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._)No.     )

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THE PNC FINANCIAL SERVICES GROUP, INC.

The PNC Financial Services Group, Inc.

(Name of Registrant as Specified Inin Its Charter)

(Name of Person(s) Filing Proxy Statement, if other thanOther Than the Registrant)

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Integrity.

Innovation.

Insight.

PNC Financial Services Group 2014 Proxy Statement

LETTER FROM THE CHAIRMAN AND CHIEF EXECUTIVE OFFICER TO OUR SHAREHOLDERS

Dear Shareholder

We invite you to attend PNC’s 2014the 2016 Annual Meeting of Shareholders of The PNC Financial Services Group, Inc. on Tuesday, April 22, 2014.

26, 2016.

The meeting will be held in Tampa, FloridaPittsburgh, Pennsylvania in the James E. Rohr Auditorium in The Tower at the InterContinental Hotel Tampa, 4860 West Kennedy Boulevard,PNC Plaza, 300 Fifth Avenue, beginning at 11:00 a.m., Eastern time. We will consider the matters described in this proxy statement and also review significant developments since last year’s meeting of shareholders.

We are again making our proxy materials available to you electronically. We hope that this continues to offer you convenience while allowing us to reduce the number of copies that we print.

The proxy statement contains important information and you should read it carefully. Even if you plan to attend the meeting in person, we strongly encourage you to designate the proxies named on the proxy card to vote your shares. If you will not be there in person, you will be able to listen to the meeting by webcast or conference call. Please see the notice that follows for more information.

We look forward to your participation and thank you for your support of PNC.

 

March 13, 2014

March 15, 2016

Sincerely,

 

Sincerely,

 

William S. Demchak

Chairman, President and Chief Executive Officer

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PARTICIPATE IN THE FUTURE OF PNC – PLEASE CAST YOUR VOTE RIGHT AWAY

Your vote is important to us and we want your shares to be represented at the annual meeting. Please cast your vote right away on the proposals listed below.

Under New York Stock Exchange (NYSE) rules, if you hold your shares through a broker, bank, or other nominee (“street name”), and you do not provide any voting instructions, your broker can onlyhas discretionary authority to vote on your behalf for mattersitems that are considered “discretionary”“routine”. The only discretionary matterroutine item on this year’s ballot is the ratification of our auditor selection.If a matteran item is not discretionarynon-routine and you do not provide voting instructions, yourno vote will not be counted.cast on your behalf.

Proposals requiring your vote

 

More information

Board recommendation

Discretionarymatter?

Abstentions

Votes required for approval

PROPOSAL 1

Election of 15 nominated directors

Page 11

FOR

No

each nominee

PROPOSAL 2

Ratification of independent registeredpublic accounting firm for 2014

Page 80

FOR

Yes

Majority

Do notMore information

of shares

PROPOSAL 3Board recommendation

Advisory approval ofRoutine item?

Page 83Abstentions

Votes required for approval

Item 1

FORElection of 13 nominated directors

NoPage 12

count FOR each nominee

cast

No

the compensation of PNC��s named Do not count

Majority of shares cast

Item 2

Ratification of independent registered public accounting firm for 2016

Page 81

FOR

Yes

Item 3

executive officers (say-on-pay)Approval of 2016 Incentive Award Plan

Page 84

FOR

No

Item 4

Advisory approval of the compensation of PNC’s named executive officers (say-on-pay)

Page 95

FOR

PROPOSAL 4

Shareholder proposal, if properlypresented

Page 85

AGAINST

No

Vote right awayyour shares

 

Please read this Proxy Statementproxy statement with care and vote right away. We offer a number of ways for you to vote your shares. We include voting instructions in the Notice of Availability of Proxy Materials and the proxy card. If you hold shares through a broker, bank, or other nominee (“in street name”),name, you will receive information on how to give voting instructions to your broker or bank. For registered holders, we offer the following methods to vote your shares and give us your proxy:

 

Web
		Telephone		Mail
www.envisionreports.com/PNC		Follow the instructions on the proxy card.		Complete, sign and date the proxy card and return it in the envelope provided.

Attend our 20142016 Annual Meeting of Shareholders

 

	11:00 a.m. on Tuesday, April 22, 2014
Directions to attend the annual meeting are		InterContinental Hotel TampaTuesday, April 26, 2016 at 11:00 a.m.
are available at		The Tower at PNC Plaza – James E. Rohr Auditorium
www.pnc.com/annualmeeting		4860 West Kennedy Boulevard300 Fifth Avenue
		Tampa, Florida 33609Pittsburgh, Pennsylvania 15222

 

4    THE PNC FINANCIAL SERVICES GROUP, INC. -20142016 Proxy Statement4

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PROXY STATEMENT SUMMARY

Proxy Statement Summary

To assist you in reviewing the proposals to be acted upon, we have included a summary of certain information. This summary does not contain all of the information that you should consider, and you should review our Annual Report on Form 10-K and the entire proxy statement and the 2015 Annual Report before you vote.

You may also read our proxy statement and 2015 Annual Report at www.pnc.com/proxystatement.www.envisionreports.com/PNC.

Who can vote (page 89)

98)

You must beare entitled to vote if you were a shareholder ofon the record asdate of January 31, 201429, 2016.

How to vote at the annual meeting.

How to cast your vote (page 90)

99)

We offer our shareholders a number of ways to vote, including by Internet, telephone, or mail. A shareholder of recordShareholders may alwaysalso vote in person by submitting a ballot at the annual meeting.

Voting matters

Item 1:  Election of directors (page 11)12)

 

•

The proxy statement contains important information about the experience, qualifications, attributes, and skills of the 15 nominees to our Board of Directors. Our Board’s Nominating and Governance Committee performs an annual assessment to confirm that our directors continue to have the skills and experience to serve PNC, and that our Board and its committees continue to be effective in the oversight of management.

•

Our Board recommends that you vote FOR all 15 director nominees.

The proxy statement contains important information about the experience, qualifications, attributes, and skills of the 13 nominees to our Board of Directors. Our Board’s Nominating and Governance Committee performs an annual assessment to confirm that our directors continue to have the skills and experience to serve PNC, and that our Board and its committees continue to be effective in carrying out their duties.

 

Our Board recommends that you voteFOR all 13 director nominees.

Item 2:  Ratification of auditors (page 80)81)

Each year, our Board’s Audit Committee selects PNC’s independent registered public accounting firm. For 2016, the Audit Committee selected PricewaterhouseCoopers LLP (PwC) to fulfill this role.

Our Board recommends that you voteFOR the ratification of the Audit Committee’s selection of PwC as our independent registered public accounting firm for 2016.

Item 3:  Approval of 2016 Incentive Award Plan (page 84)

We ask shareholders to approve a new equity compensation plan, the 2016 Incentive Award Plan, allowing us to make equity-based compensation awards to employees and directors. If the 2016 Incentive Award Plan is approved, it will replace the 2006 Incentive Award Plan, and no further awards will be made under the 2006 Incentive Award Plan. Our Board adopted the 2016 Incentive Award Plan on March 3, 2016, and it will become effective as of April 26, 2016, subject to shareholder approval. We ask shareholders to approve the plan.

Our Board recommends that you voteFOR the approval of the 2016 Incentive Award Plan.

Item 4:  “Say-on-pay” (page 95)

We ask shareholders to cast a non-binding advisory vote on our executive compensation program – known generally as the “say-on-pay” vote. We have offered a say-on-pay vote since 2009, and our shareholders confirmed their preference for annual votes in 2011. Last year, 97% of the votes cast by our shareholders supported our executive compensation program, and PNC has averaged 92% support in its say-on-pay votes over the past five years.

We recommend that you read the Compensation Discussion and Analysis (CD&A) (beginning on page 39), which explains how and why our Board’s Personnel and Compensation Committee made executive compensation decisions for 2015.

Our Board recommends that you voteFORthe non-binding advisory vote on executive compensation (say-on-pay).

THE PNC FINANCIAL SERVICES GROUP, INC. - 2016 Proxy Statement    5

PROXY STATEMENT SUMMARY

2015 PNC performance (pages 39 to 40)

 

•	Each year, our Board’s Audit Committee selects PNC’s independent registered public accounting firm. For 2014, the Audit Committee selected PricewaterhouseCoopers LLP (PwC) to fulfill this role.
•	Our Board recommends that you vote FOR the ratification of the Audit Committee’s selection of PwC as our independent registered public accounting firm for 2014.

Item 3: “Say-on-pay” (page 83)

•	We ask shareholders to cast a non-binding advisory vote on our executive compensation program – known generally as the “say-on-pay” vote. We have offered a say-on-pay vote since 2009, and our shareholders confirmed their preference for annual votes in 2011. Last year, 84% of the votes cast by our shareholders supported our executive compensation program, and PNC has averaged 94% support for say-on-pay over the past five years.
•	We recommend that you read the Compensation Discussion and Analysis (CD&A) (beginning on page 35), which explains how and why our Board’s Personnel and Compensation Committee made executive compensation decisions for 2013.
•	Our Board recommends that you vote FOR the non-binding advisory vote on executive compensation (say-on-pay).

Item 4: Shareholder proposal (page 85)

•	You will also be asked to consider a shareholder proposal described in this proxy statement. The proposal asks PNC to report to shareholders on our assessment of greenhouse gas emissions resulting from our lending portfolio and our exposure to climate change risk in lending, investing and financing activities.
•	Our Board recommends that you vote AGAINST the shareholder proposal.

PNC performance highlights (page 37)

We delivered strong performance in 2013, with record net income and strong shareholder returns.

	–	RecordIn 2015, we delivered consistent results in a challenging operating environment, with net income of $4.2$4.1 billion represents an increase(8% over budget) and diluted earnings per share of 41%$7.39 (7.4% over last year.budget) – we have earned at least $1 billion in net income during each of the past eleven quarters
	–	Our annual total shareholder return (TSR) was 36.5%.the second-highest in our peer group and our three-year TSR was the highest in our peer group – our stock price also reached an all-time high in 2015
		We diversified and improved our sources of revenue by successfully growing noninterest income and allowing our net interest income to decline – rather than adding riskier loans in a continued low interest rate environment
	–
		We continued to manage our costs, reducing our expenses for the third year in a row and exceeding our revised continuous improvement goal of $500 million in expense savings (up from our initial 2015 goal of $400 million)
		We strengthened our capital throughout the year – at December 31, 2013,and returned capital to our Basel I Tier 1 common capital ratio was 10.5% and our pro forma fully phased-in Basel III Tier 1 common capital ratio under the standardized approach was an estimated 9.4% (see Annex A for additional information). Asshareholders through both a result of increased earnings and our improving capital strength, our Board increased the common stock dividend by 10% in April 2013.

We executed on our key strategic objectives.

–

Drive growth in newly acquiredincrease and underpenetrated markets. We added households and new retail, corporate and wealth management clients throughout our Southeastern United States footprint.

THE PNC FINANCIAL SERVICES GROUP, INC. -2014 Proxy Statement5

	–	Capture more investable assets. We increased new primary client acquisitions, referral revenues and brokerage fees.share repurchases
		Continued to make strategic investments to position PNC for long-term success, including significant upgrades to our technology infrastructure, transforming the retail bank, and building a leading banking franchise in our underpenetrated markets

2015 compensation decisions (page 47)

The table below shows, for each NEO, the incentive compensation target for 2015 and the actual annual cash incentive and long-term equity-based incentives awarded in 2016 for 2015 performance.

2015 incentive compensation decisions		William S. Demchak				Robert Q. Reilly				Michael P. Lyons				E William Parsley, III(1)				Joseph C. Guyaux
Incentive compensation target		$	9,900,000			$	3,000,000			$	4,800,000			$	5,500,000			$	2,480,000
Incentive compensation awarded		$	11,900,000			$	3,300,000			$	6,100,000			$	6,100,000			$	2,880,000
Annual incentive award (cash)		$	4,100,000			$	1,400,000			$	2,020,000			$	1,300,000			$	1,130,000
Long-term incentive award (equity-based)		$	7,800,000			$	1,900,000			$	4,080,000			$	4,800,000			$	1,750,000

	–(1)	RedefineMr. Parsley’s incentive compensation award includes two grants – the retail banking business. We closed or consolidated 186 branchesgrant of equity-based awards that all other NEOs would otherwise receive (valued at $1,800,000) and a separate grant of incentive performance units related to the management of our Asset & Liability Management (ALM) unit, valued at $3,000,000. Please see page 63 for the year, phased out traditional free checking, added customers and grew net demand deposit account (DDA) households.
	–	Build a stronger mortgage banking business. We continued to show good volume trends, even though demand softened, and we expanded seamless delivery across our network, while improving the average application-to-close time.
	–	Manage expenses. We exceeded our $700 million continuous improvement goal established at the beginningdiscussion of the year, improved our efficiency ratio, and decreased our expenses over last year.Mr. Parsley’s ALM units.

PNC compensation (page 39)

Our Board’s Personnel and Compensation Committee set total compensation targets atThe amounts shown in the beginning of 2013 for our named executive officers, or when an executive assumed a new role with PNC.

See page 39 for a diagram oftable above differ from the components of total compensation targets.

In 2013, the Personnel and Compensation Committee moved away from a more formulaic assessment of PNC corporate performance to an assessment that relies on a comprehensive, balanced evaluation of quantitative and qualitative metrics. These metrics are designed to align with how management, long-term shareholders and banking regulators assess our performance and represent achievement against objective and subjective goals. The Personnel and Compensation Committee does not favor one metric over another. Instead, they use these metrics to gain a comprehensive understanding of our overall performance. After undertaking this comprehensive review, they evaluated the performance of each named executive officer.

See pages 42 to 47 for a discussion of corporate performance, individual performance and decisions made by the Personnel and Compensation Committee as it relates to 2013 performance.

The chart below compares key financial metrics to CEO performance year compensation for the past three years. For purposes of this chart, we calculated CEO performance year compensation by adding the “Salary” for each of the three years (as reportedamounts reflected in the Summary Compensation Table for each applicable year) andcompensation table on page 58. In accordance with SEC regulations, that table shows the incentive compensation amounts awarded for performance during the applicable year. Additionally, 2013 reflects the compensation earned by William S. Demchak, our current CEO. 2012 and 2011 reflects compensation for James E. Rohr, our current Executive Chairman and former CEO.long-term equity-based incentives granted in 2015 based on 2014 performance.

PAY FOR PERFORMANCE

THE PNC FINANCIAL SERVICES GROUP, INC. -2014 Proxy Statement   6

PNC governance (page 17)18)

 

•		You can find out more about our governance policies and principles atwww.pnc.com/corporategovernance.corporategovernance.
•	Our entire Board is re-elected every year; we have no staggered elections
•	Our Board is subject to a majority voting requirement; any director not receiving a majority of votes in an uncontested election must tender his or her resignation to the Board.
•	Our Board has a substantial majority of independent directors (currently 15 out of 17, or 88%), with our only non-independent directors being (1) an executive officer and (2) a former executive officer of PNC. A substantial majority of our nominees to the Board (14 out of 15, or 93%) are independent.
•	Our Board has had a Presiding Director, an independent lead director with specific duties and responsibilities, since 2004.
•	Our Presiding Director approves Board meeting schedules and agendas.
•	Our Board meets regularly in executive session, with no members of management present.
•	In 2013, our Board met 12 times and each of our directors attended at least 75% of the aggregate number of meetings of the Board and the committees on which he or she served. The average attendance of all directors at Board and committee meetings was 99%. All current directors then serving attended our 2013

Our entire Board is re-elected every year; we have no staggered elections.

Our Board is subject to a majority voting requirement; any director not receiving a majority of votes in an uncontested election must tender his or her resignation to the Board.

Our corporate governance guidelines require the Board to have a substantial majority (at least 2/3) of independent directors. Currently, 15 out of 16 directors (94%) are independent, and our only non-independent director is our CEO. All but one of our nominees to the Board (12 out of 13, or 92%) are independent.

Our Board has had a Presiding Director, a lead independent director with specific duties, since 2004.

Our Presiding Director approves Board meeting schedules and agendas.

Our Board meets regularly in executive session, with no members of management present.

6    THE PNC FINANCIAL SERVICES GROUP, INC. - 2016 Proxy Statement

PROXY STATEMENT SUMMARY

In 2015, our Board met 10 times and each of our directors attended at least 75% of the aggregate number of meetings of the Board and the committees on which he or she served. The average attendance of all directors at Board and committee meetings was 99%. All current directors then serving attended our 2015 Annual Meeting of Shareholders.

– We have four primary standing board committees:

–

Audit Committee

 

	–	We have four primary standing board committees:

	–	Audit Committee
	–	Personnel and Compensation Committee (Compensation)

	–		Nominating and Governance Committee (Governance)

–

Risk Committee

Board nominees (page 11)12)

 

Name		Age		Director since		Independent		Primary Standing Committee Memberships		Age		Director since		Independent		Primary Standing Committee Memberships
Richard O. Berndt		71		2007				Audit; Risk
Charles E. Bunch		64		2007				Compensation; Governance		66		2007		þ		Compensation; Governance
Paul W. Chellgren		71		1995				Audit (Chair); Compensation
Marjorie Rodgers Cheshire										47		2014		þ		Audit; Risk
William S. Demchak		51		2013				Risk		53		2013		¨		Risk
Andrew T. Feldstein		49		2013				Compensation; Risk		51		2013		þ		Compensation; Risk (Chair)
Daniel R. Hesse										62		2016		þ		Risk
Kay Coles James		64		2006				Risk		66		2006		þ		Governance; Risk
Richard B. Kelson		67		2002				Audit; Compensation		69		2002		þ		Audit (Chair); Compensation
Anthony A. Massaro		69		2002				Governance; Risk
Jane G. Pepper		68		1997				Risk		70		1997		þ		Risk
Donald J. Shepard		67		2007				Audit; Risk (Chair)		69		2007		þ		Audit; Governance (Chair); Risk
Lorene K. Steffes		68		2000				Risk		70		2000		þ		Risk
Dennis F. Strigl		67		2001				Compensation (Chair); Governance		69		2001		þ		Compensation (Chair); Governance
Thomas J. Usher*		71		1992				Compensation; Governance (Chair)
George H. Walls, Jr.		71		2006				Audit; Risk
Helge H. Wehmeier		71		1992				Governance
Michael J. Ward										65		2016		þ		Compensation; Governance
Gregory D. Wasson										57		2015		þ		Audit

*     Presiding Director

THE PNC FINANCIAL SERVICES GROUP, INC. -20142016 Proxy Statement7

Table of Contents

8    THE PNC FINANCIAL SERVICES GROUP, INC. -20142016 Proxy Statement8

THE PNC FINANCIAL SERVICES GROUP, INC. - 2016 Proxy Statement    9

10    THE PNC FINANCIAL SERVICES GROUP, INC. -20142016 Proxy Statement

9

Tuesday, April 26, 2016

11:00 a.m. (Eastern time)

The Tower at PNC Plaza – James E. Rohr Auditorium, 300 Fifth Avenue, Pittsburgh, Pennsylvania 15222

WEBCAST

A listen-only webcast of our annual meeting will be available atwww.pnc.com/annualmeeting. An archive of the webcast will be available on our website for thirty days.

CONFERENCE CALL

You may access the listen-only conference call of the annual meeting by calling 877-272-3498 or303-223-2682 (international). A telephone replay will be available for one week by calling800-633-8284 or 402-977-9140 (international), conference ID 21804913.

ITEMS OF BUSINESS

RECORD DATE

The close of business on January 29, 2016 is the record date for determining shareholders entitled to receive notice of and to vote at the meeting and any adjournment.

MATERIALS TO REVIEW

We began providing access to this proxy statement and a form of proxy card on March 15, 2016. We have made our proxy materials available electronically. Certain shareholders will receive a notice explaining how to access our proxy materials and vote. Other shareholders will receive a paper copy of this proxy statement and a proxy card.

PROXY VOTING

Even if you plan to attend the annual meeting in person, we encourage you to cast your vote over the Internet, or if you have a proxy card, by mailing the completed proxy card, or by telephone. This Notice of Annual Meeting and Proxy Statement and our 2015 Annual Report are available at www.envisionreports.com/PNC.

ADMISSION

To be admitted to our annual meeting you must present proof of your stock ownership as of the record date and valid photo identification. Each shareholder may bring one guest who must present valid photo identification. Please follow the admission procedures described beginning on page 97 of this proxy statement.

	March 13, 2014	15, 2016 By Order of the Board of Directors,
		Christi Davis
		Senior Counsel and Corporate Secretary

Christi Davis

Corporate Secretary

THE PNC FINANCIAL SERVICES GROUP, INC. -20142016 Proxy Statement    1011

ELECTION OF DIRECTORS (ITEM 1)

12    THE PNC FINANCIAL SERVICES GROUP, INC. -20142016 Proxy Statement11

ELECTION OF DIRECTORS (ITEM 1)

		Charles E. Bunch Age 66 Director Since 2007 Experience, Qualifications, Attributes, or Skills Mr. Bunch is the Executive Chairman and former Chief Executive Officer of PPG

Richard O. Berndt

Age 71
Director Since 2007
Experience, Qualifications, Attributes, or Skills

Mr. Berndt is the Managing Partner of Gallagher Evelius & Jones LLP, a law firm based in Baltimore, Maryland.

Mr. Berndt received an undergraduate degree from Villanova University, a law degree from the University of Maryland School of Law, and a master’s degree from Johns Hopkins University.

Mr. Berndt joined our Board following PNC’s acquisition of Mercantile Bankshares Corporation. He joined the Mercantile Board of Directors in 1978.

Our Board values Mr. Berndt’s prior experience on the board of a public company in the banking business. In addition, his involvement in the Baltimore community provides insights into this market for PNC. Mr. Berndt’s background also gives him an understanding of legal issues, although he does not serve us in a legal capacity and neither he nor his firm provides legal advice to PNC.

PNC Board Committee Memberships

Audit Committee

Risk Committee

Special Compliance Committee (Chairman)

Public Company Directorships

Municipal Mortgage & Equity, LLC (until 2010)

Mercantile Bankshares Corporation (until 2007)

Charles E. Bunch

Age 64
Director Since 2007
Experience, Qualifications, Attributes, or Skills

Mr. Bunch is the Chairman and Chief Executive Officer of PPG Industries, Inc., a Pittsburgh-based global supplier of paints, coatings, optical products, specialty materials, chemicals, glass and fiber glass.

fiberglass.

Mr. Bunch received an undergraduate degree from Georgetown University and a master’s degree in business administration from Harvard University.

Mr. Bunch’s service as a public company CEO, his extensive management and finance experience and his involvement in the Pittsburgh community add significant value to our Board. In addition, Mr. Bunch brings regulatory and banking industry experience to our Board as he formerly served as a Director and the Chairman of the Federal Reserve Bank of Cleveland, our principal banking regulator.

PNC Board Committee Memberships

Nominating and Governance Committee

Personnel and Compensation Committee

Public Company Directorships

ConocoPhillips

H.J. Heinz Company (until June 2013)

Marathon Petroleum Corporation (September 2015)

PPG Industries, Inc.

		Marjorie Rodgers Cheshire Age 47   Director Since 2014 Experience, Qualifications, Attributes, or Skills Marjorie Rodgers Cheshire is President and Chief Operating Officer of A&R Development

Corp., a diversified real estate development organization focused on the Baltimore and Washington markets. A&R’s portfolio includes residential, commercial and mixed-use developments, ranging in value from $1 million to $152 million, with an aggregate value of more than $900 million.

Paul W. Chellgren

Age 71
Prior to joining A&R, Ms. Cheshire spent many years in the media and sports industries. Her most recent position was as Senior Director Since 1995
Experience, Qualifications, Attributes, or Skills

Mr. Chellgren is an Operating Partner with Snow Phipps Group, LLC, a New York City-based private equity firm. In 2002, he retiredof Brand & Consumer Marketing for the National Football League. Prior to that, Ms. Cheshire held positions as Vice President of Business Development for Oxygen Media, Director and Special Assistant to the Chairman & CEO of ESPN, and Chief Executive OfficerManager of Ashland, Inc.,Strategic Marketing for ABC Daytime. Ms. Cheshire also worked as a providerconsultant with The Boston Consulting Group, a strategic consulting firm serving Fortune 500 companies.

Ms. Cheshire has a B.S. in Economics from the Wharton School of specialty chemical products, services and solutions, headquartered in Covington, Kentucky. He also served as the Chief Financial Officer of Ashland.

Mr. Chellgren received an undergraduate degree from the University of Kentucky, a master’s degree in business administration from Harvard University,Pennsylvania and a diploma in Developmental EconomicsMBA from Oxford University.the Stanford University Graduate School of Business. She is a Trustee of Baltimore Equitable Insurance, Baltimore School for the Arts, Johns Hopkins Bayview Medical Center, and Johns Hopkins Hospital.

Mr. Chellgren’s service as a public company CFO and his designation as an “audit committee financial expert” assist the Board in its oversight of financial and accounting issues. This financial background provides strong leadership of our Audit Committee, which he chairs. Our Board also values his extensiveMs. Cheshire’s executive management experience, includingher background in real estate, marketing and media; as a CEO of a public company, and hiswell as her involvement in the southern OhioBaltimore community and northern Kentucky communities that we serve.her familiarity with this important market for PNC.

PNC Board Committee Memberships

Audit Committee (Chairman)

ExecutiveRisk Committee

Personnel and CompensationSpecial Compliance Committee

Public Company Directorships

None

THE PNC FINANCIAL SERVICES GROUP, INC. -20142016 Proxy Statement   12    13

ELECTION OF DIRECTORS (ITEM 1)

		William S. Demchak Age 53 Director Since 2013 Experience, Qualifications, Attributes, or Skills Mr. Demchak is Chairman, President and Chief Executive Officer of The PNC Financial

William S. Demchak

Age 51
Director Since 2013
Experience, Qualifications, Attributes, or Skills

Mr. Demchak is President and Chief Executive Officer of The PNC Financial Services Group, Inc., one of the largest diversified financial services companies in the United States. Mr. Demchak joined PNC in 2002 as chief financial officer. In July 2005, he was named head of PNC’s Corporate & Institutional Banking segment responsible for PNC’s middle market and large corporate businesses, as well as capital markets, real estate finance, equity management and leasing. Mr. Demchak was promoted to senior vice chairman in 2009, named head of PNC businesses in August 2010, and elected president in April 2012, and chief executive officer in April 2013.

2013 and appointed as chairman in April 2014.

Before joining PNC in 2002, Mr. Demchak served as the Global Headglobal head of Structured Finance and Credit Portfolio for JP MorganJPMorgan Chase. He also held key leadership roles at JP MorganJPMorgan prior to its merger with the Chase Manhattan Corporation in 2000. He was actively involved in developing JP Morgan’sJPMorgan’s strategic agenda and was a member of the company’s capital and credit risk committees.

Mr. Demchak is a director of BlackRock, Inc. He is a member of the Board of The Financial Services Roundtable and serves on the Regulatory Management Committee. He is a board member and past chairman of the Greater Pittsburgh Council of the Boy Scouts of America.Roundtable. In addition, he serves on the boards of directors of the Extra Mile Education Foundation and the YMCA of Pittsburgh. He is Vice-Chair of the Allegheny Conference on Community Development, Vice-Chair of the Clearing House Corp., and a member of the Board of the Pittsburgh Cultural Trust. Mr. Demchak also is the Chair of the Advisory Committee of Envision Downtown.

Mr. Demchak received a bachelorBachelor of scienceScience degree from Allegheny College and earned an MBA with an emphasis in accounting from the University of Michigan.

The Board believes that the current CEO should also serve as a director. Under the leadership structure discussed elsewhere in this proxy statement, a CEO-director acts as a liaison between directors and management, and assists the Board in its oversight of the company. Mr. Demchak’s experiences and strong leadership provide our Board with insight into the business and strategic priorities of PNC.

PNC Board Committee Memberships

Executive Committee

Risk Committee

Public Company Directorships

BlackRock, Inc.

		Andrew T. Feldstein Age 51 Director Since 2013 Experience, Qualifications, Attributes, or Skills Mr. Feldstein is the Chief Executive Officer and Co-Chief Investment Officer of

Andrew T. Feldstein

Age 49
Director Since 2013
Experience, Qualifications, Attributes, or Skills

Mr. Feldstein is the Co-Founder and CEO of BlueMountain Capital Management, a leading alternative asset manager with $17$21 billion in assets under management and approximately 200285 professionals worldwide.

Mr. Feldstein is the Chair of the firm’s Management Committee and a member of the Investment and Risk Committees.

Prior to co-founding BlueMountain in 2003, Mr. Feldstein spent over a decade at JPMorgan where he was a Managing Director and served as Head of Structured Credit; Head of High Yield Sales, Trading and Research; and Head of Global Credit Portfolio. Mr. Feldstein is the acting Chair of the Upper West Success Academy, a New York City based charter school, and a Trustee of Third Way, a prominent, centristpublic policy think tank. He istank; a Trustee of the Santa Fe Institute, an independent research and education center; and a member of the Harvard Law School Leadership Council. In 2007, he co-founded the Darfur Project, a Clinton Global Initiative recipient that from 2007-2009 sponsored air lifts of relief supplies to Southern Sudan.

Mr. Feldstein received an undergraduate degree from Georgetown University and a J.D. from Harvard Law School.

Our Board values Mr. Feldstein’s extensive financial and risk management expertise. As founder and CEO of BlueMountain Capital and through his senior management positions at JPMorgan, Mr. Feldstein has built a reputation for innovation and significant insight into risk management. The board believes that these skills are particularly valuable to its effective oversight of risk management and will also be a valuable resource to PNC as it continues to grow its business and strengthen its balance sheet.

PNC Board Committee Memberships

Executive Committee

Personnel and Compensation Committee

Risk Committee (Chair)

Technology Subcommittee

Public Company Directorships

None

 

		Daniel R. Hesse Age 62 Director Since 2016 Experience, Qualifications, Attributes, or Skills Daniel R. Hesse is the former President and Chief Executive Officer of Sprint Corporation, one of the United States’ largest wireless carriers.

Mr. Hesse received a bachelor’s degree from the University of Notre Dame, a MBA from Cornell University and a MS from Massachusetts Institute of Technology where he was awarded the Brooks Thesis prize.

Mr. Hesse brings extensive corporate leadership experience to our Board, having served in a variety of executive positions, including as CEO of Sprint Corporation. His years of experience in the wireless communications industry provide insight into the dynamic and strategic issues overseen by the Board. The broad spectrum of technological issues in this industry give him a strong understanding to assist the Board in its oversight of technological issues.

PNC Board Committee Memberships

Risk Committee

Technology Subcommittee

Public Company Directorships

None

14    THE PNC FINANCIAL SERVICES GROUP, INC. - 2016 Proxy Statement

ELECTION OF DIRECTORS (ITEM 1)

		Kay Coles James Age 64 66 Director Since 2006 Experience, Qualifications, Attributes, or Skills   Ms. James is President and Founder of The Gloucester Institute, a non-profit organization that trains and nurtures leaders in the African-American community. From 2001 to 2006, she served as director of the U.S. Office of Personnel Management, where she was President George W. Bush’s principal human resources advisor. She has also provided consulting services as a former Senior Partner in The J.C. Watts Companies. Ms. James received an undergraduate degree from Hampton University. Having supervised the management of thousands of federal employees, Ms. James understands large-scale human resources operations and compensation matters. Our Board values these senior-level federal government and regulatory experiences, Ms. James’ experience as former chair of the Nominating and Governance Committee and the Compensation Committee at AMERIGROUP Corporation, and her leadership of a non-profit organization in the Greater Washington, D.C. area, a significant market for PNC. PNC Board Committee Memberships Risk Committee Public Company Directorships AMERIGROUP Corporation (until 2012) THE PNC FINANCIAL SERVICES GROUP, INC. -2014 Proxy Statement   13

African- American community.

From 2001 to 2005, she served as director of the U.S. Office of Personnel Management, where she was President George W. Bush’s principal human resources advisor.

She has also provided consulting services as a former Senior Partner in The J.C. Watts Companies.

Ms. James received an undergraduate degree from Hampton University.

Having supervised the management of thousands of federal employees, Ms. James understands large-scale human resources operations. Our Board values these senior-level federal government and regulatory experiences, Ms. James’ experience as former chair of the Nominating and Governance Committee and the Compensation Committee at AMERIGROUP Corporation, and her leadership of a non-profit organization in the Greater Washington, D.C. area, a significant market for PNC.

PNC Board Committee Memberships

Nominating and Governance Committee

Risk Committee

Public Company Directorships

AMERIGROUP Corporation (until 2012)

Magellan Health, Inc.

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Richard B. Kelson

Age 67
69

Director Since 2002

Experience, Qualifications, Attributes, or Skills

Mr. Kelson is the Chairman, and CEO of ServCo, LLC, a strategic sourcing and supply chain management company. He has also served as an Operating Advisor with Pegasus Capital Advisors, L.P., a private equity fund manager.

Mr. Kelson retired in 2006 as Chairman’s Counsel for Alcoa, a leader in the production and management of primary aluminum, fabricated aluminum, and alumina. At Alcoa, he served as a member of the executive council, the senior leadership group for the company. From 1994 to 1997, Mr. Kelson served as Alcoa’s General Counsel. From 1997 through 2005, he served as Alcoa’s Chief Financial Officer.

Mr. Kelson received an undergraduate degree from the University of Pennsylvania, and a law degree from the University of Pittsburgh.

Mr. Kelson’s service as a public company CFO and his designation as an “audit committee financial expert” assist the Board and Audit Committee with the oversight of financial and accounting issues. The Board also values Mr. Kelson’s executive management experience and his background as a public company general counsel, although he does not serve in a legal capacity nor provide legal advice to PNC or our Board.

PNC Board Committee Memberships

Audit Committee

Personnel and Compensation Committee

Public Company Directorships

Lighting Science Group Corporation (until 2010)

Commercial Metals Company (Lead Director)

MeadWestvaco Corp.

Anthony A. Massaro

Age 69
Director Since 2002
Experience, Qualifications, Attributes, or Skills

Mr. Massaro is the retired ChairmanPresident and Chief Executive Officer of Lincoln Electric Holdings, Inc.,ServCo, LLC, a leader in the design, development and manufacture of welding products and cutting equipment. He retired as CEO in April 2005 and as Chairman in October 2005.

Previously, Mr. Massaro served as a Group President of Westinghouse Electric Corporation, an electrical equipment and multipurpose engineering company, and in a variety of other executive positions at Westinghouse.

Mr. Massaro received an undergraduate degree from the University of Pittsburgh.

Mr. Massaro’s service as the CEO of a large public company, and his experience in a number of other senior management positions, assist our Board’s oversight of management and issues generally facing public companies.

PNC Board Committee Memberships

Nominating and Governance Committee

Risk Committee

Special Technology Subcommittee

Public Company Directorships

Commercial Metals Company

strategic sourcing and supply chain management company. He has also served as an Operating Advisor with Pegasus Capital Advisors, L.P., a private equity fund manager.

Mr. Kelson retired in 2006 as Chairman’s Counsel for Alcoa, a leader in the production and management of primary aluminum, fabricated aluminum, and alumina. At Alcoa, he served as a member of the executive council, the senior leadership group for the company. From 1994 to 1997, Mr. Kelson served as Alcoa’s General Counsel. From 1997 through 2005, he served as Alcoa’s Chief Financial Officer.

Mr. Kelson received an undergraduate degree from the University of Pennsylvania, and a law degree from the University of Pittsburgh.

Mr. Kelson’s service as a public company CFO and his designation as an “audit committee financial expert” assist the Board and Audit Committee with the oversight of financial and accounting issues. His financial background supports his strong leadership of our Audit Committee as its Chair. The Board also values Mr. Kelson’s executive management experience and his background as a public company general counsel, although he does not serve in a legal capacity or provide legal advice to PNC or our Board.

PNC Board Committee Memberships

Audit Committee (Chair)

Executive Committee

Personnel and Compensation Committee

Special Compliance Committee

Public Company Directorships

ANADIGICS, Inc.

Commercial Metals Company (Lead Director)

Lighting Science Group Corporation (until 2010)

MeadWestvaco Corp. (until 2015)

THE PNC FINANCIAL SERVICES GROUP, INC. - 2016 Proxy Statement    15

ELECTION OF DIRECTORS (ITEM 1)

		Jane G. Pepper Age 68 70 Director Since 1997 Experience, Qualifications, Attributes, or Skills   In June 2010, Ms. Pepper retired as the President of theThe Pennsylvania Horticultural Society (PHS), a non-profit organization, and America’s first horticultural society.

Ms. Pepper received undergraduate and graduate degrees from the University of Delaware.

Ms. Pepper brings a diverse set of experiences to our Board, beginning with her management experience at the PHS. For 30 years, Ms. Pepper led this Philadelphia-based organization, supervising over 100 employees, and executing a strategic plan with a vision of sustainability and community impact. Beyond this leadership, the Board appreciates her insights as PNC continues to expand our own environmentally conscious initiatives.

Ms. Pepper brings additional regulatory and banking industry experience to our Board, having formerly served as a director and the Chairwoman of the Federal Reserve Bank of Philadelphia.

PNC Board Committee Memberships

Risk Committee

Special Compliance Committee

Ms. Pepper brings a diverse set of experiences to our Board, beginning with her management experience at PHS. For 30 years, Ms. Pepper led this Philadelphia-based organization, supervising over 100 employees, and executing a strategic plan with a vision of sustainability and community impact. Beyond this leadership, the Board appreciates her insights as PNC continues to expand our own environmentally conscious initiatives.

Ms. Pepper brings additional regulatory and banking industry experience to our Board, having formerly served as a director and the Chairwoman of the Federal Reserve Bank of Philadelphia.

PNC Board Committee Memberships

Risk Committee

Special Compliance Committee (Chair)

Public Company Directorships

None

 

THE PNC FINANCIAL SERVICES GROUP, INC. -2014 Proxy Statement   14

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Donald J. Shepard

Age 67
69

Director Since 2007

Experience, Qualifications, Attributes, or Skills

 

Mr. Shepard is the retired Chairman of the Executive Board and Chief Executive Officer of AEGON N.V., a large life insurance and pension company.

Mr. Shepard received a master’s degree in business administration from the University of Chicago.

Mr. Shepard joined our Board following PNC’s acquisition of Mercantile Bankshares Corporation. He joined the Mercantile Board of Directors in 1992.

Mr. Shepard’s service as the CEO of a large, international public company, particularly a company in the financial services sector, gives him insights into many issues facing PNC, and supports the Board’s ability to oversee complex and dynamic issues. Mr. Shepard’s duties and experiences at AEGON also assist our Board with its oversight of financial and risk issues. Our Board also values Mr. Shepard’s experience on the board of a public company in the banking business and his familiarity with the Baltimore community.

PNC Board Committee Memberships

Executive Committee

Audit Committee

Risk Committee (Chairman)

Special Technology Subcommittee

Public Company Directorships

CSX Corporation

The Travelers Companies, Inc.

Mercantile Bankshares Corporation (until 2007)

Mr. Shepard joined our Board following PNC’s acquisition of Mercantile Bankshares Corporation. He joined the Mercantile Board of Directors in 1992.

Mr. Shepard’s service as the CEO of a large, international public company, particularly a company in the financial services sector, gives him insights into many issues facing PNC, and supports the Board’s ability to oversee complex and dynamic issues. Mr. Shepard’s duties and experiences at AEGON also assist our Board with its oversight of financial and risk issues. Our Board also values Mr. Shepard’s experience on the board of a public company in the banking business and his familiarity with the Baltimore community.

PNC Board Committee Memberships

Executive Committee

Audit Committee

Nominating and Governance Committee (Chair)

Risk Committee

Public Company Directorships

CSX Corporation

The Travelers Companies, Inc.

		Lorene K. Steffes Age 68 70 Director Since 2000 Experience, Qualifications, Attributes, or Skills   Ms. Steffes is an independent business advisor with executive, business management and technical expertise in the telecommunications

and information technology industries. She formerly served as Vice President and General Manager, Global Electronics Industry, for IBM, an information technology company. Ms. Steffes also served as the President and Chief Executive Officer of Transarc Corporation, a software development firm, which was later acquired by IBM.

Ms. Steffes received undergraduate and master’s degrees from Northern Illinois University.

Our Board values Ms. Steffes’s managerial experiences throughout the technology industry, including as a chief executive. Her wide array of experiences in this industry and her understanding of operational and technological issues assist the Board in its oversight of technological issues, which have become increasingly important for large, complex banking organizations.

PNC Board Committee Memberships

Risk Committee

Technology Subcommittee (Chair)

Public Company Directorships

RadiSys Corporation (until September 2015)

 

		Ms. Steffes received undergraduate and master’s degrees from Northern Illinois University. Our Board values Ms. Steffes’s managerial experiences throughout the technology industry, including as a chief executive. Her wide array of experiences in this industry and her understanding of operational and technological issues assist the Board in its oversight of technological issues, which have become increasingly important for large, complex banking organizations. PNC Board Committee Memberships Risk Committee Special Technology Subcommittee (Chair) Public Company Directorships RadiSys Corporation Dennis F. Strigl Age 67 69 Director Since 2001 Experience, Qualifications, Attributes, or Skills   Mr. Strigl served as the President and Chief Operating Officer of Verizon Communications

Inc., one of the world’s leading providers of communications services, until his retirement in December 2009. Prior to that, he was the President and Chief Executive Officer of Verizon Wireless, a joint venture controlled by Verizon.

Mr. Strigl received an undergraduate degree from Canisius College and a master’s degree in business administration from Fairleigh Dickinson University.

Our Board values Mr. Strigl’s service as a senior executive at a large public company, and his former executive management expertise as the CEO of Verizon Wireless. His management of a large workforce at Verizon informs his judgment as the Chair of our Personnel and Compensation Committee and gives him a strong understanding of human resources and compensation matters. Mr. Strigl’s additional responsibility for internal functional services, such as finance and real estate, adds depth and experience to the Board’s ability to oversee the operations of our company.

PNC Board Committee Memberships

Executive Committee

Nominating and Governance Committee

Personnel and Compensation Committee (Chair)

Technology Subcommittee

Public Company Directorships

ANADIGICS, Inc. (2000-2008; 2010-Present)

Eastman Kodak Company (until September 2013)

Nokia Corporation (May 2014 to May 2015)

Tellabs, Inc. (until December 2013)

16    THE PNC FINANCIAL SERVICES GROUP, INC. - 2016 Proxy Statement

ELECTION OF DIRECTORS (ITEM 1)

				Michael J. Ward Age 65 Director Since 2016 Experience, Qualifications, Attributes, or Skills Michael J. Ward is the Chairman and Chief Executive Officer of CSX Corporation, one of the world’s largest railroad companies.

Mr. Ward received a bachelor’s degree from the University of Maryland and a MBA from the Harvard Business School.

Mr. Ward has extensive operations, sales, marketing and finance experience from his various management roles with CSX and its subsidiaries. As a public company CEO with years of corporate leadership experience in a regulated industry, he brings knowledge and insight to the Board in its oversight of complex issues. His management of an executive team and a large group of employees adds value to his oversight of compensation issues.

PNC Board Committee Memberships

Nominating and Governance Committee

Personnel and Compensation Committee

Public Company Directorships

CSX Corporation

Ashland Inc.

				Gregory D. Wasson Age 57 Director Since 2015 Experience, Qualifications, Attributes, or Skills Gregory D. Wasson is the former President and Chief Executive Officer of Verizon Wireless,Walgreens Boots Alliance, a joint venture controlled by Verizon. Mr. Strigl received an undergraduate degree from Canisius Collegeglobal pharmacy-led health and a master’s degree in business administration from Fairleigh Dickinson University.wellbeing enterprise.

Mr. Wasson received a bachelor’s degree from Purdue University in Pharmaceutical Science.

Mr. Wasson has extensive operational and executive management experience at a complex organization with a large, diverse workforce. Mr. Wasson brings an in-depth knowledge of the retail industry and insight into the consumer experience. His background of leading a company with thousands of retail locations in an industry that, like banking, is undergoing rapid transformation provides insight that benefits PNC as we work on our strategic priorities. His service as a public company CEO and his designation as an “audit committee financial expert” assist the Board and Audit Committee with the oversight of financial and accounting issues.

PNC Board Committee Memberships

Audit Committee

Technology Subcommittee

Public Company Directorships

Verizon Communications Inc.

THE PNC FINANCIAL SERVICES GROUP, INC. - 2016 Proxy Statement    17

CORPORATE GOVERNANCE

Our Board values Mr. Strigl’s service as a senior executive at a large public company, and his former executive management expertise as the CEO of Verizon Wireless. His management of a large workforce at Verizon informs his judgment as the Chair of our Personnel and Compensation Committee and gives him a strong understanding of human resources and compensation matters. Mr. Strigl’s additional responsibility for internal functional services, such as finance and real estate, adds depth and experience to the Board’s ability to oversee the operations of our company.

PNC Board Committee Memberships

Executive Committee

Nominating and Governance Committee

Personnel and Compensation Committee (Chairman)

Public Company Directorships

ANADIGICS, Inc. (until 2007; 2010-Present)

Eastman Kodak Company (until September 2013)

Tellabs, Inc. (until December 2013)

THE PNC FINANCIAL SERVICES GROUP, INC. -2014 Proxy Statement   15

Thomas J. Usher

Age 71
Director Since 1992
Experience, Qualifications, Attributes, or Skills

Mr. Usher is the non-executive Chairman of Marathon Petroleum Corporation, a transportation fuels refining company, which began as an independent company on July 1, 2011. Until July 2011 he served as the non-executive Chairman of Marathon Oil Corporation, an integrated international energy company. He formerly served as the Chairman, Chief Executive Officer, and President of United States Steel Corporation, an integrated international steel producer, until his retirement in 2004. He served as the Chairman of the Board of U.S. Steel until 2006.

Mr. Usher received an undergraduate degree, master’s degree, and Ph.D. from the University of Pittsburgh.

Our Board values Mr. Usher’s extensive executive management experience, including as the CEO of a public company, and significant involvement throughout the Pittsburgh community. In his duties as the Board’s Presiding Director, and as Chairman of the Nominating and Governance Committee, Mr. Usher can draw from a diverse set of leadership experiences and governance perspectives at large public companies, having served as a CEO, a non-executive Chairman, and an independent director.

PNC Board Committee Memberships

Recent corporate governance developments

Corporate governance guidelines

18    THE PNC FINANCIAL SERVICES GROUP, INC. - 2016 Proxy Statement

CORPORATE GOVERNANCE

Annual meeting format

Our Board leadership structure

THE PNC FINANCIAL SERVICES GROUP, INC. - 2016 Proxy Statement    19

CORPORATE GOVERNANCE

Communicating with our Board

If you send a communication to a PNC location or by electronic mail to a PNC employee, we will evaluate it based on a process established by our Board’s independent directors. Under this process, PNC employees will determine how to respond and what to communicate to directors.

If you are a shareholder and want to recommend a candidate for our Board to be considered by our Nominating and Governance Committee, please follow the instructions on page 24.

If you are a shareholder and want to directly nominate a director candidate at an annual meeting, submit a proposal at an annual meeting, or submit a proposal to us to be included in our proxy materials next year, please follow the instructions on page 92.

Our code of ethics

PNC has adopted, and the Audit Committee has approved, a Code of Business Conduct and Ethics that applies generally to all employees and directors.

Our code of ethics addresses these important topics, among others:

 

•	Our commitment to ethics and values
•	Fair dealing with customers, suppliers, competitors, and employees
•	Conflicts and potential conflicts of interest
•	Self-dealing and outside employment
•	Insider trading and other trading restrictions, including prohibitions on transactions in any derivative of PNC securities, including buying and writing options
•	Transactions with PNC
•	Gifts and entertainment
•	Creating business records, document retention, and protecting confidential information
•	Protection and proper use of our assets, including intellectual property and electronic media

Our commitment to ethics and values

 

THEFair dealing with customers, suppliers, competitors, and employees

Conflicts and potential conflicts of interest

Self-dealing and outside employment

Insider trading and other trading restrictions, including prohibitions on transactions in any derivative of PNC FINANCIAL SERVICES GROUP, INC. -2014 Proxy Statement   19securities, includingnon-compensatory options

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•	Communicating with the public
•	Political contributions and fundraising
•	Compliance with laws and regulations
•	Protection from retaliation

 

Transactions with PNC

Gifts and entertainment

Creating business records, document retention, and protecting confidential information

Protection and proper use of our assets, including intellectual property and electronic media

Communicating with the public

Political contributions and fundraising

Compliance with laws and regulations

Protection from retaliation

The code of ethics is available on our website (atwww.pnc.com/corporategovernance). Any shareholder may also request a free, printprinted copy by writing to our Corporate Secretary at the address given on page 17.

18.

We intend that this code satisfies the SEC’s requirement to adopt a code that applies to a company’s CEO and senior financial officers. Our Board’s Audit Committee must approve any waivers or exceptions to code provisions for our directors or executive officers. We will post on our website any future amendments to, or waivers from, a provision of the code of ethics that applies to our directors or executive officers (including our Chairman and CEO, CFO, and Controller).

PNC has also adopted, and our Audit Committee has approved, Ethics Guidelines for Directors to supplement the PNC code of ethics.

 

20    THE PNC FINANCIAL SERVICES GROUP, INC. - 2016 Proxy Statement

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CORPORATE GOVERNANCE

Orientation and education

 

All of our new directors undergo a director orientation program. In addition to written materials provided to new directors, in-person orientation sessions are held for each new director. In-person orientation sessions generally include meetings with members of senior management to familiarize new directors with PNC’s strategic plan,plans, its significant financial, accounting and risk management issues, its capital markets activities, its compliance programs, its Code of Business Conduct and Ethics and related policies, its principal officers, its internal and independent auditors, and specific matters related to the committees to which a new director has been appointed.

ContinuingOur continuing education program for directors considers the directors’ knowledge and experience and PNC’s risk profile and includes training on complex products and services, PNC’s lines of business, significant risks to PNC, appropriate laws, regulations, and supervisory requirements, and other topics identified by the board and management. It is provided to the directors through a combination of in-person sessions and coordination of attendance by directors at outside seminars relevant to the duties of a director. The in-person sessions may be held in connection with, or as part of, a meeting of the Board or a committee, and coordination of attendance by directors at outside seminars relevant to the duties of a director.committee.

Board committees

 

Board committees

Our Board currently has five standing committees. Four of these committees—Audit, Nominating and Governance, Personnel and Compensation, and Risk—meet on a regular basis. The Executive Committee meets as needed and is composed of our Chairman and CEO, and the chairs of our other four primary standing committees. The Executive Committee may act on behalf of the Board and reports regularly to the full Board. Our Presiding Director chairs the Executive Committee, which met two timesdid not meet in 2013.

2015.

Our By-laws authorize the Board to create other committees. EachUnless otherwise stated in its charter, each committee may form and delegate authority to subcommittees of one or more committee members. Our Risk Committee has formed a Technology Subcommittee to facilitate Board-level oversight responsibilities with respect to technology risk, technology risk management, cybersecurity, information security, business continuity, and significant technology initiatives and programs. Our Board also created a Special Compliance Committee to assist the Board in its oversight and reporting responsibilities in connection with relevant provisions of theunder certain regulatory consent orders entered into between the PNC and banking regulators related to certain residential mortgage matters. Our Risk Committee has formed a sub-committee to facilitate Board-level oversight of our enterprise-wide technology risk (the Special Technology Subcommittee).orders.

Each committee operates under a written charter approved by the Board, or in the case of a sub-committeesubcommittee the applicable standing committee. Each committee and subcommittee annually reviews and reassesses its charter.

The Nominating and Governance Committee assesses the Executive Committee charter.

Each ofcommittee and subcommittee, other than the four primary standing committees alsoExecutive Committee, performs an annual self-evaluation to determine whether the committee and any of its subcommittees is functioning effectively and fulfilling its charter duties.

We describe the main responsibilities of the Board’s four primary standing committees below. The descriptions of the committee functions in this proxy statement are qualified by reference to the charters and our relevant By-law provisions. The charters for the four Board committees discussed in this section are all available on our website atwww.pnc.com/corporategovernance.

 

THE PNC FINANCIAL SERVICES GROUP, INC. -20142016 Proxy Statement   20    21

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CORPORATE GOVERNANCE

Audit Committee

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Audit Committee

		Chair		Other members:
		Richard B. Kelson		Paul W. Chellgren
		Paul W. Chellgren		Richard O. BerndtMarjorie Rodgers Cheshire
				Richard B. Kelson
				Bruce C. Lindsay
				Donald J. Shepard
				George H. Walls, Jr.Gregory D. Wasson

The Audit Committee consists entirely of directors who are independent as defined in the NYSE’s corporate governance rules and in the regulations of the Securities and Exchange Commission related to audit committee members. When our Board meets on April 22, 2014,26, 2016 to organize its committees, only independent directors will be appointed to the Committee.

Mr. Lindsay intendsChellgren will not stand for re-election to retire from the Board effective as ofat the annual meeting and, following the annual meeting, he will no longer be a member of the Committee.

The Board has determined that each Audit Committee member is financially literate and possessesthat at least two members possess accounting or related financial management expertise. The Board made these determinations in its business judgment, based on its interpretation of the NYSE’s requirements for committee members. Acting on the recommendation of the Nominating and Governance Committee, the Board of Directors determined that Mr. Chellgren, Mr. Kelson and Mr. KelsonWasson are each an “audit committee financial expert,” as that term is defined by the SEC.

Our Board most recently approved the charter of the Audit Committee on February 13, 2014,November 19, 2015, and it is available on our website.

The Audit Committee satisfies the requirements of SEC Rule 10A-3, which includes the following topics:

 

•

•

The independence of committee members

•		The responsibility for selecting and overseeing our independent auditors

��•		The establishment of procedures for handling complaints regarding our accounting practices

•		The authority of the committee to engage advisors

•		The determination of appropriate funding for payment of the independent auditors and any outside advisors engaged by the committee and for the payment of the committee’s ordinary administrative expenses.expenses

The Audit Committee’s primary purposes are to assist the Board by:

	•
The Audit Committee’s primary purposes are to assist the Board by:
•	Monitoring the integrity of our consolidated financial statements

•		Monitoring internal control over financial reporting

•		Monitoring compliance with our code of ethics

•		Evaluating and monitoring the qualifications and independence of our independent auditors

•		Evaluating and monitoring the performance of our internal audit function and our independent auditors

At each in-person meeting of our full Board, the chair of the Committee presents a report of the items discussed and the actions approved at previous meetings.

The Audit Committee’s responsibility is one of oversight. Our management is responsible for preparing our consolidated financial statements, for maintaining internal controls, and for our compliance with laws and regulations, and the independent auditors are responsible for auditing our consolidated financial statements.

The Committee typically reviews and approves the internal and external audit plans. The Committee is directly responsible for the selection, appointment, compensation and oversight of our independent auditors (including the resolution of any disagreements between management and the auditors regarding financial reporting if disagreements occur) for the purpose of preparing or issuing an audit report or related work. We describe the role of the Committee in regard to the independent auditors, including consideration of rotation of the independent audit firm, in more detail on page 80.81. For work performed by the independent auditors, the Committee must pre-approve all audit engagement fees and terms, as well as all permitted non-audit engagements. The Committee (or delegate) pre-approves all audit services, audit-related services, and permitted non-audit services. The Committee considers whether providing audit services, audit-related services, and permitted non-audit services will impair the auditors’ independence.

22    THE PNC FINANCIAL SERVICES GROUP, INC. - 2016 Proxy Statement

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CORPORATE GOVERNANCE

We describe the Committee’s procedures for the pre-approval of audit services, audit-related services, and permitted non-audit services on page 81.82. The Committee receives routine reports on finance, reserve adequacy, ethics, and internal and external audit.

THE PNC FINANCIAL SERVICES GROUP, INC. -2014 Proxy Statement21

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The Committee has the authority to retain independent legal, accounting, economic, or other advisors. The Committee holds regular executive sessions with our management, the General Auditor, the Chief Ethics Officer, and the independent auditors. The independent auditors report directly to the Committee. The Committee reviews the performance and approves the compensation ofappoints our General Auditor, who leads PNC’s internal audit function and reports directly to the Committee.

The Committee reviews the performance and approves the compensation of our General Auditor.

Under our corporate governance guidelines, Audit Committee members may only serve on the audit committee of no more than three public company audit committees,companies, including PNC’s.PNC.

The Audit Committee must also prepare the report required to be included in this proxy statement. The Audit Committee has approved thatthe report which is on page 82.83 as required under its charter and in accordance with SEC regulations.

 

THE PNC FINANCIAL SERVICES GROUP, INC. -20142016 Proxy Statement22    23

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CORPORATE GOVERNANCE

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Nominating and Governance Committee

 

		Chair		Other members:
		Donald J. Shepard		Charles E. Bunch
		Thomas J. Usher		Charles E. BunchKay Coles James
				Anthony A. Massaro
				Dennis F. Strigl
				Helge H. WehmeierThomas J. Usher
				Michael J. Ward

The Nominating and Governance Committee consists entirely of independent directors. When our Board meets on April 22, 2014,26, 2016, only independent directors will be appointed to the Committee.

Neither Mr. Massaro nor Mr. Usher will stand for re-election to the Board at the annual meeting and, following the annual meeting, neither will be a member of the Committee.

Our Board most recently approved the charter of the Nominating and Governance Committee on February 13, 2014,November 19, 2015, and it is available on our website.

At each in-person meeting of our full Board, the chair of the Committee presents a report of the items discussed and the actions approved at previous meetings. The primary purpose of our Nominating and Governance Committee is to assist our Board in promoting the best interests of PNC and its shareholders through the implementation of sound corporate governance principles and practices. The Committee also assists the Board by identifying individuals qualified to become Board members. The Committee recommends to the Board the director nominees for each annual meeting, and may also recommend the appointment of qualified individuals as directors between annual meetings.

In addition to theits annual committee self-evaluation, that all primary standing committees perform, the Nominating and Governance Committee also oversees the annual evaluation of the performance of the Board and committees and reports to the Board on the evaluation results, as necessary or appropriate. The Committee annually reviews and recommends any changes to the Executive Committee charter.

How we evaluate directors and candidates.candidates. At least once a year,annually, the Committee assesses the skills, qualifications and experience of our directors and recommends a slate of nominees to the Board. From time to time, the Committee also evaluates changesconsiders whether to change the composition of our Board.

In evaluating existing directors or new candidates, the Committee assesses the needs of the Board and the qualifications of the individual. Please see the discussion on pages 1213 to 1617 for more information on each of our current director nominees.

Our Board and its committees must satisfy SEC, NYSE, and other banking regulatory standards. At least a majority of our directors must be independent under the NYSE standards.standards, however, our corporate governance guidelines require that a substantial majority (at least 2/3) of our directors be independent. We require a sufficient number of independent directors to satisfy the membership needs of committees that also require independence. Our Audit Committee must include independent, financially literate directors with accounting or related financial management expertise.

Beyond that, the Nominating and Governance Committee expects directors to understandgain a sound understanding of our strategic vision, our mix of businesses, and the bankour approach to regulatory environmentrelations and material requirements.risk management. The Board must possess a mix of qualities and skills to address the various risks facing PNC and understand how PNC manages risk.PNC. For a discussion of our Board’s oversight of risk, please see the section entitledRisk Committee,, on page 27.pages 28 and 29.

To assistThe Committee has not adopted any specific, minimum qualifications for director candidates. When evaluating each director, as well as new candidates for nomination, the Committee in its identification of qualified directors,considers the Board has approved criteria that include:following Board-approved criteria:

 

•

•

A sustained record of high achievement in financial services, business, industry, government, academia, the professions, or civic, charitable, or non-profit organizations

•		Manifest competence and integrity

•		A strong commitment to the ethical and diligent pursuit of shareholders’ best interest

•		The strength of character necessary to challenge management’s recommendations and actions when appropriate and to confirm the adequacy and completeness of management’s responses to such challenges to his or her satisfaction

•		Our Board’s strong desire to maintain its diversity in terms of race and gender

•		Personal qualities that will help to sustain an atmosphere of mutual respect and collegiality among the members of our Board
The Committee does not have minimum qualifications for director candidates. Each year, the Committee assesses our current directors for possible nomination and re-election. In doing so, it considers the factors listed above. The Committee generally considers the needs of the Board, the independence of directors from PNC, a director’s meeting attendance and participation, and the value of a director’s contributions to the effectiveness of our Board and its committees.

 

24    THE PNC FINANCIAL SERVICES GROUP, INC. -20142016 Proxy Statement

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23CORPORATE GOVERNANCE

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The Committee also considers the diversity, age, skills, experience in the context of the current needs of the Board and its committees, meeting attendance and participation, and the value of a director’s contributions to the effectiveness of our Board and its committees.

Although the Board has not adopted a formal policy on diversity, the Board recognizes the value of a diverse Board. Therefore, the Committee considers the diversity of directors in the context of the Board’s overall needs. The Committee evaluates diversity in a broad sense, recognizing the benefits of demographic diversity, but also considering the breadth of diverse backgrounds, skills, and experiences that directors may bring to our Board.

How we identify new directors.directors. The Nominating and Governance Committee may identify potential directors in a number of ways. The Committee may consider recommendations made by current or former directors or members of executive management. WeThe Committee may also identify potential directors through contacts in the business, civic, academic, legal and non-profit communities. When appropriate, the Committee may retain a search firm to identify candidates.

In addition, the Committee will consider director nomineescandidates recommended by our shareholders. In ordershareholders for nomination at next year’s annual meeting. For the Committee to consider a nomineedirector candidate for election,nomination, the shareholder must submit a written proposal recommending the candidaterecommendation in writing to the office of the Corporate Secretary at our principal executive office. Each submission must include the information required under the Director Nomination Process“Director nomination process” in Section 3 of our corporate governance guidelines found at www.pnc.com/corporategovernance and must be received by November 13, 2014.

15, 2016.

The Committee will evaluate candidates recommended by a shareholder in the same manner as candidates identified by the Committee or recommended by others. The Committee has the right to request any additional information it may deem appropriate or desirable to evaluate the candidate. The Committee will not consider any candidate with an obvious impediment to serving as one of our directors.

The Committee will meet to consider relevant information regarding a director candidate, in light of the Board approved evaluation criteria and needs of our Board. If the Committee does not recommend a candidate for nomination or appointment, or for more evaluation, no further action is taken. The chair of the Committee will later report this decision to the full Board. For shareholder-recommended candidates, the Corporate Secretary will communicate the decision to the shareholder.

If the Committee decides to recommend a candidate to our Board as a nominee for election at an annual meeting of shareholders or for appointment by our Board, the chair of the Committee will report that decision to the full Board at its next meeting. Before that meeting, each of the other directors will receive the same biographical and other background information about the candidate that the Committee considered.

Board. After allowing for a discussion, the full Board will vote on whether to nominate the candidate for election or appoint the candidate to the Board. The Board may postpone this vote if it needs more information or deliberation, including additional evaluations regarding independence.

Potential candidates may be informally approached by Mr. Usher, as Presiding Director and chair of the Committee, or by the Chairman of the Board. As our corporate governance guidelines describe, invitations to join the Board should come from the Presiding Director and the Chairman, jointly acting on behalf of our Board.

Shareholders who wish to directly nominate a director candidate at an annual meeting must do so in accordance with the procedures contained in our By-laws and should follow the instructions in the section entitledGeneral Information—Shareholder proposals for 20152017 annual meeting—Advance notice procedureson page 92.102.

 

THE PNC FINANCIAL SERVICES GROUP, INC. -20142016 Proxy Statement24    25

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Personnel and Compensation Committee

 

		Chair		Other members:
		Dennis F. Strigl		Charles E. Bunch
		Dennis F. Strigl		Charles E. BunchPaul W. Chellgren
				Paul W. ChellgrenAndrew T. Feldstein
				Andrew T. FeldsteinRichard B. Kelson
				Richard B. KelsonThomas J. Usher
				ThomasMichael J. UsherWard

The Personnel and Compensation Committee consists entirely of independent directors. The Committee membership is intended to satisfy the independence standards established by applicable federal income tax and securities laws, as well as NYSE standards. When our Board meets on April 22, 2014,26, 2016, only independent directors will be appointed to the Committee.

Neither Mr. Chellgren nor Mr. Usher will stand for re-election to the Board at the annual meeting and, following the annual meeting, neither will be a member of the Committee.

Our Board most recently approved the charter of the Committee on February 13, 2014,November 19, 2015, and it is available on our website.

The Committee’s principal purpose is to discharge our Board’s oversight responsibilities relating to the compensation of our executive officers and other specified responsibilities related to personnel and compensation matters affecting PNC. The Committee may also evaluate and approve, or recommend for approval, benefit, incentive compensation, severance, equity-based or other compensation plans, policies, and programs. The Committee charter provides that approval of the compensation of the General Auditor and the Chief Risk Officer is made by the Audit Committee and the Risk Committee, respectively.

The Committee has the authority to retain independent legal, compensation, accounting, or other advisors. The charter provides the Committee with the sole authority to retain and terminate a compensation consultant acting on the Committee’s behalf, and to approve the consultant’s fees and other retention terms. The Committee retained an independent compensation consultant in 20132015 and prior years. SeeRole of compensation consultants below.

The Committee also reviews the Compensation Discussion and Analysis (CD&A) section of the proxy statement with management. See the Compensation Committee Report on page 52.55. The CD&A begins on page 35.39. The Committee reviewsevaluates the aggregaterelationship between risk impact ofmanagement and our incentive compensation programs and plans. SeeCompensation and Riskon pages 5356 and 54.

57.

The Committee has responsibility for reviewing and evaluating the development of an executive management succession plan and for reviewing our progress on diversity.workforce diversity objectives. The Committee reviews a detailed succession planning report at least annually. The materials typically include a discussion of the individual performance of executive officers as well as succession plans and development initiatives for other high potential employees. These materials provide necessary background and context to the Committee, and give each member a familiarity with the employee’s position, duties, responsibilities, and performance.

How the committee makes decisions.decisions. The Committee meets at least six times a year. Before each meeting, the chair of the Committee reviews the agenda, materials, and issues with members of our management and the Committee’s independent executive compensation consultant, as appropriate. The Committee may invite legal counsel or other external consultants to advise the Committee during meetings and preparatory sessions.

The Committee regularly meets in executive sessions without management present. At each in-person meeting of our full Board, the chair of the Committee presents a report of the items discussed and the actions approved at previous meetings. The chair provides these reports during an executive session of the Board. The Committee consults with independent directors before approving the CEO’s compensation.

The Committee adopted guidelines for information that will be presented to the Committee. The guidelines contemplate, among other things, that any major changes in policies or programs be considered over the course of two separate Committee meetings, with any vote occurring at the later meeting.

The Committee reviews all of the elements of the compensation programs periodically and adjusts those programs as appropriate. Each year, the Committee makes decisions regarding the amount of annual compensation and equity-based or other longer-term compensation for our executive officers corporate executive group, and aother designated group of other individuals.senior employees. For the most part, these decisions are made in the first quarter of each year, following the evaluation of the prior year’s performance.

 

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Delegations of authority.authorityIn November 2012, the. The Committee updated thehas delegated authority delegated to management to make certain decisions or to take certain actions with respect to compensation or benefit plans or arrangements (other than those that are solely or predominantly for the benefit of executive officers).

For employee benefit, bonus, incentive compensation, severance, equity-based and other compensation or incentive plans and arrangements, the Committee delegated to our Chief Human Resources Officer (or her designee) the ability to adopt a new plan or arrangement or amend an existing one if:

 

•

•

the decision is not expected to result in a material increase in incremental expense to PNC, defined as an expense that exceeds 5% of the relevant expense for that plan category, or

•		the change is of a technical nature or is otherwise not material.

This delegation also includes authority to take certain actions to implement, administer, interpret, construe or make eligibility determinations under the plans and arrangements.

For grants of equity or equity-based awards, the Committee has delegated to our Chief Executive Officer and our Chief Human Resources Officer (or her designee)the designee of either) the responsibility to make decisions with respect to equity grants for individuals who are not designated by the Committee as executives, including the determination of participants and grant sizes, allocation of the pool from which grants will be made, establishment of the terms of such grants, approval of amendments to outstanding grants and exercise of any discretionary authority pursuant to the terms of the grants.

The Committee has also delegated to the Audit Committee (or a qualified subcommittee) and to a qualified subcommittee of the Risk Committee the authority to make equity-based grants and other compensation under applicable plans to the General Auditor and Chief Risk Officer, respectively.

Management’s role in compensation decisions.decisions. Our executive officers, including our CEO and our Chief Human Resources Officer, often review information with the Committee during meetings and may present management’s views or recommendations. The Committee evaluates these recommendations, generally in consultation with an independent compensation consultant retained by the Committee, who attends each meeting.

The chair of the Committee typically meets with management and an independent compensation consultant before each Committee meeting to discuss agenda topics, areas of focus, or outstanding issues. The chair schedules other meetings with the Committee’s compensation consultant without management present, as needed. Occasionally, management will schedule meetings with each Committee member to discuss substantive issues. For more complicated issues, these one-on-one meetings provide a dedicated forum for Committee members to ask questions outside of the meeting environment.

During Committee meetings, the CEO often reviews corporate and individual performance as part of the compensation discussions, and other members of executive management may be invited to speak to the Committee about specific performance or risk management. The Committee reviews any compensation decisions for the Chief Human Resources Officer and CEO and chairman in executive session, without either officer present for the discussion of their compensation. Any recommendations for CEO compensation are also discussed with the full Board, with no members of management present for the discussion.

Role of compensation consultants.consultants. The Committee has the sole authority to retain and terminate any compensation consultant directly assisting it. The Committee also has the sole authority to approve fees and other engagement terms. The Committee receives comparative compensation data from our management, from proxy statements and other public disclosures, and through surveys and reports prepared by compensation consultants.

The Committee retained Meridian Compensation Partners as its independent compensation consultant for 2013.2015. In this capacity, Meridian reports directly to the Committee. In 2013,2015, one or more representatives attended all of the in-person and telephonic meetings of the Committee, and met regularly with the Committee without members of management present. Meridian also reviewed meeting agendas.

agendas and materials prepared by management.

Meridian and members of management assisted the Committee in its review of proposed compensation packages for our executive officers. For the 20132015 performance year, Meridian prepared all discussion materials for the compensation of the CEO and former CEO, which were reviewed in executive session without any members of management present. Meridian also prepared competitive pay analyses and other benchmarking reviews and pay for performance analyses for the Committee. PNC did not pay any fees to Meridian in 20132015 other than in connection with work for the Committee.

The Committee evaluated whether the work of Meridian raised any conflict of interest. The Committee considered various factors, including the six factors mandated by the SEC rules, and determined that no conflict of interest was raised by the work of Meridian described in this proxy statement.

 

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CORPORATE GOVERNANCE

Our management retains other compensation consultants for its own use. In 2013,2015, our management retained McLagan to provide certain market data in the financial services industry. It also uses Towers Watson, a global professional services firm, as its principal compensation advisor. Towers Watson providesto provide, from time to time, various actuarial and management consulting services to us, including:

 

Analyzing the competitiveness of specific compensation programs, such as executive retirement benefits or change in control arrangements

THE PNC FINANCIAL SERVICES GROUP, INC. -2014 Proxy Statement   26

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•

Preparing specific actuarial calculations on values under our retirement plans

•		Preparing surveys of competitive pay practices

•		Analyzing our director compensation packages and providing reports to our management and the Board’s Nominating and Governance Committee
•	Updating management on the effect of relevant laws and regulations

 

•

Providing guidance on certain aspects of total rewards, talent management and other human resources initiatives

Reports prepared by Towers Watson and McLagan that relate to executive compensation may also be shared with the Committee.

Compensation committee interlocks and insider participation.participation. None of the current members of the Personnel and Compensation Committee are officers or employees or former officers of PNC or any of our subsidiaries. No PNC executive officer served on the compensation committee of another entity that employed an executive officer who also served on our Board. No PNC executive officer served as a director of an entity that employed an executive officer who also served on our Personnel and Compensation Committee.

Certain members of the Personnel and Compensation Committee, their immediate family members, and entities with which they are affiliated, were our customers or had transactions with us (or our subsidiaries) during 2013.2015. Transactions that involved loans or commitments by subsidiary banks were made in the ordinary course of business and on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons and did not involve more than the normal risk of collectability or present other unfavorable features.features and otherwise complied with regulatory restrictions on such transactions.

Please seeDirector and Executive Officer Relationships—Related person transactions policies and procedures—Regulation O policies and procedures,which begins on page 31,33, for more information.

 

Risk Committee

 

		Chair		Other members:
		Andrew T. Feldstein		Marjorie Rodgers Cheshire		Jane G. Pepper
				William S. Demchak		Donald J. Shepard		Richard O. Berndt		Anthony A. Massaro
				William S. DemchakDaniel R. Hesse		Jane G. PepperLorene K. Steffes
				Andrew T. FeldsteinKay Coles James		James E. Rohr
				Kay Coles JamesAnthony A. Massaro		Lorene K. Steffes
				Bruce C. Lindsay		George H. Walls, Jr.

The Board performs its risk oversight function primarily through the Risk Committee, which includes both independent and management directors.

Mr. Lindsay and Mr. Rohr intendMassaro will not stand for re-election to retire from the Board effective as ofat the annual meeting as he has reached the mandatory retirement age set in PNC’s corporate governance guidelines and, following the annual meeting, he will no longer be membersa member of the Committee.

Our Board most recently approved the charter of the Committee on February 13, 2014,November 19, 2015, and it is available on our website.

At each in-person meeting of our full Board, the chair of the Committee presents a report of the items discussed and the actions approved at previous meetings. The Committee’s purpose is to provide oversightrequire and oversee the establishment and implementation of our enterprise-wide risk structuregovernance framework, including related policies, procedures, activities and the processes established to identify, measure, monitor, and manage ourdirect and indirect risks of PNC. Direct risks consist of credit risk, market risk (includes interest rate and price risk), liquidity risk, compliance risk (includes fiduciary risk) and operational risk (including compliance,(includes legal, operating, insurance, and fiduciarytechnology risk). Indirect risks include business risk, strategic risk, model risk, and investment risk), other thanreputation risk. PNC’s major financial risk exposures which are the responsibility of the Audit Committee. The Risk Committee serves as the primary point of contact between our Board and the management-level committees dealing with risk management. The Committee’s responsibility is one of oversight, and the Committee has no duty to assure compliance with laws and regulations.

 

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The Committee receives regular reports on enterprise-wide risk management, credit risk, market and liquidity risk, operating risk, and capital management.

The Committee may also form sub-committeessubcommittees from time to time. ItThe Committee has formed a sub-committeesubcommittee to assist the Risk Committee in fulfilling itsthe Committee’s oversight responsibilities with respect to technology risk, matters.technology risk management, cybersecurity, information security, business continuity, and significant technology initiatives and programs.

The Committee appoints our Chief Risk Officer, who leads PNC’s risk management function. The Committee reviews the performance and approves the compensation of our Chief Risk Officer.

The Risk Committee, along with the Personnel and Compensation Committee, each reviewreviews the risk components of our incentive compensation plans. For a discussion of the relationship between compensation and risk, please seeCompensation and Risk,, beginning on page 53.56.

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Board meetings in 20132015

 

The table below shows the names of our directors as of December 31, 2013.2015. The table also shows the number of Board committee meetings held in 2013,2015, and the members and chairs of each committee. We also identify each director who has been designated by our Board as an “audit committee financial expert,” as defined under SEC regulations.

Our Board held 1210 meetings in 2013.2015. Each director attended at least 75% of the combined total number of meetings of the Board and all committees on which the director served. Our Board has adopted a policy that strongly encourages each director to attend the annual meeting in person. We remind each director of this policy before the date of the annual meeting. All of our directors then serving attended PNC’s 20132015 annual meeting of shareholders.

 

Meetings Held

(1)

(2)

(1)

(3)

(1)

Audit

l

l

l

l

12

Nominating and Governance

l

l

l

l

l

5

Personnel and Compensation

l

l

l

l

l

6

Risk

l

l

l

l

l

l

l

8

 

	Chair

(1)	Designated as “audit committee financial expert” under SEC regulations

(2)	Non-independentManagement director

(3)	Presiding director (lead independent director)

 

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DIRECTOR AND EXECUTIVE OFFICER RELATIONSHIPS

 

This section discusses relationships between PNC (or affiliated entities)and its subsidiaries and our directors, executive officers, immediate family members, or certain of their affiliated entities. These relationships include transactions that we analyzed to determine the independence of our directors.

In this section, we describe the NYSE independence standards for directors and our Board-adopted independence guidelines, and our policies and procedures governing related person transactions.guidelines.

 

Director independence

 

To be independent under NYSE rules, our Board must affirmatively determine that a director does not have a “material relationship” with PNC. A material relationship between a director and PNC could also include a relationship between PNC and an organization affiliated with a director.

NYSE rules describe specific relationships that will always impair independence. The absence of one of these “bright-line” relationships does not mean that a director is automatically independent. The Board must consider all relevant facts and circumstances in determining whether a material relationship exists.

Material relationships that we may consider include commercial, industrial, banking, consulting, legal, accounting, charitable, and family relationships. The ownership of a significant amount of PNC stock, by itself, will not prevent a finding of independence under NYSE rules.

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The NYSE bright-line independence tests.Each of the following relationships will automatically impair a director’s independence under the NYSE’s “bright-line” tests:

 

•	A director employed by PNC
•	A director whose immediate family member is a PNC executive officer
•	The director’s receipt of more than $120,000 a year in direct compensation from PNC, except for certain permitted payments (such as director fees)
•	Certain relationships with PNC’s external or internal auditors
•	A director (or immediate family member) who has been an executive officer of a company where a PNC executive officer serves or served on that company’s compensation committee
•	Business relationships involving companies that make payments to, or receive payments from, PNC in excess of certain amounts

A director employed by PNC

 

A director whose immediate family member is a PNC executive officer

The director’s receipt of more than $120,000 a year in direct compensation from PNC, except for certain permitted payments (such as director fees)

Certain relationships with PNC’s external or internal auditors

A director (or immediate family member) who has been an executive officer of a company where a PNC executive officer serves or served on that company’s compensation committee

Business relationships involving certain companies affiliated with a director or immediate family member of a director that make payments to, or receive payments from, PNC in excess of certain amounts

An employee-director of PNC (or a director with an immediate family member who is a PNC executive officer) will not be independent until three years after the employment relationship ends. The other bright-line tests will impair independence if they existed at any time within the past three years.

For more information about the NYSE’s bright-line director independence tests, including the commentary explaining the application of the tests, please go to the NYSE’s website atwww.nyse.com.

Our Board guidance on independence.To help assess whether a material relationship exists, our Board adopted certain guidelines that describe four categories of relationships that will not be considered material. If a relationship meets the criteria outlined in this guidance, it will not be deemed to be a material relationship. This guidance can be found in our Corporate Governance Guidelinescorporate governance guidelines on our website atwww.pnc.com/corporategovernancecorporategovernance.. The Board may then affirm a director’s independence without further analysis of this relationship, provided that the director otherwise meets the other relevant independence tests.

The four categories of relationships described in this guidance include:

 

•	Ordinary course business relationships, such as lending, deposit, banking, or other financial service relationships involving the provision of products or services on substantially the same terms as would be available to similarly situated customers between PNC or its subsidiaries and a director, his or her immediate family members, or a company or charitable organization of which the director or an immediate family member is a partner, shareholder, officer, employee, or director
•	Other relationships with entities where the director is an investor such as a shareholder, member or partner
•	Contributions made by PNC, its subsidiaries, or a PNC sponsored foundation to a charitable organization in which a director or an immediate family member is an executive officer, director, or trustee
•	Relationships involving a director’s relative who is not an immediate family member
Ordinary course business relationships, such as lending, deposit, banking, or other financial service relationships or other relationships involving the provision of products or services between PNC or its subsidiaries and a director, his or her immediate family members, or an affiliated entity of a director or immediate family member, which meet the criteria defined in the guidelines Contributions made by PNC, its subsidiaries, or a PNC sponsored foundation to a charitable organization in which a director or an immediate family member is an executive officer, director, or trustee Relationships involving a director’s relative who is not an immediate family member 30    THE PNC FINANCIAL SERVICES GROUP, INC. - 2016 Proxy Statement DIRECTOR AND EXECUTIVE OFFICER RELATIONSHIPS Relationships or transactions between PNC or its subsidiaries and a company or charitable organization where a director or an immediate family member serves solely as a non-management board member, or where an immediate family member is employed in a non-officer position These guidelines also allow investors to assess the quality of a Board’s independence determinations.

In applying this guidance, an “immediate family member” includes a person’s spouse, parents, children, siblings, mothers and fathers-in-law, sons and daughters-in-law, brothers and sisters-in-law, and anyone (other than domestic employees) who shares such person’s home.

If a director has a relationship that would be deemed non-materialnot be considered material under our guidelines for independence, but crosses one of the NYSE’s bright-line tests, the NYSE test governs and the director will not be treated as independent.

Our Board’s independence determinations.determinations. At a meeting held on February 13, 2014,11, 2016, the Board made an independence determination for each of our 1716 directors, including our 1513 director nominees.

In making these determinations, our Board relied on the evaluation and recommendations made by the Nominating and Governance Committee. The Board considered relevant facts and circumstances when making these determinations, including an evaluation of the relationships described below.

Our Board based the independence decisions on information known as of February 13, 2014, and each11, 2016. Each director has been asked to provide updates on changes that could impact the director’s status as an independent director. The Nominating and Governance Committee and Board will consider

information throughout the year that may impact independence.

Non-independent directors.directors. Our Board affirmatively determined that Mr. Rohr and Mr. Demchak areis the only non-independent directors. Eachdirector. Mr. Demchak meets the NYSE’s bright-line relationship test as an executive officer or former executive officer of PNC. Mr. Rohr is not a nominee for director.

Independent directors.directors. Our Board affirmatively determined that each of the directors listed below has no material relationship with PNC under the NYSE corporate governance listing standards. These determinations were based, in part, on an evaluation of the facts and circumstances of relevant relationships in light of PNC’s own independence guidelines. In some cases, the relationships that we analyzed include relationships that a director has as a partner, member, shareholder, officer or officeremployee of an organization that has a relationship with PNC. They may also include relationships between directors andwhere an immediate family members.

member of a director is a partner, member, shareholder or officer of an organization that has a relationship with PNC.

Based on these evaluations, our Board affirmatively determined that each of these directors qualifies as independent under the NYSE’s corporate governance listing standards: Richard O. Berndt, Charles E. Bunch, Paul W. Chellgren, Marjorie Rodgers Cheshire, Andrew T. Feldstein, Daniel R. Hesse, Kay Coles James, Richard B. Kelson, Bruce C. Lindsay, Anthony A. Massaro, Jane G. Pepper, Donald J. Shepard, Lorene K. Steffes, Dennis F. Strigl, Thomas J. Usher, Michael J. Ward and Gregory D. Wasson. Mr. Chellgren, Mr. Massaro and Mr. Usher are not nominees for director. Richard O Berndt, George H. Walls, Jr., and Helge H. Wehmeier. Mr. Lindsay is not a nominee for director.Wehmeier, who served as directors until April 28, 2015, also qualified as independent until they retired from the Board.

 

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DIRECTOR AND EXECUTIVE OFFICER RELATIONSHIPS

Transactions with directors

 

This chart reflects banking relationships between PNC and the director, the director’s spouse, the director’s immediate family members, orand a company or charitable organization of which the director or the director’s spouse is, or was during 2013,2015, a partner, officer, employee, any immediate family member is, or was during 2015, a partner or officer, or in which the director or the director’s spouseany immediate family member holds a

significant ownership or voting position (an affiliated entity). The chart also reflects relationships where PNC contributed to a charitable organization of which a director or immediate family member was a trustee, director or executive officer. All of these transactions meet our Board guidance on independence.

 

`

Personal or Family  Relationships

Deposit, Wealth Management and Similar Banking Products(1)

l

l

l

l

l

l

l

l

l

l

l

l

l

Credit Relationships(2)

l

l

l

l

l

l

l

l

l

l

l

Charitable Contributions(3)

l

l

l

l

l

l

l

Affiliated Entity  Relationships

Deposit, Wealth Management and Similar Banking Products(1)

l

l

l

l

l

l

l

l

Credit Relationships or Commercial Banking Products(4)

l

l

l

l

l

l

l

(1)	Includes deposit accounts, trust accounts, certificates of deposit, safe deposit boxes, workplace banking, or wealth management products.

(2)	Includes extensions of credit, including mortgages, commercial loans, home equity loans, credit cards, or similar products, as well as credit and credit-related products.

(3)

Includes both charitable contributions made to entities affiliated with directors, as well asDoes not include matching gifts provided to charities personally supported by the director althoughbecause under our Board guidanceguidelines matching gifts are not a “material relationship” and are not included in considering the value of contributions against our guidance. Matching gifts are capped at $5,000 and are included as other compensation in the director compensation table.

(4)	Includes extensions of credit, including commercial loans, credit cards, or similar products, as well as credit, credit-related products, and other commercial banking products, including treasury management, purchasing card programs, foreign exchange, and global trading services.

 

Customer relationships.We provide financial services to most of our directors. We also provide financial services to some of their immediate family members and affiliated entities. We offer these services in the ordinary course of our business. We provide the services on substantially the same terms and conditions, including price, as we provide to other similarly situated customers.

We also extend credit to some of our directors and their immediate family members and affiliated entities. Federal banking law (Regulation O) governs these extensions of credit. We discuss the impact of Regulation O and our process for managing these extensions onof credit on pages 3133 and 32.34.

Business relationships.We also enter into other business relationships with entities affiliated with our directors or their immediate family members. These relationships are in the ordinary course of business.

Certain charitable contributions.contributions. We make contributions to charitable organizations where our directors serve as directors, or trustees but not asor executive officers. We also match charitable contributions made by our directors. We describe this matching gift program on page 33.37.

32    THE PNC FINANCIAL SERVICES GROUP, INC. - 2016 Proxy Statement

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DIRECTOR AND EXECUTIVE OFFICER RELATIONSHIPS

 

Related person transactions policies and proceduresCode of ethics

 

Code of ethics.Our Code of Business Conduct and Ethics contains several provisions that regulate related person transactions. The Code of Business Conduct and Ethics applies generally to all employees, including our executive officers, and directors.

Doing business with PNCPNC.. An employee or an immediate family member may want to engage in a business arrangement, such as the sale or lease of property or the provision of services, with PNC. For these transactions, we require prior approval from a supervisor and our Corporate Ethics Office. If a director desires to engage in a business arrangement with PNC, approval is required from the Corporate Ethics Office and from a Board committee.

Financial services to employees.Our employees and their extended families are encouraged to use PNC for their personal financial services. Any services must be provided on the same terms as are available to the

THE PNC FINANCIAL SERVICES GROUP, INC. -2014 Proxy Statement   30

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general public, all employees in a market or business, or all similarly situated employees.

Transacting PNC business.We prohibit directors and employees from transacting business on behalf of PNC with a supplier or customer in which the director, employee, or extended family member has a significant personal or financial interest. We also prohibit directors and employees from transacting business on behalf of PNC with respect to their own accounts, extended family member accounts, or accounts for anyone whose close relationship may reasonably be viewed as creating a conflict of interest. Our phrase “extended family member” is similar to the SEC’s definition of “immediate family member” in Item 404(a) of Regulation S-K. We have established procedures in certain of our businesses to permit employees to transact business with family members, subject to appropriate oversight and compliance with applicable laws and regulations, including Regulation O.

Employing relatives.We employ relatives of executive officers and may employ relatives of directors, in some cases under circumstances that constitute related person transactions. SeeFamily relationshipson page 32.34. We track the employment and compensation of relatives of executive officers and directors. We have policies that restrict special treatment in the hiring or compensation of a relative of an executive officer or director. Our employment of a director’s relative would be a factor in the determination of the director’s independence under NYSE rules and our own adopted guidelines for director independence. SeeDirector and Executive Officer Relationships—Director independence, which begins on page 28.30.

Waivers.Waivers. Under the Code of Business Conduct and Ethics, employees may generally request waivers or exceptions from our Corporate Ethics Office. In the case of directors and executive officers, any proposed waiver or exception must be approved by both the Corporate Ethics Office and the appropriate committee of our Board. In 2013,2015, no directors or executive officers requested an exemption under any of the provisions described above.

Ethics guidelines for directors.directors. The Nominating and Governance Committee adopted Ethics Guidelines for Directors that contain comprehensive guidance regarding the various PNC policies that govern the conduct of our directors to supplement and assist directors in understanding these policies. These guidelines were most recently amendedapproved on August 14, 2013.12, 2015. The guidelines include reference to our policies and procedures applicable to directors, including our Code of Business Conduct and Ethics, described above, and our Related Person Transactions Policy and Regulation O policies and procedures, each described in more detail below, as well as our Director Pre-Clearance of Securities Policy, and our Anti-Corruption Policy.

 

Related person transactions policy.In 2011, we adopted a new policy for the consideration and approval of related person transactions. This policy was most recently amended on August 14, 2013. This policy provides guidance on the framework for reviewing, approving, or ratifying related person transactions, and establishes our Presiding Director as the individual who decides how transactions should be evaluated. In general, a potential related person transaction that involves a director would be reviewed by our Nominating and Governance Committee, as the transaction could also impact independence. A transaction involving an executive officer would generally be reviewed by the Audit Committee. Under this policy, our Audit Committee will receive reports of approved related person transactions, and the Board will also receive reports on transactions.

Under the policy, a permitted related person transaction must be considered in, or not inconsistent with, the best interest of PNC and its shareholders. A related person transaction is generally any transaction in which PNC or its subsidiaries is or may be a party, in which the amount involved exceeds $120,000, and a director (or nominee), executive officer, or family member may be deemed to have a direct or indirect material interest.

PNC has a contract to purchase carpeting from Interface Americas. The sister-in-law of Gregory Jordan, an executive officer, is employed by Interface and serves as the sales representative on the PNC account. The relationship existed for many years before Mr. Jordan joined PNC in 2013. The contract was not negotiated with Mr. Jordan’s sister-in-law; however, she does receive commissions on purchases of carpeting from Interface by PNC. PNC is not involved in the determination of the amount of her commission and understands that it is based on customary terms. In 2013, PNC purchased carpet in an aggregate amount of $5.8 million from Interface.

Regulation O policies and procedures.procedures

We designmaintain additional policies and procedures to help ensure our compliance with Regulation O. This regulationO, which imposes various conditions on a bank’s extension of credit to directors and executive officers.officers and related interests. Any extensions of credit we make must comply with our own Regulation O policies and procedures. This includes a separate review by our designatedprocedures in accordance with Regulation O credit officer.O. A director can only meet our guidelines for independence for extensions of credit if the credit complied with Regulation O at the time PNC extended it.

Our Regulation O policies and procedures require:

 

Extensions of credit to covered individuals or entities be made on substantially the same terms (including interest rates and collateral) as those prevailing at the time for comparable transactions with those who are not covered. For credit extensions under a benefit or compensatory program widely available to all employees, we may not give preference to any covered individual.

The covered extension of credit be made following credit underwriting procedures no less stringent than those prevailing at the time for comparable transactions with non-covered

THE PNC FINANCIAL SERVICES GROUP, INC. - 2016 Proxy Statement    33

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DIRECTOR AND EXECUTIVE OFFICER RELATIONSHIPS

•	Extensions of credit to covered individuals or entities be made on substantially the same terms (including interest rates and collateral) as those prevailing at the time for comparable transactions with those who are not covered. For credit extensions under a benefit or compensatory program widely available to all employees, we may not give preference to any covered individual.
•	The covered extension of credit be made following credit underwriting procedures no less stringent than those prevailing at the time for comparable transactions with non-covered individuals or entities. The extension of credit may not involve more than the normal risk of repayment or present other unfavorable features.
•	The amount of covered extensions of credit do not exceed individual and aggregate lending limits, depending on the identity of the borrower and the nature of the loan.

 

THE PNC FINANCIAL SERVICES GROUP, INC. -2014 Proxy Statement   31The amount of covered extensions of credit do not exceed individual and aggregate lending limits, depending on the identity of the borrower and the nature of the loan.

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Our subsidiary bank, PNC Bank, National Association, designateshas a Regulation O Credit Officer to review extensions of credit to determine our compliance with these policies. If an extension of credit would result in an aggregate credit extension of more than $500,000, the bank’s Board of Directors must approve it. The bank’s Board of Directors receives a report of all extensions of credit made to executive officers under Regulation O.

All loans to directors, and executive officers, and related interests outstanding during 2013:2015:

 

•	complied with our Regulation O policies and procedures;
•	were made in the ordinary course of business;
•	were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable loans with persons not related to PNC; and
•	did not involve more than the normal risk of collectability or present other unfavorable features.

complied with our Regulation O policies and procedures;

were made in the ordinary course of business;

were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable loans with persons not related to PNC; and

did not involve more than the normal risk of collectability or present other unfavorable features.

 

Family relationships

 

No family relationship exists between any of our directors or executive officers and any of our other directors or executive officers. There are family relationships between certain directors and executive officers and some of the approximately 54,00053,000 PNC employees. These employees participate in compensation and incentive plans or arrangements on the same basis as other similarly situated employees.

A brother-in law of Gregory Jordan, one of our executive officers, is employed by PNC and had been for many years before Mr. Jordan joined PNC in 2013. He participates in compensation and incentive plans or arrangements on the same basis as similarly situated employees. He does not share a household with Mr. Jordan, is not an executive officer of PNC, and does not report directly to an executive officer of PNC. His compensation paid in 2015 exceeded the $120,000 related person transaction threshold during 2013 and as a result was reviewed by the Audit Committee.

A son of Michael Hannon, one of our executive officers, is employed by PNC. He participates in compensation and incentive plans or arrangements on the same basis as similarly situated employees. He is not an executive officer of PNC and does not report directly to an executive officer of PNC. His compensation paid in 2015 exceeded the $120,000 related person transaction threshold and as a result was reviewed by the Audit Committee.

The daughter of Charles E. Bunch, one of our non-management directors, has been employed by PNC for several years. She participates in compensation and incentive plans or arrangements on the same basis as similarly situated employees. She does not share a household with Mr. Bunch, is not an executive officer of PNC, and does not report directly to an executive officer of PNC. Her compensation paid in 2015 exceeded the $120,000 related person transaction threshold. Her compensation was reviewed by the Nominating and Governance Committee.

 

Indemnification and advancement of costs

 

We indemnify directors, officers and, in some cases, employees and agents, against certain liabilities. The covered person may have incurred a liability as a result of service on our behalf or at our request. On behalf of a covered person, we may also advance the costs of certain claims or proceedings. If we advance costs, the person agrees to repay us if it is determined that the person was not entitled to indemnification. The insurance policies we maintain for our directors and executive officers also provide coverage against certain liabilities.

The indemnification provisions, the advancement of costs, and our insurance coverage may provide benefits to our directors and executive officers. During 2013,2015, we didadvanced costs with respect to pending litigation against us on behalf of certain former and current directors and officers, including our CEO, who were also named as defendants.

34    THE PNC FINANCIAL SERVICES GROUP, INC. - 2016 Proxy Statement

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RELATED PERSON TRANSACTIONS

Related person transactions policy

Our policy for the review and approval of related person transactions was most recently approved on August 12, 2015. A related person transaction is generally any transaction in which PNC or its subsidiaries is or will be a participant, in which the amount involved exceeds $120,000, and a director (or nominee), executive officer, family member, or any beneficial owner of more than 5% of our common stock, has or will have a direct or indirect material interest.

This policy provides guidance on the framework for reviewing potential related person transactions, and approving, or ratifying related person transactions, and establishes our Presiding Director as the

individual who decides how transactions should be evaluated. In general, a potential related person transaction that involves a director would be reviewed by our Nominating and Governance Committee, as the transaction could also impact independence. A transaction involving an executive officer would generally be reviewed by the Audit Committee. Under this policy, our full Board receives reports on approved, disapproved and ratified transactions. Under the policy, a permitted related person transaction must be considered in, or not advance legal costsinconsistent with, the best interest of PNC and its shareholders.

Certain related person transactions

Based on information contained in a Schedule 13G filed with the SEC, BlackRock, Inc. (BlackRock), through certain of its subsidiaries, indicated that it beneficially owned more than 5% of our outstanding shares of common stock as of December 31, 2015 (seeSecurity ownership of certain beneficial owners on page 80). BlackRock is the beneficial owner of our common stock as a result of being a parent company or control person of the subsidiaries disclosed in its Schedule 13G, each of which holds less than 5% of the outstanding shares of common stock.

During 2015, PNC paid BlackRock approximately $8 million for use of BlackRock’s enterprise investment system and related services, which include risk analytics, portfolio management, compliance and operational processing. PNC also paid BlackRock approximately $4 million for securities trading related services, and approximately $2 million for investment advisory and administration services provided to any directorcertain PNC subsidiaries and separate accounts assets for a fee based on assets under management. These transactions were entered into on an arm’s length basis and contain customary terms and conditions.

During 2015, PNC received approximately $9 million in fees from BlackRock for distribution and shareholder servicing activities. These transactions were entered into on an arm’s length basis and contain customary terms and conditions.

PNC may in the ordinary course of business engage in transactions with BlackRock mutual funds, including using the BlackRock funds as treasury management vehicles for PNC’s corporate clients, selling BlackRock investment products to PNC customers or executive officer.placing PNC customer funds in

BlackRock mutual funds, using BlackRock funds as an investment vehicle for the PNC 401(k) accounts, providing commercial loan servicing to BlackRock funds, or providing shareholder services to PNC clients who are shareholders of BlackRock mutual funds.

PNC may also make loans to BlackRock or the BlackRock funds. These loans are made in the ordinary course of business on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable loans with persons not related to PNC; and do not involve more than the normal risk of collectability.

PNC holds an equity investment of approximately 22% in BlackRock. In connection with this equity investment, PNC has entered into various agreements governing the terms of this relationship. PNC received cash dividends from BlackRock of $320 million during 2015.

Based on information contained in separate Schedule 13G filings with the SEC, Wellington Management Group, LLP and certain subsidiaries (Wellington) and The Vanguard Group (Vanguard) each indicated that it beneficially owned more than 5% of our outstanding shares of common stock as of December 31, 2015 (seeSecurity ownership of certain beneficial ownerson page 80). In the ordinary course of business during 2015, PNC’s Corporate & Institutional Banking business engaged in treasury management and capital markets transactions with Vanguard. These transactions were entered into on an arm’s length basis and contain customary terms and conditions. This business is also a party to several credit facilities with Vanguard. The credit transactions were on substantially the same terms, including interest rates

 

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RELATED PERSON TRANSACTIONS

 

and collateral, as those prevailing at the time for comparable loans with persons not related to PNC, and do not involve more than the normal risk of collectability. In addition, PNC’s Asset Management Group and PNC Investments include Vanguard funds and Vanguard exchange traded funds in their

investment platforms. While we currently do not include Wellington funds in the platform, we may do so in the ordinary course when evaluating the funds included. Furthermore, our Deferred Compensation Plan included several Vanguard funds as an investment option during 2015.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires persons who own more than ten percent of a registered class of our equity securities (currently, none) and our directors and executive officers to file with the SEC initial reports of ownership and reports in changes in ownership of any PNC equity

securities. To the best of our knowledge all forms were filed on a timely basis during 2013 except for the following. One of our directors, General Walls, had a late Form 4 filing related to the receipt of phantom stock units under PNC’s director deferred compensation plan on October 1, 2013. The information was not processed on a timely basis. The Form 4 was filed on October 4, 2013, one day after the required filing date. Additionally, Mr. Shepard, one of our directors, received a distribution from a PNC deferred compensation plan on September 30, 2013, but his Form 4 was not processed on a timely basis. The Form 4 was filed on January 8, 2014. Also, on October 25, 2013 we withheld shares to satisfy the tax liability in connection with the vesting of restricted stock for Gregory Kozich, an executive officer, but did not file the Form 4 until March 5, 2014. We also identified a late Form 4 filing from 2012 that was not previously disclosed. Gregory Kozich was granted shares on February 7, 2012, but the Form 4 was not filed until May 24, 2013.2015. In making this statement, we have relied in part on the written representations of our directors and executive officers and on copies of the reports provided to us.

 

THE PNC FINANCIAL SERVICES GROUP, INC. -2014 Proxy Statement   32

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DIRECTOR COMPENSATION

 

Our Board’s Nominating and Governance Committee reviews all elements of non-employee director compensation, explained below, and makes an annual compensation recommendation to the Board. In addition to annual compensation, the Committee may approve special compensation to a director for extraordinary service. The primary objectives of the Committee’s annual review are to confirm continued alignment with business and shareholder interests,

evaluate the competitiveness of our director compensation program relative to the peer group, and identify and respond to continued changes in director compensation in light of the competitive environment. The Nominating and Governance Committee conducted its annual compensation review for 20132015 on April 23, 2013.

28, 2015.

Mr. Rohr and Mr. Demchak receivereceives no additional compensation for serving as a PNC director.

 

The following table describes the components of director compensation in 2013:2015:

 

Annual Retainer
Each Director		$	60,000			$	67,500
Presiding Director		$	25,000			$	30,000
Additional retainer for Chairs of Audit, Risk, and Personnel and Compensation Committees		$	20,000			$	20,000
Additional retainer for Chair of Nominating and Governance Committee		$	15,000			$	15,000
Additional retainer for Chair of Executive Committee		$	10,000			$	10,000
Meeting Fees (Board)
Each meeting (except for quarterly scheduled telephonic meetings)		$	1,500			$	1,500
Each quarterly scheduled telephonic meeting		$	750			$	1,000
Meeting Fees (Committee/Subcommittee)
First six meetings		$	1,500			$	1,500
All other meetings		$	2,000			$	2,000
Equity-Based Grants
Value of 1,934 deferred stock units awarded as of April 23, 2013		$	129,984
Value of 1,504 deferred stock units awarded as of April 28, 2015						$	137,481

 

Deferred compensation plans.Our non-management directors may choose to defer the compensation they receive from meeting fees and retainers under our Directors Deferred Compensation Plan. Our Outside Directors Deferred Stock Unit Plan provides for automatic deferrals of any stock units that we may award from time to time. For compensation deferred under these plans:

 

The deferred compensation account tracks the price of PNC common stock (the Directors Deferred Compensation Plan allows a director to

•	The deferred compensation account tracks the price of PNC common stock (the Directors Deferred Compensation Plan allows a director to	track an interest rate option instead). Additionally, the accounts are credited with a number of units (including fractional shares) that could have been purchased with the equivalent of PNC common stock cash dividends. We do not pay above-market or preferential earnings on any director compensation that is deferred.
•	The director may choose the payout date and beneficiary (the stock unit plan does not allow a payout date until retirement or age 72).
•	The payouts will be made in cash.

 

The director may choose the payout date and beneficiary (the stock unit plan does not allow a payout date until retirement or age 72).

The payouts will be made in cash.

36    THE PNC FINANCIAL SERVICES GROUP, INC. - 2016 Proxy Statement

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DIRECTOR COMPENSATION

Other director benefits.We generally limit the benefits that we provide to our directors, but we regularly provide the following:

 

•

Charitable matching gifts.We will match a director’s personal gifts to qualifying charities up to a limit of $5,000 a year. Mr. Rohr and Mr. Demchak areis only eligible to participate in our employee matching gift program ($2,500 annual limit).

•
•	Insurance policies.We pay for various insurance policies that protect directors and their families from personal loss connected with Board service.

•
•	Benefits related to Board service. We pay for expenses connected with our directors’ Board service, including travel on corporate, private or commercial aircraft, lodging, meals, and incidentals.

We may also provide other incidental benefits to our directors from time to time, including tickets to cultural, social, sporting or other events and small gifts for holidays, birthdays, or special occasions. We may also provide travel for directors on corporate aircraft for personal purposes in limited circumstances, such as a family emergency or when

a seat is available on a previously scheduled flight. We determine the value of these benefits based on the incremental cost to PNC, as described on pages 4952 and 5053 and we include the amount in the “All Other Compensation” column below.

Director stock ownership requirement.Our Board has adopted a common stock purchase guideline for our non-management directors. Under this guideline, each director must own at least 5,000 shares of PNC common stock (including phantom stock units). Until a director meets this ownership level, he or she must purchase or acquire common stock or stock units that equal at least 25% of the annual retainer for that year. A director may satisfy this requirement through open market purchases, or by deferring compensation into stock units under the Directors Deferred Compensation Plan. As of December 31, 2013,2015, the minimum ownership threshold for directors was valued at $387,900,$476,550, and all of our directors serving at that time, other than Marjorie Rodgers Cheshire who was appointed in October 2014 and Gregory D. Wasson who was appointed in July 2015, satisfied the ownership guideline.

 

THE PNC FINANCIAL SERVICES GROUP, INC. -2014 Proxy Statement   33

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Director compensation in 20132015

For the fiscal year 2013,2015, we provided the following compensation to our non-employee directors:

 

										All Other
Director Name		Fees Earned(a)				Stock Awards(b)				Compensation(c)				Total				Fees  Earned(a)				Stock  Awards(b)				All Other Compensation(c)				Total
Richard O. Berndt		$	132,500			$	129,984			$	26,612			$	289,096
Richard O. Berndt*																		$	37,620				-			$	20,455			$	58,075
Charles E. Bunch		$	104,000			$	129,984			$	21,612			$	255,596			$	92,750			$	137,481			$	38,089			$	268,320
Paul W. Chellgren		$	139,250			$	129,984			$	101,744			$	370,978			$	104,250			$	137,481			$	117,836			$	359,567
Marjorie Rodgers Cheshire																		$	123,250			$	137,481			$	2,027			$	262,758
Andrew T. Feldstein		$	35,312			$	-			$	126			$	35,438			$	125,750			$	137,481			$	14,517			$	277,748
Kay Coles James		$	90,500			$	129,984			$	34,062			$	254,546			$	96,750			$	137,481			$	48,079			$	282,310
Richard B. Kelson		$	116,000			$	129,984			$	48,931			$	294,915			$	137,250			$	137,481			$	59,275			$	334,006
Bruce C. Lindsay		$	114,000			$	129,984			$	58,243			$	302,227
Anthony A. Massaro		$	113,000			$	129,984			$	32,047			$	275,031			$	107,750			$	137,481			$	50,245			$	295,476
Jane G. Pepper		$	111,500			$	129,984			$	48,196			$	289,680			$	110,250			$	137,481			$	63,532			$	311,263
Donald J. Shepard		$	147,500			$	129,984			$	45,135			$	322,619			$	133,750			$	137,481			$	71,712			$	342,943
Lorene K. Steffes		$	105,000			$	129,984			$	44,116			$	279,100			$	102,250			$	137,481			$	64,956			$	304,687
Dennis F. Strigl		$	128,500			$	129,984			$	60,805			$	319,289			$	112,750			$	137,481			$	85,503			$	335,734
Thomas J. Usher		$	156,000			$	129,984			$	86,168			$	372,152			$	130,250			$	137,481			$	110,942			$	378,673
George H. Walls, Jr.		$	132,500			$	129,984			$	48,220			$	310,704
Helge H. Wehmeier		$	91,000			$	129,984			$	62,949			$	283,933
George H. Walls, Jr.*																		$	37,620				-			$	54,106			$	91,726
Gregory D. Wasson**																		$	46,380				-			$	217			$	46,597
Helge H. Wehmeier*																		$	25,620				-			$	62,409			$	88,029

*	Mr. Berndt, Gen. Walls and Mr. Wehmeier served as directors through April 28, 2015.

**	Mr. Wasson was appointed as a director on July 2, 2015.

 

(a)

This column includes the annual retainers, additional retainers for Chairschairs of standing committees and meeting fees earned for 2013.2015. The amounts in this column also include the fees voluntarily deferred by the following directors under our Directors Deferred Compensation Plan, a non-qualified defined contribution plan: Paul W. Chellgren ($139,250)104,250); Marjorie Rodgers Cheshire ($49,300); Andrew T. Feldstein ($30,524); Kay Coles James ($22,625); Anthony A. Massaro ($113,000)125,750); Jane G. Pepper ($27,875)27,563); Donald J. Shepard ($147,500)133,750); Lorene K. Steffes ($36,750)30,675); Dennis F. Strigl ($128,500); and George H. Walls, Jr. ($132,500)37,620); and Gregory D. Wasson ($44,900).

(b)

The dollar values in this column include the grant date fair value, under Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation—Stock Compensation, of 1,9341,504 deferred stock units awarded to each director’s account under our Outside Directors Deferred Stock Unit Plan as of April 23, 2013,28, 2015, the date of grant. The closing stock price of PNC on the date of grant was $67.21$91.41 a share. See Note 1613 in our Annual Report on Form 10-K for the year ended December 31, 20132015 for more information.

As of December 31, 2015, the non-employee directors listed in the table below had outstanding stock units in the following amounts:

THE PNC FINANCIAL SERVICES GROUP, INC. - 2016 Proxy Statement    37

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DIRECTOR COMPENSATION

Director Name		Stock Units
Charles E. Bunch			17,429
Paul W. Chellgren			59,738
Marjorie Rodgers Cheshire			1,935
Andrew T. Feldstein			6,079
Kay Coles James			22,466
Richard B. Kelson			28,111
Anthony A. Massaro			24,745
Jane G. Pepper			29,320
Donald J. Shepard			34,275
Lorene K. Steffes			29,646
Dennis F. Strigl			29,884
Thomas J. Usher			54,163
Gregory D. Wasson			428

None of our non-employee directors had any unvested stock awards as of December 31, 2015.

(c)

This column includes income under the Directors Deferred Compensation Plan, the Outside Directors Deferred Stock Unit Plan, and the Mercantile Bankshares Corporation Deferred Compensation Plan (for Mr. Shepard only) as follows: Richard O. Berndt ($21,612)15,455); Charles E. Bunch ($21,612)33,089); Paul W. Chellgren ($96,744)117,836); Marjorie Rodgers Cheshire ($2,027); Andrew T. Feldstein ($126)9,517); Kay Coles James ($29,062)43,079); Richard B. Kelson ($38,931); Bruce C. Lindsay ($53,243)54,275); Anthony A. Massaro ($32,047)50,245); Jane G. Pepper ($43,036)58,532); Donald J. Shepard ($45,135)66,712); Lorene K. Steffes ($43,366)61,293); Dennis F. Strigl ($60,805)85,503); Thomas J. Usher ($81,168)105,942); George H. Walls, Jr. ($43,040)49,106); Gregory D. Wasson ($217); and Helge H. Wehmeier ($57,949)57,409). This column also includes the dollar amount of matching gifts made by us in 20132015 to charitable organizations and the value of otherorganizations. No director received any incidental benefits described above. For one director the 2013 matching gift amount included above exceeds $5,000 because both a 2012 and 2013 director donation were matched in 2013.benefits. No non-employee director had incremental cost to PNC for personal use of our corporate aircraft in 2013.2015.

 

As of December 31, 2013, the non-employee directors listed in the table below had outstanding stock units and stock options in the following amounts:

Director Name		Stock Units				Stock Options
Richard O. Berndt			13,702				-
Charles E. Bunch			13,702				-
Paul W. Chellgren			58,795				-
Andrew T. Feldstein			288				-
Kay Coles James			18,214				-
Richard B. Kelson			23,921				-
Bruce C. Lindsay			25,010				-
Anthony A. Massaro			19,939				-
Jane G. Pepper			26,487				4,000
Donald J. Shepard			28,627				-
Lorene K. Steffes			24,752				1,000
Dennis F. Strigl			25,617				4,000
Thomas J. Usher			48,845				4,000
George H. Walls, Jr.			25,164				-
Helge H. Wehmeier			35,144				-

No stock options have been granted to any non-employee director since 2005. None of our non-employee directors had any unvested stock awards as of December 31, 2013.

38    THE PNC FINANCIAL SERVICES GROUP, INC. -20142016 Proxy Statement34

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COMPENSATION DISCUSSION AND ANALYSIS

Introduction

In thisThis section (the CD(CD&A), explains our executive compensation philosophy, describes our compensation programs and the tables that follow, we describe how we compensate our executives, includingreviews compensation decisions for the following named executive officers (NEOs):

 

Name		Title
William S. Demchak		Chairman, President and Chief Executive Officer
James E. Rohr	Executive Chairman and Former Chief Executive Officer
Robert Q. Reilly		Executive Vice President and Chief Financial Officer
Richard J. Johnson	Former Chief Financial Officer
Michael P. Lyons		Executive Vice President and Head of Corporate and Institutional Banking
E.E William Parsley, III		Executive Vice President, Chief Investment Officer and Treasurer
StevenJoseph C. Van WykGuyaux*		ExecutiveSenior Vice Chairman and CEO and President Head of Technology and OperationsPNC Mortgage

 

Table*	Effective January 31, 2015, Mr. Guyaux became the CEO and President of contents
Significant compensation decisions	36
PNC performance during 2013	36
Compensation philosophy and principles	38
Compensation program — summary	39
Total compensation targets	39
Other compensation and benefits	40
Evaluating performance	41
Impact of 2013 “say-on-pay” vote	42
Compensation program — decisions	42
2013 performance discussion	42
Individual compensation decisions	43
Annual incentive awards (cash)	45
Long-term incentive awards (equity-based)	45
Compensation policies and practices	47
Compensation and risk	47
Retaining an independent compensation consultant	47
Selecting a peer group	47
Clawback of prior compensation	47
Shareholder approval of severance agreements	48
Consideration of tax deductibility	49
Limiting perquisites	49
Guidelines on the use of discretion	50
Executive stock ownership and retention	50
Timing of equity grants	51
Restrictions on trading and hedging	51Mortgage. Prior to that date, Mr. Guyaux was our Chief Risk Officer.

THE2015 PNC FINANCIAL SERVICES GROUP, INC. -performance2014 Proxy Statement   35

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Significant compensation decisions

Our Board’s Personnel and Compensation Committee made the following significant compensation decisions related to the 2013 performance year:

 

•	Refined the process for assessing corporate performance in making compensation decisions. The Committee moved away from a more formulaic assessment of PNC corporate performance to an assessment that relies on a comprehensive, balanced evaluation of quantitative and qualitative measures.
•	Approved new total compensation targets for the following executives, in connection with their transitions to new roles:

	NEO		New role		Former role
	James E. Rohr		Executive Chairman		Chief Executive Officer
	William S. Demchak		President and Chief Executive Officer		President
	Robert Q. Reilly		Executive Vice President and Chief Financial Officer		Executive Vice President and Head of Asset Management Group

•	Continued to ensure thatIn 2015, we delivered consistent results in a significant portion of executive compensation remains at risk and tied to our future performance.
	–	For our NEOs, the Committee approved total compensation targets that will deliver at least 50% of the amount in equity-based awards that will only pay out — if at all — over multiple years.
	–	For our President and CEO, our Executive Chairman, and another NEO, this ratio increases to 60% of the total compensation target.
•	Considered the results of the 2013 “say-on-pay” vote, and continued our investor outreach efforts on compensation and governance matters, which we have implemented since 2010.
•	Awarded incentive compensation above target for 2013, based on our strong absolute and relative performance results.

PNC performance during 2013

PNC is one of the largest diversified financial services companies in the United States. We have businesses engaged in retail banking, corporate and institutional banking, asset management, and residential mortgage banking. As of December 31, 2013, we had more than 54,000 employees providing products and services throughout our primary geographic markets located in 19 states and the District of Columbia. We also provide many of our products and services nationally.

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2013 performance highlights

•	We delivered strong performance in 2013,challenging operating environment, with record net income and strong shareholder returns.
	–	Record net income of $4.2$4.1 billion represents an increase(8% over budget) and diluted earnings per share of 41%$7.39 (7.4% over last yearbudget) – we have earned at least $1 billion in net income during each of the past eleven quarters
	–	Our annual total shareholder return (TSR) was 36.5% the second-highest in our peer group and our three-year TSR was the highest in our peer group – our stock price also reached an all-time high in 2015
		We diversified and improved our sources of revenue by successfully growing noninterest income and allowing our net interest income to decline – rather than adding riskier loans in a continued low interest rate environment
	–
		We continued to manage our costs, reducing our expenses for the third year in a row and exceeding our revised continuous improvement goal of $500 million in expense savings (up from our initial 2015 goal of $400 million)
		We strengthened our capital throughout the year - at December 31, 2013,and returned capital to our Basel I Tier 1 common capital ratio was 10.5% and our pro forma fully phased-in Basel III Tier 1 common capital ratio under the standardized approach was an estimated 9.4% (see Annex A for additional information). Asshareholders through both a result of increased earnings and our improving capital strength, our Board increased the common stock dividend by 10% in April.
•	We executed on our key strategic objectives:
	–	Drive growth in newly acquiredincrease and underpenetrated markets.We added households and new retail, corporate and wealth management clients throughout our Southeastern United States footprint.
	–	Capture more investable assets.We increased new primary client acquisitions, referral revenues and brokerage fees.
	–	Redefine the retail banking business.We closed or consolidated 186 branches for the year, phased out traditional free checking, added customers and grew net demand deposit account (DDA) households.
	–	Build a stronger mortgage banking business.We continued to show good volume trends, even though demand softened, and we expanded seamless delivery across our network, while improving the average application-to-close time.
	–	Manage expenses.We exceeded our $700 million continuous improvement goal established at the beginning of the year, improved our efficiency ratio, and decreased our expenses over last year.share repurchases

We review various performance metrics with our Board’s Personnel and Compensation Committee each quarter and after the end of our performance year. For the key metrics listed below, we compare this year’s performance to how we performed last year, how we performed against this year’s budget, and how we performed against peers (see page 50 for the companies in our 2015 peer group). We also provide information to the Committee on other important capital, risk, expense and business metrics, some of which are shown below. For a general explanation of the metrics that we use to evaluate our compensation program, and our rationale for using them, see page 45.

KEY PERFORMANCE METRICS		2015 actual(1)				2014 actual(1)				2015 budget(2)
Net interest income (in millions)		$	8,278			$	8,525			$	8,401
Noninterest income (in millions)		$	6,947			$	6,850			$	6,660
Diluted earnings per common share		$	7.39			$	7.30			$	6.88
Return on common equity (without goodwill)			12.22%				12.84%				11.61%
Return on assets			1.17%				1.28%				1.10%
Efficiency ratio(3)			62.15%				61.71%				63.08%
		2015 actual(1)				2014 actual(1)
Annual total shareholder return			6.81%				20.32%
Tangible book value per share			$   63.65			$	59.88
Tier 1 risk-based capital ratio			12.00%				12.60%
Return on economic capital vs. cost of capital			5.06%				5.02%

These tables include non-GAAP financial measures. See Annex A for additional information.

NET INCOME (in $ billions)(1)		TANGIBLE BOOK VALUE (per common share)To the extent permitted, the amounts may be adjusted to omit, among other things, the effect of extraordinary items (as such term is used under generally accepted accounting principles), discontinued operations, and merger integration and
		Non-GAAP financial measure. See Annex A for additional information.
ASSETS (in $ billions)		CAPITAL (Basel I Tier 1 common capital ratio)

 

THE PNC FINANCIAL SERVICES GROUP, INC. -20142016 Proxy Statement37    39

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COMPENSATION DISCUSSION AND ANALYSIS

acquisition costs. The results also may include adjustments for select categories of events and transactions that are viewed as being outside of our ongoing management of the business, some categories of which are provided in footnote (b) on page 60 with respect to incentive performance units. When comparing performance metrics to our peers, we adjust their results comparably. We did not adjust PNC’s amounts in either 2014 or 2015, other than adjustments for the sale of Visa shares in each year, which impacted our return on economic capital.

Back(2)

2015 budget results were lower than 2014 actual results for several reasons, including, without limitation, the continued impact of the challenging economic environment on business results and our intent to Contents

manage balance sheet risk by avoiding loans and other assets that are outside of our enterprise risk appetite. The 2015 budget also included the impact of the continued, expected decrease in income recognized over time from the impaired loans we acquired through prior acquisitions (sometimes referred to purchase accounting accretion).

(3)	As efficiency ratio compares our noninterest expense to revenue, a lower percentage is better.

The Committee also reviewed PNC’s performance against key strategic objectives. Despite a challenging revenue environment, management continued to drive growth throughout the franchise and make strategic investments to position PNC for long-term success.

PERFORMANCE AGAINST STRATEGIC OBJECTIVES
Drive growth in new and  underpenetrated markets				In the Southeast region, we increased 2015 market revenue and noninterest income from the prior year
				Continued growth across most lines of business in the Southeast
Capture more investable assets				Increased retail brokerage fees and asset management fees year over year
				Increased total noninterest income by 5% year over year, primarily driven by growth in consumer service fees and brokerage consistent with our strategy of growing share of wallet
Redefine the retail banking business				Continued to focus on transforming the customer experience – 52% of consumer customers used non-teller channels for the majority of their transactions (46% in 2014) and ATM and mobile deposits accounted for 43% of total deposit transactions (35% in 2014)
				More than 375 branches now operate under the universal model (up from 156 branches at the end of 2014)
Build a stronger mortgage business				PNC Bank complied with the terms of the 2011 residential mortgage consent order issued by the OCC to several banks and received notification that the OCC had terminated that order with respect to PNC Bank
				Increased mortgage originations by 11% over the prior year
Bolster critical infrastructure and  streamline core processes				Exceeded continuous improvement goal of $500 million in expense savings
				Noninterest expense decreased from 2014 – the third straight year we decreased expenses

Compensation philosophy and principles

 

A well-designed compensation program provides incentives to achieve desired results, helps to retain and attract talent, and discourages excessive risk-taking. This section talks about how we view

compensation, and why we make the decisions that we do. Our Committee relies on several key principles to help guide its compensation decisions:

 

COMPENSATION PRINCIPLES
1.   Pay for performance
1.	Pay for performance
2.	Align executive compensation with long-term shareholder value creation
3.	Provide competitive compensation opportunities to attract, retain, and motivate executives
4.	Encourage the focus on the long-term success of PNC and discourage excessive risk-taking

 

The Committee believes that the successful application of these principles requires a thoughtful program design, which includes a balanced evaluation of performance metrics. The Committee believes that discretion, flexibility, and judgment are

critical to its ability to deliver incentive compensation that reflects near-term performance results and progress toward longer-term objectives that enhance PNC’s ability to continue to create value for our shareholders.

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COMPENSATION DISCUSSION AND ANALYSIS

 

WHAT WE DO
	Pay for performance		Pay for performance.Most executive pay is at risk and not guaranteed. We set clear financial goals that help usassess corporate performance and we differentiate pay based on individual achievement.We generally include performance-based vesting conditions on the equity-basedOur standard long-term equity incentive awardsthat we grant. are 100% performance-based.
	Discourage excessive risk-taking		We discourageDiscourage excessive risk-taking by executives in many ways, including our balancedprogram design, multiplerisk taking. Multiple performance measures and deferral periods, along with robust stock ownership and retention policies,clawback and forfeiture provisions and robust Board and management processes toidentify risk. We do not believe that any of our compensation programs create risks thatare reasonably likely to have a material adverse impact on the company, which we validatethrough ourhelp discourage excessive risk assessment of incentive-based compensation plans.taking.
	Engage with shareholders		Engage with shareholders.We actively engage with our shareholders on governance and compensation issues.
		Require strong ownershipand retention of equity		equity.We have adopted strong share ownership guidelines, and all of our NEOs currently complywith those guidelines. Executives are subject to additional retention requirements as equitygrants vest.
	Clawback		Clawback.Our clawback policy allows PNC topermits recapture of prior incentive compensation awardedbased on materially inaccurate performance metrics and cancelcanceling all or a portion of long-termlong-term incentive awards based on performance against risk metrics, risk-related actions ordetrimental conduct. The amount of any clawback applied will be publicly disclosed asappropriate.
	Limit perquisites		Limit perquisites.We believe that perquisites should promotebe modest and provide business-related benefits and we generally limitthem to $10,000 in value.value with an additional $10,000 allowance for personal aircraft usage ($100,000 allowance for personal aircraft usage by the CEO). Executives are asked to reimburse the value of perquisites over thatamount, if legally permissible.
	Provide reasonable post-employment benefits		Provide reasonable post-employment benefits.We have closed our legacy supplemental defined benefit plans to new entrants and we requireshareholder approval on change in control benefits above a certain level.
	Retain an independentcompensation consultant		Retain an independent compensation consultant.The Personnel and Compensation Committee retains an independent compensationconsultant that provides no other services to PNC.

WHAT WE DON’T DO
	No tax gross-upsû		No tax gross-ups.Since 2009, we have not entered into any new agreements that permit excise tax gross-upsupon a change in control. We also do not provide tax gross-ups on our perquisites.
û		No change in controlagreements without shareholder approval. Without shareholder approval,		We we will not enter into new change in control arrangements with our executives thatwould pay more than 2.99 times base and bonus in the year of termination unless we getshareholder approval.termination.
	No repricing of optionsû		No “single trigger” acceleration of equity.Equity grants to our senior executives require a “double trigger” to vest upon a change in control – the change in control must occur and there must be a qualifying termination of employment.
û		No repricing of options.Our equity plan does not permit us to reprice stock options that are out-of-the-money,without shareholder approval. See pages 84 – 94 for a discussion of our equity plan.
	No employmentû agreements for NEOs		No employment agreements for NEOs.Our named executives do not have individual employment agreements. They serve at thewill of the Board, which enables us to set the terms of any termination of employment,preserving the Committee’s flexibility to consider the facts and circumstances of anyparticular situation.
	No hedging or short salesû		No hedging, pledging, or short sales.We do not permit any of our employeesdirectors or directorsemployees to hedge PNC securities, or sellshort-sell PNCsecurities short. securities. In addition, we do not permit our directors or executive officers to pledge PNC securities.

Stakeholder engagement and impact of 2015 say-on-pay vote

In 2015, our shareholders voiced substantial support for the compensation of our NEOs, with approximately 97% of the votes cast approving the “say-on-pay” advisory vote on executive compensation. In seven years of say-on-pay votes, this represented the highest level of support that we have received from our shareholders.

For the past several years, we have initiated specific outreach efforts with certain institutional investors. In 2015, we invited many of our largest institutional

shareholders to participate in telephone conferences to discuss governance, compensation, and other matters included in the proxy statement. We had productive conversations with the shareholders who agreed to participate. Based on the results of these efforts and in light of the strong investor support in 2015, the Committee did not believe that any significant changes to the compensation program were needed. The Committee considered the results of this vote as one factor in its compensation decisions, among the other factors discussed in this CD&A.

 

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Compensation program—program summary

 

The Committee reviews and approves the compensation to be paid to our CEO and our Corporate Executive Group (CEG), a group of senior leaders that includes allour NEOs. We strive for clarity and transparency in our compensation

structure, using several features to design a balanced program. While we try to reflect the expectations of various stakeholders, we want our NEOs currently employed by us. Our compensation program strives to balanceachieve multiple objectives, and address the concerns of a variety of stakeholders.consistent with our compensation principles.

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COMPENSATION DISCUSSION AND ANALYSIS

 

As a large financial institution, we must also comply with various regulatory requirements. The Board of Governors of the Federal Reserve (Federal Reserve) regulates PNC as a bank holding company. As part of an ongoing review of incentive compensation programs at large financial institutions, the Federal Reservecompany and has provided guidance and set expectations with respect to our current compensation program,program. The Office of the Comptroller of the Currency (OCC) regulates our primary banking subsidiary, and wealso sets expectations for our compensation program. We expect that the Federal Reserve, the OCC and other financial industry regulatory entities, including the SEC, will continue to beremain closely involved in compensation matters.

We strive for clarity and transparency in our compensation structure, utilizing features to design a balanced program. While we try to reflect the expectations of shareholders and regulators, we want our compensation program to achieve multiple objectives, consistent with our compensation principles.

Taken as a whole, our program provides incentives for performance over the short and long-term, rewards achievement against measurable goals and qualitative objectives, considers market data and discretion, and uses cash today as well as equity deferred into the future. The Committee evaluates multiple performance metrics, both on an absolute basis and as measured against our peers. The

Committee regularly reviews the operation of our compensation program to help ensure that our objectives continue to be met.

Total compensation targets.targets

Each of our NEOs receives a total compensation target for the year – this includes the base salary and an incentive compensation target (payable in cash and equity-based awards). We set total compensationthese targets for our executives in the first quarter of the year, or when an executive assumes a new role with PNC. responsibilities.

In establishing total compensation targets, the Committee reviews on an annual basis, available market data for total compensation. Total compensationeach position. We do not set targets for our executives, however, are not formulaically set at a particular percentile.by formula. Instead, the Committee usesevaluates a variety of factors, to determine a total compensation target including but not limited to,the appropriateness of the job match and market data, the responsibilities of the position at PNC and experience. For NEOs, our total compensation targets generally fall near the median compensation for peers, as adjusted for PNC’s size.executive’s demonstrated performance, skills, and experience.

 

The total compensation target for each NEO generally includesconsists of the following components:

 

 

Our Committee believes that annual compensation should include a substantial performance-based component that varies from year to year. For information on how our Committee evaluates performance to determine the annual incentive payout, see the discussion starting on page 44.

We calculate the mixwant our NEOs to receive a significant portion of cash andcompensation in equity inthat pays out, if at all, over several years. To achieve that goal, at least 50% of the total compensation target using a predetermined mix, with at least 50%is allocated to long-term equity awards. For our CEO (and one other NEO), this proportion increases to 60%. The Committee retains discretion in determiningremainder of the allocation of cash target compensation between a base salary andannual incentive payout is delivered as an annual cash incentive award.

The Committee believes that these components collectively provide an appropriate balance between fixed and variable amounts, short-term and long-term duration of payouts, and cash and equity-based awards.

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For 2013, the Committee set the following compensation targets for our NEOs:

NEO		Total compensation target				Base salary				Incentive compensation target
William S. Demchak(1)		$	7,716,667			$	916,667			$	6,800,000
President and CEO
James E. Rohr(2)		$	2,566,667			$	400,000			$	2,166,667
Executive Chairman and Former CEO
Robert Q. Reilly(3)		$	2,875,000			$	475,000			$	2,400,000
Executive Vice President and CFO
Richard J. Johnson(4)		$	2,000,000			$	333,333			$	1,666,667
Former CFO
Michael P. Lyons		$	5,500,000			$	700,000			$	4,800,000
Executive Vice President, Head of Corporate and Institutional Banking
E. William Parsley, III		$	5,500,000			$	500,000			$	5,000,000
Executive Vice President, Chief Investment Officer and Treasurer
Steven C. Van Wyk		$	2,200,000			$	500,000			$	1,700,000
Executive Vice President, Head of Technology and Operations

(1)	On January 1, 2013, Mr. Demchak was President of PNC. In April 2013, the Board appointed Mr. Demchak as President and CEO of PNC. The total compensation target listed in the table represents a pro-rated blend of two annual targets based on the time that Mr. Demchak served in each role during 2013. For 2013, the full-year annual targets for Mr. Demchak were $6,750,000 (as President) and $8,200,000 (as President and CEO).
(2)	On January 1, 2013, Mr. Rohr was CEO of PNC. In April 2013, Mr. Rohr became Executive Chairman of PNC. The total compensation target listed in the table represents the pro-rated annual target for the time Mr. Rohr served as CEO during 2013. For 2013, the full-year annual target for Mr. Rohr as CEO was $7,700,000. For 2013, the full-year target for Mr. Rohr as Executive Chairman was $2,000,000, which included a base salary of $1,000,000 and a one-time equity award valued at $1,000,000. Mr. Rohr’s compensation as Executive Chairman is not included in the table.
(3)	On January 1, 2013, Mr. Reilly was an Executive Vice President of PNC, with responsibility for PNC’s Asset Management Group (AMG) business. In April 2013, Mr. Reilly agreed to become CFO (upon the retirement of Mr. Johnson), and a new head of AMG was appointed. The total compensation target listed in the table represents a pro-rated blend of two annual targets based on the time that Mr. Reilly served in each role during 2013. For 2013, the full-year annual targets for Mr. Reilly were $2,500,000 (as head of AMG) and $3,000,000 (as CFO).
(4)	On January 1, 2013, Mr. Johnson was an Executive Vice President and CFO of PNC. In August 2013, Mr. Reilly became the CFO of PNC and in October 2013, Mr. Johnson retired from PNC. The total compensation target listed in the table represents the pro-rated annual target for the time Mr. Johnson served as CFO during 2013. For 2013, the full-year target for Mr. Johnson as CFO was $3,000,000.

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Other compensation and benefits.In addition to the components included in the total compensation target outlined above, our executive compensation program also includes the following components:

Perquisites	•Provide modest business-related benefitsCOMPENSATION DISCUSSION AND ANALYSIS •Limited to $10,000 •No tax gross-ups permitted
Change in Control Arrangements	•Allow for continuity of management in anticipation of and through a change in control •Provide compensation when an executive officer is involuntarily terminated following a change in control •Described in more detail on pages 71 to 77
Health and Retirement Plans	•Promote health and wellness •Help employees achieve financial security after retirement

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Evaluating performance.The Committee evaluates several metrics when making compensation decisions. These metrics are designed to align with how management, long-term shareholders and banking regulators assess our performance. The metrics represent achievement against objective and subjective goals, and the Committee does not necessarily favor one metric over another. Instead, the Committee uses these metrics to gain a comprehensive understanding of our overall performance.

 

The following chart describes some of the key metrics that the Committee evaluates, and a brief explanation of why we use them.

Key metric		Why we use it
Earnings per share (EPS)		EPS is a common metric used by investors to evaluate the profitability of a company.It shows the earnings (net income) we make on each share of stock that we issue.
EPS growth		While EPS represents a specific dollar amount, EPS growth represents the percentagegrowth of EPS since last year. EPS growth helps us to compare our annual earningsstrength to our peers.
Economic capital		Economic capital represents the amount of resources that we should hold to guardagainst unexpected losses. Economic capital serves as a “common currency” of risk thatallows us to compare different risks on a similar basis across our company.
Efficiency ratio		The efficiency ratio helps us evaluate how efficiently we operate our business. The ratiodivides our noninterest expense (such as compensation and benefits, occupancy costs,equipment, and marketing) by our revenue. In general, a smaller ratio is better.
Net interest income		Net interest income measures the revenue generated from lending and other activitiesminus all interest expenses (such as interest paid on deposits and borrowing). It is agood indicator of performance for banks given the importance of interest earning assetsand interest bearing sources of funds.
Noninterest income		Noninterest income measures the fees and other revenue we derive from our businesses(other than interest income). A healthy mix of net interest income and noninterestincome provides diverse earnings streams and lessens a bank’s reliance on the interestrate environment.
Return on assets (ROA)		Investors often evaluate banks by their asset size, with loans and investment securitiesmaking up the largest components of assets. ROA is our annualized net income dividedby our average assets and represents how efficiently we use assets to generate profit.
Return on common equity		Return on common equity is our annualized net income attributable to our commonshareholders divided by average common shareholders’ equity. It shows how efficientlywe use our investor funds (common equity) to generate profit.
Return on economic capital(ROEC) vs. cost of capital		ROEC is our annualized net income divided by our economic capital. Comparing ourprofits to how much capital we are holding against potential losses helps to provide arisk-based evaluation of profitability. When we compare ROEC to our cost of capital –that is, a minimum rate of return on the overall capital that we hold – it provides a goodmeasure of the excess value that we provide to shareholders.
Tangible book value per share		This measure takes our total tangible common shareholders’ equity (intangible assets,such as goodwill, are excluded) and divides that by the number of shares outstanding.This provides investors with an objective valuation method and allows them to comparerelative values of similar companies.
Tier 1 risk-based capital ratio		The Basel I Tier 1 risk-based capital ratio is used by banking regulators to assess thecapital adequacy and financial strength of a bank. This capital ratio must exceed 6% forPNC to be considered well-capitalized by our regulators.
Total shareholder return (TSR)		TSR is a common metric used to show the total returns for an investor in our commonstock. Annual TSR takes into account the change in stock price from the beginning tothe end of the year, as well as the reinvestment of any dividends issued throughoutthe year.

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Impact of 2013 “say-on-pay” vote.In 2013, our shareholders voiced substantial support for the compensation of our NEOs, with approximately 84% of the votes cast approving the “say-on-pay” advisory vote on executive compensation. This was the fifth year in a row that we provided a “say-on-pay” vote to our shareholders. In 2011, our shareholders recommended that we hold an annual “say-on-pay” vote.

For the past several years, we have initiated specific outreach efforts with certain institutional investors. At least once a year, we have met in person, or telephonically, with the governance representatives at these investors, and discussed our governance and compensation programs and philosophies. Typically, these meetings have taken place with the participation of our Head of Investor Relations and our Corporate Secretary. In light of the decrease in last year’s say-on-pay vote, when compared to our historical average (96%) and based on publicly disclosed votes, we reached out to specific investors to determine whether they had concerns with our compensation philosophy, program or decisions. Based on these discussions and in light of overall investor support in 2013, the Committee did not believe that any significant changes to the compensation program were needed to address shareholder concerns. The Committee considered the results of this vote as one factor in its compensation decisions, among the other factors discussed in this CD&A.

Compensation program—decisions

2013 performance discussion.In 2013, we delivered very good performance, with record net income, a well positioned balance sheet, strong shareholder returns, and substantial execution against our main strategic objectives. We also performed well against our peers. In determining actual compensation, the Committee does not rely on a specific formula. This allows the Committee to use its judgment in considering performance, without providing a particular weight to any one measure. The amounts below have been adjusted from reported amounts as appropriate and permitted under the applicable plan or award agreement.

		2013				2012				2013 vs.				2013				2013 actual
Key performance metrics		actual(1)				actual(1)				2012 actual				budget(2)				vs. budget
Net interest income (in $mm)		$	9,147			$	9,640				(5.1%)			$	9,339				(2.1%)
Noninterest income (in $mm)		$	6,865			$	5,872				+16.9%			$	6,551				+4.8%
Earnings per share		$	7.46			$	5.99				+24.5%			$	6.41				+16.4%
Return on common equity (without goodwill)			14.63%				12.76%				+187 bps				12.30%				+233 bps
Return on assets			1.39%				1.18%				+22 bps				1.16%				+24 bps
Efficiency ratio			61%				65%				(375 bps)				63%				(220 bps)
										2013				2012				2013 vs.
										actual(1)				actual(1)				2012 actual
Tangible book value per share										$	54.68			$	49.18				+11.2%
Tier 1 risk-based capital ratio											12.40%				11.60%				+80 bps
Return on economic capital vs. cost of capital											13.76%				3.69%				+1007 bps
Annual total shareholder return											36.5%				3.7%				+3280 bps

This table includes non-GAAP financial measures. See Annex A for additional information.

(1)	To the extent permitted, the amounts have been adjusted to omit, among other things, the effect of extraordinary items (as such term is used under generally accepted accounting principles), discontinued operations, and merger integration and acquisition costs. The results also include adjustments for select categories of events and transactions that are viewed as being outside our ongoing management of the business, some categories of which are provided in footnote (b) on page 58 with respect to incentive performance units. When comparing performance metrics to our peers, we adjust their results comparably.
(2)	2013 budget amounts were adjusted to omit the impact of planned trust preferred securities redemptions that occurred in 2013. The Committee previously approved adjusting actual results for such redemptions.

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Key strategic objectives	Performance indicators
Drive growth in newly acquired and underpenetrated markets	• Added new clients in the Southeast including:
	-36,000 DDA households
	-151 primary corporate bank clients
	-395 primary Asset Management Group (AMG) clients
Capture more investable assets	• In wealth management:
	-22% increase in primary client acquisitions
	-44% increase in sales sourced from other PNC lines of business over 2012
	• In retail banking:
	-19% increase in brokerage fees
	-8% increase in brokerage account assets
Redefine the retail banking business	• Continued to build the branch of the future by emphasizing technology and consolidating existing branches
	• Added customers and grew net demand deposit account households
	• Established a more productive sales culture
Build a stronger mortgage banking business	• Continued to show good volume trends, even though demand softened
	• Implemented seamless delivery across the network
	• Improved the average application-to-close time and customer loyalty scores
	• Negotiated settlements with Freddie Mac and Fannie Mae resolving legacy issues
Manage expenses	• Exceeded the $700 million continuous improvement goal
	• Improved efficiency ratio from 65% to 61%, on an adjusted basis

Individual compensation decisions.After undertaking a comprehensive review of our corporate performance, the Committee evaluated the performance of each NEO. To help the Committee understand the market, management provided current benchmarked compensation data for each NEO. The CEO reviewed his assessment of the performance of executives, including the NEOs, with the Committee.

The Committee approved the compensation amounts for each of our NEOs. For our CEO and our Executive Chairman, the Committee approved the compensation amounts in an executive session, with no members of management present. Meridian, the Committee’s independent compensation consultant for 2013, participated in this discussion with the Committee during the executive session.

The Committee also reviewed its decisions for our CEO and Executive Chairman in an executive session of the independent directors of PNC, with no members of management present. In that executive session, the Committee allowed time for the independent directors to provide comments or questions before finalizing the decisions for the CEO and Executive Chairman.

The Committee awarded compensation to each NEO based on the following considerations:

William S. Demchak (CEO):

In his first year as CEO, Mr. Demchak led the company to deliver:

Very good performance with record net income, a well-positioned balance sheet, strong shareholder returns, and substantial execution against our main strategic objectives.

•	Reduced expenses and better returns on assets (1.39%) and common equity (14.63%) than last year, on an adjusted basis.
•	Good performance against our peers, including:

	–	an annual total shareholder return of 36.5%, placing us above our peer median
	–	the third-highest annual EPS growth in our peer group
	–	the highest noninterest income growth in the group

•	A well-positioned and core funded balance sheet with a loans-to-deposits ratio of 89%.
•	Growth in our key capital ratios and improvements to our Comprehensive Capital Analysis and Review (CCAR) process.
•	Significant execution against our key strategic objectives.
•	A smooth transition with several key executives, including a new CFO, head of Technology and Operations and General Counsel.

James E. Rohr (Executive Chairman; Former CEO):

•	As CEO through April 2013, delivered very good performance, with growth in earnings, a well-positioned balance sheet, strong shareholder returns, and important progress on our strategic objectives.
•	As Executive Chairman for the remainder of 2013, played a critical role in the successful transition to Mr. Demchak, and served in a consultative capacity with Mr. Demchak.
•	Provided continuity to the Board, the executive management team, key clients and shareholders, and regulatory and political relationships.

Robert Q. Reilly (CFO):

•	In his previous role as Head of our Asset Management Group (AMG) earlier in 2013, supported strategic goals by delivering record high assets under management, sales, loan and deposits and new primary clients in AMG.
•	Advanced key growth initiatives in AMG through the build out of newly acquired markets and our Wealth and Investing initiative, which is designed to capture more investable assets.

THE PNC FINANCIAL SERVICES GROUP, INC. -2014 Proxy Statement   43

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•	As Chief Financial Officer, provided effective supervision of major internal financial and accounting functions and continued to play an integral part in our achievement of 2013 financial priorities, including exceeding our continuous improvement goal of $700 million and decreasing our overall expenses year over year.
•	Served as primary spokesperson with investors, the media and the investment community and continued to support our reputation with those stakeholders.

Richard J. Johnson (Former CFO):

•	Prior to his retirement, as CFO, successfully executed against our financial priorities.
•	Maintained strong financial control and discipline, collaborating with our business leaders to drive business performance, growth, efficiency and returns.
•	Effectively represented PNC with investors, regulators, analysts and ratings agencies.
•	Provided transition assistance allowing Mr. Reilly to seamlessly move into the CFO role.

Michael P. Lyons (Head of Corporate and Institutional Banking):

•	Managed a major business that contributed approximately 34% of our revenue and 54% of our profits in 2013.
•	Delivered solid financial results, with increases in average loans (up 13.3%) and noninterest income (up 6.5%), despite a highly competitive environment on multiple fronts (competitors, markets, interest rates, regulatory).
•	Achieved growth while maintaining our desired risk appetite.
•	Achieved meaningful progress against strategic priorities, including maximizing cross sell opportunities of new relationships by achieving client penetration at a faster pace with recently added clients.
•	Gained customer share (42% increase over 2012) and improved productivity in the Southeast resulting in double digit growth for the business in that market.

E. William Parsley, III (Chief Investment Officer and Treasurer):

•	Delivered outstanding performance on our core investment portfolio – nearly doubling the return as compared to the benchmark index, surpassing budget with consumer hedging activities and surpassing 2012 results in the alternative investment portfolio.
•	Enhanced the firm’s liquidity and capital profile, increasing our liquidity coverage and improving our long-term capital plan.
•	Partnered successfully with the Risk and Finance functions to improve the evaluation and reporting of risks across the entire balance sheet.
•	Made improvements to the CCAR process.

Steven C. Van Wyk (Head of Technology and Operations):

•	As the newly hired Head of Technology and Operations, instituted a long-term plan to optimize technology and operations to further improve efficiency and effectiveness by identifying key initiatives with multi-year goals.
•	Developed an overall vision to become an industry leader in Technology and Operations and recruiting key talent to help execute the vision.
•	Aggressively managed technology infrastructure risks (such as business resilience, information security, etc.) by dramatically strengthening cyber defense, improving the reliability of our client facing systems and initiating a lean management program across our operation centers.

THE PNC FINANCIAL SERVICES GROUP, INC. -2014 Proxy Statement44

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Based on the overall corporate and business performance and these individual evaluations, the Committee granted the following incentive compensation awards to each NEO in 2013.

The table below shows the value of the incentive compensation awards for performance year 2013 – the annual incentive award paid in cash and the aggregate value of the long-term incentive awards granted on February 13, 2014 – and is different than the information provided for equity awards in the Summary Compensation Table on page 55. The principal difference between the table below and the Summary Compensation Table is the timing of the reporting of equity-based awards. The Summary Compensation Table includes the value of equity-based awards granted in 2013 (for performance year 2012) and the table below represents incentive compensation for performance year 2013.

															Value of
		Incentive				Total Incentive					Cash				long-term
NEO		compensation target				compensation awarded					award portion				equity awards portion
William S. Demchak
President and CEO		$	6,800,000			$	9,083,333				$	3,083,333			$	6,000,000
James E. Rohr
Executive Chairman and Former CEO		$	2,166,667	(1)		$	2,894,000	(1)			$	918,000			$	1,976,000
Robert Q. Reilly
Executive Vice President and Chief Financial Officer		$	2,400,000			$	2,625,000				$	1,075,000			$	1,550,000
Richard J. Johnson
Former Chief Financial Officer		$	1,666,667			$	1,800,000	(2)			$	800,000			$	1,000,000	(2)
Michael P. Lyons
Executive Vice President, Head of Corporate and Institutional Banking		$	4,800,000			$	6,100,000				$	2,020,000			$	4,080,000
E. William Parsley, III
Executive Vice President, Chief Investment Officer and Treasurer		$	5,000,000			$	5,650,000				$	1,075,000			$	4,575,000
Steven C. Van Wyk
Executive Vice President, Head of Technology and Operations		$	1,700,000			$	2,500,000				$	1,000,000			$	1,500,000

(1)	The Committee awarded the incentive compensation listed in the table based on Mr. Rohr’s service as CEO through April 2013. Mr. Rohr also received a base salary of $1,000,000, and an equity award, valued at $1,000,000, in recognition of his service as Executive Chairman.
(2)	Mr. Johnson’s long-term equity award was granted on July 19, 2013 as part of his pro-rated 2013 incentive award and in light of his subsequent retirement. See below for a description of the award.

Annual incentive awards (cash).The Committee had previously approved the eligibility of Mr. Demchak and the next three highest-paid NEOs (other than the CFO) to receive annual incentive awards under the 1996 Executive Incentive Award Plan, a shareholder-approved plan that allows PNC to receive a tax deduction for certain compensation. At that time the Committee also established the maximum amount that each executive could receive.

Under this 1996 plan, no eligible participant may receive an annual incentive award that exceeds 0.2% of PNC’s “Incentive Income” for the year—defined as our consolidated net income, with certain adjustments. Once the year ends, the Committee decides whether to make a downward adjustment from the maximum annual incentive award amount for each participant. In February 2014, the Committee made a downward adjustment from the maximum amount, taking into account the same types of performance factors it used in making compensation decisions for the executive officers who do not participate in the 1996 plan. For more information on this plan and the process for establishing maximum amounts, please see footnote (a) of theGrants of plan-based awards in 2013table on page 58, andConsideration of tax deductibilityon page 49.

Long-term incentive awards (equity-based).Under our current programs, each NEO generally receives histheir long-term incentive award in two primary forms -that are equally weighted by dollar value – the incentive performance unit, which measures PNC performance over a three-year period, and the performance-based restricted share unit (RSU), which vests in equal annual installments over a four-year period. In addition to the regular incentive performance unit, Mr. Parsley received an incentive performance unit tied to the performance of our Asset & Liability Management (ALM) function, which he manages. In 2013, other awards were granted to Mr. Rohr, Mr. Johnson, Mr. Lyons and Mr. Van Wyk and are described below.

THEEach long-term incentive award also contains forfeiture provisions that can reduce or eliminate payouts if PNC FINANCIAL SERVICES GROUP, INC. -2014 Proxy Statement45does not meet risk-based criteria.

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All of these equity-based awards are made under PNC’s shareholder-approved 2006 Incentive Award Plan and havePlan. The table below summarizes the material features summarized below:terms and conditions of these awards.

 

Key features		Incentive performance units (2014–2016)		Performance RSUs (2014–2017)
Performance period		3 years, with vesting at the end of the period		4 years, with vesting in annual installments
Performance measures		• PNC performance (absolute) - return oncommon equity without goodwill (ROCE)vs. cost of common equity hurdle •Peer performance (relative) - EPS growthrank		•PNC’s annual total shareholderreturn (TSR)

Payout range (as % of target award)		0 – 125%									75 – 125%
Payout schedules		ROCE as %
		of Hurdle			Payout %					TSR				Payout %
	≥	110.00%				125.00%			≥		+25.00%			125.00%
	Target	105.00%				100.00%			Target		0.00%			100.00%
		100.00%				75.00%			≤		-25.00%			75.00%
		75.00%				50.00%
	≤	50.00%				0.00%
		EPS
		Growth Rank			Payout %
		1				125.00%
		2				125.00%
		3				125.00%
		4				125.00%
		5				116.70%
		6				108.30%
	Target	7				100.00%
		8				90.00%
		9				80.00%
		10				60.00%
		11				40.00%
		12				0.00%
		13				0.00%

Payout form	Units payable in PNC common stock up totarget (0 to 100%), above target (100% to125%) payable in cash	Units payable in PNC common stock
Voting and dividend rights	• No voting rights
	• Dividends will accrue until vesting and be paid out in cash, adjusted for actual performance
Risk-based requirementsand adjustments	• If PNC does not meet or exceed the required Tier 1 risk-based capital ratio for “well-capitalized” institutions in a specific year, the tranche applicable to that yearwill not vest.
	• If our return on economic capital does not exceed our cost of capital for the year, the Committeemay reduce or eliminate the award

Key features	ALM incentive performance units (2014–2016)
Performance period	3 years, with vesting at the end of the period
Performance measures	PNC’s ALM performance compared to a benchmark performance index
Payout range (as % of target award)	0 - 200%
Payout schedules	Annual performance relative to benchmark			Payout %
	+ 40 basis points or higher			200.00%
	+20 basis points			150.00%
	0 to -25 basis points			100.00%
	-35 basis points			40.00%
	-40 basis points or below			0.00%
Payout form	Units payable in cash
Voting and dividend rights	• No voting rights
	• No accrued dividends

		Incentive performance units								Performance-based RSUs				ALM incentive performance units
Who receives an award?		All NEOs								All NEOs				Mr. Parsley
How do we measure performance?		•    2016-2018 (three years)   •    Vesting occurs at the end of the period   •     Performance based on absolute and relative metrics   -    50% based on our return on common equity without goodwill (ROCE) compared to our cost of common equity (COCE)   -    50% based on our EPS growth rank against our peers   •    0-125% of target award   •    Units payable in PNC common stock up to target (0-100%) and payable in cash above target (100-125%)								•    2016-2019 (four years)   •    Vesting occurs in annual installments   •    Vested amount adjusted based on PNC’s annual total shareholder return (TSR)   •    Aligns executives’ interests directly with the interests of shareholders, and has a considerably stronger tie to performance than time-based restricted shares while also supporting retention				•    2016-2018 (three years)   •    Vesting occurs at the end of the period   •    PNC’s ALM performance compared to a benchmark performance index   •    0-200% of target award   •    Units payable in cash
										•    75-125% of target award   •    Units payable in PNC common stock
What is the payout?		•    The payout percentage grid ranges are listed below. Actual payout percentages will be interpolated – taking into account how close the performance metric or peer group rank is to the actual metric or rank above and below. For example, if EPS Growth Rank is closer to 5th than 6th, the actual payout percentage will be closer to 115% than 105%. If ROCE as a % of COCE is between 105% and 110%, the payout percentage will be between 100% and 125%.
		ROCE as % of   COCE		Payout %		EPS Growth Rank		Payout %		Annual TSR		Payout %		ALM vs. index		Payout %
		>= 110%		125%		1		125%		>= +25%		125%		>= +40 basis points		200%
		105%		100%		2		125%		0%		100%		+20 basis points		150%
		100%		75%		3		125%		<= -25%		75%		0 to -25 basis points		100%
		75%		50%		4		120%						-35 basis points		40%
		<= 50%		0%		5		115%						<= -40 basis points		0%
						6		105%
						7		95%
						8		80%
						9		60%
						10		40%
						11		0%
						12		0%
How do we adjust for risk?		•    If PNC does not meet or exceed the required Tier 1 risk-based capital ratio for “well-capitalized” institutions in a specific year, the award will be forfeited.   •    If our return on economic capital does not exceed our cost of capital for the year, the Committee may reduce or eliminate the award.
What are other important provisions?		•    No voting rights   •    Dividends will accrue until vesting and be paid out in cash, adjusted for actual performance												•    No voting rights   •    No accrued dividends

 

THE PNC FINANCIAL SERVICES GROUP, INC. -20142016 Proxy Statement    4643

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COMPENSATION DISCUSSION AND ANALYSIS

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Other compensation and benefits

In 2013, and as disclosed in our 2013 Proxy Statement, Mr. Rohr and Mr. Lyons both received their annual incentive award for 2012 performanceaddition to the components included in the form of a three-year restricted stock award in February 2013. In February 2014, Mr. Rohr received a restricted share unit award for his service as Executive Chairman. The award has no service requirement, but it is subject to transfer and other restrictions that expire on the respective first, second and third anniversaries of the grant date of the award. Additional long-term equity awards were granted in 2013 withtotal compensation target outlined above, our executive compensation program also includes the following conditions:components:

 

Mr. JohnsonPerquisites		•  Few perquisites are permitted and they are limited in dollar value
		•  PNC requests reimbursement if executives exceed the prescribed dollar value
		•  No tax gross-ups permitted
Change in Control Arrangements		•  Allow for continuity of management with respect to a change in control
		•  Provide compensation when an executive officer is involuntarily terminated following a change in control
		•  Equity will not be accelerated on a change in control – there must also be a qualifying termination of employment
		•  Described in more detail on pages 73 to 78
Health and Retirement Plans		•  Promote health and wellness
		•  Help employees achieve financial security after retirement

Evaluating performance

The Committee evaluates several metrics when making compensation decisions. We design these metrics to align, to the extent possible, the objectives of our management, long-term shareholders and banking regulators. In some cases, these stakeholders have different objectives that cannot be easily reconciled – for example, long-term shareholders seeking higher returns may be willing to tolerate more risk than a federal banking

regulator would. That is one reason we use multiple metrics, representing achievement against both objective and subjective goals, as well as significant adjustments for risk management. The Committee does not necessarily favor one metric over another. Instead, the Committee uses these metrics to gain a comprehensive understanding of our overall performance.

44    THE PNC FINANCIAL SERVICES GROUP, INC. - 2016 Proxy Statement

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COMPENSATION DISCUSSION AND ANALYSIS

The following chart describes some of the key metrics that the Committee evaluates, and a brief explanation of why we use them.

Category		Metric		• Why we use it
3 year Restricted Share Unit AwardCapital and risk		Economic capital	Granted	Economic capital represents the amount of resources that we should hold to guard against unexpected losses. Economic capital serves as parta “common currency” of Mr. Johnson’s pro-rated 2013 incentive awards in light of Mr. Johnson’s retirementrisk that allows us to compare different risks on a similar basis across our company.
		• Return on economic capital (ROEC) vs. cost of capital		No service requirementROEC is our annualized net income divided by our economic capital. Comparing our profits to how much capital we are holding against potential losses helps to provide a risk-based evaluation of profitability. When we compare ROEC to our cost of capital – that is, a minimum rate of return on the overall capital that we hold – it provides a good measure of the excess value that we provide to shareholders.
		• Tier 1 risk-based capital ratio		Transfer restrictions that expire onThe Tier 1 risk-based capital ratio is used by banking regulators to assess the first, secondcapital adequacy and third anniversariesfinancial strength of grant datea bank. This capital ratio must exceed 6% for PNC to be considered “well-capitalized” by our regulators.
Mr. Van WykExpenses		Efficiency ratio		• The efficiency ratio helps us evaluate how efficiently we operate our business. The ratio divides our noninterest expense (such as compensation and benefits, occupancy costs, equipment, and marketing) by our revenue. In general, a smaller ratio is better. A bank’s efficiency ratio will be affected, however, by its particular mix of businesses.
3 year Restricted Share Unit AwardProfitability		Earnings per share (EPS)	Granted as part	EPS is a common metric used by investors to evaluate the profitability of Mr. Van Wyk’s employment offer and intended to offseta company. It shows the valueearnings (net income) we make on each share of equity forfeited at his previous employerstock that we issue.
		• EPS growth		Vests 100%While EPS represents a specific dollar amount, EPS growth represents the percentage growth of EPS since last year. EPS growth helps us to compare our annual earnings strength to our peers.
		Return on assets (ROA)		Investors often evaluate banks by their asset size, with loans and investment securities making up the largest components of assets. ROA is our annualized net income divided by our average assets and represents how efficiently we use assets to generate profit.
		Return on common equity		Return on common equity is our annualized net income attributable to our common shareholders divided by average common shareholders’ equity. It shows how efficiently we use our investor funds (common equity) to generate profit.
Revenue		Net interest income		Net interest income measures the revenue generated from lending and other activities minus all interest expenses (such as interest paid on deposits and borrowing). It is a good indicator of performance for banks given the importance of interest earning assets and interest bearing sources of funds.
		Noninterest income		Noninterest income measures the fees and other revenue we derive from our businesses (other than interest income). A healthy mix of net interest income and noninterest income provides diverse earnings streams and lessens a bank’s reliance on the third anniversaryinterest rate environment.
Valuation		Tangible book value per share		This measure takes our total tangible common shareholders’ equity (intangible assets, such as goodwill, are excluded) and divides that by the number of shares outstanding. This provides investors with an objective valuation method and allows them to compare relative values of similar companies.
		Total shareholder return (TSR)		TSR is a common metric used to show the total return to an investor in our common stock. Annual TSR takes into account the change in stock price from the beginning to the end of the year, as well as the reinvestment of any dividends issued throughout the year.

After reviewing these metrics and evaluating our corporate performance, the Committee reviews the individual performance of each NEO. The CEO reviews his assessment of the performance of executives, including the NEOs, with the Committee. To help the Committee understand the market, management provides current benchmark compensation data for each NEO. The Committee

discusses, then approves the compensation amounts for each of our NEOs. In awarding compensation to each NEO, the Committee considers PNC’s overall performance for the year, as well as performance for the lines of business or functions managed by the NEO, and the individual performance of the NEO.

THE PNC FINANCIAL SERVICES GROUP, INC. - 2016 Proxy Statement    45

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COMPENSATION DISCUSSION AND ANALYSIS

2015 compensation decisions

For 2015, the Committee set the following compensation targets for our NEOs:

		William S. Demchak				Robert Q. Reilly				Michael P. Lyons				E William Parsley, III(1)				Joseph C. Guyaux
Base salary		$	1,100,000			$	500,000			$	700,000			$	500,000			$	620,000
Incentive compensation target(2)		$	9,900,000			$	3,000,000			$	4,800,000			$	5,500,000			$	2,480,000
Annual cash incentive portion		$	3,300,000			$	1,250,000			$	1,500,000			$	1,000,000			$	930,000
Long-term incentive portion		$	6,600,000			$	1,750,000			$	3,300,000			$	4,500,000			$	1,550,000
Total compensation target		$	11,000,000			$	3,500,000			$	5,500,000			$	6,000,000			$	3,100,000

(1)

Mr. Parsley’s long-term incentive target includes two anticipated grants – the grant date, subjectof equity-based awards that all other NEOs would otherwise receive (valued at $1,500,000) and a separate grant of incentive performance units related to service conditionthe management of our Asset & Liability Management (ALM) unit, valued at $3,000,000. Please see page 63 for a discussion of Mr. Parsley’s ALM units.

(2)

For the 2015 performance year, the Committee approved increases in incentive compensation targets for Mr. Demchak (from $8,400,000 to $9,900,000) and Mr. Parsley (from $5,000,000 to $5,500,000). The Committee approved these increases based on the performance, skills and experience of the executive, as well as changes in market information for similar executives at other financial institutions.

 

The market data reviewed by the Committee show that our CEO’s total compensation target generally fell within 15% of the median compensation for peers, as adjusted for PNC’s size. The total compensation targets for our other NEOs generally fell near the unadjusted median compensation for peers, except for Mr. Guyaux whose target was positioned above the median. The Committee based Mr. Guyaux’s total compensation target on his demonstrated performance and leadership across a variety of roles at PNC throughout his career, and his agreement to take on a new role in 2015 as the CEO and President of our mortgage business, following the departure of the prior head of that business. For discussionthe 2016 performance year, the Committee also approved target increases for our CEO and two other NEOs. The Committee increased incentive compensation targets for Mr. Demchak ($10,500,000), Mr. Lyons ($6,050,000) and Mr. Parsley ($6,900,000). The Committee also increased Mr. Parsley’s base salary to $600,000. The Committee approved these increases based on the performance, skills and experience of each NEO, as well as changes in market information for similar executives at other financial institutions. Mr. Parsley’s target increase was also based on the significant expansion of his duties at the end of 2015 and beginning of 2016, as he now has responsibility for our mortgage business, and for retail lending and pricing, in addition to his previous responsibilities.

At meetings held during the first quarter of 2016, the Committee reviewed PNC’s performance for the 2015 performance year. As stated earlier in this CD&A, PNC delivered consistent performance in 2015, with solid net income in a difficult

environment, a well-positioned balance sheet, strong shareholder returns, and substantial execution against our main strategic objectives. We performed well against our peers in return on assets, a key metric for the banking industry. We were above the peer median for non-interest income (up 1.4% over last year), EPS growth (up 1.2% over last year) and efficiency ratio, and at the peer median for return on common equity adjusted without goodwill. We lagged our peer group in net interest income growth, but this reflected, in large part, the desire to stay within our risk appetite in the current low interest rate environment, which has limited our opportunities to grow loans. Based on an evaluation of PNC’s 2015 performance, including a review of the performance achieved under thesemetrics described previously in this CD&A and management’s execution against strategic objectives, the Committee determined that it was appropriate to make above-target incentive compensation awards to our NEOs. The actual incentive compensation payouts also reflect individual performance, including business unit (or function) performance and consideration of risk management.

The CEO discussed the individual performance of the NEOs with the Committee, and, where appropriate, discussed the performance of the lines of business or functions managed by the NEOs. The Committee approved compensation awards for each NEO based on an evaluation of corporate, business and individual performance. For our CEO, the Committee approved the compensation amounts in an executive session, with no members of management present. Meridian, the Committee’s independent compensation consultant for 2015, participated in this discussion with the Committee.

46    THE PNC FINANCIAL SERVICES GROUP, INC. - 2016 Proxy Statement

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COMPENSATION DISCUSSION AND ANALYSIS

The Committee also reviewed the CEO compensation decisions in an executive session of the independent members of the board of directors of PNC, with no members of management present. In that executive session, the Committee allowed time for the independent directors to provide

comments or questions about the CEO’s performance and compensation.

The table below shows, for each NEO, the incentive compensation target for 2015 and the payoutsactual annual cash incentive and long-term equity-based incentives awarded to NEOs, please readin 2016 for 2015 performance.

2015 incentive compensation decisions		William S. Demchak				Robert Q. Reilly				Michael P. Lyons				E William Parsley, III(1)				Joseph C. Guyaux
Incentive compensation target		$	9,900,000			$	3,000,000			$	4,800,000			$	5,500,000			$	2,480,000
Incentive compensation awarded		$	11,900,000			$	3,300,000			$	6,100,000			$	6,100,000			$	2,880,000
Annual incentive award (cash)		$	4,100,000			$	1,400,000			$	2,020,000			$	1,300,000			$	1,130,000
Long-term incentive award (equity-based)		$	7,800,000			$	1,900,000			$	4,080,000			$	4,800,000			$	1,750,000

(1)

Mr. Parsley’s incentive compensation award includes two grants – the grant of equity-based awards that all other NEOs would otherwise receive (valued at $1,800,000) and a separate grant of incentive performance units related to the management of our Asset & Liability Management (ALM) unit, valued at $3,000,000. Please see page 63 for a discussion of Mr. Parsley’s ALM units.

The amounts shown in the introduction totable above differ from theOutstanding Equity Awards at 2013 Fiscal Year-Endtables, beginning amounts reflected in the Summary compensation table on page 59.58. In accordance with SEC regulations, that table shows the long-term equity-based incentives granted in 2015 based on 2014 performance.

Proxy statement disclosure		2015 performance year		2014 performance year
2015 incentive compensation decisions table (above)		Annual incentive (cash) Long-term incentive (equity-based)
Summary compensation table (page 58)		Annual incentive (cash)		Long-term incentive(equity-based)

The charts below show the base salary for 2015 for each NEO, and the annual cash incentive and long-term incentive awarded in 2016 for 2015 performance. The bar surrounding each circle shows the amount of total compensation that is variable and at-risk.

WILLIAM S. DEMCHAK – CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
2015 KEY ACHIEVEMENTS
• As our CEO, Mr. Demchak continued to deliver outstanding, consistent performance and leadership in a difficult economic environment by executing well against our strategic priorities. • Delivered strong returns to our investors, with an annual total shareholder return (TSR) of 6.81%, placing us second among our peers. • Grew the franchise strategically without departing from our desired risk appetite through purposeful loan and deposit growth, and a continued increase in our fee income. • Maintained a strong, well-positioned balance sheet and returned more capital to shareholders through stock repurchases and higher dividends. • Reduced expenses year over year, marking the third straight year of declining expenses. • Despite a challenging revenue environment, continued to make strategic investments to position PNC for long-term success, including significant upgrades to our technology infrastructure, transforming the retail bank, and building a leading banking franchise in our underpenetrated markets. • The Committee also noted Mr. Demchak’s consistent strong performance as CEO since his appointment in April 2013, and that the compensation decisions for 2015 reflected, in part, pay commensurate with the performance, skills, and experience of the CEO of a large bank holding company.

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COMPENSATION DISCUSSION AND ANALYSIS

ROBERT Q. REILLY – EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
2015 KEY ACHIEVEMENTS
• As CFO, Mr. Reilly provided effective supervision of major internal financial and accounting functions and continued to play an integral part in our achievement of financial priorities, including exceeding our continuous improvement goal of $500 million in cost savings and decreasing our overall expenses year over year. • Continued to strengthen the linkages between our strategic planning, budgeting, and Comprehensive Capital Analysis and Review (CCAR) processes. • Served as primary spokesperson with investors, the media and the investment community and continued to support our reputation with those stakeholders.
MICHAEL P. LYONS – EXECUTIVE VICE PRESIDENT AND HEAD OF CORPORATE AND INSTITUTIONAL  BANKING
2015 KEY ACHIEVEMENTS
• As the head of our Corporate & Institutional Banking segment, Mr. Lyons continued to lead a major business that contributed approximately 36% of our revenue and 49% of our net income in 2015. • Delivered strong financial results, with record levels of adjusted pre-provision net revenue and fee income as a percentage of total revenue. • Achieved loan and deposit growth while maintaining our desired risk appetite and credit quality. • Continued to execute on cross-selling opportunities and new revenue initiatives, with record new clients in the Southeast, while successfully managing expenses.

48    THE PNC FINANCIAL SERVICES GROUP, INC. - 2016 Proxy Statement

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COMPENSATION DISCUSSION AND ANALYSIS

E WILLIAM PARSLEY, III – EXECUTIVE VICE PRESIDENT, CHIEF INVESTMENT OFFICER AND TREASURER
2015 KEY ACHIEVEMENTS
• As Chief Investment Officer and Treasurer, Mr. Parsley effectively manages our assets and liabilities, invests PNC’s balance sheet, oversees our broker-dealer activities, manages our alternative investments and leads our asset resolution efforts. • In 2015, he continued to deliver outstanding performance on our core investment portfolio while continuing to improve the credit quality of the portfolio and enhancing our firm’s liquidity and capital profile. • Partnered successfully with the Independent Risk Management and Finance functions to improve the evaluation and reporting of risks across the entire balance sheet. • Continued to make significant improvements to the CCAR process.
JOSEPH C. GUYAUX – SENIOR VICE CHAIRMAN AND CEO AND PRESIDENT OF PNC MORTGAGE
2015 KEY ACHIEVEMENTS
• In 2015, Mr. Guyaux successfully transitioned from our Chief Risk Officer position to the CEO of our Mortgage business. • Helped PNC Bank satisfy all of the requirements of the residential mortgage consent order issued by the OCC in 2011, which was terminated in 2015. • Continued to make solid progress in the acquisition of mortgage servicing rights, and the integration of our home equity and mortgage businesses.

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COMPENSATION DISCUSSION AND ANALYSIS

 

Compensation policies and practices

 

The Committee adopts policies and procedures to assist in the fulfillment of its duties, and reviews these from time to time. We describe some of the significant policies and procedures in this section.

In addition to formal policies and procedures, the Committee has several practices that it follows in the fulfillment of its duties and responsibilities. Some of these practices are described below.

Compensation and risk.risk

The Committee evaluates the risks inherent in the incentive compensation program. For a detailed discussion of how the Committee evaluates risk, please seeCompensation and Risk, which begins on page 53.56.

Independent compensation consultant

Retaining an independent compensation consultant.The Committee retains Meridian Compensation Partners, LLC as its independent compensation consultant. For a discussion of this relationship and the considerations that the Committee takes into account when determining independence, please see pages 2627 and 27.28.

Peer group

Selecting a peer group.The Committee selects a peer group each year. We use this group to measure relative performance and to determine our incentive performance unit payouts. We

also use this group for general compensation comparisons.

In approving a peer group, the Committee analyzes several factors, including the mix and complexity of businesses, the markets being served, market capitalization, asset size, and changes resulting from mergers or shifts in strategic direction. We also look at the companies with whom we compete for talent.

The Committee annually discussesreviews the composition of the peer group with management and its independent compensation consultant. The followingFor 2015, the Committee believed that the existing peer group for 2014 remains unchanged from the prior year:

Peer Group

Bank of America Corporation
BB&T Corporation
Capital One Financial Corporation
Comerica Incorporated
Fifth Third Bancorp
JPMorgan Chase & Co.
KeyCorp
M&T Bank Corporation
Regions Financial Corporation
SunTrust Banks, Inc.
U.S. Bancorp
Wells Fargo & Company

The Committee believes that this peer group providesgenerally provided a balanced mix of institutions in light of our size, mix and scope of businesses, products and services, and sources of executive talent. However, in performing this review, the Committee decided to remove Comerica Incorporated from the peer group. The Committee approved the removal of Comerica based on its relatively smaller size, business mix and geographic footprint as compared to PNC. Even with this change, PNC is larger than a majority of the peers, positioned between the median and the 75^thpercentile of the peer group, based on total assets, revenue and market capitalization.

The peer group for 2016 remained unchanged from 2015 and included 12 companies (including PNC), with assets, revenues and market capitalization for each company measured as of December 31, 2015:

Peer Group Company		Ticker Symbol				Peer		Assets (in billions)						Peer		Revenue (in billions)						Peer		Market Capitalization (in billions)
Bank of America Corporation		BAC				JPM		$	2,351.7					JPM		$	93.5					WFC		$	276.8
BB&T Corporation		BBT				BAC		$	2,144.3					WFC		$	86.1					JPM		$	241.9
Capital One Financial Corporation		COF				WFC		$	1,787.6					BAC		$	82.5					BAC		$	174.7
Fifth Third Bancorp		FITB				USB		$	421.9					COF		$	23.4					USB		$	74.5
JPMorgan Chase & Co.		JPM				PNC		$	358.5					USB		$	20.1					PNC		$	48.0
KeyCorp		KEY				COF		$	334.0					PNC		$	15.2					COF			38.1
M&T Bank Corporation		MTB				BBT		$	209.9					BBT		$	9.6					BBT		$	29.5
Regions Financial Corporation		RF				STI		$	190.8					STI		$	8.0					STI		$	21.8
SunTrust Banks, Inc.		STI				FITB		$	141.1					FITB		$	6.5					MTB		$	19.3
U.S. Bancorp		USB				RF		$	126.1					RF		$	5.4					FITB		$	15.8
Wells Fargo & Company		WFC				MTB		$	122.8					MTB		$	4.7					RF		$	12.5
						KEY		$	95.1					KEY		$	4.2					KEY		$	11.0

Executive stock ownership and retention

Our executive officers historically have held a significant portion of their personal wealth in the form of our common stock (or other equity-based instruments that reflect the performance of our common stock). The Committee believes it is important to require our executive officers to meet minimum stock ownership guidelines, denominated in shares.

Each executive officer and other key employees is subject to additional ownership requirements, even after the original ownership target is met. The ownership requirements increase the number of PNC shares that an individual needs to own over time. As new awards vest, designated employees need to retain more shares of stock, which they must then hold until they retire or leave PNC. This ownership policy reflects compensation awards over an executive’s career, and also ties an executive’s personal wealth closely to the performance of PNC and the interests of our long-term shareholders.

50    THE PNC FINANCIAL SERVICES GROUP, INC. - 2016 Proxy Statement

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COMPENSATION DISCUSSION AND ANALYSIS

 

Equity interests that count toward satisfaction of the ownership guidelines include shares owned outright by the officer, or his or her spouse and dependent children, restricted shares (subject to vesting requirements), certain equity awards and

shares or stock units held in a benefit plan. We count 50% of any unvested equity-based award toward satisfaction of the ownership guidelines. The guidelines are as follows:

Officer/Category		Share ownership (base requirement)				Base requirement (value as of 12/31/2015)(1)				Ongoing retention requirement
President and Chief Executive Officer			125,000				$11,913,750				33%
Management Executive Committee and Other  Corporate Executive Group (CEG) Members(2)			15,000 - 25,000			$	1,429,650 - $2,382,750				25%
Executive Officers (non-CEG Members)			5,000				$476,550				10%

(1)	Value based on PNC closing price of $95.31 as of December 31, 2015.

(2)	The CEG includes our CEO, our other NEOs, and certain other senior-level executives.

Newly hired or promoted employees who become subject to these guidelines will have up to six years to satisfy the guidelines. The Committee monitors compliance with these stock ownership guidelines and has determined that our current NEOs satisfy the guidelines. All other employees subject to the guidelines either satisfy the guidelines or are within the compliance period.

Clawback of prior compensation.and forfeitureThe Committee has approved

We have a “clawback” policy that applies to all of our NEOs and other executive officers, as well as other senior employees and those employees receiving equity-based compensation. This policy applies to all incentive compensation provided on or after January 1, 2013, although some elements of the policy were in effect previously.

 

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A summary of PNC’s clawback and incentive compensation adjustment policy is included in the table below.

 

Provision		Provision SummaryExplanation		Eligible Compensation Elements		Applicable Employee Population
Clawback for Materially–Inaccurate PerformanceMetricsMetrics		IncentiveApplies to incentive compensation basedonawarded as the result of materially inaccurateperformance metric(s); metrics (seebelow for additional details)		All incentive compensation( – vested or unvested)unvested		Senior executives &NEOs and other seniorleaders
Clawback Resulting from Negative Adjustments – Risk Metrics PerformanceDetrimental Conduct		May apply when there is less than desired performance against corporate or business unit risk metrics, as applicable		All unvested long-term incentive compensation
Competitive Clawback – Detrimental Conduct		Applies in the following instances: •    when an individual engages in competitive activity withoutprior consent while– either as an employeeof PNC or for 1one year postafter employment Fraud,•    when an individual commits fraud, misappropriation orembezzlement Felony conviction•    when an individual is convicted of a felony		All unvested long-term incentive compensation		All equity recipients
Negative Adjustments – Risk-Related Actionscompensation		All equity recipients
Negative AdjustmentsResulting fromPerformance AgainstRisk Metrics		Less than desired performanceagainst corporateMay apply when an individual’s actions, or businessunit risk metrics		All unvested long-term incentivecompensation		Senior executives & other seniorleaders
Negative AdjustmentsResulting from Risk-Related Actions		Action orthe failure to take action,act, either as an individual or a supervisor, demonstratingdemonstrates afailure to provide appropriateconsideration of risk; risk (see belowfor additional details)		All unvested long-term incentivecompensation		All equity recipients

 

For purposes of the clawback for materially inaccurate performance metrics, performance metrics include any metric, including corporate financial results, used directly or indirectly to determine whether or not incentive compensation is to be provided to an executive (or group of executives) or to determine the amount of any such compensation. The portion of the incentive compensation that represents the excess over what

would have been provided if there had been no material inaccuracy in the performance metric will be subject to clawback. The Committee retains discretion, to the extent legally permissible, to determine that it would not be in PNC’s best interests to seek to enforce the clawback.

For purposes of the negative adjustment resulting from risk related actions, the Committee may

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COMPENSATION DISCUSSION AND ANALYSIS

reduce or cancel unvested long-term incentive compensation granted to an employee who takes risk-related actions (or fails to take action) that result in or are reasonably expected to result in a material adverse impact to PNC or a business unit, such as:

 

•	Not following applicable risk management policies or procedures,
•	Disregarding the significant risks associated with a course of action for which the employee is responsible,
•	Violating, or permitting or enabling PNC to violate, statutory or regulatory requirements, or
•	Not escalating risk concerns to appropriate individuals, committees or other governing bodies.

Not following applicable risk management policies or procedures;

 

Disregarding the significant risks associated with a course of action for which the employee is responsible;

Violating, or permitting or enabling PNC to violate, statutory or regulatory requirements; or

Not escalating risk concerns to appropriate individuals, committees or other governing bodies.

This applies both to individual employees who took risk-related actions (or failed to take action) and their supervisors. The types of adverse impacts could include matters such as impacts to PNC’s or a business segment’s or corporate function’s financial performance, capital or liquidity positions, reputation or business prospects.

The negative adjustment resulting from risk related actions allows PNC to recoup unvested equity awards from recipients whose inappropriate risk-taking activities have resulted in or are expected to result in a material adverse impact to PNC in the future. By doing so, PNC is able to add further risk-balancing to our incentive arrangements by accounting for both forward- and backward-looking risk adjustments.

In February 2014, the Committee adopted amendments to theThe policy to provideprovides that if PNC applies the policy to recoup or clawback incentive compensation or negatively adjust incentive compensation as a result of risk-related actions and the underlying factual circumstances are otherwise publicly reported by PNC (1) in a filing with the SEC or (2) in disclosure that would otherwise meet the requirements for public disclosure by PNC under the SEC’s Regulation FD or (3) are disclosed by a third party in a publicly available court or administrative filing, then PNC will disclose in its annual shareholder meeting proxy statement, a current report onForm 8-K or other public filing made by it with the SEC or a posting in a clearly identifiable location in the Investor Relations section of its corporate website:

 

•	a general description of the circumstances giving rise to the incentive compensation recovery or adjustment, including items such as number of employees, seniority of employees, and line of business impacted, and
•	the aggregate amount of incentive compensation recovered or adjusted.

a general description of the circumstances giving rise to the incentive compensation recovery or adjustment, including items such as number of employees, seniority of employees, and line of business impacted; and

 

the aggregate amount of incentive compensation recovered or adjusted.

PNC may limit such disclosure if it would be likely to result in, or exacerbate, any existing or threatened, employee, shareholder or other litigation, arbitration or proceeding against PNC.

Shareholder approval of severance agreements.agreementsIn 2011, our Board adopted, at

We have a Board-approved policy regarding the recommendationshareholder approval of the Committee, a Policy Regarding Shareholder Approval of

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Future Severance Arrangements.future severance arrangements. This policy applies to future severance arrangements with executive officers. Under this policy, PNC will not enter into an arrangement with an executive officer that provides for additional severance benefits in an amount exceeding 2.99 times the sum of the executive officer’s annual base salary and target bonus for the year of termination, unless the future severance arrangement is approved by the affirmative vote of a majority of votes cast by shareholders on the matter.

The policy applies only to future severance arrangements. Future severance arrangements do not include existing severance agreements or agreements to which PNC becomes obligated in connection with an acquisition, unless in each case the severance agreement is modified to materially increase benefits that would be considered additional severance benefits. Our Board retains the right to amend, terminate or waive the policy and will promptly disclose any such change. We have made this policy available atwww.pnc.com/corporategovernancecorporategovernance..

Since 2009, no new change in control agreement has included an excise tax gross-up. For a more detailed discussion on change in control arrangements, please seeChange in control agreementson page 71.pages 73 and 74.

Consideration of tax deductibility.Section 162(m) of the Internal Revenue Code does not generally allow a company to deduct compensation over $1 million paid to certain executive officers. Under the tax rules, the executive officers whose compensation is subject to Section 162(m) includes the CEO and the next three highest-compensated executive officers (other than the CEO and the CFO).

One exception to this disallowance applies to performance-based compensation paid under shareholder-approved plans. Awards made under our shareholder-approved plans—the 1996 Executive Incentive Award Plan (annual incentive awards) and the 2006 Incentive Award Plan (other equity-based awards)—are intended to be eligible for the performance-based exception and therefore, deductible by PNC for federal income tax purposes.

Although the Committee considers the desirability of limiting PNC’s non-deductible expenses when it makes compensation decisions, the Committee believes in maintaining the flexibility and competitive effectiveness of the executive compensation program. Tax deductibility, while an important consideration, is analyzed as one component of the overall program.

Limiting perquisites.perquisites

The Committee believes in limiting the amount of perquisites provided to our executives. Since 2009, each executive officer receives a $10,000 allowance for perquisites. If the executive exceeds this allowance, the executive is asked to reimburse PNC for the excess, if legally permissible.

We consider a benefit to be a perquisite or personal benefit unless its purpose is clearly and exclusively business related.business-related. We value perquisites based on their incremental cost to us. Executive officers do not receive tax “gross-ups” on any perquisites.

The principal perquisites that we may provide to some or all of our executive officers include:include financial consulting and tax preparation services;services and limited personal use of corporate aircraft, as approved by our CEO; incidental costsCEO. One of medical examinations not covered by health insurance; andour executive officers also receives the reimbursement of costs related to home security services. We may provide additional perquisites to an executive officer from time to time.time, but this is not common.

Each executive officer receives a $10,000 allowance for general perquisites, with an additional $10,000 allowance for personal aircraft usage. This modest perquisite limit allows an NEO to receive financial consulting and tax preparation services and also allows for an occasional personal flight on the corporate aircraft (usually no more than 2-4 hours of flight time a year). In conjunction withaddition, as the Committee has previously recommended that Mr. Van Wyk’s employment withDemchak take all flights (personal or business) on the

52    THE PNC he received relocation benefits pursuant to the terms of our Executive Relocation Policy. We viewed these relocation expenses as necessary business expenses and thus they were not restricted by the $10,000 perquisite allowance.FINANCIAL SERVICES GROUP, INC. - 2016 Proxy Statement

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COMPENSATION DISCUSSION AND ANALYSIS

 

William S.corporate aircraft, the Committee has approved a general perquisite allowance of $10,000 for Mr. Demchak James E. Rohr, Robert Q. Reilly andwith an additional executive officer have accessallowance, not to our corporate aircraftexceed $100,000, for personal flights but each of these individuals is required to paytaken on the aircraft. If the executive exceeds his perquisite allowance, PNC requests reimbursement for the cost of all such flights, as determined underexcess, unless reimbursement is legally impermissible.

The Committee has previously approved the termsexecution of lease (“time-sharing”) agreements between PNC and the executive. During 2013, each of these executivescertain executive officers, including our CEO and two other thanNEOs (Mr. Guyaux and Mr. Reilly paid for all personal usage of the aircraft under the terms of these agreements. Before he executed a time-sharing agreement during 2013, Mr. Reilly’s personal use was subject to the $10,000 perquisite allowance discussed above. The Committee has approved the time-sharingReilly). These agreements in orderhelp us to comply with Federal Aviation Administration (FAA) rules and regulations that would otherwise prohibit executives from reimbursing PNC for the incremental cost of personal flights. Under the terms of these time-sharing agreements, Mr. Johnson had access toDemchak, Mr. Guyaux and Mr. Reilly will pay for the corporate aircraft under his time-sharing agreement. This agreement was terminated in connection with his retirement. Mr. Rohr’s time-sharing agreement will be terminated upon his retirement.

costs of any personal flights that exceed the perquisite allowances described above.

Due to certain operational restrictions and administrative efficiencies, we operate our corporate aircraft under FAA rules and regulations that limit our ability to accept reimbursement for personal aircraft usage unless an individual has a time-sharing agreement. The timesharingtime-sharing agreements provide a mechanism to obtain reimbursement from the executive. The costs paid by our executive officers under the terms of the agreements include incremental costs, as well as a federal excise tax and other fees. For flights subject to these time-sharing agreements, the officer is required to pay us for the following costs:

 

•	fuel, oil, lubricants, and other additives;
•	travel expenses of crew, including food, lodging, and ground transportation;
•	hanger and tie-down costs away from the aircraft’s base of operation;
•	insurance obtained for the specific flight;
•	landing fees, airport taxes, and similar assessments;
•	fuel, oil, lubricants, and other additives; travel expenses of crew, including food, lodging, and ground transportation; hangar and tie-down costs away from the aircraft’s base of operation; insurance obtained for the specific flight; landing fees, airport taxes, and similar assessments; custom, foreign permit, and similar fees directly related to the flight;
•	in-flight food and beverages; and
•	passenger ground transportation.

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In March 2014, the Committee approved amendments to the flight;

in-flight food and beverages; and

passenger ground transportation.

The Committee has adopted an aviation policy governing the use of company aircraft. To supplement the policy, the Committee also adoptedand written procedures to document and refine the principles to be applied in determining the classification of a flight as business or personal and the calculation of aggregate incremental cost for perquisite purposes, including definitions of personal use and enhanced methods for allocating costs between business and personal in complex situations and an approach for capturing deadhead flights where appropriate in the calculation of incremental costs for personal aircraft use. The Committee has also approved the use of an amended form of time-sharing agreement to bring amounts to be billed into alignment with the new

procedures (subject to FAA maximum billing limitations). As permitted by the FAA rules, the new form of agreement provides for the billing of an additional charge equal to 100% of the costs of fuel, oil and lubricants listed above to facilitate the alignment of incremental cost as currently calculated and amounts billed.

Guidelines on the use of discretion.discretion

The Committee has adopted guidelines regarding the use of discretion in incentive compensation plans. Under these guidelines, the use of discretion will be exercised so that incentive compensation awards are reasonably aligned with risk-adjusted performance. The guidance provides, among other things, that discretionary increases in compensation should be based on behaviors, actions, or results that are deemed to be extraordinary, exceed expectations, or provide meaningful direct or indirect benefits to PNC or our businesses. At the same time, discretionary reductions in compensation should be based on behaviors, actions, or results that fail to meet expectations or negatively impact our performance, reputation, or work environment. The guidelines specifically address the need to evaluate both inappropriate risk-taking behaviors during the performance year, as well as the outcome of prior inappropriate risk-taking behaviors, when making discretionary incentive compensation decisions. In addition, managers are generally required to document how discretion was applied in considering risk-taking behaviors and outcomes in employees’ performance evaluations or incentive compensation recommendations, particularly for our most senior level employees.

Executive stock ownership and retention.Our executive officers historically have held a significant portion of their personal wealth in the form of our common stock (or other equity that reflects the performance of our common stock). The Committee believes it is important to require our executive officers, to meet minimum stock ownership guidelines.

Our policy denominates the ownership requirement in shares, and each executive officer and other key employees are also subject to additional ownership requirements, even after the original ownership target is met. The ownership requirements increase the number of PNC shares that an individual needs to own over time. As new awards vest, designated employees need to retain more shares of stock, which they must then hold until they retire or leave PNC. This ownership policy reflects compensation awards over an executive’s career, and also ties an executive’s personal wealth closely to the performance of PNC and the interests of our long-term shareholders.

Equity interests that count toward satisfaction of the ownership guidelines include shares owned outright by the officer, or his or her spouse and dependent children, restricted shares (subject to vesting requirements), certain equity awards and shares or stock units held in a benefit plan. The guidelines are as follows:

				Base requirement
Officer/Category		Share ownership (base requirement)		(value as of 12/31/2013)(1)				Ongoing retention requirement
President and Chief Executive Officer		125,000		$	9,697,500			33	%
Senior Vice Chairman		50,000		$	3,879,000			33	%
Management Executive Committee Members		25,000		$	1,939,500			25	%
Other Corporate Executive Group (CEG) Members		25,000		$	1,939,500			25	%
Controller		5,000		$	387,900			10	%

(1)	Value based on PNC closing price of $77.58 as of December 31, 2013.

Over time, the guidelines will link additional stock ownership to compensation awards, rather than stock price volatility. Newly hired or promoted employees who become subject to these guidelines will have up to six years to satisfy the guidelines. The Committee monitors compliance with these stock ownership guidelines and has determined that our currently employed NEOs satisfy the guidelines. All other employees subject to the guidelines either satisfy the guidelines or are within the compliance period.

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Timing of equity grants.The Committee has adopted a policy for making equity compensation grants. This policy formalizes the practices that we generally use to grant stock options and other equity awards to most employees. The Committee believes that making equity grants as of specifically identified dates improves transparency and reduces risk. The Committee also seeks the flexibility to make all of its principal compensation decisions (salary, annual incentive, equity-based grants) on one specific date. We have not granted any stock options to our NEOs since 2010.

Generally, the Committee delegates to management the opportunity to grant equity-based awards to non-executive employees out of a pool of units established by the Committee for each year. The policy for these grants is otherwise the same as the policy applicable to grants to executive officers and other members of senior executive management. Most of these grants are awarded to non-executive employees as part of the annual performance and compensation review process, with generally the same grant date as the one used for the executive officers and other members of senior executive management. To the extent that units remain in the pool after the annual performance review period, management may grant additional equity-based awards later in the year. Stock options may only be granted outside of the annual incentive process two business days after the first quarterly earnings release following the grant decision date. The grant date for other equity-based awards may be any date, although the general practice is all equity awards shall have the same grant date, to the extent practicable.

Restrictions on trading, hedging and hedging.pledgingWe have a policy that prohibits certain employees, including all executive officers, from purchasing or selling our securities beginning 15 days before the end of each calendar quarter until the second business day after we release our earnings for that quarter. We may also impose additional trading restrictions on our executive officers due to the availability of material, non-public information regarding PNC or our securities. In addition, we require certain employees, including all executive officers, to pre-clear personal investments (other than in specified types of securities) made by the individual or any immediate family members.

Our Code of Business Conduct and Ethics and related policies, which apply to all of our employees, have for many years included anti-hedging provisions that prohibit all employees from day trading or short selling PNC securities and prohibit all employees from engaging in transactions in any derivative of PNC securities (other than securities issued under a PNC compensation plan), including buying and writing options.

We have a policy that prohibits certain employees, including all of our executive officers, from purchasing or selling our securities beginning the 16^th day of the last month of each calendar quarter until the second business day after we release our earnings for that quarter. We may also impose additional trading restrictions on certain employees, including all of our executive officers, due to the availability of material, non-public information regarding PNC or our securities. In addition, we require certain employees, including all executive officers, to pre-clear personal investments (other than in specified types of securities) made by the individual or any immediate family members.

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COMPENSATION DISCUSSION AND ANALYSIS

Additionally, the Restricted Employee Investment Transaction Rules, which covers executive officers, senior executives, and other employees who by the nature of their role must comply with additional restrictions and procedures that govern their personal investment transactions prohibits pledging PNC securities. This policy prohibits employees and directors from pledging PNC securities owned by them for loans or obligations on the margin or otherwise.

Consideration of tax deductibility

Section 162(m) of the Internal Revenue Code does not generally allow a company to deduct compensation over $1 million paid to certain executive officers. Under the tax rules, the executive officers whose compensation is subject to Section 162(m) includes the CEO and the next three highest-compensated executive officers (other than the CEO and the CFO).

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One exception to this disallowance applies to performance-based compensation paid under shareholder-approved plans. Awards made under our shareholder-approved plans—the 1996 Executive Incentive Award Plan (annual incentive awards) and the 2006 Incentive Award Plan (other equity-based awards)—are intended to be eligible for the performance-based exception and therefore, deductible by PNC for federal income tax purposes.

Although the Committee considers the desirability of limiting PNC’s non-deductible expenses when it makes compensation decisions, the Committee believes in maintaining the flexibility and competitive effectiveness of the executive compensation program. Tax deductibility, while an important consideration, is analyzed as one component of the overall program.

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COMPENSATION COMMITTEE REPORT

We have reviewed and discussed the Compensation Discussion and Analysis with PNC’s management, and based on our review and discussions, we recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement.

The Personnel and Compensation Committee of the Board of Directors of The PNC Financial Services Group, Inc.

Dennis F. Strigl,ChairmanChair

Charles E. Bunch

Paul W. Chellgren

Andrew T. Feldstein

Richard B. Kelson

Thomas J. Usher

Michael J. Ward

 

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COMPENSATION AND RISK

This section explains how we consider risk at PNC, and the relationship between risk management, performance, and compensation. We also discuss the risk reviews presented to our Board’s Personnel and Compensation Committee, and the methodology we use to assess the potential risks in our incentive compensation plans.

Risk management at PNC

 

We cannot avoid risk.encounter risk as part of the normal course of operating our business. The successful execution of our strategy requires effective management of the risks we decide to take.

 

Our risks may be internal or external, within our control or not, but we do not attempt to eliminate all risk. Instead, we want to understand, assess and manage the risk. We want our decisions to reflect aour desired risk appetite. It is our responsibility to establish an enterprise risk management framework that facilitates risk management for the benefit of our shareholders.

 

Enterprise risk appetite statement

We manage our risk appetite to optimize long-term shareholder value while supporting our employees, customers, and communities. In doing so, we:

1.

Achieve our business objectives and protect our brand by accepting risks that are understood, quantifiable, and analyzed through all phases of the economic cycle

2.

Earn trust and loyalty from all stakeholders including employees, customers, communities, and shareholders

3.

Reward individual and team performance by taking into account risk discipline and performance measurement

4.

Practice disciplined capital and liquidity management so that the firm can operate effectively through all economic cycles

We strive to embed a culture of risk management throughout PNC. With each of our employees, we reinforce the importance of managing risks in executing on our strategic objectives. We set expectations by focusing onobjectives and in support of our desired risk management and this, together with other risk management tools, helps to create risk-sensitive incentive compensation programs.

appetite.

We dynamically manageapprove our risk appetite to optimize long-term shareholder value while supporting our employees, customers,Enterprise Risk Management Framework and communities.

We actively support a risk management culture that encourages communication and teamwork, to help us manage our risks in the best interests of our business and shareholders. We dynamically set our strategies and make distinct risk taking decisions with consideration for the impact to our aggregate risk position.

We set limits on the transactions that may be taken by employees in a line of business. In managing the risks we encounter, we employ the following accepted guiding principles to establish boundaries for the risks which we are willing to accept in the course of doing business. These include being able to effectively:

•	identify and understand risks and returns
•	make balanced risk decisions
•	monitor and manage risks

Our key risk policies are approved at the Board level. We discuss our risk management approach beginning on page 71in the Risk Management section of this year’sItem 7 of our 2015 Annual Report on Form 10-K.

We intend that the incentives we build intoreflect our executive compensation structure support ourdesired enterprise risk appetite by helping to ensure that our performance management and compensation arrangements for all employees are balanced in ways that thesedo not create incentives when viewed in total, should not encourage our employees to take unnecessaryfor imprudent or excessive risks.

Compensationrisk-taking and risk

best reflect our strategic objectives, business model, and management structure.

Our compensation philosophy supports and reflects PNC’s risk appetite and risk management culture. Our risk policies and procedures guide our management decisions, including how we compensatepay employees. By setting and communicating our risk tolerancesappetite in advance, we seek to manage and control the risks that employees can take or influence, consistent with their roles and responsibilities.

All employees have performance goals that are specifically tied to business and individual performance, but each

employee, no matter their role at PNC, also has risk management.management goals. We then evaluate employee performance against these goals, including how they manage risks throughout the year,risk management goals, in addition to considering risk outcomes from actions taken in prior years. We base our incentive compensation decisions onincorporate this comprehensive evaluation of employee risk management.

management into our incentive compensation decisions. In addition, all employees are encouraged to collaborate across groups to identify and mitigate risks and elevate issues as required.

Our compensation program is designed to encourage management of risk within our appetite and discourage inappropriate risk-taking by granting a diverse portfolio of incentive compensation awards to our executives and other senior employees that is expected to reward desired behavior over time.

Specifically, we balance our portfolio of awards between fixed and variable compensation; cash and equity-based compensation; and annual and long-term compensation. We base awards on the Committee’s assessment of a variety of quantitative and qualitative performance measurements, both on an absolute and a relative basis. Compensation decisions also rely on discretion to consider other factors, such as effective risk management, compliance with controls and ethical duties, competition for top talent, market-based pay levels, and the need to attract, develop, grow, and retain the leadership team.duties.

 

56    THE PNC FINANCIAL SERVICES GROUP, INC. -20142016 Proxy Statement53

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Risk review of compensation plans

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COMPENSATION AND RISK

 

Our Chief Risk Officer makes regular reports (at least quarterly) to our Board’s Personnel and Compensation Committee to discuss risk management and reinforce the connection between effective risk management and incentive compensation. Our Chief Risk Officer also presents the Committee with a risk assessment for each of our principal business units as well as a collective assessment of staff functions including finance, human resources, technology, and operations. In addition, we have at least one director who was a member of both the Personnel and Compensation and Risk Committees during 2013.

As discussed in our CD&A, the long-term incentive program includes grants to our NEOs and certain other executives that include robust risk-based performance metrics. Payouts under these grants could be reduced or eliminated if we do not meet specific risk criteria over the vesting period.

We also have a clawback policy described on pages 51 and 52.

We implementedmaintain an equity program for approximately 130 senior leaders below the executive levels to help ensure that their incentive compensation awards reflect risk-adjusted performance outcomes that would pay out, if at all, over a four-year period. This group ofThese senior leaders receivesreceive a portion of their

incentive compensation in an equity-based award that is subject to a risk-based review trigger. We maintain separateThe equity award agreements for our senior leaders all contain an enterprise-wide risk-based review triggerstrigger, while the agreements for senior leaders in business segments versus(as opposed to those in administrative or control functions.functions) contain an additional, business-specific risk-based review trigger. If a risk-based review is triggered, the applicable review committee will determine whether a downward adjustment is warranted, up to a complete cancellation of the share units in that year’s tranche.

 

Risk review of compensation plans

Our Chief Risk Officer (CRO) reports at least quarterly to our Board’s Personnel and Compensation Committee to discuss risk management and review the connection between effective risk management and incentive compensation. Our CRO also presents the Committee with a risk assessment for each of our principal business units as well as a collective assessment of staff functions including finance, human resources, legal, operations and technology. In addition, we have a practice of having at least one director who is a member of both the Personnel and Compensation and Risk Committees. At present, the Chair of the Risk Committee also serves on the Personnel and Compensation Committee.

We also have systematically identified individuals — or groups of employees — who could potentially expose us to material financial loss, either individually or as a collective group. As with our incentive compensation plan assessment, we also established a cross-functional team that continues to identify and monitor these individuals or groups.

We alsohave developed a governance framework for our incentive compensation plans to help monitor and validate these plans. We want our plans to achieve an appropriate balance of compensation and risk-adjusted performance — this framework helps to ensure that we have the appropriate

procedures, controls and reviews in place to do so. We will continue to assess and modify our incentive compensation plans. Theplans as part of this framework represents a balanced evaluationto appropriately reflect risk considerations and the duration of the relationship betweenrisks and to enhance the documentation of existing risk-balancing strategies. Examples of incentive compensation, measuresplan modifications include:

Adding or increasing the visibility of financial performance and risk management. This framework helps PNC evaluate whether incentive compensation may drive or influence excessive risk takingmetrics in plans based on behalfthe structure of the plan participants.

We have previously performed a detailed analysis of our material incentive compensation plans at PNC — plans that covered approximately 85%and the nature of the population eligible to receive incentive compensation awards –business and have completed design assessmentsthe roles of these plans. To do this, we relied on work from cross-functional teams that included business unit leaders, and senior executives from ourparticipants

Adding or formalizing language around delaying award payments or recapture of payments where subsequent risk management, finance, and human resources functions. We looked at how plan participants could earn incentives undermetrics indicate excessive risk taking

Enhancing documentation of the plan, and evaluated plan design and plan decisions to understand the overall risks, as well as the durationuse of those risks.

We added several design features to the plans to help balance compensation and risk. These features typically included the addition of a risk-based metric (either backward or forward-looking in nature), or the introduction of a deferred payout. We also enhanced the guidelines regarding how we use discretion in making incentive compensation decisions under thesenon-formulaic plans and we modified our performance evaluation process for all of our employees to reflect specific risk considerations.at the pool funding, business allocation, or individual award level

Based on our approach to enterprise risk management, theour comprehensive risk review of our incentive compensation plans,plan governance framework, our risk assessments for significant businesses and staff functions, and the addition of risk-based metrics to long-term incentive compensation programs, we believe that the risks arising from our compensation plans, policies, and practices are not reasonably likely to have a material adverse effect on PNC.

 

THE PNC FINANCIAL SERVICES GROUP, INC. -20142016 Proxy Statement54    57

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COMPENSATION TABLES

Summary compensation table

 

Name & Principal Position		Year				Salary ($)(a)				Bonus ($)(b)				Stock Awards ($)(c)				Option Awards ($)(d)				Non-Equity Incentive Plan Compensation ($)(e)				Change in Pension Value & Nonqualified Deferred Compensation Earnings ($)(f)				All Other Compensation ($)(g)				Total ($)
William S. Demchak*			2013			$	922,115				-			$	3,863,752				-			$	3,083,333			$	53,668			$	59,235			$	7,982,103
President and CEO			2012			$	750,000				-			$	4,416,686				-			$	1,825,840			$	473,720			$	58,894			$	7,525,140
			2011			$	750,000				-			$	5,903,515				-			$	2,130,000			$	428,617			$	80,830			$	9,292,962
James E. Rohr*			2013			$	1,062,308				-			$	6,427,941				-			$	918,000				-			$	92,960			$	8,501,209
Executive Chairman			2012			$	1,200,000				-			$	4,922,847				-				-			$	2,684,484			$	135,475			$	8,942,806
and Former CEO			2011			$	1,169,231				-			$	8,861,121				-			$	2,010,000			$	4,369,782			$	197,016			$	16,607,150
Robert Q. Reilly*			2013			$	475,000				-			$	1,189,642				-			$	1,075,000			$	35,169			$	35,327			$	2,810,138
Chief Financial Officer
Richard J. Johnson*			2013			$	336,538				-			$	2,603,663				-			$	800,000			$	95,850			$	33,400			$	3,869,451
Former Chief			2012			$	500,000				-			$	1,597,424				-			$	1,003,650			$	208,116			$	40,638			$	3,349,828
Financial Officer			2011			$	496,154				-			$	1,997,864				-			$	1,062,500			$	155,973			$	45,493			$	3,757,984
Michael P. Lyons			2013			$	700,000				-			$	4,555,912				-			$	2,020,000			$	21,411			$	2,154			$	7,299,477
Executive V.P., Head of Corporate & Institutional Banking			2012			$	700,000				-			$	5,982,880				-				-			$	11,448			$	336,352			$	7,030,680
E. William Parsley, III			2013			$	500,000				-			$	4,194,598				-			$	1,075,000				-			$	5,577			$	5,775,175
Executive V.P., Chief			2012			$	484,615				-			$	4,380,190				-			$	694,700			$	148,751			$	12,762			$	5,721,018
Investment Officer and Treasurer			2011			$	400,000				-			$	3,984,997				-			$	950,000			$	176,214			$	39,967			$	5,551,178
Steven C. Van Wyk			2013			$	490,385			$	1,389,350			$	1,902,707				-			$	1,000,000			$	5,658			$	153,085			$	4,941,185
Executive V.P., Head of Technology and Operations

Name & Principal Position		Year				Salary ($)(a)				Stock Awards ($)(b)				Non-Equity Incentive Plan Compensation ($)(c)				Change in Pension Value & Nonqualified Deferred Compensation Earnings ($)(d)				All Other Compensation ($)(e)				Total ($)
William S. Demchak			2015			$	1,100,000			$	6,959,910			$	4,100,000			$	393,715			$	165,501			$	12,719,126
Chairman, President			2014			$	1,089,615			$	5,999,978			$	3,540,000			$	650,626			$	57,685			$	11,337,904
& Chief Executive Officer			2013			$	922,115			$	3,863,752			$	3,083,333			$	53,668			$	59,235			$	7,982,103
Robert Q. Reilly			2015			$	500,000			$	1,874,944			$	1,400,000			$	193,677			$	43,344			$	4,011,965
Executive Vice President &			2014			$	500,000			$	1,549,936			$	1,375,000			$	316,836			$	60,922			$	3,802,694
Chief Financial Officer			2013			$	475,000			$	1,189,642			$	1,075,000			$	35,169			$	35,327			$	2,810,138
Michael P. Lyons			2015			$	700,000			$	4,019,824			$	2,020,000			$	22,953			$	6,754			$	6,769,531
Executive Vice President & Head of			2014			$	700,000			$	4,079,882			$	1,980,000			$	21,677			$	6,577			$	6,788,136
Corporate & Institutional Banking			2013			$	700,000			$	4,555,912			$	2,020,000			$	21,411			$	2,154			$	7,299,477
E William Parsley, III			2015			$	500,000			$	4,549,900			$	1,300,000			$	50,634			$	22,108			$	6,422,642
Executive Vice President, Chief			2014			$	500,000			$	4,574,917			$	1,050,000			$	164,669			$	10,200			$	6,299,786
Investment Officer & Treasurer			2013			$	500,000			$	4,194,598			$	1,075,000				–			$	5,577			$	5,775,175
Joseph C. Guyaux			2015			$	620,000			$	1,999,842			$	1,130,000			$	708,458			$	38,551			$	4,496,851
Senior Vice Chairman & CEO &			2014			$	620,000			$	1,874,984			$	1,380,000			$	725,352			$	22,235			$	4,622,571
President of PNC Mortgage			2013			$	620,000			$	1,605,308			$	1,255,000			$	435,506			$	34,253			$	3,950,067

*

Mr. Rohr served as CEO from May 2000 to April 23, 2013. Mr. Rohr assumed the new position of Executive Chairman of PNC on that date. Effective at the annual meeting of shareholders on April 23, 2013, Mr. Demchak succeeded Mr. Rohr as CEO. Effective August 12, 2013, Mr. Johnson retired as Chief Financial Officer of PNC and Mr. Reilly succeeded Mr. Johnson as Chief Financial Officer.

(a)

The “Salary” column includes any salary amounts deferred by an NEO under qualified (ISP) or non-qualified (SISP, DCP and DCIP)(DCIP) benefit plans. We describe these PNC plans on page 67.69. Please also see theNon-qualified deferred compensation in fiscal 20132015 tableon page 6870 for the aggregate deferrals during 2013. During 2013, Mr. Demchak was paid $688,462 in salary as CEO and $233,653 in salary for his former role. Mr. Rohr was paid $373,846 in salary as CEO and $688,462 in salary for his current role.2015.

(b)

Mr. Van Wyk received two cash payments during 2013 reportable in the Bonus column. A one-time signing bonus was paid in January and a March payment compensated Mr. Van Wyk for bonuses forfeited at his former employer.

(c)

The amounts in the “Stock Awards” column reflect the grant date fair value of stock awards.awards (whole shares only). The grant date fair values are calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation—Stock Compensation (FASB ASC Topic 718). See Note 1613 in our Annual Report on Form 10-K for the year ended December 31, 20132015 for more information. The value of any fractional shares is paid in cash and included in the All Other Compensation column. See footnote (e) for additional details. In 2013,2015, stock awards were granted on February 14, 201313, 2015 consisting of long-term incentive performance units and performance-based restricted share units, and for Mr. Parsley, a grant of ALM incentive performance units. For 2012, Mr. Rohr and Mr. Lyons received a portion of their incentive compensation normally paid in cash in the form of restricted stock on February 14, 2013 based on the NYSE closing price on that day of $63.87. In connection with Mr. Van Wyk joining PNC he was granted restricted share units on January 22, 2013. In recognition for his contributions to PNC during 2013, as part of his pro-rated incentive award, Mr. Johnson was granted a restricted share unit award on July 19, 2013. The grant date fair value of the incentive performance units, performance-based restricted share units and the ALM incentive performance units is calculated using the target number of units underlying the award and a per share value based on the NYSE closing price of our common stock on February 14, 201313, 2015 of $63.87.$92.38. If PNC’s performance during the applicable measurement period results in the maximum number of units vesting, our executives would each be entitled to receive a maximum award with a grant date fair value of the maximum award as follows:

 

THE PNC FINANCIAL SERVICES GROUP, INC. -2014 Proxy Statement55

		Grant Date Fair Value of Maximum Award
NEO		Incentive Performance Units				Performance-Based Restricted Share  Units
William S. Demchak		$	4,349,943			$	4,349,943
Robert Q. Reilly		$	1,171,840			$	1,171,840
Michael P. Lyons		$	2,512,390			$	2,512,390
E William Parsley, III*		$	968,720			$	968,720
Joseph C. Guyaux		$	1,249,901			$	1,249,901