwhether the itemsproposals to be acted upon at the annual meeting are “routine” or “non-routine.”“non-routine” items below underHow a proposal gets approved—Vote required for approval. AIf a proposal is considered anon-routine item under NYSE rules and you do not provide voting instructions to your broker “non-vote” occurs when the shareholder providesor bank, no instructionsvote will be cast on your behalf with respect to that proposal. This is referred to as a “brokernon-vote” and the item is non-routine. In determining whetherit will not be counted as a vote was cast for a proposal, we will not count broker non-votes.on the proposal. In some cases, street name holders may need to take additional precautions to ensure that their shares are voted.
Our voting recommendations. If your shares are registered in your name and you sign, date and return your proxy card but do not giveprovide voting instructions, or if you use Internet or telephone voting and do not provide voting instructions for each proposal, we will vote your shares will be voted as follows: FOR each of the Board’s 13 nominees for director FOR the ratification of the selection of PricewaterhouseCoopers LLP as PNC’sour independent registered public accounting firm for 20162019 FOR the 2016 Incentive Award Plan
FOR the advisory resolution on executive compensation THE PNC FINANCIAL SERVICES GROUP, INC. - 2019 Proxy Statement 91
GENERAL INFORMATION Confidential voting. We keep votes confidential and do not disclose them to our directors, officers or employees, except: As necessary to meet legal requirements or to pursue or defend legal actions.
To allow the Judge of Election to certify the voting results.
When expressly requested by a shareholder or benefit plan participant.
If there is a contested proxy solicitation.
OurThe Board has adopted a “confidential voting” policy. With the exceptions described above,below, this policy states that all proxies, ballots, voting instructions from employee benefit plan participants and voting tabulations that identify the particular vote of a particular shareholder or benefit plan participant be kept permanently confidential and not be disclosed. We keep votes confidential and do not disclose them to our directors, officers, or employees, except:
As necessary to meet legal requirements or to pursue or defend legal actions; To allow the Judge of Election to certify the voting results; When expressly requested by a shareholder or benefit plan participant; or If there is a contested proxy solicitation. Computershare Trust Company, N.A., our independent vote tabulator and Judge of Election for the 2016 annual meeting, confirmed that its procedures will be consistent with this policy. THE PNC FINANCIAL SERVICES GROUP, INC. - 2016 Proxy Statement 99
GENERAL INFORMATION
How a proposal gets approved On the record date, we had over 500 million outstanding shares of common stock, as well as additional shares of preferred stock.Quorum. Under Pennsylvania law, we must have a quorum before we can consider proposals at an annual meeting. A quorum is“quorum” refers to the minimum number of shares that must be present at the meeting. In determining if a quorum exists, we count the number of shares represented by shareholders in person as well as the number of shares represented by proxies.
To have a quorum for the annual meeting, we need the presence of PNC shareholders or their proxies who are entitled to cast atleast a majority of the votes that all shareholders are entitled to cast. In determining if a quorum exists, we count the number of shares represented by shareholders in person at the annual meeting and the number of shares represented by proxies. If you return a proxy, whether you vote for or against a proposal, abstain from voting or only sign and date your proxy card, your holdingsshares will be counted toward the quorum. Once a quorum is achieved, different proposals may require different standards of approval. Street name holders may need to take additional precautions to ensure that their vote counts. We discuss the mechanics of proposal approval below.
Issued and outstanding shares. ThisOn February 1, 2019, the record date for the annual meeting, we had approximately 453 million shares of common stock outstanding, as well as additional shares of preferred stock. The table below shows the number of issued and outstanding shares of our common and preferred stock entitled to vote on January 29, 2016, the record date. We have additional issued and outstanding series of preferred stock that are not entitled to vote at the meeting. The table also shows the number of votes for each share for the matters brought before this meeting. The number of votes shown for each share of voting preferred stock equals the number of full shares of PNC common stock that can be acquired upon the conversion of a share of preferred stock. At the meeting, holders of common and preferred stock entitled to vote will vote together as a single class. There is no cumulative voting. | | Class | | Issued and
Outstanding
Shares
Entitled to
Vote | | | Votes
Per
Share | | | Effective
Voting
Power | | | Issued and Outstanding Shares Entitled to Vote | | | Votes Per Share | | | Effective Voting Power | | Common | | | 502,399,069 | | | | 1 | | | | 502,399,069 | | | | 453,046,877 | | | | 1 | | | | 453,046,877 | | Preferred – Series B | | | 615 | | | | 8 | | | | 4,920 | | | Preferred—Series B | | | | 615 | | | | 8 | | | | 4,920 | |
VotesVote required for approval. Different proposals may have different voting requirements for approval.
This section provides information regarding the vote required for approval of each proposal presented in the proxy statement and additional details regarding the mechanics of proposal approval. Under Pennsylvania law, if you abstain from voting itor fail to vote, your shares will not countbe counted as a vote “cast.”votes cast on the proposal. To abstain, you must check the “Abstain” box on your proxy card, or select the appropriate option when voting by Internet or telephone. A brokernon-vote is treated as a failure to vote. Therefore, if you do not provide instructions to your broker or bank regarding how to vote on a proposal that is anon-routine item, your shares will not be counted as votes cast on that proposal. If you are a shareholder of record and you sign, date and return your proxy card but do not provide voting instructions, or if you submit your proxy by Internet or telephone and do not provide voting instructions, when voting over the Internet, we will vote your shares represented by that proxy as recommended by ourthe Board of Directors and this votethose shares will countbe counted as a votevotes cast. A broker non-vote will also be treated as a failure to record a vote and will not count as a vote cast. Election of directors (Item 1). UnlessUnder Pennsylvania law, unless a company’s articles of incorporation orby-laws provide otherwise, Pennsylvania law contemplates election of directors are elected by a plurality of the votes cast. In 2009, PNC amended its OurBy-laws to include an eligibility requirement for director nominees in uncontested elections, whereby an incumbent director will offer to resign from the Board if he or she does not receive a majority of the votes cast. To receive a majority of the votes cast, the shares voted “for” a director’s election must exceed 50% of the total number of shares voted with respect to that director’s election. OurBy-laws and corporate governance guidelines describe this majority voting requirement and the related procedure in the event that requires an incumbenta director tomust tender his or her resignation to the Board. To receiveThis is considered a majority of the votes cast means that the shares voted “for” a director’s election exceed 50% of the number of votes castnon-routine item, so there may be brokernon-votes with respect to that director’s election. This will be considered a non-routine item. As a non-routine item, there may be broker non-votes. Any broker this proposal. Brokernon-votes or and abstentions will not be included in the total votes cast and will not affect the results.results of the vote on this proposal. Ratification of independent registered public accounting firm (Item 2). A majority of the votes 92 THE PNC FINANCIAL SERVICES GROUP, INC. - 2019 Proxy Statement
GENERAL INFORMATION cast will be required to approve the ratification of ourthe Audit Committee’s selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2016.2019. This will beis considered a routine item, andso brokers will have the discretion to vote uninstructed shares on behalf of clients. Asbeneficial owners with respect to this proposal. Therefore, brokernon-votes are not expected to exist for this proposal, although a routine item, there will be no broker non-votes, although brokers may otherwise fail to submit a vote. Any failuresFailures by brokers to vote orand abstentions will not be included in the total votes cast and will not affect the results. Approval of 2016 Incentive Award Plan (Item 3). A majorityresults of the votes cast will be required to approve the 2016 Incentive Award Plan. This will be considered a non-routine item. As a non-routine item, there may be broker non-votes. Any broker non-votes or abstentions will not be included in the total votes cast and will not affect the results.vote on this proposal.
“Say-on-pay”: advisory Advisory vote on executive compensation (Item 4)3). A majority of the votes cast will be required to approve this item, an advisory vote on the compensation of our named executive compensation.officers. Because your vote is advisory, it will not be binding on the Board or PNC. This will beis considered anon-routine item. As a non-routine item, so there may be broker non-votes. Any broker non-votes or with respect to this proposal. Brokernon-votes and abstentions will not be included in the total votes cast and will not affect the results.results of the vote on this proposal. 100 THE PNC FINANCIAL SERVICES GROUP, INC. - 2016 Proxy Statement
GENERAL INFORMATION
2015 annual meeting voting results
| | | | | Eligible Votes (millions)
| | | 521.5 | | Total Voted (millions)
| | | 446.0 (85.5%) | | Broker Non-Votes (millions)
| | | 39.3 (7.5%) | |
| | | | | Proposal | | Votes “For”* | | Director Elections — Average
| | | 97.6% | | Charles E. Bunch
| | | 90.0% | | Paul W. Chellgren
| | | 98.1% | | Marjorie Rodgers Cheshire
| | | 99.4% | | William S. Demchak
| | | 96.1% | | Andrew T. Feldstein
| | | 99.7% | | Kay Coles James
| | | 98.8% | | Richard B. Kelson
| | | 97.4% | | Anthony A. Massaro
| | | 98.2% | | Jane G. Pepper
| | | 98.5% | | Donald J. Shepard
| | | 98.9% | | Lorene K. Steffes
| | | 98.6% | | Dennis F. Strigl
| | | 98.5% | | Thomas J. Usher
| | | 96.7% | | Ratification of Auditors
| | | 99.5% | | Say-on-Pay
| | | 96.8% | |
* | As a percentage of total votes cast not including abstentions or broker non-votes. |
THE PNC FINANCIAL SERVICES GROUP, INC. - 20162019 Proxy Statement 10193
SHAREHOLDER PROPOSALS FOR THE 20172020 ANNUAL MEETING SEC Rule14a-8. If you are a shareholder who would like us to include your proposal in ourthe notice of the 2017our 2020 annual meeting of shareholders and related proxy materials, you must followcomply with SEC Rule 14a-8. In submitting14a-8, including with respect to submission of your proposal ourby the applicable deadline. Our Corporate Secretary must receive your proposal in writing at our principal executive offices no later than November 15, 2016.13, 2019. If your proposal is not received by the deadline or you do not followotherwise comply with Rule14a-8, we will not consider your proposal for inclusion in next year’s proxy statement.materials. Advance notice procedures. Under ourBy-laws, a shareholder who wishes to shareholders may nominate an individual for election to the Board of Directorsor propose other business to be brought directly at an annual meeting or to propose any business to be considered at an annual meeting, must deliverof shareholders by giving advance notice of such nomination or business to PNC. TheTo be eligible to do so, a shareholder must be a shareholder of record as of the date the notice is delivered to PNC and at the time of the annual meeting, and must be entitled to vote at the meeting. Theannual meeting and must comply with the notice and other applicable procedures set forth in ourBy-laws. A shareholder’s notice of a nomination or other business must be in writing and contain the information specified in ourBy-laws, for and must be delivered on a director nomination or other business. The company’s 2017timely basis. To be timely, a shareholder’s written notice related to our 2020 annual meeting is currently scheduled to be held on April 25, 2017, and to be timely, the written noticeof shareholders must be delivered to the Corporate Secretary at our principal executive offices not earlier than December 27, 201625, 2019 (the 120th120th day prior to the first anniversary of this year’s annual meeting) and not later than January 26, 201724, 2020 (the 90th90th day prior to the first anniversary of this year’s annual meeting) to the Corporate Secretary at our principal executive offices by mail or facsimile..
These advance notice procedures are separate from the SEC’s requirements that a shareholder must meet in order to have a shareholder proposal included in our proxy materials pursuant to SEC Rule14a-8 referred to above, and from the procedures you must follow to submit a director nominee for consideration by the Nominating and Governance Committee for recommendation to the Board for election as described underCorporate Governance—Board committees—Nominating and Governance Committee—How we identify new directors on page 25. Proxy access procedures. OurBy-laws permit a shareholder, or a group of up to 20 shareholders, who has continuously owned at least 3% of the outstanding shares entitled to vote in the election of directors for at least three years to nominate and include in our annual meeting proxy materials director nominees constituting up to the greater of two directors or 20% of the number of directors serving on the Board on the last day on which notice of a nomination may be delivered (known generally as “proxy access”). The proxy access notice must be in writing and contain the information specified in ourBy-laws for a proxy access nomination, and must be delivered on a timely basis. To be timely, a proxy access notice regarding a nomination for our 2020 annual meeting of shareholders must be delivered to the Corporate Secretary at our principal executive offices not earlier than October 14, 2019 (the 150th day prior to the first anniversary of the filing date of the definitive proxy statement for this year’s annual meeting) and not later than November 13, 2019 (the 120th day prior to the first anniversary of the filing date of the definitive proxy statement for this year’s annual meeting). These proxy access procedures are separate from the advance notice procedures referred to above, from the SEC’s requirements that a shareholder must meet in order to have a shareholder proposal included in our proxy statementmaterials pursuant to SEC Rule14a-8 referred to above.above, and from the procedures you must follow to submit a director nominee for consideration by the Nominating and Governance Committee for recommendation to the Board for election as described underCorporate Governance—Board committees—Nominating and Governance Committee—How we identify new directors on page 25. General.The proxies we appoint for the 20172020 annual meeting of shareholders may exercise their discretionary authority to vote on any shareholder proposal timely received and presented at the meeting. Our proxy statement for the 2020 annual meeting must advise shareholders of theany such proposal and how our proxies intend to vote. A shareholder may mail a separate proxy statement to our shareholders and satisfy certain other requirements to remove discretionary voting authority from our proxies. The Chairperson or other officer presiding at the annual meeting has the sole authority to determine whether any nomination or other business proposed to be brought before the annual meeting was made or proposed in accordance with ourBy-laws, and to declare that a defective proposal or nomination be disregarded. Please direct any notices or questions about the requirements or noticesdiscussed in this section to our Corporate Secretary at the address givenprovided on page 18. 94 THE PNC FINANCIAL SERVICES GROUP, INC. - 2019 Proxy Statement
OTHER MATTERS OurThe Board of Directors does not know of any other business to be presented at the annual meeting. If any other business should properly come before the meeting, or if there is any meeting adjournment, proxies will be voted in accordance with the best judgment of the persons named in the proxies.
| | | March 15, 201612, 2019 | | By Order of the Board of Directors, | | | 
| | |  | | | Christi DavisAlicia G. Powell | | | Corporate Secretary |
102 THE PNC FINANCIAL SERVICES GROUP, INC. - 20162019 Proxy Statement 95
ANNEX A (NON-GAAP TO GAAP RECONCILIATIONS) We provide information below to reconcile to GAAP those financial metrics used by the Personnel and Compensation Committee that are eithernon-GAAP financial metrics or reflect adjustments approved by the Personnel and Compensation Committee (as described in footnote 1 to the tableCommittee. Net Interest Income | | | | | | | | | | | | | | | | Year ended December 31, | | | Dollars in millions | | 2018 | | | 2017 | | | % change | | Net interest income | | $ | 9,721 | | | $ | 9,108 | | | | 6.7% | | Personnel and Compensation Committee approved adjustments(a) | | | – | | | | 26 | | | | | | Net interest income, as adjusted(Non-GAAP) | | $ | 9,721 | | | $ | 9,134 | | | | 6.4% | |
| (a) | Adjustment as a result of the Tax Cuts and Jobs Act. |
Diluted Earnings per Common Share | | | | | | | | | | | | | | | | Year ended December 31, | | | Dollars in millions | | 2018 | | | 2017 | | | % change | | Diluted earnings per common share | | $ | 10.71 | | | $ | 10.36 | | | | 3.4% | | Personnel and Compensation Committee approved adjustments(a) | | | (0.02 | ) | | | (2.34 | ) | | | | | Diluted earnings per common share, as adjusted(Non-GAAP) | | $ | 10.69 | | | $ | 8.02 | | | | 33.3% | |
| (a) | 2018 reflects adjustment in the amount of $(9) million, or $(0.02) per common share, due to the addition of provision for credit losses and subtraction of net charge-offs. 2017 reflects adjustments in the amount of $26 million to net interest income, or $0.05 per share, and $(1,155) million to income tax, or $(2.37) per common share, due to the Tax Cuts and Jobs Act, and an adjustment in the amount of $(10) million, or $(0.02) per common share, due to the addition of provision for credit losses and subtraction of net charge-offs. |
Return on pages 39 and 40). Financial metrics disclosed in the tableEquity | | | | | | | | | | | | | | | | Year ended December 31, | | | Dollars in millions | | 2018 | | | 2017 | | | % change | | Net income | | $ | 5,346 | | | $ | 5,388 | | | | | | Personnel and Compensation Committee approved adjustments(a) | | | (9 | ) | | | (1,139 | ) | | | | | Net income, as adjusted(Non-GAAP) | | $ | 5,337 | | | $ | 4,249 | | | | | | Average total shareholders’ equity | | $ | 46,825 | | | $ | 46,281 | | | | | | Return on equity(b) | | | 11.42% | | | | 11.64% | | | | (1.9%) | | Return on equity, as adjusted(Non-GAAP)(c) | | | 11.40% | | | | 9.18% | | | | 24.2% | |
| (a) | 2018 reflects adjustment in the amount of $(9) million due to the addition of provision for credit losses and subtraction of net charge-offs. 2017 reflects adjustments in the amount of $26 million to net interest income and $(1,155) million to income tax due to the Tax Cuts and Jobs Act, and an adjustment in the amount of $(10) million due to the addition of provision for credit losses and subtraction of net charge-offs. |
| (b) | This metric was calculated by dividing net income by average total shareholders’ equity. |
| (c) | This metric was calculated by dividing adjusted net income by average total shareholders’ equity. |
96 THE PNC FINANCIAL SERVICES GROUP, INC. - 2019 Proxy Statement
ANNEX A (NON-GAAP TO GAAP RECONCILIATIONS) Return on pages 39 and 40 that are not discussed below areAssets | | | | | | | | | | | | | | | | Year ended December 31, | | | Dollars in millions | | 2018 | | | 2017 | | | % change | | Net income | | $ | 5,346 | | | $ | 5,388 | | | | | | Personnel and Compensation Committee approved adjustments(a) | | | (9 | ) | | | (1,139 | ) | | | | | Net Income, as adjusted(Non-GAAP) | | $ | 5,337 | | | $ | 4,249 | | | | | | Average Assets | | $ | 378,235 | | | $ | 371,769 | | | | | | Return on Assets(b) | | | 1.41% | | | | 1.45% | | | | (2.8)% | | Return on Assets, as adjusted(Non-GAAP)(c) | | | 1.41% | | | | 1.14% | | | | 23.7% | |
| (a) | 2018 adjustment due to the addition of provision for credit losses and subtraction of net charge-offs. 2017 reflects adjustments in the amount of $26 million to net interest income and $(1,155) million to income tax due to the Tax Cuts and Jobs Act, and an adjustment in the amount of $(10) million due to the addition of provision for credit losses and subtraction of net charge-offs. |
| (b) | This metric was calculated by dividing net income by average assets. |
| (c) | This metric was calculated by dividing adjusted net income by average assets. |
Risk-adjusted Efficiency Ratio | | | | | | | | | | | | | | | | Year ended December 31, | | | Dollars in millions | | 2018 | | | 2017 | | | % change | | Revenue | | $ | 17,132 | | | $ | 16,329 | | | | | | Personnel and Compensation Committee approved adjustments(a) | | | – | | | | 26 | | | | | | Revenue, as adjusted(Non-GAAP) | | $ | 17,132 | | | $ | 16,355 | | | | | | Noninterest Expense | | $ | 10,296 | | | $ | 10,398 | | | | | | Personnel and Compensation Committee approved adjustments(b) | | | 420 | | | | 457 | | | | | | Noninterest Expense, as adjusted(Non-GAAP) | | $ | 10,716 | | | $ | 10,855 | | | | | | Efficiency Ratio(c) | | | 60.10% | | | | 63.68% | | | | 5.6%(e) | | Efficiency Ratio, as adjusted(Non-GAAP)(d) | | | 62.55% | | | | 66.37% | | | | 5.8%(e) | |
| (a) | 2017 adjustment due to the Tax Cuts and Jobs Act. |
| (b) | 2018 and 2017 adjustment due to the addition of net charge-offs. |
| (c) | This metric was calculated by dividing noninterest expense by revenue. |
| (d) | This metric was calculated by dividing adjusted noninterest expense by adjusted revenue. |
| (e) | As a smaller efficiency ratio is better than a larger one, we have presented the reduction in each of the efficiency ratio and the adjusted efficiency ratio as a positive change when compared to the prior year’s results. |
Tangible Book Value per Common Share | | | | | | | | | | | | Year ended December 31, | | | Dollars in millions, except per share data | | 2018 | | | 2017 | | Book value per common share | | $ | 95.72 | | | $ | 91.94 | | Tangible book value per common share | | | | | | | | | Common shareholders’ equity | | $ | 43,742 | | | $ | 43,530 | | Goodwill and Other Intangible Assets | | | (9,467 | ) | | | (9,498) | | Deferred tax liabilities on Goodwill and Other Intangible Assets | | | 190 | | | | 191 | | Tangible common shareholders’ equity | | $ | 34,465 | | | $ | 34,223 | | Period-end common shares outstanding (in millions) | | | 457 | | | | 473 | | Tangible book value per common share(Non-GAAP) | | $ | 75.42 | | | $ | 72.28 | |
THE PNC FINANCIAL SERVICES GROUP, INC. - 2019 Proxy Statement 97
ANNEX A (NON-GAAP TO GAAP metrics that were not affected by the Personnel and Compensation Committee approved adjustments in 2014 and 2015.RECONCILIATIONS) Return on Common Equity without Goodwill | | | | Year ended December 31 | | | Year ended December 31, | | | Dollars in millions | | 2015 | | | 2014 | | | 2018 | | | 2017 | | Net income attributable to common shareholders | | $ | 3,881 | | | $ | 3,947 | | | $ | 5,061 | | | $ | 5,076 | | Personnel and Compensation Committee approved adjustments(a) | | | | (28 | ) | | | (947) | | Net income attributable to common shareholders, as adjusted(Non-GAAP) | | | $ | 5,033 | | | $ | 4,129 | | Average common shareholders’ equity | | $ | 40,873 | | | $ | 39,820 | | | $ | 42,779 | | | $ | 41,985 | | Average goodwill | | $ | 9,103 | | | $ | 9,082 | | | | 9,213 | | | | 9,146 | | Average common shareholders’ equity less average goodwill | | $ | 31,770 | | | $ | 30,738 | | | Return on common equity (a) | | | 9.50% | | | | 9.91% | | | Return on common equity without goodwill (b) | | | 12.22% | | | | 12.84% | | | Average common shareholders’ equity less average goodwill(Non-GAAP) | | | $ | 33,566 | | | $ | 32,839 | | Return on common equity(b) | | | | 11.83% | | | | 12.09% | | Return on common equity without goodwill(Non-GAAP)(c) | | | | 15.00% | | | | 12.57% | |
| (a) | 2018 adjustment due to net Visa activity. 2017 adjustments in the amount of $26 million to net interest income and $(1,155) million to income tax due to the Tax Cuts and Jobs Act, and an adjustment in the amount of $182 million due to net Visa activity. |
| (b) | This metric was calculated by dividing net income attributable to common shareholders by average common shareholders’ equity. |
| (b)(c) | This metric was calculated by dividing adjusted net income attributable to common shareholders by average common shareholders’ equity less average goodwill. |
Tangible Book Value per Common ShareFee Income
| | | | | | | | | | | | Year ended December 31 | | | Dollars in millions, except per share data | | 2015 | | | 2014 | | Book value per common share | | $ | 81.84 | | | $ | 77.61 | | Tangible book value per common share | | | | | | | | | Common shareholders’ equity | | $ | 41,258 | | | $ | 40,605 | | Goodwill and Other Intangible Assets (a) | | | (9,482 | ) | | | (9,595) | | Deferred tax liabilities on Goodwill and Other Intangible Assets (a) | | | 310 | | | | 320 | | Tangible common shareholders’ equity | | $ | 32,086 | | | $ | 31,330 | | Period-end common shares outstanding (in millions) | | | 504 | | | | 523 | | Tangible book value per common share | | $ | 63.65 | | | $ | 59.88 | |
| (a) | Excludes the impact from mortgage servicing rights of $1.6 billion and $1.4 billion at December 31, 2015 and 2014, respectively. |
Return on Economic Capital vs. Cost of Capital
| | | | | | | | | | | | Year ended December 31 | | | Dollars in millions | | 2015 | | | 2014 | | Net income | | $ | 4,143 | | | $ | 4,207 | | Personnel and Compensation Committee approved adjustments, on an after-tax basis | | $ | (110 | ) | | $ | (117) | | Net income, as adjusted | | $ | 4,033 | | | $ | 4,090 | | Average economic capital | | $ | 31,450 | | | $ | 32,202 | | Plan-specified cost of capital hurdle | | | 7.76% | | | | 7.68% | | Return on economic capital less cost of capital hurdle (a) | | | 5.41% | | | | 5.38% | | Return on economic capital less cost of capital hurdle, as adjusted (b) | | | 5.06% | | | | 5.02% | |
| (a) | This metric was calculated by dividing net income by economic capital, expressing the quotient as a percentage, and then subtracting the plan-specified cost of capital hurdle. |
| (b) | This metric was calculated by dividing net income, as adjusted, by economic capital, expressing the quotient as a percentage, and then subtracting the plan-specified cost of capital hurdle. |
| | | | | | | | | | | | | | | | Year ended December 31 | | | Dollars in millions | | 2018 | | | 2017 | | | % Change | | Noninterest income | | | | | | | | | | | | | Asset management | | $ | 1,825 | | | $ | 1,942 | | | | | | Consumer services | | | 1,502 | | | | 1,415 | | | | | | Corporate services | | | 1,849 | | | | 1,742 | | | | | | Residential mortgage | | | 316 | | | | 350 | | | | | | Service charges on deposits | | | 714 | | | | 695 | | | | | | Total fee income | | | 6,206 | | | | 6,144 | | | | 1% | | Other | | | 1,205 | | | | 1,077 | | | | | | Total noninterest income | | $ | 7,411 | | | $ | 7,221 | | | | 3% | |
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ANNEX B (PROPOSED 2016 INCENTIVE AWARD PLAN) The PNC Financial Services Group, Inc.
2016 Incentive Award Plan
As used in this Plan and/or an Agreement, the following terms shall have the meanings set forth below.
1.1 “10% Shareholder” means an employee or officer of PNC who, as of the date on which an Incentive Stock Option is granted to such employee or officer, owns more than 10% of the total combined voting power of all classes of Shares then issued by the Corporation or any of its Subsidiaries.
1.2 “Agreement” means an agreement in Writing between the Corporation and the Grantee evidencing a grant of an Award under the Plan.
1.3 “Approval Date” means March 3, 2016, the date this Plan was approved by the Board.
1.4 “Award” means an Option, Share Award, Restricted Share, Share Unit, Share Appreciation Right, Restricted Share Unit, Performance Award, Other Share-Based Award or Dollar-Denominated Award.
1.5 “Base Price” means the grant price of a Share Appreciation Right as determined by the Committee on or before the Grant Date, which price shall not be less than the Fair Market Value of a Share on the Grant Date.
1.6 “Board” means the Board of Directors of the Corporation.
1.7 “Cause” means, except as otherwise provided in the applicable Agreement:
(i) the willful and continued failure of Grantee to substantially perform Grantee’s duties with PNC (other than any such failure resulting from incapacity due to physical or mental illness) after a written demand for substantial performance is delivered to Grantee by PNC that specifically identifies the manner in which it is believed that Grantee has not substantially performed Grantee’s duties;
(ii) a material breach by Grantee of (a) any code of conduct of PNC or any code of conduct of a Subsidiary that is applicable to Grantee or (b) other written policy of PNC or other written policy of a Subsidiary that is applicable to Grantee, in either case as required by law or established to maintain compliance with applicable law;
(iii) any act of fraud, misappropriation, material dishonesty, or embezzlement by Grantee against PNC or any of its Subsidiaries or any client or customer of PNC or any of its Subsidiaries;
(iv) any conviction (including a plea of guilty or of nolo contendere) of Grantee for, or entry by Grantee into a pre-trial disposition with respect to, the commission of a felony; or
(v) entry of any order against Grantee, by any governmental body having regulatory authority with respect to the business of PNC or any of its Subsidiaries, that relates to or arises out of Grantee’s employment or other service relationship with PNC.
The cessation of employment of Grantee shall be deemed to have been a termination of Grantee’s employment with PNC for Cause for purposes of the Plan and the Agreement only if and when PNC, by PNC’s CEO or his or her designee (or, if Grantee is the CEO, the Board, or if Grantee is another “officer” of the Corporation, as defined in Section 16 of the Exchange Act (and the rules thereunder), the Board or the Board’s Personnel and Compensation Committee), determines that Grantee is guilty of conduct described in clause (i), (ii) or (iii) above or that an event described in clause (iv) or (v) above has occurred with respect to Grantee and, if so, determines that the termination of Grantee’s employment with PNC shall be deemed to have been for Cause.
1.8 “CEO” means the chief executive officer of the Corporation.
1.9 “Chair” means the chairperson of the Board’s Personnel and Compensation Committee (or any successor position).
1.10 “Committee” means (i) in the case of Employee Awards, the Board’s Personnel and Compensation Committee, or such other committee or designee appointed by the Board or the Personnel and Compensation Committee to manage Employee Awards generally or specific individual or groups of
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Employee Awards, and (ii) in the case of Awards made to Directors, the Board’s Nominating and Governance Committee, unless otherwise determined by the Board. Except where the context otherwise requires, references in the Plan to the “Committee” also shall be deemed to refer to the Chair and to any delegate of the Committee while acting within the scope of such delegation. Notwithstanding the foregoing, to the extent deemed appropriate by the Board, the Committee shall be composed of not less than two individuals who are “outside directors” within the meaning of Section 162(m) of the Internal Revenue Code, “non-employee directors” within the meaning of Section 16 of the Exchange Act (and the rules thereunder) and “independent directors” within the meaning of Section 303A of the New York Stock Exchange Listing Company Manual.
1.11 “Common Stock” means the common stock, par value $5.00 per share, of the Corporation.
1.12 “Corporate Transactions” means corporate transactions involving the Corporation, including, without limitation, Share dividends, Share splits, spin-offs, split offs, recapitalizations, mergers, consolidations or reorganizations of or by the Corporation.
1.13 “Corporation” means The PNC Financial Services Group, Inc.
1.14 “Director” means any member of the Board who is not also an employee of PNC.
1.15 “Disabled” or “Disability” means, except as otherwise defined in an Agreement, that Grantee’s employment is terminated by PNC other than for Cause and because Grantee either (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, (ii) is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving (and has received for at least three months) income replacement benefits under any PNC-sponsored disability benefit plan or (iii) has been determined by the U.S. Social Security Administration to be eligible for U.S. Social Security disability benefits.
1.16 “Dividend Equivalent” means a right granted to an Eligible Person to receive the equivalent value (in cash or Shares) of dividends paid on Common Stock.
1.17 “Dollar-Denominated Award” means an Award denominated in dollars rather than in Shares, pursuant to Article 12, regardless of whether such Award is to be settled in cash or Shares.
1.18 “Effective Date” means the date this Plan is approved by the Corporation’s shareholders following the Approval Date.
1.19 “Eligible Person” means an employee or officer of PNC, or a Director, selected by the Committee as eligible to receive an Award under the Plan.
1.20 “Employee Awards” means Awards made to Eligible Persons other than Directors.
1.21 “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
1.22 “Fair Market Value” means, as of any given date, (i) the reported closing price on the New York Stock Exchange (or such successor reporting system as the Corporation may select) for a share of Common Stock on such date, or, if no Common Stock trades have been reported on such exchange for that day, such closing price on the immediately preceding day for which there were reported trades or, if the Committee has so acted, (ii) fair market value as determined using such other reasonable method adopted by the Committee in good faith for such purpose that uses actual transactions in Common Stock as reported by a national securities exchange or the Nasdaq National Market, provided that such method is consistently applied. When determining Fair Market Value for an Award under the Plan held by a Grantee, the Fair Market Value shall be rounded to the nearest cent (provided that such rounding is in compliance with the fair market value pricing rules set forth in Section 409A). Notwithstanding the foregoing, in the case of a broker-assisted exercise of an Option, the Fair Market Value shall be the actual sale price of the Shares issued upon exercise of the Option, as described under Section 3.11(iv).
1.23 “GAAP” or “U.S. generally accepted accounting principles” means accounting principles generally accepted in the United States of America.
1.24 “Grant Date” means the date on which such Award is approved by the Board or the Committee, or such later date specified by the Board or the Committee in authorizing the Award.
1.25 “Grantee” means a person who was an Eligible Person at the time of grant and has been granted an Award under the Plan that remains outstanding, including a person who is no longer an Eligible Person.
1.26 “Incentive Stock Option” means a right to purchase Shares from the Corporation granted pursuant to Article 6 and that qualifies as an incentive stock option under Section 422 of the Internal Revenue Code.
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1.27 “Individual Limit” means the annual per individual limits relating to Awards, as set forth in Section 5.2.
1.28 “Internal Revenue Code” means the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder.
1.29 “Non-Exempt Employees” means employees whose minimum wages and maximum hours are subject to the requirements imposed under sections 206 and 207 of the Fair Labor Standards Act of 1938, as amended (“FLSA”), and who are not exempted from such requirements under section 213 of the FLSA.
1.30 “Nonstatutory Stock Option” means a right to purchase Shares from the Corporation that is granted pursuant to Article 6 and that is not an Incentive Stock Option.
1.31 “Option” means an Incentive Stock Option or Nonstatutory Stock Option granted pursuant to Article 6.
1.32 “Option Period” means the period during which an Option may be exercised.
1.33 “Option Price” means the price per Share at which an Option may be exercised.
1.34 “Other Share-Based Award” means an Award granted pursuant to Article 11.
1.35 “Performance Award” shall mean any Award of Performance Shares or Performance Units granted pursuant to Article 10.
1.36 “Performance Criteria” means any performance standards selected by the Committee pursuant to Article 10 with respect to a specific Award.
1.37 “Performance Period” means the period or periods, which may be of overlapping durations, during which each Performance Criteria of a Performance Award or Qualified Performance-Based Compensation shall be measured, as specified in the Agreement relating thereto.
1.38 “Performance Share” means any grant pursuant to Article 10 of a unit valued by reference to a designated number of Shares, which value may be paid to the Grantee by delivery of such property as the Committee shall determine, including cash, Shares, other property, or any combination thereof, upon achievement of such performance goals during the Performance Period as the Committee shall establish at the time of such grant or thereafter.
1.39 “Performance Unit” means any grant pursuant to Article 10 of a unit valued by reference to a designated amount of cash or other property (other than Shares), which value may be paid to the Grantee by delivery of such property as the Committee shall determine, including cash, Shares or any combination thereof, upon achievement of such performance goals during the Performance Period as the Committee shall establish at the time of such grant or thereafter.
1.40 “Plan” means The PNC Financial Services Group, Inc. 2016 Incentive Award Plan, which is the Plan set forth in this document, as amended from time to time.
1.41 “PNC” means The PNC Financial Services Group, Inc. and its Subsidiaries.
1.42 “Prior Plan” means The PNC Financial Services Group, Inc. 2006 Incentive Award Plan, as amended.
1.43 “Prior Plan Award” means an award granted pursuant to the Prior Plan.
1.44 “Qualified Performance-Based Compensation” means any compensation that is intended to qualify as “qualified performance-based compensation” as described in Section 162(m)(4)(C) of the Internal Revenue Code.
1.45 “Related Award” means an Award with which an Option, Share Unit or other Right is granted.
1.46 “Related Option” means an Option granted in connection with a specified Award.
1.47 “Related Share Unit” means a Share Unit granted in connection with a specified Award or by amendment of an outstanding Nonstatutory Stock Option or Restricted Share granted under the Plan or the Prior Plan.
1.48 “Related Right” means a Share Appreciation Right granted in connection with a specified Award or by amendment of an outstanding Nonstatutory Stock Option granted under the Plan.
1.49 “Restricted Share” means a Share awarded pursuant to Article 7.
1.50 “Restricted Share Unit” means a Share Unit awarded pursuant to Article 9.
1.51 “Right Period” means the period during which a Share Appreciation Right may be exercised.
1.52 “SEC” means the United States Securities and Exchange Commission, or any successor agency thereto, and shall include the staff of such commission.
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1.53 “Section 409A” means Section 409A of the Internal Revenue Code.
1.54 “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
1.55 “Separation from Service” and “Separate from Service” mean the Grantee’s death, retirement or other termination of employment or service with PNC that constitutes a “separation from service” within the meaning of Section 409A. A Grantee shall be presumed to have experienced a Separation from Service when the level of bona fide services performed permanently decreases to a level less than twenty percent (20%) of the average level of bona fide services performed during the immediately preceding thirty-six (36) month period or such other applicable period as provided by Section 409A.
1.56 “Service Relationship” means engagement of a Grantee by PNC in any capacity for which the Grantee receives compensation from PNC, including the receipt of compensation as an employee, consultant, independent contractor, officer, director or advisory director.
1.57 “Share” means a share of authorized but unissued Common Stock or a reacquired share of Common Stock, including shares purchased by the Corporation on the open market for purposes of the Plan or otherwise.
1.58 “Share Appreciation Right” means a right to receive a payment based upon the appreciation in value of a Share and that is granted pursuant to Article 8.
1.59 “Share Award” means an award of Common Stock pursuant to Article 7.
1.60 “Share Unit” means right to receive a Share, or an amount based on the value of a Share, pursuant to Article 9.
1.61 “Specified Employee” means a key employee (as defined in Section 416(i) of the Internal Revenue Code without regard to paragraph (5) thereof) of PNC as determined in accordance with Section 409A and the procedures established by the Corporation.
1.62 “Subsidiary” means an entity which is a member of a “controlled group” or under “common control” with the Corporation as determined under Section 414(b) or (c) of the Internal Revenue Code except that an entity shall be deemed to be in a controlled group or under common control with the Corporation for this purpose if the Corporation either directly or indirectly owns at least 50% (or 20% with legitimate business criteria) of the total combined voting power of all classes of stock (or similar interests) of such entity or would otherwise satisfy the definition of service recipient under Section 409A.
1.63 “Writing” means any paper or electronic means of documenting the terms of an Agreement or notice of exercise of an Option hereunder, and as applicable, which satisfies such requirements for formality, authenticity and verification of signature and authority as may be established by the Committee or by those persons responsible for performing administrative functions under the Plan.
The purpose of this Plan is to promote the success and enhance the value of the Corporation by linking the personal interests of Eligible Persons to those of the Corporation’s shareholders and by providing flexibility to PNC in its ability to motivate, attract and retain the services of Directors, officers and employees upon whose judgment, interest and/or special effort are necessary to promote PNC’s long-term growth and financial success.
The Plan shall be administered by the Committee. In this regard, in addition to any other powers granted to the Committee, the Committee shall have the following powers, subject to the express provisions of the Plan:
3.1 to determine in its discretion the Eligible Persons or group of Eligible Persons to whom Awards shall be granted;
3.2 to determine the types of Awards to be granted;
3.3 to determine the number of Awards to be granted to an Eligible Person or to a group of Eligible Persons and the number of Shares (or in the case of Dollar-Denominated Awards, the dollar amount) to be subject to each Award or pool of Awards;
3.4 to determine the terms and conditions of any Award, including, but not limited to, the Option Price, grant price, purchase price, Base Price, any restrictions or limitations on the Award, any schedule for lapse of forfeiture restrictions or restrictions on the exercisability of an Award, and accelerations or waivers thereof, and any provisions related to non-competition and recapture of gain on an Award, based in each case on considerations as the Committee in its sole discretion determines;
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3.5 to determine all other terms and provisions of each Agreement, which need not be identical;
3.6 to construe and interpret the Agreements and the Plan;
3.7 to require, whether or not provided for in the pertinent Agreement, of any Grantee, the making of any representations or agreements that the Committee may deem necessary or advisable in order to comply with, or qualify for advantageous treatment under, applicable securities, tax, or other laws;
3.8 to provide for satisfaction of statutory withholding and a Grantee’s tax and other withholding liabilities and any amounts required to be accounted for to any tax authority arising in connection with the Plan through, without limitation, retention by the Corporation of Shares otherwise issuable on the exercise of, or pursuant to, an Award (provided that the Share amount retained shall not exceed the minimum applicable required withholding rate for federal (including FICA), state, local or non-United States tax or other liability, except as otherwise determined by the Committee as permitted under applicable law and accounting standards), or through delivery of Common Stock to the Corporation by the Grantee under such terms and conditions as the Committee deems appropriate, including but not limited to a Share attestation procedure, or by delivery of a properly executed notice together with irrevocable instructions to a broker to promptly deliver to the Corporation the amount of sale or loan proceeds to pay the tax and other liabilities;
3.9 to make all other determinations and take all other actions necessary or advisable for the management and administration of the Plan, including but not limited to establishing, adopting or revising any rules and regulations as it may deem necessary;
3.10 to delegate to officers or managers of PNC, or other members of the Board, the authority to make Awards to Eligible Persons, to select such Eligible Persons, and to determine such terms and conditions thereof as may be specified in such delegation, from a pool of Awards authorized by the Committee; and
3.11 without limiting the generality of the foregoing, to provide in its discretion in an Agreement:
(i) for an agreement by the Grantee to render services to PNC upon such terms and conditions as may be specified in the Agreement, provided that the Committee shall not have the power under the Plan to commit PNC to employ or otherwise retain any Grantee;
(ii) for restrictions on the transfer, sale or other disposition of Shares issued to the Grantee;
(iii) for an agreement by the Grantee to resell to the Corporation, under specified conditions, Shares issued in connection with an Award;
(iv) for the payment of the Option Price upon the exercise of an Option otherwise than in cash, including, without limitation, by delivery under such terms and conditions as the Committee deems appropriate, including but not limited to a Share attestation procedure, of Common Stock valued at Fair Market Value on the exercise date of the Option, or a combination of cash and Common Stock; or by delivery of a properly executed exercise notice together with irrevocable instructions to a broker to promptly deliver to the Corporation the amount of sale or loan proceeds to pay the Option Price, or to provide for automatic exercise of an Option with an Option Price less than the Fair Market Value per Share of the Corporation’s Common Stock as of the last business day of the applicable term of such Option;
(v) for the deferral of receipt of amounts that otherwise would be distributed upon exercise or payment of an Award, the terms and conditions of any such deferral and any interest or Dividend Equivalent or other payment that shall accrue with respect to deferred distributions, subject to the provisions of Article 14;
(vi) for the effect of a “change of control,” as defined in the Agreement, of the Corporation on the rights of a Grantee with respect to any Award; and
(vii) for Dividend Equivalents as, or in connection with, an Award, under such terms and conditions as the Committee deems appropriate, including whether (a) such Dividend Equivalents shall be paid currently or shall be deferred; (b) deferred Dividend Equivalents shall accrue interest; (c) payout of Dividend Equivalents shall be subject to service and/or performance conditions; and (d) Dividend Equivalents shall be accrued as a cash obligation or converted to Share Units. In no event shall Dividend Equivalents be granted with respect to Options or Share Appreciation Rights. In addition, Dividend Equivalents granted with respect to a Performance Award shall not be distributed during the Performance Period or to the extent any such Award is otherwise unearned. Notwithstanding the foregoing, any deferral of the payment of a Dividend Equivalent shall comply with Section 409A of the Internal Revenue Code.
Notwithstanding the foregoing, certain operational functions under the Plan shall be performed by the CEO or Chief Human Resources Officer, or any of their respective designees; such functions may include, without limitation, documenting and communicating Awards made hereunder, maintaining records concerning such Awards, and satisfying (or assisting Grantees in satisfying) any applicable reporting, disclosure, tax filing or withholding, or other legal requirements concerning Awards.
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Each member of the Committee is entitled to, in good faith, rely or act upon any report or other information furnished to that member by any officer or other employee of PNC, PNC’s independent registered public accounting firm or other certified public accountants, or any executive compensation consultant or other professional retained by the Committee, the CEO or the Chief Human Resources Officer, or any of their respective designees, to assist in the administration of the Plan.
Any determinations or actions made or taken by the Committee pursuant to this Article shall be final, conclusive and binding on the Grantee and the Grantee’s beneficiaries and any other person having or claiming an interest under an Award and/or the Plan.
Subject to the terms of the Plan and the applicable Agreement, the Committee may grant one or more Awards to Eligible Persons; provided, however, that Incentive Stock Options may not be granted to Directors.
5. | SHARES AVAILABLE UNDER THE PLAN. |
5.1 Subject to adjustment under Article 15, the maximum aggregate number of Shares available for issuance under the Plan shall be no more than the sum of (x) 30,000,000 and (y) the number of Shares that are authorized, but not issued (including such Shares subject to outstanding Awards) under the Prior Plan as of the Effective Date. The aggregate number of Shares available with respect to awards under the Plan shall be reduced by one Share for each Share to which an Award relates; provided, however, that each Share issued pursuant to an Award, other than Options or Share Appreciation Rights, shall reduce the aggregate plan limit by 2.5 Shares.
(i) The Plan serves as the successor to the Prior Plan, and no further Prior Plan Awards shall be made after the Effective Date. However, all awards under the Prior Plan outstanding on the Effective Date shall continue in full force and effect in accordance with their terms, and no provision of this Plan shall be deemed to affect or otherwise modify the rights or obligations of the holders of those Prior Plan Awards with respect to their acquisition of shares of Common Stock thereunder.
(ii) To the extent any Prior Plan Awards outstanding under the Prior Plan on the Effective Date are forfeited or expire or terminate unexercised, the number of Shares subject to those forfeited, expired or terminated awards at the time of forfeiture, expiration or termination shall be added to the share reserve under this Plan and accordingly shall be available for issuance hereunder.
5.2 | Award Limitations Under the Plan. |
(i) Grants of Incentive Stock Options under the Plan may not be made with respect to more than 1,000,000 Shares during any calendar year, provided that such limit only applies to the extent consistent with applicable regulations relating to Incentive Stock Options under the Internal Revenue Code.
(ii) Subject to adjustment as provided in Article 15, the maximum number of Shares with respect to which Awards may be granted to any Grantee during a calendar year shall be 2,000,000 Shares, and no Grantee may be granted in any one calendar year: (a) Stock Options or Share Appreciation Rights for more than 2,000,000 Shares; (b) Qualified Performance-Based Compensation (payable in Shares), other than Stock Options or Share Appreciation Rights, for more than 1,000,000 Shares (based on a target Award level on the Grant Date) or (c) Qualified Performance-Based Compensation (payable in cash by the terms of the Award) for more than an amount equal to 1,000,000 Shares (with the cash equivalent determined based on the Fair Market Value per Share, based on a target Award level, on the Grant Date).
(iii) Notwithstanding anything in this Plan to the contrary and subject to adjustment pursuant to Article 15 hereof, no Director may be granted, in any one calendar year, Awards specifically granted under this Plan with an aggregate maximum value, calculated as of their respective grant dates, of more than $500,000.
(iv) The limitations contained in this Section 5.2 shall apply only with respect to Awards granted under this Plan, and limitations on awards granted under any other incentive plan maintained by the Corporation will be governed solely by the terms of such other plan.
5.3Shares Added Back to Reserve. If (i) an Award lapses, expires, terminates, or is cancelled without the Shares underlying the Award being issued (or any portion thereof), (ii) it is determined during or at the conclusion of the term of an Award that all or some portion of the Shares underlying the Award may not be issued on the basis that the conditions for such issuance were not or shall not be satisfied, (iii) any Award (or portion thereof) is settled for cash, (iv) Shares to be issued pursuant to an Award are forfeited, or (v) Shares are issued pursuant to an Award and the Corporation subsequently reacquires such Shares pursuant to rights reserved upon the issuance of such Shares, then, in all such cases, such Shares shall be re-credited to the Plan’s reserve (in the same amount as such Shares depleted the reserve); provided, however, that Shares
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re-credited to the Plan pursuant to clause (v) may not increase the number of Shares which may be issued pursuant to Incentive Stock Options.
5.4Shares Not Added Back to Reserve. Notwithstanding the foregoing, in no event shall the following Shares be re-credited to the Plan’s reserve: Shares (i) delivered in payment of the Option Price, Base Price or other exercise price of an Award; (ii) delivered to or withheld by the Corporation to satisfy Federal, state, local or non-United States tax or other withholding obligations; (iii) purchased by the Corporation using proceeds from Option exercises; and (iv) not issued or delivered as a result of a net settlement of an outstanding Option or Share Appreciation Right.
5.5Cash-Only Awards. Awards that do not entitle the Grantee to receive or purchase Shares shall not be counted against the aggregate number of Shares available for Awards under the Plan.
5.6Substitute Awards Relating to Acquired Entities Awards may be granted under the Plan in substitution for an award of a company or business acquired by PNC by virtue of the Corporation’s assumption of the plan or arrangement of the acquired company or business, and any Shares issued or issuable in connection with such substitution shall not be counted against the number of Shares reserved under the Plan.
6.1 Subject to the provisions of the Plan, the Committee is authorized to grant Incentive Stock Options and/or Nonstatutory Stock Options to any employee of PNC (or a parent or subsidiary of PNC within the meaning of Section 424(e) and (f) of the Internal Revenue Code) who is an Eligible Person, and to grant Nonstatutory Stock Options to any Director.
6.2 All Options shall be evidenced by an Agreement. All Agreements granting Incentive Stock Options shall contain a statement that the Option is intended to be an Incentive Stock Option; if no such statement is included in the Agreement, or if the Agreement affirmatively states that the Option is intended to be a Nonstatutory Stock Option, the Option shall be a Nonstatutory Stock Option.
6.3 The Option Period shall be determined by the Committee and specifically set forth in the Agreement, provided that an Option shall not be exercisable after ten years from the Grant Date (or five years from the Grant Date in the case of Incentive Stock Options granted to 10% Shareholders) and shall not be exercisable until the expiration of at least 12 months from the Grant Date, except that this limitation need not apply in the event of the death or Disability of the Grantee or (other than with respect to Grantees who are Non-Exempt Employees) as otherwise permitted by the Agreement.
6.4 All Incentive Stock Options granted under the Plan should comply with the provisions of Section 422 of the Internal Revenue Code and with all other applicable rules and regulations, except to the extent the Committee determines otherwise. If an Option that is intended to be an Incentive Stock Option fails to meet the requirements thereof, the Option shall automatically be treated as a Nonstatutory Stock Option to the extent of such failure. If the aggregate Fair Market Value of the Shares subject to all Incentive Stock Options granted to a Grantee (as determined on the date of grant of each such Option) that become exercisable during a calendar year exceeds the dollar limitation set forth in Section 422(d) of the Internal Revenue Code, then such Incentive Stock Options shall be treated as Nonstatutory Stock Options to the extent such limitation is exceeded.
6.5 The Option Price for any Option shall not be less than the Fair Market Value of a Share on the Grant Date (or 110% of the Fair Market Value in the case of an Incentive Stock Option granted to a 10% Shareholder).
6.6 The Committee shall determine the methods by which the Option Price of an Option may be paid and the form or forms of payment that may be permitted.
6.7 All other terms of Options granted under the Plan shall be determined by the Committee in its sole discretion.
6.8 The Committee may provide in the Agreement evidencing the grant of an Option that the Committee, in its sole discretion, shall have the right to substitute a Share Appreciation Right for such Option at any time prior to or upon exercise of such Option; provided, however, that the substituted Share Appreciation Right shall be exercisable with respect to the same number of Shares for which the Option being replaced would have been exercisable, the Base Price for the substituted Share Appreciation Right shall be the same as the Option Price for the Option being replaced, and the Right Period shall be the same term as the Option Period for the Option being replaced.
6.9 Notwithstanding anything in this Plan to the contrary, other than in connection with capital adjustments as described in Article 15 or in connection with a Corporate Transaction, neither the Committee nor any other person may, without obtaining shareholder approval, (i) amend the terms of outstanding Options to reduce the Option Price of such outstanding Options; (ii) cancel outstanding Options in exchange for Options with an Option Price that is less than the Option Price of the original Options; (iii) cancel
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outstanding Options with an Option Price above the current Share price in exchange for cash or other securities; or (iv) take any other action with respect to an Option that would be treated as a repricing under the rules and regulations of the principal securities exchange on which the Shares are traded. In addition, the Committee may not make a grant of an Option with a grant date that is effective prior to the date the Committee takes action to approve such Award.
7. | SHARE AWARDS AND RESTRICTED SHARES. |
7.1 Subject to the provisions of the Plan, the Committee is authorized to grant Share Awards to any Eligible Person in such amounts and subject to such terms and conditions as determined by the Committee. All Share Awards shall be evidenced by an Agreement.
7.2 Shares issued pursuant to a Share Award may be issued for consideration or no consideration (except as required by applicable law), and may be subject to restrictions or no restrictions, as determined by the Committee. A Share Award that is issued subject to restrictions is referred to in this Plan as a Restricted Share. The Committee may establish conditions under which restrictions on Restricted Shares shall lapse over time or according to such other criteria as the Committee deems appropriate.
7.3 Restricted Shares shall be subject to such restrictions on transferability and other restrictions as the Committee may impose (including, without limitation, restrictions on the right to vote Restricted Shares or the right to receive dividends on Restricted Shares), subject to applicable law. These restrictions may lapse separately or in combination at such times, pursuant to such circumstances, in such installments, or otherwise, as the Committee determines at the time of the grant of an Award or thereafter, provided that no restrictions shall lapse prior to the expiration of 12 months from the Grant Date, except that this limitation need not apply in the event of the death or Disability of the Grantee or (other than with respect to Grantees who are Non-Exempt Employees) as otherwise permitted by the Agreement.
7.4 Except as otherwise determined by the Committee at the time of the grant of an Award or thereafter, upon termination of employment or service with PNC during the applicable restriction period, Restricted Shares that are at that time subject to restrictions shall be forfeited.
7.5 Restricted Shares granted pursuant to the Plan may be evidenced in such manner as the Committee determines. If certificates representing Restricted Shares are registered in the name of the Grantee, those certificates must bear an appropriate legend referring to the terms, conditions and restrictions applicable to such Restricted Shares, and the Corporation may, at its discretion, retain physical possession of certificates until such time as all applicable restrictions lapse.
7.6 If a Grantee makes an election pursuant to Section 83(b) of the Internal Revenue Code with respect to a Share Award or Restricted Shares, the Grantee shall file, within 30 days following the date of grant, a copy of such election with PNC and with the Internal Revenue Service in accordance with the regulations under Section 83(b) of the Internal Revenue Code.
8. | SHARE APPRECIATION RIGHTS. |
8.1 Subject to the provisions of the Plan, the Committee may grant Share Appreciation Rights to any Eligible Person, upon such terms and conditions as the Committee deems appropriate under this Article 8.
8.2 A Share Appreciation Right may be granted under the Plan:
(i) in connection with, and at the same time as, the grant of another Award to an Eligible Person;
(ii) by amendment of an outstanding Nonstatutory Stock Option granted under the Plan to an Eligible Person; or
(iii) independently of any Award granted under the Plan.
A Share Appreciation Right granted under clause (i) or (ii) of the preceding sentence is a Related Right. A Related Right may, in the Committee’s discretion, apply to all or a portion of the Shares subject to the Related Award.
8.3 A Share Appreciation Right may be exercised in whole or in part as provided in the Agreement, and, subject to the provisions of the Agreement, entitles its Grantee to receive, without any payment to the Corporation (other than required tax or other withholding amounts), either cash or that number of Shares (equal to the highest whole number of Shares), or a combination thereof, in an amount or having a Fair Market Value determined as of the date such Award is exercised not to exceed the number of Shares subject to the portion of the Share Appreciation Right exercised multiplied by an amount equal to the excess of the Fair Market Value on the exercise date of the Share Appreciation Right over the Base Price. The Base Price shall not be less than the Fair Market Value as of the Grant Date.
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8.4 The Right Period shall be determined by the Committee and specifically set forth in the Agreement, provided, however:
(i) a Share Appreciation Right may not be exercised until the expiration of at least 12 months from the Grant Date, except that this limitation need not apply in the event of the death or Disability of the Grantee or (other than with respect to Grantees who are Non-Exempt Employees) as otherwise permitted by the Agreement;
(ii) a Share Appreciation Right shall expire no later than the earlier of (A) ten years from the Grant Date, or (B) in the case of a Related Right, the expiration of the Related Award; and
(iii) a Share Appreciation Right that is a Related Right may be exercised only when and to the extent the Related Award is exercisable.
8.5 Notwithstanding anything in this Plan to the contrary, other than in connection with capital adjustments as described in Article 15 or in connection with a Corporate Transaction, neither the Committee nor any other person may, without obtaining shareholder approval, (i) amend the terms of outstanding Share Appreciation Rights to reduce the Base Price of such outstanding Share Appreciation Rights; (ii) cancel outstanding Share Appreciation Rights in exchange for Share Appreciation Rights with an Base Price that is less than the Base Price of the original Share Appreciation Rights; (iii) cancel outstanding Share Appreciation Rights with an Base Price above the current Share price in exchange for cash or other securities; or (iv) take any other action with respect to a Share Appreciation Right that would be treated as a repricing under the rules and regulations of the principal securities exchange on which the Shares are traded. In addition, the Committee may not make a grant of a Share Appreciation Right with a grant date that is effective prior to the date the Committee takes action to approve such Award.
9. | SHARE UNITS AND RESTRICTED SHARE UNITS. |
9.1 Subject to the provisions of the Plan, the Committee may grant Share Units to any Eligible Person, upon such terms and conditions as the Committee deems appropriate under this Article 9. Each Share Unit shall represent the right of the Grantee to receive a Share or an amount in cash based on the value of a Share upon such terms and conditions as the Committee deems appropriate.
9.2 Share Units may be issued for consideration or no consideration (except as required by applicable law) and may be subject to restrictions or no restrictions, as determined by the Committee. A Share Unit that is issued subject to restrictions is referred to as a Restricted Share Unit. The Committee may establish conditions under which restrictions on Restricted Share Units shall lapse over time or according to such other criteria as the Committee deems appropriate.
9.3 Share Units may be granted under the Plan:
(i) in connection with, and at the same time as, the grant of another Award to an Eligible Person;
(ii) by amendment of an outstanding Nonstatutory Stock Option or Restricted Share granted under the Plan or the Prior Plan to an Eligible Person; or
(iii) independently of any Award granted under the Plan.
A Share Unit granted under subparagraph (i) or (ii) of the preceding sentence is a Related Share Unit. A Related Share Unit may, in the Committee’s discretion, apply to all or a portion of the Shares subject to the Related Award. A Share Unit may not be granted in connection with, or by amendment to, an Incentive Stock Option.
9.4 Share Units may be paid at the end of a specified period, or payment may be deferred to a date authorized by the Committee in accordance with the deferral requirements set forth in Section 409A of the Internal Revenue Code, to the extent applicable, provided that no restrictions shall lapse on Restricted Share Units prior to the expiration of at least 12 months from the Grant Date (except that this limitation need not apply in the event of the death or Disability of the Grantee or as otherwise permitted by the Agreement).
9.5 Payment with respect to Share Units shall be made in cash, in Shares, or in a combination of the two, as determined by the Committee and set forth in the Agreement. The Agreement shall specify the maximum number of Shares (which may be determined by a formula) that shall be paid under the Share Units.
9.6 The Committee shall determine in the Agreement under what circumstances a Grantee may retain Restricted Share Units after termination of the Grantee’s employment or service with PNC, and the circumstances under which Restricted Share Units may be forfeited.
10.1 The Committee is authorized to grant Performance Awards to any Eligible Person payable in cash, Shares, or a combination thereof, on terms and conditions established by the Committee. The amount, terms and conditions of any Performance Award granted under the Plan shall be set forth in an Agreement which
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shall contain provisions determined by the Committee. The Committee may provide in the Agreement that Awards shall be payable, in whole or in part, in the event of the Grantee’s death or Disability, a change of control or under other circumstances consistent with the Treasury regulations and rulings under Section 162(m) of the Internal Revenue Code.
10.2 The performance goals to be achieved during any Performance Period shall be determined by the Committee upon the grant of each Performance Award, may be based upon Performance Criteria or any other criteria that the Committee, in its sole discretion, may determine, and may be particular to an Eligible Person or to the department, branch, Subsidiary or other unit in which the Eligible Person works, or may be based on the performance of the Corporation or of a specified portion or portions of PNC generally. The length of the Performance Period shall be determined by the Committee upon the grant of each Performance Award and shall be at least 12 months in duration, except as otherwise specified in the Agreement.
10.3 The Committee shall determine whether, and the extent to which, the applicable performance goals have been achieved or satisfied and the amount of the Performance Awards that shall be distributed based upon such determination. Except as provided in an Agreement, Performance Awards shall be distributed only after the end of the relevant Performance Period. Performance Awards may be paid in a lump sum or in installments or, in accordance with procedures established by the Committee, on a deferred basis.
10.4 The Committee may determine that an Award or Awards granted to an Eligible Person is or are Qualified Performance-Based Compensation. To the extent an award of Qualified Performance-Based Compensation is made, no such Award may be made as an alternative to another Award that is not also designated as Qualified Performance-Based Compensation.
10.5 (i) When Awards, other than Options or Share Appreciation Rights, are intended to be Qualified Performance-Based Compensation, the Committee shall establish in writing (a) the Performance Criteria that must be met, (b) the Performance Period during which performance shall be measured, (c) the maximum amounts that may be paid if the Performance Criteria are met, and (d) any other conditions that the Committee deems appropriate and consistent with the Plan and the requirements of Section 162(m) of the Internal Revenue Code for “qualified performance-based compensation.”
(ii) For Qualified Performance-Based Compensation, the Performance Criteria shall satisfy the requirements for “qualified performance-based compensation” under Section 162(m) of the Internal Revenue Code, including the requirement that the achievement of the goals be substantially uncertain at the time they are established and that the Performance Criteria be established in such a manner that a third party with knowledge of the relevant facts could determine whether and to what extent the Performance Criteria have been met.
(iii) The Committee shall not have discretion to increase the maximum amount of compensation pursuant to an award of Qualified Performance-Based Compensation that is payable upon achievement of the designated Performance Criteria, but the Committee may in its discretion reduce the amount of such compensation that is payable to an Eligible Person upon achievement of the designated Performance Criteria.
10.6 (i) The following business or financial performance metrics may form the basis of the Performance Criteria selected by the Committee for Qualified Performance-Based Compensation: (a) earnings measures (including earnings per share, net income, net interest income, non-interest income) or earnings growth measures; (b) revenue; (c) cash flow; (d) market or market-related measures (including stock price, dividends or dividend yield, total shareholder return, market to book value, price / earnings ratio); (e) improvement or maintenance of financial or credit ratings; (f) return or use of capital measures (including return on assets, equity or investment); (g) other capital or liquidity measures or objectives (including measures or objectives related to economic capital, cost of capital); (h) other measures of operating or profitability margin or performance (including net interest margin, operating or profit margin, productivity ratios); (i) risk adjusted profitability measures; (j) regulatory compliance (including Tier 1 capital ratios or Basel III objectives); (k) internal or external regulatory capital, liquidity, risk or other regulatory-related requirements, expectations, goals or objectives; (l) satisfactory internal or external audits; (m) achievement of balance sheet, income statement, or other financial objectives (including objectives related to capital management, assets, loans, charge-offs, allowance for loan and lease losses, other reserves, reduction of nonperforming assets, asset quality levels, investments, deposits, deposit mix, interest sensitivity gap levels); (n) expense measures (including objectives related to expense management, operating efficiencies, efficiency ratios, non-interest expense); (o) on or off-balance sheet portfolio objectives (including those related to servicing portfolios, securitizations, assets under administration or management, loan originations or sales); (p) achievement of asset quality objectives; (q) achievement of credit quality objectives; (r) achievement of risk management objectives; (s) achievement of strategic objectives or goals (including workforce objectives or goals); (t) technology or innovation goals or objectives; (u) consummation of acquisitions, dispositions, projects or
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other specific events or transactions; (v) acquisition integration or disposition management goals or objectives; (w) product, customer or market-related objectives (including sales, product revenues, revenue mix, product growth, customer growth, number or type of customer relationships, customer satisfaction, cross-selling goals, associate satisfaction, market share, branding); (x) and any other objective goals established by the Committee. Where more specific metrics are listed within categories herein, they are intended to be illustrative and are not to be construed as limitations on the more general metrics.
(ii) The Performance Criteria under an award of Qualified Performance-Based Compensation may be applied singly or in combination and may apply to the individual, a Subsidiary, a business unit or portion of PNC, the Corporation, or PNC as a whole, or a combination thereof.
(iii) The Performance Criteria under an award of Qualified Performance-Based Compensation may be measured annually or for a shorter or longer performance period, and may be measured on an absolute basis or relative to an established target, to previous years or other comparable period or periods’ results, to a designated comparison group or groups, or to one or more designated external or internal indices or benchmarks, in each case as or in the manner specified by the Committee.
(iv) The Committee may specify that the Performance Criteria under an award of Qualified Performance-Based Compensation shall include adjustments to include or exclude the effect of certain events, including any of the following events: litigation or claim judgments or settlements; changes in tax law, accounting principles or other such laws or provisions affecting reported results; severance, contract termination and other costs related to exiting certain business activities; gains or losses from the disposition of businesses or assets or from the early extinguishment of debt; or charges for unusual or non-recurring items of loss or expense, such as expenses related to goodwill and other intangible assets, stock offerings, stock repurchases and loan loss provisions.
10.7 The Committee shall establish the Performance Criteria under an award of Qualified Performance-Based Compensation in writing either before the beginning of the Performance Period or during a period ending no later than the earlier of (i) 90 days after the beginning of the Performance Period or (ii) the date on which 25% of the Performance Period has been completed, or such other date as may be required or permitted under applicable regulations under Section 162(m) of the Internal Revenue Code.
10.8 The Committee shall certify the results for the Performance Period under an award of Qualified Performance-Based Compensation to all affected Grantees after the Corporation determines the financial and other relevant performance results for the Performance Period. The Committee shall determine the amount, if any, to be paid pursuant to each Award based on the achievement of the Performance Criteria under an award of Qualified Performance-Based Compensation and the terms of each Agreement.
11. | OTHER SHARE-BASED AWARDS |
The Committee may grant Other Share-Based Awards, which are Awards other than those described in Articles 6 through 10 of the Plan, including Dividend Equivalents, to any Eligible Person on such terms and conditions as the Committee determines, provided that the number of OtherShare-Based Awards granted to an Eligible Person during a calendar year shall not exceed the applicable limitations set forth in Article 5 when aggregated with other applicable Awards made to such Eligible Person during that calendar year. Other Share-Based Awards may be awarded subject to the achievement of Performance Criteria or other conditions and may be payable in cash, Shares or any combination of the foregoing, as the Committee determines.
12. | DOLLAR-DENOMINATED AWARDS. |
The Committee is authorized to grant Dollar-Denominated Awards entitling Eligible Persons to receive a specified dollar amount (which may be determined by a formula) based upon the achievement of specified Performance Criteria or other conditions, provided that the amount of any Dollar-Denominated Award granted to an Eligible Person during a calendar year shall not exceed the applicable limitations set forth in Article 5 when aggregated with other applicable Awards made to such Eligible Person during that calendar year. The Committee shall determine the terms and conditions of such Awards, which may be payable in cash, Shares or any combination of the foregoing, as the Committee determines.
13. | EXERCISE; PAYMENT OF WITHHOLDING TAXES. |
(i)Exercise of an Award. An Award that is exercisable by the Grantee may, subject to the provisions of the Agreement under which it was granted, be exercised in whole or in part by the delivery to the Corporation or its designated agent of a Writing in such form as the Committee or its designated agent may prescribe. The exercise, however, shall not be effective until the Corporation or its designated agent has received such Writing and shall be subject to receipt by the Corporation of payment of any applicable Option Price or Base Price, if applicable, calculation by the Corporation of the applicable taxes and other amounts required to be withheld or accounted for to any tax authority, and receipt by the Corporation of payment for any such applicable taxes and amounts.
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(ii)Required Withholdings. All Awards under the Plan shall be subject to applicable federal (including FICA), state, local and non-United States tax and other amounts required to be withheld or accounted for to any tax authority. The Corporation is authorized to withhold from any Award granted, any payment relating to an Award under the Plan, including from a distribution of Shares, or any payroll or other payment to a Grantee, amounts required to be withheld or accounted for and other taxes due or potentially payable in connection with any transaction involving an Award, and to take such other action as the Committee may deem advisable to enable the Corporation and the Grantee to satisfy obligations for the payment of such amounts and other tax obligations relating to any Award.
If a Grantee so elects in accordance with the terms of an Agreement, the Grantee may defer any or all of an amount otherwise payable in connection with an Award in accordance with the provisions of a deferred compensation plan maintained by PNC, provided that:
(i) the Grantee makes such election by delivering to the Corporation written notice of such election, at such time and in such form as the Committee may from time to time prescribe in accordance with the deferral requirements set forth in Section 409A of the Internal Revenue Code;
(ii) such election shall be irrevocable;
(iii) such deferred payment shall be made in accordance with the provisions of such deferred compensation plan; and
(iv) the terms of the deferred compensation plan and the election to defer under this Plan comply with Section 409A of the Internal Revenue Code.
Other than in the event of a change of control, which treatment shall be at the discretion of the Committee as provided in the Agreement, if a Corporate Transaction occurs prior to the time, if any, that outstanding Awards are settled, paid or exercised, the Committee or its delegate shall make those adjustments, if any, in (i) the number and class of Shares subject to each outstanding Award, (ii) the Option Price, Base Price or purchase price for any Award using such a price, (iii) the aggregate number and class of Shares for which grants of Awards thereafter may be made or in which Awards may be paid, (iv) the Share-based limits provided for in Article 5 or (v) any other aspect of any Award, in each case, as the Committee in its sole discretion deems appropriate to reflect such Corporate Transactions, such that the rights of a Grantee are neither enlarged nor diminished as a result of such Corporate Transactions, including without limitation (x) measuring the value per share unit of any Award authorized for payment to Grantee by reference to the per share value of the consideration payable to a common shareholder of the Corporation in connection with such Corporate Transactions and (y) authorizing payment of the entire value of any Award authorized for payment to Grantee to be paid in cash. All determinations hereunder shall be made by the Committee or its delegate in its sole discretion and shall be final, binding and conclusive for all purposes on all parties, including without limitation Grantee.
16. | TERMINATION OR AMENDMENT. |
16.1 The Board or the Committee may amend, alter or terminate this Plan in any respect, at any time; provided, however, that, after this Plan has been approved by the shareholders of the Corporation, no amendment, alteration or termination of this Plan shall be made by the Board or the Committee without approval of (i) the Corporation’s shareholders to the extent shareholder approval of the amendment is required by applicable law or regulations or the requirements of the principal exchange or interdealer quotation system on which the Common Stock is listed or quoted, and (ii) each affected Grantee if such amendment, alteration or termination would adversely affect, in a material way, his or her rights or obligations under any grant or award made prior to the date of such amendment, alteration or termination except as otherwise permitted under Articles 14, 17 and 20.
16.2 The effective date of any amendment to the Plan shall be the date specified by the Board or Committee, as applicable. Any amendments to the Plan requiring shareholder approval pursuant to Section 16.1 are subject to approval by vote of the shareholders of the Corporation within 12 months after their adoption by the Board or the Committee. Subject to that approval, any such amendments are effective as of the date on which they are adopted by the Board or the Committee. Awards may be granted or awarded prior to shareholder approval of amendments, but each Award requiring such amendments shall be subject to the approval of the amendments by the shareholders. The date on which any such Award is made prior to shareholder approval of the amendment shall be the Grant Date for all purposes of the Plan as if the Award had not been subject to approval. No Award granted subject to shareholder approval of an amendment may be exercised prior to obtaining such shareholder approval, and any dividends payable thereon are subject to forfeiture if such shareholder approval is not obtained.
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17. | MODIFICATION, EXTENSION AND RENEWAL OF AWARDS. |
17.1 Subject to the terms and conditions of Section 409A and Section 424 of the Internal Revenue Code and the Plan and within the limitations of the Plan, the Committee may modify, extend or renew outstanding Awards, or accept the surrender of outstanding Awards (to the extent not theretofore exercised where applicable) granted under the Plan or under any other plan of PNC or a company or similar entity acquired by PNC, and authorize the granting of new Awards pursuant to the Plan in substitution therefor (to the extent not theretofore exercised where applicable), and the modified, extended, renewed or substituted Awards may have any provisions that are authorized by the Plan; provided, however, that unless approved by the shareholders of the Corporation, a modified, extended, renewed or substituted Option or Share Appreciation Right Award may not specify a lower Option Price or Base Price than the Option or Share Appreciation Right that is being modified, extended, renewed or replaced. Subject to the terms and conditions and within the limitations of the Plan, the Committee may modify the terms of any outstanding Agreement. Notwithstanding the foregoing, however, no modification of an Award granted under the Plan shall (i) without the consent of the Grantee, adversely affect, in a material manner, the rights or obligations of the Grantee except as otherwise permitted under Articles 14, 17 or 20 or as may be necessary for the Award to qualify as qualified performance-based compensation as provided under Article 10 or (ii) reduce the Option Price or Base Price of an Award where applicable. Adjustments pursuant to Article 15 are not applicable.
17.2 The Committee may make adjustments to the terms and conditions of, and any Performance Criteria included in, Awards in recognition of unusual or non-recurring events (including, without limitation, the events described in Article 15) affecting the Corporation or financial statements of the Corporation or of changes in applicable laws, regulations, or accounting principles, whenever the Committee determines that such adjustments are appropriate to prevent unintended dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan. The determination of the Committee as to the foregoing adjustments, if any, shall be conclusive and binding upon Grantees, the Corporation, and all other interested persons.
Unless sooner terminated by the Board or the Committee pursuant to Article 17, the Plan shall terminate on April 25, 2026, provided that the Plan shall terminate on March 3, 2026 with respect to Incentive Stock Options, and no new Awards may be granted after the applicable termination date. The termination shall not affect the validity of any Awards outstanding on the date of termination, including any rights in accordance with the applicable Agreement to make new grants in substitution for a Restricted Share or Restricted Share Unit, or a portion thereof, that is forfeited.
19. | INDEMNIFICATION OF COMMITTEE. |
In addition to such other rights of indemnification as they may have as directors or as members of the Committee, the members of the Committee and its delegates shall be indemnified by the Corporation against the reasonable expenses, including attorneys’ fees, actually and reasonably incurred in connection with the defense of any action, suit or proceeding, or in connection with any appeal therein, to which they or any of them may be a party by reason of any action taken or failure to act under or in connection with the Plan or any Awards granted hereunder, and against all amounts reasonably paid by them in settlement thereof or paid by them in satisfaction of a judgment in any such action, suit or proceeding, if such members acted in good faith and in a manner which they believed to be in, and not opposed to, the best interests of the Corporation.
20. | COMPLIANCE WITH SECTION 409A OF THE CODE. |
20.1 Notwithstanding any provision of the Plan or an Agreement to the contrary, if any Award or benefit provided under this Plan is subject to the provisions of Section 409A, the provisions of the Plan and any applicable Agreement shall be administered, interpreted and construed in a manner necessary to comply with Section 409A or an exception thereto (or disregarded to the extent such provision cannot be so administered, interpreted or construed). The following provisions shall apply, as applicable:
(i) If a Grantee is a Specified Employee and a payment subject to Section 409A (and not excepted therefrom) is due as a result of the Grantee’s Separation from Service, such payment shall be delayed for a period of six (6) months after the date the Grantee Separates from Service (or, if earlier, the death of the Grantee). Any payment that would otherwise have been due or owing during such six-month period shall be paid immediately following the end of the six-month period in the month following the month containing the six-month anniversary of the date of termination unless another compliant date is specified in the applicable Agreement.
(ii) For purposes of Section 409A, and to the extent applicable to any Award or benefit under the Plan, it is intended that distribution events qualify as permissible distribution events for purposes of Section 409A
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and shall be interpreted and construed accordingly. With respect to payments subject to Section 409A, the Corporation reserves the right to accelerate and/or defer any payment to the extent permitted and consistent with Section 409A. Whether a Grantee has Separated from Service or employment shall be determined based on all of the facts and circumstances and, to the extent applicable to any Award or benefit, in accordance with the guidance issued under Section 409A.
(iii) The Committee, in its discretion, may specify the conditions under which the payment of all or any portion of any Award may be deferred until a later date. Deferrals shall be for such periods or until the occurrence of such events, and upon such terms and conditions, as the Committee shall determine, in its discretion, in accordance with the provisions of Section 409A, the regulations and other binding guidance promulgated thereunder; provided, however, that no deferral shall be permitted with respect to Options and other stock rights subject to Section 409A. An election shall be made by filing an election with the Corporation (on a form provided by the Corporation) on or prior to December 31st of the calendar year immediately preceding the beginning of the calendar year (or other applicable service period) to which such election relates (or at such other date as may be specified by the Committee to the extent consistent with Section 409A) and shall be irrevocable for such applicable calendar year (or other applicable service period).
(iv) The grant of Options and other Share rights subject to Section 409A shall be granted under terms and conditions consistent with Treas. Reg. § 1.409A-1(b)(5) such that any such Award does not constitute a deferral of compensation under Section 409A.
21.1 The establishment of the Plan shall not confer upon any Eligible Person any legal or equitable right against the Corporation, any Subsidiary or the Committee, except as expressly provided in the Plan.
21.2 All grants and awards under the Plan are subject to the condition subsequent that an appropriate Agreement be signed by the parties.
21.3 Neither the Plan nor any Agreement constitutes inducement or consideration for the employment or retention of any Eligible Person, nor are they a contract of employment or retention for a specific term between the Corporation or any Subsidiary and any Eligible Person. Participation in the Plan shall not give an Eligible Person any right to be retained in the service of the Corporation or any Subsidiary as an employee, a director or otherwise.
21.4 The Corporation and its Subsidiaries may assume options, warrants, or rights to purchase shares issued or granted by other corporations whose shares or assets are acquired by the Corporation or its Subsidiaries, or which are merged into or consolidated with the Corporation or its Subsidiaries. Neither the adoption of this Plan, nor its submission to the shareholders, shall be taken to impose any limitations on the powers of the Corporation or its affiliates to issue, grant, or assume options, warrants, or rights otherwise than under this Plan, or to adopt other share option or restricted share plans or other incentives, or to impose any requirement of shareholder approval upon the same.
21.5 Except as the Committee may otherwise provide, or as may otherwise be required by a deferral election pursuant to Article 14, the interests of any Eligible Person under the Plan are not subject to the claims of creditors and no Award and no right under any such Award may be sold, transferred, pledged, assigned or otherwise alienated or hypothecated, other than by will or by the laws of descent or distribution. Each Award or right under any Award shall be exercisable during the Grantee’s lifetime only by the Grantee, or if permissible under applicable law, by the Grantee’s guardian, legal representative, or, at the discretion of the Committee, to the Grantee’s designated beneficiary.
21.6 The Board or the Committee may, in its sole discretion, delegate authority hereunder not already delegated by the terms hereof, including but not limited to delegating authority to select Eligible Persons, to grant Awards, to establish terms and conditions of Awards, or to amend, manage, administer, interpret, construe or vary the Plan or any Awards or Agreements, to the extent permitted by applicable law or administrative or regulatory rule.
21.7 In order to facilitate the making of any grant or combination of grants under this Plan, the Committee may, without amending the Plan, provide for such special terms for awards to Grantees who are foreign nationals, who are employed by the Corporation or any Subsidiary outside of the United States of America, who provide services to PNC under an agreement with a foreign nation or agency, or as the Committee may consider necessary or appropriate. Moreover, the Committee may approve such supplements to or amendments, restatements, or alternative versions of this Plan (including, without limitation, sub-plans) as it may consider necessary or appropriate for such purposes as the Committee deems appropriate, without thereby affecting the terms of this Plan as in effect for any other purpose, and the Secretary or other appropriate officer of the Corporation may certify any such document as having been approved and
THE PNC FINANCIAL SERVICES GROUP, INC. - 2016 Proxy Statement 117
adopted in the same manner as this Plan. No such special terms, supplements, amendments or restatements, however, shall include any provisions that are inconsistent with the terms of this Plan as then in effect unless this Plan could have been amended to eliminate such inconsistency without further approval by the shareholders of the Corporation.
21.8 Each Grantee agrees to reimburse the Corporation with respect to any Award granted under the Plan (or any Prior Plan Award) to the extent required by any clawback, adjustment or recoupment policy of the Corporation now in effect or as may be adopted by the Corporation from time to time as required by Section 304 of the Sarbanes-Oxley Act of 2002, Section 954 of theDodd-Frank Wall Street Reform and Consumer Protection Act, or as otherwise required by applicable law or regulation. By accepting Awards under the Plan, Grantees agree and acknowledge that they are obligated to cooperate with, and provide any and all assistance necessary to, PNC to recover or recoup any Award or amounts paid under the Plan subject to clawback pursuant to such law, government regulation, stock exchange listing requirement or Corporation policy. Such cooperation and assistance shall include, but is not limited to, executing, completing and submitting any documentation necessary to recover or recoup any Award or amounts paid under the Plan from a Grantee’s accounts, or pending or future compensation or Awards.
21.9 Shares acquired by an Eligible Person under this Plan upon the exercise of an Option or Share Appreciation Right, upon a grant of a Restricted Share becoming nonforfeitable or upon settlement of a Restricted Share Unit or Performance Award may be subject to share retention guidelines or minimum holding requirements established by the Corporation.
21.10 The Plan shall be governed, construed and administered in accordance with the laws of the Commonwealth of Pennsylvania, without reference to its conflict of laws provisions, and it is the intention of the Corporation that Incentive Stock Options granted under the Plan qualify as such under Section 422 of the Internal Revenue Code and that Qualified Performance-Based Compensation granted under the Plan qualify as “qualified performance-based compensation” as described in Section 162(m) of the Internal Revenue Code.
21.11 Although it is the intent of PNC that this Plan and Awards hereunder, to the extent the Committee deems appropriate and to the extent applicable, comply with Rule 16b-3 and Sections 162(m), 409A and 422 of the Internal Revenue Code: (i) none of the Corporation, the Board or the Committee warrants that any Award under the Plan shall qualify for favorable tax treatment under any provision of the federal, state, local or non-United States law; and (ii) in no event shall any member of the Board or the Committee or PNC (or its employees, officers or directors) have any liability to any Grantee (or any other person) due to the failure of an Award to satisfy the requirements of Rule 16b-3 or Section 162(m), 409A or 422 of the Internal Revenue Code or for any tax, interest, or penalties the Grantee might owe as a result of the grant, holding, vesting, exercise, or payment of any Award under the Plan.
118 THE PNC FINANCIAL SERVICES GROUP, INC. - 2016 Proxy Statement
ANNEX C (REGULATIONS FOR CONDUCT AT ANNUAL MEETING)
In the interest of a fair and orderly meeting, and to accommodate as many shareholders as possible who may wish to speak, we have established the following rules: | 1. | Calling the Meeting to Order |
Our CEO will preside as the Chairman of the meeting. The Chairman will call the meeting to order promptly at 1111:00 a.m. The Chairman will conduct the meeting in accordance with the Agendameeting agenda and these Regulations for Conduct. The Chairman retains sole authority to make any and all determinations with respect to the conduct of the meeting. If your shares are registered in your name, you may vote in person by submitting a ballot at the meeting. If you hold PNC shares in street name, you may present a written legal proxy from your broker or bank authorizing you to vote the shares it holds for you in its name. The Chairman will announce the opening and closing of the polls. No proxies or ballots will be accepted after the polls have closed. PNC representatives will be on hand to distribute ballots or to accept proxies. If you have already submitted your proxy, your shares will be voted in accordance with the instructions you provided. Unless you want to change your vote or you have not submitted a proxy, you do not need a ballot. You will have an opportunity to ask questions or make comments about each Agendaagenda item as it is addressed. Your questions or comments must pertain to the Agendaagenda item. We have scheduled a general question and answer session at the conclusion of the meeting to discuss matters not on the Agenda,meeting agenda, but appropriate for discussion. | 4. | Procedures for Speaking |
Only shareholders or their proxies may be heard during the meeting. To ask a question or make a comment, please raise your hand and wait to be recognized by the Chairman. All questions or comments must be addressed to the Chairman, once a microphone has been passed to you. Please give your name and state whether you are a shareholder or a proxy for a shareholder. Speaking out of turn or interfering when another speaker has the floor is prohibited. After a shareholder has spoken, the Chairman may respond personally or designate another person to respond. | 5. | Speaker Rotation and Time Limits |
The Chairman may limit questions to one at a time. Shareholders who wish to speak will be recognized on a rotating basis. Please keep your comments brief in order to give other shareholders the opportunity to speak. You may speak for up to two minutes on a particular matter and no one person may speak for more than six minutes. The Chairman may refuse to permit a nomination or proposal to be made by a shareholder who has not complied with applicable laws or rules, or the procedures set forth in PNC’sBy-laws. The Chairman may end discussion if it appears that the matter has been adequately addressed or is not appropriate, or for other reasons. Personal matters are not appropriate for discussion. Representatives of PNC will be available following the meeting to address individual shareholder concerns. Rudeness, personal attacks, comments in bad taste and the injection of irrelevant controversy are not permitted at any time. | 7. | Mobile Devices, Recording Devices and Briefcases |
No cameras, mobile phones, laptops, tablets or recording equipment are permitted in the meeting room. In addition, large bags, backpacks, briefcases and similar items are not permitted in the meeting room. A staffed coat check for personal belongings is available. Disturbing this meeting is a misdemeanor punishable by imprisonment and fines. 18 Pa. Cons. Stat. §§ 1101, 1104, 5508. Violators will be prosecuted. A sergeant at arms and/or local law enforcement will be present to enforce compliance with these Regulations for Conduct and all applicable laws at the direction of the Chairman, including removal of noncompliant attendees, as necessary. Weapons are not permitted in the meeting room and may not be checked in the staffed coat room. Bags, briefcases or other carried items may be searched. In the event of an emergency, exit through the doors at the front of the room. Failure to comply with these Regulations for Conduct or otherwise impeding a fair and orderly meeting may be grounds for removal from the meeting. The Annual Meeting of Shareholders is audio-recorded.audio recorded. THE PNC FINANCIAL SERVICES GROUP, INC. - 20162019 Proxy Statement 11999
 
Corporate HeadquartersPNC corporate headquarters the PNC financial services group, inc. the tower at pnc plaza 300 fifth avenue Pittsburgh, pa 15222-2401 Mix paper from responsible sources fsc fsc c132107 www.fsc.org 30%
The PNC Financial Services Group, Inc.
The Tower at PNC Plaza
300 Fifth Avenue
Pittsburgh, PA 15222-2401
| | | | | | | | | | |  | | | | | | | |  | | | | | | | | Electronic Voting Instructions
| | | | | | | | Available 24 hours a day, 7 days a week!
| | | | | | | | Instead of mailing your proxy, you may choose one of the voting methods outlined below to vote your proxy.
| | | | | | | | VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR.
| | | | | | | | Proxies submitted by the Internet or telephone must be received by 1:00 a.m., Eastern Time, on April 26, 2016.
| | | | | | | | 
| | Vote by Internet
| | | | | | | | | • Go towww.envisionreports.com/PNC
| | | | | | | | | • Or scan the QR code with your smartphone
| | | | | | | | | • Follow the steps outlined on the secure website
| | | | | | | | Vote by telephone
| | | | | | | | • Call toll free 1-800-652-VOTE (8683) within the USA, US
territories & Canada on a touch tone telephone
| Using ablack inkpen, mark your votes with anXas shown in x this example. Please do not write outside the designated areas. | | ☒ | |
| | | | Your vote matters – here’s how to vote! | | | You may vote online or by phone instead of mailing this proxy. | | |  | | Proxies submitted electronically must be received by 1:00 a.m., Eastern Time, on April 23, 2019. | | |  | | Vote by Internet Go towww.envisionreports.com/PNC or scan the QR code – login details are located in the shaded bar below. | | |  | | Vote by Telephone Call toll free1-800-652-VOTE (8683) within the USA, US territories and Canada | | |  | | eDelivery Sign up for electronic delivery at www.envisionreports.com/PNC |
| | | | Annual Meeting Proxy Card & Admission Ticket | | • Follow the instructions provided by the recorded message
|
q IF YOU HAVE NOT VOTED VIA THE INTERNETOR TELEPHONE, FOLD ALONG THE PERFORATION,VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.q | | - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - |
| | | | | A | | Proposals —– The Board recommends a voteFOR all nominees in ProposalItem 1 andFOR ProposalsItems 2 3 and 4.3. | | |
| | | | | 1. | | Election of Directors: | |  | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1. | | Election of Directors: | | For | | Against | | Abstain | | | | For | | Against | | Abstain | | | | For | | Against | | Abstain | | + | | For | | Against | | Abstain | | | | | 01 - Joseph Alvarado | | ☐ | | ☐ | | ☐ | | 02 - Charles E. Bunch | | ¨☐ | | ¨☐ | | ¨ | | 02 - Marjorie Rodgers Cheshire | | ¨ | | ¨ | | ¨☐ | | 03 - William S. DemchakDebra A. Cafaro | | ¨☐ | | ¨☐ | | ¨ | | ☐ | | | | | | | | | | | | | | | | | | | | 04 - Marjorie Rodgers Cheshire | | ☐ | | ☐ | | ☐ | | 05 - William S. Demchak | | ☐ | | ☐ | | ☐ | | 06 - Andrew T. Feldstein | | ¨☐ | | ¨☐ | | ¨ | | 05 - Daniel R. Hesse | | ¨ | | ¨ | | ¨ | | 06 - Kay Coles James | | ¨ | | ¨ | | ¨ | | ☐ | | | | | | | | | | | | | | | | | | | | 07 - Richard J. Harshman | | ☐ | | ☐ | | ☐ | | 08 - Daniel R. Hesse | | ☐ | | ☐ | | ☐ | | 09 - Richard B. Kelson | | ¨☐ | | ¨☐ | | ¨ | | 08 - Jane G. Pepper | | ¨ | | ¨ | | ¨ | | 09 - Donald J. Shepard | | ¨ | | ¨ | | ¨ | | ☐ | | | | | | | | | | | | | | | | | | | | 10 - Lorene K. SteffesLinda R. Medler | | ¨☐ | | ¨☐ | | ¨☐ | | 11 - Dennis F. StriglMartin Pfinsgraff | | ¨☐ | | ¨☐ | | ¨☐ | | 12 - Michael J. WardToni Townes-Whitley | | ¨☐ | | ¨☐ | | ¨ | | ☐ | | | | | | | | | | | | | | | | | | | | 13- Gregory D. Wasson13 - Michael J. Ward | | ¨☐ | | ¨☐ | | ¨ | | ☐ | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | For | | Against | | Abstain | | | | | | For | | Against | | Abstain | | | | | | | | | | | | 2. | | Ratification of the Audit Committee’s selection of PricewaterhouseCoopers LLP as PNC’s independent registered public accounting firm for 2016. | | ¨ | | ¨ | | ¨ | | 4. | | Advisory vote to approve named executive officer compensation. | | ¨ | | ¨ | | ¨ | | | | | | | | | | | | 3. | | Approval of 2016 Incentive Award Plan. | | ¨ | | ¨ | | ¨ | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | For | | Against | | Abstain | | | | | | For | | Against | | Abstain | | 2. | | Ratification of the Audit Committee’s selection of PricewaterhouseCoopers LLP as PNC’s independent registered public accounting firm for 2019. | | ☐ | | ☐ | | ☐ | | 3. | | Advisory vote to approve named executive officer compensation. | | ☐ | | ☐ | | ☐ |
| | | B | | Authorized Signatures —– This section must be completed for your vote to be counted. —– Date and Sign Below |
Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title. | | | | | | | | | Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title. | Date (mm/dd/yyyy) —– Please print date below. | | | | Signature 1 —– Please keep signature within the box. | | | | Signature 2 —– Please keep signature within the box. | | / / | | | | | | | | |
IF VOTING BY MAIL, PLEASE COMPLETE SECTIONS A AND B ON THIS CARD.
Notice of Annual Meeting of Shareholders THE PNC FINANCIAL SERVICES GROUP, INC. 20162019 Annual Meeting of Shareholders
For the purpose of considering and acting upon the election of 13 directors to serve until the next annual meeting of shareholders and until their successors are elected and qualified, the ratification of the Audit Committee’s selection of PricewaterhouseCoopers LLP as PNC’s independent registered public accounting firm for 2016, the approval of the 2016 Incentive Award Plan,2019, the advisory vote to approve named executive officer compensation and such other business as may properly come before the meeting and any adjournment. If you sign and date this proxy card in Section B but do not give voting instructions in Section A, this proxy will be voted in accordance with the recommendations of the Board of Directors. Tuesday, April 26, 201623, 2019 - 11:00 a.m. Eastern Time The Tower at PNC Plaza - James E. Rohr Auditorium 300 Fifth Avenue Pittsburgh, Pennsylvania 15222 Upon arrival,To attend the Annual Meeting, please present this admission ticket and valid photo identification at the registration desk.
q IF YOU HAVE NOT VOTED VIA THE INTERNETOR TELEPHONE, FOLD ALONG THE PERFORATION,VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.q - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - | | | Proxy —– The PNC Financial Services Group, Inc. | | + | This proxy is solicited on behalf of the Board of Directors for the | Annual Meeting of Shareholders on April 23, 2019. | | | William S. Demchak, Robert Q. Reilly and Alicia G. Powell, and each of them with full power to act alone and with full power of substitution, are hereby authorized to represent the undersigned at The PNC Financial Services Group, Inc. Annual Meeting of Shareholders to be held on April 23, 2019, and at any adjournment, and to vote, as indicated on the reverse side, the shares of common stock and/or preferred stock that the undersigned would be entitled to vote if personally present at said meeting. The above-named individuals are further authorized to vote such stock upon any other business as may properly come before the meeting, and any adjournment, in accordance with their best judgment. | If you are a participant in The PNC Financial Services Group, Inc. Incentive Savings Plan (the ISP or 401(k) plan) with units in the PNC Stock Fund, this proxy also serves as voting instructions to the Trustee of the plan for voting at the Annual Meeting of Shareholders to be held on April 23, 2019, and at any adjournment. You have the right to provide the Trustee with voting instructions for the equivalent shares you hold in your PNC Stock Fund account. Your vote must be received by 11:59 p.m., Eastern Time, on April 18, 2019 to ensure that the Trustee has adequate time to tabulate voting instructions. | The Pennsylvania Business Corporation Law of 1988, as amended, 15 Pa. Cons. Stat. § 1759(b), provides that shareholders voting by means of the telephone or the Internet, as instructed, will be treated as transmitting a properly authenticated proxy for voting purposes. Pennsylvania law permits the use of telephone or Internet voting both when a shareholder of record is voting and when a beneficial owner is communicating its vote to a shareholder of record, such as a securities depositary or brokerage firm. | Please sign and return promptly. | | |
This proxy is solicited on behalf of the Board of Directors for the
Annual Meeting of Shareholders on April 26, 2016.
William S. Demchak, Robert Q. Reilly and Christi Davis, and each of them with full power to act alone and with full power of substitution, are hereby authorized to represent the undersigned at The PNC Financial Services Group, Inc. Annual Meeting of Shareholders to be held on April 26, 2016, and at any adjournment, and to vote, as indicated on the reverse side, the shares of common stock and/or preferred stock that the undersigned would be entitled to vote if personally present at said meeting. The above-named individuals are further authorized to vote such stock upon any other business as may properly come before the meeting, and any adjournment, in accordance with their best judgment.
If you are a participant in The PNC Financial Services Group, Inc. Incentive Savings Plan (the ISP or 401(k) plan) this proxy also serves as voting instructions to the Trustee of the plan for voting at the Annual Meeting of Shareholders to be held on April 26, 2016, and at any adjournment. You have the right to provide the Trustee with voting instructions for the units you hold in your PNC Stock Fund account. Your vote must be received by 11:59 p.m., Eastern Time, on April 21, 2016 to insure that the Trustee has adequate time to tabulate voting instructions.
The Pennsylvania Business Corporation Law of 1988, as amended, 15 Pa. Cons. Stat. § 1759(b), provides that shareholders voting by means of the telephone or the Internet, as instructed, will be treated as transmitting a properly authenticated proxy for voting purposes. Pennsylvania law permits the use of telephone or Internet voting both when a shareholder of record is voting and when a beneficial owner is communicating its vote to a shareholder of record, such as a securities depositary or brokerage firm.
Please sign and return promptly.
| | Change of Address – Please print new address below. |
| | | | | | | C | | Non-Voting Items | | | | | Change of Address— Please print new address below. | | | | | | | | | | Will attend Meeting ¨ | | | | | ☐ |
IF VOTING BY MAIL, PLEASE COMPLETE SECTIONS A AND B ON THIS CARD.
| | | ¢ ∎ | | + |
| | | | | | |  | | | | | |  | | | | | Using ablack inkpen, mark your votes with anXas shown in x this example. Please do not write outside the designated areas. | | ☒ | |
| | | | | Annual Meeting Proxy Card |
q PLEASE FOLD ALONG THE PERFORATION,IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.q | | - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - |
| | | | | A | | Proposals —– The Board recommends a voteFOR all nominees in ProposalItem 1 andFOR ProposalsItems 2 3 and 4.3. | | |
| | | | | 1. | | Election of Directors: | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1. | | Election of Directors: | | For | | Against | | Abstain | | | | For | | Against | | Abstain | | | | For | | Against | | Abstain | | + | | | 01 - Joseph Alvarado | | ☐ | | ☐ | | ☐ | | 02 - Charles E. Bunch | | ¨☐ | | ¨☐ | | ¨ | | 02 - Marjorie Rodgers Cheshire | | ¨ | | ¨ | | ¨☐ | | 03 - William S. DemchakDebra A. Cafaro | | ¨☐ | | ¨☐ | | ¨☐ | | | | | | | | | | | | | | | | | | | 04 - Marjorie Rodgers Cheshire | | ☐ | | ☐ | | ☐ | | 05 - William S. Demchak | | ☐ | | ☐ | | ☐ | | 06 - Andrew T. Feldstein | | ¨☐ | | ¨☐ | | ¨ | | 05 - Daniel R. Hesse | | ¨ | | ¨ | | ¨ | | 06 - Kay Coles James | | ¨ | | ¨ | | ¨☐ | | | | | | | | | | | | | | | | | | | 07 - Richard J. Harshman | | ☐ | | ☐ | | ☐ | | 08 - Daniel R. Hesse | | ☐ | | ☐ | | ☐ | | 09 - Richard B. Kelson | | ¨☐ | | ¨☐ | | ¨ | | 08 - Jane G. Pepper | | ¨ | | ¨ | | ¨ | | 09 - Donald J. Shepard | | ¨ | | ¨ | | ¨☐ | | | | | | | | | | | | | | | | | | | 10 - Lorene K. SteffesLinda R. Medler | | ¨☐ | | ¨☐ | | ¨☐ | | 11 - Dennis F. StriglMartin Pfinsgraff | | ¨☐ | | ¨☐ | | ¨☐ | | 12 - Michael J. WardToni Townes-Whitley | | ¨☐ | | ¨☐ | | ¨☐ | | | | | | | | | | | | | | | | | | | 13 - Gregory D. WassonMichael J. Ward | | ¨☐ | | ¨☐ | | ¨☐ | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | For | | Against | | Abstain | | | | | | For | | Against | | Abstain | | | | | | | | | | | | 2. | | Ratification of the Audit Committee’s selection of PricewaterhouseCoopers LLP as PNC’s independent registered public accounting firm for 2016. | | ¨ | | ¨ | | ¨ | | 4. | | Advisory vote to approve named executive officer compensation. | | ¨ | | ¨ | | ¨ | | | | | | | | | | | | 3. | | Approval of 2016 Incentive Award Plan. | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | For | | Against | | Abstain | | | | | | For | | Against | | Abstain | | 2. | | Ratification of the Audit Committee’s selection of PricewaterhouseCoopers LLP as PNC’s independent registered public accounting firm for 2019. | | ☐ | | ☐ | | ☐ | | 3. | | Advisory vote to approve named executive officer compensation. | | ☐ | | ☐ | | ☐ |
| | | | | | | B | | Authorized Signatures —– This section must be completed for your vote to be counted. —– Date and Sign Below |
| Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title. |
Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title. | | | | | | | | | Date (mm/dd/yyyy) —– Please print date below. | | | | Signature 1 —– Please keep signature within the box. | | | | Signature 2 —– Please keep signature within the box. | | / / | | | | | | | | |
| | | | | ∎ | | 1 U P X 3 9 7 8 6 2 | | |
q PLEASE FOLD ALONG THE PERFORATION,IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.q - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - | Proxy – The PNC Financial Services Group, Inc. | This proxy is solicited on behalf of the Board of Directors for the | Annual Meeting of Shareholders on April 23, 2019. | William S. Demchak, Robert Q. Reilly and Alicia G. Powell, and each of them with full power to act alone and with full power of substitution, are hereby authorized to represent the undersigned at The PNC Financial Services Group, Inc. Annual Meeting of Shareholders to be held on April 23, 2019, and at any adjournment, and to vote, as indicated on the reverse side, the shares of common stock and/or preferred stock that the undersigned would be entitled to vote if personally present at said meeting. The above-named individuals are further authorized to vote such stock upon any other business as may properly come before the meeting, and any adjournment, in accordance with their best judgment. | The Pennsylvania Business Corporation Law of 1988, as amended, 15 Pa. Cons. Stat. § 1759(b), provides that shareholders voting by means of the telephone or the Internet, as instructed, will be treated as transmitting a properly authenticated proxy for voting purposes. Pennsylvania law permits the use of telephone or Internet voting both when a shareholder of record is voting and when a beneficial owner is communicating its vote to a shareholder of record, such as a securities depositary or brokerage firm. | Please sign and return promptly. |
Proxy — The PNC Financial Services Group, Inc.
This proxy is solicited on behalf of the Board of Directors for the
Annual Meeting of Shareholders on April 26, 2016.
William S. Demchak, Robert Q. Reilly and Christi Davis, and each of them with full power to act alone and with full power of substitution, are hereby authorized to represent the undersigned at The PNC Financial Services Group, Inc. Annual Meeting of Shareholders to be held on April 26, 2016, and at any adjournment, and to vote, as indicated on the reverse side, the shares of common stock and/or preferred stock that the undersigned would be entitled to vote if personally present at said meeting. The above-named individuals are further authorized to vote such stock upon any other business as may properly come before the meeting, and any adjournment, in accordance with their best judgment.
The Pennsylvania Business Corporation Law of 1988, as amended, 15 Pa. Cons. Stat. § 1759(b), provides that shareholders voting by means of the telephone or the Internet, as instructed, will be treated as transmitting a properly authenticated proxy for voting purposes. Pennsylvania law permits the use of telephone or Internet voting both when a shareholder of record is voting and when a beneficial owner is communicating its vote to a shareholder of record, such as a securities depositary or brokerage firm.
Please sign and return promptly.
| 
