SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FIRST HORIZON NATIONAL CORPORATION |
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March 12, 201816, 2020
Dear Fellow Shareholder:
You are cordially invited to attend First Horizon National Corporation’s 20182020 annual meeting of shareholders. We will hold the meeting on April 24, 2018 at28, 2020 in the Auditorium of the First Tennessee First OpsHorizon Building, 3451 Prescott Road,165 Madison Avenue, Memphis, Tennessee 38118,38103, at 10:00 a.m. local time.
Our strategic and operating results in 2017 were outstanding. We completed three acquisitions, growing our total assets
Transformation has been First Horizon’s theme for 2019. The company has continued to $41 billion and becoming the fourth largest regional bank in the Southeast, with over 800,000 customers and nearly 350 branches in Tennessee, North Carolina, South Carolina, Florida, Mississippi, Georgia, Texas and Virginia. Loanhave strong loan and deposit growth was exceptional across First Tennessee,key markets and in specialty areas, and revenue growth and expense management have created profitability. Achievement of our cost savings goals has enabled us to make significant investments in technology and talent. Our sharpened focus on efficiency and agility will support our announced expansion into key markets in North Carolina, Virginia and Georgia through the acquisition of 30 branches, expected to be completed in second quarter 2020. In 2019, we retainedunified our No. 1 deposit market share in Tennessee and continued to grow organically in our other markets.family of companies under the First Horizon brand, and our new brand promise puts understanding into action as we work to advocate for our customers. Finally, our upcoming merger of equals with IBERIABANK Corporation, expected to be completed in the first half of 2020, will create a leading regional financial services company with an expansive 11-state reach in high-growth, attractive markets across the combined company’s footprint. Even while accomplishing these strategic transformations, First Horizon has continued to receive recognition as a great banking organization and a great place to work. Highlights of 2019 include:
| Ÿ | Announced merger of equals with IBERIABANK Corporation and acquisition of 30 branches in high growth markets. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Ÿ | 2019 EPS of $1.38 (adjusted $1.66) compared to 2018 EPS of $1.65 (adjusted $1.41). [Non-GAAP results are reconciled to GAAP items in Appendix A.] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Ÿ | Balance sheet momentum with regional banking average loan growth of 9% and deposit growth of 9% compared to 2018, enhanced by the successful implementation of the merger with Capital Bank. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Ÿ | Unique business mix provides earnings contribution from countercyclical businesses and helps offset challenging rate environment: Fixed Income revenue up 52% and loans to mortgage companies up 133%. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Ÿ | Efficiency ratio improved by ~460 basis points compared to 2018 due to good expense discipline and implementation of cost saves. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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As we mark our 154thFirst Horizon embarks on its 156th year, our Firstpower culture, with its emphasis on Accountability, Adaptability, Integrity and Relationships, continues to help us meet the challenges that we face. We are proud that First Horizon was recently named to the 2020 list of America’s Most JUST Companies, ranking third overall among banks. The inclusion of First Horizon on the JUST 100 list recognizes that financial performance and positive contributions to society can go hand-in-hand. The strength of our culture and the quality of our people werehave also been reaffirmed with top-employer recognition from Fortune, American Banker, Working Mother,Forbes, Phoenix-Hecht, the National Association for Female Executives, the Human Rights Campaign,Bloomberg Gender-Equality Index, the Dave Thomas Foundation for Adoption, and the Profiles in Diversity Journal. As a result of the recently passed tax reform billWorking Mother Magazine. Our Corporate Social Responsibility report,Herefor Good, highlights our commitment to all our stakeholders—communities, employees, customers and in recognition of the outstanding performance of our employees, we were happy to award $1,000 bonuses to approximately 70% of our employees at the end of 2017 and increase the minimum pay level of our employees to $15 an hour early in 2018.shareholders.
First Horizon strives to make a positive difference in the communities we serve through the First Tennessee Foundation and the First Tennessee Community Development Fund. Together the Foundation and the Community Development Fund invested nearly $11 million in our communities in 2017 alone. Through our partnership with financial literacy organization Operation HOPE, our Education & Empowerment Program provides financial education to youth, adults and small businesses to improve financial health in the communities we serve. More than 8,000 participants have received free financial empowerment education and one-on-one credit counseling through our 13 HOPE Inside locations.
Accompanying this letter are the formal notice of the annual meeting, our 20182020 proxy statement and our annual report to shareholders, which contains detailed financial information relating to our activities and operating performance during 2017.2019. Though it is being delivered to you with our proxy statement, the annual report to shareholders is not “soliciting material” under SEC Regulation 14A.
At the meeting, we will ask you to elect twelve directors; to vote on technical amendments to modernize the Company’s Restated Charter; to vote on an advisory resolution to approve executive compensation (“say on pay”); and to ratify the appointment of KPMG LLP as our independent auditors for 2018.2020. The accompanying proxy statement contains information about these matters.
Your vote is important. You may vote your proxy by telephone, over the internet or, if you received a paper proxy card by mail, you may also vote by signing, dating, and returning the proxy card by mail (as directed on the proxy card). Even if you plan to attend the meeting, please vote your proxy by telephone or over the internet or return your proxy card as soon as possible.
Thank you for your continued support of First Horizon, and I look forward to seeing you at the annual meeting.
D. Bryan Jordan
Chairman of the Board,
President and Chief Executive Officer
NOTICEOF ANNUAL SHAREHOLDERS’ MEETING
APRIL 24, 2018
10:00A.M. CENTRAL TIMENotice of Annual Shareholders’ meeting
April 28, 2020
10:00 a.m. Central Time
The annual meeting of the holders of First Horizon National Corporation’s common stock will be held on April 24, 2018,28, 2020, at 10:00 a.m. local time atin the Auditorium of the First Tennessee First OpsHorizon Building, 3451 Prescott Road,165 Madison Avenue, Memphis, Tennessee 38118.38103.
The items of business are:
1. | Election of twelve directors to serve until the | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Note that if our proposed merger of equals with IBERIABANK Corporation is consummated, we expect three of the nominees for director named herein not to complete their full terms but to step down upon the closing of the proposed merger. See page 35 of the proxy statement for additional details. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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These items are described more fully in the following pages, which are made a part of this notice. The close of business on February 23, 201828, 2020 is the record date for the meeting. All holders of record of First Horizon’s common stock as of that time are entitled to vote at the meeting. The holders of First Horizon’s depositary shares, each representing a 1/4000th interest in a share of non-cumulative perpetual preferred stock, Series A, issued by First Horizon on January 31, 2013, are
This meeting does not entitled to vote at the meeting, but are entitled under the Tennessee Business Corporation Act to receive this notice of the meeting (which states that one of the purposes of the meeting is to consider the proposed amendmentsrelate to the Restated Charter)Special Meeting of Shareholders that will be held in connection with our pending merger of equals with IBERIABANK Corporation. A separate proxy statement is being prepared and delivered, and a copy or summaryseparate Special Meeting of Shareholders will be held, in connection with the proposed amendments.pending merger.
Management requests that you vote your proxy by telephone or over the internet or that you sign and return the form of proxy promptly, as applicable, so that if you are unable to attend the meeting your shares can nevertheless be voted. You may revoke a proxy at any time before it is exercised at the annual meeting in the manner described on page 57 of the proxy statement.
CLYDE
Clyde A. BILLINGS, JR.
Billings, Jr.
Senior Vice President, Assistant General Counsel
and Corporate Secretary
Memphis, Tennessee
March 12, 201816, 2020
IMPORTANT NOTICE
Please (1) vote your proxy by telephone (2) vote your proxy over the internet or (3) mark, date, sign and promptly mail the form of proxy, as applicable, so that your shares will be represented at the meeting.
If you hold your shares in street name, it is critical that you instruct your broker or bank how to vote if you want your vote to count in the election of directors the amendments to the Restated Charter, and the advisory resolution to approve executive compensation (Vote Item Nos.(vote item nos. 1 2 and 32 of this proxy statement). Under current regulations, if you hold your shares in street name and you do not instruct your broker or bank how to vote in these matters, no votes will be cast on your behalf with respect to these matters. For additional information, see page 68 of the proxy statement.
PROXY STATEMENTFOR 2018 FIRST HORIZONNATIONAL CORPORATION ANNUAL MEETING
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PROXY SUMMARY
Please read the entire proxy statement before voting. This summary highlights information contained elsewhere in this proxy statement and does not contain all of the information that you should consider. Page references are supplied to help you find further information in the proxy statement.
Time and Date: | 10:00 a.m. local time, April | |
Place: | The Auditorium of the First | |
Record Date: | February | |
Common Shares Outstanding and Entitled to Vote on Record Date: |
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Internet Availability: | First Horizon uses the SEC’s “notice and access” rule. Notice of internet availability of proxy materials will be sent on or about March |
Matter | Board | Page | ||||
Vote Item 1 | Election of directors.We are asking you to elect the 12 nominees named in this proxy statement as directors for a one-year term. | FOR each director nominee |
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| Advisory resolution on executive compensation. In accordance with SEC rules, we are asking you to approve, on an advisory basis, the compensation of our named executive officers as disclosed in this proxy statement. | FOR |
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Vote Item | Ratification of appointment of auditors. We are asking you to ratify the appointment of KPMG LLP as our auditors for | FOR |
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Financial Overview
Disciplined Organic Loan & Deposit Growth Drove Excellent Returns in 2019
We grew average loans by 7% and average deposits by 5% in 2019. Loan growth was strongest in the “specialty” commercial lending category, led by loans to mortgage companies. Our net interest margin for the year declined only 0.17% despite federal interest rate reductions totaling 0.75%, while our net
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2017 Performance Highlights
Our strategic and operating results in 2017 were outstanding. Compared to 2016, we achieved
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More detailed discussion of our financial performance can be found on pages 43 to 45 of the Compensation Discussion and Analysis section of this proxy statement. In addition, we completed three strategic acquisitions, growing our total assets to $41 billion and becoming the fourth largest regional bank in the Southeast, with over 800,000 customers and 350 branches in Tennessee, North Carolina, South Carolina, Florida, Mississippi, Georgia, Texas and Virginia.
Acquisitions Closed in 2017
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| ROA / Adj ROA* 1.08% / 1.30% Outlook for 2019: 1.20% | ROCE / Adj ROCE* 9.60% / 11.59% | |||||||||||||
| ROTCE / Adj ROTCE* 14.71% / 17.60% Outlook for 2019: 17% |
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In 2019, our adjusted results surpassed our outlook. Key contributors to this success were organic loan and deposit synergies stemming from the Capital Bank merger in 2017, organic loan and deposit growth in our other markets, and disciplined lending and pricing practices.
*ROTCE and adjusted results differ from results reported using generally accepted accounting principles (GAAP). The impacts of merger and restructuring expenses and certain other notable items have been excluded from 2019 adjusted results. Non-GAAP results are reconciled to GAAP items in Appendix A.
| Long-Term Financial Results: 2015-2019 |
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Strategic Transactions
30-Branch Acquisition
In the fourth quarter of 2019 we announced an agreement to purchase 30 branches in North Carolina (20), Virginia (8), and Georgia (2). We expect the branch acquisition to close in the second quarter this year. Along with the branch locations, we will acquire approximately $0.4 billion of loans and assume approximately $2.4 billion of deposits. The branch transaction will expand our presence in several attractive southeastern markets. The transaction is subject to customary closing conditions.
IBERIABANK
In the fourth quarter of 2019 we announced a merger of equals transaction with IBERIABANK Corporation (“IBKC”), which is the parent company of IBERIABANK based in Lafayette, Louisiana. The combined company, on a September 30, 2019 pro-forma basis and including the 30-branch acquisition, would have had $78 billion in assets, $59 billion in deposits, and $55 billion in loans. A special meeting of our shareholders to vote on the IBKC transaction, including related amendments to our corporate charter, is expected to be held during the second quarter of 2020. None of the matters to be considered at our 2020 regular annual meeting, or discussed in this proxy statement, relate directly to the IBKC transaction. The IBKC transaction is subject to approval by shareholders of both companies, regulatory approvals, and other customary closing conditions. Currently we expect the IBKC merger to close in the second quarter of 2020.
Compensation Highlights (detailed discussion begins on page 43)48)
Our compensation policies and practices are designed to align the interests of our employees with the interests of our shareholders. We seek to attract, retain, incent, and reward individuals who contribute to our long-term success. We strive to link pay to Company performance for all executive officers, including our CEO. Our compensation practices embrace many best practice corporate governance principles.
D. Bryan Jordan, our CEO, was recruited as CFO in 2007 and promoted to CEO in September 2008. He has led the restructuring of the company, the development and implementation of new strategies, and the recruitment of the current management team. He has emphasized improving economic profit and controlling costs. Our operating results have improved significantly during his tenure. The Compensation Committee considered his significant contributions in turning around the company when making decisions about his pay for 2017. In each of the past three years, Mr. Jordan has met or exceeded his personal goals. He provides consistent, critical leadership in dynamic times. Mr. Jordan’s regular annual target-level pay continues to be below the median of FHN’s peer group. His pay mix—the structure of the various components of his pay—is in line with company peers. The Committee believes that Mr. Jordan’s leadership is known throughout the industry. He is a director or executive committee member of the Federal Reserve Bank of St. Louis, American Bankers Association, Mid-Size Bank Coalition of America, Tennessee Bankers Association, and Operation HOPE (which strives to provide banking services to financially or socially disadvantaged persons). In 2016 he was named CEO of the year byInside Memphis Business, and was featured as a top-ten CEO inAmerican Banker. These associations and recognitions reflect well on our company and enhance Mr. Jordan’s connections to the financial services community. Mr. Jordan’s direct compensation actually paid or earned during or in relation to 2017 (consisting of salary, bonus paid, and stock awards vested) was approximately $10.7 million. See page 66 for details.
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Our executive compensation practices embrace many best practice corporate governance principles.
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Governance Highlights (a detailed discussion begins on page 8)10)
First Horizon is dedicated to operating in accordance with sound corporate governance principles. We believe that these principles not only form the basis for our reputation of integrity in the marketplace but also are essential to our efficiency and overall success. Some of our corporate governance principles, policies and practices are listed below.
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First Horizon always strives to be Here for Good. We’re honored by American Banker as No. 5among the Top 10 Most Reputable U.S. Banks******Member, 2018 Bloomberg Gender-Equality Index******recognition awarded us for our efforts. We are especially proud of the praise we have received for our community service and family-friendly work environment. Here are some of our honors:
World’s Best Banks List
Forbes Magazine, 2019
America’s Best Large Employers List
Forbes Magazine, 2019
Top 50 Companies for Executive Women******Women
National Association for Female Executives, 2019 (received in 2009, and every year since 2012)
Top Employer Recognition from Fortune, American Banker,Working Mother, Profiles100 America’s Most JUST Companies for Corporate Citizenship
Forbes Magazine and JUST Capital, 2019
100 Best Adoption-Friendly Workplaces in Diversity Journal, the America
Dave Thomas
Foundation for Adoption, and the Human Rights Campaign***
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Diversity Best Practices Inclusion Index
Working Mother Magazine, 2019 (also 2018)
Bloomberg Gender-Equality Index
Bloomberg, 2019 (also 2018 and 2020)
Best Workplaces in Finance and Insurance
Fortune Magazine, 2019
Phoenix-Hecht 2019 Middle Market Quality Index
Excellence in Middle Market Banking
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| 2020 ANNUAL MEETING & PROXY STATEMENT—GENERAL MATTERS |
2018 AProxy Statement—General MattersNNUAL MEETING& PROXY STATEMENT—GENERAL MATTERS
Purpose of the Annual Meeting of Common Shareholders
Our Board of Directors is soliciting proxies to be voted at our upcoming annual meeting of the holders of First Horizon’s common stock (and at any adjournment or adjournments of the meeting). At the meeting, our common shareholders will act
to elect twelve directors; to vote on technical amendments to modernize our Restated Charter; to vote on an advisory resolution to approve executive compensation (“say on pay”); and to ratify the appointment of KPMG LLP as our independent auditors for 2018.2020.
Date, Time & Place of the Annual Meeting
The annual meeting of the holders of our common stock will be held on Tuesday, April 24, 201828, 2020 at 10:00 a.m. local time in the Auditorium at the First Horizon Building, 165 Madison Avenue, Memphis,
Tennessee First Ops Building, 3451 Prescott Road, Memphis, Tennessee 38118.38103. To obtain additional information or directions to be able to attend the meeting and vote in person, contact our Corporate Communications office at 866-365-4313.
Terms Used in this Proxy Statement
In this proxy statement, First Horizon National Corporation is referred to by the use of “we,” “us” or similar pronouns, or simply as “FHN” or “First Horizon,” and First Horizon and its consolidated subsidiaries are referred to collectively as “the company.” The term “shares” means First Horizon’s common stock, and the term “shareholders” means the holders of that common stock, unless otherwise clearly stated. In addition,
the notice of the 20182020 annual meeting of shareholders, this proxy statement, our annual report to shareholders for the year ended December 31, 2017,2019, and the proxy card are referred to as our “proxy materials.” Though the annual report to shareholders is included in the term “proxy materials,” it is not “soliciting material” under SEC Regulation 14A.
Internet Availability of Proxy Materials
Except as noted below, we are again this year using
We use the SEC’s “notice and access” rule, which allows us to furnish our proxy materials over the internet to our shareholders instead of mailing paper copies of those materials to each shareholder. As a result, beginning on or about March 12, 2018,16, 2020, we sent to most of our shareholders by mail or e-mail a notice of internet availability of proxy materials, which contains instructions on how to access our proxy materials over the internet and vote online. This notice is not a proxy card, and you cannot be useduse it to vote your shares. If you received only a notice, you will not receive paper copies of the proxy materials unless you request the materials by following the instructions on the notice.
If you received a paper copy of the notice, we encourage you to help us save money and reduce the environmental impact of delivering paper notices by signing up to receive all of your future proxy materials electronically.
The holders of First Horizon’s depositary shares, each representing a 1/4000th interest in a share of non-cumulative perpetual preferred stock, Series A, issued by First Horizon on January 31, 2013 (the “preferred holders”), are not entitled to vote at the annual meeting, but are entitled under the Tennessee Business Corporation Act to receive notice of the meeting (stating that one of the purposes of the meeting is to consider the proposed technical amendments to modernize our
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2018 ANNUAL MEETING & PROXY STATEMENT—GENERAL MATTERS
Restated Charter) and a copy or summary of the proposed amendments. Therefore, in fulfillment of this requirement, we will be delivering copies of the notice of annual meeting and this proxy statement to the preferred holders beginning on or about March 12, 2018 in accordance with such holders’ previously expressed delivery preferences.
If you own shares of common stock in more than one account—for example, in a joint account with your spouse and in your individual brokerage account—you may have received more than one notice. To vote all of your shares, please follow each of the separate voting instructions that you received for your shares of common stock held in each of your different accounts.
 | 2020 PROXY STATEMENT | 6 |
| 2020 ANNUAL MEETING & PROXY STATEMENT—GENERAL MATTERS |
Voting by Proxy & Revoking your Proxy
The First Horizon Board of Directors is asking you to give us your proxy. Giving us your proxy means that you authorize another person or persons to vote your shares of our common stock at the annual meeting of shareholders in the manner you direct. Giving us your proxy allows your shares to be voted even if you do not attend the annual meeting in person. You may revoke your proxy at any time before it is exercised by writing to the Corporate Secretary, by timely delivering a properly executed, later-dated proxy (including by telephone or internet) or by voting by ballot at the meeting. All shares represented by valid proxies received pursuant to this solicitation, and not revoked before they are exercised, will be voted in the manner specified on the proxy.If you submit a proxy without giving specific voting instructions, your shares will be voted in accordance with the recommendations of our Board of Directors as follows:
FOR:
FOR:
| 1. |
| Election of twelve directors to serve until the | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Note that if our proposed merger of equals with IBERIABANK Corporation (“IBKC”) is consummated, we expect three of the nominees for director named herein not to complete their full terms but to step down upon the closing of the proposed merger. See page 35 for additional details. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Approval of an advisory resolution to approve executive compensation (“say on pay”). | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| 3. | Ratification of the appointment of auditors. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Solicitation of Proxies
First Horizon will pay the entire cost of soliciting the proxies. In following up the original solicitation of the proxies, we may request brokers and others to send proxy materials to the beneficial owners of the shares and may reimburse them for their expenses in so doing. If we deem it necessary, we may also use several of our employees to solicit proxies from the shareholders, either personally or by telephone, letter or e-mail, for which they will
receive no compensation in addition to their normal compensation. We have hired Morrow Sodali LLC, 470 West Ave., Stamford, CT 06902 to aid us in the solicitation of proxies for a fee of $9,000 plus out-of-pocket expenses. An additional charge of $6.50 per holder will be incurred should we choose to have Morrow Sodali LLC solicit individual holders of record.
Quorum & Vote Requirements
Except for our depositary shares (each representing a 1/4000th interest in a share of non-cumulative perpetual preferred stock, Series A, issued by First Horizon on January 31, 2013), which have limited voting rights and no right to vote at the annual meeting, our common stock is our only class of voting securities. There were ________________311,787,579 shares of common stock outstanding and entitled to vote as of February 23, 2018,28, 2020, the record date for the annual shareholders’ meeting.
Each share is entitled to one vote. A quorum of the shares must be represented at the meeting to take action on any matter at the meeting. A majority of the votes entitled to be cast constitutes a quorum for purposes of the annual meeting. Both “abstentions” and broker “non-votes” will be
considered present for quorum purposes, but will not otherwise have any effect on the vote items.
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2018 ANNUAL MEETING & PROXY STATEMENT—GENERAL MATTERS
The affirmative vote of a majority of the votes cast is required to elect the nominees as directors, and we have adopted a director resignation policy that requires a director who does not receive the affirmative vote of a majority of the votes cast with respect to his or her election to tender his or her resignation. For additional information on our director resignation policy, see the summary of the policy in the “Corporate Governance & Board Matters” section of this proxy statement beginning on page 8.10. The policy is also contained in our Corporate Governance Guidelines, which are available on our website at www.firsthorizon.com (click on “Investor Relations,” then “Corporate Governance,” and then “Governance Documents”).
| 2020 PROXY STATEMENT | 7 |
| 2020 ANNUAL MEETING & PROXY STATEMENT—GENERAL MATTERS |
The affirmative vote of a majority of the votes cast is required to approve the proposed amendments to our Restated Charter, to approve the advisory resolution on
executive compensation and to ratify the appointment of auditors.
Effect of Not Casting Your Vote
Shares Held in Street Name. If you hold your shares in street name it is critical that you instruct your broker or bank how to vote if you want your vote to count in the election of directors the amendments to our Restated Charter and the advisory resolution to approve executive compensation (Vote Item Nos.(vote items 1 2 and 32 of this proxy statement). Under current regulations, your broker or bank will not have the ability to vote your uninstructed shares in these matters on a discretionary basis. Thus, if you hold your shares in street name and you do not instruct your broker or bank how to vote, no votes will be cast on your behalf with respect to these matters. Your broker
or bank will have the ability to vote uninstructed shares on the ratification of the appointment of auditors (Vote Item No. 4)(vote item 3).
Shareholders of Record. If you are a shareholder of record and you do not vote your proxy, no votes will be cast on your behalf on any of the items of business at the annual meeting unless you attend the annual meeting and vote your shares there.
Duplicate Mailings & Householding
Duplicate mailings in most cases are inconvenient for you and an unnecessary expenditure for us. We encourage you to eliminate them whenever you can as described below.
Multiple Accounts. Some of our shareholders own their shares using multiple accounts registered in variations of the same name. If you have multiple accounts, we encourage you to consolidate your accounts by having all your shares registered in exactly the same name and address. You may do this by contacting our stock transfer agent, Equiniti Trust Company (EQ), by phone toll-free at 1-877-536-3558, or by mail to EQ Shareowner Services, P.O. Box 64854, St. Paul, MN 55164-0854.
Shares Held in Street Name. If you and other members of your household are beneficial owners of shares, meaning that you own shares indirectly through a broker, bank, or other nominee, you may eliminate any duplication of mailings by contacting your broker, bank, or other nominee. If you have eliminated duplicate mailings but for any reason would like to resume them, you must contact your broker, bank, or other nominee.
Shareholders with the Same Address; Requesting Changes.If you are among the shareholders who receive paper copies of our proxy materials, SEC rules allow us to mail a single copy of those materials to all shareholders residing at the same address if certain conditions are met. This practice is referred to as “householding.
“householding.” (Householding does not apply to either the proxy card or the notice of internet availability of proxy materials.) If your household receives only one copy of the proxy materials and if you wish to start receiving separate copies in your name, apart from others in your household, you must request that action by contacting our stock transfer agent, EQ, by phone toll-free at 1-877-536-3558 or by writing to it at EQ Shareowner Services, Attn: Householding, P.O. Box 64854, St. Paul, MN 55164-0854. That request must be made by each person in the household who desires a separate copy. Within 30 days after your request is received we will start sending you separate mailings. If you and members of your household are receiving multiple copies and you want to eliminate the duplications, please request that action by contacting EQ using
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2018 ANNUAL MEETING & PROXY STATEMENT—GENERAL MATTERS
the contact information given in this paragraph above. In either case, in your communications, please refer to your account number and our company number (998).number. Please be aware that if you hold shares both in your own name and as a beneficial owner through a broker, bank or other nominee, it is not possible to eliminate duplications as between these two types of ownership. If your household receives only a single copy of the proxy materials, and if you desire your own separate copies for the 20182020 annual meeting, you may pick up copies in person at the meeting in April or download them from our website using the website address listed in the box below. If you would like additional copies mailed, we will mail them promptly if you request them from our Investor Relations department at our
| 2020 PROXY STATEMENT | 8 |
| 2020 ANNUAL MEETING & PROXY STATEMENT—GENERAL MATTERS |
website or by mail to Investor Relations, P.O. Box 84, Memphis, TN 38101. You may also request that additional copies be mailed by calling our Corporate Communications department at
1-866-365-4313. However, we cannot guarantee you will receive mailed copies before the 20182020 annual meeting.
| Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to Be Held on April 28, 2020. |
| This proxy statement, our proxy card, and our annual report to shareholders are available at https://ir.fhnc.com/financialdocs. |
| 2020 PROXY STATEMENT | 9 |
| CORPORATE GOVERNANCE & BOARD MATTERS |
Important Notice Regarding the Availability of Proxy Materialsfor the Shareholder Meeting to Be Held on April 24, 2018.Corporate Governance & Board Matters
This proxy statement, our proxy card, and our annual report to shareholders areavailable at http://ir.fhnc.com.
7
CORPORATE GOVERNANCE & BOARD MATTERS
CORPORATE GOVERNANCE& BOARD MATTERS
In accordance with our Bylaws, First Horizon is managed under the direction of and all corporate powers are exercised by or under the authority of our Board of Directors. Our Board of Directors currently has twelvefourteen members. All of our directors are also directors of First Tennessee Bank National Association (the “Bank” or “FTB”). The Bank is our principal operating subsidiary.
First Horizon is dedicated to operating in accordance with sound corporate governance principles. We believe that these principles not only form the basis for our reputation of integrity in the marketplace but also are essential to our efficiency and overall success. Some of our corporate governance principles, policies and practices are highlighted below.
Corporate Governance Highlights
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| Annual director elections.All our directors are elected by our shareholders every year. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Ÿ | Independence. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Ÿ | Proxy access.We adopted a proxy access bylaw that allows a shareholder or group of up to 20 shareholders that has held at least 3% of our common stock for at least three years to nominate up to the greater of two directors or 20% of the Board and have those nominees appear in our proxy statement, subject to notice and other specific requirements in our Bylaws. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ÿ | Board refreshment.Our Board values fresh perspectives. Over the past six years, we have added five new directors to our Board. Average tenure on our Board | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Ÿ | Shareholder engagement.Dialogue with our shareholders is a critical part of our company’s success. Our Investor Relations area with executive management regularly conducts ongoing dialogue with our shareholders via one-on-one conversations, conferences, road shows, on-site visits and the | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Ÿ | Lead Director.Independent director Colin V. Reed serves as the Lead Director. The principal duties of the Lead Director are specified in the Corporate Governance Guidelines. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Ÿ | Other directorships.None of our current directors serves on more than two public company boards other than First Horizon; | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Ÿ | Clawback.Our Compensation Recovery Policy (commonly known as a “clawback” policy) makes performance compensation paid based on erroneous financial data recoverable if the recipient caused the error or is responsible for the data’s accuracy. Additional clawback provisions apply to most types of stock awards if certain other misconduct occurs, such as fraud or certain competitive activities, or | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Ÿ | Stock ownership guidelines.Our guidelines | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2020 PROXY STATEMENT | 10 |
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| CORPORATE GOVERNANCE & BOARD MATTERS |
| Ÿ | Individual director evaluations.Each year, the Nominating & Corporate Governance Committee evaluates the performance of each non-employee director prior to determining whether to recommend him or her to the Board for renomination. The company implemented a policy in 2019 whereby at least every three years, in lieu of the evaluation by the Nominating & Corporate Governance Committee, the company engages a third party to conduct individual director assessments and to provide advice and reports on how individual directors and the Board can improve. See | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Ÿ | Hedging.Company policy prohibits directors and executive officers from hedging with respect to First Horizon stock. See page 12 for additional details. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2020 PROXY STATEMENT | 11 |
| CORPORATE GOVERNANCE & BOARD MATTERS |
8
CORPORATE GOVERNANCE & BOARD MATTERS
Key Corporate Governance Documents
Our Board has adopted the following key corporate governance documents. All of these are available, along with several other governance documents, such as our compensation recovery policy, stock ownership guidelines, and committee charters, on our website at www.firsthorizon.com (click on “Investor Relations,” then “Corporate Governance,” and then “Governance Documents”). Paper copies are also available to shareholders upon request to the Corporate Secretary.
Corporate Governance Guidelines.The Guidelines provide our directors with guidance as to their legal accountabilities, promote the functioning of the Board and its committees, and set forth a common set of expectations as to how the Board should perform its functions. Code of Business Conduct and Ethics.This code sets forth the overarching principles that guide the conduct of every aspect of our business. Any waiver of the Code of Business Conduct and Ethics for an executive officer or director must be promptly disclosed to shareholders in any manner that is acceptable under the NYSE listing standards, including but not limited to distribution of a press release, disclosure on our website, or disclosure on Form 8-K. Code of Ethics for Senior Financial Officers. This code promotes honest and ethical conduct, proper disclosure of financial information and compliance with applicable governmental laws, rules and regulations by our senior financial officers and other employees who have financial responsibilities. We intend to satisfy our disclosure obligations under Item 5.05 of Form 8-K related to amendments or waivers of the Code of Ethics for Senior Financial Officers by posting such information on our website.
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We have also adopted a Compliance and Ethics Program Policy, which highlights our commitment to having an effective compliance and ethics program by exercising due diligence to prevent and detect criminal conduct and otherwise by promoting an organizational culture that encourages ethical conduct and a commitment to compliance with the law.
First Horizon has a policy that prohibits all “pre-clearance persons” from engaging in any activity that hedges an economic interest in First Horizon or Bank stock, unless approved by the CEO or General Counsel, or a designee, in accordance with the policy. To date, no such approval has been granted. For this purpose, a hedge includes any transaction, position, or financial instrument which offsets or ameliorates any decrease in the market value of First Horizon or Bank stock beneficially owned by the pre-clearance person, including any shares owned directly or indirectly as well as any unvested, deferred, or otherwise restricted stock-based awards. “Pre-clearance persons” consist of all executive officers, all First Horizon and Bank directors, all members of the
CEO’s executive management committee, and certain additional employees.
When a person first becomes a pre-clearance person, the person is required to inform the General Counsel of all derivative and short holdings, including any position that would constitute a hedge, which would violate the policy or the procedures if undertaken while the person has pre-clearance person status. Each pre-clearance person further is required to pre-clear any change in his or her derivative and short holdings from time to time other than a change caused by expiration due solely to the passage of time.
Our Board has adopted a director resignation policy that requires a director who does not receive the affirmative vote of a majority of the votes cast with respect to his or her election to tender his or her resignation. Under the policy, the Nominating & Corporate Governance Committee must promptly consider the resignation tender and a range of
possible responses and make a recommendation to the Board. The Board will act on the Nominating & Corporate Governance Committee’s recommendation within 90 days following certification of the shareholder vote. Thereafter, the Board will promptly disclose its decision regarding whether to accept the director’s resignation tender,
| 2020 PROXY STATEMENT | 12 |
| CORPORATE GOVERNANCE & BOARD MATTERS |
including an explanation of the decision (or the reason(s) for rejecting the resignation offer, if applicable), in a Form 8-K (or other appropriate report) filed with or furnished to the Securities and Exchange Commission. If any director’s tender of resignation under the policy is not accepted by the Board, such director will serve until the next annual meeting of shareholders and until his or her successor has been duly elected and qualified. Any director who tenders his or her resignation pursuant to the director resignation policy shall not participate in the Nominating & Corporate Governance Committee recommendation or Board action regarding whether to accept the tender of resignation. If a majority of the members of the Nominating & Corporate Governance Committee
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CORPORATE GOVERNANCE & BOARD MATTERS
did not receive the affirmative vote of a majority of
the votes cast at the same election, then all the directors who are “independent” under the listing standards of the New York Stock Exchange and who received the affirmative vote of a majority of the votes cast shall appoint a committee amongst themselves to consider the resignation tenders and recommend to the Board whether to accept them.
This committee may, but need not, consist of all of the independent directors who received the affirmative vote of a majority of the votes cast. The director resignation policy is contained in our Corporate Governance Guidelines, which are available on our website at www.firsthorizon.com (click on “Investor Relations,” then “Corporate Governance,” and then “Governance Documents”).
First Horizon made several enhancements to its environmental, social and governance practices between late 2018 and early 2020. These are outlined below.
Adoption of human rights statement and social issues statements (2020).First Horizon’s human rights statement reflects our respect for individual human rights and commitment to operate our company in an environment where everyone is treated with dignity. Our other social issues statements address other areas of shareholder and stakeholder concern, including diversity and inclusion and data privacy and cybersecurity.
Adoption of code of conduct for suppliers (2020).This code establishes the business conduct expectations for the company’s suppliers (i.e., third parties that provide goods or services to First Horizon). First Horizon expects its suppliers to comply with applicable laws and regulations and act ethically in all matters related to doing business with the company.
Adoption of proxy access (2019).Our proxy access bylaw allows a shareholder or group of up to 20 shareholders that has held at least 3% of our common stock for at least three years to nominate up to the greater of two directors or 20% of the Board and have those nominees appear in our proxy statement, subject to notice and other specific requirements in our Bylaws.
Enhanced commitment to corporate social responsibility (2018).Our inaugural Corporate Social Responsibility (CSR) report,Here for Good, which highlights the company’s impact on and outlines its commitment to its communities, employees, and customers, was published in late 2018; an updated report is expected to be published in first quarter 2020. The report is available on our website and details First Horizon’s initiatives focused on promoting social and environmental responsibility, building stronger communities, and practicing sound corporate governance. We also established an internal Corporate Social Responsibility Committee, which reviews, directs and guides the company’s environmental, social and governance efforts. The CSR committee provides the CEO, Board of Directors and Executive Management Committee with periodic reports on CSR activities and ESG initiatives. This committee is composed of senior leaders appointed by the CEO and led by the Chief Communications Officer.
Update to individual director evaluation process (2019).Our individual director evaluation process was updated in 2019 to provide that at least every three years, in lieu of the regular evaluation of the directors conducted by the Nominating & Corporate Governance Committee, the company will engage a third party to conduct individual director assessments and to provide advice and reports on how individual directors and the Board can improve.
| 2020 PROXY STATEMENT | 13 |
| CORPORATE GOVERNANCE & BOARD MATTERS |
Independence & Categorical Standards
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Independence
Our common stock is listed on the New York Stock Exchange. The NYSE listing standards require a majority of our directors and all of the members of the Compensation Committee, the Nominating & Corporate Governance Committee and the Audit Committee of the Board of Directors to be independent as defined in the listing standards. Under these standards, our Board of Directors is required to determine affirmatively that a director has no material relationship with the company for that director to qualify as independent. In order to assist in making independence determinations, the Board, upon the recommendation of the Nominating & Corporate Governance Committee, has adopted the categorical standards set forth below. In making its independence determinations, each of the Board and the Nominating & Corporate Governance Committee considered the relationships between each director and the company, including those that fall within the categorical standards. In addition, the NYSE listing standards require that the Board specifically consider certain factors in determining the independence of any director who will serve on the Compensation Committee. These factors are described under the heading “The Compensation Committee—In General” below in this proxy statement. Our Board specifically considered such factors in making the
independence determinations for all of our directors, including those who serve on the Compensation Committee.
Based on its review and the application of the categorical standards, the Board, upon the recommendation of the Nominating & Corporate Governance Committee, determined that all tentwelve of our current non-employee directors (Messrs. Burdick, Compton, Emkes, Foss, Gilchrist, Niswonger, Reed, Subramaniam and Yancy and Mmes.Mses. Davidson, Palmer and Stewart) are independent under the NYSE listing standards and that R. Brad Martin, who served on our Board until December 2017, was independent under the NYSE listing standards during the time he served as a director.standards. The Nominating & Corporate Governance Committee and the Board determined that all transactions and relationships with each director identified above as independent fell within our categorical standards. Neither Mr. Jordan, as our Chief Executive Officer, nor Mr. Taylor, aswho was employed by First Horizon until November 2019 pursuant to an employment agreement entered into in connection with our Vice Chairman,merger with Capital Bank Financial Corp., is independent.
The categorical standards established by the Board, which were last revised in 2010, are set forth below and are also available on our website at www.firsthorizon.com (click on “Investor Relations,” then “Corporate Governance,” and then “Governance Documents”).
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Director Transactions by Category or Type
With respect to each director who is identified above as independent under the NYSE listing standards, the Board considered the following types or categories of transactions, relationships or arrangements in determining the director’s independence under the NYSE standards and our categorical standards.
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| Provision by the company, in the ordinary course of business and on substantially the same terms and conditions as those prevailing at the time for comparable transactions with non-affiliated persons, of the following banking and financial services and services incidental thereto to directors, their immediate family members and/or to entities with which directors or their immediate family members are affiliated: deposit accounts (all independent directors except |
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CORPORATE GOVERNANCE & BOARD MATTERS
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| Ÿ | Provision by an entity affiliated with a director or his or her immediate family member, in the ordinary course of business and on substantially the same terms and conditions as those prevailing at the time for comparable transactions with non-affiliated persons, of the following products and services to the company: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2020 PROXY STATEMENT | 14 |
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| package delivery and print services (Mr. Subramaniam); hotel lodging for business travel by employees of the company (Messrs. Niswonger and Reed); venues for business development and for holding seminars and other corporate functions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Ÿ | Sale to an entity affiliated with a director of real property in the ordinary course of business and on non-preferential terms, in a transaction whose dollar amount was well below the threshold to be | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| considered a related party transaction as defined in our procedures. (Mr. Niswonger). | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ÿ | Charitable contributions by the company or the First Horizon Foundation to charitable organizations with which a director or immediate family member is affiliated | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Ÿ | Employment by the company in a non-executive position of an immediate family member of a director (Mr. Yancy). | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Categorical Standards
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Each of the following relationships between the Corporation (as defined below) and its subsidiaries, on the one hand, and a director, an immediate family member of a director, or a company or other entity as to which the director or an immediate family member is a director, executive officer, employee or shareholder (or holds a similar position), on the other hand, will be deemed to be immaterial and therefore will not preclude a determination by the Board of Directors that the director is independent for purposes of the NYSE listing standards:
| 1. |
| Depository and other banking and financial services relationships (excluding extensions of credit which are covered in paragraph 2), including transfer agent, registrar, indenture trustee, other trust and fiduciary services, personal banking, capital markets, investment banking, equity research, asset management, investment management, custodian, securities brokerage, financial planning, cash management, insurance brokerage, broker/dealer, express processing, merchant processing, bill payment processing, check clearing, credit card and other similar services, provided that the relationship is in the ordinary course of business and on substantially the same terms and conditions as those prevailing at the time for comparable transactions with non-affiliated persons. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2. | An extension of credit, provided that, at the time of the initial approval of the extension of credit as to (1), (2) and (3), (1) such extension of credit was in the ordinary course of business, (2) such extension of credit was made in compliance with applicable law, including Regulation O of the Federal Reserve, Section 23A and 23B of the Federal Reserve Act and Section 13(k) of the Securities and Exchange Act of 1934, (3) such extension of credit was on substantially the same terms as those prevailing at the time for comparable transactions with non-affiliated persons, and (4) the extension of credit has not been placed on non-accrual status. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3. |
| Contributions (other than mandatory matching contributions) made by the Corporation or any of its subsidiaries or First Horizon Foundation to a charitable organization as to which the director is an executive officer, director, or trustee or holds a similar position or as to which an immediate family member of the director is an executive officer; provided that the amount of the contributions to the charitable organization in a fiscal year does not exceed the greater of $500,000 or 2% of the charitable organization’s consolidated gross revenue (based on the charitable organization’s latest available income statement). | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 4. | Vendor or other business relationships (excluding banking and financial services relationships and extensions of credit covered by paragraph 1 or 2 above), provided that the relationship is in the ordinary course of business and on substantially the same terms and conditions as those prevailing at the time for comparable transactions with non-affiliated persons. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| 5. | All compensation and benefits provided to non-employee directors for service as a director. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 6. | All compensation and benefits provided in the ordinary course of business to an immediate family member of a director for services to the Corporation or any of its subsidiaries as long as such immediate family member is compensated comparably to similarly situated | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2020 PROXY STATEMENT | 15 |
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employees and is not an executive officer of the Corporation or based on salary and bonus within the top 1,000 most highly compensated employees of the Corporation.
Excluded from relationships considered by the Board is any relationship (except contributions included in category 3) between the Corporation and its subsidiaries, on the one hand, and a company or other entity as to which the director or an immediate family member is a director or, in the case of an immediate family member, an employee (but not an executive officer or significant shareholder), on the other hand.
The fact that a particular relationship or transaction is not addressed by these standards or exceeds the thresholds in these standards does not create a presumption that the director is or is not independent.
The following definitions apply to the categorical standards listed above:
“Corporation” means First Horizon National Corporation and its consolidated subsidiaries.
“Executive Officer” means an entity’s president, principal financial officer, principal accounting officer (or, if there is no such accounting officer, the controller), any vice president of the entity in charge of a principal business unit, division or function, any other officer who performs a policy-making function, or any other person who performs similar policy-making functions for the entity.
“Immediate family members” of a director means the director’s spouse, parents, children, siblings, mother-in-law, father-in-law, sons-in-law, daughters-in-law, brothers-in-law, sisters-in-law and anyone (other than domestic employees) who shares the director’s home.
“Significant shareholder” means a passive investor [meaning a person who is not in control of the entity] who beneficially owns more than 10% of the outstanding equity, partnership or membership interests of an entity. “Beneficial ownership” will be determined in accordance with Rule 13d-3 of the Securities Exchange Act of 1934.
Board Leadership Structure & Role in Risk Oversight
Leadership Structure
| Evolution of Leadership Structure |
Leadership Structure
First Horizon’s Board leadership structure has evolved significantly over the years. Prior to 2007, the Chairman of the Board and Chief Executive Officer roles were held by the same individual (except for two transition periods relating to CEO succession). In 2007, the Board made certain governance changes in order to facilitate the implementation of strategic changes it was then initiating, including the appointment of a new CEO and of a separate individual as the Chairman of the Board. Under the Bylaws, the position of Chairman of the Board was at that time an executive officer position, but in 2009, the Board adopted amendments to the Bylaws that made the position of Chairman of the Board a non-officer position. In 2012, the Board elected Mr. Jordan, our President and CEO, as Chairman of the Board as well.
| Current Leadership Structure |
Under First Horizon’s current Bylaws, the Chairman of the Board presides at all meetings of
the shareholders and of the Board (except, with respect to meetings of the Board, as the Board may otherwise determine) and has the powers and performs the duties as are normally incident to the position and as may be assigned by the Board. The Chief Executive Officer is responsible for carrying out the orders of and the resolutions and policies adopted by the Board, has general management of the business of the company and exercises general supervision over all of its affairs.
Mr. Reed, who is independent under the listing standards of the NYSE, is currently serving as Lead Director for the Board. The Lead Director’s responsibilities include, among other things, supporting the Chairman of the Board in developing (in conjunction with the Corporate Secretary) the agenda for each Board meeting and in defining the scope, quality, quantity and timeliness of the flow of information between management and the Board; presiding (or, if he cannot be in attendance, designating another independent director to preside) at executive sessions of the Board; taking any actions he deems necessary or appropriate in connection with
| 2020 PROXY STATEMENT | 16 |
| CORPORATE GOVERNANCE & BOARD MATTERS |
the Board and committee self-evaluation process
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(including (including contacting each director individually to obtain additional input on Board and committee effectiveness, if he deems appropriate); receiving reports from directors who have concerns about another director’s performance pursuant to our process for individual director performance evaluations; and receiving communications from shareholders pursuant to our process for communications with the Board.
We believe that our current board leadership structure, with a combined CEO and Chairman position and with a separate Lead Director who is independent under the NYSE listing standards and has the principal duties specified in the Corporate Governance Guidelines, is most appropriate for our company at this time. We believe that combining the roles of CEO and Chairman facilitates our prudent management of the company. Holding both roles best positions Mr. Jordan as CEO and Chairman to be aware of major issues facing the company on a day-to-day and long-term basis and to identify key risks and developments facing the company that should be brought to the Board’s attention. The combined role also provides a single point of leadership for the company so that the company maintains a unified message and strategic direction.
The combined CEO/Chairman position is counterbalanced by our strong Lead Director position, currently held by Mr. Reed, who is also chair of the Executive & Risk Committee of the Board. The Lead Director, who has the responsibilities described above, provides an independent voice on issues facing the company and ensures that key issues are brought to the Board’s attention. The Board and its committees also regularly hold executive sessions with no members of management present, thereby providing an opportunity for the independent directors to discuss their views freely; the executive sessions of the Board are generally presided over by the Lead Director (or his designee, if he cannot attend). All four regular meetings of the Board in 20172019 concluded with such an executive session. The Board itself has a high degree of independence, with all ten12 of the non-employee14 directors qualifying as independent under the NYSE listing standards. In addition, the Board values the fresh perspectives brought by new directors: over the past six years, we have added five new directors to our Board.
We recognize that different board leadership structures may be appropriate for First Horizon at different times and in different situations. As part of our Board self-evaluation process, the Board annually evaluates the company’s leadership structure to ensure that it providesremains the most appropriate structure.one for the company. As stated in our Corporate Governance Guidelines, the Board is free to select its Chairman and First Horizon’s Chief Executive Officer in the manner it considers in the best interests of the company at any given point in time. The Board has separated the roles of Chairman and CEO in the past and will consider doing so in the future should circumstances arise that make such separation appropriate.
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In the fourth quarter of 2019 we announced a merger of equals transaction with IBERIABANK Corporation (“IBKC”). If the proposed merger is consummated, the merger agreement provides that Mr. Jordan will continue to serve as President and Chief Executive Officer of the combined company and the combined bank, and Daryl G. Byrd, current President and Chief Executive Officer of IBKC, will become the Executive Chairman of the Boards of Directors of the combined company and the combined bank until the second anniversary of the closing date (or any such earlier date as of which Mr. Byrd ceases for any reason to serve in the position of Executive Chairman). At that time Mr. Jordan will succeed Mr. Byrd as the Chairman of the Boards of Directors of the combined company and the combined bank. The merger agreement also provides that until Mr. Jordan succeeds Mr. Byrd as Chairman of the Board of Directors of the combined company and the combined bank, the Lead Director of the Boards of Directors of the combined company and the combined bank will be an independent director chosen by the continuing First Horizon directors from among the continuing First Horizon directors. Following the date on which Mr. Jordan succeeds Mr. Byrd as Chairman and until the third (3rd) anniversary of the closing date, the Lead Director will be an independent director chosen by the majority of the continuing IBKC directors from among the continuing IBKC directors, and thereafter will serve in that capacity until replaced by a majority vote of the entire Board of Directors of the combined company.
| 2020 PROXY STATEMENT | 17 |
| CORPORATE GOVERNANCE & BOARD MATTERS |
Board Role in Risk Oversight
As stated in our Corporate Governance Guidelines, oversight of risk management is central to the role of the Board. Our risk management processes are reflected in a Board policy on risk management governance and in a Board statement of strategic objectives and risk appetite. The policy delegates primary responsibility for enterprise risk management oversight to the Executive & Risk Committee. The role of that Committee, as well as that of the Audit, Compensation, Information Technology and Trust Committees, is outlined below. Each of these committees and the full Board receive regular reports from management regarding the company’s risks, and each committee reports regularly to the full Board concerning risk.
Executive & Risk Committee.
| Executive & Risk Committee |
The Executive & Risk Committee’s charter authorizes and directs the Committee to assist the Board in its oversight of (i) the establishment and operation of our enterprise risk management framework, including policies and procedures establishing risk management governance, risk management procedures, risk control infrastructure, and processes and systems for implementing and monitoring compliance with the framework with respect to the management of credit, market, operational, liquidity, interest rate sensitivity, capital and equity investment risks, including emerging risks, (ii) the adoption, implementation and periodic review of significant risk management and compliance policies and (iii) our risk appetite statement. In fulfilling its risk responsibilities, the Board delegated the following duties to the Committee: to review periodically and recommend to the Board the risk appetite parameters to be employed by management in operating the company; to receive information on our business practices, policies and procedures related to the risks listed above; to monitor results to ensure alignment with First Horizon’s risk appetite; to review periodic risk and compliance reports from the Chief Risk Officer and the Chief Credit Officer,
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CORPORATE GOVERNANCE & BOARD MATTERS
including reports on major risk exposures and steps taken to monitor, mitigate and control such exposures; to review periodically with management regulatory correspondence and actions; to review and approve First Horizon’s stress testing program and results; and to establish (or recommend to the Board the establishment of) risk management and compliance policies and periodically review such policies, as appropriate. The Committee’s charter specifically states that the Committee may meet separately in executive session with the Chief Risk
Officer as often as the Committee deems necessary or appropriate.
In connection with its credit risk responsibilities, the Committee oversees First Horizon’s independent Credit Assurance Services department. The Committee charter requires the Committee to advise the Chief Audit Executive (who has responsibility for the Credit Assurance Services department) that he or she is expected to provide the Committee summaries of and, as appropriate, significant reports to management prepared by the Credit Assurance Services department and management’s responses thereto; to approve the department’s Annual Review Plan and schedule of activities; to meet quarterly with the Chief Audit Executive in separate executive session to discuss any matters that the Committee or the Chief Audit Executive believes should be discussed privately; and to review the Annual Credit Assurance Services department Statement of Independence.
Under
Federal Reserve regulations previously required the company mustto have a risk committee that is chaired by a director who is independent as defined in thosethe regulations and that has at least one member with “experience in identifying, assessing and managing risk exposures of large, complex firms.” The regulations were recently amended and no longer require the company to have a risk committee meeting the requirements outlined above. Nevertheless, the company intends to continue voluntarily to comply with these requirements as a matter of prudent risk management, and the Executive & Risk Committee currently meets thosethese requirements. If the proposed merger with IBKC is consummated, we expect that these requirements, as well as others impacting the company’s risk management, will be applicable to the company once again, and serves as the company’s risk committee for purposes of the Federal Reserve regulations.management structure will change accordingly.
Audit Committee.
| Audit Committee |
Other Board committees play a role in First Horizon’s risk management processes as well. In accordance with the NYSE listing standards and its charter, the Audit Committee receives reports from the Chief Audit Executive regarding risk governance, risk assessment and risk management, the adequacy of the company’s policies and compliance with legal and regulatory requirements. Pursuant to its charter, the Audit Committee also reviews employee complaints or material reports or inquiries received from
| 2020 PROXY STATEMENT | 18 |
| CORPORATE GOVERNANCE & BOARD MATTERS |
regulators or government agencies and management’s responses; meets periodically with the company’s Chief Risk Officer to discuss any risk and compliance matters that may have a material effect on the company’s financial statements or internal controls; discusses any significant compliance issues raised in reports or inquiries received from regulators or government agencies; reviews periodic reports regarding the Compliance and Ethics Program on the effectiveness of that program; and discusses with the General Counsel pending and threatened claims that may have a material impact on the financial statements. The Bank’s Trust Audit Committee (whose members are the same as those of the Audit Committee) carries out a risk oversight role with respect to the fiduciary activities of the Bank. The Committee is charged with ensuring that suitable audits (by internal or external auditors) of all significant Bank fiduciary activities are made either annually or on a continuous basis for the purpose of ascertaining whether the Trust Division is being administered in accordance with applicable law, regulation and sound fiduciary principles.
Compensation Committee.
| Compensation Committee |
The Compensation Committee is chiefly responsible for compensation-related risks. The charter of the Committee requires the Committee to oversee our compliance with all applicable laws and regulations
relating to (i) appropriate management of the risks associated with incentive compensation programs or arrangements or (ii) public, regulatory, or other reporting associated with such risks, programs or arrangements. Additional information about the Committee’s role in risk management is included under the heading “The Compensation Committee—Compensation Risk” on page 20.26.
Information Technology Committee.
| Trust Committee |
Trust Committee.The Trust Committee, which is a committee of the Bank’s Board, is responsible for overseeing the fiduciary activities of the Bank, including risks arising in connection with such activities. The Trust Committee receives reports from management of the Trust Division and any other units operating pursuant to the fiduciary powers of the Bank regarding fiduciary account records and the investment and distribution of fiduciary account funds.
| 2020 PROXY STATEMENT | 19 |
| CORPORATE GOVERNANCE & BOARD MATTERS |
14
The Board has five standing committees: the Audit Committee, the Compensation Committee, the Executive & Risk Committee, the Information Technology Committee and the Nominating & Corporate Governance Committee. The charter of each of these committees is currently available on our website at www.firsthorizon.com (click on “Investor Relations,” then “Corporate Governance,” and then “Governance Documents”). Paper copies are available to shareholders upon request to the Corporate Secretary. The Audit Committee, the Compensation Committee, and the Nominating & Corporate Governance Committee are each
composed of directors who are independent, as defined above under the heading “Independence & Categorical Standards” beginning on page 10.14. The chair of the Executive & Risk Committee is also independent, as defined by the Federal Reserve regulations that govern risk committees. The current membership of each of the Board’s standing committees is set forth in the table below. Membership and chairmanship continued during the entire period from January 1, 20172019 until the filing of this proxy statement unless otherwise indicated in the notes following the table.
2019 Committees of the Board
Audit Committee | Compensation | Executive & Risk | Information Technology Committee | Nominating & Corporate Governance Committee | ||||
| Mr. Burdick(1) Ms. Davidson(1) Mr. Emkes (chair) Mr. Foss(2) Ms. Stewart Mr. Yancy | Mr. Burdick(1) Mr. Compton Mr. Emkes Ms. Palmer (chair) Mr. Reed Mr. Subramaniam(1) | Mr. Compton Mr. Gilchrist Mr. Jordan Mr. Niswonger(2) Ms. Palmer Mr. Reed (chair) Mr. Taylor | Ms. Davidson(1) Mr. Emkes Mr. Gilchrist Ms. Stewart (chair) Mr. Subramaniam | Mr. Compton (chair) Mr. Foss(2) Mr. Gilchrist Mr. Niswonger(2) Mr. Subramaniam | ||||
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| (2) | Messrs. Foss and Niswonger will not be standing for reelection at the April 2020 annual meeting but will be retiring at that time. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mr. Yancy also serves as chair of the Trust Committee, a standing committee of the Bank on which Ms. Stewart also serves and on which Mr. Niswonger will also serve. serve until his retirement at the April 2020 annual meeting.
Mr. Emkes iswas the chair of the Trust Audit Committee, a standing committee of the Bank on which all the other members of the Audit Committee listed above also serve. R. Brad Martin, who served, until January 28, 2020. As of that date, the Trust Audit Committee was dissolved. For additional details, please see “The Audit Committee” beginning on our Board of Directors until December 2017, waspage 21. Mr. Subramaniam served as a member of the CompensationAudit and Nominating & Corporate GovernanceTrust Audit Committees until his departure fromApril 23, 2019.
If the Board.proposed merger with IBKC is consummated, the merger agreement provides that, for a period of three years following completion of the merger, each committee of the board of the combined company and of the combined bank will, to the fullest extent practicable, have at least five members, and each such committee will have one more continuing First Horizon director than continuing IBKC director. The merger agreement also contains provisions concerning the chairs of the Compensation Committee and the Executive & Risk Committee of the combined company and combined bank.
| 2020 PROXY STATEMENT | 20 |
| CORPORATE GOVERNANCE & BOARD MATTERS |
OverviewThe Audit Committee
| Overview |
The Audit Committee was established by our Board of Directors and operates under a written charter that was last amended in 20172019 to updatereflect the change in the Bank’s name and conversion from a referencenational bank to an auditing standard and clarify the Committee’s duties with respect to oversight of the Internal Audit Department. The charter is attached to this proxy statement at Appendix A.a Tennessee state chartered bank. In 2017,2019, the Committee met eightseven times and took action by written consent once for the principal purpose of executing its responsibilities under the Committee’s charter. FiveTwo of those meetings concluded with an executive session during which management was not present.
Subject to the limitations and provisions of its charter, the Committee assists our Board in its oversight of our accounting and financial reporting principles and policies, internal controls and procedures, the integrity of our financial statements, our compliance with legal and regulatory requirements, the independent auditor’s qualifications and independence, and the performance of the independent auditor and our internal audit function. The Committee is directly responsible for the appointment (subject, if applicable, to shareholder ratification), retention, compensation and termination of the independent auditor as well as for overseeing the work of and
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evaluating the independent auditor and its independence. The members of the Committee are themselves independent, as that term is defined in the NYSE listing standards (described above), and meet the additional independence requirements prescribed by Section 10A(m)(3) of the Securities Exchange Act of 1934, as amended, and the rules of the SEC promulgated thereunder. In addition, the Board of Directors has determined that all the members of the Committee are financially literate as required by the NYSE listing standards. The Audit Committee’s Report is included below.
In accordance with regulations of the Office of the Comptroller of the Currency requiring national banks to have a separate fiduciary audit committee, the Bank formerly had a Trust Audit Committee Financial Expert(whose members were the same as those of the Audit Committee), which carried out a risk oversight role with respect to the fiduciary activities of the Bank. Since the Bank is no longer a national bank, it is no longer subject to this requirement, so the Trust Audit Committee was dissolved in January 2020. The Internal Audit Department continues to conduct fiduciary audit activities as appropriate in the usual course of its
audit work, and the Audit Committee oversees those activities.
| Audit Committee Financial Experts |
Mr. Burdick.The Board of Directors has determined that Kenneth A. Burdick (member of the Audit Committee) is an audit committee financial expert, as that term is defined in Item 407(d)(5) of SEC Regulation S-K. Mr. Burdick received his Bachelor of Arts in American Studies from Amherst College and law degree from the University of Connecticut School of Law. Over the course of his 40 year career in healthcare, Mr. Burdick served in various positions with Cigna, UnitedHeathcare and Blue Cross and Blue Shield of Minnesota, culminating in his service as Chief Executive Officer and a director of WellCare Health Plans, Inc. (“WellCare”) from 2015 until January 23, 2020. On that date, Centene Corporation (“Centene”) acquired WellCare, and Mr. Burdick became Centene’s Executive Vice President of Products and Markets. Centene, a Fortune 100 company with approximately $74.6 billion in total revenue and managed care membership of approximately 15.2 million in 2019, is a diversified, multi-national healthcare enterprise that provides a portfolio of services to government sponsored and commercial healthcare programs. In 2019, WellCare had approximately $20.4 billion in total revenue and about 5.5 million members nationwide and was among the largest managed care organizations providing Medicaid managed care services plans, MA Plans and PDPs, as measured by membership. As CEO of WellCare, Mr. Burdick was responsible for the financial statements of the company. He actively supervised the company’s chief financial officer, who reported directly to him, regularly reviewing the company’s results in detail and discussing with the CFO issues relating to its financial statements, including issues relating to its estimates, accruals and reserves. He was an active member of WellCare’s Risk Management group, whose oversight responsibilities include accounting risks. He met quarterly with Deloitte to discuss financial statement and accounting matters and annually signed a certificate for WellCare in connection with the certification process for the Sarbanes-Oxley Act and a management representation letter for Deloitte in connection with Deloitte’s audit of the financial results of WellCare (the financial statements of which were audited in accordance with generally accepted accounting principles). Mr. Burdick has served on First Horizon’s Audit Committee since 2019.
| 2020 PROXY STATEMENT | 21 |
| CORPORATE GOVERNANCE & BOARD MATTERS |
Mr. Emkes.The Board of Directors has determined that Mark A. Emkes (chair of the Audit Committee) is an audit committee financial expert, as that term is defined in Item 407(d)(5) of SEC Regulation S-K. Mr. Emkes received his Bachelor of Arts in Economics from DePauw University and his Masters of Business Administration in International Management from the Thunderbird School of Global Management. Over the course of his career, Mr. Emkes served in various positions with Tokyo-based Bridgestone Corporation, including as President and Managing Director of Bridgestone Firestone Mexico and of Bridgestone Firestone Brazil, President of Bridgestone Latin America, and Chairman and CEO of Bridgestone North America.
In each of these positions, he actively supervised the divisional chief financial officer, who reported directly to him, and he reviewed financial results regularly. His service with Bridgestone culminated in his position as Chairman, Chief Executive Officer and President of Bridgestone Americas, Inc., a company with approximately $12 billion in annual revenue, and as a director of its parent company, Bridgestone Corporation. As CEO of Bridgestone Americas, Inc., Mr. Emkes was responsible for the financial statements of the subsidiary, and he actively supervised the CFO, regularly reviewing results in detail and discussing with the CFO issues relating to the subsidiary’s financial statements, including issues relating to its estimates, accruals and reserves. He annually signed a certificate for Bridgestone Corporation in connection with the certification process for Japan’s version of the Sarbanes-Oxley Act and a management representation letter in connection with the audit of the financial results of Bridgestone Corporation (the financial statements of which were audited in accordance with generally accepted accounting principles). For part of Mr. Emkes’s tenure at Bridgestone Americas, the internal audit division reported to him. Most recently, Mr. Emkes served as the Commissioner of the Department of Finance and Administration of the State of Tennessee, a position he retired from in May 2013. Mr. Emkes has served on First Horizon’s Audit Committee since 2008.
Independence of Audit Committee Financial Expert. Mr.
Messrs. Burdick and Emkes meetsmeet in all respects the independence requirements of the NYSE and Section 10A(m)(3) of the Securities Exchange Act of 1934, as amended, and the rules of the SEC promulgated thereunder.
Notwithstanding anything to the contrary set forth in any of our previous filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, that might
incorporate future filings by reference, including this proxy statement, in whole or in part, the following Audit Committee Report and the statements regarding members of the Committee who are not independent (if any) shall not be incorporated by reference into any such filings.
| Audit Committee Report |
The roles of the Audit Committee (“Committee”) are (1) to assist First Horizon’s Board of Directors in its oversight of (a) the company’s accounting and financial reporting principles and policies and internal controls and procedures, (b) the integrity of its financial statements, (c) its compliance with legal and regulatory requirements, (d) the independent auditor’s qualifications and independence, and (e) the performance of the independent auditor and internal audit function; and (2) to prepare this report to be included in First Horizon’s annual proxy statement pursuant to the proxy rules of the SEC. The Committee operates pursuant to a charter that was last amended and restated by the Board in 2017.2019. As set forth in the Committee’s charter, management of First Horizon is responsible for preparation, presentation and integrity of the company’s financial statements and for maintaining appropriate accounting and financial reporting principles and policies and internal controls and procedures to provide for compliance with accounting standards and applicable laws and regulations, and the internal auditor is responsible for testing such internal controls and procedures. The independent auditor is responsible for planning and carrying out audits of First Horizon’s annual financial statements and effectiveness of internal control over financial reporting, reviews of First Horizon’s quarterly financial statements prior to the filing of each quarterly report on Form 10-Q and certain other procedures.
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In the performance of its oversight function, the Committee has considered and discussed the audited financial statements with management and the independent auditors. The Committee has discussed with the Chief Executive Officer and Chief Financial Officer their respective certifications that were included in First Horizon’s Annual Report on Form 10-K for the year ended December 31, 2017.2019. The Committee has also discussed with the independent auditors the matters required to be discussed by Auditing Standard No. 1301,Communications with Audit Committees,issued by the Public Company Accounting Oversight Board (formerly the Statement on Auditing Standards No. 61, as amended (AICPA,Professional Standards, Vol. 1. AU Section 380), as adopted by the Public Company Accounting Oversight Board in
| 2020 PROXY STATEMENT | 22 |
| CORPORATE GOVERNANCE & BOARD MATTERS |
Rule 3200T). Finally, the Committee has received the written disclosures and the letter from the independent auditors required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the audit committee concerning independence, has adopted an audit and non-audit services pre-approval policy and considered whether the provision of non-audit services by the independent auditors to First Horizon is compatible with maintaining the auditor’s independence and has discussed with the auditors the auditors’ independence. At each of its regular quarterly meetings, the Committee is scheduled to meet, in separate executive sessions with no members of management present, with both the independent auditors and the internal auditor to discuss any matters that the Committee in its discretion deems appropriate.
While the Board of Directors has determined that each member of the Audit Committee has the broad level of general financial experience required to serve on the Committee and that Mr.Messrs. Burdick and Emkes is anare audit committee financial expertexperts as that term is defined in Item 407(d)(5) of Regulation S-K, none of the members of the Committee currently devotes specific attention to the narrower fields of auditing or accounting or is professionally engaged in the practice of auditing or accounting, nor are they performing the functions of auditors or accountants, nor are they experts in respect of auditor independence. Members of the Committee rely without independent verification on the information provided to them and on the representations made by management and the independent auditors.
Accordingly, the Committee’s oversight does not provide an independent basis to determine that management has maintained appropriate accounting and financial reporting principles or appropriate internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations. Furthermore, the Committee’s considerations and discussions referred to above do not assure that the audit of First Horizon’s financial statements has been carried out in accordance with generally accepted auditing standards, that the financial statements are presented in accordance with generally accepted accounting principles or that First Horizon’s auditors are in fact “independent.”
Based upon the reports and discussions described in this report, and subject to the limitations on the role and responsibilities of the Committee referred to above and in the Committee’s charter, the Committee recommended to the Board of Directors that the audited financial statements be included in our Annual Report on Form 10-K for the year ended December 31, 20172019 filed with the SEC.
Submitted by the Audit Committee of our Board of Directors.
Audit Committee
Mark A. Emkes, ChairJohn C. Compton
Kenneth A. Burdick
Wendy P. Davidson
Peter N. FossCorydon J. Gilchrist
Cecelia D. StewartRajesh Subramaniam
Luke Yancy III
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| CORPORATE GOVERNANCE & BOARD MATTERS |
CORPORATE GOVERNANCE & BOARD MATTERS
The Compensation Committee operates under a written charter that was last amended and restated by the Board of Directors in 2014.
| In General |
The purposes of the Compensation Committee are (1) to discharge the Board’s responsibilities relating to the compensation of our executive officers and members of the CEO’s executive management committee, (2) to produce an annual report on executive compensation for inclusion in our proxy statement, in accordance with the rules and regulations of the SEC [the current report is set forth below], (3) to identify and recommend to the Board individuals for appointment as officers, (4) to evaluate our management, and (5) to carry out certain other duties as set forth in the Committee’s charter.
The Compensation Committee operates under a written charter that was last amended and restated by the Board of Directors in 2019 to reflect the change in the Bank’s name and conversion from a national bank to a Tennessee state chartered bank.
The members of the Committee are independent, as that term is defined in the NYSE listing standards (described above), and meet the additional independence requirements that specifically apply to Compensation Committee members as set forth in the listing standards (as prescribed by Section 10C of the Securities Exchange Act of 1934, as amended, and the rules of the SEC promulgated thereunder). In affirmatively determining the independence of all of the directors (other than Messrs. Jordan and Taylor), including those who serve on the Committee, the Board has considered all factors specifically relevant to determining whether any of those directors has a relationship to the company which is material to that director’s ability to be independent from management in connection with the duties of a Committee member, including, but not limited to, the source of compensation of such director, including any consulting, advisory or other compensatory fee paid by the company to such director, and whether such director is affiliated with First Horizon, a subsidiary of First Horizon, or an affiliate of a subsidiary of First Horizon.
Most of our executive compensation plans specify that they will be administered by a committee. The Committee’s charter provides that the Committee will administer plan-committee functions under our various executive-level compensation plans. Under the charter, at least two members of the Committee must be “outside directors” for
purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended, and at least two members of the Committee must be “non-employee directors” for purposes of Section 16 of the Securities Exchange Act of 1934. Many of our plans have similar provisions concerning their respective plan committees. The charter stipulates that if a Committee member is disqualified under one or the other of those tests, then that member must recuse him- or herself from participating in decisions impacted by the relevant test. In that situation, the remaining members would constitute the Committee for that action. On occasion, in connection with a specific action, a Committee member may feel that his or her qualification under one of those tests may be in doubt for some reason; in that case, the member may elect recusal to avoid any risk of possible disqualification.
Processes & Procedures Regarding Executive & Director Compensation
| Processes & Procedures Regarding Executive & Director Compensation |
The Committee’s Authority
The charter of the Compensation Committee provides that the Committee has the authority to review and approve corporate goals and objectives relevant to the compensation of the CEO, to evaluate the performance of the CEO in light of those goals and objectives, to set the CEO’s compensation level based on this evaluation, and to fix the compensation, including bonus and other compensation and any severance or similar termination payments, of executive officers.officers and members of the CEO’s executive management committee. The Committee also has the authority, pursuant to its charter, to make recommendations to the Board concerning the adoption or amendment of employee benefit plans, management compensation plans, incentive compensation plans and equity-based plans, including plans applicable to executive officers, and to make recommendations to the Board concerning director compensation. The charter also provides that the Committee will oversee the company’s compliance with all applicable laws, regulations and regulationslisting standards relating to (1) appropriate management of the risks associated with incentive compensation programs or arrangements, (2) the compensation of the company’s executive officers and (3) any reporting associated with either.either of the above or with the compensation of any other employees or directors. The Committee may not delegate any of the substantive authority described
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| CORPORATE GOVERNANCE & BOARD MATTERS |
in this paragraph related to executive and director compensation to any other persons. In 2017,2019, the Committee met fivefour times (and took action by written consent once) for the principal purpose of executing its responsibilities under the Committee’s charter; all fivefour of the meetings included an executive session during which management was not present.
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CORPORATE GOVERNANCE & BOARD MATTERS
Director Compensation
The Committee periodically conducts a review of our director compensation program. The last comprehensive review took place in 2017.2019. During each comprehensive review, the design and amount of director compensation is considered by management, and any changes are recommended to the Committee, either as a short list of alternatives or as single-item recommendations. In general, management uses a consultant in formulating many of its recommendations, both for advice in designing director compensation and as a source of peer-company data. (Additional information on the use of consultants in compensation matters is provided below.) Management also prepares various presentations, analyses, and other tools for the Committee to use in considering director compensation decisions. As a result of the most recent review process, several changes were made and took effect in April 2017.2019. A complete description of our current director compensation program can be found under the heading “Director Compensation” beginning on page 8087 of this proxy statement.
Executive Compensation
The Committee determines the CEO’s salary and bonus in executive session independent of management, generally on an annual basis. That determination is based on a review of the CEO’s personal plan results for the prior year, along with peer CEO salary data provided by management’s compensation consultant as well as input from the Committee’s independent compensation consultant. The CEO participates in establishing his personal plan, but otherwise is not involved in the determination of his own salary.
Our CEO recommends to the Committee salary levels for the executive officers other than himself.himself as well as for members of the CEO’s executive management committee. Other compensation matters (bonus, equity awards, etc.) involving executivesthese officers are reviewed by management, including the CEO, which then makes recommendations to the Committee, either as a short list of alternatives or as single-item recommendations. Management uses a consultant
in formulating certain of its recommendations, both for advice and as a source of peer-company data. Management also prepares various presentations, analyses, forecasts, and other tools for the Committee to use in considering compensation decisions during the year. The Committee’s independent consultant reviews all proposals and makes recommendations to the Committee.
Benefit Programs and Plans
Management monitors and considers benefit programs used by other companies, or needed within our company, to attract and retain key employees. Recommendations are presented by management to the Committee for review and discussion. The CEO ultimately oversees these management processes. New benefit plans, or significant amendments to existing plans, typically are considered by the full Board based on recommendations from the Committee. Enrollment and other administrative actions associated with the benefit plans are handled mainly through third party vendors in accordance with the terms in the Board-approved plans. If executive-level exceptions are required for administration of the plans, such as approval of an early retirement, management generally reviews the facts of the situation and provides a recommendation to the Committee for approval.
Use of Consultants
Management uses a national compensation consulting firm to provide advice with respect to executive and director compensation matters. Management also uses a number of other specialist firms to provide data relevant to specific needs such as funding for non-qualified deferred compensation and any special compensation arrangements that are unique to specific business units such as the capital markets industry. The consultants provide competitive data/trends, keep management informed of best practices and work with management to develop programs that permit the company to attract and retain the talent needed.
In 2017,2019, management continued its engagement of McLagan as its primary advisor for executive and director compensation matters. Among other things, management directed McLagan to provide objective advice to management, the Committee and the Board on executive and director compensation, to provide expertise in executive and director compensation design, market practices in our industry and data to support recommendations, and to ensure timely reports to management and the Committee on all critical
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| CORPORATE GOVERNANCE & BOARD MATTERS |
accounting, tax, securities law and market developments and trends relating to executive and director compensation. In addition, management engages nationally-recognized law firms as appropriate to provide advice on compliance with new laws, administration of stock plans, and compensation-related agreements and arrangements. Management also engages other advisers from time to time to provide expertise in executive and director compensation matters.
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CORPORATE GOVERNANCE & BOARD MATTERS
In 2017,2019, the Compensation Committee continued its engagement of Frederic W. Cook & Co., Inc. (“FW Cook”) to provide it with independent analysis and advice on executive compensation-related matters. Among other things, FW Cook assists the Committee in its reviews of compensation program actions recommended by management, reviewing the chosen peer group and survey data for competitive comparisons and advising the Committee on best practices and ideas for board governance of executive compensation. The Committee specifically directed FW Cook was specifically directed to undertake no work on behalf of management, and the firm has no other relationships with the company or management.
The NYSE listing standards require that all compensation consultants, legal counsel or other advisers to the Committee (which we collectively refer to as “advisers”) undergo an assessment of independence from management. The Committee must consider all factors relevant to each adviser’s independence from management, including the following:
| Ÿ |
| the provision of other services to the company by the person that employs the adviser; | |
| Ÿ |
| the amount of fees received from the company by the person that employs the adviser, as a percentage of the total revenue of the person that employs the adviser; | |
| Ÿ |
| the policies and procedures of the person that employs the adviser that are designed to prevent conflicts of interest; | |
| Ÿ |
| any business or personal relationship of the adviser with a member of the Committee; | |
| Ÿ |
| any stock of the company owned by the adviser; and | |
| Ÿ |
| any business or personal relationship of the adviser or the person employing the adviser with an executive officer of the |
The Committee has assessed the independence of FW Cook and all other advisers to the Committee as required by the NYSE listing standards, considering the factors described above, and has determined that FW Cook (and the individual adviser that FW Cook employs with respect to the engagement by the company) is independent of
management. The Committee has also considered the factors listed above for determining whether the work performed by FW Cook has raised any conflict of interest and has concluded that no such conflict of interest exists.
| Compensation Risk |
Management and the Committee seek to balance several competing corporate goals: to motivate employees to achieve key goals through appropriate risk-taking; to avoid incenting inappropriate risk-taking and reinforce risk management practices; to promote retention in the face of efforts by competitors to poachhire away our talent; and to comply with regulatory standards concerning compensation and risk management. At least once each year the Committee meets with management to review and assess risks associated with incentive and other compensation plans.
As part of the 20172019 review, management conducted a risk and culture assessment of the top three tiers of management. This “tone from the top” assessment evaluated leadership performance and behaviors against risk management expectations. The results of this assessment, which management judged to be satisfactory, were reported to the Committee in 2017.2020.
In 20172019 senior management measured achievement using risk-adjusted return on capital and economic profit. These performance measures adjust profit for risk and measure profit net of the cost of capital employed. This approach has been applied to individual business lines and products, among other things, and it discourages business activities which entail risk or capital usage disproportionate to expected profit and encourages activities whose profit is at least commensurate with risk and capital usage. Our focus on these metrics is intended to drive capital-efficient, risk-appropriate, and therefore superior performance over the long term. This focus is directly supportive of our risk management goals and practices.
Other risk management features employed in various performance and retention incentives include a qualitative risk assessment used in annual personal plan performance, which can directly impact annual bonus and salary decisions; use of a mandatory deferral feature for many incentives; forfeiture of equity awards for termination for cause and certain misconduct; clawback of previously-paid awards for certain types of misconduct; and corrective clawback for incentive awards if payment is based on erroneous data.
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| CORPORATE GOVERNANCE & BOARD MATTERS |
Notwithstanding anything to the contrary set forth in any of our previous filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, that might incorporate future filings by reference, including this proxy statement, in whole or in part, the following Compensation Committee Report shall not be incorporated by reference into any such filings.
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CORPORATE GOVERNANCE & BOARD MATTERS
| Compensation Committee Report |
The Compensation Committee of our Board of Directors has reviewed and discussed with management, among other things, the section of this proxy statement captioned “Compensation
Discussion & Analysis” beginning on page 43.48. Based on that review and discussion, the Compensation Committee recommended to our Board that the “Compensation Discussion & Analysis” section be included in this proxy statement.
Compensation Committee
Vicki R. Palmer, Chair
Kenneth A. Burdick
John C. Compton
Mark A. Emkes
Colin V. Reed
Rajesh Subramaniam
The Executive & Risk Committee
The Executive & Risk Committee was established by our Board of Directors and operates under a written charter. The charter that was last amended and restated in 2015.2019 to make minor clarifying changes and to reflect the change in the Bank’s name and conversion from a national bank to a Tennessee state chartered bank. The Committee met eightseven times during 2017.2019.
The Board has delegated primary responsibility for enterprise risk management oversight to the Executive & Risk Committee. In connection with its credit risk responsibilities, the Committee oversees First Horizon’s independent Credit Assurance Services department. Additional information on the Committee’s risk-related duties is available under the heading “Board Role in Risk Oversight—Executive & Risk Committee” beginning on
page 1218 above. As an executive committee, the Committee is authorized and empowered to exercise during the intervals between meetings of the Board all authority of the Board, except as prohibited by applicable law and provided that it may not approve (1) the acquisition of control of any bank; (2) other acquisitions, divestitures or the entry into definitive agreements (not in the ordinary course of business) where the purchase or sale price or transaction amount exceeds $100 million.$150 million, or as to which the total assets being acquired are more than $2 billion, or (3) FDIC-assisted transactions where the total assets being offered by the FDIC exceed $2 billion. Also, no authority has been delegated to the Committee in its charter to approve any acquisition involving the issuance of our stock.
The Information Technology Committee
The Information Technology Committee was established in 2015 and operates under a written charter that was last amended in July 20172019 to make minor clarifying changes.reflect the change in the Bank’s name and conversion from a national bank to a Tennessee state chartered bank. The purposes of the Committee are (1) to assist management in its understanding of information technology trends, its development and maintenance of an information technology
strategy, and its management of major information technology investments, and its identification and assessment of information technology threats, and (2) to assist the Board in its oversight of information technology matters.
The Committee met fourthree times in 20172019 for the principal purpose of executing its responsibilities under its charter.
The Nominating & Corporate Governance Committee
The Nominating & Corporate Governance Committee operates under a written charter that
was last amended in 2014.2019 to reflect the change in the Bank’s name and conversion from a national bank to a Tennessee state chartered bank. The purposes of the Nominating & Corporate Governance Committee are (1) to identify and
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| CORPORATE GOVERNANCE & BOARD MATTERS |
recommend to the Board individuals for nomination as members of the Board and its committees, (2) to develop and recommend to the Board a set of corporate governance principles applicable to the company, and (3) to oversee the evaluation of the Board and management. The Committee met fourthree times in 20172019 for the principal purpose of executing its responsibilities under its charter.
Beginning in 2016 and continuing in 2017,
In the past, the Committee has from time to time retained a director search firm was retained to assist the Committeeit in assessing Board competencies and identifying potential director candidates.
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CORPORATE GOVERNANCE & BOARD MATTERS
| Nominations of Directors; Director Qualifications; Consideration of Diversity in Identifying Director Nominees |
With respect to the nominating process, the Nominating & Corporate Governance Committee discusses and evaluates possible candidates in detail and suggests individuals whose potential membership on the Board could be explored in greater depth. The Committee, with input from the Chairman of the Board theand Chief Executive Officer and the Lead Director, recommends new nominees for the position of independent director based on the following criteria:
| Ÿ |
| Personal qualities and characteristics, experience, accomplishments and reputation in the business community. | |
| Ÿ |
| Current knowledge and contacts in the communities in which the company does business and in the company’s industry or other industries relevant to the company’s business. | |
| Ÿ |
| Diversity of viewpoints, background, experience and other demographics. | |
| Ÿ |
| Ability and willingness to commit adequate time to Board and committee matters. | |
| Ÿ |
| The fit of the individual’s skills and personality with those of other directors and potential directors in building a Board that is effective and responsive to its duties and responsibilities. |
The Nominating & Corporate Governance Committee does not set specific, minimum qualifications that nominees must meet in order for the Committee to recommend them to the Board of Directors, but rather believes that each nominee should be evaluated based on his or her individual merits, taking into account the needs of the company and the composition of the Board of Directors.
As described above and set forth in our Corporate Governance Guidelines, diversity, broadly defined to mean diversity of viewpoints, background, experience and other demographics, is one
criterion on which the Committee bases its recommendations of new nominees for director positions. The inclusion of diversity in the listed criteria for director nominees reflects the Board’s belief that diversity is important to the effective functioning of the Board. This belief is expressed in the fact that when the Committee has engaged a director search firm in the past, that firm was instructed to consider diversity as a factor in seeking director candidates, and the Committee defined the success of the search process to include the presentation of a diverse slate of candidates. More generally, our Human Rights Statement and Board-adopted Code of Business Conduct and Ethics reflectsreflect First Horizon’s firm commitment to non-discrimination and equal opportunity for employees, customers and suppliers and to treatment of everyone without discrimination or harassment based on race, color, religion, sex, sexual orientation, gender identity, national origin, age, veteran status or disability. However, neither the Committee nor the Board has a formal policy with regard to the consideration of diversity in identifying director nominees.
Once a candidate is identified whom the Committee wants seriously to consider and move toward nomination, the Chairman and CEO and/or other directors as the Committee determines will enter into a discussion with that candidate.
| Shareholder Recommendations of Director Nominees; Shareholder Nominations |
Committee Consideration of Shareholder Recommendations of Director Nominees
The Nominating & Corporate Governance Committee will consider individuals recommended by shareholders as director nominees and will give any such individual is given appropriate consideration in the same manner as individuals recommended by the Committee. Committee, a director or executive officer, or a director search firm.
Shareholders who wish to submit individuals for consideration by the Nominating & Corporate Governance Committee as director nominees may do so by submitting, in compliance with the procedures and along with the other information required by our Bylaws (as described below), a notice in writing that gives such individuals’ names to the Corporate Secretary. Our Bylaws require that to be timely, a shareholder’s notice must be delivered to or mailed and received at our principal executive offices not less than 90 days nor more than 120 days prior to the date of the meeting. However, if fewer than 100 days’ notice or prior public disclosure of the date of the meeting is given or made to shareholders, a notice by a shareholder to be timely must be so delivered or received not later than the close of business on the 10th day following the earlier of (i) the day on which such notice of the date of such meeting was mailed or (ii) the day on which such public disclosure was made. A shareholder’s notice must state:
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| CORPORATE GOVERNANCE & BOARD MATTERS |
| number of shares of First Horizon that are beneficially owned (as defined in the Bylaws) by such person on the date of the notice; | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Ÿ | any other information relating to such person that is required to be disclosed in solicitations of proxies for election of directors or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (including, without limitation, such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected); | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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CORPORATE GOVERNANCE & BOARD MATTERS
| Ÿ |
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| Ÿ | Such other information as the company may reasonably require to determine the eligibility of the proposed nominee to serve as an independent director of the company and to comply with applicable law. |
Director Nominations for Inclusion in our Proxy Statement (Proxy Access)
First Horizon has adopted a proxy access bylaw that, commencing with the annual meeting of shareholders to be held in 2020, allows a
shareholder or group of up to 20 shareholders that has held at least 3% of our common stock for at least three years to nominate up to the greater of two directors or 20% of the Board and have those nominees appear in our proxy statement, subject to notice, eligibility and other specific requirements in our Bylaws. Any shareholder considering a proxy access nomination should carefully review our Bylaws, which are available on our website at www.firsthorizon.com (click on “Investor Relations,” then “Corporate Governance,” and then “Governance Documents”). The deadlines for a proxy access nomination are available on page 47 of this proxy statement.
Other Director Nominations to be Brought before the Annual Meeting
Any shareholder who is entitled to vote in the election of directors at any meeting of shareholders and who complies with the procedures described in our Bylaws may nominate an individual for election to the Board of Directors. A shareholder who wishes to nominate an individual in accordance with those procedures must submit a notice in writing to the Corporate Secretary. The notice must provide detailed information about the nominee (including but not limited to information relating to the nominee that is required to be disclosed in solicitations of proxies for election of directors or is otherwise required pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended) and about the shareholder giving the notice, all as described in detail in the Bylaws. Our Bylaws are available on our website at www.firsthorizon.com (click on “Investor Relations,” then “Corporate Governance,” and then “Governance Documents”). The deadlines for submitting a notice to the Corporate Secretary are available on page 47 of this proxy statement.
Compensation Committee Interlocks & Insider Participation
Messrs. Burdick, Compton, Emkes, Reed and ReedSubramaniam and Ms. Palmer, all non-employee directors, served as members of the Board of Director’s Compensation Committee during 2017, as did R. Brad Martin, who served as a member of the Committee until he stepped down as a member of the Board of Directors in December 2017.2019. Refer to the table in “Corporate Governance and
Board Matters—Composition of Board Committees” above for additional committee information. No interlocking relationships existed with respect to any of the members of the Committee.
Board & Committee Meeting Attendance
During 2017,2019, the Board of Directors held sixseven meetings (four of which took place over a period of two days) and took action by written consent twice.
The Audit Committee held eightseven meetings and took action by written consent once, the Compensation Committee held fivefour meetings, and took action by written consent once, the
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| CORPORATE GOVERNANCE & BOARD MATTERS |
Executive & Risk Committee held eightseven meetings, the Information Technology Committee held fourthree meetings, and the Nominating & Corporate Governance Committee held fourthree meetings. The Trust Committee of the Bank’s Board held threetwo meetings. The average attendance at Board and committee meetings exceeded 9596 percent. No incumbent director attended fewer than 75 percent of the meetings of the Board and the committees
of the Board on which he or she served during 2017.2019. As set forth in our Corporate Governance Guidelines, we expect our directors are expected to make every effort to attend every meeting of First Horizon’sour shareholders. For the last 10 years, all of our directors have been in attendance at every annual meeting of shareholders, except for one director in 2012 and one director in 2014.
Executive Sessions of the Board
To ensure free and open discussion and communication among the non-management directors of the Board and its committees, our Corporate Governance Guidelines provide that the non-management directors will meet in regularly scheduled executive sessions and as often as the Board shall request, with no members of management present, and that if any non-management directors are not independent under the NYSE listing standards, the independent, non-
management directors will meet in executive session at least once a year. All ofDuring 2019, our non-management directors were independent during all of 2017,met four times in executive session and during 2017, thoseour independent, non-management directors met four times in executive session of the Board.session. The Lead Director presides (or, if he cannot be in attendance, designates another independent director to preside) at the executive sessions of the Board.
Communication with the Board of Directors
A shareholder who desires to communicate with the Board of Directors on matters other(other than to nominate a director nominationspursuant to our Bylaws or recommend the nomination of a director to the Nominating & Corporate Governance Committee) should submit his or her communication in writing to the Lead Director, c/o Corporate Secretary, First Horizon National Corporation, 165 Madison Avenue,
Memphis, Tennessee 38103, and identify himself or herself as a shareholder. The Corporate Secretary will forward all such communications to the Lead Director for a determination as to how to proceed. Other interested parties desiring to communicate with the Board of Directors should submit their communications in the same manner.
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CORPORATE GOVERNANCE & BOARD MATTERS
Approval, Monitoring & Ratification Procedures for Related Party Transactions
The Audit Committee of the Board has adopted procedures for the approval, monitoring, and ratification of transactions between First Horizon, on the one hand, and our directors, executive officers or 5% shareholders, their immediate family members, their affiliated entities and their immediate family members’ affiliated entities, on the other hand. A copy of our procedures is available on our website at www.firsthorizon.com (click on “Investor Relations,” then “Corporate Governance,” and then “Governance Documents”). Our procedures require management to submit any proposed “related party transaction” (defined as a transaction that is required to be disclosed in our proxy statement pursuant to the requirements of Item 404(a) of Regulation S-K promulgated by the
SEC) or amendment to an existing related party transaction to the Audit Committee for approval or ratification. In some cases, the matter may be determined by the chair of the Audit Committee. In considering whether to approve a given transaction, the Audit Committee (or chair) must consider:
| Ÿ |
| whether the terms of the related party transaction are fair to First Horizon and on terms at least as favorable as would apply if the other party was not, or did not have an affiliation with, a director or executive officer of First Horizon; |
| Ÿ |
| whether First Horizon is currently engaged in other related party transactions with the related |
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| CORPORATE GOVERNANCE & BOARD MATTERS |
| party at issue or other related parties of the same director or executive officer; | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Ÿ | whether there are demonstrable business reasons for First Horizon to enter into the related party transaction; | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Ÿ | whether the related party transaction would impair the independence of a director; and | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| whether the related party transaction would present an improper conflict of interest for any director or executive officer of First Horizon, taking into account the size of the transaction, the overall financial position of the director or executive officer, the direct or indirect nature of the interest of the director or executive officer in the transaction, the ongoing nature of any proposed relationship, and any other factors the Audit Committee deems relevant. |
Transactions with Related Persons
First Horizon, the Bank and the subsidiaries of each, as applicable, have entered into lending transactions and/or other banking or financial services transactions in the ordinary course of business with our executive officers, directors, nominees, their immediate family members and affiliated entities, and the persons of which we are aware that beneficially own more than five percent of our common stock, and we expect to have such transactions in the future. Such transactions 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 transactions with persons not related to the company, and did not involve more than the normal risk of collectability or present other unfavorable features. We note that as a perquisite we offer all employees discounts on certain financial services (for example, no-fee domestic wire transfers). These discounts are available to our executive officers except in relation to credit extended at the time an executive officer is serving as such.
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| 2020 PROXY STATEMENT | 31 |
| STOCK OWNERSHIP INFORMATION |
STOCK OWNERSHIP INFORMATIONStock Ownership Information
STOCK OWNERSHIP INFORMATION
As of December 31, 2017,2019, there were 9,3198,543 shareholders of record of our common stock. To our knowledge, there were four persons who owned beneficially, as that term is defined by Rule 13d-3 of the Securities Exchange Act of 1934, more than five percent (5%) of our common stock as of December 31, 2017.2019. Certain information concerning beneficial ownership of our common stock by those persons as of December 31, 20172019 is set forth in the following table:
Security Ownership of Certain Beneficial Owners
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Name and Address of | Amount and Nature | Percent of Class | ||||||||||||
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BlackRock, Inc |
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| 29,317,893 |
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| 9.0 | % |
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Invesco Ltd |
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| 17,799,276 |
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| 5.5 | % |
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State Street Corporation |
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| 16,813,805 |
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| 7.18 | % |
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The Vanguard Group, Inc |
|
| 25,423,000 |
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| 7.79 | % |
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* Addresses appear in the text below.
| Name and Address of Beneficial Owner* | Amount and Nature of Beneficial Ownership | Percent of Class | |||
| BlackRock, Inc | 36,406,220 | 11.7% | |||
| FMR LLC | 18,152,399 | 5.833% | |||
| Franklin Mutual Advisers, LLC | 16,274,927 | 5.2% | |||
| The Vanguard Group, Inc | 31,187,307 | 10.02% |
| * | Addresses appear in the text below. |
BlackRock. The information in the table above with respect to BlackRock is based on information set forth in Schedule 13G/A, filed with the Securities and Exchange Commission on January 25, 2018February 4, 2020 by BlackRock, Inc. on behalf of its subsidiaries BlackRock (Netherlands) B.V., BlackRock Advisors (UK) Limited, BlackRock Advisors, LLC, BlackRock Asset Management Canada Limited, BlackRock Asset Management Ireland Limited, BlackRock Asset Management Schweiz AG, Blackrock Financial Management, Inc., BlackRock Fund Advisors, BlackRock Institutional Trust Company, N.A., BlackRock International Limited, BlackRock Investment Management (Australia) Limited, BlackRock Investment Management (UK) Ltd, BlackRock Investment Management, LLC, BlackRock Japan Co Ltd and BlackRock Life Limited, BlackRock (Luxembourg) S.A., BlackRock (Singapore) Limited, BlackRock Fund Managers Ltd, 55 East 52nd Street, New York, NY 10055. According to this Schedule 13G, BlackRock has sole voting power with respect to 27,692,23133,552,372 shares of our common stock and sole dispositive power with respect to 29,317,89336,406,220 shares of our common stock.
Invesco.FMR. The information in the table above with respect to Invesco Ltd. (“Invesco”) is based on information set forth in Amendment No. 2 to Schedule 13G filed with the Securities and Exchange Commission on February 9, 2018 by Invesco on behalf of its subsidiaries Invesco Advisers, Inc. Invesco Investment Advisers, LLC and Invesco PowerShares Capital Management, LLC, 1555 Peachtree Street NE, Suite 1800, Atlanta, Georgia 30309. According to this Schedule 13G, Invesco has sole voting power with respect to 16,688,916 shares of our common stock and sole dispositive power with respect to 17,799,276 shares of our common stock.
State Street. The information in the table above with respect to State Street Corporation (“State Street”)FMR is based on information set forth in Schedule 13G, filed with the Securities and Exchange Commission on February 14, 20187, 2020 by StateFMR LLC, 245 Summer Street, Boston, MA 02210, on behalf of its subsidiaries State Street Bank and affiliates FIAM LLC, Fidelity Institutional Asset Management Trust Company, SSGA Funds Management,FMR Co., Inc., State Street Global Advisor Trust Company, State Street Global Advisors Asia Ltd, State Street Global Advisors Singapore Ltd., State Street Global Advisors Limited, State Street Global Advisors GmbH, and State Street Global Advisors, Australia, State Street Financial Center, One Lincoln Street, Boston MA 02111.Strategic Advisers LLC. According to this document, State StreetSchedule 13G, FMR has sharedsole voting power with respect to 16,813,8051,478,233 shares of our common stock and sharedsole dispositive power with respect to 16,813,80518,152,399 shares of our common stock. Abigail P. Johnson is also listed as a
reporting person in the Schedule 13G. According to the Schedule 13G, Ms. Johnson is a Director, the Chairman and the Chief Executive Officer of FMR LLC. The Schedule 13G provides the following additional disclosure: Members of the Johnson family, including Abigail P. Johnson, are the predominant owners, directly or through trusts, of Series B voting common shares of FMR LLC, representing 49% of the voting power of FMR LLC. The Johnson family group and all other Series B shareholders have entered into a shareholders’ voting agreement under which all Series B voting common shares will be voted in accordance with the majority vote of Series B voting common shares. Accordingly, through their ownership of voting common shares and the execution of the shareholders’ voting agreement, members of the Johnson family may be deemed, under the Investment Company Act of 1940, to form a controlling group with respect to FMR LLC. Neither FMR LLC nor Abigail P. Johnson has the sole power to vote or direct the voting of the shares owned directly by the various investment companies registered under the Investment Company Act (“Fidelity Funds”) advised by Fidelity Management & Research Company (“FMR Co”), a wholly owned subsidiary of FMR LLC, which power resides with the Fidelity Funds’ Boards of Trustees. FMR Co carries out the voting of the shares under written guidelines established by the Fidelity Funds’ Boards of Trustees.
Franklin Mutual Advisers. The information in the table above with respect to Franklin Mutual Advisers is based on information set forth in Schedule 13G, filed with the Securities and Exchange Commission on February 3, 2020 by Franklin Mutual Advisers, LLC, 101 John F. Kennedy Parkway, Short Hills, New Jersey 07078-2789. According to this Schedule
| 2020 PROXY STATEMENT | 32 |
| STOCK OWNERSHIP INFORMATION |
13G, Franklin Mutual Advisers has sole voting power with respect to 15,732,427 shares of our common stock and sole dispositive power with respect to 16,274,927 shares of our common stock.
Vanguard. The information in the table above with respect to The Vanguard Group, Inc. (“Vanguard”) is based on information set forth in Amendment No. 69 to Schedule 13G, filed with the Securities and Exchange Commission on February 9, 201812, 2020 by Vanguard, 100 Vanguard Boulevard, Malvern, Pennsylvania 19355. 19355, on behalf of itself and its
subsidiaries Vanguard Fiduciary Trust Company and Vanguard Investments Australia, Ltd.
According to this Schedule 13G, Vanguard has sole voting power with respect to 165,730163,056 shares of our common stock, shared voting power with respect to 29,94246,673 shares of our common stock, shared dispositive power with respect to 171,802166,028 shares of our common stock and sole dispositive power with respect to 25,423,00031,021,279 shares of our common stock.
Security Ownership of Management
The table below sets forth certain information concerning beneficial ownership of our common stock by each director and nominee, each executive officer named in the Summary Compensation Table, and the directors and executive officers as a group. The information in the table is as of December 31, 20172019 except as otherwise noted in the notes to the table.
25
| Name of Beneficial Owner | Amount and Nature of Beneficial Ownership(1) | Percent of Class | ||||||
| Kenneth A. Burdick | 2,000 | * | ||||||
| John C. Compton | 74,477 | * | ||||||
| Wendy P. Davidson | 150 | * | ||||||
| Mark A. Emkes | 53,194 | * | ||||||
| Peter N. Foss | 38,712 | * | ||||||
| Corydon J. Gilchrist | 71,331 | * | ||||||
| D. Bryan Jordan | 1,316,682 | (4) | * | |||||
| Michael E. Kisber(2) | 429,703 | (4) | * | |||||
| William C. Losch, III | 434,242 | (4) | * | |||||
| Scott M. Niswonger | 706,712 | * | ||||||
| Vicki R. Palmer | 72,114 | (3) | * | |||||
| David T. Popwell | 508,257 | (4) | * | |||||
| Colin V. Reed | 101,606 | * | ||||||
| Susan L. Springfield | 241,922 | (4) | * | |||||
| Cecelia D. Stewart | 14,947 | * | ||||||
| Rajesh Subramaniam | 3,407 | * | ||||||
| R. Eugene Taylor | 1,173,356 | * | ||||||
| Luke Yancy III | 51,903 | (3) | * | |||||
| Directors and Executive Officers as a Group (22 persons) | 6,248,805 | (4) | 2.0 | % | ||||
STOCK OWNERSHIP INFORMATION
Security Ownership of Management
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Name of Beneficial Owner | Amount and Nature | Percent | ||||||||||||
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John C. Compton |
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| 74,477 |
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| * | ||||||||
Mark A. Emkes |
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| 45,103 |
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| * | ||||||||
Peter N. Foss |
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| 68,712 |
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Corydon J. Gilchrist |
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| 71,331 |
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| * | ||||||||
D. Bryan Jordan |
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| 1,045,107 | (4) |
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| * | ||||||
Michael E. Kisber(2) |
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| 717,288 | (4) |
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| * | ||||||
William C. Losch, III |
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| 311,207 | (4) |
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| * | ||||||
Scott M. Niswonger |
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| 531,289 |
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| * | ||||||||
Vicki R. Palmer |
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| 93,830 | (3) |
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| * | ||||||
David T. Popwell |
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| 351,318 | (4) |
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| * | ||||||
Colin V. Reed |
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| 97,714 | (3) |
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| * | ||||||
Cecelia D. Stewart |
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| 14,947 |
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| * | ||||||||
Rajesh Subramaniam |
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| 3,407 |
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| * | ||||||||
R. Eugene Taylor |
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| 1,222,558 |
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| * | ||||||||
Charles T. Tuggle, Jr. |
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| 311,235 | (4) |
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| * | ||||||
Luke Yancy III |
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| 49,769 | (3) |
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| * | ||||||
Directors and Executive Officers as a Group (20 persons) |
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| 5,757,216 | (4) |
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| 1.75 | % |
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| * |
| No current individual director, nominee or executive officer beneficially owns more than one percent (1%) of our outstanding common stock or depositary shares. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (1) | The respective directors, nominees and officers have sole voting and investment powers with respect to all of such shares except as specified in notes (3) and (4). | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The numbers of shares covered by stock options reported in the table have been adjusted proportionately to reflect the effects of dividends paid in common stock from October 1, 2008 through January 1, 2011. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
No current director or executive officer beneficially owns any of the depositary shares, each representing a 1/4000th interest in a share of non-cumulative perpetual preferred stock, Series A, issued by First Horizon on January 31, 2013. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (2) | The share balance for Mr. Kisber does not include 27,994 shares deferred prior to January 2005 under our stock option program and our restricted stock incentive plan, which at that time permitted participants to defer receipt of shares upon the exercise of options and receipt of shares prior to the lapsing of restrictions imposed on restricted stock awards, respectively. These shares are not currently issued and are not considered to be | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2020 PROXY STATEMENT | 33 |
| STOCK OWNERSHIP INFORMATION |
| beneficially owned for purposes of Rule 13d-3, but are reflected in a deferral account on our books as phantom stock units or restricted stock units. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (3) | Includes the following shares as to which the named non-employee directors have the right to acquire beneficial ownership through the exercise of stock options granted under our director plans, all of which are 100% vested or will have vested within 60 days of December 31, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (4) | Includes the following shares of restricted stock with respect to which the named person or group has sole voting power but no investment | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| power: Mr. Losch— |
| 2020 PROXY STATEMENT | 34 |
| VOTE ITEM 1—ELECTION OF DIRECTORS |
26
| Overview; Effect of Closing of Merger; Retirements |
VOTE ITEM NO. 1—ELECTION OF DIRECTORS
VOTE ITEM NO. 1—ELECTIONOF DIRECTORS
Overview.The Board of Directors is proposing for election all twelve of our current directors: Messrs. Burdick, Compton, Emkes, Foss, Gilchrist, Jordan, Niswonger, Reed, Subramaniam, Taylor and Yancy and Mmes.Mses. Davidson, Palmer and Stewart, at the 20182020 annual meeting, to hold office until the 20192021 annual meeting of shareholders and until their successors are duly elected and qualified. Note, however, that if our proposed merger of equals with IBKC is consummated, the merger agreement provides that the combined Board of Directors after the merger will have seventeen members, consisting of the individuals who are serving, immediately prior to the closing of the merger, as the CEO of First Horizon and the CEO of IBKC as well as eight additional members of the First Horizon Board (designated by First Horizon) and seven additional members of the IBKC Board (designated by IBKC). Therefore, we expect Messrs. Emkes, Gilchrist, and Yancy not to complete their full terms but to step down upon the closing of the proposed merger.
Two of our current directors, Messrs. Foss and Taylor were elected byNiswonger, will not stand for reelection at the Board of Directors in November 2017 in connection with First Horizon’s merger with Capital Bank Financial Corporation (“Capital Bank”). They were recommended as nominees for positions on our Board by Capital Bank and First Horizon pursuant to the provisions of the merger agreement between the two companies. annual meeting but rather will retire at that time.
If any nominee proposed by the Board of Directors is unable to accept election, which the Board of Directors has no reason to anticipate, the persons named in the enclosed form of proxy will vote for the election of such other persons as directed by the Board, unless the Board decides to reduce the number of directors pursuant to the Bylaws.
Identification and Nomination of Candidates.
| Identification and Nomination of Candidates |
The Board and the Nominating & Corporate Governance Committee regularly assess the composition of the Board as a whole and the contributions of each director. The Nominating & Corporate Governance Committee’s charter assigns to that Committee the duty to identify individuals believed to be qualified to become Board members and to recommend to the Board the individuals to stand for election or reelection as directors. In nominating candidates, the Committee may take into consideration such factors as it deems appropriate, including personal qualities and characteristics, experience, accomplishments and reputation in the business community; current
knowledge and contacts in the communities in which the company does business and in the company’s industry or other industries relevant to the company’s business; diversity of viewpoints, background, experience and other demographics; ability and willingness to commit adequate time to Board and committee matters; and the fit of the individual’s skills and personality with those of other directors and potential directors in building a Board that is effective and responsive to its duties and responsibilities and the needs of the company.
Assessment of the Board’s Composition.
| Assessment of the Board’s Composition |
At each of its regularly scheduled meetings, the Nominating & Corporate Governance Committee reviews the composition of the Board as a whole, considering the mix of skills and experience that directors bring to the Board, and evaluates Board composition in light of the company’s then-current business needs as well as applicable legal, regulatory and NYSE requirements. Among the areas considered by the Committee are each director’s independence under the NYSE listing standards; experience, including experience as a public company officer or director; primary area of business expertise; geographical markets experience; and projected retirement date. In accordance with the requirements of the National Bank Act,Tennessee banking law and regulations, the Committee also considers the proportion of directors who reside in Tennesseestates in which the Bank has a main or branch office (or within 100 miles of Memphis). In light of this review, the Committee assesses whether the Board has the necessary tools to perform its oversight functions effectively and recommends, as appropriate, new nominees for consideration by the Board. The Board, with oversight provided by the Committee, also conducts an annual self-evaluation that includes an evaluation of whether Board members have an appropriately broad and diverse range of experience and whether committee members have the right expertise, background and skills to be effective and responsive to their duties and responsibilities as committee members.
Individual Director Evaluations.
| Individual Director Evaluations |
The Nominating & Corporate Governance Committee also conducts annual individual director evaluations. To facilitate these evaluations, the Board has adopted a Statement of Expectations of Directors. The Statement of Expectations contains specific activities and conduct each director should
| 2020 PROXY STATEMENT | 35 |
| VOTE ITEM 1—ELECTION OF DIRECTORS |
engage in or adhere to and includes consideration of each director’s background, expertise and skills. The Statement of Expectations is provided to each new director at the time of orientation and to all directors once a year. Each year, the Nominating & Corporate Governance Committee conducts evaluations against the Statement of Expectations of the performance of each non-employee director prior to determining whether to recommend him or her to the Board for renomination. In addition, at least every three years, in lieu of the regular evaluation of individual directors by the Nominating & Corporate Governance Committee, the company engages a third party to conduct individual director assessments and to provide advice and reports on how individual directors and the Board can improve. These assessments may include both director self-assessments and peer assessments.
Board Experiences, Qualifications, Attributes and Skills.
| Board Experiences, Qualifications, Attributes and Skills |
Our Board selected our twelve director nominees based on the belief that each one brings significant
experience and expertise that will serve First Horizon well. The breadth of their expertise and their mix of attributes is reflected in the chart and table below. Following the table is a summary for each nominee of the particular experiences, qualifications, attributes or skills that led the Board to conclude that he or she should serve as a director of First Horizon, as well as the age, current principal occupation (which has continued for at least five years unless otherwise indicated),
27
VOTE ITEM NO. 1—ELECTION OF DIRECTORS
name and principal business of the organization in which his or her occupation is carried on, directorships in other reporting companies (including those held in the past but not currently held), and year first elected to our Board. All of our directors are also directors of the Bank.
| Committee Appointments |
Director committee appointments are disclosed below and in a table on page 1520 in the “Corporate Governance and Board Matters—Committee Charters & Committee Composition” section of this proxy statement above.
28
VOTE ITEM NO. 1—ELECTION OF DIRECTORS
Our director nominees at a glance
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8 | 5 | 4 | 10 | 2 | ||||
have experience as a CEO/President* | have finance or | have experience | have served as a | have experience | ||||
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1 | 12 | 4 | 8 | 5 | ||||
has served in | have strategic planning/leadership experience | are diverse in | have marketing | joined the Board | ||||
| 10 | 6 | 4 | 10 | 6 |
| have experience as a CEO/President1 | have finance or accounting experience2 | have experience in the banking industry | have served as a director or executive officer of another public company | have experience in information technology matters3 |
| 1 | 12 | 5 | 9 | 5 |
| has served in government | have strategic planning/leadership experience | are diverse in terms of race, gender or ethnicity | have marketing and retail distribution experience | joined the Board within the last six years |
| (1) |
| Has experience as CEO or | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| (3) | Includes experience managing a business in which information technology plays a significant role | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2020 PROXY STATEMENT | 36 |
Public company director or executive officer
| VOTE ITEM 1—ELECTION OF DIRECTORS |
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Executive Vice President of Products and Markets, Centene Corporation Independent director since |
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Age |
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Committees: Ÿ Audit Ÿ Compensation
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Mr. Compton is a Partner at Clayton, Dubilier & Rice, a New York-based private equity firm. Prior to 2015, he was a private investor and consultant and served as an Operating Advisor to Clayton, Dubilier & Rice. He served as CEO of Pilot Flying J, Knoxville, Tennessee, a national operator of travel centers, until February 2013. Prior to September 2012, he served for twenty-nine years in various senior leadership positions with PepsiCo Inc., a global food, snack and beverage company, including Chief Executive Officer of PepsiCo Americas Foods, President and CEO of Quaker, Tropicana, Gatorade and CEO of PepsiCo North America, culminating in his service as President of PepsiCo.
Skills and Expertise:
| Skills and Expertise: ŸLeadership experience at a public company Ÿ Experience in finance and accounting, employee matters, mergers and acquisitions, risk assessment, information technology, civic affairs, government relations, corporate governance, securities markets and compliance and similar matters associated with leadership positions at public companies Ÿ Florida resident with knowledge of the Florida market Prior Public Company Board Service: WellCare Health Plans, Inc. (2014-2020) Non-Profit Board Service: Serves on the board of two non-profit organizations | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
John C. Compton Partner at Clayton, Dubilier & Rice Independent director since 2011 Age 58 Committees: Ÿ Compensation Ÿ Executive & Risk Ÿ Nominating & Corporate Governance (chair) |
| Skills and Expertise: Ÿ Leadership experience at a public company ŸExperience in matters affecting public companies, including finance and accounting, employee matters, mergers and acquisitions, risk assessment, civic affairs, government relations, corporate governance, securities markets and compliance and similar matters | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ŸExtensive experience in sales, marketing, operations and general management | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ŸKnowledge of public company governance matters due to public company board service | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ŸEast Tennessee resident with knowledge of the east Tennessee market Prior Public Company Board Service: US Foods Holding Corp. (2015-2018); Pepsi Bottling Group (2008-2010) Non-Profit Board Service: Serves on the board of two non-profit organizations | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Prior Public Company Board Service: US Foods Holding Corp. (2015-2018); Pepsi Bottling Group (2008-2010)
Non-Profit Board Service: Serves on the board of two non-profit organizations.
| 2020 PROXY STATEMENT | 37 |
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VOTE ITEM NO. 1—ELECTION OF DIRECTORS
| VOTE ITEM 1—ELECTION OF DIRECTORS |
Wendy P. Davidson President, Away from Home, Kellogg Company Independent director since 2019 Age 50 Committees: Ÿ Audit Ÿ Information Technology | Wendy P. Davidson has been the President, Away from Home (formerly U.S. Specialty Channels) of Kellogg Company, Elmhurst, Illinois, a global food, cereal and snack company, since 2013. She serves as a member of the company’s Global Leadership Team, North American Leadership Team, eighteen94 Venture Capital Fund and Global Strategy Councils. From 2010 to 2013, she served in various senior roles at McCormick & Company, Inc., including as Vice President, Custom Flavor Solutions, U.S. & Latin America, and from 1993 to 2009 she held a variety of executive positions at Tyson Foods, Inc., including Senior Vice President and General Manager – Global Customer and Group Vice President – Foodservice Group, culminating in her service as Senior Vice President and General Manager – Prepared Foods. Skills and Expertise: Ÿ Extensive general management experience, including marketing, sales, operations, supply chain, strategic planning, new market development, disruptive business model innovation, crisis management, digital commerce, brand building and commercial execution Ÿ Senior level policy-making experience at a public company Ÿ Experience in employee matters, finance and accounting, mergers and acquisitions, government relations, enterprise risk assessment, and similar matters associated with running a large division of a public company Non-Profit Board Service: Serves on the board of two non-profit organizations |
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Mark A. Emkes Retired Commissioner, Department of Finance and Administration, State of Tennessee and retired Chairman, Chief Executive Officer and President, Bridgestone Americas, Inc. | |
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Independent director since 2008 | |
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Age | |
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Committees: ŸAudit (chair) Ÿ Compensation Ÿ Information Technology | |
Audit Committee Financial Expert |
Mr. Emkes retired in May 2013 as the Commissioner of the Department of Finance and Administration of the State of Tennessee, a position he had served in since January 2011. Prior to his service as Commissioner, he served as the Chairman, Chief Executive Officer and President of Bridgestone Americas, Inc. and as a director of its parent company, Tokyo-based Bridgestone Corporation, a worldwide tire and rubber manufacturer.
Skills and Expertise:
| Skills and Expertise: ŸLeadership experience at a large subsidiary of a public company | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ŸExperience in governmental affairs | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ŸExperience in matters affecting public companies, including finance and accounting, employee matters, mergers and acquisitions, risk assessment, civic affairs, government relations, corporate governance and compliance and similar matters | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ŸKnowledge of public company executive compensation and governance matters due to public company board service | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ŸNashville resident with knowledge of the Nashville market Other Current Public Company Board Service: CoreCivic, Inc. (since 2014) (Chairman of the Board since 2016) and Greif, Inc. (since 2008) Prior Public Company Board Service: Bridgestone Corporation (2004-2010) and Clarcor Inc. (2010-2017) Non-Profit Board Service: Serves on the board of two non-profit organizations | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Current Public Company Board Service: CoreCivic, Inc. (since 2014) (Chairman of the Board since 2016) and Greif, Inc. (since 2008)
Prior Public Company Board Service: Bridgestone Corporation (2004-2010) and Clarcor Inc. (2010-2017)
Non-Profit Board Service: Serves on the board of two non-profit organizations.
| 2020 PROXY STATEMENT | 38 |
| VOTE ITEM 1—ELECTION OF DIRECTORS |
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Mr. Foss is currently the general manager of the GE/NFL Head Health Program. Prior to his retirement in 2013, he served for 35 years in various leadership positions with General Electric Company, a global digital industrial company, including most recently as General Manager for Enterprise Selling and as President of the General Electric Company’s Olympic Sponsorship and Corporate Accounts. Mr. Foss became a director of First Horizon and the Bank upon the closing of First Horizon’s acquisition of Capital Bank Financial Corp. in 2017.
Skills and Expertise:
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Other Current Public Company Board Service:Healthcare Trust of America, Inc. (since 2015)
Prior Public Company Board Service: Capital Bank Financial Corp. (2009-2017), Capital Bank Corp. (2011-2012), Green Bankshares, Inc. (2011-2012) and TIB Financial Corp. (2011-2012)
Non-Profit Board Service: Serves on the boards of two non-profit organizations.
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VOTE ITEM NO. 1—ELECTION OF DIRECTORS
Corydon J. Gilchrist | |
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Private investor and Chartered Financial Analyst | |
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Independent director since 2012 | |
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Age | |
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Committees: Ÿ Executive & Risk Ÿ Information Technology Ÿ Nominating & Corporate Governance | Mr. Gilchrist is a private investor and a Chartered Financial Analyst. From 2000 to 2011 he was a portfolio manager and partner at Marsico Capital Management. While at Marsico, Mr. Gilchrist was the sole portfolio manager for Marsico’s 21st Century Fund and the Skills and Expertise: Ÿ |
Mr. Gilchrist is a private investor and a Chartered Financial Analyst. From 2000 to 2011 he was a portfolio manager and partner at Marsico Capital Management. While at Marsico, Mr. Gilchrist was the sole portfolio manager for Marsico’s 21st Century Fund and the lead portfolio manager for Marsico’s Global Fund. Before joining Marsico, he was a senior analyst and portfolio manager covering emerging markets at The Principal Financial Group.
Skills and Expertise:
| Extensive expertise in macro and micro investment analysis | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ŸUnderstanding of business value, business risk and strategic decision-making | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ŸExperience analyzing various matters, including finance and accounting, securities markets, corporate governance, mergers and acquisitions, and risk assessment, that affect public companies Non-Profit Board Service: Serves on the boards of several non-profit organizations | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-Profit Board Service: Serves on the boards of two non-profit organizations.
D. Bryan Jordan
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Chairman of the Board, President and Chief Executive Officer of First Horizon and the Bank |
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Chairman of the Board since 2012; director since 2008 |
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Age |
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Committees: ŸExecutive & Risk |
Mr. Jordan is Chairman of the Board, President and Chief Executive Officer of First Horizon and the Bank. He was elected Chairman of the Board of Directors in 2012 and has held the positions of President and Chief Executive Officer and director since 2008. Mr. Jordan was the Chief Financial Officer of First Horizon and the Bank from 2007 to 2008, and prior to that he served in various positions at Regions Financial Corporation and its subsidiary Regions Bank, including (beginning in 2002) as Chief Financial Officer. Prior to 2000, he held various finance and accounting related positions at Wachovia Corporation.
Skills and Expertise:
| Skills and Expertise: ŸExtensive experience in the banking and financial services industry | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ŸExperience in finance and accounting, employee matters, mergers and acquisitions, risk assessment, information technology, civic affairs, government relations, corporate governance, securities markets and compliance and similar matters associated with leadership positions at public companies | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ŸKnowledge of public company audit and governance matters due to public company board service | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Current Public Company Board Service: AutoZone, Inc. (since 2013)
Non-Profit Board Service: Serves on the boards of several non-profit organizations.
31
VOTE ITEM NO. 1—ELECTION OF DIRECTORS
Other Current Public Company Board Service: AutoZone, Inc. (since 2013) Non-Profit Board Service: Serves on the boards of several non-profit organizations
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| 2020 PROXY STATEMENT | 39 |
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Mr. Niswonger is the Chairman and founder of Landair Transport, Inc., a time-definite trucking, warehousing, and supply-chain management company. He previously served as Chief Executive Officer (until 2003) of Landair and as Chairman of the Board (until 2005) and Chief Executive Officer (until 2003) of Forward Air, Inc., which operated as one company with Landair until the two were separated into two public companies in 1998; Landair has since again become a private company.
Skills and Expertise:
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Prior Public Company Board Service: Landair Transport, Inc. (1998-2003) and Forward Air, Inc. (1998-2005)
Non-Profit Board Service: Serves on the boards of several non-profit organizations.
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Vicki R. Palmer |
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President of The Palmer Group, LLC |
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Independent director since 1993 |
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Age |
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Committees: ŸCompensation (chair) Ÿ Executive & Risk |
Ms. Palmer is the President of The Palmer Group, LLC, Atlanta, Georgia, a general consulting firm. Between 2004 and 2009, she served as Executive Vice President, Financial Services and Administration, Coca-Cola Enterprises Inc. (“CCE”), Atlanta, Georgia, a bottler of soft drink products. She was responsible for overseeing treasury, pension and retirement benefits, asset management, internal audit and risk management, was a member of CCE’s Risk Committee, served on CCE’s Senior Executive Committee and had oversight responsibility for CCE’s enterprise-wide risk assessment process.
Skills and Expertise:
| Skills and Expertise: ŸExpertise in public company finance, risk management and administration | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ŸSenior level policy-making experience at a public company | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ŸKnowledge of public company audit and governance matters due to public company board service | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Current Public Company Board Service: Haverty Furniture Companies Inc. (since 2001)
Non-Profit Board Service: Serves on the boards of several non-profit organizations.
32
VOTE ITEM NO. 1—ELECTION OF DIRECTORS
Other Current Public Company Board Service: Haverty Furniture Companies Inc. (since 2001) Non-Profit Board Service: Serves on the boards of several non-profit organizations
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Colin V. Reed Chairman of the Board and Chief Executive Officer of Ryman Hospitality Properties, Inc. | |
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Independent director since 2006 Lead director | |
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Age | |
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Committees: ŸCompensation Ÿ Executive & Risk (chair) | |
Mr. Reed is the Chairman of the Board and Chief Executive Officer of Ryman Hospitality Properties, Inc. (“Ryman”), Nashville, Tennessee, a real estate investment trust. Ryman is the successor by merger to Gaylord Entertainment Company (“Gaylord”), a diversified hospitality and entertainment company whose conversion to a real estate investment trust and subsequent merger into Ryman was led by Mr. Reed. Mr. Reed was elected Chairman of the Board of Gaylord in 2005 and Chief Executive Officer in 2001.
Skills and Expertise:
| Skills and Expertise: ŸLeadership experience at a public company | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ŸExtensive experience in finance and accounting as well as employee matters, mergers and acquisitions, risk assessment, information technology, civic affairs, government relations, corporate governance, securities markets and compliance and similar matters associated with leadership positions at public companies | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ŸKnowledge of public company matters due to public company board service | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ŸNashville resident with knowledge of the Nashville market Other Current Public Company Board Service: Ryman Hospitality Properties, Inc. (since 2001) Prior Public Company Board Service: Rite Aid Corporation (2003-2005) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Current Public Company Board Service: Ryman Hospitality Properties, Inc. (since 2001)
Prior Public Company Board Service: Rite Aid Corporation (2003-2005)
| 2020 PROXY STATEMENT | 40 |
| VOTE ITEM 1—ELECTION OF DIRECTORS |
Cecelia D. Stewart
Branch Map Showing First Horizon, IBKC*, and 30 Acquired Branches
NEO Compensation Changes After the IBKC Merger When we signed the merger agreement with IBKC in November, our board of directors expected significant changes to be made, after closing, to our executive officer positions. At that time we signed letter agreements with several of our executive officers, including four of the named executives: Messrs. Jordan, Losch, and Popwell and Ms. Springfield. The letter agreements settled the roles each executive will have with the combined company after the IBKC merger closes. Additional information concerning NEO arrangements following the IBKC merger is provided under “Letter Agreements related to IBKC Merger” beginning on page 85 of this proxy statement. In addition, the Compensation Committee and the Board of Directors will consider changes in executive compensation after the IBKC merger closes. Key changes known or expected at this time are:
Our compensation policies and practices are designed to align the interests of our employees with the interests of our shareholders. We seek to attract, retain, incent, and reward individuals who contribute to our long-term success. Key practices linking performance to compensation include:
Key recent actions
The Compensation Committee considered of the past
Mr. Jordan’s leadership is known throughout the industry. He is a director or executive committee
member of the Federal Reserve
Within FHN’s peer group, Mr. Jordan’s levels. The Committee raised his package in 2020 to roughly median. After the IBKC merger closes, the Committee expects to re-assess the composition of FHN’s peer
The Compensation Committee has weighted the pay mix of
CEO Pay At Risk for Performance in 2019
The chart to the right compares actual payouts of regular PSU awards and
The
Until the 2019 grants (which will vest in 2022), TSR
Shareholder Say on Pay Vote
At our 2020 Annual meeting, vote item 2—Advisory Resolution to Approve Executive Compensation, commonly known as “say on pay”—asks our shareholders to approve, on an advisory basis, our executive compensation programs as described in this proxy statement. Shareholders have voted on a similar proposal for many years:
Although the say on pay vote item is technically advisory, the Compensation Committee took the 2018 results very seriously. After extensive shareholder outreach and consultation, the Committee took the following actions in 2018 and early 2019 in response to shareholder feedback:
Alignment with Governance Principles Our
Overview of Direct Compensation Components The major components of executive compensation in The key corporate performance and noninterest expense (efficiency). The key performance measure for
Regular Direct Compensation Components in
Compensation Practices & Philosophies Our compensation programs are designed to attract and retain a talented workforce. We recruit from a broad talent pool. Our people in turn may be recruited by competitors, other financial services firms, and firms in other industries. The total compensation opportunity we provide at each level is designed to be competitive so that over the
The Compensation Committee reviews the compensation practices of a peer group of selected U.S. banks of roughly comparable size and business mix (Peer Banks). The peer review helps our programs remain competitive. For many years the Committee has considered specific data from Peer Banks in setting the compensation components for our executives. The Peer Banks used in 2017 were fourteen regional financial services companies selected by the Late in 2017 we
Bank list, re-evaluating our current size, business mix, and target markets. As a result, for 2018
The Committee uses peer and other market data to help establish the size and terms of the components of direct compensation for executives. Salary is targeted at the median of the market for each position. Actual salaries may be higher or lower than median based on individual factors—performance, experience, skills, and tenure—or retention needs. Bonus opportunities and equity awards are targeted similarly: is intended to be paid for median performance, and maximum compensation is intended to be paid for top-quartile performance. For special compensation components, including retention awards and individual retirement and severance arrangements, relevant market data often is not available. In those cases the Committee relies on recommendations from management (for awards other than to the CEO) along with external advice from the Committee’s independent consultant to determine the types, amounts, or terms of such benefits that are reasonable and appropriate for the circumstances. The Total Shareholder Return Performance Graph (“TSR
After the
Stock Ownership Guidelines
Under our stock ownership guidelines, all NEOs and directors are required to retain 50% of the net after-tax shares received from stock awards. The retention level increases to 75% The CEO’s minimum ownership level under the guidelines is six times cash salary. The minimum levels for the other named executives are two or three times their respective cash salaries, depending upon position. We intend for the combined emphasis on corporate performance in setting executive compensation and meaningful stock retention to
our executives strongly with those of our shareholders. Guideline ownership levels are assessed annually, in the third quarter. In the NEOs exceeded guideline ownership levels and all complied with the retention requirement. Performance compensation under the MIP, ECP, or otherwise that is paid based on erroneous financial data is recoverable under our Compensation Recovery Policy if the recipient caused the error or is responsible for the data’s accuracy. Additional clawback provisions apply to most types of stock awards
In Additional information concerning our use of compensation consultants appears under the caption “The Compensation Committee—Use of Consultants” on pages Role of Management in Compensation Decisions Management administers our compensation plans, monitors compensation programs used by other companies, and considers whether new or amended compensation programs are needed to maintain the competitiveness of our executive compensation packages. Management presents recommendations to the Compensation Committee for approval. The CEO ultimately oversees the development of recommendations. If executive-level exceptions are appropriate, such as approval of an executive’s early retirement, management generally reviews the facts of the situation and provides a recommendation to the CEO and, ultimately, to the Committee for approval. The CEO does not participate in Committee deliberations concerning his own compensation.
Tax Deductibility
In 2017 and earlier years, section 162(m) of the U.S. Internal Revenue Code generally disallowed a tax deduction to public companies for compensation exceeding $1 million paid during the year to the CEO and the three other highest-paid executive officers at year-end (excluding the Chief Financial Officer). Certain performance-based compensation was not, however, subject to the deduction limit. The Committee considered these tax implications in making compensation Although deductibility was an important consideration, competitive and other factors
majority of NEO compensation was designed to be “performance-based” each year, a portion was not. That portion varied from year to year.
In 2017 Congress repealed the performance-based exception, applicable Transition provisions apply to qualifying awards that were outstanding when repeal Direct Compensation Components The direct components of NEO compensation in overview of these components appears under “Overview of Direct Compensation Components” beginning on page In setting the size of the direct compensation components for included
The amount of each component usually is determined in relation to cash salary. Salary levels are based largely on these factors: individual experience, individual performance, level of responsibility, and competitive market levels. A specific need for retention also can play a role. No specific weighting is given to any one factor. The size of each direct component for the named executives as a percentage of cash salary is shown in the Sizing of As a Percentage of Annual Cash Salary
Key factors considered when target levels
For 2019, the Committee increased the CEO’s mix of
The percentages shown for all regular 2019 stock awards in the table above are based upon 2019 salary rates and upon our closing stock price on the grant date, February 11, 2019, which was $15.43 per share. In 2019, for purposes of converting the percentages mentioned above into specific share or unit numbers the Compensation Committee used the following valuation methods: for RSUs, 100% of market value at grant; for stock options, 25%; and for PSUs, 91.9%, as explained below. RSUs and PSUs. The valuation methods for RSUs and PSUs are consistent with those used for financial reporting purposes. PSU values in 2019 were discounted 8.1% (net) from target levels due to the mandatory two-year post-vesting deferral coupled with the TSR modification feature added in 2019. Neither award type is discounted for the risk of forfeiture due to employment termination or non-performance. Stock Options. The actual value of a service-vested option cannot be determined in any definitive way. Many commonly used estimation methods, including the method used for financial reporting, were developed in connection with ordinary market trading of short-term options. The Committee believes that those methods overstate the value that an executive generally would ascribe to our long-term, unmarketable options with service-vesting requirements. That overstatement is structural, given the original usage of those methods. For those reasons, the Committee believes that the relatively simple and stable 25% method it has used for several years provides a more appropriate approximation of value for our option program.
The Committee uses a tally sheet tool to review executive pay packages and when considering adjustments to executive pay levels and mix. A “sheet” for each executive summarizes all major
categories of current and recent compensation levels, including the aggregate retention value and duration of unvested awards. Tally sheets are
Early in 2019 the Committee established a formulaic structure for 2019 MIP bonuses, subject to certain potential adjustments. Individual bonuses were determined by applying a corporate rating, along with an individual rating, to individual target bonus amounts set for each NEO. The corporate rating, in turn, was determined by adding together an income factor and an efficiency factor; the resulting sum was subjected to several potential company-wide subjective adjustments. These calculation processes are depicted in the following chart:
Corporate Rating The Corporate Rating in 2019 was the sum of two percentages—the efficiency factor plus the income factor—multiplied by a subjective adjustment factor. Efficiency Factor The efficiency factor provided threshold-level reward (50%) for achieving budget noninterest expense levels, and target-level reward (100%) for achieving a 3% reduction from budget. The calculated factor was capped at 100%; better-than-target efficiency performance was to be considered as part of the subjective adjustment factor. Interest expense was excluded as being largely outside of management’s control. Expenses of our fixed income segment were excluded because they are driven substantially by commissions, which rise and fall in tandem with revenues. Except for the CEO, half of the efficiency factor outcome was driven by company-wide results, and half was driven by results in the business unit or other area of the company managed by each specific officer. In both cases (company-wide and business unit), “target” outcomes required a 3% reduction in expense from budget. 2019 Efficiency Factor Grid (40% Weighting*)
COMPENSATION DISCUSSION AND ANALYSIS Income Factor The income factor provided target-level reward for achieving budget, and superior reward for exceeding budget, in 2019. 2019 Income Factor Grid (60% Weighting)
Subjective Adjustment Factor In 2019 the sum of the efficiency and income factors could be modified by a subjective adjustment factor, in the discretion of the Compensation Committee, to arrive at a final Corporate Rating. The subjective factor could have been affected by quantitative and non-quantitative considerations. Potential subjective adjustment categories in 2019 were:
The balanced scorecard process ranked our company among Peer Banks on various financial measures. The scorecard process used quantitative financial measures and peer rankings, but was not used in a quantitative manner to determine a specific numerical rating. The risk management factor was intended to be used if unusual or exceptional events occurred that tested our level of preparedness, or if events occurred that reflected well or poorly upon our risk management functions. Under “quality of earnings” the Committee intended, among other things, to take account of unusual shortfalls or windfalls in revenues associated with interest rate movements, asset sales, and other events during the year relative to budgetary expectations. Our non-strategic segment encompasses several businesses which have been largely discontinued and are being wound down over many years. This segment often has contributed significant expenses to our operating results, and occasionally significant items of income, during the past several years. Although the efficiency and income factors exclude these impacts, the Committee retained the ability to adjust bonuses up or down depending upon the Committee’s subjective assessment of how these legacy businesses are managed to mitigate long-term impacts on the company. Calculations & Rationales Calculations of the efficiency and income factors were quantitative, without discretionary input from the Committee. As mentioned above, the two factors were added with weightings of 40% and 60%, respectively. The increased focus on efficiency in 2019 was intensified by setting target (100%) efficiency performance at expense levels 3% under budget, and by setting threshold (50%) performance at budget. The Committee also split the efficiency factor into company-wide and business unit parts so that, except for the CEO, each executive would be focused on driving efficiency in that part of our business that he or she could control directly. As a result, merely achieving budgeted expense levels (company-wide and business unit) would result in a 20% nominal reduction in earned bonus; moreover, failure to achieve company-wide budget would result in a 20% reduction by itself, and failure to achieve business unit budget separately would result in a 20% reduction. The subjective adjustment factor, an unweighted blend of many company-wide considerations, was applied to the sum of the efficiency and income factors. Required Quantitative Adjustments Pre-tax earnings, noninterest expense, and other financial performance measures for 2019 were required to be adjusted for certain specific items, including changes in accounting principles and certain unusual or non-recurring items, such as litigation settlements. The required adjustments are similar to, but not the same as, the notable item adjustments presented in Appendix A.
Actual adjustments to the calculated factors are discussed under “2019 MIP Bonus Outcomes” below.
Individual Rating In addition to the corporate rating, each NEO’s individual rating could directly impact final bonus results. Each individual rating was to be based on the Committee’s subjective assessment of personal plan results and any other individual factors the Committee chose to consider. Individual ratings could range from 0% to 150%. In management & credit Actual individual rating impacts are discussed under
The outcomes of the MIP bonus process for the NEOs other than Mr. Kisber are summarized in the following table.
2019 MIP Bonus Outcomes
Pretax earnings
Lastly, the Committee credited management with achieving these results consistently during the year despite, in the fourth quarter, having to devote substantial attention and resources to negotiating and planning for the IBKC merger that The Committee
proxy statement. For two other NEO bonuses,
Mr. Kisber is the president of our fixed income business unit The basic structure of Mr. Kisber’s pay package has not changed in many years. His compensation
elementsfor any given year are paid or grantedduringthat year and the next.
Mr. Kisber’s package Early in
The first $0.5 million of regular annual stock awards were to be granted as RSUs, and any remainder (up to $1.4 million) were to be granted 60% in PSUs and 40% in stock Mr. Kisber’s Mr. Kisber’s 2018 earned MIP cash bonus into an award of 2019 executive PSUs on standard terms. The conversion was done in the same manner, using the same valuation method, as Mr. Kisber’s 2019 package resulted in total pay of $5,837,000, slightly less than the $6 million cap. That earned package consisted of: $600,000 of salary; $2,500,000 of MIP cash bonus; $1,900,000 of regular stock award grantsduring 2020, for 2019, consisting of $500,000 of RSUs, $560,000 of stock options, and $840,000 of PSUs (at target); and $837,000 of MIP-driven RSUs that will settle in cash at vesting. FHN Financial’s business is highly cyclical, benefiting the most from high volatility in the fixed income markets and falling interest rates. The cycle was “down” in 2017 and 2018, with low volatility and rising rates, but improved significantly in 2019. The fixed income segment’s contribution to our net income in 2019 was $52 million, substantially higher than the $9 million contributed in 2018. In the chart which follows, Mr. Kisber’s potential total direct compensation package for each of the years
Mr. Kisber Potential vs Actual Pay Package ($ in thousands)
In The dollar amounts and mix of awards granted in
($ in thousands)
Regular RSUs granted to NEOs vest in March three years after grant if the NEO remains employed with the company through the vesting date. They are settled in shares. Dividends accrue during the vesting period and are paid in cash at vesting.
NEO stock option awards in 2019 vest in equal installments in March of the first four years following grant if the NEO remains employed with the company through the vesting dates. There is no accrual of cash dividends on options. Each option has a seven-year term and is priced at market at the time of grant. Options will achieve value only to the extent market value on the exercise date exceeds the option price fixed on the grant date. A stock option provides a retention incentive over its vesting period directly linked to our stock price growth. Options inherently align compensation with the interests of shareholders.
2019 PSUs Consistent with competitive practice, the Committee makes annual grants of performance equity awards, each with a three-year performance period. The financial goals established at the beginning of each performance period are company-wide in focus and are uniform for all executives. Grants are made annually, so financial results in any given year can affect three outstanding awards. The Committee sets performance goals each year based on the company’s objectives at that time, and may change the types and amounts of awards compared to prior years based on desired managerial focus, competitive pressures, and other factors. Payout of 2019 PSUs will be based on achievement of two goals as shown in the following chart. Adjusted ROTCE of our core business segments, averaged over the three-year period 2019-21, will be ranked against the average ROTCE results of those banks that comprise the
KBW Regional Bank Index (ticker symbol KRX). The ROTCE outcome will be modified by our TSR performance, ranked against the same peers. Peer banks that fall out of the Index after grant for certain specific reasons (including merger and certain types of de-listing) will not be included in the final peer calculation. Both rankings will follow our traditional practice: top-quartile results in maximum payout, bottom-quartile results in zero (ROTCE) or minimum (TSR) payout, and for the middle quartiles the percentages are interpolated. The ROTCE percentage (of target) will range from 50% to 150%, the TSR percentage will range from 75% to 125%, and the final payout calculation will multiply the two with equal weighting. The ROTCE percentage will be zero if ROTCE performance falls below the 50% threshold; the TSR percentage cannot fall below 75%. Dividends accrue until payment but are paid only to the extent the underlying units vest. Performance will be determined in 2022, but payment will be deferred until 2024. If the TSR percentage outcome is similar to the ROTCE outcome, the TSR adjustment will amplify the degree to which the overall payout percentage deviates from target. For example, if both percentages are 109%, the overall payout will be 119%; if both percentages are 85%, the overall payout will be 72%. On the other hand, if one measure is above target and the other is below, the TSR adjustment will moderate the degree to which the overall payout will deviate from target.
Only whole-year ROTCE results count in the rankings. The adjustments to our ROTCE are the same as the required adjustments associated with the 2019 MIP bonus opportunity, discussed above under “Ordinary MIP Bonus” starting on page •. The required adjustments are similar to, but not the same as, the notable item adjustments presented in Appendix A. The KRX banks currently are 50 regional banks, a wider range of institutions than those in our Peer Bank group used for other purposes. For PSU awards, the Committee believes that an independently-selected basket of competitors like the KRX banks provides a larger, more stable group against which to measure our performance over a three-year period. This rank structure was continued from recent years primarily because the use of a relative-rank goal rather than an absolute measure should provide a better reflection of our results versus competitors. It was chosen in part because of the volatile environment for us and our industry. The awards should self-adapt to industry events that will unfold over a three-year time horizon and cannot be predicted in advance. Most Recent PSU Performance Before 2019, PSU performance was measured based on our ROE performance ranked against KRX peers, without a TSR adjustment. Peer ROE data for a given year is not fully available until the following March. The most recent PSUs with final performance determined were granted in February 2016 with a 2016-18 performance period, vesting in May 2019. Our adjusted ROE over those three performance years ranked in the top half of the KRX peers. The following table shows the payout of the 2016 PSUs in relation to our TSR (base=100%) from grant to vesting, and stock prices on those dates.
Fixed Income Award Practices
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The overall amount of annual stock awards granted to Mr. Kisber, the head of our fixed income business, is impacted by the previous year’s results. See “MIP Bonus—MIP Bonus for FHN Financial Executive” starting on page 64 above.
| 2016 CEO Retention Award
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In February 2016 the Committee approved a special retention award for our CEO. The award consists of 155,238 seven-year stock units and 411,747 late-vesting stock options.
The units have a 7-year service vesting and financial performance period. The units’ performance goal is met if the TSR value of a share of our stock during the seven-year period is at least $11.63/share, which is slightly higher than market value on the grant date.
| 2020 PROXY STATEMENT | 68 |
| COMPENSATION DISCUSSION AND ANALYSIS |
The stock options were granted at-market with service vesting in 2020, 2021, and 2022, or four, five, and six years after grant. The options expire in 2023, seven years after grant.
The Committee wanted this award to have substantial retention value as well as a strong linkage to shareholder value. The entire award continues to be at-risk for the market performance of our common stock during its seven-year
duration. In making this award the Committee wanted to close a gap it perceived in the competitiveness of Mr. Jordan’s target compensation and the retention value of his outstanding awards. The Committee believes that Mr. Jordan’s leadership and experience have been critical to our company’s recent successes and will remain crucial in the years to come.
Deferral, Retirement, and Other Benefits
Benefits other than Change in Control
We provide retirement and other post-employment benefits that we believe are customary in our industry. We provide them to remain competitive in retaining and recruiting talent. The table below summarizes the major types of benefits provided to
NEOs. Many of these benefits are broad-based, available to most or all full-time employees, and many others are available generally to employees whose compensation levels exceed certain thresholds, regardless of officer status.
Deferral, Retirement, and Other Benefits Summary
$9.22 per share, so
| Benefit | Type | Benefit Provided | Further Information | ||||||
| Savings Plan (broad-based) | Tax-qualified defined contribution (retirement savings) | Participants may defer a portion of salary into a fully funded tax-advantaged savings account, up to | Match amounts for the NEOs are included in
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| Savings Restoration Plan | Non-qualified deferral | Provides a restorative benefit to savings plan participants whose compensation exceeds IRS limits, as if the
| Restoration match amounts for the
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| Deferred Compensation Plan | Non-qualified deferral | Participants may defer payment of a portion of salary, bonus, and other cash compensation. Taxation is deferred until paid. There is no company match. The plan pays at-market returns indexed to the | Deferral and withdrawal information for the |
| 2020 PROXY STATEMENT | 69 |
Our management team’s focus then, as now, was to control what could be controlled while resolving the legacy issues as optimally as possible. The focus on controllable items resulted in several key, broad initiatives:
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Starting before 2011, but especially since then, these and similar initiatives have been transformational. Loans and deposits in our regional banking segment have grown significantly and steadily, more than offsetting significant run-off of legacy business in the non-strategic segment. Although total expenses have been volatile, controllable expenses, especially those in the banking segment, have been cut while earnings have grown. Not all controllable expenses are down—costs associated with driving higher revenues or efficiencies are up in many cases, but only after management assesses the ability of those costs to more than pay for themselves. The steady and still-compounding successes in these and other areas:
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62
COMPENSATION DISCUSSION AND ANALYSIS
2012 to 36 cents annually in 2017 (48 cents in 2018);
•
resulted in our stock price increasing from $8.00 per share at year-end 2011 to $19.29 per share on October 20, 2017, the last trading day before the Committee meeting;
•
for an investor who owned 1,000 shares in 2011 with dividends reinvested, grew that investment from $8,000 to more than $21,000; and
•
positioned us to pursue seriously and then successfully close our merger in 2017 with Capital Bank Financial.
| Benefit | Type | Benefit Provided | Further Information |
Deferral, Retirement, and Other Benefits
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| 2020 PROXY STATEMENT | 70 |
| COMPENSATION DISCUSSION AND ANALYSIS |
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| Other Perquisites | Misc. | We provide
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Change in Control (CIC) Benefits
The financial services industry experiences periods of significant consolidation separated by periods of modest activity. Merger activity abated substantially following the last recession, but (excluding the four largest U.S. banks) resumed several years ago. Although this industry pattern has created substantial business opportunities for us and others, it has also created substantial personal uncertainties for employees. Our CIC severance agreements and CIC plan features were put in place a number of years ago in response to these uncertainties.
We have CIC severance agreements with each NEO. These are not employment agreements. They provide significant benefits if employment is terminated in connection with a CIC event, but otherwise provide no employment protection. Additional information about these contracts is provided under the caption “CIC Severance Agreements” in the “Change in Control” section beginning on page 85 of this proxy statement.
The primary objectives of our CIC severance agreements are to allow us to compete for executive talent during normal times, mitigating the personal risk that a CIC would present. If a CIC situation arises, the agreements also provide an incentive for our executive team to remain with the company, focused on corporate objectives, during the pursuit, closing, and transition periods that accompany CIC transactions in our industry.
Even though we will be the surviving company, the IBKC merger is a CIC transaction under our executive CIC severance agreements. For those executives who will lose their positions or experience a significant change in position, the CIC severance agreements will operate as intended. As mentioned above, Mr. Jordan and certain other NEOs signed letter agreements with us waiving their right to treat the IBKC transaction, and their related position changes, as benefit triggers under their CIC severance agreements. Additional information about the letter agreements is provided under the captions “NEO Compensation Changes After the IBKC Merger” and “Letter Agreements related to IBKC Merger” beginning on pages 51 and 85 of this proxy statement.
Under many of our programs a CIC event can cause awards or benefits to vest, be paid, or be calculated and paid at target payout levels. The main objective of these features is to allow us to offer competitive compensation packages in an industry where robust periods of consolidation occur. Like our CIC severance agreements, these program features have a double trigger, which means that vesting or payment is accelerated only when a CIC event occurs resulting in termination of employment.
The Compensation Committee Report is located on page 27 of this proxy statement under the caption “The Compensation Committee.”
| 2020 PROXY STATEMENT | 71 |
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This Recent Compensation section provides detailed information about the compensation paid to our named executive officers in 2019. This section should be read in conjunction with the immediately preceding Compensation Discussion and Analysis section.
2019 Direct Compensation Earned
A comprehensive Summary Compensation Table, along with detailed footnotes and commentary, is presented in the next several sections. To provide context for that information, the following chart shows direct compensation amounts earned in 2019 by our named executive officers. The 2019 MIP bonus (which was paid early in 2020) is
included. Direct compensation components include salary, bonus earned in relation to 2019, and stock awards vested during 2019. For this purpose, amounts are considered “earned” if they were paid or deferred on a fully-vested basis. All amounts are shown before reduction for withholding taxes and other payroll deductions.
2019 Direct Compensation Earned
($ in millions)
Key details regarding the segments in this chart follow:
| • | MIP Bonus. Each annual bonus award under the MIP for 2019 was paid early in 2020. |
| • | Stock Awards Vested. Awards vested in 2019 consisted of PSUs, restricted stock shares (RS), |
RSUs, and stock options. Values are based on the market price of our stock on the vesting date. Stock options are valued based on the “spread” at vesting, which is the difference between market price at that time and the option price; any negative spreads at vesting are ignored.
| 2020 PROXY STATEMENT | 72 |
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66
RECENT COMPENSATION
Summary Compensation & Award Grant Tables The amounts shown in the Summary Compensation Table include all compensation earned for 2019, including amounts deferred by those persons, for all services rendered in all capacities to us and our subsidiaries. Compensation amounts from the past two years are also included. Additional compensation information is provided in the remainder of this section. No named executive officer who served as a director was separately compensated as a director. Summary Compensation Table
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The amounts shown in the Summary Compensation Table include all compensation earned for 2017, including amounts deferred by those persons for all services rendered in all capacities to us and our subsidiaries. Compensation amounts from the past two years are also included. Additional compensation information is provided in the remainder of this section. No named executive officer who served as a director was separately compensated as a director.
Summary Compensation Table
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(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Name and | Year | Salary | Bonus* | Stock | Option | Non-Equity | Change in | All Other | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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D.B. Jordan | 2017 | $ | 875,000 | $ | 5,500,000 | $ | 1,640,822 | $ | 520,273 | $ | 1,225,000 | $ | 479,791 | $ | 92,879 | $ | 10,333,764 | ||||||||||||||||||||||||||||||||||||||||||||||
Chairman, | 2016 | 868,654 | — | 2,736,995 | 1,768,560 | 1,323,000 | 225,014 | 88,227 | 7,010,450 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
President, & | 2015 | 815,000 | — | 1,144,893 | 429,016 | 1,155,000 | — | 81,582 | 3,625,491 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
CEO | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
W.C. Losch |
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| 2017 |
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| 475,000 |
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| — |
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| $ |
| 498,769 |
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| $ |
| 158,164 |
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| $ |
| 525,000 |
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| $ |
| — |
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| $ |
| 43,885 |
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| 1,700,818 | ||||||||||||||||||||||
EVP & CFO |
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| 2016 |
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| 468,654 |
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| 498,804 |
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| 168,685 |
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| 513,000 |
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| — |
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| 42,329 |
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| 1,691,472 | ||||||||||||||||||||||||||||||||||||
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| 2015 |
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| 425,000 |
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| — |
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| 604,276 |
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| 167,247 |
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| 425,000 |
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| 41,382 |
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| 1,662,905 | |||||||||||||||||||||||||||||||||||||
M.E. Kisber | 2017 | $ | 600,000 | — | $ | 954,879 | $ | 288,449 | $ | 2,099,000 | $ | 121,354 | $ | 49,632 | $ | 4,113,314 | |||||||||||||||||||||||||||||||||||||||||||||||
President– | 2016 | 600,000 | — | 352,992 | — | 2,500,000 | 65,990 | 50,347 | 3,569,329 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
FTN Financial | 2015 | 600,000 | — | — | — | 2,500,000 | — | 48,917 | 3,148,917 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
D.T. Popwell |
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| 2017 |
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| $ |
| 500,000 |
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| — |
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| $ |
| 525,026 |
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| $ |
| 166,484 |
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| $ |
| 575,000 |
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| $ |
| 86,332 |
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| $ |
| 62,223 |
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| 1,915,066 | ||||||||||||||||||||||
President– |
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| 2016 |
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| 493,654 |
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| 525,050 |
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| 177,563 |
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| 540,000 |
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| 49,306 |
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| 59,959 |
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Banking |
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| 2015 |
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| 450,000 |
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| 672,517 |
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| 177,086 |
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| 450,000 |
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| 53,853 |
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C.T. Tuggle | 2017 | $ | 475,000 | — | $ | 391,882 | $ | 124,269 | $ | 427,500 | $ | 82,935 | $ | 41,172 | $ | 1,542,758 | |||||||||||||||||||||||||||||||||||||||||||||||
EVP & General | 2016 | 475,000 | — | 391,905 | 132,539 | 461,700 | 9,750 | 40,883 | 1,511,777 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Counsel | 2015 | 475,000 | — | 391,896 | 146,868 | 427,500 | — | 38,343 | 1,479,607 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| ** | Mr. Kisber’s column (e) stock awards for 2019 consisted entirely of PSUs granted to him in | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Explanations of certain columns follow:
Col (c) Salary.Annual cash salary is shown.
Col (d) Bonus. Column (g) shows the annual MIP bonus awards earned. Mr. Jordan was paid a discretionary special bonus in October 2017 to recognize outstanding performance over the previous six years.
Cols (e)-(f) Accounting Values. Columns (e) and (f) show the grant date fair value of the awards using the accounting method applicable to our financial statements. The accounting valuation method makes assumptions about growth and volatility of our stock value, expected duration in
the case of options, vesting, forfeiture, future company performance, and other matters. A discussion of those assumptions appears in note 19 to our 2019 annual report to shareholders. Actual future events may be substantially inconsistent with the assumptions. Accordingly, the actual values realized by an award holder are likely to differ substantially from these accounting values.
Col (e) Stock Awards. Column (e) includes the accounting values of RSU, PSU, retention RS, and IBKC RS awards granted during each year. These do not represent amounts paid or earned; they are the values attributed to awards under applicable
| 2020 PROXY STATEMENT | 73 |
| RECENT COMPENSATION |
accounting rules. As noted under the table, the IBKC RS awards were granted when we signed a merger agreement with IBKC and will forfeit entirely if that merger fails to close. For additional information, see “2019’s Strategic Transactions Will Drive Our Future” beginning on page 50.
Col (e) Regular PSUs. PSUs are performance based, using a three-year performance period. Eventual payout may be higher or lower than the accounting values used in column (e) and may be zero. PSUs also have a service-vesting requirement, and a mandatory two year deferral period after vesting. Generally, PSU performance depends upon our adjusted core-segment ROE ranking relative to certain peer banks during the performance period. The 2019 PSUs also have a total shareholder return (TSR) modifier, also measured against peers. Each year, a percentage of PSUs (37.5% to 187.5%) will vest if threshold or higher performance goals are achieved during the performance period and if the holder remains employed with the company through the vesting date. PSUs settle with shares rather than cash. In column (e) PSU amounts are shown at their original accounting values assigned at grant. Those accounting values are less than the possible payouts if all performance conditions are maximally achieved. The following table provides a summary of the maximum payouts of the PSU awards for each named executive, based on our stock values on the respective grant dates. For the CEO, the weighting of PSUs in 2019 increased from 50% of total equity awards to 60%, with RSUs falling from 25% to 20%. For the other NEOs except Mr. Kisber, starting in 2018 the weighting of PSUs doubled to 50% of total equity awards, and the weighting of RSUs halved to 25%.
Maximum Dollar Values* of PSUs
(Based on Share Price at Grant Date)
| Name | 2017 | 2018 | 2019 | |||||||||
| Mr. Jordan | $ | 1,640,956 | $ | 1,687,495 | $ | 2,025,030 | ||||||
| Mr. Losch | 249,427 | 524,991 | 524,997 | |||||||||
| Mr. Kisber | 682,322 | — | 1,050,023 | |||||||||
| Mr. Popwell | 262,554 | 577,492 | 577,512 | |||||||||
| Ms. Springfield | 154,705 | 329,997 | 337,493 | |||||||||
| * | Maximum dollar values = 150% of target unit levels for 2017 & 2018 PSUs, using grant date fair value. Maximum dollar value of |
Col (e) Regular RSUs. The annual equity award package includes RSUs which vest in three years and settle in shares.
Col (e) Stock Awards. Column (e) includes the accounting values of RSU, PSU, and retention
67
Col (e)-(f) Retention Awards. On occasion special retention awards are made to selected individuals. No retention awards were granted to the NEOs in 2017-19.
Col (f) Stock Options. Column (f) includes the accounting values of stock options granted.
Col (g) Annual MIP Bonus Awards. This column shows the annual bonus earned for each year under our MIP. For all three years, MIP bonuses (except for Mr. Kisber) were based upon achievement in the following areas: pre-set levels of adjusted annual pre-tax earnings; execution of personal plan goals; individual contribution to risk management, quality of earnings, and objectives for our non-strategic business segment; and the results of a balanced scorecard process ranking us among selected peer banks on a matrix of balance sheet, capital, expense, earnings, and other measures. Mr. Kisber’s bonuses were based on the net profits of our FHN Financial division, of which he is the President and, for 2018 and 2019, on divisional return on equity. FHN Financial net profits and ROE each year also drove stock awards granted to Mr. Kisber the following year. For his 2018 MIP bonus, the entire cash amount earned ($700,000) was converted into an award of 2019 PSUs using standard executive terms and conditions (service and performance requirements), and using the standard valuation method (the risk of forfeiture is ignored).
Col (h) Pension & Deferred Compensation. Column (h) includes changes in defined benefit pension actuarial values, which are the aggregate increase during the year in actuarial value of both pension plans (qualified and restoration). Our pension plans were closed to new employees in 2007; Mr. Losch does not participate. Pension benefits were frozen in 2012. Incremental changes in actuarial pension values occur after 2012 mainly due to changes in discount rates used, changes in mortality tables, and changes to life expectancy due to the passage of time. No above-market earnings on deferred compensation were accrued during the year for any of the named executives.
Col (i) All Other. Elements of “All Other Compensation” for 2019 consist of the following:
| 2020 PROXY STATEMENT | 74 |
| 2020 PROXY STATEMENT | 76 |
| RECENT COMPENSATION |
Cols (j)-(k) Stock Options. Column (j) shows the number of shares granted under options to the named executives in 2019, and column (k) shows the exercise price per share of those options. The exercise price was the market price of our stock on the grant date. For additional information regarding option awards, see the discussion of column (f) of the Summary Compensation Table beginning on page 73 of this proxy statement.
Col (l) Grant date fair values. Column (l) reflects the accounting value of the awards shown in columns (g), (i) and (j). Our stock price on the grant date, February 11, 2019, was $15.43 per share. For stock options, the grant date fair value is based on the Black Scholes value on the grant date, which was $2.6948 per share. For additional information see the discussion of columns (e) and (f) of the Summary Compensation Table on page 74.
Supplemental Disclosures for Summary Compensation and Grant Tables
For information about the rationale behind, sizing of, and other aspects of the major compensation elements, see “Overview of Direct Compensation Components,” “Relative Sizing & Mix,” and “Salary” beginning on pages 55, 59, and 61, respectively.
The vesting and expiration schedules of equity-based awards granted in 2019 are as follows:
| • | Regular
• | PSUs |
• | RSUs vest on |
March 2 three years after grant. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Vesting information related to all equity awards held by the named executives at year-end appears under the heading “Outstanding Equity Awards at Fiscal Year-End” beginning on page •, especially in the notes to the table in that section. For all awards, vesting will or may be accelerated or pro-rated in the cases of death, disability, retirement, and qualifying termination after a change in control. For performance awards, service-vesting may be
waived, but performance goals generally are not waived, following retirement, and awards may be pro-rated. Additional information concerning the acceleration features of awards is set forth under the caption “Change in Control (CIC) Arrangements” on page 84.
Dividends or dividend equivalents accrue at normal declared rates on stock awards other than options. Accrued dividends and equivalents are paid at vesting, or forfeit if the award is forfeited.
The Compensation Committee has approved a mandatory tax withholding feature under which vested shares are automatically withheld in an amount necessary to cover minimum required withholding taxes. A supplemental feature allows the holder to elect withholding at the maximum tax rate instead. Options have no mandatory or supplemental tax feature. Under our Equity Compensation Plan we do not re-use, in new grants, shares withheld to cover taxes.
The Compensation Committee generally has the power to impose deferral of payment as a term or condition of an award. The 2019 PSUs have a mandatory two-year payment deferral after vesting.
| 2020 PROXY STATEMENT | 77 |
| RECENT COMPENSATION
Outstanding Stock Awards at Fiscal Year-End The following table provides information about stock options, all types of restricted stock and stock units, and all performance stock awards (at target levels) held at December 31, 2019 by the named executive officers. Outstanding Equity Awards at Fiscal Year-End 2019
Explanations of certain columns in the table follow: Col (c) Unvested Options. Column (c) reports unvested stock options. A special retention award to the CEO in 2016 included stock options, none of which had vested by year-end. The vesting dates of options reported in column (c) are: Stock Options Unvested at Year-End
Col (g) Unvested Non-Performance Shares & Units.Column (g) includes unvested RSUs and RS, specifically regular annual RSUs, special retention RS awards, and “closing incentive” awards connected with the IBKC merger. The vesting dates of those awards are shown in the following table: RS & RSU Awards Unvested at Year-End
Col (i) Performance Equity Awards. Column (i) reports PSU awards, and a special retention stock unit award, granted from 2016 through 2019 which are outstanding at year-end. For three NEOs, starting in 2018 the PSU numbers increased largely because the Compensation Committee doubled the weighting of PSUs to 50% of total equity awards, and cut RSUs in half to 25%. The performance periods and target numbers of units for those awards are shown below. The performance period for the regular 2017 PSU awards has ended, but performance (relative to peers) cannot be determined until all peer companies have reported 2019 earnings. Awards are reported in units at target levels. For the 2019 PSUs, the maximum is 187.5% of target. For the 2017 and 2018 PSUs, the maximum is 150% of target. For the special retention award in 2016 (a special incentive-retention award for the CEO), the maximum is 100%; that award pays if the total shareholder return value of a share of stock is at least $11.63 on the 7thanniversary of grant. The special award requires continuous employment with the company during the performance period. Mr. Kisber’s 2019 PSUs were granted in lieu of his $700,000 cash bonus for 2018 under the MIP.
Performance Equity Awards Unvested at Year-End (Stock Units at Target Level)
Cols (h) & (j) Values. Columns (h) and (j) reflect year-end market values ($16.56/share) of the awards reported in columns (g) and (i), respectively, with no discount for risk of forfeiture or time delay until vesting. The values reported are not based on financial accounting methods. Options Exercised and Stock Vested The following table shows stock options exercised by the named officers along with other stock awards that vested during 2019. The value realized on exercise of options is the pre-tax difference between the market value on the exercise date and the (lower) option price, multiplied by the number of options exercised. Option awards have no dividend feature. The stock awards consist of regular RSUs and PSUs granted in 2016, all of which are paid in stock. The dollar values shown for the stock awards are based on market prices of our stock on the respective vesting dates plus accrued cash dividend equivalents, before withholding taxes. Options Exercised and Stock Awards Vested During 2019
The PSUs that vested in 2019 have not been paid. Those PSUs were granted with a mandatory two-year deferral period, and will be paid on May 12, 2021. Of the Stock Award amounts shown in the table, the portions associated with PSUs are: Jordan, 118,250 shares and $1,828,145; Losch, 18,065 shares and $279,285; Kisber, no PSUs vested in 2019; Popwell, 19,015 shares and $293,972; and Springfield, 11,817 shares and $182,691. The actual dollar values of the shares paid will depend on our stock value when deferral ends in 2021.
POST-EMPLOYMENT COMPENSATION
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Overview & Common TermsPost-Employment Compensation
We offer programs providing benefits after retirement and for certain other terminations. Other programs have features that enhance, accelerate, reduce, shorten, or forfeit benefits if employment terminates in various ways. Those programs and features are discussed in this section.
Common post-employment terms include:
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We operate two defined benefit retirement plans: a broad-based tax-qualified pension plan and an unfunded non-qualified pension restoration plan limited to employees for whom the qualified benefit is limited by tax law. The restoration plan extends the benefit beyond that tax law limit. The two plans effectively provide a single pension benefit.
The plans were closed to new hires in 2007, and benefits were frozen at year-end 2012. Credited service years do not increase after 2012, and changes in compensation are ignored.
Pension benefits are based on average compensation for the highest 60 consecutive months of the last 120 months of service prior to 2013, length of service prior to 2013, and social security benefits. Covered compensation includes cash salary reportable to the IRS plus pre-tax contributions under the savings plan and employee contributions under the flexible benefits plan, and excludes bonuses, commissions, other deferred compensation, and incentives.
A “normal” pension benefit provides a monthly payment to the employee for life beginning at retirement at age 65. Participants under age 65 who are at least age 55 with 15 years of service may retire early with a reduced pension benefit. The reduction varies based on age at retirement. Similarly, a delay in retirement will increase benefits. A participant may make other elections which change the benefit. Those include a spousal benefit election, a minimum (certain) payment term, and a lump sum benefit (restoration plan only). Married participants often choose a qualified joint and survivor annuity with a surviving spouse receiving 50 percent of the participant’s benefit.
The following table shows estimated normal retirement benefits under the pension plans as of December 31, 2017. Mr. Losch does not participate in these plans.
Pension Benefits
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| • | Retirement. A termination of employment after meeting certain age and service requirements specified in the applicable program. Some programs specify early and normal retirement requirements; others specify only normal retirement or make no provision for retirement. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| • | Change in Control, or CIC. A corporate change in control
program. The definition used in active programs is discussed in “CIC Definition” on page 84. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
We operate two defined benefit retirement plans: a broad-based tax-qualified pension plan and an unfunded non-qualified pension restoration plan limited to employees for whom the qualified benefit is limited by tax law. The restoration plan extends the benefit beyond that tax law limit. The two plans effectively provide a single pension benefit.
The plans were closed to new hires in 2007, and benefits were frozen at year-end 2012. Credited service years do not increase after 2012, and changes in compensation are ignored.
Pension benefits are based on average compensation for the highest 60 consecutive months of the last 120 months of service prior to 2013, length of service prior to 2013, and social security benefits. Covered compensation includes cash salary reportable to the IRS plus pre-tax contributions under the savings plan and employee contributions under the flexible benefits plan, and excludes bonuses, commissions, other deferred compensation, and incentives.
A “normal” pension benefit provides a monthly payment to the employee for life beginning at retirement at age 65. Participants under age 65 who are at least age 55 with 15 years of service may retire early with a reduced pension benefit. The reduction varies based on age at retirement. A participant may make other elections which change the benefit. Those include a spousal benefit election, a minimum (certain) payment term, and a lump sum benefit (restoration plan only). Married participants often choose a qualified joint and survivor annuity with a surviving spouse receiving 50 percent of the participant’s benefit.
The following table shows estimated normal retirement benefits under the pension plans as of December 31, 2019. Mr. Losch does not participate in these plans.
Pension Benefits at Year-End 2019
| (a) | (b) | (c) | (d) | (e) | ||||||||
| Name | Plan | Number of Years of Credited Service (#) | Present Value of Accumulated Benefit ($) | Payments During Last Fiscal Year ($) | ||||||||
| Mr. Jordan | Qualified | 6 yrs | $332,496 | — | ||||||||
| Restoration | 6 yrs | 998,866 | — | |||||||||
| Mr. Kisber | Qualified | 20 yrs | $1,085,160 | — | ||||||||
| Restoration | NA | NA | NA | |||||||||
| Mr. Popwell | Qualified | 6 yrs | $352,935 | — | ||||||||
| Restoration | 6 yrs | 462,010 | — | |||||||||
| Ms. Springfield | Qualified | 15 yrs | $606,729 | — | ||||||||
| Restoration | NA | NA | — | |||||||||
Explanations of certain columns follow:
Col (c). This column shows full years of credited service, unchanged since 2012.
Col (d). Column (d) reflects the actuarial present value of each named executive’s accumulated benefit, computed as of the same pension plan measurement date used for financial statement reporting purposes with respect to 2019 except that retirement age is assumed to be the normal retirement age of 65. Column (d) amounts were calculated by the pension plan actuary using the projected unit credit cost method. This method recognizes cost in an increasing pattern as a participant approaches retirement. The 2019 discount rates are 4.43% for the pension plan and 4.26% for the pension restoration plan and reflect
| 2020 PROXY STATEMENT | 81 |
| POST-EMPLOYMENT COMPENSATION
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the expected average term until settlement of each of these plans. The assumptions on which the amounts presented in the table are based are discussed in note 18 to our financial statements.
Col (e). No pension benefit amounts were paid during 2019 to any named executive officer.
Nonqualified Deferred Compensation Plans
We provide a traditional deferral plan for executives, not qualified under tax rules, which allows executives to defer receipt and taxation of cash salary and bonus. Deferred amounts are credited to accounts and earnings accrue according to the savings restoration plan, an in-service distribution date may be selected when the deferral election is made.
Col (f). Certain plan accounts are denominated as numbers of shares of stock or mutual funds. All such accounts are valued based on the fair market value of those shares at year-end.
The information above excludes the tax-qualified savings plan. For additional information concerning deferred compensation plans see “Deferral, Retirement, and Other Benefits” beginning on page 63.
Employment & Termination Arrangements
We have no employment agreement with any named executive. Many plans and programs contain special provisions of the plan. Participants have some discretion regarding the length of the deferral period, the investment criteria upon which earnings are based, and whether payout will be lump sum or an annuity. A commonly selected deferral period lasts until employment terminates.
Our qualified savings deferral plan allows an employee to make contributions of salary into a plan account, subject to limits imposed by tax laws. We provide a 100% match under the qualified savings plan for the first 6% of salary each eligible participant (having at least one year of service) elects to defer into the plan.
We have adopted a nonqualified savings restoration plan for those employees, including executives, whose base salary exceeds the tax limits imposed on the qualified savings plan. The restoration plan provides a nonqualified vehicle for employees to participate in a savings plan beyond the tax law limits. Unlike the qualified plan, the restoration plan is unfunded. The restoration plan offers many of the same investment options as the qualified plan, but our stock is not among them.
Our nonqualified plans are unfunded, meaning that no trust holds funds or investments for any of the accounts. Legally, each plan account is an unsecured debt we owe the participant. Each account is fully vested and non-forfeitable. Except for the timing of payments, plan accounts are not reduced or enhanced by termination of employment, in various common situations, including in connection with retirement or a change in control. We also have certain other arrangements that deal primarily with retirement and change in control, or other event.
We reduce the risk of our obligations under our nonqualified deferred compensation plans by purchasing investments designed to track the performance of the investment elections made by participants. The qualified savings plan has no such risk to us because all accounts are fully funded with the plan’s trust holding the investments selected by each participant.
Information concerning account activities and balances of the named executive officers with respect to nonqualified deferred compensation plans, including the savings restoration plan, is presented below.
In addition, our executive PSUs are subject to a mandatory two-year payment deferral. The values of the deferred units (from vestings in 2018 and 2019) are included in the table as Company contributions.
Nonqualified Deferred Compensation During 2019 and at Year-End
| (a) | (b) | (c) | (d) | (e) | (f) | |||||||||||||||
| Name | Executive Contributions in Last Fiscal Year ($) | Company Contributions in Last Fiscal Year ($) | Aggregate Earnings in Last Fiscal Year ($) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last Fiscal Year End ($) | |||||||||||||||
| Mr. Jordan | $330,150 | $1,874,615 | $1,033,254 | — | $5,996,568 | |||||||||||||||
| Mr. Losch | 13,200 | 292,487 | 97,404 | — | 582,540 | |||||||||||||||
| Mr. Kisber | 19,200 | 19,200 | 143,019 | — | 1,486,739 | |||||||||||||||
| Mr. Popwell | 16,200 | 310,175 | 97,973 | — | 620,004 | |||||||||||||||
| Ms. Springfield | 7,200 | 189,892 | 67,931 | — | 429,378 | |||||||||||||||
Explanations of certain columns follow:
Col (b). Traditional nonqualified deferred compensation plan. Currently up to 80% of cash salary and 80% of annual cash bonus may be deferred in our traditional nonqualified deferred compensation plan for executives.
Col (b). Savings restoration plan. Column (b) also includes executive salary contributions to our savings restoration plan.
Col (c). Includes company matching contributions under the savings restoration plan and PSUs that vested during the year (valued at vesting). We
| 2020 PROXY STATEMENT | 82 |
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make no company contributions to the traditional nonqualified deferred compensation plan.
Col (d). Earnings reflect interest for those accounts that earn interest. For accounts that hold phantom shares of stock or mutual funds, earnings reflect increases and decreases of account value throughout the year. Those amounts are netted as applicable to the individual.
Col (e). Hardship withdrawals are allowed under certain plans. In our traditional plan, an in-service
distribution date may be selected when the deferral election is made.
Col (f). Certain plan accounts are denominated as numbers of shares of stock or mutual funds. All such accounts are valued based on the fair market value of those shares at year-end.
The information above excludes our tax-qualified savings plan. For additional information concerning deferred compensation plans see “Deferral, Retirement, and Other Benefits” beginning on page 69.
Employment & Termination Arrangements
We have no traditional employment agreement with any NEO. Many plans and programs contain special provisions regarding termination of employment in various common situations, including in connection with retirement or a change in control. We have certain other arrangements that deal primarily with retirement and change in
control situations. Certain of the NEOs have signed letter agreements, in connection with our merger with IBKC, that will become effective when the merger closes. This section provides information concerning those provisions and arrangements.
Termination Unrelated to Change in Control The table below summarizes the impact upon the amounts of various items of compensation of a termination of employment under certain circumstances, other than termination related to a change in control event. Change in control situations are discussed in the following section. In addition to forfeiture of unpaid benefits, many awards provide for clawback of paid benefits if discharge “for cause,” as defined in the applicable program, occurs within two years of payment. Impact of Termination Events on Unpaid Compensation Items
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The table below summarizes the impact upon the amounts of various items of compensation of a termination of employment under certain circumstances, other than termination related to a change in control event. Change in control situations are discussed in the following section. In addition to forfeiture of unpaid benefits, many awards provide for clawback of paid benefits if discharge “for cause,” as defined in the applicable program, occurs within two years of payment.
Impact of Termination Events on Unpaid Compensation Items
| 2020 PROXY STATEMENT | 83 |
| POST-EMPLOYMENT COMPENSATION |
Change in Control (CIC) Arrangements
Special change in control (CIC) severance agreements are in place with each named executive officer. In addition, many of our compensation programs have special provisions that apply if we experience a CIC event. This section provides information concerning arrangements and benefits that would apply if a CIC occurs.
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POST-EMPLOYMENT COMPENSATION
Special change in control (CIC) severance agreements are in place with each named executive officer. In addition, many of our compensation programs have special provisions that apply if we experience a CIC event. This section provides information concerning arrangements and benefits that would apply if a CIC occurs.
CIC Definition
In our plans and programs, the term “change in control” includes the following events:
| • | A majority of the members of our Board of Directors changes, with certain exceptions. |
| • | A person or other entity becomes the beneficial owner of 20 percent or more of our outstanding voting stock, with certain exceptions. |
| • | Our shareholders approve, and there is a consummation of, a merger or other business combination, unless (i) more than 50% (60% in the CIC severance agreements) of the voting power resulting from the business combination is |
| represented by voting securities outstanding immediately prior thereto, (ii) no person or other entity beneficially owns 20% or more of the resulting corporation, and (iii) at least a majority (a two-thirds majority in the CIC severance agreements) of the members of the board of directors of the resulting corporation were our directors at the time of board approval of the transaction. | |
| • | Our shareholders’ approve a plan of complete liquidation or dissolution or a sale of substantially all of our assets. Two major plans—the Equity Compensation Plan and the Management Incentive Plan—provide that consummation of an asset sale, rather than mere approval, is a CIC event. |
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Summary of CIC Effects
The following table summarizes the impacts of a CIC event on various items of compensation. Details about current dollar amounts of many of these items are provided in the “CIC Potential Payout” section below.
Impact of CIC on Unpaid Compensation Items
| Item | Impact | Key Factors | ||
| MIP Bonus Opportunity | Pro-rate target amount of bonus if employment terminates | Performance at target is presumed; pro-rating is based on % of performance period elapsed | ||
| PSUs | Award is paid at target if employment terminates; award may be adjusted, or converted to non-performance RSUs, if employment continues. | Committee has discretion to adjust or convert awards depending on the CIC context | ||
| Exercisable Stock Options | No impact | |||
| Restricted Stock, RSUs, Unexercisable Stock Options | Accelerate if employment terminates, otherwise no impact | Awards have a double-trigger feature | ||
| Qualified Pension Plan | Limited impact | Any excess funding is allocated to all plan participants | ||
| Pension Restoration Plan | Lump sum payment | See details below | ||
| Qualified Savings Plan | No impact | |||
| Savings Restoration Plan | No impact | Any separation results in lump sum payment; CIC itself has no effect on amount or timing of payment | ||
| NQ Deferred Compensation | Limited impact | Accounts are paid into rabbi trusts, inaccessible to FHN’s successor | ||
| CIC Severance Agreements | Cash payment & other benefits if employment terminates | CIC benefits are discussed in the |
Under the pension restoration plan, a lump sum payment is made to participants representing the present value, using a discount rate of 4.2%, of the participant’s scheduled projected benefits
actuarially adjusted based on the participant’s age at the time of the CIC event. For participants under age 55, the CIC calculation is made assuming age 55 has been reached.
Impact of CIC on Unpaid Compensation Items
| 2020 PROXY STATEMENT | 84 |
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Under the pension restoration plan, a lump sum payment is made to participants representing the present value, using a discount rate of 4.2%, of the participant’s scheduled projected benefits actuarially adjusted based on the participant’s age at the time of the CIC event. For participants under age 55, the CIC calculation is made assuming age 55 had been reached.
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POST-EMPLOYMENT COMPENSATION
We have CIC severance agreements with all of the named executives. The agreements provide a payment equal to three times annual base salary plus three times a “bonus amount” if we discharge the officer other than for disability, retirement, or cause, or if the officer resigns for a predefined good reason, in either case within 36 months after a CIC event. The “bonus amount” is the average actual annual cash bonus paid over the preceding five years, excluding the years with the highest and lowest bonuses. Older agreements (Mr. Jordan) provide generally for a federal excise tax gross-up; newer agreements (each other NEO) have no such provision. Severance payments are to terminated unilaterally upon three years’ prior notice. The table below shows potential amounts payable to the named executive officers if a CIC occurred and employment with us terminated on December 31, 2019. The closing stock price on December 31, 2019 of $16.56 per share is used when valuing stock based items. For purposes of the table, the following assumptions and adjustments have been made: (1) the present value of future health and welfare and other non-cash benefits is calculated by using current costs; (2) the value of non-forfeited stock options is based solely on the spread between the option price and our actual year-end stock value; and (3) no forfeiture factors exist. Many of the amounts shown in the table accelerate the timing of payment of an amount that would have been paid eventually without increasing the amount paid. The table shows all payment amounts, whether or not increased by the CIC and termination, for the sake of completeness. Potential Dollar Value of Payments Upon An Assumed Termination of Employment at Year-End 2019 Related to a CIC Event Name Cash Pro Rata Stock Pension Savings Health & Other Tax Gross-up Total Mr. Jordan $ 5,684,400 $ 1,019,800 $ 15,480,439 $ 765,986 $ 394,586 $ 28,988 $ 25,000 $ 7,551,833 $ 30,951,032 Mr. Losch 2,491,250 355,417 2,991,924 NA 169,505 24,066 25,000 NA 6,057,162 Mr. Kisber 8,424,000 2,208,000 1,938,127 NA 436,604 26,987 25,000 NA 13,058,718 Mr. Popwell 2,687,500 395,833 3,204,193 362,440 182,655 24,647 25,000 NA 6,882,268 Mr. Tuggle 2,548,000 374,333 2,250,201 NA 209,414 24,066 25,000 NA 5,431,014 table. For Messrs. Letter Agreements Related to IBKC Merger When we signed the IBKC merger agreement last year, we also signed a letter agreement with Mr. Jordan (the “Jordan Letter Agreement”). The Jordan Letter Agreement provides that Mr. Jordan will resign as Chairman of the Board on the closing date of the IBKC merger but will continue to serve as the President and Chief Executive Officer of our company and First Horizon Bank. Daryl G. Byrd, IBKC’s chief executive, will become our Executive Chairman. Mr. Jordan will be reappointed as Chairman after Mr. Byrd steps down. The Jordan Letter Agreement provides that Mr. Jordan waives any rights to terminate his employment for “Good Reason” under his Change in Control Severance Agreement as a result of these changes, so long as Mr. Jordan remains President and Chief Executive Officer and is reappointed as Chairman as provided in his Letter Agreement. We also signed letter agreements (the “Other NEO Letter Agreements”) with three other NEOs, Messrs. Losch and Popwell and Ms. Springfield. The Other NEO Letter Agreements provide for the grant of restricted stock awards (the “Closing Incentive Awards”) in consideration for a waiver of the executive’s rights to terminate employment for “Good Reason” under the executive’s Change in Control Severance Agreement as a result of the executive’s new role after the IBKC merger and any corresponding change in duties and responsibilities. The Closing Incentive Awards (which were granted in 2019) will vest in full on the first anniversary of the closing date of the IBKC merger but will be forfeited in full if the IBKC merger does not close. Each executive’s Closing Incentive Awards also will forfeit upon any termination of employment other than a termination by us that is not for “Cause.” The Closing Incentive Awards had grant date values (measured as of November 18, 2019) of $1,250,000 for Mr. Losch, $1,400,000 for Mr. Popwell, and $863,000 for Ms. Springfield. All Closing Incentive Awards are subject to repayment and recovery in full if the executive materially violates certain restrictive covenants, including non-solicitation covenants, for one year following the closing date of the IBKC merger. Each executive also is subject to non-disparagement and confidentiality covenants that are not time-limited. Additional information concerning NEO arrangements following the IBKC merger is provided under “NEO Compensation Changes After the IBKC Merger” beginning on page 51 of this proxy statement. During 2019 and at year-end we had fourteen directors: Messrs. Jordan and Taylor serve on our Board but, because they were also employees in 2019, they were not paid for Board service. No director program discussed in this section applies to either of them for Board service in 2019. No other director was an employee of ours in 2019. For information concerning Mr. Jordan, see “Compensation Discussion & Analysis,” “Recent Compensation,” and “Post-Employment Compensation” beginning on pages 48, 72, and 81, respectively. Mr. Taylor’s employment agreement with us, discussed later in this section, expired by its terms late in 2019. His Board service in 2020 will be as a non-employee director, and he will participate in our non-employee director compensation programs. Non-Employee Director Compensation Programs Non-employee director compensation falls into two categories: base retainer and additional retainers. For each director the base retainer is $150,000, paid $65,000 in cash and $85,000 in RSUs. Additional retainers are paid in cash for particular assignments, such as lead director or Audit Committee chair. The pay year for our directors starts April 1 and ends March 31, roughly synchronous with our annual meeting cycle. Director pay is summarized in this table: Director Compensation 2019-20 Item RSUs are granted under our Equity Compensation Plan following election at the annual meeting. RSUs vest in the year following grant, accrue dividends while unvested, and are paid in stock. Payment is required to be deferred for two years after vesting; the dollar value at grant is discounted to reflect that deferral. Compensation is pro-rated for anyone elected to the Board after the annual meeting. Other Non-Employee Director Programs Non-employee directors may serve as members of our Bank’s regional boards and may be paid, as additional Board compensation, cash attendance fees up to $500 per regional board meeting. In addition, directors may receive the following benefits: a personal account executive, a no fee personal checking account for the director and his or her spouse, a Many directors have nonqualified deferred compensation accounts that earn interest or returns indexed to the performance of certain mutual funds selected by the director.CIC Severance Agreements We have CIC severance agreements with all of the named executives. The agreements provide a payment equal to three times annual base salary plus three times a “bonus amount” if we discharge the officer other than for disability, retirement, or cause, or if the officer resigns for a predefined good reason, in either case within 36 months after a CIC event. The “bonus amount” is the average actual annual cash bonus paid over the preceding five years, excluding the years with the highest and lowest bonuses. Older agreements (Messrs. Jordan and Tuggle) provide generally for a federal excise tax gross-up; newer agreements (Messrs. Losch, Kisber, and Popwell) be reduced if a small reduction in benefit (up to 5% or $50,000) would avoid the excise tax. The agreements provide for continued healthcare and life insurance benefits for an 18-month period as allowed by tax laws. Non-disparagement, cooperation, and non-solicitation covenants are included in the agreements. These agreements do not guarantee employment for any term or period; they only apply if loss of employment occurs following a CIC event. Each agreement can be reduced if a small reduction in benefit (up to 5% or $50,000) would avoid the excise tax. The agreements provide for continued healthcare and life insurance benefits for an 18-month period as allowed by tax laws. Non-disparagement, cooperation, and non-solicitation covenants are included in the agreements. These agreements do not guarantee employment for any term or period; they only apply if loss of employment occurs following a CIC event. Each agreement can beCIC Potential Payout The table below shows potential amounts payable to the named executive officers if a CIC occurred and employment with us terminated on December 31, 2017. The closing stock price on December 31, 2017 of $19.99Name Cash
Severance Pro Rata
Bonus* Stock
Awards Pension
Restoration** Savings
Restoration Health &
Welfare Other Tax Gross-up
Payments*** Total Mr. Jordan $ 6,251,800 $ 1,183,933 $ 10,834,514 $ 776,457 $ 590,373 $ 20,901 $25,000 $ 5,261,301 $ 24,944,279 Mr. Losch 2,888,000 462,667 3,215,895 NA 253,032 24,645 25,000 NA 6,869,239 Mr. Kisber 8,523,000 2,241,000 1,779,006 NA 613,599 26,985 25,000 NA 13,208,590 Mr. Popwell 3,140,000 496,667 3,569,700 359,324 273,167 25,815 25,000 NA 7,889,673 Ms. Springfield 2,181,800 327,267 1,976,924 NA 102,250 13,068 25,000 NA 4,626,309 * The amounts in this column reflect the “bonus amount” defined in each CIC severance agreement discussed above. ** Absent a CIC event, a participant in the pension restoration plan can elect, at termination of employment, to receive a lump sum payment based on the present actuarial value of the expected pension payment stream. In a CIC context, participants will receive a lump sum payment in lieu of the payment stream. If a participant terminated in relation to a CIC is under age 55 or has less than 15 years of service, the CIC lump-sum payment would be enhanced to reflect that age and those service years. The amounts in the Pension Restoration column of the table the following assumptionsfor Messrs. Jordan and adjustments have been made: (1) the present valuePopwell and Ms. Springfield reflect an estimate of future healththat enhancement measured at year-end. Messrs. Losch and welfare and other non-cash benefits is calculated by using current costs; (2) the value of non-forfeited stock options is based solely on the spread between the option price and our actual year-end stock value; and (3) no forfeiture factors exist. Many of the amounts shown in the table accelerate the timing of payment of an amount that would have been paid eventually without increasing the amount paid. The table shows all payment amounts, whether orKisber are not increased by the CIC and termination, whether or not increased by the CIC, for the sake of completeness.Potential Dollar Value of Payments Upon An AssumedTermination of Employment at Year-End 2017 Related to a CIC Event
Severance
Bonus*
Awards
Restoration**
Restoration
Welfare
Payments*** *The amounts in this column reflect the “bonus amount” defined in each CIC severance agreement discussed above.**Absent a CIC event, a participant in the pension restoration plan can elect, at termination of employment, to receive a lump sum payment based on the present actuarial value of the expected pension payment stream. In a CIC context, participants will receive a lump sum payment in lieu of the payment stream. If a participant terminated in relation to a CIC is under age 55 orparticipants.*** Mr. Jordan has less than 15 years of service, the CIC lump-sum payment would be enhanced to reflect that age and those service years. The amounts in the Pension Restoration column of the table for Messrs. Jordan and Popwell reflect an estimate of that enhancement measured at year-end. Due to his age and length of service, Mr. Tuggle would receive no such enhancement. Messrs. Losch and Kisber are not participants.***Messrs. Jordan and Tuggle have the right to receive an excise tax gross-up payment, an estimate of which is included in the table. Based on the assumptions of his hypothetical termination at year-end, Mr. Tuggle’s estimated gross-up amount would be zero. For Messrs. Losch, Kisber, and Popwell, who have agreements after 2008, no gross-up would be paid.79DIRECTOR COMPENSATIONDIRECTOR COMPENSATIONDirectors in 2017At year-end 2017 and currently, we have twelve directors:John C. ComptonVicki R. PalmerMark A. EmkesColin V. ReedPeter M. FossCecelia D. StewartCorydon J. GilchristRajesh SubramaniamD. Bryan Jordan(Chairman)R. Eugene Taylor(Vice Chairman)Scott M. NiswongerLuke Yancy IIIMessrs. Foss and Taylor joined the Board on November 30 after consummation of our merger with Capital Bank Financial Corp.In addition, R. Brad Martin served during most of 2017. Mr. Martin retired in December after 23 years of service. Compensation paid to Mr. Martin in 2017 is included in the following disclosures.JordanLosch, Kisber, and Taylor serve on our Board but, because they are also employees, they are not paidPopwell and for Board service. No director program discussed in this section applies to either of them. No other director is an employee of ours. For information concerning Mr. Jordan, see “Compensation Discussion & Analysis,” “Recent Compensation,” and “Post-Employment Compensation” beginning on pages 43, 66, and 75, respectively. Information concerning Mr. Taylor is provided in this section.Non-Employee Director Compensation ProgramsNon-employee director compensation falls into two categories: base retainer and additional retainers. For each director the base retainer is $130,000, paid half in cash and half in RSUs. Additional retainers are paid in cash for particular assignments, such as lead director or Audit Committee chair. Audit Committee membersMs. Springfield, who also serve on the Trust Audit Committee of the Bank are not separately compensated for Trust Audit service. The pay year for our directors starts April 1 and ends March 31, roughly synchronous with our annual meeting.Director pay is summarized in this table:Director Compensation 2017-18have agreements after 2008, no gross-up would be paid.2020 PROXY STATEMENT | 85 POST-EMPLOYMENT COMPENSATION 2020 PROXY STATEMENT | 86 DIRECTOR COMPENSATION Kenneth A. Burdick Scott M. Niswonger John C. Compton Vicki R. Palmer Wendy P. Davidson Colin V. Reed Mark A. Emkes Cecelia D. Stewart Peter M. Foss Rajesh Subramaniam Corydon J. Gilchrist R. Eugene Taylor
(Vice Chairman)D. Bryan Jordan
(Chairman)Luke Yancy III Annual AmtBase Retainer – cash portion:$65,000Base Retainer – RSU portion:65,000Additional Retainers (all cash): Annual Amt Base Retainer – cash portion: $65,000 Base Retainer – RSU portion: 85,000 Additional Retainers (all cash): Lead director 25,000 Chair – Audit 32,000 Chair – Executive & Risk 28,000 Chair – Compensation 17,500 Chair – other committees 10,000 Non-chair service – Audit 8,000 Non-chair service – Exec & Risk 8,000 Lead director25,000Chairman – Audit32,000Chairman – Executive & Risk28,000Chairman – Compensation17,500Chairman – other committees10,000Non-chair service – Audit8,000Non-chair service – Exec & Risk8,000RSUs are granted under our Equity Compensation Plan following election at the annual meeting. RSUs vest in the year following grant, accrue dividends while unvested, and are paid in stock. Payment is required to be deferred for two years after vesting; the dollar value at grant is discounted to reflect that deferral. Grants are pro-rated for anyone elected to the Board after the annual meeting, such as Mr. Foss.debit card, a no-fee VISA card, no fee for a safe deposit box, no fee for traveler’s checks and cashier’s checks, use of tickets for marketing and other business events up to $5,000 in value, and, subject to certain restrictions and limitations, the repurchase of shares of our common stock under a Board-approved repurchase program with no payment of any fees or commissions. Directors may participate in a charitable gift matching program up to $25,000 per year.80
| 2020 PROXY STATEMENT | 87 |
| DIRECTOR COMPENSATION |
DIRECTOR COMPENSATION
Prior to 2006, directors could receive stock options in lieu of fees under certain deferral plans, someplans. Some of whichthose options remain outstanding.
From 1985 to 1995, directors could defer fees and receive an accrual of interest at rates ranging from 17-22 percent annually. Although new deferrals under that old plan have not been permitted since 1995, interest continues to accrue on outstanding accounts. The rate is re-set annually. For many years, the rate has been set at 7 percentage points above a benchmark rate. For the 20172019 plan year, the interest rate was 9.28%10.63% for all active participants, including two directors, Ms. Palmer and Mr. Martin (who has since retired as a director).Palmer. For 2018,2020, the rate has increaseddecreased to 10.12%9.66%, corresponding to an increasea decrease in the benchmark rate. The plan continues to provide a retention tool for us since the above-market rates of return can be largely forfeited in a case of early departure from Board service.
Stock Ownership Guidelines
Our stock ownership guidelines set a stock ownership benchmark for non-employee directors of $325,000, or five times the cash portion of the base retainer. For this purpose, fully-owned shares, RSUs, and any shares held in tax-deferred plans are counted, but stock options are not counted. If the ownership guideline is satisfied, 50% of the net after-tax shares received from stock awards must be retained. If the guideline is not satisfied, 75% must be retained. The retention requirement applies during a director’s tenure on our Board, except that after age 60 directors are permitted to sell shares held at least three years to diversify in preparation for retirement. As Vice Chairman who iswas also an employee, Mr. Taylor’s ownership benchmark isin 2019 was six times his cash salary.
The following table shows compensation earned last year by directors other than Mr. Jordan, whether or not deferred.
Director Compensation 20172019
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(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | ||||||||||||||||||||||||||||||||||||||||||
Name | Fees Earned | Stock | Option | Non-Equity | Change in | All Other | Total | ||||||||||||||||||||||||||||||||||||||||||
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Mr. Compton | $ | 91,000 | $ | 64,985 | — | — | — | $ | — | $ | 180,985 | ||||||||||||||||||||||||||||||||||||||
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Mr. Emkes |
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| 97,000 |
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| 64,985 |
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| — |
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| — |
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| — |
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| 25,400 |
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| 187,385 | ||||||||||||||||||||||||||||
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Mr. Foss | — | 18,944 | — | — | — | — | 18,944 | ||||||||||||||||||||||||||||||||||||||||||
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Mr. Gilchrist |
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| 81,000 |
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| 64,985 |
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| — |
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| — |
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| — |
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| 25,000 |
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| 170,985 | ||||||||||||||||||||||||||||
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Mr. Martin | 65,000 | 64,985 | — | — | 9,340 | 87,524 | 161,864 | ||||||||||||||||||||||||||||||||||||||||||
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Mr. Niswonger |
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| 73,000 |
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| 64,985 |
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| — |
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| — |
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| — |
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| 25,000 |
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| 162,985 | ||||||||||||||||||||||||||||
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Ms. Palmer | 90,500 | 64,985 | — | — | 10,344 | 25,000 | 190,829 | ||||||||||||||||||||||||||||||||||||||||||
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Mr. Reed |
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| 116,750 |
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| 64,985 |
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| — |
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| — |
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| — |
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| 25,000 |
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| 206,735 | ||||||||||||||||||||||||||||
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Ms. Stewart | 83,000 | 64,985 | — | — | — | — | 147,985 | ||||||||||||||||||||||||||||||||||||||||||
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Mr. Subramaniam |
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| 73,000 |
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| 64,985 |
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| — |
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| — |
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| — |
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| 11,500 |
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| 149,485 | ||||||||||||||||||||||||||||
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Mr. Yancy | 83,000 | 64,985 | — | — | — | — | 147,985 | ||||||||||||||||||||||||||||||||||||||||||
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Mr. Taylor* |
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| — |
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| 2,099,995 |
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| — |
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| — |
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| — |
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| 153,381 |
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| 2,253,376 | ||||||||||||||||||||||||||||
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| (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | |||||||||||||||||||||
| Change in | ||||||||||||||||||||||||||||
| Pension Value | ||||||||||||||||||||||||||||
| and Nonqualified | ||||||||||||||||||||||||||||
| Fees Earned | Non-Equity | Deferred | ||||||||||||||||||||||||||
| or Paid in | Stock | Option | Incentive Plan | Compensation | All Other | |||||||||||||||||||||||
| Cash | Awards | Awards | Compensation | Earnings | Compensation | Total | ||||||||||||||||||||||
| Name | ($) | ($) | ($) | ($) | ($) | ($) | ($) | |||||||||||||||||||||
| Mr. Burdick* | $ | 73,000 | $ | 115,921 | — | — | — | $ | 25,000 | $ | 213,921 | |||||||||||||||||
| Mr. Compton | 83,000 | 97,510 | — | — | — | — | 180,510 | |||||||||||||||||||||
| Ms. Davidson* | 73,000 | 115,921 | — | — | — | 20,000 | 208,921 | |||||||||||||||||||||
| Mr. Emkes | 97,000 | 97,510 | — | — | — | 25,000 | 219,510 | |||||||||||||||||||||
| Mr. Foss | 73,000 | 97,510 | — | — | — | 5,000 | 175,510 | |||||||||||||||||||||
| Mr. Gilchrist | 73,000 | 97,510 | — | — | — | 25,000 | 195,510 | |||||||||||||||||||||
| Mr. Niswonger | 73,000 | 97,510 | — | — | — | 25,000 | 195,510 | |||||||||||||||||||||
| Ms. Palmer | 90,500 | 97,510 | — | — | 13,081 | 25,000 | 226,091 | |||||||||||||||||||||
| Mr. Reed | 118,000 | 97,510 | — | — | — | 25,000 | 240,510 | |||||||||||||||||||||
| Ms. Stewart | 83,000 | 97,510 | — | — | — | — | 180,510 | |||||||||||||||||||||
| Mr. Subramaniam | 67,000 | 97,510 | — | — | — | — | 164,510 | |||||||||||||||||||||
| Mr. Yancy | 83,000 | 97,510 | — | — | — | 500 | 181,010 | |||||||||||||||||||||
| Mr. Taylor** | — | — | — | $700,000 | — | 768,738 | 1,468,738 | |||||||||||||||||||||
| * | Mr. Burdick and Ms. Davidson each received one-fourth of a regular RSU grant for the 2018-2019 compensation year upon election to the Board in January 2019 and also received a full-year RSU grant in April after the 2019 annual meeting. | ||
| ** |
| As an employee during 2019, Mr. Taylor |
| 2020 PROXY STATEMENT | 88 |
| DIRECTOR COMPENSATION |
Explanations of certain columns follow:
Col (c) Stock Awards. Includes RSUs granted to non-employee directors during calendar 2017.2019. Amounts shown are the grant date fair values of awards using the accounting method applicable to our financial statements. The accounting values are higher than the base retainer amount scheduled in the table above captioned “Director
81
DIRECTOR COMPENSATION
Compensation 2017-18” due to the value discount applied for the mandatory two-year payment deferral for those awards. For additional information about valuation, see the note for columns (e)-(f) to the Summary Compensation Table on page 67.73. Additional information about outstanding awards appears under the caption “Outstanding Director Equity Awards at Year-End” below. For Mr. Taylor, this column shows the grant of a special restricted stock award required by his employment agreement. Mr. Taylor did not receive any regular stock awards in 2017.2019. See “Taylor Arrangements” below for additional information.
Col (e) Incentive Plan Compensation.Non-employee directors do not receive cash incentives. We did not pay Mr. Taylor received a cashbonus under a management incentive under our plansplan in relation to 2017.accordance with his employment agreement. See “Taylor Arrangements” below for additional information.
Col (f) Deferred Compensation. Amounts consist of above-market interest accrued during the year under a plan discontinued in 1995.
Col (g) All Other Compensation. For non-employee directors, amounts in this column consist of matching donations to eligible charitable organizations by First Horizon Foundation and cash attendance fees from regional board meetings. For Mr. Martin, the amount also includes $61,702 paid in lieu of three-fourths of his 2017 RSU award, which forfeited automatically when he retired in December. For Mr. Taylor, this column includes cash salary ($67,308), bonus owed by Capital Bank and paid by us ($84,932),700,000) and the value of perquisites and other personal benefits ($1,141)$28,353 paid during 2017.2019. See “Taylor Arrangements” below for additional information.
Taylor Arrangements
Mr. Taylor signed an employment agreement with us in anticipation of our merger with Capital Bank Financial Corp. (“CBF”), of which he was Chief Executive Officer. The agreement had a two-year term which expired November 30, 2019. His agreement providesprovided a framework for his salary, bonus opportunity, a special stock-based award, and other employment matters during the agreement’s two-year term.
Mr. Taylor’s employment agreement providesprovided for an annual base salary floor of $700,000 and an annual incentive payment of no less than 100% of base salary. He also is entitled to the continuation of certain welfare benefits whichthat had been provided to him by CBF.
At the closing of the merger he received a special award of 108,303 shares of restricted stock. The award had a grant date value of $2.1 million and will vestvested on its second anniversary, subject to Mr. Taylor’s continued employment. Vesting of the award is required to accelerate if his employment is terminated without cause, he resigns with good reason, or his death or disability occurs, all as provided in the agreement.anniversary.
Mr. Taylor’s agreement has specific provisions for compensation if his employment with us terminates under various circumstances:
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If Mr. Taylor resigns without good reason or is terminated with cause during the term of the agreement, he would be entitled to continued welfare benefits as described above.
As an employee, and officer, Mr. Taylor generally iswas eligible to participate in plans and programs applicable to our other employees, and officers, subject to the terms of his employment agreement.
Although Mr. Taylor’s employment ended in 2019, his Board service continues, and he has been nominated for re-election at the 2020 annual meeting. If re-elected, he will be compensated as any other non-employee director during the 2020-21 pay year.
Outstanding Director Equity Awards at Year-End
Directors
All non-employee directors receive annual RSU awards, and two hold option awards from an old deferral program, as presented in the following table. All options are vested. All other awards were unvested at year-end. Awards held by Mr. Jordan are omitted from the table; see “Outstanding Stock
Awards at Fiscal Year-End” beginning on page 7278 for additional information for him. Mr. Taylor is omitted from this table because no awards of his remained outstanding at year-end 2019; see “Taylor Arrangements” above for additional information.
82
| 2020 PROXY STATEMENT | 89 |
| DIRECTOR COMPENSATION |
DIRECTOR COMPENSATION
Outstanding Equity Awards at Fiscal Year-End 2017
2019 Held by Directors
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(a) | (b) | (c) | (d) | (e) | (f) | ||||||||||||||||||||||||||||||
Name | Stock Options | Restricted Stock or Unit Awards | |||||||||||||||||||||||||||||||||
Number of | Option | Option |
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Mr. Compton | — | — | — | 4,059 | $ | 81,139 | |||||||||||||||||||||||||||||
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Mr. Emkes |
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| — |
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| — |
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| — |
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| 4,059 |
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| $ |
| 81,139 | ||||||||||||||||||
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Mr. Foss | — | — | — | 977 | $ | 19,530 | |||||||||||||||||||||||||||||
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Mr. Gilchrist |
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| — |
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| — |
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| — |
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| 4,059 |
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| $ |
| 81,139 | ||||||||||||||||||
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Mr. Martin | 0 | $ | 0 | ||||||||||||||||||||||||||||||||
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| 4,704 |
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| $ |
| 22.26 |
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| 6/30/2018 |
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| 3,951 | 26.53 | 12/31/2018 | ||||||||||||||||||||||||||||||||
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| 3,484 |
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| 27.22 |
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| 3,334 | 20.40 | 12/31/2019 | ||||||||||||||||||||||||||||||||
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| 2,852 |
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| 23.49 |
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| 3,009 | 23.91 | 1/2/2022 | ||||||||||||||||||||||||||||||||
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| 2,842 |
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| 25.34 |
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| 7/1/2022 |
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| 3,119 | 24.36 | 12/4/2022 | ||||||||||||||||||||||||||||||||
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Mr. Niswonger |
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| — |
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| — |
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| — |
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| 4,059 |
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| $ |
| 81,139 | ||||||||||||||||||
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Ms. Palmer | 4,059 | $ | 81,139 | ||||||||||||||||||||||||||||||||
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| 4,196 |
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| $ |
| 22.26 |
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| 6/30/2018 |
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| 4,378 | 26.53 | 12/31/2018 | ||||||||||||||||||||||||||||||||
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| 3,848 |
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| 27.22 |
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| 6/30/2019 |
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| 4,584 | 20.40 | 12/31/2019 | ||||||||||||||||||||||||||||||||
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| 5,226 |
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| 11.85 |
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| 3,518 | 18.85 | 1/2/2021 | ||||||||||||||||||||||||||||||||
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| 3,107 |
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| 23.49 |
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| 7/2/2021 |
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| 3,093 | 23.91 | 1/2/2022 | ||||||||||||||||||||||||||||||||
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| 2,764 |
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| 25.34 |
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| 7/1/2022 |
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| 2,709 | 24.36 | 1/2/2023 | ||||||||||||||||||||||||||||||||
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| 1,121 |
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| 18.28 |
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| 7/1/2023 |
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| 2,028 | 18.24 | 1/2/2024 | ||||||||||||||||||||||||||||||||
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Mr. Reed |
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| — |
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| — |
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| — |
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| 4,059 |
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| $ |
| 81,139 | ||||||||||||||||||
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Ms. Stewart | — | — | — | 4,059 | $ | 81,139 | |||||||||||||||||||||||||||||
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Mr. Subramaniam |
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| — |
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| — |
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| — |
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| 4,059 |
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| $ |
| 81,139 | ||||||||||||||||||
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Mr. Yancy | 4,059 | $ | 81,139 | ||||||||||||||||||||||||||||||||
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| 1,379 |
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| $ |
| 23.91 |
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| 1/2/2022 |
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| 2,921 | 25.34 | 7/1/2022 | ||||||||||||||||||||||||||||||||
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| 3,202 |
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| 24.36 |
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| 1/2/2023 |
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| 1,011 | 18.28 | 7/1/2023 | ||||||||||||||||||||||||||||||||
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| 1,535 |
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| 18.24 |
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| 1/2/2024 |
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Mr. Taylor* | — | — | — | 108,303 | $ | 2,164,977 | |||||||||||||||||||||||||||||
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| (a) | (b) | (c) | (d) | (e) | (f) | |||||||||||||||
| Stock Options | Restricted Stock or Unit Awards | |||||||||||||||||||
| Number of | ||||||||||||||||||||
| Securities | Number of Shares | Market Value of | ||||||||||||||||||
| Underlying | Option | or Units of Stock | Shares or Units of | |||||||||||||||||
| Unexercised | Exercise | Option | Held that Have Not | Stock that Have | ||||||||||||||||
| Name | Options(#) | Price($/sh) | Expiration Date | Vested(#) | Not Vested($) | |||||||||||||||
| Mr. Burdick | — | — | — | 6,505 | $ | 107,723 | ||||||||||||||
| Mr. Compton | — | — | — | 6,505 | $ | 107,723 | ||||||||||||||
| Ms. Davidson | — | — | — | 6,505 | $ | 107,723 | ||||||||||||||
| Mr. Emkes | — | — | — | 6,505 | $ | 107,723 | ||||||||||||||
| Mr. Foss | — | — | — | 6,505 | $ | 107,723 | ||||||||||||||
| Mr. Gilchrist | — | — | — | 6,505 | $ | 107,723 | ||||||||||||||
| Mr. Niswonger | — | — | — | 6,505 | $ | 107,723 | ||||||||||||||
| Ms. Palmer | 6,505 | $ | 107,723 | |||||||||||||||||
| 5,226 | 11.85 | 7/3/2020 | ||||||||||||||||||
| 3,518 | 18.85 | 1/2/2021 | ||||||||||||||||||
| 3,107 | 23.49 | 7/2/2021 | ||||||||||||||||||
| 3,093 | 23.91 | 1/2/2022 | ||||||||||||||||||
| 2,764 | 25.34 | 7/1/2022 | ||||||||||||||||||
| 2,709 | 24.36 | 1/2/2023 | ||||||||||||||||||
| 1,121 | 18.28 | 7/1/2023 | ||||||||||||||||||
| 2,028 | 18.24 | 1/2/2024 | ||||||||||||||||||
| Mr. Reed | — | — | — | 6,505 | $ | 107,723 | ||||||||||||||
| Ms. Stewart | — | — | — | 6,505 | $ | 107,723 | ||||||||||||||
| Mr. Subramaniam | — | — | — | 6,505 | $ | 107,723 | ||||||||||||||
| Mr. Yancy | 6,505 | $ | 107,723 | |||||||||||||||||
| 1,379 | $23.91 | 1/2/2022 | ||||||||||||||||||
| 2,921 | 25.34 | 7/1/2022 | ||||||||||||||||||
| 3,202 | 24.36 | 1/2/2023 | ||||||||||||||||||
| 1,011 | 18.28 | 7/1/2023 | ||||||||||||||||||
| 1,535 | 18.24 | 1/2/2024 | ||||||||||||||||||
Explanations of certain columns follow:
Cols (b)/(c). Stock Options. Stock options include adjustments for stock dividends distributed 2008-2011, the cumulative compound rate of which was 20.0380%.
Col (e). RSUs. Awards held by non-employee directors are RSUs which will vest on April 2, 2018. Mr. Taylor’s award consists of restricted stock scheduled to vest on November 30, 2019.2020.
Col (f). RSU Values. Values reflect the year-end market valueprice of our common stock ($19.99/16.56/share) with no discount for the risk that the award might be forfeited or for the time remaining before vesting. Values shown here are not based on financial accounting assumptions or methods.
83
DIRECTOR COMPENSATION
Details concerning the awards outstanding at year-end are provided in the following table.
| 2020 PROXY STATEMENT | 90 |
| DIRECTOR COMPENSATION |
Details Concerningof Director Full-Value Stock Awards
Outstanding at Year-End 20172019
Name | Grant | Vesting Date | Units/Shrs | |||||||||||||
Mr. | 4/ | 4/2/2020 |
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| Mr. Compton | 4/23/2019 |
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| Ms. Davidson | 4/ | 4/2/2020 |
| 6,505 | ||||||||||||
Mr. |
| 4/2/2020 |
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| Mr. Foss | 4/23/2019 |
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| Mr. Gilchrist | 4/ | 4/2/2020 |
| 6,505 | ||||||||||||
Mr. Niswonger | 4/ | 4/2/2020 |
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| Ms. Palmer | 4/23/2019 |
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| Mr. Reed | 4/ | 4/2/2020 |
| 6,505 | ||||||||||||
| 4/ | 4/2/2020 |
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| Mr. Subramaniam | 4/23/2019 |
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| Mr. Yancy | 4/ | 4/2/2020 |
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| 6,505 | ||||||||||||||||
Director Options Exercised and Stock Vested
The following table provides information about stock options exercised during 20172019 by our directors as well as restricted stock and stock units that vested during 2017.2019. Amounts in columns (c) and (e) represent the market values of shares on the exercise or vesting dates. Messrs. Foss and For all but Mr.
Taylor, hold nothe stock options and had no vestingsawards in 2017, and so are omitted from this table.column (d) consist of RSUs that vested in 2019, but will not be settled until 2021, after a mandatory two-year deferral period. Information for Mr. Jordan also is omitted from the table; see “Options Exercised and Stock Vested” beginning on page 7480 for his information.
Director Options Exercised and Stock Vested During 20172019
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(a) | (b) | (c) | (d) | (e) | ||||||||||||||||||||||||
Name | Option Awards | Stock Awards | ||||||||||||||||||||||||||
Number of | Value Realized | Number of | Value | |||||||||||||||||||||||||
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Mr. Compton | — | — | 4,510 | $ | 82,939 | |||||||||||||||||||||||
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Mr. Emkes |
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| — |
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| — |
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| 4,510 |
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| 82,939 | ||||||||||||||||
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Mr. Gilchrist | — | — | 4,510 | 82,939 | ||||||||||||||||||||||||
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Mr. Martin* |
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| 11,143 |
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| $ |
| 5,974 |
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| 7,554 |
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| 144,641 | ||||||||||||||
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Mr. Niswonger | — | — | 4,510 | 82,939 | ||||||||||||||||||||||||
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Ms. Palmer |
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| 5,363 |
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| $ |
| 2,987 |
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| 4,510 |
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| 82,939 | ||||||||||||||
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Mr. Reed | — | — | 4,510 | 82,939 | ||||||||||||||||||||||||
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Ms. Stewart |
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| — |
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| — |
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| 4,510 |
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| 82,939 | ||||||||||||||||
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Mr. Subramaniam | — | — | 3,327 | 61,184 | ||||||||||||||||||||||||
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Mr. Yancy |
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| — |
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| — |
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| 4,510 |
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| 82,939 | ||||||||||||||||
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| (a) | (b) | (c) | (d) | (e) | ||||||||||||
| Option Awards | Stock Awards | |||||||||||||||
| Number of Shares | Value | |||||||||||||||
| Number of | Value Realized | Acquired or Units | Realized | |||||||||||||
| Shares Acquired | Upon Exercise | Paid Upon | Upon Vesting | |||||||||||||
| Name | on Exercise (#) | ($) | Vesting (#) | ($) | ||||||||||||
| Mr. Burdick | — | — | 1,255 | $ | 18,034 | |||||||||||
| Mr. Compton | — | — | 3,936 | 56,560 | ||||||||||||
| Ms. Davidson | — | — | 1,255 | 18,034 | ||||||||||||
| Mr. Emkes | — | — | 3,936 | 56,560 | ||||||||||||
| Mr. Foss | — | — | 3,936 | 56,560 | ||||||||||||
| Mr. Gilchrist | — | — | 3,936 | 56,560 | ||||||||||||
| Mr. Niswonger | — | — | 3,936 | 56,560 | ||||||||||||
| Ms. Palmer | — | — | 3,936 | 56,560 | ||||||||||||
| Mr. Reed | — | — | 3,936 | 56,560 | ||||||||||||
| Ms. Stewart | — | — | 3,936 | 56,560 | ||||||||||||
| Mr. Subramaniam | — | — | 3,936 | 56,560 | ||||||||||||
| Mr. Yancy | — | — | 3,936 | 56,560 | ||||||||||||
| Mr. Taylor | — | — | 108,303 | 1,726,350 | ||||||||||||
| 2020 PROXY STATEMENT | 91 |
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84
LEGAL MATTERS
LEGAL MATTERS
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our directors and officers to file with the SEC initial reports of ownership and reports of changes in ownership of our stock and to furnish us with copies of all forms filed.
To our knowledge, based solely on a review of the copies of such reports furnished to us and written representations that no other reports were required, during the past fiscal year our officers and directors complied with all applicable Section 16(a) filing requirements.
Availability of Annual Report on Form 10-K
A copy of our Annual Report on Form 10-K, including the financial statements and schedules thereto, which is filed with the SEC, is available free of charge to each shareholder of record upon written request to the Treasurer, First Horizon National Corporation, P. O. Box 84, Memphis, Tennessee, 38101. Each such written request must set forth a good faith representation that as of the record date specified in the notice of annual shareholders’ meeting the person making the
request was a beneficial owner of a security entitled to vote at the annual meeting of shareholders.
The exhibits to the Annual Report on Form 10-K will also be supplied upon written request to the Treasurer and payment to us of the cost of furnishing the requested exhibit or exhibits. A document containing a list of the exhibits to Form 10-K, as well as a brief description and the cost of furnishing each such exhibit, will accompany the Annual Report on Form 10-K.
Other Legal Disclosuresdisclosures
We are required to disclose a comparison of the 20172019 total compensation of our CEO with that of our median-paid employee. For that purpose, we have selected the median employee using total federally taxable income reported by us for 20172018 to the U.S. Internal Revenue Service. The median employee was that person, employed by us at year-end 2019, whose 20172018 taxable income ranked at the fiftieth percentile of all our employees other than the CEO. For this purpose, all employees included part-time and seasonal personnel as well as persons who joined us during the year. However, as permitted by applicable disclosure rules, in choosing the median employee we omitted all persons who became our employees as a result of our merger with Capital Bank Financial Corp. late in 2017.
Total compensation for our CEO in 2017,2019, calculated using the methodology reported on pages 67 – 68,73–75, was $10,333,764. Included within that total is a special multi-year cash bonus of $5,500,000, discussed at page 62 above under the caption “CEO Multi-Year Cash Bonus.” Excluding that special bonus, CEO total compensation would have been $4,833,764.$5,551,044. Total compensation for our
median employee for 2017,2019, calculated using the same methodology, was $81,836.$89,476. The ratio of 20172019 total compensation for the CEO in relation to that for the median employee is one hundred twenty six to one. Excluding the CEO’s special bonus, that ratio is fifty nine62 to one.
85
LEGAL MATTERS
Late in 2017 we announced that approximately 4,000 non-bonus-eligible, non-commission employees would receive a special cash bonus of $1,000. The median employee was one of those who received that bonus, which was included in calculating the ratios above.
The information disclosed in this section was developed and is provided solely to comply with specific new legal requirements. We do not use any of this information in managing our company. We do not believe this information provides shareholders with a useful mechanism for evaluating our management’s effectiveness, operating results, or business prospects, nor for comparing our company with any other in any meaningful respect.
BY ORDER OF THE BOARD OF DIRECTORS
Clyde A. Billings, Jr.
Senior Vice President,
Assistant General Counsel and
Corporate Secretary
March 16, 2020
| 2020 PROXY STATEMENT | 92 |
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| APPENDIX A: RECONCILIATION OF | ||
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March 12, 2018
86FHN NON-GAAP to GAAP RECONCILIATION
(Dollars and shares in thousand, except per share data)
| Adjusted Diluted EPS | 2019 | 2015 | ||||||||
| Net income available to common (“NIAC”) (GAAP) | a | $ | 434,708 | $ | 79,679 | |||||
| Plus Tax effected notable items (Non-GAAP) (a) | $ | 90,220 | $ | 111,431 | ||||||
| Adjusted NIAC (Non-GAAP) | b | $ | 524,928 | $ | 191,110 | |||||
| Diluted Shares (GAAP) | c | 315,657 | 236,266 | |||||||
| Diluted EPS (GAAP) | a/c | $ | 1.38 | $ | 0.34 | |||||
| Adjusted diluted EPS (Non-GAAP) | b/c | $ | 1.66 | $ | 0.81 | |||||
| Adjusted Return on Assets (“ROA”) | ||||||||||
| Net Income (“NI”) (GAAP) | $ | 452,373 | $ | 97,313 | ||||||
| Plus Tax effected notable items (Non-GAAP) (a) | $ | 90,220 | $ | 111,431 | ||||||
| Adjusted NI (Non-GAAP) | $ | 542,593 | $ | 208,744 | ||||||
| NI (GAAP) | d | $ | 452,373 | $ | 97,313 | |||||
| Adjusted NI (Non-GAAP) | e | $ | 542,593 | $ | 208,744 | |||||
| Average assets (GAAP) | f | $ | 41,744,264 | $ | 25,635,975 | |||||
| ROA (GAAP) | d/f | $ | 1.08 | $ | 0.38 | |||||
| Adjusted ROA (Non-GAAP) | e/f | $ | 1.30 | $ | 0.81 | |||||
| Adjusted Return on Average Common Equity (“ROCE”)/Return on Average Tangible Common Equity (“ROTCE”) | ||||||||||
| NIAC (GAAP) | $ | 434,708 | $ | 79,679 | ||||||
| Plus Tax effected notable items (Non-GAAP) (a) | $ | 90,220 | $ | 111,431 | ||||||
| Adjusted NIAC (Non-GAAP) | $ | 524,928 | $ | 191,110 | ||||||
| NIAC (GAAP) | g | $ | 434,708 | $ | 79,679 | |||||
| Adjusted NIAC (Non-GAAP) | h | $ | 524,928 | $ | 191,110 | |||||
| Average Common Equity (GAAP) | i | $ | 4,529,844 | $ | 2,190,132 | |||||
| Less: Average Intangible Assets (GAAP) (b) | $ | 1,575,338 | $ | 183,127 | ||||||
| Average Tangible Common Equity (Non-GAAP) | j | $ | 2,954,506 | $ | 2,007,005 | |||||
| Plus Equity Adjustment (c) | $ | 27,897 | $ | 75,588 | ||||||
| Adjusted Average Tangible Common Equity (Non-GAAP) | k | $ | 2,982,403 | $ | 2,082,593 | |||||
| ROCE (GAAP) | g/i | 9.60 | % | 3.64 | % | |||||
| Adjusted ROCE (Non-GAAP) | h/i | 11.59 | % | 8.73 | % | |||||
| ROTCE (Non-GAAP) | g/j | 14.71 | % | 3.97 | % | |||||
| Adjusted ROTCE (Non-GAAP) | h/k | 17.60 | % | 9.18 | % | |||||
| Adjusted Efficiency Ratio | ||||||||||
| Noninterest expense (GAAP) | l | $ | 1,231,603 | $ | 1,053,791 | |||||
| Plus notable items (GAAP) (a) | $ | (114,259 | ) | $ | (187,800 | ) | ||||
| Adjusted noninterest expense (Non-GAAP) | m | $ | 1,117,344 | $ | 865,991 | |||||
| Revenue excluding securities gains/losses (GAAP) | n | $ | 1,864,093 | $ | 1,169,667 | |||||
| Plus notable items (GAAP) (a) | $ | — | $ | (5,800 | ) | |||||
| Adjusted revenue excluding esecurities gains/losses (Non-GAAP) | o | $ | 1,864,093 | $ | 1,163,867 | |||||
| Efficiency ratio (GAAP) | l/n | 66.07 | % | 90.09 | % | |||||
| Adjusted efficiency ratio (Non-GAAP) | m/o | 59.94 | % | 74.41 | % | |||||
APPENDIX A—AUDIT COMMITTEE CHARTER
AUDIT COMMITTEE CHARTERFIRST HORIZON NATIONAL CORPORATION(As Amended(a) 2019 includes $39.8 million of pre-tax restructuring-related expenses associated with efficiency initiatives, $39.0 million of pre-tax acquisition-related expenses primarily associated with the pending merger of equals with IBKC and Restated asthe CBF acquisition, $21.3 million of July 25, 2017)
Establishmentpre-tax rebranding expenses, $11.0 million of pre-tax expense related to charitable contributions, $4.0 million of pre-tax negative valuation adjustments associated with derivatives related to prior sales of Visa Class B shares, and Purposes of the Committee
Acting pursuant to Tennessee Code Annotated Section 48-18-206, Article 11(b)(8) of the Corporation’s restated charter, as amended, and Section 3.5 of the Corporation’s bylaws, as amended, the Board of Directors of First Horizon National Corporation hereby creates the Audit Committee (the “Committee”) of the Board of Directors, which shall: (1) assist the Board of Directors in its oversight of (a) the Corporation’s accounting and financial reporting principles and policies and internal controls and procedures, (b) the integrity of the Corporation’s financial statements, (c) the Corporation’s compliance with legal and regulatory requirements, (d) the independent auditor’s qualifications and independence, and (e) the performance of the independent auditor and Corporation’s internal audit function; and (2) prepare the report to be included in the Corporation’s annual proxy statement pursuanta net $(.9) million pre-tax expense reversal related to the proxy rulessettlements of the Securities and Exchange Commission (“SEC”).litigation matters adjusted using an incremental tax rate of approximately 21 percent. 2015 includes $188.3 million related to litigation
The function of the Committee is oversight. Management of the Corporation is responsible for preparation, presentation and integrity of the Corporation’s financial statements. Management is responsible for maintaining appropriate accounting and financial reporting principles and policies and internal controls and procedures
| 2020 PROXY STATEMENT | A-1 |
| APPENDIX A: RECONCILIATION OF NON-GAAP TO GAAP FINANCIAL INFORMATION |
settlements/accruals, $(8.3) million related to provide for compliance with accounting standards and applicable laws and regulations, and the officer in charge of the Corporation’s internal audit function (“internal auditor”) is responsible for testing such internal controls and procedures. The independent auditor is responsible for planning and carrying out a proper audit of the Corporation’s annual financial statements, reviews of the Corporation’s quarterly financial statements prioran employee benefit plan amendment, $(5.8) million related to the filingretirement of each quarterly report on Form 10-Q,trust preferred debt, $5.0 million related to TrustAtlantic acquisition expenses, and $2.8 million related to the impairment of a tax credit investment adjusted using an incremental tax rate of approximately 39 percent, and $3.6 million of net discrete tax benefits.
(b) Includes goodwill and other procedures. It is recognized that, in fulfilling their responsibilities hereunder, membersintangible assets, net of the Committee are not full-time employees of the Corporation and are not, and do not represent themselves to be, performing the functions of accountants or auditors. As such, it is not the duty or responsibility of the Committee or its members to conduct “field work” or other types of auditing or accounting reviews or procedures or to set auditor independence standards, and each member of the Committee shall be entitled to rely on (1) the integrity of those persons and organizations within and outside the Corporation from which it receives information, (2) the accuracy of the financial and other information provided to the Committee by such persons or organizations absent actual knowledge to the contrary (which shall be promptly reported to the Board) and (3) the representations made by management as to any non-audit services provided by the independent auditor to the Corporation. Further, in fulfilling their responsibilities hereunder, the members of the Committee will incorporate the use of reasonable materiality standards, including the size of the Corporation and the nature, scope and risks of the activities conducted.
The independent auditor for the Corporation is accountable to the Committee as representatives of the shareholders and must report directly to the Committee. The Committee has the authority and responsibility directly to appoint (subject, if applicable, to shareholder ratification), retain, compensate, evaluate and terminate the Corporation’s independent auditor and to oversee the work of such independent auditor.
The independent auditor shall submit to the Committee annually a formal written statement (the “Auditor’s Statement”) describing: the independent auditor’s internal quality-control procedures; any material issues raised by the most recent internal quality-control review or peer review of the independent auditor, or by any inquiry or investigation by governmental or professional authorities, within the preceding five years, respecting one or more independent audits carried out by the independent auditor, and any steps taken to deal with such issues; and (to assess the independent auditor’s independence) all relationships between the independent auditor and the Corporation addressing each non-audit service provided to the Corporation and at least the matters set forth in the applicable requirements of the Public Company Accounting Oversight Board regarding the independent auditor’s communications with the Audit Committee concerning independence.
The independent auditor shall submit to the Committee annually a formal written statement of the aggregate fees billed for each of the last two fiscal years for professional services rendered by the independent auditor in the following categories (as defined by the rules of the SEC): audit, audit-related, tax and all other services.
A-1
(c) Includes the average after-tax impact of $27.9 million and $75.6 million of notable items recognized in 2019 and 2015, respectively.
APPENDIX A—AUDIT COMMITTEE CHARTER
Qualifications of Committee Members
The Committee shall consist of at least three members appointed annually by a majority of the entire Board on the recommendation of the Nominating and Corporate Governance Committee of the Board of Directors, acting in its capacity as the nominating committee.
Members shall be directors who meet the independence and experience requirements of the NYSE and Section 10A(m)(3) of the Securities Exchange Act of 1934, as amended, and the rules of the SEC promulgated thereunder. Under these requirements as currently adopted, the Board must determine:
| 2020 PROXY STATEMENT | A-2 |
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as such requirements are interpreted by the Board of Directors in the exercise of its business judgment. Members may be replaced by the Board.
No director may serve as a member of the Committee if such director serves on the audit committees of more than two other public companies unless the Board of Directors determines that such simultaneous service would not impair the ability of such director to serve effectively on the Committee, and discloses this determination in the Corporation’s annual proxy statement. No member of the Committee may be an affiliated person (as such term is defined in SEC Rule 10A-3, including any exceptions or exemptions permitted thereby) of the Corporation or any subsidiary thereof or may receive any compensation from the Corporation other than (i) director’s fees, which may be received in cash, stock options or other in-kind consideration ordinarily available to directors; (ii) a pension or other deferred compensation for prior service that is not contingent on future service; and (iii) any other regular benefits that other directors receive; provided, however, that notwithstanding the foregoing, it shall be permissible for Committee members to receive those types of compensation permitted by the rules of the SEC and the NYSE regarding the independence of audit committee members.
Operation of the Committee
Meetings shall be held at least four times yearly, or more frequently if circumstances dictate, and may be called at any time by the Committee chair or by any two members of the Committee upon written or oral notice to a majority of the members of the Committee prior to the meeting. A quorum shall consist of a majority of the members and the vote of a majority of the members present at a meeting at which a quorum is present shall be the act of the Committee. Proceedings of the Committee over the signature of a member in attendance shall be recorded in a minute book and reflect the names of those in attendance. The chair of the Committee, or acting chair of the meeting, will present a report of Committee activities to the full Board of Directors at its next regularly scheduled meeting. The Secretary of the Board will permanently maintain the minutes of Committee meetings. Meetings may be held jointly with a similar committee of First Tennessee Bank National Association (“Bank”) if either the members of the Bank’s committee and the members of this Committee are identical or all of the members of the Bank’s committee would meet the eligibility requirements of the NYSE, Section 10A(m)(3) and the rules of the SEC, including any exceptions permitted thereby, and meetings may also be held jointly with the Trust Audit Committee of the Bank under the same conditions. The Committee may, in its discretion, delegate all or a portion of its authority and duties to a subcommittee of the Committee, and may delegate to the chair the authority to grant pre-approvals of audit and permitted non-audit services as provided herein, provided that the decisions of such chair to grant pre-approvals shall be presented to the full Committee at its next regularly scheduled meeting.
The Committee shall have unrestricted access to Corporation personnel and documents. The Committee will be given the resources and authority appropriate to discharge its duties and responsibilities, including (i) the authority to retain and compensate special or independent counsel, accountants or other experts or consultants to advise the Committee, without seeking approval of the Board or management, and (ii) appropriate funding, as determined by the Committee, for payment of compensation to such counsel, accountants or other experts and consultants. The Committee may request any officer or employee of the Corporation or of the Corporation’s outside counsel or independent auditor to attend a meeting of the Committee or to meet with any members of, or consultants to, the Committee. It will be the responsibility of the Committee to maintain free and open means of communication between the directors and
A-2
APPENDIX A—AUDIT COMMITTEE CHARTER
management of the Corporation. The Committee shall meet separately periodically with management, the internal auditor, and the independent auditor in separate executive sessions to discuss any matters that the Committee or any of these persons believes should be discussed privately.
Duties and Responsibilities of the Committee
The Committee is hereby delegated full authority with respect to the following matters and such additional matters as may be provided in the bylaws of the Corporation or as the Board of Directors may from time to time by resolution adopted by a majority of the entire Board specify:
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A-3
APPENDIX A—AUDIT COMMITTEE CHARTER
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A-4
APPENDIX A—AUDIT COMMITTEE CHARTER
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A-5
APPENDIX B—SECTIONS OF RESTATED CHARTER PROPOSED TO BE AMENDED
PROVISIONS OF THERESTATED CHARTER OFFIRST HORIZON NATIONAL CORPORATIONAFFECTED BY VOTE ITEM NO. 2,WITH PROPOSED CHANGES MARKED
* * * * *
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Proposed New Article 5
5. PURPOSES AND POWERS.
The Corporation is organized: to conduct one or more financial services businesses, including any and all related, ancillary, or supportive businesses; to own other companies or enterprises (or interests therein) which conduct financial services businesses, including any and all related, ancillary, or supportive businesses; to engage in any lawful act or activity for which corporations may be organized now or hereafter under the Tennessee Business Corporation Act or other statutes or law of Tennessee; and for every other lawful purpose or purposes. Except as provided otherwise in this Restated Charter, the Corporation has each and every power enumerated in or permitted now or hereafter by the statutes or law of Tennessee, and all powers ancillary thereto.
Current Article 5, which would be replaced
5. PURPOSES.
The purpose or purposes for which the Corporation is organized are, to the extent permitted by law:
(a) To subscribe for, purchase, lease or otherwise acquire and to receive, own, hold, sell, exchange, lease, mortgage, pledge, assign or otherwise dispose of, and otherwise deal in and with “securities” (as such term is herein defined) issued or created by, or other property (real or personal) of any person, corporation, association, firm, trust, organization or other entity whatsoever, including but not limited to this corporation and any national banking association, state-chartered bank, savings bank and trust company, wherever located or organized and whether public, private or municipal, of this state, or any district, territory, subdivision, municipality or department thereof, or any other state or any district, territory, subdivision, municipality or department thereof, or any country, nation or government, or any district, territory, subdivision, municipality or department thereof; to possess and exercise any and all rights, powers and privileges of ownership of such securities or other property, including without limitation the right to vote on such securities; and to issue or deliver in payment or exchange, in whole or in part, for any such securities or other property, its own stock, bonds, notes or other obligations, or to make payment for any such securities or other property by any other lawful means; and to do any and all acts and things necessary or advisable for the preservation, protection, improvement or enhancement in value of any such securities or other property. The term “securities” as used in this Article 5 shall mean any and all shares, stocks, bonds, debentures, notes, mortgages, acceptances, evidences of indebtedness or obligations, certificates of interest or participation in any property or venture, scrip, interim receipts, voting trust certificates, instruments or interests commonly known as securities, and any and all certificates of interest or participation in, or of deposit of, any of the foregoing, or receipts for, guaranties of, or warrants or rights to subscribe for or purchase any of the foregoing.
(b) To promote, finance and assist, financially or otherwise, whether by loan, guaranty, subsidy or otherwise, any person, corporation, partnership, association, firm, trust, organization or other entity in which the Corporation shall have any interest; to guarantee the payment of dividends on any stock or the payment of the obligations issued or incurred by any such person, corporation, partnership, association, firm, trust, organization or other entity, to issue its own stock, bonds or other obligations in payment or exchange for any securities or other property acquired (pursuant to a merger, consolidation or otherwise) by any such person, corporation, partnership, association, firm, trust, organization or other entity; and to do any and all other acts and things for the enhancement, protection or preservation of any securities which are in any manner, directly or indirectly, owned, held or guaranteed by the Corporation.
B-1
APPENDIX B—SECTIONS OF RESTATED CHARTER PROPOSED TO BE AMENDED
(c) To render assistance, service, counsel and advice to, and to act as representative in any capacity (whether managing, operating, financial, purchasing, selling, advertising or otherwise) of any person, corporation, partnership, association, firm, trust, organization or other entity, including without limitation those in which the Corporation shall have any interest.
(d) To acquire by purchase, lease, exchange or otherwise, to own, hold, use, manage, develop, improve and to sell, lease, mortgage, exchange and otherwise deal in, real estate and any interest or right therein and personal property of every class and description, either for is own account or for the account of others, to erect, construct, rebuild, repair, manage and control, lease, buy and sell, any and all kinds of and interest in real estate and personal property; and to engage generally in the business of operating and leasing real estate and personal property of every character and description.
(e) To buy, sell, produce, manufacture and dispose of all kinds of goods, documents, instruments, general intangibles, chattel paper, accounts, contract rights, wares, foods, potables, merchandise, manufactures, commodities, furniture, machinery, tools, supplies and products of any kind, character or description whatsoever, and generally to engage in any mercantile, manufacturing or commercial business of any kind or character whatsoever throughout the world, and to do all things incidental to any such business or businesses.
(f) To enter into any lawful arrangements for sharing profits, union of interest, reciprocal concession or cooperation, with any corporation, association, partnership, syndicate, entity, person or governmental, municipal or public authority, domestic or foreign in the carrying on of any business which the Corporation is authorized to carry on or any business or transaction deemed necessary, convenient or incidental to carrying out any of the purposes of the Corporation.
(g) To issue bonds, debentures, convertible debentures, notes, commercial paper, or other obligations of this Corporation, from time to time for any of the objects or purposes of the Corporation and to secure the same by mortgage, pledge, deed of trust or otherwise.
(h) To guarantee obligations of any other entity and to secure such guaranties by mortgage, pledge or otherwise by vote of a majority of the entire Board of Directors.
(i) To indemnify the officers and directors during their term of office or thereafter for actions arising during their term of office, either directly or through the purchase of insurance, for expenditures as parties to suits by or in the right of the Corporation or other than by or in the right of the Corporation to the extent permitted by the statutes of Tennessee.
(j) Without in any way limiting any of the objects or purposes or powers, whether primary or secondary of the Corporation, it is hereby expressly declared and provided that the Corporation shall have power to do all acts or things necessary, incidental or convenient to do, or calculated, directly or indirectly, to promote the interest of the Corporation, or enhance the value or render profitable any of its property or rights; and in carrying on its business or businesses, or for the purpose of obtaining or furthering any of its objects, to do any and all things and exercise any and all powers, rights and privileges which a corporation for profit may now or hereafter be permitted to do or to exercise under the laws of the State of Tennessee; and to do any and all of the acts and things herein set forth to the same extent as natural persons could do, and in any part of the world, as principal, factor, agent, contractor, trustee or otherwise, either alone or in syndicates, or otherwise in conjunction with any person, entity, syndicate, partnership, association or corporation, governmental or public bodies or authorities of any kind, domestic or foreign; to establish and maintain offices and agencies and to exercise all or any of its corporate powers and rights throughout the world.
(k) To engage, in addition to the foregoing, in any lawful act or activity for which corporations may be organized under the Tennessee General Corporation Act.
(l) It is the intention that the objects, purposes and powers specified in the fifth paragraph hereof shall, except where otherwise specified in said paragraph, be no-wise limited or restricted by reference to or inference from the terms of any other clause or paragraph in this Charter, but that the objects, purposes and powers specified in the fifth paragraph and in each of the clauses or paragraphs of this Charter shall be regarded as independent objects, purposes and powers.
The foregoing clauses shall be construed both as purposes and powers, and it is hereby expressly provided that the foregoing enumeration of specific powers shall not be held to limit or restrict in any manner the powers of this Corporation.
* * * * *
B-2
APPENDIX B—SECTIONS OF RESTATED CHARTER PROPOSED TO BE AMENDED
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Proposed reservation of Articles 7 and 8, after deletion
7. [reserved]
8. [reserved]
Current Articles 7 and 8, proposed to be deleted as no longer necessary
7. COMMENCEMENT OF BUSINESS.
The Corporation will not commence business until consideration of One Thousand Dollars ($1,000.00) has been received for the issuance of shares.
8. PREEMPTIVE RIGHTS.
No shareholder of the Corporation shall because of his ownership of stock have a preemptive or other right to purchase, subscribe for or take any part of any stock or any part of the notes, debentures, bonds or other securities convertible into or carrying options or warrants to purchase stock of the Corporation issued, optioned or sold by it after its incorporation. Any part of the capital stock and any part of the notes, debentures, bonds or other securities convertible into or carrying options or warrants to purchase stock of the Corporation authorized by this Restated Charter or by any amendment duly filed, may at any time be issued, optioned for sale and sold or disposed of by the Corporation pursuant to a resolution of its Board of Directors to such persons and upon such terms as may to such Board seem proper without first offering such stock or securities or any part thereof to existing shareholders.
* * * * *
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Proposed changes to the first paragraph of Article 10
10. SERIAL PREFERRED STOCK.
The shares of any preferred class may be divided into and issued in series. If the shares of any such class are to be issued in series, then each series shall be so designated to distinguish the series thereof from all the shares of all other series and classes. All shares of the same series shall be identical. Any or all of the series of any class may vary in the relative rights and preferences as between the different series to the extent permitted by the statutes of Tennessee. The Board of Directors shall have the authority to divide any or all such classes into series and, within the limitation of the statutes and law of the State of Tennessee,and particularly Section 48-16-102 of the Tennessee Business Corporation Act or any successor provision theretoSections 48-502 and 48-503, fix and determine the relative rights and preferences of the shares of any series so established.
* * * * *
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Proposed New Article 11
11. MANAGEMENT BY BOARD OF DIRECTORS.
(a) All corporate powers shall be exercised by, and the business and affairs of the Corporation shall be managed under the direction of, the Board of Directors. The Board of Directors may exercise all powers conferred or permitted by the statutes or law of Tennessee.
(b) Without in any way limiting any of the objects or purposes or powers of the Board of Directors, whether primary or secondary, it is hereby expressly declared and provided that the Board of Directors shall have the power to remove any director for cause, within the meaning of applicable statutes or law of Tennessee, by a vote of a majority of the entire Board of Directors.
B-3
APPENDIX B—SECTIONS OF RESTATED CHARTER PROPOSED TO BE AMENDED
Current Article 11, which would be replaced
11. ADDITIONAL POWERS.
(a) The Corporation shall have the right to purchase, take, receive or otherwise acquire, hold, own, pledge, transfer or otherwise dispose of its own shares; but purchases of its own shares, whether direct or indirect, shall be made only to the extent of unreserved and unrestricted earned or capital surplus available therefor.
(b) Other provisions: Management. The Corporation shall be managed by the Board of Directors, which shall exercise all powers conferred under the laws of the State of Tennessee including without limitation the power:
(1) To hold meetings, to have one or more offices, and to keep the books of the corporation, except as otherwise expressly provided by law, at such places, whether within or without the State of Tennessee, as may from time to time be designated by the Board.
(2) To make, alter and repeal bylaws of the corporation, subject to the reserved power of the shareholders to make, alter and repeal bylaws.
(3) To approve the issuance or sale of any of its authorized but unissued shares of any class, bonds or other securities and rights or options entitling the holders thereof to purchase from the corporation shares of any class or classes, to approve the purchase or other acquisition of or the reissuance, sale or other disposition of treasury shares; to fix the consideration to be received for such shares of any class, bonds or other securities, rights or options and to cause to be issued any such shares of any class, bonds or other securities, rights or options.
(4) To use or apply any funds of the corporation lawfully available therefor for the purchase or acquisition of shares of the capital stock or bonds or other securities of the corporation, in the market or otherwise, at such price as may be fixed by the Board, and to such extent and in such manner and for such purposes and upon such terms as the Board may deem expedient and as may be permitted by law, and to sell, exchange, transfer, reissue or cancel such shares of the capital stock of the corporation upon such terms and for such consideration as it may deem proper.
(5) To determine whether and to what extent and at what times and places and under what conditions and regulations the accounts and books of the corporation, or any of them, shall be open to the inspection of the shareholders, and no shareholder shall have any right to inspect any account, record, book or document of the corporation, except as conferred by the laws of the State of Tennessee or as authorized by the Board.
(6) To remove any director for cause as defined by the laws of the State of Tennessee by a vote of a majority of the entire Board of Directors.
(7) To fill any newly created directorships resulting from an increase in the number of directors and any vacancies occurring in the Board for any reason, (including removal of directors without cause by the shareholders or for cause by the Board of Directors or the shareholders.)
(8) To designate an Executive Committee consisting of two or more directors and such other committees consisting of two or more persons, who may or may not be directors, and to delegate to such Executive Committee and other committees all such authority of the Board that it deems desirable within the limits prescribed by the statutes of the State of Tennessee.
(9) To designate the officer or officers of the corporation who shall vote the shares of capital stock held by the corporation in other corporations and to authorize the execution of any proxy that may be necessary in connection therewith.
(10) To take any action required or permitted of the Board without a meeting on written consent, setting forth the action so taken, sighed by all directors entitled to vote thereon.
* * * * *
B-4
APPENDIX B—SECTIONS OF RESTATED CHARTER PROPOSED TO BE AMENDED
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Proposed change to Article 14
14. DIRECTOR LIABILITY.
No director shall be personally liable to the Corporation or its shareholders for monetary damages for breach of fiduciary duty as director, except for liability (i) for any breach of the director’s duty of loyalty to the Corporation or its shareholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, or (iii) under Section 48-18-30248-18-304, or any successor provision thereto, of the Tennessee Business Corporation Act.
* * * * *
B-5
APPENDIX C—RECONCILIATION OF NON-GAAP TO GAAP FINANCIAL INFORMATION
RECONCILIATION OF NON-GAAP TO GAAPFINANCIAL INFORMATION
Portions of this Proxy Statement show financial measures that are not presented according to generally accepted accounting principles (GAAP). Non-GAAP financial measures are noted in this Proxy Statement when used. A reconciliation of those non-GAAP measures to comparable GAAP measures is provided in this appendix.
Although non-GAAP measures have no standard definition, our management believes the measures presented in this Proxy Statement are useful for understanding our financial results. Non-GAAP measures are reported to our management and Board of Directors through various internal reports.
The non-GAAP financial measures used in this Proxy Statement are: adjusted earnings per share (EPS), adjusted return on assets (ROA), adjusted return on equity (ROE), return on tangible common equity (ROTCE), adjusted ROTCE, and adjusted efficiency ratio, all for the fiscal year 2017. All adjusted measures exclude from GAAP measures certain “notable items” which are listed in the table below. The amount of each notable item is listed to show relative size. Except for the tax-related adjustments, amounts shown are pretax, and do not flow directly into adjustment calculations. While the selection of which items identified as “notable” is inherently subjective, we believe that the exclusion of these positive and negative notable items from our reported GAAP operating results for 2017 presents a more useful baseline for comparisons to other years. Certain calculated amounts do not add, subtract, or divide precisely as shown due to rounding.
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C-1
APPENDIX C—RECONCILIATION OF NON-GAAP TO GAAP FINANCIAL INFORMATION
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C-2
APPENDIX C—RECONCILIATION OF NON-GAAP TO GAAP FINANCIAL INFORMATION
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C-3
ANNUAL MEETING
April 28, 2020
April 24, 2018
10:00 a.m. Central time
First Tennessee First OpsHorizon Building3451 Prescott Road
M-Level Auditorium
165 Madison Avenue
Memphis, TN 3811838103
| PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND VOTING INSTRUCTION CARD FOR |  | |
FIRST HORIZON NATIONAL CORPORATION SAVINGS PLAN (“Plan”) |  |
Shareholders of Record:The undersigned appoints George P. Lewis and Ben C. Adams, Jr.,R. Mark Glover, or any one or both of them with full power of substitution, as proxy or proxies, to represent and vote all shares of stock standing in my name on the books of the corporation at the close of business on February 23, 2018,28, 2020, which I would be entitled to vote if personally present at the annual meeting of shareholders of First Horizon National Corporation, to be held in the M-Level Auditorium at the First Tennessee First OpsHorizon Building, 3451 Prescott Road,165 Madison Avenue, Memphis, Tennessee 38118,38103, on April 28, 2020 at 10 a.m. Central time, or any adjournments thereof, upon the matters set forth in the notice of said meeting as stated on the reverse side. The proxies are further authorized to vote in their discretion as to any other matters which may properly come before the meeting. The board of directors, at the time of preparation of the proxy statement, knows of no business to come before the meeting other than that referred to in the proxy statement.
Plan Shareholders:Under the terms of the Plan, each participant having funds allocated to the FHNCFirst Horizon Common Stock Fund is entitled to instruct State Street Bank and Trust Company, plan trustee (“Plan Trustee”), as to the manner in which to vote the shares of First Horizon common stockCommon Stock held in the FHNCFirst Horizon Common Stock Fund represented by the participant’s interest therein as of the close of business on February 23, 201828, 2020 (the record date for the annual meeting of shareholders). The purpose of this instruction card is for the participant to give instructions to the Plan Trustee as to how to vote such shares in connection with the annual meeting of shareholders of First Horizon National Corporation to be held in the M-Level Auditorium at the First Tennessee First OpsHorizon Building, 3451 Prescott Road,165 Madison Avenue, Memphis, Tennessee 38118,38103, on April 24, 2018,28, 2020, at 10 a.m. Central time, or any adjournments thereof, upon the matters set forth in the notice of said meeting as stated on the reverse side and also to give discretion to the Plan Trustee to vote on any other matters that may properly come before the meeting. The undersigned hereby directs the Plan Trustee to vote the shares of FHNC common stockFirst Horizon Common Stock in the FHNCFirst Horizon Common Stock Fund represented by the undersigned’s interest therein as specified on the reverse side.
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
YOU CAN VOTE BY TELEPHONE, OVER THE INTERNET, OR BY SIGNING AND RETURNING THIS CARD AS DIRECTED ON THE REVERSE SIDE.
Vote by Internet, Telephone, or Mail
There are three ways to vote. Internet or telephone voting is available 24 hours a day, 7 days a week.
Your phone or Internet vote authorizes the named proxies and/or the Plan Trustee to vote
your shares in the same manner as if you had marked, signed and returned this card.
You will need the last four digits of your Social Security or Tax ID number to vote your shares on the Internet or by phone.
INTERNET/MOBILE www.proxypush.com/fhn Use the Internet to vote your shares |  |  |
TELEPHONE 1-866-883-3382 Use any touch-tone telephone to |
Mark, sign, and date this card and return | |
If you vote by Internet or by telephone, you do NOT need to mail back this card.
 |  | Shareowner Services | ||||
| P.O. Box 64945 | ||||||
| St. Paul, MN 55164-0945 | ||||||
| Address Change? Mark box, sign, and indicate changes below:o | ||||||
| TO VOTE BY INTERNET OR TELEPHONE, SEE REVERSE SIDE OF THIS PROXY CARD. | ||||||
The Board of Directors unanimously recommends a vote FOR Items 1, 2 3 and 4.3.
| 1. | Election of twelve directors to serve until the | |||||||||||||||
| FOR | AGAINST | ABSTAIN | FOR | AGAINST | ABSTAIN | |||||||||||
| 01 Kenneth A. Burdick | o | o | o | 07 Vicki R. Palmer | o | o | o | |||||||||
| 02 John C. Compton | o | o | o | 08 Colin V. Reed | o | o | o | |||||||||
 Please fold here — Do not separate. | ||||||||||||||||
| 03 Wendy P. Davidson | o | o | o | 09 Cecelia D. Stewart | o | o | o | |||||||||
| 04 Mark A. Emkes | o | o | o | 10 Rajesh Subramaniam | o | o | o | |||||||||
| 05 Corydon J. Gilchrist | o | o | o | 11 R. Eugene Taylor | o | o | o | |||||||||
| 06 D. Bryan Jordan | o | o | o | 12 Luke Yancy III | o | o | o | |||||||||
| FOR | AGAINST | ABSTAIN | FOR | AGAINST | ABSTAIN | |||||
| 01 | John C. Compton | o | o | o | 07 | Vicki R. Palmer | o | o | o | |
| 02 | Mark A. Emkes | o | o | o | 08 | Colin V. Reed | o | o | o | |
 Please fold here – Do not separate | ||||||||||
| 03 | Peter N. Foss | o | o | o | 09 | Cecelia D. Stewart | o | o | o | |
| 04 | Corydon J. Gilchrist | o | o | o | 10 | Rajesh Subramaniam | o | o | o | |
| 05 | D. Bryan Jordan | o | o | o | 11 | R. Eugene Taylor | o | o | o | |
| 06 | Scott M. Niswonger | o | o | o | 12 | Luke Yancy III | o | o | o | |
| 2. | Approval of | o | Forn | o | Againstn | o | Abstain | ||||||
| o | Forn | o | Againstn | o | Abstain | ||||||||
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF NOTICE OF SAID MEETING AND THE RELATED PROXY STATEMENT.
| Date | , |
Signature(s) in Box
Shareholders sign here exactly as shown on the imprint on this card. When signing as Attorney, Executor, Administrator, Trustee or Guardian, please give full name. If more than one Trustee, all should sign. All Joint Owners should sign.
Performance-based (at-risk) and stock-based pay emphasized
Tax gross-up features*
