UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant ☒
Filed by a Party other than the Registrant ☐
Check the appropriate box:
☐ | Preliminary Proxy Statement |
☐ | CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE14a-6(e)(2)) |
☒ | Definitive Proxy Statement |
☐ | Definitive Additional Materials |
☐ | Soliciting Material Pursuant toSection240.14a-12 |
FIFTH THIRD BANCORP
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
☒ | No fee required. |
☐ | Fee computed on table below per Exchange Act Rules14a-6(i)(1) and0-11. |
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(2) | Aggregate number of securities to which transaction applies: |
(3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined): |
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☐ | Fee paid previously with preliminary materials. |
☐ | Check box if any part of the fee is offset as provided by Exchange Act Rule0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
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(2) | Form, Schedule or Registration Statement No.: |
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(4) | Date Filed: |
38 FOUNTAIN SQUARE PLAZA
CINCINNATI, OHIO 45263
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
March 9, 20176, 2018
To the Shareholders of Fifth Third Bancorp:
You are cordially invited to attend the Annual Meeting of the Shareholders of Fifth Third Bancorp to be held at the Regency Ballroom,Jarson-Kaplan Theater, located onat the third floor ofAronoff Center for the Hyatt Regency Cincinnati,Arts, at 151 West 5th650 Walnut Street, Cincinnati, Ohio on Tuesday, April 18, 201717, 2018 at 11:30 a.m. eastern daylight saving time for the purposes of considering and acting upon the following:
(1) | Election of all members of the Board of Directors to serve until the Annual Meeting of Shareholders in |
(2) | Approval of the appointment of the firm of Deloitte & Touche LLP to serve as the independent external audit firm for the Company for the year |
(3) | An advisory approval of the Company’s executive compensation. |
(4) | An advisory vote to determine whether the shareholder vote on the compensation of the Company’s executives will occur every 1, 2, or 3 years. |
(5) |
Transaction of such other business that may properly come before the Annual Meeting or any adjournment thereof. |
Shareholders of record at the close of business on February 24, 201723, 2018 will be entitled to vote at the Annual Meeting.
All shareholders who find it convenient to do so are invitedEven if you plan to attend the Annual Meetingmeeting in person. In any event,person, please vote at your earliest convenience by signing and returning the proxy card you receive or by voting over the internet or by telephone.
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If you plan to attend the Annual Meeting:
Please note that space limitations make it necessary to limit attendance only to shareholders of the Company and the holders of shareholder proxies. Admission to the Annual Meeting will be on afirst-come, first-served basis and will require presentation of a valid driver’s license or other federal or state-issued photo identification card. Shareholders of record must bring the admission ticket attached to their proxy card or the Notice of Internet Availability they receive in order to be admitted to the meeting. “Street name” shareholders must bring a notice regarding the availability of proxy materials, the top portion of a voting instruction form, or a recent proxy or letter from the bank, broker, or other intermediary that holds the beneficial holders’ shares and which confirms the beneficial holders’ ownership of those shares. Registration and seating will begin at approximately 11:00 a.m. eastern daylight saving time. Communication and recording devices will not be permitted at the Annual Meeting. A copy of the regulations for conduct at the Annual Meeting is attached as Annex A to the proxy statement.
If you have any questions or need assistance voting your shares, please call D.F. King & Co., Inc., which is assisting us, toll-free at1-800-488-8035.
By Order of the Board of Directors
Jelena McWilliams
Corporate Secretary
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38 Fountain Square Plaza
Cincinnati, Ohio 45263
20172018 Proxy Statement
This proxy statement, notice of the 20172018 Annual Meeting, notice of internet availability, form of proxy, and the Annual Report of the Company for the year 20162017 are first being sent or made available to shareholders on or about March 9, 2017.6, 2018.
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What is this document?
This document is called a proxy statement. This proxy statement includes information regarding the matters to be acted upon at the 20172018 Fifth Third Bancorp Annual Meeting of Shareholders (the “Annual Meeting”) and certain other information required by the Securities and Exchange Commission (the “SEC”) and the rules of the Nasdaq Global Select Market (“Nasdaq”).
When is the Annual Meeting and where will it be held?
The Annual Meeting will be held on Tuesday, April 18, 2017,17, 2018, at the Regency Ballroom,Jarson-Kaplan Theater, located on at
the third floor ofAronoff Center for the Hyatt Regency Cincinnati,Arts, at 151 West 5th650 Walnut Street, Cincinnati, Ohio at 11:30 a.m. eastern daylight saving time.
Why am I being provided this proxy statement?
Fifth Third Bancorp (the “Company” or “Fifth Third”) is required by the SEC to give you, or provide you access to, this proxy statement because it is soliciting your proxy to vote your shares of Fifth Third stock at the Annual Meeting. The enclosed proxy statement summarizes information you need in order to vote at the Annual Meeting.
What is a proxy?
A proxy is your designation of another person to vote stock you own. That other person is called a proxy. If you designate someone as your proxy in a written document, that document also is called a proxy or a proxy card. When you designate a proxy, you may also may direct the proxy how to vote your shares. Three Fifth Third directors, Emerson L. Brumback, GregoryGreg D. Carmichael, and Marsha C. Williams, have been designated as the proxies to cast the votes of Fifth Third’s shareholders at the Annual Meeting.
What actions are shareholders approving at the Annual Meeting?
Election of Directors.Directors. Twelve director nominees have been recommended for election to the Board of Directors (the “Board”) by the Nominating and Corporate Governance Committee of the Board. The nominees for election are: Nicholas K. Akins, B. Evan Bayh III, Jorge L. Benitez, Katherine B. Blackburn, Emerson L. Brumback, Jerry W. Burris, Greg D. Carmichael, Gary R. Heminger, Jewell D. Hoover, Eileen A. Mallesch, Michael B. McCallister, Eileen A. Mallesch, and Marsha C. Williams. Information about these nominees may be found in the proxy statement section titled “Election of Directors.”
Company Proposal 1: Ratification of Auditors.Auditors. This is a proposal to ratify the reappointment of Deloitte & Touche LLP as the Company’sour independent external audit firm for 2017.2018. This approval is not required by law to appoint an independent external audit firm, but this appointment is submitted by the Audit Committee in order to give shareholders a voice in the designation of the independent external audit firm. If this resolution is rejected by the shareholders, then the Audit Committee will reconsider its choice of an independent external audit firm. Even if this resolution is approved, the Audit Committee, at its discretion, may direct the appointment of a different independent external audit firm at any time during the year if it determines that such a change would be in our best interests and the best interestsinterest of the Company and itsour shareholders.
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING
Fifth Third Bancorp | 2018 Proxy Statement | 1 |
| QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING |
Company Proposal 2: Advisory Approval of Executive Compensation.Compensation. Proposal 2 is an annual advisory vote to approve the compensation of Fifth Third’sour named executive officers (“NEOs”). The Board will strongly consider the outcome of this advisory vote in determining the compensation of such executives. In 2016, over 92%2017, 94% of Fifth Third’sour shareholders who cast a vote on the Company’sour executive compensation program voted to approve it.
Company Proposal 3: Advisory Vote to Determine Frequency of Executive Compensation Votes.Votes. Proposal 3 is an advisory vote to determine how often shareholders will be given the opportunity to approve the compensation of the Company’sour NEOs: either every one, every two, or every three years. The Board will strongly consider the outcome of these votes in determining how often the shareholders are provided a say on pay vote. At the 20162017 Annual Meeting, Fifth Third’sour shareholders supported the Board’s recommendation that shareholders be provided the option to cast an advisory vote every one year on the compensation of the Company’sour NEOs. Accordingly, the Board decided to hold a “say on pay” vote annually.
Company Proposal 4: Approval of the Fifth Third Bancorp 2017 Incentive Compensation Plan. This is a proposal to approve the Fifth Third Bancorp 2017 Incentive Compensation Plan, including the issuance of shares of common stock authorized thereunder. The 2017 Incentive Compensation Plan, if approved, will replace the 2014 Incentive Compensation Plan, which was approved by the shareholders on April 15, 2014. Information about the 2017 Incentive Compensation Plan may be found in the proxy statement section entitled “Company Proposal 4: Proposal to Approve the Fifth Third Bancorp 2017 Incentive Compensation Plan Including the Issuance of Shares of Common Stock Authorized Thereunder.”
What vote is required to approve the proposals considered at the Annual Meeting?
Election of DirectorsDirectors.
As long as cumulative voting is not in effect, in an uncontested election of directors, each nominee for director receiving a greater number of votes “for” his or her election than votes “against” his or her election will be elected as directors.a director. In the event of a contested election or if cumulative voting is in effect, the twelve nominees receiving the greatest number of votes “for” his or her election shall be elected. Abstentions and shares not voted by brokers and other entities holding shares on behalf of beneficial owners will not be counted and will have no effect on the outcome of the election.
All Other ProposalsProposals.
All other proposals at the Annual Meeting require the affirmative vote of a majority of the shares present in person or by proxy at the Annual Meeting and entitled to vote on the proposal. Abstentions have the same effect as a vote cast against a proposal. Shares not voted by brokers or other entities holding shares on behalf of beneficial owners will have no effect on the outcome.
It is important to vote your shares at the Annual Meeting.
Who may vote and what constitutes a quorum at the meeting?
Holders of Fifth Third common stock on February 24, 201723, 2018 are entitled to vote on every matter that is to be voted on at the Annual Meeting.
In order to conduct the Annual Meeting, a majority of shares of Fifth Third common stock entitled to vote at the Annual Meeting on every matter that is to be voted on must be present in person or by proxy. This is called a quorum. Shareholders who deliver valid proxies or vote in person at the meeting will be considered part of the
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING
quorum. Once a share is represented for any purpose at the meeting, it is deemed present for quorum purposes for the remainder of the meeting and for any adjourned meeting. Abstentions will be counted as present and entitled to vote for purposes of determining a quorum. Broker“non-votes” (which are explained below) are counted as present and entitled to vote for purposes of determining a quorum.
How many votes do I have?
Each share of Fifth Third common stock outstanding on February 24, 201723, 2018 is entitled to one vote on all proposals at the meeting. As of the close of business on February 24, 2017,23, 2018, there were approximately 750,621,477686,981,953 shares of Fifth Third common stock outstanding and entitled to vote.
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QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING | |
If notice in writing is given by any shareholder to theour President, a Vice President, or the Secretary of the Company not less than forty-eight (48) hours before the time fixed for holding a meeting of shareholders for the purpose of electing directors that a shareholder desires that the voting at such election shall be cumulative, and if an announcement of the giving of such notice is made upon the convening of the meeting by the Chair or Secretary or by or on behalf of the shareholder giving such notice, each shareholder shall have the right to cumulate such voting power as he or she possesses in voting for directors. This will not affect the voting procedures for the other proposals considered at the Annual Meeting.
How do I vote?
Record ShareholdersShareholders.
A shareholder who owns shares in Fifth Third directly, and not through a broker, bank, or other nominee, (“record holder” or “record shareholder”) may vote in person at the Annual Meeting by filling out a ballot or may authorize a proxy to vote on his or her behalf. There are three ways to authorize a proxy:
1.Internet: You may access the proxy materials on the Internet atwww.cesvote.com and follow the instructions on the proxy card or on the Notice of Internet Availability.
2.Telephone: You may call toll-free1-888-693-8683, and follow the instructions on the proxy card or on the Notice of Internet Availability.
1. | Internet: You may access the proxy materials on the Internet atwww.cesvote.com and follow the instructions on the proxy card or on the Notice of Internet Availability. |
3.Mail: If you received your proxy materials by mail, you may vote by signing, dating, and mailing the enclosed proxy card in the postage-paid envelope provided.
2. | Telephone: You may call toll-free1-888-693-8683 and follow the instructions on the proxy card or on the Notice of Internet Availability. |
3. | Mail: If you received your proxy materials by mail, you may vote by signing, dating, and mailing the enclosed proxy card in the postage-paid envelope provided. |
Shareholders who vote over the Internet may incur costs, such as telephone and Internet access charges, for which the shareholder is responsible. The Internet and telephone voting procedures are designed to authenticate a shareholder’s identity and to allow a shareholder to vote his or her shares and confirm that his or her instructions have been properly recorded. You may use the Internet or telephone to submit your proxy until 11:00 a.m., eastern daylight saving time, on the morning of the Annual Meeting, April 18, 2017.17, 2018.
Street Name ShareholdersShareholders.
Shareholders who hold shares in “street name,” that is, through a broker, bank, or other nominee (“beneficial holder” or “street name shareholder”), should instruct their nominee to vote their shares by following the instructions provided by the nominee. Your vote as a shareholder is important. Please vote as soon as possible to ensure that your vote is recorded. See “Can my broker vote for me?” below.
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTINGon the following page.
What if I sign and date my proxy but do not provide voting instructions?
A proxy that is signed and dated, but which does not contain voting instructions, will be voted as follows:
“FOR” the election of each of the twelve directors nominated by the Fifth Third Bancorp Nominating and Corporate Governance Committee;
“FOR” the ratification of Deloitte & Touche LLP as the Company’s independent external audit firm (Company Proposal 1);
“FOR” the advisory vote on executive compensation (Company Proposal 2);
and
“FOR”For holding an advisory vote for approval of the compensation of the Company’s executives every “1 Year”YEAR” (Company Proposal 3); and,
Fifth Third Bancorp | 2018 Proxy Statement | 3 |
“FOR” the approval of the Fifth Third Bancorp 2017 Incentive Compensation Plan including the issuance of shares of common stock authorized thereunder (Company Proposal 4).
| QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING |
Can my broker vote for me?
If you are a beneficial holder of shares and do not provide the organization that holds your shares with specific voting instructions then, under applicable rules, the organization that holds your shares generally has discretionary authority to vote on “routine” matters without receiving instructions from you but cannot vote on“non-routine” matters unless you provide instructions. If the organization that holds your shares does not receive instructions from you on how to vote your shares on anon-routine matter, that organization will inform the inspector of election that it does not have the authority to vote on that matter with respect to your shares. This is generally referred to as a “brokernon-vote.”
All proposals at the Annual Meeting except Company Proposal 1 (Ratification of Auditors) are considerednon-routine matters under applicable rules. A broker, bank, or other nominee cannot vote without instructions onnon-routine matters, and therefore brokernon-votes may exist in connection with the election of directors and Company Proposals 2 3, and 4.3. It is important to instruct your broker, bank, or other nominee to vote your shares.
The ratification of Deloitte & Touche LLP as the Company’s independent external audit firm for 20172018 (Company Proposal 1) is considered a routine matter under applicable rules. A broker or other nominee generally exercises its discretionary authority to vote on routine matters without instructions. Although brokers and other nominees are not required to exercise discretionary authority, we expect that no brokernon-votes will exist in connection with Company Proposal 1.
Can I change my vote or revoke my proxy?
You may change your vote or revoke your proxy at any time before it is voted at the Annual Meeting by filing with the Companyus an instrument revoking it, filing a duly executed proxy bearing a later date (including a proxy given over the Internet or by telephone), or by attending the meeting and electing to vote in person.Even if you plan to attend the Annual Meeting, you are encouraged to vote your shares by proxy.
How are proxy materials delivered?
Fifth Third controls itsWe control costs by following SEC rules that allow for the delivery of proxy materials to the Company’sour shareholders primarily through the Internet. In addition to reducing the amount of paper used in producing these materials, this method lowers the costs associated with mailing the proxy materials to
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING
shareholders. Record holders will have a Notice of Internet Availability of Proxy Materials delivered directly to their mailing address. Beneficial holders will have a Notice of Internet Availability of Proxy Materials forwarded to them by the intermediary that holds the shares. Shareholders who have requested paper copies of all proxy materials and certain institutional and other shareholders will also receive paper copies of the other proxy materials including this proxy statement, the 20162017 Annual Report of Fifth Third Bancorp, and a proxy card or voting instruction sheet.
If you received only a Notice of Internet Availability of Proxy Materials by mail, you will not receive a printed copy of the proxy materials unless you request a copy by following the instructions on the notice. The Notice of Internet Availability of Proxy Materials also contains instructions for accessing and reviewing the proxy materials over the Internet and provides directions for submitting your vote over the Internet.
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What if I share an address and a last name with other Fifth Third shareholders?
To reduce the expenses of delivering duplicate proxy materials to shareholders, the Company iswe are relying upon SEC “householding” rules that permit it to deliverdelivery of only one set of applicable proxy materials to multiple shareholders who share an address and have the same last name, unless the Company receiveswe receive contrary instructions from any shareholder at that address. Shareholders of record who have the same address and last name and have not previously requested electronic delivery of proxy materials will receive a single envelope containing the notices or the proxy statement and proxy card for all shareholders having that address. The notice or proxy card for each shareholder will include that shareholder’s unique control number needed to vote his or her shares. This procedure reduces our printing costs and postage fees. If, in the future, you do not wish to participate in householding and prefer to receive your Notice or Proxy Statement in a separate envelope, or if your household currently receives more than one Notice or Proxy Statement and in the future, you would prefer to participate in householding, please call1-800-488-8035 (toll-free) in the U.S., or inform us in writing at: Fifth Third Bancorp, c/o D.F. King & Co., Inc., 48 Wall Street – Street—22nd Floor, New York, NY 10005, or by email at FITB@dfking.com. We will respond promptly to such requests.
For those shareholders who have the same address and last name and who request to receive a printed copy of the proxy materials by mail, we will send only one copy of such materials to each address unless one or more of those shareholders notifies us, in the same manner described above, that the shareholder(s) wish to receive a printed copy for each shareholder at that address.
Beneficial shareholders can request information about householding from their banks, brokers, or other holders of record.
How do I request a paper ore-mail copy of the proxy materials?
Record ShareholdersShareholders.
Record holders may request a paper ore-mail copy of the proxy materials by following the instructions below. You will be asked to provide your11-digit control number located on your proxy card or Notice of Internet Availability.
1. Call the toll-free telephone number1-800-516-1564 and follow the instructions provided;
1. | Call the toll-free telephone number1-800-516-1564 and follow the instructions provided; |
2. Access the website www.SendMaterial.com and follow the instructions provided; or
2. | Access the website www.SendMaterial.com and follow the instructions provided; or |
3. Send ane-mail to papercopy@SendMaterial.com with your control number in the Subject line. Unless you instruct otherwise, we will reply to youre-mail with links to the proxy materials in PDF format for this meeting only.
3. | Send ane-mail to papercopy@SendMaterial.com with your control number in the Subject line. Unless you instruct otherwise, we will reply to youre-mail with links to the proxy materials in PDF format for this meeting only. |
Please make your request for a copy on or before April 4, 20173, 2018 to facilitate timely delivery.
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING
Street Name ShareholdersShareholders.
Beneficial holders, also known as street name shareholders, should request copies of the proxy materials by following the instructions provided by their bank, broker, or other nominee.
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| QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING |
Can I attend the Annual Meeting?
You can attend the Annual Meeting if you are a:
1. | Record holder of Fifth Third common stock; |
2. | Beneficial holder of Fifth Third common stock; or |
3. | Authorized representative of persons or entities who are beneficial holders of Fifth Third common stock. |
In addition to a valid photo ID or other satisfactory proof of identification, you should bring the following items to be admitted to the Annual Meeting:
a) Record holders must present the admission ticket attached to their proxy card or Notice of Internet Availability.
A. | Record holders must present the admission ticket attached to their proxy card or Notice of Internet Availability. |
b) Beneficial holders must present evidence of their ownership. Materials that appropriately evidence ownership include: a notice regarding the availability of proxy materials, the top portion of a voting instruction form, or a recent proxy or letter from the bank, broker or other intermediary that holds the beneficial holders’ shares and which confirms the beneficial holders’ ownership of those shares.
B. | Beneficial holders must present evidence of their ownership. Materials that appropriately evidence ownership include: a notice regarding the availability of proxy materials, the top portion of a voting instruction form, or a recent proxy or letter from the bank, broker or other intermediary that holds the beneficial holders’ shares and which confirms the beneficial holders’ ownership of those shares. |
c) In addition to any evidence required under (b) above for beneficial holders, authorized representatives of beneficial holders must present a letter from the record holder certifying as to the beneficial ownership of the entity they representand a letter from the beneficial holder certifying as to their status as an authorized representative.
C. | In addition to any evidence required under (b) above for beneficial holders, authorized representatives of beneficial holders must present a letter from the record holder certifying as to the beneficial ownership of the entity they representand a letter from the beneficial holder certifying as to their status as an authorized representative. |
No recording devices, photographic equipment, or bullhorns will be permitted into the Annual Meeting. No written materials may be distributed by any person at or inwithin physical proximity to the Annual Meeting. The Chair of the Annual Meeting shall have the power to silence or have removed any person in order to ensure the orderly conduct of the Annual Meeting. Fifth Third representatives will be at the entrance to the Annual Meeting and these representatives will have the authority, on the Company’s behalf, to determine whether the admission policy and procedures are being followed and whether you will be granted admission to the Annual Meeting.
How do I propose actions for the 20182019 Annual Meeting of Shareholders?
Shareholder Proposals to be included in the Company’sour 2019 Proxy StatementStatement.
In order for a shareholder proposal for the 20182019 Annual Meeting of Shareholders to be eligible for inclusion in the Company’sour proxy statement, it must comply with the requirements of Rule14a-8 of the Securities Exchange Act of 1934 (the “Exchange Act”), and must be received by the Companyus on or before the date provided on page 8172 at the address or facsimile number provided on page 81.72.
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING
Shareholder Proposals not included in the Company’sour 2019 Proxy StatementStatement.
Any shareholder who intends to propose any matter to be acted upon at the 20182019 Annual Meeting of Shareholders without such proposal being included in the Company’s proxy statement as a shareholder proposal must send a notice to the Corporate Secretary during the period referenced on page 8172 using the address and facsimile number listed on page 81.72.
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Who can I call for help in voting my shares?
If you have any questions or need assistance voting your shares, please call D.F. King & Co., Inc., which is assisting us, toll-free at1-800-488-8035.
Who can I contact with questions about my investment in Fifth Third?
Shareholders who wish to speak to a Fifth Third representative regarding their investment in Fifth Third may communicate directly with Fifth Third’sour Investor Relations Department by calling866-670-0468. In addition, shareholders may communicate in writing directly with the Investor Relations Department by sending a letter to 38 Fountain Square Plaza, MD 1090QC, Cincinnati, OH 45263 or by emailing ir@53.com. You can also view information and request documents from the Investor Relations page of Fifth Third’sour website at www.53.com.
INFORMATION ABOUT THE 2017 ANNUAL MEETING
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The
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Our Board of Directors of the Company is soliciting proxies for the Annual Meeting of Shareholders to be held at the Regency Ballroom,Jarson-Kaplan Theater, located onat the third floor ofAronoff Center for the Hyatt Regency Cincinnati,Arts, at 151 West 5th650 Walnut Street, Cincinnati, Ohio on Tuesday, April 18, 201717, 2018 at 11:30 a.m. eastern daylight saving time (the “Annual Meeting”).time. Each of the approximately 750,621,477686,981,953 shares of common stock outstanding on February 24, 201723, 2018 is entitled to one vote on all matters acted upon at the Annual Meeting. Only shareholders of record on theour books of the Company at the close of business on February 24, 201723, 2018 will be entitled to vote at the Annual Meeting, either in person or by proxy. The shares represented by all properly executed proxies that are sent to the Companyus will be voted as designated and each not designated will be voted and counted as described in this proxy statement. Each person giving a proxy may revoke it by giving notice to the Companyus in writing or in open meeting at any time before it is voted.
The laws of Ohio under which the Company iswe are incorporated provide that if notice in writing is given by any shareholder to theour President, a Vice President, or the Secretary of the Company not less than forty-eight (48) hours before the time fixed for holding a meeting of shareholders for the purpose of electing directors that such shareholder desires that the voting at such election shall be cumulative, and if an announcement of the giving of such notice is made upon the convening of the meeting by the Chair or Secretary or by or on behalf of the shareholder giving such notice, each shareholder shall have the right to cumulate such voting power as he or she possesses in voting for directors. This will not affect the voting procedures for the other proposals considered at the Annual Meeting.
TheWe will bear the expense of soliciting proxies will be borne by the Company.proxies. Proxies will be solicited principally by mail, but may also be solicited by theour directors, officers, and other regular employees, of the Company, who will receive no compensation therefore in addition to their regular compensation. Brokers and others who hold stock on behalf of others will be asked to send proxy materialmaterials to the beneficial owners of the stock, and the Companywe will reimburse them for their expenses.
The Company hasWe have retained D.F. King & Co., Inc., a proxy solicitation firm, to assist the Companyus in soliciting proxies. The Company anticipatesWe anticipate that the costscost of D.F. King’s proxy solicitation services will be approximately $13,000, plus reasonable out of pocket expenses.
TheOur Annual Report of the Company for the year 2016,2017, including financial statements, has been delivered or made available to all shareholders. Such report and financial statements are not a part of this proxy statement. This proxy statement, form of proxy, notice of Annual Meeting, noticeNotice of internet availability,Internet Availability, and the Annual Report are first being sent or made available to shareholders on or about March 9, 2017.
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Under Section 13(d) of the Exchange Act, a beneficial owner of a security is any person who directly or indirectly has or shares voting power or investment power over such security. Such beneficial owner under this definition need not enjoy the economic benefit of such securities. The following are the only shareholders known to the Company deemed to be beneficial owners of 5% or more of the common stock of the Companysecurity as of December 31, 2016:2017. The following table contains information regarding the only persons who, to our knowledge, beneficially own more than five percent of our common stock as of December 31, 2017:
Title of Class | Name and Address |
Beneficial |
of | |||||||
Common stock |
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| T. Rowe Price Associates, Inc. | |||||||||
100 East Pratt Street Baltimore, MD 21202 | 73,557,623(1) | 10.4% | ||||||||
Common stock | The Vanguard Group 100 Vanguard Blvd. Malvern, PA 19355 | 57,022,613(2) | 8.08% | |||||||
Common stock | BlackRock, Inc. 55 East 52nd Street New York, NY 10055 | 45,980,059(3) | 6.5% | |||||||
Common stock | State Street Corporation One Lincoln Street Boston, MA 02111 | 39,164,163(4) | 5.55% | |||||||
Common stock | Invesco Ltd. 1555 Peachtree Street NE, Suite 100 Atlanta, GA 30309 | 37,879,800(5) | 5.4% |
(1) T. Rowe Price Associates, Inc. owns the above holdings in its capacity as an investment advisor in accordance with SEC Rule13d-1(b)(1)(ii)(E). According to the Schedule 13G filed with the SEC on January 10, 2018, in aggregate, T. Rowe Price Associates, Inc. and the affiliated entities included in Schedule 13G have sole voting power over 29,264,782 shares of common stock and have sole dispositive power over 73,452,323 shares of common stock.
(2) The Vanguard Group owns the above holdings in its capacity as an investment advisor in accordance with SEC Rule13d-1(b)(1)(ii)(E). According to Schedule 13G filed with the SEC on February 9, 2018, in aggregate, the Vanguard Group and the affiliated entities included in the Schedule 13G have sole voting power over 998,824 shares of common stock, have shared voting power over 165,933 shares of common stock, have sole dispositive power over 55,889,518 shares of common stock, and have shared dispositive power over 1,133,095 shares of common stock.
(3) BlackRock, Inc. owns the above holdings in its capacity as a parent company or control person in accordance with SEC Rule13d-1(b)(1)(ii)(G). According to the Schedule 13G filed with the SEC on January 29, 2018, in aggregate, BlackRock, Inc. and the affiliated entities included in Schedule 13G have sole voting power over 39,763,354 shares of common stock and have sole dispositive power over 45,980,059 shares of common stock.
(4) State Street Corporation owns the above holdings in its capacity as a parent holding company or control person in accordance with SEC Rule13d-1(b)(1)(ii)(G). According to the Schedule 13G filed with the SEC on February 14, 2018, in aggregate, State Street Corporation and the affiliated entities included in the Schedule 13G have shared voting power over 39,164,163 shares of common stock and have shared dispositive power over 39,164,163 shares of common stock.
(5) Invesco Ltd. owns the above holdings in its capacity as an investment advisor in accordance with SEC Rule13d-1(b)(1)(ii)(E) and as a parent holding company or control person in accordance with SEC Rule13d-1(b)(1)(ii)(G). According to the Schedule 13G filed with the SEC on February 9, 2018, in aggregate, Invesco Ltd. and the affiliated entities included in the Schedule 13G have sole voting power over 35,889,787 shares and have sole dispositive power over 37,879,642 shares.
9 |
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company’sour executive officers and directors, and persons who own more than ten percent of a registered class of the Company’sour stock, to file reports of ownership and changes in ownership with the SEC. Executive officers and directors, and persons who own greater than ten percent shareholdersof a registered class of our stock, are required by SEC regulation to furnish the Companyus with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it, or written representations from certain reporting persons that no Annual Statement of Changes In Beneficial Ownership of Securities on Form 5 were required for those persons, the Company believes that, for the period from January 1, 20162017 through December 31, 2016, its2017, we believe that our executive officers and directors complied with all filing requirements applicable to them, except for the failure to timely report on a Form 4 during 2016 grants by the Company of restricted stock units and stock appreciation rights issued to Lars C. Anderson, Chad M. Borton, Greg D. Carmichael, Frank R. Forrest, Mark D. Hazel, Kevin Kabat, Heather Russell Koenig, Randolph J. Koporc, Gregory L. Kosch, James C. Leonard, Philip R. McHugh, Joseph R. Robinson, Timothy N. Spence, Teresa J. Tanner and Tayfun Tuzun and one additional transaction for Philip R. McHugh involving the withholding of shares of restricted stock for taxes upon the vesting. These transactions were subsequently reported on Form 4s.them.
Additionally, with respect to prior fiscal years, the following directors failed to timely report on Form 5 the acquisition of phantom stock units pursuant to a deferred compensation plan: B. Evan Bayh III (three Form 5s covering five transactions), Ulysses L. Bridgeman Jr. (eight Form 5s covering 19 transactions), Hendrik G. Meijer (10 Form 5s covering 25 transactions), and Marsha C. Williams (two Form 5s covering four transactions), and these transactions were subsequently reported on Form 5s; the following individuals failed to include in their Form 3 filing the ownership of phantom stock units pursuant to deferred compensation plans, Ulysses L. Bridgeman Jr., Gregory L. Kosch, and Joseph R. Robinson and those holdings were subsequently reported on amended Form 3s; and Greg D. Carmichael failed to timely report on Form 4 the disposition of phantom stock units pursuant to a deferred compensation plan which was subsequently reported on an amended Form 4.
10 | Fifth Third Bancorp | 2018 Proxy Statement |
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(Item 1 on Proxy Card)
In accordance with the Company’sour Code of Regulations, directors are elected annually to a one (1) year term expiring at the next Annual Meeting of Shareholders. The terms of the directors listed below expire at the Annual Meeting on April 18, 201717, 2018 and these individuals constitute the nominees to be elected to serve until the Annual Meeting of Shareholders in 2018. Mr. Meijer will retire from the Board at the Annual Meeting. He has generously given valuable service to the Company as a director for many years. The Board of Directors has voted to decrease the size of the Board such that no vacancies will result from this retirement.2019. Any vacancies that occur after the directors are elected may be filled by the Board of Directors in accordance with law and the Company’sour Code of Regulations for the remainder of the full term of the vacant directorship.
Director candidates are nominated by the Company’s Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee’s Chartercharter directs the Committeeit to investigate and to assess the background and skills of potential candidates and to maintain an active file of suitable candidates for directors.director candidates. The Nominating and Corporate Governance Committee utilizes its pool of existing subsidiary and regional directors as well as the significant network of business contacts of its existing directors and executive management and also retainedretains third party consultants to aid it in identifying potential director candidates. Upon identifying a candidate for serious consideration, the Company’sour Chief Executive Officer and one or more members of the Nominating and Corporate Governance Committee initially interview such candidate. If the candidate merits further consideration, the candidate subsequently interviews with other Nominating and Corporate Governance Committee members (individually or as a group), and ultimately meets the remaining directors. The Nominating and Corporate Governance Committee elicits feedback from persons who meet the candidate and then determines whether or not to nominate the candidate.
The Company’sOur Corporate Governance Guidelines set forth the following criteria for directors: independence (in order to compose a Board of Directors that has a majority of its members who are independent); highest personal and professional ethics and integrity; willingness to devote sufficient time to fulfilling duties as a director; impact on the diversity of the Board’s overall experience in business, government, education, technology, and other areas relevant to the Company’sour business; impact on the diversity of the Board’s composition in terms of age, skills, ethnicity, and other factors relevant to the Company’sour business; and number of other public company boards on which the candidate may serve (generally, a director should not serve on more than three public company boards in addition to the Company)Fifth Third). The Company’sOur Corporate Governance Guidelines provide that shareholders may propose nominees to the Nominating and Corporate Governance Committee by submitting the names and qualifications of such persons to the Nominating and Corporate Governance Committee no later than December 31 of each year. Submissions are to be addressed to the Nominating and Corporate Governance Committee at the Company’sour executive offices, which submissions will then be forwarded to the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee wouldwill then evaluate the possible nominee using the criteria outlined above and wouldwill consider such person in comparison to all other candidates. The Nominating and Corporate Governance Committee is not obligated to nominate any such individual for election. No such shareholder nominations have been received by the CompanyFifth Third for this Annual Meeting. Accordingly, no rejections or refusals of such candidates have been made by the Company.Fifth Third. Shareholders may also nominate candidates directly for election by following the procedures in the Company’sour Code of Regulations. These are summarized in the “2018“2019 Shareholder Proposals” section of this proxy statement.
The Nominating and Corporate Governance Committee of the Board of Directors has nominated for election as directors the following twelve (12) persons: Nicholas K. Akins, B. Evan Bayh III, Jorge L.
Fifth Third Bancorp | 2018 Proxy Statement | 11 |
| ELECTION OF DIRECTORS |
Benitez, Katherine B. Blackburn, Emerson L. Brumback, Jerry W. Burris, Greg D. Carmichael, Gary R. Heminger, Jewell D. Hoover, Eileen A. Mallesch, Michael B. McCallister, and Marsha C. Williams.
ELECTION OF DIRECTORS
The following tables set forth information with respect to each director nominee for election at the Annual Meeting including their business experience, share holdingsshareholdings, and qualifications as a director of the Company.our directors. The Board of Directors has determined that all director nominees have met the independence standards of Rule 5605(a)(2) of the National Association of Securities Dealers listing standards with the exception of Mr. Carmichael.
Shares of Company Common Stock Beneficially Owned on January 31, 2017(1) | ||||||||||||||||
Name, Age and Principal Occupation During the Past Five Years | Director Since | Number(2) | Percent of Class | |||||||||||||
NOMINEES FOR ELECTION AS DIRECTORS: | ||||||||||||||||
![]() | NICHOLAS K. AKINS, 56, is the Chair, President & Chief Executive Officer of American Electric Power Company. | 2013 | 15,845 | .0021 | % | |||||||||||
Mr. Akins’ qualifications for service as a director include business expertise as the Chief Executive Officer of a large, multi-state electric utility where he focused on local operating utilities, community involvement, government relations and regulations at the state, local, and federal levels. Mr. Akins has experience in all facets of operational, financial and compliance-related activities in a heavily regulated business and industry.
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| B. EVAN BAYH III, 61, is a Partner with the law firm McGuireWoods LLP and a senior advisor to the private equity firm, Apollo Global Management. Mr. Bayh also serves on the Board of Directors of Marathon Petroleum Corporation, Berry Plastics Group, Inc., and RLJ Lodging Trust.
| 2011 | 19,981 | .0027 | % | |||||||||||
Mr. Bayh’s qualifications for service as a director include two decades of experience in government service. First as Governor of Indiana and then in the United States Senate, Mr. Bayh dealt with a variety of financial, economic and policy issues that impact a wide variety of businesses. He had supervisory authority over thousands of employees and oversaw a budget in excess of $10 billion. As a member of the Senate Banking Committee and Chair of the International Trade and Finance Subcommittee, Mr. Bayh gained perspective on issues of particular relevance to Fifth Third Bancorp.
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![]() | JORGE L. BENITEZ, 57, is the retired Chief Executive Officer of North America of Accenture and a director of World Fuel Services Corporation. Previously, from September 2006 to August 2011, Mr. Benitez served as Chief Operating Officer of Accenture’s Products Operating Group.
| 2015 | 5,522 | .0007 | % | |||||||||||
Mr. Benitez’s qualifications for service as a director include extensive experience developing and executing business strategies across a range of industries, particularly air, freight, and travel and transportation services, as well as significant executive experience running operating units within a large multinational publicly-traded corporation.
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ELECTION OF DIRECTORSNominees for Election as Directors
Shares of Company Common Stock Beneficially Owned on January 31, 2017(1) | ||||||||||||||||
Name, Age and Principal Occupation During the Past Five Years | Director Since | Number(2) | Percent of Class | |||||||||||||
| KATHERINE B. BLACKBURN, 51, is the Executive Vice President of the Cincinnati Bengals, Inc.
| 2014 | 30,532 | .0041 | % | |||||||||||
Ms. Blackburn’s qualifications for service as a director include business experience in running operations for the Cincinnati Bengals professional football franchise. Her experiences have given her skills and expertise that qualify her for Board service, including her roles in player contract negotiations, oversight of the team’s management of the NFL salary cap, her service as Chair of the NFL’s Diversity Committee and Super Bowl and Events Committee, and her position as one of six trustees of the Player Retirement Benefit Board (three of whom are retired players and three of whom are NFL Club representatives), as well as her education and prior experiences as an attorney. Additionally, Ms. Blackburn brings to the Board knowledge and familiarity of the Company and the city of Cincinnati.
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| EMERSON L. BRUMBACK, 65, is the retired President & Chief Operating Officer of M&T Bank and a former director of M&T Bank Corporation. He is the Vice Chair of the Board of the Great Lakes Higher Education Corporation.
| 2009 | 48,045 | .0064 | % | |||||||||||
Mr. Brumback’s qualifications for service as a director include banking expertise through his 30 years of experience in the financial services industry with several banking organizations, including the Buffalo branch of the Federal Reserve Bank of New York. He has gained valuable insight through his experience in executive positions overseeing many aspects of the banking field, including retail banking, commercial banking, banking operations, and systems. He also brings his experience as a former board member with another financial services company.
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| JERRY W. BURRIS, 58, is the retired President and Chief Executive Officer of Associated Materials Group, Inc. He was also previously a director of Associated Materials and a division president with General Electric. He is a current director of Pentair PLC.
| 2016 | 1,718 | .0002 | % | |||||||||||
Mr. Burris’ qualifications for service as a director include management expertise as the President and Chief Executive Officer of Associated Manufacturing and as a division president with General Electric. Mr. Burris’s expertise includes strong technical marketing skills, a sound understanding of how to best integrate technology, rapid innovation, mergers and acquisitions, and cost and efficiency management. He also brings experience from his service on a public company board’s compensation and governance and audit committees.
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ELECTION OF DIRECTORS
Shares of Company Common Stock Beneficially Owned on January 31, 2017(1) | ||||||||||||||||
Name, Age and Principal Occupation During the Past Five Years | Director Since | Number(2) | Percent of Class | |||||||||||||
| GREG D. CARMICHAEL, 55, is the Chief Executive Officer of Fifth Third Bancorp since November 2015 and President since September 2012. Previously, Mr. Carmichael was Chief Operating Officer of Fifth Third Bancorp from June 2006 to August 2015, Executive Vice President from June 2006 to September 2012, and Chief Information Officer from June 2003 to June 2006.
| 2015 | 1,009,325 | .1342 | % | |||||||||||
Mr. Carmichael’s qualifications for service as a director include valuable insight and knowledge for the Board due to his service as its Chief Executive Officer and his prior role as Chief Operating Officer. Mr. Carmichael also brings important technical expertise from his years of service as Chief Information Officer and his prior service in information technology roles with prior employers.
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![]() | GARY R. HEMINGER, 63, is the President, Chief Executive Officer and Chair of Marathon Petroleum Corporation and the Chair and Chief Executive Officer of MPLX GP LLC (the general partner of MPLX LP). MPLX LP is a consolidated master limited partnership formed by Marathon Petroleum Corporation.
| 2006 | 44,074 | .0059 | % | |||||||||||
Mr. Heminger’s qualifications for service as a director include valuable business knowledge gained from his responsibilities in overseeing all operations, performance, reporting, and financial metrics for Marathon’s refining, marketing, transportation and Speedway business. He has financial experience through his oversight of all financial data, working capital, and merger and acquisition activity.
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![]() | JEWELL D. HOOVER, 68, is a retired Senior Official with the Office of the Comptroller of the Currency and is the author of the “Ultimate Guide for Bank Directors.” Ms. Hoover is also a former director of First Charter Corporation and was a principal with the bank consulting firm of Hoover and Associates, LLC until 2014.
| 2009 | 40,439 | .0054 | % | |||||||||||
Ms. Hoover’s qualifications for service as a director include 28 years of service with the Office of the Comptroller of the Currency, including service as the Deputy Comptroller of the agency’s Western District. She also has gained valuable banking experience and knowledge as a bank consultant for corporate governance, director training, and problem bank resolution matters. Additionally, she has first-hand knowledge of the Company through her service as a director of its North Carolina affiliate and a predecessor banking organization.
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ELECTION OF DIRECTORS
Shares of Company Common Stock Beneficially Owned on January 31, 2017(1) | ||||||||||||||||
Name, Age and Principal Occupation During the Past Five Years | Director Since | Number(2) | Percent of Class | |||||||||||||
![]() | EILEEN A. MALLESCH, 61, is the retired Senior Vice President and Chief Financial Officer of Nationwide Property & Casualty Segment, Nationwide Mutual Insurance Company. She was also a Senior Vice President and Chief Financial Officer for Genworth Financial Life Insurance/Service Co. Ms. Mallesch currently serves on the Boards of Directors of Libbey, Inc., State Auto Financial Corp., and Bob Evans Farms, Inc.
| 2016 | 1,718 | .0002 | % | |||||||||||
Ms. Mallesch’s qualifications for service as a director include financial management experience from her roles as Chief Financial Officer for both Nationwide Mutual Insurance Company and Genworth Financial Life Insurance/Service Co. She has more than 25 years of broad finance and strategy experience in a variety of industries, ranging from insurance and telecommunications to consumer products and manufacturing. In addition, Ms. Mallesch brings vast knowledge in enterprise resource planning and large-scale technology integrations, strategic planning, and managing acquisitions, divestures, and risk and compliance management. She is also a Certified Public Accountant.
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![]() | MICHAEL B. MCCALLISTER, 64, is the retired Chair of the Board of Directors of Humana Inc. Previously, Mr. McCallister was the Chief Executive Officer of Humana Inc. from February 2000 until his retirement as Chief Executive Officer in December 2012. He was elected as a Humana board member in February 2000 and was Chair of the Board from August 2010 until December 2013. Mr. McCallister joined Humana in June 1974. He is also a director of AT&T Inc. and a director of Zoetis Inc.
| 2011 | 31,927 | .0042 | % | |||||||||||
Mr. McCallister’s qualifications for service as a director include 39 years of experience in the health care sector at Humana, Inc. combined with an intimate knowledge of Humana’s operational, financial, and strategic development. Beyond Humana, Mr. McCallister plays a leadership role in key business advocacy organizations. He served on the board of the Business Roundtable and is the past chair of the organization’s Health and Retirement Task Force.
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ELECTION OF DIRECTORS
Shares of Company Common Stock Beneficially Owned on January 31, 2017(1) | ||||||||||||||||
Name, Age and Principal Occupation During the Past Five Years | Director Since | Number(2) | Percent of Class | |||||||||||||
![]() | MARSHA C. WILLIAMS, 65, is the retired Senior Vice President and Chief Financial Officer of Orbitz Worldwide, Inc. from July 2007 through December 31, 2010. From 2002 to 2007, Ms. Williams served as Executive Vice President and Chief Financial Officer of Equity Office Properties Trust, the nation’s largest owner and operator of office buildings. She is also the Supervisory Director of Chicago Bridge & Iron Company N.V., the Lead Independent Director of Modine Manufacturing Company, and a director of the Davis Funds.
| 2008 | 50,420 | .0067 | % | |||||||||||
Ms. Williams’ qualifications for service as a director include her extensive experience in financial matters including 42 years in finance and her service as the Chief Financial Officer of Orbitz and Equity Office Properties Trust as well as her service on the board of directors of other publicly traded corporations and mutual funds. Ms. Williams also possesses knowledge and experience in the financial services industry through her 15 years of service with other banking organizations.
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NON-CONTINUING DIRECTOR: | ||||||||||||||||
| HENDRIK G. MEIJER, 65, is theCo-Chair, Chief Executive Officer, and Director of Meijer, Inc. and its affiliates, a food and general merchandise retailer with approximately 223 supercenters located in Michigan, Ohio, Indiana, Illinois, Kentucky, and Wisconsin.
| 2001 | 79,641 | .0106 | % | |||||||||||
All directors and executive officers as a Group (24 persons)
| 2,877,835 | .3822 | % |
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ELECTION OF DIRECTORS
Shares of Company Common |
Name, Age, and Principal Occupation During the Past Five Years
| Director Since
| Number(2)
|
Percent of Class
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| Nicholas K. Akins,57 Chair, President, & Chief Executive Officer of American Electric Power Company
| 2013 | 21,489 | .0031% | ||||||||||||
Mr. Akins’ qualifications for service as a director include business expertise as the Chief Executive Officer of a large, multi-state electric utility where he focuses on local operating utilities, community involvement, government relations, and regulations at the state, local, and federal levels. Mr. Akins has experience in all facets of operational, financial, and compliance-related activities in a heavily regulated business and industry.
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Name, Age, and Principal Occupation During the Past Five Years
| Director Since
| Number(2)
| Percent of Class
| |||||||||||||
| B. Evan Bayh III,62 Partner with the law firm McGuireWoods LLP; Senior Advisor to the private equity firm, Apollo Global Management; Board of Directors for Marathon Petroleum Corporation, Berry Plastics Group, Inc., and RLJ Lodging Trust. Previously, Mr. Bayh served as Governor of Indiana and as a United States Senator.
| 2011 | 19,981 | .0029% | ||||||||||||
Mr. Bayh’s qualifications for service as a director include two decades of experience in government service. First as Governor of Indiana and then in the United States Senate, Mr. Bayh dealt with a variety of financial, economic, and policy issues that impact a wide variety of businesses. He had supervisory authority over thousands of employees and oversaw a budget in excess of $10 billion. As a member of the Senate Banking Committee and Chair of the International Trade and Finance Subcommittee, Mr. Bayh gained perspective on issues of particular relevance to Fifth Third Bancorp.
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12 | Fifth Third Bancorp | 2018 Proxy Statement |
ELECTION OF DIRECTORS | |
Shares of |
Name, Age, and Principal Occupation During the Past Five Years
| Director Since
| Number(2)
| Percent of Class
| |||||||||||||
| Jorge L. Benitez,58 Retired Chief Executive Officer of North America of Accenture; Director of World Fuel Services Corporation. Previously, from September 2006 to August 2011, Mr. Benitez served as Chief Operating Officer of Accenture’s Products Operating Group.
| 2015 | 10,728 | .0015% | ||||||||||||
Mr. Benitez’s qualifications for service as a director include extensive experience developing and executing business strategies across a range of industries, particularly air, freight, and travel and transportation services, as well as significant executive experience running operating units within a large multinational publicly-traded corporation.
|
Name, Age, and Principal Occupation During the Past Five Years
| Director Since
| Number(2)
| Percent of Class
| |||||||||||||
| Katherine B. Blackburn,52 Executive Vice President of the Cincinnati Bengals, Inc.
| 2014 | 36,102 | .0052% | ||||||||||||
Ms. Blackburn’s qualifications for service as a director include business experience in running operations for the Cincinnati Bengals professional football franchise. She has extensive experience with human resource and personnel matters, cost and efficiency management, and negotiations of complex partnerships and business ventures for large and multi-faceted enterprises. Ms. Blackburn also has extensive experience with management of diversity and inclusion initiatives for large organizations through her role on the National Football League’s Diversity Committee. Additionally, Ms. Blackburn holds a law degree and brings to the Board knowledge and familiarity of Fifth Third and the City of Cincinnati.
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Fifth Third Bancorp | 2018 Proxy Statement | 13 |
| ELECTION OF DIRECTORS |
Shares of |
Name, Age, and Principal Occupation During the Past Five Years
| Director Since
| Number(2)
| Percent of Class
| |||||||||||||
| Emerson L. Brumback,66 Retired President & Chief Operating Officer of M&T Bank; Former Director of M&T Bank Corporation; Vice Chair of the Board of the Great Lakes Higher Education Corporation.
| 2009 | 53,343 | .0077% | ||||||||||||
Mr. Brumback’s qualifications for service as a director include banking expertise through his 30 years of experience in the financial services industry with several banking organizations, including the Buffalo branch of the Federal Reserve Bank of New York. He has gained valuable insight through his experience in executive positions overseeing many aspects of the banking field, including retail banking, commercial banking, banking operations, and systems. Mr. Brumback also brings his experience as a former board member with another financial services company.
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Name, Age, and Principal Occupation During the Past Five Years
| Director Since
| Number(2)
| Percent of Class
| |||||||||||||
| Jerry W. Burris,54 Retired President & Chief Executive Officer of Associated Materials Group, Inc.; Previous Division President of General Electric; Current Director of Pentair PLC.
| 2016 | 1,755 | .0003% | ||||||||||||
Mr. Burris’ qualifications for service as a director include management expertise as the President and Chief Executive Officer of Associated Manufacturing and as a division president with General Electric. Mr. Burris’ expertise includes strong technical marketing skills, a sound understanding of how to best integrate technology, rapid innovation, mergers and acquisitions, and cost and efficiency management. He also brings experience from his service on a public company board’s compensation and governance and audit committees.
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14 | Fifth Third Bancorp | 2018 Proxy Statement |
ELECTION OF DIRECTORS | |
Shares of Company Common |
Name, Age, and Principal Occupation During the Past Five Years
| Director Since
| Number(2)
| Percent of Class
| |||||||||||||
| Greg D. Carmichael,56 Chairman, Chief Executive Officer, and President of Fifth Third Bancorp; Elected Chairman in 2018, and has served as Chief Executive Officer since November 2015 and President since September 2012; Previous Chief Operating Officer of Fifth Third Bancorp from June 2006 to August 2015 and Chief Information Officer from June 2003 to June 2006.
| 2015 | 1,172,408 | .1687% | ||||||||||||
Mr. Carmichael’s qualifications for service as a director include valuable insight and knowledge for the Board due to his service as its Chief Executive Officer and his prior role as Chief Operating Officer. Mr. Carmichael also brings important technical expertise from his years of service as Fifth Third’s Chief Information Officer and his prior service in information technology roles with prior employers.
|
Name, Age, and Principal Occupation During the Past Five Years
| Director Since
| Number(2)
| Percent of Class
| |||||||||||||
| Gary R. Heminger,64 President, Chief Executive Officer, and Chair of Marathon Petroleum Corporation; Chair and Chief Executive Officer of MPLX GP LLC (the general partner of MPLX LP); MPLX LP is a consolidated master limited partnership formed by Marathon Petroleum Corporation; Director at PPG Industries, Inc.
| 2006 | 44,082 | .0063% | ||||||||||||
Mr. Heminger’s qualifications for service as a director include valuable business knowledge gained from his responsibilities in overseeing all operations, performance, reporting, and financial metrics for Marathon’s refining, marketing, transportation, and Speedway business. He has financial experience through his oversight of all financial data, working capital, and merger and acquisition activity.
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Fifth Third Bancorp | 2018 Proxy Statement | 15 |
| ELECTION OF DIRECTORS |
Shares of Company Common |
Name, Age, and Principal Occupation During the Past Five Years
| Director Since
| Number(2)
| Percent of Class
| |||||||||||||
| Jewell D. Hoover,69 Retired Senior Official with the Office of the Comptroller of the Currency; Author of the “Ultimate Guide for Bank Directors”; Former Director of First Charter Corporation; Principal with the bank consulting firm Hoover and Associates, LLC until 2014.
| 2009 | 43,685 | .0063% | ||||||||||||
Ms. Hoover’s qualifications for service as a director include 28 years of service with the Office of the Comptroller of the Currency, including service as the Deputy Comptroller of the agency’s Western District. Ms. Hoover also has gained valuable banking experience and knowledge as a bank consultant for corporate governance, director training, and problem bank resolution matters. Additionally, she has first-hand knowledge of Fifth Third through her service as a director of its North Carolina affiliate and a predecessor banking organization.
|
Name, Age, and Principal Occupation During the Past Five Years
| Director Since
| Number(2)
| Percent of Class
| |||||||||||||
![]() | Eileen A. Mallesch,62 Retired Senior Vice President & Chief Financial Officer of Nationwide Property & Casualty Segment, Nationwide Mutual Insurance Company; Former Senior Vice President & Chief Financial Officer for Genworth Financial Life Insurance/Service Co.; Currently serves on Board of Directors for Libbey, Inc. and State Auto Financial Corp., and previously served as director for Bob Evans Farms, Inc.
| 2016 | 7,044 | .0010% | ||||||||||||
Ms. Mallesch’s qualifications for service as a director include financial management experience from her roles as Chief Financial Officer for both Nationwide Mutual Insurance Company and Genworth Financial Life Insurance/Service Co. She has more than 25 years of broad finance and strategy experience in a variety of industries, ranging from insurance and telecommunications to consumer products and manufacturing. In addition, Ms. Mallesch brings vast knowledge in enterprise resource planning and large-scale technology integrations, strategic planning, and managing acquisitions, divestures, and risk and compliance management. Ms. Mallesch is also a Certified Public Accountant.
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16 | Fifth Third Bancorp | 2018 Proxy Statement |
ELECTION OF DIRECTORS | |
Shares of Company Common |
Name, Age, and Principal Occupation During the Past Five Years
| Director Since
| Number(2)
| Percent of Class
| |||||||||||||
| Michael B. McCallister,65 Retired Chair of the Board of Directors of Humana, Inc.; Previous Chief Executive Officer of Humana Inc. from February 2000 to December 2012; Humana board member in February 2000 and Chair of the Board from August 2010 until December 2013; Mr. McCallister joined Humana in June 1974; Current Director of AT&T Inc. and of Zoetis Inc.
|
2011 |
37,562 |
.0054% | ||||||||||||
Mr. McCallister’s qualifications for service as a director include 39 years of experience in the health care sector at Humana, Inc. combined with an intimate knowledge of Humana’s operational, financial, and strategic development. Beyond Humana, Mr. McCallister plays a leadership role in key business advocacy organizations. He served on the board of the Business Roundtable and is the past chair of the organization’s Health and Retirement Task Force.
|
Name, Age, and Principal Occupation During the Past Five Years
| Director Since
| Number(2)
| Percent of Class
| |||||||||||||
| Marsha C. Williams,66 Retired Senior Vice President & Chief Financial Officer of Orbitz Worldwide, Inc. from July 2007 to December 2010; Executive Vice President & Chief Financial Officer of Equity Office Properties Trust from 2002 to 2007; Supervisory Director of Chicago Bridge & Iron Company N.V.; Lead Independent Director of Modine Manufacturing Company; Director of the Davis Funds.
| 2008 | 31,751 | .0046% | ||||||||||||
Ms. Williams’ qualifications for service as a director include her extensive experience in financial matters including 42 years in finance and her service as the Chief Financial Officer of Orbitz and Equity Office Properties Trust as well as her service on the board of directors of other publicly traded corporations and mutual funds. Ms. Williams also possesses knowledge and experience in the financial services industry gained through her 15 years of service with other banking organizations.
|
All directors and executive officers as a Group (22 persons) | 2,765,194 | .3974% |
(1) As reported to Fifth Third Bancorp by the Directors as of the date stated. Includes shares held in the name of spouses, minor children, certain relatives, trusts, estates, and certain affiliated companies as to which beneficial ownership may be disclaimed. As of January 31, 2018, none of the Company’s current executive officers or directors owned any Series H Preferred Stock, Series I Preferred Stock, Series J Preferred Stock, or any Depositary Shares representing interests in Series H Preferred Stock, Series I Preferred Stock, or Series J Preferred Stock.
(2) The amounts shown represent the total shares owned outright by such individuals together with stock appreciation rights exercisable (or exercisable within 60 days) as of January 31, 2018 but unexercised and shares of common stock underlying outstanding restricted stock units. Specifically, the following individuals have the number of stock appreciation rights exercisable (or exercisable within 60 days) as of January 31, 2018 indicated after their names: Ms. Hoover, 500; Mr. Carmichael, 772,860. The amounts listed for stock appreciation rights represent the number of rights that may be exercised; the actual number of shares delivered will vary based on
Fifth Third Bancorp | 2018 Proxy Statement | 17 |
| ELECTION OF DIRECTORS |
the stock’s appreciation over the grant price at the time of exercise. The aggregate number of stock appreciation rights currently exercisable (or exercisable within 60 days) but unexercised held by the executive officers who are not also directors or nominees is 528,188. Directors owned the following number of restricted stock units as of January 31, 2018: Nicholas K. Akins, 21,490; B. Evan Bayh III, 20,611; Jorge L. Benitez, 10,728; Katherine B. Blackburn, 16,602; Emerson L. Brumback, 20,611; Jerry W. Burris, 7,045; Greg D. Carmichael, 260,112; Gary R. Heminger, 20,611; Jewell D. Hoover, 20,611; Eileen A. Mallesch, 7,045; Michael B. McCallister, 21,490; and Marsha C. Williams, 25,423. Some directors have deferred receipt of the common stock underlying certain of their restricted stock units: B. Evan Bayh III, 15,988; Jerry W. Burris, 5,289, Gary R. Heminger, 15,988; Jewell D. Hoover, 5,522; and Marsha C. Williams, 25,423. All directors and executive officers as a group own 942,635 restricted stock units. 303,010 of these restricted stock units are subject to vesting within 60 days of January 31, 2018.
VOTE REQUIREDVote Required
Under Ohio law and the Company’sour Articles of Incorporation and Code of Regulations, as long as cumulative voting is not in effect, in an uncontested election of directors (i.e., an election where the number of candidates nominated for election to the Board of Directors equals the number of directors to be elected), each person receiving a greater number of votes “for” his or her election than votes “against” his or her election will be elected as a director. In the event of a contested election or if cumulative voting is in effect, the twelve nominees receiving the greatest number of votes “for” their election shall be elected. The Company hasWe have also adopted provisions of itsour Corporate Governance Guidelines stating that, as long as cumulative voting is not in effect, in an uncontested election of directors, any nominee for director who receives a greater number of votes “against” his or her election than votes “for” his or her election will promptly tender his or her resignation to the Chair of the Board following certification of the shareholder vote. The Nominating and Corporate Governance Committee will promptly consider the tendered resignation and will recommend to the Board whether to accept or reject the tendered resignation no later than 60 days following the date of the shareholders’ meeting at which the election occurred. In considering whether to accept or reject the tendered resignation, the Nominating and Corporate Governance Committee will consider factors deemed relevant by the Committeeits members including, without limitation, the director’s length of service, the director’s particular qualifications and contributions to Fifth Third, the reasons underlying the majority against“against” vote (if known) and whether these reasons can be cured, and compliance with stock exchange listing standards and the Corporate Governance Guidelines. The Board will act on the Nominating and Corporate Governance Committee’s recommendation no later than 90 days following the date of the shareholders’ meeting at which the election occurred. In considering the Nominating and Corporate Governance Committee’s recommendation, the Board will consider the factors considered by that committeethe Nominating and Corporate Governance Committee and such additional information and factors the Board believes to be relevant.
If any nominee(s) shall be unable to serve, which is not now contemplated, the proxies will be voted for such substitute nominee(s) as the Nominating and Corporate Governance Committee of the Board of Directors recommends. Proxies in the form solicited hereby which are returned to the Companyus and not revoked will be voted in favor of the twelve (12) nominees specified above unless otherwise instructed by the shareholder. Abstentions and shares not voted by brokers or other entities holding shares on behalf of beneficial owners will not be counted and will have no effect on the outcome of the election in accordance with Ohio law and the Company’sour Articles of Incorporation and Code of Regulations.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” EACH OF THE
OF THE CANDIDATES FOR DIRECTOR NAMED ABOVE.
BOARD OF DIRECTORS, ITS COMMITTEES, MEETINGS AND FUNCTIONS
18 | Fifth Third Bancorp | 2018 Proxy Statement |
The
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Our Board of Directors of the Company met twelve (12)eleven (11) times during 2016. The Company’s2017. Our Board of Directors also regularly holds executive sessions of those members of the Board of Directors who meet the then current standards of independence. TheIn 2017, the chair at these executive sessions iswas the Chair of the Company’s Board of Directors. In 2018, following the election of Mr. Carmichael as Chair of the Board of Directors, executive sessions of members of the Board who meet the current standards of independence will be led by the Lead Director.
No current member of theour Board of Directors of the Company attended less than 75% of the aggregate meetings of the Board of Directors and all committees on which such director served during 2016.2017.
Neither the Board nor the Nominating and Corporate Governance Committee has implemented a formal policy regarding director attendance at the Annual Meeting; however, the Board typically holds a Board meeting directly following the Annual Meeting. In 2016,2017, all directors except Mr. McCallister,Ms. Blackburn attended the Annual Meeting.
During 2016,2017, there were six (6)five (5) committees of the Board of Directors: Audit, Human Capital and Compensation, Finance, Nominating and Corporate Governance, Regulatory Oversight, and Risk and Compliance.
TheOur Audit Committee of the Company was established in accordance with Section 3(a)(58)(A) of the Exchange Act and serves in a dual capacity as the Audit Committee of the CompanyFifth Third Bancorp and Fifth Third Bank. Twelve (12) meetings of thisthe Audit Committee were held during 2016. This2017. The Audit Committee’s functions include the engagement of the independent external audit firm, reviewing with that firm the plans and results of the audit engagement of the Company, approving the annual audit plan and reviewing the results of the procedures for internal auditing, reviewing the independence of the independent external audit firm, reviewing the Company’sour financial results and periodic SEC filings, reviewing the design and effectiveness of the Company’sour internal controls and similar functions, and approving all auditing andnon-auditing services performed by itsour independent external audit firm. Another function of the Audit Committee is to carry out the statutory requirements of a bank audit committee as prescribed under applicable law. The Audit Committee also oversees the administration of Fifth Third’s Code of Business Conduct and Ethics and considers any material waivers thereto. The Audit Committee members for 20162017 were Emerson L. Brumback (Chair), Katherine B. Blackburn, Jewell D. Hoover, and Marsha C. Williams. Jerry W. Burris, also served onand Jewell D. Hoover. Marsha C. Williams was a member of the Audit Committee beginning in December 2016.from January through April 2017. All members of the Audit Committee met the independence standards of Rule 5605(a)(2) and the audit committee qualifications of Rule 4350(d)(2) of the National Association of Securities Dealers listing standards. The Board of Directors has determined that Emerson L. Brumback and Marsha C. Williams areis an audit committee financial expertsexpert for the CompanyFifth Third Bancorp and areis independent as described in the preceding sentence. The Board of Directors has adopted a written charter for the Audit Committee, which may be found in the Corporate Governance section of the Company’sour website at www.53.com. The formal report of the Audit Committee with respect to the year 20162017 is on page 6366 herein.
TheOur Finance Committee of the Company serves in a dual capacity as the Finance Committee of the CompanyFifth Third Bancorp and Fifth Third Bank. The Finance Committee met six (6) times in 2016. This2017. The Finance Committee exercises, during the intervals between the meetings of the Board of Directors, all the powers of the Board of Directors of the CompanyFifth Third Bancorp and Fifth Third Bank in the management of the business, properties, and affairs of the Company and Fifth Third Bankboth entities that may be permissibly exercised by a committee thereof. The Finance Committee consisted
Fifth Third Bancorp | 2018 Proxy Statement | 19 |
| BOARD OF DIRECTORS, ITS COMMITTEES, MEETINGS AND FUNCTIONS |
of Gary R. Heminger (Chair), Nicholas K. Akins, Emerson L. Brumback, Jewell D. Hoover, Michael B. McCallister, and Marsha C. Williams. Former Directors James P. Hackett and Kevin Kabat also served on the Finance Committee from January through April 2016. The Board of Directors has adopted a Finance Committee charter which may be found in the Corporate Governance section of the Company’sour website at www.53.com.
The Company has aOur Human Capital and Compensation Committee is comprised entirely of independent directors. The Human Capital and Compensation Committee met six (6)seven (7) times during 2016.2017. Executive compensation and equity plan allocations are determined by this Committee of the Board of Directors. In 2016,2017, the Human Capital and Compensation Committee consisted of Michael B. McCallister (Chair), Nicholas K.
BOARD OF DIRECTORS, ITS COMMITTEES, MEETINGS AND FUNCTIONS
Akins, Gary R. Heminger, and Eileen A. Mallesch. Former Director Hendrik G. Meijer.Meijer also served on the Human Capital and Compensation Committee from January through April 2017. The Board of Directors has adopted a Human Capital and Compensation Committee charter which may be found in the Corporate Governance section of the Company’sour website at www.53.com. The formal report of the Human Capital and Compensation Committee with respect to 20162017 compensation is on page 4751 herein.
The Company has aOur Nominating and Corporate Governance Committee is comprised entirely of independent directors. The Nominating and Corporate Governance Committee met four (4) times during 2016. This2017. The Nominating and Corporate Governance Committee develops and recommends to the Board corporate governance policies and guidelines for the Company and for the identification and nomination of director and committee member candidates and nominates directors for election to the Board and appointment to committee membership. In 2016,2017, the Nominating and Corporate Governance Committee consisted of Nicholas K. Akins (Chair), B. Evan Bayh III, Jorge L. Benitez, Katherine B. Blackburn, Gary R. Heminger and Marsha CC. Williams. Former Director Ulysses L. Bridgeman, Jr. also served on the Nominating and Corporate Governance Committee from January through April 2016. The Board of Directors has adopted a Nominating and Corporate Governance Committee charter which may be found in the Corporate Governance section of the Company’sour website at www.53.com.
The Company’sOur Risk and Compliance Committee serves in a dual capacity as the Risk and Compliance Committee of the CompanyBancorp and the Bank. The Risk and Compliance Committee met twelve (12)ten (10) times in 2016. This2017. The Risk and Compliance Committee is responsible for the risk management policies of the Company’sFifth Third’s global operation and oversight of its global risk management framework.framework, including processes for identifying, assessing, managing, monitoring, and reporting risks of all types, including the categories of credit risk, market risk, liquidity risk, operational risk (including cyber security risk), regulatory compliance risk, legal risk, reputational risk, and strategic risk. The Risk and Compliance Committee consisted of five independent directors: Jewell D. Hoover (Chair), B. Evan Bayh III, Jorge L. Benitez, Jerry W. Burris, and Eileen A. Mallesch. Marsha C. Williams and former director Hendrik G. Meijer and Marsha C. Williams. Eileen A. Mallesch also served on the Risk and Compliance Committee beginning in December 2016.from January through April 2017. The Board of Directors has adopted a Risk and Compliance Committee charter which may be found in the Corporate Governance section of the Company’sour website at www.53.com.
The Company had a Regulatory Oversight Committee. In December 2016, the Board of Directors approved the dissolution of the Regulatory Oversight Committee upon completion of regulatory alignment, which occurred in the first quarter of 2017. Upon dissolution of the Regulatory Oversight Committee, the charter of the Risk and Compliance Committee was amended to include certain responsibilities previously held by the Regulatory Oversight Committee. In 2016, the Regulatory Oversight Committee of the Company was comprised entirely of independent directors and served in a dual capacity as the Regulatory Oversight Committee of the Company and Fifth Third Bank. The Regulatory Oversight Committee met six (6) times in 2016. This Committee oversaw the Company’s supervisory issues and enforcement and the Company’s efforts to remediate them. It consisted of Marsha C. Williams (Chair), Nicholas K. Akins, Katherine B. Blackburn, Emerson L. Brumback, and Jewell D. Hoover. The Board of Directors adopted a Regulatory Oversight Committee charter which was available in the Corporate Governance section of the Company’s website at www.53.com before the dissolution of the Committee.
20 | Fifth Third Bancorp | 2018 Proxy Statement |
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The Board of Directors has adopted the Fifth Third Bancorp Corporate Governance Guidelines which may be found in the Corporate Governance section of the Company’sour website at www.53.com. The Board of Directors has also adopted the Fifth Third Bancorp Code of Business Conduct and Ethics which applies to the Company’sour directors; its Chief Executive Officer, Chief Financial Officer, and Controller; and itsour other employeesemployees. The Code of Business Conduct and Ethics may also be found in the Corporate Governance section of the Company’sour website at www.53.com.
BOARD LEADERSHIPBoard Leadership.
The Board believes that the Company’sour shareholders are best served by a Board that has the flexibility to establish a leadership structure that fits theour needs of the Company at any particular point in time. Accordingly, under the Company’sour Code of Regulations and Corporate Governance Guidelines, the Board of Directors has the authority to combine or separate the positions of Chair and Chief Executive Officer as well as determine whether, if the positions are separated, the Chair is an affiliated director or an independent director.
Currently, the same person does not serve as the Company’sThe Board’s Chair is currently Fifth Third’s Chief Executive Officer and Board Chair. The Company’sits former Chair, Marsha C. Williams, is anon-executive director.the Lead Independent Director. The Board believes that this leadership structure is appropriate at this time given the current timecontributions Mr. Carmichael has given to date in order to allow the Chairhis role as CEO and his ability to provide supportstrategic and guidanceoperational leadership. The Board determined that leadership by our CEO coupled with our strong Lead Independent Director, experienced Committee Chairs, and our other well-qualified directors, all of whom are independent, will allow Fifth Third to grow and meet the Chief Executive Officer while also allowing the Board to have a separate director handle governance matters and coordinate meetings of independent directors. These decisions were based, in part, on the qualifications of the Chair who has 42 years of experience in finance including her service as the Chief Financial Officer of Orbitz and Equity Office Properties Trust as well as her service with other banking organizations.
From time to time, the Board may consider combining the role of Chair and Chief Executive Officer or utilizing a Lead Director. These decisions will be dependent on themake-up of the Board at that timechallenges facing it and the availabilityindustry.
Under our Code of Regulations and willingness of candidates for Chair and/orCorporate Governance Guidelines, our Lead Independent Director who meet any expertise and experience criteria and qualifications identified by the Board, as well as other factors.will:
The role
Risk management oversight and governance is provided primarily by the Risk and Compliance Committeeimplementation of the Board of DirectorsCompany’s Corporate Governance Guidelines;
Fifth Third Bancorp | 2018 Proxy Statement | 21 |
| CORPORATE GOVERNANCE
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Risk Management Oversight.The role of the Board of Directors is to provide oversight to ensure an effective enterprise risk management program is in place, including an appropriate enterprise risk management framework and related governance structure. The Board sets our overall risk appetite, including the establishment and monitoring of risk tolerances. The formulation of risk appetite considers our operating capacity, which is represented by its available financial resources, defined as Tier 1 Capital less our largest capital buffer (Common Equity Tier 1 Capital Policy Target less the Basel III Buffered Common Equity Tier 1 Minimum), that sets an absolute limit on risk assumption in our annual financial and strategic plans. Our risk appetite is limited by policy to a maximum of 95 percent of operating capacity. Tolerances are the maximum amount of risk applicable to each of the eight specific risk categories included in the enterprise risk management framework. Through their oversight role, directors ensure that the risk management processes designed and implemented under this framework and governance structure are aligned to the Board’s corporate strategy and are functioning as directed. The Board also considers the optimal organizational structure at both the Board and management levels. This may include delegating responsibility through Board committees, management committees, the Chief Executive Officer, and the Chief Risk Officer.
Risk management oversight and governance is provided primarily by the Risk and Compliance Committee of the Board of Directors and through the Enterprise Risk Management Committee, a management committee that reports to it. The Enterprise Risk Management Committee is supported by several management committees whose membership includes a broad cross-section of line of business and support representatives. The Risk and Compliance Committee of the Board of Directors currently consists of five outside directors and has responsibility for the oversight of our risk management, as well as ensuring that risks are properly controlled, quantified, and within our risk appetite.
The primary purpose of the Risk and Compliance Committee is responsibility for the risk management policies of our global operation and oversight of its global risk management framework.
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The Risk and Compliance Committee charter outlines more specific responsibilities under all categories of risk. The Chief Risk Officer has a direct reporting relationship to the Chief Executive Officer and the Risk and Compliance Committee and has regular executive sessions with the Risk and Compliance Committee without other members of management present. In addition, the Director of Credit Risk Review reports directly to the Risk and Compliance Committee.
Communication with the Board. Shareholders may communicate directly to the Board of Directors in writing by sending a letter to the Board at: Fifth Third Bancorp Board of Directors, c/o Fifth Third Legal Department, Office of the Corporate Secretary, 38 Fountain Square Plaza, MD 10909F, Cincinnati, OH 45263. All communications directed to the Board of Directors will be received and processed by the Fifth Third Legal Department and will be transmitted to the Nominating and Corporate Governance Committee.
The Audit Committee has also established Fifth Third’s EthicsLine, a toll-free hotline through which confidential complaints may be made regarding: illegal or fraudulent activity; questionable accounting, internal controls or auditing matters; conflicts of interest, dishonest or unethical conduct; disclosures in the Company’s SEC reports, bank regulatory filings, and other public disclosures that are not full, fair, accurate, timely, and understandable; violations of the Company’s Code of Business Conduct and Ethics; and/or any other violations of laws, rules, or regulations. The contact information for the EthicsLine is available in the Company’s Code of Business Conduct and Ethics, which is available at the Company’s website. Complaints submitted through this process are presented to the Audit Committee on a regular, periodic basis.
SHAREHOLDER COMMUNICATION WITH INVESTOR RELATIONS DEPARTMENT
Shareholders who wish to speak to a Fifth Third representative regarding their investment in Fifth Third may communicate directly with Fifth Third’s Ethics Line, a toll-free hotline and web portal through which confidential complaints may be made regarding: illegal or fraudulent activity; questionable accounting, internal controls or auditing matters; conflicts of interest, dishonest or unethical conduct, including incentive gaming; disclosures in the Company’s SEC reports, bank regulatory filings, and other public disclosures that are not full, fair, accurate, timely, and understandable; violations of our Code of Business Conduct and Ethics; and/or any other violations of laws, rules, or regulations. The contact information for the Ethics Line is available in the Code of Business Conduct and Ethics, which is available at our website. Complaints submitted through this process are presented to the Audit Committee on a regular, periodic basis.
Shareholder Communication with Investor Relations Department.Shareholders who wish to speak to a Fifth Third representative regarding their investment in Fifth Third may communicate directly with our Investor Relations Department by calling866-670-0468. In addition, shareholders may communicate in writing directly with the Investor Relations Department by sending a letter to 38 Fountain Square Plaza, MD 1090QC, Cincinnati, OH 45263 or by emailing ir@53.com. Shareholders can also view information and request documents from the Investor Relations page of Fifth Third’s website at www.53.com.
Fifth Third Bancorp | 2018 Proxy Statement | 23 |
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In 2017, the director compensation program was revised to eliminate per meeting fees in favor of an annual retainer system. The following table illustrates the 2017 compensation structure fornon-employee directors. In addition to the compensation described below,non-employee directors are reimbursed for reasonableout-of-pocket expenses incurred for travel and attendance related to meetings of the Board of Directors or its committees. To the extent available, directors may travel on corporate aircraft for board or committee meetings where their attendance is expected.Non-employee directors are not authorized to use corporate aircraft for their personal use. Employee directors receive no compensation for their Board service.
Element of Compensation | Position | 2017 Amount(1) | ||||||
Annual retainer (cash) | Chair | $200,000 | ||||||
Member | $85,000 | |||||||
Annual committee chair retainer (cash) | Audit Committee | Chair | $45,000 | |||||
Member | $10,000 | |||||||
Risk & Compliance Committee | Chair | $45,000 | ||||||
Member | $10,000 | |||||||
Human Capital & Compensation Committee | Chair | $25,000 | ||||||
Nominating & Corporate Governance Committee | Chair | $20,000 | ||||||
Finance Committee | Chair | $55,000 | ||||||
Restricted stock units2 | Chair | $150,000 | ||||||
Member | $125,000 |
(1) Payments are made in arrears on a quarterly basis each January, April, July, and October, with the exception of restricted stock units (“RSUs”) which are granted on the annual meeting date.
(2) All long term incentive (“LTI”) compensation granted to the Board of Directors vests on the Board service end date unless deferral instructions are received prior to the year the grant is made.
The Company’s 2017 Incentive Compensation Plan provides that the Human Capital and Compensation Committee has full authority to provide equity-based or other incentive awards tonon-employee directors. Equity-based awards shown in the table on the following page were granted under the 2017 Incentive Compensation Plan. In 2017, the Company had a stock ownership guideline for its directors of shares having a value equal to at least $300,000. Directors have five years from their election date to meet this requirement.
Pursuant to the Fifth Third Bancorp Unfunded Deferred Compensation Plan forNon-Employee Directors, directors may annually elect to defer fromone-half to all of their cash compensation. The deferred funds receive earnings based on the mutual fund(s) elected by each director. The directors do not receive any above-market or preferential earnings. Prior to June 23, 2017, directors had the option to defer contributions into Fifth Third stock; that option was discontinued for future contributions effective June 23, 2017.
24 | Fifth Third Bancorp | 2018 Proxy Statement |
BOARD OF DIRECTOR COMPENSATION | |
The following table summarizes the compensation earned by or awarded to eachnon-employee director who served on the Board of Directors during 2017. The amounts listed in the Stock Awards column represent a restricted stock unit award that vests once service as a director ends. The award relates to the fiscal year in which it was granted. Directors did not receive any Option Awards orNon-Equity Incentive Plan Compensation in 2017.
2017 Director Compensation
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Name
| Fees Earned or Paid in Cash ($) | Stock Awards ($)(1)(2) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Nonqualified Deferred Compensation Earnings ($) | All Other Compensation ($)(3) | Total ($) | |||||||||||||
Nicholas K. Akins
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| $96,750
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| $125,000
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| —
| —
| —
| $11,544
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| $233,294
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B. Evan Bayh III
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| $87,250
|
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| $125,000
|
| —
| —
| —
| $12,141
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| $224,391
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Jorge L. Benitez
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| $87,250
|
|
| $125,000
|
| —
| —
| —
| $4,765
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| $217,015
|
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Katherine B. Blackburn
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| $85,250
|
|
| $125,000
|
| —
| —
| —
| $8,754
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| $219,004
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Emerson L. Brumback
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| $117,500
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|
| $125,000
|
| —
| —
| —
| $12,141
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| $254,641
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Jerry W. Burris
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| $100,895
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| $125,000
|
| —
| —
| —
| $3,297
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| $229,192
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Gary R. Heminger
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| $121,000
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|
| $125,000
|
| —
| —
| —
| $12,141
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| $258,141
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Jewell D. Hoover
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| $131,000
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|
| $125,000
|
| —
| —
| —
| $12,141
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| $268,141
|
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Eileen A. Mallesch
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| $95,895
|
|
| $125,000
|
| —
| —
| —
| $3,297
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| $224,192
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Michael B. McCallister
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| $96,500
|
|
| $125,000
|
| —
| —
| —
| $13,189
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| $234,689
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Hendrik G. Meijer(4)
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| $39,750
|
|
| —
|
| —
| —
| —
| $10,201
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| $49,951
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Marsha C. Williams
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| $150,000
|
|
| $150,000
|
| —
| —
| —
| $15,289
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| $315,289
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(1) The values shown for stock awards in 2017 in both the Director Compensation Table and the table below reflect the grant date fair value of $24.01, which was the closing price of Fifth Third stock on the April 18, 2017, grant date.
(2) The full fair value of stock awards granted in 2017 totaled $1,400,000. Outstanding stock appreciation and restricted stock units for current directors totaled 192,280 shares as of December 31, 2017 as shown below.
(3) Amounts include RSA and RSU dividends.
(4) Mr. Meijer did not stand forre-election at the April 18, 2017 annual meeting and stepped down from the Board effective on the meeting date. As such, he did not receive a stock award in 2017. Fees paid are for service provided prior to April 2017.
Outstanding Equity Awards at December 31, 2017
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Director
| Option Awards (#) | Stock Awards (#) | ||
Nicholas K. Akins
| —
| 21,385
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B. Evan Bayh III
| —
| 20,611
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Jorge L. Benitez
| —
| 10,728
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Katherine B. Blackburn
| —
| 16,520
| ||
Emerson L. Brumback
| —
| 20,611
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Jerry W. Burris
| —
| 7,010
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Gary R. Heminger
| —
| 20,611
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Jewell D. Hoover
| 500
| 20,611
| ||
Eileen A. Mallesch
| —
| 7,010
| ||
Michael B. McCallister
| —
| 21,385
| ||
Marsha C. Williams
| —
| 25,298
|
Fifth Third Bancorp | 2018 Proxy Statement | 25 |
| BOARD OF DIRECTOR COMPENSATION |
Director compensation for 2018 was reviewed by the Human Capital and Compensation Committee in consultation with its independent compensation consultant in light of best practices, peer institution benchmarking, and other relevant factors. Based upon this review, the Human Capital and Compensation Committee determined that director pay is well aligned and the only change made to the Director Pay Program for 2018 related to the inclusion of an annual retainer of $65,000 and annual grant of $150,000 in restricted stock units for the position of Lead Director, which was a newlyre-instituted role in response to the reunification of the CEO and Chair roles.
26 | Fifth Third Bancorp | 2018 Proxy Statement |
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The Company’s Compensation Discussion and Analysis provides information concerning the compensation for our executive officers. This information is set forth in the following sections:
Executive Summary
Summary of Executive Compensation | ||
Highlights of 2017 Company Performance | ||
Compensation Methodology and Structure | ||
• | Compensation Philosophy | |
• | Features of our Executive Compensation Program | |
• | Compensation Risk Management | |
• | Committee’s Role | |
• | Role of Executive Officers in Compensation Decisions | |
• | Role of the Third-party Compensation Consultant | |
• | Benchmarking Methodology | |
• | Tally Sheet | |
• | Non-Binding Say-on-Pay Proposal | |
• | Compensation Structure | |
• | Pay Mix and Pay for Performance
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• | Base Salary | |
• | 2017 Variable Compensation Plan Design | |
• | Variable Compensation Plan Performance Goals | |
• | Performance Against Variable Compensation Plan Goals | |
• | Determination of Variable Compensation Plan Awards | |
• | 2017 Long-term Equity-based Incentive Compensation Plan Design | |
• | Other Long-term Equity-based Plan Provisions | |
• | Determination of Long-term Equity-based Incentive Awards | |
• | Qualitative Performance Assessments | |
• | The Committee’s Considerations
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Tax and Accounting Impacts of Compensation Programs | ||
2018 Executive Compensation Plan Design Changes | ||
• | 2018 Variable Compensation Plan Changes | |
• | 2018 Long-term Equity-based Incentive Plan Changes
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Executive Benefits and Perquisites | ||
• | Summary of Eligibility for Benefits and Perquisites | |
• | Retirement Benefits | |
• | Health and Welfare Benefits | |
• | Deferred Compensation | |
• | Severance and Change in Control Benefits
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Executive Ownership and Capital Accumulation | ||
| Share Ownership Guidelines | |
• | Beneficial Ownership | |
• | Prohibition on Hedging | |
• | Claw backs and Recoupments |
Fifth Third
| 27 |
| COMPENSATION DISCUSSION AND ANALYSIS
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In the various sections of this Compensation Discussion and Analysis, we will describe our compensation methodology and structure and how pay decisions were made in 2017. We will focus on the compensation of individuals who served in the following roles during fiscal year 2017, which are referred to as our “Named Executive Officers” or “NEOs”:
Greg D. Carmichael | Chairman, President, and | |
Tayfun Tuzun | Executive Vice President and | |
Lars C. Anderson | Executive Vice President and | |
Timothy N. Spence | Executive Vice President and Head of Payments, Strategy, and Digital Solutions | |
Frank R. Forrest | Executive Vice President and Chief Risk Officer |
Summary of Executive Compensation Programs
At Fifth Third, we endeavor to attract and retain the best people and motivate them to fulfill the Company’s Vision of becoming the One Bank that people most value and trust. We intend to accomplish this in the way that we consider our shareholders’ long-term interests, by establishing compensation programs that reward our people for delivering products and services our customers highly value, and for avoiding excessive risk. Our compensation philosophy acts as our beacon in this endeavor.
Compensation is delivered through three primary elements:
Base Salary | + | Annual Cash Incentive (Variable Compensation Plan) | + | Long Term Incentive (Equity-based Compensation) |
The Company typically pays base salary and annual incentive compensation (Variable Compensation Plan) awards in cash. All long-term equity-based incentive compensation awards are paid in shares of the Company’s common stock. These three elements combined define Total Direct Compensation, which is referred to in the discussion that follows.
When making pay decisions, the Human Capital and Compensation Committee (as used in the Compensation Discussion and Analysis, the “Committee”) considers the aggregate and mix of an executive officer’s Total Direct Compensation and reviews Company performance results, individual performance, and risk assessment information to ensure that pay decisions align with performance.
Our executive compensation program includes several features that help to address potential concerns about risk:
Potential for downward discretionary pay adjustment based on risk performance assessment; includes results of examinations by our banking regulators, internal examinations by our audit staff, and a qualitative review by the chief risk officer. |
Caps on the maximum payment under our Variable Compensation Plan and our Performance Share Plan. |
Balanced mix of short-term and long-term compensation. |
Forfeiture provisions related to material risk events. |
Stock ownership and retention guidelines. |
Restitution rights for compensation received as a result of misconduct. |
28 | Fifth Third Bancorp | 2018 Proxy Statement |
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Summary of Executive Compensation Best Practices.Our executive compensation program incorporates certain best practices such as:
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COMPENSATION DISCUSSION AND ANALYSIS
Highlights of 2017 Company Performance
Project NorthStar. In 2017, we made significant progress on initiatives outlined under Project NorthStar. We re-launched our brand, continued to exit non-strategic commercial relationships, and invested in strategic acquisitions and partnerships to help grow fee revenues. We also began to implement a number of other key initiatives to drive improvements in customer service, increase efficiency, and generate revenue growth. On the regulatory front, we received notification that our Community Reinvestment Act (“CRA”) rating was upgraded to outstanding, demonstrating our commitment to the communities we serve. We again created significant value for our shareholders by continuing to monetize our ownership stake in Vantiv Holding LLC, subsidiary of Worldpay, Inc. We were proud to receive important recognition as a leader in customer service and employee satisfaction in several surveys.
Following are highlights of 2017 Company performance results:
Ongoing improvement in all NorthStar financial targets: - Return on - Return on assets
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We are entering 2018 with a strong balance sheet as a result of the significant steps taken in 2017, positioning us well to capitalize on future opportunities.
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| COMPENSATION DISCUSSION AND ANALYSIS
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Compensation Methodology and Structure
Compensation Philosophy.Our compensation methodology and structure centers on our compensation philosophy, which comprises the following guiding principles:
In order to drive our business strategy and human capital plan, compensation must be competitive to
attract and retain essential talent, reward high performance, and be internally equitable. The Company is committed to making compensation decisions that are fiscally responsible, such that we carefully consider the expected return on investment for those decisions. Our expected total compensation opportunities generally reflect the median pay levels of our compensation peer group, with variations based on specific talent needs, experience, and other internal factors. We believe that actual total compensation should
vary with the performance of the organization so that outstanding performance results in above-market compensation. Since a majority of compensation is tied to performance, actual total compensation will vary within a competitive range.
Features of our Executive Compensation Program.Our executive compensation program incorporates features such as:
Paying for performance.
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Incorporating risk-balancing features. | |||||||||||||||||||||||||
Including double-triggerchange-in-control provisions. | |||||||||||||||||||||||||
Providing no excise taxgross-ups to executive officers. | |||||||||||||||||||||||||
Maintaining share ownership guidelines and | |||||||||||||||||||||||||
Prohibiting speculative trading and hedging strategies by executive officers. | |||||||||||||||||||||||||
Utilizing an independent compensation consultant hired and overseen by the Committee. | |||||||||||||||||||||||||
Providing minimal perquisites. | |||||||||||||||||||||||||
Granting long-term incentives onpre-determined dates. | |||||||||||||||||||||||||
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Including claw back features in all executive officer variable pay. |
30 | Fifth Third Bancorp | 2018 Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS | |
Compensation Risk Management.We believe it is critical to bring a multi-faceted strategy toward mitigating risk in incentive plans. We incorporate formulaic and discretionary risk-balancing mechanisms, which include specific metrics for modifying payouts to discourage taking unnecessary or imprudent risks. Senior executive pay also includes a heavy focus on long-term incentives. This facilitates collaboration among business units, ownership in the Company, and a focus on shareholder goals.
To execute the risk mitigation strategies, we conduct yearly review processes, which are documented and incorporate input from business segments including Finance, Human Resources, Risk Management, and business leaders. These processes include:
We believe it is critical that our people clearly understand how they are rewarded to ensure that pay facilitates the appropriate strategic and risk awareness behaviors. Because of this, we provide ongoing compensation communication and education to our employees through a robust network of Human Resources business partners staffed to each business segment, in addition to employee communications, and online trainings.
In February 2017, the Committee, in conjunction with the Risk and Compliance Committee, reviewed our executive and other incentive programs. Based on the provisions and actions above, the Committee concluded that their design and/or metrics do not encourage taking unnecessary or inappropriate risk.
Committee’s Role.The Committee is composed of independent directors and is responsible for establishing, implementing, and monitoring the administration of compensation and benefits programs in accordance with the Company’s compensation philosophy and strategy, along with approving executive compensation and equity plan awards. The Committee focuses on the attraction and retention of key executives and, when making decisions, considers the Company’s compensation philosophy, the achievement of business goals set by the Company, relevant peer data, recommendations made by the chief executive officer, and the advice of Compensation Advisory Partners LLC (“CAP”), a respected, independent, external executive compensation consulting firm with financial services industry expertise hired by the Committee.
The Committee seeks to establish “Total Rewards” for the Company’s executive officers that are fair, reasonable, risk-balanced, and competitive. The Total Rewards program includes base salary, Variable
Fifth Third Bancorp | 2018 Proxy Statement | 31 |
| COMPENSATION DISCUSSION AND ANALYSIS
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Compensation Plan awards, long-term equity-based incentive compensation, benefits, and certain perquisites. Generally, the types of compensation and benefits paid to Named Executive Officers are similar to those provided to other officers of the Company.
The Committee followed several key processes during 2017 to ensure that it effectively carried out its responsibilities:
Engaged CAP to provide the Committee with relevant market data and to advise the Committee on alternatives when making compensation decisions for the Named Executive Officers and on the recommendations
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Provided oversight of incentive and variable compensation practices and balanced risk-taking across the Company with the Compensation Risk Oversight Committee (a management committee that reports to the Committee).
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Conducted an annual review of the Company’s compensation philosophy to ensure that it remains appropriate given the Company’s strategic objectives.
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Evaluated the execution of the Company’spay-for-performance philosophy to ensure that the actual award decisions resulted in relative pay that aligns with Company performance and also aligns with pay in the Compensation Peer Group
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Reviewed all compensation components for the Company’s chief executive officer, chief financial officer, and other Named Executive Officers,
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Completed
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Role of Executive Officers in Compensation Decisions.The chief executive officer annually reviews the performance of each of the other Named Executive Officers, along withwhich includes a risk performance assessment.assessment completed by the Company’s chief risk officer. Based on this review, the chief executive officer makes compensation recommendations to the Committee, including recommendations for salary adjustments, annual cash incentives,Variable Compensation Plan awards, and long-term equity-based incentive awards. In addition, the chief executive officer and certain other members of management also annually assess performance for other executive officers and make compensation recommendations to the Committee. Although the Committee considers these recommendations along with data provided by its other advisors,consultant, it retains full discretion to set all compensation for the Company’s executive officers. The Committee works directly with its consultant, CAP, to determine compensation for the chief executive officer andofficer; the chief executive officer has no input into his own award determinations.
Additionally, the chief risk officer reviews and evaluates with the Committee all executive officer and employee incentive compensation plans. The purpose of the review is to confirm that the Company’s incentive compensation plans do not incent or pose unnecessary or excessive risks to the Company.
COMPENSATION DISCUSSION AND ANALYSIS
32 | Fifth Third Bancorp | 2018 Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS | |
The Role of the Third-Party Compensation Consultant.The Committee uses the services of its outside executive compensation consultant, CAP, to provide guidance and advice to the Committee on all matters covered by its charter. This consultant was directly selected and engaged by the Committee to provide a broad set of services pertaining to the compensation of the Company’s executives.
The consultant fulfills the following responsibilities:
Reviews the Company’s compensation philosophyexecutives and competitive positioning for reasonableness and appropriateness.
Reviews the Committee’s charter annually and recommends changes as appropriate.
Reviews the Committee’s agendas and supporting materials in advance of each meeting.
Advises the Committee on management proposals, as requested.
Reviews information from a peer group of publicly traded banking and financial institutions (collectively the “Compensation Peer Group”) and survey data for competitive comparisons.
Reviews the Company’s executive compensation programs annually and advises the Committee on the design of incentive plans or practices that might be changed to improve the effectiveness of its compensation program.
Reviews competitive pay practices of the Compensation Peer Group for its Boards of Directors annually and recommends to the Committee changes required to pay the Company’s Board of Directors, in a competitive fashion.
Reviews, analyzes, and summarizes survey data on executive pay practices and amounts that come before the Committee.
Attends all Committee meetings, including executive sessions.
Advises the Committee on potential practices for Board governance of executive compensation as well as areas of concern and risk in the Company’s programs.
Undertakes special projects at the request of the Committee.
During 2016, CAP was specifically engaged on the following projects:
Advising the Committee with respect to the appropriateness of compensation structure and actual amounts paid to the Company’s executive officers given the Company’s compensation philosophy, size, and Compensation Peer Group.
Participating actively in the review and design of all executive compensation programs.
Advising on the appropriateness of executive performance goals and metrics.
Reviewing and advising on the compensation program for the Company’s Board of Directors.
Reviewing the Company’s risk assessment of executive and employee incentive plans.
Advising the Committee on market and regulatory trends and developments.
Providing recommendations to the Committee on the compensation of the chief executive officer.
Assessing the relationship between the chief executive officer’s compensation and performance on a realizable pay basis.
Reviewing the 2015 Compensation Discussion and Analysis and related sections for the 2016 proxy statement.
Assisting the Committee in collecting and summarizing Board feedback on the performance of the chief executive officer, chief risk officer, chief credit risk officer, and chief auditor.
COMPENSATION DISCUSSION AND ANALYSISthese key actions:
Advising the Committee on compensation program design, competitive practices, market trends, and peer group composition.
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Providing recommendations to the Committee on the compensation of the chief executive officer. |
Providing advisory recommendations to the Committee and members of management regarding the compensation of the other executive officers. |
Reviewing competitive pay practices in the Compensation Peer Group for their Boards of Directors and recommending to the Committee changes required to pay the Company’s Board of Directors in a competitive fashion. |
Providing an annual review of performance and pay levels for the Company and its Compensation Peer Group. |
Undertaking special projects at the request of the Committee, including during 2017, reviewing the methodology and the process for determining the median employee as required under the CEO Pay Ratio disclosure. |
The Company does not engage CAP for additional services outside of executive compensation consulting.
The Committee conducted an assessment of potential conflicts of interest ofand independence issues for CAP and no conflicts of interest or independence issues relating to CAP’s services were identified by
the Committee.
The Committee’s Considerations.The Committee considers both the aggregate amounts and mix of an executive officer’s Total Direct Compensation (base salary, annual cash incentive compensation, and long-term equity-based incentive compensation) when making decisions. The Committee assessed Total Direct Compensation relative to competitive market data during its December 2015 meeting. The Committee discussed recommendations for executive compensation and approved final merit, annual cash incentive awards (our Variable Compensation Plan), and final long-term incentive recommendations at its February 2016 meeting.
Based on its most recent review of the competitive data, the Committee has determined that the compensation structure for executive officers is effective and appropriate. The structure reflects the Company’s compensation philosophy, in that its incentive payout ranges are aligned with the competitive market data, it has appropriate leverage to ensure a strong linkage between compensation, risk outcomes, and performance, and it drives rewards based on the most relevant performance measures for the Company and shareholders.
The Committee also has reviewed the internal relationships between the compensation for the chief executive officer and for other executive officers and has deemed them to be appropriate. The Committee believes that the relative difference between the compensation of the chief executive officer and the compensation of the Company’s other executive officers is consistent with such differences found in the Company’s Compensation Peer Group.
EXECUTIVE COMPENSATION PHILOSOPHY AND RISK MANAGEMENT
Compensation Philosophy.The Company endeavors to attract and retain the best people in the financial services industry and motivate them to fulfill the Company’s Vision of becoming the One Bank that people most value and trust. We intend to accomplish this in the way that we consider our shareholders’ long-term interests, by establishing compensation programs that reward our people for delivering products our customers highly value, and avoiding excessive risk. Our compensation philosophy comprises the following guiding principles:
Provide competitive compensation opportunities in order to attract and retain executive talent that will drive the business strategy.
Manage risk effectively within incentive programs designed to pay for performance.
Align compensation with long-term shareholder interests.
Provide strong oversight of executive pay.
Conduct recurring processes that ensure strategic and fiscal soundness along with balanced risk taking.
Communicate for understanding and transparency.
In order to drive our business strategy and human capital plan, compensation must be competitive to attract and retain essential talent, reward high performance, and be internally equitable. In addition, the Company is committed to making compensation decisions that are fiscally responsible, such that we carefully consider the expected return on investment for those decisions. Our expected total compensation opportunities generally reflect the median pay levels of our peer group with variations based on specific talent needs, experience, and other internal factors. We believe that actual total compensation should vary with the performance of the organization, such that outstanding performance results in above market compensation. Since a majority of compensation is tied to performance outcomes, actual total compensation will vary within a competitive range.
COMPENSATION DISCUSSION AND ANALYSIS
Compensation Risk Management.We believe it is critical to bring a multi-faceted strategy toward mitigating risk in incentive plans. We incorporate formulaic and discretionary risk-balancing mechanisms, which outline specific metrics for modifying payouts to discourage unnecessary or imprudent risk-taking actions.
Senior executive pay also includes a heavy focus on long-term incentives. This long-term focus facilitates collaboration among business units, ownership in the Company, and a focus on shareholder goals.
To execute the risk mitigation strategies, we conduct yearly review processes, which are documented and incorporate input from Finance, Human Resources, Risk Management, and business leaders. These processes include:
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As a result of the process and applicable financial institution regulation, our compensation program for our Named Executive Officers has several features that help to address potential concerns about risk:
Downward discretionary pay adjustment based on risk performance assessment which includes results of examinations by our banking regulators, internal examinations by our audit staff, and a qualitative review by the chief risk officer.
Caps on the maximum payment under our annual cash incentive plan and our performance share (“PSA”) plan.
Balanced mix of short-term, medium-term, and long-term compensation.
Forfeiture provisions related to material risk events.
Stock ownership and retention guidelines.
Restitution rights for compensation received as a result of misconduct.
Finally, we believe it is critical that our people clearly understand how they are rewarded to ensure that pay facilitates the appropriate strategic and risk awareness behaviors. Because of this, we provide ongoing compensation communication and education.
In December 2015, the Committee, in conjunction with the Risk and Compliance Committee, reviewed our executive and other incentive programs. Based on the provisions and actions above, the Committee concluded that their design and/or metrics do not encourage unnecessary and/or inappropriate risk taking.
COMPENSATION DISCUSSION AND ANALYSIS
COMPENSATION STRUCTURE AND METHODOLOGY
Compensation Structure. The compensation structure (i.e., each element of pay described below and the respective amounts for each element) for executive officers is reviewed annually. When determining the compensation structure, the following items are considered:
The most recent and prior years’ comparative proxy statement and survey data for similar positions among the Compensation Peer Group.
The 25th percentile, median (i.e., 50th percentile), and 75th percentile peer data for each element of compensation (base salary, target annual cash incentive compensation, and target long-term equity-based incentive compensation, as well as the resulting Total Direct Compensation).
The ability to provide market median (i.e., 50th percentile) Total Cash Compensation (i.e., base salary plus annual cash incentive compensation) for 50th percentile performance relative to the Compensation Peer Group.
The ability to provide upper quartile Total Cash Compensation for upper quartile performance (i.e., 75th percentile or better performance relative to the Compensation Peer Group).
Benchmarking Methodology.In making compensation decisions, the Committee compares Company performance and each element of executive officers’ Total Direct Compensation with the Compensation Peer Group. The Committee refers to this Compensation Peer Group for both compensation and performance-related benchmarking.benchmarks. Financial performance data is prepared either by the Committee’s external compensation consultant or by the Company, using data from public filings. Compensation data is generally prepared by the Committee’s external compensation consultants, using proprietary compensation databases and publicly available data from proxy statements. The Committee’s consultant reviews all financial and/orand compensation data that is prepared by the Company and provided to the Committee.
The Compensation Peer Group consists of companies with which the Committee believes the Company competes for talent and for stockholder investment and which are generally similar in asset size and business mix. The following 1211 companies were identified by the Committee as the 20162017 Compensation Peer Group:
BB&T Corporation | The PNC Financial Services Group, Inc. | |
| Regions Financial Corporation | |
Comerica Incorporated | SunTrust Banks, Inc. | |
Huntington Bancshares Incorporated | ||
| U.S. Bancorp | |
KeyCorp | Zions Bancorporation | |
M&T Bank Corporation |
Fifth Third Bancorp | 2018 Proxy Statement | 33 |
| COMPENSATION DISCUSSION AND ANALYSIS |
The Committee annually reviews the Compensation Peer Group and considers changes to the Compensation Peer Group deemed necessary to ensure that the nature and size of the organizations continue to be appropriate. Based on the Committee’s evaluation of the Compensation Peer Group, for 2016 in regard to the business mix, size, and ongoing challenges with pay levels at these institutions, Wells Fargo and Company and Capital One will no longer be included inFinancial Corporation were removed from the Compensation Peer Group starting in 2017. Citizen’s2017 because of those institutions’ business mix, size, and differences in pay models. Citizens Financial Group will beInc. was added based on its similar size and business structure to that of the Company. The Company’s assets were at approximately the 56th55th percentile of its 20162017 Compensation
Peer Group as of June 2016.
COMPENSATION DISCUSSION AND ANALYSIS
Pay for Performance.Under the compensation structure, annual cash and long-term incentives comprise the majority of executive officers’ Total Direct Compensation. The actual amounts realized by executive officers under these incentive plans vary based on the performance of the Company and individual performance. Company performance is evaluated from a variety of perspectives, including:
Absolute performance and performance relative to peers.
Return measures including return on average equity.
Growth in earnings per share.
Efficiency ratio.
Stock price growth.
Risk performance assessment.
Annual cash incentive compensation awards to executive officers are approved from a pool funded on the basis of Company performance relative to the specific goals described below. This pool of available compensation awards is allocated to each participant based on qualitative assessments of individual performance against a set of stated objectives and individual risk assessment. Long-term equity-based incentive compensation awards also are made to each participant based on qualitative assessments of individual performance against a set of stated objectives and individual risk assessment. Long-term equity-based incentive compensation awards derive value based on shareholder return and stock price appreciation. Amounts realizable from prior compensation awards do not influence decisions relative to future awards.
Pay Elements and Pay Mix. Under thepay-for-performance compensation structure, compensation is delivered through three primary elements:
Base salary.
Annual cash incentive (delivered through the Variable Compensation Plan).
Long-term incentives.
The 2016 total compensation included a mix of cash and equity awards. The Company typically pays base salary and the annual incentive compensation in cash. All long-term equity-based incentive compensation awards are paid in shares of the Company’s common stock. Generally, our Named Executive Officers have approximately 50 percent or more of total compensation delivered in the form of equity-based compensation. The charts below show the mix between cash and equity for our chief executive officer and average pay mix for our other NEOs:
COMPENSATION DISCUSSION AND ANALYSIS
Tally Sheet. The Company annually prepares a tally sheet of all compensation and potential payouts for
the Committee’s use when considering compensation matters. The Committee reviews all components
of compensation for the Company’s chief executive officer, chief financial officer, and the other NEOs’ compensation,
NEOs, including:
Base salary. |
Variable Compensation Plan compensation. |
Long-term equity-based incentive compensation targets. |
Accumulated, realized, and unrealized equity award gains. |
The dollar value to the executive and cost to the Company of all perquisites and other personal benefits. |
The earnings and accumulated payout obligations under the Company’s nonqualified deferred compensation plan. |
Several potential termination scenarios, includingchange-in-control where applicable. |
Base salary.
Annual cash incentive compensation.
Long-term equity-based incentive compensation.
Accumulated, realized, and unrealized equity award gains.
The dollar value to the executive and cost to the Company of all perquisites and other personal benefits.
The earnings and accumulated payout obligations under the Company’s nonqualified deferred compensation plan.
Several potential termination scenarios, includingchange-in-control where applicable.
The Committee reviewed all the above compensation components and the associated dollar amounts for 20152016 compensation in June 2016. Moving this review tomid-year allows for a more focused look at each executive’s compensation components, separate from when annual pay recommendations are being made.2017. At that time, the Committee also reviewed a sensitivity analysis of the relationship between each NEO’s 20152016 Total Direct Compensation and the Company’s performance––performance, including both stock price performance and Company performance results. The Committee will perform the annual tally sheet review specific to 20162017 compensation components later in June 2017.2018.
Non-Binding AdvisorySay-on-Pay Proposal.In 2017, our shareholders approved anon-binding advisorysay-on-pay proposal at our 2017 Annual Meeting with 94 percent of the votes cast in favor of that proposal. The Committee reviews the results annually and considers them when approving plan design changes as well as pay decisions. The Committee believes the results of the shareholder vote in 2017 as well as in prior years indicate strong support among shareholders for ourpay-for-performance approach. Future votes cast will be closely monitored to ensure that there is continued support for our pay programs and pay decisions among our shareholders.
Historical Say on Pay Vote
34 | Fifth Third Bancorp | 2018 Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS | |
Compensation Structure. The compensation structure (including each element of pay described below and the respective amounts for each element) for executive officers is reviewed annually. When determining the compensation structure, the following items are considered:
The most recent and prior years’ comparative proxy statement and survey data for similar positions among the Compensation Peer Group. |
The 25th percentile, median (50th percentile), and 75th percentile peer data for each element of compensation (base salary, Variable Compensation Plan compensation, and target long-term equity-based incentive compensation, as well as the resulting Total Direct Compensation). |
The ability to provide market median (50th percentile) Total Cash Compensation (i.e., base salary plus Variable Compensation Plan awards) for 50th percentile performance relative to the Compensation Peer Group. |
The ability to provide upper quartile Total Cash Compensation for upper quartile (i.e., 75th percentile or better relative to the Compensation Peer Group) performance. |
Pay Mix and Pay for Performance.Generally, our Named Executive Officers have approximately 50 percent or more of their actual total compensation delivered in the form of equity-based compensation, as demonstrated in the charts on the following page.
Determinations.2017 Total Compensation Pay Mix1
(1) The percentages reflect the Named Executive Officer’s base salary as of December 31, 2017, actual Variable Compensation Plan award the executive earned for 2017, and target long-term equity-based incentive for 2017. Actual long-term equity-based incentives granted will vary from target based on 2017 Company and individual performance and were approved by the Committee in January 2018.
The Committee considers several factors and objectives relevant to each specific program when determining compensation, including a risk performance assessment.compensation. The Committee also contemplates the impact of each award on the Total Direct Compensation package. Total Direct Compensation opportunities are intended to target the median (i.e., 50th(50th percentile) of the relevant market data, and actual compensation (both amount and mix) for executives varies based on their performance, prior experience, and other pertinent factors. In addition, for purposes of attracting and retaining key executives, the Committee may determine that an additional award, an above-mediansign-on package, and/or an incentive guarantee for a new hire, or a Total Direct Compensation package that is above market median, is appropriate.
Fifth Third Bancorp | 2018 Proxy Statement | 35 |
| COMPENSATION DISCUSSION AND ANALYSIS |
As shown in the pay mix charts on the previous page, the Variable Compensation Plan award and long-term equity-based incentives constitute the majority of executive officers’ Total Direct Compensation under ourpay-for-performance structure. The actual amounts realized by executive officers under these incentive plans vary based on individual performance and the performance of the Company.
Company performance under these incentive plans is evaluated from a variety of perspectives, including:
2016 EXECUTIVE COMPENSATION PLAN DESIGN AND AWARD DECISIONS2017 Executive Compensation Plan Design and Award Decisions
As stated above, compensation is delivered through three primary elements: base salary, our Variable Compensation Plan, and long-term equity-based incentives. We review and assess our compensation practices and program on an annual basis, taking into account the Company’s strategic objectives, compensation philosophy, regulatory guidance, risk culture, and external market practices. Each element of the senior executive’s compensation program, along with any changes that were made to the program for 2017, are described in the following paragraphs.
Base SalarySalary..The Committee reviews individual base salaries of the Company’s executive officers annually and/or at the time of promotion or hire, as applicable. The objectives of the Company’s base salary program are to provide salaries at a level that allows the Company to attract and retain qualified executives and to recognize and reward individual performance. The following items are considered when determining base salary levels:
Market data provided by the Company’s external compensation consultant.
The executive officer’s experience, scope of responsibilities, performance, and potential.
Internal equity in relation to other executive officers with similar levels of experience, scope of responsibilities, performance, and potential.
Other relevant information, which may include federal programs or regulatory requirements.
Market data provided by the Company’s external compensation consultant. |
The executive officer’s experience, scope of responsibilities, performance, and potential. |
Internal equity in relation to other executives with similar levels of experience, scope of responsibilities, |
Other relevant information, which may include governmental or regulatory considerations. |
Salary increases, if any, are based on the Company’s overall performance and the executive’s attainment of individual objectives during the preceding year in the context of competitive market data.
COMPENSATION DISCUSSION AND ANALYSIS
Thisyear. The annual review and evaluation at the beginning of 2017 showed that modest base salary increases ranging from 2 percent to 5 percent were needed for two NEOs that had fallen significantly belowin order to maintain pay levels competitive with the market median for their roles. Increases of 17 percent for Chad M. Bortonmarket. Mr. Carmichael, Chairman, President, and 21 percent for Tayfun Tuzun were needed to bring these individuals within 90 percent and 89 percent, respectively, of the market median for their roles. The remaining NEO’s receivedChief Executive Officer, did not receive a base salary adjustments ranging from 0 percent to 2 percent.increase in 2017.
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COMPENSATION DISCUSSION AND ANALYSIS | |
2016 Annual Cash Incentive2017 Variable Compensation Plan DesignDesign.. The annual cash incentive compensation program’sVariable Compensation Plan’s objective is to reward executives for corporate, business unit, and/orand individual performance. Each year, we review and updateBelow is a graphic presentation of the design of our VCP program to ensure alignment with our business strategy, regulatory guidance, and the external market. For 2016, the three primary funding measures were:2017 Variable Compensation Plan:
It is the view of the Committee that primarythis mix of core funding measures within the VCP program providemetrics provides executives with balanced incentivesincentive to increase the absolute level of earnings while also ensuringgrowth, ensures that shareholder capital is used efficiently to generate competitive returns. Adjusted efficiency ratio is useful as a complementary measure as it provides an assessment ofreturns, and assesses the cost efficiency of the Company’s operations.
In addition The funding modifiers are useful as complementary metrics to the primary funding measures, there are three funding modifier metrics that the Committee considers to adjust the calculated pool funding up or down, as described in more detail below:
add focus onNon-performingbest-in-class assets
Capital levels
Liquidity coverage ratio
business processes. The Committee retains discretion to adjust pool funding downward based on other factors
as well.
For 2016, there were two changes madeVariable Compensation Plan awards to executive officers are approved from a pool funded on the VCP program comparedbasis of Company performance relative to 2015. Net charge-offs were removedspecific goals. This pool of available compensation awards is allocated to each participant based on qualitative assessments of individual performance against a set of stated objectives and an individual risk assessment. Amounts realizable from the list of funding modifiers and Available Liquidity was changedprior compensation awards do not influence decisions relative to Liquidity Coverage Ratio. It was determined that net charge-offs were already appropriately included within the core funding metrics and was considered to be duplicative as a stand-alone funding modifier. Available Liquidity was changed to Liquidity Coverage Ratio due to the implementation of the Liquidity Coverage Ratio measure effective January 1, 2016 by the Federal Reserve Bank.
COMPENSATION DISCUSSION AND ANALYSIS
future awards.
VCPVariable Compensation Plan Performance Goals.The financial plan approved by the Board of Directors includes specific target levels for each of the measures that arecore funding metrics as shown below.below and assumes a Quartile 2 funding pool. Actual performance against these targets is considered, in addition to the threefour funding modifiers, when determining the available funding for all participants of the VCP.Variable Compensation Plan. The Committee set the 2016 performancegoals for the 2017 core funding metrics to exclude certainnon-recurring items not included in the Company’s financial plan and excluded those items when determining the adjusted
Fifth Third Bancorp | 2018 Proxy Statement | 37 |
| COMPENSATION DISCUSSION AND ANALYSIS |
Company performance results.metrics. These exclusions are discussed on the following page. The goals for the senior executive pool under the VCP,Variable Compensation Plan, which includes all senior executives designated as Category 1 in accordance with the federal banking interagency guidance on sound incentive compensation practices (which includes all NEOs), were scaled to represent four quartiles of performance. Each quartile contains a performance level range, a score, a score range, and a funding pool range. The funding pool ranges are set starting with Quartile 4 which represents the sum of the maximum opportunity available for each senior executive who participates in the pool, which generally aligns with the 75th percentile of the market for each participant.
| Weight | Company Performance Levels | ||||||||||
Below |
| Quartile Score: | Quartile Score: | Quartile 3 Score: 3 | Quartile 4 Score: 4 | |||||||
Earnings Per Share (EPS) | 50% | $ | $ | $ | ||||||||
(ROA) | 25% | |||||||||||
Efficiency Ratio (FTE) | 25% | ³ 65.7% | 65.6% to 64.7% | 64.6% to 63.6% | 63.5% to 62.5% |
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Score Range | 0 | < 1.5 | ³ 1.5 < 2.5 | ³ 2.5£ 3.0 | > 3.0 - £ 4.0 | |||||||
Funding Pool Ranges | ||||||||||||
$0M | £ $6.8M | £ $9.9M |
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To determine the VCPVariable Compensation Plan funding pool, each performance measurecore funding metric is reviewed to determine the performance quartile that was achieved and the associated score is assigned. The overall funding score represents the sum of the weighted average score for each performance measure.core funding metric. The overall funding score is compared to the quartile score ranges to determine the preliminary funding pool range.
As mentioned in the above Plan Design section, theThe Committee may use the funding modifiers to increase or decrease the preliminary funding score. The Committee may exercise discretion to increase a preliminary funding score up to a maximum of 0.66 points; however, downward discretion is not capped and can be made in any amount deemed appropriate. These measures
Funding Modifier | Threshold Goal | Target Goal | Exceptional Goal | |||
Non-performing assets | 75th peer percentile | Peer median | 25th peer percentile | |||
Capital levels | Meet required regulatory minimum | Exceed target levels | ||||
Liquidity coverage ratio | Meet required regulatory minimum | Exceed target levels | ||||
Customer experience | > 1 achieved | 3 – 5 achieved | > 5 achieved |
38 | Fifth Third Bancorp | 2018 Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS | |
Performance against Variable Compensation Plan Goals.The Company performed well against the goals set for the Variable Compensation Plan for 2017. Consistent with our practice used in setting goals and evaluating performance metrics, we use adjusted Company performance metrics to determine performance against our plan targets. Adjusted Company performance metrics are determined by first excluding financial effects of certain events in order to reflect core financial performance in the plan year. In determining the preliminary 2017 adjusted Company performance metrics for 2016the plan, we excluded:
The net gain resulting from the Company’s third quarter 2017 Vantiv, Inc. share sale; |
A charge related to the valuation of the Company’s Visa total return swap; |
Items resulting from the Tax Cuts and Jobs Act including a remeasurement of deferred tax liability, a remeasurement of portfolio carrying values for leveraged leases, an impairment related to affordable housing investments, a contribution to the Fifth Third Foundation, and aone-time employee bonus; and, |
Treasury securities gains / losses. |
After excluding the items listed above and making further adjustments to account for the effects from a preliminary funding pool greater than Quartile 2, the adjusted Company performance metrics for the Variable Compensation Plan for 2017 would be an adjusted EPS of $1.80, an adjusted ROA of 1.02%, and an adjusted taxable equivalent efficiency ratio of 64.1%.
Adjusted Core Funding Metrics | 2017 Reported Metrics | 2017 Adjusted Metrics (Including effects of preliminary funding pool) | ||
EPS
| $2.83
| $1.80
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ROA
| 1.56%
| 1.02%
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Efficiency Ratio (FTE)
| 56.6%
| 64.1%
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In addition to these key financial performance metrics, we met or exceeded target on the funding modifiers are outlined below:considered by the Committee in assessing annual performance:
Funding Modifier | 2017 Actual | |
Non-performing assets | 38th peer percentile | |
Capital levels | Exceeded | |
Liquidity coverage ratio | Exceeded | |
Customer experience | At target |
Fifth Third Bancorp | 2018 Proxy Statement |
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COMPENSATION DISCUSSION AND ANALYSIS
Determination of VCP AwardsVariable Compensation Plan Awards.. As described inon the VCP Performance Goals section, to determineprevious page, each core funding metric is assigned a score based on the VCP funding pool, eachquartile of its performance measure is reviewedand these scores are then weighted to determine an overall funding score and performancewhich then determines the quartile as well as the associated score for the preliminary funding pool range. For 2016, the Company’s pro forma results on adjusted EPS relative to our target were within the fourth quartile, results on adjusted RORWA were within the third quartile, and the adjusted efficiency ratio was within the second quartile. Using the sum of the weighted average score for each performance measure as set forth above,2017, the overall funding score would have been 3.25 as shown below. This would havewas 3.00, which resulted in a preliminary Quartile 43 funding pool of up to $15.7$13.7 million for the senior executives.
Pro Forma Adjusted Performance Measures | 2016 Pro Forma | Score | Weight | Weighted Score (Score x Weight) | ||||
EPS | $1.67 | 4 | 50% | 2.00 | ||||
RORWA | 1.07% | 3 | 25% | 0.75 | ||||
Efficiency Ratio | 64.6% | 2 | 25% | 0.50 | ||||
Core Funding Score | 3.25 |
Adjusted Core Funding Metrics
| 2017 Adjusted Metrics
| Quartile Score
| Weight
| Weighted Score (Score * Weight)
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EPS
| $1.80
| 3
| 50%
| 1.50
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ROA
| 102 bps
| 4
| 25%
| 1.00
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Efficiency Ratio (FTE)
| 64.1%
| 2
| 25%
| 0.50
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Core Funding Score
| 3.00
|
The Committee then considered the three funding modifiers and determined that the performance against these modifiers was in line with goals. Considering this performance, and after taking into account otherthe Committee then performed a quantitative and qualitative assessment of other financial factors the Committee exercised its discretion and approved a negative adjustment to the poolpreliminary funding pool. The decision to reduce it toapprove a Quartile 3 pool of up to $12.1 million or 77 percent of the maximum pool. This negative adjustment was based on a review of overall performance against peers and the need to generate a higher and more sustainable level of profitability, as reflected in our goals under NorthStar. This adjustment reduced the compensation expensesqualitative assessment of the Company. As a result of this reduction to compensation expense, the final adjusted EPS, RORWA and efficiency ratio were as set forth in the “2016 Performance Results” as set forth on page 26.
COMPENSATION DISCUSSION AND ANALYSISfollowing items:
The benefits to planned net interest income from the market interest rate levels; |
A lower than planned fee income growth offset by lower than planned expenses charge related to the valuation of the Company’s Visa total return swap; |
Lower than planned loan growth; and |
The associated impact on loan loss provision combined with lower loan losses. |
This negative adjustment to the preliminary funding pool reduced it to a Quartile 2 funding pool of up to $9.9 million, or 56 percent of the maximum pool.
40 | Fifth Third Bancorp | 2018 Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS | |
When making the final determination of individual awards using the approved Quartile 32 pool, the Committee had the benefit of information relating to market median and market 75th percentile compensation levels and 2016 Company financial performance as well as the adjustments noted above.performance and risk assessment rating information. Considering these factors and each individual’s qualitative performance assessment (described for each NEO in the qualitative performance assessments section below) and risk performance assessment, the Committee thought it appropriate to make final individual award decisions that totaled approximately 9899 percent of the approved $12.1$9.9 million pool. These included a VCPVariable Compensation Plan award of 7663 percent of the CEO’s individual maximum and VCPVariable Compensation Plan awards ranging from 6747 percent to 9065 percent of individual maximums for the other NEOs.
Fifth Third Bancorp | 2018 Proxy Statement | 41 |
| COMPENSATION DISCUSSION AND ANALYSIS |
20162017 Long-term Equity-based Incentive Compensation Plan Design.The objective of the long-term equity-based incentive programplan is an important piece of the compensation mix for our Named Executive Officers. The objectives of our plan, the types of equity-based awards employed under the plan, and areas included in individual performance assessments used to align executives’ interests with shareholders’ interests, to facilitate share ownership amongdetermine award amounts for Named Executive Officers and to link rewards with the long-term performance of the Company. Target award levels are established at the beginning of the year for each executive officer based on market median compensation for each position. Award levels are not automatically made at target. The actual award levels are based on Company performance and the Committee may include qualitative assessments of individual performance of each Named Executive Officer in areas such as:are:
The Company’s revenue and expense results.
Division revenue and expenses vs. budget.
Internal and external customer service levels.
Performance relative to the Company’s strategic initiatives.
Results related to specific individual responsibilities.
Results related to specific individual risk assessments.
The Company currently employs three types of long-term equity-based incentive compensation awards: stock-settled stock appreciation rights, restricted stock units, and performance shares. The mix of long-term equity-based incentive compensation awards for its executive officers (including all NEOs) was reviewed in 2016 to ensure that it effectively supported the Company’s objectives of:
Aligning management and shareholders’ interests.
Motivating senior executives to optimize long-term shareholder value.
COMPENSATION DISCUSSION AND ANALYSIS
Encouraging stock ownership among senior executives.
Enhancing the Company’s ability to retain key executives.
Ensuring the program design is consistent with our compensation philosophy and reflective of external market trends.
Strengthening the risk-adjusted pay decisions.
Plan Objectives | Equity Type Mix | |
Align management and shareholders’ interests | ||
Motivate senior executives to optimize long-term shareholder value | ||
Encourage stock ownership among our employees | ||
Enhance the Company’s ability to retain key talent | ||
Ensure the program design is consistent with our compensation philosophy and reflective of external market trends | ||
Strengthen risk-adjusted pay decisions | ||
Areas of Assessment | ||
The Company’s revenue and expense results | Stock Appreciation Right Awards are calculated by taking 15% of the total LTI award amount divided by the SARs Black-Scholes value on the date of grant Restricted Stock Unit Awards are calculated by taking 40% of the total LTl award amount divided by the Company’s closing stock price on the date of grant Performance Share Awards are calculated by taking 45% of the total LTI award amount divided by the Company’s closing stock price on the date of grant | |
Division revenue and expenses vs. budget | ||
Internal and external customer service levels | ||
Performance relative to the Company’s strategic initiatives | ||
Results related to specific individual responsibilities | ||
Results related to specific individual risk assessments |
The Committee believes that a portion of the long-term equity-based incentive compensation opportunity should come from a growth-oriented incentive, (i.e., SARs)specifically Stock Appreciation Rights, or SARs, that alignsalign executives’ interests with those of the Company’s shareholders. In addition, the Committee believes that full-value share awards (i.e.,in the form of performance shares and restricted stock units)units complement each other and are important for driving stronger retention value and enhanced ownership creationownership-creation opportunities, and should therefore be a meaningful portion of the long-term incentive. The Committee also believes that performance shares further the objective of creating a clear connection between results achieved and compensation earned. The Committee determined in 20152016 that the mix of long-term incentives for grants to be made in 20162017 was appropriate based on the Company’s long-term incentive plan objectives, strategic objectives, compensation philosophy, regulatory guidance, risk culture, and competitive practice.
Target award levels are established at the beginning of the year for each executive officer based on market median compensation for each position. Award levels are not automatically made at target. Actual award levels are based on Company performance, and the Committee includes qualitative assessments of individual performance of each Named Executive Officer in areas shown in the graphic display above. Amounts realizable from prior compensation awards do not influence decisions relative to future awards.
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Stock Appreciation Rights. SARs for Named Executive Officers have been and will continue to be granted at the closing price of the Company’s common stock on the date of grant and with a10-year term. Grants made in 2016 have a four-year graded vesting schedule. These award terms are consistent with the annual grant for all eligible employees at the Company.
The grant date is the date of the Committee’s approval of the awards, which will typically beis at a first quarter meeting of the Committee or at the annual shareholder meeting in April. The grant dates for awards made in 20162017 are detailed in the 20162017 Grants of Plan-Based Awards table. The Company does not adjust the timing of its annual grant based on SEC filings or press releases. Rather, the annual grant date is established and communicated well in advance.
DuringStock Appreciation Rights are granted at the 2015 annual plan review cycle,closing price of the vesting schedule forCompany’s common stock appreciation rights granted to executives was changed fromon the date of grant and with a four-year graded schedule to10-year term. Grants made in 2017 have a three-year graded schedule in order to alignvesting schedule. The Company does not grant discounted stock options or SARs,re-price previously granted stock options, or SARs, or grant reload stock options.
Restricted stock units have a three-year graded vesting schedule. These grants are eligible for dividend equivalent payments but do not have voting rights during the vesting schedule among the various equity vehicles. Stock appreciation rights granted in 2017 are the first made with the three-year graded schedule.period.
Performance Share Awards.Performance share grants made in 20162017 were structured as follows:
The primary metric used for our performance share awards is return on average equity (“ROAE”) as adjusted, relative to our peer banks.
To achieve balance between relative and absolute metrics, two absolute performance hurdles must also be met:
COMPENSATION DISCUSSION AND ANALYSIS
In 2017, the performance period for the |
The performance payout grid is shown below. Payout opportunities range from 0 percent to 150 percent of target, with no payout earned if relative ROAE falls below the 25th percentile of the Compensation Peer Group.
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The 2013 performance share award measured performance from April 1, 2013 through March 31, 2016. Totalgranted in 2014 ended. Performance was based on the total shareholder return (“TSR”), relative to the Compensation Peer Group was the metric tied to this grant.measured from April 1, 2014 through March 31, 2017. The threshold performance level to achieve any payout was set at the 33rd percentile relative to peers. The Company’s performance on TSR over the three-year performance period was atunder the 25th33rd percentile, which resulted in azero-share payout in 20162017 for this grant.
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| COMPENSATION DISCUSSION AND ANALYSIS |
The long-term equity-based incentive plan provides incentive for the creation of shareholder value since the full benefit of the grant to each Named Executive Officer can be realized only with an appreciation in the price of the Company’s common shares or based on relative return on average common equity, depending on the type of award.
Restricted Stock Units.Other Long-term Equity-based Plan Provisions. In 2016, The Variable Compensation Plan and long-term equity-based incentive compensation awards made in 2017 were authorized under the Company started granting annual restricted stock awardsCompany’s 2014 Incentive Compensation Plan which was approved and adopted by the Company’s shareholders in the form of restricted stock units, RSUs. Restricted stock units have a three-year graded vesting schedule. These grants are eligible for dividend equivalent payments but do not have voting rights during the vesting period.2014.
For senior executives (including NEOs), a performance-based vesting requirement was introduced in 2013 using ROTCEThe Committee has delegated to certain Named Executive Officers, as a threshold metric before each annualwell as to the chief human resource officer, the authority to grant ordinary course equity grant vesting tranche is earned. The ROTCE threshold goalawards for 2016 was 2 percent. The threshold was put in placerecruiting and retention purposes up to protect against high levels of compensation payouts for poor risk or performance outcomes.specified limits.
Determination of Long-term Equity-based Incentive AwardsAwards..The chief executive officer recommends the award levels for the othereach Named Executive OfficersOfficer except for himself, and the Committee makes the final award determination for all Named Executive Officers.Officers, including the chief executive officer. The award considerations are not based on a formula. Rather, the Committee may choose to make the actual award higher or lower than the target award based on the qualitative assessment of performance against stated objectives as well as the individual’s risk assessment results. The Committee believes that, by including a performance element as part of theup-front grant process, the Company is able to reinforce further reinforce thepay-for-performance objective of the long-term incentives.
These grants provide incentive for the creation of shareholder value since the full benefit of the grant to each Named Executive Officer can only be realized with an appreciation in the price of the Company’s common shares or based on relative return on average common equity, depending on the type of award. The Company does not grant discounted stock options or SARs,re-price previously granted stock options or SARs, or grant reload stock options.compensation structure.
When making the final determination to grant long-term equityequity-based incentive compensation awards in February 2016,2017, the Committee had the benefit ofconsidered information relating to market medianmarket-median compensation levels, Company financial performance during 2015,2016, the qualitative performance assessment described below, and individual risk performance assessments.
Qualitative Performance Assessments.After reviewing this information for 2015,2016, the Committee granted a 20162017 long-term equity incentive compensation award of 106125 percent of target for the chief executive officer and
COMPENSATION DISCUSSION AND ANALYSIS
equity awards ranging from 100 percent to 153133 percent of target for each of the other Named Executive Officers.
Qualitative Performance Assessments.The individual qualitative performance assessment referenced in the discussions above is a review of how each Named Executive Officer performed against a set of stated objectives. This assessment is performed by the Board of Directors with respect to the chief executive officer’s performance and by the chief executive officer with respect to the performance of the other NEOs. The specific objectives assessed for each Named Executive Officer areis as follows.follows:
For Mr. Carmichael: Carmichael:Leadership and execution as president and chief executive officer relating to the NorthStar strategy; short and long-term financial results; driving accountability for a culture of strong risk management; customer and talent goals; and promotion of the Bank’s Core Values: Work as One Bank, Take Accountability, Be Respectful & Inclusive and Act with Integrity. The Variable Compensation Plan award was based on Mr. Carmichael’s 2017 performance against these objectives tiedand his overall contribution to our performance.
The long-term equity-based award granted in February 2017 was based on 2016 performance against objectives of leadership and execution as president and chief executive officer relating to Company
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COMPENSATION DISCUSSION AND ANALYSIS | |
financial performance in a well-managed risk environment; customer and employee index goals; “One Bank” success; and promotion of the Bank’s Core Values of Accountability, Integrity, Respect and Inclusion, and Teamwork and Collaboration.Values.
For Mr. Carmichael’s objectives for 2016 were consistent with those in 2015 while in the role of chief executive officer. The VCP award was based on Mr. Carmichael’s strong 2016 performance against these objectives and his overall contribution to our performance. The LTI award granted in February 2016 was based on 2015 performance against these objectives as well as objectives he had while serving as president and chief operating officer until November 2015.Tuzun:
For Mr. Tuzun: Leadership and execution as executive vice president and chief financial officer relating to objectives concerning balance sheet management; capitalthe management of the 2017 financial plan and liquidity management;financial management of NorthStar initiatives in a well-managed risk management and compliance;environment; operational excellence; maintaining a strong financial team;customer and talent goals; and promotion of the Bank’s Core Values ofValues: Work as One Bank, Take Accountability, Integrity, RespectBe Respectful & Inclusive and Inclusion, and Teamwork and Collaboration.Act with Integrity. The VCPVariable Compensation Plan award was based on 2017 performance against these objectives. The long-term equity-based award granted in February 2017 was based on 2016 performance against these objectives. The LTI award granted in February 2016 was based on 2015 performance against these objectives.
For Mr. Anderson: Leadership and execution as executive vice president and chief operating officer relating to objectives tied to Companystrategic and financial management of line of business financial performanceand NorthStar initiatives in a well-managed risk environment; customer service levels; team work across divisional and functional areas;talent goals; and promotion of the Bank’s Core Values ofValues: Work as One Bank, Take Accountability, Integrity, RespectBe Respectful & Inclusive and Inclusion, and Teamwork and Collaboration. Mr. Anderson’s objectives were consistentAct with Integrity. The Variable Compensation Plan award was based on 2017 performance against these objectives. The long-term equity-based award granted in 2015 and 2016. The VCP awardFebruary 2017 was based on 2016 performance against these objectives. The LTI award granted in February 2016 was based on 2015 performance against these objectives.
For Mr. Borton: Spence: Leadership and execution as executive vice president and head of the Consumer Bankpayments, strategy, and digital solutions relating to objectives tied to Companystrategic outcomes of NorthStar initiatives, payments and line of business financial performancestrategy office in a well-managed risk environment; customer service levels; team work across divisional and functional areas;talent goals; and promotion of the Bank’s Core Values ofValues: Work as One Bank, Take Accountability, Integrity, RespectBe Respectful & Inclusive and Inclusion, and Teamwork and Collaboration.Act with Integrity. The Variable Compensation Plan award was based on Mr. Borton’s objectives were consistentSpence’s 2017 performance against these objectives. The long-term equity-based award granted in 2015 and 2016. The VCP awardFebruary 2017 was based on 2016 performance against these objectives. The LTI award granted in February 2016 was based on 2015 performance against these objectives.
For Mr. Spence: Leadership and execution as executive vice president and chief strategy officer relating to objectives tied to strategic planning and investments; payments; and promotion of the Bank’s Core Values of Accountability, Integrity, Respect and Inclusion, and Teamwork and Collaboration. The VCP award was based on Mr. Spence’s 2016 performance against these objectives. The LTI award granted in February 2016 was based on 2015 performance against these objectives. Forrest:
For Mr. Forrest: Leadership and execution as executive vice president and chief risk officer relating to objectives concerning risk management and compliance; credit loss management;NorthStar initiatives; operational excellence; customer and talent goals; and promotion of the Bank’s Core Values ofValues: Work as One Bank, Take Accountability, Integrity, RespectBe Respectful & Inclusive and Inclusion, and Teamwork and Collaboration. Mr. Forrest’s objectives were consistentAct with Integrity. The Variable Compensation Plan award was based on 2017 performance against these objectives. The long-term equity-based award granted in 2015 and 2016. The VCP awardFebruary 2017 was based on 2016 performance against these objectives.
The LTI award grantedCommittee’s Considerations.The Committee considers both the aggregate amount and mix of an executive officer’s Total Direct Compensation when making the decisions discussed above. The Committee assesses Total Direct Compensation relative to competitive market data annually during its December meeting. Recommendations for executive compensation are reviewed and approved as final during its February meeting.
Based on its most recent review of the competitive data, the Committee has determined that the compensation structure for executive officers is effective and appropriate. The structure reflects the Company’s compensation philosophy in February 2016 wasthat its incentive payout ranges are aligned with the competitive market data; it has appropriate leverage to ensure a strong linkage between compensation, risk outcomes, and performance; and it drives rewards based on 2015the most relevant performance against these objectives.measures for the Company and shareholders.
COMPENSATION DISCUSSION AND ANALYSISThe Committee also has reviewed the internal relationships between the compensation for the chief executive officer and for other executive officers and has deemed them to be appropriate. The Committee
Fifth Third Bancorp | 2018 Proxy Statement | 45 |
| COMPENSATION DISCUSSION AND ANALYSIS |
believes that the relative difference between the compensation of the chief executive officer and the compensation of the Company’s other executive officers is consistent with such differences found in the Company’s Compensation Peer Group.
Tax and Accounting Impacts of Compensation Programs
Other Long-term Equity-based Plan Provisions.Deductibility of Executive Compensation.Section 162(m) of the Internal Revenue Code limits the deductibility of compensation paid to or earned by certain executive officers of a public company. Section 162(m) limits the annual deductibility of certain executive compensation to $1 million per covered executive officer. Certain other limitations on the deductibility of executive compensation will continue to apply to some forms of compensation earned during the Company’s participation in the Troubled Asset Relief Program’s Capital Purchase Program in addition to the limitation under Section 162(m). While the Company’s compensation philosophy has been to consider the deductibility of executive compensation in approving compensation that may not be deductible, the Committee has determined that the underlying executive compensation programs are appropriate and necessary to attract, retain, and motivate senior executives and that failing to meet these objectives creates more risk for the Company than the financial impact of losing the tax deduction. For the year ending December 31, 2017, the tax impact related tonon-deductible compensation expense was approximately $4.1 million.
Accounting and Financial Reporting.The annual cash andCompany accounts for long-term equity-based incentive compensation awards madepayments including stock options, SARs, restricted stock, and performance shares in 2016 were authorized under the Company’s 2014 Incentive Compensation Plan. This Plan was approved and adopted by the Company’s shareholders in 2014.
The Company’s Code of Business Conduct and Ethics provides that the Company reserves the right to and, if appropriate, will seek restitution of any bonus, commission, or other compensation received as a result of an employee’s intentional or knowing fraudulent or illegal conduct or misconduct, including the making of a material misrepresentation containedaccordance with accounting principles generally accepted in the Company’s financial statements.United States (U.S. GAAP).
The Committee has delegated to certain Named Executive Officers, as well as to the chief administrative officer, the authority to grant equity awards for recruiting and retention purposes up to specified limits.
46 | Fifth Third Bancorp | 2018 Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS | |
2017 EXECUTIVE COMPENSATION PLAN DESIGN CHANGES2018 Executive Compensation Plan Design Changes
20172018 Variable Compensation Plan Changes.As stated above, theThe Company and the Committee review the Variable Compensation Plan annually to determine if any changes need toshould be made to the plan for the next year. During 2016,2017, the Company and the Committee reviewed the plan to determine that the right core funding metrics were in place to provide strong business focus and alignment with the business strategy. The Committee determined that the existing core funding metrics and funding modifiers are still appropriate, and it made no changes to them. It was determined, during this reviewhowever, that a core metricmodifications could be made to simplify the design of Return on Assets (“ROA”) would provide better alignment with the Company’s strategic plan and as such, ROACategory 1 pool funding structure while also aligning the design to that of the broad-based plan. Starting in 2018, there no longer will replace RORWA for the 2017be two separate Variable Compensation Plan. In addition, customer experience was added toPlan pool structures for executives and broad-based employees, but instead, one pool structure for all employees. The performance quartile structure will be eliminated, and the plan as acore funding modifier.metrics will be expressed in the same way for executives and broad-based employees. The addition of customer experience tochart below highlights the plan will add specific focus tokey changes made in the cornerstone of our business strategy of “putting the customer at the center of all we do.”new design:
From: | To: | |
Separate VC plans for Category 1 | Same VC plan for Category 1 and broad-based employees. | |
Discretionary pool funding within | Formulaic pool funding based on core performance | |
Pool funding capped at sum of maximums. | Pool funding capped at 150% of target. | |
Discretionary individual award allocations. | Discretionary individual award allocation using | |
Individual award ranges aligned with market. | Individual award targets aligned with market. |
20172018 Long-term Equity-based Incentive Plan Changes.The Company and the Committee also reviewsreview the long-term equity-based incentive plan annually to determine if any changes need to be made to the plan (i.e., award mix, performance measures, modifiers, etc.) for the next year. During 2016,2017, the Company reviewed the long-term incentive plan and decided to make the following changes to continue to strengthen the governance, reporting, competitiveness, and risk-adjusted pay decisions to meet evolving regulatory guidance:
Stock appreciation rights will be eliminated from the broad-based equity mix and grants to eligible non-executive employees will be made 100 percent in restricted stock units. The equity mix for executives will remain the same.
The retirement provision on performance shares will allow for continued vesting of the full target amount instead of reducing target for service worked during the performance period.
The performance metric under the performance share plan will be changed from ROAE to return on average common equity (“ROACE”); this clarification in return measure strengthens thetie-in to common shareholders and drives the Company’s share price performance.
For the Performance Share Plan the payout grid will change so that payout amounts are distributed in 20 point increments in an effort to more evenly spread payout opportunities on the upside as well as the downside of the grid. |
Payouts will continue to be capped at 150 percent for performance starting at the 75th percentile performance of our Compensation Peer Group and no payout will be achieved for performance at or under the 25th percentile. |
These changes will impact any long-term incentives to be granted in 20182019 based on 20172018 performance. The Committee approved the changes at its December 20162017 meeting.
EXECUTIVE BENEFITS AND PERQUISITESExecutive Benefits and Perquisites
Summary of Eligibility for Benefits and Perquisites.The Company provides few benefits and perquisites to executive officers that are not available to the general employee population. Special benefits include an executive physical exam programhealth and fitness programs and a deferred compensation plan. Special perquisites for executives
Fifth Third Bancorp | 2018 Proxy Statement | 47 |
| COMPENSATION DISCUSSION AND ANALYSIS |
include the following: financial planning reimbursement, nominal holiday gifts, and parking. Additionally, spouses or guests of executive officers may be provided travel and/or entertainment benefits related to business events whereat which their attendance is expected and appropriate, such as company recognition events or trips, recruiting meals, or social events held for marketing or other business purposes. These benefits are often provided with little or no incremental cost to the Company. The Company does not provide taxgross-ups for these special perquisites.
Retirement Benefits.The Company’s retirement benefits are designed to assist employees in accumulating wealth to provide income during their retirement years. The retirement benefits are designed to attract and retain
COMPENSATION DISCUSSION AND ANALYSIS
employees and to encourage employees to save money for their retirement while maintaining a competitive cost structure for the Company. Based on the Company’s research using two national benefits surveys, its retirement benefits are positioned near the market median for similar employers. The Company’s primary retirement benefit plan is a defined contribution 401(k) plan with a company match. This plan was amended effective January 1, 2015, as discussed below. The Company also maintains a defined benefit plan that has been frozen and none of the Named Executive Officers participate in the plan.
The Company maintains the same 401(k) plan for all eligible employees, including the Named Executive Officers. The 401(k) plan provides a match to employee contributions. Effective January 1, 2015, the Company’s match iscontributions of 150 percent ofon the first 2 percent and 100 percent ofon the next 4 percent of eligible compensation an employee contributes to the plan, and is invested in any of the plan’s existing investment alternatives that the employee selects. This Company match is immediately 100 percent vested. All Named Executive Officers are eligible for this plan up to the IRS wage or contribution limits. Effective June 23, 2017, the option to invest future contributions in Fifth Third stock was discontinued.
The Company maintains a defined benefit pension plan which was frozen to new participants as of November 15, 1998. Employees who met the age and service requirement at that time are “grandfathered” and continue to accrue benefits under that plan. No Named Executive Officers are participants in this plan.
Health and Welfare Benefits.The Company offers medical, dental, vision, life, and disability insurance to its employees. The benefits are designed to attract and retain employees and provide security to employees and their dependents for their health and welfare needs. Based on the Company’s research using national benefits surveys, its health and welfare benefits are positioned near the market median for similar employers. These benefits are offered to employees and Named Executive Officers on a uniform basis and are subject to insurance policy limitations. The Company also provides to each Named Executive Officer a comprehensive physical exam program. The Company provides Company-paid life insurance coverage equalprogram and access to an employee’s base salary, up to $1 million. The Company’s long-term disability benefit is 60 percent of an employee’s base salary and the benefit is limited to $20,000 per month. The Company also offers a Company-paid short-term disability benefit with similar benefits to the long-term disability program.fitness facility.
Deferred Compensation.The Company offers some of its employees (atat certain salary band levels, including its executive officers)officers, a nonqualified deferred compensation plan. This plan allows for the deferral of base salary and bonus.awards received under the Variable Compensation Plan. The plan also provides for the Company to make a contribution for loss of qualified plan 401(k) match due to deferral of pay into this plan or due to wage and/or contribution limitations under the qualified 401(k) plan. The deferred funds receive earnings based on the mutual funds elected by each executive. Executives may alsoThe executives do not earn any preferential or above-market returns on these earnings. Prior to June 23, 2017, executives were able to elect a rate equal to the return on Company common stock. The executives do not earn any preferential or above market returns.Effective June 23, 2017, that option was discontinued for future contributions.
Severance and Change in Control Benefits.The Fifth Third Bancorp Executive Change in Control Severance Plan (the “Severance Plan”) provides severance benefits to certain officers upon a qualifying termination after a change in control, subject to execution of a release andnon-compete agreement. The plan covers approximately 44 officers, including all of the 2016 Named Executive Officers.
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COMPENSATION DISCUSSION AND ANALYSIS | |
Under the Severance Plan, certain executives will receive severance if, in connection with a change in control, the executive’s employment is terminated without Cause (as defined in the Severance Plan) or the executive resigns for Good Reason (as defined in the Severance Plan). Upon a qualifying termination after a change in control, Messrs. Carmichael, Tuzun, and Anderson are eligible to receive an amount equal to 2.99 times the sum of their Base Salary and Variable Compensation Plan amount (as defined in the Severance Plan), and Messrs. Borton, Spence and Forrest are eligible to receive an amount equal to 2.0 times the same amount (each as defined in the Severance Plan).amount. In addition, continued insurance benefits and certain retirement benefits payablewill be paid to the Named Executive Officers will be paid for three years for Messrs. Carmichael, Tuzun, and Anderson and for two years for Messrs. Borton,
COMPENSATION DISCUSSION AND ANALYSIS
Spence and Forrest. As noted above, no excise taxgross-ups will be provided. For this purpose, a change in control would occur in any of the following instances:
Any person is or becomes the beneficial owner of 25 percent or more of the voting power of the Company’s outstanding securities.
During any consecutivetwo-year period, the directors in office in the beginning of such period (or directors who were approved bytwo-thirds of such directors) cease to constitute a majority of the Board.
The sale or disposition of substantially all of the Company’s assets or the merger or consolidation of the Company with any other corporation unless the voting securities of the Company outstanding prior to such action continue to represent at least 50 percent of the voting power of the merged or consolidated entity.
The Company’s shareholders approve a plan of complete liquidation of the Company.
Any person is or becomes the beneficial owner of 30 percent or more of the voting power of the Company’s outstanding securities. |
During any consecutive 12 month period, the directors in office in the beginning of such period (or directors who were approved bytwo-thirds of such directors) cease to constitute a majority of the Board. |
The sale or disposition of substantially all of the Company’s assets or the merger or consolidation of the Company with any other corporation unless the voting securities of the Company outstanding prior to such action continue to represent at least 50 percent of the voting power of the merged or consolidated entity. |
The Company’s shareholders approve a plan of complete liquidation of the Company. |
The Severance Plan defers to the applicable Incentive Compensation Plans for treatment of long-term equity-based incentive compensation in the event of a change in control. Since April 2008, we have not granted any awards that provide for single trigger“single-trigger” vesting upon a change in control. Instead, the vesting provisions for those awards provide for accelerated vesting only if there is a change in control and a subsequent qualifying termination of employment (i.e., (“double trigger)trigger” vesting). Performance-based awards (performance shares or PSAs) would be paid out at the higher of (1) the extent to which the performance goals had been met through the date of the change in control or (2) the value on the date of the change in control of the number of target shares awarded on the grant date. As discussed above, an annual review of the LTI plan was performed during 2016 where it was decided that several changes were needed to strengthen the governance and competitiveness of our plan. In addition to those changes discussed above, starting
Starting with grants to be made in 2018, the payout provision for performance shares in the event of a change in control will change. Performance-based awards will be paid out at the higher of (1) the extent to which the performance goals had been met through the date of the change in control or (2) the value on the date of the change in control of the number of target shares, in each case prorated based on the portion of the performance period elapsed at the time of the change in control.
TAX AND ACCOUNTING IMPACT OF COMPENSATION PROGRAMSExecutive Ownership and Capital Accumulation
Deductibility of Executive Compensation.Section 162(m) of the Internal Revenue Code limits the deductibility of compensation paid to or earned by certain executive officers of a public company. Section 162(m) limits the annual deductibility of certain(non-performance based) executive compensation to $1 million per covered executive officer. Certain other limitations on the deductibility of executive compensation will continue to apply to some forms of compensation earned during the Company’s participation in the Troubled Asset Relief Program’s Capital Purchase Program in addition to the limitation under Section 162(m). While the Company’s compensation philosophy has been to, where appropriate, position executive compensation to qualify for deductibility, in approving compensation that may not be deductible, the Committee has determined that the underlying executive compensation programs are appropriate and necessary to attract, retain, and motivate senior executives, and that failing to meet these objectives creates more risk for the Company than the financial impact of losing the tax deduction. For the year ending December 31, 2016, the tax impact related tonon-deductible compensation expense was approximately $2.2 million.
Accounting and Financial Reporting. The Company accounts for long-term equity-based incentive compensation payments including stock options, SARs, restricted stock, and performance shares in accordance with accounting principles generally accepted in the United States.
COMPENSATION DISCUSSION AND ANALYSIS
EXECUTIVE OWNERSHIP AND CAPITAL ACCUMULATION
Share Ownership Guidelines.The executive compensation program is designed in part to provide opportunities for executive officers to build ownership in the Company and to align performance with shareholder interests. Accordingly, the Company has established share ownership guidelines for senior employees in the Company’s salary band structure, including the executive officers. The amount of shares required to be retained varies based upon the assigned salary band and associated multiple of base salary. These employees are expected to use shares net of taxes obtained through awards under the long-term
Fifth Third Bancorp | 2018 Proxy Statement | 49 |
| COMPENSATION DISCUSSION AND ANALYSIS |
equity-based incentive compensation program to establish a significant level of direct ownership. Stock ownership includes:
Shares owned | Restricted stock not yet vested. | Shares held in the | Shares held in the | Shares held in the |
Shares owned individually and by immediate family sharing the same household.
Restricted stock not yet vested.
Shares held in the 401(k) plan.
Shares held in the employee stock purchase plan.
Shares held in the nonqualified deferred compensation plan.
Until ownership guidelines are met, executive officers are required to retain 100 percent of the netafter-tax shares following exercise or receipt of shares under the shares.long-term equity-based incentive compensation program. Executives have five years to achieve their executive share ownership requirements. Specific ownership guidelines for the Named Executive Officers are:
Share Ownership Guidelines | ||||
| ||||
Chief Executive Officer | 6x Salary | |||
Other Named Executive Officers | 3x Salary |
The Committee reviews progress toward achieving the ownership goal for the Company’s executive officers on an annual basis. Based onAs of the review performed in June 2016 and as of the June 1, 2016 share price,2017, all of the Named Executive Officers had reached their ownership guideline except Mr. Tuzun. Mr. Tuzun has until 2018 to meet his ownership requirement and is making appropriate progress toward meeting the requirement.guideline.
Beneficial Ownership. The following table sets forth certain information regarding the Named Executive Officers’ beneficial ownership of the Common Stock of the Company as of January 31, 2017:2018:
Title of Class | Name of Officer | Number of Shares Beneficially Owned(1) | Percent of Class | Name of Officer
|
Number of Shares
| Percent of Class
| ||||||||||
Common Stock | Greg D. Carmichael | 1,009,325 | 0.1342% |
Greg D. Carmichael
|
1,172,408
|
.1687
| ||||||||||
Common Stock | Tayfun Tuzun | 167,384 | 0.0223% |
Tayfun Tuzun
|
224,167
|
.0323
| ||||||||||
Common Stock | Lars C. Anderson | 203,430 | 0.0271% |
Lars C. Anderson
|
221,457
|
.0319
| ||||||||||
Common Stock | Chad M. Borton | 117,868 | 0.0157% |
Timothy N. Spence
|
157,968
|
.0228
| ||||||||||
Common Stock | Timothy N. Spence | 175,436 | 0.0233% |
Frank R. Forrest
|
77,856
|
.0112
| ||||||||||
Common Stock | Frank R. Forrest | 77,177 | 0.0103% |
COMPENSATION DISCUSSION AND ANALYSIS
Prohibition on Hedging.The Company prohibits its executive officers from engaging in speculative trading and hedging shares of Company securities. This includes prohibitions against day trading or short selling of Company securities and transactions in any derivative of Company securities, including buying and writing options. Executives are restricted from buying Company securities on margin or using Company
50 | Fifth Third Bancorp | 2018 Proxy Statement |
|
securities as collateral for a loan. Additionally, the Company’s Insider Trading Policy prohibits trading during designated blackout periods and requires approval by the Legal department prior to any trade.
Clawbacks and Recoupments.The Company’s Code of Business Conduct and Ethics provides that the Company reserves the right to and, if appropriate, will seek restitution of any bonus, commission, or other compensation received as a result of an employee’s intentional or knowing fraudulent or illegal conduct or misconduct, including the making of a material misrepresentation contained in the Company’s financial statements.
The following Report of the Human Capital and Compensation Committee does not constitute soliciting material and should not be deemed filed or incorporated by reference into any other Company filing under the Securities Act or the Exchange Act, except to the extent the Company specifically incorporates this Report by reference therein.
The Human Capital and Compensation Committee has reviewed and discussed with management the preceding Compensation Discussion and Analysis. Based on that discussion, the Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement and incorporated into the Company’s Annual Report on Form10-K for the year ended December 31, 2016.2017.
Michael B McCallister, Chair
Nicholas K. Akins
Gary R. Heminger
Hendrik G. Meijer
Fifth Third Bancorp | 2018 Proxy Statement | 51 |
COMPENSATION OF NAMED EXECUTIVE OFFICERS AND DIRECTORS
|
As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(u) of RegulationS-K, we are providing information about the relationship of the annual total compensation of Greg D. Carmichael, our chief executive officer (“CEO”), and the median annual total compensation of our employees. The Company believes that the ratio of pay included in this information is a reasonable estimate calculated in a manner consistent with Item 402(u) of RegulationS-K.
As of December 31, 2017:
Based on this information, for 2017 the ratio of the annual total compensation for our CEO to the median of the annual total compensation of our employees was 145 to 1.
In order to determine this ratio, we first identified one of our employees as the median employee. Since only 11 percent of our employees receive equity compensation, we considered total cash compensation as a consistently applied compensation measure. As allowed by the rules, we excluded our CEO and our 13 employees located outside the United States (11 in Canada and 2 in the United Kingdom) who constitute less than 1 percent of our 18,757 employee base. We then examined the total cash compensation (salary, wages, and bonus) for the remaining employees who were employed on December 31, 2017, as reflected in our payroll records and reported to the Internal Revenue Service on FormW-2 for 2017. In making this examination we annualized the salary of approximately 2,909 full-time employees hired in 2017 who did not work the entire year. We did not annualize the pay of any other type of employee (i.e. part-time,co-ops, etc.) or make any other adjustments to the payroll data.
Once we identified the median employee, we then compared all elements of that employee’s 2017 compensation in accordance with the requirements of Item 402(c)(2)(x) of RegulationS-K; the same methodology we used for our named executive officers in the 2017 Summary Compensation Table on page 54 of this proxy statement, to comparable total compensation of our CEO in order to determine the ratio as shown below:
Chairman, President and CEO
|
Median employee
| |||||||||
Base salary
|
|
$1,000,064
|
|
|
$52,892
|
| ||||
Stock awards
|
|
$4,526,248
|
|
|
$0
|
| ||||
Option awards
|
|
$798,750
|
|
|
$0
|
| ||||
Non-equity incentive plan compensation
|
|
$2,000,000
|
|
|
$2,800
|
| ||||
Change in pension value/Nonqualified deferred compensation earnings
|
|
$0
|
|
|
$0
|
| ||||
All other compensation
|
|
$363,230
|
|
|
$4,386
|
| ||||
TOTAL
|
|
$8,688,292
|
|
|
$60,078
|
| ||||
CEO pay ratio
|
|
145 : 1
|
|
52 | Fifth Third Bancorp | 2018 Proxy Statement |
CEO PAY RATIO | |
December 31, 2017 was the date selected to identify the “median employee” because it is the date consistent with the rest of the discussion included in this proxy statement and because our employee base does not materially change at any point during the year.
As stated earlier in this discussion, we believe compensation must be competitive to attract and retain essential talent, to reward high performance, and to be internally equitable. Our expected total compensation opportunities for our employees are specific to the role they hold at the Company and generally reflect market median pay levels for our broader base of employees and median pay levels of our peer group for our executives, with variations based on specific talent needs, experience, and other internal factors. We believe that actual total compensation should vary with the performance of the organization, such that outstanding performance results in above-market compensation.
Fifth Third Bancorp | 2018 Proxy Statement | 53 |
|
Summary Compensation Table.The table below summarizes the compensation awarded, paid to, or earned by the Company’s Named Executive Officers during 2014-2016.2015-2017. The amounts in the Stock Awards and Option Awards columns indicate the grant date fair value associated with all grants awarded in the corresponding year and do not correspond with the amounts that the Named Executive Officers may eventually realize with respect to these awards. The benefit, if any, actually received from these awards will depend upon the future value of our common stock.
2016 Summary Compensation Table | ||||||||||||||||||||||||||||||||||||
Name & Principal Position | Year(1) | Salary ($) | Bonus ($)(2) | Stock ($)(3) | Option ($)(4) | Non-Equity ($)(5) | Change in Pension Value & Nonqualified Deferred Compensation Earnings ($)(6) | All Other ($)(7) | Total ($) | |||||||||||||||||||||||||||
Greg D. Carmichael, President and Chief | 2016 | $ | 994,287 | $ | 0 | $ | 3,612,503 | $ | 637,501 | $ | 2,000,000 | $ | 0 | $ | 310,790 | $ | 7,555,081 | |||||||||||||||||||
2015 | $ | 806,986 | $ | 0 | $ | 3,748,629 | $ | 308,577 | $ | 1,336,000 | $ | 0 | $ | 250,858 | $ | 6,451,050 | ||||||||||||||||||||
2014 | $ | 709,203 | $ | 0 | $ | 1,385,816 | $ | 537,497 | $ | 935,459 | $ | 0 | $ | 345,374 | $ | 3,913,349 | ||||||||||||||||||||
Tayfun Tuzun, Executive Vice President | 2016 | $ | 519,342 | $ | 0 | $ | 849,999 | $ | 150,001 | $ | 900,000 | $ | 0 | $ | 127,359 | $ | 2,546,701 | |||||||||||||||||||
2015 | $ | 452,632 | $ | 0 | $ | 688,494 | $ | 121,500 | $ | 800,000 | $ | 0 | $ | 95,681 | $ | 2,158,307 | ||||||||||||||||||||
2014 | $ | 425,006 | $ | 0 | $ | 580,111 | $ | 224,998 | $ | 367,420 | $ | 0 | $ | 58,114 | $ | 1,655,649 | ||||||||||||||||||||
Lars C. Anderson, Executive Vice President | 2016 | $ | 675,002 | $ | 0 | $ | 1,445,007 | $ | 255,001 | $ | 900,000 | $ | 0 | $ | 223,111 | $ | 3,498,121 | |||||||||||||||||||
2015 | $ | 272,597 | $ | 3,750,000 | $ | 2,999,992 | $ | 0 | $ | 0 | $ | 0 | $ | 60,159 | $ | 7,082,748 | ||||||||||||||||||||
Chad M. Borton, Executive Vice President | 2016 | $ | 491,260 | $ | 0 | $ | 1,350,001 | $ | 150,001 | $ | 900,000 | $ | 0 | $ | 307,577 | $ | 3,198,839 | |||||||||||||||||||
Timothy N. Spence, Executive Vice President | 2016 | $ | 450,008 | $ | 12,200 | $ | 1,020,008 | $ | 179,999 | $ | 900,000 | $ | 0 | $ | 252,621 | $ | 2,814,836 | |||||||||||||||||||
2015 | $ | 131,541 | $ | 712,829 | $ | 3,674,982 | $ | 0 | $ | 217,230 | $ | 0 | $ | 2,372 | $ | 4,738,954 | ||||||||||||||||||||
Frank R. Forrest, Executive Vice President | 2016 | $ | 519,713 | $ | 0 | $ | 849,999 | $ | 150,001 | $ | 900,000 | $ | 0 | $ | 142,614 | $ | 2,562,327 | |||||||||||||||||||
2015 | $ | 528,093 | $ | 0 | $ | 1,264,977 | $ | 135,001 | $ | 750,000 | $ | 0 | $ | 109,627 | $ | 2,787,698 | ||||||||||||||||||||
2014 | $ | 500,011 | $ | 0 | $ | 644,565 | $ | 250,001 | $ | 455,002 | $ | 0 | $ | 100,600 | $ | 1,950,179 |
2017 Summary Compensation Table
| ||||||||||||||||||||||||||||||||
Name & Principal Position
| Year
| Salary ($)
| Bonus ($)(1)
| Stock ($)(2)
| Option ($)(3)
| Non-Equity ($)(4)
| All Other ($)(5)
| Total ($)
| ||||||||||||||||||||||||
Greg D. Carmichael, Chairman, President and Chief
|
|
2017 |
|
|
$1,000,064 |
|
|
$0 |
|
|
$4,526,248 |
|
|
$798,750 |
|
|
$2,000,000 |
|
|
$363,230 |
|
|
$8,688,292 |
| ||||||||
2016 | $994,287 | $0 | $3,612,503 | $637,501 | $2,000,000 | $310,790 | $7,555,081 | |||||||||||||||||||||||||
| 2015
|
|
| $806,986
|
|
| $0
|
|
| $3,748,629
|
|
| $308,577
|
|
| $1,336,000
|
|
| $250,858
|
|
| $6,451,050
|
| |||||||||
Tayfun Tuzun, |
|
2017 |
|
|
$553,426 |
|
|
$0 |
|
|
$1,190,006 |
|
|
$209,997 |
|
|
$630,000 |
|
|
$129,575 |
|
|
$2,713,004 |
| ||||||||
Executive Vice President | 2016 | $519,342 | $0 | $849,999 | $150,001 | $900,000 | $127,359 | $2,546,701 | ||||||||||||||||||||||||
and Chief Financial Officer |
| 2015
|
|
| $452,632
|
|
| $0
|
|
| $688,494
|
|
| $121,500
|
|
| $800,000
|
|
| $95,681
|
|
| $2,158,307
|
| ||||||||
Lars C. Anderson, |
|
2017 |
|
|
$686,943 |
|
|
$0 |
|
|
$1,444,996 |
|
|
$255,004 |
|
|
$637,500 |
|
|
$251,669 |
|
|
$3,276,112 |
| ||||||||
Executive Vice President | 2016 | $675,002 | $0 | $1,445,007 | $255,001 | $900,000 | $223,111 | $3,498,121 | ||||||||||||||||||||||||
and Chief Operating Officer |
| 2015
|
|
| $272,597
|
|
| $3,750,000
|
|
| $2,999,992
|
|
| $0
|
|
| $0
|
|
| $60,159
|
|
| $7,082,748
|
| ||||||||
Timothy N. Spence, Executive Vice President and Digital Solutions
|
|
2017 |
|
|
$461,950 |
|
|
$0 |
|
|
$1,359,999 |
|
|
$239,999 |
|
|
$715,000 |
|
|
$318,772 |
|
|
$3,095,720 |
| ||||||||
2016 | $450,008 | $12,200 | $1,020,008 | $179,999 | $900,000 | $252,621 | $2,814,836 | |||||||||||||||||||||||||
| 2015
|
|
| $131,541
|
| $712,829 | $3,674,982 | $0 | $217,230 | $2,372 | $4,738,954 | |||||||||||||||||||||
Frank R. Forrest, Executive Vice President
|
|
2017 |
|
|
$534,796 |
|
|
$0 |
|
|
$1,190,006 |
|
|
$209,997 |
|
|
$600,000 |
|
|
$148,245 |
|
|
$2,683,044 |
| ||||||||
2016 | $519,713 | $0 | $849,999 | $150,001 | $900,000 | $142,614 | $2,562,327 | |||||||||||||||||||||||||
| 2015
|
|
| $528,093
|
|
| $0
|
|
| $1,264,977
|
|
| $135,001
|
|
| $750,000
|
|
| $109,627
|
|
| $2,787,698
|
|
(1) The amount shown for Mr. Anderson in 2015 includes a $3 million signing bonus and a $750,000 Variable Compensation Plan payment guaranteed as part of his new hire offer. The amounts shown for Mr. Spence in 2015 and 2016 comprise a signing bonus payable over two years as part of his new hire offer.
(2) The values included for performance share awards for 2017 in both the Summary Compensation Table and the table below reflect the grant date fair value of $26.52 which was also the closing price on the February 3, 2017 grant date and the price used to calculate the number of performance shares awarded. The values shown for performance share awards for 2016 reflect the grant date fair value of $14.87 which was also the closing price on the February 12, 2016 grant date and the price used to calculate the number of performance shares awarded. The values shown for performance share awards for 2015 reflect the grant date fair value of $18.78 which was also the closing price on the February 11, 2015 grant date and the price used to calculate the number of performance shares awarded. Fair value for 2015, 2016, and 2017 performance share awards assume target performance achievement as of the date of grant. Fair values assuming maximum performance as of the date of grant are as follows:
Executive
| Fair Value at Maximum Performance
| |||||
2015
| 2016
| 2017
| ||||
Greg D. Carmichael
|
$1,388,612
|
$2,868,758
|
$3,594,362
| |||
Tayfun Tuzun
|
$546,752
|
$674,994
|
$945,014
| |||
Lars C. Anderson
|
n/a
|
$1,147,503
|
$1,147,494
| |||
Timothy N. Spence
|
n/a
|
$810,006
|
$1,080,000
| |||
Frank R. Forrest
|
$607,486
|
$674,994
|
$945,014
|
(3) Amounts reflect the aggregate grant date fair value of awards granted during the year valued in accordance with statement of accounting principles generally accepted in the United States. Assumptions used in determining fair value are disclosed in note 24 “Stock Based Compensation” located on pages 156-159 of the Company’s Annual Report on Form10-K for the year ended December 31, 2017.
54 |
| |
COMPENSATION OF NAMED EXECUTIVE OFFICERS AND DIRECTORS(5) The amounts reflected in the All Other Compensation column consist of the benefits provided to the Company’s Named Executive Officers as described above under “Compensation Discussion and Analysis—Executive Benefits and Perquisites.” The following table reflects the costs of these benefits for 2017:
Executive
| Perquisites
| Registrant Contributions to Defined Contribution
| Tax Insurance
| Severance
| Other(G)
| Total
| ||||||
Greg D. Carmichael | $11,395(A) | $210,004 | $672 | $0 | $141,159 | $363,230 | ||||||
Tayfun Tuzun | $5,900(B) | $96,179 | $356 | $0 | $27,140 | $129,575 | ||||||
Lars C. Anderson | $14,809(C) | $111,086 | $454 | $0 | $125,320 | $251,669 | ||||||
Timothy N. Spence | $113,979(D) | $95,336 | $303 | $0 | $109,154 | $318,772 | ||||||
Frank R. Forrest | $2,400(E) | $100,436 | $350 | $0 | $45,059 | $148,245 |
(A) The amount shown for Mr. Carmichael represents trust and estate planning fees, parking, an executive physical, and the incremental cost of travel and entertainment benefits provided to Mr. Carmichael’s guest at business functions.
(B) The amount shown for Mr. Tuzun represents trust and estate planning fees and parking.
(C) The amount shown for Mr. Anderson represents trust and estate planning fees, parking, and the incremental cost of travel and entertainment benefits provided to Mr. Anderson’s guest at business functions.
(D) The amount shown for Mr. Spence represents parking, an executive physical, relocation expenses, and $96,075 in housing and commuting expenses.
(E) The amount shown for Mr. Forrest represents parking.
(F) Fifth Third does not provide tax reimbursements to executive officers. The amounts shown in this column represent payments for insurance premiums only.
(G) The amount shown for Mr. Carmichael represents wellness rewards, a company Health Savings Account contribution, and dividends of $138,659 paid on unvested restricted stock awards. The amount shown for Mr. Tuzun represents a company Health Savings Account contribution, and dividends of $26,640 paid on unvested restricted stock awards. The amount shown for Mr. Anderson represents wellness rewards, a company Health Savings Account contribution, and dividends of $122,820 paid on unvested restricted stock awards. The amount shown for Mr. Spence represents wellness rewards and dividends of $107,154 paid on unvested restricted stock awards. The amount shown for Mr. Forrest represents wellness rewards, a company Health Savings Account contribution, and dividends of $42,559 paid on unvested restricted stock awards.
55 |
|
|
Fair Value at Maximum Performance | ||||||||||||
Executive | �� | 2014 | 2015 | 2016 | ||||||||
Greg D. Carmichael | $ | 788,711 | $ | 1,388,612 | $ | 2,868,758 | ||||||
Tayfun Tuzun | $ | 330,152 | $ | 546,752 | $ | 674,994 | ||||||
Lars C. Anderson | n/a | n/a | $ | 1,147,503 | ||||||||
Chad M. Borton | $ | 155,897 | $ | 405,000 | $ | 674,994 | ||||||
Timothy N. Spence | n/a | n/a | $ | 810,006 | ||||||||
Frank R. Forrest | $ | 366,843 | $ | 607,486 | $ | 674,994 |
Name | Perquisites and Other Personal Benefits | Registrant Contributions to Defined Contribution | Tax Insurance | Severance | Other(G) | Total | ||||||||||||||||||
Greg D. Carmichael | $ | 14,162 | (A) | $163,120 | $ | 576 | $ | 0 | $ | 132,932 | $ | 310,790 | ||||||||||||
Tayfun Tuzun | $ | 9,400 | (B) | $92,354 | $ | 356 | $ | 0 | $ | 25,249 | $ | 127,359 | ||||||||||||
Lars C. Anderson | $ | 20,304 | (C) | $99,750 | $ | 487 | $ | 0 | $ | 102,570 | $ | 223,111 | ||||||||||||
Chad M. Borton | $ | 12,637 | (D) | $83,388 | $ | 337 | $ | 0 | $ | 211,215 | $ | 307,577 | ||||||||||||
Timothy N. Spence | $ | 98,727 | (E) | $44,946 | $ | 303 | $ | 0 | $ | 108,645 | $ | 252,621 | ||||||||||||
Frank R. Forrest | $ | 9,600 | (F) | $88,880 | $ | 350 | $ | 0 | $ | 43,784 | $ | 142,614 |
|
|
|
|
|
|
|
COMPENSATION OF NAMED EXECUTIVE OFFICERS AND DIRECTORS
Grants of Plan-Based Awards.The following table illustrates the long-term equity-based incentive compensation awards made to Named Executive Officers during 2016.2017. The table reflects the full grant date fair value of awards made in 2016.
2017. On February 12, 2016,3, 2017, each of the Named Executive Officers received grants of performance shares that will vest three years from the grant date (contingent on meeting the performance threshold), restricted stocksSARs that will vest in three equal annual installments from the date of grant, and SARsrestricted stock units that will vest in fourthree equal annual installments from the date of grant.
Dividends are paid on unvested restricted stock units;units. None of these awards have beenre-priced or modified.
Performance shares are reported in the Estimated Future Payouts Under Equity Incentive Plan Award columns below; restricted stock units are reported in the All Other Stock Awards: Number of Shares of Stock or Units column below. Nonebelow; and SARs are reported in the All Other Option Awards: Number of these awards have been repriced or modified.
COMPENSATION OF NAMED EXECUTIVE OFFICERS AND DIRECTORSSecurities Underlying Options column below.
2017 Grants of Plan-Based Awards | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Name
| Grant
| Date Grant
| Estimated Future Payouts Under Non-Equity Incentive Plan Awards(2) | Estimated Future Payouts Under Equity Incentive Plan Awards(3) | All (#)
| All Other
| Exercise ($ / Sh)
| Grant Date Fair ($)
| ||||||||||||||||||||||||||||||||||||||||||||||||
Number Units
| Threshold
| Target ($)
| Maximum ($)
| Number
| Threshold (#)
| Target (#)
| Maxi- mum (#)
| |||||||||||||||||||||||||||||||||||||||||||||||||
Greg D. Carmichael | — | — | $ | 3,200,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
2/3/2017 | 2/3/2017 | 90,356 | 45,178 | 90,356 | 135,534 | $2,396,241 | ||||||||||||||||||||||||||||||||||||||||||||||||||
2/3/2017 | 2/3/2017 | 93,421 | $ | 26.52 | $798,750 | |||||||||||||||||||||||||||||||||||||||||||||||||||
2/3/2017 | 2/3/2017 | 80,317 | $2,130,007 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Tayfun Tuzun | — | — | $ | 1,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
2/3/2017 | 2/3/2017 | 23,756 | 11,878 | 23,756 | 35,634 | $630,009 | ||||||||||||||||||||||||||||||||||||||||||||||||||
2/3/2017 | 2/3/2017 | 24,561 | $ | 26.52 | $209,997 | |||||||||||||||||||||||||||||||||||||||||||||||||||
2/3/2017 | 2/3/2017 | 21,116 | $559,996 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Lars C. Anderson | — | — | $ | 1,350,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
2/3/2017 | 2/3/2017 | 28,846 | 14,423 | 28,846 | 43,269 | $764,996 | ||||||||||||||||||||||||||||||||||||||||||||||||||
2/3/2017 | 2/3/2017 | 29,825 | $ | 26.52 | $255,004 | |||||||||||||||||||||||||||||||||||||||||||||||||||
2/3/2017 | 2/3/2017 | 25,641 | $679,999 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Timothy N. Spence | — | — | $ | 1,100,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
2/3/2017 | 2/3/2017 | 27,149 | 13,575 | 27,149 | 40,724 | $719,991 | ||||||||||||||||||||||||||||||||||||||||||||||||||
2/3/2017 | 2/3/2017 | 28,070 | $ | 26.52 | $239,999 | |||||||||||||||||||||||||||||||||||||||||||||||||||
2/3/2017 | 2/3/2017 | 24,133 | $640,007 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Frank R. Forrest | — | — | $ | 1,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
2/3/2017 | 2/3/2017 | 23,756 | 11,878 | 23,756 | 35,364 | $630,009 | ||||||||||||||||||||||||||||||||||||||||||||||||||
2/3/2017 | 2/3/2017 | 24,561 | $ | 26.52 | $209,997 | |||||||||||||||||||||||||||||||||||||||||||||||||||
2/3/2017 | 2/3/2017 | 21,116 | $559,996 |
(1) Awards were made under the 2014 Incentive Compensation Plan as approved by shareholders on April 15, 2014.
(2) NEOs do not have assigned Variable Compensation Plan targets or thresholds; rather, each NEO has an incentive opportunity range up to an established maximum.
2016 Grants of Plan-Based Awards | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Estimated Future Payouts Under Non-Equity Incentive Plan Awards(2) | Estimated Future Payouts Under Equity Incentive Plan Awards(3) | All (#) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise ($ / Sh) | Grant Date Fair ($) | |||||||||||||||||||||||||||||||||||||||||||||||||||
Name | Grant Date(1) | Date Grant Approved by Compensation Committee | Number Units | Threshold ($) | Target ($) | Maximum ($) | Number of Units | Threshold (#) | Target (#) | Maximum (#) | ||||||||||||||||||||||||||||||||||||||||||||||
Greg D. Carmichael | — | — | $ | 2,625,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
2/12/2016 | 2/12/2016 | 128,615 | 32,154 | 128,615 | 192,923 | $ | 1,912,505 | |||||||||||||||||||||||||||||||||||||||||||||||||
2/12/2016 | 2/12/2016 | 147,912 | $ | 14.87 | $ | 637,501 | ||||||||||||||||||||||||||||||||||||||||||||||||||
2/12/2016 | 2/12/2016 | 114,324 | $ | 1,699,998 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Tayfun Tuzun | — | — | $ | 1,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
2/12/2016 | 2/12/2016 | 30,262 | 7,566 | 30,262 | 45,393 | $ | 449,996 | |||||||||||||||||||||||||||||||||||||||||||||||||
2/12/2016 | 2/12/2016 | 34,803 | $ | 14.87 | $ | 150,001 | ||||||||||||||||||||||||||||||||||||||||||||||||||
2/12/2016 | 2/12/2016 | 26,900 | $ | 400,003 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Lars C. Anderson | — | — | $ | 1,350,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
2/12/2016 | 2/12/2016 | 51,446 | 12,862 | 51,446 | 77,169 | $ | 765,002 | |||||||||||||||||||||||||||||||||||||||||||||||||
2/12/2016 | 2/12/2016 | 59,165 | $ | 14.87 | $ | 255,001 | ||||||||||||||||||||||||||||||||||||||||||||||||||
2/12/2016 | 2/12/2016 | 45,730 | $ | 680,005 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Chad M. Borton | $ | 1,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/12/2016 | 2/12/2016 | 30,262 | 7,566 | 30,262 | 45,393 | $ | 449,996 | |||||||||||||||||||||||||||||||||||||||||||||||||
2/12/2016 | 2/12/2016 | 34,803 | $ | 14.87 | $ | 150,001 | ||||||||||||||||||||||||||||||||||||||||||||||||||
1/11/2016 | 9/15/2015 | (5) | 27,518 | $ | 500,002 | |||||||||||||||||||||||||||||||||||||||||||||||||||
2/12/2016 | 2/12/2016 | 26,900 | $ | 400,003 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Timothy N. Spence | — | — | $ | 1,100,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
2/12/2016 | 2/12/2016 | 36,315 | 9,079 | 36,315 | 54,473 | $ | 540,004 | |||||||||||||||||||||||||||||||||||||||||||||||||
2/12/2016 | 2/12/2016 | 41,763 | $ | 14.87 | $ | 179,999 | ||||||||||||||||||||||||||||||||||||||||||||||||||
2/12/2016 | 2/12/2016 | 32,280 | $ | 480,004 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Frank R. Forrest | — | — | $ | 1,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
2/12/2016 | 2/12/2016 | 30,262 | 7,566 | 30,262 | 45,393 | $ | 449,996 | |||||||||||||||||||||||||||||||||||||||||||||||||
2/12/2016 | 2/12/2016 | 34,803 | $ | 14.87 | $ | 150,001 | ||||||||||||||||||||||||||||||||||||||||||||||||||
2/12/2016 | 2/12/2016 | 26,900 | $ | 400,003 |
(3) Comprises performance shares that are settled in Company common stock, only after threshold performance or greater is achieved.
(4) Grant Date Fair Value of Option Awards granted on February 3, 2017, calculated as the total number of shares multiplied by $8.55. Grant Date Fair Value of Stock Awards granted (including performance shares) on February 3, 2017, calculated as the total number of shares multiplied by $26.52.
56 | Fifth Third Bancorp | 2018 Proxy Statement |